Bolivia - BPC Power Project : Credit 0062 - Project Agreement - Conformed

CREDIT NUMBER 62 BO Project Agreement (BPC Power Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BOLIVIAN POWER COMPANY LIMITED DATED JULY 24, 1964 CREDIT NUMBER 62 BO Project Agreement (BPC Power Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND BOLIVIAN POWER COMPANY LIMITED DATED JULY 24, 1964 AGREEMENT, dated July 24, 1964, between the INTER- NATIONAL DEVELOPMENT AssoCIATION (hereinafter called the Association) and BOLIVIAN POWER COMPANY LIMITED, a company duly incorporated under the laws of Nova Scotia, Canada (hereinafter called BPC). 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 five million dollars ($5,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BPC agree to undertake certain obligations to the Associ- ation as hereinafter in this Project Agreement set forth; and WHEREAS BPC, 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. Except where the context otherwise requires, the several terms defined in the Development Credit Agreement shall have the same meaning as in such Development Credit Agreement wherever used in this Agreement. 4 ARTICLE II Particular Covenants SECTION 2.01. BPC shall carry out the Project with due diligence and efficiency and in conformity with sound engi- neering, commercial and financial practices. SECTION 2.02. (a) BPC shall cause the proceeds of the Credit relent by the Borrower pursuant to the Subsidiary Loan Agreement to be applied exclusively to financing the cost of goods required to carry out the Project. The specific goods to be so financed out of the proceeds of the Credit and the methods and procedures for the procurement of such goods shall be determined by agreement between the Association and BPC, subject to modification by further agreement between them. (b) Except as the Association and BPC shall otherwise agree, BPC (i) shall use or cause to be used all goods so financed out of the proceeds of the Credit exclusively in the carrying out and operation of the Project; (ii) shall obtain title to such goods free and clear of all incumbrances; and (iii) shall not sell or dispose of any goods purchased or paid for out of the proceeds of the Credit, other than such goods as shall have become worn out or obsolete. SECTION 2.03. BPC shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BPC shall not amend, assign, abrogate or waive any provision of the Subsidiary Loan Agreement. SECTION 2.04. (a) BPC shall furnish to the Association, promptly upon their preparation, the plans, specifications and the construction schedule for the Project and any material modifications subsequently made therein, in such detail as the Association shall from time to time request. (b) BPC shall maintain or cause to be maintained records adequate to identify the goods financed out of such proceeds 5 of the Credit as shall be relent by the Borrower to BPC, to disclose the use of such goods, to record the progress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound account- ing practices the operations and financial condition of BPC; shall enable the Association's representatives to inspect the Project, the goods and any relevant records and docu- ments and all other plants, sites, works, properties and equipment of BPC or its subsidiaries (if any); and shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit relent by the Borrower to BPC, the Project, the goods and the adminis- tration and the operations and financial condition of BPC. SECTIOx 2.05. (a) BPC and the Association shall cooper- ate 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. (b) BPC and the Association 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 BPC. BPC 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 BPC of its obligations under this Project Agreement, or which shall increase or threaten to increase materially the estimated cost of the Project. SECTION 2.06. BPC 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 territories of the Borrower and delivery thereof to BPC and shall be for such amounts, as shall be consistent with sound commercial 6 practices. Such insurance shall be payable in the currency in which the cost of the goods insured thereunder shall be payable or in dollars. SECTION 2.07. (a) BPC shall at all times maintain its corporate 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 neces- sary or useful in the conduct of its business. (b) BPC 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; and (iii) take out and maintain 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, BPC shall not sell, lease, transfer or assign any of its property or assets, except in the normal course of its business. SECTION 2.08. Except as the Association shall otherwise agree, BPC shall not incur and shall not permit its sub- sidiaries (if any) to incur any indebtedness unless the net consolidated revenues of BPC 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 incurrences on all indebtedness of BPC and its subsidiaries (if any), including the indebtedness proposed to be incurred. For the purposes of this Section: 7 (a) the term "indebtedness" shall include the assump- tion and guarantee of indebtedness and shall mean all indebtedness of BPC and its subsidiaries (if any) maturing by its terms more than one year after the date of its incurrence but excluding any indebtedness between BPC and its subsidiaries (if any) or between such subsidiaries; (b) indebtedness shall be deemed to be incurred on the date of execution and delivery of the contract or loan agreement providing for such indebted aess; (c) the term "net consolidated revenues" shall mean gross revenues from all sources, excluding any revenues arising from transactions between BPC and its subsidiaries (if any) or between such subsidiaries, adjusted to take account of tariffs in effect at the time of incurrence of the indebtedness even though they were not in effect during the twelve consecutive months to which such revenues related, less operating and administrative expenses, including pro- vision for taxes if any, but before provision for depreciation, interest and other charges on debt; (d) the term "debt service requirements" shall mean the aggregate amount of amortization (including sinking fund contributions), interest and other charges on debt including the debt to be incurred; (e) whenever for the purposes of this Section 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 valu- ation, lawfully obtainable for the purposes of servicing such indebtedness; and (f) the term "subsidiary" shall mean any corporation, at least a majority of the outstanding voting stock of which shall be owned, or which shall be effectively controlled, by BPC or by one or more subsidiaries of BPC or by BPC and one or more of its subsidiaries. 8 SECTION 2.09. Except as the Association shall otherwise agree, BPC shall take all steps necessary or desirable to establish and maintain such electric tariffs as will produce revenues sufficient to provide the Rate of Return. SECTION 2.10. BPC shall have its accounts regularly audited by an independent accountant or accounting firm 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 2.11. BPC shall promptly make and carry out arrangements, satisfactory to the Association, with CBF or the Company, as the case may be, pursuant to the principles set forth in the Interconnection Letter. ARTICLE III Effective Date; Termination SECTION 3.01. This Project 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 Associ- ation shall promptly notify BPC thereof and, upon the giving of such notice, this Project Agreement and all obligations of the parties hereunder shall forthwith cease and determine. SECTION 3.02. This Project Agreement shall terminate and all obligations of the Association and BPC hereunder shall cease and determine on the date on which the Sub- sidiary Loan Agreement shall terminate in accordance with its terms. ARTICLE IV Miscellaneous Provisions SECTION 4.01. Any notice, demand or request required or permitted to be given or made under this Project Agreement I 9 and any agreement between the parties contemplated by this Project 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 radiogram 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: (a) For the Association: International Development Association 1818 H Street, N.W. Washington, D. C. 20433 United States of America Alternative address for cablegrams and radiograms: Indevas Washington, D. C. (b) For BPC: Bolivian Power Company Ltd. P.O. Box 308 Montreal 1, Canada Alternative address for cablegrams and radiograms: Bolivpower, Montreal, Canada SECTION 4.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Project Agreement or the Development Credit Agreement on behalf of BPC may be taken or 10 executed by the President or Vice President of BPC or such other person or persons as they shall jointly designate in writing. SECTION 4.03. BPC shall furnish to the Association sufficient evidence of the aathority of the person or persons who will, on behalf of BPC, take any action or execute. any documents required or permitted to be taken or executed by BPC pursuant to any of the provisions of the Develop- ment Credit Agreement or this Project Agreement and the authenticated specimen signature of each such person. IN WITNESS WIEREOF the parties hereto have caused this Project Agreement to be 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 BOLIVIAN POWER COMPANY LIMITED By /s/ JOHN KAZAKOFF Authorized Representative