Consorcio Transmantaro

Transcription

1 Consorcio Transmantaro 2011 Report

2 I. Business Context 1.1 ISA and its businesses ISA carries out important projects in linear infrastructure directly and through its 30 branches and subsidiaries boosting development in the continent. In order to achieve this, it focuses its activities on Electricity Transmission, Telecommunications, Road Concessions and Real-Time Systems Intelligent Management businesses. ISA s linear infrastructure systems extend from city to city and from country to country, point-to-point, fostering the development of people from Colombia, Brazil, Peru, Chile, Bolivia, Ecuador, Argentina, Panama and Central America. For nearly 45 years, the Company has distinguished itself by delivering efficient and reliable services, within a human-rights-respect and environment-protection framework in order to foster competitiveness and regional sustainability, improve current standard of living and further the development of society, wherever it is present. All this is possible thanks to a human team made up by 3,435 highly qualified and committed workers. ISA is a socially responsible company, with an ethical and serious standing and committed to initiatives such as the Global Pact, the Millennium Development Objectives and the climate change, which will permit the creation of economic, social and environmental value for its stakeholders, businesses and future generations. Electricity Transmission Through its branch companies and subsidiaries, ISA expands, operates and maintains high voltage power transmission systems, by which it has been recognized as one of the largest international power transmission companies in Latin America. This is thanks to the 39,429 km of high voltage circuits it operates, to the international interconnections between Venezuela and Colombia, Colombia and Ecuador and Ecuador and Peru, and to its 70,457 MVA transformation capacity. In Colombia, ISA counts with its companies ISA and TRANSELCA; in Peru con ISA Peru, Red de Energía del Peru REP and Consorcio Transmantaro CTM ; in Bolivia with ISA Bolivia; and in Brazil with the subsidiaries Companhia de Transmissão de Energia Elétrica Paulista CTEEP (bought through its investment instrument ISA Capital do Brasil), Interligação Elétrica Pinheiros PINHEIROS, Interligação Elétrica Serra do Japi SERRA DO JAPI, Interligação Elétrica de Minas Gerais IEMG and Interligação Elétrica Garanhuns IE GARANHUNS. CTEEP, with other regional partners, has investments in Brazil in the following companies: Interligação Elétrica Norte and Nordeste IENNE, Interligação Elétrica Sul IESUL and Interligação Elétrica do Madeira IE MADEIRA. In addition, ISA has an 11.11% shareholding in Empresa Propietaria de la Red EPR that builds the Electric Interconnection System in Central American Countries SIEPAC, and shares ownership of Interconexión Eléctrica Colombia Panamá ICP with Empresa de Transmisión Eléctrica S.A. ETESA (Panamá).

3 Telecommunications Transportation ISA s shareholding in this line of business is carried out through INTERNEXA, a company that after a decade of operations, has managed to set up an optic fiber network of 19,912 km, which consolidates it as the telecommunications operator that owns the largest overland continuous layout network in the continent. It goes through seven countries, connects the Pacific Coast to the Atlantic Coast and joins telecommunications in all South America. In addition, ISA has an 11.11% shareholding in REDCA, the company in charge of managing optic fiber assets of the SIEPAC Project. INTERNEXA, as a branch company of ISA, together with the other partner companies, takes part in the construction of this infrastructure. In this way, the company is getting ready to operate 1,800 km of optic fibers in Central America in the medium term, thus consolidating a km long network in the continent. INTERNEXA, convinced that broad band mass coverage and immediate availability of local and internationally produced material are key in improving people s standard of living, has developed a strategy that will enable it to be leader in Latin America in distributing relevant digital material. In this sense, it has set up a data center in Colombia (North Node) and another in Brazil (South Node) in which it houses international distributors digitalcontent servers. In this way, ISA s telecommunications branch consolidates itself as a single supplier, which enables Latin American users to have access to the most consulted contents, in a direct and integrated way. This ecosystem generates adequate conditions for a large scale development of a contents industry in the region. Road-building Concession ISA structures, designs, builds, operates and maintains road infrastructures in markets where it can be important. The operation and maintenance is carried out according to standards established by the business regulating body in each of the countries where it is present and is supported in processes that ensure operative excellence and safety for users. ISA, through INTERVIAL CHILE and its five concessionaires (Maipo Route, Maule Route, Del Bosque Route, De la Araucanía Route and De los Ríos Route), operates 907 km of highways in Chile, which extend from Santiago up to the city of Río Bueno, representing nearly 40% of the network given in concession in Chile and places it as the largest interurban road operator in the country. These roads cross six important regions, which contribute 80% of the population, 70% of the Domestic Gross Product DGP and 74% of the total number of motor vehicles. INTERVIAL CHILE was purchased through the investment instrument ISA Inversiones Chile. In Colombia, ISA submitted to the National Institute of Concessions - INCO - (currently National Infrastructure Agency - ANI) the engineering, environmental, traffic, legal and financial studies of the Mountain Highway Project for its assessment in August. These studies will help determine everything in relation to the construction, operation, maintenance, conservation and business exploitation of the four road corridors located in Antioquia, Caldas and Risaralda. This will enable to continue with the national competitiveness corridors started by the Central Government (Western Main Line and Magdalena Main Line).

4 Real-Time Systems Intelligent Management Through XM, ISA develops activities in planning, designing, optimization, start up of operation, operation, administration or management of transactional systems or technological platforms, which involve exchanging information with added value and related goods and services markets. The experience developed by XM in operating the electric system and managing the electricity market, enables it to provide intelligent solutions to various sectors of the economy based on its technology and know-how: Electric Sector: In Colombia, XM is in charge of operating the National Interconnected System SIN, managing the Wholesale Electricity Market MEM and managing International Electricity Transactions TIEs with Ecuador. Financial Sector: together with the Colombia Stock Exchange BVC it operates Derivex, the company in charge of managing the country s power energy derivatives market and takes part as an investor in the Cámara de Riesgo Central de Contraparte CRCC (Central Counterparty Clearing House). Traffic and Transportation Sector: the company Sistemas Inteligentes en Red SIR, an XM branch, in alliance with UNE EPM Telecomunicaciones and the ITS consortium, operate the Traffic Control Center CCT of the Medellin Intelligent Transportation System SIMM. With the services provided through the Real-Time Systems Intelligent Management, XM contributes to the development of cities and to the improvement of its inhabitants standard of living and to the competitiveness of its companies. 1.2 Development of Peru during 2011 Electric Sector The production of electricity in the National Interconnected Electric Power System (SEIN) reached 35, GWh during 2011, which represents an 8.61% increase in relation to During 2011, SEIN s maximum demand was 4,961.2 MW, which happened on Wednesday 14 December, which represents an 8.35% increase in relation to the one registered in The year 2011 marked a historic milestone for the development of the Electricity System in Peru with the start up of operations of the first 500 volts transmission line, the Chilca- La Planicie-Zapallal line, an infrastructure that helped provide greater reliability and strengthen the National Interconnected Electric Power System. On March 31 st, 2011, ISA was given the award of the International Public Tender for the execution of the Project: Trujillo Chiclayo (La Niña) 500 kv Transmission Line. The Concession Agreement was signed by and between the Ministry of Energy and Mines and CTM on May 26th of the same year. The start up of business operations is foreseen for November 2013 and will generate annual incomes for USD 15.7 million. The purpose of this Project is to expand the 500 kv main line towards northern Peru, in order to ensure coverage of electricity supply in the medium term in this important area of the country, in a timely fashion and with good quality level. It is worth mentioning that this project is the continuation of the 500 kv Zapallal Trujillo Transmission Line, which is currently being built by CTM.

5 The strengthening of the Mantaro-Socabaya Transmission Line was another important investment in transmission which was completed and started operations by mid This line will help increase its transportation capacity in more than 60%, thus eliminating congestion problems in the transmission line in the southern part of the country. On June 23 rd, 2011, the Independencia Ica Transmission Line was put into operation. Another project with emphasis is forming an energetic ring to ensure electricity supply to the southern part of the country is the 220 kv Machu Picchu Abancay Cotaruse Transmission Line, which is being built by the Consorcio Transmantaro since 2011, and will have a length of 204 kilometers. Through this line, energy from the generation projects in execution in the southern region will be transported, among them the II stage of the Machupicchu Hydroelectric Power Plant (102 MW) and Santa Teresa Hydroelectric Power Plant (100 MW). Energy from the project Quillabamba Thermal Power Plant (200 MW) would also be transported. In order to improve the stability of the electricity supply of the network between Machupicchu- Cusco-Tintaya-Arequipa and supply energy for the productive development in the Redesur area, the 220 kv Tintaya Socabaya Transmission Line is being built, with a length of 207 kilometers, whose estimated start up of operation date is during the first semester of This line will join the city of Arequipa with Espinar (Cusco). In this way, the transmission infrastructure has maintained continuous growth through new lines and reinforcements, which represent investments in more than 1500 additional kilometers, to enable to service the increase in the country s electricity demand, as well as offering greater reliability to the SEIN operation. The lines should be completed in the foreseen periods. This will enable to count with a reliable transmission system prepared to timely face demand growth in the next few years. Servicing the important growth of the demand in the hinterland cannot be deferred, especially in the northern and southern areas and ensure reliable and safe supply to the entire system. Economic Environment Peru s GDP growth was slightly lower than the 8.8% obtained in 2010; this was due to factors such as less growth of world economy, the dissipation of monetary and fiscal stimuli and deterioration of business expectations. In 2011, the GDP grew by 7.0%, in line with high quotations of the principal export products. International Net Reserves (INR) of Peru reached a milestone of USD 48,815 million by the end of 2011, which is equivalent to almost 29% of the Gross Domestic Product. It is worth pointing out that this exceeds the second country in the region with the largest level of international reserves in relation to the GDP, Chile, with 19%. The country risk average, measured by the spread of the Emerging Markets Bonds Index - EMBI - of Peru is located at 214 basic points, in comparison to the 152 it obtained in 2010; this increase, even above the peer economy of the region, is also a reflection of certain nervousness of investors. The Lima Stock Exchange (BVL) accrued losses for approximately USD 40,000 Million in market capitalization at the end of 2011; shares with the largest drop were mining companies which lost nearly 70% of this value, going from USD 88,549 Million at the end of the previous year to USD 61,030 Million.

6 The CPI accrued to December 2011 was 4.74%, while the WPI was 6.26%. The exchange rate ended 2011 with high volatility due to the financial uncertainty of international markets. The exchange rate ended the year at S/. per USD. Social Environment During 2011, the social environment in Peru revealed a growing social opposition to mining and energetic projects in some of the regions where these projects are foreseen to be executed. Since the new Government took office, new policies have been announced for promoting private investment to generate growth with social inclusion. However, results by the end of 2011 showed that conflicts against investments struck huge blows to the development of large projects in the country. The situation became so difficult that in agreement with the Government, the Yanacocha mining company had to suspend the development of the Conga project, the largest in the country, with an estimated investment for USD 4.8 Billion. In addition, this was so serious that a state of emergency had to be declared in the Department of Cajamarca. It is important to take into account that in Peru, there is an investment portfolio of USD 51Billion for the next five years (80% of the total mining projects). However, due to social conflicts, several mega projects do not show sustainable progress. The same thing happens to the bidding of approximately 30 oil and natural gas lots, which has been postponed since July 2011 because the affected communities have to be consulted before these can be developed. Likewise, there are approximately 14 projects with investments that total USD 300 Million that have been suspended waiting for the approval of Environmental Impact Studies. Statistics on social conflicts submitted by the Bureau for Prevention of Social Conflicts and Governance of the Ombudsman Office reported the following information by the end of 2011: Conflicts according to type No. of cases Social-environmental 126 National Government Affairs 18 Local Government Affairs 17 Labor 17 Territorial Demarcation 12 Regional Government Affairs 11 Others 10 Community-related 10 Electoral 1 Coca leaf growing 1 Total Perspectives for 2012 Transmission Perspectives In relation to electricity transmission, the following is expected: start up of operations of the 500 kv Zapallal-Chimbote- Transmission Line, the second triad of the 220 kv Trujillo

7 North Guadalupe Chiclayo West transmission line, the 220 kv Pomacocha Carhuamayo Line, strengthening of the short-circuit capacity of facilities operated by REP at Lima substations and the second 220 kv triad of the Piura - Talara line. Economic Perspectives The global scenario is volatile due to the following factors: weak macroeconomic results, which makes world activities decelerate in a general way, partly due to temporary factors (earthquake in Japan, oil prices), as well as more uncertainty on the near future, growing doubts on finding an integral solution to the sovereign crisis in Europe, with high risk of a systemic effect, extending to Italy, Spain and threatening central countries; effects on the deterioration of the European banking system in general. Volatility in the fixed and variable income market has significantly increased in Europe and North America to levels not seen since October The increase of global aversion to risk has also expanded to emerging markets, as shown in lower capital inflows. On the other hand, it is possible to foresee the scope of deceleration in emerging economies in an environment of external and internal inflationary pressures, which they have to face. In any case, it is expected that growth rates will be less than those of the precrisis level. Experts indicate that in the years following a crisis, there is a significantly lower GDP growth and higher unemployment level in comparison to the decade before the crisis. Taking these factors into account, it is estimated that in 2012 the GDP of Peru s main trading partners will grow 3.2%, that is, 0.4 percentage points less than in Likewise, between 2012 and 2014 the average growth of trading partners will reach 3.3%, 1.2 percentage points less than the average of the pre-crisis period ( ). For the period, exchange terms will gradually fall to an average annual rate of 4%, explained by an average increase in importation prices of 3.4% and an average exportation price contraction of 0.7%. For 2012, it is assumed average quotations for copper will be USD 385 per pound and for gold USD 1,400 per ounce. High volatility of the principal exportation product prices in Peru reinforce the idea of making conservative assumptions in case the price of metals continue with their downward trend in the next few months. On the other hand, petroleum would stand above USD 100 per barrel with an upward trend, supported by the growing world demand, the supply gap and the geo-political problems in the Middle East (tensions with Iran). On the other hand, prices of wheat, maize and soybean would drop even though they would continue to be quoted at high levels in relation to the average of the last four years, with an upward trend risk. In this scenario, Peru expects to retake the concessions agenda. There are a good number of free trade agreements, which will be in force in 2012 and at the same time, a responsible macroeconomic scenario is expected to be maintained. Consequently, despite the various social conflicts, the Government expects a recovery of expectations, which will depend on the scope and duration of the crisis. If the world grows below its potential for a long period of time, internal fiscal and monetary policies will help up to a certain point. Still, emphasis will be focused on how to eliminate bottlenecks, improve infrastructure, labor force and to have more diversification of the productive apparatus.

8 II. The Company Consorcio Transmantaro S.A. (CTM) is a Peruvian company that forms part of the ISA business group, the largest international electric power transportation company in Latin America. 2.1 Company Information Company affairs The object of the company is the construction, operation and maintenance of electric power transmission networks and system development. Initially, the company was created to develop electric transmission activities as a concessionaire of the Mantaro- Socabaya transmission line, to join the Central-North Interconnected System with the South Interconnected System. Type of company Corporation RUC (Taxpayer s Unified Registry No.) C.I.I.U Legal Address Avenida Canaval y Moreyra 522, Piso 11, San Isidro, Lima 27 (Perú) Phone (51-1) Fax (51-1) External Auditor Risk rating companies Medina, Zaldívar, Paredes & Asociados Sociedad Civil de Responsabilidad Limitada- Ernst & Young member company Apoyo & Asociados Internacionales Pacific Credit Rating Company Incorporation Consorcio Transmantaro S.A. is a Peruvian company established on January 30 th, 1998, registered in the Lima registration office of the Registry of Legal Persons under the Entry No In 1997, the Peruvian State called an international public tender for the concession and operation of the project Mantaro-Socabaya electric power transmission line, with the purpose of interconnecting the central-north interconnected system (SICN) with the south interconnected system (SIS) and setting up the national interconnected electric system (SEIN). On January 15 th, 1998, the Commission for the Promotion of Private Concessions (Promcepri) awarded the international public tender for the electric concession of the Mantaro-Socabaya transmission system to the Consorcio Transmantaro S.A. (CTM). The strategic operator in charge of operating the Mantaro-Socabaya Line was Hydro-Quebec International Inc.

9 On February 27 th, 1998, CTM and the Ministry of Energy and Mines - on behalf of the State - signed the BOOT Agreement for the design, supply, construction and exploitation of the Mantaro Socabaya Transmission System (main transmission system) for a 33-year period of time, after which the goods object of the concession will be transferred to the State. On October 8 th, 2000, CTM started operating the Mantaro-Socabaya Interconnection system, through which the SEIN electric transmission was interconnected. Thus, from December 12 th, 2006, Interconexión Eléctrica S.A. E.S.P. (ISA), in association with Empresa de Energía de Bogotá S.A. E.S.P. (EEB), became the new strategic interconnection operator. At present, Red de Energía del Perú (REP) performs as Consorcio Transmantaro s Management Center, delivering integral, technical and administrative management services. Ownership Structure The company s authorized, subscribed and paid for capital to December 31 st, 2011 is represented by 580,714,259 common shares with a face value of S/.1 each, the capital stock amounts to S/. 580,714,259. Shareholder No. of shares % share Interconexión Eléctrica S.A. E.S.P. 348,428, Empresa de Energía de Bogotá S.A. E.S.P. 232,285, Voting shares: Holding No. of shareholders % share Less than 1% - - Between 1% and 5% - - Between 5% and 10% - - Greater than 10% Total Shareholders The following are shareholders of the Consorcio Transmantaro: Interconexión Eléctrica S.A. E.S.P. (ISA) and Empresa de Energía de Bogotá S.A. E.S.P. (EEB), which are important players in the Latin American power sector. Shareholding structure to December 31 st, 2011 No. Shareholder % Country 1 Interconexión Eléctrica S.A. E.S.P 60 Colombia 2 Empresa de Energía de Bogotá E.S.P 40 Colombia Total 100

10 Registered Shareholders of Stocks of Companies holding Company Shares (5% or more) 1 Interconexión Eléctrica S.A. E.S.P % Country La Nación Colombia Empresas Públicas de Medellín (Public Companies Colombia from Medellín) Ecopetrol 5.32 Colombia Shareholders with less than 5% shares Total Empresa de Energía de Bogotá S.A. E.S.P % País Capital district of Bogotá Colombia Ecopetrol 6.87 Colombia Corficolombiana S.A Colombia Others Total 100 Empresa de Energía de Bogotá S.A. ESP (EEB) Colombia The Energía de Bogotá Group is a business group that takes part in electricity transmission and distribution and transportation of natural gas. In addition to being one of the most important players in the Colombian energetic sector due to the size and soundness of its assets and the markets it services, it has international presence in Peru and Guatemala, with growth perspective in other countries of the region. Likewise, the group has important investments in other businesses of the electricity chain (generation and distribution/sale) and natural gas (distribution / sale) in alliances with renowned partners at an international level: Endesa Group (Italy- Spain), Gas Natural (Spain), Citigroup and ISA (Colombia). The following are the most important milestones of Empresa de Energía de Bogotá S.A.: 1896 Creation of the company by private initiative ( Samper Brush family), with activities in Generation (G), Transmission (T), Distribution (D) and Sale (C) of electricity 1959 The city of Bogotá bought all Company shares Bogotá is consolidated as the most important market in the country Gwt - year (32% of the national total) The operating capacity reaches 690 MW (136 T and 554 H); 14% of the national total EEB increases its operating capacity to MW with Paraiso - Guaca at 700 km, 115kV line. EEB adds 163 km of 230 kv/double circuit lines 1990 The company begins D&S business of Natural Gas to service the Bogotá area. In electricity, EEB services a 8100GWh -year demand, which is approximately 24% of the national demand EEB increases its operating capacity to 2196 MW (22% of the National total) Demand serviced by EEB reaches 8886 GWh-year (24% of the National total) The 115kV grid totals 957 km and 392 kms at 230kV Company transformation: Direct management of transmission and separation of generation activities (creation of EMGESA, and distribution/sale (CODENSA) 40% Shareholding at Red de Energía del Perú (REP) the largest transmission company in Peru. EEB becomes a financial and energetic holding company

11 Shareholding in natural gas transportation begins with the acquisition of 72% of TRANSCOGAS, a company engaged in the transportation of natural gas to Bogotá and its area of influence. Expansion of EEB electricity transmission network: Award of Interconnection Project with Ecuador by the UPME. Acquisition of transmission assets from TermoCandelaria Award of Tunal compensation by UPME EEB and ISA awardee of the Consorcio Transmantaro in Peru 2007 EEB acquires 97.91% of TGI, the largest gas transportation company in Colombia, which has more than 3,700 km of gas pipelines EEB adjusts its capital structure by placing international bonds for USD 610 Million EEB is awarded the concession for T/D of natural gas in ICA - Peru EEB is awarded the PET winning bid, the most important Electricity Transmission project in Guatemala TGI Capitalization Expansion of EEB electricity transmission network. Award of Reactors Project by UPME Acquisition of 60% of Calidda and 15.6% of Promigas Issuance of bonds for nearly USD 400 Million Restructuring of debt in international bonds for USD 610 Million at a lower rate. At present, the EEB s principal shareholder is the City of Bogotá D.C. with 76.28% of the company s capital. Pension Fund Administrating Companies 6% Others 7% Corficolombiana 4% Ecopetrol 7% Bogotá, Capital District 76% To December 2011, the consolidated EEB reached assets for a value equivalent to million dollars and a net worth of million dollars, thus becoming one of the most important business groups in Colombia s energetic sector. EEB is a Business Group that takes part in the energetic sector by investing in different types of businesses: BOGOTA ENERGY GROUP Portfolio with Control Portfolio without Control Electricity Transmission Electricity Distribution Gas Transportation Gas Distribution Electricity Transmission Electricity Generation Electricity Distribution Natural Gas Distribution Gas Transportation

12 COMPANIES WITH SHAREHOLDING CONTROL The following is EEB s shareholding in the Natural Gas sector: TGI, company in which EEB has 68.05% share. It is the most important transporter in the country due to the length of its gas pipelines (3.774 km with a total transportation capacity of 583 Mpcd) and due to the average volume transported, which reached 419 Mpcd. TGI s infrastructure links the Atlantic Coast system to the country s hinterland and at the same time, it interconnects the principal gas production fields (Cusiana in the Eastern Plains and Guajira on the Atlantic Coast) with Colombia s main consumption centers. CONTUGÁS. This is the vehicle made up by EEB (75%) and TGI (25%) for developing the natural gas distribution business through pipelines in the department of ICA (Peru). In March 2009, a Concession agreement was signed for a 30-year period (extendable for 30 years). CALIDDA (Gas Natural de Lima y Callao SA) is a Peruvian company that has a concession from the Peruvian State to design, build and operate the natural gas distribution system in the Department of Lima and the Constitutional Province of Callao, for a period of 33 years (as of 2000), extendable for up to a maximum period of time of 60 years. EEB assumed control of the company in February 2011 after it purchased 60% from AEI. To December 2011, it serviced customers and had nearly vehicles converted to natural gas. On the other hand, EEB s participation in the Electric Sector is as follows: EEB TRANSMISIÓN. EEB is the third largest electricity transmission company in Colombia. To December 2011, its share in the incomes of the National Transmission System was 8.0%. It has and operates kms of 230kV transmission circuits that represent 12.4% of the total 230 kv NTS network, it has assets in kv substations (50 line bays, 9 coupling bays, 7 sectioning bays and 11 common modules), 5 capacitive compensation bays at 115 kv and 3 inductive reactor bays at 230 kv. Some of its ongoing projects are: i) the expansion of the transportation system in Guatemala, and, ii) the installation of three (3) 25 MVAR inductive reactors each, located in Colombia at the Altamira, Mocoa and San Bernardino substations at 230 kv, a project that should start operating in April TRECSA. In 2009, EEB went into the electricity transmission business in Guatemala (TRECSA) after being awarded the entire transmission system expansion works of this country. The project consists in the design, construction and permanent operation of

13 the transmission system, which includes 6 blocks distributed throughout the Guatemalan territory, constituting a total of 850 kms of 230 kv lines and 24 works that include expansions and the construction of new substations. The purpose of this project is to ensure the coverage, quality and reliability of the system in order to face the great challenges of growth in the demand and the country s economy. The estimated investment is for USD 370 million. The start up of operations of this project is foreseen for October DECSA EEC. The company, Distribuidora Eléctrica de Cundinamarca S.A. ESP (DECSA ESP), with 51% share from EEB and 49% from Codensa, was established with the purpose of acquiring 82.34% of shares from Empresa de Energía Cundinamarca S.A. ESP. (EEC), a public utilities company that focuses its strategy on the generation, distribution and sale of electricity. It provides services to 279,077 customers in 77 municipalities in Cundinamarca. COMPANIES WITHOUT SHAREHOLDING CONTROL In the electricity sector: EMGESA. EEB has 51.51% share of EMGESA (14.07% corresponds to preferential shares), a company that in 2011, continued to be one of the market leaders in electricity generation in Colombia. It also acts as a marketer for part of the nonregulated market (15.7 %). During 2011, EMGESA generated GWh, equivalent to 20.7 % of the National total. In 2010, EMGESA started the construction of the hydroelectric project El Quimbo (400 MW), which will require an investment of 837 million dollars. It is expected to start operations in CODENSA. At CODENSA SA ESP, EEB has 51.51% (the 15.15% corresponds to preferential shares). It is the largest company in the country for the distribution-sale of electricity and services 24% of the distribution market in Colombia, with 2,495,694 customers located in Bogotá and in 95 nearby municipalities. In 2011, it invoiced GWh, with a loss level of 7.78%. REP. EEB has 40% of Red de Energía del Perú REP, the most important electricity transmission company in Peru. It controls 51% of the interconnected system. CTM. In 2006, EEB and ISA were granted the award of the Consorcio Transmantaro (CTM) in Peru, with a 610 km line that links the central system with the southern system. EEB has 40% share in CTM. REP and CTM have more than 64% of the total Transmission system in Peru. EMSA. EEB has 16.2% share in Electrificadora del Meta (EMSA), a company that distributes and sells electricity in the eastern part of Colombia to 231,760 customers. Other Shareholdings Likewise, EEB has 2.5% share at ISAGEN, an electricity generating company that sells approximately Gwh/year and has 1.82% shareholdings in ISA s capital stock. In the natural gas sector: GAS NATURAL S.A. EEB has 25% share in Gas Natural S.A. ESP, the largest natural gas distributor and seller in Colombia, with 1,766,962 customers in the Bogotá, Soacha and Sibate market. The company has an effective coverage that exceeds 91% of the residential market in Bogotá and has achieved an important increase in Natural Gas

14 Vehicle consumption, with 119,707 vehicles running on gas in the city. In addition, Gas Natural SA ESP controls distributing-selling companies that service the markets of Bucaramanga, Barrancabermeja and the CundiBoyacense Highland Plateau. PROMIGAS SA. In February 2011, EEB acquired 15.6% of Promigas capital stock through a 30% share in Promigas Holding, Promigas LTD and Promigas Investment. Promigas is the second most important natural gas transporter in Colombia with almost 45% market share. Its system links the Guajira and La Creciente fields with the urban centers on the Atlantic Coast and has a 1,822 Km long pipeline without including Transmetano, Transoriente and Transoccidente. 2.3 Consorcio Transmantaro s Board of Directors CTM s Board of Directors is made up by five Permanent Directors and five Acting Directors. These are chosen by the General Shareholders Meeting for a two-year period and have the possibility of being reelected for an indefinite period of time. President Vice-president Full Members Acting Members Luis Fernando Alarcón Mantilla Mónica De Greiff Lindo Luis Ernesto Mejía Castro Guido Alberto Nule Amín Ernesto Moreno Restrepo Ana Mercedes Villegas Mejía Julián Darío Cadavid Velásquez Brenda Rodríguez Tovar Henry Navarro Sánchez Jorge Armando Pinzón Barragán Luis Fernando Alarcón Mantilla Became president of CTM s Board on March 20 th, 2007, and Manager of ISA in January of that same year. Born in Bucaramanga (Colombia), he previously worked as President of the Pension and Unemployment Fund Administrating Association (ASOFONDOS). Likewise, he was Minister of Finance and Public Credit of Colombia and represented Colombia as Executive Director at the Inter-American Development Bank. He was also President of the Grancolombia Merchant Fleet and member of the Board of Directors of Banco de Bogotá, the Colombia Stock Exchange, Petrocolombia S.A., ISA, CTEEP and Internexa, among other companies and financial entities. He studied Civil Engineering and made post-graduate studies at Universidad de los Andes. Later, he obtained a Master of Science in Civil Engineering (Hydraulic Resource Systems) at the Massachusetts Institute of Technology (MIT) and in 1995, he took part in the Advanced Management Program at Oxford University. Mónica de Greiff Lindo Has worked as Permanent Director of CTM since March 17 th, She is a lawyer from Universidad del Rosario. She was Vice-minister of Mines and Energy, Minister of Justice and Law in Between 1991 and 1993, she was Vice-president of Shell in Colombia. In 1994, she was Advisor for International Affairs and between 1995 and 1998, she was the President s representative at the National Television Commission. In 2008, she was appointed by the City Mayor of Bogotá as District Secretary for Economic Development. She has been working as President of EEB since January 19 th, 2009.

15 Luis Ernesto Mejía Castro Permanent Director of CTM since March 15 th, He is a lawyer from Universidad San Buenaventura, and holds a Master s Degree in Business Administration from Instituto Colombiano de Estudios Superiores from INCOLDA -ICESI. He has held several posts in the private industrial sector and in trade union activities, among which the following stand out: MAC S.A., where he worked as Industrial Relationships Manager, Assistant to the President, Financial Manager, Commercial Manager, Administrative Vice-president and General Manager; He was Vice-minister of Hydrocarbons and Mines and Minister of Mines and Energy. At present, he is an independent consultant and member of the following Board of Directors: Cerrejón Foundation for Development of la Guajira; Consejo Superior (Council) at Universidad ICESI; Carvajal Internacional S. A. and Isagen S.A. E.S.P. Likewise, he is a principal member of ISA s Board of Directors. Guido Alberto Nule Amín Permanent Director at CTM since July 31 st, 2002 and General Manager at Transelca since September Studied Economy at Universidad del Atlántico (Barranquilla) and graduated in Development Banking at the American University (United States). He held the positions of President at Promigas ( ), Minister of Communications of Colombia (1992) and Minister of Mines and Energy of Colombia ( ), in addition to working as company consultant and advisor ( ). Ernesto Moreno Restrepo Permanent Director at CTM since July 31 st, 2002, he is currently the Vice-president of Tranmission at Empresa de Energía de Bogotá (EEB). He studied Electrical Engineering at Universidad de los Andes (Bogotá) and majored in Business Administration and Marketing at Universidad de los Andes. He was head of the electric planning division at EEB. Ana Mercedes Villegas Mejía Acting Director at CTM on two opportunities, from July 22 nd, 2005 to November 16 th, 2006, and again appointed from August 19 th, 2008 to date. Worked as Management and Organization Director at CTEEP from October 2006 to July Likewise, she was appointed Electricity Transmission Manager at ISA in August At present, she works as Manager of Corporate Strategy at ISA. She got a degree in Electrical Engineering from Universidad Pontificia Bolivariana. In addition, she has a Master s Degree in Development of Hydraulic Resources from Universidad Nacional and graduated in Top Management at Universidad de Los Andes. Her link with ISA dates back to 1985, where she worked as an engineer and held the posts of Energy Planning Director, Director of Maintenance Management and Director of Energy Transportation Service Development. Henry Navarro Sánchez Acting Director at CTM since July 31 st, 2002, he is currently the Vice-president of the Shareholding Portfolio and Corporate Planning at EEB. Electrical Engineer from Universidad Nacional de Colombia, Master s Degree in Power Systems from Universidad Nacional de Colombia and in Electrical Engineering from Manchester University (England). Previously worked as Planning, Transmission and Development Director at EEB. Julián Cadavid Velásquez Acting Director at CTM from November 16 th, 2006 to August 18 th, 2008, and again appointed Acting Director from March 17 th, 2009 to date. At present, he is the Energy Transportation Manager at ISA. He is an Electrical Engineer from Universidad Pontificia Bolivariana. He previously worked at Red de Energía del Perú as Transmission Manager ( ), as Coordinating Engineer of Operations at the National Control Center and as Management Director of the Red de Energía del Perú company. He also held the posts of

16 Director of the Northwestern Energy Transmission Center (South Ancón) and Maintenance Manager of the Power transmission Management at ISA. Brenda Rodríguez Tovar Acting Director at CTM since July 31 st, 2002; at present she holds the position of Financial Manager at Transelca. She is an Economist from Universidad Simón Bolívar, has a postgraduate degree in Financial Administration from Universidad del Norte de Colombia and an MBA from Universidad de Los Andes. She previously held the post of Financial Submanager at Terpel del Norte. Jorge Armando Pinzón Barragán Acting Director at CTM since July 31 st, 2002; at present he holds the position of Financial Vice-president at EEB. Studied Economy at Universidad Nacional de Colombia and majored in Taxes at Universidad Externado of Colombia. He was Head of the Financial Planning Division at EEB. 2.4 Principal Executives Luis Alejandro Camargo Suan General Manager at Consorcio Transmataro since March Electrical Engineer from Universidad Nacional de Colombia with a MSc degree in Computer Studies from Essex University (UK) and a major in Business Law from Universidad Externado. He joined the ISA businesss group in 1981, heading several responsibilities throughout his career, among which the following stand out: Director of Information Technology; Managements of Information Services, Wholesale Electricity Market and the Management of Financial Operations at XM - Company of Market Experts. José Miguel Acosta Suárez Comptroller at Consorcio Transmataro since September 2002; Electrical Engineer. Majored in Finances and obtained a Master s Degree in Business Administration - MBA - both from Universidad de los Andes (Bogotá). He is a licensed internal auditor (CIA) and has Certificates in Control Self-evaluation (CCSA) and in Risk Management and Assurance (CRMA) from the Internal Auditors Institute (IAI). He worked as Head of the Internal Control Office and held different technical and administrative posts at EEB and other companies of the sector. He has 30 years of working experience.

17 III. Strategic Management 3.1 Corporate Strategy CTM s strategy is determined by the company s Board of Directors and implemented through the REP company, which acts as the Business Management Center for Power Transportation in Peru. The strategy is aligned to the corporate objectives of the ISA Business Group. Management Instruments Assurance and monitoring of CTM s strategic management is a constant process in order to validate the business environment, its approach on initiatives and the achievement of result indicators. In this sense, CTM s strategic management reported full compliance of the following results by the end of 2011: Perspective Strategic Objective Indicator Unit December 2011 Increase ET business CTM EBITDA Thousand 37,856 value USD Reach efficient cost Payment of CTM USD 0 levels compensations Financial Ensure financial (debt balance + securities) % 3.96 resources for growth /EBITDA CTM EBITDA/ REP Interests Times 3.55 Market Guarantee reliable, available and safe service Total non-supplied power CTM MWh 1, Efficiency and productivity Manage assets during their life cycle Coordinate and manage relationships with stakeholders Total availability of CTM assets Meeting goals in solving new occupations in CTM easements % % Controlling Auditing Committee The main purpose of the Auditing Committee is to help the Board of Directors fulfill their surveillance responsibilities over the internal control system. It is made up by three members: two Board members and the Corporate Auditor. The appointment of members and the Chairman is made by the Board of Directors. The General Manager and the Comptroller help the Committee without the right to vote. The external auditor attends as a guest when summoned by the Committee. According to the Administration, Operation and Maintenance service agreement signed with Red de Energía del Perú S.A., the latter provides internal auditing services, while the company directly assumes the role of Auditing Office, pursuant to its By-Laws.

18 The Auditing Committee is made up by: Jorge Pinzón Barragán Acting Director (Chairman of the Committee), Financial Vicepresident of the shareholding company, Empresa de Energía de Bogotá S.A. Brenda Rodríguez Tovar Acting Director, Financial Manager of Transelca S.A. John Jairo Vásquez López Corporate Auditor of the ISA Group The following are the main functions of the Auditing Committee: 1. Check significant cases where accounting and financial reporting including complex or unusual transactions, as well as regulating and accounting remarks could somehow when applied affect some item of the financial statements. 2. Check the financial statements to be submitted to the Board of Directors and Shareholders Board and be sure to adhere to and meet the international accounting standards. 3. Check that the Company has an effective corporate internal control system. 4. Check that the administration had implemented policies to ensure that risks are being identified and that controls are adequate, current and work effectively. 5. Take into account internal control effectiveness on annual and mid-term financial information, including safety and control of information technology. 6. Ensure compliance with the Control Policy, Ethics Code and Protocol to the Management of Improper Acts Risks. 7. Approve the Annual Auditing Plan and follow up compliance.

19 IV. Business Management 4.1 Network Infrastructure CTM has 11 substations and 1,716 km of 500, 220 and 138 kv transmission line circuits. In addition, it has 2,476 MVA of transformation capacity. The 220 kv Central North South Interconnection involves the Mantaro, Cotaruse and Socabaya substations and a transmission line of 1,221.6 km of circuits, series compensation in Cotaruse and +300/-100 MVA SVC. The 220 kv Platanal Chilca T.L., km long, allows the Hydroelectric Power Plant - HPS- El Platanal to evacuate its generation to the SEIN. The 138 kv La Niña Bayobar T.L., km long, helps supply the Miskimayo mine, which also comprises the 220/138 kv transformation at the La Niña substation. The 500 kv Chilca Carabayllo T.L., 89.8 km long, comprises the Chilca and Carabayllo substations, comprising 500/220 kv autotransformers. The 220 kv Chilca Planicie - Carabayllo Zapallal T.L., 200 km of circuits, comprises their respective cells at the Chilca, Planicie and Carabayllo substations. The 220 kv Independencia Ica T.L., 57.1 km long, comprises its respective cells at the Independencia and Ica substations. CTM develops its operation and maintenance activities through operation and maintenance service agreements with the company Red de Energía del Perú, striving always to provide efficient and reliable services to facilities distributed throughout the country. 4.2 Operation Management During 2011, the growing maximum domestic demand and the deficit on generation by the SEIN southern area required a greater use of the interconnection line between the northern and southern areas of the country. The almost constant overload put all along the Mantaro-Socabaya line was alleviated by the overhauling and boosting completed in July 2011, by improving the transportation capabilities in the Colca Valley area, by installing a +300/-100 MVAR Static Reactive- Power Compensation System -SVC- and by increasing the line s series compensation level from 50% to 65% its reactance, which enabled to raise the transportation capacity to 505 MVA. Even though this boosting meant an important leap in the power transmission capacity from the central to the southern part of the country - in the order of 200 additional MW -, the demand service for the south has become more dependent on the operational capacity of this single link, which does not guarantee reliability to the southern system.

20 On the other hand, in May 2011, CTM put into operation the first 500 kv transmission line in the country, the 90 km long Chilca - Carabayllo TL, which was an important milestone for electric engineering in Peru. This project also included a second line, the 220 kv Chilca Planicie - Carabayllo Zapallal line, ready to be transformed to 500 kv on the stretch from Chilca to Carabayllo whenever required by the system. The start-up of this system has strengthened power transportation between the central and northern part of the country for the next few years. In May 2011, the second 57-km long, 220-kV Independencia-Ica transmission line, was put into operation, thus improving the safety and reliability of the power supply in the middle southern area in the country. In October 2011, phase separators were installed in the Cotaruse Socabaya stretch of the 220 kv Mantaro-Socabaya interconnection line with the purpose of mitigating the galloping effect caused by the intense snowfalls of the last few years. Service Indicators The transmission service quality has been improving throughout time. Thus, the number of failures per each 100 km-year for the 220 kv lines was 1.24 in 2011, which stands as the lowest historic value for the interconnection. Number of Failures /100 Km/year From the point of view of operation and maintenance service continuity, the CTM network registered a record-breaking availability of 99.87%. 99.9% 99.6% 99.3% 99.0% 98.7% 98.4% 98.1% 99.87% 99.59% 99.53% 99.67% 99.51% 99.32% 99.36% 99.30%

21 Equipment Voltage Level Unavailability % Availability kv Maintenance Failure % Lines Transformers Miskimayo Transformers Reactive Compensation On the other hand, the Non-supplied Power index reached a value of 1,777 MWh. Likewise, the Interruption Rate behaved satisfactorily and reached Business Management and Customers In 2011, invoicing for transmission services delivered by the Consorcio Transmantaro reached S/. 135,234,943.62, without taking into account the general sales tax. Income coming from Connection Charges and Tariff Rates from the Main Transmission System, accounted for 76% of it; the Guaranteed Transmission System, for 13%; and transmission services of the Complementary Transmission System SCT, for around 11%, as shown on the following table: CTM INCOMES 2011 Invoicing S/. I - INCOMES FOR TRANSMISSION SERVICES (BOOT) ,84 II - INCOMES FOR TRANSMISSION SERVICES (SCT) ,26 III - INCOMES FOR TRANSMISSION SERVICES (SGT) ,52 TOTAL INCOME FROM SERVICES ,62

22 Invoicing for Services during January - December 2011 Invoicing for Services during January - December 2011 SGT 11% Customers the company delivered transmission services to in 2011: Aguas y Energía del Perú Egesur Aipsa Eléctrica Santa Rosa San Gabán Celepsa Electroperú SDF Energía Chinango Enersur Shougesa Duke Energy Egenor Gepsa Sinersa Edegel Hidroeléctrica Santa Cruz SN Power Perú Eepsa Kallpa Generación Sociedad Minera Corona Egasa Maja Energía Termoselva Egemsa Petramas.S.A.C. Customers the company delivered transmission services to arising from SCT Agreements in 2011: Celepsa Compañía Minera Misky Mayo Duke Energy Egenor Kallpa During the first semester of 2011, the Consorcio Transmantaro defended before OSINERGMIN the annual income statement for Electric Transmission services, corresponding to the period between March February The procedure applied is established in OSINERGMIN Resolution No OS/CD and in the Finished Goods Less Food and Energy (WPSSOP3500 Index) of the United States Labor Department, which changed from to between September 2000 and February 2011, to update the New Replacement Value (NRV). By OSINERGMIN Resolution No OS/CD, issued on April 12 th, 2011, the Total Transmission Cost for the period between May April 2012 was established at USD 33.1 Million, made up by: (i) NRV Annual payment for USD 26.7 Million, (ii) Annual payment for Amount to be Restored in Addendum No. 5 for USD 1.0 Million, (iii) Annual

23 Operation and Maintenance Cost for USD 6.0 Million, (iv) NRV Annual payment and Annual Cost of Operation and Maintenance in Addendum No. 8 for US$ 1.96 Million and (v) Annual Payment for USD -1.1 Million. Rate Fixing of May 2011 determined the annual payment of the Connection Charge and the Tariff Income of the Main Transmission System (SPT) of the Consorcio Transmantaro, which totaled S/ million and S/ million, respectively. In this period Business Operations started up as follows: Boosting of the Main Transmission System (PTS), addendum 8 of the Consorcio Transmantaro, which totaled S/ Million, invoiced as from August. Chilca-Planicie-Carabayllo-Zapallal Guaranteed Transmission System, which totaled S/ Million, invoiced as from August. New Businesses: In 2011, as a result of its taking part in the bids conducted by PROINVERSIÓN, CTM signed a new concession agreement for the construction and operation of the new transmission infrastructure. Added to this was the investment agreement with third parties to deliver transmission services as part of the Complementary Transmission System (SCT) in the framework of Law No In this sense, the following was achieved: New Concessions 500 kv Trujillo Chiclayo (La Niña) Transmission Line The international public call to make tender offers for the Project: 500 kv Trujillo Chiclayo (La Niña) Transmission Line was conducted by PROINVERSIÓN. The purpose of this Project is to enlarge the 500 kv mains towards northern Peru in order to ensure coverage of electric power supply in the medium term in this important area of the country, in a timely fashion and with good quality level. The project comprises the Departments of Piura, Lambayeque and La Libertad. It includes the construction of a 500 kv transmission line of approximately 304 km between the Trujillo Nueva and Laguna La Niña substations, the construction of the new 500/220 kv Laguna La Niña substation and its respective 220 kv link to the existing 220 kv Laguna La Niña substation as well as the enlarging of the 500 kv Trujillo Nueva and 220 kv Laguna La Niña substations. The notice to proceed with the project, which forms part of the Guaranteed Transmission System, was awarded to ISA on March 31 st, The relevant Concession Agreement was signed between the Ministry of Energy and Mines and the CTM on May 26 th. The start-up of operations is foreseen for November 2013 and will generate annual incomes for USD 15.7 Million. Business with Third Parties Within the framework of Law No , the following transmission services agreement was signed for the facilities of the Complementary Transmission System: 220 kv Kallpa CC - Chilca Connection On December 16 th, 2011, a Transmission Services Agreement - SCT - was signed for a 220 kv cell at the Chilca Substation. This connection to the National Interconnected System will enable the delivery of energy produced by the Combined Cycle Unit of the Kallpa Thermoelectric Power Station located in Chilca. The signed agreement will be effective for a 20-year period.

24 4.4 Financial Management During 2011, the Consorcio Transmantaro achieved great performance, as shown by its indicators, by complying with its commitments and by being granted the AAA risk-rating (Apoyo & Asociados Internacionales S.A.C. and Pacific Credit Rating) for bonds placed in the capital market. It is worth pointing out that in February 2011, a Management Trust was constituted with the purpose of executing the Zapallal-Trujillo project and to have the corresponding financing. This is an innovative transaction that helps leverage CTM s growth by improving competitiveness of bids and ensuring compliance with indicators, maintaining at the same time the AAA rating. According to current regulations (Article 87 of Taxing Code and Supreme Decree No EF), since January 1 st, 2003, the company keeps its accounting records in US dollars. Medina, Zaldívar, Paredes y Asociados Sociedad Civil de R. L., member company of ERNST & YOUNG, CTM s external auditor since 2009, reviewed the financial statements prepared according to International Financial Reporting Standards IFRS - and issued an unconditional opinion for the end of the 2011 fiscal year. During the fiscal year, the external auditor did not provide additional services other than reviewing the financial statements. Specialized advisory services were provided by different auditing and consulting companies. Financial Results To December 31 st, 2011, the net result of the fiscal year was USD 17.6 Million, a value exceeding by USD 2.1 Million the results obtained the fiscal year 2010, mainly due to the start-up of operations of the following projects: Enlarging 1 of the Mantaro-Socabaya Concession and the Chilca - La Planicie - Zapallal and Ica - Independencia projects. It is worth mentioning that the greatest volatility in financial results due to variations in the macroeconomic environment has been partly mitigated by the company s decision to keep its accounting records in US dollars. The company s operational incomes reached a value of USD 44.5 Million. As a result of the start up of operations of the projects previously mentioned, there was a 40% increase in the EBITDA by 2011, going from USD 27 Million by 2010 to USD 37.9 Million by Operational costs and expenses (without including reserves, depreciations or amortizations for USD 13 Million) reached a total value of USD 6.6 Million, which show an increase of 46% in relation to the accrued amounts in 2010, mainly due to the increased transmission lines maintenance service related to the new ongoing projects. It is worth mentioning that by applying the CINIIF 12, the company acknowledges construction costs of transmission lines as expenditures in the profit and loss statement, since in accordance with such interpretation, the company delivers construction services in favor of the Peruvian State. That rule also provides that a reasonable value of the service delivered should be acknowledged as an income, which in this case, corresponds to the same amount of the cost incurred, inasmuch as no margin is generated in these services because they are delivered, administered and supervised by the related company PDI. The value of such services amounts to USD Million, and they have not been included in the enclosed income statement since they do not to affect operational profits.

25 Amortization, depreciation and reserves of the fiscal year had a value of USD 13 Million, which meant an increase of 102% in relation to the previous period, which is explained by a greater depreciation of pre-operative expenses and capitalized interests of incoming projects. Income Statement Expressed in thousand USD Change % Operational Income 44,465 31,586 41% Operation Costs and Expenditures -6,609-4,521 46% EBITDA 37,856 27,065 40% Reserves, Amortization and depreciation -12,997-6, % Operational Profit 24,859 20,627 21% (Net) Financial Incomes (Expenditures) 151 2,035-93% Profits before taxes and shares 25,010 22,662 10% Income Tax and Workers Shareholding -7,413-7,213 3% Year s Net Profit 17,597 15,449 14% Income (thousand USD) Operational Operational Costs EBITDA Operational Net Profit Incomes and Expenditures Profit

26 Financial incomes generated in 2011 included cash surpluses, application of IAS 17 and incomes from Addendum 5 of the Mantaro-Socabaya concession agreement. Financial incomes of the fiscal year reach a total of USD 5.4 Million, in comparison to the USD 4.8 Million registered the previous year. With regard to net financial expenditures, a total of USD 6.9 Million were spent, which represents a 23% increase in comparison to 2010, mainly explained by larger debt balances during the year, given the higher investments on ongoing projects. Likewise, the net exchange profit in 2011, USD 1.6 Million, was the result of the appreciation that took place in the year. Financial Situation Statement (Expressed in thousand USD) Assets Change Current assets 78,929 30,994 47,936 Non-current assets 540, , ,974 Total Assets 619, , ,909 Liability and net worth Change Current liability 125,900 36,875 89,026 Non-current liability 238, , ,287 Total liability 364, , ,313 Net worth 255, ,289 17,597 Total liability and net worth 619, , ,909 The company s non-current assets featured an increase of USD 174 Million, which may be explained mainly because of the increased amount of machinery and equipment installed free of depreciation charges and increased financial leasing accounts receivable, as a result of new investments throughout the year. Current liabilities showed an increase of USD 89 Million, due to an increase of the current part of the long-term debt and to the increase of short-term loans with related companies. Non-current liabilities increased by USD 115 Million, mainly explained by the mediumterm Bank loan signed with the BCP and Bancolombia banks for USD 160 Million, being its purpose financing the Zapallal-Trujillo project. In addition, a loan agreement was signed with the BBVA bank for USD 90 Million for an 8-year term and a subordinated loan received from the related company Red de Energía del Perú S.A. (REP), which were used to finance the projects: Talara- Piura, Machupicchu-Cotaruse, Pomacocha-Carhuamayo and Fénix Connection. At the end of the year the company s equity reached USD Million, from which USD Million correspond to the capital stock and additional capital, USD 8 Million, to legal reserve, and USD 53.4 Million to cumulative results, including the year s profit. No capital contribution was received during Capital Investments During 2011, the Consorcio Transmantaro executed investments in capital expenditures for USD 193 Million, out of which USD Million correspond to investments in projects related to concessions. The following stand out: Chilca-La Planicie-Zapallal TTLL, Enlarging to Mantaro-Socabaya TTLL, Zapallal-Trujillo, Trujillo-Chiclayo TTLL, Talara- Piura TTLL; Machupicchu-Abancay-Cotaruse TTLL; and the Fénix Connection.

27 On the other hand, the company acquired fixed assets. One that stands out is a connection in the Chilca SS to the Kallpa company, with the purpose of providing transmission services to it. Financial Situation Statement (thousand USD) Total assets Total liabilities Net Worth Financial Indicators Debt-to-equity-ratio 1.42x 0.67x Debt ratio 0.59x 0.40x Liquidity Ratio - Current test 0.63x 0.84x EBITDA (thousand USD) 37,856 27,065 EBITDA Margin 85.1% 85.7% Operational Margin 55.9% 65.3% Net Margin 39.6% 48.9% The company s financial indicators show a sound financial situation. Investment Securities Issued Under the First corporate bond Issuance Program, the following four issuances detailed below were carried out: Corporate Bonds- Consorcio Transmantaro (Thousand USD) CONCEPT CURRENCY RATE ISSUANCE DATE TERM PAYMENT PERIOD AMOUNT ISSUED AMORTIZ Balance to Dec-11 Bonds 50,000 40,000 10,000 1 st prog. - 1 st Issuance (Series A) 1 st prog. - 1 st Issuance (Series B) 1 st prog. - 2 nd Issuance (Series A) 1 st prog. - 2 nd Issuance (Series B) Dollars 8.125% Dollars 8.344% Dollars 6.000% Dollars 6.250% years 9 years 8 years 9 years Sem. 15,000 15,000 - Sem. 15,000 15,000 - Sem. 10,000 10,000 - Sem. 10,000-10,000