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CONFORMED COPY
GEF TRUST FUND GRANT NUMBER TF020548
Global Environment Facility Trust Fund Grant Agreement
(Renewable Energy in the Rural Market Project)
between
ARGENTINE REPUBLIC
and
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
acting as an Implementing Agency of the Global Environment Facility
Dated October 26, 1999
GEF TRUST FUND GRANT NUMBER TF020548
GLOBAL ENVIRONMENT FACILITY TRUST FUND GRANT AGREEMENT
AGREEMENT, dated October 26, 1999, between ARGENTINE REPUBLIC (the Recipient) 
and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) acting as an 
implementing agency of the Global Environment Facility (GEF) in respect of grant funds 
provided to the GEF Trust Fund by certain members of the Bank as participants of the 
GEF. 
WHEREAS (A) the Bank, pursuant to Resolution No. 91-5 of March 14, 1991 of the 
Executive Directors of the Bank, established the GEF to assist in the protection of 
the global environment and promote thereby environmentally sound and sustainable 
economic development; 
(B)
following the restructuring of the GEF, such arrangements continued in 
place on the basis set forth in Resolution No. 94-2 of May 24, 1994, of the Executive 
Directors of the Bank which, inter alia, established the GEF Trust Fund, authorized 
the first replenishment of the GEF Trust Fund and appointed the Bank as Trustee of the 
GEF Trust Fund (Resolution No. 94-2); 
(C)
the second replenishment of the GEF Trust Fund was approved on the basis 
set forth in Resolution No. 98-2 of July 14, 1998, of the Executive Directors of the 
Bank (Resolution No. 98-2);
(D)
the Recipient, having satisfied itself as the feasibility and priority of 
the Project described in Schedule 2 to this GEF Grant Agreement, has requested 
assistance from the resources of the GEF Trust Fund in the financing of Parts A.1, 
A.4, B, C.1-.7, C.13 and D.1-.2 of the Project, and said request having been approved 
in accordance with the provisions of the Instrument for the Establishment of the 
Restructured Global Environment Facility approved under Resolution No. 94-2, and to be 
funded from contributions to the GEF Trust Fund under Resolution No. 98-2, which may 
include funds carried over from the first replenishment of the GEF Trust Fund under 
Resolution No. 94-2; and
(E)
the Recipient has also requested the Bank to provide additional financing 
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towards the financing of Parts A, C and D.1-.2 of the Project by an agreement of even 
date herewith between the Recipient and the Bank (the Loan Agreement), whereby the 
Bank has agreed to provide such assistance in an amount equal to thirty million 
Dollars ($30,000,000) (the Loan); and
WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to 
extend a grant (the GEF Trust Fund Grant) to the Recipient upon the terms and 
conditions set forth in this agreement (the GEF Grant Agreement);
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01 (a) The following provisions of the "General Conditions Applicable 
to Loan and Guarantee Agreements for Single Currency Loans" of the Bank, dated May 30, 
1995, as amended through December 2, 1997, with the modifications set forth in 
paragraph (b) of this Section (the General Conditions), constitute an integral part of 
this GEF Grant Agreement: 
(i)
Article I; 
(ii)
Sections 2.01 (3), (4), (5), (6), (7), (8), (14), (15), (16), (18) 
and (21), 2.02 and 2.03; 
(iii)
Section 3.01; 
(iv)
Sections 4.01 and 4.06; 
(v)
Article V; 
(vi)
Sections 6.01, 6.02 (a), (c), (d), (e), (f), (g), (i) and (l) 
through (p) 6.03, 6.04 and 6.06; 
(vii)
Section 8.01 (b); 
(viii)Sections 9.01 (a) and (c), 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09; 
(ix)
Sections 10.01, 10.03 and 10.04;  
(x)
Article XI; and 
(xi)
Sections 12.01, 12,02 , 12.03 and 12.04.
(b)
The General Conditions shall be modified as follows:
(i)
a new paragraph shall be added to the end of Section 2.01 to read 
as follows: "the term "Special Drawing Rights" and the symbol 
"SDR" mean special drawing rights as valued by the International 
Monetary Fund in accordance with its Articles of Agreement"; 
(ii)
the term "Bank", wherever used in the General Conditions, other 
than in Sections 2.01 (6) and 6.02 (f) thereof and the last use of 
such term in Section 5.01 thereof, means the Bank acting as an 
implementing agency of the GEF, except that in Section 6.02, the 
term "Bank" shall also include the Bank acting in its own 
capacity; 
(iii)
the term "Borrower", wherever used in the General Conditions, 
means the Recipient; 
(iv)
the term "Loan Agreement", wherever used in the General 
Conditions, means this GEF Grant Agreement; 
(v)
the terms "Loan" and "loan", wherever used in the General 
Conditions, mean the GEF Trust Fund Grant; 
(vi)
the term "Loan Account", wherever used in the General Conditions, 
means the GEF Trust Fund Grant Account; and
(vii)
a new subparagraph is added after subparagraph (o) in Section 6.02 
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of the General Conditions, as follows: "an extraordinary situation 
shall have arisen in which any further disbursement under the GEF 
Trust Fund Grant would exceed the resources available for 
disbursement from the GEF."
Section 1.02. Unless the context otherwise requires, the several terms defined 
in the General Conditions and in the Preamble to this GEF Grant Agreement have the 
respective meanings therein set forth and the following additional terms have the 
following meanings: 
(a)
"CFE" means the Recipient’s Consejo Federal de Energía Eléctrica (Federal 
Electric Power Council); 
(b)
"Concession Agreement" means a Concession Agreement I or a Concession 
Agreement II; 
(c)
"Concession Agreement I" means the agreement referred to in paragraph (d) 
(A) of Schedule 5 to this GEF Grant Agreement; 
(d)
"Concession Agreement II" means the agreement referred to in paragraph 
(d) (B) (2) of Schedule 5 to this GEF Grant Agreement; 
(e)
"Concessionaire" means the Existing Concessionaire or the New 
Concessionaire; 
(f)
"Existing Concessionaire" means a private sector provider of electricity 
services operating in urban areas of a Participating Province as of February 1, 1999 
pursuant to the terms of a concession agreement with the Participating Province;
(g)
"Implementation Letter" means the letter of even date herewith from the 
Recipient to the Bank setting forth the Project monitoring indicators;  
(h)
"New Concessionaire" means a private sector provider of electricity 
services (acting under private commercial law and the management of which is not 
controlled by public sector owners) selected pursuant to paragraph (d) (B) (1) of 
Schedule 5 to this GEF Grant Agreement; 
(i)
"Participation Agreement" means any of the agreements referred to in 
Section 3.01 (c) of this GEF Grant Agreement;  
(j)
"Participating Province" means any one of the Recipient’s provinces, 
eligible to enter into a Participation Agreement as set forth to in Section 3.01 (c) 
of this GEF Grant Agreement, which has in fact entered into a Participation Agreement; 
(k)
"PCU" means the unit referred to in Section 3.04 of this GEF Grant 
Agreement; 
(l)
"PIU" means the Project implementation unit of a Participating Province;
 
(m)
"Procurement Agency Agreement" means the agreement referred to in Section 
3.02 (b) of this GEF Grant Agreement; 
(n)
"SE" means the Recipient’s Secretariat of Energy (Secretaría de Energía);
(o)
"Solar Home System" and the acronym "SHS" mean a system of one or more 
solar photovoltaic panels, with battery storage and battery charge and discharge 
controllers, not connected to a power distribution grid, suitable for powering:  (i) 
energy-efficient appliances; and (ii) at least three lighting fixtures with bulbs; 
(p) 
"Special Account" means the account referred to in Section 2.02 (b) of 
this GEF Grant Agreement; and
(q) 
"Wind Home Unit" means a unit consisting of a small turbine, with battery 
storage and battery charge and discharge controllers, not connected to a power 
distribution grid, suitable for powering:  (i) energy-efficient home appliances; and 
(ii) at least three lighting fixtures with bulbs.
Section 1.03. Each reference in the General Conditions to the Project 
implementation entity shall be deemed as a reference to each Participating Province. 
ARTICLE II
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The GEF Trust Fund Grant
Section 2.01. The Bank agrees to make available to the Recipient, on the terms 
and conditions set forth or referred to in this GEF Grant Agreement, the GEF Trust 
Fund Grant in an amount in various currencies equivalent to seven million, two hundred 
thousand Special Drawing Rights (SDR 7,200,000).
Section 2.02. (a) The amount of the GEF Trust Fund Grant may be withdrawn from 
the GEF Trust Fund Grant Account in accordance with the provisions of Schedule 1 to 
this GEF Grant Agreement for expenditures made (or, if the Bank shall so agree, to be 
made) in respect of the reasonable cost of installation, goods and services required 
for carrying out Parts A.1, A.4, B, C.1-.7, C.13 and D.1-.2 of the Project and to be 
financed out of the proceeds of the GEF Trust Fund Grant. 
(b)
The Recipient may, for the purposes of Parts A.1, A.4, B, C.1-.7, C.13 
and D.1-.2 of the Project, open and maintain in Dollars a special deposit account in 
Banco de la Nación Argentina on terms and conditions satisfactory to the Bank, 
including appropriate protection against set off, seizure or attachment.  Deposits 
into, and payments out of, the Special Account shall be made in accordance with the 
provisions of Schedule 4 to this GEF Grant Agreement. 
Section 2.03. The Closing Date shall be September 30, 2005 or such later date as 
the Bank shall establish.  The Bank shall promptly notify the Recipient of such later 
date.
ARTICLE III 
Execution of the Project
Section 3.01. (a) The Recipient declares its commitment to the objectives of the 
Project, and, to this end, shall: 
(i) 
coordinate, administer and supervise the execution of the Project 
as a whole and specifically carry out Parts B, C and D of the 
Project through SE with due diligence and efficiency and in 
conformity with appropriate technical, administrative, financial 
and environmental practices; and 
(ii)
cause the Participating Provinces to carry out Parts A.1-.3 of the 
Project or Parts A.4-.6 of the Project, all in accordance with the 
provisions of the corresponding Participation Agreement. 
(b)
The Recipient shall provide, promptly as needed, the funds, facilities, 
services and other resources required for the Project and shall not take or permit to 
be taken any action which would prevent or interfere with the carrying out of Part A 
of the Project by the respective Participating Province.
(c)
The Recipient shall, from among those of its provinces deemed eligible 
because they have established a regulatory framework and have a power sector 
regulatory entity (all satisfactory to the Bank and compatible with the sound 
provision of electricity to the dispersed rural market and the private sector’s 
participation in such provision), enter into an agreement with each of at least eight 
of such eligible provinces.  Each said agreement shall: (i) govern each of such 
province’s participation in carrying out Parts A.1-A.3 of the Project or Parts A.4-A.6 
of the Project; and (ii) be satisfactory to the Bank and include the terms and 
conditions set forth in Schedule 5 to this GEF Grant Agreement.
(d)
The Recipient shall exercise its rights and carry out its obligations 
under each Participation Agreement in such manner as to protect the interests of the 
Recipient and the Bank and to accomplish the purposes of the GEF Trust Fund Grant, 
and, except as the Bank shall otherwise agree, the Recipient shall not assign, amend, 
abrogate, terminate, waive or fail to enforce any Participation Agreement or any 
provision thereof. 
(e)
Without limitation upon the provisions of paragraph (a) of this Section 
and except as the Recipient and the Bank shall otherwise agree, the Recipient shall 
complete the carrying out of Parts C.2-.12 of the Project in accordance with the 
timetable set forth in the Implementation Letter.  For purposes of Part C.13 of the 
Project, the Recipient shall prepare by no later than each October 31 throughout the 
course of Project implementation, a plan satisfactory to the Bank for the carrying out 
of such Part C.13 of the Project during the calendar year immediately following each 
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such preparation.  The Recipient shall prepare the first such plan no later than 
October 31, 1999, and shall carry out Part C.13 of the Project in accordance with the 
terms of each such plan.
(f)
For purposes of Part B of the Project, the Recipient shall select 
provinces (which need not be Participating Provinces or eligible provinces pursuant to 
paragraph (c) of this Section) where there are necessary wind resources and each of 
which has agreed in writing with the Recipient to allow a pilot demonstration program 
under Part B of the Project to be carried out within its territory, cooperate in such 
program’s execution and support the continuity of renewable energy service to rural 
users in its territory after completion of the pilot demonstration program.
Section 3.02. (a) Except as the Bank shall otherwise agree, procurement of the 
goods and consultants’ services required for the Project and to be financed out of the 
proceeds of the GEF Trust Fund Grant, as well as procurement of turn-key Wind Home 
Unit installation contracts under Part B of the Project and selection of each New 
Concessionaire, shall be governed by the provisions of Schedule 3 to this GEF Grant 
Agreement.
(b)
For purposes of procuring the consultants’ services required under Parts 
C and D.1 of the Project, the Recipient may enter into an agreement with a procurement 
agent (the Procurement Agency Agreement) under terms and conditions satisfactory to 
the Bank.
(c)
The Recipient shall exercise its rights and carry out its obligations 
under the Procurement Agency Agreement in such manner as to protect the interests of 
the Recipient and the Bank and to accomplish the purposes of the GEF Trust Fund Grant, 
and, except as the Bank shall otherwise agree, the Recipient shall not assign, amend, 
abrogate, terminate, waive or fail to enforce the Procurement Agency Agreement or any 
provision thereof.
(d)
The Recipient shall, through the PCU and not later than forty-five days 
before the conclusion of each calendar semester throughout Project implementation, 
prepare and furnish to the Bank the procurement plan to be followed by the Recipient, 
the Participating Provinces and the Existing Concessionaires (if applicable) under the 
Project during the calendar semester following the date of presentation of such plan.  
The first such plan shall be prepared by the Recipient with respect to procurement to 
be undertaken during the first calendar semester of 2000.
Section 3.03. For the purposes of Section 9.08 of the General Conditions and 
without limitation thereto, the Recipient shall: 
(a)
prepare, on the basis of guidelines acceptable to the Bank, and furnish 
to the Bank not later than six months after the Closing Date or such later date as may 
be agreed for this purpose between the Recipient and the Bank, a plan for the future 
operation of the Project; and
(b)
afford the Bank a reasonable opportunity to exchange views with the 
Recipient on said plan. Section 3.04. The Recipient shall establish within SE, and 
thereafter operate and maintain throughout the course of Project implementation, a 
Project coordination unit (the PCU) with staff, functions and responsibilities 
satisfactory to the Bank, including, inter alia, the responsibility to assist SE in 
the monitoring, administration and supervision of the Project.
Section 3.05. The Recipient shall: 
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with the Project monitoring indicators set 
forth in the Implementation Letter, the carrying out of the Project and the 
achievement of the objectives thereof; 
(b)
prepare, under terms of reference satisfactory to the Bank, and through 
the PCU furnish to the Bank, on or about forty days after the conclusion of each 
calendar quarter throughout the course of Project implementation, a report integrating 
the results of the monitoring and evaluation activities performed pursuant to 
paragraph (a) of this Section, on the progress achieved in the carrying out of the 
Project during the calendar quarter preceding the date of said report and setting out 
the measures recommended to ensure the efficient carrying out of the Project and the 
achievement of the objectives thereof during the period following such date (the first 
such report shall be prepared by the Recipient during the last calendar quarter of 
1999); and
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(c)
review with the Bank, by June 30, 2001, or such later date as the Bank 
shall request (the mid-term review), the reports referred to in paragraph (b) of this 
Section, and, thereafter, take all measures required to ensure the efficient 
completion of the Project and the achievement of the objectives thereof, based on the 
conclusions and recommendations of said reports and the Bank’s views on the matter. 
ARTICLE IV 
Financial Covenants 
Section 4.01. (a) The Recipient shall establish and maintain, or cause to be 
established and maintained, a financial management system, including records and 
separate accounts, adequate to reflect in accordance with sound accounting practices 
the operations, resources and expenditures in respect of the Project of the 
Participating Provinces and the departments or agencies of the Recipient responsible 
for carrying out the Project or any part thereof.
(b) 
The Recipient shall: 
(i)
have the records and accounts referred to in paragraph (a) of this 
Section, including those for the Special Account, for each fiscal 
year audited, in accordance with appropriate auditing principles 
consistently applied, by independent auditors acceptable to the 
Bank; 
(ii)
furnish or cause to be furnished to the Bank as soon as available, 
but in any case not later than six months after the end of each 
such year, the report of such audit by said auditors, of such 
scope and in such detail as the Bank shall have reasonably 
requested; and 
(iii)
furnish or cause to be furnished to the Bank such other 
information concerning said records and accounts and the audit 
thereof as the Bank shall from time to time reasonably request.
(c)
For all expenditures with respect to which withdrawals from the GEF Trust 
Fund Grant Account were made on the basis of statements of expenditure, the Recipient 
shall: 
(i)
maintain or cause to be maintained, in accordance with paragraph 
(a) of this Section, records and accounts reflecting such 
expenditures; 
(ii)
retain or cause to be retained, until at least one year after the 
Bank has received the audit report for the fiscal year in which 
the last withdrawal from the GEF Trust Fund Grant Account was 
made, all records (contracts, orders, invoices, bills, receipts 
and other documents) evidencing such expenditures; 
(iii)
enable the Bank’s representatives to examine such records; and 
(iv)
ensure that such records and accounts are included in the annual 
audit referred to in paragraph (b) of this Section and that the 
report of such audit contains a separate opinion by said auditors 
as to whether the statements of expenditure submitted during such 
fiscal year, together with the procedures and internal controls 
involved in their preparation, can be relied upon to support the 
related withdrawals.
ARTICLE V 
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (p) of the General Conditions, the 
following additional events are specified:
(a)
any Participating Province shall have failed to perform any of its 
obligations under its Participation Agreement.
(b)
as a result of events which have occurred after the date of the GEF Grant 
Agreement, an extraordinary situation shall have arisen which shall make it improbable 
that any Participating Province will be able to perform its obligations under its 
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Participation Agreement.
(c)
Law No. 15,336/60 (Ley Nacional de la Energía Eléctrica; National 
Electric Power Law) and/or regulations thereunder of the Recipient shall have been 
amended, suspended, abrogated, repealed or waived so as to in the opinion of the Bank 
affect materially and adversely the ability of the Recipient or of any Participating 
Province to perform any of its obligations in respect of the Project.
(d)
(i) 
Subject to paragraph (ii) of this paragraph: 
(A)
the right of the Recipient to withdraw the proceeds of the  
Loan  made to the Recipient for the financing of the Project 
shall have been suspended, canceled or terminated in whole 
or in part, pursuant to the terms of the Loan Agreement 
providing therefor; or 
(B)
such Loan shall have become due and payable prior to the 
agreed maturity thereof.
(ii)
Subparagraph (i) of this paragraph shall not apply if the 
Recipient establishes to the satisfaction of the Bank that: (A)
such suspension, cancellation, termination or prematuring is not 
caused by the failure of the Recipient to perform any of its 
obligations under such agreement; and  (B) adequate funds for the 
Project are available to the Recipient from other sources on terms 
and conditions consistent with the obligations of the Recipient 
under this GEF Grant Agreement;
(e)
the Recipient shall have failed to perform any of its obligations under 
the Loan Agreement; and
(f)
as a result of events which have occurred after the date of the GEF Grant 
Agreement, an extraordinary situation shall have arisen which shall make it improbable 
that the Recipient will be able to perform its obligations under the Loan Agreement. 
ARTICLE VI 
Effective Date; Termination 
Section 6.01. The following event is specified as an additional condition to the 
effectiveness of the GEF Trust Fund Grant within the meaning of Section 12.01 (c) of 
the General Conditions, namely that the Loan Agreement has been executed and delivered 
and all conditions precedent to its effectiveness thereunder, except only the 
effectiveness of this GEF Grant Agreement, have been fulfilled.
Section 6.02. The date January 26, 2000 is hereby specified for the purposes of 
Section 12.04 of the General Conditions. 
Section 6.03. This GEF Grant Agreement shall continue in effect until the GEF 
Trust Fund Grant has been fully disbursed and the parties to this GEF Grant Agreement 
have fulfilled their obligations hereunder. 
ARTICLE VII 
Representative of the Recipient; Addresses 
Section 7.01. The Minister of Economy and Public Works and Services of the 
Recipient is designated as representative of the Receipt for the purposes of Section 
11.03 of the General Conditions.
Section 7.02. The following addresses are specified for the purposes of Section 
11.01 of the General Conditions:
For the Receipt:
Ministerio de Economía y Obras y Servicios Públicos
Hipólito Yrigoyen 250
1086 Buenos Aires
Argentina
Cable address: 
Telex:
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MINISTERIO ECONOMIA
121942-AR
                                          Baires
For the Bank:
International Bank for
  Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
INTBAFRAD
248423 (MCI) or
Washington, D.C.
 64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this GEF Grant Agreement to be signed in their respective 
names in Buenos Aires, Argentina, as of the day and year first above written.
ARGENTINE REPUBLIC
By /s/ Roque Benjamín Fernández 
Authorized Representative
INTERNATIONAL BANK FOR
   RECONSTRUCTION AND DEVELOPMENT
as an implementing agency of the Global Environment Facility
By /s/ Myrna Alexander
Acting Regional Vice President 
Latin America and the Caribbean
SCHEDULE 1
Withdrawal of the Proceeds of the GEF Trust Fund Grant
1.
The table below sets forth the Categories of items to be financed out of the 
proceeds of the GEF Trust Fund Grant, the allocation of the amounts of the GEF Trust 
Fund Grant to each Category and the percentage of expenditures for items so to be 
financed in each Category:
       Amount of the GEF
Trust Fund Grant
          % of
Allocated (Expressed 
Expenditures
Category
in SDR)
to be Financed
(1)
Amounts, under Parts A.1 and 
100% of the amounts 
A.4 of the Project, paid by a
so paid and reimbursed
Participating Province to:
(a) an Existing Concessionaire 2,360,000
as provided in paragraphs
(e) (2) through (13) of
Schedule 5 to this GEF
Grant Agreement and
reimbursed to the Participating
Province by the Recipient as
provided in paragraph (a) of
Schedule 5 to this GEF Grant
Agreement
(b) a New Concessionaire as
1,570,000
       provided in paragraphs
       (e) (2) through (13) of
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       Schedule 5 to this GEF
Grant Agreement and
       reimbursed to the Participating
       Province by the Recipient as
       Provided in paragraph (a) of
       Schedule 5 to this GEF Grant
       Agreement
(2)
Turn-key installation of
  300,000
70%
Wind Home Units under
Part B of the Project
(3)
Consultants’ services:
(a) under Part C.1 of 
  210,000
75%
the Project
(b) under Parts C.2-.7
1,360,000
66%
of the Project
(c) under Parts D.1 and
  860,000
34%
D.2 of the Project
(4)
Training under Part C.13
  290,000 
40%
the Project
(5)
Unallocated
  250,000
TOTAL
7,200,000
2.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be 
made in respect of:  
(a)
payments made for expenditures prior to the date of this GEF Grant 
Agreement, except that withdrawals, in an aggregate amount not exceeding the 
equivalent of SDR 720,000, may be made in respect of Categories (1) through (4) on 
account of payments made of expenditures before that date but after May 31, 1998; and  
(b)
payments made for expenditures under Category (3) (a) set forth in the 
table in paragraph 1 of this GEF Grant Agreement to finance the market structure study 
referred to in Part C.1 of the Project for the benefit of a province of the Recipient, 
unless the conditions set forth in paragraph (2) (b) of Schedule 1 to the Loan 
Agreement have been fulfilled; and
(c)
payments made for expenditures under Category (1) set forth in the table 
in paragraph 1 of this GEF Grant Agreement to finance the installation of the systems 
referred to in  Parts A.1 and A.4 of the Project, as the case may be, within the 
jurisdiction of a Recipient province unless the conditions set forth in paragraph (2) 
(c) (i) through (iv) of Schedule 1 to the Loan Agreement have been fulfilled. 
3.
The Bank may require withdrawals from the GEF Trust Fund Grant Account to be 
made on the basis of statements of expenditure for expenditures for items not covered 
by the terms of Section I, Part D.2 and Section II, Part D.2 of Schedule 3 to this GEF 
Grant Agreement, under such terms and conditions as the Bank shall specify by notice 
to the Recipient. 
4.
If the Bank shall have determined at any time that any payment made from the GEF 
Trust Fund Grant Account was used for any expenditure not consistent with the 
provisions of this GEF Grant Agreement, the Recipient shall, promptly upon notice from 
the Bank, refund to the Bank for deposit into the GEF Trust Fund Grant Account, an 
amount equal to the amount so used or the portion thereof as specified by the Bank.
SCHEDULE 2 
Description of the Project
The objectives of the Project are to: (a) provide the rural areas of the 
Participating Provinces with reliable electric supply in a sustainable manner through 
the use of renewable energy; (b) advance the reform of the Recipient’s energy sector 
in particular critical areas; (c) support the Recipient’s strategy to expand the 
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participation of the private sector in the provision of electricity in the rural areas 
of the Participating Provinces, as well as strengthen the capacity of Participating 
Provinces to regulate such participation; and (d) support the creation of sustainable 
business operations for rural energy in Argentina.
The Project consists of the following parts, subject to such modifications 
thereof as the Recipient and the Bank may agree upon from time to time to achieve such 
objectives:
Part A:
Electricity Generating Equipment for Rural Markets 
1.
Financing the installation by Existing Concessionaires of about 39,500 Solar 
Home Systems in individual households in rural areas of Participating Provinces. 
2.
Financing the installation by Existing Concessionaires of about 400 Solar Home 
Systems in public provincial institutions (such as public schools, medical centers and 
police stations) in rural areas of Participating Provinces.
3.
Financing the installation by Existing Concessionaires of: (a) decentralized 
electricity supply systems (which may consist of mini-hydro (run of the stream) 
plants, wind turbines, diesel plants or hybrid plants operated by diesel/wind or 
diesel/solar or solar/wind means and shall constitute the least-cost solution for 
providing electricity under the circumstances) to provide collective grid electricity 
service to about 2,200 households living in small communities in Participating 
Provinces; or (b) other non-greenhouse gas emitting and non-solar electricity supply 
systems (which shall constitute the least-cost solution for providing electricity 
under the circumstances) to provide non-grid electricity service to individual users 
in rural areas of Participating Provinces. 
4.
Financing the installation by New Concessionaires of about 26,000 Solar Home 
Systems in individual households in rural areas of Participating Provinces. 
5.
Financing the installation by New Concessionaires of about 700 Solar Home 
Systems in public provincial institutions (such as public schools, medical centers and 
police stations) in rural areas of Participating Provinces.
6.
Financing the installation by New Concessionaires of: (a) decentralized 
electricity supply systems (which may consist of mini-hydro (run of the stream) 
plants, wind turbines, diesel plants or hybrid plants operated by diesel/wind or 
diesel/solar or solar/wind means and shall constitute the least-cost solution for 
providing electricity under the circumstances) to provide collective grid electricity 
service to about 1,350 households living in small communities  in Participating 
Provinces; or (b) other non-greenhouse gas emitting and non-solar electricity supply 
systems (which shall constitute the least-cost solution for providing electricity 
under the circumstances) to provide non-grid electricity service to individual users 
in rural areas of Participating Provinces.
Part B:
Wind Home Systems 
Carrying out a pilot demonstration program which consists of the turn-key 
installation of Wind Home Units (equivalent to 50 Watt-peak capacity) in two rural 
communities (one in a province selected by the Recipient and the other in a different 
province selected by the Recipient) of no more than 100 households each.
Part C:
Capacity Building
1.
Carrying out a market structure study in each Participating Province for 
purposes of: (a) determining the scope of the rural electricity market; (b) 
determining the willingness of the rural population to pay for electric services; (c) 
establishing electric tariff levels and structure for said market; (d) evaluating the 
economic and financial viability of servicing said market; and (e) assessing the risks 
in servicing said market. 
2.
Creating performance standards and certification procedures for purposes of 
ensuring an efficient, reliable and rational development of solar photovoltaic home 
systems in Argentina. 
3.
Carrying out a promotion and public education campaign in the Recipient’s 
territory with respect to the contents of the Project. 
4.
Carrying out feasibility studies concerning the installation of centralized 
renewable energy systems for rural areas of Participating Provinces. 
Page  11
5.
Carrying out a study to assess the current availability of  direct current 
appliances and their compatibility with renewable energy systems.
6.
Creating a database to improve solar resource information available in Argentina 
and another database to improve wind resource information available in Argentina, as 
well as providing training and acquiring and utilizing equipment required therefor. 
7.
Designing and carrying out workshops for rural market concessionaires to better 
serve their clientele. 
8.
Carrying out a study on means to increase competition in power transmission and 
distribution in Argentina. 
9.
Preparing a catalog of Argentine hydroelectric power projects having potential 
for private sector participation. 
10.
Carrying out a review of the Recipient’s existing policy on the efficient use of 
energy. 
11.
Carrying out a study on Argentine energy export options. 
12.
Establishing a national policy and strategy for the use of renewable energy in 
urban and rural areas in Argentina. 
13.
Carrying out a training program to strengthen the capacity of the staff of the 
provincial regulatory agencies of the Participating Provinces with respect to 
technical, economic, financial and institutional aspects related to Solar Home Systems 
and other types of renewable energy systems.
Part D:
Project Administration 
1.
Providing technical assistance, office equipment and supplies to the PCU to 
assist SE in the monitoring, administration and supervision of the Project. 
2.
Hiring a Project coordinator for each PIU. 
* * *
The Project is expected to be completed by March 31, 2005.
SCHEDULE 3 
Procurement 
Section I.
Procurement of Goods and Installation Thereof
Part A:
General 
Goods and installation thereof shall be procured in accordance with the 
provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA 
Credits" published by the Bank in January 1995 and revised in January and August 1996, 
September 1997 and January 1999 (the Guidelines) and the following provisions of 
Section I of this Schedule.
Part B:
International Competitive Bidding 
1.
Except as otherwise provided in Part C of this Section, goods shall be procured 
under contracts awarded in accordance with the provisions of Section II of the 
Guidelines and paragraph 5 of Appendix 1 thereto. 
2.
The following provisions shall apply to goods to be procured under contracts 
awarded in accordance with the provisions of paragraph 1 of this Part B. 
(a)
Grouping of Contracts 
To the extent practicable, contracts for goods shall be grouped in bid packages 
estimated to cost $500,000 equivalent or more each. 
(b)
Preference for Domestically Manufactured Goods 
The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 
Page  12
thereto shall apply to goods manufactured in the territory of the Recipient.
Part C:
Other Procurement Procedures 
1.
National Competitive Bidding 
Goods estimated to cost less than $500,000 equivalent per contract, up to an 
aggregate amount not to exceed $10,300,000 equivalent, may be procured under contracts 
awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. 
2.
National Shopping 
Goods estimated to cost less than $200,000 equivalent per contract, up to an 
aggregate amount not to exceed $2,100,000 equivalent, may be procured under contracts 
awarded on the basis of national shopping procedures in accordance with the provisions 
of paragraphs 3.5 and 3.6 of the Guidelines. 
3.
Selection of Turn-Key Contractors and New Concessionaires 
Each Concession Agreement II, as well as each contract for turn-key installation 
under Part B of the Project, shall be awarded on the basis of international 
competitive bidding procedures in accordance with the provisions of Section II of the 
Guidelines, subject to the provisions of paragraph 3.13 (a) thereof.  The 
installation, goods and services required for carrying out its portion of the Project 
shall then be procured in accordance with the applicable procedures of said Concession 
Agreement II concessionaires or turn-key contractors, as the case may be.
Part D:
Review by the Bank of Procurement Decisions 
1.
Procurement Planning 
Prior to the issuance of any invitations to bid for contracts, the proposed 
procurement plan for the Project shall be furnished to the Bank for its review and 
approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the 
Guidelines.  Procurement of all goods and works shall be undertaken in accordance with 
such procurement plan as shall have been approved by the Bank, and with the provisions 
of said paragraph 1.
2.
Prior Review 
With respect to: (a)
each contract for goods estimated to cost the 
equivalent of $500,000 or more; and (b)
the award of Concession Agreements II and 
turn-key contracts under Part C.3 of this Section, the procedures set forth in 
paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. 
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the 
procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. 
Section II.
Employment of Consultants
Part A:
General
Consultants’ services shall be procured in accordance with the provisions of the 
Introduction and Section IV of the "Guidelines:  Selection and Employment of 
Consultants by World Bank Borrowers" published by the Bank in January 1997 and revised 
in September 1997 and January 1999 (the Consultant Guidelines) and the following 
provisions of Section II of this Schedule.
Part B:
Quality- and Cost-based Selection
Except as otherwise provided in Part C of this Section, consultants’ services 
shall be procured under contracts awarded in accordance with the provisions of Section 
II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 
thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to 
quality- and cost-based selection of consultants.
Part C:
Other Procedures for the Selection of Consultants 
1.
Quality-based Selection
Page  13
Services under Part C.5 of the Project shall be procured under contracts awarded 
in accordance with the provisions of paragraphs 3.1 through 3.4 of the Consultant 
Guidelines. 
2.
Selection Based on Consultants’ Qualifications
Services under Parts C.3, C.7, C.13, D.1 and D.2 of the Project estimated to 
cost less than $100,000 equivalent per contract may be procured under contracts 
awarded in accordance with the provisions of paragraphs 3.1 and 3.7 of the Consultant 
Guidelines. 
3.
Individual Consultants
Services under Parts C.3, C.7, C.13, D.1 and D.2 of the Project may be procured 
under contracts awarded to individual consultants in accordance with the provisions of 
paragraphs 5.1 through 5.3 of the Consultant Guidelines.
Part D:
Review by the Bank of the Selection of Consultants 
1.
Selection Planning 
Prior to the issuance to consultants of any requests for proposals, the proposed 
plan for the selection of consultants under the Project shall be furnished to the Bank 
for its review and approval, in accordance with the provisions of paragraph 1 of 
Appendix 1 to the Consultant Guidelines.  Selection of all consultants’ services shall 
be undertaken in accordance with such selection plan as shall have been approved by 
the Bank, and with the provisions of said paragraph 1. 
2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms 
estimated to cost the equivalent of $100,000 or more, the procedures set forth in 
paragraphs 1, 2 and (other than the third subparagraph of paragraph 2 (a)) and 5 of 
Appendix 1 to the Consultant Guidelines shall apply.
(b)
With respect to each contract for the employment of individual 
consultants estimated to cost the equivalent of $50,000 or more, the qualifications, 
experience, terms of reference and terms of employment of the consultants shall be 
furnished to the Bank for its prior review and approval.  The contract shall be 
awarded only after the said approval shall have been given.
(c)
Notwithstanding the provisions of Parts D.1 and D.2 (a) and (b) of this 
Section, prior review and approval by the Bank of terms of reference shall be required 
to award any contract for consultant services. 3.
Post Review With respect to each 
contract not governed by paragraph 2 of this Part, the procedures set forth in 
paragraph 4 of Appendix 1 to the Consultant Guidelines shall apply.
SCHEDULE 4 
Special Account
1.
For the purposes of this Schedule: 
(a)
the term "eligible Categories" means Categories (1) through (4) set forth 
in the table in paragraph 1 of Schedule 1 to this GEF Grant Agreement; 
(b)
the term "eligible expenditures" means expenditures in respect of the 
reasonable cost of installation, goods and services required for the Project and to be 
financed out of the proceeds of the GEF Trust Fund Grant allocated from time to time 
to the eligible Categories in accordance with the provisions of Schedule 1 to this GEF 
Grant Agreement; and 
(c)
the term "Authorized Allocation" means an amount equivalent to $1,000,000 
to be withdrawn from the GEF Trust Fund Grant Account and deposited into the Special 
Account pursuant to paragraph 3 (a) of this Schedule. 
2.
Payments out of the Special Account shall be made exclusively for eligible 
expenditures in accordance with the provisions of this Schedule.
3.
After the Bank has received evidence satisfactory to it that the Special Account 
has been duly opened, withdrawals of the Authorized Allocation and subsequent 
Page  14
withdrawals to replenish the Special Account shall be made as follows: 
(a)
For withdrawals of the Authorized Allocation, the Recipient shall furnish 
to the Bank a request or requests for deposit into the Special Account of an amount or 
amounts which do not exceed the aggregate amount of the Authorized Allocation.  On the 
basis of such request or requests, the Bank shall, on behalf of the Recipient, 
withdraw from the GEF Trust Fund Grant Account and deposit into the Special Account 
such amount or amounts as the Recipient shall have requested. 
(b)
(i)
For replenishment of the Special Account, the Recipient shall 
furnish to the Bank requests for deposits into the Special Account 
at such intervals as the Bank shall specify.
(ii)
Prior to or at the time of each such request, the Recipient shall 
furnish to the Bank the documents and other evidence required 
pursuant to paragraph 4 of this Schedule for the payment or 
payments in respect of which replenishment is requested.  On the 
basis of each such request, the Bank shall, on behalf of the 
Recipient, withdraw from the GEF Trust Fund Grant Account and 
deposit into the Special Account such amount as the Recipient 
shall have requested and as shall have been shown by said 
documents and other evidence to have been paid out of the Special 
Account for eligible expenditures.  All such deposits shall be 
withdrawn by the Bank from the GEF Trust Fund Grant Account under 
the respective eligible Categories, and in the respective 
equivalent amounts, as shall have been justified by said documents 
and other evidence. 
4.
For each payment made by the Recipient out of the Special Account, the Recipient 
shall, at such time as the Bank shall reasonably request, furnish to the Bank such 
documents and other evidence showing that such payment was made exclusively for 
eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall 
not be required to make further deposits into the Special Account: 
(a)
if, at any time, the Bank shall have determined that all further 
withdrawals should be made by the Recipient directly from the GEF Trust Fund Grant 
Account in accordance with the provisions of Article V of the General Conditions and 
paragraph (a) of Section 2.02 of this GEF Grant Agreement; 
(b)
if the Recipient shall have failed to furnish to the Bank, within the 
period of time specified in Section 4.01 (b) (ii) of this GEF Grant Agreement, any of 
the audit reports required to be furnished to the Bank pursuant to said Section in 
respect of the audit of the records and accounts for the Special Account; 
(c)
if, at any time, the Bank shall have notified the Recipient of its 
intention to suspend in whole or in part the right of the Recipient to make 
withdrawals from the GEF Trust Fund Grant Account pursuant to the provisions of 
Section 6.02 of the General Conditions; or
(d)
once the total unwithdrawn amount of the GEF Trust Fund Grant allocated 
to the eligible Categories, minus the total amount of all outstanding special 
commitments entered into by the Bank pursuant to Section 5.02 of the General 
Conditions, shall equal the equivalent of twice the amount of the Authorized 
Allocation. Thereafter, withdrawal from the GEF Trust Fund Grant Account of the 
remaining unwithdrawn amount of the GEF Trust Fund Grant allocated to the eligible 
Categories shall follow such procedures as the Bank shall specify by notice to the 
Recipient.  Such further withdrawals shall be made only after and to the extent that 
the Bank shall have been satisfied that all such amounts remaining on deposit in the 
Special Account as of the date of such notice will be utilized in making payments for 
eligible expenditures.
6.
(a)
If the Bank shall have determined at any time that any payment out of the 
Special Account:  (i) was made for an expenditure or in an amount not eligible 
pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence 
furnished to the Bank, the Recipient shall, promptly upon notice from the Bank: 
(A) provide such additional evidence as the Bank may request; or (B) deposit into the 
Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal 
to the amount of such payment or the portion thereof not so eligible or justified.  
Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special 
Account shall be made until the Recipient has provided such evidence or made such 
Page  15
deposit or refund, as the case may be. 
(b)
If the Bank shall have determined at any time that any amount outstanding 
in the Special Account will not be required to cover further payments for eligible 
expenditures, the Recipient shall, promptly upon notice from the Bank, refund to the 
Bank such outstanding amount.
(c)
The Recipient may, upon notice to the Bank, refund to the Bank all or any 
portion of the funds on deposit in the Special Account. 
(d)
Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of 
this Schedule shall be credited to the GEF Trust Fund Grant Account for subsequent 
withdrawal or for cancellation in accordance with the relevant provisions of this GEF 
Grant Agreement, including the General Conditions.
SCHEDULE 5 
Terms and Conditions of Participation Agreements
Each Participation Agreement shall provide, inter alia, that:
(a)
the Recipient shall on a grant basis transfer funds (chargeable to the 
Loan and GEF Trust Fund Grant), to the Participating Province, to reimburse the 
Participating Province for the amounts, set forth in paragraph (e) (1) through (e) 
(14) of this Schedule, paid by the Participating Province to the Concessionaire;
(b)
for amounts owed by the Participating Province to the Concessionaire for 
purposes of Part A of the Project (other than those amounts obtained by the 
Participating Province from the Recipient pursuant to paragraph (a) of this Schedule), 
the Participating Province shall draw on its allotment of funds from the Fondo 
Especial de Desarrollo Eléctrico del Interior administered by CFE;
(c)
the Participating Province shall carry out Part A of the Project (as 
provided in paragraph (d) below) with due diligence and efficiency and in conformity 
with appropriate technical, administrative, financial and environmental practices, and 
shall provide, promptly as needed, the funds, facilities, services and other resources 
required for implementing such Part A of the Project;
(d)
in the event that: (A) the Existing Concessionaire has agreed to 
participate in the installation of the systems referred to in Parts A.1 through A.3 of 
the Project, the Participating Province shall, under terms and conditions satisfactory 
to the Bank, enter into an agreement amending the Existing Concessionaire’s concession 
agreement with the Participating Province, thus transforming said agreement into a new 
document (the Concession Agreement I); and (B) there is no Existing Concessionaire or 
the Existing Concessionaire has not agreed to participate in the installation of the 
systems referred to in Parts A.1 through A.3 of the Project, then the Participating 
Province shall: (1) select a New Concessionaire for purposes of carrying out the 
installation of the systems referred to in Parts A.4 through A.6 of the Project in 
accordance with the procurement procedures set forth in Part C.3 of Section I of 
Schedule 3 to this GEF Grant Agreement; and (2) immediately thereafter enter into a 
concession agreement (the Concession Agreement II) with the New Concessionaire, under 
terms and conditions satisfactory to the Bank;
(e)
the Participating Province shall reimburse to the Concessionaire in 
Argentine currency a portion of the installation cost of the corresponding SHS or 
other electricity supply systems under Part A of the Project, which portion shall 
include amounts equivalent to the following: 
(1)
$3.10 per Watt-peak capacity of any size of SHS installed; 
(2)
$125 for each SHS’s unit of 50 Watt-peak capacity installed by the 
Concessionaire during the first two years of the effectiveness of the Concession 
Agreement; 
(3)
$120 for each SHS’s unit of 50 Watt-peak capacity installed by the 
Concessionaire during the third year of the effectiveness of the Concession Agreement; 
(4)
$105 for each SHS’s unit of 50 Watt-peak capacity installed by the 
Concessionaire during the fourth year of the effectiveness of the Concession 
Agreement; 
Page  16
(5)
$70 for each SHS’s unit of 50 Watt-peak capacity installed by the Concessionaire 
during the fifth year of the effectiveness of the Concession Agreement; 
(6)
$105 for each SHS’s unit of 70 Watt-peak capacity installed by the 
Concessionaire during the first two years of the effectiveness of the Concession 
Agreement; 
(7)
$100 for each SHS’s unit of 70 Watt-peak capacity installed by the 
Concessionaire during the third year of the effectiveness of the Concession Agreement; 
(8)
$90 for each SHS’s unit of 70 Watt-peak capacity installed by the Concessionaire 
during the fourth year of the effectiveness of the Concession Agreement; 
(9)
$60 for each SHS’s unit of 70 Watt-peak capacity installed by the Concessionaire 
during the fifth year of the effectiveness of the Concession Agreement; 
(10)
$85 for each SHS’s unit of 100 Watt-peak capacity installed by the 
Concessionaire during the first two years of the effectiveness of the Concession 
Agreement; 
(11)
$80 for each SHS’s unit of 100 Watt-peak capacity installed by the 
Concessionaire during the third year of the effectiveness of the Concession Agreement; 
(12)
$70 for each SHS’s unit of 100 Watt-peak capacity installed by the 
Concessionaire during the fourth year of the effectiveness of the Concession 
Agreement; 
(13)
$45 for each SHS’s unit of 100 Watt-peak capacity installed by the 
Concessionaire during the fifth year of the effectiveness of the Concession Agreement; 
and
(14)
25% of the costs of goods and installation thereof for electricity supply 
systems under Parts A.3 and A.6 of the Project;
(f)
(i) the Participating Province shall operate and maintain throughout the 
course of Project implementation the PIU with staff, functions and responsibilities 
satisfactory to the Bank, including, inter alia, the responsibility to assist the 
Participating Province in the monitoring, administration and supervision of the 
corresponding activities under Part A of the Project; and (ii) the Recipient shall 
assist the Participating Province with respect to the obligations set forth in 
paragraph (f) (i) of this Schedule by hiring and paying, pursuant to Part D.2 of the 
Project, a qualified PIU Project coordinator proposed by the Participating Province;
(g)
the Participating Province shall: (1) furnish to the Recipient the 
necessary information concerning the progress made by the Concessionaire, in carrying 
out the installation of the corresponding systems under Part A of the Project, so as 
to permit timely compliance with the terms of Section 3.05 (b) of this GEF Grant 
Agreement; and (2) participate in the mid-term review referred to in Section 3.05 (c) 
of this GEF Grant Agreement; 
(h)
the Participating Province shall maintain records and separate accounts 
in respect of its activities under Part A of the Project, and allow or carry audits 
thereof, so as to permit timely compliance with the terms of Section 4.01 of this GEF 
Grant Agreement; 
(i)
the Participating Province shall maintain throughout the course of 
Project implementation the regulatory framework and entity referred to in Section 3.01 
(c) of this GEF Grant Agreement; 
(j)
except the Bank shall otherwise agree, the Participating Province shall 
not take or concur in any action which would have the effect of assigning, amending, 
abrogating, terminating, waiving or failing to enforce the Participation Agreement or 
the Concession Agreement I or the Concession Agreement II or any provision thereof;
(k)
the Participating Province shall, throughout the course of Project 
implementation, provide full assistance to the Recipient to allow the Recipient to 
carry out Part C.3 of the Project in the Participating Province; 
(l)
the Participating Province shall ensure that its Concession Agreement 
requires the Concessionaire to install, operate and maintain equipment under the 
Page  17
Project in accordance with environmental standards and procedures that comply with 
local law, ensure proper recycling or disposal of batteries and solar cells, ensure 
proper storage, handling and disposal of fuels and ensure that mini-hydro (run of the 
stream) plants are set outside of protected areas, are set away from fish spawning 
areas and areas of particular ecological or scenic values, do not harm riverine 
vegetation and are regulated so as to restrict access by hunters and fishermen to 
sensitive areas; and 
(m)
the Participating Province shall ensure that the Existing Concessionaire 
(if any) procures goods and services for the Project, to be financed out of the 
proceeds of the Loan or GEF Trust Fund Grant, according to the applicable provisions 
of Schedule 4 to the Loan Agreement or Schedule 3 to this GEF Grant Agreement.