---------------------- 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.