



                            (Unofficial Translation)

                     CONTRACT OF PURCHASE AND SALE OF STOCK
           COMPANHIA CENTRO-OESTE DE DISTRIBUICAO DE ENERGIA ELETRICA



This document is herewith signed in due form of law by:


on the one hand:

the COMPANHIA  ESTADUAL DE ENERGIA  ELETRICA - CEEE, the public services utility
company for the  generation,  transmission  and  distribution of electric power,
with  head  offices  in  Porto  Alegre,  Rio  Grande  do Sul  State,  at  Centro
Administrativo  Engenheiro  Noe de  Mello  Freitas,  in  Avenida  Joaquim  Porto
Villanova, 201, Building "C", Bairro Jardim Carvalho, registered on the Treasury
Ministry  Corporate  Tax-Payers'  Roll  under  CGC/MF  N(0)  92.715.812/0001-31,
represented  herein by its  Financial  Director,  Mr. Jairo da Silva Dutra,  and
hereinafter  called the SELLER;  having as intervening party, the Secretariat of
Energy,  Mines and  Communications and the Director Counsel of Reforming Program
of the Estate;

the STATE OF RIO GRANDE DO SUL, an institution set up under  Brazilian  Internal
Public Law, with head offices in the City of Porto Alegre,  Estate of Rio Grande
do Sul,  in Palacio  Pyratini,  at Praca  Marechal  Deodoro,  registered  on the
Treasury    Ministry    Corporate    Tax-Payers'    Roll   under   CGC/MF   N(0)
90.010.900/0001-00,  represented  herein  by the  State  Governor,  Mr.  Antonio
Britto, and hereinafter called the INTERVENOR;

and, on the other hand:

AES GUAIBA  EMPREENDIMENTOS  LTDA.,  a company  organized and existing under the
laws of the  Federative  Republic of Brazil,  with head  offices in the City and
State of Sao Paulo, at Avenida Roque Petroni Junior,  999, 2nd floor, suite "D",
registered on the Treasury Ministry Corporate Tax-Payers' Roll under CGC/MF N(0)
02.126.176/0001-10,  represented  herein by its General Manager,  Mr. Luiz David
Travesso, Brazilian citizen, married, engineer, bearer at Identity Card RG under
n(0)  8.857.240  (SSP/SP),  enrolled  with the CPF/MF under  n(0)082.892.468-62,
hereinafter called the PURCHASER;

Whereas COMPANHIA CENTRO-OESTE DE DISTRIBUICAO DE ENERGIA ELETRICA was set up as
a result of the corporate and asset restructuring of the SELLER as authorized by
State Law n(0) 10,900 issued on 26 December 1996;

Whereas the common shares  representing stock control of COMPANHIA  CENTRO-OESTE
DE  DISTRIBUICAO  DE ENERGIA  ELETRICA owned by the STATE were sold at a special
public  Auction  for the  highest  bid  (Auction)  held on October  21,  1997 in
compliance with the legislation  applicable thereto and the terms of PUBLICATION
N(0)  COD-05/97  prepared by the Steering  Committee of the State Reform Program
(PUBLICATION), which forms an integral part of this Contract;

Whereas the PURCHASER was the winning bidder in the above-mentioned  Auction and
thus became the majority  shareholder in COMPANHIA  CENTRO-OESTE DE DISTRIBUICAO
DE ENERGIA ELETRICA;

The Parties  herewith  resolve to sign this  CONTRACT  OF  PURCHASE  AND SALE OF
SHARES, which will be regulated by the following clauses and conditions:


CLAUSE ONE - PURPOSE OF THE CONTRACT

The SELLER is the owner with clear and unencumbered  title,  free of third party
rights or  restrictions  of any type,  of  487,585,814  (four hundred and eighty
seven  million,  five  hundred and eighty five  thousand  and eight  hundred and
fourteen)  common shares issued by COMPANHIA  CENTRO-OESTE  DE  DISTRIBUICAO  DE
ENERGIA  ELETRICA,  corresponding  to around  90.91%  (ninety point nine one per
cent) of the voting capital, with such stocks hereinafter called the SHARES.

By this deed the SELLER sells to the  PURCHASER all the  above-mentioned  SHARES
for the price of R$ 1,510,000,000.00  which is herewith paid by the PURCHASER to
the SELLER in Brazilian  currency,  by means of release of resources with Camara
de Liquidacao e Custodia S/A - CLC.


CLAUSE TWO - RESPONSIBILITY FOR HIDDEN LIABILITIES, INSUFFICIENT ASSETS AND
SUBSEQUENT CONTINGENCIES

As the Seller of the common shares of COMPANHIA CENTRO-OESTE, COMPANHIA ESTADUAL
DE ENERGIA ELETRICA - CEEE undertakes  responsibility for settling debts arising
from decisions handed down through to 11 August 1997, in court cases being heard
as part of the labor claims brought against the Company by employees transferred
to the above-mentioned COMPANHIA CENTRO-OESTE, even though the court rulings are
effective after this date. The obligation to settle possible  outstanding  debts
is limited to the period during which the employee worked at CEEE, meaning until
11 August 1997, with COMPANHIA  CENTRO-OESTE  being responsible for settling any
debts  arising from periods  subsequent to 11 August 1997 through to the date of
the effective payment of the debt.

With the exception of the obligations  undertaken as laid out above, the SELLER,
as the owner of the  shares  sod  hereunder,  shall not be liable  for any other
hidden liabilities, insufficient assets or subsequent contingencies of COMPANHIA
CENTRO-OESTE,   regardless   of  whether  or  not  they  are  mentioned  in  the
PUBLICATION.


CLAUSE THREE  - SPECIAL OBLIGATIONS OF THE SELLER

I - The SELLER agrees to sign the  documents  required to carry out and formally
complete the sale to the PURCHASER of the SHARES covered by this CONTRACT.

II - The SELLER agrees to assume  responsibility  for any  obligations  deriving
from the SHARES covered by this Contract in existence up to the date of transfer
thereof,  but does not accept liability for obligations that may arise therefrom
after this date.


CLAUSE FOUR - SPECIAL OBLIGATIONS OF THE PURCHASER

The  PURCHASER  and the  heirs and  successors  thereto  of any type,  including
through later assignment and transfer of the shares, will be jointly bound in an
irrevocable  and  irretractable  manner  to  comply  strictly  with the  special
obligations  stipulated  in Item 4.3.  of  PUBLICATION  N(0)  COD-05/97  and the
Annexes thereto, which form an integral part of this Contract.


CLAUSE FIVE - SUCCESSION

The  obligations  stipulated in this Contract  should be undertaken by any third
party that acquires ownership of the SHARES acquired hereunder by the PURCHASER,
representing  stock  control,  under  penalty of declaring  the transfer of such
shares thereto null and void.

The PURCHASER also agree to note in the margin of the SHARE records in the Share
Registration Book of COMPANHIA  CENTRO-OESTE or on the respective  certificates,
the  following  words in  Portuguese:  The shares  covered by these  records (or
Certificate)  are subject to the provisions in the CUSTOMER OF PURCHASE AND SALE
OF SHARES signed by the SELLER and AES GUAIBA  EMPREENDIMENTOS LTDA., on October
27, 1997.


CLAUSE SIX -  IRREVOCABILITY

The sale of SHARES  covered by this Contract is irrevocable  and  irretractable,
binding the Parties thereto and their  successors of any type to compliance with
the clauses agreed herein of any type, with specific execution.


CLAUSE SEVEN  -  LAW COURTS

The  Parties  elect the Law Courts of the City of Porto  Alegre,  capital of the
State of Rio  Grande do Sul,  as  competent  to resolve  any doubts or  disputes
arising from this Contract, waiving any other, no matter how privileged.

Being in full and fair agreement, the Parties sign this deed in 3 (three) copies
of identical form and content, in the presence of the undersigned witnesses.

Porto Alegre, October 27, 1997.

                  COMPANHIA ESTADUAL DE ENERGIA ELETRICA - CEEE

                   -------------------------------------------
                                Pedro Bisch Neto,
                               Director President.

                   -------------------------------------------
                              Jairo da Silva Dutra,
                               Financial Director.

                 SECRETARIAT OF ENERGY, MINES AND COMMUNICATIONS

                   -------------------------------------------
                             Assis Roberto de Souza,
                             Secretary of the State.

               DIRECTOR COUNSEL OF REFORMING PROGRAM OF THE ESTATE

                   -------------------------------------------
                             Assis Roberto de Souza,
                                   President.

                   -------------------------------------------
                                 Cezar Busatto,
                            Counsellor of COD-PRE and
                        Secretary of the Public Treasury.

                           STATE OF RIO GRANDE DO SUL

                   -------------------------------------------
                                 Antonio Britto,
                                 State Governor.

                                    PURCHASER

                   -------------------------------------------
                              Luiz David Travesso,
                                General Manager.


Witnesses:
1.________________________          2.__________________________
Name: Helio Campos                    Name: Mario Rache Freitas
CPF: 292.869.210-04                   CPF: 333.959.690-53


