Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 147/2016

SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES CONCESSIONAL EXTRAORDINARY CREDIT TO THE NATIONAL ELECTRIC COMPANY (ENDE) FOR Bs3,827,478,000.-

VISTOS:

• 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.
• Law No. 769 on the General State Budget – Management 2016 (PGE-2016) of December 17, 2015.
• Ministerial Resolution (R.M.) of the Ministry of Economy and Public Finance (MEFP) No. 010 of January 5, 2016.
• Ministerial Resolution (R.M.) of the Ministry of Hydrocarbons and Energy (MHE) No. 143-16 of July 7, 2016.
• Board Resolution of the BCB No. 019/2016 of February 2, 2016, which approves the Regulations of the Central Bank of Bolivia for the Approval of Credits to National Strategic Public Companies within the framework of the General State Budget Laws.
• Board Resolution of ENDE No. 22/2016 of June 20, 2016.
• The note from the MHE CITE: MHE-05532 DGAJ-00075, received on July 8, 2016.
• The notes from ENDE CITE: ENDE-PREJ-7/4-16, ENDE-PREJ-7/49-16, ENDE-PREJ-7/50-16 and ENDE-PREJ-7/52-16 received on July 12, 18, 19 and 22, 2016, respectively.
• The notes from ENDE CITE: ENDE-PREJ-7/5-16, ENDE-PREJ-7/6-16 and ENDE-PREJ-7/7-16, all dated July 11, 2016.
• The note from the BCB CITE: BCB-GOM-SOSP-DCE-CE-2016-127 of July 25, 2016.
• The note from ENDE CITE: ENDE-PREJ-7/57-16 of July 29, 2016.
• The Report from the Monetary Operations Management (GOM) CITE: BCB-GOM-SOSP-DCE-INF-2016-22 of July 22, 2016.
• The report from the Legal Affairs Management (GAL) CITE: BCB-GAL-SANO-DLBCI-INF-2016-183 of July 22, 2016.

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//2. B.R. No. 147/2016

CONSIDERING:

• That the Political Constitution of the State (CPE), 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 the development and strengthening of the productive base in its different dimensions and levels. Likewise, in paragraph I numeral 10 of Article 158 and Article 322, it is established that the Plurinational Legislative Assembly has the attribution to approve the contracting of public debt.
• That Article 322 of the CPE provides that the Plurinational Legislative Assembly will authorize the contracting of public debt when the capacity to generate income to cover the principal and interest is demonstrated, and the most advantageous conditions in terms of rates, terms, amounts, and other circumstances are technically justified. Public debt will not include obligations that have not been expressly authorized and guaranteed by the Plurinational Legislative Assembly.
• That Law No. 769, in its Article 9, Paragraph I, authorizes the BCB to grant an extraordinary credit of up to Bs12,270,161,994.- (Twelve Billion Two Hundred Seventy Million One Hundred Sixty-One Thousand Nine Hundred Ninety-Four 00/100 Bolivianos) in favor of ENDE, on concessional conditions, with the object of financing investment projects for generation and transmission in the energy sector, or generation projects that will be executed by its subsidiary or affiliate companies through capital contributions or by ENDE parent company, or by ENDE parent company associated with its affiliate and subsidiary companies. For this effect, the BCB is exempted from the application of Articles 22 and 23 of Law No. 1670 of October 31, 1995. Likewise, it provides that in accordance with 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 in numeral III of the cited article, the MEFP is authorized, through the TGN, to issue and grant Non-Negotiable Treasury Bonds in favor of the BCB, to guarantee the amount of the credit granted, upon written request of the lead sector Ministry and jointly with the BCB.
• That in accordance with numeral IV of the mentioned article, the Ministry of Hydrocarbons and Energy is responsible for the evaluation and monitoring of the execution of the resources of the credit to be granted by the BCB in favor of ENDE.
• That in accordance with numeral V, 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 in accordance with numeral VI of the same article, the MHE through R.M. 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 Economic and Social Development Plan, and that future flows will be used for the payment of the credit.

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//3. B.R. No. 147/2016

• That the R.M. of the MEFP No. 010 determines for the 2016 management, a value of at least 20%, as the degree of concessionality for Public Companies that access extraordinary internal credits from the BCB.
• That the R.M. of the MHE No. 143-16 justifies to the BCB and resolves among other things: 1) Determine that in accordance with Law No. 769 of December 17, 2015, of the Public Sector Budget for Fiscal Management 2016, the Ivirizu Hydroelectric Project to be executed by ENDE Corporation, will be financed with a credit of Bs3,827,478,000.- (Three Billion Eight Hundred Twenty-Seven Million Four Hundred Seventy-Eight Thousand 00/100 Bolivianos), to be requested from the BCB, whose amount will be destined to the Project. 2) Approve the technical feasibility report of the execution of the Ivirizu Hydroelectric Project, based on what was stated in the Technical Report MHE-VMEEA-DGE No. 00048/2016, issued by the Undersecretariat of Electricity and Alternative Energies (VMEEA). 3) Approve the economic-financial evaluation of the project contained in the financial report ENDE-IF-DGFN-6/7-16, based on what was stated in Report DGAA No. 00265/2016, issued by the General Directorate of Administrative Affairs of the MHE, since the Ivirizu Hydroelectric Project justifies and ensures the payment capacity of the credit to be contracted with the BCB and establishes that the use and destination of the resources of the credit to be acquired by ENDE Corporation are of national priority within the framework of the "Patriotic Agenda for the Bicentennial 2025", and the Economic and Social Development Plan 2016 – 2020; and that the future flows of the project mentioned in Paragraph I, will be used for the payment of the credit to be granted by the BCB. 4) It is ordered that the MHE will authorize ENDE Corporation's disbursement requests to the BCB based on an evaluation and monitoring report issued for each disbursement; the MHE through the VMEEA will carry out the evaluation and monitoring of the physical and financial execution of the project; ENDE Corporation is obliged to provide all the information and documentation required by the MHE, through the VMEEA, for the corresponding evaluation and monitoring.
• That the Regulations of the Central Bank of Bolivia for the Approval of Credit to National Strategic Public Companies within the framework of the General State Budget, approved by Board Resolution of the BCB No. 019/2016, has the object of regulating the granting of credits by the BCB in favor of the SPNE.
• That through B.R. No. 22/2016, the Board of Directors of ENDE approves the Investment Plan and the Disbursement Schedule of the resources of the credit to be granted by the BCB, for the execution of the Ivirizu Hydroelectric Project.
• That through note CITE: MHE-05532 DGAJ-00075, the MHE transmits Ministerial Resolution No. 143-16 which has the object "To Determine that in accordance with Law No. 769 of December 17, 2015, of the General State Budget – PGE of the public sector for Fiscal Management 2016, the Ivirizu Hydroelectric Project to be executed by ENDE Corporation, will be financed with a credit of Bs3,827,478,000.- (Three Billion Eight Hundred Twenty-Seven Million Four Hundred Seventy-Eight Thousand 00/100 Bolivianos), to be requested from the BCB.

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//4. B.R. No. 147/2016

• That through notes CITE: ENDE-PREJ-7/4-16, ENDE-PREJ-7/49-16, ENDE-PREJ-7/50-16 and ENDE-PREJ-7/52-16, ENDE requests from the BCB the granting of a concessional extraordinary credit for Bs3,827,478,000.- (Three Billion Eight Hundred Twenty-Seven Million Four Hundred Seventy-Eight Thousand 00/100 Bolivianos), to finance the Ivirizu Hydroelectric Project, for this effect, it attaches the documentation established in the Regulations for the Approval of Credit to National Strategic Public Companies within the framework of the General State Budget.
• That through notes CITE: ENDE-PREJ-7/5-16, ENDE-PREJ-7/6-16 and ENDE-PREJ-7/7-16, ENDE informs the MEFP, MHE and Ministry of Development Planning, respectively, of a copy of the Board Resolution of ENDE No. 22/2016 of June 20, 2016.
• That through note CITE: BCB-GOM-SOSP-DCE-CE-2016-127, the BCB communicates to ENDE the conditions approved by the Board and requests its acceptance.
• That through note CITE: ENDE-PREJ-7/57-16, ENDE communicates that its Board accepts the conditions of the concessional credit approved by the Board of the BCB.
• That the Monetary Operations Management recommends in its report CITE: BCB-GOM-SOSP-DCE-INF-2016-22, to consider the interest rate scenarios proposed for the approval of the financial conditions of the credit requested by ENDE, include a clause in the Credit Contract, through which ENDE commits to make advance payments on principal once the company concludes contracts for the export of electricity, 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-DLBCI-INF-2016-183, that the request made by ENDE is within the framework of the current regulations, for this effect it has complied with the presentation of the documents required in Article 2 of the BCB Regulations for the Approval of Credits to National Strategic Public Companies in the Framework of the General State Budget and recommends putting before the Board the credit approval request presented by ENDE.
• That Article 8 of the Regulations of the Central Bank of Bolivia for the Approval of Credit to National Strategic Public Companies in the Framework of the General State Budget Laws, establishes that upon receipt of the SPNE's conformity on the financial considerations, the Board of the BCB through Resolution will approve the granting of the credit, with the favorable vote of two-thirds of its members present at the respective meeting. Likewise, it will authorize the President of the BCB to sign the respective contract.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

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//5. B.R. No. 147/2016

Article 1.- Approve within the framework of what is established in Law No. 769 on the General State Budget – Management 2016 (PGE – 2016), of the antecedents and provisions described above, the granting of a concessional extraordinary credit in favor of ENDE, to finance the Ivirizu Hydroelectric Project, under the following terms and conditions:

Concept	Value
Currency:	Bolivianos.
Total Credit Amount:	Bs3,827,478,000.- (Three Billion Eight Hundred Twenty-Seven Million Four Hundred Seventy-Eight Thousand 00/100 Bolivianos).
Term:	50 years from the first disbursement.
Grace Period on Principal:	6 years.
Interest Rate:	1.68% (one point six eight percent).
Deadline for Disbursements:	October 31, 2020.
Payment Plan:	Annual.
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 the General Management are in charge of the execution and compliance of this Resolution.

La Paz, August 2, 2016

Marcelo Zabalaga Estrada

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//6. B.R. No. 147/2016

Sergio Velarde Vera
Ronald Polo Rivero
Abraham Pérez Alandia
Luis Baudoin Olea