Decree 101-2016

Approve in all and each of its parts CONTRACT No. 069-2014, which contains the CONTRACT FOR THE SUPPLY OF POWER AND ASSOCIATED ELECTRICAL ENERGY, sent by the Executive Power through the Secretary of State in the Offices of Energy, Natural Resources, Environment and Mines, executed in the city of Tegucigalpa, Municipality of the Central District, on July 3, 2014, between Licenciado Emil Mahfuz Hawit Medrano, General Manager of the National Electrical Energy Company (ENEE), and Engineer José Raúl Welchez Villamil in representation of the company HIDROENERGÍA, S.A. DE C.V. (HIDROENERGÍA), for the installations of the LAGUNETAS PHASE II PLANT (BAJO GRANDE), located between the municipalities of Victoria, Department of Yoro and Santa Cruz de Yojoa, Department of Cortés, which literally states: "SECRETARY OF STATE IN THE OFFICES OF ENERGY, NATURAL RESOURCES, ENVIRONMENT AND MINES. Contract No. 069-2014. BETWEEN THE NATIONAL ELECTRICAL ENERGY COMPANY AND HIDROENERGÍA, S.A. DE C.V. TEGUCIGALPA, HONDURAS JULY 3, 2014. [TABLE OF CONTENTS SECTION 1: CONTRACTUAL AGREEMENT... A. DOCUMENTS OF THE CONTRACT... B. CONTRACT TERM... C. GENERAL DESCRIPTION OF THE PLANT... D. SCHEDULED DATE FOR COMMENCEMENT OF COMMERCIAL OPERATION... E. INTERCONNECTION FACILITIES, DELIVERY POINT AND MEASUREMENT... F. EXPANSION OF THE NATIONAL INTERCONNECTED SYSTEM... G. PRICE OF PURCHASE OF ENERGY AND POWER... H. COMMUNICATIONS BETWEEN THE PARTIES... I. COMMITMENT OF SALE TO THE BUYER J. AMOUNT OF THE GUARANTEE K. ACRONYMS AND ABBREVIATIONS... SECTION 2: GENERAL CONDITIONS... CLAUSE 1 DEFINITIONS... Definitions... CLAUSE 2 OBJECT OF THE CONTRACT... 2.1 General Description of the Object of the Contract... 2.2 Obligation to Build, Operate and Maintain... 2.3 Obligation of Purchase and Sale... 2.4 Commitment of Energy Dispatch... 2.5 Sale of Energy to Third Parties... 2.6 Commitment of Energy... 2.7 Commitment of Transmission... 2.8 Works for the Expansion of the National Interconnected System... CLAUSE 3 PERIOD PRIOR TO COMMERCIAL OPERATION... 3.1 Construction Program... 3.2 Operating Committee and Its Powers... 3.3 Permits... 3.4 Errors and Discrepancies... CLAUSE 4 VALIDITY, TERM AND TERMINATION OF THE CONTRACT... 4.1 Entry into Force... 4.2 Commercial Operation Start-up... 4.3 Duration of the Contract... 4.4 Extension... 4.5 Early Termination of the Contract by the BUYER... 4.5.1 Procedure for Early Termination of the Contract by the BUYER... 4.6 Early Termination of the Contract by the SELLER... 4.6.1 Procedure for Early Termination of the Contract by the SELLER CLAUSE 5 DECLARATIONS, GUARANTEES AND AGREEMENTS... 5.1 Applicable Laws... 5.2 Intellectual and Industrial Property... 5.3 Nationality of Employees... 5.4 Declarations and Guarantees... 5.4.1 Declarations and Guarantees of the SELLER... 5.4.2 Declarations and Guarantees of the BUYER 5.4.3 Changes of Information... CLAUSE 6 OPERATION OF THE INSTALLATIONS 6.1 Rules of Operation and Maintenance of the Plant 6.2 Operating Procedures... 6.3 Operator and Change of Operator... 6.4 Functional Tests... 6.5 Grant of Entry Permits... 6.6 Protection Devices... 6.7 Changes Affecting Protection Devices... 6.8 Consumables... CLAUSE 7 INTERCONNECTION 7.1 Interconnection Facilities... CLAUSE 8 MEASUREMENT... 8.1 Commercial Measurement System... 8.2 Repair and Replacement of the Measurement System... 8.3 Reading... CLAUSE 9 PRICES, BILLING AND PAYMENTS 9.1 Obligation to Purchase the Supply of Energy and Power... 9.2 Payment for the Supply of Energy and Power... 9.3 Payment for Supply before the Date of Commencement of Commercial Operation... 9.4 Charge for Works Financed by the SELLER to the BUYER (COF)... 9.5 Other Applicable Charges (OCA)... 9.5.1 Unavailability of the SIN to Receive Energy from the Plant... 9.6 Form of Payment and Billing... 9.6.1 Billing and Payments... 9.6.2 Final Billing at Contract Termination... 9.6.3 Interest... 9.7 Support Agreement CLAUSE 10 TESTS... 10.1 Initial Capacity Test... 10.2 Test Protocol... CLAUSE 11 INSURANCE 11.1 Insurance... CLAUSE 12 LIABILITY, NON-PERFORMANCE AND GUARANTEES... 12.1 Limitation of Liability... 12.2 Indemnification for Fines and Charges... 12.3 Risk of Loss... 12.3.1 Risk of Loss of the SELLER... 12.3.2 Risk of Loss of the BUYER... 12.4 Solidarity... 12.5 Adjustment for Failure to Achieve Guaranteed Annual Plant Factor... 12.6 Calculation of Penalties and Their Payment... 12.7 Performance Guarantee... CLAUSE 13 FORCE MAJEURE OR FORTUITOUS EVENT... 13.1 Application of Force Majeure or Fortuitous Event... 13.2 Burden of Proof 13.3 Effect of Force Majeure or Fortuitous Event... 13.4 Prior Payment Obligations Not Waived... 13.5 Extension of Time Limits... CLAUSE 14 TAXES AND CLAIMS... 14.1 Applicable Taxes... 14.2 Reimbursement of Differences... CLAUSE 15 RESOLUTION OF CONTROVERSIES OR DISPUTES... 15.1 Resolution of Disputes in Consultations and Negotiations... Classification of Disputes... 15.3 Resolution of Technical Disputes... 15.4 Resolution of Other Disputes... 15.5 Compliance... CLAUSE 16 ENVIRONMENT... 16.1 Environmental Laws... 16.2 Environmental Study... 16.3 Environmental License for Works to Expand the National Interconnected System... CLAUSE 17 NOTICES... 17.1 Addresses and Addressees 17.2 Changes of Address... CLAUSE 18 MISCELLANEOUS PROVISIONS... Modification... 18.2 Successors, Assignees and Designees... 18.3 Supplementary Provisions... 18.4 Headings... 18.5 Third Parties... 18.6 Non-Waiver... 18.7 Relationship of the Parties... 18.8 Survival of Obligations... 18.9 Severability... 18.10 Maintenance of Records... Confidentiality... 18.12 Triplicates... CLAUSE 19 REGULATORY CHANGE... 19.1 Regulatory Changes... CLAUSE 20 ASSIGNMENT AND RIGHT TO ENCUMBER... 20.1 Assignment by the SELLER... 20.2 Assignment by the BUYER 20.3 Consent for Assignment... 20.4 Written Authorization of Assignment... 20.5 Effects of Assignment of the Contract... 20.6 Right to Encumber... CLAUSE 21 SALE TO THIRD PARTIES... CLAUSE 22 INTEGRITY... ANNEX I DESCRIPTION OF THE PLANT AND THE SITE... ANNEX II CONDITIONS OF INTERCONNECTION... ANNEX III CONTROL AND OPERATION OF THE PLANT AND TECHNICAL LIMITS... ANNEX IV CONDITIONS OF OPERATION... ANNEX V MODEL OF CONTRACT PERFORMANCE GUARANTEE... ANNEX VI OPERATING COMMITTEE AND ITS POWERS... ANNEX VII REQUIREMENTS OF THE COMMERCIAL MEASUREMENT SYSTEM... ANNEX VIII SUPPORT AGREEMENT... ANNEX IX MODEL OF THE CERTIFICATE OF THE DATE OF COMMENCEMENT OF COMMERCIAL OPERATION...] SECTION 1: CONTRACTUAL AGREEMENT. CONTRACT FOR THE SUPPLY OF POWER AND ASSOCIATED ELECTRICAL ENERGY BETWEEN THE NATIONAL ELECTRICAL ENERGY COMPANY AND HIDROENERGÍA, S.A. DE C.V. We, the NATIONAL ELECTRICAL ENERGY COMPANY, a decentralized Institution of the State of Honduras, created by Decree Law No. 48 of February 20, 1957 and represented in this act by Mr. EMIL MAHFUZ HAWIT MEDRANO, of legal age, single, Licenciado in Business Administration, of Honduran nationality and domiciled herein, with Identity Card No. 1804-1958-01845, who accredits his representation with the Certification of Agreement No. 02-JD-EX-2012 issued in Point 03 of Minutes No. JD-EX-02-2012 of the extraordinary session held by the Board of Directors of the National Electrical Energy Company on February 13, 2012, with sufficient powers to sign this Contract pursuant to Resolution number JD-2014 issued in Point, Item Number of Minutes Number JD-1115-2014, of the Ordinary Session held by the Board of Directors of ENEE on June 26, 2014, who from now on shall be called the BUYER and Hidroenergía, S.A. de C.V., HIDROENERGÍA, a company incorporated in accordance with the laws of the Republic of Honduras, registered with No. 24 volume 4 of the Register of Social Merchants of Santa Rosa de Copán, who henceforth is called the SELLER represented in this act by José Raúl Welchez Villamil, of legal age, Married, Civil Engineer, of Honduran nationality, with identification document 0801-1957-00375, with domicile in Copán Ruinas, acting as President of the Board of Directors, with sufficient powers for the signature of this contract in conformity with the general power of administration granted in his name contained in Public Instrument No. of the Constitution of the Company, Registered with No. 24 volume 4 of the Register of Social Merchants of Santa Rosa de Copán, having mutually examined and found satisfactory the respective representations with which we act and in accordance with the laws of Honduras, we have decided to execute and by this act we execute the present Contract for the Supply of Power and Associated Electrical Energy, in accordance with the Clauses established herein. A. DOCUMENTS OF THE CONTRACT. The following documents constitute the Contract between the BUYER and the SELLER and constitute a single body that must be interpreted in an integrated manner: the Contractual Agreement, the General Conditions and their annexes. In case of conflict or ambiguity, the order of precedence shall be established by the order in which the documents were listed. B. CONTRACT TERM. The term of this Contract for the purposes established in Clause 2.1 General Description of the Object of the Contract, of the General Conditions is Twenty (20) years counted from the Date of Commencement of Commercial Operation. C. GENERAL DESCRIPTION OF THE PLANT. Name of the Project: Lagunetas Phase II (Bajo Grande) Location Municipalities: Victoria and Santa Cruz de Yojoa Departments: Yoro and Cortés Coordinates: 1672150, 419250 Technology: Kaplan Installed Capacity: [specification] MW Annual Energy Production: [specification] MWh Maximum Capacity to Deliver: [specification] MW Delivery Point: Caracol Substation, at the 138 kV bar Measurement Point: Caracol Substation, at the 138 kV bar Guaranteed Plant Factor (%): 68.82 D. SCHEDULED DATE FOR COMMENCEMENT OF COMMERCIAL OPERATION. The SELLER establishes that it has scheduled to put the Plant into commercial operation no later than November 30, 2018. E. INTERCONNECTION FACILITIES, DELIVERY POINT AND MEASUREMENT. For the purposes established in Clause, Interconnection Facilities of the General Conditions, the Point of Interconnection shall be located at Caracol Substation, at the 138 kV bar. F. EXPANSION OF THE NATIONAL INTERCONNECTED SYSTEM. Any work or improvement that the signatory of the Contract has identified as necessary to receive the energy produced by the Plant shall be constructed at the expense and risk of the SELLER. The designs of such works shall be approved by the BUYER. G. PRICE OF PURCHASE OF ENERGY AND POWER. For the purposes established in Clause 9.2 regarding the payment of energy and power, it is established that the Base Energy Price has a value of one hundred fourteen United States dollars with fourteen cents per Megawatt-hour (USD 114.14/MWh) and the Base Power Price has a value of eight United States dollars with ninety-two cents per kilowatt-month (USD 8.92/kW-month), values that were published in the Official Gazette La Gaceta on January 13, 2014. H. COMMUNICATIONS BETWEEN THE PARTIES. For the purposes established in Clause, Notices of the General Conditions, the address of the Parties shall be as follows: For the SELLER: Hidroenergía S.A. de C.V. Colonia el Alamo, 100 meters from Instituto Central Vicente Cáceres, Comayagüela. Tegucigalpa, M.D.C., Francisco Morazán, Honduras Attention: President of the Board of Directors Telephone: (504) 2225-4620 Fax: (504) 2225-4620 Email: hidroenergia@contempohn.com For the BUYER: National Electrical Energy Company Residential El Trapiche, Corporate Building Tegucigalpa, MDC. Honduras, C.A. Attention: General Manager Telephone: (504) 2235-2000 Fax: (504) 2235-2294 Email: eneeger@enee.hn I. COMMITMENT OF SALE TO THE BUYER. The SELLER commits to sell to the BUYER no less than 105,385.51 megawatts-hour annually and a power of 17.48 Megawatts. J. AMOUNT OF THE GUARANTEE. For the purposes of Clause, Performance Guarantee, the SELLER shall constitute a Guarantee in the name of the BUYER for an amount of Two million One hundred eighty thousand nine hundred fifty-seven (2,180,957.00) USD. Both Parties manifest that they are in agreement with the content of all and each one of the clauses of this Contract and for record we sign in triplicate of equal validity in the city of Tegucigalpa, MDC, Department of Francisco Morazán, on the 3rd day of the month of July 2014. BY THE BUYER ) (EMIL HAWIT MEDRANO, General Manager BY THE SELLER ) (JOSÉ RAÚL WELCHEZ VILLAMIL, President of the Board of Directors. K. ACRONYMS AND ABBREVIATIONS. kW - Kilowatt kWh - Kilowatt-hour MW - Megawatt (equivalent to 1,000 kilowatts) MWh - Megawatt-hour RTU - Remote Terminal Unit SERNA - Secretary of State in the Offices of Natural Resources and Environment. SECTION 2: GENERAL CONDITIONS. CLAUSE 1. DEFINITIONS. Definitions. Wherever the following words, phrases, sentences appear in this Contract or in the annexes hereto, whether in singular or plural, in masculine or feminine gender, they shall have the meaning expressed below, unless within the context where they are used they express another meaning. Support Agreement - Document executed between the SELLER and the Attorney General of the Republic with the joint guarantee of the Secretary of State in the Office of Finance, for the performance of this contract covering up to the quantities of power and electrical energy that are the object of this contract, in the format included in the annexes. 2. Calendar Year - Means the period of twelve consecutive months that begins each January first and ends on December 31 of the same year. 3. Year of Commercial Operation—Means each period of twelve (12) consecutive months from the Date of Commencement of Commercial Operation. 4. Notice of Non-Performance - A written notice of non-performance of the Contract delivered, either by the BUYER or by the SELLER. 5. Notice of Termination - A written notice of termination of the Contract delivered, either by the BUYER or by the SELLER. 6. Capacity - Means the maximum electrical power that equipment, a plant or system is capable of generating under determined conditions. 7. Committed Capacity - Means the average capacity that the SELLER shall reserve in each month to cover the needs and commitments of the BUYER contemplated in this Contract and that shall be supplied at the Delivery Point. For the purposes of the Contract, the Committed Capacity is established in section I COMMITMENT OF SALE TO THE BUYER of the Contractual Agreement. 8. Declared Capacity - Available capacity to be generated by the Plant according to the availability of the renewable resource used and the Prudent Practices of Electrical Service, as communicated in advance hour by hour by the SELLER to the National Load Dispatch Center (CND), in accordance with the Generation Program. 9. Initial Capacity - Means the Capacity of the Plant at the commencement of Commercial Operation. 10. Installed Capacity - It is the capacity, calculated at the point of highest voltage in the Plant, that results from the sum of the nominal capacities of the generation equipment corrected by the efficiency and losses of the auxiliary equipment and the conduction lines. 11. Maximum Capacity to Deliver - It is the Maximum Capacity that can be registered at the Delivery Point through the Installed Capacity once the losses and efficiencies of the associated equipment are considered. 12. Nominal Capacity.— It is the nominal power that each Unit has described in the manufacturer's nameplate data. 13. Power Capacity. For a determined month means the Electrical Energy Billed in the Peak Hours of said month, divided by the number of Peak Hours of such month. 14. Fortuitous Event - A fortuitous event is considered to be an occurrence from nature, unforeseeable or which, though foreseen, could not have been avoided and which makes impossible the partial or total performance of the obligations derived from this Contract. The following events are considered Fortuitous Events, among others: epidemics, earthquakes, landslides or displacement of other materials, floods, hurricanes, extraordinary climatic phenomena, fires, as well as any other unforeseeable or unavoidable event, provided that it causes in a direct and substantial way that one or both Parties cannot promptly perform the obligations contained in this Contract. 15. Assignment of the Contract - Transfer of rights and obligations assumed in this Contract by any of the Parties to a third party, who assumes the status of the person who assigns, subrogating himself in all or in part of his rights and obligations, provided that the Parties previously express their written consent to this effect, except for the exceptions contemplated in this Contract. 16. Cession of Goods - An act by which one of the Parties cedes the entirety of its goods or a percentage thereof to a third party so that they are guaranteed and where appropriate the debts of the assigning party are paid and discharged. 17. Assignor - Means the Party that transfers to a third party, rights or the entirety or percentage of its goods, shares or securities. 18. National Load Dispatch Center (CND)- It is the unit responsible for the operation and supervision in real time and in a continuous and uninterrupted manner of the National Interconnected System (SIN). 19. Assignee - The person in whose favor the assignment of goods is made, the transfer of a credit or the transmission of any other rights. 20. National Energy Commission (CNE) - It is the technical advisory body for the application of the Framework Law of the Electric Sub-Sector. 21. Operating Committee - It is the committee established between the SELLER and the BUYER for the purpose of coordinating and agreeing on technical aspects, resolution of disputes, claims and other matters of the contractual relationship, in all cases compatible with the provisions of this Contract, the provisions, norms and instructions issued by the CND and the Applicable Laws. 22. Contract- It is the agreement for the supply of Power and its associated Electrical Energy contained in this instrument, its amendments, modifications, and expansions together with all its annexes. 23. Operation Contract- It is the contract executed between the SELLER and SERNA to operate as a company in the Electric Sub-Sector. 24. Short-Term Marginal Cost of Energy - It means the base value at which the BUYER pays the SELLER for the energy supplied to it at the Delivery Point and which is subject to the adjustments provided for in this Contract. 25. Short-Term Marginal Cost of Power - It means the value at which the BUYER pays the SELLER the Power Capacity placed at the disposal by the SELLER. 26. Dispatch - The power of the CND to issue instructions in accordance with a) the Technical Limits fixed in this Contract in accordance with what is established by the manufacturer of the equipment, and b) the Applicable Laws, to program and control the generation of the Plant and to initiate, increase, decrease or interrupt the production of energy destined for the SIN. 27. Day - Means a calendar day beginning at 0:00 hours (00:00 hours or official time of the Republic of Honduras) of said calendar day and ending at 24:00 hours (24:00 hours or official time of the Republic of Honduras) of that same calendar day. 28. Administrative Business Day - Applicable to the Parties, it is any day from Monday to Thursday with business hours from 8:00 am to 4:00 pm and Friday from 8:00 am to 3:00 pm or the hours that are in effect at that time, excepting holidays and February 3 for Tegucigalpa. 29. Dollars or USD- Legal tender currency of the United States of America. 30. Emergency - A condition or situation that, based on Prudent Practices of the Electrical Industry, in the judgment of the CND and/or the SELLER, threatens human life or substantially and adversely affects the capacity of the National Interconnected System or the SELLER's Plant to maintain a continuous, adequate electrical energy supply service and under pre-established safety conditions. 31. Associated Energy - Electrical energy delivered by the SELLER to the SIN and registered by the Measurement Equipment at the Delivery Point. 32. Billed Electrical Energy - Electrical energy measured in kilowatt-hours (kWh) delivered and billed by the SELLER to the BUYER at the Delivery Point. 33. Annual Delivered Energy - It is the total Electrical Energy delivered by the SELLER to the SIN during any Calendar Year. 34. Test Energy - It is all the energy produced by the Plant during the equipment and systems testing period, which has been delivered to the BUYER prior to the Date of Commencement of Commercial Operation. 35. Electrical Energy - It is the product generated by the SELLER's Plant and which is delivered to the SIN in accordance with the terms of this Contract. It is expressed in kilowatt-hours (kWh). 36. Annual Plant Factor - It is the value that is calculated in accordance with what is established in Clause 12.5 Adjustment for Failure to Achieve Guaranteed Annual Plant Factor. 37. Guaranteed Plant Factor - It is the Annual Plant Factor that the SELLER guarantees for each year of Commercial Operation of the Plant and which is established in section C GENERAL DESCRIPTION OF THE PLANT. 38. Failure— It is the situation that results from a fault, deficiency or error in the obligations established in this Contract and that substantially affects the execution thereof. 39. Date of Commencement of Commercial Operation - Means the date from which the Plant is considered to be in reliable and continuous operation and has complied with what is established in Clause 4.2 Commercial Operation Start-up. 40. Payment Date — It is the date on which the BUYER makes the payment to the SELLER for the sale of Power and Billed Electrical Energy and which corresponds to Day forty-five counted from the date of delivery of the error-free invoice. 41. Effective Date — It shall be the date that results from what is established in Clause 4.1 Entry into Force. 42. Scheduled Date of Commencement of Commercial Operation - It is the date set forth in section D SCHEDULED DATE FOR COMMENCEMENT OF COMMERCIAL OPERATION of the Contractual Agreement of this Contract. 43. Financier - Means any natural or foreign person who provides financing or refinancing in any form for the development, construction or operation of the generation facilities and associated works of the SELLER and in whose favor an Assignment of the Contract and Assignment of Goods may be made for the purpose of guaranteeing such financing or refinancing as applicable. 44. Force Majeure - It is considered Force Majeure, that which originates from the action of man, an unforeseeable event or which, though foreseen, could not have been avoided and which makes impossible the partial or total performance of the obligations derived from this Contract. Cases of Force Majeure are considered, among others, the following events: wars, revolutions, insurrections, civil unrest, blockades, embargoes, strikes, sabotage, accidents, fires as well as any other causes of the type mentioned above, provided that it causes in a direct manner that any of the Parties cannot promptly perform the obligations contained in the Contract. 45. Large Consumers - Consumers served at a voltage of at least 13.8 kV and whose maximum demand is at least [specification] kW and whose classification may be periodically modified by the CNE. 46. Peak Hours - It is the period for business days comprised from 11:00 to 13:00 hours and the period from 18:00 to 20:00 hours. 47. Consumer Price Index (CPI) - It is the urban consumer price index known as CPI by its English acronym, published by the Department of Labor of the United States of America, and which means the measure of the average change over time in prices of goods and services purchased in all urban households of the United States of America, without adjustments (Consumer Price Index for all Urban Consumers CPI-U, U.S., City Average Unadjusted all items). 48. Interconnection Facilities - Means the new installations of the transport line that connects the Plant to the Point of Interconnection, including gantries, circuit breakers and disconnecting switches, protection and control equipment, measurement equipment, current and potential transformers, transmission lines, communication systems, communications processor for data transmission to the CND, compatible with the equipment of the CND's SCADA and measuring transducers of voltage, frequency, active power and reactive power until the Point of Interconnection. 49. Framework Law of the Electric Sub-Sector and Its Regulation— It is Decree No. published in the Official Gazette La Gaceta on November 24, 1994 and its Regulation, Agreement No. 934-97 published in the Official Gazette La Gaceta on April 24, 1999. 50. Law for the Promotion of Generation of Electrical Energy with Renewable Resources - It is Decree No. 70-2007 published on October 8, 2007 in number of the Official Gazette La Gaceta, the interpretation contained in Decree No. 162-2007 published in the Official Gazette La Gaceta on October 14, 2009 and Decree 138-2013 published on August 1, 2013. 51. Applicable Laws - Means all the laws, treaties, regulations, decrees, norms, rules, ordinances, decisions, resolutions, sentences, judicial orders, interpretations and authorizations issued in accordance with and based on the Law, by any governmental authority with jurisdiction and competence over the matter in question and that are in force at the moment of the signature of this Contract. 52. Environmental License - Means the permit that the Secretary of State in the Offices of Natural Resources and Environment extends for: a) the construction and commercial operation of the Plant and b) for the works for the expansion of the National Interconnected System and the mitigation contract that establishes as a result of each environmental impact assessment, the responsibilities and obligations that the SELLER or the BUYER must comply with. 53. Technical Limits - The limits and restrictions defined in Annex III, numeral of this Contract, as well as the technical recommendations of the manufacturer of the equipment that is part of the Plant. 54. Month - Means a calendar month beginning at 00:00 hours (00:00 hours or official time of the Republic of Honduras) of the Day of each month and ending at 24:00 hours (24:00 hours or official time of the Republic of Honduras) of the last Day of the same month. 55. Commercial Operation - It is the period that begins on the Date of Commencement of Commercial Operation and runs throughout the entire period of duration of the Contract, as established in section B CONTRACT TERM of the Contractual Agreement. 56. Forced Outage - Means the interruption of the generation capacity of the entire Plant that is not due to a Scheduled Outage nor to a Force Majeure or Fortuitous Event. 57. Scheduled Outage - Means a planned interruption of the production of electrical energy of part or all of the Plant, which is necessary for the purpose of carrying out an inspection or maintenance operations. 58. Party (ies) - Means the BUYER or the SELLER or both. 59. Technical Expert - Means the person or persons qualified and appointed by the Parties or by a third party at the request of the same, to resolve a technical discrepancy arising between them. 60. Plant- It is the set of machinery, civil works, electrical and mechanical equipment, transformation substations, transmission lines and their components and the elements necessary for its reliable and continuous operation installed up to the Delivery Point which shall be operated and maintained by the SELLER and which shall be of his property, which are required to produce and supply energy and power to the BUYER at the Delivery Point whose description is detailed in Annex II. 61. Prudent Practices of the Electrical Industry - They are the methods that are used or whose use is reasonably expected in relation to the optimal operation and maintenance of electrical energy generating plants of similar size and characteristics and that are in accordance with the recommendations and requirements of equipment manufacturers, with the norms of the electrical industry, with considerations of reliability, safety, efficiency and environment, as well as with any applicable government regulation in force during the Term of the Contract. 62. Annual Generation Program - It is the document prepared by the SELLER, in accordance with the format established by the CND, which contains for each Month of the Calendar Year that such program covers, the total amount of Power and Associated Electrical Energy that the SELLER proposes to deliver at the Delivery Point, whether such amounts are destined for the BUYER and/or third parties that are authorized by the BUYER. 63. Annual Maintenance Program - It is the program that the SELLER submits for the consideration of the BUYER in which he describes for each Month of the Calendar Year for which it is prepared, the total number of Units that are unavailable, as well as the resulting available Capacity. Such program should indicate the SELLER's preferred dates and the estimated duration of each scheduled maintenance. 64. Capacity Test— Means the test performed on the Plant and its auxiliary equipment to determine the Capacity of the Plant, in accordance with Clause 10 Tests. 65. Delivery Point - It is the point at which the SELLER delivers to the BUYER the Electrical Energy destined for it and to third parties, if any. This point shall define the limit of responsibility of both Parties for the maintenance and operation of the installations. The Delivery Point is the one indicated in the single-line diagram of the Plant shown in Annex II, which forms an integral part of this Contract. 66. Point of Interconnection - Means the physical location where the Interconnection Facilities are connected with the SIN, which is shown in Annex II. 67. Measurement Point - It is the point where current and voltage transformers are installed that generate the signals for the equipment for measuring Electrical Energy that is the object of this Contract, defined in accordance with Annex II. 68. Auxiliary Services - Auxiliary services shall be understood as the following:

• a)

  the generation or absorption of reactive power up to the limit of the capacity of the generation equipment, considering the active power that such generation equipment generates simultaneously with the production or absorption of reactive power;

• b)

  participation in the task of frequency regulation both in its primary and secondary modality;

• c)

  the supply of spinning reserve capacity;

• d)

  collaboration to maintain service in emergency situations;

• e)

  collaboration in the tasks of restoring service; where applicable, including black start startups and autonomous powering of load islands as required by the CND. 69. National Interconnected System (SIN) - It is made up of the generating stations, distribution systems and the subset of elements of the transmission and sub-transmission system that unite them physically without interruption and that are located within the territory of the Republic of Honduras. 70. Exchange Rate — Means the average sale price of Dollars of the United States of America to individuals in the public auctions of foreign exchange carried out by the Central Bank of Honduras and in the event that such system is no longer used, it shall be the Exchange Rate determined in accordance with the exchange regulations in force. 71. Average Rate - Means the weighted average rate for active operations in national currency of the national banking system and shall be taken from the publication "Summary of Interest Rates on New Operations of the Banking System" of the Central Bank of Honduras or the analogous publication published by such institution, corresponding to the weighted average of the Month immediately preceding the date on which it is necessary to apply it. 72. Units of the Plant or Units - Each one of the modules that make up the Plant. CLAUSE 2. OBJECT OF THE CONTRACT. 2.1 General Description of the Object of the Contract - The object of this Contract is the supply of energy and power by the SELLER to the BUYER during the Term of the Contract. As stipulated in this Contract, the BUYER shall purchase all the electrical energy and power generated by the Plant that is delivered, measured and billed by the SELLER. Compliance, among others, with respect to the Date of Commencement of Commercial Operation, the price, the Power Capacity and the Delivery Point, shall be regulated by the provisions established in this Contract. 2.2 Obligation to Build, Operate and Maintain - In order to comply with the purpose of the Contract, the SELLER undertakes, at its own risk and expense, to build, operate and maintain a generating plant of its own property. The Plant shall comply with the technical performance specifications detailed in Annexes III and IV of this Contract. Commercial Operation shall commence on the date the conditions set forth in this Contract for such purpose are met. The SELLER further undertakes to perform the connection of the Plant to the Point of Interconnection, as detailed in this Contract and to supply electrical energy and power at the Delivery Point to the BUYER, who shall pay in accordance with the stipulations established in this Contract. The SELLER shall have full control and responsibility for the operation and maintenance of the Plant in accordance with operating standards, in accordance with Prudent Practices of the Electrical Industry and the terms and conditions of this Contract, using a Maintenance Program in accordance with the manufacturer's recommendations. In matters not regulated by this Contract, the SELLER's practices shall apply. Likewise, the SELLER undertakes at its own risk and expense to design, supply, build and connect the works necessary to make available and/or deliver the energy and power to be supplied at the Delivery Point. 2.3 Obligation of Purchase and Sale - The production of the Plant must be used in a priority manner to satisfy, at the Delivery Point, the Committed Capacity, which is specified in section I COMMITMENT OF SALE TO THE BUYER of the Contractual Agreement. The BUYER undertakes to purchase and pay the SELLER all the electrical energy and power billed in accordance with the prices, terms and conditions established in this Contract. The Parties recognize that the obligation of the SELLER under this Contract shall be to deliver energy and power to the SIN at the Delivery Point. 2.4 Commitment of Energy Dispatch - The BUYER through the CND shall obligatorily dispatch all the energy that the SELLER produces and delivers at the Delivery Point, during the entire term of this Contract. The obligatory Dispatch shall have the following exceptions:

  • a)

    When the reservoirs of the hydroelectric plants owned by the State are spilling and the receipt of the production of the SELLER needs a reduction of the production of those plants, with a consequent increase of the spilled volumes;

  • b)

    When failures in the SELLER's Plant are causing disturbances in the SIN; and,

  • c)

    When the Plant is disconnected from the SIN in Emergency situations or during the restoration of service after a failure, while the CND has not given it instructions to reconnect to the network and this condition is technically justified. 2.5 Sale of Energy to Third Parties - In the event that for four (4) consecutive months the BUYER does not fully pay the charges billed by the SELLER, the BUYER hereby grants authorization for the SELLER to have from that moment forward the right to commit or supply to third parties any quantity of energy produced by the Plant. The SELLER shall exercise such right by only notifying in writing to the BUYER its intention to make use of it. The exercise of this right shall not exempt the BUYER from its obligation to purchase the energy and power that the SELLER bills to it. Upon making use of its right to sell to third parties in accordance with this clause, the SELLER shall pay USD [amount]/kWh for each unit of energy sold to third parties and shall supply the BUYER with one percent (1%) of energy for losses corresponding to the energy transferred to third parties in accordance with what is established in Decree No. 70-2007. The procedure for billing to third parties shall be established by the Operating Committee prior to the Commencement of Commercial Operation of the Plant, taking into account the legal, regulatory and billing procedures, in such a way as to achieve the speeding up of the issuance of invoices issued by the BUYER and the SELLER to their respective clients and reduce the periods for each Party to receive their respective payments for the supply of power and electrical energy that it has provided in each billing period. The SELLER's customers must comply with the regulations issued by the National Energy Commission in compliance with applicable laws and regulations. Authorization for sale to third parties shall establish the conditions under which it is granted. The Operating Committee shall ensure that once the debts that led to the suspension or limitation of supply to the BUYER are paid, such supply is restored in the most expedited manner without prejudice to the agreements that the SELLER may have entered into with third parties. 2.6 Commitment of Energy - Subject to Dispatch by the CND, but in all cases observing the requirements of voltage level and frequency and the other requirements and Technical Limits detailed in Annex III, numeral 2, the SELLER shall supply to the BUYER the active and reactive energy associated with the Committed Capacity in accordance with the terms and conditions established in this Contract. 2.7 Commitment of Transmission - The BUYER must receive the Power and Electrical Energy at the Delivery Point, likewise, perform the necessary maintenance to its transmission lines, in particular, to the lines and substations associated with the Delivery Point. 2.8 Works for Expansion of the National Interconnected System - If along the term of this Contract the Parties agree that new facilities or improvements in the SIN are required to receive the energy delivered by the Plant from the Delivery Point and/or improvements in the SIN that generate technical and economic benefit to the BUYER, these shall be constructed in accordance with the Applicable Laws. CLAUSE 3. PERIOD PRIOR TO COMMERCIAL OPERATION. 3.1 Construction Program - No later than one hundred sixty-eight (168) Calendar Days counted from the date of entry into force of this Contract, the SELLER must deliver to the BUYER a construction program of the installations with an execution schedule of the works, prepared with project control software, which includes the activities and milestones with their times, dates, correlations between them and that allows establishing the critical path to achieve the Date of Commencement of Commercial Operation of the Plant, in such schedule all the prior activities required to carry out the construction must be included, including the obtaining of permits, authorizations, socializations, acquisition of lands, imposition of easements, negotiations with contractors, financiers, among others. The term for construction and installation of the Plant, transmission lines, substation and other facilities may not exceed the term established in section D SCHEDULED DATE FOR COMMENCEMENT OF COMMERCIAL OPERATION. Without prejudice to what is established in Clause 4.2 Commercial Operation Start-up, the terms of the construction program shall be automatically extended if during the construction period one or more events of Force Majeure or Fortuitous Event occur. The extension shall be for the sum of the duration of each period that the Force Majeure or Fortuitous Event affects the construction of the Plant. 3.2 Operating Committee and Its Powers - The Parties agree to the establishment of an Operating Committee within the following twenty-eight (28) days counted from the execution of this Contract, such committee shall be composed of four (4) members, of which each Party shall appoint and accredit two (2) members ("Representatives of the Operating Committee"). The Operating Committee shall be responsible, among other aspects, for administering this Contract, monitoring the process that allows the construction of the Interconnection Works and the process that allows the start-up of the Plant, as well as ensuring adequate, reliable and secure operation of the Plant during the entire term of this Contract. The composition, powers and operating norms of the Operating Committee are established in Annex VI of this Contract and may be updated by agreement between the Parties, within the framework of the Applicable Laws. The Operating Committee must establish within the twenty-eight (28) Days following its formation, the procedures related to the calling and holding of meetings, the preparation of minutes of meetings and the establishment of subcommittees; subject to the quorum for any meeting of the Operating Committee being achieved with at least one (1) representative appointed by each Party. Likewise, the Operating Committee shall meet when convoked by any of the Parties with at least three (3) Administrative Business Days' notice. Each Party shall have one vote in the Operating Committee and any member appointed by each of the Parties may use the vote of that Party. The decisions of the Operating Committee shall require the unanimous vote of the Parties. 3.3 Permits - The SELLER must obtain all provisional and final permits that are required by the Applicable Laws, pay all inherent fees and ensure that its representatives, associated companies, subcontractors and employees comply with all laws, ordinances, regulations and provisions relating to the conduct of the activities specified herein. The BUYER shall collaborate in the management of these permits before the competent authorities, without such collaboration implying responsibility of the BUYER in obtaining such permits. In the event that such permits have a delay of more than sixty (60) Days in being issued, despite the SELLER having carried out the corresponding studies and efforts for their obtaining with sufficient notice and diligence before the competent body for their obtaining, the BUYER, upon request for extension from the SELLER, but without prejudice to what is established in Clause 4.2 Term for Commercial Operation Start-up, may extend the Scheduled Date of Commencement of Commercial Operation by the Days of delay exceeding sixty (60) Days. The SELLER must present as part of the Construction Program the activities that need permit from any governmental body and shall report to the BUYER monthly and in writing, of the progress or delay of the efforts for obtaining the required permits or authorizations. 3.4 Errors and Discrepancies - If in the course of the construction and installation works of the Plant, the SELLER, its associated companies or its subcontractors found errors or omissions in specifications or data supplied by the BUYER or discrepancies between them, the SELLER shall be obligated to inform the BUYER in writing, as soon as it had knowledge. In such case the BUYER...

This Decree shall enter into force from the day of its publication in the Official Gazette "La Gaceta". Given in the city of Tegucigalpa, municipality of the Central District, in the Session Hall of the National Congress, on the twenty-seventh day of the month of July of two thousand sixteen. ANTONIO CÉSAR RIVERA CALLEJAS PRESIDENT MARIO ALONSO PÉREZ LÓPEZ SECRETARY SARA ISMELA MEDINA GALO SECRETARY To the Executive Power Therefore Execute Tegucigalpa, MDC, September 2016 JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE OFFICES OF ENERGY, NATURAL RESOURCES, ENVIRONMENT AND MINES. ROBERTO ORDOÑEZ