Loan Agreement CONFORMED COPY LOAN NUMBER 1136 YU. (Buk Bijela Hydropower Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND

Transcription

1 Public Disclosure Authorized LOAN NUMBER 1136 YU CONFORMED COPY Public Disclosure Authorized Loan Agreement (Buk Bijela Hydropower Project) Public Disclosure Authorized BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND ELEKTROPRIVREDA BOSNE I HERCEGOVINE-SARAJEVO Public Disclosure Authorized DATED JUNE 30, 1975

2 CONFORMED COPY LOAN NUMBER 1136 YU Loan Agreement (Buk Bijela Hydropower Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND ELEKTROPRIVREDA BOSNE 1 HERCEGOVINE-SARAJEVO DATED JUNE 30, 1975

3 LOAN AGREEMENT AGREEMENT, dated June 30, 1975, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and ELEKTROPRIVREDA BOSNE I HERCEGOVINE - SARAJEVO (hereinafter called Elektroprivreda), an Organization of Associated Labor established and operating under the laws of the Socialist Federal Republic of Yugoslavia, acting in its own name and in the name of, and on behalf of, its constituent Basic Organizations (as this term is hereinafter defined), all of which are hereinafter collectively called the Borrower. WHEREAS (A) The Borrower has requested the Bank to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) The Borrower has indicated to the Bank that from the resources of the Federal Fund for Crediting Accelerated Development in the Economically Insufficiently Developed Republics and the Socialist Autonomous Province of Kosovo (Fond Federacije a Kreditanje Brzeg Razvoja Privredno Nedovolino Razvijenih Republika i Pokrajine Kosovo) of the Socialist Federal Republic of Yugoslavia, there has been made available to Drina (as this term is hereinafter defined) a loan for the Project in the amount of one hundred and ten million (110,000,000) Dinars; (C) The Borrower has indicated to the Bank that its constituent Basic Organizations (as this term is hereinafter defined) pursuant to the provisions of the Self-Management Agreement of Elektroprivreda (as this term is hereinafter defined) have proposed to undertake to make an amount of not less than one thousand three hundred and fifty eight million Dinars (Din1,358,000,000), out of their free resources referred to in Article 62 of such Agreement, available to Elektroprivreda and Drina for the purpose of assisting Elektroprivreda and Drina in carrying out the Project; (D) The.iBorrower has indicated to the Bank that the Socialist Republic of Bosnia-Herzegovina (hereinafter called the Republic) proposes to undertake to provide to the Borrower and to Drina pooled resources to be secured by the Republic for the purposes of financing its electric power development plan (i) through loans from industries located within the Republic; and (ii) through surcharges from electricity consumers, over and above the Loan hereunder and the other funds to be made available to the Borrower, which are referred to in

4 4 the preceding Recitals (B) and (C) hereof, and such additional funds as may be required to carry out and complete the Project as scheduled; (E) Part B of the Project will be carried out by the Borrower and Part A of the Project will be carried out by Drina with the Borrower's assistance and, as part of such assistance, the lbrrower will make available to Drina a portion of the proceeds of the Loan as hereinafter provided; (F) The Bank is willing to make the Loan available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Bank and Drina (hereinafter called the Project Agreement); and (G) By an agreement of even date herewith between the Socialist Federal Republic of Yugoslavia (hereinafter called the Guarantor) and the Bank (hereinafter called the Guarantee Agreement), the Guarantor has agreed to guarantee the Loan as to payment of principal, interest and other charges; WHEREAS the Bank, on the basis inter alia of the foregoing, has agreed to make a loan to the Borrower on the conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions): (a) Paragraph 6 of Section 2.01 of the General Conditions is deleted and the following is substituted therefor: "6. The term "Borrower" means Elektroprivreda Bosne i Hercegovine - Sarajevo with all of its constituent Basic Organizations, as the latter term is defined in the Loan Agreement, acting jointly and severally as parties to the Loan Agreement and, whenever the context so requires, includes any one of the foregoing entities."

5 5 (b) The following sub-paragraph 19 is added to Section 2.01: "19. The terni "Project Agreement" shall have the meaning set forth in the Loan Agreement"; and (c) Section is amended by inserting the words "Project Agreement" after the words "Loan Agreement". Section Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Drina" means "Hidroelektrane na Drini-Sarajevo", a working organization under the process of foundation pursuant to the provisions of the Guarantor's Law published in the Official Gazette (Sluzbeni List) of the Guarantor, dated April 19, 1973 and registered with the District Commercial Court in Sarajevo on December 14, 1973 under No. 1475/73, for which the Borrower is the founder for the purposes of the provisions of the said Law or any successor organization to which the assets constructed under Part A of the Project shall have been transferred in accordance with Section 5.04 of the Project Agreement; (b) "Project Agreement" means the agreement between the Bank and Drina of even date herewith, as the sarne may be amended from time to time, and such term includes all schedules to the Project Agreement; (c) "Self-Management Agreement of Elektroprivreda" means the Self-Management Agreement of Elektroprivreda, dated December 21, 1973; (d) "Statutes of Elektroprivreda" means the statutes of Elektroprivreda adopted by the Workers' Council of Elektroprivreda on July 25, 1974; V (e) "Social Accounting Service" means the Sluzba Drustvenog Knjigovodstva referred to in paragraph (5) of Article 281 of the Guarantor's Constitution; (f) "Basic Organizations" means the 17 basic organizations of associated labor (within the meaning of the provisions of the Guarantor's Law published in the Official Gazette (Shivbeni List) of the Guarantor, dated April 19, 1973) which are constituent parts of Elektroprivreda as listed in Schedule 4 to this Agreement and whenever the context so requires, includes any one of the foregoing basic organizations;

6 6 (g) "Investment Program" means the Borrower's investment program referred to in Article 61 of the Self-Management Agreement of the Borrower; (h) "Self-Management Agreement on Pooling the Resources for Expanded Production" means the agreement to be entered into among the Basic Organizations listed under numbers 1 through 14 in Schedule 4 to this Agreement pursuant to Article 62 of the Self-Management Agreement of Elektroprivreda; and (i) "Self-Management Agreement on Jointly Realized Income from the Sale of Electric Power" means the agreement dated October 16, 1974 entered into among the Basic Organizations listed under numbers 1 through 13 in Schedule 4 to this Agreement. ARTICLE II The Loan Section The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to seventy million dollars ($70,000,000). Section The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time, 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 and to be financed out of the proceeds of the Loan. Section Except as the Bank shall otherwise agree, the goods, works and services (other than consultants' services) for the Project to be financed out of the proceeds of the.loan, shall be procured in accordance with the provisions of Schedule 1 to the Project Agreement. Section The Closing Date shall be December 31, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time.

7 7 Section The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section Interest and other charges shall be payable semi-annually on May I and November 1 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. Section The obligations of Elektroprivreda and the Basic Organizations to pay interest and other charges on the Loan, or to repay the principal of the Loan, in accordance with the provisions of the Loan Agreement, shall be joint and several and shall not be subject ot any prior notice to, or demand upon, or action against, any of them. ARTICLE III Execution of the Project Section (a) The Borrower shall carry out Part B of the Project with due diligence and efficiency and in conformity with sound engineering, financial, public utility and administrative practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause Drina to perform in accordance with the provisions of the Project Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable Drina to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall make available to Drina the portion of the proceeds of the Loan required for the carrying out of Part A of the Project and provided for under Categories (1) and (2) of the allocation of the amounts of the Loan set forth in paragraph 1 of Schedule 1 to this Agreement, as such Schedule may be amended from time to time, under arrangements (including provision for

8 8 payment by Drina to the Borrower of the debt service on the Loan out of the revenues of the power facilities included under Part A of the Project) in form and substance satisfactory to the Bank. Section Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section (a) The Borrower shall furnish or cause to be furnished to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work schedules for Part B of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain or cause to be maintained, records adequate to record the progress of Part B of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in Part B of the Project; (ii) shall, enable the Bank's representatives to examine such goods and any relevant records and documents; and (iii) shall furnish or cause to be furnished to the Bank all such information as the Bank shall reasonably request concerning Part B of the Project, the expenditure of the proceeds of the Loan for Part B of the Project and the goods and services financed out of such proceeds. (c) As part of the information as may be requested under subparagraph (ii) of paragraph (a) of Section 9.01 of the General Conditions, the Borrower shall furnish annually to the Bank statistical data and monitoring indicators (including statistical data and monitoring indicators for the years ) on the Borrower's electric power facilities and operations in such detail as the Bank shall reasonably request. (d) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment in connection with the Project and relevant records and documents of the Borrower. Section The Borrower shall cause to be taken all such action as shall be necessary to acquire as and when needed all such land, and rights in respect of land as shall be required for the construction (and operation) of the facilities included in Part A of the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to Part A of the Project.

9 9 Section (a) In order to assist the Borrower in carrying out Part B of the Project, the Borrower shall employ no later than December 31, 1975, or such other date as the Bank may agree, management consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank and the Borrower. (b) The Borrower undertakes that it shall afford the Bank a reasonable opportunity to exchange views with the Borrower on the recommendations of the consultants referred to in paragraph (a) of this Section and on the actions the Borrower proposes to take on the basis of the said recommendations. Section The Borrower shall, no later than December 31, 1976, or such other date as the Bank may agree, complete, with the assistance of qualified and experienced consultants acceptable to the Bank to be employed under terms and conditions acceptable to the Bank by the Borrower no later than December 31, 1975, or such other date as the Bank may agree, a study of the fishery resources of that portion of the Drina river basin located within the Republic, and shall thereafter exchange views with the Bank on the results of the said study. The said study shall be carried out within the context of a study covering the entire Drina river basin. ARTICLE IV Management and Operations of the Borrower Section The Borrower shall at all times carry out its operations, manage its affairs and maintain its financial position and plan its future expansion, all in accordance with sound engineering, business, financial and public utility principles and practices, and under the supervision of experienced and competent management, assisted by qualified and competent staff in adequate numbers. Section The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with sound practice. Section The Borrower shall operate and maintain its plants, equipment and properties, and from time to time make all necessary renewals and repairs thereof, in accordance with sound engineering and public utility practices. Section The Borrower shall at all times maintain the right to carry on its operations, and take all steps necessary to acquire, maintain and renew all rights and franchises which are necessary or useful in the conduct of its business.

10 10 Section Except as the Bank may otherwise agree, the Borrower shall not sell, lease, transfer, assign or otherwise dispose of any of its rights, property or assets, related to its power generation and transmission operations, except in the ordinary course of business. ARTICLE V Financial Covenants Section The Borrower shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition. Section The Borrower shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, on a consolidated basis and for each Basic Organization and Elektroprivreda, in accordance with sound auditing principles consistently applied, by the Social Accounting Service or another competent and experienced independent auditing organization 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, (A) certified copies of its financial statements for such year as so audited and (B) 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 the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any such assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price

11 0 11 of such property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section (a) Except as the Bank shall otherwise agree the Borrower shall apply rates for the sale of power at such levels as shall provide revenues sufficient: (i) (ii) (iii) to cover in any given year all operating expenses including employee compensation, depreciation, and interest on debt; to cover in any given year debt amortization insofar as it exceeds depreciation; and to finance, after payment of taxes and other contributions provided by law, if any, an average of not less than 35% of the cost of investment in power facilities, including interest payable during construction, and its working capital requirements during any social economic development plan period of the Guarantor. (b) For purposes of the foregoing and as part of such information as may be requested under subparagraph (ii) of paragraph (a) of Section 9.01 of the General Conditions, the Borrower shall, within the first six months of each fiscal year: (i) (ii) prepare and furnish annually to the Bank an up-dated statement of sources and application of funds covering in every case all years of any current social economic development plan period of the Guarantor; and prepare and furnish to the Bank all other relevant information concerning the steps taken or planned to be taken by the Borrower in order to comply with its obligations under paragraph (a) of this Section. Section Without limitation or restriction to the provisions of Section 5.04 to this Agreement the Borrower shall, as and when it shall make arrangements for the supply of electric power outside the regular tariff schedule, ensure (i) that the rates to be charged under such arrangements reflect adequately the estimated cost of such supply of power, and (ii) that such arrangements include provision for said rates to be adjusted periodically and as necessary to take account of increases in the cost of supply of power.

12 12 Section Before making any modification in the Investment Program resulting in a variation in cost of said program equivalent to one hundred million Dinars (Din100,000,000) or more, the Borrower shall afford the Bank a reasonable opportunity to exchange views with the Borrower on any such proposed modification. Section Except as the Borrower and the Bank shall otherwise agree, if the Borrower or Drina shall repay in advance of maturity any part of its indebtedness having a remaining maturity of one year or more the Borrower shall simultaneously repay a proportionate amount of the Loan then outstanding. All the provisions of the General Conditions relating to repayment in advance of maturity shall be applicable to any repayment by the Borrower in accordance with this Section. Section The Borrower undertakes that it shall use its best efforts to maintain a uniform depreciation policy for its assets consistently applied from year to year. ARTICLE VI Remedies of the Bank Section For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) The Republic or any of the Basic Organizations have failed to perform any of the undertakings referred to in Recitals (C) and (D) of this Agreement, respectively in such a way as to materially and adversely affect the ability of the Borrower and of Drina to carry out their obligations tinder the Loan Agreement and Project Agreement, respectively; (b) The Republic shall have failed to perform any of its undertakings referred to under paragraph (d) of Section 7.01 of this Agreement; (c) Any provision (i) of any of the agreements (including any Schedule attached thereto) referred to in paragraphs (c), (h) and (i) of Section 1.02 of this Agreement, (ii) of the agreement referred to in paragraph (b) of Section 7.01 of this Agreement, or (iii) of the Statutes of Elektroprivreda and of the statutes of any one of the Basic Organizations, as affect in any way the Borrower's ability to carry out the covenants, agreements and obligations set forth in the Loan Agreement or the Borrower's existence as an independent enterprise, shall have been amended, suspended, abrogated or terminated without prior agreement between the Bank and the Borrower;

13 13 (d) Any part of the principal amount of any loan or credit to the Borrower or to Drina, including any loan made pursuant to the undertakings referred to in paragraph (a) above, shall have become due and payable prior to its agreed maturity pursuant to the terms thereof; (e) Drina shall have become unable to pay its debts as they mature or any action or proceeding shall have been taken by Drina or by others, whereby any of the property of Drina shall or may be distributed among its creditors; (f) Drina shall have failed to perform any covenant, agreement or obligation of Drina under the Project Agreement; (g) An extraordinary situation shall have arisen which shall make it improbable that Drina will be able to perform its obligations under the Project Agreement; (h) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of Drina or for the suspension of its operations; (i) The Workers' Council of the Borrower or of Drina shall have passed a resolution or shall have taken any other action, having the effect of changing the status of Drina in such a way as materially and adversely to affect the ability of Drina to carry out the covenants, agreements and obligations set forth in the Project Agreement; and (j) Any provisions of the contract (including any schedule thereto) referred to in paragraph (e) of Section 7.01 of this Agreement has been amended, suspended, abrogated, terminated or waived, in such a way as materially and adversely to affect the ability of Elektroprivreda and Drina to carry out their respective covenants, agreements and obligations set forth in the Loan Agreement and Project Agreement, respectively. Section For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the events specified in paragraphs (b), (c), (f) and (j) of Section 6.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower and the Guarantor; and (b) any event specified in paragraphs (a), (d), (e), (h) and (i) of Section 6.01 of this Agreement shall occur.

14 14 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 12.01(c) of the General Conditions: (a) The Basic Organizations have adopted decisions, or given other appropriate assurances, all in form and substance acceptable to the Bank, by which they undertake the obligations referred to in Recital (C) of this Agreement, respectively, and all instruments, required to this effect, have been duly executed and authorized or ratified by all necessary corporate action and are in full force and effect; (b) The "Self-Management Agreement on Pooling and Use of the Resources for Expanded Production" has been duly executed and authorized or ratified by all necessary corporate action and is in full force and effect; (c) The execution and delivery of the Project Agreement on behalf of Drina have been duly authorized or ratified by all necessary corporate action; (d) The Republic has adopted decisions, or given other appropriate assurances in form and substance satisfactory to the Bank, by which the Republic shall undertake: (i) (ii) the obligations referred to in Recital (D) of this Agreement; and to enable the Borrower to apply such tariffs for the sale of power as shall provide the revenues required by the provisions set forth in Section 5.04 of this Agreement; and (e) The execution and delivery on behalf of Elektroprivreda and Drina of a contract on their mutual rights and obligations (providing inter alia for the arrangements referred to in paragraph (c) of Section 3.01 of this Agreement) in form and substance acceptable to the Bank between Elektroprivreda and Drina, respectively, have been duly authorized or ratified by all necessary corporate action. Section The following are specified as additional matters, within the meaning of Section 12.02(c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank:

15 15 (a) That the agreements and instruments referred to in paragraphs (a), (b), and (e) of Section 7.01: (i) have been duly executed and authorized or ratified by all necessary corporate action, (ii) are legally binding upon the parties thereto in accordance with their terms, and (iii) are in full force and effect; (b) That the Project Agreement has been dtly authorized or ratified by, and executed and delivered on behalf of, Drina, and is legally binding upon Drina in accordance with its terms; and (c) that the decisions or other assurances referred to in paragraph (d) of Section 7.01 of this Loan Agreement have been duly taken or given by the Republic and are in full force and effect. Section The date December 1, 1975, is hereby specified for the purposes of Section of the General Conditions. ARTICLE VIII Addresses Section The following addresses are specified for the purposes of Section of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: For the Borrower: INTBAFRAD Washington, D.C. Preduze6e za Proizvodnju i Prenos Elektrine Energije Elektroprivreda Bosne i Hercegovine Sarajevo Kralja Tomislava ul. 3

16 16 Cable address: Telex: ELPRIV ELEKTROPRIVREDA BIH Sarajevo IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Willi A. Wapenhans Acting Regional Vice President Europe, Middle East and North Africa ELEKTROPRIVREDA BOSNE I HERCEGOVINE - SARAJEVO acting in its own name and in the name and on behalf of its constituent Basic Organizations. By /s/ Josip Kulisic Authorized Representative

17 17 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The 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 % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Hydro, Mechanical 55,900, % of foreign and Electrical expenditures or Equipment and 100% of the exassociated services factory price of locally manufactured equipment (2) Equipment and material 7,000, % of foreign for civil works expenditures or 100% of the exfactory price of locally manufactured equipment (3) Consulting 100, % of foreign services for expenditures epniue Drina (4) Consultants' 1,500, % of foreign services under expenditures Part B of the Project (5) Unallocated 5,500,000 TOTAL 70,000, For the purposes of this Schedule the term "foreign expenditures" meins expenditures for goods or services supplied from, the territory, and in the currency, of any country other than the Guarantor. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account

18 18 of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Loan, the Bank may, by notice to the Borrower, correspondingly adjust the disburs6ment percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category to the extent required to meet the estimated shortfall proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then apph able to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan.

19 19 SCHEDULE 2 Description of the Project The Project is part of the Borrower's Investment Program and consists of the following parts: Part A: Part B: Construction and equipping of the Buk Bijela hydro-electric station on the Drina river, to be located slightly downstream from its confluence with the Piva and Tara rivers and comprising a rock fill dam with clay core, spillways, intakes and pressure tunnels; a cavern-type power house containing four MW turbo-generator units operating under a net head of 84 m with appropriate accessory equipment and a switchyard; a compensating reservoir with a concrete dam about 10 km downstream near the town of Foca to regulate discharge waters; Improvement of Elektroprivreda's, Drina's and the Basic Organizations' administration, accounting, and training. The Project is expected to be completed by June 30, 1980.

20 20 Date Payment Due SCHEDULE 3 Amortization Schedule Payment of Principal (expressed in dollars)* November 1, ,000 May 1, ,000 November ,000 May 1, ,0 November 1, ,000 May 1, ,000 November 1, ,000 May 1, ,000 November 1, ,000 May 1, ,010,000 November 1, ,055,000 May 1, ,095,000 November 1, ,145,000 May 1, ,195,000 November 1, ,245,000 May 1, ,295,000 November 1, ,350,000 May 1, ,410,000 November 1, ,470,000 May 1, ,530,000 November 1, ,595,000 May 1, ,665,000 November 1, ,735,000 May 1, ,810,000 November 1, ,885,000 May 1, ,965,000 November 1, ,050,000 May 1, ,35,000 November 1, ,5,000 May 1, ,320,000 November 1, ,000 May 1, ,525,000 November 1, ,630,000 May 1, ,740,000 November ,860,000 May 1, 199A 2,980,000 November 1, ,105,000 May 1, ,240,000 November 1, ,375,000 May 1, ,515,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal.

21 21 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05(b) of the General Conditions: Time of Prepayment Premium Not more than three years 1% before maturity More than three years but 2-1/4% not more than six years before maturity More than six years but not 4% more than eleven years before maturity More than eleven years but 5-1/2% not more than sixteen years before maturity More than sixteen years but 7-1/4% not more than twenty-one years before maturity More than twenty-one years 8% but not more than twenty-three years before maturity More than twenty-three years 8-1/2% before maturity

22 22 SCHEDULE 4 Basic Organizations of Associated Labor of Elektroprivreda 1. "Hidroelektrana Trebinje I" in Trebinje 2. "Hidroelektrana Trebinje II" in Trebinje 3. "RP Trebinje" in Trebinje 4. "Zajednicke sluzbe" in Trebinje 5. "Hidroelektrana Jablanica" in Jablanica 6. "Hidroelektrana Rama" in Jablanica 7. "Zajednicke djelatnosti i razvoj hidroelektrana na slivu Neretve" in Jablanica 8. "Hidroelektrana Jajce I" in Jajce 9. "Hidroelektrana Jajce II" in Jajce 10. "Usluzne djelatnosti" in Jajce 11. "Termoelektrana Kakanj" in Catici 12. "Termoelektrana Tuzla" in Tuzla 13. "Elektroprenos" in Sarajevo 14. "Investiciona izgradnja" in Trebinje 15. "Projektovanje, montaza i izgradnja elektroprenosnih objekata" (ELPIM) in Sarajevo 16. "Ribogojiliste Jezero" in Jajce V " n r 17. "Radnicki restoran Termoelektrana Kakanj" in Catici