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Jáuregui y Del Valle

BORDO PONIENTE LANDFILL

This Informational Notice refers to the Project of biogas utilization in the landfill known as Bordo Poniente IV Etapa (the “Bordo Poniente”).

I. Background and environmental condition of the Bordo Poniente

Since 1994 and through the month of December 2011, the Bordo Poniente Landfill received daily approximately 12 thousand tons of waste. Currently, it is estimated that the landfill stores approximately 76 million of solid urban waste (“SUW”) distributed within a surface of 375 hectares of federal land concessioned to the Government of the Federal District (the “GDF”) by the National Water Commission.

The Bordo Poniente is located in the lakebed of the ancient Texcoco Lake.

The current over-capacity of SUW at the Bordo Poniente might affect the hydraulic infrastructure and the geomembrane of the landfill, producing the leakage of leachates and the pollution of aquifers.[1]

Likewise, waste decomposition produces emissions of methane gas, currently without any existing capture system.

The environmental and health risk that the current situation of the Bordo Poniente represents evidences the urgency to carry out actions tending to the control of leachates and damaging emissions.

II. Needs and actions carried out by the government

In view of the condition described, the GDF committed to carrying out actions in order to close the Bordo Poniente landfill and use the biogas produced by the SUW.

On February 27, 2012, the GDF published a call for the Bid for the purpose of issuing a concession (the “Concession”) regarding the SUW in the Bordo Poniente, including the development and operation of the biogas project (the “Project”) consisting in the capture, exploitation and utilization of biogas as fuel or energy.

The Awardee of the Bid will also be responsible for the corresponding registration of the Project in order to obtain carbon bonds.

The Concession will be in effect for a period of 25 years.

According to the Bid called, any Mexican or foreign business may participate as bidders of the Concession through a Mexican legal entity which will ultimately be, as an Awardee of the Bid, the holder of the Concession Title. The Bid Bases will be made public within two days as of the date of this Informational Notice, that is, on March 29, 2012 and available for purchase until April 4, 2012.

The name of the Awardee will be made public on July 24, 2012. On the same date, the GDF will issue the Concession Title to such Awardee.

Upon the Project reaching the end of its useful life, the landfill will be closed according with the procedure established in the Mexican Official Standard NOM-083-SEMARNAT-2003- Specifications for the environmental protection of the site, design, construction, monitoring, closure, and complementary works of a site for final disposition of the “SWU” and in its case the disposal of waste of special management.

Upon closure of the landfill as above-mentioned, it will be dedicated to a green area.

III. Generation capacity and viability of the Project

Pursuant to the Climate Action Program of Mexico City 2008-2012 it is estimated that the utilization of the biogas produced by the SUW in the Bordo Poniente, will represent a reduction of approximately 1.4 million tons of CO2 eq/year.

As for the viability of electricity generation with the biogas produced by the SUW in the Bordo Poniente, the Electricity Research Institute (Instituto de Investigaciones Eléctricas) (the “IIE”) has carried out a study (the “Study”) whereby it concludes the possibility of installing and operating a combined cycle plant with capacity of 62.5 MW and an annual average generation of 500 million MWh during the next 20 years.[2]

Such IIE study deems possible that the energy generated in the Bordo Poniente may be used as follows: 50% toward public street lighting, 20% for the metro system, 15% toward pumping of wastewater, and 15% for secondary purposes.[3]

With regard to the profitability of the Project, the IIE assumes that the average prices applicable to the uses above-mentioned and the trade of carbon bonds make feasible the viability and financial productivity of the Project.[4]

1 Press releases from the Federal Attorney General’s Office for Environmental Protection (Procuraduría Federal de Protección al Ambiente) National Water Commission (Comisión Nacional del Agua) on January 20, 212 and March 1, 2012 respectively: www.conagua.gob.mx/~/ComunicadodePrensaNo.075-12.pdf and www.profepa.gob.mx/~/~resultados_de_la_visita_de_inspeccion_al_relleno_sanitario_bordo_poniente.html

2 http://www.iie.org.mx/boletin042008/brev01.pdf

3 Ídem.

4 Ídem.