ELECTRIC SECTOR PRIVATIZATION.

Two foreign companies, Union Fenosa from Spain and Constellation Power from the U.S., acquired 51% of the shares and a contract to operate three power distribution companies, according to the plans to privatize the Instituto de Recursos Hidraulicos y Electrificacion, the Panamanian power and light company (IRHE):

. Union Fenosa acquired control of two companies: Metro Oeste S.A., serving part of Panama City and the Central Provinces, and Chiriqui S.A., serving the Province of Chiriqui. Price paid for the two companies was US$212 million. Constellation Power acquired the control of Panama Noreste S.A., serving part of Panama City and the rest of the country. Price paid was US$89.8 million. The Government of Panama said it was pleased with the results of this bid. It also planned to sell 49% of four power generation companies in November; . In a separate deal, IRHE awarded a contract to purchase electricity from a 60 MW plant to the U.S. consortium Illinova Generating Co./ERI(IGC/ERI) Services, Inc. This contract will be transferred to the distribution companies; . 16 companies were prequalified for the sale of the three distribution companies but only three companies made proposals: Union Fenosa, Constellation Power, and the U.S./Chilean consortium Consorcio Empresas ENEL/PP&L,Inc.

. The distribution companies just sold are: (1) Metro Oeste S.A. (Covering the central provinces). Annual sales: 1,610 gwh. US$184 million. Customers: 198,521 Average consumption per customer: 675 kwh; (2) Noreste S.A (Covering eastern Panama). Annual sales: 1,275 gwh. US$139 million. Customers: 160,363. Average consumption per customer: 662 kwh; (3) Chiriqui S.A. (Covering the province of Chiriqui). Annual sales: 330 gwh. $34 million. Customers: 62,859 Average consumption per customer: 437 kwh; . According to the privatization program, IRHE was divided into three distribution companies, four generation companies and one transmission company. 51% of the shares of the distribution companies have already being sold, 39% will be retained by the Government, and 10% will be sold to the unionized IRHE workers. The Government will retain 49% of the shares in the four generation companies, 49% will be sold, and the remaining 2% will be transferred to the workers. The Government has no plans to sell the transmission company. The International Finance Corp., an agency of the World Bank, is guiding IRHE in the privatization process, including preparation of tender documents; . For more information on IRHE's privatization program, please contact: (1) IRHE Investment Advisor, International Finance Corp. (IFC), Mr. Luc Dejonckheere. Tel: [phone]. Fax: [phone]. E-mail: [e-mail]. Or (2) Instituto de Recursos Hidraulicos y Electrificacion (IRHE), Unidad de Reestructuracion, P.O. Box 5285, Panama 5, Panama. Tel: [phone]. Fax: [phone]. Contact: Michael Mihalitsianos, Director. IRHE website: www.irhe.com