El Salvador - Guajoyo Hydroelectric Project : Loan 0263 - Loan Agreement - Conformed

LOAN NUMBER 263 ES Loan Agreement (Guajoyo Hydroelectric Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEMPA DATED JULY 29, 1960 LOAN NUMBER 263 ES Loan Agreement (Guajoyo Hydroelectric Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND COMISION EJECUTIVA HIDROELECTRICA DEL RIO LEMPA DATED JULY 29, 1960 TIvant AgrrPmunt AGREEMENT, dated July 29, 1960 between INTERNA- TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank) and COMISION EJECUTIVA HIDRO- ELECTRICA DEL Rio LEMPA (hereinafter called the Borrower). ARTICLE I Loan Regulations 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. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to three million eight hundred and forty thousand dollars ($3,840,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3 of 1% ) per annum on the principal amount of the Loan not so withdrawn from time to time. Such S 4 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shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations.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 Borrower shall pay interest at the rate of five and three-fourths per cent (5%%) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time.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 Borrower shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (/ 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 April 15 and October 15 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall apply the proceeds of the Loan exclusively to financing the cost of goods required 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 procedures for procurement of such goods shall be de- termined by agreement between the Bank and the Bor- rower, subject to modification by further agreement be- tween them. 5 SECTIoN 3.02. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Loan to be imported into the territories of the Guarantor and there to be used exclusively in the carrying out of the Project. ARTIOLE IV Bonds SEenIox 4.01. The Borrower shall execute and deliver Bonds representing the principail amount of the Loan as provided ini the Loan1 Regulations. Sixc'riox 4.02. The Presidente of the Borrower and sucn person or persons as he shall appoint in writing are desig- nlate(1 as authorized representatives of the Borrower for the purposes of Section 6.12(a) of the Loan Regulations. ARTICLE V Particular Covenants Sicrrox 5.01. (a) The Borrower shall carry out the 1Project with duc diligence and efficiency and in conforiity With soundf engineering, financial and public utility prac- tices. (b) Except as the Banki and the iBorrower shall other- visc agree, the Boriower shall eniploy for the carrying out of the Project su ita)ly quaified and competent engi- neeriig consultants and contractois. Tihe (select.ion of the engineering consultants an( the nature and scope of their responsibilities shall be the subject of agteement between the Banh and the Borrower. (c) ITpon request from time to time by the Bank, the Borrower shall promptly furnish to the Bank the plans and specifications for the Project and any material modifi- cations subsequently made therein, in such ldetail as the Bank shall request. 6 (d) The Borrower 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 to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower; shall submit annually to the Bank an audit report of, and financial statements certified by, independent public accountants satisfactory to the Bank; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and docu- ments; and shall furnish to the Bank all such information as the Bank shall reasonably request concerning the ex- penditure of the proceeds of the Loan, the Project, the goods, and the operations and financial condition of the Borrower. SECTION 5.02. (a) The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reason- ably request with regard to the general status of the Loan. (b) The Bank and the Borrower 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 Borrower shall promptly infori the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purp 'ses of the Loan or the maintenance of the service thereof. SECTION 5.03. The Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower 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 7 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; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred an( to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions an(d securing a debt maturing not more than one year after its (late. SecTIOX 5.04. The Borrower shall pay or cause to be paid all taxes or fees, if any, inposed under the laws of the Guarantor or laws in effect in the territories of the Guarantor on or in connection with the execution, issue, de- livery or registration of this Agreement, the Guarantee Agreement or the Bonds, or the payment of principal, in- terest or other charges thereunder; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, paynents under any Bond to a holder thereof other than the Bank when such Bond is bene- ficially owned by an individual or corporate resident of the Guarantor. SECTiON 5,05. The Borrower 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 terri- tories of such country or countries on or in connection with thcl execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.06. (a) Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall insure or cause to be insured with responsible insurers all goods financed with the proceeds of the Loan. Such 8 insurance shall cover such marine, transit and other hazards incident to purchase and importation of the goods into the territories of the Guarantor and to delivery thereof to the site of the Project, and shall be for such amounts as shall be consistent with sound commercial practice. Such insurance shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable. (b) In addition, the Borrower shall insure against such risks and in such amounts as shall be consistent with sound public utility and business practices, SECTION 5.07. (a) The Borrower shall at all times main- tain its 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, privileges and franchises which are necessary or useful in the conduct of its business. (b) The Borrower shall operate and maintin 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 public utility and busi- ness practices. (c) The Borrower shall not, without the consent of the Bank, sell or otherwise dispose of all or substantially all of its property and assets or all or substantially all the property included in the Project or any plant included therein, unless the Borrower shall first redeem and pay, or make adequate provision satisfactory to the Bank for redemption or payment of, all of the Loan which shall then be outstanding and unpaid. SECTION 5.08. The Borrower, in accordance with the principles presently set forth in the law creating it, coven- ants that it will take all steps necessary to earn revenues 9 sufficient: (a) to cover operating expenses, including taxes, if any, adequate maintenance, depreciation and interest; (b) to meet repayments on long-term indebtedness but only to the extent that such repayments shall exceed pro- vision for depreciation; and (c) to create a surplus for financing a reasonable portion of planned expansion. SECTION 5.09. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur debt unless the sum of (i) its not revenies for the fiscal year next preceding such incurrence or for the twelve-month period ended prior to such incurrence, whichever is the greater, and (ii) 75/ of the difference between the reve- nues referred to in (i) above, and the estimate of its net revenues for the twelve months next following a period of six months after the date of completion of works under construction at the time of incurrence of the proposed debt and the works to be Iinanced by the proposed debt, shall be not less than 1.5 times the maximum debt service requirement for any succeeding fiscal year on all debt exist- ing on the (late the computation is made together with the debt proposed to be incurred. For the purposes of this Section: (a) The term "debt" shall mean all indebtedness of the Borrower maturing by its terms more than one year after the (late on which it is incurred; (b) Debt shall be deemed to have been incurred: (i) in the case of a loan from the Guarantor on the date on which the decree of the Legislative Assembly of the Guar- antor granting such loan shall enter into force and effect as provided in such decree; and (ii) in the case of any other indebtedness on the date of execution and deliverv of the contract providing for such indebtedness; (c) The term "net revenues" shall mean gross reve- nues from all sources, adjusted to take account of rates in effect at the time of the calculation even though they were not in effect during such fiscal year or twelve-month '4 10 period, less all operating and administrative expenses, including provision for taxes, if any, but before provisioii covering depreciation, interest and othei charges oni debt; (d) The term "debt service requirement" shall mean the aggregate amount of amortization (including sinking fund payments, if any) interest and other charges on debt; and (e) The equivalent in currency of the Guarantor of amounts of debt payable in any other currocy shall be determined on the basis of the rate of exchange which on the date of calculation is available to the Borrower for the purchase of such other currency for debt service. 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 3.02 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 Borrower, 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 inmediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. SECTION 6.02. The following is specified as an event for the purposes of Section 5.02 (j) of the Loan Regulations: There shall have occurred any event specified in paragraph (c) of Section 5.02 of Loan Regulations No. 4 of the Bank, dated June 15, 1956, as incorporated in the loan agreement between the Bank and the Borrower dated February 20, 1959. 11 ARTICLE VII Miscellaneous SET'IO)N 7.01. rlh Closing Date shall be October 1, 1963. SEX'TION 1.02. A (kate iiinety days after the date of this Agrleeient is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SE7TIN .03. lie following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the iBorrower: Coniisiói Ejecutiva Hidroel(4triec. del Rto Lempa .Edificio Dueñlas San Salvador, E Salvador Alte.native address for cablegrais and radioglrams: CEL San Salvador Foi the Bank: liternational Bank for Reconstruction and Developient 1818 H Street, N. W. Washington 25, ). C. Ulnited States of Anerica Alternative address for cablegrams an(d radioglram.: Intbafrad WashingtoiI, D. C. IN WITNESs WlEREOF, the parties hereto, acting through their representatives tlerelunto dilly authorized, have 12 caused this Loan Agreement to be signed in their respec- tive 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 CoMISIoN EJECUTIVA HIDROELECTRICA DEL Rio LEMPA By /s/ ENRIQUE LIMA Authorized Representative 0 13 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* October 15, 1963 $ 43,000 April 15, 1964 44,000 October 15, 1964 45,000 April 15, 1965 47,000 October 15, 1965 48,000 April 15, 1966 49,000 October 15, 1966 51,000 April 15, 1967 52,000 October 15, 1967 54,000 April 15, 1968 55,000 October 15,1968 57,000 April 15,1969 58,000 October 15, 1969 60,000 April 15, 1970 62,000 October 15, 1970 64,000 April 15, 1971 65,000 October 15, 1971 67,000 April 15, 1972 69,000 October 15, 1972 71,000 April 15,1973 73,000 October 15, 1973 75,000 April 15, 1974 78,000 October 15, 1974 80,000 April 15, 1975 82,000 October 15, 1975 84,000 April 15, 1976 87,000 October 15, 1976 89,000 April 15, 1977 92,000 October 15, 1977 95,000 April 15, 1978 97,000 October 15, 1978 100,000 April 15, 1979 103,000 October 15, 1979 107,000 April 15, 1980 109,000 October 15,1980 112,000 April 15,1981 115,000 October 15, 1981 119,000 April 15, 1982 122,000 October 15,1982 126,000 April 15, 1983 129,000 October 15,1983 133,000 April 15, 1984 137,000 October 15, 1984 141,000 April 15, 1985 145,000 October 15, 1985 149,000 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. 14 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 Section 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 ma- turity ............................ of 1 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 ........ More than eleven years but not more than sixteen years before maturity ........ ..21/2 More than sixteen years but not more than twenty-one years before maturity 3 % AMore than twenty-one years but not more than twenty-three years before matu- rity ............................... 44% More than twenty-three years before ma- turity ................ .............53/4% 15 SCHEDULE 2 Description of Project The project will consist of: (a) the construction of the Guajoyo generating plant, including intakes, outlets and ancillary works, which will be located near the existing Lake Guija control works, and which will be equipped with one turbine and generator unit of 15 MW capacity; (b) the construction, adjacent to the Guajoyo generating plant, of a switchyard which will be equipped with a transformer of approximately 16,000 kva capacity with space for an additional transformer unit; (c) the construction of a single-circuit transmission line approximately 30 kilome- ters in length from the Guajoyo generating plant to the Santa Ana sub-station; (d) the addition at the San Salva- dor sub-station of a 15,000 to 20,000 kva transformer; and (e) the addition at the Santa Ana and San Salvador sub- stations of the necessary circuit breakers and accessory equipment. S 16 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 deletion of the first five lines of Section 5.02 and the substitution therefor of the following lines: " Section 5.02. Huspension, by the Bank. If any of the following events shall have happened and be continuing, the Bank may at any time or from time to time by notice to the Borrower suspend in whole or in part the right of the Borrower to make with- drawals from the Loan Account:" (c) By the deletion of the last paragraph of Section 5.02 and the substitution therefor of the following para- graph: "The right of the Borrower to make withdrawals from the Loan Account shall continue to be sus- pended in whole or in part, as the case may be, until the event or events which gave rise to such suspen- sion shall have ceased to exist or until the Bank shall have notified the Borrower that the right to make withdrawals has been restored, whichever is the earlier; provided, however, that in the case of any such notice of restoration, the right to make withdrawals shall be restored only to the extent and subject to the conditions specified in such notice, and no such notice shall affect or impair any right, power or remedy of the Bank in respect of any other or subsequent event described in this Section." 17 (d) By the deletion of Section 9.03 and the substitution therefor of the following section: "Section 9.03. Effective Date. Notwithstanding the provisions of Section 8.01, except as shall be other- wise agreed by the Borrower and the Bank, the Loan Agreement shall come into force and effect on the date upon which the Bank dispatches to the Borrower and the Guarantor notice of its acceptance of the evidence required by Section 9.01." (e) By the deletion of paragraph 14 of Section 10.01 and the substitution therefor of the following para- graph: "14. The term 'external debt' means any debt pay- able in any medium other than currency of the Guarantor, whether such debt is or may become payable absolutely or at the option of the creditor in such other medium."