Colombia - Power Development Finance Project : Loan 2401 - Loan Agreement - Conformed

FCIAL IAN NUMBER 2401 CO Loan Agreement (Power Development Finance Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and FINANCIERA ELECTRICA NACIONAL S.A. Dated , 1984 NUMBER 2401 CO LOAN AGREEMENT AGREEMENT, dated 7, 1984, between INTERNATIONAL BANK FOR REC NSTRUCTION AND DEVELOPMENT (herein- after called the Bank) and FINANCIERA ELECTRICA NACIONAL S.A. (hereinafter called the Borrower). WHEREAS: (A) the Borrower has requested the Bank to assist in the financing of the Project described in Section 3.01 of this Agreement by making the Loan as hereinafter provided; (B) the Borrower and the Power Companies (as hereinafter defined) have entered into an agreement of even date herewith pursuant to which each of the Power Companies has undertaken cer- tain obligations with respect to the Bank and the Borrower; (C) the Borrower will on-lend the proceeds of the Loan to the Power Companies in order to enable the latter to carry out specific Sub-projects, and for such purposes the Borrower shall enter into subsidiary loan agreements with the respective Power Companies in the terms and conditions hereinafter set forth. (D) the Borrower intends to borrow from lenders out- side Colombia, including the Bank, an amount equivalent to $200,000,000 (hereinafter called the Additional External Financing) to assist in the financing of the Project; (E) the Republic of Colombia (hereinafter called the Gua- rantor) by agreement of even date herewith between the Guarantor and the Bank (hereinafter called the Guarantee Agreement), in consideration of the Bank's entring into this Agreement with the Borrower, has agreed to, inter alia, guarantee the repayment of the principal of the Loan and payment of interest and other charges thereon; NOW THEREFORE, the parties hereto hereby agree as follows: 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 Gua- rantee Agreements of the Bank dated October 27, 1980, with the same force and effect as if they were fully set forth herein, - 2 - subject, however, to the modifications thereof set forth in Sche- dule 3 to this Agreement (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, 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 Gen- eral Conditions have the respective meanings therein set forth, and the following additional terms have the following meanings: (a) "Sub-loan" means a loan made or proposed to be made by the Borrower out of the proceeds of the Loan or the Bank's share of the Additional External Financing to a Power Company to cover the foreign exchange cost of a Sub-project and "free-limit Sub- loan" means a Sub-loan, as so defined, which qualifies as a free- limit Sub-loan pursuant to the provisions of Section 2.02 (c) of this Agreement. (b) "FEN Loans" means a loan made or proposed to be made by the Borrower to a Power Company out of the proceeds of the Addi- tional External Financing not provided by the Bank to finance a Sub-project. (c) "Power Company" means any of the following power com- panies: Interconexi6n El'ctrica S.A., Empresas Publicas de Mede- 11fn, Corporaci6n Aut6noma Regional del Cauca, Empresa de Energfa El'ctrica de Bogota, Instituto Colombiano de Energ a El4ctrica and Corporacion El5ctrica de la Costa Atdntica, such power com- panies hereinafter collectively called the Power Companies. (d) "Sub-project" means a specific development project to be carried out by a Power Company utilizing the proceeds of a Sub-loan or the proceeds of a loan made or proposed to be made by the Borrower to a Power Company out of the proceeds of the Addi- tional External Financing, or both, and consisting in a power generation, transmission or distribution project and general plant relating to the foregoing or a portion thereof currently being carried out or to be carried out by a Power Company or studies related to power sector operations and developments. (e) "Relevant Legislation and Regulations" means the Gua- rantor's Ley No. 11 dated January 20, 1982; Decreto No. 1471, dated May 27, 1982; Decreto No. 2267, dated August 2, 1982; and Decreto No. 3574, dated December 30, 1983, as such Ley or Decre- tos may be amended from time to time. -3- (f) "Credit Regulations" means the Reglamento de Credito approved by the Board of Directors of the Borrower on Novem- ber 24, 1982, the Manual de Credito approved by Circular Normativa No. CN15 of 1984 of the Borrower, and Resoluc16nNo.03 of 1984 of the Borrower's Board of Directors, as such Reglamento, Manual and Resolucion may be amended from time to time. (g) "Subsidiary Loan Agreement" means the agreement between the Borrower and a Power Company providing for a Sub-loan or a FEN Loan and referred to in Section 3.02 of this Agreement. (h) "Power Financing Agreement" means the agreement between the Borrower and the Power Companies of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Power Financing Agreement and all agreements supplemental thereto. (i) "Account Bank" means Banco de la Repdblica. (j) "Special Account" means the account to be opened and thereafter maintained pursuant to Section 2.02 (b) of this Agreement. (k) "Initial Deposit" means the amount of the proceeds of the Loan withdrawn from the Loan Account through one or more withdrawals under Category (3) of the table set forth in para- graph 1 of Schedule 1 to this Agreement and deposited in the Special Account pursuant to paragraph 3 of Schedule 4 to this Agreement. (1) "pesos" and "Col$" mean the currency of the Guarantor. (m) "foreign currency" means any currency other than the currency of the Guarantor. 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 one hundred seventy million dollars ($170,000,000). -4- Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account for amounts paid (or, if the Bank shall so agree, for amounts to be paid) by the Borrower on account of: (i) disbursements made to a Power Company under a Sub-loan to meet the reasonable cost of goods and services, and interest and other charges during construction under existing Bank loans to such Power Company for the Sub-project in respect of which the with- drawe,1 from the Loan Account is requested; provided, however, that no withdrawal ehall be made in respect of a Sub-loan unless: (A) the Sub-loan has been approved by the Bank, or (B) the Sub- loan is a free-limit Sub-loan for which the Bank has authorized withdrawals from the Loan Account; (ii) payments made by the Borrower to meet the reasonable cost of the consultant services required by the Borrower to carry out the program described in sub-paragraph (a) (ii) of Section 3.01 of this Agreement; and (iii) the payment to be made by the Borrower pursuant to Section 2.04 of this Agreement. (b) The Borrower shall, for purposes of the Project, open and thereafter maintain in the Account Bank a Special Account denominated in, and convertible into, dollars on terms and condi- tions satisfactory to the Bank. Deposits into and payments out of the Special Account shall be made in accordance with the provi- sions of Schedule 4 to this Agreement. (c) A free-limit Sub-loan shall be a Sub-loan for a Sub- project in an amount to be financed out of the proceeds of the Loan which shall not exceed the sum of $4,000,000 equivalent, when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the Loan for such Sub- project; provided, however, that the first three Sub-loans each of which do not exceed the sum of $4,000,000 equivalent to be presented by the Borrower for financing under the Loan shall not be considered free-limit Sub-loans. (d) Except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made on account of: (i) expendi- tures before the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding $29,000,000 equivalent, may be made out of the proceeds of the Sub-loans on account of the reasonable cost of goods and services paid for Sub-projects before that date but after January 1, 1983; or (ii) except as provided under the preceeding subparagraph, expenditures by a Power Company in respect of a Sub-loan subject to the Bank's approval if such expenditures shall have been made more than one -5- hundred-eighty days prior to the date on which the Bank shall have received in respect of such Sub-loan the application and information required by Section 2.03 (a) of this Agreement or, in respect of a free-limit Sub-loan, more than one hundred-eighty days prior to the date on which the Bank shall have received in respect of such free-limit Sub-loan the request and information required by Section 2.03 (b) of this Agreement; or (iii) expendi- tures under a Sub-project, whenever the amount of such expendi- tures, when added to all other expenditures financed out of the proceeds of the Loan for the respective Sub-project, exceed the estimated foreign exchange cost for such Sub-project calculated in accordance with methods satisfactory to the Bank; provided, however, that financing of consultants' services under a Sub- project shall be limited to fifty percent (50%) of the total reasonable cost of such services. (e) If the Bank shall have reasonably determined that the procurement of any of the goods and services to be financed out of the proceeds of a Sub-loan is inconsistent with the proce- dures set forth or referred to in Schedule I to the Power Financ- ing Agreement, no expenditure for such item shall be financed out of the proceeds of the Loan or the Bank's share of the Additional External Financing, as the case may be, 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 rea- sonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the pro- ceeds of the Sub-loan. (f) The proceeds of the Loan shall be allocated and dis- bursed as set forth in paragraph 1 of Schedule 1 to this Agree- ment. Section 2.03. (a) When presenting a Sub-loan (other than a free-limit Sub-loan) to the Bank for approval, the Borrower shall furnish to the Bank an application, in form satisfactory to the Bank, together with: (i) the name of the Power Company and an appraisal of the Sub-project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the proposed terms and conditions of the Sub-loan, including the schedule of amortization of the Sub-loan; and (iii) ach other information as the Bank shall reasonably request. (b) Each request by the Borrower for authorization to make withdrawals from the Loan Account in respect of a free-limit Sub-loan shall contain: (i) the name of the Power Company and a - 6 - summary description of the Sub-project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the terms and conditions of the Sub-loan, including the schedule of amortization therefor; and (iii) such other information as the Bank shall reasonably request. (c) Except as the Bank and the Borrower shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (a) and (b) of this Section: (i) shall be presented to the Bank on or before December 31, 1985; and (ii) shall be presented in respect of Sub-loans to be made to Instituto Colombiano de Energ a E14ctrica or to Corporaci6n Eltrica de la Costa Atlantica only if the Bank shall have been furnished,not later than November 30, 1984, with: (A) a financial plan, satis- factory to the Bank, for each such Power Company covering their respective financial program and performance during the years 1984 through 1987; and (B) a complete financing scheme, satisfac- tory to the Bank, for the Urra project (in respect of Corporaci6n El4ctrica de la Costa Atlantica) and for the La Miel project (in respect of Instituto Colombiano de Energra Elctrica). (d) The Borrower shall not make a FEN Loan to a Power Com- pany unless such Company is eligible for receiving a Sub-loan. Section 2.04. (a) The Borrower shall pay to the Bank a fee equivalent to four hundred twenty-three thousand nine hundred forty dollars ($423,940). (b) On or promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount of the said fee in such currency or currencies as the Bank shall determine. Section 2.05. The Closing Date shall be December 31, 1986 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.06. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.07. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one - 7 - half percent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as pra:ticable after the end of each Semester, the Bank shall notify the Borrower and the Guarantor of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six-month period commencing on each date specified in Section 2.08 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost" of Qualified Borrowings means the cost, expressed as a percentage per annum, as reasonably determined by the Bank, provided that the amount of $8,520.5 million referred to in (iii) (B) hereunder shall be reckoned at a cost of 10.93% per annum. (iii) "Qualified Borrowings" means (A) outstanding borrowings of the Bank drawn down after June 30, 1982; and (B) until July 1, 1985, the amount of $8,520.5 million (representing borrowings of the Bank between July 1, 1981 and June 30, 1982) less any part thereof repaid earlier than July 1, 1985. (iv) "Semester" means the first six months or the second six months of a calendar year. Section 2.08. Interest and other charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.09. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 2 to this Agreement. ARTICLE III Description of the Project; Management and Operations of the Borrower Section 3.01. (a) The objectives of the Project are to pro- vide financial assistance to the Power Companies to enable the -8- latter to carry out the construction of power generation, trans- mission and distribution projects and general plant related to the foregoing included in the Power Companies' investment pro- grams for the years 1983 to 1985, and the strengthening of the technical capability of the Borrower. The Project consists of: (i) the financing of Sub-projects through loans to the Power Com- panies in furtherance of such purposes of the Borrower as are provided in the Relevant Legislation and Regulations and the Credit Regulations; and (ii) a program to strengthen the tech- nical capacity of the Borrower in its lending activities, includ- ing a study of the Borrower's technical staffing requirements for evaluating loan proposals and monitoring Project implementation. (b) The Borrower declares its commitment to the objective of the Project set forth in paragraph (a) above, and, to this end, shall carry out the Project and conduct its operations and affairs in accordance with sound financial and banking standards and practices, with qualified management and personnel, and in accordance with the Relevant Legislation and Regulations and the Credit Regulations. (c) In order to assist the Borrower in the carrying out of the program referred to in paragraph (a) (ii) above, the Borrower shall, by June 30, 1984, employ consultants whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Bank, such consultants to be selected in accor- dance with principles and procedures satisfactory to the Bank on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. (d) The Borrower shall: (i) by December 31, 1984, carry out the study included in the program referred to in paragraph (a) (ii) above, under terms of reference satisfactory to the Bank; (ii) promptly upon its completion, furnish to the Bank for com- ment the recommendations of such study; and (iii) based on the recommendations of such study and the Bank's comments thereon, employ experienced and qualified staff needed for its technical operations. Section 3.02 (a) The Borrower undertakes that, any Sub-loan or FEN Loan made by the Borrower to a Power Company for the pur- pose of financing a Sub-project will be made on terms and condi- tions whereby the Borrower shall enter into a Subsidiary Loan Agreement with the respective Power Company, satisfactory to the - 9 - Bank, such agreement to include, inter alia: (i) the Power Com- pany's obligation to repay such Sub-loan or FEN Loan in an amount in pesos equivalent to the various currencies in which the prin- cipal of the Loan or the Additional External Financing would be payable, such amount to be determined on the basis of the rate of exchange between the peso and such various currencies in effect at the time each payment is made* (ii) the Power Company's oblig- ation to pay interest and other charges in such amounts as shall be necessary to cover the cost to the Borrower of the Loan and the Additional External Financing plus a spread of one half of one percent, such spread to be reviewed from time to time by the Borrower and revised, if advisable, in agreement with the Bank, such cost of borrowings, interest and other charges to be calcu- lated in accordance with a methodology satisfactory to the Bank; (iii) the Power Company's obligation to repay the principal of such Sub-loan or FEN Loan in a period not exceeding fifteen years including a grace period not exceeding four years; (iv) the description of the respective Sub-project and the goods and services to be financed out of proceeds of such Sub-loan or FEN Loan; and (v) the confirmation in respect of the respective Sub- project of the obligations of the Power Company set forth in the Power Financing Agreement. (b) Except as the Bank shall otherwise agree, the Borrower shall not assign, waive, abrogate, amend or fail to enforce the Subsidiary Loan Agreements or any provision thereof. Section 3.03. (a) The Borrower shall furnish to the Bank at regular intervals all such information as the Bank shall reason- ably request concerning the expenditure of the proceeds of the Loan, the Project, the Sub-prcjects, the Sub-loans or FEN loans including all information to be furnished by the Power Companies to the Borrower pursuant to the provisions of the Power Financing Agreement or Subsidiary Loan Agreements. (b) Within six months following the last withdrawal from the Loan Account, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation, where applicable, of the Sub-projects, their costs and the benefits derived and to be derived from them, the performance by the Borrower and the Bank of their respective obligations under this Agreement and the accomplishment of the purposes of the Loan. Section 3.04. The Borrower shall exercise its rights in re- lation to the Power Financing Agreement in such a manner as to - 10 - protect the interest of the Bank and the Borrower, and, except as the Bank shall otherwise agree, shall not assign, waive, abrogate or amend any provision thereof. ARTICLE IV Financial and Other Covenants Section 4.01. (a) The Borrower shall maintain procedures and records adequate to monitor and record the progress of the Project and of each Sub-project (including its cost and the benefits to be derived from it) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower. (b) The Borrower shall retain or cause to be retained until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts, and other documents) evidencing the expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditures, and shall enable or cause to enable the Bank's representatives to examine such records. Section 4.02. (a) The Borrower shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) and the Special Account for each fiscal year audited in accordance with sound auditing prin- ciples 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 three months after the end of each such year, (A) certified copies of its financial statements for such year and of the Special Account 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; including, without limitation to the foregoing, separate opinions by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the loan withdrawn from the Loan Account on the basis of statements of expenditures have been used for the purposes for which they were provided; (iii) furnish to the Bank each month certified statements of the Special Account showing the move- ments in such Account during the previous calendar month; and (iv) 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. - 11 - (b) The Borrower shall prepare and furnish to the Bank a report of such scope and in such detail as the Bank shall have reasonably requested showing: (i) not later than two months after the end of each calendar quarter of the fiscal year, the Bor- rower's performance during the twelve-month period preceding the end of such quarter and projected for the immediately following twelve-month period; and (ii) not later than two months after the end of each fiscal year, up-to-date projections of the Borrower's balance sheets, statements of income and statements of sources and applications of funds for the following seven-year period. Section 4.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if any lien shall be created on any assets of the Borrower or any subsidiary 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 that 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 or of any subsi- diary 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, tnat 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 as security for the payment of the debt incurred for the purpose of financing the purchase 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 4.04. Except as the Bank shall otherwise agree, the Borrower shall: (i) conduct its operations and affairs in such manner as shall be necessary to maintain, at all times, its debt/equity ratio within the limit referred to in Section 4.05 of this Agreement; and (ii) if such ratio shall, for reasons beyond the Borrower's control, be exceeded, promptly take all such reasonable action as shall be necessary or advisable to bring such ratio within such limit. - 12 - Section 4.05. (a) Except as the Bank shall otherwise agree, the Borrower shall not incur any debt if, after the incurring of such debt, the ratio of debt to equity shall be greater than 7 to 1. (b) For purposes of this Section: (i) The term "debt" means any indebtedness of the Borrower. (ii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date, and to the extent, the amount of such debt has become out- standing pursuant to such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such gua- rantee has been entered into but only to the ex- tent that the guaranteed debt is outstanding. (iii) The term "equity" means the sum of the total unim- paired paid-up capital, retained earnings and re- serves of the Borrower not allocated to cover specific liabilities. (iv) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Guarantor, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Bank. Section 4.06. (a) Except as the Bank shall otherwise agree, the Borrower shall, during the month of February of each year: (i) prepare, in accordance with a methodology satisfactory to the Bank, an estimate of (A) the expenditures to be incurred by the Borrower during the following twelve months, and (B) the local debt amortization service requirements of the Borrower for the same period; and (ii) maintain, at all times during each twelve month-period following the month in which the estimate is - 13 - made, a reserve, to be held half in assets which could, in the ordinary course of business, be converted into cash within 90 days and half in other assets which could, in the ordinary course of business, be converted into cash within 30 days, equal in the aggregate to not less than the sum of: (A) 1/6 of the total expenditures estimated to be incurred by the Borrower during such period plus (B) 1/12 of the aggregate of the local debt amortiza- tion service requirements of the Borrower for the same period. (b) For purposes of this Section: (i) The term "expenditures" means all expenditures, including administration (excluding depreciation and other non-cash operating charges), interest and other charges on debt (excluding interest financed under a loan contract), all taxes or payments in lieu of taxes, all cash dividends and other cash distributions of surplus, and any other cash outflows other than repayments of the princi- pal of debt; (ii) The term "local debt amortization service require- ments" means the aggregate amount of amortization (including sinking fund payments, if any) of any debt of the Borrower in pesos; and (iii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment on the date, and to the ex- tent, the amount of such debt has become outstand- ing pursuant to such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such gua- rantee has been entered into but only to the ex- tent that the guaranteed debt is outstanding. Section 4.07. The Borrower shall not make any repayment in advance of maturity in respect of any outstanding debt of the Borrower (other than the Loan) which, in the judgment of the Bank, would materially affect the Borrower's ability to meet its financial obligations. - 14 - Section 4.08. The Borrower shall take such steps satisfac- tory to the Bank as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the currencies (including pesos) used in its lending and borrowing operations. Section 4.09. The Bank and the Borrower shall from time to time, at the request of either party, exchange views through their representatives with regard to the administration, opera- tions and financial condition of the Borrower, and the Borrower shall furnish to the Bank all such information as the Bank shall reasonably request concerning the administration, operations and financial condition of the Borrower. Section 4.10. The Borrower shall enable the Bank's repre- sentatives to inspect the records referred to in Section 4.01 (a) of this Agreement and any relevant documents. Section 4.11. The Borrower shall, not later than Decem- ber 31, 1984, furnish to the Guarantor and the Bank a plan of action, acceptable to the Guarantor and the Bank, for purposes of enabling the Borrower to raise resources in the Colombian capital market on a medium- and long-term basis. Section 4.12. (a) The Borrower shall take all actions neces- sary in order to raise in the domestic capital market in Colombia an amount in pesos of not less than: 10,000 million during the calendar year 1984; 11,800 million during the calendar year 1985; 14,700 million during the calendar year 1986 and 17,900 million during the calendar year 1987. (b) The Borrower shall, not later than April 1 in each year, exchange views with the Guarantor and the Bank on the per- formance by the Borrower of its borrowing and lending operations during the preceding twelve-month period and its projected bor- rowing and lending operations during the immediately suceeding twelve-month period, the extent to which the lending channels established in the Relevant Legislation and Regulations enable the Borrower to comply with its lending targets and the adequacy of the annual domestic borrowing targets set forth in paragraph (a) above, as revised from time to time by agreement between the Bank and the Borrower, specifically on the basis of the exchange of views pursuant to Section 4.13 (b) of this Agreement. - 15 - Section 4.13. (a) The Borrower shall: (i) not later than September 15, 1984, carry out a study, in accordance with terms of reference satisfactory to the Bank, on the finances of the power sector in Colombia including the formulation and evaluation of alternative proposed strategies for the financing of the power sector's investment program; and (ii) promptly thereafter, ex- change views with the Bank on, and submit to the Guarantor for its consideration the conclusions of said study and the recom- mendations deriving therefrom. (b) The Borrower shall exchange views with the Guaran- tor, the Bank and Interconexi6n El'ctrica S.A. not later than August 31 in each year beginning the year 1985 on the adequacy of the existing financing strategy for the power sector in Colombia and on the necessary revisions thereto, the first exchange of views to be carried out on the basis of the study referred to in paragraph (a) above. Section 4.14. Except as the Bank shall otherwise agree, the Borrower shall not enter into new lending commitments (either in the form of new loans, rescheduling or refinancing of existing loans or any other operation which would result in the provision of additional financial assistance) with any of the Power Com- panies or other borrowers of the Borrower which shall have failed to make payments under lending commitments made by the Borrower (either in the form of loans, rescheduling or refinancing of existing loans) at the time such amounts became due and payable, until such payments shall have been made. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the Gene- ral Conditions the following additional events are specified: (a) any part of the principal amount of any loan to the Borrower having an original maturity of one year or more shall, in accordance with its terms, have become due and payable in advance of maturity as provided in the relative contractual instruments, or any security for any such loan shall have become enforceable; (b) a change shall have been made in the Relevant Legis- lation and Regulations or in the Credit Regulations which would - 16 - materially and adversely affect, in the Bank's opinion, the operations or the financial condition of the Borrower or the execution of the Project; (c) a resolution shall have been passed for the dissolution or liquidation of the Borrower; (d) the Borrower 6r any of the Power Companies shall have failed to comply with any of their respective obligations under the Power Financing Agreement or the Subsidiary Loan Agreements; and (e) the Borrower's access to Banco de la Republica's redis- counting facilities referred to in Section 6.01 of this Agreement shall have been terminated or such access shall have been limited or otherwise amended in a way in which, the terms provided to the Borrower are less favorable than those given to similar financial intermediaries operating in Colombia. Section 5.02. For the purposes of Section 7.01 of the General Conditions the following additional events are specified: (a) the event specified in paragraph (a) or paragraph (b) or paragraph (c) of Section 5.01 of this Agreement shall occur; and (b) the event specified in paragraph (d) or in paragraph (e) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower. ARTICLE VI Effective Date, Termination, Address Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement with- in the meaning of Section 12.01 (c) of the General Conditions, namely, that the Bank shall have been furnished evidence satis- factory to the Bank to the effect that the Guarantor has given to the Borrower adequate access to Banco de la Repdlblica's re- discount credit facilities for providing coverage to financial intermediaries against short-term liquidity problems arising from - 17 - sudden reduction in deposits, under the same conditions appli- cable to similar financial intermediaries operating in Colombia. Section 6.02. The date -O Ati.24 1 I)4 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.03. 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: Financiera El'ctrica Nacional S.A. Calle 71 A, No. 6-30 Piso 20 Bogota, Colombia Telex: 61726 - 18 - 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 City of Paris, France, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Authori-;ed Representative FINANCIERA ELECTRICA NACIONAL S.A. By Authorized Representative - 19 - 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) Sub-loans 119,496,060 100% of the amounts dis- bursed by the Borrower (2) Consultants' 80,000 100% of foreign Services expenditures and 50% of local ex- penditures (3) Initial Deposit 50,000,000 Amount due under in Special paragraph 3 of Account Schedule 4 to this Agreement (4) Fee 423,940 Amount due under Section 2.04 of this Agreement TOTAL 170,000,000 2. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Bank has reasonably estimated that the amount of the Loan then allocated tc any Category will be insufficient to finance the agreed percentage of all expenditures in that Cate- gory, the Bank may, by notice to the Borrower or at the request of the Borrower: (i) reallocate to such Category, to the extent - 20 - 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. 3. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Guarantor for goods or services supplied from the territory of any country other than that of the Guarantor; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor or for goods or services supplied from the territory of the Guarantor. 4. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that the proceeds of the Loan shall not 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 there- of; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such Category as re- quired to be consistent with the aforementioned policy of the Bank. - 21 - SCHEDULE 2 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning September 1, 1988 through September 1, 2000 6,540,000 On March 1, 2001 6,500,000 * To the extent that any portion of the Loan is repayable in currency other than dollars (see General Conditions, Section 4.04), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 22 - Premiums of Prepayments 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 3.04 (b) of the General Conditions or to Section 2.09 of the Loan Agreement: Time of Prepayment Premium Not more than three years .18 before maturity More than three years but .35 not more than six years be- fore maturity More than six years but not .65 more than eleven years be- fore maturity More than eleven years but .88 not more than fifteen years before maturity More than fifteen years be- 1.00 fore maturity - 23 - SCHEDULE 3 Modifications of the General Conditions For the purposes of the Loan Agreement, the provisions of the General Conditions are modified as follows: (1) The word "Sub-projects" is substituted for the words "the Project" at the end of Section 5.03. (2) Section 6.03 is deleted and replaced by the following new Section: "Section 6.03. Cancellation by the Bank. If (a) the right of the Borrower to make withdrawals from the Loan Account shall have been suspnnded with respect to any amount of the Loan for a continuous period of thirty days, or (b) by the date specified in paragraph (c) (i) of Section 2.03 of the Loan Agreement no applications or requests permitted under paragraph (a) or paragraph (b) of such Section shall have been received by the Bank in respect of any portion of the Loan, or having been so received, shall have been denied, or (c) after the Closing Date an amount of the Loan shall remain unwithdrawn from the Loan Account, or (d) the Bank shall have received notice from the Guarantor pursuant to Section 6.07 with respect to an amount of the Loan, the Bank mry by notice to the Borrower terminate the right of the Borrower to submit such applications or requests or to make withdrawals from the Loan Account, as the case may be, with respect to such amount or portion of the Loan. Upon the giving of such notice such amount or portion of the Loan shall be cancelled." - 24 - SCHEDULE 4 Special Account 1. For the purposes of this Annex: (a) the term "Categories" means, collectively, Category (1) and Category (2) as set forth in the table in paragraph 1 of Schedule 1 to this Agreement and the term "Category" means one of them; and (b) the term "eligible expenditures" means expenditures in respect of interest and other charges included in Sub-projects paid by the Power Companies before the Effective Date and the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan allocated from time to time to the Categories in accordance with the provisions of, and in the percentages set forth in, the table in paragraph 1 of Schedule 1 to this Agreement. 2. Payments out of the Special Account shall be made exclusive- ly for eligible expenditures in accordance with the provisions of this Schedule. For each withdrawal, the Account Bank shall debit the Special Account with the dollar equivalent of the amount in pesos, or any other currency other than dollars so withdrawn, determined on the basis of the rate of exchange between the dollar and such currency in effect. 3. The Bank shall, at the request of the Borrower, withdraw on behalf of the Borrower from the Loan Account and deposit into the Special Account the Initial Deposit. Thereafter and on the basis of requests by the Borrower furnished to the Dank at such in- tervals as the Bank shall specify, the Bank shall further so withdraw from the Loan Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for eligible expenditures, but only to the extent that the amount of any such deposit, together with any amount remaining on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of the initial deposit. Except as the Bank may otherwise agree, each such deposit after the initial deposit shall be withdrawn by the Bank from the Loan Account under the respective Categories, and in the respective equivalent amounts, as shall have been justi- fied by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. - 25 - 4. Prior to or at the time of each request by the Borrower for a deposit by the Bank into the Special Account after the initial deposit, the Borrower shall furnish to the Bank in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Bank shall reasonably request, showing that such payment was made for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, no further deposit into the Special Account may be made by the Bank (a) when the Bank shall have determined at any time that all further withdrawals can be made directly by the Borrower from the Loan Account in accordance with the provisions of paragraph (a) of Section 2.02 of the Loan Agreement, or (b) when the total unwithdrawn amount of the Loan allocated to Categories minus the amount of any qualified agreement to reimburse made by the Bank and of any special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Categories, shall be equal to the equivalent of $70,000,000. Withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the Categories shall follow such procedures as the Bank shall specify by notice to the Borrower and shall, except as the Bank shall otherwise agree, be made only after and to the extent the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. If the Bank shall have determined at any time that: (a) any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to para- graph 2 of this Schedule, or (ii) was not justified by the evi- dence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Bank and, unless otherwise agreed by the Bank, prior to any further deposit into the Special Account by the Bank, deposit into the Special Account or, if the Bank shall so request, refund to the Bank an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or (b) any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, and unless otherwise agreed by the Bank, refund to the Bank such amount then outstanding in the Special Account. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day of -J 198f. FOR SECRETARY