TCRLA_Public/050303.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                    L A T I N   A M E R I C A

           Thursday, March 3, 2005, Vol. 6, Issue 44



CAPALCO TEXTIL: Court Favors Creditor's Bankruptcy Petition
CRESUD: Noteholder Exercises Conversion Rights
EDICIONES TENERIFE: Court Declares Company Bankrupt
ESPOSITO COMERCIO: Creditor Wins Court Ruling
GAS ARGENTINO: Fitch Maintains `D(arg)' Rating on $130M of Bonds

IEBA: Fitch Retains $230M of Bonds in Default Territory
IRSA: Reduces Debt by US$6,124 With Notes Conversion
METROGAS: Local S&P Maintains Various Default Ratings on Bonds
S.M.C. INGENIERIA: Court Declares Company Bankrupt
SUDMERI CONSTRUCTORA: Seeks Reorganization Approval from Court

TGS: Assigns `raBB' rating on Bonds
VINTAGE PETROLEUM: Reports on Status of Operational Activities
* Kirchner Declares Debt Swap "A Success"


CSN: Records BRL2.0Bln Net Income in 2004
ELETROPAULO: EBITDA Grows 14% in 2004
EMBRATEL: Announces New ADS Record Date For Rights Offering


ENDESA CHILE: To Pay Dividends Equal to 50% of Net Profit


KAISER ALUMINUM: Issues Restructuring Progress Report


CINTRA: Enlists CSFB to Help on State Airlines Sale
GRUPO ELEKTRA: Opens Subsidiary in Panama
PEMEX: Strong Demand, Prices Boost 2004 Results
PEMEX: Forecasts Decline in Major Field's Output This Year
PEMEX: Crude Output Drops 2% in January

PEMEX: To Combine Petrochem Units This Year

T R I N I D A D   &   T O B A G O

QUEEN'S HALL: Chairman Declares Company Not Shutting Down

     - - - - - - - - - -


CAPALCO TEXTIL: Court Favors Creditor's Bankruptcy Petition
Mejico Hermanos S.A. was successful in its involuntary
bankruptcy proceeding against Capalco Textil S.R.L. after Court
No. 20 of Buenos Aires' civil and commercial tribunal declared
the Company "Quiebra," reports La Nacion. The creditor filed the
motion after the Capalco failed to pay debts totaling

As such, the textile company will now start the bankruptcy
process with Ms. Silvia Davicco as trustee. Creditors of the
Company must submit their proofs of claim to the trustee by
April 29 for authentication. Failure to do so will mean a
disqualification from the payments that will be made after the
Company's assets are liquidated.

Individual reports from claims submitted by the Company's
creditors are due for court submission on June 13. The
submission of the general report should follow on August 9.

Clerk No. 20 assists the court on the case.

CONTACT: Capalco Textil S.R.L.
         Avenida Corrientes 1827
         Buenos Aires

         Ms. Silvia Davicco, Trustee
         Avenida Presidente Roque Saenz Pena 651
         Buenos Aires

CRESUD: Noteholder Exercises Conversion Rights
By letter dated March 1, 2005, the Company reported that a
holder of Company's Convertible Notes exercised it conversion
right. Hence, the financial indebtedness of the Company shall be
reduced in US$170,000 and an increase of 334,777 ordinary shares
face value pesos 1 (V$N 1) each was made. The conversion was
performed according to terms and conditions established in the
prospectus of issuance at the conversion rate of 1.96928 shares,
face value pesos 1 per Convertible Note of face value US$1. As a
result of that conversion the amount of shares of the Company
goes from 157,888,566 to 157,888,566. On the other hand, the
amount of registered Convertible Notes is US$40,601,415.

CONTACT: Cresud S.A.C.I.F. y A
         Av. Roque Saenz Pena 832
         8th Fl.
         Buenos Aires

         Phone: 001-54-1-3287808

EDICIONES TENERIFE: Court Declares Company Bankrupt
Court No. 23 of Buenos Aires' civil and commercial tribunal
declared local company Ediciones Tenerife S.A. "Quiebra",
relates La Nacion. The court approved the bankruptcy petition
filed by Ms. Carolina Kuj, to whom the Company failed to pay
debts amounting to US$48,510.

The Company will undergo the bankruptcy process with Ms. Jessica
Minc as trustee. Creditors are required to present their proofs
of claims to the trustee for verification before April 19.

The city's Clerk No. 45 assists the court on the case.

CONTACT: Ediciones Tenerife S.A.
         Araoz 2490
         Buenos Aires

         Ms. Jessica Minc, Trustee
         Vuelta de Obligado 1715
         Buenos Aires

ESPOSITO COMERCIO: Creditor Wins Court Ruling
Court No. 19 of Buenos Aires' civil and commercial tribunal
declared Esposito Comercio Internacional S.R.L. bankrupt, says
La Nacion. The ruling comes in approval of the bankruptcy
petition filed by the Company's creditor, Ogden Rural S.A.

Trustee Horacio Caliri will examine and authenticate creditors'
claims until April 12. This is done to determine the nature and
amount of the Company's debts. Creditors must have their claims
authenticated by the said date in order to qualify for the
payments that will be made after the Company's assets are

The city's Clerk No. 38 assists the court on the case that will
conclude with the liquidation of the Company's assets.

CONTACT: Esposito Comercio Internacional S.R.L.
         Alsina 1609
         Buenos Aires

         Mr. Horacio Caliri, Trustee
         Avellaneda 1789
         Buenos Aires

GAS ARGENTINO: Fitch Maintains `D(arg)' Rating on $130M of Bonds
Gas Argentino S.A.'s US$130 Million bond issue remains in
default. The CNV described the bonds, which matured on June 30
2000, as "Obligaciones negociables simples por U$S 130.000.000."

According to CNV, Fitch Argentina Calificadora de Riesgo S.A.
gave the bonds a `D(arg)' rating based on the Company's
financial status as of September 30, 2004.

Fitch said that the given rating is assigned to bonds that are
in payment default or whose obligor is seeking bankruptcy

CONTACT: Gas Argentino S.A.
         Ruta 16 - km. 23,7
        (3505) - Puerto Tirol

IEBA: Fitch Retains $230M of Bonds in Default Territory
Fitch Argentina Calificadora de Riesgo S.A. maintained the
default rating given to a total of US$230 million worth of
Inversora Electrica de Buenos Aires S.A. corporate bonds.

According to the country's securities regulator, the Comision
Nacional Valores, the rating given last week was based on the
Company's finances as of September 30, 2004.

The 'D(arg)' rating applies to US$100 million of "Obligaciones
Negociables por U$S 100.000.000", and US$130 million of
"Obligaciones Negociables Simples no convertibles en acciones."
These bonds were classified under "Simple Issue."

IRSA: Reduces Debt by US$6,124 With Notes Conversion
By letter dated March 1, 2005, the Company reported that a
holder of Company's Convertible Notes exercised it conversion
right. Hence, the financial indebtedness of the Company shall be
reduced in US$6,124 and an increase of 11,236 ordinary shares
face value pesos 1 (V$N 1) each was made. The conversion was
performed according to terms and conditions established in the
prospectus of issuance at the conversion rate of 1.83486 shares,
face value pesos 1 per Convertible Note of face value US$1. As a
result of that conversion the amount of shares of the Company
goes from 273,485,348 to 273,496,584. On the other hand, the
amount of registered Convertible Notes is US$79,645,275.

CONTACT: IRSA Inversiones y Representaciones S.A.
         Bolivar 108
         Buenos Aires, Argentina
         Phone: 541-342-7555

METROGAS: Local S&P Maintains Various Default Ratings on Bonds
The Argentine arm of Standard & Poor's International Ratings,
Ltd. affirmed the `raD' rating to various corporate bonds issued
by Metrogas S.A., according to the CVN. The rating affects the
following bonds that are classified under Series and/or Class:

- US$130 million worth of "Serie C por U$S 130.000.000 dentro
del Programa Global de U$S 600 millones" which matured on May 7,

- US$110 million worth of "Serie B por euros 110 millones" which
matured on Sep. 27, 2002

- US$100 million worth of "Serie A por U$S 100.000.000 dentro
del Programa Global de U$S 600 millones" which matured on April
1, 2003.

The rating also affects corporate bonds worth US$600 million,
which are classified under Program. The maturity date of this
particular bond issuance was not disclosed.

The rating assigned to all the bonds were based on Metrogas'
financial status as of September 30, 2004.

          Gregorio Araoz de Lamadrid 1360
          Buenos Aires
          CPA C 1267
          Phone: +54 11 4309 1010
          Fax:  +54 11 4309 1025
          Home Page;
          William Harvey Alvarez, President

S.M.C. INGENIERIA: Court Declares Company Bankrupt
Mendoza-based S.M.C. Ingenieria S.R.L. was declared bankrupt
after Court No. 3 of the city's civil and commercial tribunal
endorsed a petition for the company's liquidation. Infobae
reports that the court assigned Mr. Osvaldo Rodolfo Orlandi to
supervise the liquidation process as trustee.

CONTACT: S.M.C. Ingenieria S.R.L.
         Coronel Rodriguez 1056

         Mr. Osvaldo Rodolfo Orlandi, Trustee
         Buenos Aires 136
         Buenos Aires

SUDMERI CONSTRUCTORA: Seeks Reorganization Approval from Court
Court No. 6 of Buenos Aires' civil and commercial tribunal is
currently reviewing the merits of the reorganization petition
filed by Sudmeri Constructora S.A.. Argentine daily La Nacion
reports that the company filed the request after defaulting on
its debt payments since July 30, 2002.

The reorganization petition, if granted by the court, will allow
the civil construction firm to negotiate a settlement with its
creditors in order to avoid a straight liquidation.

The city's Clerk No. 12 assists the court on this case.

CONTACT: Sudmeri Constructora S.A.
         Avenida Juan Bautista Alberdi 6470
         Buenos Aires

Mr. Pedro Gaston Insussarry, market relations officer of Telecom
Argentina S.A., informs the Buenos Aires Stock Exchange about
the status of the Company's Acuerdo Preventivo Extrajudicial
proceedings through this letter submitted February 28:

Buenos Aires, February 28th, 2005

Dear Sirs,

RE.: Relevant Information
     Publication of Judicial Notices of APE

I am writing you as Responsible for Market Relations of Telecom
Argentina S.A. ("Telecom Argentina" or the "Company") to inform
you that the Judge Mrs. Adela N. Fernandez in charge of the
First Instance Commercial Court No 19 (Secretariat N o 38) has
dictated a resolution dated February 25, 2005 (that the Company
was notified at 6:00 PM of that same day) under which it
declares the Acuerdo Preventivo Extrajudicial ("APE") that was
subscribed by the Company and its financial creditors, presented
under the terms of Article N o 72 and related articles of the
Law 24.522 (and its amendments).

In such resolution the publication of the judicial notices in
the terms of the Article N o 72 of the above-mentioned law is
ordered. For your information, we attach a copy of the mentioned


Pedro Gaston Insussarry
Responsible for Market Relations

CONTACT: Telecom Argentina S.A.
         Alicia Moreau de Justo
         No. 50
         Buenos Aires, 1107
         Phone: (54-11) 4968-3627

TGS: Assigns `raBB' rating on Bonds
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
assigned an `raBB' rating on corporate bonds issued by
Transportadora de Gas del Sur S.A. (TGS), says the CNV.

The bonds affected are:

- US$276,600,000 worth of bonds described as "Clase A bajo el
Programa por hasta U$S 800 millones monto emitido" maturing on
December 31, 2010.

- US$42,900,000 worth of bonds described as "Clase A-P bajo el
Programa por hasta U$S 800 millones monto emitido" maturing on
December 31, 2010.

- US$233,600,000 worth of bonds described as "Clase B-A bajo el
Programa por hasta U$S 800 millones monto emitido" maturing on
December 31, 2013.

- US$36,200,000 worth of bonds described as "Clase B-A-P bajo el
Programa por hasta U$S 800 millones monto emitido" maturing on
December 31, 2013.

- US$21,700,000 worth of bonds described as "Clase B-B bajo el
Programa por hasta U$S 800 millones monto emitido" maturing on
December 31, 2013.

- US$3,300,000 worth of bonds described as "Clase B-B-P bajo el
Programa por hasta U$S 800 millones monto emitido" maturing on
December 31, 2013

The rating action is based on the Company's financial status as
of December 31, 2004.

TGS's operates the largest gas pipeline system in Latin America
capable of transporting 2.2 billion cubic feet per day
("bcf/d"). Its system connects the main gas fields in the south
and west areas of Argentina with the gas distributors in the
city of Buenos Aires and other areas.

CONTACT: Transportadora de Gas del Sur S.A.
         Don Bosco 3672, 5th Floor
         1206 Capital Federal
         Buenos Aires,
         Phone: (212) 688-5144
         Fax: (212) 688-5213

         Web Site:

VINTAGE PETROLEUM: Reports on Status of Operational Activities
Vintage Petroleum, Inc. (NYSE: VPI) announced Monday the results
and status of its 2004 operational activities and plans for

In 2004, the company made oil and gas capital expenditures in
its continuing operations totaling $347.6 million, with $237.0
million allocated to exploitation and exploration projects.
During 2004, $179.8 million, or 76 percent of the company's
total 2004 non-acquisition capital spending of $237.0 million,
was spent on a variety of lower-risk exploitation projects. The
remaining 24 percent was allocated to potentially higher-impact
exploration programs in the U.S. and Yemen. In addition, Vintage
acquired producing properties in the U.S. and Argentina in close
proximity to existing company operations for $110.5 million
during the second half of the year, effectively rekindling the
contribution to growth from acquisitions.

"We executed our game plan to revitalize and increase internally
generated production, achieving contributions from all of our
producing areas aggregating to five percent. In addition, we are
well positioned to demonstrate production growth in 2005,
benefiting from a continuation of internally generated growth as
well as a full year's contribution to production from
acquisitions made during the second half of 2004," said Charles
C. Stephenson, Jr., CEO.

United States - Exploitation

During 2004, the company participated in the drilling of 25 net
exploitation wells with an 80 percent success rate and completed
80 net workovers. In the Luling, Darst Creek and West Ranch
fields of South Central Texas, continued vigorous exploitation
activity has resulted in the daily production rate more than
doubling over the last two years. Also, drilling and workover
activity at the company's Main Pass 116 complex resulted in an
increase in daily net production to 13.3 MMcfe from 1.2 Mmcfe
during 2004. Production from these fields was a significant
contributor to the revitalization of domestic production volumes
in 2004.

For 2005, a capital budget of $40 million has been allocated to
U.S. exploitation activities. A total of 20 net exploitation
wells are initially planned to be drilled and workovers are also
planned on approximately 45 wells during the year, principally
in California, Louisiana and Texas. Activity in 2005 targets the
continuation of an infill drilling program at the Gilmer South
field in East Texas, expanded drilling programs and workover
activity in the Luling, Darst Creek and West Ranch fields in
South Central Texas and workover activity at our South Pass and
Main Pass complexes in South Louisiana and the federal waters in
the Gulf of Mexico, respectively.

To date in the first quarter of 2005, the company has returned
to production 3,300 net BOE per day of the total 6,100 net BOE
per day of production that was temporarily shut-in due to the
mudslides in California during January. The company currently
estimates that it will complete the remaining repair of mudslide
damage for a total cost of approximately $8.5 million early in
the second quarter of this year.

United States - Exploration

During 2004, the company drilled 10 exploration wells and
recorded a success rate of 40 percent. Vintage began 2005 with
an inventory of 13 domestic exploration prospects and a capital
budget of $64 million. The focus of domestic exploration
activity is split between conventional exploration targeting the
Texas Gulf Coast and onshore unconventional gas resource plays.
Twenty-six million dollars has been allocated to the
unconventional gas resource exploration program to drill 10
wells during 2005 to test a minimum of four play concepts
identified during 2004. In one of these plays, located in the
Palo Duro basin of Texas, the company has secured a substantial
leased and optioned position in excess of 128,000 acres. The
first of two planned exploratory wells to evaluate the
commercial potential of the play has been drilled and is being
evaluated. Vintage owns working interests in this venture which
range between 65 and 75 percent.

An additional $38 million has been allocated to conventional
exploration activities primarily targeting natural gas that can
be brought to production quickly. This endeavor anticipates
drilling 11 exploration wells to test prospects primarily
located in the onshore and offshore Texas Gulf Coast. These
projects are similar geologically to plays in which the company
was successful during 2004. Production commenced in the second
half from the drilling of four successful wells targeting
Miocene gas sands in two offshore Texas blocks (High Island 55-L
and High Island 56-L). Vintage is the operator and has a 65
percent working interest in these prospects.

Two Miocene prospects were drilled at Matagorda Island 639 and
640 during the second half of 2004 with both encountering
apparent pay sands. Vintage holds a 25 percent working interest
in this offshore Texas prospect and expects these wells to be
brought online with the installation of production facilities
anticipated in mid-2005. Vintage also controls a 53 percent
working interest in an opportunity to re-develop a Frio gas
field with exploration upside in the onshore Texas Gulf Coast. A
3-D seismic survey of the area is scheduled to be completed
during the second quarter with drilling anticipated to commence
in the third quarter of 2005.


During 2004, the company continued its successful growth program
in Argentina. A total of 81 exploitation wells were drilled and
92 workovers were performed during the year with expanded
capital spending totaling $93.2 million. A fifth drilling rig
was added during the fourth quarter, reflecting the highest
number of drilling rigs working since the company began
operations in Argentina. As a result of the revitalized drilling
campaign and the acquisition in September of nearby properties
which produce 1,900 net BOPD, daily net oil production now
exceeds 31,000 barrels. This is an all-time high level of oil
production by the company in Argentina.

Vintage rekindled its acquisition efforts in 2004 commencing
with the purchase of a producing concession on the northern
flank of the San Jorge basin during the third quarter.

Vintage estimates that it acquired approximately 7.4 million
barrels of proved oil reserves in the transaction which has
additional upside potential. The recently activated rig is
currently being mobilized to the concession and sufficient
prospects have been identified to keep the rig active there
throughout most of 2005.

Additional 3-D seismic activity was performed on 150,000 acres
covering the Cerro Overo, Canadon Leon, Tres Picos and Cerro
Wenceslao concessions during 2004. The 3-D seismic activity
planned for the 2005 budget will add approximately 87,000 acres,
or about seven percent additional coverage, bringing the total
3-D coverage to 58 percent of the company's 1.2 million gross
operated acreage in Argentina. Addition of 3-D seismic coverage
has historically provided future drilling and production
visibility. The company plans additional production growth in
2005 supported by an increase in Argentina capital spending of
21 percent to $113 million and targets drilling 110 wells.

Further, a portion of 2005 capital spending is budgeted for the
implementation of four waterflood projects which are targeted to
contribute to production in 2005 and beyond. In addition, in
spite of the company's highest drilling activity level ever in
the country, Vintage added more proved undeveloped locations
than it drilled, ending the 2004 year with well in excess of 400
proved undeveloped well locations and over 400 probable and
possible well locations providing multi-year drilling
opportunities and improving production visibility.


During 2004, Vintage successfully drilled and completed 8
consecutive development and appraisal wells in its An Nagyah
field contributing to its high 89 percent overall success rate
in the country. Productive capacity from the An Nagyah wells is
now approximately 12,000 barrels (6,250 net) of oil per day.

Work began in late 2004 on the construction of a permanent
pipeline and central processing facility that is slated to have
initial daily capacity of 10,000 barrels of oil and is expected
to be completed mid-2005. Several additional wells are planned
for An Nagyah in 2005 in order to complete the development of
the field.

International Exploration

The company is continuing to pursue its exploration program in
Block S-1 in Yemen. Approximately $8 million has been allocated
to international exploration in 2005, with approximately 76
percent dedicated to the effort in Yemen. One exploration well
on the company's Malaki prospect in Yemen has been drilled and
is currently being evaluated. Also in Yemen, the company
anticipates the drilling of one additional exploration well and
the continued assessment of the economic feasibility for further
development of the reservoir at our Harmel discovery.

CONTACT: Mr. Robert E. Phaneuf
         Vice President - Corporate Development
         Phone: (918) 592-0101

         Website at

* Kirchner Declares Debt Swap "A Success"
President Nestor Kirchner on Tuesday hailed Argentina's gigantic
global debt swap as "a success", and said the country is
recovering from its worst crisis in history, relates The
Associated Press.

President Kirchner made the remarks to a joint session of
Congress just days after Argentina, the biggest sovereign
defaulter in history, closed its US$103-billion debt offer for
bondholders late on Friday.

The president did not say exactly how many bondholders worldwide
had accepted the restructuring by the Friday deadline, but
promised to release the final results on Thursday. Analysts have
pegged the acceptance rate at between 70 and 80 percent, despite
an estimated loss to bondholders of up to 70 percent of
the original value of the bonds.


CSN: Records BRL2.0Bln Net Income in 2004
Companhia Siderurgica Nacional (CSN) (BOVESPA: CSNA3) (NYSE:
SID) announced its results for the fourth-quarter (4Q04) and the
full year of 2004, in accordance with the accounting principles
required by Brazilian Corporate Law and denominated in Reais.
The comments included in this press release refer to the
consolidated results and comparisons are with the fourth quarter
of 2003 (4Q03) and the full year of 2003, unless otherwise
stated. The US dollar/Real exchange rate on December 31, 2004,
was R$ 2.6544.

Message from Benjamin Steinbruch, CEO and Chairman:

CSN achieved record results in 2004 in both the operational and
financial areas. Crude steel and rolled output totaled 5.5
million tons and 5 million tons, respectively, while net income
reached R$ 2 billion on EBITDA of R$ 4.8 billion, the third
successive annual improvement. These figures underline the
strength of our long-term strategy - integrating mining, steel
and logistics operations with a flexible mix of products and
markets - for dealing with a sector like steel, which is
extremely sensitive to changes in the economic climate.

During the year, we consolidated our leadership of the coated
flat steel segment by acquiring outright control over GalvaSud
S.A., in which we had maintained a stake since 1999. By
implementing a management system more in line with CSN's own
practices, we achieved a significant improvement in GalvaSud's
production, quality and sales. The firm now complements our
efforts to provide our clients with high-quality products,
services and service on all fronts, enabling us to conquer new
markets and expand to our share of certain existing ones.

As for the Casa de Pedra expansion project, our aim is to
increase the mine's production capacity by two and a half times,
giving us an even more representative share of the mining
sector. In the same area, we will continue to invest in the
Sepetiba port complex to equip it for future ore exports.

Distribution is yet another important facet in expanding CSN's
steel activities. This year, we consolidated our nationwide
presence through Inal, the country's biggest flat-steel
distributor, offering our customers rapid, first-class product
and service delivery.

The outlook for the steel market both in Brazil (domestic) and
abroad is also highly promising, so it is essential that we be
alert and fully prepared to face the challenges of the potential
for further growth ahead. In this context, the acquisition in
recent years of 50% of Lusosider, in Portugal, and 100% of CSN
LLC, in the United States, will assume an increasingly important
role in the globalization of our steel production. And we
continue to explore opportunities to make more advances in this

CSN is now a global player, maintaining the respect and trust of
its shareholders, clients, suppliers and the market. Our product
and service mix is among the best in the sector. Our technology
is second to none and our personnel are fully qualified to
operate it. Our 2004 performance was achieved through a seamless
combination of a committed effort by every member of our
workforce and our competitive advantage in terms of cost, raw
materials and logistics.

Given these attributes and our results, we are convinced that
the sector's transformations and challenges will make us
stronger and even better prepared to expand our presence in the
global steel industry and become an important player in the
mining sector, consolidating our position as a major and
successful Brazilian company. We are convinced that we can
fulfill these possibilities and realize these prospects in 2005.

Production and Production Costs


Output1 volumes in the fourth quarter totaled 1.40 million tons
of crude steel and 1.30 million tons of rolled products,
respective year-on-year increases of 2.9% and 3.6%. Annual
crude-steel and rolled production stood at 5.5 million tons and
5.0 million tons, respectively, both 3.8% up on the
corresponding 2003 figures. In fact, CSN has been recording
output growth every year since 2002, thanks to its continuous
efforts to improve productivity, which averaged 1,012
ton/man/year in 2004, 7% higher than the year before.

Production Costs (parent company)

Overall production costs moved up 36% in the final quarter, with
coke and coal accounting for 78% of the increase.

Total Production Costs

For the year as a whole, raising in coal and coke explain 57% of
increase in total production costs. A further 10% came from
higher aluminum, zinc, tin and scrap-metal costs.

Another highlight was the increase in depreciation, caused by
the revaluation of assets in May/03, and the first recorded
depreciation of the Parana subsidiary (Jan/04).

On the other side, hot-coil acquisitions fell from 183,000 tons,
in 2003, to 82,000 tons (just 5,500 tons in the final quarter)
due to lower volume consumed.

All in all, production costs totaled R$ 1.2 billion in 2004, 36%
more than in 2003. Dollar-pegged costs moved up by 10 percentage
points (p.p), accounting for 46% of total cash costs, due to the
higher coal and coke prices.

It's important to highlight the difference between production
cost, which behavior was analyzed in this section, and cost of
goods sold. COGS reported a 4% reduction, as consequence of
lower sales in 4Q04, whereas, in 2004 presented 30% increase.
However, changes in unit cost of goods sold and unit production
costs are similar: 42% and 33% increase for the 4Q04 and 2004,

Net Revenues

Fourth-quarter net revenues climbed 28% year-on-year, due to the
upturn in domestic and international prices. Sales volume
totaled 1.0 million tons, 29% down when compared to 4Q03 and 15%
less than the quarter before, the reduction being caused by
December's performance. On the export front, reduced demand from
America led to a build-up of inventories in the service centers.

The Company decided to await better conditions in this market
and stopped sending products to its US subsidiary, preferring to
maintain stocks in Brazil. Domestic sales were adversely
affected by shipment difficulties at the beginning of December'
04, caused by the negotiations over freight prices.

Domestic market sales fell from 918,000 tons, in the third
quarter, to 756,000 tons in 4Q04, and exports from 297,000 to
282,000 tons in the same period.

Annual net revenues jumped by 41%, reaching the record level of
R$ 9.8 billion (US$ 3.4 billion), reflecting the year's
healthier steel prices and more than offsetting the decline in
volume. The latter stood at 4.7 million tons, 256,000 tons less
than in 2003 (-5%), chiefly due to the fourth-quarter result.
Most went to the domestic market (70%, versus 61%), fueled by
the recovery of the Brazilian economy and higher domestic

The United States and Europe continued to absorb most of the
parent company's export volume (34% each of the total), chiefly
due to CSN LLC (USA) and Lusosider (Portugal). Asia and Latin
America absorbed 11% and 10%, respectively, with China alone
accounting for 40% of the Asian figure. Since CSN LLC and
Lusosider sales are made in their respective regions,
consolidated sales showed substantially the same distribution
pattern as those of the parent company.

Gross Profit, Operating Income and EBITDA

Gross Profit

Gross profit in the fourth quarter climbed R$ 623 million (77%)
year-on-year. For 2004 as a whole, gross profit growth exceeded
R$ 1,662 million (+53%) and gross margins widened from 45% to
49%. The latter improvement reflected the recovery of crude
steel prices throughout the year, especially in Brazil.

Operating Income

Annual operating income totaled R$ 3,774 million, 81% (or R$
1,691 million) higher than in 2003, pushed by the increase in
gross income, lower selling expenses (due to the drop in export
volume) and lower provisions. Operating income in the final
quarter stood at R$ 1,046 million, versus R$ 327 million in the
same period the year before, also reflecting the changes in
gross profit and selling expenses.


EBITDA margins reached 49% for the year, up by 6 p.p. compared
to 2003. The corresponding EBITDA figures stood at R$ 4.8
billion for 2004 and R$ 1.4 billion in the 4Q04, a 60% and 93%
growth, respectively, exceeding the previous records set in

Financial and Equity Results

Financial Results

Financial results (which include financial revenues and
expenses, beyond net monetary and exchange variations, but
exclude the amortization of deferred exchange losses) were R$
179 million negative for the quarter, versus a negative R$ 345
million in the 4Q03, and R$ 809 million negative for the year,
versus R$ 903 million negative in 2003.

Deferred Exchange Losses: the amortization of deferred exchange
losses arising from the devaluation of the Real in 2001, was
concluded in 2004, totaling expenses of R$ 113 million, versus
R$ 133 million in 2003. There will be no further such
amortizations as of 2005.

Equity Income

Annual equity income were R$ 46 million negative, versus a gain
of R$ 1 million in 2003, the downturn being due to the non-
recurrence of the amortization of goodwill from the acquisition
of a stake in Tecon in the 2003 (R$ 93 million), plus the
already-cited consolidation of the holdings in MRS and Itasa.

Consequently, the 2004 results comprised the amortizations of
goodwill from the investments in GalvaSud (R$ 14 million),
Tangua (controlled by CSN LLC - R$ 18 million) and Metalic (R$
13 million).

Net Income

The Company posted a consolidated annual net income of R$ 1,982
million, almost double (+92%) the 2003 total. The fourth quarter
figure was R$ 531 million, R$ 215 million up year-on-year.

Net income was substantially impacted by the increase in income
tax and social contribution expenses, which totaled R$ 238
million for the quarter, versus R$ 349 million credit in the
4Q03, and R$ 823 million expenses for the year, versus R$ 47
million expenses in 2003. The main reasons for the difference
were the higher pre-tax earnings and the 2003 booking of R$ 369
million in tax credits, due to a judicial decision in favor of
the Company regarding the effects of understated inflation of
the CPI in 1989 ("Plano Verao").

Net Debt

Consolidated net debt at year-end totaled R$ 4.7 billion, R$ 200
million less than at the close of 2003. If we exclude the impact
of the consolidation of Itasa and MRS, the reduction would have
been R$ 629 million. Cash generation in the period was partially
offset by, among other factors, financial and income tax and
social contribution expenses, the increase in working capital
(chiefly due to raw material and finished product inventories),
dividends to shareholders and capital expenditures (including
the acquisition of the remaining stake in GalvaSud, around R$
300 million).

The net debt/EBITDA ratio closed the year at 0.98x, slightly
below the target announced at the end of 2003 (between 1 and
1.5x).The average cost of debt stood at 13.5%, equivalent to 84%
of the CDI.

Gross debt fell by R$ 487 million, closing at R$ 8.5 billion,
although it remained virtually flat in dollars - US$ 3.2
billion, versus US$ 3.1 billion in 2003.

During the year, CSN raised a total of US$ 562 million from
three debt issues, with maturity terms of from 8 to 11 years and
yields varying between 7.4% and 10% p.a. The resources were
allocated to working capital and helped extend the debt's
profile and lower its average cost.


Annual consolidated Capex stood at R$ 891 million, most of which
went towards projects designed to maintain operational and
technological excellence in the installations and the
acquisition of the remaining capital of Galvasud (R$ 306
million). Since 2003, with the completion of the major upgrading
and expansion projects, the Company has maintained a normal
Capex level of around US$ 150 million p.a.

Recent Events

On January 21, 2005, the Company issued US$ 200 million in 10%
a.a. notes, due 2015. The proceeds of which resources will be
used for general corporate purposes. CSN was the only Brazilian
non-financial firm that raised money on the international
capital market in January.

On February 28, 2005 the Steinbruch family, has agreed to
purchase almost all of the voting capital of Vicunha Steel S.A.
held by the sellers. The share purchase and sale contract of
which, with all terms and conditions, will be executed and
delivered upon the fulfillment of certain conditions.

Once the above-mentioned purchase is accomplished, the
Steinbruch family will become the sole controlling shareholder
of Vicunha Steel S.A. This company, through Vicunha Acos S.A.,
owns 99.9% of the voting and total capital stock of Vicunha
Siderurgia S.A.. The shares issued by Vicunha Siderurgia S.A.
are not publicly traded and its shareholding of 46.48% in the
voting and total capital of CSN remains unchanged.


The Company expects total sales volume of 5.3 million tons in
2005, accompanied by a higher added value product mix given
higher output from the galvanization plants in Brazil and the
US. The domestic market should absorb around 75% of the total.
Thus we expect the 4Q04 decline will be more than offset
throughout the year, leading to a new record for this market.

We believe average prices will be higher in 2005 than in the
year just ended, both internationally and in Brazil, where they
should retain the premium over the European market observed in
the 4Q04. International prices may record a slight downturn as
of the second half, when supply and demand will be more balanced
in the US and Europe. In January and February, the indications
have been somewhat contradictory: while prices in the latter two
markets have dipped, due to high inventories and seasonal
factors. Some European firms have announced their intention to
introduce price increases in the second quarter; in Asia,
though, prices have remained firm, thanks to burgeoning demand.
In any event, prices will be strongly influenced throughout the
year by raw material prices, especially those of iron ore.

As for costs, we expect average coal prices of between US$ 100
and US$ 110/t (FOB), with new contracts coming into effect as of
April and July. In the case or coke, we do not believe prices
will increase dramatically, as they did in 2004, thanks to
healthy supply conditions (at the end of 2004, the Chinese
government had already freed export licenses involving
sufficient volume to cover half of estimated annual
consumption). We therefore expect an average of between US$ 250
and US$ 280/t (C&F).

Taking all the above into consideration, we expect 2005 EBITDA
margins to widen, thanks to the higher and more stable prices.
Regarding 2005 cash flow, the main impact will come from
investments in the Casa de Pedra expansion project and the
higher income tax and social contribution rate (with a
substantial reduction in the tax credit balance, as seen in
2004). Considering these effects we intend to maintain a net
debt/EBITDA ratio of less than 1.0x, bearing in mind the
expected increase in EBITDA for the period.

About CSN

Companhia Siderurgica Nacional, located in the State of Rio de
Janeiro, Brazil, is a steel complex comprising investments in
infrastructure and logistics whose operations include captive
mines, an integrated steel mill, service centers, ports and
railways. With a total annual production capacity of 5.7 million
tons of crude steel and consolidated gross revenues of R$ 12.3
billion in 2004, CSN is also the only tin-plate producer in
Brazil and one of the five largest tin-plate producers

To view financial statements:

CONTACT: Mr. Marcos Leite Ferreira
         CSN - Investor Relations
         Phone: (55 11) 3049-7591

         Web site:

ELETROPAULO: EBITDA Grows 14% in 2004

Gross Operating Revenue in 2004 increased by 15.4% in comparison
with the previous year. This performance reflects:

- the average rate adjustment of 17.9% on July 4, further
increased by 0.7% on September 21, 2004;

- deferred increases in PIS/Cofins taxes with an impact of RS$
154.2 million on operating result in 2004.

Operating Expenses increased by 13.4%, compared to 2003. This
increase was due to:

- a 9.8% increase in the cost of electricity purchased due to an
average readjustment of 9.4% in the Initial Contracts and the
amendments to the contracts with Cesp, AES Tiete and Duke and in
the increase in energy supplied by AES Tiete (bilateral

- a 42.4% increase in transmission costs, due to the
readjustment of basic grid rates (10.8%), Cust (62.0%) and
transport Itaipu (7.0%), and the start of the amortization of
the CVA for Systems Services Charges (ESS), of R$ 91.7 million
in 2004 the increase of 20.8% and 133.6% in CCC and CDE
expenses, respectively, as a result of the stipulate quotas.
There were also increases in CVA with CCC and CDE expenses, due
to the start of the amortization of the regulatory asset.

Adjusted EBITDA for 2004 recorded an increase of 13.6% compared
to 2003, due to the increase in operating revenues, although is
was partially offset by increases in operating expenses.

Net adjusted financial result in 2004 amounted to an expense of
R$ 541.4 million, versus adjusted expenses of R$ 57.9 million in
2003. The principal reasons for the increases in this account

- A decline of 8.3% in financial income due to the reduction in
the average annual interbank rate (CDI)from 23.2% in 2003 to
16.3% in 2004.

- An increase of 77.4% in financial expenses, as a function of a
lower rate of appreciation of the Real against the US dollar, of
8.1% in 2004, compared with 18.2% in 2003, which led to a
reduction of R$ 546.8 million in income from Foreign Currency
Monetary Variation, and also because of a negative impact of R$
207.7 million from hedge contracts.

Eletropaulo reported a R$ 5.6 million net income in 2004, versus
a R$ 86.3 million net income in 2003, because of increases in
operating expenses and net financial expenses in 2004.

Losses - In 2004, Eletropaulo strengthened its loss recovery
plan. This plan made losses move down from 12.84% in 2003 to
12.34% in 2004.

Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A.
(Bovespa: ELPL3 and ELPL4), the largest electricity distribution
company in Latin America in billings, announced Monday its
results for 2004. The operational and financial information of
the company, except where otherwise indicated, are based on the
figures of the Parent Company in Brazilian Reais in accordance
with Brazilian Corporate Legislation. All the comparisons in
this release are in relation to the year 2004 or the fourth
quarter of 2004 (4Q04), compared to 2003 or the third quarter
2004 (3Q04), as specified in the text.

Change In The Presentation Of Accounting Statements

ANEEL, under Official Report No. 2306/04, established new
procedures with regards to the preparation and disclosure of
accounting statements by concessionaires and permit holders
engaged in the business of electric utilities, which resulted in
changes in the breakdown of some accounts of the Accounting

The Chamber of Electric Energy Commercialization held the
largest auction of electric energy in the history of Brazil on
December 7, 2004, in which Electric Energy distributors
purchased 100% of their projected electrical energy needs for
the years 2005, 2006 and 2007. The Company was successful in
obtaining legal and regulatory qualification as well as meeting
the timetable for holding the auction without reservations and
with the support of guarantees. The average prices weighted by
the amount purchased by Eletropaulo for energy in 2005, 2006 and
2007 were respectively: R$ 57.51 /MWh, R$ 67.33 /MWh and R$
75.46 /MWh.

In December 13, the following events took place:

- AES Eletropaulo took the commitment to have closer relations
with its various publics, including capital markets
participants. The commitment was confirmed when the company
joined the Bovespa Corporate Governance Level 2 through an
agreement signed on December 13, 2004 between the Company, its
controlling shareholders and management and the Sao Stock
Exchange (BOVESPA).

- The Investor Relations Area launched its new site
( Among other innovations on the new
site are a corporate calendar with the dates of all events
taking place in 2005 and list of all the documents filed the
Company with the Brazilian Securities Exchange Commission (CVM),
available for download. There is also an "e-mail alert" system
that allows interested persons to sign up to receive information

- The Company received the National Award for Conservation and
Rational Use of Energy - 2004 from the Ministry of Mines and
Energy (MME). It currently is in first place in the Electric
Energy Sector - Large Scale Category.


On January 11, 2005, The Company received the third tranche
amounting to R$243,298,289.82 of the Company's Financial
Agreement with the BNDES under the Emergency and Exceptional
Financial Support Program for Electricity Distribution Public
Concessionaires. Of this amount, R$142,448,504.01 and
US$15,427,795.14 were used for the proportional pre-payment of
the amount agreed with creditors in the Process of Restructuring
the Debt Profile of the Company, concluded on March 12, 2004.

Evolution of Electricity Consumption in 2004

The total amount of electricity supplied by AES Eletropaulo to
its captive consumers, not including its own consumption, was
32,667,506 MWh during the year, and 8,263.4 MWh during 4Q04.
With these results, the consumption of energy in 2004 declined
0.3% compared to 2003. However, in 4Q04 consumption increased by
2.3% over 3Q04.

In 2004, the behavior of total sales of the Company was
influenced by the following factors:

- The positive behavior of the economy in general, with
improvements in the labor market and consequently a recovery in
the confidence level of consumers;

- 44 of the company's consumers moved to the free market,
representing a level of consumption equivalent to 4.4% of the
billed market in 2004.

- The penetration of natural gas via pipeline as an alternative
power source, principally for industrial consumers, generating
competition for electricity.

- Despite the fact that the number of workdays did not change
significantly during the year, during the first half the effect
of long holidays was much greater than in other years;

- Milder temperatures during the year compared to temperatures
recorded in 2002 and 2003;

- It should be pointed out that during April, in addition to
normal supply, an additional 213,611 MWh were billed as part of
the recovery of fraud.

The performance of each consumer class was affected as follows:


The increase in residential consumption of 5.0% during 2004
compared to 2003 was due, principally, to the recovery of
average income of the salaried population and a decline in the
unemployment rate that began to be seen as a result of the
recovery of the country's level of economic activity. Other
important factors for this increase were the regularization of
clandestine and other connections, and fraud recovery agreements
with consumers. In addition, in 2004 clients in commercial,
industrial and other classes who were unable to prove their
classifications by presenting a corporate taxpayer
identification number (CNPJ) were reclassified as residential.

With respect to 4Q04, the increase of 5.2% compared to the same
period in the previous year also was explained by the reasons
outlined above. With respect to consumption in 3Q04, a decline
of 1.9% was observed, basically as a result of the fewer number
of days billed in December.


With the exit of 34 consuming units to the free market during
2004, and the increase in competition from natural gas,
consumption in this class declined by 7.8% during 2004.

The exit of consumers to the free market also resulted in a
decline of 6.4% in consumption during 4Q04, compared to the same
period the previous year. In the last quarter of the year, three
other consuming units withdrew from the captive market,
resulting in a 1.1% drop compared to the previous quarter.

Considering the consumption of free market customers in the
Eletropaulo concession area, the consumption of this class
during 4Q04 increased by 5.1% in relation to 4Q03, which
reflects the recovery in economic activity, and a decline of
0.6% with respect to the previous quarter, which is explained by
the extended vacation period during December.


2004 recorded an increase of 2.9% over the previous year.
Consumption by this class was the result of the positive effects
of the economic recovery in 2004 and the benefits of the program
for the recovery of commercial losses. On the other hand, in
2004 the behavior of electricity sales was affected by the exit
of 30 consumers to the free market.

Consumption in 4Q04 increased by 4.0% in relation to the
previous quarter. This can be explained by the higher
temperatures (increased use of air conditioning) and by the
holiday period at the end of the year (use of decorative
lighting). When compared to the same quarter the year before,
the smaller increase, of 0.6%, can be explained by the decline
in the number of consumers in this Class, reflecting the
movement of those who joined the free market in 2004. If the
consumption of these units is taken into account, the increase
in consumption in 4Q04 over 4Q03 would have been 2.1%.

Other Classes

Declined by 4.8% over 2003, reflecting the exit of four consumer
units that joined the free market in September 2004.

Consumption in 4Q04 increased by 24.5% compared to the previous
quarter. This increase can be explained basically by the billing
for Public Lighting services, which should have occurred in
September, but actually took place in October, with the result
that four months were billed during 4Q04. No consumers migrated
to the free market during the fourth quarter.

Free Clients

During 2004, Eletropaulo developed a loyalty plan for
Potentially Free Clients. This plan is showing positive results,
given that from January to December 2004, 40 contracts were
renewed. In 4Q04, workshops on the free energy and special
energy markets were conducted to further improve the
relationship with corporate customers.

The Tariff for Distribution Use (TUSD) charged to free clients,
represented sales of R$ 47.5 million in 4Q04, 26% greater than
the previous quarter. This tariff is responsible for the
recovery of sectorial charges, the operating costs of the
Distribution Company, taxes on revenues, as well as remuneration
on the Company's own capital and that of third parties. By the
end of 2004, 68 consumer units had opted for the free market.

Operating Results

CVA - From July 4, 2004, Eletropaulo began to receive 7.51% of
accumulated CVA within its tariff, split into 4.12% - referring
to 50% of CVA accumulated in the tariff year 2002-2003 and 3.39%
relative to the CVA accumulated during the tariff year 2003-
2004. The remaining 50% of CVA accumulated in the tariff year
2002-2003 will be passed on to the tariff rate at the next
tariff increase, now scheduled for July 4, 2005. In addition to
receiving the CVA, new values were determined for CCC, CDE,
Itaipu and ESS in the Company's tariffs. Eletropaulo was also
authorized by ANEEL, in December 2004, to include the CVA tariff
for the Basic Grid, after consultations in September 2004.

As mentioned above, the accounting will be in the following

New values in the tariffs accounted as expenses:

CCC - R$ 31.4 million/month
CDE - R$ 17.6 million/month
Itaipu - tariff of US$ 17.8474/KW and exchange rate of R$/US$
3.1075, set on 6/30/2004
ESS - values presented to MAE
Basic Grid - R$52.2 million/month

CCC and CDE - There were no significant changes in 4Q04 compared
to the previous quarter. With respect to accounting, increases
in these expenses were 1.2% for CCC and 1.3% for CDE, explained
by the fact that in 3Q04 these costs were given in the tariff
beginning 7/4/2004; that is, they applied only to 27 days in the
month of July.

The cash portion of CCC rose 5.4% compared to 3Q04, representing
an increase of R$ 5.4 million. The increase in expenditures for
CDE was 1.5%, equivalent to R$ 0.8 million. These increases were
due to the necessity of meeting the cash requirements stipulated
by ANEEL for 2004. The differences in cash expenses and
accounting expenses are being accumulated in the CVA account and
will only have an impact on the Company's results beginning with
the next tariff adjustment on July 4, 2005.

Bought Energy Expenses - in 4Q04 were 2.4% higher than during
the previous quarter due to:

The allocation of a greater proportion of the contract with Cesp
and AES Tiete (bilateral) during 4Q04 because of the seasonal
load variations in consumption in the Eletropaulo concession
area. The additions to the initial contracts with AES Tiete
(8/25/2004 and 9/27/2004) and Duke-Paranapanema (8/25/2004)
through the end of 2004, to meet load requirements. The
additions were approved by ANEEL in resolutions 132, 212, 213
and 232 of 2004.

Expenses related to charges for use of the national grid and
transmission - A reduction of 9.8% during 4Q04 can be explained
principally by the CVA of the Basic Grid that began to be
charged in December 2004, but was retroactive to July 4, 2004
the date of the tariff readjustment. The accounting of this CVA
generates a regulatory asset in the Balance of Payments and an
offsetting deduction in expenses for the Basic Grid in the
financial statements for 4Q04.

Expenses related to materials and services provided by third
parties - The increase of 47.9% in 4Q04 compared to the previous
quarter occurred because of two factors:

- Intensification of the projects for the Reluz program during
the quarter which cost an increase in expenses for hiring
additional labor and purchase of material, for the amount of R$
25.6 million. This expense is funded 75% by Eletrobras resources
and the remaining 25% are charged to Sao Paulo City Hall. The
amount related to Eletrobras funding is backed by an agreement
between the company and Sao Paulo City Hall, which reflects the
same terms and conditions of Eletrobras's liabilities.

- Increase of R$ 11.6 million derived by constructions of

Personnel expenses - In 4Q04 personnel expenses were 64.9%
higher then in the third quarter because of the accounting
adjustment of R$ 35.0 million in the account "labor claims",
which resulted from adverse decisions in legal claims against
deposits made by the claimants in various periods and verified
through accounting reconciliation.

Other operating expenses - This account registered a decline of
14.5% in comparison with 3Q04. This variation is explained by an
increase of R$ 14.1 million in expenses for the taxes on free
energy in the preceding quarter as a function of the deferred
costs of PIS/COFINS on the amounts of Free Energy.

The Adjusted Consolidated Financial Result for the period showed
net expenses of less than the previous quarter of 78.8%. This
fact may be explained by the following factors:

- appreciation of 7.1% of the Brazilian Real versus the US
dollar in 4Q04, against an appreciation of 8.0% in 3Q04;

- an increase in the interbank rate (CDI) from 16.17% at the end
of the previous quarter to 17.76% at the end of the year;

- an agreement with the municipal government of Sao Paulo,
reversing a payment of R$ 62.3 million in 3Q04, referring to the
monetary correction of the value of late payments, leading to a
negative impact in the account - Monetary Variation for
Consumers. This event was not repeated in 4Q04.

Financial Income - Increased 198.6% during the period compared
with the previous quarter. This increase can be explained by
nonrecurring events that took place in 3Q04 such as:

Income from Financial Investments: a negative adjustment in the
SWAP during 3Q04 of R$ 16.9 million that offset previous gains.

Monetary variation - consumers: reversal of R$ 62.3 million of
income from monetary correction of the unpaid amounts owed by
the municipal government of Sao Paulo, due to the signing of a
new agreement.

Debt surcharges - registered a reduction of 40.7%. The principal
impact was felt in the account called "other financial
expenses", that fell 51.4% - principally as a result of the
Company having filed a lawsuit challenging the payment of
PIS/PASEP surcharges supported by injunctions, and had not been
withholding these amounts. Through 3Q04, the Company has been
making provisions for the amounts related to fines, but
supported by the findings of its legal consultants, the company
stopped making these provisions in 4Q04, which led to a reversal
of R$ 65.0 million in this account.

Foreign Currency Monetary Variation- an increase of 62.5%,
principally because of the reduction of 19.5% in income from
changes in the monetary value of foreign exchange, brought about
by the amortization and consequent reduction of the amount of
foreign currency debt, and by smaller appreciation of the value
of the Brazilian Real against the dollar during this quarter
compared to the previous period.

On the other hand, Translation gain/loss on the controlled
company's financial statements (Metropolitana Overseas II)
showed an expense of R$ 91.7 million, 18.0% lower than the
previous quarter, as a result of smaller appreciation of the
value of the Brazilian Real against the dollar during 4Q04, that
contributed to a smaller increase in foreign currency monetary
variation. Note that this had a strictly accounting impact. To
better reflect the financial expense, the Debt Confession Iia is
being considered as an adjustment.

4Q04 Analysis Controlling


EBITDA declined 13.6% in 4Q04 when compared to the previous
quarter. The principal factors that contributed to this result

An increase of 14.6% in the account "Deductions From Operating
Income" explained by the deferral of the increases in PIS and
Cofins that had a positive impact of R$ 117.7 million on this
account during the previous quarter. The accounting effect will
have an initial cash effect when the increases in PIS/Cofins
taxes are incorporated in the next Eletropaulo tariff
adjustments and have up to three years for recovery.

An increase of 3.2% in operating expenses that can be explained
by the increases in expenses for energy purchased (2.4%),
personnel expenses (31.2%) and materials and services from third
parties (47.9%), as indicated in the Operating Results Chapter.

The Company's adjusted EBITDA was R$ 437.3 million, 10.6% less
than 3Q04. The calculation of adjusted EBITDA involves the
following corrections:

Debt Confession IIa - Represents, in fact, a financial expense
with the Cesp Foundation. It is therefore not included in the
EBITDA and will be included as an adjustment to financial

RTE (Extraordinary Tariff Adjustment) is effectively part of
Eletropaulo's operating cash flow. However it is deducted from
the gross revenues while amortizing the regulatory asset. In
parallel, when the company amortizes the debt related to the
financing contract agreed with National Economic and Social
Development Bank (BNDES), derived from the rationing losses, the
company also incurs in a debt amortization expense. Therefore,
the lack of an EBITDA adjustment will result in double counting
of this expense. For that reason and in agreement to the
precision and impartiality in the financial results
demonstration, the RTE was adjusted in the EBITDA. This account
increased by 11.9% during the quarter as a function of the
tariff adjustment of July 4, 2004.

Cetemeq - A contingency related to a lawsuit regarding the
Cetemeq purchase/sale contract occurring during the AES
Eletropaulo divestiture process. According to the contract, this
asset was sold by Companhia de Transmissao de Energia Eletrica
Paulista (CTEEP) for R$ 72 million. Based on a legal opinion
regarding the value of common shares at the time of the sale, it
was decided to act conservatively and increase the contingency
reserves by R$ 46.4 million in 2003. This contingency should
have no cash effect and is a non-recurring event, and was not,
therefore, considered in 2004.

The final result for 4Q04 was a net income of R$ 17.5 million,
compared with a net loss of R$ 6.4 million for the previous
quarter. This result occurred because of the reversal of the
financial results from an expense of R$ 90 million in 3Q04 to a
financial income of R$ 0,8 million in 4Q04, as explained in the
" Financial Results" chapter.



With the publication of Decree n. 5.163 on July 30, 2004, the
Government assumed the regulation of the sale of electricity and
the process of granting concessions and authorization for the
generation of electric energy.

The legal instrument provides that:

1) The distribution company must contract 100% of its market;
2) Contracting should take place within the Regulated
Contracting Environment, (ACR);
3) Contracting should take place through auctions;
4) The auctions should promote the supply of new energy, with
contracts from 15 to 30 years, starting beginning in the third
or fifth year of the contract (A-3 e A-5); of the existing
energy with contracts from 5 to 15 years beginning in the year
following the start of the contract (A-1) and through
adjustments of the contracts of up to two years starting in the
fourth month of the contract.

The edicts of the Ministry of Mines and Energy (MME) nž 219 of
July 30, 2004, nž 309 of September 26, 2004 and nž 310 of
November 30, 2004, establish the rules for the distribution
agents to present a declaration defining the amounts of energy
and power that they have and that will be contracted for in
2004, for delivery at the beginning of each year of the period
between 2005 and 2009, further specifying the parcels for
consumers that may potentially enter the free-market.

Electric Energy Wholesale Market (MAE) and the Chamber of
Electric Energy Commercialization (CCEE)

On August 12, 2004, the Government issued a new decree
establishing the applicable rules for the new Chamber of
Electric Energy Commercialization (CCEE) and thus, on November
10, 2004 the MAE was succeeded by the CCEE and its activities
and assets were absorbed by this new agency.

One of the principal responsibilities of the CCEE is to hold
public auctions in the Regulated Contracting Environment (ACR)
such as the auction that was held of December 7, 2004. In
addition, the CCEE is responsible, among other things for (1)
recording all the contracts for the sale of electricity in the
Regulated Contracting Environment, the contracts and adjustments
concluded under the Free Contracting Environment, and (2) to
record and liquidate short-term transactions.

The CCEE consists of representatives from the generation,
distribution, sale and free market consumer segments. Its Board
of Directors is made up of four members nominated by these
representatives and one by the MME, who is the Chairman of the
Board of Directors.


On September 30, 2004, Decree nž 231 of the MME approved the
guidelines for the existing electric energy auctions and those
to be run by ANEEL in 2004. On the same day, Eletropaulo
submitted to the MME its energy requirements for electricity to
be contracted to satisfy 100% of its load.

ANEEL Normative Resolution nž 110 of November 3, 2004, approved
the public notice of the Auction, which stipulated that three
kinds of products should be auctioned, with deliveries scheduled
for January 2005, 2006 or 2007, in contracts of up to eight

The Chamber of Electric Energy Commercialization held the
largest energy auction in the history of the country on December
7, 2004 during which the energy distributing companies purchased
100% of their projected market demands for 2005, 2006 and 2007.
The average prices, weighted by the amounts acquired, purchased
by Eletropaulo in 2005, 2006 and 2007 were respectively: R$57.51
/MWh, R$ 67.33 /MWh and R$ 75.46 /MWh.

Only the agents of the distributing companies and the agents for
the sellers (generators) that satisfied conditions in the Public
Notice were authorized to participate in the Auction,
emphasizing that the sellers were obliged to prove they had
reserves for the sale of electricity, guaranteeing supply
throughout the contract period.

The second auction for existing energy will be held on March 31,
according to the public notice approved by ANEEL in the
extraordinary meeting held on February 23, 2005. The changes in
the public notice were basically the result of minor changes,
remaining practically the same as in the first auction.

An auction committee will be created, composed of three ANEEL
superintendents and two representatives of the CCEE. During this
meeting, the contract to be signed between the companies and the
Commission, with the conditions for sale of energy in the index
for readjustment, the IPCA, were approved. The products to be
sold at auction will have a duration of eight years.

The deadline for the delivery of documents for pre-qualification
of interested parties will be between March 8 and March 10. The
results of the qualification, proceedings and the deposit of the
guarantees, (according to a report of the meeting), will take
place on March 28. The simulation of the auction is anticipated
on the following day.

CVA - Basic Grid

Normative Resolution n.67/2004 modified the criteria for the
composition of the Basic Grid, creating a rate for the use of
the Transmission System - TUST-FR, as a way of compensation for
frontier assets. The electricity supply tariffs and the use of
distribution systems belonging to Eletropaulo, as approved by
Res.165/2004 do not include all the frontier charges for
Eletropaulo. Therefore, Directive 145/2004 of the SRT
(Superintendence for the Regulation of Transmission Services of
ANEEL) are understood to apply to the CVA mechanism for the
Basic Grid for Eletropaulo.

Energy Summary

4Q04 MAE liquidations were carried out according to the schedule
planned. Eletropaulo's result in 4Q04 is summarized in the table
below. It is worth noting that the figures related to the System
Service Charges (ESS) are contained in the CVA.

Capital Market and Shareholder Structure

Capital Markets

Preferred shares of Eletropaulo depreciated by 2.6% during the
fourth quarter and increased in value by 1.7% for the year,
while the Bovespa Index rose by 12.7% and 17.8% during the same
period. After the ownership realignment and the restructuring of
AES Eletropaulo's liabilities with creditor banks, factors that
generated great expectations in the market and therefore,
greater movement in share prices, the market assumed a "wait and
see" position with regard to the performance of AES Eletropaulo.

The data on liquidity for the quarter show that there were
13,963 trades involving approximately 3.1 billion preferred
shares and R$ 226.5 million (a daily average of R$ 3,500). For
the year, the average daily financial volume of trades in
preferred shares of AES Eletropaulo was R$ 3.9 million, 31%
greater that that recorded in 2003.

To view financial statements:

CONTACT: Ms. Clarice Assis
         Investor Relations Manager
         Phone: (55 11) 2195-2229

         Mr. Geraldo Colonhezi Jr.
         Investor Relations Analyst
         Phone: (55 11) 2195-2289

EMBRATEL: Announces New ADS Record Date For Rights Offering
Embratel Participacoes S.A. (NYSE: EMT) ("Embratel"), announced
Tuesday that the new record date for its rights offering of new
preferred shares represented by American Depositary Shares, or
ADSs, will be March 10, 2005. ADS holders on this record date
will be entitled to receive rights to subscribe for new ADSs in
the offering. Under the terms of the offering, as described in
the amended registration statement filed with the Securities
Exchange Commission on March 1, 2005, each ADS holder will be
issued 1.267668 ADS rights for every ADS held on the ADS record

Each ADS right will entitle ADS holders to purchase one new ADS
in the initial offering round, which is expected to end on April
7, 2005. In order to exercise ADS rights, ADS holders must pay
U.S.$8.73 per ADS, which is the ADS subscription price of
R$21.50 per ADS translated into U.S. dollars, plus an additional
5%, which represents an allowance for currency fluctuations,
conversion expenses, ADS issuance fees of the depositary and
financial transaction taxes in Brazil. Holders of ADS rights who
subscribe for new ADSs will also be permitted to subscribe for
leftover ADSs in reoffering rounds, subject to availability and
in accordance with the terms and conditions set forth in the
registration statement. The ADS rights are expected be listed
for trading on the New York Stock Exchange.

This communication shall not constitute an offer to sell nor a
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of such state. A copy of the
registration statement is available from The Bank of New York,
101 Barclay Street, New York, NY, 10286 (tel. 1-800-507-9357).

About Embratel

Embratel is one of Brazil's largest telecommunications services
providers, operating in domestic and international long-
distance, data communications and local services . Service
offerings include telephony, advanced voice, high-speed data
communication services, Internet, satellite data communications,
corporate networks and local voice services for corporate
clients. The company's network has countrywide coverage with
28,868 km of fiber cables comprising 1,068,657 km of optic

CONTACT: Ms. Silvia M.R. Pereira
         Investor Relations
         Phone: (55 21) 2121-9662
         Fax: (55 21) 2121-6388


ENDESA CHILE: To Pay Dividends Equal to 50% of Net Profit
The Boards (Boards of Directors) of Enersis (NYSE:ENI), the
flagship company for ENDESA's Latin American businesses, and
Endesa Chile (NYSE:EOC), the 60%-owned subsidiary of the Chilean
holding company, have agreed to modify their respective dividend
policies. This decision will be submitted for shareholder
approval at the AGM's which both companies will celebrate on 8
April 2005.

In the case of Enersis, the shareholders will be asked to
approve a dividend payout of 50% of 2004 net profit, equivalent
0.42 Chilean pesos per share. We would point out that for
purposes of calculating the dividend payout, the depreciation of
the higher value of its investments is deducted from net profit.

In accordance with this criterion, the total amount to be
distributed to Enersis shareholders would be 13.646 billion
Chilean pesos (around US$ 22 million).

Like Enersis, Endesa Chile will propose paying out 50% of 2004
net profit to its shareholders. As a result, if approved at the
AGM on 8 April, Chile's largest generator will pay out total
dividends of 33.873 billion Chilean pesos (around US$ 56
million), equivalent to 4.13 pesos per share.

These decisions taken by the Boards of Enersis and Endesa Chile
represent a significant departure from current dividend policy,
since both companies had been paying out the minimum legal
dividend of 30% of annual net profit.

As a reminder, Enersis did not make a dividend payment last year
since it recorded losses for the year.

The increase in Endesa Chile's payout from 30% to 50% represents
an increase of 75% in the dividend payable against fiscal year
2004, as compared to the year before.

It is worth highlighting that the proposals made by both
companies' Boards are based on their respective solid and sound
equity and financial structures, something that has been duly
noted by the market.

CONTACT: Mr. David Raya
         North America Investor Relations Office
         Phone: # 212-750-7200

         Web site:


KAISER ALUMINUM: Issues Restructuring Progress Report
Mr. Jack A. Hockema, President and Chief Executive Officer of
Kaiser Aluminum, updates its customers, employees and suppliers
on the Company's restructuring:

- The most noteworthy action was the Court's approval of
Kaiser's request to reject the lease on its Houston office. The
Company continues to work on transition issues related to the
consolidation of the headquarters office in Foothill Ranch,

Recap of Recent Events

The past several months have been exceptionally busy as the
Company continues to gain momentum toward the planned filing of
its Plan of Reorganization (POR) and Disclosure Statement within
the next few months. The milestones summarized below have all
been previously disclosed at various times and in various

- The disclosure statements for two separate liquidating plans
relating to the subsidiaries through which Kaiser has conducted
alumina operations in Jamaica and Australia;

- An extension of exclusivity through April 30 for these
liquidating subsidiaries - and through June 30 for the remainder
of Kaiser Aluminum;

- A new $200 million Debtor-in-Possession (DIP) credit facility,
which was completed on February 11, and a commitment for a
multi-year exit financing arrangement;

- The Intercompany Settlement Agreement, which resolves the
treatment of intercompany claims among the various Kaiser

- The company's settlement with the Pension Benefit Guaranty

In addition, Kaiser executed a term sheet concerning the
resolution of the company's major personal injury tort claims
and demands (including claims and demands associated with
asbestos) within the context of the upcoming POR.


Liquidity - defined as cash and borrowing availability - has
continued to be adequate under the new DIP. As expected, the
Company made a smooth transition to the new facility and have
retained comparable borrowing availability, which has been above
the $100 million range.

CONTACT: Kaiser Aluminum Corp.
         5847 San Felipe
         Suite 2500
         P.O. Box 572887
         Houston, TX 77257-2887
         Phone: 713-267-3777



CINTRA: Enlists CSFB to Help on State Airlines Sale
The board of directors of Mexican airline holding company Cintra
SA (CINTRA.MX) has approved the appointment of Credit Suisse
First Boston (CSFB) as advisor on the sale of Mexico's largest
airlines, reports Dow Jones Newswires.

In a press release Monday, Cintra said Credit Suisse was chosen
over six other investment banks for the job. The company is
planning to sell leading domestic carrier AeroMexico together
with regional unit Aerolitoral. Mexicana, Mexico's top
international carrier, Mexicana, will also be sold along with a
new low-cost airline that will offer flights at a 30% discount
to normal fares. The assets of Mexicana unit AeroCaribe will
likewise be included in that sale, which Cintra expects to be
completed within 12 months.

AeroMexico is a member of the SkyTeam alliance while Mexicana
has a code-sharing agreement with AMR Corp.'s (AMR) American

GRUPO ELEKTRA: Opens Subsidiary in Panama
Grupo Elektra S.A. de C.V. ("The Company"; BMV: ELEKTRA*; NYSE:
EKT; Latibex: XEKT), Latin America's leading specialty retailer,
consumer finance and banking and financial services company,
announced Tuesday the start of operations of its first banking
subsidiary outside Mexico. Banco Azteca (Panama), S.A. is
headquartered in Panama City.

"We thank the Panamanian authorities for providing us with a
general banking license that will allow us to offer
comprehensive financial services in that country," commented
Javier Sarro, CEO of Grupo Elektra. "This is the first step for
Grupo Elektra to start replicating in other countries our
successful business strategy implemented in Mexico, which
combines retailing with banking operations."

In accordance with Panamanian regulation, Grupo Elektra has
fully funded the US$10 million required capitalization. The
Company projects a capital outlay in 2005 of about US$2 million
to build the planned infrastructure of Banco Azteca (Panama).

In addition, Mr. Sarro commented: "We are delighted that the
Banco Azteca brand name has expanded into Latin America after
more than two years of successful operations in Mexico. We
welcome the challenge of bringing quality banking services and
products to the Panamanian population and in helping them to
improve their quality of life, as we have done with our clients
in Mexico."

Banco Azteca (Panama) will start banking operations to the
general public opening 12 hours, seven days a week, and offering
its successful savings products "Guardadito" and "Inversion
Azteca," as well as personal loans under the well known brand-
name "Credimax Efectivo". Banco Azteca (Panama) will analyze and
pilot-test other potential products and services in the coming
months to continue with its efforts to provide more quality
products and services to the Panamanian population.

The company noted that Banco Azteca (Panama), S.A. is a wholly
owned subsidiary of Grupo Elektra.

About Grupo Elektra

Grupo Elektra is Latin America's leading specialty retailer,
consumer finance and banking services company. Grupo Elektra
sells retail goods and services through its Elektra, Salinas y
Rocha, Bodega de Remates and Elektricity stores and over the
Internet. The Group operates more than 1,000 stores in Mexico,
Guatemala, Honduras and Peru. Grupo Elektra also sells and
markets its consumer finance, banking and financial products and
services through its more than 1,350 Banco Azteca branches
located within its stores, as a stand-alone, and in other
channels in Mexico and Panama. Banking and financial services
include consumer credit, personal loans, money transfers,
extended warranties, savings accounts, term deposits, pension-
fund management and insurance.

CONTACT: Investor and Press Inquiries
         Mr. Rolando Villarreal
         Head of Investor Relations
         Grupo Elektra S.A. de C.V.
         Phone: +52 (55) 1720-7819
         Fax: +52 (55) 1720-7822

         Ms. Samantha Pescador
         Investor Relations
         Grupo Elektra S.A. de C.V.
         Phone: +52 (55) 1720-7819
         Fax: +52 (55) 1720-7822

         Web site:

PEMEX: Strong Demand, Prices Boost 2004 Results
PEMEX, Mexico's oil and gas company and the world's ninth
largest integrated oil and gas company1, announced its unaudited
consolidated financial results for the twelve months ending
December 31, 2004.

Financial Highlights

- Total sales increased 18%, compared to 2003, reaching Ps.
778.6 billion (US$69.1 billion)
- Crude oil exports averaged 1,870 thousand barrels per day
(Mbd), up 1% from 2003
- Income before taxes and duties increased 28%, to Ps. 458.9
billion (US$40.7 billion)
- Net loss for 2004 decreased Ps. 28.6 billion compared to 2003,
resulting in a net loss of Ps. 14.1 billion (US$1.3 billion)

Operational Highlights

- Total liquid hydrocarbons production in 2004 totaled 3,825
Mbd, 1% greater than the production of 2003
- Crude oil production increased 12 Mbd, to 3,383 Mbd
- Natural gas production rose 2% to 4,573 million cubic feet per
day (MMcfd)
- Natural gas liquids production increased 6% to 442 Mbd
- In 2004, gas flaring represented 3.3% of total natural gas


Exploration and production

In 2004, crude oil and natural gas production totaled 3,383 Mbd
and 4,573 MMcfd, respectively. Heavy crude oil represented 73%
of total crude oil production and non-associated natural gas was
34% of total natural gas production. During the fourth quarter
of 2004, crude oil production decreased 2% because of adverse
weather conditions. Moreover, during the same period,
nonassociated natural gas production increased 12% while total
natural gas production grew 1%.

Gas flaring

In 2004, gas flaring represented 3.3% of total natural gas
production, compared to 5.6% in 2003. During the fourth quarter
of 2004, gas flaring was 2.9% of total natural gas production,
compared to 5.9% in the same period of 2003. This decrease was
an effect of the start-up of the offshore gas treatment facility
within the Akal-C complex in Cantarell.

Drilling activity

In 2004, exploration drilling activity increased 17%, from 88 to
103 exploratory wells. Development drilling activity rose 24%
compared to 2003, from 505 to 624 development wells. During the
fourth quarter of 2004, exploratory and development drilling
activity diminished 7% and 1%, respectively, relative to the
same quarter of 2003. In 2004, PEMEX successfully completed the
exploratory well Nab-1 at a water depth of 681 meters. This is
the deepest marine well drilled by PEMEX. The reserves
associated to this finding are in the process of evaluation and,
therefore, they do not yet modify Mexico's hydrocarbon reserves

Akal L

In 2004, the Akal - L processing center began operations in the
Cantarell field. This complex provides greater operating
flexibility for the handling and distribution of hydrocarbons
which, among other things, facilitates performing maintenance
within the Cantarell complex without affecting production

Nitrogen extraction plant

During the fourth quarter of 2004, PEMEX began the construction
of a nitrogen extraction plant in the Ciudad PEMEX Gas
Processing Center located in Southeastern Mexico. This plant
will have a capacity of 630 MMcfd and will process the
associated gas produced in Cantarell.

Multiple Service Contracts

By the end of 2004, 22 wells have been drilled under the five
contracts awarded to execute the works and services in the
Burgos basin under the Multiple Service Contracts mechanism. In
2004, total investment by the holders of MSC's was US$71 million
and natural gas output reached 94 MMcfd.

The contract for the Pandura - Anahuac block was awarded on
November 9, 2004 to the Mexican firm Industrial Perforadora de
Campeche (IPC).

On February 8, 2005, no proposals were submitted on the bidding
process for the Ricos block. PEMEX will examine the technical
information related to the block and determine whether to make a
new call for bids.

On February 17 and 24, 2005, the Monclova and Pirineo blocks
were awarded for US$456 million and US$645 million,
respectively. PEMEX expects to sign the contracts for these
blocks by March 2005.


Gas processing

In 2004, given the greater supply of wet natural gas and
condensates for processing, the production of dry gas from the
processing plants increased 4% compared to the production
registered in 2003, averaging 3,144 MMcfd. Gas liquids
production, including condensates, was 442 Mbd, 6% greater than
that observed in 2003.

During the fourth quarter of 2004, dry gas from processing
plants and gas liquids production increased 4% and 2%,
respectively, relative to the fourth quarter of 2003.

Additional cryogenic plants

In 2004 PEMEX started operations of two modular cryogenic plants
and a condensates fractionation plant in the Burgos Gas
Processing Center (GPC) in northern Mexico. Each plant has a
processing capacity of 200 MMcfd of sweet wet gas, while the
fractionation plant has a capacity of 6 Mbd of condensates.

Additionally, in the third quarter of 2004, PEMEX signed a
contract to build a third modular cryogenic plant and expects to
sign a new contract, in the first half of 2005, to build a
fourth plant. Both new plants will be constructed at the Burgos
GPC and will have the same processing capacity as the first two.

At the end of 2004, PEMEX carried out the initial phase to build
a liquefied petroleum gas (LPG) pipeline with a transport
capacity up to 30 Mbd from the GPC Burgos to Monterrey.


Processing During 2004, heavy crude oil processing as a
percentage of total crude oil processed, increased to 42% from
36% in 2003 (see figure 2). In the fourth quarter of 2004 heavy
crude oil processing was 43% compared to 40% in 2003. In 2004,
diesel and gasoline production increased 5%, while fuel oil
production decreased 7%, relative to 2003. During the fourth
quarter of 2004, gasoline and fuel oil production increased 8%
and 2%, respectively, compared to the same quarter of 2003.

Diesel production declined 1% compared to the fourth quarter of
2003. The increase in heavy crude oil processing capacity and
the higher production of gasoline and intermediate distillates
are the result of the stabilized operation of the coker plants
of the Madero and Cadereyta refineries.

Refining Margin

In 2004, Mexico's refining margin increased 61%, to US$4.30 per
barrel, from US$2.67 per barrel in 2003. Regarding the
difference between the Mexican and the US refining margins,

it is worth mentioning that U.S, margins are often higher due

- The crude mixes processed, which contain more value-added
- The refineries' complexity, which allows them to extract more
value-added products

Minatitlan The project for the reconfiguration of the Minatitlan
refinery was divided into six engineering, procurement and
construction (EPC) packages.

The first package (EPC-1) was awarded at the end of 2003,
beginning the reconfiguration project. During the third quarter
of 2004 two EPC packages were awarded. EPC-2 includes:

- Construction of a utilities plant
- Construction of a sour water treatment plant

Integration works, caustic waste and effluent treatment EPC -3
includes the construction of:

- An atmospheric and vacuum distillation plant
- An intermediate distillates hydro-treatment plant
- A fluid catalytic cracker


The number of franchised gas stations rose 9% to 6,732 as of
December 31, 2004, from 6,164 as of December 31, 2003.


Petrochemicals Production

Total accumulated petrochemicals production for 2004 was 10,731
thousand tons (Mt), 4% higher than in 2003. In particular,
ethylene production grew 3%, relative to 2003. This growth is
partly attributed to the modernization and enlargement of the
installed capacity at the petrochemical plant La Cangrejera.

During the fourth quarter of 2004, total accumulated
petrochemicals production increased 6% compared to the same
period of 2003, from 2,641 Mt to 2,809 Mt. Ethylene output
totaled 243 Mt, a 2% year on year increase.

Subsidiary companies

On September 15, 2004, the Secretary of Energy was authorized to
carry out the merger of the following subsidiary companies of
PEMEX Petroquimica:

Petroquimica Camargo, S.A. de C.V.
Petroquimica La Cangrejera, S.A. de C.V.
Petroquimica Cosoleacaque, S.A. de C.V.
Petroquimica Escolin, S.A. de C.V.
Petroquimica Morelos, S.A. de C.V.
Petroquimica Pajaritos, S.A. de C.V.
Petroquimica Tula, S.A. de C.V.

This merger is expected to be completed during 2005.

Fenix Project On October 2004, PEMEX announced the names of its
partners for the execution of the Fenix Project:

Indelpro, S.A. de C.V. (affiliate of Alfa)
Grupo Idesa, S.A. de C.V.
Nova Chemicals Corporation

The Fenix Project requires budgetary approvals and, therefore,
it is still under discussion.

Crude oil exports

In 2004, PEMEX's crude oil exports averaged 1,870 Mbd, 1% higher
than the volume registered in 2003. Approximately 87% of the
total crude oil exports were heavy crude oil (Maya) and the rest
was light and extra-light crude oil (Isthmus and Olmeca).

79% of the total crude oil exports were delivered to the United
States, while the remaining 21% were distributed among Europe
(10%), the Far East (2%), and the rest of America (9%).

The 2004 annual weighted average export price of the Mexican
crude oil basket was US$31.02 per barrel, as compared to
US$26.78 per barrel in 2003.

In the fourth quarter of 2004, crude oil exports averaged 1,968
Mbd, 4% higher than the volume registered in the same quarter of
2003. Approximately 85% of these exports were heavy crude oil.

The weighted average export price of the Mexican crude oil
basket during the fourth quarter of 2004 was US$33.32 per
barrel, as compared to US$25.03 per barrel in the same quarter
of 2003.

Refined Products and Petrochemicals

In 2004, exports of refined products averaged 152 Mbd, 15% below
the 2003 level. This was due to a decrease in the exports of
fuel oil, asphalt and jet fuel. Petrochemical exports increased
10% on a yearly basis, totaling 916 Mt.

In 2004, imports of refined products increased 8%, to 310 Mbd in
2004 from 287 Mbd in 2003 as a result of higher demand for
regular gasoline in urban areas. Petrochemicals imports
decreased 48%, to 277 Mt, as a consequence of substitution of
imports by increased domestic production.

Natural gas imports increased 1% to 766 MMcfd in 2004 from 757
MMcfd in 2003.

During the fourth quarter of 2004, exports of refined products
averaged 136 Mbd, 27% below the exports registered in the same
period of 2003. In the same quarter, petrochemicals exports
declined 12%, to 223 Mt from 254 Mt in the fourth quarter of

Also, during the fourth quarter of 2004, imports of refined
products increased 32%, to 392 Mbd from 297 Mbd in the same
period of 2003. Petrochemicals imports decreased 10%, to 70 Mt
from 78 Mt.

In the fourth quarter of 2004, imports of natural gas decreased
1%, to 801 MMcfd from 810 MMcfd in the comparable period of


Total sales

Total sales Total sales (including the special tax on production
and services, or IEPS) increased 18% in constant pesos to Ps.
778.6 billion (US$69.1 billion) for 2004, compared to Ps. 657.9
billion in 2003.

Domestic sales

Total domestic sales (including IEPS) increased 10% to Ps. 449
billion (US$39.9 billion) during 2004, from Ps. 407.3 billion in
2003. Total domestic sales (excluding IEPS) increased 28% to Ps.
394.3 billion (US$35 billion) during 2004, from Ps. 308.4
billion in 2003:

- Sales of refined products4, net of IEPS, grew 27% to Ps. 304.7
billion (US$27.1 billion) from Ps. 239.4 billion. Refined
products sales volume increased 2% to 1,718 Mbd, from 1,684 Mbd.
The IEPS generated by these sales decreased 45% to Ps. 54.7
billion (US$4.9 billion) from Ps. 99 billion. Sales of refined
products, including IEPS, increased 6% to Ps. 359.4 billion
(US$31.9 billion) from Ps. 338.4 billion
- Natural gas sales rose 27% to Ps. 71.1 billion (US$6.3
billion) from Ps. 55.8 billion. Natural gas sales volume
increased 5% to 2,757 MMcfd from 2,621 MMcfd. The average sales
price of natural gas for 2004 was US$6.09 per million British
Thermal Units, for 2003, average sales price was US$5.04 per
- Petrochemical sales5 increased 40% to Ps. 18.5 billion (US$1.6
billion) from Ps. 13.2 billion. Petrochemicals sales volume grew
12% to 3,531 Mt from 3,144 Mt Exports Export sales totaled Ps.
329.6 billion (US$29.3 billion), 32% higher than the Ps. 250.6
billion registered in 2003:
- Crude oil and condensates export sales increased 32% to Ps.
299.4 billion (US$26.6 billion) from Ps. 226.6 billion. Crude
oil exports volume rose 1% to 1,870 Mbd from 1,844 Mbd
- Refined products export sales6 rose 23% to Ps. 27.5 billion
(US$2.4 billion) from Ps. 22.4 billion. Refined products exports
volume fell 15% to 152 Mbd from 179 Mbd. This reduction was due
mainly to a decrease of 19 Mbd of fuel oil exports as a result
of a lower fuel oil output
- Petrochemical products export sales7 increased 70% to Ps. 2.7
billion (US$0.2 billion) from Ps. 1.6 billion. Petrochemical
products exports volume grew 10% to 916 Mt from 835 Mt.


Costs and expenses grew 24%

Costs and operating expenses increased 24% with respect to 2003,
reaching Ps. 336.5 billion (US$29.9 billion).

Cost of sales

Cost of sales increased 27%, or Ps. 59.4 billion (US$5.3
billion), to Ps. 277.2 billion (US$24.6 billion). The increase
is composed of the following changes:

- Ps. 36.8 billion (US$3.3 billion) increase in purchases made
by PEMEX for its trading operations
- Ps. 14.4 billion (US$1.3 billion) increase in operational
- Ps. 7.8 billion (US$0.7 billion) increase in the cost of the
reserve for retirement payments, pensions and indemnities
- Ps. 7.1 billion (US$0.6 billion) increase in depreciation and
amortization expenses
- Ps. 1.3 billion (US$0.1 billion) increase in product
manufacturing expenses
- An offsetting favourable effect of Ps. 4.6 billion (US$0.4
billion) resulting from inventory valuations
- An offsetting favourable effect of Ps. 2.1 billion (US$0.2
billion) resulting from a decrease in operating expenses
- An offsetting favourable effect of Ps. 1.4 billion (US$0.1
billion) due to the elimination of the specific oil-field
exploration and depletion reserve, as a consequence of the
implementation of the successful efforts method for the
accounting of costs incurred in exploration, acquisition and
development of oil and gas reserves.

Transportation and distribution expenses

Transportation and distribution expenses increased 20% to Ps.
19.7 billion (US$1.7 billion) in 2004, from Ps. 16.4 billion in

Administrative Expenses

Administrative expenses increased 7% to Ps. 39.6 billion (US$3.5
billion) in 2004, from Ps. 37 billion in 2003.

Cost of the reserve for retirement payments

The cost of the reserve for retirement payments, pensions and
indemnities increased 34% to Ps. 52.8 billion (US$4.7 billion)
in 2004 from Ps. 39.5 billion in 2003. This cost is distributed
among cost of sales, transportation and distribution expenses
and administrative expenses. The growth in the cost of the
reserve for retirement payments results not only from the
natural evolution of the reserve but also from the incorporation
of medical services into the reserve.


Operating income

Operating income in 2004 totaled Ps. 442.1 billion (US$39.2
billion), 14% higher than the comparable 2003 figure of Ps.
386.6 billion. Excluding IEPS, operating income grew 35%, or Ps.
99.7 billion (US$8.6 billion), increasing from Ps. 287.7 billion
in 2003 to Ps. 387.4 billion (US$34.5 billion) in 2004.


Decrease of comprehensive financing cost

Comprehensive financing cost improved by Ps. 35.6 billion, from
a cost of Ps. 32.3 billion in 2003 to an income of Ps. 3.3
billion (US$0.3 billion) in 2004 (see table 2). This variation
was caused by:

- A decrease of Ps. 1.9 billion in net interest expense
- A decrease of Ps. 25.4 billion in net foreign exchange loss
- An increase of Ps. 8.3 billion in gains on monetary position

Net interest Net interest expense decreased 11% to Ps. 15.7
billion (US$1.4 billion) in 2004, from Ps. 17.6 billion in 2003.
Interest expense increased Ps. 3.6 billion, while interest
income increased Ps. 5.5 billion.

Foreign exchange loss

Net foreign exchange loss totaled Ps. 1.4 billion (US$0.1
billion) in 2004 as compared to a net foreign exchange loss of
Ps. 26.8 billion in 2003. This decrease of Ps. 25.4 billion was
primarily a consequence of a lower depreciation of the Mexican
peso against the US dollar. From December 31, 2002 to December
30, 2003 it was 9% (from Ps. 10.3125 to Ps. 11.236 per US
dollar), while from December 31, 2003 to December 31, 2004 it
was 0.3% (from Ps. 11.236 to Ps. 11.2648 per US dollar).

Monetary gain

Monetary gain for 2004 was Ps. 20.4 billion (US$1.8 billion),
representing a 69% increase over the monetary gain during 2003.
The Ps. 8.3 billion (US$0.7 billion) increase in monetary gain
is a consequence of a higher annual inflation observed in 2004
relative to 2003 (5.19% vs 3.98%).


Other Net Revenues

During 2004, other net revenues increased 333% to Ps. 13.5
billion (US$1.2 billion). The corresponding figure for 2003 was
of Ps. 3.1 billion. The Ps. 10.4 billion (US$0.9 billion)
increase was mainly due to:

- The capital gains from the investment in shares of Repsol YPF,
S.A. (in 2003 these were held mainly by asset swaps and they
were recorded at mark to market)
- Higher net income generated by the Deer Park refinery, in
which PEMEX has participation
- The Federal Government's contribution to the Voluntary
Retirement Fund


Income before taxes

Income before taxes and duties for 2004 was Ps. 458.9 billion
(US$40.7 billion), 28% higher than the Ps. 357.4 billion
observed in 2003. From 2003 to 2004, operating income increased
Ps. 55.5 billion (US$4.9 billion), while income before taxes
grew Ps. 101.5 billion (US$9 billion). The difference between
these increases is the result of:

- A reduction of Ps. 35.6 billion (US$3.2 billion) in the
comprehensive financing cost
- An increase of Ps. 10.4 billion (US$0.9 billion) in other net

Taxes and duties

18% increase Petroleos Mexicanos and its subsidiary entities pay
taxes and duties equivalent to 60.8% of total sales. This
includes the special tax on production and services (IEPS) that
applies to gasoline. From 2003 to 2004 the taxes and duties paid
increased 18%, from Ps. 402.3 billion to Ps. 473 billion (US$42

IEPS IEPS is paid by the end consumer of gasoline and PEMEX is
an intermediary between the Ministry of Finance (SHCP) and the
end consumer. The Ministry of Finance determines the retail
price of gasoline. Recently, gasoline prices have remained
nearly unchanged because changes are linked to increases in the
consumer price index. When PEMEX sells gasoline, it collects an
amount based on an estimate of its production cost, assuming
efficient refinery operation. The difference between the retail
price and the cost that PEMEX collects is primarily IEPS.
Therefore, when the crude price is high and so is the production
cost of gasoline, the IEPS decreases. The converse is true when
crude oil prices
are low.

In 2003, the weighted average crude oil export price was
US$24.78 per barrel. For 2004, this price increased 25%,
reaching US$31.02 per barrel. For 2004, IEPS decreased 45% to
Ps. 54.7 billion (US$4.9 billion) from Ps. 99 billion (US$8.8
billion) during 2003.

Duty for infrastructure

In 2004, the duty for exploration, gas, refining and
petrochemicals infrastructure (duty for infrastructure) replaced
the prior excess gains duty. Both duties are equal to 39.2% of
the revenues from crude oil export sales in excess of a
threshold crude oil price set by the Mexican Government. In
2004, the threshold price was US$20.00 per barrel, compared to
US$18.35 per barrel in 2003.

Until 2004, there was no difference between both duties. In
2004, the duty for infrastructure was reimbursed to PEMEX. The
Income Law (Ley de Ingresos de la Federacion9) for the fiscal
year 2004 established that "the proceeds from this duty. will be
allocated to the investment in infrastructure in exploration,
gas, refining and petrochemicals that Petroleos Mexicanos and
its subsidiary entities perform."

In 2003, the excess gains duty paid by PEMEX was Ps. 19.7
billion (US$1.7 billion) and in 2004, the duty for
infrastructure was Ps. 34.4 billion (US$3.1 billion).

Reimbursement of the duty for infrastructure

PEMEX received reimbursements of the duty for infrastructure
totaling Ps. 33 billion from the Ministry of Finance:

- Ps. 12.5 billion received on September 30, 2004
- Ps. 8 billion received on December 15, 2004
- Ps. 12.5 billion received on December 31, 2004

The reimbursements will be destined to finance non-PIDIREGAS
capital expenditures and amortizations of PIDIREGAS projects.

Accounting of the duty for infrastructure

Most of the Ps. 33 billion received was exchanged into US
dollars, based on the allocation of non-PIDIREGAS investment and
PIDIREGAS projects amortizations. Since the Mexican peso
appreciated in dollar terms, the accounting of the reimbursement
of this duty resulted in a Ps. 0.4 billion exchange loss. The
Ps. 32.6 billion difference was deposited by PEMEX in a Trust.
Therefore, the accounting registered was a credit to an account
receivable and a debit to PEMEX's equity.

Net loss

Net loss of Ps. 14.1 billion

In 2004, PEMEX recorded a net loss of Ps. 14.1 billion (US$1.3
billion), compared to a net loss of Ps. 42.8 billion in 2003.
The Ps. 28.6 billion (US$2.5 billion) decrease in the net loss
is explained by:

- An increase of Ps. 55.5 billion (US$4.9 billion) in operating
income. Excluding IEPS, operating income grew Ps. 99.7 billion
(US$8.6 billion)
- A decrease of Ps. 35.6 billion (US$3.2 billion) in the
comprehensive financing cost
- An increase of Ps. 10.4 billion (US$0.9 billion) in other net
- The offsetting effect due to a Ps. 70.7 billion (US$6.3
billion) increase in taxes and duties. Excluding IEPS, the
increase in taxes and duties was Ps. 115 billion (US$10.2
- A favorable offsetting effect of Ps. 2.1 billion (US$0.2
billion) due to the initial accumulated effect of the
implementation of accounting bulletin C-15(impairment of assets)


EBITDA increased 35% to Ps. 504.4 billion (US$44.8 billion) in
2004 from Ps. 374.1 billion in 2003.


Total assets increased 15%. As of December 31, 2004, total
assets were Ps. 1,018.3 billion (US$90.4 billion), representing
a 15%, or a Ps. 129 billion (US$11.4 billion) increase with
respect to total assets as of December 31, 2003.

- Cash and cash equivalents increased 10%, or Ps. 7.8 billion
(US$0.7 billion)
- Accounts receivable increased 73%, or Ps. 53.7 billion (US$4.8
- Valuation of inventories increased 21%, or Ps. 6.2 billion
(US$0.6 billion), as a result of higher hydrocarbon prices
- Plant, property and equipment rose 8%, or Ps. 46.3 billion
(US$4.1 billion), reflecting new investments
- Other assets increased 11%, or Ps. 15.1 billion (US$1.3
billion), mainly as a result of the increase in value of PEMEX's
shareholdings in Repsol YPF, S.A., through the RepCon Lux S.A.


Total liabilities increased 14% to Ps. 960.3 billion (US$85.2
billion), with respect to December 31, 2003.

- Short-term liabilities decreased 8% to Ps. 132.7 billion
(US$11.8 billion), primarily as a result of the decrease in
short term documented debt
- Long-term liabilities increased 19% to Ps. 827.5 billion
(US$73.5 billion), due to the increase in long-term documented
debt Total debt is discussed at greater length under "Financing

Reserve for retirement payments

The reserve for retirement payments, pensions and seniority
premiums increased 16% to Ps. 347.2 billion (US$30.8 billion)
from Ps. 300.6 billion as of December 31, 2003. The increase of
Ps. 46.6 billion (US$4.1 billion) resulted from:

- An increase of Ps. 11.5 billion (US$1billion) due to a
decrease in the pension fund
- An increase of Ps. 10.3 billion (US$0.9 billion) due to the
difference between the realized and the expected wages'
- An increase of Ps. 10 billion (US$0.9 billion) due to changes
in actuarial assumptions
- An increase of Ps. 8.3 billion (US$0.7 billion) caused by the
incorporation of future medical services for retirement,
according to accounting bulletin D-3
- An increase of Ps. 4.9 billion (US$0.4 billion) due to a
decrease of one year in the funding period
- An increase of Ps. 1.6 billion (US$0.1 billion) due to the
seniority annual growth


As of December 31, 2004, PEMEX's equity increased 20%, or Ps.
9.8 billion (US$0.9 billion) to Ps 58.1 billion (US$5.2 billion)
from Ps. 48.2 billion as of December 31, 2003. The increase is
primarily explained by the Ps. 32.6 billion (US$2.9 billion)
equity contribution from the reimbursement of the duty for
exploration, gas, refining and petrochemicals infrastructure.

Results by segment

Total sales of each subsidiary entity increased from 2003 to
2004. Exploration and Production and Gas and Basic
Petrochemicals registered positive operating income, while the
rest of the subsidiary entities reported operating losses.
Relative to 2003, operating results for each business line

Operating income

The net loss of PEMEX Exploration and Production, which caused
the net loss of the Corporate and its subsidiary companies is
primarily attributed to the increase in the tax and duties
(excluding IEPS) payment, from Ps. 303.3 billion to Ps. 418.3
billion (US$37.1 billion). The increase in tax and duties
(excluding IEPS) payment, from Ps. 303.3 billion to Ps. 418.3
billion (US$37.1 billion). The increase in tax and duties paid
by PEMEX Exploration and Production was US$10.2 billion.

Statement of changes in financial position

During 2004 funds used in operating activities totaled Ps. 1.1
billion (US$0.1 billion), mainly due to:

- An increase in accounts, notes receivable and other due to the
reimbursement of the duty for infrastructure
- The impact on monetary gains as a consequence of the higher
- inflation observed in 2004 relative to 2003. This is a non-
cash item

During 2004 funds used in investing activities totaled Ps. 95
billion (US$8.4 billion) as a result of an increase in fixed
assets. The main difference between realized capital expenditure
and the increase in fixed assets is due to exploration
investment and maintenance expenditures.


Capital expenditures (CAPEX)

2004 CAPEX Capital expenditures for 2004 totaled US$10.1
billion, based on an exchange rate of Ps. 11.6 per US dollar.
CAPEX were allocated as follows:

- Exploration and Production 92%
- Refining 4%
- Gas and basic petrochemicals 2%
- Petrochemicals 1%
- Others 1%

Nearly 90% of 2004 capital expenditures, or US$9.1 billion, were
used to fund PIDIREGAS projects.

2005 CAPEX projected allocation

In 2005, projected capital expenditures are US$11.2 billion,
based on an exchange rate of Ps. 11.6 per US dollar, and is
expected to be allocated as follows:

- Exploration and Production 85%, consisting of exploration
18.6%, production 49% and maintenance 17%
- Refining 10%
- Gas and basic petrochemicals 3%
- Petrochemicals 2%
- Others 0.4%

Nearly 88% of 2005 projected capital expenditures, or US$9.9
billion, will be used to fund PIDIREGAS.

2004 financing As of December 31, 2004, US$9.5 billion were
raised as follows:

- US$4.3 billion in foreign capital markets
- US$2.5 billion in the Mexican capital market
- US$1.4 billion from export credit agencies (ECA's)
- US$1.3 billion in bank loans

Approximately 60% has been raised in the international markets
and the rest in the Mexican market.

Since market conditions were favorable, PEMEX pre-funded part of
its 2005 financing requirements by approximately US$1.5 billion.

2005 financing program

In 2005, PEMEX plans to raise an additional US$8.5 billion,
approximately. Around 60% will be raised in foreign capital
markets and the rest in the Mexican market.

- US$2.5 billion in foreign capital markets
- US$2.7 billion in the Mexican capital market
- US$0.8 billion from export credit agencies (ECA's)
- US$2.5 billion in bank loans

Capital markets

Exchange offer PEMEX's strategy in the capital markets aims to
reduce the number of issues and increase their liquidity. As a
consequence, in December 2004, Petroleos Mexicanos and the Pemex
Project Funding Master Trust concluded exchange offers relating
to bonds of the former to bonds of the latter. The principal
amount exchanged was US$2.3 billion, which was 77% of the
aggregate principal amount eligible for the exchange offer. The
market value of the amount exchanged as of December 31, 2004 was
US$2.9 billion.

Short-term notes program

In July 2004, Petroleos Mexicanos and the Mexican Trust F/163
established a Ps.10 billion short term notes program, which will
also be used to fund working capital needs. Under this program,
either Petroleos Mexicanos or Trust F/163 may issue notes having
maturities of less than 360 days.

Master Trust

During 2004, the Pemex Project Funding Master Trust, a Delaware
trust controlled by, and whose debt is guaranteed by PEMEX,

- On June 15, 2004, US$1.5 billion of its floating-rate notes
due 2010
- On August 5, 2004, EUR850 million of its 6.375% notes due 2016
- On September 28, 2004, US$1.75 billion of its 7.75% perpetual
bond with an option to redeem in full beginning in year five
- On February 24, 2005, the Pemex Project Funding Master Trust
issued EUR1,000 million of its 5,5% notes due 2025.


During the third quarter of 2004, Trust F/163 reopened its peso
bond issuances of October, 2003. Including the first issuance on
October 24, 2003 and the reopenings of January and March, 2004,
the aggregate amount of the peso bonds issued totals Ps. 32.7
billion, distributed as follows:

- Ps. 13 billion of floating rate instruments due 2007
- Ps. 13.5 billion of floating rate instruments due 2009
- Ps. 6.2 billion of 8.38% instruments due 2010

On December 23, 2004, Trust F/163 issued notes in the Mexican
market. The amount was settled in UDI's equivalent to Ps. 5.0
billion. The notes issued are zero-coupon with a 9.01% interest
rate and 15 years maturity. On February 1, 2005, the issuance
was reopened for UDI's equivalent to Ps. 6 billion with a 9.07%
interest rate.

On February 11, 2005 Trust F/163 issued Ps.15 billion notes in
the Mexican market. The issuance was done in two tranches:

- A principal amount of Ps. 7.5 billion, with an interest rate
equal to 91 days CETES plus 51 basis points due in 2010
- A principal amount of Ps. 7.5 billion, with an interest rate
equal to 182 days CETES plus 57 basis points due in 2013

Petroleos Mexicanos

On June 30, 2004, Petroleos Mexicanos obtained a syndicated
revolving credit facility that will be used to fund working
capital needs. The facility is divided in two tranches:

- US$600 million maturing on December 31, 2007 with an interest
rate of LIBOR plus 0.55%
- US$650 million maturing on June 30, 2009 with an interest rate
of LIBOR plus 0.75%

This syndicated revolving credit facility replaced two banker's
acceptance credit facilities totaling US$785 million, and a
commercial paper program of US$445 million. As of today, this
syndicated revolving credit facility has not been used.

RepCon Lux

On January 26, 2004, RepCon Lux S.A., a financing vehicle formed
in Luxembourg, issued US$1.37 billion of its 4.5% guaranteed
exchangeable bonds due 2011. These bonds are guaranteed by PEMEX
and are exchangeable into shares of Repsol YPF, S.A. or, at the
option of the issuer, the cash equivalent thereof.


As of December 31, 2004, total consolidated debt including
accrued interest was Ps. 505.3 billion (US$44.9 billion). This
figure represents an increase of 15%, or Ps.67.1 billion,
compared to the figure recorded on December 31,
2003. Total debt includes:

- Documented debt of Petroleos Mexicanos, the Pemex Project
Funding Master Trust, Trust F/163 and RepCon Lux S.A.
- Notes payable to contractors
- Sale of future accounts receivable (representing Pemex Finance
debt of US$3.6 billion as of December 31, 2004)

Net debt, or the difference between debt and cash equivalents,
increased Ps. 59.3 billion, to Ps. 420.4 billion (US$ 37.3
billion) as of December 31, 2004, from Ps. 361.1 billion as of
December 31, 2003.

Short-term debt

Total debt with a remaining maturity of less than twelve months
was Ps. 48.7 billion (US$4.3 billion) as of December 31, 2004,

- Ps. 46.8 billion (US$4.2 billion) in documented debt
- Ps. 1.9 billion (US$0.2 billion) in notes payable to

As of December 31, 2003, the corresponding amounts were Ps. 60.5
billion and Ps. 2 billion, respectively and total short-term
debt was Ps. 62.5 billion.

Long-term debt

Total long-term debt as of December 31, 2004 was Ps. 456.7
billion (US$40.5 billion). This figure includes:

- Ps. 394.5 billion (US$35 billion) in documented debt
- Ps. 25.5 billion (US$2.3 billion) in notes payable to
- Ps. 36.6 billion (US$3.3 billion) in sale of future accounts
receivable As of December 31, 2003 these figures were Ps. 319.4
billion, Ps. 13.8 billion and Ps. 42.6 billion, respectively,
and total long-term debt was Ps. 375.8 billion.

Financial ratios

The ratio of EBITDA to interest expense (excluding capitalized
interest) was 17.8 as of December 31, 2004, compared to 15.1 as
of the same date of 2003. The ratio of EBITDA to net interest
expense was 32.1 as of December 31, 2004, compared to 21.3 as of
December 31, 2003.

Increase of duration

PEMEX aims to increase the duration of its outstanding debt in
order to make it comparable to that of other oil and gas
companies with similar credit ratings.

Interest rate risk

PEMEX's policy is to maintain a balance between fixed and
floating rate liabilities, in order to mitigate the impact of
fluctuations in interest rates. As of December 31, 2004,
approximately 62% of PEMEX's debt exposure carried a fixed
interest rate, and 38% of its debt bore interest at floating
rates. As a consequence of issuance of peso-denominated
securities, PEMEX's US dollar debt exposure has decreased 4
percentage points from December 31, 2003 to the same date of

Crude oil price risk

In September 2004, PEMEX arranged a short term hedging program
in order to mitigate the impact of crude oil price volatility on
its cash flows. The program consists of the acquisition of
options in order to hedge against potential price crude oil
reductions for the rest of the year. The underlying crude volume
accounted for approximately 7% of PEMEX's annual crude oil
production. This program ended December 31, 2004. Due to high
crude prices, these options expired with out being exercised.

Other relevant developments

Oil spillages Recently, sizable spillages of crude oil and
derivatives have occurred in the States of Veracruz and Tabasco.

On December 22, 2004, a fire took place in the Mazumiapan
pumping station of the 30-inch Nuevo Teapa - Poza Rica oil
pipeline. This accident caused the rupture of the pipeline,
spilling 5 Mb of crude oil in the region of Nanchital, Veracruz.

On December 31, 2004, a crude oil spillage took place in the
state of Tabasco due to a rupture of a 16-inch pipeline running
from Cunduacan Storage and Pumping Central to Dos Bocas Maritime

On January 24, 2005 a light naptha spillage was registered in
the region of Agua Dulce, Veracruz. The accident occurred due to
the rupture of a 12-inch gasoline pipeline running from the
Cactus Gas Processing Center to La Cangrejera Petrochemical

In collaboration with the Veracruz Government, the Mexican Army
and Navy, the Ministry of Environment and Natural Resources, the
Ministry of Health, municipal authorities, Veracruz University,
Civil Protection, local communities and specialized companies,
among others, PEMEX has implemented contingency plans to protect
and reestablish the health and integrity of the population and
counteract the environmental impact.

Fiscal regime in 2005

In 2005 PEMEX will pay a hydrocarbon duty equivalent to 60.8% of
its sales revenues. It will also pay an excess gains duty on the
value of crude oil exports if the crude oil export average price
per barrel exceeds US$23.00. The excess gains duty will be 39.2%
of the revenue from crude oil export sales in excess of US$23.00
per barrel, multiplied by the crude oil export volume. The
excess gains duty generated for amounts in excess of US$27.00
per barrel will be destined:

- 50% to PEMEX capital expenditures in exploration, production,
refining, gas and petrochemical activities
- 50% to infrastructure and equipment investment programs and
projects of other federal entities

Proposed PEMEX's fiscal regime

On October 28, 2004, the Chamber of Deputies approved a new
fiscal regime for PEMEX.10 It remains subject to approval by the
Senate. Under this proposal, PEMEX's Exploration and Production
tax regime would be governed by the "Ley Federal de Derechos"
and the taxes for the other subsidiary entities would continue
to be governed by the "Ley de Ingresos de la Federacion".

If passed, the new fiscal regime for PEMEX Exploration and
Production would consist of the following duties:

- Duty for hydrocarbons extraction, which is paid on the value
of production of crude oil and natural gas (net of quantities
used for production). This duty distinguishes crude oil from
natural gas production and separates existing from new
hydrocarbons.11 Sales of existing crude oil (as defined in the
proposal) would be taxed at a rate ranging from 35.1 to 74.8%,
depending on the sales price,12 and new crude oil would be taxed
at a 25% rate. Sales of existing gas would be taxed at a rate of
15%, while new gas would be taxed at a 10% rate. This duty would
have exemptions of up to 30 barrels of crude oil per day per
producing well and up to one million cubic feet per day of non-
associated natural gas per well
- Duty for hydrocarbons for the stabilization fund, which is
paid on the value of the extracted crude oil production, would
range from 1% to 10%, depending on the average Mexican crude oil
export price, and only if the crude oil export price exceeds
US$22 per barrel13
- Extraordinary duty for crude oil exports of 13.1%, paid on the
value of exports when the average export price of the Mexican
crude oil basket exceeds the price estimated by the Congress
each year. This duty is to be credited against the duty for
hydrocarbons for the stabilization fund
- Ordinary duty for hydrocarbons of 69% on the value of
extracted production minus certain permitted deductions
(including for certain investments, some costs and expenses, and
the other duties). The purpose of the new fiscal regime is to
strengthen PEMEX's competitiveness and to contribute to improve
its financial position.

Credit rating upgrade

On February 1, 2005, Standard & Poor's Ratings Services (S&P)
raised the foreign currency long-term corporate credit rating on
PEMEX and on the Pemex Project Funding Master Trust to BBB from
BBB-. S&P also raised the PEMEX and RepConLux S.A. unsecured
foreign currency ratings to BBB from BBB-.

At the same time, S&P affirmed PEMEX's (A-) local currency
credit rating, its (mxAAA) national scale corporate credit
rating, and the (mxAAA) national scale senior unsecured rating
assigned to Fideicomiso F/163, as well as PEMEX's and
Fideicomiso F/163 rating for their (mxA-1+) short term note

The rating actions follow the upgrade of the foreign currency
sovereign ratings on Mexico to BBB from BBB- and the
confirmation of its local currency rating of A-. The upgrade on
PEMEX is, according to S&P:

"consistent with S&P's opinion that PEMEX's importance to the
country constitutes a strong economic incentive for the
sovereign to support the issuer during a period of financial
distress. Despite the fact that PEMEX's debt is not guaranteed
by the Mexican government, S&P acknowledges that PEMEX's debt
has received pari passu treatment with direct debt of the
sovereign in previous restructurings of Mexico's external debt.
Additionally, certain notes issued by PEMEX contain collective
action clauses that are also included in some notes issued by
the sovereign, again indicating the tight relationship between
the debt management of United Mexican States and PEMEX."

S&P considered the outlook for PEMEX's foreign currency rating
to be stable.


PEMEX is Mexico's national oil and gas company. Created in 1938,
it is the exclusive producer of Mexico's oil and gas resources.
The operating subsidiary entities are PEMEX Exploration and
Production, PEMEX Refining, PEMEX Gas and Basic Petrochemicals
and PEMEX Petrochemicals. The principal subsidiary company is
PMI, its international trading arm.

To view financial statements:

CONTACT: Investor Relations
         Mr. Esteban Levin

         Ms. Celina Torres

         Phone: (5255) 1944 9700

PEMEX: Forecasts Decline in Major Field's Output This Year
Mexico's state oil monopoly Pemex is now preparing measures for
the expected decline of production at Cantarell, its largest oil
field, this year, reports Bloomberg. Cantarell accounted for
more than 60 percent of Pemex's oil production last year.

According to Vinicio Suro, planning director for Pemex's
production and exploration unit, the company will seek to make
up for the shortfall at its other fields. He said that Cantarell
will produce an estimated 2.02 million barrels of oil in 2005,
down from 2.11 million barrels per day in 2004. This would mean
the decline in output would be around 80,000 or 90,000 barrels
of oil per day, Mr. Suro said.

However, the company will still increase overall oil production
this year despite the expected decline at Cantarell. According
to Mr. Suro, the company will do this by boosting output mainly
at its Ku-Maloob-Zap complex and light marine crude field.

"We are continuing to develop plans in order to increase
production and in order to retain our capacity to increase our
production," Suro said.

For the last four years, Pemex has been investing about US$10
million annually to boost production in other fields to make up
for the expected decline.

PEMEX: Crude Output Drops 2% in January
Mexican state oil monopoly Petroleos Mexicanos (PEM.YY), one of
the top foreign suppliers of crude oil to the U.S., said Monday
its production of crude oil for January fell by 2% to 3.35
million barrels a day, compared to the 3.42 million b/d it
reported for the same period last year, Dow Jones Newswires

Pemex broke down its January production into 2.45 million b/d of
heavy Maya crude, 784,000 b/d of light Isthmus crude, and
121,000 b/d of extra light Olmeca crude. It natural gas output,
meanwhile, stood at 4.61 billion cubic feet a day.

The company also reported that in January, it exported 1.82
million b/d of crude oil at US$31.08 a barrel and earned US$1.75
billion. from those exports. Of its total January exports, 1.65
million b/d went to the U.S. and other parts of the Americas,
and 170,000 b/d went to Europe, the company said.

PEMEX: To Combine Petrochem Units This Year
In line with efforts to improve its business segment, Mexican
state oil monopoly Petroleos Mexicanos (PEM.YY) said Tuesday it
is planning to merge its petrochemical units into one company
this year, says Dow Jones Newswires.

In a conference call with investors, Pemex chief financial
officer Juan Jose Suarez said the company expects to have a
lower cost structure as a result of the merger.

Last year, Pemex's petrochemical production increased by 4% to
10.7 million metric tons. Pemex does not have a monopoly on
petrochemicals in the country, but private sector producers
depend on the state company for raw materials like natural gas
and ethylene.

Mexico imported about 6.5 million metric tons of petrochemicals
in 2003, leading to a US$5.9 billion trade deficit for the
country's chemical industry.

T R I N I D A D   &   T O B A G O

QUEEN'S HALL: Chairman Declares Company Not Shutting Down
The board chairman of performance venue Queen's Hall has denied
a report that it is facing closure just two years after a $45-
million refurbishment, The Trinidad Express reports. Chairman
Astra Da Costa has conceded that construction-related problems
at Queen's Hall were still being addressed, but she declared
that it will not be closed "in the foreseeable future".

She also gave the assurance the eight-member Board will be meet
every two weeks and set itself a target to fix the facility's
construction-related problems, including tight seating, a
leaking roof, loose flooring, washroom and a muddy car park.

Among the measures the board is taking is the approval of a
project to pave the venue's car park in six weeks. Ms. Da Costa
also claimed the leaks in the roof have already been repaired. A
decision to repair the flooring will likewise be made.

As for the seating problems, Ms. Da Costa said no decision on
the matter will be made until a proper review and analysis of
the problem has been conducted.

Originally constructed in 1959, Queen's Hall usually
accommodates 1,100 people, but this was reduced to about 840 to
allow for roomier chairs in 2002.


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter - Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
Lucilo Junior M. Pinili, Editors.

Copyright 2005.  All rights reserved.  ISSN 1529-2746.

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