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ENARGAS ISSUES RESOLUTION IN TGS'S FIVE-YEAR TARIFF REVIEW
FOR IMMEDIATE RELEASE: Monday, July 7, 1997
Houston - Enron Global Power & Pipelines L.L.C. (Ticker Symbol: EPP) today announced that Transportadora de Gas del Sur S.A. (TGS) has received from Argentina's Ente Nacional Regulador del Gas (ENARGAS) the resolution determining TGS transportation tariffs for the five-year period commencing January 1, 1998. The resolution included an up-front, one-time tariff reduction of 6.5 percent for the efficiency factor and the framework by which TGS will promote and price future system expansions. The resolution did not address the investment factor nor other proposals which could mitigate the impact of the rate reduction.
Under the Argentine Natural Gas Act, every five years ENARGAS is required to review the tariffs charged for regulated transportation services with the use of an incentive tariff methodology. The methodology provides for the derivation of an efficiency factor and an investment factor. The efficiency factor, which is a reduction to transporters' base tariff rates, is a sharing mechanism between the transporters and their customers resulting from specific, quantifiable efficiencies identified by ENARGAS. The investment factor, which is an increase to the transporters' base tariff, is a funding mechanism designed to recover the incremental investment in and return on ENARGAS-approved expansions to be undertaken by the transporter during the established period.
"We are disappointed that the issues and information presented by TGS were not fully considered by ENARGAS", said Rodney L. Gray, chairman and CEO of EPP. "We believe the concepts ENARGAS has applied are inconsistent with the letter and the spirit of the regulatory framework which was intended to encourage operational efficiencies. We will continue to work with TGS to evaluate the resolution and its impact on planned future investments," continued Gray.
TGS, with a delivery capacity of approximately 1.9 billion cubic feet per day, is Argentina's leading transporter of clean, efficient natural gas with over 60 percent market share. EPP owns 23.3 percent of TGS, through its 33 1/3 percent ownership in Compania de Inversiones de Energia S.A., which owns 70 percent of TGS. EPP's other assets consist of interests in two power plants in the Philippines, power plants in Guatemala and the Dominican Republic, and a natural gas pipeline system in Colombia. Enron Global Power & Pipelines, majority owned by Enron Corp., is traded on the New York Stock Exchange under the ticker symbol "EPP"
As announced on Wednesday, May 14, 1997, Enron is proposing to merge EPP into Enron in a transaction in which each EPP stockholder would receive $32 per share in Enron common stock.
For additional information please contact:
Debbie Witmer
(713) 853-3078
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