Colombia - Guavio Hydro Power Project : Loan 2008 - Sponsors" Agreement - Conformed

OFFI CIAL -D TS LOAN NUMBER 2008 CO Sponsors' Agreement (Guavio Hydro Power Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and INTERCONEXION ELECTRICA S.A. EMPRESAS PUBLICAS DE MEDELLIN CORPORACION AUTONOMA REGIONAL DEL CAUCA INSTITUTO COLOMBIANO DE ENERGIA ELECTRICA CORPORACION ELECTRICA DE LA COSTA ATLANTICA EMPRESA DE ENERGIA ELECTRICA DE BGOTA Dated , 1982 LOAN NUMBER 2008 CO SPONSORS' AGREEMENT AGREEMENT, dated jP , 1982, between INTERNATIONAL BANK FOR RECONSTRUCTION DEVELOPMENT (hereinafter called the Bank) and INTERCONEXION ELECTRICA S.A. (hereinafter called ISA), EMPRESAS PUBLICAS DE MEDELLIN (hereinafter called EPM), CORPORACION AUTONOMA REGIONAL DEL CAUCA (hereinafter called CVC), INSTITUTO COLOMBIANO DE ENERGIA ELECTRICA (hereinafter called ICEL), CORPORACION ELECTRICA DE LA COSTA ATLANTICA (hereinafter called CORELCA) and EMPRESA DE ENERGIA ELECTRICA DE BOGOTA (here- inafter called EEEB) (acting in its capacity as shareholder of ISA and not as Borrower under the Loan Agreement), (ISA, EPM, CVC, ICEL, CORELCA and EEEB hereinafter sometimes collectively called the Sponsors). WHEREAS by the Loan Agreement of even date herewith between the Bank and Empresa de Energia E16ctrica de Bogotf (here- inafter called the Borrower), the Bank has agreed to make to the Borrower a loan in various currencies equivalent to three hundred fifty-nine million dollars ($359,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Sponsors agree to extend to the Borrower additional financing as hereinafter provided; WHEREAS by the Guarantee Agreement of even date herewith the Guarantor has agreed to guarantee the obligations of the Borrower in the Loan Agreement contained, on the terms and conditions therein set forth, and only to the extent set forth in the Guarantee Agreement; and WHEREAS the Sponsors, in consideration of the Bank's entering into the Loan Agreement with the Borrower, have agreed to undertake the obligations in this Agreement contained, but only to the extent set forth therein; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated October 27, 1980, as modified by Section 1.01 of -2- the Loan Agreement, and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Section 2.01. Each Sponsor shall exercise its rights and powers as a Sponsor and every other right, power or remedy avail- able to it to cause the Borrower punctually to carry out Part A of the Project, and shall not take any action which would prevent or interfere with such performance by the Borrower. ARTICLE III Section 3.01. The Sponsors shall enter into the Guavio Participation Agreement, the terms and conditions of which shall be satisfactory to the Bank, such terms and conditions to include, inter alia: (a) the issuance and delivery by the Borrower of partici- pations to ISA, on behalf of the other Sponsors, in an amount equivalent to forty per cent (40%) of the estimated local expenditures for the Project; (b) the purchase of such participations of the Borrower by ISA, on behalf of the other Sponsors, and the purchase by the other Sponsors from ISA of such participations in such proportion as set forth in the Guavio Participation Agreement; (c) the right of ISA, on behalf of the other Sponsors, to purchase forty per cent (40%) of the power capacity and generation of electricity of the Guavio hydroelectric plant; and (d) the participation by ISA, on behalf of the other Sponsors, in the financial return on the operation of the Guavio hydroelectric plant. ARTICLE IV Section 4.01. (a) The Bank and each Sponsor shall cooperate fully to ensure that the purposes of Part A of the Project will be accomplished. To that end, the Bank and each Sponsor shall from time to time, at the request of either party, exchange views with regard to the performance by the Borrower in regard to Part A of the Project, the administration, operations and financial condition of such Sponsor and other matters relating to the purposes of the Loan. (b) Each Sponsor shall furnish or cause to be furnished to the Bank all such information as the Bank shall reasonably request concerning the matters specified in paragraph (a) of this Section. (c) Each Sponsor shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of Part A of the Project or the performance by such Sponsor of its obligations under this Agreement. ARTICLE V Section 5.01. Until the Project shall have been completed, each Sponsor shall: (1) inform the Bank on any proposal of the Sponsor to make any capital expenditure- for increasing its power generating capacity by more than one hundred megawatts in the case of EPM, CVC, ICEL and CORELCA, and two hundred megawatts in the case of ISA; (ii) afford the Bank a reasonable opportunity to comment. on any such proposal; and (iii) not commit itself to any such capital expenditure unless the proposed expenditure is economically justified as part of the National Power Expansion Program and the Sponsor has obtained financing under terms and conditions which will not materially and adversely affect its financial condition and the performance of its obligations under this Agreement or any other agreement between the Bank and any Sponsor. Section 5.02. Except as the Guarantor, the Bank and the pertinent Sponsor shall otherwise agree: (a) EPM, CVC, CORELCA and ISA shall establish and maintain tariffs and charges for the supply and sale of electricity which will generate for each of them annual returns at the following rates, on the average net current value of their respective assets in operation, calculated in accordance with the method outlined in the Schedule to this Agreement: (i) EPM, at least ten percent (10%) in the 1982 fiscal year, fourteen percent (14%) in the 1983 -4- and 1984 fiscal years, and twelve percent (12%) in the 1985 fiscal year and thereafter; (ii) CVC, at least nine percent (9%) in the 1982 fiscal year and thereafter; (iii) CORELCA, at least seven and one-half percent (7.5%) in the 1982 fiscal year and eleven percent (11%) in the 1983 fiscal year and thereafter; and (iv) ISA, at least nine ,percent (9%) in the 1982 fiscal year and thereafter. (b) The Sponsors referred to in paragraph (a) above shall, within the first two months of each quarter of the fiscal year, review the adequacy of their respective tariffs and charges to produce the annual returns required under such paragraph (a) and shall furnish to the Bank the results of such review. (c) If any such review shall show that any of the Sponsors referred to in paragraph (a) above would not earn the annual return required under such paragraph (a) in the course of the twelve-month period commencing with such calendar quarter, such Sponsor shall adjust its tariffs and charges in such a manner as to achieve the respective target specified in such paragraph (a), and the adjusted tariffs and charges shall be brought into effect not later than the end of the following quarter. Section 5.03. Each Sponsor shall punctually perform, jointly with the Borrower and the other Sponsors, the obligations set forth in the Guavio Participation Agreement. Section 5.04. Each Sponsor shall furnish the Borrower, promptly as needed, the information for the preparation by the Borrower of the quarterly reports referred to in paragraph (c) of Section 3.05 of the Loan Agreement. Section 5.05. Each Sponsor shall not take any action which would prevent or interfere with the performance by any Sponsor of its obligations under this Agreement. -5- Section 5.06. Each of the Sponsors shall take all reasonable and appropriate action required on its part for the achievement of the objectives of Section 3.07 of the Guarantee Agreement. Section 5.07. The Sponsors shall give all necessary assis- tance to the Guarantor for the carrying out of the study referred to in Section 3.08 of the Guarantee Agreement. ARTICLE VI Section 6.01. This Agreement shall come into force and effect on the Effective Date referred to in Section 8.03 of the Loan Agreement. Section 6.02. This Agreement and the obligations of the parties hereunder shall terminate when the Loan Agreement shall terminate in accordance with its terms. Section 6.03. Notwithstanding any cancellation or suspension pursuant to Article VI of the General Conditions, all the provi- sions of the Sponsors' Agreement shall continue in full force and effect. Section 6.04. Any notice or request required or permitted to be given or made under this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall have been delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified, or at such other address as such party shall have designated by notice to the party giving such notice or making such request. Section 6.05. The obligations of each Sponsor under this Agreement shall not be discharged except by performance and then only to the extent of such performance. Such obligations shall not be subject to any prior notice to, demand upon or action against the Borrower or the Guarantor or to any prior notice or demand upon any Sponsor, and shall not be impaired by any of the follow- ing: any extension of time, forbearance or concession given to the Borrower or the Guarantor or any other Sponsor; any assertion of, or failure to assert, or delay in asserting any right, power or remedy against the Borrower or the Guarantor or any other Sponsor or in respect of any security for the Loan; any modifica- tion or amplification of the provisions of the Loan Agreement or the Guarantee Agreement contemplated by the terms thereof; any -6- failure of the Borrower to comply with any requirement of any law, regulation or order of the Guarantor or of any political subdivision or agency of the Guarantor. Section 6.06. Each Sponsor shall furnish to the Bank suffi- cient evidence of the authority of the person or persons who will, on behalf of such Sponsor, take any action or execute any documents required or permitted to be taken or executed by such Sponsor under this Agreement and the authenticated specimen signature of each such person. Section 6.07. The following addresses are specified for the purposes of Section 6.04 of this Agreement: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Sponsors: (i) Interconexi6n El6ctrica S.A. Calle 50 - No. 50-21 (Piso 13) Medellin Colombia Cable address: Telex: ISA 06559 Medellfn (ii) Empresas PGhlicas de Medellin. Calle 53 - No. 5216 Medellfn Colombia -7- Cable.address: Telex: EMPRESAS 06649 Medellin (iii) Corporaci6n Aut6noma Regional del Cauca Apartado Aéreo 1545 Cali Colombia Cable address: Telex: PLAN 055708 Cali (iv) Instituto Colombiano de Energía Eléctrica Carrera 13 - No. 27-00 Bogotá Colombia Cable address: Telex: ICEL 043319 Bogotá (v) Corporación Eléctrica de la Costa Atlántica Apartado Aéreo 2741 Barranquilla Colombia Cable address: Telex: CORELCA 033309 Barranquilla (vi) Empresa de Energía Eléctrica de Bogotá Calle 13 - No. 37-35 Apartado Aéreo 4453 Bogotá Colombia Cable address: Telex: ENERGIA 041242 Bogotá -8- IN WITNESS WHEREOF the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the city of Bogot&, Republic of Colombia, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Authorized Representative INTERCONEXION ELECTRICA S.A. By uthorized Representative EMPRESAS PUBLICAS DE MEDELLIN Authorized Representative CORPORACION AUTONOMA REGIONAL DEL CAUCA By Authorized Representative -9- INSTITUTO COLOMBIANO DE ENERGIA ELECTRICA By Authorized Representative CORPORACION ELECTRICA DE LA COSTA ATLANTICA By Authorized Representative EMPRESA DE ENERGIA ELECTRICA DE BOGOTA By Authorized Representative - 10 - SCHEDULE Method for Calculating Rate of Return of Sponsors 1. The annual returns specified in Section 5.02 of the Sponsors' Agreement will be calculated, in each calendar quarter in respect of the twelve-month period beginning with such quarter and the twelve-month period immediately preceding, by using as the denominator the average between the net current values of the respective fixed assets in operation at the beginning and at the end of each such period and as numerator the operating income of the Sponsor for the same period. 2. Any shortfall or overrun in the required annual return for the twelve-month period immediately preceding the quarter in which the calculation is to be made will be carried forward and sub- tracted or added, as the case may be, to the numerator used for the forthcoming twelve-month period. 3. "Operating income" will be the difference between all revenues from the sale of electricity, and all administrative and operating costs relating thereto, including maintenance and adequate provision for straight-line depreciation on the average gross value of revalued fixed assets in operation, but excluding interest and other charges. 4. The net current value of fixed assets in operation will be at any given date their gross value less accumulated depreciation to such date, as revalued and depreciated in accordance with para- graphs 5 and 6 below. 5. Until another method, satisfactory to the Bank, for the maintenance of value of assets of public utilities shall have been made applicable to the Sponsor, the gross value of the fixed assets in operation and works in progress of ISA, EPM, CVC (including its subsidiary Central Hidroelfctrica del Rio Anchicayf Ltda.), ICEL, and CORELCA will be revalued quarterly in accordance with the corresponding variations in the Indice nacional de precios al consumidor - Obreros, published by the Departamento Administrativo Nacional de Estadistica of the Guarantor, or a similar index approved by the Bank, to the last month preceding the quarter in which the calculation is to be made. For the purposes of this calculation, as of December 31, 1976: - 11 - (a) the aggregate gross value of each Sponsor's fixed assets in operation will be fixed in pesos as follows: (i) ISA, one thousand eight hundred thirty-three million pesos (Col.$1,833,000,000); (ii) EPM, eight thousand forty-four million pesos (Col.$8,044,000,000); (iii) CVC (including its subsidiary Central Hidroel6c- trica del Rio Anchicay& Ltda.), nine thousand four hundred fifty-nine million pesos (Col.$9,459,000,000); and (iv) CORELCA, two thousand nine hundred forty-five million pesos (Col.$2,945,000,000). (b) the aggregate gross value of each Sponsor's fixed assets in construction will be fixed in pesos as follows: (i) ISA, ten thousand four hundred sixty-four million pesos (Col.$10,464,000,000); (ii) EPM, three thousand one hundred forty-eight million pesos (Col.$3,148,000,000); (iii) CVC (including its subsidiary Central Hidroel6c- trica del Rio Anchicayl Ltda.), one hundred sixty-three million pesos (Col.$163,000,000); and (iv) CORELCA, one thousand three hundred seventy-three million pesos (Col.$1,373,000,000); (c) the accumulated depreciation on the assets in (a) hereof will be fixed in pesos as follows: (i) ISA, two hundred eleven million pesos (Col.$211,000,000); (ii) EPM, one thousand seven hundred seventy-nine million pesos (Col.$1,779,000,000); (iii) CVC (including its subsidiary Central Hidroelfc- trica del Rio Anchicaya Ltda.), one thousand - 12 - three hundred eighty-seven million pesos (Col.$1,387,000,000); and (iv) CORELCA, three hundred fifty million pesos (Col. $350, 000, 000). 6. ISA, EPM, CVC (including its subsidiary Central Hidroel6c- trica del Rio Anchicayl Ltda.) and CORELCA will each furnish to the Bank during the first quarter of each fiscal year a report on the revaluation of its assets through the end of the preceding fiscal year. 7. Depreciation will be charged on a straight-line basis over the estimated useful life of the Sponsor's fixed assets. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this e L day of U 4, 198 A. FORSECRETARY