ISA ECONOMIC GROUP GENERAL OVERVIEW

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Conference Hotel Charleston Santa Teresa Cartagena, Colombia

1 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA ECONOMIC GROUP GENERAL OVERVIEW Bear Stearns 2006 Colombia Conference Hotel Charleston Santa Teresa Cartagena, Colombia October ISA ECONOMIC GROUP GENERAL OVERVIEW OCTOBER

2 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. Forward- Looking Statements This presentation contains statements relating to future results (including certain projections and business trends) that are subject to risks and uncertainties that may cause our actual results or performance to differ, perhaps materially, from any future results or performance expressed or implied by the forward-looking statements. All forward-looking statements contained in this presentation or otherwise attributable to us or persons acting on our behalf are expressly qualified in their entirety by reference to such factors. You should not place undue reliance on such statements, which speak only as of the date that they were made. Our independent public accountants have not examined or compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may issue in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect later events or circumstances or to reflect the occurrence of unanticipated events. 2

3 Agenda ISA ECONOMIC GROUP All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. ECONOMIC GROUP Who are we? PRESENCE IN THE MARKET RECENT TRANSACTIONS ADVANCE OF RELEVANT PROJECTS ISA GROUP FINANCIAL FIGURES Second Quarterly Results 2006 GROWTH STRATEGY 3

4 ISA Group is currently a major participant in Latin American Power and Telecommunication sectors. All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P ENERGY 1967 TELECOMMUNICATIONS INTERCONEXIÓN ELÉCTRICA ISA PERÚ S.A Transport of Energy 2006 Operation of National Interconnection System and Energy Market Operator Carrier and Value Added Services 4

All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. ISA MATRIX SHAREHOLDERS SHAREHOLDERS NUMBER OF SHARES TRADITIONAL INVESTORS 689,590,319 71.

5 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. ISA MATRIX SHAREHOLDERS SHAREHOLDERS NUMBER OF SHARES TRADITIONAL INVESTORS 689,590, % COLOMBIAN GOVERNMENT 569,472, % EPM 102,582, % EEB 17,535, % PRIVATE INVESTORS 270,751, % INDIVIDUALS 129,473, % INSTITUTIONAL INVESTORS 110,249, % LEGAL PERSONS 16,898, % FOREIGN INVESTMENT FUNDS 9,377, % ISA ADR PROGRAM 4,752, % TOTAL 960,341, % % The 28.19% belongs to private capital shareholders and their shares are freely traded on the Stock Exchange (free float). As of September 30, 2006 the Company had shares and shareholders. On March 22, 2004, ISA s shares were registered in the United States as Level I ADR. 5

7 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. ISA Group is one of the major players in the Latin American Power sector. 12.5% 12.5% EPR 1830 km ISA Group is involved in the Operation, Administration and Transport of Energy in Colombia, Brazil, Peru, Bolivia, and Central America Participation in transmission grid >= 220 kv (km of circuit) UPME km % 52% INTERCONEXIÓN ELÉCTRICA ISA PERÚ S.A. 10% 91% 7

8 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. With km, the ISA Group has presence in Latin American energy markets. ISA s Group Latin American network INTERCONEXIÓN ELÉCTRICA ISA PERÚ S.A. S/E MVA 10,105 2,820 1, ,515 53,871 MVAR 2, ,669 6,765 Km kv 1, ,849 8,298 Km (circuit) Kv 7,367 1,517 4, ,412 15,887 Km (circuit) <220 kv , ,005 11,517 Total km 8,941 1,531 5, ,266 36,305 8

9 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group The largest dedicated energy transmitter in Latin America. 50,000 40,000 30,000 Integrated (G+T+D+C) Transmission Kms of circuits 20,000 10,000 0 CFE ISA Group CEMIG FURNAS CHESF TRANSENER ELETROSUL TRANSELEC ELETRONORTE EDELCA UTE ANDE TRANSELECTRIC RED ELÉCTRICA ICE ENTRESA ETESA ETESAL TRELEC 9

10 ISA, operator and administrator of the Colombian electric market and TIE. All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. TIE SCHEME Since 2003 The dynamics of exchanges is an evidence of the benefits of the Ecuador - Colombia integration BENEFITS Coordinated dispatch ANDEAN REGION (Col - Ecu) Mar Aug GWh US$ 3.7 MM TIE with Ecuador: Growing trend in electricity exports. Mar Aug GWh US$477 MM Colombia Ecuador Reduction in end-user s rates from congestion rents to cover constraints Support to Social Energy Fund Demand satisfaction in emergencies Reduction in final user s rates due to a lower marginal cost Savings in fuel consumption 10

first specialized wireless broadband operator. 4.

11 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. ISA Group, Colombia s most reliable telecommunications transport network, national and international carrier of carriers and the country s first specialized wireless broadband operator km fiber-optic network, National Microwave network, Satellite Network and LMDS Network International connections: Arcos and Maya Cables and interconnection with Ecuador. Market Participation CARRIER SERVICE Nacional: 56.0% 47.9% Internet: 42.6% 27.4% VALUE ADDED SERVICE % 1.4% 11

13 Recent transactions Perú: Consorcio TransMantaro S. A. All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. Key Facts Map of TransMantaro S.A. In 1997, the Peruvian State held an international public bidding process for a concession to build and, thereafter, operate the Mantaro- Socabaya electric transmission line with the objective to interconnect the Central-Northern Interconnected System (or SICN) with the Southern Interconnected System (or SIS). Deal was closed with HQI and FSTQ for 85% of the company. On September 11 th, a bid presented for the remaining 15% (ETECEN) was awarded to ISA. This deal will probably be concluded by November. Transition process shared with REP. Technical Infraestructure 220kV Transmission Line 603 km (Northern Section, 292 km, connects Cotaruse and Mantaro and Southern Section, 311 km, connects Cotaruse and Socabaya Three Substations Mantaro: 2,060m above sea level. Cotaruse: 4,165m above sea level. Socabaya: 2,350m above sea level. Altitude: 60% over de 3,800m above sea level Maximum altitude 4,985m above sea level Microwave network The line is operated and maintained by HQI, Peru Branch. HQI: Hydro-Québec Internacional FSTQ: Fonds de Solidarité des Travailleuers dú Québec ETECEN: Empresa de Transmisión Eléctrica Centro Norte S.A. ( Lima) 13

The operational area of CTEEP is concentrated in the State of São Paulo, the most important interconnection Key Facts Approximately 30% of all energy in Brazil and 60% of the energy in the Southeast

3 thousand km of transmission circuits 39,156 MVA of total transforming capacity 100 substations (102 operated by CTEEP) 464 transformers / 76 reactors / 177 telecommunication stations 1.

14 The operational area of CTEEP is concentrated in the State of São Paulo, the most important interconnection Key Facts Approximately 30% of all energy in Brazil and 60% of the energy in the Southeast region is transmitted through CTEEP s transmission lines. This requires a complex infrastructure comprising: 11.8 thousand km of transmission lines 18.3 thousand km of transmission circuits 39,156 MVA of total transforming capacity 100 substations (102 operated by CTEEP) 464 transformers / 76 reactors / 177 telecommunication stations 1.8 thousand km of optical fiber 3 regional operating centers (CRO) and 1 system operating center (COS) All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. Recent transactions: Brazil: Companhia Transmissão de Energía Elétrica Paulista -CTEEP- center between Brazil s South, Southeast and Mid- West regions. The State has approximately 22% of the Brazilian population and onethird of the national GDP. Map of CTEEP Transmission Network Currently, CTEEP holds two concession contracts for its transmission system in the State of São Paulo, valid up to 2015 and Largest transmission company in Brazil 14

16 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. Underconstruction Projects Colombia: National Transmission System - STN Copey Bolívar Ocaña Primavera Bacatá UPME Primavera-Bolívar UPME Primavera-Bacatá Operation Start Lines Advance Subs. With these projects, ISA will strengthen its national transportation grid. Revenues per Year (1 to 25) (USD MM) 1, , UPME 01 Dec 31, % 94.2% UPME 02 Mar 31, % 83.3%

17 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. Underconstruction Projects Colombia: Connection Assets Transformation Bank Connecttion EPSA (San Marcos) July 2007 Investment 0.82 MUSD Annuity 0.19 MUSD (25 years) SVC OXY Connecttion (Caño Limón) November 2007 Investment MUSD Annuity 3.8 MUSD (5 years) Transformation Bank Connection (La Reforma) EMSA July 2007 Investment 0.8 MUSD Annuity 0.18 MUSD (25 years) 17

18 Underconstruction Projects Central America: SIEPAC Project All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. GUATEMALA HONDURAS EPR: Empresa Propietaria de la Red Central America GUATE NORTE GUATE ESTE PANALUYA AHUACHAPAN NEJAPA 15 SEPTIEMBRE EL SALVADOR RIO LINDO EL CAJON TICUANTEPE SUYAPA PAVANA PL.NI. NICARAGUA Antigua (Guatemala), February 17, 2005 ISA formalized its incorporation as the 8 th partner of EPR, which means:. Equal share participation of 12,5%. Capital infusion worth USD 5 MM. Guarantee for USD 40 MM loan. Appointment of one Board Director To begin operation in the second quarter of 2008 Country Length (km) Partners: Central American Countries + ENDESA + ISA CAÑAS COSTA RICA PANAMÁ PARRITA CHANGUINOLA CHORRERA RIO CLARO VELADERO Costa Rica: El Salvador: Guatemala: Honduras: Nicaragua: Panama: Total: 1,

20 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group Consistent growth of revenues and income ISA has revenues exceeding USD 450 million, and strong operating margins that show the Group s operating strength Revenue EBITDA Margin 67% Operating Income Net Income Operating Margin 47% Net Margin 27% Jun Jun

21 ISA Group Subsidiary contribution to ISA Group All rights reserved - Interconexión Eléctrica S.A. E.S.P. OPERATING REVENUES ISA GROUP ISA Colombia REP Transelca XM ISA Bolivia ISA Perú Internexa Flycom Energy 92% TeleCos 8% 59% 13% 12% 4% 2% 2% 7% 1% OPERATING EXPENSES ISA GROUP ISA Colombia50% 50% REP 13% 13% Transelca 14% 14% XM 7% 7% ISA Bolivia 2% 2% ISA Perú 1% 1% Internexa 9% 9% Flycom 4% 4% Energy 87% TeleCos 13% EBITDA ISA GROUP ISA Colombia REP Transelca XM ISA Bolivia ISA Perú Internexa Flycom 63% 13% 12% 2% 2% 3% 5% 0% 21

22 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group EBITDA Margin 90% 80% 70% 60% 71% 67% 84% 68% 73% 81% 50% 40% 30% 52% 39% 20% 10% 0% 20% 0% ISA Col. Transelca ISA Perú REP ISA Bolivia TransMantaro CTEEP XM Internexa Flycom 22

23 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group Sound capital structure Post acquisition, ISA Group will have approximately USD 5.0 billion in assets Assets 1,764 Liabilities 1,865 1,974 2,319 2,571 2,361 Equity 1,106 1,220 1, ,079 1,187 1, Jun Jun

24 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group Coverage ratios 4,5 ISA stand-alone 4,0 3,5 3,0 2,5 2, Jun Total Net Debt / EBITDA 3,76x 3,77x 2,81x 2,60x 2,46x 2,69x EBITDA / Interest 2,54x 3,24x 3,16x 4,29x 3,84x 4,13x 4,5 4,0 ISA consolidated 3,5 3,0 2,5 2, jun Total Net Debt / EBITDA 3,43 4,28 2,96 2,66 2,71 2,82 EBITDA / Interest 2,63 3,02 3,00 3,36 3,57 3,69 24

26 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. Our Strategy for Growth Limitations in the market contributed to search for new opportunities... Power Telecommunications Sectors Gas Transport Reform of the electrical sector Diversification of risks (telecommunications and other services) International experience of similar electrical companies Regional integration of energy markets Andean Region Investment in assets Central America Types of business Market promotion Mercosur and Chile Service delivery Target Market North America 26

27 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group Debt profile as of June 2006 Long Term 82% ISA stand-alone USD 466 mln DEBT BY TERM ISA consolidated USD 811 mln DEBT BY TERM Short Term 14% Short Term 18% Long Term 86% 57,5% 1,3% 5,2% 10,2% 3,2% 22,6% Local Banks Internal. Banks Bonds MLAs ECAs Others USD mln ,5% 57,4% 6,1% 5,8% 1,8% 23,3% USD mln Local Banks Internal. Banks Bonds MLAs ECAs Others

28 All rights reserved - Interconexión Eléctrica S.A. E.S.P. Implementation of strategy demands concrete actions First, develop an ideal Second, find the resources Third, alingn the media Aristóteles Growth Objectives Media alignment Strategy Media Service efficiency and quality Developments in new financial structures (Capital Markets) Good Governance Practices 39-year experience in the sector translate into Know- How, Personnel and Technology 28

29 All rights reserved - Interconexión Eléctrica S.A. E.S.P. Efficiency and Quality in the service Some Awards Availability of ISA s Energy Transport Grid Competitiveness Study (Monitor 1995) Analysis on implementation of the New ISA (1996) Integrated Management Diagnosis (Corporación Calidad 1997) Environmental National Award (corporate category) (1998) Day-to-Day Management ( ) Management Instruments ( ) The Colombia Presidency and the Ministry of Economic Development grant ISA the Colombian Quality Award (2001) ISO 9001 Certification for: Energy Service Transport (2001) Market Operation and Administration (2002) ISO 9001 certification renewal, 2000 version Percentage Goal established by CREG: % Results upper the regulatory target

30 Development new financial structures Experience in the capital markets All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group has a proven track record in the capital markets having successfully accessed the debt and equity capital markets in the past Future Domestic AAA Rating Duff & Phelps de Colombia S.A. Bond Offerings (USD 500m) Colombia AAA Affiliates AAA Dutch Auction mrchanism 144 A/ Reg S For domestic debt bonds issued by ISA and TRANSELCA Primary Issuance and Underwriting of Shares Short-terms and long-term Hedging transactions Successful IPO of ISA, with 23.72% of shares in hands of over Colombians FX Forwards (USD 542 m) Swaps (USD 121 m) Filing of level Y ADR in the USA (NY) Commodities ADR Leve lii Domestic AAA rating For bonds issued by REP in the Peruvian capital market Foreign Currency :BB/ positive outlook Standard & Poor s ISA s credit-rating same as Republic of Colombia s sovereign rating for LT Debt Project Finance at International level Syndicated Loan ISA Perú (USD 40.5 m) ISA Bolivia (USD 54 m) CTEEP ABN-JP MORGAN (USD550 m) Strong Ratings Based On Competitive position Revenue diversification High corporate governance standards Good financial performance Financial soundness 30

31 ISA s Good Governance Practices Statement of the Nation All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. The Nation, as ISA s controlling shareholder, subscribed on December 15th, 2000, a statement to protect minority shareholders during a ten-year period. Establishment of a shareholder information center Shareholder service offices in Medellín and Bogotá Toll-free number Electronic mail Meetings with national and foreign investors Shareholder Account Statement and Corporate Newsletter delivered every six months Clear dividend policy Every year, at least 70% of distributable income shall be distributed as dividends. Dividend s growing trend. Limits to operations with affiliates Majority decisions are presented in to Stockholders Meeting Mechanism to guarantee the stock s liquidity Liquidity fund established in June of Liquidated in June of In 2003, ISA s shares were listed on the Colombian Stock Exchange. On March 22, 2004, ISA s shares were deposited in the United States as Level I ADR. Representation of minority shareholders to the Board of Directors Since 2001, common citizens have a principal and an alternate member representing them to the Board of Directors. In 2004, the representative of minority shareholders assumed the Presidency of the Board of Directors. Right to withdrawal and sale 31

32 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. ISA s Good Governance Practices Governance Code & Information Disclosure Good Governance Code Information Disclosure In 2001, and in compliance with Resolution 0275 of May 23, 2001, ISA prepared a Good Governance Code to compile the management practices used in the Company and incorporate new ones. Contents were previously discussed and agreed with Asofondos and Confecámaras. The Board of Directors approved the Good Governance Code on November 15, On March 18, 2002, the Stockholders Meeting raised to the status of bylaws the practices adopted under the Code not already included in the bylaws. The Company has implemented a mechanism for on-line verification of compliance with each commitment included in the Code that sends alert signals to those responsible one month before its due date. Constant publication on the Web page [ of updated economic and financial information related to the Company, its management, and other issues of interest. Annual meetings with stockbrokers and institutional investors to report results obtained and financial projections (3 meetings with stockbrokers and more than 10 investor meetings). Monthly electronic newsletter with relevant corporate news and financial reports. In 2005, 15 reports with monthly financial results and relevant news were published and sent to shareholders and stockbrokers. 32

33 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. ISA s Good Governance Practices Board of Directors: Committees and Reports Board of Directors Committees Board of Directors Reports Board Committee: To follow up and accompany Management in financial and human talent issues, operation and evaluation of the Board of Directors, compliance with the Good Governance Code, and evaluation of the General Manager. Met on 11 occasions during New Business Committee: To analyze new businesses and investments and monitor those under execution. Met on 13 occasions during Auditing Committee: To guide and facilitate control inside the organization. Met on 5 occasions during Reports presented to the Stockholders Meeting since 2001: Evaluation of the General Manager: Integrated Management Chart indicators. Self-evaluation of the Board of Directors: Top Level Integrated Management Chart (approved by sections 618 and 620). Board of Directors Operation Report: Meetings held, attendance of principal and alternate members, preparation of agenda. Report on compliance with the Good Governance Code. 33

34 All rights All rights reserved - by Interconexión Eléctrica S.A. E.S.P. ISA has been working to make reality it s vision. In the year 2006, ISA will be recognized as Latin America s most efficient economic group in the provision of power market administration, operation and transport services integrated with telecomunicactions services. Our Growth Strategy enables us to achieve our Vision. 34

36 All Interconexión rights All rights reserved Eléctrica - by S.A. Interconexión E.S.P ISA. Eléctrica All rights S.A. reserved. E.S.P. Attacks on the electric infrastructure ISA s towers affected 2001 September 2006 YEAR TOTAL TOWERS DAMAGED/FAILE D TOTAL TOWERS REPAIRED PENDING REPAIRED ACCUMULATED RECOVERY COST (MILL USD) % REVENUES % OF ISA TOWERS % 1.50% % 2.34% % 1.46% % 1.96% % 1.61% % 0.59% % 0.95% % 0.92% Total A notorious reduction of attacks against the electric infrastructure have been observed during 2004 and 2005 in comparison with the historical levels. 36

38 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group Income Statement as of June 2006 (unaudited) INCOME STATEMENT (USD mln) ISA stand-alone ISA consolidated Jun-06* Jun-05 % Jun-06* Jun-05 % Operating Revenues % % Operating Expenses % % Operating Income % % Non Operating Loss % % Income Before Taxes % % Income Taxes % % Net Income % % EBITDA % % Ebitda Margin(%) 71% 70% 67% 67% Operating Margin(%) 55% 53% 47% 47% Net Margin(%) 45% 29% 27% 19% Amounts expressed in US dollars are intended for information purposes only. As of 6/30/2006 USD 1.00 = COP * Note: June 2006 figures exclude XM financial results due to spin-off of that business in October

39 All rights reserved - Interconexión Eléctrica S.A. E.S.P. ISA Group Balance Sheet as of June 2006 (unaudited) BALANCE SHEET (USD mln) ISA stand alone ISA consolidated Jun-06* Dec 05 % Jun-06* Dec 05 % Total Assets % % Total Liabilities % % Minority Interest % Equity % % Amounts expressed in US dollars are intended for information purposes only. As of 6/30/2006 USD 1.00 = COP * Note: June 2006 figures exclude XM financial results due to spin-off of that business in October

QuarterlyResults A quick follow up to ISA Group's overall performance

QuarterlyResults A quick follow up to ISA Group's overall performance 4 th Quarter & 1 st Quarter 2007 ISA Interconexión Eléctrica S.A. E.S.P. Stockholder call center: 018000 11 5000 Stockholder office: Calle 12 sur N 18-168. Medellín, Colombia, South America. Phone: (574)