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

CREDIT NUMBER 148 BO Development Credit Agreement (Second ENDE Power Project) BETWEEN REPUBLIC OF BOLIVIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED APRIL 28, 1969 CREDIT NUMBER 148 BO Development Credit Agreement (Second ENDE Power Project) BETWEEN REPUBLIC OF BOLIVIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED APRIL 28, 1969 Drudiaptrut TrrhIit Agurrment AGREEMENT. dated April 28, 1969, between RE- PUBLIC OF BOLIVIA (hereinafter called the Borrowe7) and IN- TERKATIONAL DEVELOPMENT AssocUIrON (hereinafter called the Association). WHEREAS the Empresa Nacional de Electricidad S.A. (hereinafter called ENDE) plans to expand its facilities in order to meet the growing power demand of the Borrower's economy, in accordance with a program which has been review ed with the Association; WHEREAS the Borrower has requested the Association to assist in the financing of the said program and in particular of the project described in Schedule 2 to this Agreement; WHEREAS the Borrower will make available to ENDE the proceeds of the credit as provided for herein; and WHEREAS the Association has agreed to make a credit to the Borrower for the said project upon the terms and conditions set forth herein and in a project agreement of even date herewith between the Association and ENDE; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I Credit Regulations; Special Definitions SECTION 1.01. The parties to this Agreement accept all the provisions of Development Credit Regulations No. 1 of the Association dated June 1, 1961 as amended February 9, 1967, with the same force and effect as if they were fully 4 set forth herein, subject, however, to the following modifica- tions thereof (said Development Credit Regulations No. 1 as so modified being hereinafter called the Regulations): (a) Section 6.02 is amended by inserting the words "or either party under the Project Agreement" after the words "the Development Credit Agreement". (b) The following sub-paragraph is added to Section 9.01: "13. The term 'Project Agreement' shall have the meaning set forth in the Development Credit Agreement." SOTIoN 1.02. Unless the context otherwise requires, the following terms wherever used in this Development Credit Agreement shall have the following meanings: (a) The term "Project Agreement" means the agree- ment of even date herewith between the Association and ENDE, as the same may be amended or supplemented from time to time by agreement between the parties thereto. (b) The term "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ENDE referred to in Section 4.02 (a) (i) of this Agree- ment, as the same may be amended or supplemented from time to time. (c) The term "Interconnection Agreement" means an agreement satisfactory to the Association to be entered into between ENDE and the Bolivian Power Company Ltd. relating to the interconnection and operation of their re- spective systems to function as the central integrated power system in Bolivia. (d) The term "DINE" means Direccion Nacional de Electricidad of the Borrower. (e) The term "Electricity Code" means the Codigo de Electricidad (Supreme Decree No. 08438) dated 31 July, 1968, of the Borrower. 5 ARTICLE II The Credit SECTION 2.01. The Association agrees to make available to the Borrower, on the terms and conditions in this De- velopment Credit Agreement set forth or referred to, a development credit in an amount in various currencies equivalent to seven million four hundred thousand dollars ($7,400,000). SECTION 2.02. (a) The Association shall open a Credit Account on its books in the name of the Borrower and shall credit to such account the amount of the Credit. (b) The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, this Agreement and the Regulations and in accordance with the allocation of the proceeds of the Credit set forth in Schedule 1 to this Agreement, as such allocation shall be modified from time to time pursuant to the provisions of such Schedule or by further agreement between the Borrower and the Associa- tion. SECTION 2.03. The Borrower shall be entitled to with- draw from the Credit Account (i) such amounts as shall have been paid for the reasonable cost of goods to be financed under the Development Credit Agreement; and (ii), if the Association shall so agree, such amounts as shall be required to meet payments to be made for the reasonable cost of such goods. Except as shall be otherwise agreed between the Association and the Borrower, no with- drawals shall be made on account of (a) expenditures prior to the date of this Agreement or (b) expenditures in the currency of the Borrower or for goods produced in (includ- ing services supplied from) the territories of the Borrower. 6 SECTIOiv 2.04. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (34 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. SECTION 2.05. Service charges shall be paid semi-annu- ally on June 15 and December 15 in each year. SECTION 2.06. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payable on each June 15 and December 15 commencing June 15, 1979, and ending De- cember 15, 2018, each installment to and including the in- stallment payable on December 15, 1988 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (12%o) of such principal amount. SECTION 2.07. The currency of the United States of America is hereby specified for the purposes of Section 3.02 of the Regulations. ARTICLE III Use of Proceeds of the Credit SECTION 3.01. The Borrower shall apply the proceeds of the Credit in accordance with the provisions of this Agree- ment and the Subsidiary Loan Agreement exclusively to expenditures on the Project described in Schedule 2 to this Agreement. SECTION 3.02. Except as the Association shall otherwise agree, (i) the goods (other than consulting services) to be financed out of the proceeds of the Credit shall be pro3ured on the basis of international competitive bidding as set forth in the "Guidelines Relating to Procurement under 7 World Bank Loans and IDA Credits" published by the Association in February 1968, and in accordance with such other procedures supplemental thereto as shall be agreed between the Association and ENDE, and (ii) any contract for the procurement of any nf the goods required to carry out the Project (including ionsulting services) shall be subject to the approval of the Association. SECTION 3.03. Except as the Borrower and the Associa- tion shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Credit to be used in the territories of the Borrower exclusively in carrying out the Project. ARTICLE IV Particular Covenants SECTION 4.01. (a) The Borrower shall take or cause to be taken all action which shall be necessary on its part to carry out the Project with due diligence and efficiency and to enable ENDE to perform all the covenants and agree- ments set forth in the Project Agreement and shall not take, cause or permit to be taken any action that would prevent or interfere with the performance by ENDE of such covenants and agreements. (b) The Borrower shall at all times make or cause to be made available to ENDE, promptly as needed, the funds, facilities, services and other resources which shall be re- quired for the carrying out of the Project. SECTION 4.02. (a) The Borrower shall relend (i) to ENDE an amount equivalent to up to seven million three hundred and forty thousand dollars ($7,340,000) out of the proceeds of the Credit on terms and conditions satisfactory to the Association, pursuant to a loan agreement satisfac- tory to the Association and (ii) to DINE an amount equiva- lent to up to sixty thousand dollars ($60,000) out of the proceeds of the Credit for the purpose of retaining spe- cialized, competent and experienced consultants (unavail- able in Bolivia) acceptable to, and on terms and conditions satisfactory to, th Association. (b) The Borrower shall not take any action or concur in any action which would have the effect of amending, abrogating, assigning or waiving any provision of the Sub- sidiary Loan Agreement, except with the prior approval of the Association. SECTION 4.03. (a) The Borrower and the Association 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 rea- sonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower and the inter- national balance of payments position of the Borrower. (b) The Borrower 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 the maintenance of the service thereof. The Borrower shall promptly inform the Association of any condition which interferes with, or threatens t. interfere with, the accomplishment of the purposes of the Credit or the main- tenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. (d) The Borrower shall furnish to the Association all such information as the Association shall reasonably re- 9 quest concerning the administration, operations and finan- cial condition of DINE. SECTION 4.04. Except as the Association shall otherwise agree, the Borrower shall not permit or cause the Estatutos of ENDE to be amended. SECTION 4.05. Except as the Association shall otherwise agree, the Borrower shall, from time to time, take all action necessary to cause ENDE to be granted and to cause to be maintained, electric tariffs designed to produce revenues sufficient to provide ENDE with a rate of return of nine per cent (9/o) in accordance with the provisions of the Electricity Code. SHcTIoN 4.06. Except as the Association shall otherwise agree, the Government of the Borrower shall not later than September 30, 1971 take all necessary steps to have the Electricity Code enacted by the Congress. SECTION 4.07. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of the Borrower or laws in effect in its territories. SECTION 4.08. This Agreement and the Project Agree- ment shall be free from any taxes that shall be imposed under the laws of the Borrower or laws in effect in its ter- ritories on or in connection with the execution, delivery or registration thereof. ARTICLE V Remedies of the Association SECTION 5.01. (i) If any event specified in paragraphs (a) or (c) of Section 5.02 of the Regulations shall occur 10 and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (b) of Section 5.02 of the Regulations or in paragraphs (a), (b), (c), (d), (e) or (f) of Section 5.02 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower, then at any subsequent time during the continuance thereof the Association, at its option, may declare the principal of the Credit then outstanding to be dr and payable immediately, and upon any such declaratio . such principal shall become due and payable immediately, anything in this Agreement to the contrary notwithstanding. SECTION 5.02. The following additional events are speci- fied for the purposes of paragraph (k) of Section 5.02 of the Regulations: (a) ENDE shall have failed to perform any obligation under the Project Agreement or under the Project Agree- ment between the Association and Corporacion Boliviana de Fomento dated July 24, 1964; (b) The Borrower or ENDE shall have failed to perform any obligation under the Subsidiary Loan Agreement; (c) Any material amendment or repeal of any of the provisions of the Electricity Code (either before or after its enactment in accordance with the provisions of Section 4.06 of this Agreement) or of Supreme Decrees Nos. 05999, 06792, 06793, 07591 or 08283 of the Borrower dated Febru- ary 9, 1962, June 9, 1964, April 20, 1966 and February 28, 1968, respectively, not previously agreed to by the Borrower and the Association, which adversely affect the execution of the Project, the purposes of the Credit, the financial condition of power enterprises operating in Bolivia, or DINE, shall have come into force; (d) ENDE shall be unable to pay its debts as they mature or any action or proceeding sh-ll have been taken 11 by ENDE or by others whereby any of the property of ENDE shall or may be distributed among its creditors; (e) The outstanding principal of the credit provided for in the I)evelopment Credit Agreement (ENDE Power Proj- ect) between the Borrower and the Association dated July 24, 1964 shall have been declared, or become, due and payable in advance of the agreed maturity thereof; (f) The Borrower or any other authority having juris- diction shall have taken any action for (i) the dissolution of ENDE or for the suspension of its operations, or (ii) the acquisition of the ownership, possession or control of any of the property or assets of ENDE necessary for the proper and efficient operation of its buisiness; and (g) An extraordinary situation shall have arisen which shall make it improbable that ENDE will be able to per- form its obligations under the Project Agreement. ARTICLE VI Effective Date; Termination SECTION 6.01. The following events are specified as ad- ditional conditions to the effectiveness of this Development Credit Agreement within the meaning of Section 8.01 (b) of the Regulations: (a) The execution and delivery of the Project Agree- inilent on behalf of ENDE has been duly authorized or ratified by all necessary corporate and governmental action; (b) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and ENDE has been duly authorized or ratified by all necessary corporate and governmental action; (c) DINE shall have employed consultants acceptable to the Association on terms and conditions satisfactory to the 12 Association for the purpose of providing specialized assist- ance in the carrying out of its regulatory functions; (d) The execution and delivery of the Interconnection Agreement on behalf of ENDE has been duly authorized or ratified by all necessary corporate and governmental action; and (e) ENDE shall have employed a firm of independent auditors acceptable to the Association to carry out the provisions of Section 2.08(d) of the Project Agreement. SECTION 6.02. The following are specified as additional matters, within the meaning of Section 8.02(b) of the Regu- lations, to be included in the opinion or opinions to be furnished to the Association: (a) That the Project Agreement has been duly author- ized or ratified by, and executed and delivered on behalf of, ENDE and constitutes a, valid and binding obligation of ENDE, in accordance with its terms; (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ENDE, and constitutes a valid and binding obligation of the parties thereto in accordance with its terms; and (c) That the Interconnection Agreement has been duly authorized or ratified by, and executed and delivered on behalf of ENDE and constitutes a valid and binding obli- gation of ENDE in accordance with its terms. SECTION 6.03. If this Agreement shall not have come into force and effect by July 15, 1969, this Agreement and all obligations of the parties hereunder shall terminate, unless the Association, after consideration of the reasons for the delay, establishes a later date for the purpose of this See- tion. The Association shall promptly notify the Borrower of such later date. 13 SECTION 6.04. Upon termination of the Project Agree- ment in accordance with its terms, the obligations of the Borrower with respect to the Project shall forthwitf ter- minate. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be June 30, 1973 or such other date as shall be agreed between the Borrower and the Association. SECTION 7.02. The following addresses are specified for the purposes of Section 7.01 of the Regulations: For the Borrower: Ministerio de Economia Nacional La Paz, Bolivia Cable address: Mineconomia La Paz For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address. Indevas Washington, D.C. SECTION 7.03. The Minister of National Economy of the Borrower is designated for the purposes of Section 7.03 of the Regulations. IN WITNESS WHEREOF, the parties hereto acting through their representatives thereunto duly authorized, have 14 caused this Development Credit Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF BOLIVIA By /s/ ENRIQUE LARREA H. Authorized Representative INTERNATIONAL DEVELOPMENT AssocIATioN By /s/ J. BURKE KNAPP Vice President 15 SCHEDULE 1 Allocation of Proceeds of Credit Amounts Expressed in Category U.S. Dollar Equivalent A. Materials and services for the construction of the Santa Isabel hydroelectric plant, in- cluding associated transmission facilities 6,200,000 B. Engineering and consulting services for ENDE 340,000 C. Consulting services for DINE 60,000 D. Unallocated 800,000 TOTAL 7,400,000 Reallocation Upon Change in Cost Estimates 1. If the estimate of the foreign exchange cost of the items included in any of the Categories A, B or C shall decrease, the amount of the Credit then allocated to, and no longer required (i) for Category A or B, as the case may be, will be reallocated by the Association to Category D, and (ii) for Category C will be cancelled by notice from the Association to the Borrower. 2. If the estimate of the foreign exchange cost of the items included in any of the categories A or B, shall in- crease, an amount equal to such increase will be allocated by the Association, at the request of the Borrower and ENDE, to such Category A or B, as the case may be, from Category D, subject, however, to the requirements for con- tingencies, as determined by the Association, in respect of the cost of other items in such Category A or B. 16 SCHEDULE 2 Description of the Project The Project consists in: 1. The construction of a hydroelectric plant at Santa Isabel of about 34 MW using tailrace waters from the Corani plant with associated transmission facilities to con- nect the plant to the existing power system, including engi- neering services for supervision of construction and the study of further extensions. 2. Consultant services for DINE for the purpose of pro- viding specialized assistance in the carrying out of its regulatory functions. The Project is expected to be completed by March 31, 1972.