Colombia - Second Expansion Program : Loan 0313 - Loan Agreement - Conformed

LOAN NUMBER 313 CO Loan Agreement (Second Expansion Program) 3ETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND EMPRESA DE ENERGIA ELECTRICA DE BOGOTA DATED MAY 23, 1962 LOAN NUMBER CO Loan Agreement (Second Expansion Program) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND EMPRESA DE ENERGIA ELECTRICA DE BOGOTA DATED MAY , 1962 Can Agrunment AGREEMENT, dated May 23, 1962, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and EMPRESA DE ENERGIA ELECTRICA DE BOGOTA (hereinafter called the Borrower). WHEREAS by a loan agreement dated January 20, 1960, between the Bank and the Borrower (hereinafter called the First Loan Agreement) the Bank agreed to lend to the Borrower on the terms and conditions therein set forth the sum of $17,600,000, or the equivalent thereof in currencies other than dollars, for the purpose of financilig a project for the expansion of its facilities; and WHEREAS the Bank has agreed to make a loan to the Borrower upon the terms and conditions hereinafter set forth; Now THEREFORE, it is hereby agreed as follows: ARTICLE I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated February 15, 1961, with the same force and effect as if they were fully set forth herein, subject, however, to the following modification thereof (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations): namely, that Section 4.01 of the Loan Regu- lations is deleted. SECTION 1.02. Unless the context otherwise requires, wherever used in this Agreement, the term "CAR" shall mean Corporacion Autonomna Regional de La Sabana de Bogota y Valles de Ubate by Chiquinquira, an agency of the Guarantor. 4 ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to fifty million dollars ($50,000,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to the rights of cancellation and suspension set forth in, this Agreement and the Loan Regulations. SECTION 2.03. Except as the Bank shall otherwise agree, the Borrower shall be entitled, subject to the provisions of this Agreement to withdraw from the Loan Account: (a) such amounts as shall have been expended after June 30, 1961 for the reasonable foreign currency cost of goods to be financed under this Agreement; (b) the equivalent in currencies as reasonably selected by the Bank of such amounts as shall have been expended in the currency of the Guarantor after December 31, 1960 for the reasonable cost of services required for part 9 of the Project and not included in (a) above; and (c) if the Bank shall so agree, such amounts as shall be required by the Borrower to meet payments under each of the foregoing paragraphs: Provided, however, that no withdrawals shall be made on account of: (i) expenditures required for part 8 of the Project unless and until (A) the Bank and the Borrower shall have agreed on the program to be undertaken by CAR and (B) the Bank shall have approved the financial and administrative arrangements between the Borrower and CAR for the carrying out of such part of the Project, or (ii) expenditures made in the territories of any country 5 (except Switzerland) which is not a member of the Bank or for goods produced in (including services supplied from) such territories. 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 so withdrawn from time to time. SECTION 2.05. The Borrower shall pay interest at the rate of five and three-fourths per cent (5%/7c) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.06. Except as the Bank and the Borrower shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one half of one per cent ( of 1o) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.07. Interest and other charges shall be pay- able semi-annually on February 1 and August 1 in each year. SECTION 2.08. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall apply the proceeds of the Loan exclusively to financing the cost of goods required to carry out the Project described in Schedule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan and the methods and procedures for procurement of such goods shall be determined by agree- ment between the Bank anid the Borrower, subject to modi- fication by further agreement between them. 6 SECTION 3.02. Except as the Bank shall otherwise agree, the Borrower shall cause all goods financed out of the pro- ceeds of the Loan to be imported into the territories of the Guarantor and there to be used exclusively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The General Manager (Gerente General) of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representa- tives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with sound engineering and financial practices. To assist it in carrying out the Project the Borrower shall employ competent and experienced engineering consultants and contractors under terms and conditions satisfactory to the Bank. The Borrower shall also add to its staff competent technical and financial personnel. (b) Upon request from time to time by the Bank, the Borrower shall promptly furnish or cause to be furnished to the Bank the plans, specifications and work schedules for the Project and any material modifications subsequently made therein, in such detail as the Bank shall reasonably request. (c) The Borrower shall maintain records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the 7 progress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial conditions of the Borrower. (d) The Borrower shall enable the Bank's representa- tives to inspect the Project, the goods, all other plants, works, properties and equipment of the Borrower and any relevant records and documents. (e) The Borrower shall furnish to the Bank all such information as the Bank shall reasonably request concern- ing the expenditure of the proceeds of the Loan, the Project, the goods and the operations and financial condition of the Borrower. (f) The Borrower shall have its financial statements (balance sheet and related statement of earnings and ex- penses) certified annually by an independent accountant or accounting fiim acceptable to the Bank and shall promptly affer their preparation and not later than four months after the close of the Borrower's fiscal year transmit to the Bank certified copies of such statements and a signed copy of the accountant's or accounting firm's report. SECTION 5.02. (a) The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. (b) The Bank and the Borrower shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. SECTION 5.03. The Borrowei undert.akes dhat, except as the Bank shall otherwise agree, if any lien shall be created I 8 on any assets of the Borrower, or of any corporation or company all or a majority of the capital stock of which shall be owned by the Borrower, as security for any debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provisions will be made to that effect; provided, however, that the foregoing provisions of this Section shall not apply to: (i) any lien created on prop- erty, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (ii) any lien arising in the ordinary course of banking transactions and securing a.debt maturing not more than one year after its date. SECTION 5.04. The Borrower shall pay or cause to be paid all taxes, if any, imposed under the laws of the Guar- antor or laws in effect in the territories of the Guarantor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds, or the payment of principal, interest or other charges thereunder; provided, howqver, that the provi- sions of this Section shall not apply to taxation of, pay- ments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 5.05. The Borrower shall pay or cause to be paid all taxes, if any, imposed under the laws of the coun- try or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries on or in connection with the execu- tion, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.06. (a) The Borrower shall insure or cause to be insured with responsible insurers all goods financed out of the proceeds of the Loan. Such insurance shall cover such marine, transit and other hazards incident to purchase and 9 importation of the goods into the territory of the Borrower and delivery thereof to the site of the Project, and shall be for such amounts, as shall be consistent with sound com- mercial practices. Such insurance shall be payable in dollars or in the currency in which the cost of the goods ;nsured thereunder shall be payable. (b) In addition, the Borrower shall take out and main- tain, with responsible insurers, insurance against such risks and in such amounts as shall be consistent with sound public utility and business practices. SECTION 5.07 (a) The Borrower shall at all times main- tain its existence and right to carry on operations and shall, except as the Bank shall otherwise agree, take all steps necessary to maintain and renew all rights, powers, privi- leges and franchises which are necessary or useful in the conduct of its business. (b) The Borrower shall operate and maintain its plants, equipment and property, and from time to time make all necessary renewals and repairs thereof, all in accordance with sound engineering standards; and shall at all times operate its plants and equipment and maintain its financial position in accordance with sound business, financial and public utility principles and practices. SECTION 5.08. Except as the Bank shall otherwise agree, the Borrower shall not sell, lease, transfer or otherwise dispose of its property and assets or of the property in- cluded in the Project or any plant included therein, except in the ordinary course of business. SECTION 5.09. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur debt unless its net revenues for the fiscal year next preceding such incurrence or for a later twelve-month period ended prior to such incurrence, whichever is the gieater, shall be not less than 1.3 times the naxinnini debt service requirements 10 for any succeeding fiscal year on all debt, including the debt to be incurred. For the purposes of this Section: (a) The term "debt" shall include the assumption and guarantee of debt and shall mean all indebtedness of the Borrower maturing by its terms more than one year after the date on which it is incurred and indebtedness maturing on demand, or by its terms in one year or less, in excess of 15,000,000 Colombian pesos; (b) Debt shall be deemed to be incurred on the date of execution and delivery of a contract or loan agreement providing for such debt; (c) The term "not revenues" shall mean gross revenues from all sources, adjusted to take account of rates in effect at the time of the incurrence of debt even though they were not in effect during the fiscal year or twelve-month period to which such revenues relate, less all operating and administrative expenses, including provisions for taxes, if any, but before provision covering depreciation, interest and other charges on debt; (d) The term "debt service requirement" shall mean the aggregate amount of amortization (including sinking fund payments, if any) interest and other charges on debt; and (e) 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 valu- ation 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. SECTION 5.10. The Borrower shall take all steps neces- sary or desirable to obtain such adjustments in its rates as will provide revenues sufficient: (a) to cover operating expenses, including taxes, if any, adequate maintenance and depreciation, and interest; (b) to meet repayments on long- term indebtedness to the extent that such repayments shall 11 exceed provision for depreciation; and (c) to leave, after paying, or providing for, dividends, if any, a reasonable surplus to finance new investment. ARTICLE VI Remedies of the Bank SECTION 6.01 (i) If any event specified in paragraph (a), paragraph (b), paragraph (e), paragraph (f) or paragraph (j) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. SECTION 6.02. For the purposes of Section 5.02 (j) of the Loan Regulations, the following additional event is specified, namely, any event specified or referred to in Section 6.01 of the First Loan Agreement. ARTICLE VII Modification of First Loan Agreement SECTION 7.01. For the purposes of the First Loan Agree- ment, paragraph (a) of Section 5.02 of Loan Regulations No. 4 of the Bank, dated June 1j', 1956, is hereby amended to read as follows: " (c) A default shall have occurred in the perform- ance of any other covenant or agreement on the part of the Borrower or the Guarantor under the Loan Agreement, the Guarantee Agreement or the Bonds or under the loan agreement dated May , 1962, the 12 guarantee agreement of even date therewith, or the bonds therein provided for". ARTICLE VIII Effective Date; Termination SECTION 8.01. The following event is specified as an additional condition to the effectiveness of this Agreement within the meaning of Section 9.01 (c) of the Loan Regu- lations, namely, that the Borrower shall have made arrange- ments satisfactory to the Bank to obtain funds required to finance the local currency costs of the Project. SECTION 8.02. The following is specified as an additional matter within the meaning of Section 9.02 (c) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank, namely, that the arrangements required pursuant to Section 8.01 are valid and binding. SECTION 8.03. A date 90 days after the date of this Agreement is hereby specified for the purposes of Sec- tion 9.04 of the Loan Regulations. ARTICLE IX Miscellaneous SECTION 9.01. The Closing Date shall be December 31, 1965, or such other date as shall be agreed by the Bank and the Borrower as the Closing Date. SECTION 9.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Empresa de Energia Electrica de Bogota Bogota, Colombia Alternative address for cablegrams and radiograms: Energia Bogota, Colombia 13 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ EUGENE R. BLACK President EMPRESA DE ENERGIA ELECTRICA DE BOGOTA By /s/ MANUEL J. MADERO PARIS Authorized Representative 14 SCHEDULE 1 Amort."zation Schedule Payment of Principal Date Payment Due (expressed in dollars)* February 1, 1966 $ 605,000 August 1, 1966 620,000 February 1, 1967 640,000 August 1, 1967 655,000 February 1, 1968 675,000 August 1, 1968 695,000 February 1, 1969 715,000 August 1, 1969 735,000 February 1, 1970 755,000 August 1, 1970 780,000 February 1, 1971 800,000 August 1, 1971 825,000 February 1, 1972 850,000 August 1, 1972 870,000 February 1, 1973 895,000 August 1, 1973 925,000 February 1, 1974 950,000 August 1, 1974 975,000 February 1, 1975 1,005,000 August 1, 1975 1,035,000 February 1, 1976 1,065,000 August 1, 1976 1,095,000 February 1, 1977 1,125,000 August 1, 1977 1,160,000 February 1, 1978 1,190,000 August 1, 1978 1,225,000 February 1, 1979 1,260,000 August 1, 1979 1,295,000 February 1, 1980 1,335,000 August 1, 1980 1,370,000 February 1, 1981 1,410,000 August 1, 1981 1,450,000 February 1, 1982 1,495,000 August 1, 1982 1,535,000 February 1, 1983 1,580,000 August 1, 1983 1,625,000 February 1, 1984 1,675,000 August 1, 1984 1,720,000 February 1, 1985 1,770,000 August 1, 1985 1,820,000 February 1, 1986 1,875,000 August 1, 1986 1,930,000 February 1, 1987 1,990,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.03), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 15 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than three years before maturity. % More than three years but not more than six years before maturity............... 1% More than six years but not more than eleven years before maturity........... 134% More than eleven years but not more than sixteen years before maturity.........2. . 2% More than sixteen years but not more than twenty-one years before maturity....... 3% More than twenty-one years but not more than twenty-three years before maturity. 43/4o More than twenty-three years before maturity .............. ...... 53/4% 16 SCHEDULE 2 Description of Project The Project consists of the expansion of the power generation and distribution facilities of the Borrower through installation of new hydroelectric and thermo- electric facilities and additions to the Borrower's trans- mission and distribution system. The Project includes the following major elements: 1. Construction on the Bogota River of a new hydro- electric power plant known as El Colegio. Three 50 MW units will be installed in the new station which will be laid out to permit emplacement in the future of three additional 50 MW units. 2. Installation of a second thermal unit of about 33 MW at Zipaquira, consisting of a single unit boiler, turbine- generator, condenser and necessary auxiliary equipment. 3. The heightening by approximately 11 meters of the Guatavita earth-fill dam presently under construction on the Siecha River. 4. The installation of a second station near Alicachin to pump water from the Bogota River into the Muna Reser- voir. The installation will include an 8 cubic meter per second electrically driven pump, penstock, outlet structure and other equipment necessary for a complete installation. 5. Further modernization and expansion of 115 kv and 57.5 kv substations and transmission circuits. 6. Further modernization and expansion of the secondary voltage distribution system in the service area. 7. Procurement and installation of new machine shop equipment, overhaul of equipment in the existing Charquito Thermal Station and procurement of construction equip- ment. 8. Extension of transmission and distribution facilities in areas served by CAR. 9. The consulting engineering services necessary for the proper execution of the Project.