NB Power

NB Power proceeding with legal action over Orimulsion (05/09/01)

NB 1119

Sept. 1, 2005

FREDERICTON (CNB) - NB Power Holding Corp. is proceeding with legal action with regard to the supply of Orimulsion to its Coleson Cove Generating Station.

The action is being taken against Bitumenes Orinoco, S.A (Bitor), Petroleos de Venezuela S.A. (PDVSA) and the Bolivarian Republic of Venezuela.

A previously filed legal suit was suspended about one year ago in an attempt to negotiate a settlement with the Venezuelan suppliers of Orimulsion. Despite intensive efforts, the negotiations have not arrived at a satisfactory settlement.

NB Power is seeking an order for specific performance directing PDVSA and BITOR to perform their obligations under the Fuel Supply Agreement (FSA) or, alternatively, damages for breach of contract in an amount to be determined, but presently estimated at about $2.2 billion.

As an alternative, NB Power is seeking from PDVSA, BITOR and Venezuela, damages for breach of the duty of good faith arising out of the special relationship between the parties and/or damages for negligent misrepresentation in an amount to be determined, but presently estimated at about $560 million.

As a further alternative, NB Power is seeking from PDVSA, BITOR and Venezuela restitution based on the unjust enrichment of the defendants.

Action is being taken simultaneously in New Brunswick and the State of New York. In New Brunswick, the suit has been filed in the Court of Queen's Bench.

NB Power has offered to consent to a stay of the action in New Brunswick if PDVSA and BITOR agree to arbitrate the contract claim in New York in accordance with the Fuel Supply Agreement's arbitration clause. The arbitration would be conducted under the auspices of the American Arbitration Association.

In New Brunswick, NB Power is being represented by Ken McCullogh, Q.C. of the law firm of Stewart McKelvey Stirling and Scales. In New York, legal representation is being handled by the firm of Simpson Thacher & Bartlett LLP.

Whether the matter goes to arbitration or goes forward in New Brunswick, it is expected it will be two to two and a half years before a decision is reached.

05/09/01

MEDIA CONTACT: Brian Duplessis, NB Power, 506-458-4979.

05/09/01