Guatemala - Aguacapa Power Project : Loan 1426 - Loan Agreement - Conformed

7 10 0 CONFORMED COPY LOAN NUMBER 1426 GU Loan Agreement (Aguacapa Power Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and INSTITUTO NACIONAL DE ELECTRIFICACION Dated June 10, 1977 LOAN AGREEMENT AGREEMENT, dated June 10, 1977, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and INSTITUTO NACIONAL DE ELECTRIFICACION (hereinafter called the Borrower). - 2 - ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Estatuto" means Decree No. 1287 of May 27, 1959, enacted by the Congress of the Guarantor, as amended up to the date of this Agreement; (b) "Guacalate Loan Agreement" means the Loan Agreement (Guacalate Power Project) between the Bank and the Borrower, dated June 28, 1968, as amended, and "Guacalate Guarantee Agreement" means the Guarantee Agreement of even date therewith between the Guarantor and the Bank, as amended; -3- (c) "First Power Loan Agreement" means the Loan Agreement (Power Project) between the Bank and the Borrower, dated March 10, 1967, as amended, and "First Power Guarantee Agreement" means the Guarantee Agreement of even date therewith, between the Guarantor and the Bank, as amended; (d) "EEG" means Empresa Electrica de Guatemala, S.A., or any succesor thereto; (e) "Subsidiary Contract" means the contract to be entered into between the Guarantor, the Borrower and EEG, as required by Section 3.10 of the Guarantee Agreement and Section 3.06 of this Agreement, providing for the matters listed in Schedule 1 to the Guarantee Agreement; (f) "Program" means the Borrover's expansion electricity program substantially as detailed in Schedule 5 to this Agreement, to be carried out during calendar years 1977 through 1979; (g) "Interconnected System" means the Borrower's and EEG's existing generation and transmission facil.ities operating as an integrated system within the Borrower's territory; (h) "Power Sector" means the Borrower and EEG, and any other entity which the Guarantor, the Bank and the Borrower shall agree to include therein; and "Power Sector Entity" means the Borrower or EEG or any other such entity; and (i) "Fiscal Year" means the Borrower's Fiscal Year or EEG's Fiscal Year both of which coincide with the calendar year. The terms defined importing the singular number import the plural number and vice-versa. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to fifty-five million dollars ($55,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1979 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. -6- Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) pe. annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and two-tenths per cent (8.20%) per annum on the princi- pal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on June 15 and December 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. - 7 - ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate engineering, financial and public utility practices. (b) Without limitation or restriction upon the provisions of paragraph (a) of this Section and unless the Bank shall otherwise agree, the Borrower shall (i) enter into one or more contracts on terms and conditions satisfactory to the Bank, for purposes of the Project and in accordance with Section 2.02 (a) of the Guarantee Agreement; (ii) exercise its rights and comply with its obligations thereunder in such manner as to protect the interests of the Bank and the Borrower; and (iii) not change or fail to enforce any such contract or any provision thereof. Section 3.02. In order to assist the Borrower in the carrying out of Part C of the Project and in the supervision and all engineering phases of Parts A and B of the Project, the Borrower shall employ management and engineering consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. -8- Section 3.03. Except as the Bank shall otherwise agree, the Borrower shall (i) complete the study included in Part C (a) of the Project not later than -iive months from the Effective Date; and (ii) promptly thereafter furnish to the Bank for comment the recommendations of such study. Section 3.04. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against 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 the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.05. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. -9- (b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall fLrnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents. Section 3.06. The Borrower shall enter with the Guarantor and EEG into the Subsidiary Contract, which shall provide, on terms and conditions satisfactory to the Bank, for the matters listed in Schedule I to the Guarantee Agreement, and, except as the Bank shall otherwise agree, the Borrower shall not change or fail to enforce the Subsidiary Contract or any provision thereof. - 10 - ARTICLE IV Management and Operations of the Borrower Section 4.01. (a) The Borrower shall at all times manage its affairs, carry on its operations, plan its future expansion and maintain its financial position in accordance with sound business and public utility practices under the supervision of qualified and experienced management. (b) Except as the Bank shall otherwise agree, the Borrower shall, not later than June 30, 1978: (i) reorganize its planning and financial staff into, respectively, a planning departLment and a finance department; (ii) put into effect a program, satisfactory to the Bank, for achieving adequate financial planning and improvements in respect of all its accounting practices; and (iii) prepare all the necessary planning for the construction of the Borrower's central headquarters building (including preliminary contractual arrangements for land acquisition and preliminary designs and specifications for such building). Section 4.02. The Borrower shall at all times maintain its existence and right to carry on its operations and shall, except as the Bank shall otherwise agree, take all necessary steps that are required to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. - 11 - Section 4.03. The Borrower shall at all times operate and maintain its plants, equipment and property, and from time to time make all necessary repairs or renewals thereof, all in accordance with sound engineering and public utility practices. Section 4.04. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not sell, lease, transfer or otherwise dispose of its property or assets which shall be required for the efficient operation of its business, including the Project. Section 4.05. The Borrower shall take out and maintain with responsible insurers insurance against such risks and in such amounts as shall be consistent with sound public utility practices. Section 4.06. The Borrower shall, not later than June 30, 1979 or such other date as the Bank shall determine, make arrangements satisfactory to the Bank to cause the dam, waterways and earthworks included in the Project (hereinafter called the Structures) to be periodically inspected in accordance with appropriate engineering practices for purposes of determining any deficiency (including potential deficiencies) in the condition of the Structures which may endanger their safety. - 12 - Section 4.07. The Borrower shall not create, acquire a proprietary interest in, or take over any company, if such creation, acquisition or taking over would adversely and substantially affect its financial condition or the efficiency of the Borrower's management and personnel. - 13 - ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.02. The Borrower shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each Fiscal Year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. - 14- (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall. not apply to: (A) 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 (B) 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 5.04. Except as the Bank shall otherwise agree, the Borrower shall take, from time to time: - 15 - (a) such measures (including, but not limited to, adjustments in the rates for the sale of electricity by the Borrower) as shall be required to provide the Borrower, commencing with Fiscal Year 1977 and every Fiscal Year thereafter until the Project shall have been completed, with funds from internal sources which, together with the funds from internal sources of the other Power Sector Entities for the same Fiscal Year, will be sufficient to meet the requirements of Section 3.02 (a) of the Guarantee Agreement; (b) such measures (including, but not limited to, adjustments in the rates for the sales of electricity by the Borrower) as shall be required, commencing with the Fiscal Year following that Fiscal Year in which the Project shall have been completed, and every Fiscal Year thereafter, to provide the Borrower with revenues which, together with the revenues of the other Power Sector Entities for the same Fiscal Year, will be sufficient to meet the requirements of Section 3.03 of the Guarantee Agreement. The applicable definitions and methods of calculation included in Sections 3.02 and 3.03 of the Guarantee Agreement shall apply to, respectively, paragraphs (a) and (b) of this Section. (c) all such action as shall be necessary to furnish to the Bank: - 16 - (i) as soon as available but not later than four months after the end of each Fiscal Year, a funds flow analysis of the Power Sector for the preceding Fiscal Year, in form satisfactory to the Bank, showing, inter alia, the results of applying the test defined in paragraph (a) of Section 3.02 of the Guarantee Agreement (hereinafter called "the test" for purposes of this Section), to such Fiscal Year; (ii) semi-annually, as soon as available but not later than February 28 and August 31 on each Fiscal Year, a funds flow analysis of the Power Sector for the then current Fiscal Year, in form satisfactory to the Bank, including an updating of the Power Sector's capital expenditures and showing, inter alia, the results of applying the test to such Fiscal Year; and (iii) as soon as available but not later than one month after requested by the Bank, all other relevant information concerning the measures taken, or proposed to be taken, by the Guarantor, the Borrower or other Power Sector Entity for compliance with - 17 - the obligations of the Guarantor under Section 3.02 (a) of the Guarantee Agreement, and of the Borrower under paragraph (a) of this Section. Section 5.05. The provisions of Section 5.04 of this Agreement replace the provisions of Section 5.10 of, respectively, the Guacalate Loan Agreement and the First Power Loan Agreement. Section 5.06. Except as the Bank shall otherwise agree, the Borrower shall take in Fiscal Year 1977 and every Fiscal Year thereafter all such measures as shall be necessary or advisable to cause its rates for the sale of electricity to EEG to be set in accordance with Section 3.05 of the Guarantee Agreement. Section 5.07. (a) Except as the Bank shall otherwise agree, the Borrower shall, from time to time, take all necessary action to ensure that, by December 31, 1977, and at all times thereafter, the amount of the Borrower's accounts receivable from public agencies shall not exceed the sum of the amounts billed by the Borrower to such public agencies during the two months immediately preceding the date on which such calculation is made, such calculation to be made at least quarterly. (b) For purposes of this Section, the term "public agencies" means any agency or instrumentality of the Guarantor, any political or administrative subdivision thereof and any entity (other than the Borrower or EEG) owned or controlled by, or - 18 - operating for the account or benefit of, the Guarantor or any such agency, instrumentality, or subdivision. Section 5.08. (a) Except as the Bank shall otherwise agree and until the Project shall have been completed, the Borrower shall not undertake, or permit to be undertaken on its behalf, any major work or construction not included in the Program and shall not acquire, or permit to be acquired on its behalf, new assets not included in the Program, unless the Bank shall have been furnished with evidence satisfactory to the Bank that: (i) such major work or construction or acquisition is economically justified; and (ii) the Borrower has available adequate financial resources for the carrying out of such major work or construction or acquisition. (b) For the purposes of this Section, "major work or construction" and "new assets" shall be any work or construction or new fixed asset, estimated to cost more than the equivalent of one million dollars. - 19 - Section 5.09. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur any debt unless its net revenues for the fiscal year immediately preceding such incurrence or for a later twelve-month period ended prior to such incurrence, whichever are the greater, shall not be less than 1.5 times the maximum debt service requirements on all debt (including the debt to be incurred) in any succeeding fiscal year. For the purposes of this Section: (a) the term "debt" shall mean all debt of the Borrower payable by its terms on demand or maturing more than one year from the date on which it is originally incurred; (b) debt shall be deemed to be incurred on the date such debt becomes outstanding and payable in accordance with the loan contract, agreement or other instrument providing for such debt or, in the case of a guarantee, on the date of execution and delivery of the contract, agreement or other instrument providing for such guarantee, but only to the extent that the guaranteed debt is outstanding; - 20 - (c) the term "net revenues" shall mean gross revenues from all sources adjusted to take account of rates in effect at the time of incurrence of debt even though such rates were not in effect during the fiscal year or twelve-month period to which such revenues relate, less operating and administrative expenses and provision 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 payments, if any), interest and other charges on debt; and (e) whenever it shall be necessary to value in the currency of the Guarantor debt payable in another currency, such valuation shall be made on the basis of the rate of exchange at which such other currency is obtainable by the Borrower, at the time such valuation is made, for the purposes of servicing such debt or, if such other currency is not so obtainable, at the rate of exchange that will be reasonably determined by the Bank. The foregoing provisions of this Section replace the provisions of Section 5.11 of, respectively, the Guacalate Loan Agreement and the First Power Loan Agreement. - 21 - ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) any provision of the Estatuto shall have been changed or shall not have been enforced; (b) any party to the Subsidiary Contract shall have failed to perform any of its obligations thereunder; (c) (i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any loan with an original maturity of one year or more made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof; - 22 - (ii) subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement, and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditiuas consistent with the obligations of the Borrower under this Agreement; and (d) a resolution shall have been passed for the dissolution or liquidation of the Borrower. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the event specified in paragraph (b) of Section 6.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) the event specified in paragraph (a) or in paragraph (c) (i) B or in paragraph (d) of Section 6.01 of this Agreement shall occur. - 23 - ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the execution and delivery of the Subsidiary Contract have been duly authorized and ratified by all corporate and governmental action; (b) that the rates for the sale of electricity by the Power Sector have been adjusted in form and substance satisfactory to the Bank; and (c) that either the Borrower or the Guarantor has received assurances, in form and substance satisfactory to the Bank, that the Borrower will be provided with the financing assistance for purposes of the Project required, for Fiscal Year 1977, by Section 2.02 (a) of the Guarantee Agreement. Section 7.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that the Subsidiary Contract has been duly authorized or ratified by, and executed and delivered on behalf of, respectively, the Guarantor, the Borrower and EEG. - 24 - Section 7.03. The date of September 14, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 25 - ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Borrower: Instituto Nacional de Electrificaci6n Guatemala City Guatemala Cable address: Telex: INDE INDE 5324-GU Guatemala - 26 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names 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/ A. Krieger Regional Vice President Latin America and the Caribbean INSTITUTO NACIONAL DE ELECTRIFICACION By /s/ Luis Francisco Sfenz Authorized Representative - 27 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 22,500,000 49% (representing the estimated for- eign expenditure component) (2) Electrical and 23,850,000 100% of foreign mechanical expenditures equipment and materials (3) Management 250,000 100% of foreign consultants' expenditures services (4) Unallocated 8,400,000 TOTAL 55,000,000 - 28 - 2. For the purposes of this Schedule,the term "foreign expenditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, - 29 - the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 30 - SCHEDULE 2 Description of the Project Part A: Generation The construction of the Aguacapa hydroelectric plant consisting of: (a) construction of a gravity diversion dam of about 90,000 m3 capacity in the Aguacapa river, at the immediate vicinity of its confluence with the Agua Caliente Stream, with a regulating pond of about 300,000 m3 capacity, downstream from such dam and on the left bank abutment; (b) construction of a concrete lined power tunnel .of about 12 km long and about 2.5 m net inside diameter; (c) installation of a steel penstock of about 3.7 km long and about 2.5 m average inside diameter, which will connect the tunnel referred to in (b) above and the power station referred to in (d) below; and (d) construction of a power station to be equipped with three generating units of about 30 MW each (hereinafter called the Power Plant). - 31 - Part B: Transmission (a) installation at the Power Plant of three transformers with a capacity of 3.75 MVA (13.8/230kV) each; (b) construction of a switching station (230 kV) (hereinafter called the Aguacapa Substation) at about 500 m downstream from the Power Plant; and (c) construction of about 23 'km of a single circuit 230 kV transmission line connecting the Aguacapa Substation and the existing Escuintla Substation. Part C: Management Consultant Services (a) completion of a study reviewing the value of the fixed assets of the Borrower and of EEG and proposing adequate methods for the periodical revaluation thereof; (b) preparation and implementation of a program to assist the Borrower in financial planning and in the improvement of all its accounting functions; and - 32 - (c) preparation and implementation of a program for upgrading of the Borrower's staff. The Project is expected to be completed by June 30, 1979. - 33 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each June 15 and December 15 beginning June 15, 1981 through December 15, 1993 2,035,000 On June 15, 1994 2,090,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 34 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.45% More than three years but not more than six years before maturity 2.90% More than six years but not more than eleven years before maturity 5.30% More than eleven years but not more than fifteen years before maturity 7.25% More than fifteen years before maturity 8.20% - 35 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in the Introduction and Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines) including the pertinent provisions of the General Introduction thereto, on the basis of international competitive bidding. 2. Bidders for the works included in Part A of the Project shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. B. Evaluation and Comparison of Bid for Goods; Preference for Manufacturers Established in the Territories of the Central American Common Market 1. For the purpose of evaluation and comparison of bids for the supply of goods: (a) bidders shall be required to state in their bid the c. and f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; - 36 - (b) customs duties and oLher import taxes on imported goods, and sales and similar taxes on domestically- supplied goods, shall be excluded; and (c) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Bids shall be compared in accordance with the following rules: (a) the term "Central American Bid" means a bid submitted by a manufacturer established in the territories of the Central American Common Market for goods manufactured or processed to a substantial extent (as reasonably determined by the Bank) in such territories; any other bid will be deemed to be a "Non-Central American Bid"; (b) the bid price under a Central American Bid will be the sum of the following amounts: (i) the ex-factory price of such goods; and (ii) freight, insurance and other costs of delivery of such goods to the site designated in the specifications; and (c) for the purpose of comparing any Non-Central American Bid with any Central American Bid, the price under a Non-Central American Bid will be the sum of the following amounts: - 37 - (i) the c. and f. (port of entry) price of such goods; (ii) insurance costs to the port of entry; (iii) half the amount of any taxes on the importation of such goods into the territories of the Guarantor which generally apply to non-exempt importers, or 15% of the amounts specified in (i) and (ii) above, whichever shall be the lower; and (iv) freight insurance and other costs of delivery of such goods from the port of entry to the site designated in the specifications. 3. The bidding documents shall clearly indicate the margin of preference to be granted. C. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower shall, before qualification is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such - 38 - additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works and to contracts for equipment and materials estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommendations - 39 - for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 40 - SCHEDULE 5 The Program (a) Generation: - Escuintla II - 53 MW- - Palin II hydro plant - 5 MW - Aguacapa hydro plant - 90 MW - Chixoy hydro plant - 300 MW - Improvements on small hydro plants (b) Transmission: Lines: - Escuintla - Guatemala Sur, 43 km, 1st circuit, 230 kV - Aguacapa - Escuintla, 23 km, 1 circuit, 230 kV Substations: - Escuintla expansion, 100 MVA, 230/138 kV - Guatemala Sur, 150 MVA, 230/69 kV (c) Distribution: - Ongoing low-voltage system expansion not exceeding the equivalent of $12,500,000 (d) Rural Electrification: - Ongoing program not exceeding the equivalent of $500,000