Colombia - Yumbo III - Calima I Power Project : Loan 0255 - Loan Agreement - Conformed

LOAN NUMBER 255 CO Loan Agreement (Yumbo III-Calima I Power Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND CORPORACION AUTONOMA REGIONAL DEL CAUCA AND CENTRAL HIDROELECTRICA DEL RIO ANCHICAYA LIMITADA DATED MAY 10, 1960 LOAN NUMBER 255 CO Loan Agreement (Yumbo III-Calima I Power Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND CORPORACION AUTONOMA REGIONAL DEL CAUCA AND CENTRAL HIDROELECTRICA DEL RIO ANCHICAYA LIMITADA DATED MAY 10, 1960 E~nan Areement AGREEMENT, dated May 10, 1960, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank), party of the first part, and CORPORACION AUTONOMA REGIONAL DEL CAuCA and CENTRAL HIDROELECTRICA DEL RIO ANCHICAYA LIMITADA, parties of the second part 7hereinafter called the Borrowers). ARTICLE I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated June 15, 1956, subject, however, to the modifications thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Wherever used in this Loan Agreement, unless the context shall otherwise require, the following terms shall have the following meanings: 1. The term "CVC" means Corporaci6n Aut6noma Regional del Cauca, one of the parties of the second part hereto. 2. The term"CHIDRAL" means Central Hidroelectrica del Rio Anchicaya Limitada, one of the parties of the second part hereto. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrowers, on the terms and conditions in this Agreement set forth 4 or referred to, an amount in various currencies equivalent to twenty-five million dollars ($25,000,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrowers and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. SECTION 2.03. The Borrowers 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charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. Such commitment charge shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrowers from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrowers shall pay interest at the rate of six per cent (6%) per. annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Except as the Bank and the Borrowers shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrowers pursuant to Section 4.02 of the Loan Regu- lations shall be at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on May 15 and November 15 in each year. 5 SECTION 2.07. The Borrowers shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. SECTION 2.08. All obligations of the Borrowers under this Agreement and the Bonds, unless they shall have been expressly undertaken by only one of the Borrowers, shall be joint and several, and the obligation of either of them to comply with any provision of this Agreement is not subject to any prior notice to, demand upon or action against the other. No extension of time or forbearance given to either of the Borrowers in respect of the perform- ance of any of its obligations under this Agreement or the Bonds, and no failure of the Bank or of any holder of the Bonds to give any notice or to make any demand or protest whatsoever to either of the Borrowers, or strictly to assert any right or pursue any remedy against either of them in respect of this Agreement or the Bonds, and no failure by either of the Borrowers to comply with any requirement of any law, regulation or order, shall in any way affect or impair any obligation of the other Borrower under this Agreement or the Bonds. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrowers shall apply the proceeds of the Loan exclusively to financing the cost of goods re- quii -d to carry out the Project described in Schedule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan and the methods and proce- dures for procurement of such goods shall be determined by agreement between the Bank and the Borrowers, subject to modification by further agreement between them. SECTION 3.02. The Borrowers shall cause all goods financed out of the proceeds of the Loan to be imported 6 into the territories of the Guarantor, and there to be used exclusively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrowers shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Director Ejecutivo of CVC and such person or persons as he shall appoint in writing and the Gerente of CHIDRAL and such person or persons as he shall appoint in writing are designated as authorized rep- resentatives of CVC and CHIDRAL, respectively, for the purposes of Section 6.12 (a) of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01 (a) The Borrowers shall carry out or cause the Project to be carried out with due diligence and efficien- ey and in conformity with sound engineering and financial practices. To assist them in carrying out the Project the Borrowers shall employ competent and experienced engi- neering consultants and contractors satisfactory to the Bank. (b) The Borrowers shall furnish to the Bank, promptly upon their preparation, the plans and specifications for the Project and any material modifications subsequently made therein, in such detail as the Bank shall from time to time request. (c) The Borrowers shall maintain records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and 7 to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrowers; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such information as the Bank shall reasonably request concern- ing the expenditure of the proceeds of the Loan, the Pro- ject, the goods, and the operations and financial condition of the Borrowers. SECTION 5.02. (a) The Bank and the Borrowers shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of the parties hereto shall furnish to any other such party all such in- formation as such other party shall reasonably request with regard to the general status of the Loan. (b) The Bank and the Borrowers shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrowers shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accom- plishment of the purposes of the Loan or the maintenance of the service thereof. SECTION 5.03. CVC undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of CVC as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing provisions of this Section shall not apply to: (i) 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 (ii) any 8 lien arising in the ordinary course of CVC 's business and securing a debt maturing not more than one year after the date on which it is originally incurred. SECTION 5.04. CHIDRAL undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of CHIDRAL as security for any debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing provisions of this Section shall not apply to: (i) 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 (ii) 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 5.05. The Borrowers shall pay or cause to be paid all taxes or fees, if any, imposed under the laws of the Guarantor or laws in effect in the territories of the Guarantor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the provisions of this Section shall not apply to tax- ation of, or fees upon, payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 5.06. The Borrowers shall pay or cause to be paid all taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories 9 of such country or countries on or in connection with the execution, issue, delivery or registration of this Agree- ment, the Guarantee Agreement or the Bonds. SECTION 5.07. The Borrowers shall at all times maintain their existence and right to carry on operations and shall, except as the Bank shall otherwise agree, take all steps necessary to maintain and renew all rights, powers, privi- leges and franchises which are necessary or useful in the conduct of their business. SECTION 5.08. Except as shall be otherwise agreed be- tween the Bank and the Borrowers, the Borrowers shall take out or cause to be taken out and maintain or cause to be maintained such insurance, against such risks and in such amounts, as shall be consistent with sound business practices. Insurance covering marine and transit hazards on the goods financed out of the proceeds of any part of the Loan shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable. SECTION 5.09. The Borrowers undertake that, upon com- pletion of each of Parts 1, 2 and 3 of the Project, title to all property, plants and equipment included in each such Part shall be vested exclusively in CHIDRAL free and clear of all encumbrances. SECTION 5.10. The Borrowers undertake that: (a) CHIDRAL shall operate and maintain its plants, equipment and property, and from time to time make all necessary renewals and repairs thereof, all in accordance with sound engineering standards; and shall at all times operate its plants and equipment and maintain its financial position in accordance with sound business and public utility practices; 10 (b) CHIDRAL shall not, without the consent of the Bank, sell or otherwise dispose of all or substantially all, of its property aiid assets or all or substantially all the property included in the Project or any plant included therein, unless the Borrowers shall first redeem and pay, or make adequate provision satisfactory to the Bank for redemption and payment of, all the Loan which shall then be outstanding and unpaid. SECTION 5.11. The Borrowers undertake that, until such time as the Project shall have been completed, CHIDRAL shall not, without the consent of the Bank, directly or indirectly at any time (i) declare or pay any dividends, or acquire any shares of its capital stock for a consider- ation, or (ii) undertake or execute any major projects other than the Project or make any major additions to its plant and other properties, unless at such time the Borrowers have set aside and made available in a special reserve fund currency of the Guarantor sufficient to cover expenditures which will not be covered out of the proceeds of the Loan and which will be required for carrying out the Project. SECTION 5.12. If CHIDRAL shall propose to incur any debt, the Borrowers shall inform the Bank of such pro- posal and, before the proposed action is taken, shall afford the Bank all opportunity which is reasonably practicable in the circumstances to exchange views with the Borrowers with respect thereto; provided, however, that the provi- sions of this Section shall not apply to: (i) tie incurring by CHIDRAL of additional debt through utilization, in accordance with the terms of any credit established prior to the date of this Loan Agreement, of any unused amounts available of such credit; or (ii) the incurring by CHIDRAL in the ordinary course of its business of any indebtedness maturing not more than one year after the date on which it is originally incurred. 11 SECTION 5.13. The Borrowers undertake that, except as the Bank and the Borrowers shall otherwise agree, CHIDRAL shall not incur debt unless its net revenues for any twelve consecutive months out of the fifteen-month period last preceding the date of such incurrence shall not be less than 1.3 times the maximum debt service re- quirements on all CHIDRAL's debt (including the Loan and the proposed debt to be incurred) in any succeeding fiscal year of CHIDRAL. For the purposes of this Section: (a) the term "debt" shall include the assumption and guarantee of debt and shall mean all indebtedness of CHIDRAL maturing by its terms more than one year after the date on which it is originally incurred; (b) debt shall be deemed to be incurred on the date of execution and delivery of a contract or loan agreement; (c) the term "net revenues" shall mean gross revenues from all sources (including recoveries from other persons on account of proceeds of CHIDRAL 's debt relent or other- wise made available by CHIDRAL to such other persons), adjusted to take account of rates in effect at the time of incurrence of debt even though they were not in effect during the twelve consecutive months to which such reve- nues relate, less operating and administrative expenses, including provision for taxes, if any, but before provision covering dcpreciation, interest and other charges on debt; (d) the term "debt service requirements" shall mean the aggregate amount of amortization (including sinking fund payments, if any), interest and other charges on debt, and (e) debt service payable in a currency other than cur- rency of the Guarantor shall be valued at the rate of ex- change at which such other currency is obtainable, on the date the additional debt is incurred, for the purpose of such service or, if such currency is not so obtainable, at the rate of exchange reasonably determined by the Bank. 12 SECTION 5.14. The Borrowers shall from time to time take all steps necessary or desirable to obtain such adjust- ments in CHIDRAL's rates as will provide revenues sufficient: (a) to cover CHIDRAL's operating expenses, including taxes, if any, adequate maintenance and depre- ciation, and interest; (b) to meet repayments on CHID- RAL's long-term indebtedness to the extent that such repayments shall exceed provision for depreciation; and (c) to create a reasonable surplus of CHIDRAL to finance new investment. SECTION 5.15. Whenever there is reasonable cause to believe that the funds available to CHIDRAL will be in- adequate to meet the estimated expenditures required for carrying out the Project, CVC undertakes to make arrange- ments, satisfactory to the Bank, promptly to provide CHIDRAL or cause CHIDRAL to be provided with such funds as are needed to meet such expenditures. SECTION 5.16. The Borrowers shall relend not more than $354,000 of the proceeds of the Loan to the Municipality of Cali and Empresas Municipales de Cali for the con- struction of electric power distribution facilities pursuant to a loan agreement (the Second Subsidiary Loan Agree- ment) containing provisions satisfactory to the Borrowers and the Baik. Except as the Bank shall otherwise agree, the Borrowers shall exercise their rights under the Second Subsidiary Loan Agreement in such manner as to protect the interests of the Borrowers and the Bank, and the Bor- rowers shall not amend, assign, abrogate or waive any provision of the Second Subsidiary Loan Agreement. SECTION 5.17. The Borrowers shall make available, pur- suant to arrangements satisfactory to the Borrowers and the Bank, not more than $646,000 of the proceeds of the Loan to electric power distribution enterprises in the Cauca Valley, other than Empresas Municipales de Cali, for the construction of electric power distribution facilities. 13 ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a), paragraph (b), paragraph (e) or paragraph (f) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrowers, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. ARTICLE VII Effective Date; Termination SECTION 7.01. The following event is specified as an additional condition to the effectiveness of this Agreement within the meaning of Section 9.01 (a) (ii) of the Loan Regulations: (a) all debts presently owed by CHIDRAL to CVC shall have been converted into stock capital of CHIDRAL pur- suant to arrangements satisfactory to the Borrowers and the Bank. SECTION 7.02. The following is specified as an additional matter, within the meaning of Section 9.02 (e) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: (a) that the arrangements whereby all debts presently owed by CHIDRAL to CVC have been converted into stock 14 capital have been duly authorized or ratified by CVC and CHIDRAL and are valid and binding. SECTION 7.03. A date 90 days after the date of this Agreement is hereby specified for the purposes of Sec- tion 9.04 of the Loan Regulations. ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be March 31, 1965. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrowers: Corporaci6n Aut6noma Regional del Cauca and Central Hidroelectrica del Rio Anchicaya Limitada Apartado Aereo 1545 Cali, Colombia Alternative address for cablegrams and radiograms: Chidral Cali, Colombia For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D.C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have 15 caused this Loan Agreement to be signed in their respective names and delivered 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 /s/ J. BURKE KNAPP Vice-President CORPORACION AUTONOMA REGIONAL DEL CAUCA By /s/ BERNARDO GARCES CORDOBA Authorized Representative CENTRAL HIDROELECTRICA DEL Rio ANCHICAYA LIMITADA By /s/ BERNARDO GARCES CORDOBA Authorized Representative 16 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars) November 15, 1963 $177,000 May 15, 1964 182,000 November 15, 1964 187,000 May 15, 1965 193,000 November 15, 1965 395,000 May 15, 1966 407,000 November 15, 1966 419,000 May 15, 1967 432,000 November 15, 1967 445,000 May 15, 1968 459,000 November 15, 1968 471,000 May 15, 1969 486,000 November 15, 1969 501,000 May 15, 1970 515,000 November 15, 1970 531,000 May 15, 1971 547,000 November 15, 1971 563,000 May 15, 1972 580,000 November 15, 1972 598,000 May 15, 1973 616,000 November 15, 1973 634,000 May 15, 1974 653,000 November 15, 1974 673,000 May 15, 1975 693,000 November 15, 1975 714,000 May 15, 1976 735,000 November 15, 1976 757,000 May 15, 1977 779,000 November 15, 1977 803,000 May 15, 1978 827,000 November 15, 1978 852,000 May 15, 1979 878,000 November 15, 1979 904,000 May 15, 1980 932,000 November 15, 1980 476,000 May 15, 1981 491,000 November 15, 1981 505,000 May 15, 1982 521,000 November 15, 1982 536,000 May 15, 1983 552,000 November 15, 1983 569,000 May 15, 1984 586,000 November 15, 1984 604,000 May 15, 1985 622,000 *To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 17 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Sec- tion 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than three years before maturity 1/2% More than three years but not more than six years before maturity............. 1% More than six years but not more than eleven years before maturity .......... 2% More than eleven years but not more than sixteen years before maturity ......... . 3% More than sixteen years but not more than twenty-one years before maturity...... .4% More than twenty-one years but not more than twenty-three years before maturity 5% More than twenty-three years before maturity ........................... 6% 18 SCHEDULE 2 Description of Project The Project consists of: Part 1. Yumbo Thermoelectric Plant The existing Yumbo Thermoelectric Plant operated by CHIDRAL will be extended and a 33,000 kw turbo-gener- ator with associated boiler plant and auxiliary equipment will be installed. Necessary additions will be made to the coal handling plant, cooling water system and other auxilia- ry installations. A 3-phase transformer and associated switchgear will be installed in the outdoor substation. This Part of the Project is scheduled to be completed by the middle of 1962. Part 2. Calima Hydroelectric Plant A hydroelectric plant will be constructed on the Calima River at a site about 60 kilometers northwest of Cali. A rock or gravel fill dam will be constructed across the river and will create a reservoir with a total capacity of about 530 million cubic meters. The main civil works will include intake structure, pressure tunnel, pressure shafts, underground powerhouse, tailrace, access tunnel and diver- sion tunnel to transfer water from the Bravo River into the Calima reservoir. The powerhouse will be equipped with two 30,000 kw generators, driven by Francis-type turbines. The intake, tunnels and powerhouse will be de- signed and constructed so as to permit the future installa- tion of two additional generating units. An outdoor substation will be constructed and equipped with trans- formers and switchgear of adequate capacity. The Calima plant is scheduled to be completed by the middle of 1964 and will be operated by CHIDRAL. 19 Part 3. Transmission System (115 kv) A 115 kv transmission line about 154 kilometers long will be constructed through the central part of the Cauca Valley between Yumbo and Cartago and step down sub- stations will be constructed at the towns of Buga, Tulua, Zarzal and Cartago. A 115 kv transmission line about 33 kilometers long will be constructed to connect the Calima plant with the substation at Buga. This transmission system is scheduled to be completed by the end of 1963 and will be operated by CHIDRAL. Part 4. Transmission Systems (34 kv and 13 kv) A network consisting of 90 kilometers of 34 kv and 40 kilometers of 13 kv transmission lines will be constructed in the Cauca Valley. The network is scheduled to be completed by the end of 1963 and its operation will be supervised by CVC. Part 5. Distribution Systems (a) The distribution system in the city of Cali, operated by the Empresas Municipales, will be improved and extended. (b) The distribution system in the town of Cartago will be improved and extended. (c) The distribution systems in a number of smaller towns and villages in the Cauca Valley will be ex- tended and improved. The operation of these sys- tems will be supervised by CVC. All the distribution systems are scheduled to be com- pleted by the end of 1963. 20 SCHEDULE 3 Modifications of Loan Regulations No. 4 For the purposes of this Agreement the provisions of Loan Regulations No. 4 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: (a) By the deletion of Section 2.02. (b) By the addition of the following sentence at the end of Section 6.07: "All Bonds shall contain appropriate pro- visions to the effect that the obligations of the Borrowers are joint and several as provided in Section 2.08 of the Loan Agreement." (c) By the deletion of Section 9.03 and the substitution therefor of the following Section: " Section 9.03. Effective Date. Except as shall be otherwise agreed by the Bank and the Borrowers, the Loan Agreement and the Guarantee Agreement shall come into force and effect on that date upon which the Bank shall dispatch to the Borrowers and to the Guar- antor notice of its acceptance of the evidence required by Section 9.01." (d) By the deletion of paragraph 6 of Section 10.01 and the substitution therefor of the following paragraph: "6. The term "Borrowers" means the parties to the Loan Agreement to which the Loan is made; the term "Borrower" means the Borrowers, except that in Sections 5.02 (b), 5.02 (c), 5.02 (d), 5.02 (e), 5.02 (f), 7.01 and 7.02 such term means the Borrowers or either of them; and the term "Guarantor" means Republic of Colombia." (e) By the deletion of paragrapL 14 of Section 10.01 and the substitution therefor of the following paragraph: "14. The term 'external debt' means any debt pay- able in any medium other than currency of the Guaran- tor, whether such debt is or may become payable absolutely or at the option of the creditor in such other medium."