Colombia - Village Electrification Project : Loan 1999 - Loan Agreement - Conformed

0 IC IA LOAN NUMBER 1999 CO DOCUMENT S Loan Agreement (Village Electrification Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and CORPORACION ELECTRICA DE LA COSTA ATLANTICA Dated , 1982 LOAN NUMBER 1999 CO LOAN AGREEMENT AGREEMENT, dated M tL , 1982, between INTERNATIONAL BANK FOR RECONSTRUCTION AWDEVELOPMENT (hereinafter called the Bank) and CORPORACION ELECTRICA DE LA COSTA ATLANTICA (hereinafter called the Borrower). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of part of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) the Borrower owns and effectively controls the majority of the outstanding voting stock or other proprietary interest of Electrificadora de Atlantico, Electrificadora de Bolivar, Electri- ficadora de Cesar, ELectrificadora de Cordoba, Electrificadoea de Guajira, Electrificadora de Magdalena, Electrificadora de San Andres and Providencia and Electrificadora de Sucre (hereinafter sometimes collectively called Electrificadoras); and (C) the Borrower will obtain from Electrificadoras and from other sources assistance in the financing of the balance of the cost of the Project; WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; 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 Loan and Guarantee Agreements of the Bank, dated October 27, 1980, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions): -2- Section 11.03 is amended to read as follows: "Section 11.03. Action on behalf of the Borrower or Guarantor. *Any action required or permitted to be taken, and any documents required or permitted to be executed, pursuant to the Loan Agreement or the Guarantee Agreement, on behalf of the Borrower or the Guarantor, may be taken or executed by the representa- t tve of the Borrower or the Guarantor designated in the Loan Agreement or the Guarantee Agreement for the purposes of this Section or any person thereunto authorized in writing by him. Any modification or amplification of the provisions of the Loan Agreement or the Guarantee Agreement may be agreed to on behalf of the Borrower or the Guarantor by written instrument executed on behalf of the Borrower or the Guarantor by the representative so designated or any person thereunto authorized in writing by him; provided- that such modification or amplification is reasonable in the circumstances 'and will not substantially increase the obligations of the Borrower under the Loan Agreement or of the Guarantor under the Guarantee Agreement." 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: (a) "First Shareholders' Agreement" means the Shareholders' Agreement for Loan No. 1582-CO (San Carlos I Hydro Power Project) of July 14, 1978 between the Bank and Empresa de Energia El&ctrica de BogotS, and Empresas Pfblicas de Medellin and Corporacion Aut6noma Regional del Cauca and Instituto Colombiano de Energia Elictrica and the Borrower (hereinafter called the Shareholders); (b) "Second Shareholders' Agreement" means the Shareholders' Agreement for Loan No. 1725-CO (San Carlos II Hydro Power Project) of November 30, 1979 between the Bank and the Shareholders; (c) "Estatutos" means the estatutos of the Borrower approved by the Guarantor's Decree No. 963 dated June 8, 1972, as amended to the date of this Agreement and as further amended from time to time, under which the Borrower was established and operates; -3- (d) "Subsidiary Agreement" means any agreement entered into between the Borrower and any of the Electrificadoras in accordance ith Section 3.02 of this Agreement; (e) "pesos" and "Col.$" mean pesos in the currency of the Guarantor; (f) "Fiscal Year" means the Borrower's fiscal year, commen- cing January 1 and ending December 31; and (g) "Investment Program" means the investment program of the Borrower for the years 1981 to 1985, as amended to the date of this Agreement. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to thirty-six million dollars ($36,000,060). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed -out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1986 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of nine and three-fifths per cent (9-3/5%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on April 1 and October 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accbrdance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the rroject with due diligence and efficiency and in conformity with appro- priate administrative, financial, engineering and public utility practices. Section 3.02. (a) The Borrower shall enter into a Subsidiary Agreement with each of the Electrificadoras, for defining (A) the financial contribution of Electrificadoras to the cost of the Project and their rights and obligations, and (B) the terms and conditions whereby ownership of the facilities under Part B of the Project will be transferred to the Electrificadoras upon their completion, and including such other terms and conditions as shall be satisfactory to the Bank. (b) The Borrower shall exercise its rights under the Subsi- diary Agreement in such manner as to protect the interest of the Borrower and the Banl nd to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Agreement or any provision thereof. Section 3.03. In order to assist the Borrower in (a) the supervision of the execution of the Project, and (b) the carrying out of Part D of the Project, the Borrower shall employ consul- tants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. -5- Section 3.04. The Borrower shall take all necessary measures to ensure that the Project is carried out with due regard to appropriate ecological and environmental factors. Section 3.05. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incitent to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.06. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to visit the facili- ties and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any rele- vant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reason- ably request concerning the Project, its cost and, where appro- priate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) The Borrower shall: (i) prepare quarterly reports on the execution of the Project and the Borrower's financial conditions, including detailed information on the status of payments to the Borrower from the Guarantor and Electrificadoras; and (ii) furnish to the Bank such reports promptly after their preparation. -6- (d) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Loan, the Bank may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (e) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank, and the Borrower and Electrificadoras of their respective obligations under the Loan Agreement and the Subsidiary Agreement and the accomplishment of the purposes of the Loan. (f) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents. Section 3.07. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire all such land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project. ARTICLE IV Management and Operations of the Borrower Section 4.01. (a) The Borrower shall at all times manage its affairs, maintain its financial position, plan its future expan- sion and carry on its operations in accordance with appropriate business, financial and public utility practices and under the supervision of experienced and competent management assisted by experienced and competent staff in adequate number. -7- (b) The Borrower shall (i) furnish to the Guarantor and the Bank, for their comments, the recommendations emanating from the current study of the administrative and managerial procedures of the Borrower, Electrificadora de Atlantico, Electrificadora de Bolivar and Electrificadora de Magdalena; and (ii) not later than December 31, 1982, give effect to such recommendations as it shall decide to be appropriate, taking into account the comments of the Guarantor and the Bank. (c) The Borrower shall take all action as shall be required to strengthen the management, organization, planning and opera- tions of Electrificadoras. Section 4.02. (a) The Borrower shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary in the conduct of its business. (b) The Borrower shall take all action, including the provision of funds and other resources, to ensure that its faci- lities, equipment and property are operated, maintained, renewed and repaired in accordance with appropriate public utility and engineering practices. (c) Except as the Bank shall otherwise agree, the Borrower shall not sell, lease, transfer or otherwise dispose of any of its property or assets which shall be required for the efficient operation of its business and undertaking, including the facili- ties to be constructed under Part A of the Project. Section 4.03. The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE V Financial and Other Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.02. The Borrower shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in -8- accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satis- factory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 5.04. The Borrower shall, until the Project has been completed: (a) (i) Inform the Bank of any proposal to make any capital expenditure for increasing its power generating capacity by more than one hundred megawatts; (ii) afford the Bank a reasonable opportunity to comment on any such proposal before commiting itself to such expenditure; and (iii) not commit itself to any such capital expenditure unless the proposed expenditure is economically justified as part of the national power expansion -9- program of the Guarantor and the Borrower has obtained financing under terms and conditions which shall not materially and adversely affect its financial condition or its operations, including the carrying out of the Project. (b) Obtain the concurrence of the Bank before committing itself to any capital expenditure not included in the Investment Program: (i) if the sum of such capital expenditure and all other such capital expenditures made or to be made in any one fiscal year exceed or will exceed an amount equivalent to one per cent (1%) of the net current value of the Borrower's fixed assets in operation, as determined in accordance with Schedule 5 to this Agreement; or (ii) if such capital expenditure is not directly related to the power operations of the Borrower or any of the Electrificadoras. Section 5.05. Except as the Bank shall otherwise agree, the Borrower shall not incur any debt unless a reasonable forecast of the revenues and expenditures of tne Borrower shows that the projected internal cash generation of the Borrower for each fiscal year during the term of the debt to be incurred shall be at least the following percentage of the projected debt service of the Borrower in such year on all debt of the Borrower including the debt to be incurred: (i) 110% for fiscal year 1982; and (ii) 130% for fiscal year 1983 and thereafter. For the purposes of this Section: (a) "debt" means any debt incurred by the Borrower maturing more than one year after the date on which it is originally incurred. (b) Debt shall be deemed to be incurred: (i) under a loan contract or agreement (or other instrument providing for such debt or further modification of its terms of payment) on the date of signature of such contract, agreement or instrument; and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent the guaranteed debt is outstanding. (c) "debt of the Borrower" means the total amount of debt of the Borrower. (d) "internal cash generation of the Borrower" means gross income of the Borrower from all sources less all operating and - 10 administrative expenses of the Borrower, excluding depreciation of assets and interest and other charges on debt. (e) "debt service" means the aggregate amount of amorti- zation (including sinking fund payments, if any) oZ, and interest and other charges on, debt. (f) The term "reasonable forecast" means a forecast prepared by the Borrower in the fiscal year in which the debt in question is to be incurred, which both the Bank and the Borrower accept as reasonable and as to which the Bank has notified the Borrower of its acceptability, provided that no event has occurred since such notification which has or may reasonably be expected in the future to have a material adverse effect on the financial condition or future operating results of the Borrower. Section 5.06. Except as the Bank shall otherwise agree, the Borrower shall: (a) Take all measures (including adjustments of its tariffs and charges) for the supply and sale of electricity as shall be required to generate an annual return on the average net current value of its fixed assets in operation at a rate of at least seven and one-half per cent (7.5%) in the 1982 fiscal year, eleven per cent (11%) in the 1983 fiscal year and each fiscal year thereafter. Such rates of return shall be calculated in accordance with the method set forth in Schedule 5 to this Agreement. (b) Within the first two months of each calendar quarter, review the adequacy of its tariffs and charges for the supply and sale of electricity to produce the annual rates of return required under paragraph (a), and shall furnish to the Bank the results of such review promptly after its completion. (c) If any such review shall show that the Borrower would not achieve the annual rates of return required under paragraph (a) in the course of the twelve-month period commencing with such quarter: (i) adjust its tariffs and charges in such a manner as to permit the achievement of the targets established in paragraph (a); and (ii) put into effect the adjusted tariffs and charges not later than the end of the next following calendar quarter. - 11 - Section 5.07. The Borrower shall: (a) under terms of reference satisfactory to the Bank, carry out a study for the establishment of the current value of the assets of the Borrower and of each of the Electrificadoras and a methodology for the revaluition of such assets; (b) by June 30, 1983, furnish to the Guarantor and the Bank, for review and comment, the findings of the study; and (c) taking into account the recommendations of such study, and the comments of the Bank and the Guarantor thereon, introduce, not later than January 1, 1984, on its books the asset values so established and on its accounting system an asset revaluation methodology. Section 5.08. The Borrower shall, not later than Decem- ber 31, 1983, furnish to the Bank its transmission program for the years 1985 to 1990. Section 5.09. The Borrower shall: (i) not later than August 31, 1982, prepare and furnish to the Guarantor and to the Bank, for comment, a plan to settle the outstanding debt to Electrificadoras for electricity supplied by Electrificadoras; and (ii) not later than October 30, 1982, carry out the plan referred to in (i) hereof, taking into account the comments of the Guaran- tor and of the Bank thereon. ARTICLE VI Amendments to First and Second Shareholders' Agreement Section 6.01. Section 5.02 (a) (iv) of the First Share- holders' Agreement is hereby amended and shall read as follows: "(iv) CORELCA, at least four per cent (4%) in the year 1978, five per cent (5%) in the years 1979 and 1980, three-and-a-half per cent (3.5%) in the year 1981, seven-and-a-half per cent (7.5%) in the year 1982 and eleven per cent (11%) in the year 1983 and thereafter". Section 6.02. Section 5.02 (a) (iv) of the Second Share- holders' Agreement is hereby amended and shall read as follows: - 12 - "(iv) CORELCA, at least five per cent (5%) in the years 1979 and 1980, three-and-a-half per cent (3.5%) in the year 1981, seven-and-a-half per cent (7.5%) in the year 1982 and eleven per cent (11%) in the year 1983 and thereafter". ARTICLE VII Remedies of the Bank Section 7.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (k) thereof, namely that the Estatutos, or any provision thereof, shall have been amended, suspended or abrogated without the prior agreement of the Bank. Section 7.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (h) thereof namely that the event specified in Section 7.01 of this Agreement shall occur. ARTICLE VIII Effective Date; Termination Section 8.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that arrangements, satisfactory to the Bank, have been made to provide the Borrower with the financing required for carrying out the Investment Program during the 1982 and 1983 Fiscal Years; and () that the execution and delivery of the Subsidiary Agreement on behalf of the Borrower and Electrificadoras have been duly authorized or ratified by all necessary corporate and govern- mental action. Section 8.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that the Subsidiary Agreement has - 13 - been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and Electrificadoras and that such Agreement constitutes a valid and binding obligation of the Borrower and Electrificadoras in accordance with its terms. Section 8.03. The date UV f /2 /9M2, is hereby speci- fied for the purpose of Section 12.04 of the General Conditions. ARTICLE IX Addresses Section 9.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: 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 Borrower: Corporacion Electrica de la Costa Atlantica Calle 53-B, No. 4650 Barranquilla, Colombia Cable address: Telex: CORELCA 33309 Barranquilla, Colombia - 14 - 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 District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMEnT By 5&A10 B X" Regional Vice President Lati7America and the Caribbean CORPORACION ELECTRICA DE LA COSTA ATLANTICA By Authorized Representative - 15 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment and 8,800,000 100% of foreign materials (ex- expenditures and cluding poles) 100% of local for Part A of expenditures the Project ex-factory (2) Equipment and 20,300,000 100% of foreign materials (ex- expenditures and cluding poles) 100% of local for Part B of expenditures the Project ex-factory (3) Consultants' ser- 1,400,000 50% vices for Parts A and B of the Project (4) Materials and 1,200,000 100% of foreign equipment for expenditures and Part C of the 100% of local Project expenditures ex-factory (5) Consultants' ser- 300,000 100% of foreign vices and train- expenditures ing for Part C of the Project (6) Consultants' ser- 300,000 100% vices for Part D the Project - 16 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (7) Unallocated 3,700,000 TOTAL 36,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor or for goods or services supplied from the territory of the Guarantor. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) Expenditures for Part C (1) of the Project under Cate- gories (4) and (5) until: the Borrower and the Electrificadora de Atlantico: (i) have agreed upon the terms and conditions for the establishment and operation of the training center included in - 17 - Part C of the Project; (ii) have appointed a Board of Directors to coordinate the activities of such center; and (iii) have appointed a Manager to manage the operations of such center. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, Jf the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 18 - SCHEDULE 2 Description of the Project The Project is part of the Borrower's village electrification program for the years 1981 to 1985, and consii;ts of: Part A: Transmission Construction and installation of: (1) About 220 km of 110 kV and 66 kV transmission lines; and (2) Substations with a combined transformer capacity of about 130 MVA. Part B: Subtransmission and Distribution Construction and installation of: (1) About 1,150 km of 34.5 kV and 13.8 kV subtransmission lines and related Substation equipment; and (2) About 470 km of distribution lines, and about .35 MVA of distribution transformer capacity and related distribution equipment. Part C: Training (1) Acquisition and utilization of teaching and laboratory equipment for a training center of the Borrower and the Electrifi- cadora de Atlantico; and (2) Training of, including scholarships to, members of the staff of the Borrower and Electrificadoras in areas related to the operations of the Borrower and of Electrificadoras. Part D: Electric Power Losses Study Carrying out, by March 31, 1983, a study of electric power losses in the systems of Electrificadoras. The Project is expected to be completed by December 31, 1985. - 19 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed Li dollars)* On each April 1 and October 1 beginning October 1, 1985 through October 1, 1997 1,385,000 On April 1, 1998 1,375,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.04), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 20 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.70% More than three years but not more than six years before maturity 3.40% More than six years but not more than eleven years before maturity 6.20% More than eleven years but not more than fifteen years before maturity 8.50% More than fifteen years before maturity 9.60% - 21 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977, 1980 edition (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, and in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating there- to, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connecti3n with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Colombia may be granted a margin of preference in accordance with, and subject to, the following provisions: - 22 - 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Colombia if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Colombia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest evalu- ated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. - 23 - C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for goods and civil works estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract together with the analysis of the respective bids, recommenda- tions for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the -24- award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 10% of the original price, the Borrower shall inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. - 25 - SCHEDULE 5 Method for Calculating Rate of Return 1. The annual rate of return specified in Section 5.06 of this Agreement wfil be calculated, in each calendar quarter in respect of the twelve-month period beginning with such quarter and the twelve-month period imaediately preceding, by using as the denom- inator the average between the net current values of the respec- tive fixed assets in operation at the beginning ;and at the end of each such period and as numerator the operating income of the Borrower 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 reve- nues from the sale of electricity and transmission charges, 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. 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 Borrower, the gross value of the Borrower's fixed assets in operation and wor's in progress 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: (a) the aggregate gross value of the Borrower's fixed assets in operation will be fixed in two thousand nine hundred forty-five million pesos (Col.$2,945,000,000); - 26 - (b) the aggregate gross value of the Borrower's fixed assets in construction will be fixed in one thousand three hundred seventy-three million pesos (Col.$1,373,000,000); and (c) the accumulated depreciation on the assets in (a) hereof will be fixed in three hundred fifty million pesos (Col.$350,000,000). 6. The Borrower will furnish to the Bank during the first quarter of each fiscal year a report on the revaluation of assets through the end of the preceding fiscal year. The report for the fiscal year 1981 will be furnished to the Bank by June 30, 1982. 7. Depreciation will be charged on a straight-line basis over the estimated useful life of the Borrower'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 J day ofo W26 , 198. FOR SECRETARY