**Exhibit 14.7**

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**Compañía Inversora en Transmisión  EléctricaCitelec S.A.**

**Consolidated Financial Statementsas of December 31, 2001 and for each ofthe two years in the period ended December 31, 2001**

 

 

 

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**Compañía Inversoraen Transmisión Eléctrica Citelec S.A.**

**Index to the Consolidated Financial Statements**

|                                                                                                      | Page |
|-----------------------------------------------------------------------------------------------------------|------|
|                                                                                                      |      |
| Report of Independent Auditors                                                                            | F-2  |
| Consolidated Balance Sheet as of December 31, 2001                                                        | F-3  |
| Consolidated Statements of Income for the years ended December 31, 2001 and 2000                          | F-4  |
| Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2001 and 2000 | F-5  |
| Consolidated Statements of Sources and Uses of Funds for the years ended December 31, 2001 and 2000       | F-6  |
| Notes to the Consolidated Financial Statements                                                            | F-7  |

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**Report of Independent Auditors**

To the Board of Directors and Shareholders ofCompañía Inversora en Transmisión EléctricaCitelec S.A.: 

In our opinion,    the accompanying consolidated balance sheet and the related consolidated    statements of income, of changes in shareholders’ equity and of sources and uses of funds present fairly, in all material respects, the financial position of Compañía Inversora en Transmisión Eléctrica Citelec S.A. and its subsidiaries at December 31, 2001, and the results of their operations and their sources and uses of funds for the year then ended in conformity with accounting principles generally accepted in Argentina. These financial statements are the responsibility of the Company’s    management; our responsibility is to express an opinion on these financial    statements based on our audit. We conducted our audit of these statements    in accordance with the standards of the Public Company Accounting Oversight    Board (United States), which require that we plan and perform the audit to    obtain reasonable assurance about whether the financial statements are free    of material misstatement. An audit includes examining, on a test basis, evidence    supporting the amounts and disclosures in the financial statements, assessing    the accounting principles used and significant estimates made by management,    and evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

The accompanying    consolidated financial statements have been prepared assuming that the Company    will continue as a going concern. As discussed in Note 13, during 2002 the    Company was negatively impacted by the devaluation of the Argentine Peso    and the Argentine Government adoption of various economic measures, including    the conversion of dollar-denominated tariffs to Argentine pesos at an exchange    rate of Ps.1 = US$ 1. As a result of these circumstances, the Company did    not comply with certain restrictive covenants contained in its debt agreements    and suspended the payment of its financial debts. These circumstances raise    substantial doubt about the Company’s ability to continue as a going    concern. Management plans in regard to these matters are also described in    Note 13. The accompanying consolidated financial statements do not includeany adjustments that might result from the outcome of this uncertainty. 

Accounting principles generally accepted in Argentina vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 14 to the consolidated financial statements.

PRICE WATERHOUSE & Co.

| by  /s/ Miguel A. Urus  (Partner)  |   |
|---------------------------------------------------|--------|
|                                                   |        |   |
| Miguel A. Urus                                    |   |
|                                              |   |

Buenos Aires, Argentina.May 17, 2004

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**Compañía Inversora en Transmisión EléctricaCitelec S.A.**

**Consolidated Balance Sheet as      of December 31, 2001**(In Argentine Pesos, except as otherwise indicated)

|                                           |                                                  |  **2001** |          |
|------------------------------------------------|-------------------------------------------------------|----------------|---------------|
|                                           |                                                  |                |               |   |
| **ASSETS**                                     |                                                  |           |          |
| **Current Assets**                             |                                                  |           |          |
|                                           | Cash and banks                                        | Ps.            | 4,761,248     |   |
|                                           | Investments                                           |           | 3,083,422     |   |
|                                           | Trade accounts receivable                             |           | 45,264,369    |   |
|                                           | Other receivables                                     |           | 8,298,654     |   |
|                                           |                                                  |                |               |   |
|                                           | **Total current assets**                              |           | 61,407,693    |   |
| **Non-Current Assets**                         |                                                       |                |          |
|                                           | Other receivables                                     |           | 21,315,870    |   |
|                                           | Investments                                           |           | 2,000,000     |   |
|                                           | Other assets, net                                     |           | 248,302,720   |   |
|                                           | Property, plant and equipment, net                    |           | 728,734,456   |   |
|                                           | Intangible assets, net                                |           | 8,138,804     |   |
|                                           |                                                  |                |               |   |
|                                           | **Total non-current assets**                          |           | 1,008,491,850 |   |
|                                           |                                                       |                |          |
| **Total Assets**                               | Ps.                                                   | 1,069,899,543  |          |
|                                           |                                                       |                |          |
| **LIABILITIES**                                |                                                  |           |          |
| **Current Liabilities**                        |                                                  |           |          |
|                                           | Trade accounts payable                                | Ps.            | 17,057,979    |   |
|                                           | Short-term debt and current portion of long-term debt |           | 210,200,216   |   |
|                                           | Salaries and social security payable                  |           | 4,063,265     |   |
|                                           | Taxes payable                                         |           | 13,401,293    |   |
|                                           | Provisions                                            |           | 7,128,133     |   |
|                                           | Other liabilities                                     |           | 6,991         |   |
|                                           |                                                  |                |               |   |
|                                           | **Total current liabilities**                         |           | 251,857,877   |   |
|                                           |                                                  |                |               |   |
| **Non-Current Liabilities**                    |                                                  |           |          |
|                                           | Trade accounts payable                                |           | 70,481,438    |   |
|                                           | Long-term debt                                        |           | 270,827,922   |   |
|                                           |                                                  |                |               |   |
|                                           | **Total non-current liabilities**                     |           | 341,309,360   |   |
|                                           |                                                       |                |          |
| **Total Liabilities**                          |                                                  | 593,167,237    |          |
|                                           |                                                  |                |               |   |
|                                           | Minority interest                                     |           | 181,881,013   |   |
|                                           |                                                       |                |          |
| **SHAREHOLDERS' EQUITY**                       |                                                  | 294,851,293    |          |
|                                           |                                                       |                |          |
| **Total Liabilities and Shareholders' Equity** | Ps.                                                   | 1,069,899,543  |          |
|                                           |                                                       |                |          |

The accompanying notes are an integral part of these consolidated financial statements*.*

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**Compañía Inversora en Transmisión EléctricaCitelec S.A.**

**Consolidated Statements of Income for the years ended December 31, 2001 and 2000**(In Argentine Pesos, except as otherwise indicated)

|                                          |  **2001** |        | **2000****(Unaudited)** |   |
|-----------------------------------------------|----------------|-------------|-------------------------|--------|
|                                          |                |             |                    |        |  |   |
| Net revenues                                  | Ps.            | 202,517,614 |                    | Ps.    | 215,851,154 |   |
| Operating expenses                            |           | (96,993,978 | )                       |   | (109,585,391 | ) |
|                                          |                |             |                    |        |  |   |
| **Gross profit**                              |           | 105,523,636 |                    |   | 106,265,763 |   |
| Administrative expenses                       |           | (18,606,090 | )                       |   | (17,642,529 | ) |
|                                          |                |             |                    |        |  |   |
| **Operating income**                          |           | 86,917,546  |                    |   | 88,623,234 |   |
| Financial results, net                        |           | (38,649,583 | )                       |   | (45,032,305 | ) |
| Other income, net                             |           | 1,202,128   |                    |   | 295,356 |   |
|                                          |                |             |                    |        |  |   |
| **Income before taxes and minority interest** |           | 49,470,091  |                    |   | 43,886,285 |   |
| Income tax expense                            |           | (15,967,233 | )                       |   | (12,357,658 | ) |
| Minority interest                             |           | (12,646,698 | )                       |   | (12,007,860 | ) |
|                                          |                |             |                    |        |  |   |
| **Net income**                                | Ps.            | 20,856,160  |                    | Ps.    | 19,520,767 |   |
|                                          |                |             |                    |        |  |   |

The accompanying notes are an integral part of these consolidated financial statements*.*

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**Compañía Inversora en Transmisión EléctricaCitelec S.A.**

**Consolidated Statements of Changes  in Shareholders' Equity for the years ended December 31, 2001 and 2000**(In Argentine Pesos, except otherwise  indicated)

|                                                  | **Common****stock** | **Legal****reserve** |   | **Retained****earnings** |      | **Shareholders'****equity** |   |
|-------------------------------------------------------|---------------------|----------------------|--------|--------------------------|-----------|-----------------------------|--------|
|                                                  |                     |                      |   |                          |           |                        |        |  |   |  |  |   |
| **Balances as of December 31,      1999 (Unaudited)** | Ps.                 | 249,392,486          |   | Ps.                      | 3,155,873 |                        | Ps.    | 34,356,007 |   | Ps. | 286,904,366 |   |
| Increase in legal reserve (unaudited)                 |                | —               |   |                     | 609,026   |                        |   | (609,026 | ) |   | — |   |
| Distribution of dividends (unaudited)                 |                | —               |   |                     | —    |                        |   | (15,450,000 | ) |   | (15,450,000 | ) |
| Net income for the year (unaudited)                   |                | —               |   |                     | —    |                        |   | 19,520,767 |   |   | 19,520,767 |   |
|                                                  |                     |                      |   |                          |           |                        |        |  |   |  |  |   |
| **Balances as of December 31,      2000**             | Ps.                 | 249,392,486          |   | Ps.                      | 3,764,899 |                        | Ps.    | 37,817,748 |   | Ps. | 290,975,133 |   |
|                                                  |                     |                      |   |                          |           |                        |        |  |   |  |  |   |
| Increase in legal reserve                             |                | —               |   |                     | 976,038   |                        |   | (976,038 | ) |  | — |   |
| Distribution of dividends                             |                | —               |   |                     | —    |                        |   | (16,980,000 | ) |   | (16,980,000 | ) |
| Net income for the year                               |                | —               |   |                     | —    |                        |   | 20,856,160 |   |   | 20,856,160 |   |
|                                                  |                     |                      |   |                          |           |                        |        |  |   |  |  |   |
| **Balances as of December 31,      2001**             | Ps.                 | 249,392,486          |   | Ps.                      | 4,740,937 |                        | Ps.    | 40,717,870 |   | Ps. | 294,851,293 |   |
|                                                  |                     |                      |   |                          |           |                        |        |  |   |  |  |   |

 

The accompanying notes are an integral  part of these consolidated financial statements*.*

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**Compañía Inversora en Transmisión EléctricaCitelec S.A.**

**Consolidated Statements of Sources  and Uses of Funds for the years ended December 31, 2001 and 2000**(In Argentine Pesos, except as otherwise  indicated)

|                                                                            | **2001** |        | **2000****(Unaudited)** |   |
|---------------------------------------------------------------------------------|----------|-------------|-------------------------|--------|
|                                                                            |          |             |                    |        |  |   |
| **CHANGES IN FUNDS:**                                                           |     |        |                    |   |   |   |
| Funds at the beginning of the      year                                         | Ps.      | 1,718,134   |                    | Ps.    | 8,719,174 |   |
| Increase (decrease) in funds                                                    |     | 6,126,536   |                    |   | (7,001,040 | ) |
|                                                                            |          |             |                    |        |  |   |
| Funds at the end of the year                                                    |     | 7,844,670   |                    |   | 1,718,134 |   |
|                                                                            |          |             |                    |        |  |   |
| **SOURCES AND USES OF FUNDS:**                                                  |     |        |                    |   |   |   |
| Net sales collected                                                             |     | 162,960,596 |                    |   | 167,840,440 |   |
| Operating costs paid                                                            |     | (52,808,427 | )                       |   | (63,847,116 | ) |
| Administrative expenses paid                                                    |     | (13,757,609 | )                       |   | (12,371,075 | ) |
| Interest expense and other financial      results                               |     | (34,757,383 | )                       |   | (39,991,117 | ) |
| Other income collected                                                          |     | 1,399,922   |                    |   | 836,680 |   |
|                                                                            |          |             |                    |        |  |   |
| Funds from ordinary operations                                                  |     | 63,037,099  |                    |   | 52,467,812 |   |
|                                                                            |     |        |                    |   |   |   |
| Collection of current receivables                                               |     | 37,395,667  |                    |   | 36,430,786 |   |
| Collection of non-current receivables                                           |     | 624,960     |                    |   | 1,170,000 |   |
|                                                                            |          |             |                    |        |  |   |
| Other sources of funds                                                          |     | 38,020,627  |                    |   | 37,600,786 |   |
|                                                                            |          |             |                    |        |  |   |
| **Total sources of funds**                                                      |     | 101,057,726 |                    |   | 90,068,598 |   |
|                                                                            |          |             |                    |        |  |   |
| Payment of cash dividends                                                       |     | (16,980,000 | )                       |   | (15,450,000 | ) |
| Payment    of current liabilities                      |     | (20,640,407 | )                       |   | (43,355,458 | ) |
| Acquisition      of property, plant and equipment      |     | (30,440,399 | )                       |   | (26,124,511 | ) |
| Increase in intangible assets                                                   |     | (442,376    | )                       |   | (1,952,617 | ) |
| Increase in other non-current      assets                                       |     | (14,558,008 | )                       |   | (737,052 | ) |
| Increase in non-current investments                                             |     | (2,000,000  | )                       |   | — |   |
| Payment of dividends to minority      interests                                 |     | (9,870,000  | )                       |   | (9,450,000 | ) |
|                                                                            |          |             |                    |        |  |   |
| **Other uses of funds**                                                         |     | (94,931,190 | )                       |   | (97,069,638 | ) |
|                                                                            |          |             |                    |        |  |   |
| **Increase (decrease) in funds**                                                | Ps.      | 6,126,536   |                    | Ps.    | (7,001,040 | ) |
|                                                                            |          |             |                    |        |  |   |

 

The accompanying notes are an integral  part of these consolidated financial statements*.*

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial  Statements**(In Argentine Pesos, except as otherwiseindicated)

| **1.** | **Organization and description of business** |
|--------|----------------------------------------------|

Compañía Inversora en Transmisión Eléctrica Citelec S.A. (“Citelec” and together with its subsidiaries, the “Company”)      is a holding company incorporated under the laws of Argentina primarilyengaged, through its subsidiaries, in the electricity transmission business. 

Citelechas a 65% ownership interest in Compañía de Transporte de Energía Eléctrica en Alta Tensión Transener S.A. (“Transener”), which also has a 90% ownership interest in Empresa de Transporte de Energía Eléctrica por Distribución Troncal de la Provincia de Buenos Aires Sociedad Anónima Transba S.A. (“Transba”).

Under 95-year concession agreements entered into with the government in 1993 and 1997, Transener and Transba, respectively, operate the two main networks of the electricity transmission system in Argentina. Under the concession agreements, Transener and Transba have the exclusive right to provide high voltage and trunk-line electricity transmission services, respectively. 

Transener      also has the exclusive license to construct, maintain and operate the fourth      line of the Comahue-Buenos Aires electricity transmission system (the “Fourth Line”).See Note 8 for details.

| **2.** | **Preparation of      financial statements** |
|--------|----------------------------------------------|
|   |                                         |   |
|   | **a.**                                       | **Basis of presentation** |

The      accompanying consolidated financial statements have been prepared for purposes      of being presented by National Grid Transco plc (“NGT”, one of the Company’s shareholders) to the Securities and Exchange Commission (“SEC”)      as separate financial statements of an unconsolidated significant subsidiary      as defined by Rule 3-09 of Regulation S-X of the SEC. As waived by the      SEC, these financial statements only cover fiscal years 2001 and 2000.Information regarding fiscal year 2000 is unaudited.

The      consolidated financial statements of the Company have been prepared in      accordance with generally accepted accounting principles used in Argentina      ("Argentine GAAP"), which differ in certain significant respects from generally accepted accounting principles in the United States of America ("US GAAP"). Such differences involve methods of measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by US GAAP and Regulation S-X of the SEC.  These consolidated financial statements include solely a reconciliation of net income and shareholders’ equity      to US GAAP. Pursuant to Item 17 of Form 20-F, this reconciliation does      not include disclosure of all information that would be required by USGAAP and Regulation S-X of the SEC. See Note 14 for details. 

Certain reclassifications and accommodations have been made to conform more closely to the form and content required by the SEC. 

|   | **b.** | **Basis of consolidation** |
|--------|--------|----------------------------|

The consolidated financial statements include the accounts of Citelec and its subsidiaries over which Citelec has effective control. All significant intercompany balances and transactions have been eliminated in consolidation.

In      accordance with Argentine GAAP, the presentation of the parent company’s      individual financial statements is mandatory and consolidated financial      statements are included as supplementary information to the individual      financial statements. For the purpose of these financial statements, individual      financial statements have been omitted since they are not required forSEC reporting purposes.

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **2.** | **Preparation of    financial statements (continued)** |
|--------|--------------------------------------------------------|
|   |                                                   |
|   | **b.**                                                 | **Basis of consolidation (continued)** |

A description of the subsidiaries with their respective percentage of capital stock owned is presented as follows:

|   | **Subsidiaries** |   | **Percentage of capital      stock owned****as of December 31,** |   |
|--------|------------------|--------|------------------------------------------------------------------|--------|
|   |                  |   |                                                                  |        |  |   |
|   |             |   | **2001**                                                         |   | **2000** |   |
|   |             |   |                                                                  |   |  |   |
|   | Transener        |   | 65.00                                                            | %      | 65.00 | % |
|   | Transba          |   | 58.50                                                            | %      | 58.50 | % |
|   |             |   |                                                             |   |   |   |

|   | **c.** | **Use of estimates** |
|--------|--------|----------------------|

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

|   | **d.** | **Reclassifications** |
|--------|--------|-----------------------|

Certain reclassifications of prior year information have been made to conform to the current year presentation.

| **3.** | **Significant accounting policies** |
|--------|-------------------------------------|

The following is a summary of significant accounting policies followed by the Company in the preparation of these consolidated financial statements.

|   | **a.** | **Revenue recognition** |
|--------|--------|-------------------------|

 The Company    primarily derives its revenues from the electricity transmission services.    The Company’s rate from the transportation service is made up of charges for (1) connection to the system, (2) energy transmission and (3) transmission    capacity. Revenues from electricity transmission services are recognizedin income as services are provided. 

As stated in the concession agreements, the Company receives bonus payments from the government when certain quality thresholds are met. Bonuses are recognized in income when earned. 

In connection    with the exclusive license to construct, maintain and operate the fourth    line of the Comahue-Buenos Aires electricity transmission system, the Company    receives monthly, equal and consecutive installments related to the fee payable    by the government for a period of 15 years. In addition, the Company has    received subsidies from CAMMESA, which have been recognized as “customers’ prepayments” within    the non-current portion of trade accounts payable in the accompanying consolidated    balance sheet. These subsidies are being recognized in income on a straight-linebasis over 15 years.

The Company derives additional revenues related to the transmission services from the supervision of the construction and operation of certain assets connected to the networks and other services provided to third parties. These revenues are recognized in income as services are rendered.

|   | **b.** | **Provision for penalties** |
|--------|--------|-----------------------------|

Under the    concession agreements, the Company is subject to penalties when any line    within the Company’s networks is not available to transmit electricity. Penalties are imposed and determined by ENRE based on the type of asset and the period of unavailability. The Company’s    policy is to recognize a provision for penalties when occurred based on theamount that is expected to be determined by the ENRE.

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **3.** | **Significant accounting policies    (continued)** |
|--------|----------------------------------------------------|
|   |                                               |
|   | **c.**                                             | **Statement of sources and uses of funds** |

The Company considers cash and banks and current investments as funds for purposes of presenting the statements of sources and uses of funds. 

|   | **d.** | **Investments** |
|--------|--------|-----------------|

Current and    non-current investments include government bonds. Government bonds are carried    at the lower of amortized cost or fair market value. Unrealized gains and    losses on government bonds are included within “Financial results, net” inthe accompanying consolidated statements of income. 

|   | **e.** | **Property, plant and equipment,    net** |
|--------|--------|-------------------------------------------|

Property, plant and equipment received from the government as a result of the privatizations have been valued at their transfer price, equaling the aggregate amount of cash paid and liabilities assumed. Subsequent additions have been valued at cost. Accumulated depreciation of the assets received from the government as a result of the privatizations is computed under some technical formulas over the estimated useful lives of the assets. Accumulated depreciation of subsequent additions is computed under the straight-line method over the estimated useful lives of the assets. The estimated useful lives of the assets are as follows:

|   | **Asset**                     | **Estimated useful life (years)** |   |
|--------|-------------------------------|-----------------------------------|--------|
|   |                          |                                   |   |
|   | Vehicles                      | 5                                 |   |
|   | Air and heavy equipment       | 5-25                              |   |
|   | Furniture and fixtures        | 10-20                             |   |
|   | Information systems           | 3                                 |   |
|   | Transmission lines            | 15-50                             |   |
|   | Substations and related works | 10-50                             |   |
|   | Buildings and civil works     | 12-50                             |   |
|   | Labs and maintenance          | 12-20                             |   |
|   | Communication equipment       | 12-25                             |   |
|   | Miscellaneous                 | 3                                 |   |

The cost of maintenance and repairs is charged to expense as incurred. The cost of significant renewals and improvements are added to the carrying amount of the respective asset. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of income.

|   | **f.** | **Intangible assets, net** |
|--------|--------|----------------------------|

Intangible assets represent costs primarily incurred in the start-up and organization of the Company, including certain costs incurred in the optimization of the technical and administrative processes. These costs are primarily being amortized on a straight-line basis over 5 years. 

|   | **g.** | **Other assets, net** |
|--------|--------|-----------------------|

Other assets represent costs and expenses incurred in the construction of the Fourth Line. These costs and expenses are being amortized on a straight-line basis over 15 years. See Note 8 for details. 

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A. Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **3.** | **Significant accounting    policies (continued)** |
|--------|----------------------------------------------------|
|   |                                               |   |
|   | **h.**                                             | **Foreign currency assets and liabilities** |

Assets and    liabilities denominated in foreign currencies are translated at the prevailing    exchange rates as of year-end. Transactions denominated in foreign currencies    are translated into Argentine pesos at the prevailing exchange rates on the    date of transaction settlement. Foreign currency transaction gains and losses    are generally recorded within “Financial results, net” in theaccompanying consolidated statements of income. 

In accordance    with Resolution N° 1/02 of the *Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma    de Buenos Aires* (“CPCECABA”), assets and liabilities denominated    in foreign currencies as of December 31, 2001 were valued at the exchange    rate of Ps. 1 per U.S. dollar or its equivalent in any other foreign currency    (the exchange rate in effect when the exchange market was suspended). See    Note 13 for details of the devaluation of the Argentine peso occurred in    2002. Assets and liabilities denominated in foreign currencies are disclosedin Note 15.c. 

|   | **i.** | **Income tax provision** |
|--------|--------|--------------------------|

The subsidiaries of the Company calculate their income taxes on a separate basis. The Company did not either calculate or pay income taxes on a consolidated basis for any of the periods presented. The statutory income tax rate was 35% for all the periods presented. The Company does not recognize deferred income taxes.

|   | **j.** | **Asset tax provision** |
|--------|--------|-------------------------|

The Company is subject to the asset tax. Pursuant to this tax regime, the Company is required to pay the greater of the income tax or the asset tax. Any excess of the asset tax over the income tax may be carried forward and recognized as a tax credit against future income taxes payable over a 10-year period. The asset tax provision is calculated on an individual entity basis at the statutory asset tax rate of 1% and is based upon the taxable assets of each company as of the end of the year, as defined by Argentine law.

|   | **k.** | **Provisions for contingencies** |
|--------|--------|----------------------------------|

The Company    has certain contingent liabilities with respect to existing or potential    claims, lawsuits and other proceedings, including those involving labor and    other matters. The Company accrues liabilities when it is probable that future    costs will be incurred and such costs can be reasonably estimated. Such accruals    are based on developments to date, the Company's estimates of the outcomes    of these matters and the Company’s lawyers’ experience in contesting,    litigating and settling other matters. As the scope of the liabilities becomes    better defined, there will be changes in the estimates of future costs, which    could have a material effect on the Company's future results of operations    and financialcondition or liquidity.

|   | **l.** | **Pension information** |
|--------|--------|-------------------------|

The Company    and its shareholders do not maintain any pension plans for the Company’s employees. Argentine laws provide for pension benefits to be paid to retired employees from government pension plans and/or private fund managed plans to which employees may elect to contribute.  The Company and its shareholders do not sponsor any employee stock ownership plans for the Company’semployees.

|   | **m.** | **Vacation expenses** |
|--------|--------|-----------------------|

Vacation expense in excess of normal remuneration is accrued in the period the employee renders services to earn such vacation.

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statement**(In Argentine Pesos, except as otherwise indicated)

     

| **3.**  | **Significant accounting    policies (continued)** |
|--------------|----------------------------------------------------|
|         |                                               |   |
|         | **n.**                                             |  **Impairment    of long-lived assets** |

The Company periodically evaluates the carrying value of its long-lived assets for impairment. The carrying value of a long-lived asset is considered impaired by the Company when the expected cash flows undiscounted and without interest, from such asset is separately identifiable and less than its carrying value.  In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved or based on independent appraisals.

|   | **o.** | **Derivative financial instruments** |
|--------|--------|--------------------------------------|

The      Company uses derivative financial instruments as part of its overall strategy      to manage its exposure to market risks associated with fluctuations in      interest rates and exchange rates. Premiums on foreign currency forward-exchange      and option contracts are amortized over the life of the respective contracts.      Interest rate swap agreements are accounted for on an accrual basis, with      the net receivable or payable recognized as an adjustment to interest expense.      The related accrued receivable or payable is included as an adjustment      to interest payable. The fair value of the derivative instruments is not      recognized in the accompanying consolidated financial statements. As a      matter of policy, the Company does not use derivatives for trading or speculative      purposes. See Note 9 for a description of the Company’s derivativeinstruments activity.

|   | **p.** | **Monetary assets and liabilities** |
|--------|--------|-------------------------------------|

Monetary assets and liabilities are stated at their face value plus the related financial gain or loss.

| **4.** | **Breakdown of the main balance    sheet captions** |
|--------|-----------------------------------------------------|
|   |                                                |   |

|   | **a.** | **Cash and banks:** |
|--------|--------|---------------------|

|                      |   | **2001**  |      |
|---------------------------|--------|-----------|-----------|
|                      |   |           |
| Cash in local currency    | Ps.    | 225,863   |      |
| Banks in local currency   |   | 1,053,311 |      |
| Banks in foreign currency |   | 3,482,074 |      |
|                      |   |           |
|                      |   | Ps.       | 4,761,248 |   |
|                      |   |           |

|   |   |             |
|--------|--------|------------------|
|   | **b.** | **Investments:** |

|   |    |
|--------|--------------|

|             |   | **2001**  |      |
|------------------|--------|-----------|-----------|
| **Current**      |        |
| Government bonds | Ps.    | 19,428    |      |
| Bank deposits    |   | 3,063,994 |      |
|             |   |           |           |  |
|             |   | Ps.       | 3,083,422 |   |
|             |   |           |           |  |

| **Non-current**  |   |      |   |
|------------------|--------|-----------|--------|
| Government bonds | Ps.    | 2,000,000 |   |
|             |        |           |        |
|             | Ps.    | 2,000,000 |   |
|             |        |           |        |

|   |               |                           |
|--------|--------------------|--------------------------------|
|   | **c.**   | **Trade accounts receivable:** |

|     |
|--------------------|

|                | **2001** |       |
|---------------------|----------|------------|
| **Current**         |          |
| Services receivable | Ps.      | 45,264,369 |   |
|                |          |            |  |
|                | Ps.      | 45,264,369 |   |
|                |          |            |  |

F-11

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

      

| **4.** | **Breakdown of the    main balance sheet captions (continued)** |
|--------|-----------------------------------------------------------------|
|   |                                                            |   |

|   |  **d.** |  **Other    receivables:** |
|--------|--------------|---------------------------------|
|   |         |                            |

|                         |   |      | **2001** |      |
|------------------------------|--------|-----------|----------|-----------|
|                         |   |      |          |
| **Current**                  |   |      |     |
| Guarantee deposits (i)       | Ps.    | 3,372,739 |     |
| Advances to suppliers        |   | 483,510   |     |
| Unbilled services            |   | 1,261,065 |     |
| Prepaid expenses             |   | 2,038,535 |     |
| Tax credits                  |   | 52,828    |     |
| Personnel loans and advances |   | 836,097   |     |
| Others                       |   | 253,880   |     |
|                         |   |      |          |           |  |
|                         |   |      | Ps.      | 8,298,654 |   |
|                         |   |      |          |           |  |

| **Non-Current**                   |   |       |   |
|-----------------------------------|--------|------------|--------|
| Guarantee deposits (ii)           | Ps.    | 2,354,155  |   |
| Unbilled services                 |   | 978,063    |   |
| Stock ownership program (Note 11) |   | 17,983,652 |   |
|                              |        |            |        |
|                              | Ps.    | 21,315,870 |   |
|                              |        |            |        |

(i) Pursuant    to an agreement entered into between Yacylec S.A. (“Yacylec”, an independent transmission company) and the Argentine government, Transener collects revenue fees from CAMMESA on behalf of Yacylec. As such, such collected fees are subsequently remitted to Yacylec. In May 1995, CAMMESA retained Ps. 3.4 million from the amount payable to the Company as a guarantee of the obligations assumed by Transener in connection with the above-mentioned agreement. The Company has brought a claim requesting the payment of such amount since the Company’s    management understands that it was improperly retained by CAMMESA. The Companyhas classified the guarantee deposit as other current receivables. 

(ii)      The non-current portion of guarantee deposits represents the amount of      turnover tax paid in May 1998 in connection with the claim brought by the      Province of Entre Rios against the Company. As described in Note 10, this      amount must be reimbursed to the Company since the Argentine Federal Supreme      Court (the “Court”) decided in April 2002 that the Companyis exempt from paying such tax.

|   | **e.** | **Other assets, net:** |
|--------|--------|------------------------|

|   |   |
|--------|--------|

|                                                  | **2001** |        |
|-------------------------------------------------------|----------|-------------|
|                                                  |          |             |  |
| **Non-Current**                                       |     |        |   |
| Fourth    Line (Note 8)      | Ps.      | 248,302,720 |   |
|                                                  |          |             |  |
|                                                  | Ps.      | 248,302,720 |   |
|                                                  |          |             |  |

|   | **f.** | **Trade accounts payable:** |
|--------|--------|-----------------------------|

|   |   |
|--------|--------|

|                                                                  | **2001** |       |
|-----------------------------------------------------------------------|----------|------------|
|                                                                  |          |            |  |
| **Current**                                                           |     |       |   |
| Suppliers           | Ps.      | 17,057,979 |   |
|                                                                  |          |            |  |
|                                                                  | Ps.      | 17,057,979 |   |
| **Non-current**                                                       |          |            |  |
| Suppliers                                                             | Ps.      | 1,320,148  |   |
| Customers prepayments (Note 8)                                        |     | 69,161,290 |   |
|                                                                  |          |            |  |
|                                                                  | Ps.      | 70,481,438 |   |
|                                                                  |          |            |  |

F-12

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statement**(In Argentine Pesos, except as otherwise indicated)

**4.**      **Breakdown of the main balance sheet captions (continued)**

|   | **g.** | **Short-term and long-term debt:** |
|--------|--------|------------------------------------|

|                                                                                |
|-------------------------------------------------------------------------------------|
| **Short-term debt and current portion of long-term debt consist of the following:** |

|                      | **2001** |       |
|---------------------------|----------|------------|
|                      |          |            |  |
| **Short-term debt:**      |     |       |   |
| BankBoston NA             | Ps.      | 7,596,303  |   |
| Río    de la Plata |     | 3,085,569  |   |
| Citibank                  |     | 2,018,935  |   |
| HSBC Bank plc             |     | 30,486,506 |   |
| Bank of Tokyo Mitsubishi  |     | 46,475,339 |   |
| Other bank loans          |     | 2,159,802  |   |
| Bank overdrafts           |     | 3,378,504  |   |
|                      |          |            |  |
|                      | Ps.      | 95,200,958 |   |
|                      |          |

| **Current portion of long-term debt:** |   |        |   |
|----------------------------------------|--------|-------------|--------|
| Corporate bonds                        | Ps.    | 5,625,000   |   |
| Floating rate notes                    |   | 107,118,091 |   |
| Nordic Investment Bank                 |   | 129,259     |   |
| Bank Boston                            |   | 1,152,961   |   |
| Río    de la Plata              |   | 973,947     |   |
|                                   |        |             |        |
|                                   | Ps.    | 114,999,258 |   |
|                                   |        |             |        |
|                                   | Ps.    | 210,200,216 |   |
|                                   |        |

|                                       | **2001** |        |
|--------------------------------------------|----------|-------------|
|                                       |          |             |  |
| **Non-current portion of long-term debt:** |     |        |   |
| Corporate bonds                            | Ps.      | 250,000,000 |   |
| Floating rate notes                        |     | 8,938,040   |   |
| Nordic Investment Bank                     |     | 6,000,000   |   |
| BankBoston                                 |     | 3,200,806   |   |
| Río    de la Plata                  |     | 2,689,076   |   |
|                                       |          |             |  |
|                                       | Ps.      | 270,827,922 |   |
|                                       |          |

See      Note 9 for a description of the Company’s short-term and long-termdebt.

|   | **h.**  | **Salaries and social security payable:** |
|--------|--------------|-------------------------------------------|
|   |         |                                      |

|                               | **2001** |      |
|------------------------------------|----------|-----------|
|                               |          |           |  |
| Provision for vacation and bonuses | Ps.      | 2,551,226 |   |
| Social security payable            |     | 1,277,972 |   |
| Salaries payable                   |     | 234,067   |   |
|                               |          |           |  |
|                               | Ps.      | 4,063,265 |   |
|                               |          |

|   | **i.**   | **Taxes payable:** |
|--------|--------------------|--------------------|

|     |
|--------------------|

|                                                    | **2001** |       |
|---------------------------------------------------------|----------|------------|
|                                                    |          |            |  |
| VAT payable, net                                        | Ps.      | 6,310,728  |   |
| Income tax, net                                         |     | 7,051,236  |   |
| Other tax    withholdings      |     | 38,705     |   |
| Other taxes                                             |     | 624        |   |
|                                                    |          |            |  |
|                                                    | Ps.      | 13,401,293 |   |
|                                                    |          |

F-13

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

**4.**      **Breakdown of the main balance sheet captions (continued)**

|   | **j.**      **Provisions:** |
|--------|------------------------------------------------------|

|   |                            |   | **2001**   |   |
|--------|---------------------------------|--------|------------|--------|
|   |                            |        |            |   |
|   | **Current**                     |   |       |   |
|   | Operating fees payable (Note 6) | Ps.    | 452,818    |   |
|   | Provision for penalties         |   | 7,322,566  |   |
|   | Bonuses receivable              |   | (3,184,388 | )      |
|   | Provision for contingencies (i) |   | 2,537,137  |   |
|   |                            |        |            |   |
|   |                            | Ps.    | 7,128,133  |   |
|   |                            |        |            |   |

(i) The Company is a party to several civil and labor proceedings and claims that have arisen in the ordinary course of its business. The Company has established reserves for an aggregate amount of Ps. 2.5 million at December 31, 2001 to cover for potential losses under these claims.

**5.**      **Shareholders' equity**

|   | **a.** | **Common stock** |
|--------|--------|------------------|

At December 31, 2001, the Company has authorized, issued and outstanding 105,974,400 shares of Class A common stock, 105,974,400 shares of Class B common stock, 18,704,437 shares of Class C common stock and 18,739,249 shares of Class D common stock. All classes of common stock have a par value of Ps. 1 per share. Holders of these shares are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders.

|   | **b.** | **Restrictions on distribution of profits** |
|--------|--------|---------------------------------------------|

In accordance    with the Argentine Corporations Law and the Company’s by-laws, 5% of the net and realized profit for the year calculated in accordance with Argentine GAAP plus (less) prior year adjustments must be appropriated by resolution of shareholders to a legal reserve until such reserve equals 20% of the Company’s  outstanding capital. This legal reserve may be used only to absorb losses.

**6.**      **Balances and transactions with related parties**

The Company    and its primary shareholders, National Grid Finance B.V. (“National Grid”) and Pecom Energía S.A. (“Pecom”, formerly Perez Companc S.A., and together with National Grid, the “Operators”), have entered into an operating agreement (the “Operating Agreement”) under which the Operators provide services, expertise, know-how and technical assistance in connection with the Company’s    activities. The Operators provide advisory and coordination services in the    areas of human resources, general administration, information systems, quality  control and consulting.

The operating fee payable by the Company is based on 5% of energy transmission revenue. Fees for operating services are included as a component of operating expenses in the accompanying consolidated statements of income and totaled Ps. 1.8 million and Ps. 1.7 million for the years ended December 31, 2001 and 2000, respectively.

**7.**      **Financial results, net**

|                      | **Year ended December 31,** |      |
|---------------------------|-----------------------------|-----------|
|                      |                             |           |  |   |
|                      | **2001**                    |      | **2000****(Unaudited)** |   |
| **Generated by assets:**  |                             |           |   |  |  |   |
| Interest income           | Ps.                         | 3,329,730 |   | Ps. | 1,460,941 |   |
| Exchange differences, net |                        | —    |   |   | 1,832 |   |
|                      |                             |           |   |  |  |   |
|                      | Ps.                         | 3,329,730 |   | Ps. | 1,462,773 |   |
|                      |                             |           |   |  |  |   |

F-14

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A. Notes to the Consolidated Financial Statement**(In Argentine Pesos, except as otherwise indicated)

7.     **Financial results,net (continued)**

|                          | **Year ended December 31,** |        |
|-------------------------------|-----------------------------|-------------|
|                          |                             |             |  |   |
|                          | **2001**                    |        | **2000****(Unaudited)** |   |
| **Generated by liabilities:** |                             |             |   |  |  |   |
| Interest expense              | Ps.                         | (38,677,684 | ) | Ps. | (44,671,070 | ) |
| Exchange differences, net     |                        | (3,301,629  | ) |   | (1,824,008 | ) |
|                          |                             |             |   |  |  |   |
|                          | Ps.                         | (41,979,313 | ) | Ps. | (46,495,078 | ) |
|                          |                             |             |   |  |  |   |
|                          | Ps.                         | (38,649,583 | ) | Ps. | (45,032,305 | ) |
|                          |                             |             |   |  |  |   |

**8.**      **Fourth Line of the Comahue-Buenos Aires electricity transmission system**

In October 1997, Transener obtained the exclusive license to construct, maintain and operate the fourth line of the Comahue-Buenos Aires electricity transmission system pursuant to a contract entered into with the *Grupo      de Generadores de Energía Eléctrica del Area del Comahue* (the “COM Contract”).      The COM Contract was approved by ENRE in November 1997 and provided for      the construction of approximately 1,300 km of 500kV electricity lines,      the installation of approximately 2,550 high-tension towers and the expansion  of 5 substations. 

The COM Contract    establishes a fee to be paid to the Company in monthly equal and consecutive    installments during 15 years as from December 1999 (the date operations began).    In addition, the Company has received subsidies from CAMMESA, which have    been recognized as “customers’ prepayments” within the    non-current portion of trade accounts payable in the accompanying consolidated    balance sheet. These subsidies are being recognized in income on a straight-line  basis over 15 years.

**9.**      **Financing structure**

The Company    has issued various series of notes under its global program. The issuances    were approved by shareholders’ general meetings which in turn authorized    the Board of Directors to determine the terms and conditions, including amount,  price, interest rate and currency. The issuances were as follows:

| **Corporate bonds**       |   | **Date of  issuance** |   | **Amount in US$** |   | **Interest rate** |   | **Term** |   | **Use of proceeds** |   |
|---------------------------|--------|-----------------------|--------|-------------------|--------|-------------------|--------|----------|--------|---------------------|--------|
|                           |   |                       |   |                   |   |                   |   |          |   |                     |   |
| Series 1 Class A          |   | April 13, 1998        |   | 100,000,000       |   | 8.625             | %      | 5 years  |   | Debt refinancing    |   |
| Series 1 Class B          |   | April 13, 1998        |   | 150,000,000       |   | 9.25              | %      | 10 years |   | Debt refinancing    |   |
|                      |   |                  |   |                   |   |              |   |     |   |                |   |
| **Total Corporate bonds** |   |                  |   | **250,000,000**   |   |              |   |     |   |                |   |
|                      |   |                  |   |                   |   |              |   |     |   |                |   |

| **Floating rate notes (FRN)** |   | **Date of issuance** |   | **Amount in US$** |   | **Interest rate (i)** |   | **Term**                           |   | **Use of proceeds**                                        |
|-------------------------------|--------|----------------------|--------|-------------------|--------|-----------------------|--------|------------------------------------|--------|------------------------------------------------------------|
|                               |   |                      |   |                   |   |                       |   |                                    |   |                                                            |
| Class 1 Series A              |   | December 21, 1998    |   | 16,173,698        |   | LIBOR + 1.5%          |   | 4 years                            |   | Debt refinancing                                           |
| Class 2 Series A              |   | December 23, 1998    |   | 14,808,758        |   | LIBOR + 1.5%          |   | 3, 4 and 5 years by one third each |   | Construction of the fourth line and working capital needs. |
| Class 2 Series B              |   | August 10, 1999      |   | 12,000,000        |   | LIBOR + 1.5%          |   | 3, 4 and 5 years by one third each |   | Construction of the fourth line.                           |
| Class 3 Series A              |   | December 23, 1998    |   | 29,517,544        |   | LIBOR + 1.4    - 1.7% |   | 4 years                            |   | Construction of the fourth line and working capital needs. |
| Class 3 Series B              |   | March 5, 1999        |   | 30,000,000        |   | LIBOR + 1.4    - 1.7% |   | 4 years                            |   | Construction of the fourth line and working capital needs  |
| Class 3 Series C              |   | August 5, 1999       |   | 20,000,000        |   | LIBOR + 1.4    - 1.7% |   | 4 years                            |   | Construction of the fourth line and working capital needs. |
| **Total Floating rate notes** |   |                 |   | **122,500,000**   |   |                  |   |                               |   |                                                       |

(i) See “Derivative financial instruments” below.

F-15

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A. Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

**9.     Financing      structure (continued)**

On August 24, 2001 the Company paid the first amortization installment of the FRN Class 2 Series A and FRN Class 2 Series B for US$ 4.9 million and US$ 4.0 million, respectively. The Company used the proceeds of a short-term loan obtained from HSBC Bank plc for US$ 10.0 million to make these payments. 

The Company’s  long-term debt also includes the following bank loans:

|   | **Bank**                        |   | **Maturity**                           |   | **Amount**    |
|--------|---------------------------------|--------|----------------------------------------|--------|---------------|
|   |                                 |   |                                        |   |               |
|   | Nordic Investment Bank          |   | March 15, 2005                         |   | US$ 6,000,000 |
|   | Bank Boston N.A.                |   | Various dates throughJanuary 6, 6006   |   | US$ 3,621,703 |
|   | Banco    Río de la Plata |   | Various dates throughFebruary 15, 2006 |   | US$ 4,283,856 |

The Company’s  short-term debt is primarily comprised of the following bank loans:

|   | **Bank**                                                                                         |   | **Maturity**                                  |   | **Amount**                                          |
|--------|--------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|-----------------------------------------------------|
|   |                                                                                                  |   |                                               |   |                                                     |
|   | Bank Boston N.A.                                                                                 |   | April 28, 2002May 29, 2002April 28, 2002      |   | US$ 5,000,000US$ 1,023,367US$ 1,500,000             |
|   | Banco Río    de la Plata                                                                  |   | August 3, 2002                                |   | US$ 3,080,000 (i)                                   |
|   | Citibank                                                                                         |   | February 2, 2002                              |   | US$ 2,000,000 (i)                                   |
|   | HSBC Bank plc                                                                                    |   | March 8, 2002April 11, 2002                   |   | US$ 10,000,000US$ 20,000,000                        |
|   | Bank of Tokyo Mitsubishi                                                                         |   | April 25, 2002August 2, 2002                  |   | ¥ 2,452,000,000    (ii)¥ 3,130,000,000 (ii) |
|   | Banco Río    de la Plata (iii)Banco Río de la Plata (iii)Chase Bank of Texas (iii) |   | July 15, 2002September 3, 2002August 15, 2002 |   | US$ 543,994US$ 542,306US$ 690,477                   |

          (i)     As      discussed in Note 13, subsequent to year-end these dollar-denominated bank      loans were    convertedto Argentine pesos at the rate of exchange of Ps. 1 per US$.

         (ii)     See “Derivativefinancial instruments” below.

         (iii)      Included within “Otherbank loans”. See Note 4.g. 

**         Derivativefinancial instruments**

From time to time, the Company uses derivative financial instruments as part of its overall strategy to manage its exposure to market risks associated with fluctuations in interest rates and exchange rates. The counterparties to these instruments generally are major financial institutions.  The Company does not hold or issue derivative instruments for trading purposes. 

A description    of the Company’s derivative instruments activity during the two years  in the period ended December 31, 2001 follows:

|  | (i) | Foreign currency forward-exchange contracts |
|--|-----|---------------------------------------------|

In order to manage its foreign currency exposure, during the years ended December 31, 2000 and 2001, the Company entered into foreign currency forward-exchange contracts with financial institutions to effectively convert its yen-denominated short-term debts to US dollar-denominated debts. 

F-16

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **9.**  | **Financing    structure (continued)** |
|--------------|----------------------------------------|
|         |                                   |

|  | (i) | Foreign currency forward-exchange contracts (continued) |
|--|-----|---------------------------------------------------------|

As of December    31, 2000, the Company had three foreign currency forward-exchange contracts    outstanding with an aggregate notional amount of Yen 6,323,500,000 maturing    in April and August 2001. These foreign currency forward-exchange contracts    covered yen-denominated short-term debts with Bank of Tokyo-Mitsubishi and    Banco Río de la Plata S.A. amounting to Yen 4,718,500,000 and Yen  1,605,000,000, respectively, with the same maturity dates. 

As of December 31, 2001, the Company had a foreign currency forward-exchange contract outstanding with JPMorgan Chase Bank for an aggregate notional amount of Yen 2,452,000,000 covering a yen-denominated short-term debt with Bank of Tokyo Mitsubishi maturing on April 25, 2002.  

|  | (ii) | Foreign currency option contract |
|--|------|----------------------------------|

In order to manage its foreign currency exposure, during the year ended December 31, 2001 the Company entered into a foreign currency option contract with Bank of America, pursuant to which the Company has the option to buy Yen 3,130,000,000 at a strike price of Yen 119 per US dollar. This foreign currency option contract covers a yen-denominated short-term debt maintained with Bank of Tokyo Mitsubishi which matures on August 2, 2002. 

|  | (iii) | Interest rate swap |
|--|-------|--------------------|

In order to manage its interest rate exposure, in June 2001 the Company entered into two interest rate swap agreements with Bank of America to effectively convert its Floating Rate Notes from dollar-denominated variable-rate debt to dollar-denominated fixed-rate debt.  Under the swap agreements, the Company paid interest at a fixed rate of 4.6225% and received interest at a variable rate equal to LIBOR. 

| **10.** | **Turnover          tax – Province    of Entre Rios** |
|---------|------------------------------------------------------------|

The Company    had received a claim from the Tax Bureau of the Province of Entre Rios to    collect turnover tax, according to their interpretation, on energy transportation    services. In May 1998, Transener paid Ps. 2.3 million under protest and filed    a suit before the Court requesting the expedition on the legitimacy of the    claim for such tax, since the terms and conditions of the concession agreement    explicitly stated that the Company’s services are not subject to local taxes. In April 2002, the Court finally expedited in favor of the Company stating that the Company’s    services are exempt from paying turnover tax. The receivable with the Province    of Entre Rios is classified as a non-current other receivable in the accompanying  consolidated balance sheet.

| **11.** | **Stock ownership programs** |
|---------|------------------------------|

Pursuant to the terms and conditions of the privatizations, 10% of the capital stock of both Transener and Transba, represented by their Class C shares, were included in the*“Programa      de Propiedad Participada* or PPP” and “*Programa de Participación      Accionaria de Personal* or PPAP”, employee stock ownership programssponsored by the government, respectively.

Pursuant to the PPP and PPAP, the Class C shares of Transener and Transba are held by a trustee for the benefit of employees of the formerly state-owned company who remained employed by the Company and who elected to participate in the plan until the purchase price is fully paid. 

In connection with the privatization of Transba, Transener had paid the government the fair market value of the 10% of the capital stock included in the PPAP. This amount has been recognized as a non-current other receivable and is being collected from the trustee with the proceeds the trustee receives from Transener as dividend distributions.

F-17

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(InArgentine Pesos, except as otherwise indicated)

|  **12.** |  **Restricted    assets and limitation to the transfer of Transener and Transba shares** |
|---------------|-----------------------------------------------------------------------------------------------|
|          |                                                                                          |
|          | **Restricted assets**                                                                         |

Pursuant to    the concession agreements, the Company may not pledge, mortgage, or grant    any other lien or right in favour of third parties over the assets affected  to the provision of the Company’s electricity transmission services.

|   | **Limitation to the transfer of Transener    and Transba shares** |
|--------|-------------------------------------------------------------------|

Citelec is    not permitted to modify its 65% ownership interest in Transener nor sell    its Class A shares representing    51% of Transener’s capital stock without prior approval by the ENRE.    Transener may also not modify or sell its ownership interest in Transba withoutprior approval by the ENRE.

Under the concession agreements, Class A shares of both Transener and Transba have been pledged in favour of the Argentine government as guarantee for the execution of the obligations assumed under such agreements. The Company should increase the guarantee in the event of newly issued shares as a result of capital contributions and/or capitalization of profits or inflation adjustment balances.

Pursuant to    the Company’s by-laws, Transener and Transba Class A shares may not    be pledged or granted as guarantee, except for the exceptions stated in the  concession agreements.

| **13.**  | **Subsequent events** |
|---------------|-----------------------|
|          |                  |

|   | **a.**                      | **Argentine economic    situation and its impact on the Company’s financial position** |
|--------|----------------------------------|---------------------------------------------------------------------------------------------|
|   |                             |                                                                                        |
|   | **Argentine economic situation** |

The    Argentine economy has experienced significant difficulties including, a significant    public debt burden, high    interest rates, a financial system in crisis and a four-year economic recession.    This situation has led to a significant decrease in products and services    consumption in the country and an increase in the unemployment level, mainly    through the end of 2002. These circumstances have affected the Government’sability to comply with existing commitments and access to bank financing. 

As from December 3, 2001 the government issued certain measures to restrict the free availability and circulation of cash and the transfer of foreign currency abroad. As from December 21, 2001 all working days until the closing of the financial year were declared exchange holidays. Subsequently, the Government declared default on the external debt.

As from January    6, 2002, the Argentine government issued measures, laws, decrees and regulations    that involved significant changes to the prevailing economic model (the “Public Emergency Law”), including (i) the establishment of a floating exchange rate system, that led to a significant devaluation of the Argentine peso during the first months of 2002, and (ii) the mandatory conversion into Argentine pesos of certain foreign currency-denominated assets and liabilities held in Argentina (known as “Pesification”).    During 2002, there was an important inflation process as a consequence of  the end of the convertibility regime.

Listed below    are some of the measures adopted by the Government that are in force at the    date of issuance of these consolidated financial statements and the effect  they had on the Company’s economic and financial situation. 

|   | Exchange system / Transfers outside Argentina |
|--------|-----------------------------------------------|

On February 8, 2002 a single free exchange market system was established, which is regulated and controlled by *Banco  Central de la República Argentina* (the “Argentine Central Bank”)*.*Presently, certain transfers abroad of a financial nature require the prior approval of the Central Bank and there are certain requirements for settling and collecting foreign currency arising from exports.

F-18

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(InArgentine Pesos, except as otherwise indicated)

| **13.**  | **Subsequent events    (continued****)** |
|---------------|------------------------------------------|
|          |                                     |

|   | **a.**                                          | **Argentine      economic situation and its impact on the Company’s financial position    (continued)** |
|--------|-------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
|   |                                            |                                                                                                         |
|   | **Argentine economic situation    (continued)** |
|   |                                            |                                                                                                         |
|   | Deposits in Argentine financial    institutions |

As from February 3, 2002 deposits in U.S. dollars or other foreign currencies in Argentine financial institutions were converted to pesos at the exchange rate of Ps. 1.4 per US$ 1 or its equivalent in such other currency.

|   | Financial debts in foreign currency with    Argentine financial entities |
|--------|--------------------------------------------------------------------------|

Debts in U.S. dollars or other foreign currencies in the Argentine financial system were converted to pesos at the rate of exchange of Ps. 1 per US$ 1 or its equivalent in another currency. As from February 3, 2002 the reference stabilization index (CER) and an interest rate are being applied to these debts. The CER is an index that measures the daily rate of change derived from the monthly change in the Consumer Price Index (CPI) published by the INDEC. 

|   | Receivables and debts not related to the    financial system |
|--------|--------------------------------------------------------------|

The obligation to pay sums denominated in U.S. dollars or other foreign currency that are not related to the financial system, whatever their origin or nature, were converted to pesos at the exchange rate of Ps. 1 to US$ 1 or its equivalent in such other foreign currency. The CER is being applied to these balances as from February 3, 2002.  If application of this provision were to lead to the resulting value of the item, good or service being higher or lower at the time of payment, either of the parties can request a fair readjustment of the price.  If no agreement is reached, the case could be submitted to the Courts.

|   | Pesification of prices and tariffs / Renegotiation of concession agreements |
|--------|-----------------------------------------------------------------------------|

The Public    Emergency Law established that, in the case of contracts related to public    services, clauses setting forth the price of such public services in U.S.    dollars or other foreign currencies, and escalator clauses based on foreign    price indexes or any other indexation mechanisms are no longer valid. Prices    and tariffs resulting from those clauses were converted into Argentine pesos    at a Ps.1 = US$ 1 parity. Pursuant to such law, the Government is entitled    to renegotiate the terms of these contracts based on the following criteria:    (i) the impact of tariffs on the economy and its effect on people’s income, (ii) service quality and investment plans, as contractually agreed, (iii) the customers interests andaccess to the services, (iv) the security of the systems, and (v) the company’sprofitability.

|   | Accounting for the effects of the devaluation    / Capitalization of exchange losses / Inflation accounting |
|--------|-------------------------------------------------------------------------------------------------------------|

In accordance    with Resolution N° 1/02    of the CPCECABA, assets and liabilities denominated in foreign currencies    as of December 31, 2001 were valued at the exchange rate of Ps. 1 per U.S.    dollar or its equivalent in any other foreign currency (the exchange rate    in effect when the exchange market was suspended). The effects of the devaluation    were recognized during fiscal year 2002. However, as permitted by Resolution    MD No.3/02 of the CPCECABA, during 2002 the Company capitalized certain foreign    currency exchange losses related to foreign currency liabilities existingat January 6, 2002 as part of cost of construction of the fourth-line.

As a result of the inflationary environment in Argentina during 2002, the CPCECABA approved on March 6, 2002, a resolution reinstating the application of inflation accounting in financial statements as from January 1, 2002.

|   | Deferral of the deduction of the exchange    difference from income tax |
|--------|-------------------------------------------------------------------------|

The net negative results caused by the devaluation of the Argentine peso on January 11, 2002 are deductible from taxable income over five years, beginning in 2002.

F-19

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(InArgentine Pesos, except as otherwise indicated)

| **13.**  | **Subsequent    events (continued)** |
|---------------|--------------------------------------|
|          |                                 |   |
|          | **a.**                          | **Argentine        economic situation and its impact on the Company’s financial position    (continued)** |

**Impact      on the Company’s financial position and results of operations – Defaultand going concern**

The new macroeconomic    scenario after enactment of the Public Emergency Law deeply changed the economic-financial    equation of the Company. The significant effect of the devaluation, within    a context where revenues remained unchanged as a consequence of the Pesification    of rates and financial debts primarily denominated in foreign currency, affected    the Company’s financial position, results of operations and cash generationability to comply with financial obligations. 

As a consequence,    on April 22, 2002 Transener publicly announced the suspension of principal    and interest payments on its financial debts. In addition, during 2002 Transener    did not comply with a debt covenant contained in the Floating Rate Notes    agreement, resulting in another event of default as defined in such debt    agreement. Due to cross-default provisions in the agreements that govern    the Company’s financial debts, this event of default also constituted an event of default under all other debt agreements. As a result of the defaults, creditors have the right to request the accelerated payment of the Company’s    financial debts. Transener retained an international financial advisor to    develop arestructuring plan for its aggregate financial debts.

As a result    of the Company’s suspension of principal and interest payments on its financial debts, the Company did not pay the amount due at its maturity, totaling US$ 1.9 million, in connection with a foreign currency forward-exchange contract matured on April 25, 2002. In addition, as a result of the Company’s    default, the swap agreements with original maturities in August 2002 and    2003 were early terminated. The early termination resulted in the recognitionof a US$ 1.7 million loss that is still pending of payment. 

Regarding    the renegotiation of the concession agreements, the Company filed all information    as required by the government, which included information on the impact caused    by the economic crisis on the Company’s financial position and its    revenues, the pre-existing mechanisms for tariffs adjustments, operating    costs, indebtedness, payment commitments with the government and on future    and on-going investments. However, the Company cannot anticipate the outcomeof the renegotiation process.

On September 11, 2003, the Company was served notice of an involuntary bankruptcy petition filed against it by an alleged corporate bond holder amounting to US$ 0.1 million. The Company has requested the dismissal of the petition and is pending resolution as of the date of issuance of these financial statements. In addition, the Company is also aware of certain summary attachment proceedings filed against it by persons alleging to be holders of corporate bonds. The Company has been served with process and filed the required formal responses to each of these claims. Trade account receivables for US$ 0.1 are restricted in connection with these summary attachment proceedings.

At the date    of issuance of these financial statements, mutual investment funds and local    private managed pension funds are the primary creditors of the Company’sdebts. 

The Company’s consolidated financial statements have been prepared on the going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. However, the circumstances abovementioned raise substantial doubt about the Company’s ability to continue as a going concern. Management plans to continue as a going concern include the renegotiation of its concession agreements and its financial debts on favorable terms. However, no assurance can be given that (i) the Company will restructure its financial debts on favorable terms or the Company’s creditors will not request the accelerated payment of the financial debts,and (ii) the Company will renegotiate the concession agreements on favorable terms. Therefore, the Company’sconsolidated financial statements could not include any adjustment that mightresult from the outcome of this uncertainty.

F-20

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(InArgentine Pesos, except as otherwise indicated)

| **13.** | **Subsequent events    (continued)** |
|---------|--------------------------------------|
|    |                                 |   |
|    | **b.**                               | **Adoption    of new accounting standards** |

Effective    January 1, 2003 the Company adopted new accounting pronouncements related    to valuation and disclosure criteria. The principal differences of such new    standards, as they relate to the Company, are (a) the accounting for deferred    income taxes; (b) the use of discounted values for the measurement of certain    assets and liabilities; (c) the accounting for derivative financial instruments    at fair value; (d) the full accrual of vacation expense in the period the    employee renders service to earn such vacation; and (e) the presentation    of the statement of cash flows. As required by Argentine GAAP, in presenting    2003 financial statements, the accompanying consolidated financial statements    as well as the 2002 consolidated financial statements were restated for comparative    purposes to retroactively reflect the adopted changes in accounting principles,    except for certain valuation and disclosure criteria that in accordance with    the transition provisions were applied prospectively. The impact of such    an adoption on reported amounts of shareholders’ equity and net income    as of and for the year ended December 31, 2001, respectively, is summarizedas follows:

|            | **Shareholders’ equity** |   | **Net income** |   |
|-----------------|-------------------------------|--------|----------------|--------|
|            |                               |   |                |   |
| As reported     | Ps.                           |   | 294,851,293    |   | Ps. | 20,856,160 |   |
| As restated (i) | Ps.                           |   | 274,270,110    |   | Ps. | 21,533,317 |   |

(i) Amounts expressed in historical Argentine pesos (before inflation restatement applied as from January 1, 2002).

|   | **c.** | **Change of shareholders** |
|--------|--------|----------------------------|

In January    2004, The Argentine Investment Company sold its 7.514% ownership interestin Citelec to Dolphin Management Fund (“DMF”). 

In addition,    in March 2004, DMF entered into a purchase agreement with National Grid to    acquire an additional 42.493% ownership interest in Citelec. However, in    April 2004, Petrobras Energía S.A. (“Petrobras”, formerly Pecom Energía S.A.) notified National Grid the exercise of its preemptive rights to acquire 0.007% of its ownership interest in Citelec. This transaction is subject to approval by the Argentine government and by the ENRE. Once the Argentine government and the ENRE approve this transaction the Company’sshareholders will be Petrobras and DMF, each having a 50% ownership interest. 

|   | **d.** | **Foreign activities** |
|--------|--------|------------------------|

In August    2002, Transener formed Transener Internacional Ltda (“Transener Brazil”)    to provide electricity transmission, operation and maintenance services as    well as consulting and other related services in Paraguay, Uruguay, Brazil,Peru, Venezuela, Ecuador and Colombia. 

In May 2003,    Transba formed Transba Internacional S.A. (“Transener Panama”)    to provide electricity transmission, operation and maintenance services as  well as consulting and other related services in Panama and other countries.

| **14.** | **Differences    between Argentine GAAP and US GAAP** |
|---------|-------------------------------------------------------|

The    Company’s consolidated financial statements have been prepared in accordance with Argentine GAAP, which differ in certain significant respects from US GAAP. Such differences involve methods of measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by US GAAP and Regulation S-X of the SEC. These consolidated financial statements include solely a reconciliation of net income and shareholders’ equity    to US GAAP. Pursuant to Item 17 of Form 20-F, this reconciliation does not    include disclosure of all information that would be required by US GAAP andRegulation S-X of the SEC.

F-21

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(InArgentine Pesos, except as otherwise indicated)

| **14.** | **Differences    between Argentine GAAP and US GAAP (continued)** |
|---------|-------------------------------------------------------------------|
|    |                                                              |   |
|    | *I.*                                                         | *Difference    in measurement methods* |

The principal differences between Argentine GAAP and US GAAP are described below, together with an explanation, where appropriate, of the method used in the determination of the necessary adjustments.

|                                              | **Year ended December 31,** |         |
|---------------------------------------------------|-----------------------------|--------------|
|                                              |                             |         |
|                                              | **2001**                    |         | **2000****(Unaudited)** |   |
|                                              |                             |         |   |  |   |
| **Reconciliation    of net income:**              |                        |         |   |   |   |   |
| Net income as reported under Argentine GAAP       | Ps.                         | 20,856,160   |   | Ps. | 19,520,767 |   |
| **US GAAP adjustments:**                          |                        |         |   |   |   |   |
| Provision for vacation (a)                        |                        | (58,795      | ) |   | (155,132 | ) |
| Start-up and organization costs (b)               |                        | 4,367,475    |   |   | 3,373,794 |   |
| Capitalization of interest costs (c)              |                        | (328,137     | ) |   | 2,913,036 |   |
| Depreciation of property, plant and equipment (d) |                        | (7,361,640   | ) |   | (10,579,990 | ) |
| Devaluation of the Argentine peso (e)             |                        | (281,119,627 | ) |   | — |   |
| Voluntary retirement program (f)                  |                        | (139,130     | ) |   | (139,131 | ) |
| Valuation of property plant and equipment (g)     |                        | 1,753,975    |   |   | 1,753,975 |   |
| Increasing-rate debt (h)                          |                        | (6,074       | ) |   | (76,304 | ) |
| Derivative financial instruments (i)              |                        | 1,935,218    |   |   | — |   |
| Accounting for multiple element arrangements (j)  |                        | 11,400,000   |   |   | 12,200,000 |   |
| Deferred income taxes (k)                         |                        | (4,504,956   | ) |   | (4,819,980 | ) |
| Minority interest (l)                             |                        | 96,067,551   |   |   | (1,393,933 | ) |
|                                              |                             |         |  |   |
| Net (loss) income under US GAAP                   | Ps.                         | (157,137,980 | ) | Ps. | 22,597,102 |   |
|                                              |                             |         |  |   |

|                                                    |   **As      of****December 31, 2001** |         |
|---------------------------------------------------------|-------------------------------------------------|--------------|
|                                                    |                                                 |         |
| **Reconciliation    of shareholders’ equity:**     |                                            |         |   |
| Total    shareholders’ equity under Argentine GAAP | Ps.                                             | 294,851,293  |   |
| **US GAAP adjustments:**                                |                                            |         |   |
| Provision for vacation (a)                              |                                            | (2,103,927   | ) |
| Start-up and organization costs (b)                     |                                            | (6,925,601   | ) |
| Capitalization of interest costs (c)                    |                                            | 12,247,857   |   |
| Depreciation of property, plant and equipment (d)       |                                            | (75,929,451  | ) |
| Devaluation of the Argentine peso (e)                   |                                            | (281,119,627 | ) |
| Voluntary retirement program (f)                        |                                            | 4,422,506    |   |
| Valuation of property plant and equipment (g)           |                                            | (55,250,251  | ) |
| Increasing-rate debt (h)                                |                                            | (192,368     | ) |
| Derivative financial instruments (i)                    |                                            | (1,386,169   | ) |
| Accounting for multiple element arrangements (j)        |                                            | 4,000,000    |   |
| Deferred income taxes (k)                               |                                            | 6,312,254    |   |
| Minority interest (l)                                   |                                            | 141,486,772  |   |
|                                                    |                                                 |         |
| Shareholders’ equity    under US GAAP              | Ps.                                             | 40,413,288   |   |
|                                                    |                                                 |         |

| **Description    of changes in shareholders’ equity under US GAAP:** |  **Year    ended    December 31, 2001** |         |
|---------------------------------------------------------------------------|----------------------------------------------|--------------|
|                                                                      |
|                                                                      |                                              |         |
| Shareholders’ equity    as of the beginning of the year              | Ps.                                          | 215,934,554  |   |
| Distribution of dividends                                                 |                                         | (16,980,000  | ) |
| Other comprehensive loss                                                  |                                         | (1,403,286   | ) |
| Net loss for the year                                                     |                                         | (157,137,980 | ) |
|                                                                      |                                              |         |
| Shareholders’ equity    as of the end of the year                    | Ps.                                          | 40,413,288   |   |
|                                                                      |                                              |         |

F-22

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**Compañía Inversora  en Transmisión Eléctrica Citelec S.A.  Notes to the Consolidated Financial  Statements**(In Argentine Pesos, except as otherwise  indicated)

| **14.** | **Differences between Argentine GAAP and      US GAAP (continued)** |
|---------|---------------------------------------------------------------------|

|   |                                       |                       |
|--------|--------------------------------------------|----------------------------|
|   | **Description of      reconciling items:** |
|   |                                       |                       |
|   |  **(a)**                              | **Provision for vacation** |

Under Argentine GAAP, there are no specific requirements governing the recognition of accrual for vacations.  The accepted practice in Argentina is to expense vacation when taken and to accrue only the amount of vacation in excess of normal remuneration.

Under US GAAP, vacation expense is fully accrued in the period the employee renders services to earn such vacation.

|   |  **(b)** | **Start-up and organization costs** |
|--------|---------------|-------------------------------------|

Under Argentine GAAP, the Company has capitalized start-up and organization costs as intangible assets in the accompanying consolidated balance sheets. These costs are primarily being amortized on a straight-line basis over 5 years. Included as start-up and organization costs are fees and expenses related to the issuance of certain financial debts amounting to Ps. 1,213,203 as of December 31, 2001. These fees and expenses are being amortized on a straight-line basis over the term of the debt agreements.  

Under US GAAP, start-up and organization costs are expensed as incurred and classified as operating costs. Fees and expenses related to the issuance of certain financial debts are capitalized and amortized over the term of the debt agreements using the effective interest method of amortization.

|   |  **(c)** | **Capitalization of interest costs** |
|--------|---------------|--------------------------------------|

Under Argentine GAAP, the Company did not capitalize interest incurred on construction in progress.

Under      US GAAP the Company applies the provisions of Statement of Financial Accounting      Standards ("SFAS") No. 34, "Capitalization of Interest Cost",      which requires interest capitalization on assets which have a period of      time to get them ready for their intended use. In accordance with these      requirements, the Company capitalized interest costs amounting to Ps. 410,173      and Ps. 3,169,035 for the years ended December 31, 2001 and 2000, respectively.      The net US GAAP adjustments include amortization of the capitalized interest      amounting to Ps. 738,310 and Ps. 255,999 for the years ended December 31,2001 and 2000, respectively.

|   | **(d)** | **Depreciation of property, plant      and equipment** |
|--------|---------|--------------------------------------------------------|

Under Argentine GAAP, property, plant and equipment transferred to the Company as a result of the privatization processes are depreciated based on some technical formulas. 

Under US GAAP, property, plant and equipment are depreciated based on the straight-line method.

|   | **(e)** | **Devaluation of the Argentine      peso** |
|--------|---------|--------------------------------------------|

As discussed in Note 13, the Argentine government declared exchange holidays all working days between December 21, 2001 and December 31, 2001. On January 11, 2002, when the exchange market first opened, the exchange rate was Ps. 1 to US$ 1.4 (buying rate) and Ps. 1 to US$ 1.6 (selling rate). As of December 31, 2001, under Argentine GAAP, the Company accounted for its foreign currency assets and liabilities at an exchange rate of Ps. 1 to US$ 1. The effects of the devaluation were recognized during fiscal year 2002.

Under      US GAAP, the Company applied the guidance set forth in the EITF D-12 “Foreign Currency Translation – Selection of the Exchange Rate When Trading is Temporarily Suspended”,      that states that when exchangeability between two currencies is temporarily      lacking at the balance sheet date, the first subsequent rate at which exchange      could be made shall be used. Accordingly, under US GAAP, the Company accounted      for its foreign currency assets and liabilities using the buying rate of      Ps. 1.4 and the selling rate of Ps. 1.6 to the dollar, as appropriate.      The reconciling item reflects the timing difference for the recognitionof the foreign currency exchange loss. 

F-23

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**Compañía Inversora  en Transmisión Eléctrica Citelec S.A.  Notes to the Consolidated Financial  Statements**(In Argentine Pesos, except as otherwise  indicated)

| **14.** | **Differences between Argentine      GAAP and US GAAP (continued)** |
|---------|---------------------------------------------------------------------|
|    |                                                                |   |
|    | **(f)**                                                             | **Voluntary retirement program** |

Under Argentine GAAP, costs associated with voluntary retirement programs incurred in the start-up of the Company at the time of the privatization were capitalized as intangible assets and amortized on a straight-line basis over 5 years. 

Under US GAAP, these costs were considered as a liability assumed in determining the value assigned to the property, plant and equipment transferred by the government as a result of the privatization. As a result, these costs increased the cost of property, plant and equipment under US GAAP. The difference between Argentine GAAP and US GAAP relates to the different amortization period.

|   | **(g)** | **Valuation of property, plant and equipment** |
|--------|---------|------------------------------------------------|

Under Argentine    GAAP, the value assigned to property, plant and equipment transferred by    the government as a result of the privatization of the Company’s subsidiaries    was determined based on the purchase price paid for the percentage of ownership    interest in these companies. The Company paid the purchase price of the privatized    companies using government bonds that the Company had acquired from the market,considering the government recognized an amount greater than its fair value.

Under US GAAP, the purchase price was determined based on the consideration paid plus the fair market value of the government bonds at the time of payment. As the fair market value was below the amount recognized by the government, the purchase price under US GAAP was lower than the purchase price under Argentine GAAP, resulting in a lower value assigned to property, plant and equipment. This adjustment gave rise to differences in depreciation expense.

|   | **(h)** | **Increasing-rate debt** |
|--------|---------|--------------------------|

The Class 3 Floating Rate Notes accrues interest at a variable-increasing rate based on LIBOR plus basic points.  Under Argentine GAAP, interest is recognized based on the effective rate applicable to each interest period. 

Under      US GAAP, in accordance with EITF 86-15 “Increasing Rate Debt”,      the Company is recognizing the periodic interest cost related to the FloatingRate Notes using the effective interest method over the debt term.

|   | **(i)** | **Derivative financial instruments** |
|--------|---------|--------------------------------------|

As discussed    in Note 9, from time to time, the Company uses derivative financial instruments    as part of its overall strategy to manage its exposure to market risks associated    with fluctuations in interest rates and exchange rates. The counterparties    to these instruments generally are major financial institutions. The Company    does not hold or issue derivative instruments for trading purposes. A description    of the Company’s derivative instruments activity during the years endedDecember 31, 2001 and 2000 follows:

Foreign currency forward-exchange contracts

In order to manage its foreign currency exposure, during the years ended December 31, 2000 and 2001, the Company entered into foreign currency forward-exchange contracts with financial institutions to effectively convert its yen-denominated short-term debts to US dollar-denominated debts. 

As of December 31, 2000, the Company had three foreign currency forward-exchange contracts outstanding with an aggregate notional amount of Yen 6,323,500,000 maturing in April and August 2001. These foreign currency forward-exchange contracts covered yen-denominated short-term debts with Bank of Tokyo-Mitsubishi and Banco Rio de la Plata S.A. amounting to Yen 4,718,500,000 and Yen 1,605,000,000, respectively, with the same maturity dates. 

As of December 31, 2001, the Company had a foreign currency forward-exchange contract outstanding with JPMorgan Chase Bank for an aggregate notional amount of Yen 2,452,000,000 covering a yen-denominated short-term debt with Bank of Tokyo Mitsubishi maturing on April 25, 2002. 

F-24

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**Compañía Inversora  en Transmisión Eléctrica Citelec S.A.  Notes to the Consolidated Financial  Statements**(In Argentine Pesos, except as otherwise  indicated)

| **14.** | **Differences between Argentine      GAAP and US GAAP (continued)** |
|---------|---------------------------------------------------------------------|
|    |                                                                |   |
|    | **(i)**                                                             | **Derivative financial instruments      (continued)** |

Under Argentine GAAP and, until December 31, 2000, also under US GAAP, premiums on foreign currency forward-exchange contracts were amortized over the life of the respective contracts. Gains and losses on the hedge contracts were reported in earnings and offset the gains and losses on the foreign currency exposure. The fair values of the foreign currency forward-exchange contracts were not recognized in the consolidated financial statements. 

Effective      January 1, 2001, under US GAAP the Company adopted Statement of Financial      Accounting Standards No.    133, Accounting for Derivative Instruments and Hedging Activities, and its      corresponding amendments (SFAS No. 133). SFAS No. 133 establishes accounting      and reporting standards requiring that every derivative instrument be recorded      in the balance sheet as either an asset or liability measured at its fair      value. SFAS No. 133 requires that changes in the derivative's fair value      be    recognized currently in earnings unless specific hedge accounting criteria      are met. Special accounting for qualifying hedges allows a derivative's      gains    and losses to offset related results on the hedged item in the income statement,      and requires that a company must formally document, designate, and assess      the effectiveness of transactions that receive hedge accounting. In accordance      with the transition provisions of SFAS No 133, the Company recorded      a net-of-tax cumulative-effect-type loss adjustment of Ps. 235,653 (Ps.      153,174    net of minority interest) in earnings to reflect the impact of the adoption      of this standard. This loss relates to the fair market value of the foreign      currency forward-exchange contracts outstanding as of December 31, 2000      totaling    Ps. 362,543. In accordance with SFAS No. 133, although these derivative instruments      were used to hedge liabilities denominated in foreign currency, no special      or hedge accounting was needed because FAS No. 52 requires these liabilities      be translated at current spot exchange rates and the resulting gains and      losses    be reported in earnings. Therefore, changes in the fair market value of these    derivative financial instruments were also recognized in earnings.

Foreign currency option contract

In order to manage its foreign currency exposure, during the year ended December 31, 2001 the Company entered into a foreign currency option contract with Bank of America, pursuant to which the Company has the option to buy Yen 3,130,000,000 at a strike price of Yen 119 per US dollar. This foreign currency option contract covers a yen-denominated short-term debt maintained with Bank of Tokyo Mitsubishi which matures on August 2, 2002. 

Under Argentine GAAP, the premium on the foreign currency option contract is being amortized over the life of the respective contract. The fair value of the foreign currency option contract is not recognized in the consolidated financial statements. 

Under US      GAAP, in accordance with SFAS No. 133 this derivative financial instrument      has been recognized on the    company’s balance sheet at its fair value, with changes in fair value    reported in earnings. 

Interest rate swap

In order to manage its interest rate exposure, in June 2001 the Company entered into two interest rate swap agreements with Bank of America to effectively convert its Floating Rate Notes from dollar-denominated variable-rate debt to dollar-denominated fixed-rate debt.  Under the swap agreements, the Company pays interest at a fixed rate of 4.6225% and receives interest at a variable rate equal to LIBOR. The swap agreements have original maturities in August 2002 and 2003.

Under Argentine GAAP, any differential to be paid or received is accrued and recognized as an adjustment to interest expense in the statement of income. The related accrued receivable or payable is included as an adjustment to interest payable. The fair values of the swap agreements are not recognized in the consolidated financial statements. 

Under      US GAAP, the interest rate swaps have been designated as a hedge of the      changes in cash flows of the variable-rate debts related to fluctuations      in interest rates. In accordance with SFAS No. 133, the swaps have been      recorded on the balance sheet at their fair values. The swaps have been      classified as cash flow hedges, and accordingly, the effective portion      of the swap’s loss has been reported in other comprehensive income      (loss). Amounts accumulated in other comprehensive income (loss) are reclassifiedto earnings when the related interest payments affect earnings. 

F-25

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A. Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **14.** | **Differences between Argentine GAAP and US GAAP (continued)** |
|---------|----------------------------------------------------------------|
|    |                                                           |   |
|    | **(j)**                                                        | **Accounting for multiple element    arrangements** |

As      discussed in Note 8, in October 1997 Transener obtained the exclusive license      to construct, maintain and operate the fourth line of the Comahue-Buenos      Aires electricity transmission system. The Company received subsidies from      CAMMESA totaling US$ 80 million during the construction phase of the contract,      which ended in December 1999. The contract also establishes a fee to be paid      to the Company in monthly equal and consecutive installments during 15 yearsas from December 1999 (the date operations began). 

Under Argentine    GAAP, there is no guidance to be followed when a contract has multiple deliverables.    The Company has considered the construction, operation and maintenance as    a single unit of accounting. Therefore, subsidies received from CAMMESA during    the construction phase were recognized as “customers’ prepayments” within    the non-current portion of trade accounts payable and are being recognizedin income on a straight-line basis over 15 years.

Under US GAAP, revenue was allocated to the multiple elements based on their estimated fair value at the date the agreement was signed.  The US GAAP adjustment relates to the result of the construction phase, which is being recognized, under Argentine GAAP, on a straight-line basis over 15 years.

|   |  **(k)** | **Deferred income taxes** |
|--------|---------------|---------------------------|

Under    Argentine GAAP, income taxes are recognized on the basis of amounts currently    due in accordance with Argentine tax law and regulations. Temporary differences    between the financial reporting and income tax basis of accounting are thereforenot considered in recognizing income taxes. 

Under US GAAP,    the Company applies the principles of Statement of Financial Accounting Standards    ("SFAS") No. 109, "Accounting for Income Taxes", which    requires a comprehensive liability method of accounting for income taxes.    Under the comprehensive liability method, deferred income taxes are recognized    for the future tax consequences attributable to differences between the financial    statement carrying amounts of existing assets and liabilities and their respective    tax basis. Deferred tax assets are also recognized for tax loss carryforwards.    SFAS 109 requires companies to record a valuation allowance for that component    of net deferred tax assets which does not meet the more likely than not criterion    for realization. Deferred tax assets and liabilities are measured using enacted    tax rates expected to apply to taxable income in the years in which those    temporary differences are expected to be recovered or settled. The effect    on deferred tax assets and liabilities of a change in tax rates is recognizedin income in the period that includes the enactment date.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning in making these assessments. In accordance with SFAS 109, the Company is required to continuously evaluate the recoverability of deferred tax assets. This evaluation is made based on internal projections which are routinely updated toreflect more recent operating trends. Based on current financial projections, the Company is uncertain that it will recover its deferred tax assets through future taxable income. Accordingly, the Company has established a valuation allowance against its deferred tax assets.

In addition, the US GAAP adjustment includes the effect on deferred income taxes of the foregoing reconciling items, as appropriate.

|   | **(l)** | **Minority interest** |
|--------|---------|-----------------------|

This    adjustment represents the effect on minority interest of the foregoing reconcilingitems, as appropriate.

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A. Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **14.** | **Differences between Argentine    GAAP and US GAAP (continued)** |
|---------|-------------------------------------------------------------------|
|    |                                                              |   |   |
|    | *II.*                                                             | *Additional disclosure requirements* |
|    |                                                              |   |   |
|    | **(a)**                                                           | **Statement of income classification    differences** |
|    |                                                              |   |   |
|    | **Operating income**                                              |

Under Argentine    GAAP, the recoveries of certain expenses have been included within “Other income, net” in    the accompanying consolidated statements of income. Under US GAAP, such items    would have been classified as a reversal to the amounts in the line items    which were originally recorded. Operating income under US GAAP but using    Argentine GAAP numbers would have been Ps. 88.2 million and Ps. 88.9 millionfor the years ended December 31, 2001 and 2000, respectively.

|   | **(b)** | **Statements of cash flows** |
|--------|---------|------------------------------|

As    required by Argentine GAAP, the Company presents the statements of sourcesand uses of funds in the primary financial statements.

Under US GAAP,    the Company is required to present the statements of cash flows in accordance    with SFAS 95, “Statement of Cash Flows”.  The presentation of    the statements of cash flows under US GAAP but using Argentine GAAP numbersfollows:

**Consolidated Statements of Cash Flows for the years ended December 31, 2001 and 2000**(In Argentine Pesos, except as otherwise indicated)

|                                                                                         | **2001** |        | **2000****(Unaudited)** |   |
|----------------------------------------------------------------------------------------------|----------|-------------|-------------------------|--------|
|                                                                                         |          |        |                         |   |
| **Cash  flows from operating activities:**                                                   |     |        |                    |   |   |   |
| Net income for the year                                                                      | Ps.      | 20,856,160  |                    | Ps.    | 19,520,767 |   |
| **Adjustments to reconcile net income to cash flow from operating activities:**              |     |        |                    |   |   |   |
|      Financial    results                                           |     | 3,282,201   |                    |   | 1,824,008 |   |
|      Depreciation    of property, plant and equipment               |     | 20,656,895  |                    |   | 18,928,260 |   |
|      Amortization    of intangible assets                           |     | 5,201,590   |                    |   | 5,915,786 |   |
|      Amortization    of other assets                                |     | 19,145,136  |                    |   | 18,106,863 |   |
|      Loss    (gain) from sale of property, plant and equipment      |     | 76,016      |                    |   | (29,408 | ) |
|      Provision    for contingencies                                 |     | (238,344    | )                       |   | 3,343,353 |   |
|      Minority    interest                                           |     | 12,646,698  |                    |   | 12,007,860 |   |
|      Income    tax expense                                          |     | 15,967,233  |                    |   | 12,357,658 |   |
| **Changes in certain assets and liabilities, net of non-cash:**                              |     |        |                    |   |   |   |
|      (Increase)    in trade accounts receivable                     |     | (1,503,460  | )                       |   | (3,813,151 | ) |
|      Decrease in other receivables         |     | 2,683,501   |                    |   | 3,877,701 |   |
|      (Increase) in other assets            |     | (14,558,008 | )                       |   | (737,052 | ) |
|      (Increase)    in intangible assets                             |     | (442,376    | )                       |   | (1,905,577 | ) |
|      (Decrease)    in trade accounts payable                        |     | (6,269,208  | )                       |   | (16,143,111 | ) |
|      Increase    (decrease) in salaries and social security payable |     | 274,926     |                    |   | (333,632 | ) |
|      (Decrease)    in taxes payable                                 |     | (12,714,722 | )                       |   | (10,015,693 | ) |
|      (Decrease)    in provisions                                    |     | (611,088    | )                       |   | (507,401 | ) |
|      (Decrease) in other liabilities       |     | (746        | )                       |   | (3,412 | ) |
|      (Decrease)    in accrued interest                              |     | (2,591,668  | )                       |   | (1,374,269 | ) |
|                                                                                         |          |        |                         |   |
| **Net cash provided by operating activities**                                                | Ps.      | 61,860,736  |                    | Ps.    | 61,019,550 |   |
|                                                                                         |          |        |                         |   |

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A. Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **14.** | **Differences between    Argentine GAAP and US GAAP (continued)** |
|---------|-------------------------------------------------------------------|
|    |                                                              |   |
|    |  **(b)**                                                     | **Statements of cash flows (continued)** |

|                                                                                                                                                   | **2001**           |        | **2000****(Unaudited)** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|-------------|-------------------------|--------|
|                                                                                                                                                   |                    |        |                         |   |
| **Cash flows from investing activities:**                                                                                                              |     |        |               |   |
| Acquisition of property, plant and equipment                                                                                                           | Ps.                | (30,440,399 | )                       | Ps.    | (26,124,511 | ) |
| Net proceeds from sale of fixed assets                                                                                                                 |               | 1,995,130   |                    |   | 3,680,875 |   |
| Increase in non-current investments                                                                                                                    |               | (2,000,000  | )                       |   | — |   |
|                                                                                                                                                   |                    |        |                         |   |
| **Net cash  used in investing activities**                                                                                                             | Ps.                | (30,445,269 | )                       | Ps.    | (22,443,636 | ) |
|                                                                                                                                                   |                    |        |                         |   |
| **Cash flows from financing activities:**                                                                                                              |               |        |                    |   |   |   |
| Net increase (decrease) in short-term debt                                                                                                             | Ps.                | 7,892,732   |                    | Ps.    | (18,741,789 | ) |
| Repayment of long-term debt                                                                                                                            |               | (10,870,524 | )                       |   | (1,935,165 | ) |
| Proceeds from issuance of long-term debt                                                                                                               |               | 6,000,000   |                    |   | — |   |
| Payment of debt related to the acquisition of property, plant and equipment                                                                            |               | (1,480,567  | )                       |   | — |   |
| Payment of cash dividends to minority interests                                                                                                        |               | (9,870,000  | )                       |   | (9,450,000 | ) |
| Payment of cash dividends to shareholders                                                                                                              |               | (16,980,000 | )                       |   | (15,450,000 | ) |
|                                                                                                                                                   |                    |        |                         |   |
| **Net cash used in financing activities**                                                                                                              | Ps.                | (25,308,359 | )                       | Ps.    | (45,576,954 | ) |
|                                                                                                                                                   |                    |        |                         |   |
| Increase (decrease) in cash and cash equivalents                                                                                                       |               | 6,107,108   |                    |   | (7,001,040 | ) |
| Cash and    cash equivalents as of the beginning of the year                |               | 1,718,134   |                    |   | 8,719,174 |   |
|                                                                                                                                                   |                    |        |                         |   |
| Cash and cash equivalents as of the end of the year                                                                                                    | Ps.                | 7,825,242   |                    | Ps.    | 1,718,134 |   |
|                                                                                                                                                   |                    |        |                         |   |
| **Supplemental cash flow information:**                                                                                                                |               |        |                    |   |   |   |
|                                                                                                                                                   |               |        |                    |   |   |   |
| **Cash paid during the years for:**                                                                                                                    |               |        |                    |   |   |   |
| Interest                                                                                                                                               | Ps.                | 41,269,350  |                    | Ps.    | 46,045,339 |   |
| Income tax                                                                                                                                             |               | 12,768,616  |                    |   | 14,368,168 |   |
|                                                                                                                                                   |               |        |                    |   |   |   |
| **Non-cash transactions:**                                                                                                                             |               |        |                    |   |   |   |
| Acquisition of property, plant and equipment through an increase in accounts payable                                                                   | Ps.                | —      |                    |   | 7,943,127 |   |

Under US GAAP, the total amounts of cash and cash equivalents at the end of the years shown in the consolidated statements of cash flows are required to be the same amounts as similarly titled line items shown in the consolidated balance sheets, as of those dates.  The following table reconciles the balances included as cash and banks and current investments in the balance sheet to the total amounts of cash and cash equivalents at the beginning and end of the year shown in the statements of cash flows:

|                                                                  | **As of December 31,** |      |
|-----------------------------------------------------------------------|------------------------|-----------|
|                                                                  |                        |      |
|                                                                  | **2001**               |      | **2000****(Unaudited)** |   |
|                                                                  |                        |      |  |   |
| Cash and banks                                                        | Ps.                    | 4,761,248 |   | Ps. | 938,179 |   |
| Current investments                                                   |                   | 3,083,422 |   |   | 779,955 |   |
|                                                                  |                        |      |  |   |
| **Total cash and banks and current investments as per balance sheet** |                   | 7,844,670 |   |   | 1,718,134 |   |
|                                                                  |                        |      |  |   |
| Less: Items not considered cash and cash equivalents                  |              |      |    |   |
| – Government    bonds                                            |                   | (19,428   | ) |   | — |   |
|                                                                  |                        |      |  |   |
| **Cash and cash equivalents as shown in the statement of cash flows** | Ps.                    | 7,825,242 |   | Ps. | 1,718,134 |   |
|                                                                  |                        |      |  |   |

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**Compañía Inversora  en Transmisión Eléctrica Citelec S.A.  Notes to the Consolidated Financial  Statements**(In Argentine Pesos, except as otherwise  indicated)

| **14.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | **Differences between Argentine      GAAP and US GAAP (continued)** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **(c)**                                                             | **Comprehensive income (loss)** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                |   |
|           On July 1, 1998, the Company      adopted SFAS No. 130, "Reporting Comprehensive Income". SFAS      No. 130 establishes guidelines for the reporting and display of comprehensive      income and its components (revenues, expenses, gains and losses) in a full      set of general purpose financial statements. SFAS No. 130 requires that      all items that are required to be recognized under accounting standards      as components of comprehensive income be reported in a financial statement      that is displayed with the same prominence as other financial statements.      Accumulated other comprehensive (loss) income is presented below, net of    income tax benefit/expense: |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                |

|   |                                                                                                                                           | **Year ended December      31,** |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|
|   |                                                                                                                                           |                                  |
|   |                                                                                                                                           | **2001**                         |   | **2000****(Unaudited)** |
|   |                                                                                                                                           |                                  |  |  |   |  |  |
|   | Net (loss)      income under US GAAP                                                                                                           | Ps.                              | (157,137,980 | ) |   | Ps. | 22,597,102 |
|   | Other comprehensive loss:                                                                                                                      |                             |   |   |   |   |   |
|   | Change in fair      value of derivative financial instruments (net of income taxes of Ps. 1,162,485      and minority interest of Ps. 755,616) |                             | (1,403,286 | ) |   |   | — |
|   |                                                                                                                                           |                                  |  |  |   |  |  |
|   | Comprehensive      (loss) income                                                                                                               | Ps.                              | (158,541,266 | ) |   | Ps. | 22,597,102 |
|   |                                                                                                                                           |                                  |  |  |   |  |  |
|   |                                                                                                                                           |                             |   |   |   |   |   |

|   |                                      | **As of December      31,** |
|--------|-------------------------------------------|-----------------------------|
|   |                                      |                             |
|   |                                      |                        | **2001** |   |   |   | **2000****(Unaudited)** |
|   |                                      |                             |  |  |   |  |  |
|   | Accumulated other comprehensive      loss | Ps.                         | (1,403,286 | ) |   | Ps. | — |
|   |                                      |                             |  |  |   |  |  |
|   |                                      |                        |   |   |   |   |   |

| **15.** | **Other financial      statement information**                                                                                |
|---------|-------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                          |   |
|    | The following tables      present additional consolidated financial statement disclosures required      under Argentine GAAP: |
|    |                                                                                                                          |   |
|    | a.                                                                                                                            | Property, plant and equipment,      net |
|    |                                                                                                                          |   |
|    | b.                                                                                                                            | Intangible assets, net |
|    |                                                                                                                          |   |
|    | c.                                                                                                                            | Foreign currency assets and liabilities |
|    |                                                                                                                          |   |
|    | d.                                                                                                                            | Other expenses |

F-29

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**Compañía Inversora  en Transmisión Eléctrica Citelec S.A.  Notes to the Consolidated Financial  Statements**(In Argentine Pesos, except as otherwise  indicated)

| **15.** |   | **Other financial statement      information (continued)** |
|---------|--------|------------------------------------------------------------|
|    |   |                                                       |
|    | **a.** | **Property, plant and equipment,      net**                |
|    |   |                                                       |

|                                | **Original value**                       |   | **Depreciation** |   |           |
|-------------------------------------|------------------------------------------|--------|------------------|--------|----------------|
|                                |                                          |   |                  |   |           |
| **Principal account**               | **As of the beginning of      the year** |   | **Additions**    |   | **Deductions** |   | **Reclassifications** |   | **As of the end of the year** |   | **Accumulatedas of thebeginning ofthe year** |   | **Decreases** |   | **Current yeardepreciation** |   | **Accumulatedas of the endof the year** |   | **Net carrying value****at year-end** |
|                                |                                          |   |                  |   |                |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
| Land                                | 818,020                                  |   | —           |   | (10,811        | ) | — |   | 807,209 |   | — |   | — |   | — |   | — |   | 807,209 |
| Vehicles                            | 6,627,512                                |   | 591,662          |   | (161,647       | ) | — |   | 7,057,527 |   | (4,166,322 | ) | 49,096 |   | (683,836 | ) | (4,801,062 | ) | 2,256,465 |
| Air and heavy equipment             | 2,590,632                                |   | 145,387          |   | —         |   | — |   | 2,736,019 |   | (482,327 | ) | — |   | (97,009 | ) | (579,336 | ) | 2,156,683 |
| Furniture and fixtures              | 1,326,752                                |   | 69,220           |   | —         |   | — |   | 1,395,972 |   | (551,261 | ) | — |   | (130,845 | ) | (682,106 | ) | 713,866 |
| Information systems                 | 3,301,424                                |   | 375,584          |   | —         |   | — |   | 3,677,008 |   | (2,764,479 | ) | — |   | (298,389 | ) | (3,062,868 | ) | 614,140 |
| Transmission lines                  | 383,110,938                              |   | —           |   | —         |   | 3,635,140 |   | 386,746,078 |   | (41,386,233 | ) | — |   | (8,872,723 | ) | (50,258,956 | ) | 336,487,122 |
| Substations and related works       | 292,253,517                              |   | 1,819,592        |   | —         |   | 17,274,948 |   | 311,348,057 |   | (40,181,475 | ) | — |   | (8,698,368 | ) | (48,879,843 | ) | 262,468,214 |
| Building and civil works            | 24,963,222                               |   | 174,298          |   | (186,594       | ) | 3,202,636 |   | 28,153,562 |   | (2,804,699 | ) | 7,017 |   | (688,364 | ) | (3,486,046 | ) | 24,667,516 |
| Labs and maintenance                | 930,555                                  |   | —           |   | —         |   | — |   | 930,555 |   | (525,825 | ) | — |   | (106,114 | ) | (631,939 | ) | 298,616 |
| Communication equipment             | 16,235,868                               |   | 78,067           |   | —         |   | 7,212,265 |   | 23,526,200 |   | (4,410,464 | ) | — |   | (1,077,835 | ) | (5,488,299 | ) | 18,037,901 |
| Miscellaneous                       | 1,645,400                                |   | 47,651           |   | —         |   | — |   | 1,693,051 |   | (1,401,081 | ) | — |   | (130,555 | ) | (1,531,636 | ) | 161,415 |
| Work in progress                    | 53,680,197                               |   | 24,647,880       |   | —         |   | (31,412,505 | ) | 46,915,572 |   | — |   | — |   | — |   | — |   | 46,915,572 |
| Spare parts                         | 31,816,796                               |   | 994,254          |   | (622,603       | ) | 828,066 |   | 33,016,513 |   | — |   | — |   | — |   | — |   | 33,016,513 |
| Advances to suppliers               | 395,431                                  |   | 1,623,947        |   | (1,145,604     | ) | (740,550 | ) | 133,224 |   | — |   | — |   | — |   | — |   | 133,224 |
|                                |                                          |   |                  |   |                |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
| Totals fiscal year 2001             | 819,696,264                              |   | 30,567,542       |   | (2,127,259     | ) | — |   | 848,136,547 |   | (98,674,166 | ) | 56,113 |   | (20,784,038 | ) | (119,402,091 | ) | 728,734,456 |
|                                |                                          |   |                  |   |                |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
| Totals fiscal year 2000 (Unaudited) | 789,231,698                              |   | 34,134,299       |   | (3,669,733     | ) | — |   | 819,696,264 |   | (79,697,511 | ) | 18,266 |   | (18,994,921 | ) | (98,674,166 | ) | 721,022,098 |
|                                |                                          |   |                  |   |                |   |  |   |  |   |  |   |  |   |  |   |  |   |  |

F-30

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**Compañía Inversora  en Transmisión Eléctrica Citelec S.A.  Notes to the Consolidated Financial  Statements**(In Argentine Pesos, except as otherwise  indicated)

| **15.** | **Other financial statement    information (continued)** |
|---------|----------------------------------------------------------|
|    |                                                     |   |
|    | **b.**                                                   | **Intangible assets, net** |
|    |                                                     |   |

|                                | **Original value**                 |   | **Amortization** |   |           |
|-------------------------------------|------------------------------------|--------|------------------|--------|----------------|
|                                |                                    |   |                  |   |                |
| **Principal account**               | **As of the beginningof the year** |   | **Additions**    |   | **Deductions** |   | **As of the endof the year** |   | **Accumulated asof the beginningof the year** |   | **Current yearamortization** |   | **Accumulated asof the end of theyear** |   | **Net carrying      value****at year-end** |
|                                |                                    |   |                  |   |                |   |  |   |  |   |  |   |  |   |  |
| Start-up and organization costs     | 62,346,096                         |   | 442,376          |   | —         |   | 62,788,472 |   | (49,448,078 | ) | (5,201,590 | ) | (54,649,668 | ) | 8,138,804 |
|                                |                                    |   |                  |   |                |   |  |   |  |   |  |   |  |   |  |
| Totals fiscal year 2001             | 62,346,096                         |   | 442,376          |   | —         |   | 62,788,472 |   | (49,448,078 | ) | (5,201,590 | ) | (54,649,668 | ) | 8,138,804 |
|                                |                                    |   |                  |   |                |   |  |   |  |   |  |   |  |   |  |
| Totals fiscal year 2000 (Unaudited) | 60,440,519                         |   | 1,952,617        |   | (47,040        | ) | 62,346,096 |   | (43,532,292 | ) | (5,915,786 | ) | (49,448,078 | ) | 12,898,018 |
|                                |                                    |   |                  |   |                |   |  |   |  |   |  |   |  |   |  |

F-31

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**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **15.** | **Other    financial statement information (continued)** |
|---------|----------------------------------------------------------|
|    |                                                     |   |
|    | **c.**                                                   | **Foreign currency assets and liabilities** |

|                              |   |         |   |                                             |   |                               |   |                                    |        |
|-----------------------------------|--------|--------------|--------|--------------------------------------------------|--------|------------------------------------|--------|-----------------------------------------|-------------|
| **Captions**                      |   | **Currency** |   | **Amount          of****foreign       currency** |   | **Current****exchange       rate** |   | **As          of****December 31, 2001** |        |
|                                   |        |              |        |                                                  |        |                                    |        |                                         |             |   |
| **Assets**                        |   |         |   |                                             |   |                               |   |                                    |        |   |
| **Current assets**                |   |         |   |                                             |   |                               |   |                                    |        |   |
| Cash and banks                    |   | US$          |   | 3,525,745                                        |   | 1                                  |   | Ps.                                     | 3,525,745   |   |
| Investments                       |   | US$          |   | 3,081,342                                        |   | 1                                  |   |                                    | 3,081,342   |   |
| Trade receivables                 |   | US$          |   | 5,087,531                                        |   | 1                                  |   |                                    | 5,087,531   |   |
| Other receivables                 |   | US$          |   | 3,832,447                                        |   | 1                                  |   |                                    | 3,832,447   |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
| **Total current assets**          |   |         |   |                                             |   |                               |   | Ps.                                     | 15,527,065  |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
|                              |   |         |   |                                             |   |                               |   |                                    |        |   |
| **Non-current assets**            |   |         |   |                                             |   |                               |   |                                    |        |   |
| Other receivables                 |   |         |   |                                             |   |                               |   |                                    |        |   |
| Investments                       |   | US$          |   | 978,063                                          |   | 1                                  |   | Ps.                                     | 978,063     |   |
| Trade receivables                 |   | US$          |   | 2,000,000                                        |   | 1                                  |   |                                    | 2,000,000   |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
| **Total non-current assets**      |   |         |   |                                             |   |                               |   | Ps.                                     | 2,978,063   |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
| **Total assets**                  |   |         |   |                                             |   |                               |   | Ps.                                     | 18,505,128  |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
|                              |   |         |   |                                             |   |                               |   |                                    |        |   |
| **Liabilities**                   |   |         |   |                                             |   |                               |   |                                    |        |   |
| **Current liabilities**           |   |         |   |                                             |   |                               |   |                                    |        |   |
| Trade accounts payable            |   | US$          |   | 1,304,102                                        |   | 1                                  |   | Ps.                                     | 1,304,102   |   |
| Short-term and long-term debt     |   | US$          |   | 209,974,275                                      |   | 1                                  |   |                                    | 209,974,275 |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
| **Total current liabilities**     |   |         |   |                                             |   |                               |   | Ps.                                     | 211,278,377 |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
|                              |   |         |   |                                             |   |                               |   |                                    |        |   |
| **Non-current liabilities**       |   |         |   |                                             |   |                               |   |                                    |        |   |
| Customers prepayments             |   | US$          |   | 69,161,290                                       |   | 1                                  |   | Ps.                                     | 69,161,290  |   |
| Long-term debt                    |   | US$          |   | 270,827,922                                      |   | 1                                  |   |                                    | 270,827,922 |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
| **Total non-current liabilities** |   |         |   |                                             |   |                               |   | Ps.                                     | 339,989,212 |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |
| **Total liabilities**             |   |         |   |                                             |   |                               |   | Ps.                                     | 551,267,589 |   |
|                              |   |         |   |                                             |   |                               |   |                                         |             |   |

F-32

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Back to Contents

**Compañía Inversora en Transmisión Eléctrica      Citelec S.A.Notes to the Consolidated Financial Statements**(In Argentine Pesos, except as otherwise indicated)

| **15.** | **Other financial    statement information (continued)** |
|---------|----------------------------------------------------------|
|    |                                                     |   |
|    | **d.**                                                   | **Other expenses** |

|                                                          |         |          |        |               |   |                             |   |                                            |         |   |   |        |   |
|---------------------------------------------------------------|--------------|---------------|-------------|--------------------|--------|----------------------------------|--------|-------------------------------------------------|--------------|--------|--------|-------------|--------|
|                                                          | **Expenses** |          |        |               |   |                             |   |                                            |
|                                                          |              |          |        |               |   |                             |
| **Items**                                                     |         | **Operating** |        | **Administrative** |   | **Total****fiscal year****2001** |   | **Total****fiscal year****2000****(Unaudited)** |         |
|                                                               |         |               |             |               |        |                                  |   |                                                 |              |   |        |             |   |
| Salaries and social security        charges                   |         | Ps.           | 27,694,932  |               | Ps.    | 6,721,643                        |   | Ps.                                             | 34,416,575   |   | Ps.    | 33,462,481  |   |
| Other personnel costs                                         |         |          | 608,997     |               |   | 556,400                          |   |                                            | 1,165,397    |   |   | 1,172,099   |   |
| Fees    for operating services       |         |          | 1,797,818   |               |   | —                           |   |                                            | 1,797,818    |   |   | 1,745,795   |   |
| Professional fees                                             |         |          | 690,626     |               |   | 1,228,974                        |   |                                            | 1,919,600    |   |   | 1,609,050   |   |
| Equipment maintenance                                         |         |          | 1,059,384   |               |   | —                           |   |                                            | 1,059,384    |   |   | 784,308     |   |
| Work for third parties' materials                             |         |          | 5,821,779   |               |   | —                           |   |                                            | 5,821,779    |   |   | 18,049,992  |   |
| Fuels and lubricants                                          |         |          | 610,781     |               |   | 28,692                           |   |                                            | 639,473      |   |   | 699,197     |   |
| General maintenance                                           |         |          | 6,393,143   |               |   | 177,784                          |   |                                            | 6,570,927    |   |   | 6,613,579   |   |
| Electricity                                                   |         |          | 457,130     |               |   | 41,107                           |   |                                            | 498,237      |   |   | 636,435     |   |
| Depreciation of property, plant        and equipment          |         |          | 18,610,990  |               |   | 2,045,905                        |   |                                            | 20,656,895   |   |   | 18,928,260  |   |
| Amortization of intangible        assets                      |         |          | 2,102,320   |               |   | 3,099,270                        |   |                                            | 5,201,590    |   |   | 5,915,786   |   |
| Amortization of other assets                                  |         |          | 19,145,136  |               |   | —                           |   |                                            | 19,145,136   |   |   | 18,106,863  |   |
| Administration expenses related        to WEM                 |         |          | 501,264     |               |   | —                           |   |                                            | 501,264      |   |   | 431,417     |   |
| Regulatory fees                                               |         |          | 516,699     |               |   | —                           |   |                                            | 516,699      |   |   | 496,664     |   |
| ATEERA membership fees                                        |         |          | —      |               |   | 138,359                          |   |                                            | 138,359      |   |   | 144,186     |   |
| Communications                                                |         |          | 2,033,675   |               |   | 86,593                           |   |                                            | 2,120,268    |   |   | 2,389,099   |   |
| Transportation                                                |         |          | 376,805     |               |   | 7,478                            |   |                                            | 384,283      |   |   | 381,668     |   |
| Insurance                                                     |         |          | 139,908     |               |   | 1,705,111                        |   |                                            | 1,845,019    |   |   | 1,369,789   |   |
| Rents                                                         |         |          | 541,218     |               |   | 346,459                          |   |                                            | 887,677      |   |   | 1,101,847   |   |
| Travel and lodging expenses                                   |         |          | 2,424,053   |               |   | 197,421                          |   |                                            | 2,621,474    |   |   | 2,491,746   |   |
| Stationary and printing                                       |         |          | 174,281     |               |   | 324,704                          |   |                                            | 498,985      |   |   | 544,511     |   |
| Taxes and government contributions                            |         |          | 1,677,987   |               |   | 342,486                          |   |                                            | 2,020,473    |   |   | 1,123,088   |   |
| Directors and syndics fees                                    |         |          | —      |               |   | 289,273                          |   |                                            | 289,273      |   |   | 164,080     |   |
| Bank charges                                                  |         |          | 168,337     |               |   | 186,346                          |   |                                            | 354,683      |   |   | 310,843     |   |
| Office and substation cleaning                                |         |          | 1,072,339   |               |   | 2,500                            |   |                                            | 1,074,839    |   |   | 1,234,387   |   |
| Security                                                      |         |          | 733,205     |               |   | 17,935                           |   |                                            | 751,140      |   |   | 773,175     |   |
| Electro duct maintenance                                      |         |          | 408,619     |               |   | —                           |   |                                            | 408,619      |   |   | 743,378     |   |
| Provisions                                                    |         |          | (238,344    | )                  |   | —                           |   |                                            | (238,344     | )      |   | 3,343,353   |   |
| Other                                                         |         |          | 1,470,896   |               |   | 1,061,650                        |   |                                            | 2,532,546    |   |   | 2,460,844   |   |
|                                                          |         |               |             |               |        |                                  |   |                                                 |              |   |        |             |   |
| Totals fiscal year 2001                                       |         | Ps.           | 96,993,978  |               |   | 18,606,090                       |   |                                            | 115,600,068  |   |   |        |   |
|                                                     |         |               |             |               |        |                                  |   |                                                 |              |   |   |        |   |
| Totals fiscal year 2000 (Unaudited)                           |         | Ps.           | 109,585,391 |               |   | 17,642,529                       |   |                                            |         |   |   | 127,227,920 |   |
|                                                     |         |               |             |               |        |                                  |   |                                       |    |   |        |             |   |

F-33

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