Board Resolution No. 045/2014

BOARD RESOLUTION NO. 045/2014

SUBJECT: MONETARY OPERATIONS MANAGEMENT APPROVES CONCESSIONAL EXTRAORDINARY CREDIT TO THE NATIONAL ELECTRIC COMPANY (ENDE) FOR AN AMOUNT OF Bs 3,114,868,692 TO FINANCE THE PROJECT: "MIGUILLAS HYDROELECTRIC".

HAVING SEEN:

The Political Constitution of the State promulgated on February 7, 2009.

Law No. 1670 of the Central Bank of Bolivia (BCB) of October 31, 1995.

The General State Budget for Management 2010 (PGE-2010), approved within the framework of what is provided in numeral 11 of paragraph 1 of article 158 of the CPE.

Law No. 050 of Modifications to the General State Budget — Management 2010 of October 9, 2010.

Law No. 062 of the General State Budget — Management 2011 of November 28, 2010.

Law No. 211 of the General State Budget — Management 2012 of December 23, 2011.

Law No. 317 of the General State Budget — Management 2013 (PGE-2013) of December 11, 2012.

Law No. 455 of the General State Budget — Management 2014 (PGE-2014) of December 11, 2013.

Supreme Decree (D.S.) No. 29644 of July 16, 2008.

Supreme Decree (D.S.) No. 0267 of August 26, 2009.

Supreme Decree (D.S.) No. 1691 of August 14, 2013.

Ministerial Resolution (R.M.) of the Ministry of Economy and Public Finance (MEFP) No. 023 of January 7, 2014.

Ministerial Resolutions of the Ministry of Hydrocarbons and Energy (MHE) No. 055 and No. 078 — dated March 14 and April 16, 2014, respectively.

Board Resolution of the BCB No. 023/11 of February 22, 2011, which approves the Regulation for the granting of credits to National Strategic Public Enterprises within the framework of the General State Budget — Management 2010 and 2011; modified through Board Resolutions No. 026/11, No. 027/11, No. 030/11, No. 097/11, No. 039/12, No. 064/12, No. 024/13 and No. 008/14 of dates March 2, March 18, March 22 and August 9, 2011, March 23, May 29, 2012, March 12, 2013 and January 28, 2014 respectively.

Board Resolution of the BCB No. 144/2013 of October 15, 2013, modified through Board Resolution of the BCB No. 040/2014 of April 29, 2014.

Board Resolution of ENDE No. 002/2014 of February 3, 2014.

ENDE CITE notes: ENDE-TYCP-2/12, 2/13, 2/11-14 of February 14, 2014.

ENDE CITE notes: ENDE-PREJ-3/58-14 and ENDE-DGFN-4/21-14 received on March 24 and April 17, 2014, respectively.

Report from the Economic Policy Advisory CITE: BCB-APEC-SMF-2014-19 of April 29, 2014.

Report from the Monetary Operations Management CITE: BCB-GOM-SOSP-DCE-INF-2014-25 of April 29, 2014.

Report from the Legal Affairs Management CITE: BCB-GAL-SANO-INF-2014-140 of April 29, 2014.

CONSIDERING:

That the Political Constitution of the State (CPE), approved by Referendum on January 25, 2009 and promulgated on February 7, 2009, in numeral 6 of its Article 9, establishes that it is the end and function of the State to promote and guarantee the responsible and planned use of natural resources, and to boost their industrialization, through development and strengthening of the productive base in its different dimensions and levels. Likewise, in numeral 10 of paragraph I of article 158 and article 322, it establishes that the Plurinational Legislative Assembly has the attribute to approve the contracting of public debt.

That article 322 of the Political Constitution of the State provides that the Plurinational Legislative Assembly will authorize the contracting of public debt when the capacity to generate income to cover the capital and interest is demonstrated, and the most advantageous conditions in rates, terms, amounts and other circumstances are technically justified. Public debt does not include obligations that have not been expressly authorized and guaranteed by the Plurinational Legislative Assembly.

That the General State Budget of Management 2010 (PGE-2010), approved within the framework of what is provided in numeral 11 of paragraph I of article 158 of the CPE, in its article 41 authorizes the BCB to grant an extraordinary credit up to the equivalent of $1,000,000,000 USD, in favor of National Strategic 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 application of articles 22 and 23 of Law No. 1670 is exempted from the BCB.

That Law No. 050, in its Article 8 authorizes the BCB to grant ENDE an extraordinary credit of up to Bs 5,715,400,000 (Five Billion Seven Hundred Fifteen Million Four Hundred Thousand 00/100 Bolivianos) under concessional conditions, with the object of financing productive investment projects and/or making capital contributions to its subsidiary companies, for which the BCB is exempted from the application of Articles 22 and 23 of Law No. 1670 of October 31, 1995.

That Law No. 062, in Article No. 13 modifies Article 8 of Law No. 050 reducing the amount assigned to ENDE to Bs 4,879,000,000 (Four Billion Eight Hundred Seventy-Nine Million 00/100 Bolivianos).

That Law No. 211, in its Article 27 extends during the 2012 fiscal management, the validity of article 8 of Law No. 50, modified by article 13 of Law No. 62, regarding the resources of the credit authorized in favor of ENDE, that had not been committed.

That Law No. 317, in its Article 22 extends the validity of article 8 of Law No. 50, modified by article 13 of Law No. 62, regarding the resources of the credit authorized in favor of ENDE, that had not been committed.

That Law No. 455, in its Article 14 authorizes the BCB to grant ENDE an extraordinary credit of up to Bs 765,600,000 (Seven Hundred Sixty-Five Million Six Hundred Thousand 00/100 Bolivianos) additionally to the amount of Bs 4,879,000,000 (Four Billion Eight Hundred Seventy-Nine Million 00/100 Bolivianos) established in Article 13 of Law No. 062, under concessional conditions, with the object of financing productive investment projects and/or making capital contributions to its subsidiary companies.

That within the framework of Paragraph I of the mentioned Article and according to what is established by Article 158, Paragraph I numeral 10 and Article 322 of the CPE, ENDE is authorized to contract the referred credit with the BCB.

That according to numeral III, the MHE is responsible for the evaluation and monitoring of the execution of the credit resources to be granted by the BCB in favor of ENDE.

That according to numeral IV, ENDE is responsible for the use and destination of the resources to be disbursed by the BCB, within the framework of Paragraph I of the mentioned Article.

That according to numeral V, the Ministry of Economy and Public Finance (MEFP) is authorized, through the General Treasury of the Nation (TGN), to issue and grant Non-Negotiable Treasury Bonds in favor of the BCB to guarantee the amount of the credit granted by said entity in favor of ENDE, upon written request of the Head Sector Ministry and jointly with the BCB.

That according to numeral VI, ENDE is exempted from the effects and scope of the application of Articles 33 and 35 of Law No. 2042 of December 21, 1999, on Budgetary Administration.

That in concordance with numeral VII, the MHE through Ministerial Resolution must justify before the BCB that the use and destination of the credit resources to be acquired by ENDE are of national priority within the framework of the National Development Plan and that future flows will be used for the payment of the credit indicated in the mentioned Article.

That D.S. No. 29644 establishes that ENDE has the institutional nature of a Strategic National Public Enterprise and corporate, with a central structure and new companies owned by it.

That D.S. No. 0267 modifies Article 4 of D.S. No. 29644 referred to the Executive and Director Levels of ENDE, and approves the statutes of ENDE.

That D.S. No. 1691 defines the structure of ENDE Corporation, establishes the organizational and functional structure of ENDE parent company and approves the Salary Scale for specialized personnel in strategic areas of the entity, with remuneration levels higher than that established for the President of the Plurinational State of Bolivia.

That R.M. of the MEFP No. 023 determines for the 2014 management, a value of at least 20%, as the degree of concessionality for Public Enterprises that access extraordinary internal credits from the Central Bank of Bolivia.

That the R.M. of the MHE No. 055 and No. 078 — 14, justify before the BCB the following: 1) According to the PGE Law — 2014, the "Miguillas Hydroelectric" project, to be executed by ENDE - Corporation, will be financed with a credit of Bs 3,114,868,692 (Three Billion One Hundred Fourteen Million Eight Hundred Sixty-Eight Thousand Six Hundred Ninety-Two 00/100 Bolivianos), to be requested from the BCB, whose amount will be destined to the mentioned project. 2) Confirms the technical feasibility of the execution of the "Miguillas Hydroelectric" project. 3) Determines that according to the economic and financial evaluation carried out through the General Directorate of Administrative Affairs of the MHE, the project: "Miguillas Hydroelectric", justifies and ensures the payment capacity of the credit and establishes that the use and destination of the credit resources are of national priority within the framework of the National Development Plan and that future flows will be used for the payment of the credit. 4) Disposes that the MHE will authorize the disbursement requests based on an evaluation and monitoring report issued for each disbursement. That the MHE through the Vice Ministry of Electricity and Alternative Energies commits to carrying out the evaluation and monitoring of the physical and financial execution of the project and obliges ENDE - Corporation to provide all the information and documentation required by the MHE.

That the Regulation for the Concession of Credit to National Strategic Public Enterprises within the framework of the General State Budget Management 2010 and 2011, approved through Board Resolution of the BCB No. 023/11 and modified through Board Resolutions No. 026/11, No. 027/11, No. 030/11, No. 097/11, No. 039/12, No. 064/12, No. 024/13 and No. 008/14, has the object of regulating the granting of credits by the BCB in favor of the EPNE.

That Article 1 of Board Resolution No. 024/13 modifies the Regulation for the Concession of credit to National Strategic Public Enterprises in the Framework of the PGE — Management 2010, 2011 and 2012 modifying the Regulation for the Approval of Credit to National Strategic Public Enterprises in the Framework of the General State Budget — Management 2010, 2011, 2012 and 2013.

That Board Resolution No. 144/13 approves modifications to the Regulation for the Concession of Credit to National Strategic Public Enterprises within the framework of the General State Budget — Management 2010, 2011, 2012 and 2013 and incorporates the Procedure to define the Discount Rate and the Degree of Concessionality in Credits to be granted to the EPNE.

That Board Resolution No. 040/2014 modifies the appendix of the Regulation for the Approval of Credit to National Strategic Public Enterprises (EPNE) within the framework of the General State Budget — Management 2010, 2011, 2012, 2013 and 2014.

That through Board Resolution No. 002/2014, the Board of Directors of ENDE approves the investment plan and the disbursement schedule for the execution of the Miguillas Hydroelectric Project.

That through notes CITE: ENDE-TYCP-2/12, 2/13 and 2/11-14, ENDE informs the Ministry of Economy and Public Finance, Ministry of Development Planning and Ministry of Hydrocarbons and Energy, of the ENDE B.R. No. 002/2014.

That through ENDE note CITE: ENDE — PREJ — 3/58 — 14 and within the framework of what is provided by Laws No. 050, No. 062 and No. 455, it requests from the BCB a credit for an amount of Bs 3,114,868,692 (Three Billion One Hundred Fourteen Million Eight Hundred Sixty-Eight Thousand Six Hundred Ninety-Two 00/100 Bolivianos) to finance the project: "Miguillas Hydroelectric", payable in a term of thirty (30) years considering five (5) years of grace and an interest rate of 1.24%. Likewise, it attaches the proposed Disbursement Schedule and Payment Plan and the documentation established in the Regulation for the approval of credit to National Strategic Public Enterprises.

That through note ENDE-DGFN-4/21-14, the entity clarifies the observations made by the BCB through note CITE: BCB-GOM-SOSP-DCE-CE-2014-62, correcting the literal amount in the legal framework section that supports the request, attaching a new disbursement schedule and informing that the MHE sent to the BCB the corresponding Ministerial Resolution that modifies R.M. No. 078-14.

That the Economic Policy Advisory points out in its report CITE: BCB-APEC-SMF-2014-19 that to date the disbursements to the EPNE in the 2014 management, including the disbursements programmed for the rest of the management, are below the total amount considered in the monetary and fiscal program. That the "Miguillas Hydroelectric" Project is of national interest and priority as it will contribute to the change of the energy matrix and guarantee the electricity supply avoiding rationing in the SIN.

That the Monetary Operations Management recommends in its report CITE: BCB-GOM-SOSP-DCE-INF-2014-25, to consider the interest rate scenarios proposed for the approval of the financial conditions of the credit requested by ENDE and in case the request is considered favorably, ENDE must open the corresponding disbursement and payment accounts at the BCB through the MEFP.

That the Legal Affairs Management concludes in its report CITE: BCB-GAL-SANO-INF-2014-140 that ENDE has complied with the presentation of the documents required in article 2 of the Regulation for the Concession of Credit to National Strategic Public Enterprises Management 2010, 2011, 2012, 2013 and 2014.

That Article 6 of the Regulation for the Approval of Credit to National Strategic Public Enterprises in the Framework of the PGE — Management 2010, 2011, 2012, 2013 and 2014 establishes that the Board of Directors of the BCB, in consideration of the technical and legal reports, will consider the credit request and in its case approve it, through the favorable vote of two thirds of its members present in the Board meeting, issuing the corresponding Resolution, and instructing the elaboration and subsequent signing of the contract by the President of the BCB, prior to review and approval by the Board.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve within the framework of what is provided in Article 8 of Law No. 050 of October 9, 2010 of Modifications to the General State Budget (PGE 2010), Article No. 13 of Law No. 062 of November 28, 2010 of the General State Budget — Management 2011 and of Article No. 14 of Law No. 455 of December 11, 2014 of the General State Budget — Management 2014 (PGE — 2014), of the antecedents and dispositions described above, the granting of a concessional extraordinary credit to ENDE under the following terms and conditions:

Currency: Bolivianos.
Total Credit Amount: Bs 3,114,868,692 (Three Billion One Hundred Fourteen Million Eight Hundred Sixty-Eight Thousand Six Hundred Ninety-Two 00/100 Bolivianos).
Term: 30 years.
Grace Period: 5 years.
Annual Interest Rate: 1.31% (one point thirty-one percent).
Principal Payment: Fixed annual installments.
Interest Payment: Annual.
Disbursement Deadline: June 29, 2018.
Guarantees: Non-Negotiable Treasury Bonds.

Article 2.- Authorize the President of the BCB to sign the contract with the National Electric Company (ENDE) under the terms of this Resolution.

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

Rafael Boyan Tellez
La Paz, May 6, 2014

[Signatures]

C. (Copy) to the General Secretary of the Board.