Bolivia - Thrid Ende Power Project : Credit 0433 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 433 BO Development Credit Agreement (Third ENDE Power Project) BETWEEN REPUBLIC OF BOLIVIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED OCTOBER 17, 1973 CONFORMED COPY CREDIT NUMBER 433 BO Development Credit Agreement (Third ENDE Power Project) BETWEEN REPUBLIC OF BOLIVIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED OCTOBER 17, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated October 17, 1973, between REPUBLIC OF BOLIVIA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) The Project will be carried out by Empresa Nacional de Electricidad S.A. (hereinafter called ENDE) and by the Direcci6n Nacional de Electricidad of the Borrower (hereinafter called DINE) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to ENDE and DINE the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and ENDE; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the deletion of Sections 5.01 and 6.02(h) thereof and to the renumbering of Section 6.02(i) into 6.02(h) thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: 4 (a) "Project Agreement" means the agreement between the Association and ENDE of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ENDE pursuant to Section 3.01(b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (c) "Electricity Code" means the Codigo de Electricidad (Supreme Decree No. 08438) dated July 31, 1968 of the Borrower; (d) "Second ENDE Power Credit" means the Development Credit Agreement between the Borrower and the Association dated April 28, 1969; and (e) "Supreme Decrees" means the Supreme Decrees Nos. 05999, 06793, 07591 and 10388 of the Borrower dated February 9, 1962, June 9, 1964, April 20, 1966 and July 31, 1972, respectively. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to six million dollars ($6,C000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services required for the Project and to be financed out of the proceeds of the Credit shall be procured pursuant to the provisions set forth or referred to in Section 2.04 of the Project Agreement. 5 Section 2.04. The Closing Date shall be December 31, 1976, or such other date as shall be agreed between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 15 and October 15 commencing October 15, 1983 and ending April 15, 2023, each installment to and including the installment payable on April 15, 1993 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause ENDE to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable ENDE to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend to ENDE such portion of the proceeds of the Credit as shall be disbursed from the Credit Account for Part I of the Project tinder a subsidiary loan agreement to be entered into between the Borrower and ENDE under terms and conditions which shall have been approved by the Association. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the 6 Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. (d) The Borrower shall: (i) relend to DINE under terms and conditions satisfactory to the Association such portion of the proceeds of the Credit as shall be disbursed from the Credit Account for Part II of the Project, and (ii) shall cause DINE to carry out Part II of the Project with due diligence and efficiency and with the assistance of consultants acceptable to the Association employed on terms and conditions satisfactory to the Association. Section 3.02. Except as the Association shall otherwise agree, the Borrower shall from time to time take all action necessary to cause ENDE to be granted and to cause to be maintained, electric tariffs designed to produce revenues sufficient to provide ENDE with a rate of return of nine per cent (9%) in accordance with the provisions of the Electricity Code. ARTICLE IV Consultation, Information and Inspection Section 4.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by ENDE of its obligations under the Project Agreement, the carrying out of Part II of the Project by DINE, the administration, operations and financial condition of ENDE and, in respect of Part II of the Project, of DINE, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 4.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request 7 concerning the administration, operations and financial condition of ENDE and, in respect of Part II of the Project, of DINE. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement, the performance by ENDE of its obligations under the Project Agreement and the Subsidiary Loan Agreement, or the carrying out of Part II of the Project by DINE. Section 4.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE V Taxes and Restrictions Section 5.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 5.02. The Development Credit Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 5.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VI Remedies of the Association Section 6.01. If any event specified in Section 7.01 of the General Conditions or in Section 6.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately 8 together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 6.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) A default shall occur in the performance of any covenant or agreement under the Project Agreement by ENDE or under the Subsidiary Loan Agreement by either party thereto. (b) An extraordinary situation shall arise which shall make it improbable that ENDE will be able to perform its obligations under the Project Agreement. (c) The Electricity Code or any of the Supreme Decrees shall be amended, suspended, abrogated or repealed without the prior agreement of the Association in such a way (i) as to materially and adversely affect (A) the ability of ENDE to carry out the covenants, agreements and obligations set forth in the Project Agreement, or (B) the financial condition of power enterprises operating in Bolivia, or (ii) as to affect DINE's functions or responsibilities provided therein. (d) ENDE's Estatutos shall have been amended without the prior agreement of the Association in such a way as (i) to materially and adversely affect ENDE's ability to carry out the Project or the efficiency of ENDE's operations, or (ii) to modify the provisions regarding the appointment of ENDE's Gerente General. (e) The Borrower shall have required ENDE's Gerente General to be appointed in a manner other than the one provided by ENDE's Estatutos. (f) An event specified in Section 5.02(d) or (f) of the Second ENDE Power Credit shall occur. Section 6.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) any event specified in paragraph (a) of Section 6.02 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraphs (c), (d), (e) and (f) of Section 6.02 of this Agreement shall occur. 9 ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of ENDE have been duly authorized or ratified by all necessary corporate and governmental action. (b) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and ENDE, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. Section 7.02. The following are specified as additional matters, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ENDE, and constitutes a valid and binding obligation of ENDE in accordance with its terms. (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ENDE, respectively, and constitutes a valid and binding obligation of the Borrower and ENDE in accordance with its terms. Section 7.03. The date January 18, 1974 is hereby specified for the purposes of Sectioii 10.04 of the General Conditions. Section 7.04. The obligations of the Borrower under Sections 3.01 and 3.02 of this Agreement and the provisions of Sections 6.02 and 6.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. 10 ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Ministerio de Finanzas La Paz Bolivia Cable address: MINFINANZAS La Paz For the Association: International Development Association :818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 11 in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF BOLIVIA By /s/ Edmundo Valencia Ibifez Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Gerald Alter Regional Vice President Latin America and the Caribbean 12 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated %0 Of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Material, equip- 2,785,000 100% of foreign ment and installa- expenditures tion for Part L.A of the Project II. Expenditures for Part I.B of the Project: (a) Material 1,290,000 100% of total and equip- expenditures ment (b) Installation 11000 100% of foreign expenditures III. Material and 130,000 100% of foreign equipment for expenditures Part I.C of the Project IV. Consultants' serv- ices for ENDE: (a) for Parts L.A and LB of the 30001%ofrei Project (b) for Parts I.D and I.E of the 50001%ofrei Project V. Consultants' serv- 80,000 100% of foreign ices for DINE for expenditures Part II. of the Project VI. Unallocated 695,000 TOTAL 6,00 o000 13 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; and (b) the term "total expenditures" means the aggregate of foreign expenditures and of expenditures for goods produced in, or services supplied from, the territories of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Category IV on account of expenditures incurred after January 1, 1973 in an aggregate amount not exceeding the equivalent of $50,000; and (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and (c) if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.04 of the Project Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the 14 Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 15 SCHEDULE 2 Description of the Project Part I.: ENDE's Part of the Project Part I. of the Project is included in ENDE's expansion program for the years 1973 through 1977 and consists of the following: A: Gas Turbines The supply and installation in ENDE's diesel power plant at Santa Cruz of two gas turbine units having each a capacity of about 8 MW, and the construction of an addition to said plant. B: Power Transmission Lines and Substations 1. The construction of a 22 km extension from Warnes to Montero of the existing 66 kV power transmission line from Santa Cruz to Warnes, and the expansion of the substation at Santa Cruz, Warnes and Montero. 2. The construction of a 40 km single-circuit 115 kV power transmission line between ENDE's Santa Isabel hydroelectric plant and the Sacaba substation, and the expansion (including shunt capacitor compensation) of substations at Catavi, Huanani, Machacamarca and Oruro. 3. The construction of a 45 km single circuit 66 kV power transmission line between the Miguillas and Viloco substations. C: Office Building The construction of a two-story office building covering an area of about 2,170 m2 at Cochabamba. D: Studies The carrying out of the following studies: 1. A study of the interconnection of ENDE's central and northern electric power systems. 16 2. An engineering study of the expansion of ENDE's Corani hydroelectric plant. 3. Feasibility studies of new power generating facilities for ENDE. E: Management Improvement The improvement of the administrative and operating procedures and of the reporting practices of ENDE. Part II.: DINE's Part of the Project A: Studies 1. Studies of the present and future availability, prices and consumption of energy by sources in the Borrower's territories. 2. Studies of the present and future organization of the Borrower's power sector. B: Management Improvement The improvement of DINE's administrative and regulatory procedures and practices. The Project is expected to be completed by December 31, 1975.