Re: Forms

---------------------- Forwarded by Brent Hendry/ENRON_DEVELOPMENT on
05/05/2000 12:05 PM ---------------------------

Sami Arap
05/05/2000 01:20 PM
To: Brent Hendry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:
Subject: Re: Forms

Brent;

Today I had a meeting with the originators with respect to their intentions
to structure call & put option deals in Brazil. I have asked Luiz Maurer
(Regulatory) to attend the meeting as each deal they want to structure has
different specifics. We still have a lot to discuss from a regulatory
standpoint. Basically, Enron Marketer ("buyer") would enter into a call
option agreement with a company ("seller") who, for example, is contracted
for 100MW but is only using 90MW at its industrial facility (seller's
decrease of use of power is due to a reduction of its production line).
Seller is contracted on a TOP basis with a LDC. We are having discussions
whether such transaction would be treated as a financial and physical
transaction (like a normal PPA) or a financial transaction only (the
so-called Brazilian "Bilateral Contract"). Also,there are discussions with
respect to delivery point (seller's substation/busbar in case of a normal PPA
OR center of gravity for a financial transaction only). There are other
deals to be studied such as a seller being contracted on a TOP basis with a
LDC and having a turbine available at its facilities. Buyer could enter into
a call option agreement with seller, but the specifics of the deal would be
different from a regulatory standpoint.

One of my questions deals with the re-selling of such energy. If Seller can
re-sell such energy at the spot price at any time he wants, why would Seller
contract a call option with Buyer at a lower price ?

Anyway, we still have a lot of issues to discuss internally. I will keep you
posted as discussions progress.

Regards,

Sami

Brent Hendry
05/04/2000 06:23 PM
To: Sami Arap/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:

Subject: Re: Forms

Here are two confirm formats for a put and a call option. These transactions
would be subject to a master agreement that would already be in place. Let
me know if you want to see the master agreement as well.