Conformed Copy - L2961 - Water Supply and Sewerage Sector Project - Supplemental Guarantee Agreement

Page 1 CONFORMED COPY LOAN NUMBER 2961 CO (Water Supply and Sewerage Sector Project) between REPUBLIC OF COLOMBIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated November 8, 1991 LOAN NUMBER 2961 CO SUPPLEMENTAL GUARANTEE AGREEMENT AGREEMENT, dated November 8, 1991 between REPUBLIC OF COLOMBIA (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS: (A) by a loan agreement, dated February 8, 1989, between the Bank and Banco Central Hipotecario (hereinafter called BCH) (such agreement as amended to this date hereinafter called the Loan Agreement), the Bank made a loan (hereinafter called the Loan) to BCH in an amount in various currencies equivalent to one hundred and fifty million United States dollars (US$150,000,000) on the terms and conditions set forth or referred to in the Loan Agreement; (B) by a guarantee agreement, dated February 8, 1989, between the Guarantor and the Bank (such agreement hereinafter called the Guarantee Agreement), the Guarantor guaranteed the obligations of BCH set forth or referred to in the Loan Agreement, on the terms and conditions set forth or referred to in the Guarantee Agreement; (C) Law No. 57 of the Guarantor, dated November 14, 1989, provides that the assets and liabilities of Fondo Financiero de Desarrollo Urbano, administered by BCH, are to be transferred to Page 2 Financiera de Desarrollo Territorial (hereinafter called FINDETER); (D) the Guarantor, BCH and FINDETER have requested the Bank to agree to the undertaking by FINDETER of all of BCH's covenants, agreements and obligations set forth or referred to in the Loan Agreement, and, for that purpose, to enter into a loan assumption agreement (hereinafter called the Loan Assumption Agreement) of even date herewith among the Bank, BCH and FINDETER; (E) the Guarantor has agreed to confirm its obligations set forth or referred to in the Guarantee Agreement with respect to FINDETER; (F) the Bank has agreed to the request of the Guarantor, BCH and FINDETER based on the representations made by them about the finances and operations of FINDETER; and WHEREAS, on the basis, inter alia, of the foregoing, the Guarantor and the Bank have agreed to enter into this Supplemental Guarantee Agreement upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions Section 1.01. Article X of the "General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 1, 1985", shall apply to this Supplemental Guarantee Agreement as if this Supplemental Guarantee Agreement were the Guarantee Agreement. ARTICLE II Particular Covenants of the Guarantor Section 2.01. For purposes of the Guarantee Agreement, the Guarantor hereby approves the Loan Assumption Agreement and agrees and confirms that the Guarantee Agreement, as amended and supplemented herein, shall remain in full force and effect in respect of the obligations set forth or referred to therein and in the Loan Agreement, as amended. Section 2.02. The Guarantor shall cause FINDETER to perform punctually all of its obligations under the Loan Assumption Agreement. ARTICLE III Amendments to the Guarantee Agreement Section 3.01. The Guarantee Agreement is hereby amended as follows: 1. Section 2.02 (b) is amended by replacing the words "the Borrower, DWSS and CENAGUAS", on the third line thereof, by "the Borrower and DWSS". 2. Section 2.03 is amended to read as follows: Section 2.03. Without limitation or restriction to Section 2.01 of this Agreement, the Guarantor shall take all necessary and adequate action to enable, and refrain from taking any action which would prevent, the Borrower to comply with the terms and conditions set forth in Schedule 7 to the Loan Agreement, including the rediscount rates, spreads and interest rate ceiling provided therein. 3. Section 2.07 (a), is amended as follows: (i) the word "CENAGUAS" is deleted from the fourth line; and (ii) the phrase "financial policies of the Borrower, participation of financial intermedaries in the Borrower's operation, financial Page 3 performance of the Borrower" is inserted between the words "tariff policy" and "and performance" in the eighth line. 4. Section 2.07 (b) is amended by deleting the period at the end of the paragraph and adding the following: ", including adjustments, within the terms and conditions set forth in Schedule 7 to the Loan Agreement, of the rediscount rates, spread and interest rate ceiling applied by the Borrower in its lending operations." 5. In Section 2.08 (b), the reference to "Section 3.02 (f) of the Loan Agreement" is replaced by "Section 3.02 (b) of the Loan Agreement". 6. Section 3.01 (c) is amended to read as follows: "(c) The Guarantor shall carry out Part C.1 and Part C.2 of the Project in accordance with plans of action and timetables, satisfactory to the Bank, to be provided to the Bank not later than May 31, 1989, in the case of Part C.1 of the Project, and not later than October 31, 1991, in the case of Part C.2 of the Project." 7. In Section 3.01 (d) (i), second line, the words "Part C of the Project" are replaced by "Part C.1 of the Project". ARTICLE IV Effectiveness Section 4.01. This Supplemental Guarantee Agreement and the amendments to the Guarantee Agreement herein contained shall become effective on the date on which the Loan Assumption Agreement becomes effective. ARTICLE V Addresses Section 5.01. The following addresses are specified for the purposes of any notice required or permitted to be given under the Loan Assumption Agreement and this Agreement: For the Guarantor: Ministerio de Hacienda y Crhungarumlautdito P