Board Resolution No. 012/2011

BOARD RESOLUTION NO. 012/2011

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES APPLICATION FOR CONCESSIONAL EXTRAORDINARY CREDIT TO THE NATIONAL ELECTRIC COMPANY FOR AN AMOUNT OF Bs846,000,000.-

HAVING SEEN:

The Political Constitution of the State promulgated on February 7, 2009. Budgetary Administration Law No. 2042 of December 21, 1999. Law No. 1670 of the Central Bank of Bolivia (BCB) of October 31, 1995. The General State Budget for the 2010 management period (PGE-2010). Law No. 050 of October 9, 2010, Modifying the PGE – 2010. Law No. 062 of November 28, 2010, Approving the General State Budget for the 2011 management period (PGE – 2011). The National Development Plan approved by Supreme Decree No. 29272 of September 12, 2007. The Board Resolution of the National Electric Company No. 010/2010 of November 13, 2010. The Resolution of the Ministry of Hydrocarbons and Energy No. 465-10 of December 7, 2010. The note from the National Electric Company CBGAF – 11330/10 of December 16, 2010. The Report from the Economic Policy Advisory BCB-APEC-SSMF-INF-2011-04 of January 14, 2011. The reports from the Monetary Operations Management BCB-GOM–SOSP–DCE-INF-2011-1 of January 14, 2011. The report from the Legal Affairs Management BCB-GAL-SANO-INF-2011-11, of January 14, 2011.

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CONSIDERING:

That the General State Budget 2010 (PGN-2010) approved as established by article 158 numeral 11 of the Political Constitution of the State, in its article 41 establishes that: “The Central Bank of Bolivia is authorized to grant an extraordinary credit up to the equivalent of $US1,000,000,000.- (One Thousand Million 00/100 United States Dollars), in favor of Strategic National Public Enterprises under concessional conditions, with the exclusive object of financing productive investment projects within the framework of the country's food and energy security; for this effect, the Central Bank of Bolivia is exempted from the application of articles 22 and 23 of Law No. 1670 of October 31, 1995” referred to the prohibition of granting credits to the Public Sector and the need to document through negotiable public debt values issued by the TGN, respectively.

That Law No. 050 in its article 8 establishes that within the framework of article 41 of the PGE – 2010, the BCB is authorized to grant ENDE an extraordinary credit of up to Bs5,715,400,000.- under concessional conditions with the object of financing productive investment projects and/or making capital contributions to its subsidiary companies, for which the Central Bank of Bolivia is exempted from the application of articles 22 and 23 of Law No. 1670 of October 31, 1995. Likewise, in its article 19 it determines to release ENDE from the application of articles 33 and 35 of Law No. 2042 of Budgetary Administration.

That Law No. 062 in its article 13 establishes that within the framework of article 41 of the PGE-2010, the BCB is authorized to grant ENDE an extraordinary credit of up to Bs4,879,000,000.- with the object of financing productive investment projects and/or making capital contributions to its subsidiary companies.

That Ministerial Resolution No. 465-10 of the Ministry of Hydrocarbons and Energy, resolves: 1) That the use of Bs846,000,000.- of the extraordinary credit to be contracted by ENDE with the BCB will be destined to the South Thermoelectric Plant Project, since the mentioned project is of national priority within the framework of the NDP; 2) That the future flows generated by the South Thermoelectric Plant Project, less operating costs, will be employed for the payment of the debt that ENDE incurs with the BCB; 3) That ENDE, in coordination with the Vice Ministry of Electricity and Alternative Energies, within the framework of article 8 of Law No. 050, are in charge of continuing the procedures to finalize the credit before the BCB, to complement the documentation or information that said entity requires.

That the National Electric Company, through letter, requests the credit for the execution of the South Thermoelectric Project.

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That the Economic Policy Advisory (APEC) in its Report BCB-APEC-SSMF-INF-2011-04, concludes that the credit requested by ENDE is within the amount provided for in the Base Monetary Program of the 2011 management. Likewise, it points out that with respect to the impact of the credit requested by ENDE on the 2011 Base Monetary Program, the disbursement of the requested credit will not affect the fulfillment of the variables subject to measurement in said Program.

That the Monetary Operations Management points out in its report BCB-GOM–SOSP–DCE-INF-2011-1, that the financial conditions to be established must respect the concessional nature of the credit within the framework of current regulations, in addition to ensuring the recovery of the credit in the shortest possible time. To establish these conditions, aside from the semi-annual average of the TRE, the term of the credit, the grace period, and the corresponding payment flow must be negotiated with ENDE.

That in the aforementioned report from GOM, it is concluded that it is necessary to enable a specific account in the name of ENDE to disburse the credit resources, prior to ENDE's request through the Ministry of Economy and Public Finances and the fulfillment of all requirements established by the BCB Board for this effect. Likewise, a specific account must be enabled to provision the resources for the payment of the credit service (Capital and interest). In the corresponding credit contract, the guarantees and possible mechanisms that ensure the amortization of the capital and the payment of the corresponding interest must be established.

That the Legal Affairs Management in its Report BCB-GAL-SANO-INF-2011-11 concludes that the request presented by ENDE is legally appropriate, since it does not contravene the current legal framework.

That by virtue of what is provided in article 44 of Law No. 1670, the BCB Board is the competent instance to authorize the granting of the extraordinary credit in favor of ENDE in order to comply with what is expressly disposed in the PGE-2010 and applicable legal provisions in the case.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve within the framework of article 41 of the PGE-2010, article 8 of Law No. 050 and article 13 of Law No. 062, the application for a concessional extraordinary credit in favor of ENDE, for an amount of up to Bs846,000,000.- (Eight Hundred Forty-Six Million 00/100 Bolivianos), for the South Thermoelectric Plant project.

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Article 2.- Authorize the President of the BCB to negotiate with ENDE the conditions and terms of the credit contract indicated in the preceding article, for subsequent consideration and approval by the BCB Board.

Article 3.- The Presidency and General Management are in charge of the execution and compliance of this Resolution.

La Paz, January 18, 2011

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Marcelo Zabalaga Estrada

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Ernesto Yáñez Aguilar Rolando Marín Ibáñez

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Hugo Dorado Araníbar Rafael Boyán Téllez