Loan Agreement. Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1516 JM. Public Disclosure Authorized. (Second Power Project)

Transcription

1 Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1516 JM Public Disclosure Authorized Loan Agreement (Second Power Project) Public Disclosure Authorized between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and JAMAICA PUBLIC SERVICE COMPANY, LIMITED Public Disclosure Authorized Dated March 6, 1978

2 LOAN NUMBER 1516 JM LOAN AGREEMENT AGREEMENT, dated March 6, 1978, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and JAMAICA PUBLIC SERVICE COMPANY, LIMITED (hereinafter called the Borrower). 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 (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). 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) the term "Indenture" means the Indenture dated July 9, 1923, executed by the Borrower in favor of Montreal Trust Company, as Trustee, and includes any indenture supplemental thereto issued, executed and delivered in accordance with the provisions of the Indenture; (b) the term "Fifteenth Supplemental Indenture" means the supplemental indenture which shall be executed by the Borrower pursuant to the provisions of Section 6.01 of this Agreement providing for the issue, authentication and delivery of Debenture Stock; (c) the term "Debenture Stock" means first mortgage debenture stock issued pursuant to the Fifteenth Supplemental Indenture and this Agreement; (d) the term "subsidiary" means any corporation, firm or association directly or indirectly controlled by the Borrower; and (e) the term "Licence" means the All Island Electric Licence dated April 28, 1977, granted by the Guarantor to the Borrower and shall include all amendments thereto.

3 -2- 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 twenty million dollars ($20,000,000). Section The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, 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. Section Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section The Closing Date shall be September 30, 1982 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 per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section The Borrower shall pay interest at the rate of seven and forty-five hundredths per cent (7.45%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section Interest and other charges shall be payable semiannually on February 15 and August 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.

4 -3- ARTICLE III Execution of the Project Section The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate engineering, financial and public utility practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section In order to assist the Borrower in carrying out Parts A (i) and (ii), B (i), D and E of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, th2 imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) 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 to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for 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 records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it) to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall

5 -4- reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. (d) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrow-r and any relevant records and documents. Section The Borrower shall take 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 carrying out 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 the Project. ARTICLE IV Management and Operations of the Borrower Section The Borrower shall at all times carry out its operations, manage its affairs, plan its future expansion and maintain its financial position in accordance with appropriate engineering, financial and public utility practices 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 appropriate practice.

6 - 5 - Section The Borrower shall: (i) or)erate and maintain its plants, equipment and property, and from time to time make all necessary renewals and repairs thereof, all in accordance with appropriate engineering practices; and (ii) take all steps necessary to maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. Section The Borrower shall not sell, lease, transfer or otherwise dispose of any of its property or assets required for the efficient conduct of its operations. Section The Borrower shall no later than December 31, 1979 prepare with the assistance of consultants employed pursuant to Section 3.02 of this Agreement a detailed program for training its personnel particularly in maintenance and planning and shall send to the Bank, for its review and comments, the said program together with a schedule for carrying it out before the program is put into effect. Section The Borrower shall no later than March 31, 1979 establish an internal audit department directly responsible to the Borrower's Executive Chairman. The organization and general terms of reference of the department shall be determined by the Borrower after prior consultation with the Bank. Section (a) The Borrower shall no later than June 30, 1978, or such other date as the Bank and the Borrower may agree, appoint after prior consultation with the Bank a qualified and experienced person as chief financial officer. (b) The Borrower shall consult the Bank before it makes, or agrees to make, any changes in the positions or in the persons filling the positions of chief executive, chief financial officer and chief technical officer of the Borrower. Section The Borrower shall prepare and send to the Bank for its review and comments a schedule construction for the 70 MW oil-fired steam units proposed for Old Harbour and Hunts Bay under the Borrower's five-year generation program and shall not undertake any detailed engineering of the unit until after the Bank has been afforded a reasonable opportunity for commenting on the said schedule.

7 -6- Section The Borrower shall cause each of its subsidiaries (if any) to observe and perform the obligations of the Borrower under tiis Agreement to the extent to which the same may be applicable thereto as though such obligations were binding upon each of such subsidiaries. ARTICLE V Financial Covenants Section The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate 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 audiled, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) have the results of the revaluation of its gross fixed assets in operation required by Section 5.05 hereof (including the effect of such revaluation on the Borrower's fin.ancial statements) reviewed by the said auditors; (iii) 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, (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested and (C) the review by said auditors of the results of the said revaluation of the Borrower's gross fixed assets in operation; and (iv) furnish to the Bank such other information concerning (A) the accounts and financial statements of the Borrower and the audit thereof and (B) the revaluation and review of assets mentioned above, as the Bank shall from time to time reasonably request. Section Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not create, incur, assume or suffer to exist any lien upon any of its properties or assets, whether now owned or hereafter acquired, unless such lien shall rank after the lien constituted by the Indenture; provided, however, that the foregoing provisions of this Section shall not apply to: (a) the mortgage and charge of the Indenture in respect of the present and future issues of debenture stock or bonds;

8 -7- (b) any lien subsisting at the date of this Agreement disclosed to the Bank; (c) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (d) any lien arising in the ordinary courne of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred; and (e) any lien permitted in the Indenture on the date of this Agreement securing an amount not exceeding fifty thousand Pounds Sterling (L50,000) in the aggregate at any one time outstanding. Section (a) Except as the Bank shall otherwise agree, the Borrower shall take, or cause to be taken, all necessary action (including the adjustment of its electricity rates) to provide revenues sufficient to produce on the Borrower's net fixed assets in operation, as revalued in accordance with Section 5.05 of this Agreement as from fiscal year 1978 through fiscal year 1980, an annual rate of return of not less than 8% and thereafter an annual rate of return of not less than 8.5%. (b) For the purposes of paragraph (a) above: (i) the annual rate of return shall be calculated by relating the Borrower's net income from operations for that fiscal year to the average of the value of its net fixed assets in operation at the beginning and at the end of that year; (ii) (iii) the term "net income from operations" means gross operating revenues from the provision of electric power, less all operating, administrative and overhead expenses including adequate maintenance, straight line depreciation computed in accordance with the Licence and taxes (if any) other than taxes on income but without deduction of interest and other charges on debt; the term "net fixed assets in operation" means gross fixed assets in operation as revalued from time to time in accordance with methods of

9 -8- valuation acceptable to the Bank, depreciation. less accumulated Section The Borrower shall in accordance with methods of valuation acceptable to the Bank (i) revalue by the Effective Date its gross fixed assets in operation on December 31, 1976 and (ii) thereafter revalue annually or at such other times as the Bank and the Borrower determine its gross fixed assets in operation. Section (a) Except as the Bank shall otherwise agree, the Borrower shall not incur any debt unless the Borrower's net revenue for the fiscal year immediately preceding the date of such incurrence or for any later twelve month period ending before the date of such incurrence, whichever is the greater, shall be not less than 1.5 times the maximum debt service requirement for any succeeding fiscal year on all the Borrower's debt, including the debt to be incurred. (b) For the purposes of this Section: (i) the term "debt" means all debt, including debt assumed or guaranteed by the Borrower except debt incurred in the ordinary course of business and maturing by its terms on demand or less than one year after its incurrence; (ii) the term "incur" with reference to any debt includes any modification of the terms of payment of such debt; and debt shall be deemed to have been incurred on the date the loan or, as the case may be, the guarantee agreement providing for such debt is entered into; (iii) the term "net revenue" means gross operating revenue, adjusted to take account of rates for the sale of electricity in effect at the time of incurrence of debt even though they were not in effect during the entire fiscal year or twelve month period to which such revenue relates, less all operating and administrative expenses, including adequate maintenance and taxes (if any) other than taxes on income but before provision for depreciation, other non-cash provisions and debt service requirements;

10 -9- (iv) the term "debt service requirements" means the aggregate amount of amortization (including sinking fund payments, if any) interest and other charges on debt of the Borrower; and (v) whenever it shall be necessary to value in the currency of the Guarantor debt payable in another currency such valuation shall be made on the basis of the rate of exchange at which such other currency is obtainable by the Borrower, at the time such valuation is made, for the purposes of servicing such debt, or, if such other currency is not so obtainable, at the rate of exchange that will reasonably be determined by the Bank. Section The Borrower shall not at any time incur any overdraft or any debt maturing by its terms on demand or for a period of less than one year if the total sum of any overdrafts and such debts of the Borrower at the date of such incurrence would exceed one-sixth of the Borrower's cash operating expenses during the period of twelve months immediately preceding such debt. Section The Borrower shall not: (i) undertake any major works not included in the expansion program agreed by the Borrower and the Bank; or (ii) acquire any new assets not included in the said program, unless the Bank shall have been furnished with evidence satisfactory to the Bank showing: (A) that the undertaking of such major works or acquisition of such new assets is technically and economically justified; and (B) that the Borrower has a sound financial plan for the undertaking of such major works or the acquisition of such new assets. For the purposes of this Section the term "major works" or "new assets" shall mean any works or new fixed assets including expenditures exceeding the equivalent of two per cent of the value of the Borrower's gross fixed assets in operation as revalued in accordance with Section 5.05 of this Agreement. Section (a) The Borrower shall continue to strengthen its billing and collection procedures and shall no later than September 30, 1978 complete a study of the feasibility of billing all customers on a monthly basis and shall discuss the results of such a study with the Bank no later than December 31, 1978 and, if found feasible, carry out a program to establish monthly billings for some or all of its customers.

11 (b) The Borrower shall reduce its outstanding accounts receivable to such levels as the Borrower and the Bank shall agree. Section The Borrower shall: (i) no later than June 30, 1978 but in any event before proceeding with the final designs and preparation of bidding documents for the Duncans-Bellevue 138 kv transmission line complete its studies of the least cost alternative between Tredegar-Bellevue and Duncans-Bellevue transmission lines; (ii) furnish the results of the said studies to the Bank for its review and comments; and (iii) construct the transmission line resulting in the least cost alternative. ARTICLE VI Debenture Stock Section (a) The Borrower shall as soon as practicable but in any event not later than three months after the Effective Date execute, deliver and register a supplemental indenture (the Fifteenth Supplemental Indenture), in form and substance satisfactory to the Bank: (i) providing for the issue, authentication and delivery of Debenture Stock ranking pari passu with the debenture stock issued under the Indenture; and (ii) providing by way of security for the principal of, and interest and other charges on, the Loan: (A) a first mortgage upon all the properties of the Borrower expressed in the Indenture to be specifically mortgaged premises thereunder or intended so to be; and (B) a first floating charge upon all the property and assets expressed in the Indenture to be charged or intended so to be by the first floating charge created thereby. (b) The Borrower shall furnish to the Bank an opinion or opinions satisfactory to the Bank of legal counsel acceptable to the Bank showing that the Fifteenth Supplemental Indenture has been validly and effectively executed, delivered and registered, and has created valid and effective mortgages, charges and priorities in accordance with its terms. (c) Except as the Borrower shall otherwise agree, the Bank shall not sell, transfer or otherwise dispose of the Debenture

12 Stock other than for the purpose of protecting its interests, in the event of a default or a threat thereof, in the payment of principal, interest or any other charge required under the Loan Agreement and in such event the Bank shall be subject to no limitation of whatsoever kind or nature which may attempt to restrict the form or method of disposition of the Debenture Stock issued to it. (d) Insofar as, and to the extent, that the obligation for the repayment of principal on any Debenture Stock shall have been so discharged, the Bank shall surrender to the Borrower such Debenture Stock for cancellation. Section Subject to the exemptions conferred by Sections 3.04 and 3.05 of the Guarantee Agreement, the Borrower shall pay or cause to be paid all taxes, if any, imposed under the laws of the Guarantor or laws in effect in its territories on or in connection with the execution, issue, delivery or registration of the Fifteenth Supplemental Indenture and the Debenture Stock or the payment of principal, interest and other charges thereunder; provided, however, that the provisions of this Section shall not apply to taxation of payments under any Debenture Stock to a holder thereof other than the Bank when such Debenture Stock is beneficially owned by an individual or corporate resident of the Guarantor. Section The Borrower shall pay or cause to be paid all taxes, if any, imposed under the laws of the country or countries in whose currency the Debenture Stock is 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 the Indenture, the Fifteenth Supplemental Indenture or the Debenture Stock. Section Except with the prior approval of the Bank, the Borrower shall not redeem or prepay prior to the maturity thereof any notes, bonds or debenture stock issued by it otherwise than: (i) upon a refunding thereof by the issuance of notes, bonds or debenture stock of the same or later maturity or maturities; or (ii) for the purpose from time to time of meeting annual sinking fund requirements near falling due. Section The Borrower shall duly perform all covenants, agreements and obligations to be performed by it under the Indenture and the Licence.

13 Section Except with the approval of the Bank, the Borrower shall not consent to any action taken at any meeting of bond or debenture stock holders which would or might change the terms of the Indenture or of the Debenture Stock. ARTICLE VII Remedies of the Bank Section For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) The Memorandum and Articles of Association of the Borrower as at the date of this Agreement shall have been amended so as to affect adversely and materially the management and operations and financial condition of the Borrower; (b) The Guarantor shall have enacted legislation which materially and adversely affects the management and operations and financial condition of the Borrower; (c) A subsidiary or any other entity shall have been created or acquired or taken over by the Borrower, if such creation, acquisition or taking over would adversely affect the conduct of the Borrower's business or the Borrower's financial condition or the efficiency of the Borrower's management and personnel or the carrying out of the Project; (d) The Guarantor or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of the Borrower or for the suspension of its operations; (e) The Licence shall have been amended, abrogated, waived, assigned, suspended or revoked without the prior consent of the Bank; and (f) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or

14 (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement, and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to paragraph (h) thereof: the events specified in paragraphs (a), (b) and (c) of Section 7.01 of this Agreement shall occur. ARTICLE VIII Effective Date; Termination Section The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section (c) of the General Conditions, namely, revaluation of the Borrower's assets as of December 31, 1976 in accordance with methods of valuation acceptable to the Bank. Section The date June 5, 1978, is hereby specified for the purposes of Section of the General Conditions. ARTICLE IX 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

15 Cable address: INTBAFRAD Washington, D.C. Telex: (ITT) (RCA) or (WUI) For the Borrower: Jamaica Public Service Company, Limited 6, Knutsford Boulevard, P.O. Box 54 Kingston, Jamaica Cable address: Telex: JAMSERVICE 2180 Kingston 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/ S.M.L. van der Meer Acting Regional Vice President Latin America and the Caribbean JAMAICA PUBLIC SERVICE COMPANY, LIMITED By /s/ Marshall Hall Authorized Representative

16 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 amounts of the Loan to each Category and the percentge 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) Transmission lines 5,100, % of foreign expenditures (2) Substations 4,600, % of foreign expenditures (3) Distribution program 4,300, % of foreign expenditures for items directly imported and 100% of the exfactory price for domestically manufactured items (4) Consultants' services 1,300, % of foreign expenditures (5) Personnel training 600, % of foreign program expenditures (6) Unallocated 4,100,000 TOTAL 20,000, For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of any country other

17 than the Guarantor and for goods or services supplied from the territory 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 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 the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $200,000, may be made in respect of consultants' services under Category (4) on account of payments made for such expenditures before that date but after August 31, 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, 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. 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.

18 SCHEDULE 2 Description of the Project The Project forms a part of the Borrower's 1978 to 1982 construction program and consists of the following: (A) construction of the following transmission lines: (i) about 40 miles of 138 kv transmission line between Duncans and Bogue; (ii) (iii) (iv) about 43 miles of 138 kv transmission line between Duncans and Bellevue or about 25 miles of 138 kv transmission line between Tredegar and Bellevue, whichever is the least cost alternative; about 12 miles of 69 kv transmission line between Greenwich Road and Cane River; about 22 miles of 69 kv transmission line between Oracabessa and Annotto Bay; and (v) about 24 miles of 69 kv transmission line between Annotto Bay and Port Antonio. (B) (1) Expansion of substations at Cane River, Bogue and Duncans (or Tredegar) to accommodate the transmission lines proposed under Part A above. (2) Provision of adequate capacity for expected load growth at Kingston through installation of 90 NVA of kv transformer capacity at Hunts Bay. (3) Provision of adequate capacity for expected load growth through the installation of: (i) 25 MVA, kv at Bogue and Bellevue; (ii) 12.5 MVA, 69-24kV at Parnassus, Duhaney, Annotto Bay, Bogue, Duncans, Bellevue and Spur Tree; and (iii) 6.25 MVA, kv at Port Antonio.

19 (C) The carrying out of about two years of the Borrower's distribution program involving the installation of: (i) 45 MVA of distribution transformers, 5 to 50 kva each; (ii) 300 circuit-miles of 24 and 12 kv lines and 220/110 volt lines; (iii) (iv) 20,000 KWh meters; and 140 MVAR of capacitors. (D) (1) Strengthening of the Borrower's operating and maintenance practices in transmission and distribution, utilizing about 80 man-months of consultants' services. (2) Strengthening of the Borrower's operating and maintenance practices in generating stations, utilizing about 70 man-months of consultants' services. (3) Studies of the Borrower's tariff structure, ulilizing about 10 man-months of consultants' services. (4) Design and preparation of contract documents and supervision of construction of 138 kv lines and substations included in the Project, utilizing about 60 man-months of consultants' services. (E) Training of Borrower's personnel. The Project is expected to be completed by March 31, 1982.

20 SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars)* On each February 15 and August 15 beginning August 15, 1982 through August 15, ,000 On February 15, ,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 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 before maturity 1.30% More than three years but not more than six years before maturity 2.65% More than six years but not more than eleven years before maturity 4.80% More than eleven years but not more than fifteen years before maturity 6.55% More than fifteen years before maturity 7.45%

22 SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of international competitive bidding under the Project, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case v:ay be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. B. Other Procurement Procedures Specialized equipment for substations not exceeding in the aggregate the equivalent of $75,000 shall be purchased directly from the manufacturers under contracts satisfactory to the Bank. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with local procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall

23 Ne axcluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Jamaica may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Jamaica if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Jamaica equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Jamaica. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would

24 have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower shall, before qualification is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for -he exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: contracts estimated to cost the equiva- With respect to all lent of $50,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report, on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines

25 or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the delivery to the Bank of the first application for withdrawal of funds from the Loan Accc.nt in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.