Bolivia - Ende Power Project : Credit 0061 - Project Agreement - Conformed

CREDIT NUMBER 61 BO Project Agreement (ENDE Power Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND CORPORACION BOLIVIANA DE FOMENTO DATED JULY 24, 1964 CREDIT NUMBER 61 BO Project Agreement (ENDE Power Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND CORPORACION BOLIVIANA DE FOMENTO DATED JULY 24, 1964 prtiut Agrmtu AGREEMENT, dated July 24, 1964, between the INTER- NATIONAL DEVELOPMENT AssoCIATION (hereinafter called the Association) and CORPORACION BOLIVIANA DE FOMENTO, an agency of the Republic of Bolivia (hereinafter called CBF) - WHEREAS by a development credit agreement of even date herewith (hereinafter called the Development Credit Agreement) between Republic of Bolivia (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to ten million dollars ($10,000,000), on the terms and conditions set forth in the Develonment Credit Agreement, but only on condition that CBF agree to undertake certain obligations to the Associ- ation as hereinafter in this Project Agreement set forth; and WHEREAS CBF, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations herein- after set forth; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions SECTION 1.01. Wherever used in this Project Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement shall have the respective meanings therein set forth. 4 ARTICLE II Particular Covenants SECTION 2.01. (a) CBF shall carry out the Project with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) To assist CBF in carrying out the Project and planning for future expansion of its power system CBF shall employ competent and experienced consultants satis- factory to, and upon terms and conditions agreed between, the Association and CBF. (c) CBF shall furnish to the Association, promptly upon their preparation, the plans, specifications and the con- struction schedule for the Project and any material modifi- cations subsequently made therein, in such detail as the Association shall from time to time request. (d) CBF shall maintain or cause to be maintained records adequate to identify the goods financed out of the proceeds of the Credit, 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 main- tained sound accounting practices the operations and financial condition of CBF; shall enable the Association's representatives to inspect the Project, the goods and any relevant records and documents and all other plants, sites, works, properties and equipment of CBF utilized for the generation, transmission and distribution of electric power; and shall furnish to the Association all such information as the Association shall reasonably request concerning the expenditures of the proceeds of the Credit, the Project, the goods, and the administration, operations and financial condition of CBF. SECTION 2.02. (a) The Association and CBF shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request. 5 (b) The Association and CBF shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Credit and to the administration, operations and financial condition of CBF. CBF shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the performance by CBF of its obligations under this Agreement or the obligations to be performed by CBF pursuant to the provisions of the Credit Agreement, or which shall increase or threaten to increase materially the estimated cost of the Project. SECTION 2.03. (a) As provided in Section 3.01 of the Development Credit Agreement, the specific goods to be financed out of the proceeds of the Credit and the methods and procedures for procurement of such goods shall be determined by agreement between the Association and CBF, subject to modification by further agreement between them. (b) Except as the Association shall otherwise agree, CBF: (i) shall use, or cause to be used, all goods financed out of the proceeds of the Credit exclusively in the carrying out of the Project; (ii) shall obtain title to all such goods free and clear of all encumbrances; and (iii) shall not sell or otherwise dispose (except for the purposes of Section 2.08 of this Agreement) of any goods financed out of the proceeds of the Credit, other than such goods as shall have become worn out or obsolete. SECTION 2.04. (a) CBF shall insure or cause to be insured with responsible insurers all imported goods financed out of the proceeds of the Credit. Such insurance shall cover such marine, transit and other hazards incident to purchase and importation of such goods into the terri- tories of the Borrower and delivery thereof to the site of 6 the Project, and shall be for such amounts, as shall be consistent with sound commercial practices. Such insurance shall be payable in the currency in which the cost of the goods insured thereunder shall be payable or in dollars. (b) In addition, CBF shall insure against such other risks and in such amounts as shall be consistent with sound public utility and business practices. SECTION 2.05. Except as the Association shall otherwise agree, CBF shall take all steps necessary or desirable to obtain and maintain such electric tariffs as will produce revenues sufficient to provide the Rate of Return. SECTION 2.06. CBF shall promptly make and carry out arrangements, satisfactory to the Association, with BPC pursuant to the principles set forth in the Interconnection Letter. SECTION 2.07. Except as the Association shall otherwise agree, CBF shall not undertake or execute, for its own account or for the account of any other party or parties, any major power projects or developments other than the Project. SECTION 2.08. Except as the Association shall otherwise agree, CBF shall, on a date not later than January 1, 1965 and on terms and conditions satisfactory to the Association transfer, or cause to be transferred, to the Company: (i) all its electric facilities, all assets and current liabilities relat- ing thereto, and its rights and obligations under the IDB Loan Agreement (except for an amount of $50,000) but no other liabilities; (ii) the functions and responsibilities of its power department and its rights and obligations under any arrangements made, pursuant to the Intercon- nection Letter; and (iii) all its rights and obligations under this Agreement. SECTION 2.09. As part of the terms and conditions to be S 7 satisfied pursuant to Section 2.08 of this Agreement, CBF shall cause the Company to undertake that: (a) The Company shall at all times maintain its existence and right to carry on operations and shall, except as the Association shall otherwise agree, take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. (b) The Company shall (i) operate and maintain all its plants, equipment and property and from time to time make all necessary renewals and repairs thereof, all in accordance with sound engineering and public utility practices; (ii) at all times manage its affairs, operate its plants and equip- ment and maintain its financial position in accordance with sound business and public utility practices under competent and experienced management; and (iii) take out and main- tain insurance against such risks and in such amounts as shall be consistent with sound business and public utility practices. (c) Except as the Association shall otherwise agree, the Company shall not sell, lease, transfer or assign any of its property or assets, except in the normal course of its business and shall not engage in any activity other than power generation, transmission and distribution. (d) Except as the Association shall otherwise agree, the Company shall not incur any indebtedness unless the net consolidated revenues of the Company and its subsidiaries (if any) in the twelve consecutive months immediately preceding such incurrence shall be at least 1.5 times the estimated maximum debt service requirements for any succeeding twelve-month period following such incurrence on all indebtedness of the Company and its subsidiaries (if any), including the indebtedness proposed to be incurred. For the purposes of this paragraph: (i) the term "indebtedness" shall include the assumption and guarantee of indebtedness and shall mean all indebtedness of the Company 8 and its subsidiaries (if any) maturing by its terms more than one year after the date of its incurrence, but excluding any indebtedness between the Company and its subsidiaries (if any) or between such subsidiaries; (ii) indebtedness shall be deemed to be incurred on the date of execution and delivery of the contract or loan agreement providing for such indebtedness; (iii) the term "net consolidated revenues" shall mean gross revenues from all sources, excluding any revenues arising from the transactions between the Company and its subsidiaries (if any) or between such subsidiaries, adjusted to take account of electric tariffs in effect at the time of incurrence of indebtedness even though they were not in effect during the twelve con- secutive months to which such revenues related, less operating and administrative expenses in- cluding provision for taxes, if any, but before provision for depreciation and interest and other charges on debt; (iv) the term "debt service requirements" shall mean the aggregate amount of amortization (including sinking fund contributions), interest and other charges on debt; and (v) whenever for the purposes of this paragraph it shall be necessary to value, in terms of the currency of the Borrower, indebtedness payable in another currency, such valuation shall be made on the basis of the prevailing rate of exchange at which such other currency is, at the time of such valuation, lawfully obtainable for the purposes of servicing such indebtedness. (e) The Company shall have its accounts regularly audited by an independent accountant or accounting firm 9 acceptable to the Association and shall furnish to the Association, promptly upon their preparation, its annual financial statements (balance sheet and profit and loss state- ment) certified by such accountant or accounting firm. SECTION 2.10. The obligations to be assumed by the Company pursuant to the provisions of Section 2.08 and 2.09 of this Agreement shall be applicable to any subsidiary of the Company as though such obligations were binding on any such subsidiary, and the Company shall cause any such subsidiary to carry out such obligations. SECTION 2.11. (a) Promptly after the transfers referred to in Section 2.08 of this Agreement shall have been made and the conditions set forth or referred to in such Section 2.08 and in Section 2.09 of this Agreement shall have been satisfied, CBF shall furnish, and shall cause the Company to furnish, to the Association an opinion or opinions of coun- sel acceptable to the Association showing that: (i) the Com- pany is duly organized and existing under the laws of the Borrower and has full power to own the properties and to carry on the business which it owns and carries on; (ii) all the transfers herein referred to have been duly authorized or ratified by, an- made on behalf of and accepted by, CBF and the Company, as the case may be; (iii) the assumption by the Company of the obligations of CBF under this Agreement constitutes a valid and binding obligation of the Company in accordance with its terms; and (iv) the undertakings of the Company pursuant to the provisions of Section 2.09 of this Agreement constitute valid and binding obligations of the Company in accordance with their respective terms. (b) The obligations of CBF under this Agreement shall continue in full force and effect until, and the obligations of the Company hereunder shall take effect only on, such date as the Association shall dispatch to CBF and the Company notice: (i) of its acceptance of the opinion or 10 opinions referred to in paragraph (a) of this Section; and (ii) of its satisfaction that all other terms and conditions referred to in Section 2.08 of this Agreement have been fulfilled. ARTICLE III Effective Date; Termination SECTIOx 3.01. This Agreement shall come into force and effect on the Effective Date. If, pursuant to Section 8.04 of the Regulations, the Association shall terminate the Development Credit Agreement, the Association shall promptly notify CBF or the Company, as the case may be, of such termination and, upon the giving of such notice, this Agreement and all obligations of the parties hereunder shall forthwith cease and determine. SECTION 3.02. This Agreement shall terminate and all obligations of the Association and CBF or the Company, as the case may be, hereunder shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty-five years after the date of this Agreement, whichever shall be the earlier. ARTICLE IV Miscellaneous Provisions SECTIOx 4.01. Any notice, demand or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable or radio- gram to the party to which it is required or permitted to be given or made at its 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. The addresses so specified are: 11 (a) For the Association: International Development Association 1818 H Street, N.W. Washington, D. C. 20433 United States of America Alternative address for cablegrams or radiograms: Indevas Washington, D. C. (b) For CBF: Empresa Nacional de Electricidad Casilla 565 Cochabamba, Bolivia Alternative address for cablegrams or radiograms: ENELECTRIC Cochabamba SECTION 4.02. (a) Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement or the Development Credit Agreement on behalf of CBF may be taken or executed by the Presidente of CBF or such other person or persons as lie shall designate in writing. (b) Any action required or permitted to be taken and any document required or permitted to be executed, under this Agreement or the Development Credit Agreement, on behalf of the Company after the event specified in Section 2.11(b) shall have occurred, shall be taken or executed by the Presidente and/or the Gerente General, as the case may be, or such person or persons as either one or both of them shall designate in writing. SECTION 4.03. CBF (and the Company after the event specified in Section 2.11 (b) shall have occurred) shall 12 furnish to the Association sufficient evidence of the author- ity of the person or persons who will, on behalf of CBF or the Company, take any action or execute any documents required or permitted to be taken or executed by CBF or the Company, as the case may be, pursuant to any of the provisions of the Development Credit Agreement or this Agreement and the authenticated specimen signature of each such person. SECTIOx 4.04. This Agreement may be executed in several counterparts, each of which shall be an original and all collectively but one instrument. IN WITNESS WIEREOF the parties hereto have caused this Agreement to bo signed in their respective names by their representatives thereunto duly authorized and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT AssoCIATION By /s/ G. M. WILsON Vice President CORPORACION BOLIVIANA DE FOMENTO By /s/ ADOLFO LINARES ROBERTO CAPRILES Authorized Representatives