Costa Rica - Power And Telecommunications Project : Loan 0346 - Loan Agreement - Conformed

LOAN NUMBER 346 CR Loan Agreement (Power and Telecommunication Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INSTITUTO COSTARRICENSE DE ELECTRICIDAD DATED JULY 10, 1963 LOAN NUMBER 346 CR Loan Agreement (Power and Telecommunication Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INSTITUTO COSTARRICENSE DE ELECTRICIDAD DATED JULY 10, 1963 . [van Agrunmrnt AGREEMENT, dated July 10, 1963, between INTERNA- TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank) and INSTITUTO COSTARRICENSE DE ELECTRICIDAD (hereinafter called the Borrower). WHEREAS, by an agreement dated February 3, 1961 between the Bank and the Borrower, the Bank agreed to lend to the Borrower an amount in various currencies equivalent to eight million eight hundred thousand dollars to assist the Borrower in the expansion of its power gen- eration and transmission facilities; and WHEREAS the Borrower has requested the Bank to make a second loan to assist it in financing (i) the further expan- sion of its power generation and transmission facilities and (ii) the establishment of a telecommunication system in Costa Rica; Now THEREFORE, the parties hereto hereby agree as follows: Article I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loan Agreement ac- cept 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 (said Loan Regulations No. 4 being hereinafter called the Loan Regulations). SECTION 1.02. Wherever used in this Loan Agreement, unless the context shall otherwise require, the following terms shall have the following meanings: 1. The term "Mortgage" shall mean the Original Mort- gage, as defined in Section 6.01 of this Agreement, and 4 shall include any Supplemental Mortgage constituted pur- suant to the provisions of Section 6.01 of this Agreement. 2. The term "Long-term Indebtedness" shall mean any debt maturing by its terms more than one year after the date on which it is originally incurred. 3. The term "colones" and the sign "O" shall mean colones in the currency of the Guarantor. 4. The term "Decree Law No. 449" shall mean Decreto Ley No. 449 of the Guarantor, issued on April 8, 1949, and shall include any amendments thereof in effect at the date of this Agreement. 5. The term "First Loan Agreement" shall mean the loan agreement (Rio Macho Hydroelectric Project), dated February 3, 1961, between the Bank and the Borrower, and shall include such changes in said agreement as may from time to time be agreed by the Bank and the Borrower. 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 twenty-two million dollars ($22,000,000). 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 sus- pension set forth in, the Loan Agreement. SECTION 2.03. 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 2.04. The Borrower shall pay interest at the rate of five and one-half per cent (51/2%) per annum on the 5 principal amount of the Loan so withdrawn and outstand- ing from time to time. SECTION 2.05. 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 (1/ of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on March 1 and September 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. SECTION 2.08. Except as the Bank shall otherwise agree, if the Borrower shall repay, in advance of matitrity, all or part of its indebtedness then outstanding under the First Loan Agreement, the Borrower shall repay, in advance of maturity, all or a proportionate amount, as the case may be, of the Loan then outstanding. Any amount of the Loan to be repaid pursuant to the foregoing provisions of this Section which cannot be applied to the payment of an entire maturity may, notwithstanding the provisions of subsection (b) of Section 2.05 of the Loan Regulations, be applied to the payment of a part of a maturity only. In all other respects the provisions of the Loan Regulations relat- ing to repayment in advance of maturity shall apply to any repayment of the Loan pursuant to this Section. 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 re- quired to carry out the Project described in Schedule 2 6 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 agreement between the Bank and the Borrower, subject to modification by further agreement between them. SECTION 3.02. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds 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. In addition to the provisions set forth in the Loan Regulations, the Bonds shall contain: (a) provisions satisfactory to the Bank to the effect that the Mortgage will equally and ratably secure pay- ment of the principal of, interest, premium, if any, on prepayment or redemption, and other charges on, the Loan and the Bonds; and (b) in the event the Bank shall have assigned the Mort- gage to a trustee or trustees or a similar fiduciary or fiduciaries, as contemplated in Section 6.03 of this Agreement, provisions satisfactory to the Bank to the effect that any and all rights or powers, under the Mortgag,, of any holder of the Bonds, will be exercised by such trustee or trustees or fiduciary or fiduciaries. SECTION 4.03. Bonds executed and delivered by the Bor- rower prior to the date on which the Bank shall have as- signed the Mortgage to a trustee or trustees or a similar 7 fiduciary or fiduciaries, as contemplated in Section 6.03 of this Agreement, shall, as soon as practicable after the Bank shall have so requested the Borrower and without charge to the Bank, be exchanged for new Bonds containing provisions complying with the terms of Section 4.02 (b) of this Agreement. SECTION 4.04. The Gerevte General of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representatives 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 the Borrower in carrying out the Project, the Borrower shall employ consulting engineers acceptable to the Bank, upon terms and conditions satisfactory to the Bank. (b) Upon request from time to time by the Bank, the Borrower shall promptly furnish to the Bank the plans and specifications for the Project and any material modi- fications subsequently made therein, in such detail as the Bank shall from time to time 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 progress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower; shall submit annually to the Bank an audit report of, and financial statements certified by, inde- pendent public accountants satisfactory to the Bank; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such information as the Bank 8 shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the goods, and the opera- tions and financial condition of the Borrower. SECTION 5.02. (a) The Bank and the Borrower shall co- operate 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 reason- ably 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 Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of 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 provision will be made to that effect; provided, however, that, except with respect to any property used or to be used for the construction of the Cachi hydroelectric plant, described in Part A paragraphs 1 through 5 of Schedule 2 to this Agreement, or for the construction of such part of the telecommunication system as is described in Part B paragraph 1 of Schedule 2 to this Agreement, the foregoing provisions of this Section shall not apply to: (i) 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 (ii) any lien arising in the ordi- nary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. 9 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, the Mortgage or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the provisions of this Section shall not apply to taxa- tion of payments 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 execution, issue, delivery or registration of this Agreement, the Guar- antee Agreement, the Mortgage or the Bonds. SECTION 5.06. (a) Except as the Bank and the Borrower shall otherwise agree, the Borrower shall insure or cause to be insured with responsible insurers the goods financed out of the proceeds of the Loan against risks incident to their purchase and importation into the territories of the Guarantor and to the delivery thereof to the site of the Project. Such insurance shall be consistent with sound commercial practice and shall be payable in the currency in which the cost of the goods insured thereunder shall be payable or in any convertible currency. (b) In addition, the Borrower shall insure against such risks and in such amounts as shall be consistent with sound business and public utility 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, 10 privileges 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 and public utility practices. (c) The Borrower shall not, without the consent of the Bank, sell or otherwise dispose of all or substantially all of its property and assets or all or substantially all of the property included in the Project or any plant or building the cost of which is financed in whole or in part out of the proceeds of the Loan, unless the Borrower shall first pay or redeem, or make adequate provision satisfactory to the Bank for payment or redemption of, all of the Loan and the Bonds which shall then be outstanding and unpaid. SECTION 5.08. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur any debt unless its net revenue for the fiscal year next preceding such incurrence or for a later twelve-month period ended prior to such incurrence, whichever is the greater, shall be not less than 1.5 times the maximum debt service require- ment 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: (i) Long-term Indebted- ness, (ii) any debt maturing on demand, and (iii) any debt, in excess of ten million colones (910,000,000), maturing by its terms in one year or less. (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. 11 (c) The term "net revenues" shall mean revenue from all sources, adjusted to take account of power and telecom- munication rates in effect at the time of the calculation 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 pro- visions for taxes, if any, but before provision covering de- preciation, 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. SECTION 5.09. The Borrower shall from time to time take all steps necessary or desirable to obtain such adjustments in its power and telecommunication rates as will provide revenues sufficient: (a) to cover operating expenses, in- cluding adequate maintenance and depreciation, taxes and interest; (b) to meet repayments on Long-term Indebted- ness but only to the extent that such repayments shall exceed provision for depreciation; and (c) to create a sur- plus for financing a reasonable portion of future expansion of its power and telecommunication facilities. SECTION 5.10. (a) The Borrower shall promptly take all steps which shall be necessary to obtain title to the prop- erties used or to be used for the construction of the Cachi hydroelectric plant described in Part A paragraphs 1 through 5 of Schedule 2 to thik Agreement, free of all liens and encumbrances. (b) Promptly after acquiring an ownership interest in any property used or to be used for the construction of the Cachi hydroelectric plant, described in Part A para- graphs 1 through 5 of Schedule 2 to this Agreement, or for the construction of such part of the telecommunication sys- tem as is described in Part B paragraph 1 of Schedule 2 to this Agreement, the Borrower shall notify the Bank of such 12 acquisition, specifying all liens and encumbrances, if any, existing on such property at the time title is obtained by the Borrower. ARTICLE VI Mortgage SECTION 6.01. (a) Promptly after acquiring title to any property used or to be used for the construction of the Cachi hydroelectric plant, described in Part A paragraphs 1 through 5 of Schedule 2 to this Agreement, the Borrower shall take such action and execute and deliver to the Bank, in form and substance satisfactory to the Bank, such instru- ment or instruments (hereinafter called the Original Mort- gage) as shall be necessary to constitute under the laws of the Guarantor, in favor of the Bank and of the holders from time to time of the Loan and the Bonds, a hipoteca y prenda. industrial, both de primer grado, on all such property. (b) The Borrower shall thereafter from time to time within sixty days after receipt of a request from the Bank to that effect, take such action and execute and deliver to the Bank, in form and substance satisfactory to the Bank, such supplemental instrument or instruments (each such supplemental instrument being hereinafter called the Sup- plemental Mortgage) as shall be necessary to constitute under the laws of the Guarantor, in favor of the Bank and of the holders from time to time of the Loan and the Bonds, a hipoteca y prenda industriil, both de primer grado, on so much of the property used or to be used for the construction of such part of the telecommunication system described in Part B paragraph 1 of Schedule 2 to this Agreement, as shall be specified in such request; provided, however, that if the Borrower shall so desire and the Bank shall so agree, the Borrower shall instead within sixty days after receipt of a request from the Bank to that effect, take such action and execute and deliver to the Bank, in form and substance satisfactory to the Bank, such supplemental instrument or instruments as shall be necessary to modify the hipoteca y 13 prenda industrial, constituted pursuant to Article VI of the First Loan Agreement, to the effect that such hipoteca y prenda industrial shall secure the Loan, in favor of the Bank and of the holders from time to time of the Loan and the Bonds, in addition to the loan made by the Bank to the Borrower under the First Loan Agreement. (c) The hipotecas y prendas industriales de primer grado provided for in paragraph (a) and paragraph (b) of this Section shall equally and ratably secure payment of the principal of, interest, premium, if any, on prepayment and redemption, and other charges on, the Loan and the Bonds. SECTION 6.02. (a) The Borrower shall duly record, regis- ter and file and re-record, re-register and re-file the Original Mortgage and each Supplemental Mortgage in every juris- diction for which the Bank may from time to time request any such recording, registration or filing or where such recording, registration or filing may be necessary or de- sirable in order to render or maintain the Mortgage a valid and enforceable first lien. (b) Promptly after execution and delivery of each Mort- gage the Borrower shall furnish to the Bank: (i) evidence satisfactory to the Bank that such Mortgage has been duly recorded, registered and filed in accordance with the laws of the Guarantor in all such jurisdictions as may be re- quired under the laws of the Guarantor to make it a valid and enforceable first lien in favor of the Bank and of the holders from time to time of the Loan and the Bonds; and (ii) an opinion or opinions satisfactory to the Bank, of counsel acceptable to the Bank, that such Mortgage has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower, that it has been duly recorded, registered and filed in such jurisdictions as may be re- quired under the laws of the Guarantor to make it a valid and enforceable first lien, that it constitutes a. valid first lien under the laws of the Guarantor enforceable in accord- ance with its terms, and that at the dates of the Mortgage 14 and of the recording, registration and filing thereof the Borrower had valid title to the property described therein free of all liens and encumbrances other than the liens of the Mortgage. (c) The Borrower shall take all such other action and execute and deliver all such other documents as the Bank may from time to time reasonably request or as may from time to time be required in order to render or maintain the Mortgage a valid and enforceable first lien. SECTION 6.03. The Borrower agrees to the assignment by the Bank, at any time, of the Mortgage to a trustee or trustees, or a similar fiduciary or fiduciaries, which may be the Bank, for the equal and ratable benefit of all holders of the Loan and the Bonds. The Borrower shall take all such action and execute and deliver all such documents as the Bank may from time to time reasonably request or as may from time to time be required in order to render or maintain such assignment of the Mortgage valid and enforceable. SECTION 6.04. In the event the Bank shall appoint a trustee or trustees or a fiduciary or fiduciaries, as in Sec- tion 6.03 of this Agreement provided, the Borrower shall pay all costs and expenses incidental to such appointment or appointments or arising out of the exercise by such trustee or trustees or fiduciary or fiduciaries of his or their functions. ARTICLE VII Remedies of the Bank SECTIOx 7.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 7.02 of this Agreement shall occur, or (ii) if any event specified in paragraph (a), para- graph (b), paragraph (e) or paragraph (f) of Section 5.02 of the Loan Regulations, or any event specified in para- graph (c) of Section 7.02 of this Agreement, shall occur and 15 shall continue for a period of thirty days, or (iii) 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 de- clare 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 7.02. For the purposes of Section 5.02(j) of the Loan Regulations the following events are specified: (a) demand upon the Borrower for repayment in ad- vance of maturity of the loan granted to the Borrower pursuant to the agreement dated August 1, 1958 between the Borrower and Caja Costarricense de Seguro Social, by reason of any default as specified in said agreement; (b) suspension or termination of the right of the Bor- rower to obtain the proceeds of, or demand upon the Bor- rower for repayment in advance of maturity of, the loan referred to in paragraph (a) of Section 8.01 of this Agree- ment by reason of any default as specified in the agreement covering such loan; (c) any amendment, abrogation or waiver of any pro- vision of Decree Law No. 449 without the Bank having, in advance thereof, notified the Guarantor and the Borrower of its concurrence therewith. SECTION 7.03. The Bank and the Borrower hereby agree that for the purposes of the First Loan Agreement and this Loan Agreement, respectively, an event referred to in paragraph (c) of Section 5.02 of the Loan Regulations No. 4 of the Bank applicable to either one of these agreements shall be deemed to be an event under paragraph (c) of 16 Section 5.02 of the Loan Regulations No. 4 of the Bank applicable to the other of these agreements. ARTICLE VIII Effective Date; Termination SECTION 8.01. The following events are specified as addi- tional conditions to the effectiveness of this Agreement within the meaning of Section 9.01(c) of the Loan Regu- lations: (a) The Borrower shall have made arrangements satis- factory to the Bank to borrow an amount of ten million colones (910,000,000) for carrying out Part B of the Project. (b) The President of the Republic of Costa Rica shall have issued a decree or decrees by which all the properties used or to be used for the construction of the Cachi hydro- electric plant, described in Part A paragraphs 1 through 5 of Schedule 2 to this Agreement, are declared expro- priated in favor of the Borrower, or the Borrower shall have acquired ownership title, free of all liens and encum- brances, to such properties, whichever shall take place earlier. SECTION 8.02. The following are specified as additional matters, 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: (a) That the agreement containing the arrangements referred to in paragraph (a) of Section 8.01 above con- titutes a valid and binding obligation of the parties thereto in accordance with its terms. (b) That the decree or decrees referred to in paragraph (b) of Section 8.01 above are valid and effective, or that the Borrower shall have valid title to the properties de- 17 scribed in said paragraph (b) free of all liens and encum- brances, as the case may be. SECTION 8.03. A date ninety days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. ARTICLE IX Miscellaneous SECTION 9.01. The Closing Date shall be September 30, 1967, or such other date as shall be agreed upon from time to time by the Bank and the Borrower. SECTION 9.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Instituto Costarricense de Electricidad Apartado XXXII San Jose, Costa Rica Alternative address for cablegrams and radiograms: ICE San Jose 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. 18 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/ GEORGE D. WOODS President INSTITUTO COSTARRICENSE DE ELECTRICIDAD By /s/ R. GIL P. Authorized Representative 19 SCHEDULE 1 Amortization Schedule Payment of Principal Date payment due (expressed in dollars)* September 1, 1967 $320,000 March 1, 1968 330,000 September 1, 1968 340,000 March 1, 1969 350,000 September 1, 1969 360,000 March 1, 1970 370,000 September 1, 1970 380,000 March 1, 1971 390,000 September 1, 1971 400,000 March 1, 1972 410,000 September 1, 1972 420,000 March 1, 1973 435,000 September 1, 1973 445,000 March 1, 1974 460,000 September 1, 1974 470,000 March 1, 1975 485,000 September 1, 1975 495,000 March 1, 1976 510,000 September 1, 1976 525,000 March 1, 1977 540,000 September 1, 1977 555,000 March 1, 1978 570,000 September 1, 1978 585,000 March 1, 1979 600,000 September 1, 1979 615,000 March 1, 1980 635,000 September 1, 1980 650,000 March 1, 1981 670,000 September 1, 1981 690,000 March 1, 1982 705,000 September 1, 1982 725,000 March 1, 1983 745,000 September 1, 1983 765,000 March 1, 1984 785,000 September 1, 1984 810,000 March 1, 1985 830,000 September 1, 1985 855,000 March 1, 1986 880,000 September 1, 1986 895,000 * 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. 20 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 1/y% 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.......... 11/2% More than eleven years but not more than sixteen years before maturity... .....2% More than sixteen years but not more than nineteen years before maturity ........ 1 3 o' More than nineteen years but not more than twenty-one years before maturity. . 412 More than twenty-one years before m aturity ............................ 512 21 SCHEDULE 2 Description of Project PART A-POWER 'his part of the Project is the construction of the Cachi hydroelectric plant with a capacity of 56 mw, transmission lines and substations extending the existing power system operated by the Borrower and the extension of the Liberia diesel electric plant by 300 kw. The principal items of this part of the Project are: 1. A concrete arch dam, about 54 meters high at Cachi on Rio Reventazon, designed to create a reservoir with a capacity of 10.5 million cubic meters. 2. Intake works on the right bank of Rio Reventazon upstream of the dam equipped with sliding gates and trash racks. 3. A concrete lined pressure tunnel, some 5,940 meters long with a capacity of 35 cubic meters per second and an underground surge tank located at the end of the tunnel. 4. A steel lined tumel section about 116 meters long and a steel penstock about 450 meters long connecting the pressure tunnel with the power house. 5. A power house, located at El Congo coffee and sugar mill, equipped with two 28,000 kw turbo-generating units and associated mechanical and electrical equip- ment necessary for the operation of the units and a short tailrace channel to return the water to Rio Reventazon. 6. Outdoor substations located adjacent to Cachi power house and at El Radio near Cartago and Limon and extensions to existing substations and switchyards at Ciruelitas, Barranca, El Meson, Esparta, Garita, Guacimo, Marvilla, Naranjo and Puntarenas. 22 7. Installation of a second circuit of the 38 kilometer Rio Macho-Colima 138 kv transmission line, about 110 kilometers of new 138 kv transmission lines and about 185 kilometers of 33 kv transmission lines. 8. Expansion of the Liberia diesel electric plant by in- stallation of 300 kw diesel generating unit. PART B-TELECOMMUNICATION This part of the Project is the construction of automatic telephone exchanges for a total of 26,000 lines, cable and line networks and radio installations for interurban con- nections. The principal items of this part of the Project are: 1. In San Jose two main automatic telephone exchanges, one in the center of the town with 13,500 subscriber lines and switchboards for long distance traffic and information services, and one at San Pedro with 5,000 subscriber lines. Both exchanges are to be de- signed for later expansion and equipped with neces- sary auxiliary services. Six satellite telephone ex- changes with a total of about 1,300 subscriber lines would be located in suburban areas. 2. In the towns of Alajuela, Cartago, Heredia, Punta- renas and Limon automatic telephone exchanges with a total of about 4,900 subscriber lines. In an additional 17 smaller towns, automatic telephone exchanges with a total of about 1,240 subscriber lines. 3. Networks to connect the exchanges with the sub- scribers. 4. Cables to connect the towns of Alajuela, Heredia and Cartago with San Jose; microwave installations to connect San Jose with Limon, Puntarenas and towns in the northern and southern part of the country; and VHF radio equipment to provide connections to 17 smaller towns. 5. 30,000 telephone subscriber sets and 300 public tele- phones.