Board Resolution No. 202/2012

BOARD RESOLUTION NO. 202/2012 SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES THE CONCESSIONAL EXTRAORDINARY CREDIT TO THE NATIONAL ELECTRIC COMPANY (ENDE) FOR THE EXECUTION OF THE PROJECT "ADDITION OF THE FOURTH THERMOELECTRIC UNIT OF THE SOUTH".

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 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). Law No. 211 of December 23, 2011, approving the General State Budget for the 2012 management period (PGE-2012). The Regulation for the Concession of Credit to National Strategic Public Enterprises within the framework of the General State Budgets for the 2010, 2011, and 2012 management periods, approved by Board Resolution of the Central Bank of Bolivia No. 23/2011, of February 22, 2011, and its subsequent modifications. Ministerial Resolution No. 532 of August 16, 2012, from the Ministry of Economy and Public Finance. The note from the Vice Ministry of Treasury and Public Credit, dependent on the Ministry of Economy and Public Finance (MEFP/VTCP/DGAFT/USCFT/N°1616/12) of August 22, 2012. Supreme Decree No. 29644 of July 16, 2008. Supreme Decree No. 267 of August 26, 2009. Supreme Resolution No. 7124 of March 7, 2012. The note from the National Electric Company ENDE-GGN-11/17-12 of November 19, 2012. The Technical Report from the National Electric Company ENDE-IT-GGR-10/4-12 of October 17, 2012.

//2. B.R. No. 202/2012 The Financial Report from the National Electric Company ENDE-IF-DFI-11/2-12 of November 6, 2012. The Legal Report from the National Electric Company INF.DIR. 15-2012 of November 6, 2012. The Board Resolution of ENDE No. 17/2012 of November 8, 2012, approving the Investment Plan and the Disbursement Schedule of the resources of the credit to be granted by the BCB, with a breakdown of expenditure in national and foreign currency. The Ministerial Resolution of the Ministry of Hydrocarbons and Energy No. 334/12 of November 14, 2012. The notes from the National Electric Company ENDE-GGN-11/8-12, ENDE-GGN-11/7-12, and ENDE-GGN-11/6-12, all dated November 12, 2012, addressed to the Ministry of Economy and Public Finance, the Ministry of Development Planning, and the Ministry of Hydrocarbons and Energy, respectively. The Report from the Economic Policy Advisory BCB-APEC-SSMF-INF-2012-35 of November 23, 2012. The Report from the Monetary Operations Management BCB-GOM-SOSP-INF-2012-19 of November 22, 2012. The Report from the Legal Affairs Management BCB-GAL-SANO-INF-2012-374 of November 26, 2012.

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 it is the attribute of the Plurinational Legislative Assembly to approve the contracting of loans that commit the general revenues of the State.

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 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 paragraph II of Articles 20 and 379 of the Political Constitution of the State establish that it is the responsibility of the State, at all levels of government, to guarantee the generation of electrical energy for internal consumption of the Country.

//3. B.R. No. 202/2012 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 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" referring to the prohibition of granting credits to the Public Sector and the need to document through negotiable debt securities issued by the General Treasury of the Nation (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.

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 cash flows will be used for the payment of the credit indicated in this article.

That Article 19 of Law No. 50 determines the exemption of ENDE from the application of Articles 33 and 35 of Law No. 2042 on Budgetary Administration.

That the PGE-2011 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 object 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. For this effect, 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.

//4. B.R. No. 202/2012 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 cash 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 Article 27 of Law No. 211 of December 23, 2011, 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 the National Electric Company (ENDE), which had not been committed by December 31, 2011.

That the Regulation for the Approval of Credit to National Strategic Public Enterprises within the framework of the General State Budgets for the 2010, 2011, and 2012 management periods, approved by BCB Board Resolution No. 023/2011 and its subsequent modifications, aims to regulate the granting of credits by the BCB in favor of the EPNE, within the framework of what is provided in the PGE-2010, modified by Law No. 50, the PGE-2011 approved by Law No. 62, and the PGE-2012 approved by Law No. 211.

That the note from the Vice Ministry of Treasury and Public Credit, dependent on the Ministry of Economy and Public Finance (MEFP/VTCP/DGAFT/USCFT/N° 1616/12), forwards to the Central Bank of Bolivia Ministerial Resolution No. 532 of August 16, 2012, where the methodology for calculating the degree of concessionality of 20% for the 2012 management is established.

That Supreme Decree No. 29644 aims to establish 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. 7124, Mr. Hugo Villarroel Senzano is appointed as Acting General Manager of ENDE.

That through note ENDE-GGN-11/17-12 received on November 20, 2012, the National Electric Company (ENDE) presents the request for a concessional credit of Bs94,361,815.- (Ninety-four million three hundred sixty-one thousand eight hundred fifteen 00/100 Bolivianos), for the implementation of the project named "Addition of the Fourth Thermoelectric Unit of the South", for which it forwards the corresponding documentation and offers as guarantee Non-Negotiable Bonds of the General Treasury of the Nation.

//5. B.R. No. 202/2012 That by Ministerial Resolution No. 334/12 of November 14, 2012, from the Ministry of Hydrocarbons and Energy, the following aspects are justified before the BCB:

1. It determines that according to the National Development Plan, the execution of the project named "Addition of the Fourth Thermoelectric Unit of the South" is of national priority and will be executed by ENDE ANDINA Mixed Anonymous Society – ENDE ANDINA SAM, through the capital contribution that ENDE will make, for which it will request a credit of Bs94,361,815.- from the BCB, whose amount will be destined to the referred project and that the future cash flows, expressed in the profits that ENDE receives from its participation in ENDE ANDINA SAM, will be used for the payment of the credit;
2. It confirms the technical feasibility of the execution of the project "Addition of the Fourth Thermoelectric Unit of the South", as stated in the Report MHE-VMEEA-DGE No. 0101/2012 issued by the Vice Ministry of Electricity and Alternative Energies – VMMA of the MHE;
3. It determines that according to the economic and financial evaluation of the project "Addition of the Fourth Thermoelectric Unit of the South", contained in report DGAA No. 554/2012, issued by the General Directorate of Administrative Affairs, the payment capacity of the credit to be contracted with the BCB is ensured. Without prejudice to the above and additionally, it is determined that the available profits generated by ENDE's subsidiary companies will be used to pay the debt that said company will incur with the BCB for the execution of the referred project;
4. To provide that within the framework of what is established in this Resolution, this Ministry will authorize the disbursement requests that ENDE makes to the BCB, based on an evaluation and monitoring report issued for each disbursement. This Ministry commits, through the VMEEA, to carry out the evaluation and monitoring of the execution of the Credit resources. To provide that ENDE, ENDE ANDINA SAM, and the MHE, prior to the authorization of any disbursement of the resources of the credit to be contracted with the BCB, will modify the agreement they signed with the purpose of establishing the technical, administrative, and financial conditions necessary to operationalize the monitoring that the VMEEA will carry out on the execution of the referred project, which ENDE ANDINA SAM in coordination with ENDE will carry out with the resources of the capital contribution that is made.

That the Board Resolution of ENDE No. 017/2012 approves the Investment Plan and the Disbursement Schedule of the resources of the credit to be granted by the BCB, with a breakdown of expenditure in national and foreign currency.

//6. B.R. No. 202/2012 That the report BCB-APEC-SSMF-INF-2012-35 from the Economic Policy Advisory, establishes with respect to the impact on the 2012 Monetary Program of the credit requested by ENDE for the "Project Addition of the Fourth Thermoelectric Unit of the South" that, except for extraordinary operations that may imply pronounced increases in Net Internal Credit (CIN), the disbursement of Bs23,590,454 that could be effected in the remainder of the fourth quarter of 2012 will not affect the fulfillment of the targets subject to measurement in said Program, due to the fact that the Non-Financial Public Sector (SPNF) accumulated significant margins throughout the year.

That the Monetary Operations Management points out in its Report BCB-GOM–SOSP–DCE-INF-2012-19, 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 for calculating the discount rate of the present value and the degree of concessionality and the financial conditions of the credit.

That the Report BCB-GAL-SANO-INF-2012-374 from the Legal Affairs Management, establishes that the request made by ENDE has complied with the presentation of the required documents, and it corresponds to the BCB Board to consider the approval of the extraordinary credit under concessional conditions to ENDE for the execution of the "Project Addition of the Fourth Thermoelectric Unit of the South".

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 provided in the PGE-2010, 2011, and 2012 and applicable legal provisions to the case.

THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES: Article 1.- Approve within the framework of Articles 8 of Law No. 50 and 13 of Law No. 062 approving the PGE-2011, valid in the 2012 management as provided in Article 27 of Law No. 211, the antecedents and provisions described above, the concession of a concessional extraordinary credit to ENDE for the execution of the "Project Addition of the Fourth Thermoelectric Unit of the South" under the following terms and conditions: Currency: Bolivianos. Total Credit Amount: Bs94,361,815.- (Ninety-four million three hundred sixty-one thousand eight hundred fifteen 00/100 Bolivianos). Term: Twenty (20) years.

//7. B.R. No. 202/2012 Grace Period: Five (5) years on principal with interest payments computable from the first disbursement. Annual Interest Rate: 0.85% (zero point eighty-five percent) as established by Ministerial Resolution No. 532 of the Ministry of Economy and Public Finance of August 16, 2012. Disbursement Deadline: Until December 30, 2013. 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 in charge of the execution and compliance of this Resolution.

La Paz, November 27, 2012

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Marcelo Zabalaga Estrada

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Hugo Dorado Araníbar Rolando Marín Ibáñez

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Gustavo Blacutt Alcalá Abraham Pérez Alandia