Conformed Copy - L3083 - Hydroelectric Development Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3083 ME (Hydroelectric Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and NACIONAL FINANCIERA, S.N.C. Dated September 25, 1989 LOAN NUMBER 3083 ME LOAN AGREEMENT AGREEMENT, dated September 25, 1989 between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and NACIONAL FINANCIERA S.N.C. (the Borrower). WHEREAS (A) the United Mexican States (the Guarantor), the Borrower and COMISIiN FEDERAL DE ELECTRICIDAD (CFE), having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, have requested the Bank to assist in the financing of the Project; (B) by an agreement (the Guarantee Agreement) of even date herewith between the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Loan and to undertake such other obligations as set forth in the Guarantee Agreement; Page 2 (C) by an agreement (the Project Agreement) of even date herewith, between the Bank and CFE, the latter has agreed to undertake the obligations set forth in the Project Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985 (the General Conditions), with the last sentence of Section 3.02 deleted, constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Peso" means the currency of the Guarantor; (b) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (c) "CFE" means Comision Federal de Electricidad, (Federal Electricity Commission) wholly owned by the Guarantor and estab- lished by the Ley que crea la Comision Federal de Electricidad, published in the Diario Oficial of the Guarantor on August 24, 1937 as amended through October 1, 1988; (d) "SEMIP" means Secretaria de Energia, Minas e Industria Paraestatal, (Ministry of Energy, Mines and Parastatal Industries) of the Guarantor; (e) "Project Agreement" means the agreement between the Bank and CFE of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (f) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and CFE pursuant to Section 3.01 (a) of this Agreement, as the same may be amended from time to time, and such term includes all schedules and agreements supple- mental to the Subsidiary Loan Agreement; (g) "Financial Rehabilitation Agreement" means the agreement between the Guarantor and CFE dated August 20, 1986, and when applicable, as amended pursuant to Section 3.05 (c) of the Guarantee Agreement; (h) "Ten-Year Investment Plan" means the Programa de Obras e Inversiones del Sector Electrico - POISE, the program of works and investments for the electric power sector of the Guarantor dated March 3, 1989; and (i) "Environmental and Resettlement Plan" means the plan of action to carry out Part B of the Project, including the guide- lines for directing the process of mobilization, resettlement, rehabilitation, compensation and environment protection, and a detailed schedule for implementation, furnished to the Bank on April 21, 1989. ARTICLE II The Loan Page 3 Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to four hundred and sixty million dollars ($460,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement 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. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account 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 pro- visions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1996 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment 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 2.05. (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-half of one percent (1/2 of 1%) 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 practicable after the end of each Semester, the Bank shall notify the Guarantor and the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six-month period com- mencing on each date specified in Section 2.06 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost of the outstanding borrowings of the Bank drawn down after June 30, 1982, expressed as a percentage per annum, as reasonably determined by the Bank. (iii) "Semester" means the first six months or the second six months of a calendar year. Section 2.06. Interest and other charges shall be payable semiannually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Transfer of Loan Proceeds; Execution of the Project; Other Covenants Section 3.01. (a) The Borrower shall lend the proceeds of the Loan to CFE for purposes of carrying out the Project under a sub- sidiary loan agreement, satisfactory to the Bank, to be entered into between the Borrower and CFE, and that shall include, inter alia, the following terms and conditions: Page 4 (i) the funds lent to CFE shall be denominated in dollars; (ii) CFE shall pay the same charges, interest and have the same amortization period as are set forth in Sections 2.04 through 2.07 of this Agreement, on all amounts withdrawn and outstanding under the Subsidiary Loan Agreement; and (iii) CFE shall pay a fee to the Borrower of 10% of the interest due and payable on amounts withdrawn and outstanding under the Subsidiary Loan Agreement. (b) Except as the Bank shall otherwise agree, the Borrower shall not change or fail to enforce the Subsidiary Loan Agreement, or any provision thereof. Section 3.02. Except as the Bank shall otherwise agree, pro- curement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 3.03. The Bank and the Borrower hereby agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating respectively to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) shall be carried out: (i) in respect of Parts A, B, and D of the Project, by CFE pursuant to Section 2.04 of the Project Agreement; and (ii) in respect of Part C of the Project by the Guarantor pursuant to Section 3.03 of the Guarantee Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain, or cause to be maintained, the Special Account, and separate records and accounts adequate to reflect in accordance with sound accounting practices, the resources and expenditures in connection with the execution of the Project: (b) The Borrower shall: (i) have such separate records and the Special Account for each fiscal year audited, in accordance with generally accepted auditing standards and practices consistently applied, by independent and qualified auditors; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; (iii) furnish to the Bank each month certified statements of the Special Account; and (iv) furnish to the Bank such other information concern- ing the Special Account, the audit thereof and said records as the Bank shall from time to time reason- ably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain, or cause to be maintained, in accordance with paragraph (a) of this Section, records and Page 5 accounts reflecting such expenditures; (ii) retain, or cause to be retained, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the proce- dures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional events are specified: (a) CFE shall have failed to perform any of its obligations under the Project Agreement; (b) as a result of events which have occurred after the date of the Loan Agreement, an extraordinary situation shall have arisen which shall make it improbable that CFE will be able to perform its obligations under the Project Agreement; (c) the Guarantor or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of CFE, or for the suspension of its operations; and (d) a change shall have been made in the Environmental and Resettlement Plan which could materially and adversely affect the carrying out of the Project, or any part thereof. Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) 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; and (b) the event specified in paragraph (c) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and CFE; and (b) that CFE has made progress satisfactory to the Bank in the implementation of Part B.1 of the Project. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Page 6 Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly executed and authorized, and is legally binding upon, CFE in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been executed and duly authorized by, and is legally binding upon, the Borrower and CFE in accordance with its terms. Section 6.03. The date December 27, 1989 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Director Internacional of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. 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: Direccion Internacional Nacional Financiera, S.N.C. Plaza NAFINSA, Insurgentes Sur 1971 Torre Sur, 11