Board Resolution No. 063/2011

BOARD RESOLUTION NO. 063/2011

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES APPLICATION FOR CONCESSIONAL EXTRAORDINARY CREDIT TO THE NATIONAL ELECTRIC COMPANY FOR AN AMOUNT OF Bs36,797,152.

VIEWING:

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 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).

Supreme Decree No. 29644, of July 16, 2008.

Supreme Decree No. 267, of August 26, 2009.

Supreme Resolution No. 4990 of January 14, 2011.

The note from the National Electric Company CB-CA-GGN-5/34-11 of May 12, 2011.

The Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget for the 2010 and 2011 management periods, approved by Board Resolution of the Central Bank of Bolivia No. 23/2011, of February 22, 2011, and modified by Board Resolutions No. 26/2011, No. 27/2011, and No. 30/2011, of March 2, 18, and 22, 2011.

The Ministerial Resolution of the Ministry of Hydrocarbons and Energy No. 207/11, of May 11, 2011.

The Board Resolution of the National Electric Company No. 010/2011, of May 11, 2011.

The notes from the National Electric Company CB-CA-GGN-5/33-11; CB-CA-GGN-5/32-11, and CB-CA-GGN-5/31-11, all dated May 12, 2011.

The Report from the Economic Policy Advisory BCB-APEC-SSMF-INF-2011-014 of May 17, 2011.

The reports from the Monetary Operations Management BCB-GOM–SOSP–DCE-INF-2011-8 of May 16, 2011.

The report from the Legal Affairs Management BCB-GAL-SANO-INF-2011-178, of May 16, 2011.

Act No. 026/2011 corresponding to the Ordinary Meeting of the BCB Board of Directors on May 17, 2011.

The BCB Board Resolution No. 054/2011 of May 17, 2011.

The notes from the Presidency of the Central Bank of Bolivia BCB-PRES-CE-2011-465 and BCB-PRES-CE-2011-466 of May 17, 2011.

The note from the National Electric Company CB-CA-GGN-5/39-11 of May 18, 2011, to which Ministerial Resolution 219-11 of May 18, 2011, from the Ministry of Hydrocarbons and Energy, and ENDE Board Resolution No. 011/2011 of May 18, 2011, are attached.

The note from the Acting President of the Central Bank of Bolivia and the Minister of Hydrocarbons and Energy BCB-PRES-CE-2011-473 MHE-3977 DESP-0933-11 of May 18, 2011.

The note from the Ministry of Economy and Public Finance MEFP/VTCP/DGCP/UEPS-834/2011 of May 19, 2011.

CONSIDERING:

That the Political Constitution of the State (CPE), approved by referendum on January 25, 2009, and promulgated on February 7, 2009, establishes in Article 158, paragraph I, numeral 10, that the Plurinational Legislative Assembly has, among others, the authority to approve the contracting of loans that commit the general revenues of the State.

That Article 322 of the CPE establishes that the Plurinational Legislative Assembly will authorize the contracting of public debt when the capacity to generate income to cover capital and interest is demonstrated, and the most advantageous conditions in rates, terms, amounts, and other circumstances are technically justified; and it states that public debt will not include obligations that have not been expressly authorized and guaranteed by the Plurinational Legislative Assembly.

That the PGE-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 Billion 00/100 United States Dollars), in favor of National Strategic Public Enterprises under concessional conditions, with the exclusive objective 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 securities 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 objective 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.

That within the framework of paragraph I of Article 41 referred to and according to what is established by numeral 10, paragraph I of Article 158, and 322 of the Political Constitution of the State, ENDE is authorized to contract the aforementioned credit with the BCB.

That Article 8 of the aforementioned Law establishes that the Ministry of Hydrocarbons and Energy, through Ministerial Resolution, must justify to the BCB that the use and destination of the resources of the credit 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 this article.

That in Article 19 of the aforementioned Law, it is determined to exempt ENDE from the application of Articles 33 and 35 of Law No. 2042 on Budgetary Administration. Consequently, ENDE is not subject to what is provided by the Regulation for the Registration of the Start of Credit Operations, approved by the Ministry of Economy and Public Finance, through Ministerial Resolution No. 525 of October 22, 2007, and modified through Ministerial Resolution No. 318 of August 26, 2009.

That Law No. 62 approves the General State Budget for the 2011 management period (PGE-2011) and, through its Article 13, modifies Article 8 of Law No. 50, providing 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.- (Four Billion Eight Hundred Seventy-Nine Million 00/100 Bolivianos), with the objective of financing productive investment projects and/or making capital contributions to its subsidiary companies, under concessional conditions; for which the BCB is exempted from the application of Articles 22 and 23 of Law No. 1670.

That within the framework of paragraph I of Article 13 of Law No. 62 and according to what is established by numeral 10, paragraph I of Article 158, and Article 322 of the CPE, ENDE is authorized to contract the credit with the BCB.

That Article 13 of Law No. 62, which modifies Article 8 of Law No. 50, establishes that the Ministry of Hydrocarbons and Energy, through Ministerial Resolution, must justify to the BCB that the use and destination of the resources of the credit to be acquired by ENDE is of national priority within the framework of the National Development Plan and that future flows will be used for the payment of the credits indicated in that article.

That Article 14 of Law No. 62 establishes that for the contracting and execution of concessional extraordinary credits, the validity of Article 19 of Law No. 50 is extended for the 2011 management period.

That Supreme Decree No. 29644 has the object of establishing the legal nature of ENDE as a national strategic and corporate public enterprise.

That Supreme Decree No. 267, of August 26, 2009, modifies Article 4 of Supreme Decree No. 29644 and approves the Statutes of ENDE.

That by Supreme Resolution No. 4990, Mr. Jhonny Nelson Caballero Vargas is appointed as Acting General Manager of ENDE.

That the Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget for the 2010 and 2011 management periods, approved by Board Resolution of the Central Bank of Bolivia No. 023/2011 and modified by Board Resolutions No. 026/2011, No. 027/2011, and No. 030/2011, has the object of regulating the granting of credits by the BCB in favor of the EPNEs, within the framework of what is provided in the PGE-2010, modified by Law No. 50, and the PGE-2011 approved by Law No. 62.

That through note CB-CA-GGN-5/34-11, the National Electric Company (ENDE) presents the application for a concessional credit of Bs36,797,152 for the “Energy Supply Project to the Huanuni Mining Center” by ENDE, for which effect it sends the corresponding documentation and offers as guarantee the automatic debit of ENDE accounts opened at the BCB.

That by Ministerial Resolution No. 207-11/11, the Ministry of Hydrocarbons and Energy justifies to the BCB the following aspects: 1) It determines that according to the National Development Plan, the execution of the “Energy Supply Project to the Huanuni Mining Center” is of national priority and will be executed by ENDE, for which it will request a credit of Bs36,797,152 from the BCB and that future flows will be used for the payment of the credit; 2) It confirms the technical feasibility of the aforementioned project; 3) It determines that according to the economic and financial evaluation of the project, the payment capacity of the credit contracted with the BCB is ensured. Likewise, that the available profits generated by ENDE's subsidiary companies will be used for the payment of the debt that said company will contract with the BCB for the Execution of the Emergency Plan; 4) That the MHE will authorize the disbursement requests that ENDE makes to the BCB in accordance with the Credit Contract to be signed, committing through the Vice Ministry of Electricity and Alternative Energies to monitor the execution of the credit resources.

That ENDE Board Resolution No. 010/2011 approves the Investment Plan and the Disbursement Schedule of the credit resources to be granted by the BCB, with a breakdown of expenditure in national and foreign currency.

That through notes CB-CA-GGN-5/33-11; CB-CA-GGN-5/32-11, and CB-CA-GGN-5/31-11, all dated May 12, 2011, ENDE sends to the Ministry of Hydrocarbons and Energy (MHE), Ministry of Economy and Public Finance (MEFP), and Ministry of Planning and Development, the General Board Resolution No. 010/2011 and the Investment Plan of the resources destined for the execution of the “Energy Supply Project to the Huanuni Mining Center.”

That the Economic Policy Advisory (APEC) in its Report BCB-APEC-SSMF-INF-2011-014, concludes that the credit of Bs36,797,152 requested by ENDE is within the amount provided in the Base Monetary Program of the 2011 management period, which was incorporated into the Fiscal-Financial Program Execution Decision signed with the MEFP on February 9, 2011. Likewise, it states 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 indicates in its report BCB-GOM–SOSP–DCE-INF-2011-8, 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, and it pronounces on the methodology to calculate the discount rate of the present value and the degree of concessionality and the financial conditions of the credit.

That the Legal Affairs Management, within its competence and in compliance with clause c) of Article 5 of the Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget - 2010 and 2011 Management Periods, concludes that the request made by ENDE for the granting of a credit of Bs36,797,152.- does not violate the corresponding norms, since ENDE has presented the documents required in Article 2 of the Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget - 2010 and 2011 Management Periods, so there is no legal impediment for the BCB Board of Directors to consider the aforementioned credit request, by two-thirds of the votes of the members present in the meeting.

That the BCB Board of Directors through Act No. 026/2011, based on Articles 13 and 14 of the PGE 2011 approved by Law No. 62 of November 28, 2010, the Ministerial Resolution of the Ministry of Hydrocarbons and Energy No. 207-11 of May 11, 2011, and what is established by the BCB Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget for the 2010 and 2011 management periods, and on the basis of the Reports BCB-APEC-SSMF-INF-2011-014 from the APEC, BCB-GOM-SOSP-DCE-INF-2011-8 from the GOM, and BCB-GAL-SANO-INF-2011-178 from the GAL, the Board of Directors of the Central Bank of Bolivia has determined to accept the credit application in Bolivianos for the amount of Bs36,797,152.- (Thirty-six million seven hundred ninety-seven thousand one hundred fifty-two 00/100 Bolivianos) for a term of 30 years, with a grace period on capital of 5 years, with interest payable computable from the first disbursement, at an annual interest rate of 0.88%, setting the deadline for disbursements until December 30, 2012.

That in the aforementioned Act, the Board determined not to accept the guarantees offered by the National Electric Company, proceeding to request the issuance of Treasury Bonds to the Ministry of Economy and Public Finance in accordance with Article 4, numeral 3) of the BCB Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget for the 2010 and 2011 management periods.

That by BCB Board Resolution No. 054/2011, BCB Board Resolution No. 142/2010 of December 21, 2010, is rendered void.

That through notes BCB-PRES-CE-2011-465 and BCB-PRES-CE-2011-466, the Acting President of the BCB communicates to the General Manager of ENDE and the Minister of Hydrocarbons and Energy the decision of the Board of the Issuing Entity of May 17, 2011, regarding the conditions for the granting of a concessional extraordinary credit to the National Electric Company for the “Energy Supply Project to the Huanuni Mining Center.”

That the ENDE Board through Resolution No. 011/2011, attached to note CB-CA-GGN-5/39-11, resolves to have no observations to the conditions of the Concessional Credit approved by the BCB Board of Directors, described in note BCB-PRES-CE-2011-465.

That through note BCB-PRES-CE-2011-473 MHE-3977 DESP-0933-11, the Acting President of the BCB and the Minister of Hydrocarbons and Energy communicate to the Minister of Economy and Public Finance that in accordance with the Regulation for the Granting of Credit to National Strategic Public Enterprises within the framework of the General State Budget for the 2010 and 2011 management periods, the Board of Directors of the Central Bank of Bolivia has considered and approved, in favor of the National Electric Company (ENDE), the application for a concessional credit of Bs36,797,152.- for the “Energy Supply Project to the Huanuni Mining Center”; however, the aforementioned Board has not accepted the guarantee offered by said Company, so in order to facilitate the signing of the contract and make effective the credit required by ENDE, as provided in Article 4, numeral 3 of the aforementioned Regulation, the issuance of the list of Treasury Bonds that will constitute the guarantee for the obligations contracted by ENDE is requested from the MEFP. To this effect, a detail of the amounts and maturity dates of the required bonds is attached.

That the Minister of Economy and Public Finance in note MEFP/VTCP/DGCP/UEPS-834/2011 attaches the list with the serial numbers of the Non-Negotiable Treasury Bonds, which that State portfolio commits for the credit operation to be carried out within the framework of Article 13 of Law No. 062. In this regard, the Ministry of Economy and Public Finance will issue and deliver the corresponding Treasury Bonds to the BCB, immediately after each disbursement that the BCB makes in favor of ENDE, according to the disbursement schedule to be agreed upon in the BCB-ENDE-MHE Credit Contract.

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

That Article 6 of the Regulation for the Granting of Credit to National Strategic Public Enterprises within the Framework of the General State Budget - 2010 and 2011 Management Periods establishes that the BCB Board of Directors, considering the technical and legal reports, will consider the credit request and, if appropriate, approve it, through the favorable vote of two-thirds of its members present in the Board meeting, issuing the corresponding Resolution; and it will instruct the preparation and subsequent signing of the contract by the President of the BCB, prior to review and approval by the Board of Directors.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve within the framework of Articles 13 and 14 of Law No. 062 of November 28, 2010, which approves the PGE- 2011, of the antecedents and provisions described above, the granting of a concessional extraordinary credit to ENDE under the following terms and conditions:

Currency: Bolivianos.

Total Credit Amount: Bs36,797,152.- (Thirty-six million seven hundred ninety-seven thousand one hundred fifty-two 00/100 Bolivianos).

Term: 30 years.

Grace Period: On capital five (5) years with interest payable computable from the first disbursement.

Annual Interest Rate: 0.88% (zero point eighty-eight percent).

Deadline for Disbursements: Until December 30, 2012.

Payment Plan: Annual

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

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

La Paz, May 20, 2011

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Marcelo Zabalaga Estrada

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Rolando Marín Ibáñez Hugo Dorado Araníbar

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Gustavo Blacutt Alcalá Rafael Boyán Téllez