Attached is an analysis of the probability of a devaluation in Argentina and 
the contractual protections TGS has in the event of a devaluation.  

Long and short of it is - 

Argentina's economy is primarily dollarized and it would appear that a 
devaluation would do considerable short term harm to the economy. 

Convertibility Law was enacted in 1991.  Large part of the population 
remembers the super inflation of 1989 and 1990.

To devalue the currency, Argentina would have to amend the Convertibility Law 
- this requires  approval of the Federal Congress.

TGS has numerous layers of protection from a devaluation - in addition to the 
Convertibility law, it has protection through its license and regulations.  
Indeed, as you remembered, the tariff is indexed to the exchange rate.

A concern is - to the extent the Government takes action as drastic as 
changing the Convertibility Law to implement a devaluation, and it is willing 
to suffer the short term economic and political harm of a devaluation - then 
there is a reasonable chance they would go the extra step and find a way 
delink the tariffs of the privatized regulated companies from the dollar.    
In this case Enron would have protection under the BIT treaty.

The impact on Enron's P&L is a function of whether or not we use the Peso as 
the functional currency.  If we use the Peso as the functional currency - 
Enron would have a signficant negative translation adjustment from a 
devaluation.  If we use the dollar as the functional currency - there would 
be no impact on our income statement.   I will research this further in order 
to ensure we can use the dollar as a our functional currency.



Pete