Public Tender for the Generation of Energy from Renewable Sources New terms and guarantees

Within the framework of: (i) Law No 26,190 for the Promotion of Electric Power Generation from Renewable Sources aimed at having, within a 10-year term, eight percent (8%) of the total electric energy used in the country come from renewable energy sources; and (ii) Law N 26,093 for Bio-fuel Promotion, the state-owned company Energía Argentina S.A. (“ENARSA”) has called for the “National and International Public Tender No EE 001/2009 for the award of power purchase agreements from renewable sources” (the “Tender”).

Under the Tender, ENARSA shall enter into Power Purchase Agreements, where the power being acquired will have to be generated from renewable sources and for a term of up to 15 years as from the issuance of the commercial authorization of each plant.

Under the Tender, up to 1,015 MW of power supply shall be purchased, distributed as follows among the different types of energy sources:

– Wind Power: 500 MW
– Thermal fro, bio-fuels: 150 MW
– Solid Urban Waste: 120 MW
– Bio-mass: 100 MW
– Small-scale Hydroelectric Use: 60 MW (up to 30 MW per plant)
– Geo-Thermal: 30 MW
– Solar Thermal: 25 MW
– Biogas: 20 MW
– Solar Photovoltaic: 10 MW

Successful bidders will become ENARSA suppliers of power availability and energy, as applicable. ENARSA will act as a power generator for the Wholesale Electricity Market or Mercado Eléctrico Mayorista (“MEM”) providing Compañía Administradora del Mercado Mayorista Eléctrico Sociedad Anónima (“CAMMESA”) the availability of power and energy which will in turn be supplied by successful bidders. To this end, ENARSA and CAMMESA will enter into power purchase agreements for every agreement executed with successful bidders.

Under the Tender, the remuneration shall be fixed in dollars but payments will be performed in pesos, for an amount as necessary to buy the amount of dollars set forth in the Power Purchase Agreement, according to the Reference Exchange Rate set forth in BCRA Communication “A” 3500 (wholesale), and will include:

– Bio-fuel: payment for power availability and electric power supplied.
– Other energy sources: payment for the electric power actually supplied.

The guarantees for successful bidders are the following:

(i)   ENARSA’s Purchase Guaranty: ENARSA guarantees the purchase of energy generated by the plants unforced by requirement of the contractors and with a dispatch related to the capacity to deliver energy based on the availability of the plant.
(ii)  Guarantee Fund: ENARSA guarantees the performance of its obligations by contributing 5% of the monthly fee payable under all the Agreements executed under the Tender.
(iii) Endorsements of the National Treasury as a guarantee for ENARSA’s performance of its contractual obligations. Along with the enactment by the National Congress of the Law of Budget for Expenditures and Resources for 2010, the granting of endorsements, bonds or guarantees in favor of ENARSA aimed at the investment in electric energy generation from renewable sources, was approved. Thus, the Guarantee Fund will be also integrated by an endorsement granted by the National Treasury for up to US$ 2,000,000,000 (United States Dollars two thousand million). The fiduciary administration of the funds will be performed by a financial entity authorized under the provisions set forth in Law No 24,441.

The relevant dates for the Tender are as follows:

a) Filing of proposals: admitted until 12.30 p.m. of December 9, 2009.
b) Award: January 5, 2010.
c) Execution of Contracts: January 18, 2010.