(Electric Power Sector Project) between THE ARGENTINE REPUBLIC. and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT. Dated November 18, 1988

Transcription

1 Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 2998 AR Public Disclosure Authorized (Electric Power Sector Project) between THE ARGENTINE REPUBLIC Public Disclosure Authorized and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated November 18, 1988 LOAN NUMBER 2998 AR LOAN AGREEMENT Public Disclosure Authorized AGREEMENT, dated November 18, 1988, between THE ARGENTINE REPUBLIC (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Bank to assist in the financing of the Project; (B) by an Agreement (the Project Agreement) of even date herewith, between the Bank and Entidad Binacional Yacyreta, 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

2 Section The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 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) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "EBY" means Entidad Binacional Yacyreta; (c) "AyE" means Agua y Energia Electrica S.E.; (d) "SEGBA" means Servicios Electricos del Gran Buenos Aires S.A.; (e) "HIDRONOR" means Hidroelectrica Norpatagonica S.A.; (f) "BCRA" means Banco Central de la Republica Argentina; (g) "Austral" means the currency of the Borrower; (h) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and EBY pursuant to Section 3.02 (a) of this Agreement, as the same may be amended from time to time; (i) "Yacyreta Loan Agreement" means the Loan Agreement, dated November 6, 1979, between the Bank and the Borrower, as amended; (j) "Loan 1761 AR" means the Loan, as so defined under the Yacyreta Loan Agreement; (k) "Sector Expansion Plan" means all the projects resulting from the planning carried out by the Borrower through SE (as hereinafter defined) and updated from time to time, concerning on-going and future electric power generation and transmission facilities in Argentina, within SIN, as hereinafter defined; (l) "SE" means Secretaria de Energia, the Borrower s Secretariat of Energy; (m) "CNEA" means Comision Nacional de Energia Atomica; (n) "DEBA" means Direccion de Energia de la Provincia de Buenos Aires, the energy utility of the Province of Buenos Aires; (o) "National Utilities" means SEGBA, AyE and HIDRONOR; (p) "Yacyreta Project" means the Project, as so defined in the Preamble to the Yacyreta Loan Agreement; (q) "Project Agreement" means the Project Agreement of even date herewith between the Bank and EBY, as such Agreement may be amended from time to time; (r) "Second Owners Agreement" means the Second Owners Agreement of even date herewith between the Borrower and Paraguay (as hereinafter defined) in which such parties have agreed to undertake certain obligations with regard to the execution and operation of the facilities of EBY, as such Agreement may be amended from time to time; this Second Owners Agreement shall supplement the Owners Agreement entered into between the Borrower and Paraguay on November 6, 1979 (the First Owners Agreement); (s) "IDB" means the Inter-American Development Bank; (t) the "IDB Loan Agreement" means the Loan Agreement to be executed between EBY and IDB on or about the date of this Loan Agreement pursuant to which IDB shall grant a loan in an amount equivalent to approximately $250 million to provide financing for Part A.1 of the Project parallel with the financing provided by the Loan; (u) "Paraguay" means the Republic of Paraguay; (v) "Energy and Electrical Funds" means the proceeds of the surcharge on energy

3 rates and prices which are channelled to the Borrower s Fondo Chocon-Cerros Colorados-Alicopa Fund (FCCC), Fondo Nacional de Grandes Obras Electricas (FNGOE), Fondo Nacional de la Energia Electrica (FNEE), Fondo Especial para el Desarrollo Electrico del Interior (FEDEI), and Fondo Nacional de Energia (FNE), established under Law No. 17,574, dated December 21, 1967, Law No. 19,287, dated October 5, 1971, Law No. 15,336, dated September 15, 1960, Law No , dated December 28, 1967, and Law No , dated December 30, 1964, respectively, as amended to the date of this Agreement; (w) "Treaty" means the Treaty, dated December 3, 1973, between the Borrower and Paraguay in respect of the carrying out and operation of Yacyreta Project; (x) "Nota Reversal" means any of the diplomatic notes supplementary to the Treaty and exchanged by the Borrower and Paraguay; (y) "Protocolo" means any of the Protocolos supplementary to the Treaty and executed by the Borrower and Paraguay; and (z) "SIN" means Sistema Interconectado Nacional, the Borrower s National Interconnected System. ARTICLE II The Loan Section The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount in various currencies equivalent to two hundred fifty two million dollars ($252,000,000). Section (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 Parts A.1 and B of the Project, open and maintain in dollars, a special account in BCRA or in another bank acceptable to the Bank on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. (c) On each of the semiannual interest payment dates specified in Section 2.06 of this Agreement and in Section 2.06 of the Yacyreta Loan Agreement, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amounts required to pay, on such date, interest and other charges on the Loan and on Loan 1761 AR accrued and payable on or before the date set forth, and up to the amount allocated, in Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank. Section The Closing Date shall be June 30, 1990 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section (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 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 Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) (ii) "Interest Period" means the six-month period commencing on each date specified in Section 2.06 of this Agreement, including the Interest Period in which this Agreement is signed. "Cost of Qualified Borrowings" means the cost of the outstanding

4 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 Interest and other charges shall be payable semiannually on May 15, and November 15, in each year. Section 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 Execution of the Project Section The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restriction upon any of its other obligations under this Loan Agreement, shall carry out Parts A.4 and B of the Project, and shall cause AyE and HIDRONOR to carry out Part A.2 of the Project, and AyE and SEGBA to carry out Part A.3 of the Project, with due diligence and efficiency and in conformity with appropriate administrative, financial and electric power industry practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the aforesaid Parts of the Project. Section (a) The Borrower shall on-lend to EBY the portion of the proceeds of the Loan allocated to Categories (1), (2), (4) and (5) of the table set forth in paragraph 1 of Schedule 1 to the Loan Agreement and required for Part A.1 of the Project, under a subsidiary loan agreement to be entered into between the Borrower and EBY, on terms and conditions satisfactory to the Bank which shall include financial terms identical, mutatis mutandis, to those applicable to the Loan under this Loan Agreement. (b) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the parties to this Agreement and to accomplish the purposes of the Loan, and, except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section Except as the Bank shall otherwise agree, procurement of the goods, works or consultants services, as the case may be, required for the Project and to be financed out of the proceeds of the Loan shall be governed, in respect of Part A.1 of the Project, by the provisions of Schedule 1 to the Project Agreement, and, in respect of Part B of the Project, by the provisions of Schedule 4 to this Agreement. Section The Borrower shall through SE: (a) not later than March 31, 1989 complete, under terms of reference acceptable to the Bank, a diagnostic study on the organization and operational efficiency of the Borrower s Electric Power Sector and the National Utilities; (b) promptly after its completion furnish to the Bank a copy of such study for comment; (c) prepare programs or plans of action taking into account the recommendations of such study and the Bank s comments thereon to implement such programs or plans, and revise such programs or plans from time to time by agreement between the Borrower and the Bank; and (d) implement such programs or plans. Section (a) The Borrower shall, not later than April 30, 1989 and by each April 30 thereafter complete, in consultation with the Bank and using methodologies and assumptions mutually agreed upon between the Borrower and Bank: (i) an update of the Sector Expansion Plan; and (ii) an update of the financing schemes for major projects included in the Sector Expansion Plan to ensure, inter alia, that commissioning dates required thereby are feasible; and (b) promptly after the completion of each such update referred to above the Borrower shall furnish to the Bank a copy thereof for comment.

5 Section The Borrower shall implement the results of the tariff study being carried out under Section 4.07 of the Yacyreta Loan Agreement in a manner and according to a timetable, both satisfactory to the Borrower and the Bank. Section The Borrower shall take all administrative and other action required on the part of itself and its federal agencies to pay, and to cause all its provincial and municipal agencies and all its autonomous public sector agencies either to pay or settle, not later than December 1, 1989, the outstanding overdue balances on their accounts to SEGBA, AyE and HIDRONOR and thereafter always promptly pay and cause such agencies promptly to pay the balances due on such accounts. Section The Borrower shall, not later than May 31, 1989, provide to the Bank a plan, satisfactory to the Bank, for completing the financing of the Yacyreta Project, and such plan shall be reviewed annually by the Borrower and the Bank and, if required, may be revised and updated on terms satisfactory to the Bank. Section (a) The Borrower shall cause CNEA to charge a bulk tariff to Centro Unificado de Carga, the Central Dispatch Center of the Borrower, which shall not be higher than the maximum bulk sale price charged by the utilities, other than CNEA, generating power for the Borrower s electric power sector and supplying power to the SIN. (b) The Borrower undertakes to allocate funds from the Energy and Electrical Funds to finance any financial requirements of CNEA only after the financial requirements of utilities, other than CNEA, operating within the Borrower s electric power sector have been fully met. Section The Borrower with support from consultants to be employed under terms of reference acceptable to the Bank, shall carry out a study on power generation options, which shall be completed in time to be used in the April 30, 1989 update of the Sector Expansion Plan as provided in Section 3.05 (a)(i) hereof, for purposes of (i) evaluating the operating conditions of existing thermal plants and recommending a rehabilitation program for the plants found to be deteriorated or approaching deterioration and, (ii) determining the feasibility of introducing the combined cycle alternative in future electric power generation expansion plans. Section The Bank and the Borrower 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 to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of Part A.1 of the Project shall be carried out by EBY pursuant to Section 2.03 of the Project Agreement. ARTICLE IV Financial Covenants Section (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, including separate records and accounts in respect of Parts A.1 and B of the Project. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section, including those for the Special Account, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors which, in respect of the records and accounts in respect of Parts A.1 and B of the Project, shall be auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four 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; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request.

6 (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) (ii) (iii) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; retain, 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; 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 procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section (a) Except as he Bank shall otherwise agree, the Borrower shall cause the National Utilities to maintain, for each of the calendar years 1988, 1989 and 1990, a ratio of total consolidated operating expenses to total consolidated operating revenues not higher than 91%, 81% and 79% respectively. (b) By May 31, 1989 and by each May 31 thereafter, the Borrower shall, on the basis of forecasts prepared by the Borrower and satisfactory to the Bank, review whether the National Utilities would meet the requirements set forth in paragraph (a) in respect of such year and the next following calendar year, and of measures required to meet such requirements, and shall furnish to the Bank, the results of such review upon its completion. (c) If any such review shows that the National Utilities would not meet the requirements set forth in paragraph (a) for the calendar years covered by such review, the Borrower shall promptly take, or cause to be taken, all necessary measures to achieve such requirements. (d) For the purposes of this Section: (i) (ii) The term "total consolidated operating expenses" means the aggregate expenses related to operations of the National Utilities, including administration, adequate maintenance, taxes and payments in lieu of taxes, but excluding depreciation and, interest and other charges on debt. The term "total consolidated operating revenues" means the aggregate revenues of the National Utilities from all sources related to their operations. Section (a) Except as the Bank shall otherwise agree, the Borrower shall cause the National Utilities to produce, for each year beginning in 1988, funds from internal sources equivalent to not less than 30% of the annual capital expenditures of the National Utilities. (b) By May 31, 1989 and by each May 31 thereafter, the Borrower shall, on the basis of forecasts prepared by the Borrower and satisfactory to the Bank, review whether the National Utilities would meet the requirements set forth in paragraph (a) in respect of such year and the next following fiscal year and shall furnish to the Bank a copy of such review upon its completion. (c) If any such review shows that the National Utilities would not meet the requirements set forth in paragraph (a) for the fiscal years covered by such review the Borrower shall promptly take or cause to be taken all necessary measures to achieve such requirements. (d) For the purposes of this Section: (i) The term "funds from internal sources" means the difference between:

7 (A) (B) the sum of revenues from all sources related to operations and consumer contributions in aid of construction, net non-operating income, allocated Energy and Electrical Funds and any reduction in working capital other than cash; and the sum of all expenses related to operations, including administration, adequate maintenance and taxes and payments in lieu of taxes (excluding provision for depreciation and other non-cash operating charges), debt service requirements, all cash dividends and other cash distribution of surplus, increase in working capital other than cash and other cash outflows other than capital expenditures. (ii) The term "net non-operating income" means the difference between: (A) (B) revenues from all sources other than those related to operations; and expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above. (iii) (iv) The term "working capital other than cash" means the difference between current assets excluding cash and current liabilities at the end of each fiscal year. The term "current assets excluding cash" means all assets other than cash which could in the ordinary course of business be converted into cash within twelve months, including accounts receivable, marketable securities, inventories and pre-paid expenses properly chargeable to operating expenses within the next fiscal year. (v) The term "current liabilities" means all liabilities which will become due and payable or could under circumstances then existing be called for payment within twelve months, including accounts payable, customer advances, taxes and payments in lieu of taxes and dividends. (vi) (vii) The term "debt service requirements" means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt (excluding debt service payments assumed by the Borrower). The term "capital expenditures" means all expenditures incurred on account of fixed assets, including interest charged to construction, related to operations. (viii)whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, 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 (a) The Borrower shall take or cause the National Utilities to take all actions as shall be required to meet improvements in financial management and operational levels, other than those resulting from the compliance with the provisions of Section 4.02 and 4.03 of this Agreement, to be measured through key performance indicators to be mutually agreed upon between the Borrower and the Bank, as such indicators may be revised and updated annually in terms satisfactory to the Bank. (b) The SE of the Borrower and the Country Department IV, Latin America and Caribbean Region of the Bank shall be the representatives of the Borrower and the Bank, respectively, for purposes of revising and updating the performance indicators referred to in Section 4.04 (a) of this Agreement. ARTICLE V Other Covenants

8 Section Without limitation to any of the rights of the Borrower and the Bank to request an exchange of views pursuant to Section 9.01 (a) of the General Conditions, the Borrower and the Bank undertake, as a minimum, to carry out an annual review of (i) performance of the Borrower s electric power sector including compliance with Sections 4.02 and 4.03 of this Agreement, and establish the necessary measures, if any, acceptable to the Borrower and the Bank, to meet the key performance indicators referred to in Section 4.04 of this Agreement; (ii) the update of the Sector Expansion Plan including the update of the financing schemes for major projects included therein as provided for in Section 3.05 of this Agreement; and (iii) the update of the plan for completing the financing of the Yacyreta Project as provided for in Section 3.08 of this Agreement. Such annual review shall be held commencing not later than May 31, 1989 and by each May 31 thereafter. Section The Borrower undertakes that it shall authorize the initiation of the construction of a public generation or transmission project only if the project in question is in accordance with the Sector Expansion Plan and has an adequate financing plan. The parties may agree on modifications to such Plan in connection with the annual review provided for under Section 5.01 above or by request of either the Borrower or the Bank. For purposes of this Section, a public power generation or transmission project means a facility which will be part of the SIN and has an estimated cost equivalent to fifty million dollars ($50,000,000) or more. Section The Borrower through SE, shall issue regulations in connection with new power sector projects concerning protection of the environment and mitigation of the economic and social effects of involuntary resettlement. ARTICLE VI Remedies of the Bank Section Pursuant to Section 6.02 (k) of the General Conditions, the following additional events are specified: (a) the Treaty, any Nota Reversal, and Protocolo or any other legal instrument under which EBY has been created and is operating, shall have been amended or waived so as to affect materially and adversely the carrying out of Part A.1 of the Project or the operations or financial condition of EBY; (b) any authority having jurisdiction shall have taken any action for the dissolution or disestablishment of EBY for the suspension of its operations; (c) EBY shall have failed to perform any of its obligations under the Project Agreement; (d) the Borrower or Paraguay shall have failed to perform any of its obligations under the Second Owners Agreement; (e) any event shall have occurred giving the Bank the right, pursuant to the Yacyreta Loan Agreement, to suspend in whole or in part the right of the Borrower to make withdrawals under such Loan Agreement; (f) the right of the Borrower or EBY to withdraw the proceeds of any loan made to the Borrower or EBY for the financing of the Project or Part A.1 of the Project, respectively, shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; (g) any loan referred to in paragraph (f) of this Section shall have become due and payable prior to the agreed maturity therefor; (h) an extraordinary situation shall have arisen which shall make it improbable that EBY will be able to perform its obligations under the Project Agreement; (i) the Borrower and the Bank shall have failed to agree on any update or revision of the key performance indicators for any year as provided in Section 4.04 (a) of this Agreement; (j) the Borrower and the Bank shall have failed to agree on any update of the Sector Expansion Plan including the financing of major projects included therein pursuant to Section 3.05 of this Agreement; (k) the Borrower and the Bank shall have failed to agree on any update of the

9 financing plan for the completion of the Yacyreta Project pursuant to Section 3.08 of this Agreement; and (l) the Borrower shall have failed to take actions which, in the opinion of the Bank, are necessary for purposes of protecting the environment in connection with the execution of the Project. Paragraphs (f) and (g) of this Section shall not apply if: (i) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower or EBY to perform any of its obligations under such agreement; and (ii) adequate funds for Part A.1 of the Project are available to EBY from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement and of EBY under the Project Agreement. Section Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified: (a) an event specified in paragraphs (c), (d), (i), (j), (k) or (l) of Section 6.01 of this Agreement shall occur and shall continue for a period of 30 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraphs (a), (b), (e), (f), or (g) of Section 6.01 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section (c) of the General Conditions: (a) IDB has notified the Bank that the IDB Loan Agreement has been executed, and subject only to the fulfillment of the initial conditions of disbursement, if any; (b) the Subsidiary Loan Agreement has been duly executed by the Borrower and EBY; and (c) all action has been taken by the Guarantor in order to permit the timely procurement of goods and services to be financed out of the proceeds of the Loan in accordance with the provisions set forth or referred to in this Loan Agreement. Section The following are specified as additional matters, within the meaning of Section (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by EBY and is legally binding upon EBY in accordance with its terms; (b) that the Second Owners Agreement has been duly authorized or ratified by the Borrower and Paraguay, and is legally binding upon the Borrower and Paraguay in accordance with its terms; (c) that the Subsidiary Loan Agreement has been duly executed and duly authorized or ratified by the Borrower and EBY, and is legally binding upon such parties in accordance with its terms; (d) that all necessary acts, consents and approvals to be performed or given by the Borrower and Paraguay and by any political subdivision thereof in order to authorize the carrying out of the Project and to enable EBY to perform all of its obligations pursuant to the Project Agreement, together with all necessary powers and rights in connection therewith, have been performed or given; and (e) that the action referred to in Section 7.01 (c) of this Loan Agreement has been taken and no other action on behalf of the Guarantor or the Borrower is required for the procurement of goods and services in accordance with the provisions of the Guarantee Agreement and this Agreement. Section The date February 20, 1989 is hereby specified for the purposes of Section of the General Conditions. ARTICLE VIII

10 Representatives of the Borrower; Addresses Section Except as provided in Section 4.04 (b) of this Agreement, the Ministro de Economia of the Borrower is designated as representative of the Borrower for the purposes of Section of the General Conditions. Section The following addresses are specified for the purposes of Section of the General Conditions: For the Borrower: Ministerio de Economia Hipolito Yrigoyen 250 Buenos Aires Argentina Cable address: MINISTERIO ECONOMIA Baires Telex: AR For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: INTBAFRAD Washington, D.C. Telex: (ITT) (RCA) or (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. THE ARGENTINE REPUBLIC By /s/ Rodolfo Terragno Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Shahid Husain Regional Vice President Latin America and the Caribbean SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. he 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 (Expressed in % of Expenditures

11 Category Dollar Equivalent) to be Financed (1) Civil works 182,400,000 50% under Part A.1 of the Project (2) Consultants 27,000,000 50% services under Part A.1 of the Project (3) Goods and services 2,000, % under Part B of the Project (4) Interest and 18,200,000 Amounts due other charges pursuant to on the Loan Section 2.02 (c) accrued on of this Agreeor before ment May 14, 1990 (5) Interest and 22,400,000 Amounts due purother charges suant to Section on Loan 1761 AR 2.02 (c) of this accrued after Agreement the date of this Loan Agreement and on or before May 14, 1990 TOTAL 252,000, For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 4. Notwithstanding the provisions of paragraph 1, above, the percentage of expenditures to be financed from the proceeds of the Loan in respect of Categories (1) and (2) may, in the Bank s sole discretion, be increased up to 100 percent of such expenditures if by the Effective Date of this Loan Agreement the initial conditions of disbursement under the IDB Loan Agreement shall not have been fulfilled, provided, however, that: (i) as a result of financing such increased percentage of expenditures, withdrawals in respect of Categories (1) and (2) shall not in the aggregate exceed the equivalent of $104,700,000; and (ii) after the initial conditions of disbursement under the IDB Loan Agreement shall have been fulfilled, such percentage shall be decreased to less than 50 percent to the extent necessary to ensure that the Bank and IDB shall each finance a total of 50 percent of the aggregate amount of expenditures in respect of each of the categories (1) and (2). 5. Notwithstanding the provisions of paragraph 1 above, no further withdrawals shall be made in respect of expenditures to be financed from the proceeds of the Loan after the aggregate amount of the proceeds of the Loan withdrawn from the Loan Account shall have reached the equivalent of $170,000,000, unless: (a) all conditions of disbursement under the IDB Loan Agreement, other than the conditions of disbursement referred to in Section 7.01 (a) of this Agreement, if any, shall have been fulfilled; and (b) the Bank shall be satisfied with: (i) the progress in implementing the programs or plans referred to in Section 3.04 (d) of this Agreement; and (ii) the results of the review to be held commencing not later than May 31, 1989 pursuant to Section 5.01 of this Agreement.

12 6. If, after the review described in paragraph 5 (b) above, the Bank shall have given notice to the Borrower that the progress achieved and actions taken are not satisfactory and, within ninety (90) days after such notice, the Borrower shall not have achieved progress and taken actions satisfactory to the Bank, then the Bank may, by notice to the Borrower, cancel the unwithdrawn amount of the Loan or any part thereof. SCHEDULE 2 Description of the Project The objectives of the Project are to: (a) improve the allocation of resources within, and the financial soundness of the National Utilities; (b) improve the efficiency of the National Utilities; (c) promote the rational use of electricity through a tariff system based on economic costs; (d) strengthen the institutional structure of the Borrower s electric power sector in the areas of coordination, planning and regulation; (e) establish and enforce policies and procedures in respect of environmental protection and resettlement aspects in connection with the Borrower s electric power sector projects; and (f) implement a portion of the Borrower s investment program included in the Sector Expansion Plan for the years The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Investment Program 1. All works and services in connection with the Yacyreta Project. 2. Power generation and transmission works carried out by AyE and HIDRONOR. 3. Power distribution works being carried out or to be carried out by AyE and SEBGA. 4. Studies to be carried out by the Borrower concerning the Borrower s needs for electric power generation, transmission and distribution systems after the year Part B: Institutional Strengthening Provision of technical assistance for the carrying out of: 1. Consultants studies. 2. Acquisition and utilization of computers and office equipment. 3. Acquisition and utilization of data base and communication equipment for SE. 4. Acquisition and utilization of miscellaneous equipment. * * * The Project is expected to be completed by December 31, SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars) On each May 15 and November 15

13 beginning May 15, 1995 through November 15, ,000,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and Premiums on Prepayment The following premiums are specified for the purposes of Section 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years 0.20 before maturity More than three years but 0.40 not more than six years before maturity More than six years but 0.73 not more than eleven years before maturity More than eleven years but not 0.87 more than thirteen years before maturity More than thirteen years before 1.00 maturity The interest rate (expressed as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment multiplied by: SCHEDULE 4 Procurement and Consultants Services Section I. Part A: Procurement of Goods under Part B of the Project Limited International Bidding Goods shall be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids invited from a list of at least three qualified contractors or suppliers, eligible under the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines), and in accordance with the procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). Part B: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts:

14 (a) With respect to each contract for equipment estimated to cost the equivalent of $200,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, said procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Bank pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 5 to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Bank has authorized withdrawals from the Loan Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c)(ii) of this Agreement. 2. The figure of 10% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants Whenever consultants are employed to assist in the carrying out of the Project, such consultants shall have qualifications, experience and terms and conditions of employment satisfactory to the Bank. Such consultants shall be selected in accordance 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 For the purposes of this Schedule: SCHEDULE 5 Special Account (a) the term "Eligible Categories" means Categories (1), (2) and (3) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "Eligible Expenditures" means expenditures in respect of 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 eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $50,000,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for Eligible Expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account may be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall

15 furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been made out of the Special Account for Eligible Expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective Eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for Eligible Expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Loan allocated to the Eligible Categories for the Project, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of $100,000,000, twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the Eligible Categories for the Project shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for Eligible Expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) 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. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that 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, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.