Bolivia - Second Ende Power Project : Credit 0148 - Project Agreement - Conformed

CREDIT NUMBER 148 BO Project Agreement (Second ENDE Power Project) BETWEEN * INTERNATIONAL DEVELOPMENT ASSOCIATION AND EMPRESA NACIONAL DE ELECTRICIDAD S.A. DATED APRIL 28, 1969 CREDIT NUMBER 148 BO Project Agreement (Second ENDE Power Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND EMPRESA NACIONAL DE ELECTRICIDAD S.A. DATED APRIL 28, 1969 AGREEMENT, dated April 28, 1969, between the INTERNATIONAL DEVELOPMENT AssoCIAXIoN (hereinafter called the Association) and EMPRESA NAcIONAL DE ELEC- TRiDAD S.A. (hereinafter called ENDE). WHEREAS by a development credit agreement of even date herewith between Republic of Bolivia (hereinafter called the Borrower) and the Association, which agreement, the schedules therein referred to and the Development Credit Regulations No. 1 of the Association made appli- cable thereto are hereinafter called the Development Credit Agreement, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to seven million four hundred thousand dollars ($7,400,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that seven million three hundred and forty thousand dollars ($7,340,000) out of the proceeds thereof be relent to ENDE and that ENDE agree to undertake certain obligations to the Association as hereinafter in this Project Agreement set forth; and WHEREAS ENDE, in consideration of the Association '. entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations herein- after s(-t 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, (i) the several 4 terms defined in the Development Credit Agreement shall have the respective meanings therein set forth, and (ii) the term "subsidiary" shall mean any corporation of which at least a majority of the outstanding voting stock shall be owned, or which shall be effectively controlled, by ENDE or by one or more subsidiaries of ENDE or by ENDE and one or more of its subsidiaries. ARTICLE II Particular Covenants SECTION 2.01. (a) ENDE shall carry out Part 1 of the Project with due diligence and efficiency and shall at all times conduct its operations and affairs in accordance with sound engineering, public utility, administrative, and fian- cial practices and under the supervision of experienced and competent management. (b) To assist ENDE iii carrying out Part 1 of the Project, ENDE shall employ competent and experienced consultants satisfactory to, and upon terms and conditions agreed between, the Association and ENDE. (c) Except as the Association shall otherwise agree, ENDE shall cause all works included in Part 1 of the Project to be constructed by contractors acceptable to the Association and ENDE. (d) ENDE shall furnish to the Association, promptly upon their preparation, the plans, specifications and the construction schedule for Part I of the Project and any material modifications subsequently made therein, in such detail as the Association shall from time to time request. (e) ENDE 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 Part 1 of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices 5 the operations and financial condition of ENDE; shall enable the Association's representatives to inspect Part I of the Project, the goods and any relevant records and documents and all other plants, sites, works, properties and equipment of ENDE and shall furnish to the Association all such information as the Association shall reasonably iequest concerning the expenditures of the proceeds of the Credit, which have been relent to it, Part 1 of the Project, the goods, and the administration, operations and financial condition of ENDE. SECTION 2.02. (a) The Association and ENDE shall co- operate 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) The Association and ENDE 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 ENDE. ENDE shall promptly inform the Association of any condition which interferes with, or threatens to inter- fere with, the accomplishment of the purposes of the Credit or the performance by ENDE of its obligations under this Agreement or the obligations to be performed by ENDE pursuant to the provisions of the Development Credit A greement, or which shall increase or threaten to increase materially the estimated cost of the Project. SECTION 2.03. ENDE shall duly perform all its obliga- tions under the (i) Subsidiary Loan Agreement and (ii) Interconnection Agreement, and shall not take any action or concur in any action which would have the effect of amending, abrogating, assigning or waiving any of their provisions -without the prior approval of the Association. SECTION 2.04. Except as the Association shall otherwise agree, ENDE: (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 procure such goods in accordance with the terms and conditions set forth in Section 3.02 of the Development Credit Agreement and Schedule 1 to this Agreement; (iii) shall obtain title to all such goods free and clear of all encumbrances; and (iv) shall not sell or otherwise dispose of any goods financed out of the said proceeds, other than such goods as shall have become worn out or obsolete. SECTION 2.05. (a) ENDE shall take out and maintain with responsible insurers, or make other provisions satis- factory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound public utility practices. (b) Without limiting the generality of the foregoing, ENDE undertakes to insure the imported goods financed out of the proceeds of the Subsidiary Loan Agreement against marine, transit and other hazards incident 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 ENDE to replace or repair such goods. SECTION 2.06. Except as the Association shall otherwise agree, ENDE shall take all steps necessary or desirable to obtain and maintain electric tariffs designed to produce revenues sufficient .o provide it with a rate of return of nine per cent (917 ) in accordance with the provisions of the Electricity Code. SECTION 2.07. Except as the Association shall otherwise agree, ENDE shall not undertake or execute, for its own account or for the account of any other party or parties, any power projects or developments exceeding 3 MW of physical capacity other than the Project. 7 SECTION 2.08. (a) ENDE shall (i) 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; (ii) operate and main- tain all its plants, equipment and property and from time to time make all necessary renewals and repairs thereof, all in accordance with sound engineering, public utility, administrative and financial practices; and (iii) at all times manage its affairs, plan its future expansion and maintain its financial position in accordance with sound engineering, public utility, administrative and financial practices. (b) Except as the Association shall otherwise agree, ENDE 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. (c) Except as the Association shall otherwise agree E.]NDE shall not incur any indebtedness unless the net consolidated revenues of ENDE and its subsidiaries (if any) in the twelve consecutive months immediately preced- ing 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 in- debtedness of ENDE and its subsidiaries (if any), includ- ing the indebtedness proposed to be incurred. For the purposes of this paragraph: (i) the term "indebtedness" shall include the assump- tion and guarantee of indebtedness and shall mean all indebtedness of ENDE and its subsidiaries (if any) maturing by its terms more than one year after the date of its incurrence, but excluding any indebtedness between ENDE and its subsidiaries (if any) or between such subsidiaries; 8 (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 rev- enues arising from the transactions between ENDE and its subsidiaries (if any) or between such sub- sidiaries, 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 consecutive months to which such revenues related, less operating and administrative expenses including 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 o-P 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. (d) ENDE shall have its accounts regularly audited at least once a year by independent auditors acceptable to the Association and shall promptly upon their preparation and not later than five months after the close of the fiscal year to which they relate, send to the Association certified copies of such accounts and the auditors report. SECTION 2.09. The obligations to be assumed by ENDE pursuant to the provisions of Section 2.08 of this Agree- 9 ment shall be applicable to any subsidiary of ENDE as though such obligations were binding on any such subsidi- ary, and ENDE shall cause any such subsidiary to carry out such obligations. 0ECTION 2.10. (a) Any change of the Gerente General of ENDE shall be made only after prior consultation with the Association. (b) Except as the Association shall otherwise agree, ENDE shall not permit or cause its Estatutos to be amended. ARTICLE III Effective Date; Termination SECTION 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 Assoiation shall p)romptly notify ENDE of such termination and, upon the giving of such notice, this Agreement and all obliga- tions of the parties hereunder shall forthwith cease and determine. SECTION 3.02. This Agreement shall terminate and all obligations of the Association and ENDE hereunder shall, cease and determine on the date on which the Development Credit Agreement shall terminate or on a date thirty years after the date of this Agreement, whichever shall be the earlier. ARTICLE IV Miscellaneous Provisions SECTION 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 10 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: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Alternative address for cablegrams or radioorans: Indevas Washington, D.C. For ENDE: Empresa Nacional de Electricidad S.A. Casilla 565 Cochabamba, Bolivia Alternative address for cablegrams or radiograms: Enelectric Cochabamba SECTION 4.02. ENDE shall furnish to the Association sufficient evidence of the authority of the person or persons who will, on behalf of ENDE, take any action or execute any documents required or permitted to be taken or exe- cuted by ENDE, pursuant to any of the provisions of the Development Credit Agreement or this Agreement and the authenticated specimen signature of each such person. 11 SECTION 4.04. This Agreement may be executed in sev- eral counterparts, each of which shall be an original and all collectively but one instrument. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be signed in their respective names by their representatives thereunto duly authorized and deliv- ered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. BURKE KNAPP Vice President EMPRESA NACIONAL DE ELEcTRiciAD S.A. By /s/ ROBERTO CAPRILES /s/ JULIO SANJINES Authorized Representatives 12 SCHEDULE 1 1. With respect to all contracts for civil works and for the purchase of machinery, equipment or materials involving expenditures exceeding the equivalent of U.S.$50,000 the following procedures shall apply: (a) Copies of advertisements together with a description of advertising procedures, invitations to bid, speci- fications, conditions of contract and all other tender documents will be submitted to the Association for review and approval prior to the issuance of any such document for purpose of invitations to bid. (b) After bids have been received, analyzed and evalu- ated, the recommendation of ENDE's consultants and the proposal for contract award, together with the documents substantiating the recommendations and proposals, will be submitted to the Association for review and approval prior to making an award of contract or issuing a letter of intent. (c) If the proposed final contract is to differ substan- tially from the terms and conditions contained in the respective documents approved by the Association under paragraph (a) or (b) above, the text of the proposed changes will be submitted to the Associa- tion for review and approval prior to the signature of the contract. (d) As soon as a letter of intent has been issued or a contract signed two copies thereof will be sent to the Association. 2. For contracts involving expenditures equivalent to U.S.$50,000 or less copies of all relevant documents, includ- ing the invitation to bid and the bid analysis and evalua- tion, and two copies of the signed contract, and any other related material that the Association shall request, shall be sent to the Association promptly after execution of any such contract and prior to the submission to the Associa- tion of the first application for withdrawal in respect of such contract.