##### Table of Contents





As filed with the Securities and Exchange Commission on
    May 21, 2009
   UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  FORM 20-F
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  for the fiscal year ended December 31, 2008
  Commission File Number: 000-53606
  AEI
 (exact name of registrant as
    specified in its charter)
 Cayman Islands
 (jurisdiction of incorporation
    or organization)
  Clifton House, 75 Fort Street,
    P.O. Box 190GT
 George Town, Grand Cayman, Cayman Islands
 (address of principal executive
    offices)
  Maureen J. Ryan
 Executive Vice President, General Counsel and Chief
    Compliance Officer, AEI Services LLC
 700 Milam, Suite 700, Houston, Texas 77002
    (713) 345-5200
    maureen.ryan@aeienergy.com
 (name, telephone,
    e-mail
    and/or facsimile number and address of company contact
    person)
  Securities registered or to be registered pursuant to
    Section 12(b) of the Act:
  Securities registered or to be registered pursuant to
    Section 12(g) of the Act:
  Ordinary shares $0.002 par value
  (Title of class)
  Securities for which there is a reporting obligation pursuant
    to Section 15(d) of the Act:
  The number of outstanding shares of each of the issuers
    classes of capital or common stock as of December 31, 2008
    was:
    Indicate by check mark if the registrant is a well-known
    seasoned issuer, as defined in Rule 405 of the Securities
    Act.
  o þ
  If this report is an annual report, indicate by check mark if
    the registrant is not required to file reports pursuant to
    Section 13 or 15(d) of the Securities Exchange Act of
    1934.
  o þ
  Indicate by checkmark whether the registrant (1) has
    filed all reports required to be filed by Section 13 or
    15(d) of the Securities Exchange Act of 1934 during the
    preceding 12 months (or for such shorter period that the
    registrant was required to file such reports), and (2) has
    been subject to such filing requirements for the past
    90 days.
  o þ
  Indicate by checkmark whether the registrant has submitted
    electronically and posted on its corporate Web site, if any,
    every Interactive Data File required to be submitted and posted
    pursuant to Rule 405 of
    Regulation S-T
    (§ 232.405 of this chapter) during the preceding
    12 months (or for such shorter period that the registrant
    was required to submit and post such files).
  o o
  Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, or a non-accelerated
    filer. See definition of accelerated filer and large
    accelerated filer in
    Rule 12-b-2
    of the Exchange Act. (Check one):
  o o þ
  Indicate by check mark which basis of accounting the
    registrant has used to prepare the financial statements included
    in this filing:
  U.S.
    GAAP þ

International Financial Reporting Standards as issued by
    the International Accounting Standards
    Board o

Other o   If this is an annual report, indicate by check mark whether
    the registrant is a shell company (as defined in
    Rule 12b-2
    of the Exchange Act).
  o þ




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##### Table of Contents





TABLE OF
    CONTENTS
  
  PageIntroduction


iiiBusiness
    of AEI


iiiNon-GAAP Financial
    Measures


ivPresentation
    of Information


viForward-Looking
    Statements


viiGlossary
    of Technical Terms


viiiGlossary
    of Defined Terms


xITEM 1.

Identity
    of Directors, Senior Management and Advisers


1ITEM 2.

Offer
    Statistics and Expected Timetable


2ITEM 3.

Key
    Information


3A.

Selected
    Financial Data


3B.

Capitalization
    and Indebtedness


7C.

Reasons
    for the offer and use of proceeds


7D.

Risk
    Factors


8ITEM 4.

Information
    on the Company


23A.

History
    and Development of the Company


23B.

Business
    Overview


26C.

Organizational
    Structure


81D.

Property,
    Plant and Equipment


83ITEM 4A.

Unresolved
    Staff Comments


86ITEM 5.

Operating
    and Financial Review and Prospects


87A.

Operating
    results


95B.

Liquidity
    and Capital Resources


115C.

Research
    and Development, Patents and Licenses, Etc.


121D.

Trend
    Information


121E.

Off-balance
    sheet arrangements


123F.

Tabular
    Disclosure of Contractual Obligations


124ITEM 6.

Directors,
    Senior Management and Employees


125A.

Directors
    and Senior Management


125B.

Compensation


129C.

Board
    Practices


129D.

Employees


133E.

Share
    Ownership


133ITEM 7.

Major
    Shareholders and Related Party Transactions


136A.

Major
    Shareholders


136B.

Related
    Party Transactions


136C.

Interests
    of Experts and Counsel


137ITEM 8.

Financial
    Information


138A.

Consolidated
    Statements and Other Financial Information


138B.

Significant
    Changes


138ITEM 9.

The Offer
    and Listing


139A.

Offer and
    Listing Details


139B.

Plan of
    Distribution


139C.

Markets


139D.

Selling
    Shareholders


139E.

Dilution


139F.

Expenses
    of the Issue


139ITEM 10.

Additional
    Information


140A.

Share
    Capital


140B.

Memorandum
    and Articles of Association


140C.

Material
    Contracts


140D.

Exchange
    Controls


141E.

Taxation


141F.

Dividends
    and Paying Agents


143G.

Statement
    by Experts


143H.

Documents
    on Display


143I.

Subsidiary
    Information


144ITEM 11.

Quantitative
    and Qualitative Disclosures about Market Risk


145ITEM 12.

Description
    of Securities other than Equity Securities


147ITEM 13.

Defaults,
    Dividend Arrearages and Delinquencies


148ITEM 14.

Material
    Modifications to the Rights of Security Holders and Use of
    Proceeds


149ITEM 15.

Controls
    and Procedures


150




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##### Table of Contents



PageITEM 16A.

Audit
    Committee Financial Expert


151ITEM 16B.

Code of
    Business Conduct


152ITEM 16C.

Principal
    Accountant Fees and Services


153ITEM 16D.

Exemptions
    from the Listing Standards for Audit Committees


154ITEM 16E.

Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers


155ITEM 16F.

Change in
    Registrants Certifying Accountant


156ITEM 16G.

Corporate
    Governance


157ITEM 17.

Financial
    Statements


158ITEM 18.

Financial
    Statements


159ITEM 19.

Exhibits


160EX-12.1EX-12.2EX-13.1EX-13.2   ii




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INTRODUCTION  345-949-4900. 713-345-5200.
 BUSINESS
    OF AEI  www.aeienergy.com
 iii




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NON-GAAP FINANCIAL
    MEASURES         iv




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v




---



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PRESENTATION
    OF INFORMATION        
    Argentine pesos or AR$ are
    to the lawful currency of Argentina;
    Brazilian real, Brazilian
    reais or R$ are to the lawful
    currency of Brazil;
    Chinese renminbi or CNY
    are to the lawful currency of China;
    Colombian pesos or COP are
    to the lawful currency of Colombia;
    Dominican pesos or DOP are
    to the lawful currency of the Dominican Republic;
    Guatemalan quetzals or GTQ
    are to the lawful currency of Guatemala;
    Pakistani rupees or PKR
    are to the lawful currency of Pakistan;
    Panamanian balboas are to the lawful currency
    of Panama;
    Peruvian nuevos soles are to the lawful
    currency of Peru;
    Polish zlotys or PLN are
    to the lawful currency of Poland;
    New Turkish lira or TRY
    are to the lawful currency of Turkey;
    Dollars,
    U.S. dollars, $ or
    U.S.$ are to the lawful currency of Ecuador,
    El Salvador, Panama and the United States; and
    Venezuelan bolívares are to the lawful
    currency of Venezuela.   vi




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FORWARD-LOOKING
    STATEMENTS    
    Our businesses are primarily in emerging markets. Our results of
    operations and financial condition are dependent upon economic
    conditions in those countries in which we operate, and any
    decline in economic conditions could harm our revenues, results
    of operations or financial condition.
    Governments exercise a greater degree of influence over the
    economies in which we operate and invest compared to those in
    developed economies. This influence, as well as political and
    economic conditions, could adversely affect our businesses.
    The uncertainty of the legal and regulatory environment in
    certain countries in which we operate, develop, or build energy
    infrastructure assets may make it more difficult for us to
    enforce our respective rights under agreements relating to our
    businesses.
    Currency exchange rate fluctuations relative to the
    U.S. dollar in the countries in which we operate our
    businesses may adversely impact our business, financial
    condition and results of operations.
    Most of our businesses are subject to significant governmental
    regulations and our business, results of operations, cash flows
    and financial condition could be adversely affected by changes
    in the law or regulatory schemes.
    The tariffs of most of our business segments are regulated and
    periodically revised by regulators. Reductions in tariffs could
    result in the inability of our businesses to maintain current
    operating margins and to recover operating costs, including
    commodity costs,
    and/or
    investments.
    The operation of our businesses involve significant risks that
    could lead to lost revenues, increased expenses, or termination
    of agreements.
    Other risk factors set forth in Item 3. Key
    Information  D. Risk Factors.     vii




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GLOSSARY
    OF TECHNICAL TERMS    Availability
    
    For power plants, the ratio of the difference between maximum
    MWh that could be produced and MWh not produced due to planned
    and unplanned outages to maximum MWh that could be produced
    expressed as a percentage; for pipelines, the ratio of the
    difference between the maximum volume programmed to be
    transported and the volume not transported due to planned and
    unplanned restrictions/outages to the maximum volume programmed
    to be transported expressed as a percentage; and for gas plants,
    the ratio of the difference between the maximum volume that
    could be produced and the volume not produced due to planned and
    unplanned restrictions/outages to the maximum volume that could
    have been produced expressed as a percentageBcf/d
    
    Billion cubic feet per dayBOMT
    
    Build, operate, maintain and transfer agreementBOT
    
    Build, operate and transfer agreementBTU
    
    British thermal unitBtu/kWh
    
    British thermal unit/kilowatt hourCNG
    
    Compressed natural gasDEC
    
    Duration of outages (measured in hours per customer) as defined
    by ANEELFEC
    
    Frequency of outages (measured in occurrences per customer) as
    defined by ANEELGJ
    
    GigajouleGW
    
    GigawattGWh
    
    Gigawatt hourHRSG
    
    Heat recovery steam generatorISO
    
    International Organization for StandardizationISO 9001
    
    ISO standards for quality managementISO 14001
    
    ISO standards for environmental managementkWh
    
    Kilowatt hourkV
    
    KilovoltLDC
    
    Local distribution companyLost Time Incident
    
    Any work-related injury or illness that prevents an employee (or
    contractor) from returning to work on his next regularly
    scheduled work shift; does not include restricted work cases,
    medical treatment cases, or sport injuries that occur on company
    premises during employee leisure timeLost Time Incident Rate
    
    Number of Lost Time Incidents multiplied by 200,000 divided by
    the number of
    man-hours
    worked and is generally calculated as annual and
    12-month
    rolling viii




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LPG
    
    Liquefied petroleum gasMMb/day
    
    Million barrels per dayMMBtu
    
    Million British thermal unitsmmcfd
    
    Million cubic feet per dayMVA
    
    Megavolt ampereMW
    
    MegawattMWh
    
    Megawatt hourNGL
    
    Natural gas liquidsOHSAS 18001
    
    Occupational Health and Safety Assessment Series standards for
    occupational health and safety management systemsReliability
    
    For power plants, the ratio of the difference between maximum
    MWh that could be produced and MWh not produced as a result of
    unplanned outages to maximum MWh that could be produced
    expressed as a percentage; for pipelines, the ratio of the
    difference between the maximum volume programmed to be
    transported and the volume not transported due to unplanned
    restrictions/outages to the maximum volume programmed to be
    transported expressed as a percentage; and for gas plants, the
    ratio of the difference between the maximum volume that could be
    produced and the volume not produce due to unplanned
    restrictions/outages to the maximum volume that could be
    produced expressed as a percentageSAIDI
    
    System average interruption duration index; duration of outages
    (measured in hours per customer) as defined by the Institute of
    Electrical and Electronic EngineersSAIFI
    
    System average interruption frequency index; frequency of
    outages (measured in occurrences per customer) as defined by the
    Institute of Electrical and Electronic EngineersTWh
    
    Terawatt hour ix




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GLOSSARY
    OF DEFINED TERMS    AEI Delaware
    
    AEI LLC (formerly known as Ashmore Energy International LLC), a
    Delaware limited liability companyAEIL
    
    Ashmore Energy International Limited, a Cayman Islands companyAESEBA
    
    AESEBA S.A., an Argentine company that holds a controlling
    interest in EDENANEEL
    
    Brazilian National Electric Energy Agency (Agência
    Nacional de Energia Elétrica)Amayo
    
    Consorcio Eolico Amayo S.A.ASEP
    
    Panamanian National Authority of Public Services (Autoridad
    Nacional de los Servicios Públicos)Ashmore
    
    Ashmore Investment Management Limited, an emerging markets
    investment managerAshmore Funds
    
    Investment funds directly or indirectly managed by AshmoreBBPL
    
    Bolivia-to-Brazil Pipeline which comprises GTB and TBGBLM
    
    Bahía Las Minas Corp., our Panamanian Power Generation
    business which we sold on March 14, 2007BMG
    
    Beijing Macrolink Gas Co. Ltd., our Chinese Natural Gas
    Distribution businessBNDES
    
    Brazilian Economic Development Bank (Banco Nacional de
    Desenvolvimento Econômico e Social)BOTAŞ
    
    Boru Hatlari Ile Petrol Tasima A.S., the Turkish government
    owned natural gas monopolyBrazilian MME
    
    Brazilian Ministry of Mines and Energy (Ministério de
    Minas e Energia)Cálidda
    
    Gas Natural de Lima y Callao S.A., our Peruvian Natural Gas
    Distribution businessChilquinta
    
    Chilquinta Energia S.A. and associated companies, our Power
    Distribution business in ChileCDEEE
    
    Dominican Corporation of State-owned Electricity Companies
    (Corporación Dominicana de Empresas Eléctricias
    Estatales)CIESA
    
    Compañía de Inversiones de Energía S.A., an
    Argentine energy company that holds a controlling interest in
    TGS and in which we hold debt instrumentsColombian MME
    
    Colombian Ministry of Mines and EnergyCREG
    
    Colombian Regulatory Commission for Energy and Gas
    (Comisión de Regulación de Energía y Gas)Cuiabá Integrated Project
    
    Integrated project in Bolivia and Brazil consisting of EPE, GOB,
    GOM and TBS x




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##### Table of Contents



DCL
    
    DHA Cogen Limited, our Pakistani power generation and water
    desalination companyEC
    
    Electricidad de CentroAmerica S.A. de C.V., our wholly owned
    subsidiary which holds 86.4% of DelsurEDEN
    
    Empresa Distribuidora de Energía Norte S.A., our Argentine
    Power Distribution businessEEGSA
    
    Empresa Eléctrica de Guatemala S.A., the Guatemalan power
    distributorElektra
    
    Elektra Noreste, S.A., our Panamanian Power Distribution businessElektro
    
    Elektro Eletricidade e Serviços S.A., our Brazilian Power
    Distribution businessEmgasud
    
    Emgasud S.A., an Argentine energy corporationEMHC
    
    EMHC Ltd., a wholly owned subsidiary of PEIEMRA
    
    Turkish Energy Market Regulatory AuthorityENS
    
    Elektrocieplownia Nowa Sarzyna Sp.z.o.o., our Polish Power
    Generation businessEPE
    
    EPE  Empresa Produtora de Energia Ltda., one of our
    Brazilian Power Generation businesses and part of the
    Cuiabá Integrated ProjectFenix
    
    Empressa Electrica de Generacion de Chilca S.A., a Peruvian
    company in the advanced stages of developing a combined cycle
    power plant in Chilca, PeruFurnas
    
    Furnas Centrais Elétricas, S.A., one of Brazils
    federally controlled electricity generation companiesGASA
    
    Gas Argentino S.A., which holds a controlling interest in
    MetroGas and in which we held debt instrumentsGBS
    
    Gases de Boyacá y Santander, GBS S.A., one of our Colombian
    Natural Gas Distribution businesses and part of PromigasGazel
    
    Gas Natural Comprimido S.A., one of our Colombian Retail Fuel
    businessesGOB
    
    GasOriente Boliviano Ltda., one of our Bolivian Natural Gas
    Transportation and Services businesses and part of the
    Cuiabá Integrated ProjectGOM
    
    GasOcidente do Mato Grosso Ltda, one of our Brazilian Natural
    Gas Transportation and Services businesses and part of the
    Cuiabá Integrated ProjectGTB
    
    Gas Transboliviano S.A., one of our Bolivian Natural Gas
    Transportation and Services businesses and part of the
    Bolivia-to-Brazil
    PipelineJaguar
    
    Jaguar Energy Guatemala LLCJPPC
    
    Jamaica Private Power Company Ltd., our Jamaican Power
    Generation business xi




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##### Table of Contents



Luoyang
    
    Luoyang Sunshine Cogeneration Co., Ltd., our Chinese Power
    Generation businessLuz del Sur
    
    Luz del Sur S.A. and associated companies, our Power
    Distribution business in PeruMetroGas
    
    MetroGas S.A., an Argentine Natural Gas Distribution businessMIHPS
    
    Ministry of Infrastructure, Housing and Public Services of the
    Province of Buenos Aires, ArgentinaNPC
    
    National Power Corporation of the PhilippinesNDRC
    
    National Development and Reform Commission of ChinaOperadora San Felipe
    
    Operadora San Felipe Limited Partnership, the operator of
    San Felipe and our wholly owned subsidiaryPDG
    
    Panama Distribution Group, S.A., Panama, holder of AEIs
    51% ownership of Elektra common stockPDVSA
    
    Petróleos de Venezuela, S.A., the Venezuelan
    state  owned oil companyPEI
    
    Prisma Energy International Inc., our predecessorPoliwatt
    
    Poliwatt Limitada, a wholly owned subsidiary of PQPPPO
    
    Private Power Operators Limited, the operator of JPPCPQP
    
    Puerto Quetzal Power LLC, our Guatemalan Power Generation
    businessPromigas
    
    Promigas S.A. ESP, our Colombian company which holds the
    interests in our Colombian Natural Gas Transportation and
    Services, Natural Gas Distribution and Retail Fuels businessesPromigas Pipeline
    
    1,297 mile pipeline in Colombia extending along the
    Atlantic coast from Ballena to Jobo, which is owned by PromigasPSI
    
    Promigas Servicios Integrados, one of our Colombian Natural Gas
    Transportation and Services businessesRepsol
    
    Repsol YPF, S.A., a Spanish integrated oil and gas companyShell
    
    Royal Dutch Shell plc and its affiliatesSIE
    
    Sociedad de Inversiones de Energía S.A., our Colombian
    Retail Fuel businessSIGET
    
    El Salvador General Superintendency of Electricity and
    Telecommunications (Superintendencia General de Electricidad
    y Telecomunicaciones)TBG
    
    Transportadora Brasileira Gasoduto Bolivia-Brasil S.A., one of
    our Brazilian Natural Gas Transportation and Services businesses
    and part of the Bolivia-to-Brazil PipelineTBS
    
    Transborder Gas Services Ltd., one of our Natural Gas
    Transportation and Services businesses operating in Brazil and
    Bolivia and part of the Cuiabá Integrated ProjectTecnored
    
    Tecnored S.A., a company that provides electricity maintenance
    and construction services in Chile xii




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Tecsur
    
    Tecsur S.A., a company that provides electricity maintenance and
    construction services in PeruTerpel
    
    Organización Terpel Inversiones S.A., one of our Colombian
    Retail Fuel businessesTETAS
    
    Türkiye Elektrik Ticaret ve Taahut A.S., the Turkish
    state-run electricity contracting and trading companyTGI
    
    Transportadora de Gas del Interior, entity recently privatized
    by the Colombian governmentTGS
    
    Transportadora de Gas del Sur S.A., an Argentine Natural Gas
    Transportation and Services businessTongda
    
    Tongda Energy Private Limited, our Chinese Natural Gas
    Distribution businessTotal
    
    Total S.A., a French integrated oil and gas companyTrakya
    
    Trakya Elektrik Uretim ve Ticaret A.S., our Turkish power plantTransredes
    
    Transredes-Transporte de Hidrocarburos S.A., a Bolivian Natural
    Gas Transportation and Services businessVengas
    
    Vengas S.A., a Venezuelan liquid petroleum gas distribution
    business, in which we sold our interest in November 2007 to PDVSAYPFB
    
    Yacimientos Petroliferos Fiscales Bolivianos, the Bolivian
    state-owned energy company xiii




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##### Table of Contents



PART I
  Item 1.  
    Identity of Directors, Senior Management and
    Advisers
   1




---



##### Table of Contents



Item 2.  
    Offer Statistics and Expected
    Timetable
   2




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Item 3.  
    Key Information
  A.
    Selected
    Financial Data  275-day 90-day 249-day
    AEI and
    Elektra
    Elektra Noreste,S.A. (Predecessor)



AEI (Successor)For the



For the275-Day



90-DayPeriod



PeriodFrom



From


For the


For the


For theFor the


January 1,



October 3,


Year


Year


YearYear Ended


2005 to



2005 to


Ended


Ended


EndedDecember 31,


October 2,



December 31,


December 31,


December 31,


December 31,2004


2005



2005


2006(1)


2007


2008Millions of dollars (U.S.)



Millions of dollars (U.S.) except per share dataStatement of Operations Data:Revenues

$
225


$
200



$
72


$
946


$
3,216


$
9,211Cost of sales


152



140




53



566



1,796



7,347Operating expenses:Operations, maintenance, general and administrative expenses


31



22




7



193



630



894Depreciation and amortization


11



9




3



59



217



268Taxes other than income






1








7



43



43Other charges



















50



56(Gain) loss on disposition of assets






1








7



(21
)


(93
)Equity income from unconsolidated affiliates















37



76



117Operating income


32



27




9



151



577



813Interest income






1








71



110



88Interest expense


(4
)


(6
)



(3
)


(138
)


(306
)


(378
)Foreign currency transactions gain (loss), net















(5
)


19



(56
)Loss on early retirement of debt



















(33
)


Other income (expense), net















7



(22
)


9Income before income taxes and minority interests


28



22




6



86



345



476Provisions for income tax


(8
)


(7
)



(2
)


(84
)


(193
)


(194
)Minority interests











(2
)


(20
)


(65
)


(124
)Income (loss) from continuing operations















(18
)


87



158Income from discontinued operations, net of tax















7



3



Gain from disposal of discontinued operations, net of tax



















41



Net income (loss)

$
20


$
15



$
2


$
(11
)

$
131


$
158Cash Flow Data:Net cash flows provided by (used in):Operating activities

$
28


$
19



$
12


$
155


$
686


$
508Investing activities


(16
)


(13
)



(6
)


(1,729
)


(1,151
)


(414
)Financing activities


(7
)


(12
)



(5
)


2,395



88



173Capital expenditures


(18
)


(13
)



(6
)


(76
)


(249
)


(372
)Other Financial Data:Adjusted
    EBITDA(2)















217



823



1,044Basic and diluted earnings per share:Income (loss) from continuing operations















(0.09
)


0.42



0.73Net income (loss)















(0.05
)


0.63



0.73Weighted average shares outstanding















202



209



218   3




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##### Table of Contents



Elektra Noreste, S.A.(Predecessor)



AEI (Successor)As of



As of


As of


As of


As ofDecember 31,



December 31,


December 31,


December 31,


December 31,2004



2005


2006


2007


2008Balance Sheet Data:Property, plant and equipment (net)

$
221



$
228


$
2,307


$
3,035


$
3,524Total assets


282




568



6,134



7,853



8,953Long-term debt


95




90



2,390



2,515



3,415Total debt


100




100



2,677



3,264



3,962Net
    debt(2)


91




91



1,591



2,525



3,094Total shareholders equity


110




327



1,441



1,858



1,830     (1)
    
    Includes Elektra on a consolidated
    basis for the entire year and PEI on the equity method basis
    from June through August and on a consolidated basis from
    September to December.(2)
    
    See Non-GAAP Financial
    Measures.    Elektra Noreste, S.A.(Predecessor)



AEI (Successor)As of



As of


As of


As of


As ofDecember 31,



December 31,


December 31,


December 31,


December 31,2004



2005


2006


2007


2008Total debt

$
100



$
100


$
2,677


$
3,264


$
3,962LessCash and cash equivalents


(7
)



(6
)


(830
)


(516
)


(736
)Current restricted cash











(117
)


(95
)


(83
)Non-current restricted cash


(2
)



(3
)


(139
)


(128
)


(49
)Net debt

$
91



$
91


$
1,591


$
2,525


$
3,094     Natural GasPower


Power


Transportation


Natural GasDistribution


Generation


and Services


Distribution


Retail Fuel


Other


TotalMillions of dollars (U.S.)Net income (loss)

$
209


$
(16
)

$
53


$
26


$
17


$
(131
)

$
158Depreciation and amortization


138



24



21



18



61



6



268Minority interests


12



(49
)


21



30



93



17



124Provision for income taxes


110



43



25



28



21



(33
)


194Interest expense


134



45



44



19



53



83



378Subtract:Interest income


54



14



6



2



9



3



88Foreign currency transaction gain (loss), net


(5
)


(25
)


(1
)


(3
)


(28
)


6



(56
)(Gain) loss on disposition of assets


19















(69
)


(43
)


(93
)Other charges






44















12



56Other income (expense), net


(11
)


19



10



(1
)


(15
)


7



9Adjusted EBITDA


584



83



149



123



210



(105
)


1,044  4




---



##### Table of Contents



Natural GasPower


Power


Transportation


Natural GasDistribution


Generation


and Services


Distribution


Retail Fuel


Other


TotalMillions of dollars (U.S.)Net income (loss)

$
227


$
83


$
53


$
22


$
55


$
(309
)

$
131Depreciation and amortization


139



42



20



8



3



5



217Minority interests


11



10



15



31



13



(15
)


65Provision for income taxes


105



(16
)


29



20



12



43



193Interest expense


90



41



42



14



12



107



306Subtract:Income from discontinued operations


















3







3Gain from disposal of discontinued operations


















41







41Interest income


58



27



7



2



2



14



110Foreign currency transaction gain (loss), net


3



19



(3
)


2







(2
)


19(Gain) loss on disposition of assets


10



(21
)


(6
)


(3
)


(1
)






(21
)Other charges






50



















50Loss on early retirement of debt






















(33
)


(33
)Other income (expense), net


(2
)


(5
)


6



(2
)


(2
)


(17
)


(22
)Adjusted EBITDA

$
523


$
148


$
143


$
90


$
50


$
(131
)

$
823     Natural GasPower


Power


Transportation


Natural GasDistribution


Generation


and Services


Distribution


Retail Fuel


Other


TotalMillions of dollars (U.S.)Net income (loss)

$
93


$
18


$
15


$
1


$
2


$
(140
)

$
(11
)Depreciation and amortization


47



9



2







1







59Minority interests


9



8



3















20Provision for income taxes


40



32



4







5



3



84Interest expense


27



18



5







2



86



138Subtract:Income from discontinued operations


















7







7Interest income


20



11















40



71Foreign currency transaction gain (loss), net


(4
)


(1
)


















(5
)(Gain) loss on disposition of assets


7























7Other income (expense), net


2



5



7











(7
)


7Adjusted EBITDA

$
205


$
70


$
22


$
1


$
3


$
(84
)

$
217  5




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##### Table of Contents



PEI
    Prisma Energy International Inc. (Predecessor)For the 249-DayFor the Year Ended


For the Year Ended


Period EndedDecember 31, 2004


December 31, 2005


September 6, 2006Millions of dollars (U.S.)Statement of Operations Data:Revenues

$
1,187


$
1,901


$
1,414Cost of sales


575



930



750Operating expensesOperations, maintenance, general and administrative


233



387



233Depreciation and amortization


77



101



63Taxes other than income


20



31



32Loss on disposition of assets


3



14



6Equity income from unconsolidated affiliates


111



109



35Operating income


390



547



365Interest income from unconsolidated affiliates






4



2Interest income


41



97



80Interest expense


(65
)


(104
)


(96
)Foreign currency transaction gain (loss), net


74



95



17Other income (expense), net


82



71



26Income before income taxes and minority interest


522



710



394Provision for income taxes


112



181



209Minority interest


16



79



21Net income

$
394


$
450


$
164Cash Flow Data:Net cash flows provided by (used in):Operating activities

$
304


$
507


$
448Investing activities


9



186



(448
)Financing activities


(169
)


(169
)


(580
)Capital expenditures


(53
)


(97
)


(72
)   Prisma Energy International Inc. (Predecessor)As of


As ofDecember 31, 2004


December 31, 2005Millions of dollars (U.S.)Balance Sheet Data:Property, plant and equipment (net)

$
1,673


$
1,629Total Assets


4,145



4,759Long-term debt


622



748Total debt


838



870Net
    debt(1)


174



(375
)Total shareholders equity


2,080



2,471     (1)
    
    See Non-GAAP Financial
    Measures. 6




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##### Table of Contents



Prisma Energy International Inc. (Predecessor)As of


As ofDecember 31, 2004


December 31, 2005Millions of dollars (U.S.)Total debt

$
838


$
870LessCash and cash equivalents


(489
)


(1,046
)Current restricted cash


(144
)


(150
)Non-current restricted cash


(31
)


(49
)Net debt

$
174


$
(375
)   B.
    Capitalization
    and Indebtedness    C.
    Reasons
    for the offer and use of proceeds   7




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##### Table of Contents



D.
    Risk
    Factors  Risks
    Associated with the Countries in which We Operate
  Our
    businesses are primarily in emerging markets. Our results of
    operations and financial condition are dependent upon economic
    conditions in those countries in which we operate, and any
    decline in economic conditions could harm our revenues, results
    of operations or financial condition.
  and/or
  Governments
    exercise a greater degree of influence over the economies in
    which we operate and invest compared to those in developed
    economies. This influence, as well as political and economic
    conditions, could adversely affect our businesses.
    
    consumption of electricity and natural gas;
    economic growth;
    currency fluctuations;
    inflation;
    exchange and capital control policies;
    interest rates;
    liquidity of domestic capital and lending markets;
    fiscal policy;
    tax laws, including the effect of tax laws on distributions from
    our subsidiaries;
    import/export restrictions; and
    other political, social and economic developments in or
    affecting the country where each business is based.     8




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##### Table of Contents



The
    uncertainty of the legal and regulatory environment in certain
    countries in which we operate, develop, or build infrastructure
    assets may make it more difficult for us to enforce our
    respective rights under agreements relating to our
    businesses.
      
    forced renegotiation or modification of concession and purchase
    agreements,
    termination of permits or concessions and compensation upon any
    such termination, and
    threatened withdrawal of countries from international
    arbitration conventions.  Currency
    exchange rate fluctuations relative to the U.S. dollar in the
    countries in which we operate our businesses may adversely
    impact our business, financial condition and results of
    operations.
      Existing
    and new exchange rate controls and/or restrictions on transfers
    to foreign investors of proceeds from their investments and/or
    measures to control the proceeds that enter into the country
    would restrict or impair our ability to receive distributions
    from our subsidiaries or could affect our ability to access the
    international capital markets and could adversely affect our
    business, results of operations, cash flows and financial
    condition.
   9




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##### Table of Contents



and/or
  We may
    be affected by terrorism, border conflict, or civil unrest in
    the countries in which we operate, which could affect our
    assets, our ability to operate and our personnel.
    Inflation
    in some of the countries in which we operate, along with
    governmental measures to combat inflation, may have a
    significant negative effect on the economies of those countries
    and, as a result, on our business, financial condition and
    results of operations.
        The
    Bolivian and Venezuelan governments have recently nationalized
    or expropriated energy industry assets, and our remaining
    businesses in Bolivia and Venezuela may also be nationalized or
    expropriated.
   10




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##### Table of Contents



Lack
    of transparency, threat of fraud, public sector corruption and
    other forms of criminal activity involving government officials
    increases risk for potential liability under anti-bribery
    legislation, including the U.S. Foreign Corrupt Practices
    Act.
    Risks
    Relating to the Industries in which We Operate
  Most
    of our businesses are subject to significant governmental
    regulations and our business, results of operations, cash flows
    and financial condition could be adversely affected by changes
    in the law or regulatory schemes.
    
    changes or terminations of key permits, operating licenses, or
    concessions,
    changes in the determination, definition or classification of
    costs to be included as controllable or non-controllable
    pass-through costs,
    changes in the methodology of calculating or the timing of
    tariff revisions and changes in the tariffs regulated
    returns,
    changes in the definition of events which may or may not qualify
    as changes in economic equilibrium under the terms of concession
    agreements,
    rules governing energy supply and purchase contracts,
    changes in subsidies
    and/or
    incentives provided by governments,
    rules governing dispatch order,
    methodology of calculating firm capacity payment charges and
    frequency of adjustment of those charges,
    calculation of transportation/transmission rates, and
    other changes in the regulatory determinations under the
    relevant concessions.   11




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##### Table of Contents



The
    tariffs of most of our business segments are regulated and
    periodically revised by regulators. Reductions in tariffs could
    result in the inability of our businesses to recover operating
    costs, including commodity costs, and/or investments and
    maintain current operating margins.
    Some
    of our markets may face power rationings, which could lead to a
    reduction in the level and/or growth in electricity consumption
    and sales.
  and/or and/or
  Many
    of our businesses operate under concessions granted by the
    various countries in which we operate and we are subject to
    penalties, including termination of the concession agreements,
    if we do not comply with the terms of the concession
    agreements.
    
    warning notices;
    fines for breaches of concessions based on a percentage of
    revenues for the year immediately before the violation date;
    temporary suspension from participating in bidding processes for
    new concessions;
    injunctions prohibiting investments in new facilities and
    equipment;
    restrictions to the operations of existing facilities and
    equipment;
    intervention by the authority granting our concession; and
    possible termination of our concession.     12




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##### Table of Contents



Our
    business performance may be adversely affected by our ability to
    address various operating risks typically faced by companies in
    the energy business.
    
    periodic service disruptions and variations in power quality in
    our Power Distribution businesses, which may result in
    significant revenue loss and potential liabilities to third
    parties;
    fluctuations or a decline in aggregate customer demand for
    energy in line with prevailing economic conditions, which could
    result in decreased revenues;
    equipment or other failures at our Power Generation facilities
    causing unplanned outages;
    the dependence of our Power Generation facilities on a specified
    fuel source, including the quality and transportation of fuel,
    which could impact the operation of those facilities;
    breakdown or failure of one of our Power Generation facilities
    may prevent the facility from performing under applicable power
    sales agreements which, in certain situations, could result in
    termination of the agreement or incurring liability for
    liquidated damages;
    service disruptions in our Natural Gas Transportation and
    Natural Gas Distribution businesses, reductions in customer
    demand or reductions in throughput could result in reduced
    revenues from these businesses;
    failures and faults in the electricity transmission system or in
    the electricity generation facilities of Power Generation
    companies due to circumstances beyond our control;
    system failure affecting our information technology systems or
    those of other energy industry participants, which could result
    in loss of operational capacities or critical data;
    environmental costs and liabilities arising from our operations,
    which may be difficult to quantify and could affect our results
    of operations;
    energy losses, whether arising from technical reasons inherent
    in the normal operation of electricity and liquids distribution
    systems or arising from non-technical reasons (such as theft,
    fraud and inaccurate billing), resulting in revenue losses which
    we are unable to pass through to customers; and
    injuries to third parties or our employees in connection with
    our businesses, which may result in liabilities, higher
    insurance costs or denial of insurance coverage.     13




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##### Table of Contents



We are
    dependent on external parties and other factors for consumables,
    energy and fuel and our inability to obtain such supplies could
    adversely affect our ability to operate, financial condition and
    results of operations and cash flows.
    
    existing upstream energy reserves need to be available and new
    reserves developed in order to efficiently utilize the
    distribution capacity of our gas and liquids pipelines; any
    prolonged interruption in our ability to access upstream
    reserves would affect our ability to generate revenues;
    if upstream reserves are depleted, and no new fields or wells
    are developed, the amount of natural gas available for
    consumption will be reduced, and so will the volumes of liquids
    and associated gas transported by our pipelines, or availability
    of fuel to our power plants or for resale by our Natural Gas
    Distribution and Retail Fuel businesses, which would materially
    and adversely affect our overall revenues and profits;
    in the event that our local suppliers become unwilling or unable
    to supply fuel or energy to our businesses, we may not have any
    remedies under our supply contracts, or that such available
    remedies will be sufficient to offset the potential incremental
    costs or reduction in revenues;
    service disruptions, stoppages, or variations in power quality
    contracted or transmitted by third parties to our power
    distributions businesses could cause us to be unable to
    distribute power to the end users of electricity. In that case,
    we would be unable to receive revenues for power distribution,
    and may be subject to claims for damages from end users, fines
    from regulators and the possible loss of our
    concessions; and
    should a neighboring government decide, for political reasons or
    otherwise, to curtail or interrupt the transportation of fuel or
    energy required by our businesses to operate, an alternate
    source for that energy may not be available, or become
    available, in sufficient time to preclude an interruption of our
    operations.    Our
    businesses are dependent on and we are exposed to credit risks
    and, in some instances, the impact of credit concentration,
    arising out of the creditworthiness of customers who, for some
    of our businesses, are limited in number. Therefore, if one of
    our businesses large customers were to default on their
    obligations to us, it could adversely affect our financial
    condition and results of operations and cash
    flows.
       14




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##### Table of Contents



Our
    equipment, facilities and operations are subject to numerous
    environmental, health and safety laws and regulations that are
    expected to become more stringent in the future, which may
    result in increased liabilities, compliance costs and increased
    capital expenditures.
      Risks
    Related to Our Businesses
  The
    operation of our businesses involves significant risks that
    could lead to lost revenues, increased expenses, or termination
    of agreements.
    
    the inability to obtain or renew required governmental permits
    and approvals;
    fuel spillage, seepage or release of hazardous materials;
    the unavailability of critical equipment or parts;
    fuel or energy supply interruptions;
    work stoppages and labor unrest;
    errors in the operation and failures of critical equipment;
    social unrest;
    severe weather and seasonal variations;
    natural disasters or catastrophic events that affect our
    physical assets or cause interruptions in our ability to provide
    our services and products, particularly ones that cause damage
    in excess of our insurance policy limits;
    injuries to people and damages to property resulting from
    transportation and handling of electricity, natural gas, liquid
    fuels or hazardous materials; 15




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##### Table of Contents




    the possibility of material litigation and regulatory
    proceedings being brought against us or our businesses;
    increases in line losses, including technical and commercial
    losses;
    forecasting errors in total volumes of gas transported
    and/or
    distributed;
    decreases in energy consumption due to higher energy prices;
    miscalculation of our energy needs in our power distribution
    businesses which are required to contract in advance for their
    electricity needs; and
    construction and operational delays or unanticipated cost
    overruns.    A
    failure to resolve current gas supply issues at the Cuiabá
    Integrated Project may have a material adverse effect on the
    operations and performance of that business.
  force majeure 30-day
      A
    failure to attract and retain skilled people could have a
    material adverse effect on our operations.
   16




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##### Table of Contents



Our
    proposed acquisitions and development projects may not be
    completed or, if completed, perform as expected. Our acquisition
    and development activities may consume a portion of our
    managements focus, and increase our leverage, and if not
    successful, reduce our profitability.
        
    acquired businesses may not perform as expected;
    we may incur unforeseen obligations or liabilities;
    acquired business may not generate sufficient cash flow to
    support the indebtedness incurred to acquire them or the capital
    expenditures needed to develop them;
    the rate of return from acquired businesses may not justify our
    decision to invest our capital to acquire them; or
    we may not be able to expand as planned or to integrate the
    acquired companys activities and achieve the economies of
    scale and any expected efficiency gains that often drive such
    acquisitions.    Competition
    to acquire energy assets is strong and could adversely affect
    our ability to grow.
   17




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##### Table of Contents



Our
    insurance policies may not fully cover damage or we may not be
    able to obtain insurance against certain risks, and our results
    of operations may be adversely affected if we incur liabilities
    that are not fully covered by our insurance
    policies.
    We are
    strictly liable for any damages resulting from the inadequate
    rendering of electricity services by our Power Distribution
    businesses, and any such liabilities could result in significant
    additional costs to us and may adversely affect our results of
    operations.
    Operador Nacional do Sistema
  We
    make non-controlling investments in projects which may limit our
    ability to control the development, construction, acquisition or
    operation of such investments and future
    acquisitions.
  i.e.
  Our
    businesses may incur substantial costs and liabilities and be
    exposed to commodity price volatility, as a result of risks
    associated with the wholesale electricity markets, which could
    have a material adverse effect on our financial
    performance.
   18




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##### Table of Contents



Financial
    Risks
  A
    downgrade in our credit ratings or that of our subsidiaries
    could adversely affect our ability to access the capital markets
    which could increase our interest costs or adversely affect our
    liquidity and cash flows.
        We may
    not be able to raise sufficient capital to fund greenfield
    development in certain less developed economies which could
    change or in some cases adversely affect our growth
    strategy.
    Current
    market developments may adversely affect our industry, business,
    results of operations and access to capital.
   19




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##### Table of Contents



Risks
    Associated with our Structure
  We are
    a holding company and therefore are dependent upon the receipt
    of funds from our subsidiaries by way of dividends, fees,
    interest, loans, or otherwise. Failure to receive such funds
    could impact our ability to pay our interest and other expenses
    at the parent company or to pay dividends.
        We are
    a Cayman Islands company and may not receive the diplomatic and
    treaty protections that a U.S. company would receive in some of
    the countries where we do business, which could adversely affect
    our ability to enforce our rights under our concessions and
    contracts.
    If
    ownership of our ordinary shares continues to be highly
    concentrated, it may prevent minority shareholders from
    influencing significant corporate decisions and
    policies.
   20




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##### Table of Contents



The
    interests of the group of shareholders that control us may be
    adverse to the interests of other shareholders.
      Our
    shareholders may compete with us for investment opportunities
    which could impair our ability to consummate
    transactions.
    We are
    a Cayman Islands company. As such, shareholders may face
    difficulties in protecting their interests, and it may be
    difficult for them to enforce judgments against us and our
    directors and executive officers.
     21




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##### Table of Contents



22




---



##### Table of Contents



Item 4.  Information
    on the Company  A.
    History
    and Development of the Company  Our
    Corporate Information
  345-949-4900. 713-345-5200. www.aeienergy.com
  History
    Acquisition
    of Elektra Noreste, S.A. by certain Ashmore Funds
      Contribution
    of Enron Corporations international energy infrastructure
    businesses to Prisma Energy International Inc.
    non-U.S. power
   23




---



##### Table of Contents



Formation
    of AEIL
        Acquisition
    of PEI by AEIL
    
    Stage 1 (completed May 25, 2006): AEIL acquired 24.26% of
    the voting capital and 49.0% of the economic interest in PEI;
    Stage 2 (completed September 7, 2006): AEIL acquired the
    remaining 75.74% of the voting capital and 51.0% of the economic
    interests.     24




---



##### Table of Contents



AEILs
    Acquisition of a Controlling Interest in Promigas S.A.
    ESP
      Bolsa de Valores de Colombia
  Superintendencia
    Financiera de Colombia
  Merger
    of AEIL and PEI
      
 25




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##### Table of Contents



Recent
    Developments in 2009
  
    We contributed our respective interests in various Nicaragua
    power companies to a common holding company, Nicaragua Energy
    Holdings. Currently, we own 57.67% and Centrans owns 42.33% of
    Nicaragua Energy Holdings, which indirectly owns 100% of Corinto
    and Tipitapa and a 22.05% interest in Amayo. Centrans was given
    a call option that may be exercised at any time prior to
    December 8, 2013 to increase its interest in Nicaragua
    Energy Holdings up to 50%.
    The BOT agreement between Subic and National Power Corporation
    of the Philippines (NCP) expired on schedule and the
    plant was turned over to NCP.
    We terminated our restructuring agreement with CIESA. Pursuant
    to this agreement, the debt that we held in CIESA was to be
    converted into equity of CIESA, subject to the receipt of
    various regulatory approvals prior to an agreed deadline. After
    extending this deadline twice, we terminated this agreement due
    to the fact that the requested approvals did not appear to be
    forthcoming. We subsequently we filed a petition in Argentina
    for the involuntary bankruptcy liquidation of CIESA, which
    process is ongoing.
    See  Item 5  Operating
    and Financial Review and Prospects  Legal
    Proceeding for additional information.
    We signed an agreement to purchase an additional 31% of Trakya.
    The closing of this transaction is subject to a number of
    conditions, including obtaining regulatory and third party
    consents. If these consents are obtained, we anticipate this
    transaction will be completed in mid 2009.  B.
    Business
    Overview      
    104,000 miles of power distribution and transmission lines;
    2,214 MW of electric power generation capacity;
    4,900 miles of natural gas and gas liquids transportation
    pipelines;
    20,500 miles of natural gas distribution pipeline networks;
    6.6 million retail customers, including approximately
    4.3 million electric power customers and 2.3 million
    natural gas customers;
    2,327 owned and affiliated gasoline and CNG service
    stations; and
    14,230 employees.  Our
    Competitive Strengths
    Well-positioned
    and diversified across multiple segments of the energy
    industry
   26




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##### Table of Contents



Operational
    excellence
    Strong
    contracted and regulated cash flows to support
    growth
    Exclusive
    focus in emerging markets
    Demonstrated
    capability to execute strategy
  and/or
  Strong
    local presence with experienced management team and strong local
    brands
    Our
    Strategy
   27




---



##### Table of Contents



and/or
    
    maximizing the financial performance of our existing businesses;
    applying technical, environmental, health and safety best
    practices to maximize operational performance of our businesses;
    developing and maintaining our strong relationships with local
    regulators, governments and communities through active
    involvement in the regulatory process and the maintenance of
    open communication channels;
    maintaining a flexible financial profile through moderate levels
    of debt and reinvestment of cash flow to deliver growth;
    leveraging our strong management teams and their relationships
    and market knowledge to pursue opportunities to grow the
    business; and
    integrating new businesses into our platform and sharing best
    practices to maximize operating and financial performance.    Challenges
    in Implementing Our Strategy
    
    our revenues are dependent upon economic growth in general and
    growth in our customer base and in energy demand in particular;
    we operate in emerging markets, where we are exposed to
    political and regulatory risks, including the possibility of
    nationalization and the fact that tariffs are set by
    governmental agencies;
    we are affected by trends in energy consumption and fluctuations
    in availability and cost of fuel, labor, and supplies;
    the fact that some of our growth is dependent on the expansion
    of existing businesses, the integration of newly acquired
    businesses, which we have no history of owning or operating and
    successful greenfield developments; and
    we may not be able to raise sufficient capital to fund our
    growth activity.   28




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##### Table of Contents



Our
    Businesses
    Business
    Segments
  Power Distribution and/or and/or
  Power
    Distribution(1)ApproximateAEI Ownership




Number of





GWhStart of


Interest (Direct


Operating

Customers


Network


SoldBusiness

Country


Operations(2)


and Indirect)


Control(3)

(Thousands)


in Miles


(2008)(4)Elektro


Brazil



1998



99.68
%

Yes


2067



65,749



10,876Elektra


Panama



1998



51.00
%

Yes


340



5,340



2,250EDEN(5)


Argentina



1997



90.00
%

Yes


322



10,880



2,510Delsur


El Salvador



1996



86.41
%

Yes


308



5,159



1,162Chilquinta


Chile



1981



50.00
%

Joint with
    Sempra


475



5,088



2,303Luz del Sur


Peru



1994



37.97
%

Joint with
    Sempra


808



11,193



5,3334,189



103,409



24,434     (1)
    
    Information provided in this table
    is as of December 31, 2008.(2)
    
    Start of Operations
    refers to the beginning of commercial operations as a
    stand-alone entity, not when we acquired an interest in the
    business.(3)
    
    Operating Control means
    that AEI has either a controlling interest in the business or
    operates the business through an operating agreement.(4)
    
    Represents GWh sold plus GWh
    transmitted through the business service territory on
    behalf of others.(5)
    
    Subject to local anti-trust
    approval. 29




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##### Table of Contents



Power Generation
  Power
    Generation(1)AEI




InstalledOwnership




GeneratingStart of


Interest (Direct


Operating

Capacity


PrimaryBusiness

Country


Operations(2)


and Indirect)


Control(3)

(MW)


Fuel TypeTrakya


Turkey



1999



59.00
%

Yes


478


Natural GasCuiabá-EPE


Brazil



1999



50.00
%

Joint with Shell


480


Natural GasLuoyang


China



2006



50.00
%

Yes


270


CoalPQP


Guatemala



1993



100.00
%

Yes


234


Bunker FuelSan Felipe


Dominican
    Republic



1994



100.00
%

Yes


180


Bunker FuelENS


Poland



2000



100.00
%

Yes


116


Natural GasSubic(4)


Philippines



1994



50.00
%

Yes


116


Bunker FuelCorinto


Nicaragua



1999



50.00
%

Yes


70


Bunker FuelTipitapa


Nicaragua



1999



100.00
%

Yes


51


Bunker FuelJPPC


Jamaica



1996



84.43
%

Yes


60


Bunker FuelDCL


Pakistan



2008



59.94
%

Yes


94


Natural GasEmgasud


Argentina



1991
(5)


31.89
%

No


66


Natural Gas2214     (1)
    
    Information provided in this table
    is as of December 31, 2008. During the first quarter of
    2009, we acquired an interest in Amayo.(2)
    
    Start of Operations
    refers to the beginning of commercial operations as a
    stand-alone entity, not when we acquired an interest in the
    business.(3)
    
    Operating Control means
    that AEI has either a controlling interest in the business or
    operates the business through an operating agreement.(4)
    
    During the first quarter of 2009,
    the BOT agreement for Subic expired on schedule and the plant
    was turned over to NCP.(5)
    
    Operations commenced in 1991,
    however, power generation operation began in 2008. 30




---



##### Table of Contents



Natural Gas Transportation and Services
  Natural Gas Transportation and
    Services(1)AEI Ownership




2008Start of


Interest (Direct and


Operating

Throughput


NetworkBusiness

Country


Operations(2)


Indirect)


Control(3)

(mmcfd)(4)


in MilesPromigas










52.13
%Promigas Pipeline


Colombia



1974



52.13
%

Yes(5)


294



1,286Transmetano


Colombia



1993



50.35
%

Yes(5)


34



93GBS


Colombia



1999



49.37
%

Yes(5)


12



196Centragas


Colombia



1996



13.03
%

Yes(5)


165



458PSI


Colombia



2003



50.52
%

Yes(5)


305



N/A
(6)Transoccidente


Colombia



1998



35.96
%

Yes(5)


37



7Transoriente


Colombia



1994



13.73
%

No


12



98CuiabáGOB


Bolivia



2001



50.00
%

Joint with
    Shell


2.29



225GOM


Brazil



2001



50.00
%

Joint with
    Shell


1.44



175Brazil/TBS


Bolivia



1999



50.00
%

Joint with
    Shell


1.41
(7)


N/A
(7)Accroven


Venezuela



2001



49.25
%

Joint with
    Williams


759



N/A
(8)Bolivia-to-Brazil PipelineGTB(9)


Bolivia



1999



17.65
%

Joint with
    Shell


1,098



346TBG(9)


Brazil



1999



4.27
%

No


987



1,611Emgasud


Argentina



2007



31.89
%

No


126



3943,834



4,889     (1)
    
    Information provided in this table
    is as of December 31, 2008.(2)
    
    Start of Operations
    refers to the beginning of commercial operations as a
    stand-alone entity, not when we acquired an interest in the
    business.(3)
    
    Operating Control means
    that AEI has either a controlling interest in the business,
    operates the business through an operating agreement or has
    operating control through its operating control of Promigas.(4)
    
    Includes both gas and liquids.(5)
    
    AEI has operating control through
    its control of Promigas.(6)
    
    PSI provides services related to
    the drying and compression of natural gas.(7)
    
    TBS is a natural gas shipper which
    purchases natural gas in Bolivia and resells it to EPE.(8)
    
    Accroven operates a natural gas
    liquids extraction, fractionation, storage and refrigeration
    facility.(9)
    
    Includes the percentages of GTB and
    TBG previously owned through Transredes. 31




---



##### Table of Contents



Natural Gas Distribution
  Natural Gas
    Distribution(1)AEIOwnership





ApproximateInterest





Number ofStart of


(Direct and


Operating


Customers


Network inBusiness

Country


Operations(2)


Indirect)


Control(3)


(Thousands)


MilesPromigas










52.13
%Surtigas(4)


Colombia



1968



52.07
%


Yes
(5)


449



4,875Gases de
    Occidente(4)


Colombia



1992



46.97
%


Yes
(5)


619



4,061Gases del Caribe


Colombia



1966



16.16
%


No



921
(6)


8,494Emgasud


Argentina



2001



31.89
%


No



24



483Cálidda


Peru



2002



80.85
%


Yes



12



404BMG


China



1988



70.00
%


Yes



92



1,118Tongda


China



1998



100.00
%


Yes



142



1,1102,259



20,545     (1)
    
    Information provided in this table
    is as of December 31, 2008.(2)
    
    Start of Operations
    refers to the beginning of commercial operations as a
    stand-alone entity, not when we acquired an interest in the
    business.(3)
    
    Operating Control means
    that AEI has either a controlling interest in the business,
    operates the business through an operating agreement or has
    operating control through its operating control of Promigas.(4)
    
    On March 7, 2008, Promigas
    purchased additional interest in Surtigas and Gases de
    Occidente, which increased our ownership to 52.07% and 46.97%,
    respectively.(5)
    
    AEI has operating control through
    its operating control of Promigas.(6)
    
    Includes its consolidated
    subsidiaries, Gases de La Guajira, Gases del Quinido, Gases
    del Risaralda and Gas Natural del Centro.  Retail Fuel
  Retail
    Fuel(1)AEIOwnershipInterestStart of


(Direct and


Operating


Product


Volume SoldBusiness

Country

Operations(2)


Indirect)


Control(3)


Sold


(2008)SIE - Gazel(4)


Colombia, Chile,
    Mexico, Peru



1986



24.96
%


Yes



Compressed
    Natural Gas


12,119
    mmscfSIE - Terpel(4)


Colombia, Chile,
    Ecuador, Panama



1968



24.96
%


Yes



Gasoline, Diesel,
    Jet Fuel,
    Lubricants


1,160 million
    gallons     (1)
    
    Information provided in this table
    is as of December 31, 2008.(2)
    
    Start of Operations
    refers to the beginning of commercial operations as a
    stand-alone entity, not when we acquired an interest in the
    business.(3)
    
    Operating Control means
    that AEI has either a controlling interest in the business,
    operates the business through an operating agreement or has
    operating control through its operating control of Promigas.(4)
    
    On January 2, 2008, Promigas
    contributed its ownership interests in its wholly-owned
    subsidiary Gazel to SIE in exchange for additional shares of
    SIE. SIE subsequently transferred Gazel to its subsidiary Terpel. 32




---



##### Table of Contents



Power
    Distribution
  Segment
    Overview
  Power Distribution and/or and/or
    ScheduledAEI




TerminationOwnership




Date of

ApproximateInterest




Principal

Number of


Approximate





GWh(Direct and


Operating

Concession

Customers


Number


Network


SoldBusiness

Country

Indirect)


Control(1)

Agreement

(thousands)


of Employees


in Miles


(2008)(2)Elektro


Brazil



99.68
%

Yes

2028,
    extendable
    for 30 years


2067



2,678



65,749



10,876Elektra


Panama



51.00
%

Yes

Expires in
    2012, then
    subject to
    new bid


340



557



5,340



2,250EDEN


Argentina



90.00
%(3)

Yes

2092


322



725



10,880



2,510Delsur


El Salvador



86.41
%

Yes

Terminates
    only if Delsur
    breaches
    agreement


308



273



5,159



1,162Chilquinta


Chile



50.00
%

Joint with
    Sempra

Indefinite;
    may be
    revoked if
    Chilquinta
    fails to meet
    certain
    quality and
    safety
    standards


475



427



5,088



2,303Luz del Sur


Peru



37.97
%

Joint with
    Sempra

Indefinite;
    terminates
    only if Luz
    del Sur
    breaches
    agreement


808



688



11,193



5,3334,324



5,547



103,694



20,177     (1)
    
    Operating Control means
    that AEI either has a controlling interest in the business or
    operates the business through an operating agreement.(2)
    
    Represents GWh sold plus GWh
    transmitted through the business service territory on
    behalf of others.(3)
    
    Subject to local anti-trust
    approval.   33




---



##### Table of Contents



Elektro
    Eletricidade e Serviços S.A. (Elektro)
  Overview
  Comissão de Valores Mobiliários
  As of and for the Year Ended December 31,2006


2007


2008Millions of dollars (U.S.) except GWh, customers and milesCustomers at year end (thousands)


1,954



2005



2,067Energy sales (GWh)


9,868



10,093



10,845Operating income

$
320


$
323


$
298Depreciation and amortization

$
60


$
115


$
110Net
    debt(1)

$
134


$
229


$
241Network length (miles)


62,678



64,478



65,749     (1)
    
    See Non-GAAP Financial
    Measures and Item 3. Key
    Information  A. Selected Financial Data. Net
    debt as indicated in the table above is reconciled below:  As of December 31,2006


2007


2008Millions of dollars (U.S.)Total debt

$
415


$
414


$
370LessCash and cash equivalents


(237
)


(130
)


(93
)Current restricted cash


(23
)


(25
)


(7
)Non-current restricted cash


(21
)


(30
)


(29
)Net debt

$
134


$
229


$
241   Concession
    and Contractual Agreements
  30-year
    Tariffs
   34




---



##### Table of Contents



Customer
    Base
      Number of
    Customers
  WeightedAverageAnnual GrowthAs of December 31,


2008/2006Customer Type

2006


2007


2008


(%)Residential


1,674,743



1,712,012



1,763,950



2.6Commercial


131,522



133,693



139,733



3.1Industrial


21,475



21,833



22,112



1.5Government


19,432



20,041



21,228



4.5Rural


107,035



117,314



120,128



6.0Total


1,954,207



2,004,893



2,067,151



2.8  35




---



##### Table of Contents



Sales by
    Types of Customer
  AverageAnnualFor the Year Ended December 31,


Growth 2008/2006Customer Type

2006


2007


2008


%Millions of dollars (U.S.) except GWhGWh





GWh











GWhResidential

$
618



3,060


$
704



3,184


$
739



3,347



9.4



4.6Commercial


256



1,379



296



1,490



305



1,580



9.2



7.0Industrial


445



3,348



469



3,464



594



4,052



16.1



10.2Government


138



1,004



150



1,024



152



1,058



5.0



2.7Rural


80



770



90



809



87



807



4.5



2.4Other revenues/taxes


(507
)


306



(514
)


123



(488
)


31



(1.9
)


(67.3
)Total net revenues  Elektro


1,031



9,868



1194



10,094



1,389



10,876



16.1



5.0EKCE(1)


49



1,338



45



986



18



318



(33.3
)


(47.1
)Total net revenues  consolidated

$
1,080



11,206


$
1,239



11,080


$
1,407



11,194



14.2



0.0     (1)
    
    EKCEs results are
    consolidated into Elektros U.S. GAAP financial results.  and/or
  Power
    Supply
  reais
     36




---



##### Table of Contents



(Câmara de Comercialização
    de Energia Elétrica  CCEE).
    Operations
    Associação Brasileira de
    Distribuidoras de Energia Elétrica Associação Brasileira de
    Distribuidoras de Energia Elétrica
      For the Year EndedDecember 31,2006


2007


2008FEC (number per customer per year)


6.7



6.4



6.02DEC (hours per customer per year)


10.2



9.4



8.52    37




---



##### Table of Contents



Luz
    para Todos Conta
    de Desenvolvimento Energético
  Financing
      Elektra
    Noreste, S.A. (Elektra)
  Overview
    As of and for the Year EndedDecember 31,2006


2007


2008Millions of dollars (U.S.), except GWh, customers and
    milesCustomers at year end (thousands)


312



328



340Energy sales
    (GWh)(1)


2,029



2,179



2,250Operating income

$
33


$
34


$
36Depreciation and amortization

$
12


$
13


$
13Net
    debt(2)

$
67


$
91


$
119Network length (miles)


4,914



5,154



5,340     (1)
    
    Does not include sales for
    distribution in third-party transmission. 38




---



##### Table of Contents



(2)
    
    See Non-GAAP Financial
    Measures and Item 3. Key
    Information  A. Selected Financial Data. Net
    debt as indicated in the table above is reconciled below:  As of December 31,2006


2007


2008Millions of dollars (U.S.)Total debt

$
99


$
99


$
144LessCash and cash equivalents


(32
)


(8
)


(25
)Current restricted cash


0



0



0Non-current restricted cash


0



0



0Net debt

$
67


$
91


$
119   Concession
    and Contractual Agreements
  Autoridad Nacional de los Servicios
    Públicos
  15-year 15-year
      Customer
    Base
   39




---



##### Table of Contents



Operations
      For the Year EndedDecember 31,2006


2007


2008SAIFI (number per customer per year)


3.02



2.69



2.75SAIDI (hours per customer per year)


3.39



2.99



3.10     Financing
    Empresa
    Distribuidora de Energía Norte S.A. (EDEN)
  Overview
      As of and for the Year EndedDecember 31,2006


2007


2008Customers at year end (thousands)


307



315



322Energy sales
    (GWh)(1)


2,279



2,418



2,510Network length (miles)


10,644



10,745



10,880     (1)
    
    Does not include sales for
    distribution in third-party transmission. 40




---



##### Table of Contents



Concession
    and Contractual Agreements
  10-year provided however
  pesos
  Customer
    Base
    Operations
      For the Year Ended December 31,2006


2007


2008SAIFI (number per customer per year)


8.67



8.21



8.82SAIDI (hours per customer per year)


15.48



13.83



15.04   Financing
    Distribuidora
    de Electricidad Del Sur, S.A. de C.V. (Delsur)
  Overview
   41




---



##### Table of Contents



Bolsa de Valores de El Salvador
    As of and for the Year EndedDecember 31,2006


2007


2008Customers at year end (thousands)


289



299



308Energy sales (GWh)


1,093



1,113



1,162Network length (miles)


4,037



4,037



5,159   Concession
    and Contractual Agreements
  Superintendencia General de Electricidad
    y Telecomunicaciones
    Customer
    Base
    Operations
   42




---



##### Table of Contents



For the Year Ended December 31,2006


2007


2008SAIFI (number per customer per year)


11



17



15SAIDI (hours per customer per year)


31



41



37     Financing
    Chilquinta
    Energia S.A. (Chilquinta)
  Overview
      As of and for the Year Ended December 31,2006


2007


2008Customers at year end (thousands)


454



465



475Energy sales (GWh)


2,121



2,281



2,303Network length (miles)


4,949



4,921



5,088   Concession
    and Contractual Agreements
    (Comisión Nacional de Energía)
   43




---



##### Table of Contents



Customer
    Base
    Operations
        For the Year Ended December 31,2006


2007


2008SAIFI (number per customer per year)


2.7



1.5



1.5SAIDI (hours per customer per year)


7.3



4.1



3.8   Luz
    del Sur S.A. (Luz del Sur)
  Overview
      As of and for the Year Ended December 31,2006


2007


2008Customers at year end
    (thousands)(1)


787



782



808Energy sales
    (GWh)(1)(2)


4,642



4,994



5,333Network length
    (miles)(1)


11,004



11,169



11,400     (1)
    
    Includes Luz del Sur only and does
    not include its subsidiary.(2)
    
    Does not include sales for
    distribution in third-party transmission.  Concession
    and Contractual Agreements
    Gerencia Adjunta de Regulación
    Tarifaria
 44




---



##### Table of Contents



Customer
    Base
    Operations
        For the Year Ended December 31,2006


2007


2008FEC (number per customer per year)


3.1



2.2



2.2DEC (hours per customer per year)


6.9



6.3



6.1   Power
    Generation
  Segment
    Overview
    Power GenerationPercentGeneratingCapacity UnderContracts andScheduledInstalled




Termination DateAEI Ownership




Generating




Under Principal

ApproximateInterest (Direct


Operating

Capacity


Primary Fuel

Power Purchase

Number ofBusiness

Country


and Indirect)


Control(1)

(MW)


Type

Agreements

EmployeesTrakya


Turkey



59.00
%

Yes


478


Natural Gas

100%
    until June 2019


86Cuiabá  EPE


Brazil



50.00
%

Joint with
    Shell


480


Natural Gas

100%
    until May 2019


65Luoyang(2)


China



50.00
%

Yes


270


Coal

PPA renewed
    annually.


95PQP


Guatemala



100.00
%

Yes


234


Bunker Fuel

47%
    until February 2013


45San Felipe


Dominican
    Republic



100.00
%

Yes


180


Diesel Oil/
    Bunker Fuel

100%
    until January 2015


78ENS


Poland



100.00
%

Yes


116


Natural Gas

79%
    until December 2010


47Subic(3)


Philippines



50.00
%

No


116


Bunker Fuel

100%
    until February 2009


76Corinto


Nicaragua



50.00
%

Yes


71


Bunker Fuel

71%
    until September 2014


84 45




---



##### Table of Contents



Power GenerationPercentGeneratingCapacity UnderContracts andScheduledInstalled




Termination DateAEI Ownership




Generating




Under Principal

ApproximateInterest (Direct


Operating

Capacity


Primary Fuel

Power Purchase

Number ofBusiness

Country


and Indirect)


Control(1)

(MW)


Type

Agreements

EmployeesTipitapa(4)


Nicaragua



100.00
%

Yes


51


Bunker Fuel

100%
    until 2014


49JPPC


Jamaica



84.40
%

Yes


60


Bunker Fuel

100%
    until 2016


55DCL(5)


Pakistan



60.22
%

Yes


94


Natural Gas

100%
    until April 2038


99Emgasud


Argentina



31.89
%

No


65


Natural Gas/
    Fuel Oil

100%
    until 2011 and 2012


162,215







795     (1)
    
    Operating Control means
    that AEI has either a controlling interest in the business or
    operates the business through an operating agreement.(2)
    
    On February 5, 2008, we
    acquired a 48.00% interest in Luoyang. On June 6, 2008, we
    acquired an additional 2.00% interest in Luoyang.(3)
    
    During the first quarter of 2009,
    the BOT agreement for Subic expired on schedule and the plant
    was turned over to NCP.(4)
    
    On June 11, 2008, we acquired
    a 100.00% interest in Tipitapa.(5)
    
    On July 18, 2008, we acquired
    a 48% interest in DCL. Since the additional acquisition, we have
    executed additional share subscription agreements that have
    resulted in an increase in our ownership to 60.22%.    Power
    Generation Growth
    Trakya
    Elektrik Uretim ve Ticaret A.S. (Trakya)
  Overview
   46




---



##### Table of Contents



As of and for the Year Ended December 31,2006


2007


2008Millions of dollars (U.S.), except MW, % and Btu/kWhCapacity (MW)


478



478



478Capacity factor (%)


96.3



98.6



96.0Heat rate (Btu/kWh)


7,431.8



7,400.2



7,452.0Operating income

$
85


$
46


$
24Depreciation and amortization

$
19


$
19


$
16Net
    debt(1)

$
82


$
(62
)

$
(59
)     (1)
    
    See Non-GAAP Financial
    Measures and Item 3. Key
    Information  A. Selected Financial Data. Net
    debt as indicated in the table above is reconciled below:  As of December 31,2006


2007


2008Millions of dollars (U.S.)Total debt

$
94


$
47


$
0LessCash and cash equivalents


(60
)


(8
)


(59
)Current restricted cash


(13
)


(13
)


0Non-current restricted cash


(103
)


(88
)


0Net debt

$
(82
)

$
(62
)

$
(59
)   Contractual
    Agreements
     47




---



##### Table of Contents



force majeure and/or
  Operations
    For the Year Ended December 31,2006


2007


2008Availability (%)


97.55



97.72



88.34Reliability (%)


99.94



99.72



99.03Generation (GWh)


3,703



3,753



3,342       Management
    and Governance
      Financing
   48




---



##### Table of Contents



Cuiabá 
    EPE  Empresa Produtora de Energia Ltda.
    (EPE)
  Cuiabá
    Integrated Project Overview
      
    (1)
    
    This agreement expired on
    June 30, 2008.      As of and for the Year Ended December 31,2006


2007


2008Millions of dollars (U.S.), except MW, % and Btu/kWhCapacity (MW)


480



480



480Capacity factor (%)


25.06



24.56



3.8Heat rate (Btu/kWh)


7,564



6,519



7,576Operating income

$
(1
)

$
(85
)

$
(90
)Depreciation and amortization

$
1


$
1


$
1Net
    debt(1)(2)

$
12


$
3


$
24  49




---



##### Table of Contents



(1)
    
    Attributable to notes owed to
    shareholder affiliates.(2)
    
    See Non-GAAP Financial
    Measures and Item 3. Key
    Information  A. Selected Financial Data.    As of December 31,2006


2007


2008Millions of dollars (U.S.)Total debt

$
44


$
42


$
42LessCash and cash equivalents


(32
)


(39
)


(13
)Current restricted cash


0



0



(5
)Non-current restricted cash


0



0



0Net debt

$
12


$
3


$
24   Concession
    and Contractual Agreements
    reais
      19-year make-up
     50




---



##### Table of Contents



Operations
    For the Year Ended December 31,2006


2007


2008Availability (%)


95.61



91.92



100.00Reliability (%)


99.00



99.76



100.00Generation (GWh)


1,055



1,015



161.20        51




---



##### Table of Contents



Financing
    Luoyang
    Sunshine Cogeneration Co., Ltd. (Luoyang)
  Overview
    Concession
    and Contractual Agreements
      Management
    and Governance
      Operations
  Commercial operations of the plant began in
    2006.
 52




---



##### Table of Contents



For the Year Ended December 31,2006


2007


2008Availability (%)


97.08
%


97.81
%


36.00
%Reliability (%)


96.06
%


97.42
%


81.00
%Generation (GWh)


846



1,024



849   Growth
    Financing
    Puerto
    Quetzal Power LLC (PQP)
  Overview
      As of and for the Year Ended December 31,2006


2007


2008Capacity (MW)


234



234



234Capacity factor (%)


27.6



39.6



31.7Heat rate (Btu/kWh)


9,312



9,256



9,228   Concession
    and Contractual Agreements
  20-year
 53




---



##### Table of Contents



Merchant
    Activities
      Operations
    For the Year EndedDecember 31,2006


2007


2008Availability (%)


93.9



93.6



93.7Reliability (%)


98.1



98.9



98.5Energy Sales (GWh)


1,227



1,336



1,377   Superintendencia de Administración
    Tributaria 2003-2005 2001-2002 2003-2005 2001-2002
  Financing
    Generadora
    San Felipe Limited Partnership
    (San Felipe)
  Overview
   54




---



##### Table of Contents



As of and for the Year EndedDecember 31,2006


2007


2008Millions of dollars (U.S.), except MW, % and Btu/kWhCapacity (MW)


180.0



180.0



180.0Capacity factor (%)


80.3



50.1



65.1Heat rate (Btu/kWh)


10,061.1



10,051.2



9,496.0Operating income

$
22


$
19


$
11Depreciation and amortization

$
2


$
6


$
(9
)Net
    debt(1)

$
(13
)

$
(16
)

$
(8
)     (1)
    
    See Non-GAAP Financial
    Measures and Item 3. Key
    Information  A. Selected Financial Data. Net
    debt as indicated in the table above is reconciled below:  As of December 31,2006


2007


2008Millions of dollars (U.S.)Total debt

$
0


$
0


$
0LessCash and cash equivalents


(13
)


(16
)


(2
)Current restricted cash


0



0



(6
)Non-current restricted cash


0



0



0Net debt

$
(13
)

$
(16
)

$
(8
)   Concession
    and Contractual Agreements
        Secretaría de Medio
    Ambiente y Recursos Naturales
 55




---



##### Table of Contents



Operations
    For the Year Ended December 31,2006


2007


2008Availability (%)


77.83



83.66



80.80Reliability (%)


83.62



94.92



91.20Generation (GWh)


899



693



1,029     Financing
    Elektrocieplownia
    Nowa Sarzyna Sp. z.o.o. (ENS)
  Overview
      As of and for the Year Ended December 31,2006


2007


2008Millions of dollars (U.S), except MW, %and Btu/kWhCapacity (MW)


116



116



116Capacity factor (%)


78.6



78.3



79.3Heat rate (Btu/kWh)


8,678.3



8,592.4



8,586.0Operating income

$
15


$
16


$
30Depreciation and amortization

$
6


$
10


$
2Net
    debt(1)

$
53


$
57


$
56     (1)
    
    See Non-GAAP Financial
    Measures and Item 3. Key
    Information  A. Selected Financial Data. Net
    debt as indicated in the table above is reconciled below:  As of December 31,2006


2007


2008Millions of dollars (U.S.)Total debt

$
85


$
77


$
67LessCash and cash equivalents


(19
)


(10
)


(8
)Current restricted cash


(13
)


(10
)


(3
)Non-current restricted cash


0



0



0Net debt

$
53


$
57


$
56  56




---



##### Table of Contents



Concession
    and Contractual Agreements
      20-year zlotys
  20-year zlotys
  Operations
    For the Year EndedDecember 31,2006


2007


2008Availability (%)


90.83



99.75



98.09Reliability (%)


99.95



99.79



99.85Generation (GWh)


681



754



754Thermal energy produced (GJ)


584,979



606,291



610,838   Financing
   57




---



##### Table of Contents



Empresa
    Energética Corinto Ltd. (Corinto)
  Overview
      Concession
    and Contractual Agreements
  and/or 12-year
  Operations
    For the Year Ended December 31,2006


2007


2008Availability (%)


90.13



93.30



92.10Reliability (%)


97.60



98.28



97.40Generation (GWh)


536



556



508   Management
    Tipitapa
    Power Company Ltd. (Tipitapa)
  Overview
   58




---



##### Table of Contents



Concession
    and Contractual Agreements
    Operations
    For the Year EndedDecember 31,2006


2007


2008Availability (%)


96.03



95.75



96.10Reliability (%)


98.38



97.45



98.58Generation (GWh)


420.2



409.25



392.96   Jamaica
    Private Power Company Ltd. (JPPC)
  Overview
    Concession
    and Contractual Agreements
      Operations
    For the Year Ended December 31,2006


2007


2008Availability (%)


92.2



90.7



88.9Reliability (%)(1)










95.3Generation (GWh)


460.9



436.3



454.9     (1)
    
    Reliability was not tracked at this
    business prior to our purchase in October 2007. 59




---



##### Table of Contents



DHA
    Cogen Limited (DCL)
  Overview
    Concession
    and Contractual Agreements
  30-year
    take-or-pay 30-year
  Operations
    Financing
   60




---



##### Table of Contents



Emgasud
    S.A. (Emgasud)
  Overview
        Operations
      Concession
    and Contractual Agreements
      Financing
   61




---



##### Table of Contents



Jaguar
    Energy Guatemala LLC (Jaguar)
  300-MW 275-MW 150-MW 15-year 200-MW 75-MW
  Empresa
    Electrica de Generacion de Chilca S.A. (Fenix)
  541-MW (522-MW
  Consorcio
    Eolico Amayo S.A. (Amayo)
  5-year 15-year
  Natural
    Gas Transportation and Services
  Segment
    Overview
  Natural Gas Transportation and Services
 62




---



##### Table of Contents



Natural Gas Transportation and ServicesScheduledTerminationDate of








%AEI Ownership








Principal


Approximate


2008


ContractedInterest (Direct


Operating


Network


Concession


Number of


Through put


Under FirmBusiness

Country

and Indirect)


Control(1)


in Miles


Agreement


Employees


(mmcfd)(2)


ContractPromigas




52.13
%Promigas Pipeline

Colombia


52.13
%


Yes
(3)


1,286



2026



296



294



80%Transmetano

Colombia


49.78
%


Yes
(3)


93



2043



36



34



92%GBS

Colombia


49.37
%


Yes
(3)


196



2009



11



12



N/ACentragas

Colombia


13.03
%


Yes(3
)


458



2011



24



165



N/APSI

Colombia


49.11
%


Yes
(3)


N/A
(4)


N/A
(4)


6



305



100%Transoccidente

Colombia


35.96
%


Yes
(3)


7



N/A



3



37



42%Transoriente

Colombia


13.73
%


No



98



2045



14



12



53%CuiabáTBS

Brazil


50.00
%


Joint with Shell



N/A
(5)


N/A(5
)


0



1.41



N/A
(5)GOM

Brazil


50.00
%


Joint with Shell



175



2027



3



1.44



100%GOB

Bolivia


50.00
%


Joint with Shell



225



2024



15



2.29



100%Accroven

Venezuela


49.25
%


Joint with Williams



N/A
(6)


2021



120



759



100%Bolivia-to-BrazilPipelineGTB

Bolivia


17.65
%(7)


Joint with Shell



346



2037



68



1,098



100%TBG

Brazil


4.27
%(7)


No



1,611



2037



278



987



100%Emgasud

Argentina


31.89
%


No



394



2027



8



126



100%4,889







882



3,824     (1)
    
    Operating Control means
    that AEI has either a controlling interest in the business,
    operates the business through an operating agreement or has
    operating control through its operating control of Promigas.(2)
    
    Includes both gas and liquids.(3)
    
    AEI has operating control through
    its operating control of Promigas.(4)
    
    PSI provides services related to
    the drying and compression of natural gas.(5)
    
    TBS is a natural gas shipper which
    purchases natural gas in Bolivia and resells it to EPE.(6)
    
    Accroven operates a natural gas
    liquids extraction, fractionation, storage and refrigeration
    project.(7)
    
    Includes the percentages of GTB and
    TBG previously owned through Transredes.    Promigas
    S.A., ESP (Promigas)
  Overview
    of Promigas
  Bolsa de Valores de
    Colombia
   63




---



##### Table of Contents



As of and for the Year EndedDecember 31,2006


2007


2008Volume transported (mmcfd)


328



305



294Maximum capacity (mmcfd)


475



475



535Customers


12



12



13     Management
    and Governance
    Promigas
    Transportation Businesses
  PromigasPipeline


Ownership % as ofCompany

Length (Miles)


December 31, 2008Promigas Pipeline


1,286



100%Centragas


458



25.00%Transoriente


98



20.00%Transmetano


93



94.98%GBS


196



91.39%Transoccidente


7



55.91%   Promigas
    Pipeline
  and/or
  Concession
    and Contractual Agreements
  20-year
 64




---



##### Table of Contents



Tariffs
  take-or-pay take-or-pay,
  Customer
    Base
    Operations
    Other
    Promigas Pipelines
  Promigas 
    Transmetano S.A. ESP (Transmetano)
    20-year
  Comisión de
    Regulación de Energía y Gas
 65




---



##### Table of Contents



Promigas 
    Gases de Boyacá y Santander, GBS S.A. (GBS)
          Promigas 
    Centragas (Centragas)
          Promigas 
    Promigas Servicios Integrados S.A. (PSI)
        Promigas 
    Transoccidente S.A. ESP (Transoccidente)
     66




---



##### Table of Contents



Promigas 
    Transoriente S.A. ESP (Transoriente)
            Cuiabá 
    GasOcidente do Mato Grosso Ltda. (GOM), GasOriente Boliviano
    Ltda. (GOB) and Transborder Gas Services Ltd.
    (TBS)
  Overview
  18-inch 18-inch
    Contractual
    Agreements
    Agência Nacional de
    Petróleo 25-year
  40-year 25-year
 67




---



##### Table of Contents



Operations
  sub-contract 15-year
    As of and for the Year EndedDecember 31,2006


2007


2008Millions of dollars (U.S.),except mmcfd and %GOMAverage monthly throughput (mmcfd)


20.6



20.1



1.44Maximum capacity (%)


20.6
%


20.1
%


1.2
%Operating income

$
14


$
15


$
17Depreciation and amortization

$
4


$
3


$
3Net
    debt(1)(2)

$
25


$
15


$
7GOBAverage monthly throughput (mmcfd)


23.6



20.9



2.29Maximum capacity (%)


23.6
%


20.9
%


1.2
%Operating income

$
11


$
13


$
14Depreciation and amortization

$
3


$
2


$
2Net
    debt(1)(2)

$
36


$
32


$
28     (1)
    
    Attributable to notes owed to
    shareholder affiliates. 68




---



##### Table of Contents



(2)
    
    See Non-GAAP Financial
    Measures and Item 3. Key
    Information  A. Selected Financial Data. Net
    debt for GOM as indicated in the table above is reconciled below:  As of December 31,2006


2007


2008Millions of dollars (U.S.)Total debt

$
26


$
23


$
23LessCash and cash equivalents


(1
)


(8
)


(16
)Current restricted cash


0



0



0Non-current restricted cash


0



0



0Net debt

$
25


$
15


$
7     As of December 31,2006


2007


2008Millions of dollars (U.S.)Total debt

$
37


$
33


$
31LessCash and cash equivalents


(1
)


(1
)


(3
)Current restricted cash


0



0



0Non-current restricted cash


0



0



0Net debt

$
36


$
32


$
28   Financing
    Accroven
    S.R.L. (Accroven)
  Overview
     69




---



##### Table of Contents



As of and for the Year Ended December 31,2006


2007


2008Throughput (mmcfd)


773



763



759Maximum capacity (%)


96.6



95.4



94.9   Operations
    Bolivia-to-Brazil
    Pipeline (BBPL)
  Gas
    Transboliviano S.A. (GTB)
  Overview
      As of and for the Year Ended December 31,2006


2007


2008Average monthly throughput (mmcfd)


905



987



1,098Capacity factor (%)


100
%


100
%


100
%   Concession
    and Contractual Agreements
  ship-or-pay ship-or-pay
  20-year
   70




---



##### Table of Contents



Management
    and Governance
      Transportadora
    Brasileira Gasoduto Bolivia-Brasil S.A. (TBG)
    ship-or-pay
  Emgasud
    S.A. (Emgasud)
   71




---



##### Table of Contents



15-year
  Natural
    Gas Distribution
  Segment
    Overview
  Natural Gas Distribution
  Natural Gas DistributionScheduledAEI





2008


TerminationOwnership





Average


Date of


ApproximateInterest





Sales


Principal


Number


Approximate


Network(Direct and


Operating


Volume


Concession


of Customers


Number of


SizeBusiness

Country


Indirect)


Control(1)


(mmcfd)


Agreement


(Thousands)


Employees


(Miles)Promigas






52.13
%Surtigas


Colombia



52.07
%


Yes
(2)


32



2034



449



410



4,675Gases de Occidente


Colombia



46.97
%


Yes
(2)


48



2014



619



380



4,061Gases del Caribe


Colombia



16.16
%


No



108



2028



922
(3)


346
(3)


8,494Emgasud


Argentina



31.89
%


No



8.1



2027



24



27



483Cálidda


Peru



80.85
%


Yes



157



2033



12



165



404BMG(4)


China



70
%


Yes



11.6



2038



92



732



1,118Tongda


China



100
%


Yes



5.6



2026



142



612



1,110370.3







2,260



2,672



20,544     (1)
    
    Operating Control means
    that AEI either has a controlling interest in the business,
    control of the business through a majority owned subsidiary or
    operates the business through an operating agreement.(2)
    
    AEI has operating control through
    its operating control of Promigas.(3)
    
    Includes its consolidated
    subsidiaries, Gases de la Guajira, Gases del Quinido, Gases del
    Risaralda and Gas Natural del Centro. Promigas owns a small
    direct interest in Gases de la Guajira.(4)
    
    On January 30, 2008, we
    acquired an additional 59.77% interest in BMG, which increased
    our ownership to 70.00%.    Promigas
     72




---



##### Table of Contents



Promigas 
    Surtigas S.A. E.S.P. (Surtigas)
  Overview
      As of and for the Year EndedDecember 31,2006


2007


2008Customers (thousands)


404



427



449Annual growth


8%



6%



5%Volume transported (Bcf)


11.6



10.5



11.4Network
    penetration(1)


81%



73%



77%Percent
    connected(2)


86%



89%



91%     (1)
    
    Network penetration
    refers to the covered service area.(2)
    
    Percent connected
    refers to the percentage of the covered service area which is
    connected to the network.  Concession
    and Contractual Agreements
  20-year
  Customer
    Base
    Operations
      Financing
   73




---



##### Table of Contents



Promigas 
    Gases de Occidente S.A. E.S.P. (Gases de
    Occidente)
  Overview
      As of and for the Year EndedDecember 31,2006


2007


2008Customers (thousands)


521



573



619Annual growth


12%



10%



8%Volume transported (Bcf)


15.0



17.0



17.7Network
    penetration(1)


97%



97%



99%Percent
    connected(2)


67%



71%



72%     (1)
    
    Network penetration
    refers to the covered service area.(2)
    
    Percent connected
    refers to the percentage of the covered service area which is
    connected to the network.  Concession
    and Contractual Agreements
    Customer
    Base
    Operations
      Financing
    Promigas 
    Gases del Caribe S.A. E.S.P. (Gases del Caribe)
  Overview
   74




---



##### Table of Contents



As of and for the Year EndedDecember 31,2006


2007


2008Customers
    (thousands)(1)


794



858



922Annual growth


8%



8%



7%Volume transported
    (Bcf)(1)


36.0



40.6



39.2Network
    penetration(2)


94%



95%



96%Percent
    connected(3)


81%



79%



83%     (1)
    
    Includes its consolidated
    subsidiaries, Gases de la Guajira, Gases del Quinido, Gases del
    Risaralda and Gas Natural del Centro.(2)
    
    Network penetration
    refers to the covered service area.(3)
    
    Percent connected
    refers to the percentage of the covered service area which is
    connected to the network.  Concession
    and Contractual Agreements
    Customer
    Base
    Operations
      Gas
    Natural de Lima y Callao S.A. (Cálidda)
  Overview
    Concession
    and Contractual Agreements
  33-year
 75




---



##### Table of Contents



sub-contract 2004-2009
  Customer
    Base
    Operations
  20-inch
      Financing
    Beijing
    Macrolink Gas Co., Ltd. (BMG)
  Overview
   76




---



##### Table of Contents



Concession
    and Contractual Agreements
    Customer
    Base
    Operations
    Tongda
    Energy Private Limited (Tongda)
  Overview
  88-mile
  Concession
    and Contractual Agreements
    Customer
    Base
    Operations
   77




---



##### Table of Contents



Emgasud
    S.A. (Emgasud)
    Retail
    Fuel
  Segment
    Overview
  Retail Fuel
  Retail FuelAEI OwnershipInterest








Approximate(Direct and


Operating



2008

Number ofBusiness

Country

Indirect)


Control(1)

Product Sold

Volume Sold

EmployeesSIE - Gazel(2)

Colombia, Chile, Mexico, Peru


24.96
%

Yes

Compressed
    Natural Gas

12,119 million
    cubic feet


582SIE - Terpel(2)

Colombia, Ecuador, Panama, Chile


24.96
%

Yes

Gasoline,
    Diesel, Jet
    Fuel,
    Lubricants

1,160 million
    gallons


3,2553,837     (1)
    
    Operating Control means
    that AEI either has a controlling interest in the business or
    operates the business through an operating agreement or through
    control of Promigas.(2)
    
    On January 2, 2008, Promigas
    contributed its ownership interests in its wholly-owned
    subsidiary Gazel to SIE in exchange for additional shares of
    SIE. SIE subsequently transferred Gazel to its subsidiary Terpel.    Promigas
  Overview
      Promigas 
    Sociedad de Inversiones en Energia (SIE)
   78




---



##### Table of Contents



Organización
    Terpel Inversiones S.A. (Terpel)
      As of and for the Year EndedDecember 31,2006


2007


2008Number of owned stations


160



418



386Number of affiliate stations


1,119



1,178



1,726Gallons of sales per dayWholesale


2,749,854



2,698,455



3,316,485Retail


418,232



422,096



788,452Aviation


166,536



336,114



430,581Lubricants


15,569



13,222



13,838Fuel margin per gallon ($)Wholesale

$
0.09


$
0.13


$
0.14Retail

$
0.13


$
0.22


$
0.38Aviation

$
0.24


$
0.29


$
0.18Lubricants

$
2.58


$
3.53


$
3.64             
    In 2006, the acquisition of 65 service stations from Chevron of
    its distribution and retail business in Ecuador representing 8%
    of the market;
    In February 2007 the acquisition of Petrolera Nacional in Panama
    with 53 service stations marketing under the brand name Accel
    and holding a 12% market share of Panamas gasoline and
    lubricant business; and, 79




---



##### Table of Contents




    The acquisition at the end of 2007 of Repsol retail gasoline and
    industrial sales business in Chile, with 206 services stations
    and a 10% market share.  Operations
      Gas
    Natural Comprimido S.A. (Gazel)
  Overview
        As of and for the Year EndedDecember 31,2006


2007


2008Number of stations


114



163



201Sales per day per station (cubic feet)


231,000



188,876



165,194Converted vehicles (cumulative)


168,523



235,058



280,123Fuel margin per cubic foot ($)

$
0.005


$
0.007


$
0.009   Operations
       80




---



##### Table of Contents



C.
    Organizational
    Structure  Our
    Segments and Businesses
    Business

Full Legal Name

Country

AEI Ownership
    %(1)Power DistributionChilquinta

Chilquinta Energía S.A.

Chile


50.00
%Delsur

Distribuidora de Electricidad Del Sur, S.A. de C.V.

El Salvador


86.41
%EDEN(2)

Empresa Distribuidora de Energía Norte S.A.

Argentina


90.00
%Elektra

Elektra Noreste, S.A.

Panama


51.00
%Elektro

Elektro Eletricidade e Serviços S.A.

Brazil


99.68
%Luz del
    Sur(3)

Luz del Sur S.A.A.

Peru


37.97
%Power GenerationCorinto

Empresa Energética Corinto Ltd.

Nicaragua


50.00
%DCL

DHA Cogen Limited

Pakistan


59.94
%ENS

Elektrocieplownia Nowa Sarzyna Sp. z o.o.

Poland


100.00
%EPE

EPE  Empresa Produtora de Energia Ltda. (Cuiabá
    Integrated Project)

Brazil


50.00
%Emgasud(4)

Emgasud S.A.

Argentina


31.89
%JPPC

Jamaica Private Power Company Ltd.

Jamaica


84.43
%Luoyang

Luoyang Sunshine Cogeneration Co., Ltd.

China


50.00
%PQP

Puerto Quetzal Power LLC

Guatemala


100.00
%San Felipe

Generadora San Felipe Limited Partnership

Dominican Republic


100.00
%Subic

Subic Power Corp.

Philippines


50.00
%Trakya

Trakya Elektrik Uretim ve Ticaret A.S.

Turkey


59.00
%Tipitapa

Tipitapa Power Company Ltd.

Nicaragua


100.00
%Natural Gas Transportation and ServicesAccroven

Accroven S.R.L.

Venezuela


49.25
%Centragas

Centragas (Promigas S.A., ESP)

Colombia


13.03
%Emgasud

Emgasud S.A.

Argentina


31.89
%GBS

Gases de Boyacá y Santander, GBS S.A. (Promigas S.A., ESP)

Colombia


49.37
%GOB

GasOriente Boliviano Ltda. (Cuiabá Integrated Project)

Bolivia


50.00
%GOM

GasOcidente do Mato Grosso Ltda. (Cuiabá Integrated Project)

Brazil


50.00
% 81




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##### Table of Contents



Business

Full Legal Name

Country

AEI Ownership
    %(1)GTB

Gas Transboliviano S.A. (Bolivia-to-Brazil Pipeline)

Bolivia


17.65
%Promigas Pipeline

Promigas Pipeline (Promigas S.A., ESP)

Colombia


52.13
%PSI

Promigas Servicios Integrados S.A. (Promigas S.A., ESP)

Colombia


50.52
%TBG

Transportadora Brasileira Gasoduto Bolivia-Brasil S.A.
    (Bolivia-to-Brazil Pipeline)

Brazil


4.21
%TBS

Transborder Gas Services Ltd. (Cuiabá Integrated Project)

Brazil


50.00
%Transmetano

Transmetano S.A. ESP (Promigas S.A., ESP)

Colombia


50.35
%Transoccidente

Transoccidente S.A. ESP (Promigas S.A., ESP)

Colombia


35.96
%Transoriente

Transoriente S.A. ESP (Promigas S.A., ESP)

Colombia


13.73
%Natural Gas DistributionBMG

Beijing Macrolink Gas Co., Ltd

China


70.00
%Cálidda

Gas Natural de Lima y Callao S.A.

Peru


80.85
%Emgasud

Emgasud S.A.

Argentina


31.89
%Gases de Occidente

Gases de Occidente S.A. E.S.P. (Promigas S.A., ESP)

Colombia


46.97
%Gases del Caribe

Gases del Caribe S.A. E.S.P. (Promigas S.A., ESP)

Colombia


16.16
%Surtigas

Surtigas S.A. E.S.P. (Promigas S.A., ESP)

Colombia


52.07
%Tongda

Tongda Energy Private Limited

China


100.00
%Retail FuelSIE 
    Terpel(5)

Sociedad de Inversiones en Energia (Promigas S.A., ESP) and
    Organización Terpel Inversiones S.A. (SIE)

Colombia, Ecuador, Panama, Chile


24.96
%SIE 
    Gazel(5)

Sociedad de Inversiones en Energia (Promigas S.A., ESP) and Gas
    Natural Comprimido S.A. (Promigas S.A., ESP)

Chile, Colombia, Mexico, Peru


24.96
%     (1)
    
    Represents AEIs net interest
    via direct and indirect ownerships.(2)
    
    We acquired our 90.00% interest in
    EDEN in 2007. The transaction is subject to local anti-trust
    approval. For additional details on the acquisition, see
    Item 4. Information on the Company  A.
    History and Development.(3)
    
    In May 2008, we acquired an
    additional 0.03% of Luz del Sur in a public tender. We currently
    own 37.97% of Luz del Sur. Our stake in Luz del Sur is owned
    indirectly through our 50.00% ownership of its holding company
    Peruvian Opportunity Company SAC, or POC.(4)
    
    On November 28, 2008, we
    acquired a 28.00% equity interest in Emgasud. On
    December 23, 2008 we made a second capital contribution,
    thereby increasing our ownership interest to 31.89%.(5)
    
    On January 2, 2008, Promigas
    contributed its ownership interests in its wholly-owned
    subsidiary Gazel to SIE in exchange for additional shares of
    SIE. SIE subsequently transferred Gazel to its subsidiary Terpel. 82




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##### Table of Contents



D.
    Property,
    Plant and Equipment    Power
    Distribution
  Business

Location

Approximate Miles of Power Distribution and Transmission
    LinesElektro

Brazil


65,750Elektra

Panama


5,400Luz del Sur

Peru


11,400Chilquinta

Chile


5,100Delsur

El Salvador


5,150EDEN(1)

Argentina


10,900     (1)
    
    Pending local anti-trust approval.  Power
    Generation
  GeneratingBusiness

Power Plant Location

Capacity (MW)

Fuel TypeTrakya

Turkey

478

Natural gas and fuel oilCuiabá  EPE

Brazil

480

Natural gas and fuel
    oil(1)Luoyang(2)

China

270

CoalPQP

Guatemala

234

Bunker fuelSan Felipe

Dominican Republic

180

Diesel oil/bunker fuelENS

Poland

116

Natural gasSubic

Philippines

116

Bunker fuelCorinto

Nicaragua

71

Bunker fuelTipitapa(3)

Nicaragua

51

Bunker fuelJPPC

Jamaica

60

Bunker fuelDCL(4)

Pakistan

94

Natural gasEmgasud(5)

Argentina

65

Natural gas and fuel oil     (1)
    
    Upon ANEEL request and based on
    reimbursement of fuel oil, EPE is able to run its power plant on
    a dual fuel basis.(2)
    
    On February 5, 2008, we
    acquired a 48% interest in Luoyang and an additional 2% interest
    on June 6, 2008.(3)
    
    On June 11, 2008, we acquired
    a 100% interest in Tipitapa.(4)
    
    On July 18, 2008, we acquired
    a 48% interest in DCL. Since the additional acquisition, we have
    executed additional share subscription agreements that have
    resulted in an increase in our ownership to 60.22%.(5)
    
    On November 28, 2008, we
    acquired a 28.00% equity interest in Emgasud. On
    December 23, 2008 we made a second capital contribution,
    thereby increasing our ownership interest to 31.89%. 83




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##### Table of Contents



Natural
    Gas Transportation and Services
  Business

Location

DescriptionPromigasPromigas Pipeline

Colombia

1,286 miles pipeline system in La Guajira region, to
    Jobo station in Department of SucreTransmetano

Colombia

93 mile pipeline in the Cauca ValleyGBS

Colombia

196 mile pipeline in Boyacá and SantanderCentragas

Colombia

458 mile pipeline in the regions of La Guajira, Cesar
    and SantanderPSI

Colombia

natural gas drying and compression facility at Ballena stationTransoccidente

Colombia

7 mile pipeline in the Cauca ValleyTransoriente

Colombia

98 mile pipeline in BucaramagaCuiabáGOB

Bolivia

225 mile pipeline connecting to GOM pipelineGOM

Brazil

175 mile pipeline in Mato Grosso connecting to GOB pipelineAccroven

Venezuela

NGL extraction facilities at San Joaquín and Santa
    Bárbara gas fields NGL fractionation, storage and
    refrigeration facilities in Jose petrochemical complex on
    Northeastern coastBBPLGTB

Bolivia

346 mile pipeline from Station Rio Grande to Station Mutun
    and connecting to TBG pipelineTBG

Brazil

1,611 mile pipeline from GTB pipeline at Station Mutun,
    Bolivia to southeastern BrazilEmgasud

Argentina

394 miles of pipeline   Natural
    Gas Distribution
  Business

Location

DescriptionPromigasSurtigas

Colombia

4,875 miles of mains in Bolívar, Sucre and CordobaGases de Occidente

Colombia

4,061 miles of mains in Valle del CaucaGases del Caribe

Colombia

8,494 miles of mains in Magdalena, Cesar, Atlántico
    and La GuajiraCálidda

Peru

404 miles of mains in Lima and Callao provincesBMG(1)

China

1,118 miles of mains in 14 service areasTongda

China

1,110 miles of mains in 10 service areas in Jiangsu provinceEmgasud

Argentina

483 miles     (1)
    
    In December 2007, we acquired a
    10.23% interest in BMG and an additional 59.77% interest in
    January 2008. 84




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##### Table of Contents



Retail
    Fuel
  Business

Location

DescriptionPromigasGazel

Colombia

202 service stationsMexico

3 service stationsPeru

10 service stationsChile

1 service stationTerpel

Colombia

1,603 service stations, including 28 supply stationsChile

206 service stationsEcuador

62 service stationsPanama

57 service stations  85




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Item 4A.  Unresolved
    Staff Comments   86




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##### Table of Contents



Item 5.  Operating
    and Financial Review and Prospects  This discussion should be read together with the
    Item 3. Key Information  A. Selected
    Financial Data, the consolidated financial statements
    (including the notes thereto) and PEIs consolidated
    financial statements included elsewhere in this annual report.
    Unless otherwise indicated, the financial data contained in this
    annual report has been prepared in accordance with
    U.S. GAAP. See Forward-Looking Statements and
    Item 3. Key Information  D. Risk
    Factors for a discussion of factors that could cause
    future financial condition and results of operations to be
    different from those discussed below.
  Interests in certain companies are accounted for under the
    equity method, which means that their net income or losses are
    included into consolidated profit and loss accounts in
    proportion to the ownership interest that is owned of the
    relevant company or entity during the respective periods. See
    Note 11 to the consolidated financial statements for the
    year ended December 31, 2008 . The consolidated financial
    statements for the year ended December 31, 2007 account for
    Accroven, Chilquinta, GTB, Luz del Sur, Promigas equity
    method investments, Subic, and Transredes under the equity
    method of accounting and for BMG and TBG under the cost method.
    In 2008, BMG is consolidated and beginning in May 2008, GTB is
    accounted for using the cost method. Promigas was consolidated
    as of December 31, 2006 and for the full year ended
    December 31, 2007. During the year ended December 31,
    2006, Promigas was accounted for under the equity method. All
    intercompany transactions and balances have been eliminated in
    consolidation. From May 25, 2006 to September 6, 2006,
    PEI was accounted for using the equity method of accounting and
    consolidated thereafter.
  Overview
  Our
    Business
    Recent
    Developments in 2009
  
    We contributed our respective interests in various Nicaragua
    power companies to a common holding company, Nicaragua Energy
    Holdings. Currently, we own 57.67% and Centrans owns 42.33% of
    Nicaragua Energy Holdings, which indirectly owns 100% of Corinto
    and Tipitapa and a 22.05% interest in Amayo. Centrans was given
    a call option that may be exercised at any time prior to
    December 8, 2013 to increase its interest in Nicaragua
    Energy Holdings up to 50%.
    The BOT agreement between Subic and National Power Corporation
    of the Philippines (NCP) expired on schedule and the
    plant was turned over to NCP.
    We terminated our restructuring agreement with CIESA. Pursuant
    to this agreement, the debt that we held in CIESA was to be
    converted into equity of CIESA, subject to the receipt of
    various regulatory approvals prior to an agreed deadline. After
    extending this deadline twice, we terminated this agreement due
    to the fact that the requested approvals did not appear to be
    forthcoming. We subsequently we filed a petition in Argentina
    for the involuntary bankruptcy liquidation of CIESA, which
    process is ongoing.
    See  Item 5  Operating
    and Financial Review and Prospects  Legal
    Proceeding for additional information.
    We signed an agreement to purchase an additional 31% of Trakya.
    The closing of this transaction is subject to a number of
    conditions, including obtaining regulatory and third party
    consents. If these consents are obtained, we anticipate this
    transaction will be completed in mid 2009. 87




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Legal
    Proceedings
    CIESA
    Elektro
         88




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San Felipe
      DCL
     89




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Critical
    Accounting Policies and Estimates
    Basis
    of Presentation
    Acquisition
    Accounting
       90




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##### Table of Contents



Long-Lived
    Assets
  and/or
      Goodwill
    and Indefinite Life Intangible Assets
    Revenue
    Recognition
   91




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##### Table of Contents



Regulatory
    Assets and Liabilities
    Income
    Taxes
    Accounting for Uncertainty in
    Income Taxes Accounting for Income Taxes
 92




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##### Table of Contents



Pension
    and Other Postretirement Obligations
        Foreign
    Currency
     93




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##### Table of Contents



Contingencies
    Recent
    Accounting Policies
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
 94




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##### Table of Contents



No. 08-6, Equity Method Investment Accounting Considerations No. 08-6 No. 08-6 No. 08-6
  No. 08-6,
  Disclosures
    about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments
    and Hedging Activities
  A.
    Operating
    results    
    Stage 1 (completed May 25, 2006) AEIL
    acquired 24.26% of the voting capital and 49% of the economic
    interest in PEI.
    Stage 2 (completed September 7, 2006) AEIL acquired the remaining 75.74% of the voting capital and
    the remaining 51% economic interest.      
    the timing of AEIs step acquisitions of PEI resulted in
    AEI accounting for PEI on an equity basis from May 25, 2006
    to September 6, 2006 and on a consolidated basis
    thereafter; and
    we completed additional acquisitions throughout 2007 and 2008.      Revenues
  
    Power Distribution revenues are derived primarily from contracts
    with retail customers in the residential, industrial and
    commercial sectors. These revenues are based on tariffs,
    reviewed by the applicable regulator on a periodic basis, and
    recognized upon delivery. In addition to a reasonable rate of
    return on regulatory assets and other amounts, tariffs include a
    pass-through of nearly all wholesale energy costs included in
    our Power Distribution cost of sales. Therefore, Power
    Distribution revenues are significantly impacted by wholesale
    energy costs. Upon each periodic regulatory review, tariffs are
    reset to the appropriate level, which might be higher or lower
    than the current level, to align the 95




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##### Table of Contents



business revenue to the authorized pass-through of costs
    and the applicable return on the business asset base. Therefore,
    revenues for a specific business may vary substantially from one
    period to the next if there has been a tariff reset in between.
    EDEN expects its next tariff review to be sometime during 2009.  
    Power Generation revenues are generated from the sale of
    wholesale power under long-term contracts to large off-takers,
    which in many circumstances are state controlled entities.
    JPPCs, Trakyas and San Felipes contracts
    contain decreasing rate schedules, which results in revenues
    being deferred due to differences between the amounts billed to
    customers and the average revenue stream over the life of the
    contract. These contracts contemplate a future decrease from
    $27.33/kWh per month in 2008, declining annually through 2011 to
    $20.81/kWh per month, then declining to $12.63/kWh per month in
    2012 through the end of the contract, in the case of JPPC;
    $3.16/kWh to $0.05/kWh starting 2010 in the case of Trakya; and
    from $16.69/kWh per month to $4.55/kWh per month starting 2011
    in the case of San Felipe.
    Natural Gas Transportation and Services revenues are primarily
    service fees received based on regulated rates set by a
    government controlled entity, and the capacity volume allocated
    for natural gas transportation in pipelines. Additional revenues
    are recognized for other natural gas related services, such as
    compression or liquefaction. As with the Power Distribution
    segment, businesses in this segment are subject to periodic
    regulatory review of their tariffs. Promigas and its regulated
    subsidiaries have a tariff review scheduled in 2009.
    Natural Gas Distribution revenues are primarily generated from
    service fees received based on regulated rates, set by a
    government controlled entity, and the volume of natural gas sold
    to retail customers in the residential, industrial and
    commercial sectors. Similar to the Power Distribution segment,
    businesses in this segment are subject to periodic regulatory
    review of their tariffs. Promigas regulated subsidiaries
    have a tariff review scheduled in 2009.
    Retail Fuel revenues represent primarily the distribution and
    retail sale of gasoline and CNG. Gasoline prices are normally
    regulated, whereas CNG prices are normally free of regulation,
    but tend to correlate with gasoline prices.  Cost
    of sales
    Operating
    expenses
   96




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AEI
    Results of Operations
    For the Years Ended December 31,Dollar Change


Dollar Change2008


2007


2006


2008 vs. 2007


2007 vs. 2006(Millions of dollars (U.S.) except per share data)Revenues

$
9,211


$
3,216


$
946


$
5,995


$
2,270Costs of Sales


7,347



1,796



566



5,551



1,230Operating expenses:Operations, maintenance, and general and administrative expenses


894



630



193



264



437Depreciation and amortization


268



217



59



51



158Taxes other than income


43



43



7







36Other charges


56



50







6



50(Gain) loss on disposition of assets


(93
)


(21
)


7



(72
)


(28
)Total operating expenses


1,168



919



266



249



653Equity income from unconsolidated affiliates


117



76



37



41



39Operating income


813



577



151



236



426Other income (expense):Interest income


88



110



71



(22
)


39Interest expense


(378
)


(306
)


(138
)


(72
)


(168
)Foreign currency transaction gain (loss), net


(56
)


19



(5
)


(75
)


24Loss on early retirement of debt






(33
)






33



(33
)Other income (expense), net


9



(22
)


7



31



(29
)Total other expense


(337
)


(232
)


(65
)


(105
)


(167
)Income before income taxes and minority interests


476



345



86



131



259Provision for income taxes


(194
)


(193
)


(84
)


(1
)


(109
)Minority interests expense


(124
)


(65
)


(20
)


(59
)


(45
)Income (loss) from continuting operations


158



87



(18
)


71



105Income from discontinued operations






3



7



(3
)


(4
)Gain from disposal of discontinued operations






41







(41
)


41Net income (loss)

$
158


$
131


$
(11
)

$
27


$
142Basic and diluted earnings per share:Income (loss) from continuing operations

$
0.73


$
0.42


$
(0.09
)

$
0.31


$
0.51Discontinued operations






0.21



0.04



(0.21
)


0.17Net income (loss)

$
0.73


$
0.63


$
(0.05
)

$
0.10


$
0.68  97




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##### Table of Contents



For the Year Ended December 31,2008

2007

2006Power DistributionChilquinta

Equity Method

Equity
    Method(7)

Delsur

Consolidated

Consolidated(7)

EDEN

Consolidated

Consolidated(7)

Elektra

Consolidated

Consolidated

ConsolidatedElektro

Consolidated

Consolidated

Consolidated(1)Luz del Sur

Equity Method

Equity
    Method(7)

Power GenerationBLM(2)





Consolidated(1)Corinto

Consolidated

Consolidated(3)

Equity
    Method(1)Cuiabá  EPE

Consolidated

Consolidated

Consolidated(1)DCL

Consolidated(8)



ENS

Consolidated

Consolidated

Consolidated(1)Emgasud

Equity
    Method(8)



Fenix

Consolidated(8)



Jaguar

Consolidated(8)



JPPC

Consolidated

Consolidated(7)

Luoyang

Consolidated(8)



PQP

Consolidated

Consolidated

Consolidated(1)San Felipe

Consolidated

Consolidated

Consolidated(1)Subic

Equity Method

Equity Method

Equity
    Method(1)Tipitapa

Consolidated(8)



Trakya

Consolidated

Consolidated

Consolidated(1)Natural Gas Transportation and ServicesAccroven

Equity Method

Equity Method

Equity
    Method(1)Centragas(5)

Equity Method

Equity Method

Equity
    Method(4)Cuiabá  GOB/GOM/TBS

Consolidated

Consolidated

Consolidated(1)GBS(5)

Consolidated

Consolidated

Equity
    Method(4)GTB

Cost
    Method(6)

Equity Method

Equity
    Method(1)Promigas

Consolidated

Consolidated

Equity
    Method(4)PSI(5)

Consolidated

Consolidated

Equity
    Method(4)TBG

Cost Method

Cost Method

Cost
    Method(1)Transmetano(5)

Consolidated

Consolidated

Equity
    Method(4)Transoccidente(5)

Consolidated

Consolidated

Equity
    Method(4)Transoriente(5)

Equity Method

Equity Method

Equity
    Method(4)Transredes

Cost
    Method(6)

Equity Method

Equity
    Method(1)Natural Gas DistributionBMG

Consolidated

Cost
    Method(7)

Cálidda

Consolidated

Consolidated(7)

Gases de
    Occidente(5)

Consolidated

Consolidated

Equity
    Method(4)Gases del
    Caribe(5)

Equity Method

Equity Method

Equity
    Method(4)Surtigas(5)

Consolidated

Consolidated

Equity
    Method(4)Tongda

Consolidated

Consolidated(7)

Retail FuelGazel(5)

Consolidated

Consolidated

Equity
    Method(4)SIE(5)

Consolidated(9)

Equity Method

Equity
    Method(4)OtherPromitel(5)

Consolidated

Consolidated

Equity
    Method(4)     (1)
    
    Acquired in 2006 as part of the
    step acquisition of PEI.(2)
    
    AEI divested its interests in BLM
    on March 14, 2007. 98




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##### Table of Contents



(3)
    
    In August and September 2007,
    through a series of transactions, AEI acquired an additional net
    15% interest in Corinto and began consolidating Corintos
    results as of September 2007.(4)
    
    Acquired as part of the 2006 step
    acquisition of PEI. Promigas is reflected in AEIs results
    under the equity method during 2006. A controlling interest in
    Promigas was purchased on December 27, 2006 and as a
    result, only its balance sheet is consolidated with AEI at
    December 31, 2006. These entities were accounted for under
    the equity method for the year ended December 31, 2006.(5)
    
    AEI ownership interest is held
    through its ownership in Promigas.(6)
    
    The Companys ownership in
    Transredes, and therefore GTB, changed during June 2008 as
    explained further in Note 3 to the consolidated financial
    statements.(7)
    
    The Companys initial interest
    was purchased during 2007.(8)
    
    The Companys initial interest
    was purchased during 2008.(9)
    
    On January 2, 2008, Promigas
    contributed its ownership interests in Gazel to SIE in exchange
    for additional shares of SIE. As a result of this transaction,
    Promigas ownership in SIE increased from 37.19% as of
    December 31, 2007 to 54% with SIE owning 100% of Gazel. See
    Note 3 to consolidated financial statements.  period-to-period 12-month
    Year
    Ended December 31, 2008 Compared to the Year Ended
    December 31, 2007
    Revenues
    For the YearsEndedDecember 31,2008


2007Millions of dollars (U.S.)Colombia

$
3,926


$
563Brazil


1,503



1,406Chile


1,311



Panama


808



389Turkey


416



337Guatemala


206



168Dominican Republic


211



139Ecuador


126



Argentina


122



52China


104



8Other


478



154Total

$
9,211


$
3,216  99




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##### Table of Contents



For the YearsEndedDecember 31,2008


2007Millions of dollars (U.S.)Power Distribution

$
2,217


$
1,746Power Generation


1,175



874Natural Gas Transportation and Services


202



199Natural Gas Distribution


584



352Retail Fuel


5,137



160Headquarters/Other/Eliminations


(104
)


(115
)Total revenues

$
9,211


$
3,216     Power
    Distribution
  real
  Power
    Generation
   100




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##### Table of Contents



Zloty
  Natural
    Gas Transportation and Services
  peso
  Natural
    Gas Distribution
    Retail
    Fuel
  peso
  Cost
    of Sales
    For the YearsEndedDecember 31,2008


2007(Millions of dollars U.S.)Power Distribution

$
1,374


$
963Power Generation


984



610Natural Gas Transportation and Services


13



36Natural Gas Distribution


386



224Retail Fuel


4,697



90Headquarters/Other/Eliminations


(107
)


(127
)Total cost of sales

$
7,347


$
1,796    101




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Power
    Distribution
  real
  Power
    Generation
    Natural
    Gas Transportation and Services
    Natural
    Gas Distribution
  peso
 102




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##### Table of Contents



Retail
    Fuel
    Operating
    Expenses
  Operations,
    Maintenance and General and Administrative Expenses
    For the YearsEndedDecember 31,2008


2007Millions of dollars (U.S.)Power Distribution

$
323


$
241Power Generation


123



118Natural Gas Transportation and Services


62



57Natural Gas Distribution


82



49Retail Fuel


215



33Headquarters/Other/Eliminations


89



132Total operations, maintenance and general and administrative
    expenses

$
894


$
630     Power
    Distribution
  real
  Power
    Generation
   103




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##### Table of Contents



Natural
    Gas Transportation and Services
  peso
  Natural
    Gas Distribution
    Retail
    Fuel
    Depreciation
    and Amortization
    For the YearsEndedDecember 31,2008


2007Millions of dollars (U.S.)Power Distribution

$
138


$
139Power Generation


24



42Natural Gas Transportation and Services


21



20Natural Gas Distribution


18



8Retail Fuel


61



3Headquarters/Other


6



5Total depreciation and amortization expenses

$
268


$
217    104




---



##### Table of Contents



Other
    Charges
    (Gain)
    Loss on Disposition of Assets
    Equity
    Income from Unconsolidated Affiliates
    For the YearsEndedDecember 31,2008


2007Millions of dollars (U.S.)Power Distribution

$
68


$
2Power Generation


12



11Natural Gas Transportation and Services


27



39Natural Gas Distribution


11



13Retail Fuel


1



11Headquarters/Other/Eliminations


(2
)


Total equity income from unconsolidated affiliates

$
117


$
76    105




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##### Table of Contents



Operating
    Income
    For the YearsEndedDecember 31,2008


2007Millions of dollars (U.S.)Power Distribution

$
427


$
373Power Generation


15



77Natural Gas Transportation and Services


128



128Natural Gas Distribution


104



85Retail Fuel


218



49Headquarters/Other/Eliminations


(79
)


(135
)Total operating income

$
813


$
577   Interest
    Income
    Interest
    Expense
    Foreign
    Currency Transaction Gain (Loss), Net
  peso real lira lira real
  Loss
    on Early Retirement of Debt
   106




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##### Table of Contents



Other
    Income (Expense), net
    Provision
    for Income Taxes
    Minority
    Interests
    Net
    Income
    Year
    Ended December 31, 2007 Compared to the Year Ended
    December 31, 2006
   107




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##### Table of Contents



Revenues
    For the YearsEndedDecember 31,2007


2006Millions of dollars (U.S.)Colombia

$
563


$
Brazil


1,406



390Panama


389



371Turkey


337



116Guatemala


168



48Dominican Republic


139



145Argentina


52



China


8



Other


154



(124
)Total

$
3,216


$
946     For the YearsEndedDecember 31,2007


2006Millions of dollars (U.S.)Power Distribution

$
1,746


$
685Power Generation


874



278Natural Gas Transportation and Services


199



24Natural Gas Distribution


352



Retail Fuel


160



Headquarters/Other/Eliminations


(115
)


(41
)Total revenues

$
3,216


$
946     Power
    Distribution
  real
 108




---



##### Table of Contents



Power
    Generation
    Natural
    Gas Transportation and Services
    Natural
    Gas Distribution
    Retail
    Fuel
  peso
 109




---



##### Table of Contents



Cost
    of Sales
    For the YearsEndedDecember 31,2007


2006Millions of dollars (U.S.)Power Distribution

$
963


$
410Power Generation


610



193Natural Gas Transportation and Services


36



4Natural Gas Distribution


224



Retail Fuel


90



Headquarters/Other/Eliminations


(127
)


(41
)Total cost of sales

$
1,796


$
566     Power
    Distribution
  real
  Power
    Generation
    Natural
    Gas Transportation and Services
   110




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##### Table of Contents



Natural
    Gas Distribution
    Retail
    Fuel
    Operating
    Expenses
  Operations,
    Maintenance and General and Administrative Expenses
    For the YearsEndedDecember 31,2007


2006Millions of dollars (U.S.)Power Distribution

$
241


$
91Power Generation


118



37Natural Gas Transportation and Services


57



6Natural Gas Distribution


49



Retail Fuel


33



Headquarters/Other/Eliminations


132



59Total operations, maintenance and general and administrative
    expenses

$
630


$
193        111




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##### Table of Contents



Depreciation
    and Amortization
    For the YearsEndedDecember 31,2007


2006Millions of dollars (U.S.)Power Distribution

$
139


$
47Power Generation


42



9Natural Gas Transportation and Services


20



2Natural Gas Distribution


8



Retail Fuel


3



1Headquarters/Other


5



Total depreciation and amortization expenses

$
217


$
59     Taxes
    other than Income
   112




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##### Table of Contents



Other
    Charges
    (Gain)
    Loss on Disposition of Assets
    Equity
    Income from Unconsolidated Affiliates
    For the YearsEndedDecember 31,2007


2006Millions of dollars (U.S.)Power Distribution

$
2


$
26Power Generation


11



21Natural Gas Transportation and Services


39



10Natural Gas Distribution


13



Retail Fuel


11



4Headquarters/Other/Eliminations






(24
)Total equity income from unconsolidated affiliates

$
76


$
37    113




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##### Table of Contents



Operating
    Income
    For the YearsEndedDecember 31,2007


2006Millions of dollars (U.S.)Power Distribution

$
373


$
151Power Generation


77



60Natural Gas Transportation and Services


128



21Natural Gas Distribution


85



Retail Fuel


49



3Headquarters/Other/Eliminations


(135
)


(84
)Total operating income

$
577


$
151   Interest
    Income
    Interest
    Expense
    Foreign
    Currency Transaction Gain (Loss), Net
  real
  Loss
    on Early Retirement of Debt
   114




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##### Table of Contents



Other
    Income (Expense), Net
  eal
  Provision
    for Income Taxes
    Minority
    Interests
    Discontinued
    Operations
    Net
    Income
    B.
    Liquidity
    and Capital Resources  Overview
  case-by-case
   115




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##### Table of Contents




    cash generated from our operations received in the form of
    dividends, capital returns, interest and principal payments on
    intercompany loans and shareholder loans from our businesses;
    borrowing under our credit facilities, including a
    $500 million revolving credit facility, $495 million
    of which was drawn as of December 31, 2008;
    future debt and subordinated debt offerings;
    issuance of additional equity; and
    fees from management contracts.    
    interest expense;
    principal repayments of debt;
    acquisitions;
    investment in new projects; and
    parent company overhead and development costs.   116




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##### Table of Contents



and/or
  Capital
    Expenditures
    Our
    Cash Flows for the Years ended December 31, 2008 and
    December 31, 2007
  Cash
    Flows from Operating Activities
    Cash
    Flows from Investing Activities
   117




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##### Table of Contents



Cash
    Flows from Financing Activities
    Our
    Cash Flows for the Years ended December 31, 2007 and
    December 31, 2006
  Cash
    Flows from Operating Activities
    Cash
    Flows from Investing Activities
    Cash
    Flows from Financing Activities
   118




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##### Table of Contents



Parent
    Company Long-Term Debt
  Credit
    Agreement
    Note
    Purchase Agreement (PIK Notes)
             119




---



##### Table of Contents



Subsidiaries
    Long-Term Debt Schedule
    Balance as ofCurrency of

December 31,

Maturity



Summary of DistributionBusiness

Borrowing

2008

Profile

Collateral

RestrictionsMillions ofdollars (U.S.)Cálidda

U.S.$

87

2009-2015

Security includes the gas distribution concession, income trust
    and SBLC of $47 million

No restrictions, but must meet leverage and debt service
    coverage ratios, among others.Cuiabá 
    EPE(1)

U.S.$

43

2015-2016

Shareholder loan with Shell (no security)

N/ACuiabá 
    GOB(1)

U.S.$

31

2015-2016

Shareholder loan with Shell (no security)

N/ACuiabá 
    GOM(1)

U.S.$

23

2015-2016

Shareholder loan with Shell (no security)

N/ADelsur

U.S.$

73

2015

Security includes subsidiary guarantees and pledges of shares

No default/must meet distribution ratios/local lawsDCL(2)

Pakistani
    rupees

77

2009-2019

Charges over Fixed and Current Assets

Restriction on dividend distribution:
     1 year period from the Commercial Operate Date
     subject to satisfaction of the Debt Service Coverage
    Ratio (>=1.5) and the Leverage Ratio (Debt to Equity
    <=75:25, Current Ratio>=0.7 5:1) and Applicable LawEDEN(3)

U.S.$

37

2013

Unsecured

No default/limited to% of excess cashElektra

U.S.$

144

2009-2021

Unsecured

NoneElektro

R$

370

2010-2020

Security includes pledge of account receivables cash flow and
    cash collateral

 Default under any Eletrobrás agreement and certain
    agreements with Banco Nacional de Desenvolvimento
    Econômico e Social, or  BNDES
     Dividends/Shareholder Interest less than 110% of the Net
    ProfitENS

U.S.$

67

2009-2018

Security includes mortgage on assets, assignment of contracts,
    pledge of shares, DSRA, DSA, insurance assignments, etc.

No default/must meet distribution ratios/local lawsLuoyang

Chinese
    Renminbi

133

2009-2016

Security includes assignment of rights to collection of revenues

NonePQP

U.S.$

88

2015

Security includes mortgage on assets, assignment of contracts,
    pledge of shares etc.

No default/must meet distribution ratios/local laws 120




---



##### Table of Contents



Balance as ofCurrency of

December 31,

Maturity



Summary of DistributionBusiness

Borrowing

2008

Profile

Collateral

RestrictionsMillions ofdollars (U.S.)Promigas(4)

Colombian
    pesos

650

2009-2012

Unsecured

NonePromigas(5)

U.S.$

291

2012

Security includes certain subsidiaries of Promigas

Dividends Depending on the leverage ratio
    <=2.5 X 50% of the Net Income <2.5 X 100% of
    the Net IncomeOthers

U.S.$
    and
    Chinese
    Renminbi

65

2009-2014Total



$2,179     (1)
    
    The Cuiabá entities have only
    shareholder loans. We recognize those loans with Shell as third
    party loans. We do not include in this table those shareholder
    loans with AEI or AEI subsidiaries.(2)
    
    On January 24, 2009, DCL
    received notice of default from one of its senior lenders. That
    same day two of DCLs senior lenders filed claims against
    DCL and Sacoden in the courts of Sindh Province, Pakistan
    seeking repayment by DCL of $46 million. See Note 25
    to the consolidated financial statements.(3)
    
    EDEN is in non-payment default,
    however it remains current in all of its payment obligations
    under the credit agreement and, to date, has not been notified
    by the lenders of the acceleration of its obligations under the
    credit agreement. See Note 15 to the consolidated financial
    statements.(4)
    
    Some of the credit facilities
    included in this entry may have shorter maturity profiles.(5)
    
    Some of the credit facilities
    included in this entry may have shorter maturity profiles,
    unsecured collateral and no distribution restrictions.  C.
    Research
    and Development, Patents and Licenses, Etc.    D.
    Trend
    Information    Current market developments.
  Macroeconomic Developments in Emerging
    Markets.
 121




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##### Table of Contents



Foreign Currency Changes. real
  Energy Demand Growth in Our Markets.
  2006

2007

2008Electricity



Electricity



ElectricityConsumption



Consumption



ConsumptionReal GDP

Growth

Real GDP

Growth

Real GDP

GrowthGrowth(1)

Rate(2)

Growth(1)

Rate(2)

Growth(1)

Rate(2)Brazil


3.7%



3.9%



5.4%



5.8%



5.2%



3.8
%Colombia


6.8%



4.1%



7.7%



4.0%



4.0%



1.6
%Turkey


6.9%



9.7%



4.6%



9.5%



3.5%



5.5
%Argentina


8.5%



5.6%



8.7%



5.5%



6.5%



2.9
%Dominican Republic


10.7%



9.2%



8.5%



4.2%



4.7%



N/AGuatemala


5.2%



6.4%



5.7%



6.0%



4.5%



1.6
%Panama


8.5%



2.8%



11.5%



6.7%



8.3%



2.1
%     (1)
    
    International Monetary
    Fund World Economic Outlook Database, October 2008 (2008
    includes IMF Staff Estimates)(2)
    
    Global Insight; Coordinating Body
    of the National Interconnected Electric System of the Dominican
    Republic (Organismo Coordinador del Sistema Eléctrico
    Nacional Interconectado de la República Dominicana);
    Administrator of the Wholesale Market of Guatemala
    (Administrador del Mercado Mayorista de Guatemala); and
    National Dispatch Center of Panamá (Centro Nacional de
    Despacho de Panamá).  Acquisitions and Future Greenfield
    Development.
  Regulatory Developments in Emerging
    Markets.
 122




---



##### Table of Contents



Tariff Reviews.
  Commodity Price Increases.
  Political Developments.
  Environmental Concerns.
  E.
    Off-balance
    sheet arrangements     123




---



##### Table of Contents



F.
    Tabular
    Disclosure of Contractual Obligations    Less Than








AfterTotal


1 Year


1-3 Years


3-5 Years


5 Years(In millions of $)Debt
    obligations(1)

$
3,962


$
547


$
1,078


$
903


$
1,434Interest payments on long-term
    debt(2)


1,598



388



439



283



488Pension obligations


199



12



27



34



126Operating lease
    obligations(3)


91



16



24



20



31Capital lease
    obligations(4)


71



12



29



22



8Power
    commitments(5)


11,901



790



1,741



1,634



7,736Fuel
    commitments(6)


4,700



474



889



834



2,503Transportation
    commitments(7)


499



55



115



85



244Equipment
    commitments(8)


156



22



14



37



83FIN 48 obligations, including interest and Penalties


117



11



5







101Other
    commitments(9)


11



7



3



1



Total

$
23,305


$
2,334


$
4,364


$
3,853


$
12,754     (1)
    
    Debt obligations includes
    non-recourse debt and recourse debt presented in our
    consolidated financial statements. Non-recourse debt borrowings
    are not a direct obligation by us, and are primarily
    collateralized by the capital stock of the relevant business and
    in certain cases the physical assets of, and/or all significant
    agreements associated with, such businesses. These non-recourse
    financings include structured project financings, acquisition
    financings, working capital facilities and all other
    consolidated debt of the businesses. Recourse debt borrowings
    are our borrowings.(2)
    
    Interest payments are estimated
    based on final maturity dates of debt securities outstanding at
    December 31, 2008 and do not reflect anticipated future
    financing, new debt issuances, early redemptions, or certain
    interests on liabilities other than debt. Variable rate interest
    obligations are estimated based on rates as of December 31,
    2008.(3)
    
    Operating lease obligations are the
    future obligations primarily related to land, office, office
    equipment and vehicles in which several our businesses are the
    lessees.(4)
    
    Capital lease obligations are the
    future obligations primarily related to certain pipelines and
    equipment in which Promigas and Elektro are the lessees. The
    leases are all nonrecourse. As of December 31, 2008 and
    2007, the net assets held under capital leases were
    $42 million and $26 million, respectively, and imputed
    interest for these obligations were both $14 million.(5)
    
    Represents take-or-pay and other
    commitments to purchase power of various quantities from third
    parties.(6)
    
    Represents take-or-pay and other
    commitments to purchase fuel of various quantities from third
    parties.(7)
    
    Represents a commitment to purchase
    gas transportation services from an unconsolidated affiliate and
    third parties.(8)
    
    Represents commitments of various
    duration for parts and maintenance services provided by third
    parties, which are expensed during the year of service.(9)
    
    Represents various other purchase
    commitments with third parties. 124




---



##### Table of Contents



Item 6.  Directors,
    Senior Management and Employees  A.
    Directors
    and Senior Management    Name

PositionRonald W. Haddock

Non-Executive Chairman of the board of directorsBrent de Jong

Non-Executive Vice Chairman of the board of directorsJames Hughes

Chief Executive Officer and DirectorRobert Barnes

DirectorPhilippe A. Bodson

DirectorHenri Philippe Reichstul

DirectorRobert E. Wilhelm

DirectorGeorge P. Kay

DirectorJohn G. Fulton

EVP, Finance and TreasuryMaureen J. Ryan

EVP, General Counsel and Chief Compliance OfficerEmilio Vicens

EVP, CommercialLaura C. Fulton

EVP, AccountingAndrew Parsons

EVP, AdministrationBrian Zatarain

EVP, RiskBrian Stanley

EVP, Operations   Ronald W. Haddock
  Brent de Jong
  James Hughes
 125




---



##### Table of Contents



Robert Barnes
  Philippe A. Bodson
  Henri Philippe Reichstul
 126




---



##### Table of Contents



Robert E. Wilhelm
  George P. Kay
  John G. Fulton Coca-Cola Coca-Cola Euromoney Corporate
    Finance FX&MM
  Maureen J. Ryan
  Emilio Vicens
 127




---



##### Table of Contents



Laura C. Fulton
  Andrew Parsons
  Brian Zatarain
  Brian Stanley
 128




---



##### Table of Contents



International
    Management
  c/o AEI
  Years of Experiencein the EnergyName

Position

IndustryAntonio Celia Martínez-Aparicio

CEO of Promigas


24Carlos Marcio Ferreira

CEO of Elektro


5Pablo Ferrero

EVP, Southern Cone


17Roberto Figueroa

EVP, Central America and Caribbean


21Jacek Glowacki

VP, AEI Europe


27Colin Tam

CEO of AEI Asia


36   B.
    Compensation  Compensation
    of Directors and Executive Officers
    C.
    Board
    Practices  Duties of
    Directors
      
    overall responsibility for the management of the business of our
    company;
    convening shareholders annual general meetings and
    reporting its work to shareholders at such meetings;
    issuing authorized but unissued shares and redeeming or
    purchasing outstanding shares of our company;
    declaring dividends and distributions;
    appointing officers and determining the term of office and
    compensation of officers;
    exercising the borrowing powers of our company and mortgaging
    the property of our company; and
    approving the transfer of shares of our company, including the
    registering of such shares in our share register. 129




---



##### Table of Contents



Terms of
    Directors and Executive Officers
    Qualification
    Board
    Committees
    Audit
    Committee
  Form 20-F
  Regulation S-K. Rule 10A-3
    
    selecting, in its sole discretion, independent auditors to audit
    the books and accounts of AEI and its subsidiaries for each
    fiscal year, reviewing the performance of such independent
    auditors and making decisions regarding the replacement or
    termination of the independent auditors;
    annually reviewing a report prepared by the independent auditors
    describing such firms internal quality-control procedures,
    any material issues raised by the most recent internal quality
    control review of such firm and all relationships between the
    independent auditors and us, and present its conclusions with
    respect to such matters to our board;
    overseeing the independence of our independent auditors;
    establishing clear hiring policies for employees or former
    employees of the independent auditors;
    reviewing with management and the independent auditors our
    annual audited financial statements and periodic financial
    statements and any major related issues, critical accounting
    policies, including 130




---



##### Table of Contents



financial reporting issues that could have a material impact on
    our financial statements, and major issues regarding accounting
    principles and financial statements presentations;  
    resolving disagreements between our independent auditors and its
    management regarding financial reporting;
    reviewing with the independent auditors any problems or
    difficulties encountered in the course of any audit work and
    managements response;
    reviewing the annual audit plan of our independent auditors and
    the annual working plan of our internal auditors;
    reviewing our internal audit function, the adequacy and
    effectiveness of our accounting and internal control policies
    and procedures, managements yearly report assessing the
    effectiveness of our internal control over financial reporting;
    discussing guidelines and policies governing the process by
    which our exposure to risk is assessed and managed and steps
    taken to monitor and control such exposure;
    preparing the reports required under the rules of the SEC to be
    included in an annual proxy statement as applicable;
    establishing procedures for the receipt, retention and treatment
    of complaints regarding accounting, internal accounting controls
    or auditing matters and the confidential, anonymous submission
    by our employees of concerns regarding questionable accounting
    or auditing matters; and
    periodically reviewing with our chief executive officer, chief
    financial officer, internal auditors and independent auditors
    all significant deficiencies and material weaknesses in the
    design or operation of internal control over financial reporting
    that are reasonably likely to adversely affect our ability to
    record, process, summarize, and report financial data and any
    changes in internal control over financial reporting that
    occurred during the most recent fiscal quarter and that have
    materially affected, or are reasonably likely to materially
    affect, our internal control over financial reporting.  Compensation
    Committee
  Rule 16b-3
    
    reviewing our executive compensation, incentive-based,
    equity-based, general compensation and other employee benefits
    plans and our goals and objectives with respect to such plans
    and amend or recommend amending such plans or our goals and
    objectives with respect to such plans as appropriate;
    evaluating annually the performance of our executive officers in
    light of the goals and objectives of our executive compensation
    plans, and determining and approving the compensation level of
    such executive officers based on this evaluation, including the
    long-term incentive component of their compensation, if
    any; and
    evaluating annually the appropriate level of compensation for
    board and committee service by non-employee members of the board
    of directors. 131




---



##### Table of Contents



Nominating
    and Corporate Governance Committee
      
    establishing procedures for evaluating the suitability of
    potential director nominees and recommending to our board
    director nominees for election by shareholders or appointment by
    our board, as the case may be;
    reviewing the suitability for continued service as a director of
    each member of our board of directors upon the expiration of the
    directors term or a significant change in such
    directors status;
    reviewing annually with our board of directors the composition
    of the board as a whole and recommend measures necessary to
    ensure compliance with the listing standards set forth in NYSE
    Manual;
    reviewing and making recommendations with respect to the size of
    our board of directors and the frequency and structure of board
    meetings as proposed by the chairman of our board;
    making recommendations to our board regarding the size and
    composition of each standing committee of our board;
    making recommendations concerning any aspect of the procedures
    of our board of directors that the committee considers warranted;
    monitoring the functioning of the committees of our board and
    making recommendations for any changes that the committee may
    deem necessary;
    reviewing any actual or potential conflict of interest between
    us and any director having a personal interest in any matter
    before the board;
    developing and reviewing periodically the corporate governance
    principles adopted by our board to ensure compliance with the
    requirements of the NYSE and applicable listing standards and
    recommending any desirable change to our board; and
    overseeing an annual self-assessment of the board of
    directors performance, as well as the performance of each
    board committee and overseeing the evaluation of our management,
    including our chief executive officer.  Corporate
    Governance
    Interested
    Transactions
  provided
 132




---



##### Table of Contents



Remuneration
    and Borrowing
    D.
    Employees    E.
    Share
    Ownership  Share
    Ownership of Directors and Executive Officers
    Ordinary Shares Held byDirectors and Executive OfficersOrdinaryShares


Total


GrandBeneficially


Options


TotalName

Owned


Owned


Owned


PercentDirectors and Executive OfficersRonald W.
    Haddock(1)


1,555,103.45



14,796.00



1,569,899.45



*Brent de Jong














James
    Hughes(2)


46,224.19



269,227.00



315,451.19



*Robert
    Barnes(3)


2,322.76



13,210.00



15,532.76



*Philippe A.
    Bodson(4)


37,999.56



13,210.00



51,209.56



*Henri Philippe
    Reichstul(5)


34,211.89



11,625.00



45,836.89



*Robert E.
    Wilhelm(6)


39,556.24



14,796.00



54,352.24



*John G.
    Fulton(7)


86,959.23



254,799.00



341,758.23



*Maureen J.
    Ryan(8)


23,640.14



133,892.00



157,532.14



*Emilio
    Vicens(9)


13,669.04



78,433.00



92,102.04



*Laura C.
    Fulton(10)


6,438.04



39,046.00



45,484.04



*Andrew
    Parsons(11)


53,282.60



64,699.00



117,981.60



*Brian
    Zatarain(12)


25,769.09



50,071.00



75,840.09



*Brian
    Stanley(13)


83,978.83



75,249.00



159,227.83



*All Directors and Executive Officers as a Group


2,009,155.06



1,033,053.00



3,042,208.06



*     (1)
    
    1,552,669.3 shares are vested
    and no additional vesting within 60 days. 875 options are
    vested and no additional vesting within 60 days. 452
    options have an exercise price of $13.60/share and an expiration
    date of 9/13/2014. 423 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015  (2)
    
    2,506.90 shares are vested and
    no additional vesting within 60 days. 14,845.00 options are
    vested and no additional vesting within 60 days. 5,167
    options have an exercise price of $13.60/share and an expiration
    date of 9/13/2014. 9,678 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015.(3)
    
    149.84 shares are vested and
    no additional vesting within 60 days. 781.00 options are
    vested and no additional vesting within 60 days. 403
    options have an exercise price of $13.60/share and an expiration
    date of 9/13/2014. 378 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015. 133




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##### Table of Contents



(4)
    
    35,826.64 shares are vested
    and no additional vesting within 60 days. 781.00 options
    are vested and no additional vesting within 60 days. 403
    options have an exercise price of $13.60/share and an expiration
    date of 9/13/2014. 378 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015.(5)
    
    32,300.16 shares are vested
    and no additional vesting within 60 days. 687.00 options
    are vested and no additional vesting within 60 days. 355
    options have an exercise price of $13.60/share and an expiration
    date of 9/13/2014. 332 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015.(6)
    
    37,122.13 shares are vested
    and no additional vesting within 60 days. 875.00 options
    are vested and no additional vesting within 60 days. 452
    options have an exercise price of $13.60/share and an expiration
    date of 9/13/2014. 423 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015.(7)
    
    14,549.84 shares are vested
    and no additional vesting within 60 days. 48,380.00 options
    are vested and no additional vesting within 60 days. 45,356
    options have an exercise price of $11.18/share and an expiration
    date of 2/28/2014. 3,024 options have an exercise price of
    $16.00/share and an expiration date of
    2/22/2015.(8)
    
    3,021.35 shares are vested and
    no additional vesting within 60 days. 18,619.00 options are
    vested and no additional vesting within 60 days. 15,716
    options have an exercise price of $11.18/share and an expiration
    date of 2/28/2014. 2,903 options have an exercise price of
    $16.00/share and an expiration date of
    2/22/2015.(9)
    
    701.82 shares are vested and
    no additional vesting within 60 days. 5,002.00 options are
    vested and no additional vesting within 60 days. 2,583
    options have an exercise price of $13.60/share and an expiration
    date of 9/13/2014. 2,419 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015.(10)
    
    246.41 shares are vested and
    no additional vesting within 60 days. 1,848.00 options are
    vested and exercisable at $16.00/share with an expiration date
    of
    2/22/2015.
    No additional vesting within 60 days.(11)
    
    40,515.94 shares are vested
    and no additional vesting within 60 days. 6,044.00 options
    are vested and no additional vesting within 60 days. 3,625
    options have an exercise price of $11.18/share and an expiration
    date of 2/28/2014. 2,419 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015.(12)
    
    17,941.75 shares are vested
    and no additional vesting within 60 days. 4,380.00 options
    are vested and no additional vesting within 60 days. 2,687
    options have an exercise price of $11.18/share and an expiration
    date of 2/28/2014. 1,693 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015.(13)
    
    72,284.12 shares are vested
    and no additional vesting within 60 days. 8,408.00 options
    are vested and no additional vesting within 60 days. 6,158
    options have an exercise price of $11.18/share and an expiration
    date of 2/28/2014. 2,250 options have an exercise price of
    $16.00/share and an expiration date
    of 2/22/2015.*
    
    Owns less than 1.00%.  Incentive
    Plans
  AEI
    2007 Incentive Plan
    Options
   134




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Restricted
    Share Grants
    Other
    Awards
    Employment
    Agreements
   135




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##### Table of Contents



Item 7.  Major
    Shareholders and Related Party Transactions  A.
    Major
    Shareholders    Ordinary Shares Heldby 5% ShareholdersOrdinary SharesBeneficially OwnedNumber


PercentGreater than 5% ShareholdersAshmore Cayman SPC No. 3 Ltd.


20,865,704.11



8.98
%Ashmore Global Special Situations Fund 2 Limited


13,169,904.15



5.67
%Ashmore Global Special Situations Fund 3 Limited


24,513,133.95



10.55
%Ashmore Global Special Situations Fund 4 Limited


10,302,628.73



4.44
%Ashmore Global Opportunities Limited


6,237,038.27



2.69
%Asset Holder PCC Limited in respect of Ashmore Emerging Markets
    Liquid Investment Portfolio


1,325,065.34



0.57
%EMDCD Ltd.


5,091,644.25



2.19
%Ashmore Emerging Markets Global Investment Portfolio Limited


1,435,247.81



0.62
%FCI Ltd.


44,028,858.35



18.96
%Ashmore Growing Multi Strategy Fund Limited


1,505,937.36



0.65
%Total Ashmore Funds


128,475,162.32



55.31
%Buckland Investment Pte
    Ltd.(1)


54,588,391.46



23.50
%Sherbrooke, Ltd.


13,931,096.06



6.00
%     (1)
    
    On May 9, 2008, Buckland
    purchased from us 12.5 million of our ordinary shares as
    well as 12.5 million ordinary shares from certain of our
    shareholders. In a series of transactions since that time,
    Buckland has purchased approximately 29.5 million
    additional ordinary shares from certain of our shareholders.    B.
    Related
    Party Transactions  Ashmore
    Management Services Agreement
       136




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PIK
    Notes
      Familial
    Relationships
    C.
    Interests
    of Experts and Counsel   137




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Item 8.  Financial
    Information  A.
    Consolidated
    Statements and Other Financial Information    B.
    Significant
    Changes   138




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Item 9.  The
    Offer and Listing  A.
    Offer
    and Listing Details  Price History of Stock
    Type and class of securities being offered or listed
    Limitations of rights of securities holders
    Other securities being offered or listed
    B.
    Plan
    of Distribution    C.
    Markets    D.
    Selling
    Shareholders    E.
    Dilution    F.
    Expenses
    of the Issue   139




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##### Table of Contents



Item 10.  Additional
    Information  A.
    Share
    Capital    B.
    Memorandum
    and Articles of Association  Form 20-F No. 000-53606)
 C.  Material
    Contracts    Credit Agreement,
  AEI 2007 Incentive Plan.
  Concession Contract 187/98, 30-year
  Second Amended and Restated Shareholders
    Agreement and/or
  Amended and Restated Registration Rights
    Agreement
 140




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##### Table of Contents



Form F-3 Form S-3 Form F-3 Form S-3,
  D.
    Exchange
    Controls    E.
    Taxation  The following is a general summary of the material Cayman
    Islands and U.S. federal income tax consequences relevant
    to our ordinary shares. The discussion is not intended to be,
    nor should it be construed as, legal or tax advice to any
    particular prospective purchaser. The discussion is based on
    laws and relevant interpretations thereof in effect as of the
    date hereof, all of which are subject to change or different
    interpretations, possibly with retroactive effect. The
    discussion does not address United States state or local tax
    laws, or tax laws of jurisdictions other than the Cayman Islands
    and the United States. To the extent that the discussion relates
    to matters of Cayman Islands tax law, it represents the advice
    of Walkers, special Cayman Islands counsel to us. To the extent
    the discussion relates to legal conclusions under current
    U.S. federal income tax law, and subject to the
    qualifications herein, it represents the advice of Clifford
    Chance US LLP, our special U.S. counsel. You should consult
    your own tax advisors with respect to the consequences of
    acquisition, ownership and disposition of our ordinary
    shares
  Cayman
    Islands Taxation
     141




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##### Table of Contents




    no law which is enacted in the Cayman Islands imposing any tax
    to be levied on profits or income or gains or appreciation
    applies to us or our operations; and
    the aforesaid tax or any tax in the nature of estate duty or
    inheritance tax are not payable on our ordinary shares,
    debentures or other obligations.    United
    States Federal Income Taxation
  non-U.S., non-U.S. income
    Dividends
    Sale
    or Other Disposition of Ordinary Shares
   142




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##### Table of Contents



Passive
    Foreign Investment Company Rules
  non-U.S. corporation non-U.S. corporation
    Backup
    withholding and information reporting requirements
    The above summary is not intended to constitute a complete
    analysis of all U.S. federal income tax consequences to a
    U.S. Holder of acquiring, holding, and disposing of,
    ordinary shares. U.S. Holders should consult their own tax
    advisors with respect to the U.S. federal, state, local and
    non-U.S. consequences
    of acquiring, holding and disposing of ordinary shares.
  F.
    Dividends
    and Paying Agents    G.
    Statement
    by Experts    H.
    Documents
    on Display  Form 20-F and/or Form 20-F Form 6-K.
 143




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##### Table of Contents



1-800-SEC-0330. http://www.sec.gov,
  Form 20-F
    I.
    Subsidiary
    Information   144




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Item 11.  Quantitative
    and Qualitative Disclosures about Market Risk  Quantitative
    and Qualitative Analysis of Market Risk
  Overview
    Regarding Market Risks
    Interest
    Rate Risks
    Foreign
    Exchange Rate Risk
    reais
 145




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Commodity
    Price Risk
   146




---



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Item 12.  Description
    of Securities other than Equity Securities    147




---



##### Table of Contents



PART II
 Item 13.  Defaults,
    Dividend Arrearages and Delinquencies    148




---



##### Table of Contents



Item 14.  Material
    Modifications to the Rights of Security Holders and Use of
    Proceeds   149




---



##### Table of Contents



Item 15.  Controls
    and Procedures  Disclosure
    Controls and Procedures
    Managements
    Annual Report on Internal Control Over Financial
    Reporting
    Remediation
    of Material Weaknesses in Internal Control Over Financial
    Reporting
        Changes
    in Internal Control Over Financial Reporting
   150




---



##### Table of Contents



Item 16A.  Audit
    Committee Financial Expert   151




---



##### Table of Contents



Item 16B.  Code
    of Business Conduct  www.aeienergy.com
 152




---



##### Table of Contents



Item 16C.  Principal
    Accountant Fees and Services    December 31,2008


2007Millions of dollars (U.S.)Audit
    fees(a)

$
13.1


$
15.8Audit-related
    fees(b)


0.4



0.1Tax
    Fees(c)


0.2



0.2Other fees






     (a)
    
    Includes fees for the audit of the
    Companys annual financial statements, the review of
    quarterly financial statements, services in connection with
    statutory and regulatory filings or engagements, and comfort
    letters and consents for financings and filings made with the
    SEC.(b)
    
    Fees for due diligence work and
    consultation in connection with various business and financing
    transactions.(c)
    
    Our principal accounting firm does
    not provide tax consulting and advisory services to AEI or any
    of its affiliates.  Approval of Fees 
 153




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##### Table of Contents



Item 16D.  Exemptions
    from the Listing Standards for Audit Committees   154




---



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Item 16E.  Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers    155




---



##### Table of Contents



Item 16F.  Change
    in Registrants Certifying Accountant    156




---



##### Table of Contents



Item 16G.  Corporate
    Governance    157




---



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Item 17.  Financial
    Statements    158




---



##### Table of Contents



Item 18.  Financial
    Statements   page F-1.
 159




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##### Table of Contents



Item 19.  Exhibits  Form 20-F,
  
    should not in all instances be treated as categorical statements
    of fact, but rather as a way of allocating the risk to one of
    the parties if those statements prove to be inaccurate;
    have been qualified by disclosures that were made to the other
    party in connection with the negotiation of the applicable
    agreement, which disclosures are not necessarily reflected in
    the agreement;
    may apply standards of materiality in a way that is different
    from what may be viewed as material to you or other
    investors; and
    were made only as of the date of the applicable agreement or
    such other date or dates as may be specified in the agreement
    and are subject to more recent developments.  Form 20-F http://www.sec.gov
  Exhibit No.

Description1.1
*

Amended and Restated Articles of Association of AEI dated
    December 20, 20071.2
*

Amended and Restated Memorandum of Association of AEI dated
    December 20, 20072.1
*

Amended and Restated Registration Rights Agreement by and among
    AEI and certain Investors dated December 29, 20064.1
*

Credit Agreement, dated March 30, 2007, among Ashmore
    Energy International, AEI Finance Holding LLC, various financial
    institutions as lenders, Credit Suisse Cayman Islands Branch, JP
    Morgan Chase Bank, N.A., Credit Suisse Securities (USA) LLC and
    J.P. Morgan Securities, Inc.4.2
*

AEI 2007 Incentive Plan effective as of January 23, 2007,
    as amended on August 23, 20074.3
*

2005 Prisma Energy International Inc. Sales Incentive Plan
    effective as of August 18, 2005 as amended on May 22,
    20064.4
*

2004 Prisma Energy International Inc. Stock Incentive Plan
    effective as of September 30, 2004 as amended on
    August 18, 2005 and May 22, 20064.5
*

Distribution Concession Contract No. 187/98, dated
    August 27, 1998, between ANEEL and Elektro Eletricidade e
    Servicos S.A., as amended4.6
*

Distribution First Amendment to Concession Contract
    No. 187/98, dated December 14, 1999, between ANEEL and
    Elektro Electricidade e Servicos S.A.4.7
*

Distribution Second Amendment to Concession Contract
    No. 187/98, dated July 12, 2005 between ANEEL and
    Elektro Electridade e Servicos S.A.4.8
*

Distribution Third Amendment to Concession Contract
    No. 187/98, dated December 18, 2007, between ANEEL and
    Elektro Eletricidade e Servicos S.A.4.9
*

Second Amended and Restated Shareholders Agreement, dated
    May 9, 2008, among AEI and the shareholders of AEI
    identified therein4.10
*

2006 Restricted Stock Agreement8.1
*

List of Subsidiaries of AEI12.1


Certification of James Hughes, Chief Executive Officer
    (Principal Executive Officer) of AEI, pursuant to 15 U.S.C.
    Section 78(m)(a), as adopted pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002. 160




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##### Table of Contents



Exhibit No.

Description12.2


Certification of John G. Fulton, EVP, Finance and Treasury
    (Principal Financial Officer) of AEI, pursuant to 15 U.S.C.
    Section 78(m)(a), as adopted pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.13.1


Certification of James Hughes, Chief Executive Officer
    (Principal Executive Officer) of AEI, pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.13.2


Certification of John G. Fulton, EVP, Finance and Treasury
    (Principal Financial Officer) of AEI, pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.     *
    
    Previously field as an exhibit to the Companys
    registration statement on
    form 20-F
    (File
    No. 000-53606)
    filed with the SEC on March 27, 2009 and incorporated
    herein by reference. 161




---



##### 



Index
    to the Financial Statements
  AEI AND
    SUBSIDIARIES
   
 PageREPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM


F-2Consolidated Balance Sheets as of
    December 31, 2008 and December 31, 2007


F-3Consolidated Statements of Operations for the
    years ended December 31, 2008, 2007 and 2006


F-4Consolidated Statements of Cash Flows for the
    years ended December 31, 2008, 2007 and 2006


F-5Consolidated Statements of Shareholders
    Equity for the years ended December 31, 2008, 2007 and
    2006


F-6Notes to Consolidated Financial Statements


F-7Schedule II Valuation and Qualifying
    Accounts


F-67   F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    c/o AEI
             F-2




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##### Table of Contents



AEI AND
    SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(Millions of dollars (U.S.), except share and par value
    data)ASSETSCurrent assets:Cash and cash equivalents

$
736


$
516Restricted cash


83



95Accounts and notes receivable:Trade (net of allowance of $69 and $46, respectively)


863



650Unconsolidated affiliates


11



75Inventories


239



117Prepaids and other current assets


384



263Total current assets


2,316



1,716Property, plant and equipment, net


3,524



3,035Investments in and notes receivable from unconsolidated
    affiliates


907



1,028Goodwill


614



402Intangibles, net


393



237Other assets


1,199



1,435Total assets

$
8,953


$
7,853LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable:Trade

$
572


$
380Unconsolidated affiliates


30



94Current portion of long-term debt, including related party


547



749Accrued and other liabilities


594



525Total current liabilities


1,743



1,748Long-term debt, including related party


3,415



2,515Deferred income taxes


199



168Other liabilities


1,331



1,276Commitments and contingenciesMinority interest


435



288Shareholders equity:Common stock, $0.002 par value, 5,000,000,000 shares
    authorized; 224,624,481 and 210,403,374 shares issued and
    outstanding






Additional paid-in capital


1,754



1,521Retained earnings


280



122Accumulated other comprehensive income (loss)


(204
)


215Total shareholders equity


1,830



1,858Total liabilities and shareholders equity

$
8,953


$
7,853    F-3




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##### Table of Contents



AEI AND
    SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Years EndedDecember 31,2008


2007


2006(Millions of dollars(U.S.), except shareand per share data)Revenues

$
9,211


$
3,216


$
946Costs of sales


7,347



1,796



566Operating expenses:Operations, maintenance, and general and administrative expenses


894



630



193Depreciation and amortization


268



217



59Taxes other than income


43



43



7Other charges


56



50



(Gain) loss on disposition of assets


(93
)


(21
)


7Total operating expenses


1,168



919



266Equity income from unconsolidated affiliates


117



76



37Operating income


813



577



151Other income (expense):Interest income


88



110



71Interest expense


(378
)


(306
)


(138
)Foreign currency transaction gain (loss), net


(56
)


19



(5
)Loss on early retirement of debt






(33
)


Other income (expense), net


9



(22
)


7Total other expense


(337
)


(232
)


(65
)Income before income taxes and minority interests


476



345



86Provision for income taxes


194



193



84Minority interests expense


124



65



20Income (loss) from continuing operations


158



87



(18
)Income from discontinued operations






3



7Gain from disposal of discontinued operations






41



Net income (loss)

$
158


$
131


$
(11
)Basic and diluted earnings per share:Income (loss) from continuing operations

$
0.73


$
0.42


$
( 0.09
)Discontinued operations






0.21



0.04Net income (loss)

$
0.73


$
0.63


$
(0.05
)    F-4




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##### Table of Contents



AEI AND
    SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the YearsEndedDecember 31,2008


2007


2006(Millions of dollars (U.S.))Cash flows from operating activities:Net income (loss)

$
158


$
131


$
(11
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization


268



217



59Other charges


56



50



Increase in deferred revenue


55



120



28Deferred income taxes


11



106



25Equity earnings from unconsolidated affiliates


(117
)


(76
)


(37
)Distributions from unconsolidated affiliates


67



28



11Foreign currency transaction (gain) loss, net


56



(19
)


5(Gain) loss on disposition of assets


(93
)


(21
)


7Gain from disposal of discontinued operations






(41
)


Loss on early retirement of debt






33



Minority interests


124



65



20Changes in operating assets and liabilities, net of translation,
    acquisitions, dispositions and non-cash items:Trade receivables


(85
)


(59
)


(34
)Accounts payable, trade


24



77



27Accrued income taxes


(24
)


(26
)


9Accrued interest


16



14



(8
)Inventories


(15
)


(7
)


(15
)Prepaids and other current assets


4



(5
)


13Regulatory assets


(8
)


112



31Regulatory liabilities


(24
)


(10
)


8Other


35



(3
)


17Net cash provided by operating activities


508



686



155Cash flows from investing activities:Proceeds from sale of investments


99



162



24Capital expenditures


(372
)


(249
)


(76
)Cash paid for acquisitions, exclusive of cash and cash
    equivalents acquired


(253
)


(1,111
)


(2,280
)Cash and cash equivalents acquired


60



21



516Net decrease in restricted cash


78



61



27Other


(26
)


(35
)


60Net cash used in investing activities


(414
)


(1,151
)


(1,729
)Cash flows from financing activities:Issuance of long-term debt


478



1,531



1,788Repayment of long-term debt


(213
)


(1,777
)


(172
)Payment of debt issuance costs






(18
)


(33
)Increase (decrease) in short-term borrowings


(124
)


459



(19
)Dividends paid to minority interest


(167
)


(101
)


(64
)Proceeds from issuance of common shares


200







920Other


(1
)


(6
)


(25
)Net cash provided by financing activities


173



88



2,395Effect of exchange rate changes on cash


(47
)


63



3Increase (decrease) in cash and cash equivalents


220



(314
)


824Cash and cash equivalents, beginning of period


516



830



6Cash and cash equivalents, end of period

$
736


$
516


$
830Cash payments for income taxes, net of refunds

$
173


$
172


$
50Cash payments for interest, net of amounts capitalized

$
264


$
246


$
66    F-5




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##### Table of Contents



AEI AND
    SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
  AccumulatedAdditional


Retained


Other


TotalCommon


Paid-In


Earnings


Comprehensive


Shareholders


ComprehensiveStock


Capital


(Deficit)


Income (Loss)


Equity


Income(Millions of dollars (U.S.))Balance, January 1, 2006

$



$
350


$
2


$
(25
)

$
327Net loss










(11
)






(11
)

$
(11
)Contribution of invested capital






1,088











1,088



Compensation under stock incentive plan






(1
)










(1
)


Foreign currency translation














2



2



2Stock issuance costs






(4
)










(4
)


Transition adjustment for pension and other post retirement
    benefits, net of income tax of $3 million














6



6



Change in fair value of
    available-for-sale-
    securities














34



34



34Comprehensive income





















$
25Balance, December 31, 2006

$



$
1,433


$
(9
)

$
17


$
1,441Net income










131







131



131Contribution of invested capital






79











79



Compensation under stock incentive plan






9











9



Foreign currency translation














210



210



210Minimum pension liability adjustments, net of income tax of
    $8 million














16



16



16Net unrealized loss on qualifying derivatives














(25
)


(25
)


(25
)Change in fair value of
    available-for-sale-
    securities














(3
)


(3
)


(3
)Comprehensive income





















$
329Balance, December 31, 2007

$



$
1,521


$
122


$
215


$
1,858Net income










158







158



158Issuance of new shares






223











223



Compensation under stock incentive plan






7











7



Foreign currency translation














(343
)


(343
)


(343
)Minimum pension liability adjustments, net of income tax of
    $16 million














32



32



32Net unrealized loss on qualifying derivatives, net of income tax
    of $2 million














(43
)


(43
)


(43
)Change in fair value of
    available-for-sale-
    securities














(62
)


(62
)


(62
)Other






3







(3
)






(3
)Comprehensive loss





















$
(261
)Balance, December 31, 2008

$



$
1,754


$
280


$
(204
)

$
1,830    F-6




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
  1.
    DESCRIPTION
    OF THE COMPANY AND OPERATIONS          
    Stage 1 (completed May 25, 2006) AEIL
    acquired 24.26% of the voting capital and 49% of the economic
    interest in PEI.
    Stage 2 (completed September 7, 2006) AEIL acquired the remaining 75.74% of the voting capital and
    the remaining 51% economic interest.     F-7




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2008Ownership


Accounting


Location ofCompany Name

Interest (%)


Method


Operations

SegmentAccroven SRL
    (Accroven)(a)


49.25



Equity Method


Venezuela

Natural gas
    transportation and
    servicesBeijing Macro Gas Link Co. Ltd
    (BMG)(b)(c)


70.00



Consolidated


China

Natural gas distributionGas Natural de Lima y Callao S.A.
    (Calidda)(b)


80.85



Consolidated


Peru

Natural gas distributionChilquinta Energia S.A.
    (Chilquinta)(b)(d)


50.00



Equity Method


Chile

Power distributionDHA Cogen Limited
    (DCL)(c)


59.94



Consolidated


Pakistan

Power generationDistribuidora de Electricidad Del Sur, S.A. de C.V.
    (Delsur)(b)


86.41



Consolidated


El Salvador

Power distributionEmpresa Distribuidora de Energia Norte, S.A.
    (EDEN)(b)


90.00



Consolidated


Argentina

Power distributionElektra Noreste S.A. (Elektra)


51.00



Consolidated


Panama

Power distributionElektrocieplownia Sp. z.o.o.
    (ENS)(a)


100.00



Consolidated


Poland

Power generationElektro  Eletricidade e Serviços S.A.
    (Elektro)(a)


99.68



Consolidated


Brazil

Power distributionEmgasud S.A.
    (Emgasud)(c)


31.89



Equity Method


Argentina

Power generationEmpresa Energetica Corinto Ltd.
    (Corinto)(a)(b)(e)


50.00



Consolidated


Nicaragua

Power generationEPE  Empresa Produtora de Energia Ltda.
    (EPE)(a)(f)


50.00



Consolidated


Brazil

Power generationEmpresa Electrica de Generacion de Chilca S.A.
    (Fenix)(c)


85.00



Consolidated


Peru

Power generationGas Transboliviano S.A.
    (GTB)(a)(g)


17.65



Cost Method


Bolivia

Natural gas
    transportation and
    servicesGasOcidente do Mato Grosso Ltda.
    (GOM)(a)(f)


50.00



Consolidated


Brazil

Natural gas
    transportation and
    servicesGasOriente Boliviano Ltda.
    (GOB)(a)(f)


50.00



Consolidated


Bolivia

Natural gas
    transportation and
    servicesGeneradora San Felipe Limited Partnership (Generadora
    San Felipe)(a)(b)(h)


100.00



Consolidated


Dominican Republic

Power generationJaguar Energy Guatemala LLC
    (Jaguar)(c)


100.00



Consolidated


Guatemala

Power generationJamaica Private Power Corporation
    (JPPC)(b)


84.43



Consolidated


Jamaica

Power generationLuoyang Yuneng Sunshine Cogeneration Company Limited
    (Luoyang)(c)


50.00



Consolidated


China

Power generationOperadora San Felipe Limited Partnership (Operadora
    San Felipe)(a)(b)(h)


100.00



Consolidated


Dominican Republic

Power generationPeruvian Opportunity Company SAC
    (POC)(b)(d)


50.00



Equity Method


Peru

Power distributionPromigas S.A. E.S.P.
    (Promigas)(a)(c)


52.13



Consolidated


Colombia

Natural gas
    transportation and
    services, Natural gas
    distribution and Retail
    fuelPuerto Quetzal Power LLC
    (PQP)(a)(b)


100.00



Consolidated


Guatemala

Power generationSubic Power Corp.
    (Subic)(a)


50.00



Equity Method


Philippines

Power generationTipitapa Power Company Ltd
    (Tipitapa)(c)


100.00



Consolidated


Nicaragua

Power generationTongda Energy Private Limited
    (Tongda)(b)


100.00



Consolidated


China

Natural gas
    distributionTrakya Elektrik Uretim ve Ticaret A.S.
    (Trakya)(a)


59.00



Consolidated


Turkey

Power generationTransborder Gas Services Ltd.
    (TBS)(a)(f)


50.00



Consolidated


Brazil, Bolivia

Natural gas
    transportation and
    services F-8




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2008


2008Ownership


Accounting


Location ofCompany Name

Interest (%)


Method


Operations

SegmentTransportadora Brasileira Gasoduto Bolivia-Brasil S.A. TBG
    (TBG)(a)(i)


4.00



Cost Method


Brazil

Natural gas
    transportation and
    servicesTransredes-Trasporte de Hidrocarburos S.A.
    (Transredes)(a)(g)


1.28



Cost Method


Bolivia

Natural gas
    transportation and
    services     (a)
    
    Acquired in 2006 as part of the
    step acquisition of PEI.(b)
    
    The Companys initial or
    additional interest was purchased during 2007 (see Note 3).(c)
    
    The Companys initial or
    additional interest was purchased during 2008 (see Note 3).(d)
    
    The Companys initial interest
    was purchased during December 2007. POC holds the interest in
    the operations referred to as Luz del Sur. At the
    time of purchase of the 50.00% interest in Chilquinta, the
    Company also acquired a 50.00% interest in a related service
    company, Tecnored S.A. (Tecnored).(e)
    
    As part of the acquisition of an
    additional interest in Corinto in 2007, the Company acquired a
    50.00% interest in Empresa Energetica Corinto Holdings Ltd.
    (EEC Holdings) and began consolidating the accounts
    of Corinto based on the voting power controlled by AEI (see
    Note 3).(f)
    
    These four companies comprise the
    integrated project Cuiabá.(g)
    
    As explained further in
    Note 3, the Companys ownership in Transredes, through
    a 50.00% ownership in the holding company TR Holdings Ltda.
    (TR Holdings), decreased from 25% to 0% and the
    Companys indirect ownership in GTB through Transredes
    decreased from 12.75% to 0%. The company also maintains a 1.28%
    direct ownership interest in Transredes. Total direct and
    indirect ownership in GTB is 17.65% as of December 31,
    2008. Due to the decrease in ownership, the Companys
    investments in Transredes and GTB are now accounted for using
    the cost method.(h)
    
    The Company comprises an integrated
    part of the operation referred to collectively as
    San Felipe.(i)
    
    Ownership interest based on direct
    ownership. Total ownership, including indirect interests held
    through TR Holdings, is 4.27%.      2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Basis of Presentation 
  Acquisition Accounting
 F-9




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Discontinued Operations
  Cash and Cash Equivalents
  Restricted Cash
  Allowance for Doubtful Accounts
  Inventories first-in,
  Regulatory Assets and Liabilities Accounting for the Effects of Certain
    Types of Regulation
  Property, Plant, and Equipment
 F-10




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Machinery and equipment

3-50 yearsPipelines

25-50 yearsPower generation equipment

18-40 yearsBuildings

5-50 yearsVehicles

3-15 yearsFurniture and fixtures

4-10 years     Long-Lived Asset Impairment
  Investments in Unconsolidated Affiliates
  Marketable Securities
  Goodwill
  Intangible Assets
 F-11




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Asset Retirement Obligations
  Deferred Financing Costs
  Revenue Recognition
  Deferred Revenue kilowatt-hour kilowatt-hour
    Earnings Per Share
  Income Taxes Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109
  Derivatives
 F-12




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Pension Benefits
  Stock-Based Compensation
  Environmental Matters
  Foreign Currency
 F-13




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Use of Estimates
  Recent Accounting Policies Fair Value
    Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
 F-14




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. 08-6, Equity Method Investment Accounting Considerations No. 08-6 No. 08-6 No. 08-6
  No. 08-6,
  Disclosures
    about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments
    and Hedging Activities
  3.
    ACQUISITIONS
    AND DISPOSALS  Acquisitions
  2008
    Acquisitions
  Sociedad de Inversiones en Energia SIE) EITF 90-13, Accounting for Simultaneous Common Control Mergers
 F-15




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    SIEMillions ofdollars (U.S.)Current assets

$
86Property, plant, and equipment, net


51Goodwill


188Intangibles


78Other noncurrent assets


11Assets acquired


414Current liabilities


87Long-term debt


66Other long-term liabilities


17Minority interest


114Liabilities assumed


284Net assets acquired

$
130     Unaudited
    Pro Forma Results of Operations
    For the Year EndedDecember 31, 2007Millions of dollars (U.S.)Revenues

$
7,475Cost of sales


5,676Operations, maintenance, and general and administrative expenses


1,110Operating income


821Income before income taxes and minority interests


462Minority interests


145Income from continuing operations


90Basic earnings per share

$
0.43   BMG
 F-16




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Luoyang
  Tipitapa
  DCL 
  2008
    Acquisitions of development assets
  Fenix
 F-17




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    BMG


Luoyang


Tipitapa


DCL


FenixMillions of dollars (U.S.)Current assets

$
56


$
15


$
22


$
30


$
1Property, plant, and equipment, net


29



149



12



35



125Goodwill


6



11







10



Intangibles, net


32



8











Other assets


6







3



67



1Assets acquired


129



183



37



142



127Current liabilities


35



76



8



47



5Long-term debt


8



85



6



61



Other liabilities


8



2



5







8Minority Interest


20



1







11



14Liabilities assumed


71



164



19



119



27Net assets acquired

$
58


$
19


$
18


$
23


$
100     2008
    Acquisition of equity investments
  Emgasud
  2008
    Greenfield development projects
  Jaguar
 F-18




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2008
    Acquisitions of additional interests in entities already
    consolidated in 2007
  Promigas
  2007
    Acquisitions
  DelSur
  EDEN
  Cálidda
  Tongda
  Corinto
  JPPC
  Chilquinta and POC
 F-19




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2007
    Acquisitions of additional interests in entities already
    consolidated in 2006
  Generadora San Felipe and Operadora
    San Felipe
  PQP
  2006
    Acquisitions
  PEI
    Promigas
  Dispositions
  Transredes
   F-20




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    BLM
    Discontinued
    Operations  Vengas
      For the Years EndedDecember 31,2007


2006Millions of dollars (U.S.)Revenues

$
64


$
23Income from discontinued operations before taxes


3



7Provision for income tax






Income from discontinued operations


3



7Gain on sale of discontinued operations


41



  F-21




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Unaudited
    Pro Forma Results of Operations
    For the Year EndedDecember 31,2007


2006Millions of dollars (U.S.)Revenues

$
3,452


$
3,044Cost of sales


1,946



1,694Operations and maintenance expense


974



833Operating income


664



620Other expense


319



174Income from continuing operations before income taxes


286



367Income from continuing operations


85



49Basic earnings per share

$
0.41


$
0.25   4.
    OTHER
    CHARGES  Cuiabá
     F-22




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Synthesis Energy Systems, Inc.
    (SES)
  5.
    (GAIN)
    LOSS ON DISPOSITION OF ASSETS    For the YearsEndedDecember 31,2008


2007


2006Millions of dollars (U.S.)Gain on exchange for additional shares of SIE (see Note 3)

$
(68
)

$



$
Gain on nationalization of Transredes (see Note 3)


(57
)






Loss on sale of operating equipment


18



10



7Loss on sale of debt securities (see Note 13)


14







Gain on sale of BLM (see Note 3)






(21
)


Gain on sale of shares of Promigas






(10
)


$
(93
)

$
(21
)

$
7       6.
    OTHER
    INCOME (EXPENSE), NET    For the YearEndedDecember 31,2008


2007


2006Millions of dollars (U.S.)Dividend income

$
3


$
3


$
Gain (loss) on derivatives


(2
)


(13
)


2Other


8



(12
)


5$
9


$
(22
)

$
7    F-23




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    7.
    CASH AND
    CASH EQUIVALENTS    December 31,2008


2007Millions of dollars (U.S.)Parent Company

$
284


$
31Consolidated Holding and Service Companies


35



157Consolidated Operating Companies


417



328Total cash and cash equivalents

$
736


$
516       December 31,2008


2007Millions of dollars (U.S.)Brazilian Real

$
111


$
133Colombian Peso


96



50Chinese Renminbi


15



Chilean Peso


14



Polish Zloty


8



4Argentinean Peso


7



6Peruvian Nuevo Sol


2



8Jamaican Dollar


2



Other


5



4Total foreign currency cash and cash equivalents

$
260


$
205  F-24




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007Millions of dollars (U.S.)Current restricted cash:Restricted due to power purchase agreements

$
4


$
5Collateral and debt reserves for financing agreements


63



78Other


16



12Total current restricted cash


83



95Noncurrent restricted cash (included in other assets, see
    Note 13):Restricted due to long-term power purchase agreements


5



56Amounts in escrow accounts related to taxes


24



25Collateral and debt reserves for financing agreements


8



47Other


12



Total non-current restricted cash


49



128Total restricted cash

$
132


$
223   8.
    INVENTORIES    December 31,2008


2007Millions of dollars (U.S.)Materials and spare parts

$
141


$
78Fuel


98



39Total inventories

$
239


$
117  F-25




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    PREPAIDS
    AND OTHER CURRENT ASSETS    December 31,2008


2007Millions of dollars (U.S.)Prepayments

$
29


$
30Regulatory assets


25



30Deferred income taxes


71



88Receivable from YPFB (see Note 3)


60



Taxes other than income


36



31Government subsidy  Delsur


20



7Net investments in direct financing leases (see Notes 3 and
    13)


10



Current marketable securities


7



2Other


126



75Total

$
384


$
263   10.
    PROPERTY,
    PLANT AND EQUIPMENT, NET    December 31,2008


2007Millions of dollars (U.S.)Machinery and equipment

$
1,888


$
1,924Pipelines


777



745Power generation equipment


862



432Land and buildings


378



117Vehicles


29



20Furniture and fixtures


31



13Other


106



108Construction-in-process


209



143Total


4,280



3,502Less accumulated depreciation and amortization


(756
)


(467
)Total property, plant and equipment, net

$
3,524


$
3,035   30-year
   F-26




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          For the YearsEndedDecember 31,2008


2007


2006Millions of dollars (U.S.)Depreciation and amortization of property, plant and equipment,
    including those recorded under capital leases

$
223


$
184


$
55Amortization of intangible assets, net


45



33



4Total

$
268


$
217


$
59    F-27




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    INVESTMENTS
    IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED
    AFFILIATES    December 31,2008


2007Millions of dollars (U.S.)Equity method:Accroven

$
24


$
14BMGs equity method investments


1



Chilquinta


266



330EEC Holdings


7



7GTB






14Emgasud (see Note 3)


49



POC


341



344Promigas equity method investments


41



84Subic


9



7Tecnored


21



24TR Holdings (see Note 3)






58Total investments  equity method


759



882Total investments  cost method


28



27Total investments in unconsolidated affiliates


787



909Notes receivable from unconsolidated affiliates:Chilquinta


98



97GTB


14



14TBG


8



8Total notes receivable from unconsolidated affiliates


120



119Total investments in and notes receivable from unconsolidated
    affiliates

$
907


$
1,028       Peso
   F-28




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the YearsEndedDecember 31,2008


2007


2006Millions of dollars(U.S.)Accroven

$
16


$
12


$
BMGs equity (loss) from investments in unconsolidated
    affiliates


(1
)






Chilquinta


32



1



GTB


1



5



2PEI (see Note 1)










30POC


32



1



Promigas










3Promigas equity income from investments in unconsolidated
    affiliates


14



29



Subic


12



10



4Tecnored


4







TR Holdings


7



18



(2
)Total

$
117


$
76


$
37         December 31,2008


2007Millions of dollars (U.S.)Combined Balance Sheet dataCurrent assets

$
662


$
1,265Noncurrent assets


2,126



3,864Current liabilities


470



930Noncurrent liabilities


968



2,070   For the Years EndedDecember 31,2008


2007


2006Millions of dollars (U.S.)Combined Income Statement dataRevenues

$
1,616


$
4,486


$
429Cost of sales


940



3,522



42Net income


227



266



43  F-29




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    12.
    GOODWILL
    AND INTANGIBLES    December 31,2008


2007Millions of dollars (U.S.)Balance at January 1

$
402


$
290Acquisitions:New acquisitions (see Note 3)


225



103Acquired goodwill from consolidation of new acquisitions


35



Translation adjustments and other


(48
)


9Balance at December 31

$
614


$
402     December 31, 2008


December 31, 2007Accum.








Accum.Cost


Amort.


Net


Cost


Amort.


NetMillions of dollars (U.S.)


Millions of dollars (U.S.)Amortizable intangibles:Customer relationships

$
171


$
20


$
151


$
81


$
7


$
74Concession and land use rights


152



8



144



88



2



86Power purchase agreements and contracts


64



43



21



58



19



39Software costs


42



21



21



12



6



6Other


4



4







4



2



2Total amortizable intangibles

$
433


$
96



337


$
243


$
36



207Nonamortizable intangibles:Elektra concession rights










31











30Promigas trademarks










25











Total nonamortizable intangibles










56











30Total intangibles









$
393










$
237   Goodwill
  Intangibles
 F-30




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    20-year
    Millions of dollars (U.S.)2009

$
312010


262011


232012


212013


18Thereafter


218Total

$
337  F-31




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    OTHER
    ASSETS    December 31,2008


2007Millions ofdollars (U.S.)Long-term receivables from customers:Corporation Dominicana de Empresas Electricias Estatales
    (CDEEE)

$
169


$
161Promigas customers


128



113Elektro customers


8



12Furnas






11Other


1



1306



298Net investments in direct financing leases (see Notes 3 and
    4)


63



174Regulatory assets


49



10Deferred income taxes


265



334Investments in debt securities


192



306Restricted cash (Note 7)


49



128Deferred financing costs, net


22



22Other miscellaneous investments


7



10Other deferred charges


160



94Other noncurrent assets


86



59Total

$
1,199


$
1,435   Long-Term Receivables from Customers
  pesos
  Net investment in direct financing lease
 F-32




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007Millions of dollars (U.S.)Total minimum lease payments to be received

$
440


$
484Less amounts representing executory costs


(180
)


(208
)Total minimum lease receivables


260



276Less allowance for uncollectibles


(9
)


(40
)Less unearned income


(178
)


(82
)Less estimated residual value of leased properties






20Net investments in direct financing leases


73



174Current portion


10



Long-term portion

$
63


$
174    F-33




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Investments in debt securities
  For the YearsEndedDecember 31,2008


2007


2006Millions of dollars (U.S.)Available-for-sale debt securities:Matured debt securities included in debt restructuring
    agreements:Fair value at beginning of period

$
282


$
268


$
225Purchases of additional securities in exchange for AEI common
    stock






82



Purchases of additional securities for cash






5



21Sale of existing securities


(38
)






(12
)Conversion to equity securities






(74
)


Realized loss on sale of securities


(14
)






Unrealized net gain (loss) affecting other comprehensive income


(62
)


1



34Fair value at end of period


168



282



268Corporate debt securities:Fair value at beginning of period






24



24Unrealized net loss affecting other comprehensive income






(24
)


Fair value at end of period










24Total available-for-sale securities, end of period


168



282



292Held-to-maturity debt securities:Participation in commercial bank loan portfolio


22



22



Promissory notes


2



2



2Total held-to-maturity securities, beginning and end of period


24



24



2Total

$
192


$
306


$
294      F-34




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    ACCRUED
    AND OTHER LIABILITIES    December 31,2008


2007Millions of dollars (U.S.)Employee liabilities

$
48


$
45Deferred income taxes


10



56Other taxes:Value added taxes


40



42Taxes on revenues


13



18Withholding taxes


25



19Governmental taxes


11



11Other


31



14Interest


42



30Customer deposits


64



14Dividends payable to minority interests


17



15Regulatory liabilities


35



89Tax and legal contingencies


19



15Cost Increase Protocol payable  Trakya (see
    Note 17)


37



Deferred revenues


32



22Other accrued expenses


47



55Other


123



80Total

$
594


$
525  F-35




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    LONG TERM
    DEBT    Variable or

Interest

Final

December 31,Fixed Rate

Rate (%)

Maturity

2008


2007Millions of dollars (U.S.), except interest ratesDebt held by Parent Company:Senior credit facility, U.S. dollar

Variable

4.5

2014

$
936


$
979Revolving credit facility, U.S. dollar

Variable

3.8

2012


390



345Synthetic revolving credit facility, U.S. dollar

Variable

3.5

2012


105



105PIK note, U.S. dollar

Fixed

10.0

2018


352



319Debt held by consolidated subsidiaries:Cálidda, U.S. dollar

Variable

2.1 - 5.3

2009 - 2015


87



82Cuiabá, U.S. dollar notes

Fixed

5.9

2015 - 2016


97



99Delsur, U.S. dollar

Variable

6.5 - 7.0

2015


73



100DCL, Pakistan Rupee

Variable

14 - 18.6

2009 - 2019


77



EDEN, U.S. dollar

Variable

4.2

2013


37



44Elektra, U.S. dollar senior notes

Fixed

7.6

2021


99



99Elektra, U.S. dollar debentures

Variable

6.9

2018


20



Elektra, U.S. dollar revolving credit facility

Variable

4.3 - 5.5

2009


25



Elektro, Brazilian realdebentures

Variable

15.5 - 22.8

2011


238



287Elektro, Brazilian realnote

Variable

5.0 - 12.3

2010 - 2020


132



127ENS, Polish Zlotyloans

Variable

7.5 - 8.0

2009 - 2018


67



77Luoyang, Chinese Renminbi

Variable

6.1 - 13.0

2009 - 2016


133



PQP, U.S. dollar notes

Variable

4.2 - 4.9

2015


88



90Promigas, Colombian pesodebentures

Variable

15.1 - 15.9

2011 - 2012


116



129Promigas, Colombian pesonotes

Variable

12.0 - 14.0

2009 - 2011


534



253Promigas, U.S. dollar notes

Variable

4.2 - 5.9

2012


291



26Trakya, U.S. dollar notes

Fixed



2008






26Trakya, U.S. dollar notes

Variable



2008






21Others, U.S. dollar notes and Chinese Renminbi

Fixed and
    Variable

6.1 - 10.5

2009 - 2014


65



563,962



3,264Less current maturities








(547
)


(749
)Total







$
3,415


$
2,515      F-36




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Millions of dollars (U.S.)2009

$
5472010


5002011


5782012


7842013


119Thereafter


1,434Total

$
3,962     Senior Credit Facility
    Payment in Kind (PIK) Notes
 F-37




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Cálidda
    Cuiaba
  Delsur
 F-38




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    DCL Rupees Rupees
  Rupees
    EDEN
    Elektra
      Elektro  reais
 F-39




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  reais reais
  reais
    December 31, 2008CDI


12.3
%IGP-M


9.8
%RGR


0.0
%TJLP


6.2
%   ENS  zloty 20-year 15-month zloty zloty zloty zloty
  Luoyang Renminbi Renminbi
 F-40




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Renminbi
  PQP
  Promigas peso peso
  peso pesos
  peso
    peso peso
   F-41




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  16.
    INCOME
    TAXES      Income Tax Provision
  For the YearsEndedDecember 31,2008


2007


2006Millions of dollars (U.S.)Current:Cayman Islands

$



$



$
Foreign


205



106



64Total current


205



106



64Deferred:Cayman Islands










Foreign


(11
)


87



20Total deferred


(11
)


87



20Provision for income taxes

$
194


$
193


$
84   Effective Tax Rate Reconciliation
  December 31,2008


2007


2006Statutory tax rate  Cayman Island


0.0
%


0.0
%


0.0
%Foreign tax rate differential


36.4
%


42.0
%


64.7
%Tax credits


0.0
%


0.0
%


(1.1
)%Change in valuation allowance


4.4
%


14.0
%


31.0
%Effective tax rate


40.8
%


56.0
%


97.6
%      F-42




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the YearsEnded December 31,2008


2007Millions of dollars (U.S.)Unrecognized tax benefit, January 1

$
50


$
51Gross increases, tax positions in prior period


4



5Gross decreases, tax positions in prior period






(12
)Gross increases, tax positions in current period


12



16Settlements






(1
)Lapse of statute of limitations


(5
)


(9
)Unrecognized tax benefit, December 31

$
61


$
50         non-U.S. subsidiaries
  Jurisdiction

YearsArgentina

2004-presentBolivia

2005-presentBrazil

2004-presentColombia

2006-presentDominican Republic

1998-June 2001 and 2004-presentPanama

2006-presentPhilippines

2005-presentPoland

2004-presentTurkey

2004-present      F-43




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007Millions of dollars (U.S.)Deferred tax assets:Inventory

$
7


$
Goodwill


23



71Accrued expenses


133



244Operating losses and tax credit carryforwards


216



236Reserves


101



Foreign currency and other


5



39Valuation allowance


(193
)


(168
)Total deferred tax assets


292



422Deferred tax liabilities:Fixed assets

$
(158
)

$
(201
)Foreign currency and other


(7
)


(25
)Total deferred tax liabilities


(165
)


(226
)Total deferred tax assets (liabilities)

$
127


$
196       CarryforwardNOL


Tax CreditMillions of dollars (U.S.)2009

$
4


$
2010


9



2011


5



2012


26



2013


14



1Thereafter


27



5Unlimited


125



Total

$
210


$
6    F-44




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    17.
    OTHER
    LIABILITIES    December 31,2008


2007Millions of dollars (U.S.)Deferred revenue

$
437


$
414Special obligations


192



241Uncertain tax positions (see Note 16)


156



125Notes payable to unconsolidated affiliates


109



120Tax and legal contingencies (see Note 25)


68



81Unfavorable power purchase agreements (see Note 12)


57



65Taxes payable  San Felipe (see Note 25)


66



59Capital lease obligations (see Note 13)


48



30Cost Increase Protocol payable  Trakya


25



12Interest


22



22Pension and other postretirement benefits (see Note 24)


14



10Regulatory liabilities


25



34Other


112



63Total

$
1,331


$
1,276   Special obligations 
  Capital lease obligations 
 F-45




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Millions of dollars (U.S.)2009

$
122010


182011


112012


162013


6Thereafter


8Future minimum lease payments


71Less amount representing interest


14Total

$
57   Cost Increase Protocol payable 
  18.
    LEASE
    COMMITMENTS      DirectFinancing


OperatingMillions of dollars (U.S.)2009

$
10


$
1742010


1



712011


1



722012


1



682013


1



68Thereafter


59



151Total

$
73


$
604    F-46




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Millions of dollars (U.S.)2009

$
162010


132011


112012


102013


10Thereafter


31Total

$
91   19.
    FAIR
    VALUE OF FINANCIAL INSTRUMENTS  Fair Value Measurements
    (SFAS No. 157),
    Level 1
  Level 2
  Level 3 and/or
    Fair Value Measurement at Reporting Date UsingFinal Quoted


SignificantPrices in Active


Other


SignificantMarkets for


Observable


UnobservableDecember 31,


Identical Assets


Inputs


InputsAssets

2008


(Level 1)


(Level 2)


(Level 3)Millions of dollars (U.S.)Available-for-sale securities

$
168


$



$
168


$
Derivatives


1







1



Total assets

$
169


$



$
169


$
Derivatives

$
64


$



$
64


$
Total liabilities

$
64


$



$
64


$
  F-47




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Available for-sale securities
         F-48




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Derivative Instruments
  Interest Rate Swaps
    zloty 15-month
  Net Investment Hedges real Peso real Peso
    real Peso
  Fair Value of Financial Instruments
 F-49




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        December 31,2008


2007Carrying


Fair


Carrying


FairValue


Value


Value


ValueMillions of dollars (U.S.)Assets:Notes receivable from unconsolidated subsidiaries

$
120


$
123


$
122


$
120Investment in debt securities, including available-for-sale
    securities


192



192



306



306Foreign currency forwards and swaps


1



1



2



2Liabilities:Interest rate swaps


64



64



25



25Long-term debt, including current maturities


3,962



3,753



3,264



3,292     20.
    PER SHARE
    DATA    For the YearsEndedDecember 31,2008


2007


2006Basic earnings (loss) per share:Income (loss) from continuing operations (millions of U.S.
    dollars)

$
158


$
87


$
(18
)Average number of common shares outstanding (millions)


218



209



202Income (loss) from continuing operations per share

$
0.73


$
0.42


$
(0.09
)Effect of dilutive securities:Stock options (millions of options)










Restricted stock (millions of shares)






1



Dilutive earnings (loss) per share

$
0.73


$
0.42


$
(0.09
)    F-50




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      21.
    ACCUMULATED
    OTHER COMPREHENSIVE INCOME (LOSS)    December 31,2008


2007Millions of dollars (U.S.)Cumulative foreign currency translation

$
(131
)

$
212Unrealized derivative losses


(68
)


(25
)Unamortized actuarial and investment gains


54



22Unrealized gain (loss) on available-for-sale securities


(59
)


6Total

$
(204
)

$
215   22.
    RELATED-PARTY
    TRANSACTIONS    Interest expense  shareholders 
  Interest income from unconsolidated
    subsidiaries
 F-51




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    23.
    COMPENSATION
    PLANS  Annual Incentive Plans
  2007 Equity Incentive Plan 10-year 10-year
      2008


2007Weighted Average Fair Value of Grants

$
5.39


$
4.61Expected Volatility


25.37
%


25.00
%Risk-Free Interest Rate


3.20
%


4.00
%Dividend Yield


0.00
%


0.00
%Expected Life


6.58 Years



7 Years      F-52




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-Average


AggregateRestricted Stock

Shares


Grant Price


Intrinsic Value(Thousands)





(Millions ofdollars (U.S.))Granted during 2007


500


$
12.63


$
6Vested during 2007










Nonvested, January 1, 2008


494


$
12.65


$
6Granted


238



16.03



4Forfeited


(47
)


13.78



(1
)Exercised


(5
)


11.54



Vested


(44
)


12.75



Nonvested, December 31, 2008


636


$
13.83


$
9         Weighted-


Weighted-Average


AverageFair Value of


Exercise Price


AggregateStock Options

Options


Grants


of Grants


Intrinsic Value(Thousands)








(Millions ofdollars (U.S.))Exercised during 2007


(31
)

$
4.11


$
11.18


$
Vested during 2007














Outstanding, January 1, 2008


1,657


$
4.62


$
12.52


$
8Granted


1,313



5.39



16.03



7Forfeited


(241
)


4.87



13.86



(1
)Exercised














Outstanding, December 31, 2008


2,729


$
4.97


$
14.09


$
14Exercisable as of December 31, 2008


161


$
4.61


$
12.50


$
1    F-53




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004 Stock Incentive Plans
  36-month
      Weighted-Average


AggregateUnits/Shares


Grant Price


Intrinsic Value(Thousands)





(Millions ofdollars (U.S.))Total Time-Based restricted shares vested during 2007


586


$
7.99


$
5Total Performance-Based restricted shares vested during 2007


2,179


$
7.99


$
17     Sales Incentive Plan
  12-month
    F-54




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Weighted-Average


AggregateRestricted Stock Issued in Lieu of Second Sales Incentive
    Plan Payment

Shares


Grant Price


Intrinsic Value(Thousands)





(Millions ofdollars (U.S.))Vested during 2007


(312
)

$
7.99


$
(2
)Nonvested, January 1, 2008


320


$
7.99


$
3Exercised


(103
)


7.99



(1
)Forfeited


(16
)


7.99



Vested


(201
)


7.99



(2
)Nonvested, December 31, 2008





$



$
   24.
    PENSION
    AND OTHER POSTRETIREMENT BENEFITS  U.S.-based U.S.-based
    Elektro Plans
   F-55




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007Millions of dollars (U.S.)Projected benefit obligation

$
224


$
307Accumulated benefit obligation


213



285Fair value of plan assets


292



325Prepaid pension asset


68



18       December 31,2008


2007Millions in dollars (U.S.)Change in projected benefit obligation:Benefit obligation, beginning of period

$
307


$
229Service cost


4



3Interest cost


32



31Actuarial gains and losses


32



9Benefits paid


(15
)


(12
)Effect of foreign exchange rate change


(69
)


47Change in assumptions


(67
)


Benefit obligation  end of period

$
224


$
307Change in plan assets:Fair value of plan assets, beginning of period

$
325


$
222Actual return on plan assets


72



65Contributions by employer


1



2Contributions by plan participants


1



2Benefits paid


(15
)


(12
)Effect of foreign exchange rate change


(92
)


46Fair value of plan assets  end of period

$
292


$
325Funded status at end of year

$
68


$
18Amounts recognized on the balance sheet  prepaid
    pension asset

$
68


$
18Net amount recognized at end of year

$
68


$
18  F-56




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the YearsEndedDecember 31,2008


2007


2006Millions of dollars (U.S.)Service cost

$
4


$
3


$
1Interest cost


32



31



6Expected employee contribution


(2
)


(2
)


Expected return on plan assets for the period


(38
)


(33
)


(7
)Total net periodic pension (benefit) cost

$
(4
)

$
(1
)


     2008


2007


2006Periodic





Periodic





PeriodicBenefit


Pension


Benefit


Pension


Benefit


PensionObligation


Cost


Obligation


Cost


Obligation


CostWeighted-average of discount rates


12.37
%


12.37
%


10.24
%


10.24
%


11.30
%


11.30
%Weighted-average rates of compensation increase


7.63
%


7.63
%


7.12
%


7.12
%


8.15
%


8.15
%Weighted-average expected long-term rate of return on plan assets






13.29
%






11.28
%






12.35
%       December 31,2008


2007Fixed income


75.7
%


70.7
%Equities


17.3
%


21.7
%Real estate


3.6
%


4.0
%Loans to participants


3.4
%


3.6
%Total


100.0
%


100.0
%    F-57




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Millions ofdollars (U.S.)Expected employer contribution in 2009

$
1Expected benefit payments:2009


122010


132011


142012


162013


182014 - 2018


126   25.
    COMMITMENTS
    AND CONTINGENCIES    2009


2010


2011


2012


2013


Thereafter


TotalMillions of dollars (U.S.)Power commitments(1)

$
790


$
865


$
876


$
879


$
755


$
7,736


$
11,901Fuel commitments(2)


474



462



427



388



446



2,503



4,700Equipment commitments(3)


22



10



4



3



34



83



156Transportation commitments(4)


55



56



59



50



35



244



499FIN 48 obligations, including interest and penalties


11



5















101



117Other commitments


7



2



1



1











11Total

$
1,359


$
1,400


$
1,367


$
1,321


$
1,270


$
10,667


$
17,384     (1)
    
    Represents take-or-pay and other
    commitments to purchase power of various quantities from third
    parties. Power purchases under long-term commitments for the
    year ended December 31, 2008, 2007 and 2006 totaled
    $716 million, $917 million and $232 million,
    respectively.(2)
    
    Represents take-or-pay and other
    commitments to purchase fuel of various quantities from third
    parties. Fuel purchases under long-term commitments for the year
    ended December 31, 2008, 2007 and 2006 totaled
    $541 million, $425 million and $107 million,
    respectively.(3)
    
    Represents commitments of various
    duration for parts and maintenance services provided by third
    parties, which are expensed during the year of service.(4)
    
    Represents a commitment to purchase
    gas transportation services from an unconsolidated affiliate and
    third parties.  Letters of Credit
   F-58




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Restrictions on Transfer of Net Assets
  Political
    Matters:
  Turkey
  Poland zloty
  Bolivia/Brazil 30-day
 F-59




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Litigation/Arbitration:
      Elektro
     F-60




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        EPE
  San Felipe Limited Partnership
   F-61




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    DCL
      26.
    SEGMENT
    AND GEOGRAPHIC INFORMATION    Power Distribution  and/or
  Power Generation 
 F-62




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Natural Gas Transportation and Services  and/or
  Natural Gas Distribution 
  Retail Fuel 
  Headquarters and Other 
  Eliminations 
    Power


Power


Nat. Gas.


Nat. Gas.


Retail


HeadquartersAs of and for the Year Ended December 31, 2008

Dist.


Gen.


Trans.


Dist.


Fuel


and Other


Eliminations


TotalMillions of dollars (U.S.)Revenues

$
2,217


$
1,175


$
202


$
584


$
5,137


$
22


$
(126
)

$
9,211Equity income from unconsolidated affiliates


68



12



27



11



1







(2
)


117Operating income


427



15



128



104



218



(36
)


(43
)


813Interest income


54



14



6



2



9



3







88Interest expense


134



45



44



19



53



136



(53
)


378Depreciation and amortization


138



24



21



18



61



6







268Capital expenditures


183



16



12



61



86



14







372Equity method investments in unconsolidated affiliates


628



65



35



23



8











759Goodwill


53



54



26



144



323



14







614Total assets as of December 31, 2008


3,304



1,897



924



1,110



1,323



3,865



(3,470
)


8,953   F-63




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Power


Power


Nat. Gas.


Nat. Gas.


Retail


HeadquartersAs of and for the Year Ended December 31, 2007

Dist.


Gen..


Trans.


Dist.


Fuel


and Other


Eliminations


TotalMillions of dollars (U.S.)Revenues

$
1,746


$
874


$
199


$
352


$
160


$
19


$
(134
)

$
3,216Equity income from unconsolidated affiliates


2



11



39



13



11











76Operating income


373



77



128



85



49



286



(421
)


577Interest income


58



27



7



2



2



14







110Interest expense


90



41



42



14



12



143



(36
)


306Depreciation and amortization


139



42



20



8



3



5







217Capital expenditures


168



3



9



24



37



8







249Equity method investments in unconsolidated affiliates


698



14



106



26



38











882Goodwill


53



33



27



117



158



14







402Total assets as of December 31, 2007


3,732



1,433



1,138



913



384



4,170



(3,917
)


7,853   Power


Power


Nat. Gas.


Nat. Gas.


Retail


HeadquartersFor the Year Ended December 31, 2006

Dist.


Gen.


Trans.


Dist.


Fuel


and Other


Eliminations


TotalMillions of dollars (U.S.)Revenues

$
685


$
278


$
24


$



$



$
1


$
(42
)

$
946Equity income from unconsolidated affiliates


26



21



10







4



(24
)






37Operating income


151



60



21







3



(7
)


(77
)


151Interest income


20



11















40







71Interest expense


27



18



5







2



97



(11
)


138Depreciation and amortization


47



9



2







1











59Capital expenditures


71



1











4











76  F-64




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    RevenuesFor the Years Ended


Operating IncomeDecember 31,


For the Years Ended December 31,2008


2007


2006


2008


2007


2006Millions of dollars (U.S.)Colombia

$
3,926


$
563


$



$
371


$
198


$
3Brazil


1,503



1,406



390



185



220



120Chile


1,311











68







Panama


808



389



371



44



57



37Turkey


416



337



116



24



46



38Guatemala


206



168



48



23



42



12Dominican Republic


211



139



145



11



19



22Ecuador


126











2







Argentina


122



52







14



8



China


104



8







(19
)


(6
)


Other


478



154



(124
)


90



(7
)


(81
)Total

$
9,211


$
3,216


$
946


$
813


$
577


$
151   Property, Plant &Equipment, NetDecember 31,2008


2007Millions of dollars (U.S.)Colombia

$
714


$
614Brazil


1,281



1,482Chile


88



Panama


272



242Turkey


132



143Guatemala


48



37Dominican Republic


24



23Ecuador


14



Argentina


88



89China


256



36Other


607



369Total

$
3,524


$
3,035  F-65




---



##### Table of Contents



AEI AND
    SUBSIDIARIES
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  27.
    SUBSEQUENT
    EVENTS  Nicaragua Energy Holdings 
  Subic
 F-66




---



##### Table of Contents



SCHEDULE II



VALUATION
    AND QUALIFYING ACCOUNTS  Additions


DeductionsBalance at


ChargedBeginning


to Costs











Balance atof the


and


Translation


Acquisitions


Amounts


the End ofMillion of Dollars (U.S.)

Period


Expenses


Adjustment


of Business


Written off


the PeriodAllowance for lease receivables:For the year ended December 31, 2006

$



$



$



$



$



$
For the year ended December 31, 2007






40















40For the year ended December 31, 2008


40



44



(3
)


10



(82
)(a)


9Allowance for accounts receivable:For the year ended December 31, 2006

$
5


$
5


$



$
35


$
(6
)

$
39For the year ended December 31, 2007


39



9



5



5



(12
)


46For the year ended December 31, 2008


46



27



(8
)


31



(27
)


69    F-67




---



##### Table of Contents



Signatures
  Form 20-F
       By:
    /s/  James
    A. Hughes   Title:
    Chief Executive Officer