Cuinba                                                          Page 1 of I


  09/15/2000 06:01
       PM           bce:
                  Subject Culabe

  The issues on the Cuiaba plant arc as follows:

  1. The plant has no long terni gas supply arrangements at this tigue. A 20 year contract was
  ncgotiated Will] YPF, utilizing Argentine gas~ howevei, YPF has only been able to obtain a 1 year
  transport permit to transport the gas from Argentina across Bolivia to Brazil YPF is attempting to
  have the transport permit extended to 2Oyeazs, however, the gas supply contract will expire on May.
  4,2001 if the permit is not extended by that time. Enron has agreed to supply fuel to the plant if
  necessaly until May 4,2001 and if the YPF contract expires on that date, Enron will have 12 months
  to arrange a long term replacement supply. If the replacement fuel supply is not in place by May 4,
  2002, Enron's backup obligations convert to a debt service guaranty. If the replacement fuel supply
  is not in place by May 4,2003, the Leaders can put their debt back to Eiu'on.

  2. The plant has experienced operational problems as a result of operating on fuel oil instead of
  gas. The Siemens turbines were not designed to operate on fuel oil for the duration that has been
  experienced as a result of the plant not having gas supply. The turbines experienced fhihxre of the
  ceramic tiles that are used for beat resistence. The tiles have been replaced, however, it is uncertain
  how the turbines will continue to perform under the current operating conditions. Gas is not expected
  to reach the plant for another 2-3 months when the pipeline is completed.

  3. Conditions precedent for the permanent financing have not been satisfied, which is imparing
  returns. Enron and Shell (the Sponsors) and the Lenders, OPICi~C±W, have agreed on a contingent
  sponsor support package whereby the Sponsors will provide indemnities or contingent support to
  deal with gas supply risk. currency conversion risk and transfer risks. However, the Lenders require
  consents for the assignement of the Power Purchase Agreements to the Lenders. These consents are
  needed from two Brazilian companies, Electrobras and Fumas, who are currently refusing to sign the
  consents. Therefore, until the consents are obtained, OPICIK!W will not fund. There is currently no
  good estimate of when these consents may be obtained and the financing funded.

  4. The project has experienced cost overruns due to the delayed start and change orders of
  S14&4 MM on an original budget of 5519 MM, which is impairing returns. These cost overruns
  consist of i) $55.5 MM of late start penalties payable to the power purchaser, Furnas, ii) $8.5 MM of
  Additional Interest During construction, iii) $38.3 MM of change orders and iv) $46.2 MM of
  additional scope of work on the pipeline.


                                                               Coofldenti~I Treatmwt
MK008987                                                            Requested

~ 9/ 18t2000


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                                                                              EXHIBIT             fl
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                                                                              CrmiNo H-04-0025    j

Kathy Lyun           Ta:Andr~w Fasaow/Lfl Ioustan@LlMiwestmeims, Anlie
                       YecgerlLflvfl4oustoz~BLJMInvestzncnts