Background

As a result of  Decree 1174/92  that instructed the Secretariat of  Electric Energy
to privatize the power transmission system associated with the Yacyretá Hydro-
electric Power Station,  an international tender  was called  for  the  construction,
operation and maintenance of the first 500 kV electric link between the Yacyretá
Hydroelectric  Power  Station,  in the province of Corrientes,  and the Resistencia
Substation,  in the province of Chaco.  The project  is  the  first link of the nation's
interconnected 500 kV system.  On February 22,  1993  the project was  awarded
by national executive Decree 273/93 to YACYLEC,  and work commenced in mid-
March the same year.

The Contract

Performance of the contract was divided in two stages: Project Construction and
Start-Up  of Commercial Operation,  which  was set  for  September 1, 1994,  and
Project Operation and Maintenance,  whereby  YACYLEC  is granted  the  right  to
operate and maintain the power line for  95 years from the date of start-up of its
commercial operation.

Financing

Construction  and  supply of materials  demanded an  investment of  around  130
million US dollars.

Financing of the  Project  was done through  direct contributions  from the share-
holders,  export loans from  Italy and Spain,  and commercial financing on a risk-
project basis with  funds from the  International Finance Corporation and foreign
private banks syndicated by IFC.

Engineering

The call for tenders was  based on a basic blueprint  designed by  Agua y Energía
and the Yacyretá Special Unit for an Energy Transmission System (UESTY).

Based on these guidelines,  the Power Lines and  Substation Engineering Depart-
ments made a complete  appraisal of the  Project,  drew up calculation protocols
and basic and detail  engineering  for construction,  thus assuming responsibility
for the Project.

Quality Control

All materials incorporated to the  Project were factory-tested in accordance with
the Project's technical specifications, followed by type and batch tests.

For the construction proper,  YACYLEC set up its own in-situ quality control, with
the participation  of  soils  experts,  a concrete  laboratory,  and  an  independent
technical auditing office for the civil engineering work and monitoring of concrete
structures and foundations.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
YACYLEC S.A. Bartolomé Mitre 797 - Piso 11 - (1036) BUENOS AIRES - ARGENTINA
Tel: (54-11) 4322-4585/86 - Fax: (54-11) 4322-4587