SUPPLEMENT DATED 2 MAY 2012 TO THE BASE PROSPECTUS DATED 22 DECEMBER REN - Redes Energéticas Nacionais, SGPS, S.A.

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1 SUPPLEMENT DATED 2 MAY 2012 TO THE BASE PROSPECTUS DATED 22 DECEMBER 2011 REN - Redes Energéticas Nacionais, SGPS, S.A. EUR 5,000,000,000 Euro Medium Term Note Programme This supplement dated 2 May 2012 (the "Supplement") to the Base Prospectus dated 22 December 2011 (the "Base Prospectus"), constitutes a supplementary prospectus for the purposes of Section 87G of the Financial Services and Markets Act 2000 (the "FSMA") and is prepared in connection with the EUR 5,000,000,000 Euro Medium Term Note Programme (the "Programme") established by REN - Redes Energéticas Nacionais, SGPS, S.A. (the "Issuer"). Terms defined in the Base Prospectus have the same meaning when used in this Supplement. This Supplement is supplemental to, and should be read in conjunction with, the Base Prospectus and any other supplements to the Base Prospectus produced by the Issuer. The Issuer accepts responsibility for the information contained in this Supplement. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Supplement is in accordance with the facts and does not omit anything likely to affect the import of such information. The purpose of this Supplement is to supplement and to update the information provided in the Base Prospectus relating to: (i) the Documents Incorporated by Reference, by incorporating the press release of the Issuer dated 1 March 2012 entitled "Annual Results 2011" and the 2011 audited consolidated financial statements, (ii) the Recent Developments section, highlighting the re-privatisation of the Issuer, a number of agreements entered into by the Issuer and the Issuer's rating by the rating agencies (iii) the Taxation section, reflecting the recent amendments to the relevant tax laws and (iv) the changes to the shareholder structure and to the management of the Issuer resulting, in particular, from the resolutions passed at the Issuer s General Shareholders Meeting on 27 March Documents Incorporated by Reference The following documents are hereby incorporated by reference: (a) (b) the press release of the Issuer dated 1 March 2012 entitled Annual Results 2011 presenting the unaudited condensed consolidated financial statements of the Issuer for the year end 31 December 2011 including the profit and loss statement (page 26) and the balance sheet (page 27). All of this press release is hereby incorporated by reference; and a direct and accurate English translation of (i) the audited consolidated financial statements and notes to the consolidated financial statements contained on pages 292 to 372 of the audited consolidated annual report and accounts for the financial year ended 31 December 2011; and (ii) the auditors report in respect of the consolidated financial information contained on pages 419 to 420 of the audited consolidated annual report and accounts of the Group for the financial year ended 31 December The non-incorporate parts of the document are either not relevant for the investor or are covered elsewhere in the Base Prospectus. 1

2 Recent Developments The following Recent Developments have occurred since the date of the Base Prospectus: On 2 February 2012, the Issuer disclosed to the market that in the context of the second re-privatisation phase of the Issuer, the Portuguese Government selected State Grid International Development Limited ( SGID ) and Oman Oil Company S.A.O.C. ( OOC ) to acquire shares, representing, 25% and 15% respectively of REN s share capital. Furthermore, the Issuer also disclosed that following the decision of the Portuguese Government, REN s Board of Directors resolved, also on 2 February 2012, to enter into a framework agreement with each of the purchasers, establishing the terms and conditions of long term strategic projects, whereby SGID becomes REN s main industrial strategic partner and OOC becomes a financial strategic partner of REN. On 3 February 2012, the Issuer disclosed to the market an investor presentation to explain the strategic partnerships with State Grid International Development Limited ( SGID ) and Oman Oil Company S.A.O.C. ( OOC ). According to this presentation REN, SGID and OOC will combine efforts in a number of strategic initiatives in Portugal and abroad with the objective of: (i) enhancing REN s leading position in Portugal and supporting the development of the Iberian energy market and (ii) supporting REN s internationalisation process, as well as cooperating in areas such as exchange of technology skills, R&D initiatives and procurement. Furthermore, as per the presentation, SGID obtained a commitment for a 1 bn credit facility from a Chinese financial institution to fund capital expenditure and debt refinance, as well as additional letters of interest from three other banks to provide further financial support. On 16 February 2012, the Issuer disclosed to the market that the rating agency, Moody s was analysing REN s rating, following the downgrade of the Portuguese Republic s rating, as announced by Moody s on February 13th, The Issuer's rating on the date thereof remained the same. In addition, the Issuer disclosed that Moody s had informed that if a decision was made to downgrade REN s rating, this was expected to be limited to one notch. Furthermore such a decision would be dependent upon the agency s evaluation of the impact of REN s re- privatisation, namely the final terms and conditions of the credit line(s) referred to above and the specific allocation to capital expenditure (capex) and refinancing requirements, in the context of the new shareholders' strategy and REN's medium-term investment objectives and needs. That evaluation would seek to clarify whether the potential provision of additional liquidity as part of REN's reprivatisation and the involvement of new non-domestic strategic shareholders could enable REN to achieve a higher degree of severance from the sovereign's country risk and mitigate refinancing and liquidity risks. On 21 February 2012, the Issuer disclosed to the market that amendments to the following concession agreements between the Portuguese State and several companies of the REN Group were signed: a) the concession agreement for electricity transmission through the National Electricity Grid, entered into by REN - Rede Eléctrica Nacional, S.A.; b) the concession agreement for natural gas transmission through the National Natural Gas Transmission Grid, entered into by REN - Gasodutos, S.A.; c) the concession agreement for the reception, storage and regasification of Liquefied Natural Gas to the Sines terminal, entered into by REN - Atlântico, Terminal de GNL, S.A.; d) the concession agreement for natural gas underground storage, entered into by REN - Armazenagem, S.A. The Issuer further disclosed that the main purposes of the amendments were (i) to give details of the functions of the operators of the electricity and natural gas national transmission grids; (ii) developing the regime for the monitoring and supervision of the activities of the concessionaires by the Portuguese State, (iii) clarifying the terms applicable to the provision of information by each of those concessionaires, and (iv) adjusting the relevant contractual clauses to reflect the legal and regulatory provisions pursuant to Decree-Law No. 77/2011 and Decree-Law No. 78/2011, both of June 20. On 22 February 2012, the Issuer disclosed to the market that in the context of the second re-privatisation phase of REN, the Issuer entered into an industrial strategic partnership agreement with State Grid International Development Limited and a financial strategic partnership agreement with Oman Oil Company 2

3 S.A.O.C., which will become effective upon the entry of the referred shareholders in REN s share capital pursuant to the mentioned re-privatisation phase. On 28 February 2012, the Issuer disclosed to the market that Standard & Poor's had reviewed REN s long and short term rating, which has changed from BBB-/A-3 to BB+/B, as well as the rating of its unsecured senior debt from BBB- to BB+. At the same time, Standard & Poor s removed REN s ratings from CreditWatch and set out a negative outlook on REN. Standard & Poor's considered that according to their methodology, REN s rating shall not stay more than one notch higher than the rating of the Republic of Portugal. Nevertheless, Standard & Poor's stated that it considered that the business risk profile of REN was still strong, considering, on the one hand, that REN benefits from a favourable regulatory framework and, on the other hand, that the strategic partnerships with its future shareholders - State Grid International Development Limited and Oman Oil Company will reduce REN s refinancing risks, through the diversification of its sources of funding. On 1 March 2012, the Issuer disclosed to the market its consolidated results for On 27 March 2012 and following REN s Annual General Shareholders Meeting, the Issuer disclosed, inter alia, a distribution gross dividend of per share, out of profits, in relation to the financial year ending on 31 December On 9 April 2012, the Issuer disclosed to the Market that it has entered into an agreement with Parpública Participações Públicas, SGPS, S.A. ( Parpública ), CEZA Companhia Eléctrica do Zambeze, S.A. ( CEZA ) and EDM Electricidade de Moçambique, EP ( EDM ) under which the Issuer will purchase from Parpública 2,060,661,943 shares, representing 7.5% of the share capital and voting rights of Hidroeléctrica de Cahora Bassa, S.A. ( HCB ), at a price of 38,400, (thirty-eight million four hundred thousand euro). The Issuer also informed the Market that the above mentioned agreement is subject to the satisfaction of certain conditions. These conditions include a General Shareholders Meeting of HCB, held on or before 15 June 2012, in which the consent for the transfer of shares to REN, representing 7.5% of the share capital of HCB shall be granted. Furthermore, the Issuer also disclosed to the market that at the same time as entering into the above mentioned agreement, REN, CEZA and EDM entered into another agreement to establish the future involvement of REN, by holding a relevant stake, in the Projecto da Espinha Dorsal da Rede Eléctrica Nacional ( Project ), as technological partner and services provider, by purchasing shareholdings in companies directly or indirectly owned by EDM, which were or will be incorporated under and for the purposes of the implementation of the referred Project. The Issuer further informed the Market that the purchase of such shareholdings will lead to the sale to EDM (or to any company in which EDM has a dominant influence) by REN of its shareholding of 7.5% in the share capital of HCB. Taxation The following amendments to the taxation framework in Portugal have occurred since the date of the Base Prospectus: Personal Income Tax (IRS) The withholding tax levied on interest or other investment income earned by resident individuals has increased from 21.5 per cent. to 25 per cent. A non-progressive 2.5 per cent. extraordinary surtax has been created and shall accrue in the 2012 and 2013 tax years to the taxable income exceeding EUR

4 The tax rate levied on capital gains obtained by Portuguese resident individuals on the transfer of Notes, when exceeding EUR 500, has increased from 20 per cent to 25 per cent. The tax rate levied on capital gains realised by non-resident individuals on the transfer of Notes has increased to 25 per cent. Corporate Income Tax (IRC) Interest and other investment income (including positive variation in worth), as well as capital gains obtained on the transfer of Notes, when earned by any corporate entities resident for tax purposes in Portugal, or by non-resident corporate entities with a permanent establishment in Portugal to which the income or gains are attributable, are now subject to a single corporate income tax rate of 25 per cent. (the 12.5 per cent. tax rate over the first EUR 12,500 of taxable income no longer applies). The state surtax ("derrama estadual") has increased from 2.5 per cent. to 3 per cent. and is now levied on the part of the taxable profits exceeding EUR 1.5 million instead of the previous EUR 2 million. In addition, a new 5 per cent. surtax ( derrama estadual ) will be levied on the part of the taxable profits exceeding EUR 10 million. The withholding tax levied on interest and other investment income made available to both corporate entities resident for tax purposes in Portugal and non-resident corporate entities, with or without a Portuguese permanent establishment to which the income is attributable, has increased from 21.5 per cent. to 25 per cent. Shareholders Structure of the Issuer In the context of the second re-privatisation phase of the Issuer, the Portuguese Government has selected State Grid International Development Limited (SGID) and Oman Oil Company S.A.O.C. (OOC) to acquire shares, representing, 25% and 15% respectively of REN s share capital. Following said selection, REN s Board of Directors resolved to enter into a framework agreement with each of the purchasers, establishing the terms and conditions of long term strategic projects, whereby SGID becomes REN s main industrial strategic partner and OOC becomes a financial strategic partner of REN. These strategic partnership agreements will become effective with the transfer of REN s shares to each of the purchasers. The execution of the share sale and purchase agreements between Parpública Participações Públicas (SGPS), SA, SGID and OOC, was authorised by the Portuguese Government, through the Resolution of the Council of Ministers No. 13/2012, dated February 8 th (RCM 13/2012). The transfer of REN s shares to the purchasers is subject to conditions precedent which shall be satisfied no latter than June 30 th, According to the RCM 13/2012, the transfer of shares is expressly subject to the entry into force of the amendments to Decree-Laws nos. 29/2006 and 30/2006, (both February 15 th ), relating to the ownership of shares in REN. Article 25 of Decree-Law No. 29/2006 and articles 20-A and 21 of Decree-Law No. 30/2006 establish that ownership of shares in REN is restricted to 5% or 10% depending on whether or not the holder carries out activities within the regulated sectors governed by these rules. On 27 March 2012, at the REN General Shareholders Meeting a resolution was passed to amend REN's bylaws, increasing the ownership thresholds to 25% of the voting rights. Nonetheless, this amendment will only take effect after the amendments to article 25 of the Decree-Law No. 29/2006, and articles 20-A and 21 of Decree-Law No. 30/2006, (both February 15), come into force and then only in so far as the resolution is compatible with the amendment. 4

5 Once the transfer of the shares is completed, which will only occur upon the approval and publication in the Official Gazette of the amendments to the above referred Decree-Laws, REN will no longer be deemed to be a state-owned company as the Portuguese Republic will no longer hold the majority of the share capital of the Issuer. At this stage, the approval and publication of said Decree-Laws has not yet occurred. Consequently, the Issuer cannot ensure when the referred changes on its shareholders structure will effectively take place. Nevertheless, assuming that the second re-prisatisation phase of the Issuer will be completed as expected and in the terms described above, REN s shareholders structure will become the following: Own Shares 0.7% Columbia Wanger 2.0% Red Eléctrica Corporación, S.A. 5.0% O liren, SGPS, S.A. 5.0% Free Float 17.0% Parpública, SGPS, S.A. 11,0% EDP - Energias de Portugal, S.A. 5,0% Oman Oil 15.0% Gestmin, SGPS, S.A. 5.8% EGF - GCF, S.A. 8.4% State Grid 25.0% Management At REN s General Shareholders Meeting, held on 27 March 2012, a resolution was passed to elect the members of the Board of Directors who would exercise managing functions for the period As per such resolution, the following new members were elected to Board of Directors of the Issuers: Mr. Gonçalo João Figueira Morais Soares ( CFO ), State Grid International Development Limited (represented by Mr. Guangchao Zhu, Vice-Chairman), Mr. Hilal al Kharusi, Mr. Mengrong Cheng, Mr. Haibin Wan, Mr. Luís Palha da Silva, and Mr. Emílio Rui Vilar. Moreover, Red Eléctrica Corporatión, S.A. is now represented by Mr. José Folgado Blanco. Nonetheless, the effective exercise of the respective functions by State Grid International Development Limited (represented by Mr. Guangchao Zhu), Mr. Mengrong Cheng and Mr. Haibin Wan is conditional upon the entry into force of the strategic partnership agreement between REN and State Grid International Development Limited. Furthermore the effective exercise of the respective functions by Mr. Hilal Ali Saif Al-Kharusi is conditional upon the entry into force of the strategic partnership agreement by and between REN and Oman Oil Company S.A.O.C., both entered into in February As referred to above, these agreements are subject to the entry into force of the amendments to Decree-Laws Nos. 29/2006 and 30/2006, (both February 15 th ), relating to the ownership of shares in REN in the terms and conditions compatible with the amendments introduced in REN s by-laws at the General Shareholders Meeting held on 27 March Mr. Emílio Rui Vilar (who was also appointed as member of the Audit Committee) and Mr. Luís Palha da Silva have declared their intention to accept their respective appointment after the completion of the second phase of REN s re-privatisation. 5

6 The new directors elected at REN s General Shareholders Meeting, held on 27 March 2012 currently perform the following functions: Mr. Gonçalo Morais Soares - Mr. Guangchao Zhu State Grid Development Limited President, CEO and member of the board of Directors State Grid Brazil Holding S.A. - Chairman of Board Mr. José Folgado Blanco Red Eléctrica Corporación, S.A. Chairman of the Board of Directors Universidad Autónoma de Madrid Professor Universidad Autónoma de Madrid Member of the Social Committee Mr. Hilal al Kharusi Oman Rolling Mill Company - Chairman Takamul Investment Company - Vice Chairman Bharat Oman Refineries Limited - Vice Chairman Oman Gas Company - Director Oman India Fertilizers Company - Director Sohar Aluminum Company - Director Mr. Mengrong Cheng IEC MSB Chinese Committee - Member State Grid Corporation of China - Co-head, Dept. of International Cooperation, member of the overseas investment management committee Mr. Haibin Wan State Grid European Office - Deputy Director General Mr. Luís Palha da Silva Jerónimo Martins Group - Member of the Board of Directors, Chairman of the Corporate Responsibility Committee and Member of the Evaluation and Appointments Committee Mr. Emílio Rui Vilar Centro Português de Fundações President SEDES founder and first President Istituto Português de Corporate Governnace founding member Fundação Calouste Gulbenkian President of the Board of Trustees Partex Oil and Gás (Holdings) Corporation Chairman of the Board of Directors Banco de Portugal Chairman of the Audit Committee The Remuneration Committee is composed of the following members elected by the General Shareholders Meeting held on 27 March 2012, for the term of office: Mr. Carlos Adolfo Coelho Figueiredo Rodrigues (Chairman), Rui Horta e Costa and Pedro Sommer de Carvalho. Mr. Gonçalo João Figueira Morais Soares is now REN s market relations representative. General If documents which are incorporated by reference themselves incorporate any information or other 6

7 documents therein, either expressly or implicitly, such information or other documents will not form part of this Supplement for the purpose of the Prospectus Directive (Directive 2003/71/EC) except where such information or other documents are specifically incorporated by reference or attached to this Supplement. To the extent that there is any inconsistency between (a) any statement in this Supplement or any statement incorporated by reference into the Base Prospectus by this Supplement and (b) any other statement in or incorporated by reference in the Base Prospectus, the statements in (a) above will prevail. Save as disclosed in this Supplement, there has been no other significant new factor, material mistake or inaccuracy relating to information included in the Base Prospectus which may require the submission of a supplementary prospectus in accordance with section 87G of the FSMA. In accordance with section 87Q(4) of the FSMA, investors who have agreed to purchase or subscribe for any Notes before this Supplement is published have the right, exercisable before the end of the period of two working days beginning with the working day after the date on which this Supplement was published, to withdraw their acceptances. 7