OFFICTAL LOAN NUMBER 1868 CO

Loan Agreement(Guadalupe IV Hydro Power Project)

between

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

and

EMPRESAS PUBLICAS DE MEDELLIN

Dated b9 , 1980

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LOAN NUMBER 1868 CO

LOAN AGREEMENT

AGREEMENT, dated b e enbe-- l1 , 1980, betweenINTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinaftercalled the Bank) and EMPRESAS PUBLICAS DE MEDELLIN (hereinaftercalled the Borrower).

ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all theprovisions of the General Conditions Applicable to Loan andGuarantee Agreements of the Bank, dated March 15, 1974, with thesame force and effect as if they were fully set forth herein,subject, however, to the following modifications thereof (saidGeneral Conditions Applicable to Loan and Guarantee Agreements ofthe Bank, as so modified, being hereinafter called the GeneralConditions):

Section 11.03 is amended to read as follows:

"Section 11.03. Action on behalf of the Borroweror Guarantor. Any action required or permitted to betaken, and any documents required or permitted to beexecuted, pursuant to the Loan Agreement or the Guaran-tee Agreement, on behalf of the Borrower or the Guaran-tor, may be taken or executed by the representative ofthe Borrower, or of the Guarantor designated in theGuarantee Agreement for the purposes of this Section, orany person thereunto authorized in writing by suchrepresentative. Any modification or amplification ofthe provisions of the Loan Agreement or the GuaranteeAgreement may be agreed to on behalf of the Borrower orthe Guarantor by written instrument executed on behalfof the Borrower or the Guarantor by such representativesor any person thereunto authorized in writing by him;provided that such modification or amplification isreasonable in the circumstances and will not substan-tially increase the obligations of the Borrower underthe Loan Agreement or of the Guarantor under the Guaran-tee Agreement."

Section 1.02. Wherever used in this Agreement, unless thecontext otherwise requires, the several terms defined in the

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General Conditions have the respective meanings therein set forthand the following additional terms have the following meanings:

(a) "Power Department" means the Borrower's power servicedepartment;

(b) "Department" means one of the following of the Borrower'sdepartments: energla, telefonos, and acieducto and alcanta-rillado;

(c) "Power Assets" means all electric power generatingplants, substations, transmission lines and related facilities andassets assigned to the Power Department;

(d) "pesos" and "Col$" means pesos in the currency of theGuarantor;

(e) "Estatutos" means the estatutos of the Borrower setforth in Acuerdo No. 58 of 1955 of the Municipalidad de Medellinissued in accordance with Decreto No. 1816 of 1955 as such estatu-tos may be amended from time to time and such term shall includeall other applicable legislation of the Municipalidad de Medellin;

(f) "Telecommunications Loan Agreement" means the loanagreement for Loan 1825-CO between the Bank and the Borrower, and"Telecommunications Guarantee Agreement" means the guaranteeagreement for Loan 1825-CO between the Guarantor and the Bank;

(g) "First Power Loan Agreement" means the loan agreementfor Loan No. 225-CO of May 20, 1959 between the Bank and theBorrower, and "First Power Guarantee Agreement" means the gia-rantee agreement for Loan No. 225-CO of even date between theGuarantor and the Bank;

(h) "Second Power Loan Agreement" means the loan agreementfor Loan No. 282-CO of May 12, 1961 between the Bank and theBorrower, and "Second Power Guarantee Agreement" means the gua-rantee agreement for Loan No. 282-CO of even date between theGuarantor and the Bank;

(i) "Third Power Loan Agreement" means the loan agreementfor Loan No. 369-CO of February 7, 1964 between the Bank and theBorrower, and "Third Power Guarantee Agreement" means the gua-rante- agreement for Loan No. 369-CO of even date between theGuarantor and the Bank;

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(j) "Fourth Power Loan Agreement" means the loan agreementfor Loan No. 874-CO of January 12, 1973 between the Bank and theBorrower, and "Fourth Power Guarantee Agreement" means the gua-rantee agreement for Loan No. 874-CO of even date between theGuarantor and the Bank;

(k) "First Power Shareholder Agreement" means the share-holder agreement for Loan 1582-CO of July 14, 1978 between theBank and the Borrower, and "Fifth Power Guarantee Agreement" meansthe guarantee agreement for Loan 1582-CO of even date between theGuarantor and the Bank;

(1) "Second Power Shareholder Agreement" means the share-holder agreemeut for Loan 1725-CO of November 30, 1979 between theBank and the Borrower, and "Sixth Power Guarantee Agreement" meansthe guarantee agreement for Loan 1725-CO of even date between theGuarantor and the Bank;

(m) "Power Loan Agreements" means collectively the loanagreements referred to in paragraphs (g), (h), (i) and (j) hereof;

(n) "Power Guarantee Agreements" means collectively theguarantee agreements referred to in paragraphs (g), (h), (i), (j),(k) and (1) hereof;

(o) "Power Shareholders' Agreements" means collectivelythe shareholders' agreements referred to in paragraphs (k) and (1)hereof; and

(p) "Investment Program" means the Borrower's investmentprogram set forth in Acta No. 931 of April 1979 of the JuntaDirectiva of the Borrower.

ARTICLE II

The Loan

Section 2.01. The Bank agrees to lend to the Borrower,on the terms and conditions in the Loan Agreement set forthor referred to, an amount in various currencies equivalentto one hundred twenty-five million dollars ($125,000,000).

Section 2.02. The amount of the Loan may be withdrawnfrom the Loan Account in accordance with the provisions ofSchedule 1 to this Agreement, as such Schedule may be amended fromtime to time by agreement between the Borrower and the Bank, for

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expenditures made (or., if the Bank shall so agree, to be made) inrespect of the reasonable cost of goods and services required forthe Project and to be financed out of the proceeds of the Loan.

Section 2.03. Except as the Bank shall otherwise agree,procurement of the goods and civil works to be financed out of theproceeds of the Loan, shall be governed by the provisions ofSchedule 4 to this Agreement.

Section 2.04. The Closing Date shall be June 30, 1985or such later date as the Bank shall establish. The Bank shallpromptly notify the Borrower and the Guarantor of such laterdate.

Section 2.05. The Borrower shall pay to the Bank a commitmentcharge at the rate of three-fourths of one per cent (3/4 of1%) per annum on the principal amount of the Loan not withdrawnfrom time to time.

Section 2.06. The Borrower shall pay interest at the rateof eight and twenty-five hundredths per cent (8.25%) per annumon the principal amount of the Loan withdrawn and outstandingfrom time to time.

Section 2.07. Interest and other charges shall be payablesemiannually on March 15 and September 15 in each year.

Section 2.08. The Borrower shall repay the principal amountof the Loan in accordance with the amortization schedule set forthin Schedule 3 to this Agreement.

ARTICLE III

Execution of the Project

Section 3.01. The Borrower shall carry out the Projectwith due diligence and efficiency and in conformity with appro-priate administrative, financial, engineering and public utilitypractices, and shall provide, promptly as needed, the funds,facilities, services and other resources required for the purpose.

Section 3.02. The Borrower shall employ consultants whosequalifications, experience and terms and conditions of employmentshall be satisfactory to the Bank, to assist the Borrower in: (a)the design and supervision of the carrying out of Part A of

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the Project, such consultants to be employed by the Borrowernot later than April 30, 1982; and

(b) the carrying out of the study referred to in Part F(a) of the Project, such consultants to be employed by the Bor-rower not later than December 31, 1981.

Section 3.03. The Borrower shall by September 30, 1980,employ consultants under terms of reference satisfactory to theBank, in order to assist the Borrower in the design, procurementand supervision for the carrying out of Part C of the Project.

Section 3.04. The Borrower shall take all necessary measuresto ensure that the Project is carried out with due regard toecological and environme tal factors.

Section 3.05. (a) The Borrower undertakes to insure, ormake adequate provision for the insurance of, the imported goodsto be financed out of the proceeds of the Loan against hazardsincident to the acquisition, transportation and delivery thereofto the place of use or installation, and for such insurance anyindemnity shall be payable ir a currency freely usable by theBorrower to replace or repair such goods.

(b) Except as the Bank shall otherwise agree, the Borrowershall cause all goods and services financed out of the proceedsof the Loan to be used exclusively for the Project.

Section 3.06. (a) The Borrower shall furnish to the Bank,promptly upon their preparation, the plans, specifications,reports, contract documents and construction and procurementschedules for the Project, and any material modifications thereofor additions thereto, in such detail as the Bank shall reasonablyrequest.

(b) The Borrower: (i) shall maintain records and proceduresadequate to record and monitor the progress of the Project (in-cluding its cost and the benefits to be derived from it), toidentify the goods and services financed out of the proceeds ofthe Loan, and to disclose their use in the Project; (ii) shallenable the Bank's accredited representatives to visit the facili-ties and construction sites included in the Project and to examine

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the goods financed out of the proceeds of the Loan and any rele-vant records and documents; and (iii) shall furnish to the Bank atregular intervals all such information as the Bank shall reason-ably request concerning the Project, its cost and, where appro-priate, the benefits to be derived from it, the expenditureof the proceeds of the Loan and the goods and services financedout of such proceeds.

(c) Promptly after completion of the Project, but in anyevent not later than six months after the Closing Date or suchlater date as may be agreed for this purpose between the Borrowerand the Bank, the Borrower shall prepare and furnish to the Bank areport, of such scope and in such detail as the Bank shall reason-ably request, on the execution and initial operation of theProject, its cost and the benefits derived and to be derived fromit, the performance by the Borrower and the Bank of their respec-tive obligations under the Loan Agreement and the accomplishmentof the purposes of the Loan.

(d) The Borrower shall enable the Bank's representativesto examine all plants, installations, sites, works, buildings,property and equipment of the Borrower and any relevant reordsand documents.

Section 3.07. The Borrower shall take all such action asshall be necessary to acquire as and when needed all such landand rights in respect of land as shall be required for theconstruction and operation of the facilities included in theProject and shall furnish to the Bank, promptly after such acqui-sition, evidence satisfactory to the Bank that such land andrights in respect of land are available for purposes related tothe Project.

ARTICLE IV

Management and Operations of the Borrower

Section 4.01. The Borrower shall at all times manage itsaffairs, maintain its financial position, plan its future expan-sion and carry on its operations in accordance with appropriatebusiness, financial and public utility practices and under thesupervision of experienced and competent management assisted byadequate, experienced and competent staff.

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Section 4.02. The Borrower shall take all steps necessary

to acquire, maintain and renew all rights, powers, privileges and

franchises which are necessary or useful in the conduct of its

business.

Section 4.03. The Borrower shall take out and maintain

with responsible insurers, or make other provision satisfactory to

the Bank for, insurance against such risks and in such amounts as

shall be consistent with appropriate practice.

Section 4.04. (a) The Borrower shall operate and maintain its

plants, equipment and property, and from time to time make all

necessary renewals and repairs thereof, all in accordance with

appropriate engineering standards; and shall at all times operate

its plants and equipment and maintain its financial position in

accordance with appropriate public utility and business practices.

(b) Without limiting the generality of the preceding para-graph, the Borrower shall, under arrangements satisfactory to the

Bank, cause all of its dams, reservoir banks, waterways and

earthworks assigned to the Power Department to be periodically

inspected, in accordance with sound engineering practices, in

order to determine whether there are any deficiencies or potential

deficiencies in the condition of such structures and earthworks,

or in the quality and adequacy of maintenance or methods of

operation of such structures and earthworks which may endanger the

safety of such structures and earthworks.

ARTICLE V

Other Covenants

Section 5.01. The Borrower shall operate each of its Depart-

ments separately and shall, for the assets, revenues and expendi-

tures of each of its Departments, maintain separate records

adequate to reflect in accordance with consistently maintained

sound accounting practices the operations and financial conditionof such Departments.

Section 5.02. The Borrower shall: (i) for each of its Depart-ments, have its accounts and financial statements (balance sheets,

statements of income and expenses and related statements) for each

fiscal year audited, in accordance with sound auditing principles

consistently applied, by independent auditors acceptable to the

Bank; (ii) furnish to the Bank as soon as available, but in any

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case not later than five months after the end of each such year,(A) certified copies of its financial statements for such year asso audited and (B) the report of such audit by said auditors, ofsuch scope and in such detail as the Bank shall have reasonablyrequested; and (iii) furnish to the Bank such other informationconcerning the accounts and financial statements of the Borrower'sDepartments and the audit thereof as the Bank shall from time totime reasonably request.

Section 5.03. Not later than three months after the end ofeach calendar year, the Borrower shall for each of its Departmentsprepare and furnish to the Bank a report, of such scope and insuch detail as the Bank shall have reasonably requested, showingthe Borrower's financial performance through the end of such yearand projected through the following twelve months.

Section 5.04. (a) The Borrower represents that at the dateof this Agreement no lien exists on any of its assets as securityfor any debt except as otherwise currently reported to the Bank orstated in writing.

(b) The Borrower undertakes that, except as the Bank shallotherwise agree: (i) if the Borrower shall create any lien on anyof its assets as security for any debt, such lien will equally andratably secure the payment of the principal of, and interest andother charges on, the Loan, and in the creation of any such lienexpress provision will be made to that effect, at no cost to theBank; and (ii) if any statutory lien shall be created on anyassets of the Borrower as security for any debt, the Borrowershall grant, at no cost to the Bank, an equivalent lien satisfac-tory to the Bank to secure the payment of the principal of, andinterest and other charges on, the Loan; provided, however, thatthe foregoing provisions of this paragraph shall not apply to: (A)any lien created on property, at the time of purchase thereof,solely as security for the payment of the purchase price of suchproperty; or (B) any lien arising in the ordinary course ofbanking transactions and securing a debt maturing not more thanone year. after the date on which it is originally incurred.

Section 5.05. The Borrower shall not, without the consentof the Bank, sell or otherwise dispose of all or substantiallyall of its Power Assets or all or substantially all of theproperty included in the Project or any plant included therein,unless the Borrower shall first redeem and pay, or make adequateprovision satisfactory to the Bank for redemption or paymentsof, all of the Loan which shall then be outstanding and unpaid.

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Section 5.06. Except as the Bank shall otherwise agree, theBorrower shall not incur any debt for the benefit of the opera-tions of any Department, unless the net revenues earned on the

operations of such Department for the fiscal year next precedingsuch incurrence or for a later twelve-month period ended prior tosuch incurrence, whichever amount is greater, shall be not lessthan 1.5 times the maximum debt service requirement for any

succeeding fiscal year on all debt, including the debt to be

incurred, to be serviced with revenues generated by the operations

of such Department. For the purposes of this Section:

(a) the term "debt" shall mean all debt of the Borrower,including debt for the service of which the Borrower is respon-sible, maturing by its terms more than one year after the date on

which it is originally incurred;

(b) debt shall be deemed to be incurred: (A) under a con-tract, loan agreement or other instrument providing for such debtor for the modification of its terms of payment, on the date ofsuch contract, agreement or instrument; and (B) under a guaranteeagreement, on the date the agreement providing for such guarantee

has been entered into but only to the extent that the guaranteeddebt is outstanding;

(c) the term "net revenues" shall mean gross revenuesfrom all sources, adjusted to take account of the Borrower's

tariffs in effect at the time of the incurrence of debt even

though they were not in effect during the fiscal year or twelve-month period to which such revenues relate, less all operating and

administrative expenses and provision for taxes, if any, but

before provision covering depreciation, interest and other charges

on debt;

(d) (i) the term "debt service requirement" shall meanthe aggregate amount of amortization (including sinking fund

payments, if any), interest and other charges on debt; provided,however, that in respect of the Borrower's Power Department thisterm shall also include all amounts to be payable by the Borrower

to Interconexi6n El6ctrica S.A. (hereinafter called ISA) inexchange for shares and bonds of ISA, as required by the Estatutos

of ISA (ii) for the purpose of sub-paragraph (i) hereof, the term

"Estatutos" means the estatutos of ISA dated September 14, 1967,as amended as of the date of this Agreement and as further amended

from time to time, under which ISA was established and operates,and the term "bonds" means titulos issued by ISA pursuant

to paragraph (b) of Article 12 of the Estatutos; and

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(e) whenever for the purposes of this Section it shallbe necessary to value, in terms of the currency of the Guarantor,debt payable in another currency such valuation shall be made onthe basis of the prevailing lawful rate of exchange at which suchother currency is, at the time of such valuation, obtainable forthe purposes of servicing such debt.

Section 5.07. Except as the Bank and the Borrower, with theconcurrence of the Guarantor, shall otherwise agree:

(a) the Borrower shall establish and maintain for the-services provided by each Department tariffs which will providerevenues at least sufficient to cover its administrative andoperating expenses (including taxes, if any, contributions to theMunicipalidad de Medellin and adequate provision for maintenanceand depreciation), debt service in excess of depreciation, and areasonable contribution towards new capital investments of thatDepartment; provided, however, that the provisions of this para-graph shall not be construed, under any circumstances, as limitingthe rate of return requirements for the Borrower's telephoneoperations, as set forth in the Telecommunications Loan Agreement.

(b) without limitation upon the foregoing, the Borrower ir.the carrying out of its power operations shall take all such stepsas shall be necessary (including adjustment of tariffs) in orderto generate an annual return at a rate of at least ten and a halfper cent (10.5%) in the year 1981, thirteen per cent (13%) in theyears 1982 and 1983 and ten per cent (10%) in the year 1984 andthereafter, on the average net current value of its fixed PowerAssets in operation calculated in accordance with the methodoutlined in Schedule 5 to this Agreement;

(c) the Borrower shall, within the first two months of, eachcalendar quarter:

(i) calculate in respect of its Power Department:

(A) the actual return earned in the course ofthe twelve-month period immediately precedingsuch quarter;

(B) the return which, on the basis of reasonableestimates, is expected to be earned in thecourse of the twelve-month period beginningwith such quarter, after adding to or sub-stracting from the estimated operating incomefor such period any overrun or shortfall in

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the actual return for the preceding twelve-month period; and

(ii) furnish to the Bank the assumptions for and theresults of such calculations; and

(d) if any such calculation shall show that the Borrowercannot be expected to earn in respect of its Power Department thereturn required under paragraph (b) during the twelve-month periodcommencing with the calendar quarter in which the calculation ismade, the Borrower shall adjust its electric power tariffsaccordingly, and the adjusted tariffs shall be brought into effectnot later than the end of the following calendar quarter.

Section 5.08. Without limitation upon the provisions ofSection 5.07 of this Agreement, and except as the Bank shallotherwise agree, the Borrower shall maintain the current 2.2%monthly tariff increases through December 31, 1983.

Section 5.09. The Borrower shall obtain the concurrence ofthe Bank before committing itself to, or making, any capitalexpenditure not directly related to the operations of any of itsDepartments.

Section 5.10. Until the Project shall have been completed:

(a) The Borrower shall: (i) inform the Bank on any proposalof the Borrower to make any capital expenditure (not required forthe Project) for increasing its power generating capacity by morethan one-hundred megawatts; (ii) afford the Bank a reasonableopportunity to comment on any such proposal; and (iii) not commititself to, nor make, any such capital expenditure unless theproposed expenditure is economically justified as part of thenational power expansion program of Interconexi6n El6ctricaS.A. and the Borrower has obtained financing under terms andconditions which will not affect its financial condition, thecarrying out of the Project and the performance of its obligationsunder the Power Shareholders' Agreements; and

(b) The Borrower shall obtain the concurrence of the Bankbefore committing itself to any capital expenditure for thebenefit of its power operations if the aggregate of such capitalexpenditure and all such other capital expenditures made or to bemade in any one fiscal year (excluding those referred to inparagraph (a) above and those required for (i) the Project, (ii)

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payments to Interconexi6n E14ctrica S.A., and (iii) investmentsincluded in the Borrower's Investment Program) exceed or willexceed an amount equivalent to one per cent (1%) of the netcurrent value of the Borrower's fixed assets in operation,as defined in Schedule 5 to this Agreement.

Section 5.11. The Borrower shall allocate all funds generatedby the Power Department exclusively to such Department and shallnot transfer such funds, or any portion thereof, to any of itsother Departments unless the funds proposed to be transferredare in excess of those required by the Power Department to coverall: (i) administrative, operating and maintenance expenses,including the adequate funding of such reserves in respect of theBorrower's power operations as shall be consistent with appro-priate public utility and business practices; (ii) repayment ofloans (including sinking fund payments), interest and othercharges on debt; and (iii) capital expenditures, including theProject; provided, however, that any such transfer shall betreated as a loan from the Power Department to the other Depart-ments, on commercial terms and conditions.

Section 5.12. (a) The Borrower shall: (i) for purposes ofrevising the structure of the Borrower's tariffs and rates for itsservices prepare, by March 31, 1981, a program satisfactory tothe Bank, such program to be prLpared taking into account theconclusions of the study referred to in Sections 5.10 of the PowerShareholders' Agreements and the comments of the Bank thereon; and(ii) put into effect such program by May 30, 1981.

(b) In the event that the Borrower shall be unable toprepare the program in paragraph (a) of this Section due to delaysin the conclusion of the study referred to in Sections 5.10 of thePower Shareholders' Agreements the Borrower shall, by March 31,1981, prepare an interim program, satisfactory to the Bank,covering the period from May 30, 1981 through May 30, 1983, forthe same purposes as the program referred to in paragraph (a) ofthis Section and shall put into effect such interim program notlater than May 30, 1981; provided, however, that upon preparationof the program referred to in paragraph (a) of this Section, thelatter program shall be substituted for said interim programand put into effect in accordance with paragraph (a) of thisSection.

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ARTICLE VI

Amendment of the Fourth Power Loan Agreementand Power Shareholders' Agreements

Section 6.01. The Fourth Power Loan Agreement is herebyamended by the deletion of the text of Sections 4.04 (b) and 5.06of such Agreement and the.substitution therefor of the textof Sections 4.04 (b) and 5.07 of this Agreement, respectively.

Section 6.02. The Power Shareholders' Agreements are herebyamended by the deletion of the text of Section 5.02 (a) (ii)of each such Agreement and the substitution therefor of thefollowing text: "EPM, at least nine per cent (9%) in the year1980, ten and a half per cent (10.5%) in the year 1981, thirteenper cent (13%) in the years 1982 and 1983 and ten per cent (10%)in the year 1984 and thereafter."

ARTICLE VII

Remedies of the Bank

Section 7.01. For the purposes of Section 6.02 of the GeneralConditions, the following additional events are specified pursuantto paragraph (k) thereof:

(a) the Estatutos or any provision thereof shall have beenamended, suspended or abrogated, or new legislation shall havebeen adopted by the Municipal Council of Medellfn which wouldaffect, materially and adversely, the operations or finan-cial condition of the Borrower or the performance by the Borrowerof its obligations under the Loan Agreement; and

(b) a default shall have occurred in the performance ofany obligation (other than an obligation to pay monies) on thepart of the Borrower or the Guarantor under the Power Loan Agree-ments, the Power Guarantee Agreements, the Power Shareholders'Agreements, the Telecommunication Loan Agreement or the Tele-communication Guarantee Agreement.

Section 7.02. For the purposes of Section 7.01 of the GeneralConditions, the following additional events are specified pursuantto paragraph (h) thereof, namely, that the events specifiedin paragraphs (a) and (b) of Section 7.01 of this Agreement shalloccur and shall continue for a period of sixty days after noticethereof shall have been given by the Bank to the Borrower.

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ARTICLE VIII

Effective Date; Termination

Section 8.01. The following event is specified as an addi-tional condition to the effectiveness of the Loan Agreementwithin the meaning of Section 12.01 (c) of the General Conditions,namely, that arrangements, satisfactory to the Bank, have beenmade in order to meet the Borrower's financing requirements forthe years 1980 through 1982.

Section 8.02. The date 1ewC 1) 1q) is herebyspecified for the purpose of Section 12.04 of the GeneralConditions.

ARTICLE IX

Addresses

Section 9.01. The following addresses are specified for thepurposes of Section 11.01 of the General Conditions:

For the Bank:

International Bank forReconstruction and Development

1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address: Telex:

INTBAFRAD 440098 (ITT)Washington, D.C. 248423 (RCA) or

64145 (WUI)

For the Borrower:

Empresas Pfblicas de MedellinCalle 53, No. 52-16MedellinColombia

Cable address: Telex:

EMPRESAS 06649Medellin

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IN WITNESS WHEREOF, the parties hereto, acting throughtheir representatives thereunto duly authorized, have caused thisAgreement to be signed in their respective names in the Districtof Columbia, United States of America, as of the day and yearfirst above written.

INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT

By 1 I" t'JI'caYS /A+ l4""eRegional Vice President

Latin America and the Caribbean

EMPRESAS PUBLICAS DE MEDELLIN

By RepresnTaiAuthorized Representative

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SCHEDULE 1

Withdrawal of the Proceeds of the Loan

1. The table below sets forth the Categories of items to befinanced out of the proceeds of the Loan, the allocation of theamounts of the Loan to each Category and the percentage ofexpenditures for items so to be financed in each Category:

Amount of theLoan Allocated % of(Expressed in Expenditures

Category Dollar Equivalent) to be Financed

(1) Civil works 37,000,000 52%for Part A ofthe Project

(2) Electro- 21,000,000 100% of foreignmechanical expendituresequipment and 94% of the(excluding ex-factory costturbines and of locallygenerators) for manufacturedPart A of the goodsProject

(3) Transmission 24,000,000 100% of foreignlines and sub- expendituresstation mate- and 94% of therial and equip- ex-factory costment (Part B of of locallythe Project) manufactured

goods

(4) Control Center 9,500,000 100% of foreign(Part C of the expendituresProject) and 94% of the

ex-factory costof locallymanufacturedgoods

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Amount of theLoan Allocated % of(Expressed in Expenditures

Category Dollar Equivalent) to be Financed

(5) Distribution 12,000,000 100% of foreignequipment expenditures(Part D of the and 94% of theProject) ex-factory cost

of locallymanufacturedgoods

(6) Special utility 1,500,000 100% of foreignequipment (Part E expendituresof the Project) and 94% of the

ex-factory costof locallymanufacturedgoods

(7) Training 1,000,000 100% of foreignPart F of the expendituresProject

(8) Engineering 6,000,000 100% of foreignconsulting expend4turesservices for foreign

consultants and50% of localexpendituresfor localconsultants

(9) Unallocated 13,000,000

TOTAL 125,000,000

2. For the purposes of this Schedule:

(a) the term "foreign expenditures" means expendituresin the currency of any country other than the Guarantor and forgoods or services supplied from the territory of any country otherthan the Guarantor; and

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(b) the term "local expenditures" means expenditures inthe currency of the Guarantor and for goods or services suppliedfrom the territory of the Guarantor.

3. The disbursement percentages have been calculated in com-pliance with the policy of the Bank that no proceeds of theLoan shall be disbursed on account of payments for taxes leviedby, or in the territory of, the Guarantor on goods or services,or on the importation, manufacture, procurement or supply thereof;to that end, if the amount of any such taxes levied on or inrespect of any item to be financed out of the proceeds of the Loandecreases or increases, the Bank may, by notice to the Borrower,increase or decrease the disbursement percentage then applicableto such item as required to be consistent with the aforementionedpolicy of the Bank.

4. Notwithstanding the provisions of paragraph 1 above, nowithdrawals shall be made in respect of payments made for expen-ditures prior to the date of this Agreement, except that with-drawals, in an aggregate amount not exceeding the equivalent of$500,000, may be made in respect of Categories (1), (3), (5) and(6) of paragraph 1 above before that date but after May 1, 1980.

5. Notwithstanding the allocation of an amount of the Loanor the disbursement percentages set forth in the table in para-graph 1 above, if the Bank has reasonably estimated that theamount of the Loan then allocated to any Category will be insuffi-cient to finance the agreed percentage of all expendituresin that Category, the Bank may, by notice to the Borrower: (i)reallocate to such Category, to the extent required to meet theestimated shortfall, proceeds of the Loan which are then allocatedto another Category and which in the opinion of the Bank arenot needed to meet other expenditures; and (ii) if such realloca-tion cannot fully meet the estimated shortfall, reduce the dis-bursement percentage then applicable to such expenditures in orderthat further withdrawals under such Category may continue untilall expenditures thereunder shall have been made.

6. If the Bank shall have reasonably determined that theprocurement of any item in any Category is inconsistent withthe procedures set forth or referred to in this Agreement, noexpenditures for such item shall be financed out of the proceedsof the Loan and the Bank may, without in any way restrictingor limiting any other right, power or remedy of the Bank underthe Loan Agreement, by notice to the Borrower, cancel such amount

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of the Loan as, in the Bank's reasonable opinion, representsthe amount of such expenditures which would otherwise have beeneligible for financing out of the proceeds of the Loan.

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SCHEDULE 2

Description of the Project

The Project is part of the Borrower's development program andconsists of:

Part A: Guadalupe IV Hydro Power Plant

Construction and equipping of the Guadalupe IV hydro elec-tric station on the Guadalupe River comprising compensating tank,intake works, power and pressure tunnels, surge tank and surfacepenstocks; a surface type power house with three 71 MW turbo-generator units operating under a head of 417 m and reservespace for a fourth unit, together with accessory equipment;and a substation including matched transformers and accessoryequipment.

Part B: Transmission

(a) Acquisition and installation of about 50 km of 115 kVtransmission lines, and of about 100 km of 230 kV transmissionlines.

(b) Expansion of about five existing substations andconstruction of about five new substations which would provide anadditional aggregate transformer capacity of about 420 MVA.

Part C: Control Center

Part D: Distribution

(a) Acquisition and installation of about: (i) 130 km ofoverhead lines of 13.2 kV; (ii) 40 km of underground cables of13.2 kV; (iii) 35 km of overhead lines of 44 kV; and (iv) 110 kmof LT lines.

(b) Acquisition and installation of distribution trans-formers with an aggregate capacity of about 11 MVA.

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Part E: Equipment

(a) Acquisition and utilization of special metering equip-ment, including a cable fault locator, about 2,900 current sensorsand about 16 power registering meter systems.

(b) Acquisition and utilization of about 7 special utilityvehicles, line and cable tools, 30 mobile phones and 2 manholeventilatorso

Part F: Studies, Training and Fellowships

(a) Carrying out, by September 30, 1982, a study of thedevelopment of high voltage transmission facilities of the Bor-rower.

(b) Carrying out, by December 31, 1984 a program, satisfac-tory to the Bank, for the training of the Borrower's staff.

Part A of the Project is expected to be completed by June 30,1984, and Parts B, C, D, E and F are expected to be completed byDecember 31, 1984.

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SCHEDULE 3

Amortization Schedule

Payment .f PrincipalDate Payment Due (expressed in dollars)*

On each March15 and September 15

beginning September 15, 1984through September 15, 1996 4,810,000

On March 15, 1997 4,750,000

* To the extent that any portion of the Loan is repayable in acurrency other than dollars (see General Conditions, Section4.02), the figures in this column represent dollar equiva-lents determined as for purposes of withdrawal.

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Premiums on Prepayment

The following percentages are specified as the premiumspayable on repayment in advance of maturity of any portion ofthe principal amount of the Loan pursuant to Section 3.05 (b)of the General Conditions:

Time of Prepayment Premium

Not more than three years 1.45%before maturity

More than three years but not 2.90%more than six years beforematurity

More than six years but not 5.35%more than eleven yearsbefore maturity

More than eleven years but not 7.30%more than fifteen yearsbefore maturity

More than fifteen years 8.25%before maturity

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SCHEDULE 4

Procurement

A. International Competitive Bidding

1. Goods and civil works shall be procured under contracts

awarded in accordance with procedures consistent with those set

forth in the "Guidelines for Procurement under World Bank Loans

and IDA Credits" published by the Bank in March 1977 (hereinafter

called the Guidelines), on the basis of international competitive

bidding as described in Part A of the Guidelines.

2. For goods and works to be procured on the basis of inter-

national competitive bidding, and in addition to the requirements

of paragraph 1.2 of the Guidelines, the Borrower shall prepare and

forward to the Bank as soon as possible, and in any event not

later than 60 days prior to the date of availability to the public

of the first tender documents relating thereto, as the csp maybe, a general procurement notice, in such form and detail and

containing such information as the Bank shall reasonably request;

the Bank will arrange for the publication of such notice in order

to provide timely notification to prospective bidders of the

opportunity to bid for the goods and works in question. The

Borrower shall provide the necessary information to update such

notice annually so long as any goods or works remain to be pro-

cured on the basis of international competitive bidding.

3. For the purpose of evaluation and comparison of bids for

the supply of goods to be procured on the basis of international

competitive bidding: (i) bidders shall be required to state

in their bid the c.i.f. (port of entry) price for the imported

goods, or the ex-factory price or off-the-shelf price of other

goods, offered in such bid; and (ii) customs duties and other

import taxes levied in connection with the importation, or &'e

sales and similar taxes levied in connection with the sale or

delivery, pursuant to the bid, of the goods shall not be taken

into account in the evaluation of the bids.

B. Preference for Domestic Manufacturers

In the procurement of goods in accordance with the procedures

described in Part A of this Schedule, goods manufactured in

Colombia may be granted a margin of preference in accordance with,

and subject to, the following provisions:

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1. All bidding documents for the procurement of goodsshall clearly indicate any preference which will be granted,the information required to establish the eligibility of a bidfor such preference and the following methods and stages that willbe followed in the evaluation and comparison of bids.

2. After evaluation, responsive bids will be classifiedin one of the following three groups:

(1) Group A: bids offering goods manufactured inColombia if the bidder shall have established tothe satisfaction of the Borrower and the Bank thatthe manufacturing cost of such goods includes avalue added in Colombia equal to at least 20%of the ex-factory bid price of such goods.

(2) Group B: all other domestic bids.

(3) Group C: bids offering any other goods.

3. In order to determine the lowest evaluated bid of eachgroup, all evaluated bids in each group shall first be comparedamong themselves, without taking into account customs duties andother import taxes levied in connection with the importation, andsales and similar taxes levied in connection with the sale ordelivery, pursuant to the bids, of the goods. Such lowest eval-uated bids shall then be compared with each other, and if, as aresult of this comparison, a bid from group A or group B is thelowest, it shall be selected for the award.

4. If, as a result of the comparison under paragraph3 above, the lowest bid is a bid from group C, all group C bidsshall be further compared with the lowest evaluated bid fromgroup A after adding to the evaluated bid price of the importedgoods offered in each group C bid, for the purpose of this furthercomparison only, an amount equal to: (i) the amount of customsduties and other import taxes which a non-exempt importer wouldhave to pay for the importation of the goods offered in suchgroup C bid; or (ii) 15% of the c.i.f. bid price of such goodsif said customs duties and taxes exceed 15% of such price. Ifthe group A bid in such further comparison is the lowest, itshall be selected for the award; if not, the bid from group Cwhich as a result of the comparison under paragraph 3 is thelowest evaluated bid shall be selected.

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C. Review of Procurement Decisions by the Bank

1. Review of invitations to bid and of proposed awards andfinal contracts:

With respect to all contracts estimated to cost the equiv-alent of US $500,000 or more:

(a) Before bids are invited, the Borrower shall furnishto the Bank, for its comments, the text of the invitations tobid and the specifications and other bidding documents, togetherwith a description of the advertising procedures to be followedfor the bidding, and shall make such modifications in the saiddocuments or procedures as the Bank shall reasonably request.Any further modification to the bidding documents shall requirethe Bank's concurrence before it is issued to the prospectivebidders.

(b) After bids have been received and evaluated, the Bor-rower shall, before a final decision on the award is made, informthe Bank of the name of the bidder to which it intends to awardthe contract and shall furnish to the Bank, in sufficient time forits review, a detailed report on the evaluation and comparison ofthe bids received, and such other information as the Bank shallreasonably request. The Bank shall, if it determines that theintended award would be inconsistent with the Guidelines or thisSchedule, promptly inform the Borrower and state the reasons forsuch determination.

(c) The terms and conditions of the contract shall not,without the Bank's concurrence, materially differ from thoseon which bids were asked or prequalification invited.

(d) Two conformed copies of the contract shall be furnishedto the Bank promptly after its execution and prior to the submis-sion to the Bank of the first application for withdrawal offunds from the Loan Account in respect of such contract.

2. With respect to each contract not governed by the precedingparagraph, the Borrower shall furnish to the Bank, promptly afterits execution and prior to the submission to the Bank of thefirst application for withdrawal of funds from the Loan Accountin respect of such contract, two conformed copies of such con-tract, together with the analysis of the respective bids, recom-mendations for award and such other information as the Bank shall

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reasonably request. The Bank shall, if it determines that theaward of the contract was not consistent with the Guidelines orthis Schedule, promptly inform the Borrower and state the reasonsfor such determination.

3. Before agreeing to any material modification or waiverof the terms and conditions of a contract, or granting an exten-sion of the stipulated time for performance of such contract, orissuing any change order under such contract (except in cases ofextreme urgency) which would increase the cost of the contract bymore than 15% of the original price, the Borrower shall informthe Bank of the proposed modification, waiver, extension orchange order and the reasons therefor. The Bank, if it determinesthat the proposal would be inconsistent with the provisions ofthis Agreement, shall promptly inform the Borrower and statethe reasons for its determination.

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SCHEDULE 5

Method for Calculating Rate of Return

1. The annual return specified in Section 5.07 (b) of thisAgreement will be calculated, in each calendar quarter in respectof the twelve-month period beginning with such quarter and thetwelve-month period immediately preceding, by using as the denom-inator the average between the net current values of the respec-tive fixed assets in operation at the beginning and at the end ofeach such period and as numerator the operating income of theBorrower for the same period.

2. Any shortfall or overrun in the required annual return forthe twelve-month period immediately preceding the quarter in whichthe calculation is to be made will be carried forward and sub-tracted or added, as the case may be, to the numerator used forthe forthcoming twelve-month period.

3. "Operating income" will be the difference between all reve-nues from the sale of electricity, and all administrative andoperating costs relating thereto, including maintenance andadequate provision for straight-line depreciation on the averagegross value of revalued fixed assets in operation.

4. The net current value of fixed assets in operation will be atany given date their gross value less accumulated depreciation tosuch date, as revalued and depreciated in accordance with para-graphs 5 and 7 below.

5. Until another method for the maintenance of value of assetsof the Borrower shall have been established, the gross value ofthe Borrower's fixed assets in operation and works in progresswill be revalued quarterly in accordance with the correspondingvariations in the Indice nacional de precios al consumidor - Nivel1 - published by the Departamento Administrativo Nacional deEstadistica of the Guarantor, to the last month preceding thequarter in which the calculation is to be made. For the purposesof this calculation as of December 31, 1976:

(a) the aggregate gross value of the Borrower's fixedassets in operation will be fixed at eight thousand forty-fourmillion pesos (Col$8,044,000,000);

(b) the aggregate gross value of the Borrower's fixedassets in construction will be fixed at three thousand one hundredforty-eight million pesos (Col$3,148,000,000); and

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(c) the accumulated depreciation on the assets in (a)hereof will be fixed at one thousand seven hundred seventy-ninemillion pesos (Col$1,779,000,000).

6. The Borrower will furnish to the Bank during the firstquarter of each fiscal year a report on the revaluation of assetsthrough the end of the preceding fiscal year.

7. Depreciation will be charged on a straight-line basis overthe estimated useful life of the Borrower's fixed assets.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

CERTIFICATE

I hereby certify that the foregoing is a true

copy of the original in the archives of the Interna-

tional Bank for Reconstruction and Develop-

ment.

In witness whereof I have signed this Certifi-

cate and affixed the Seal of the Bank thereunto

this L9 day of . ,198 o_

FOR SECRETARY