LOAN NUMBER 9362-DO Loan Agreement (Electricity Reform for Sustainable Growth Development Policy Loan) between DOMINICAN REPUBLIC and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT LOAN AGREEMENT AGREEMENT dated as of the Signature Date between DOMINICAN REPUBLIC ("Borrower") and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("Bank") for the purpose of providing financing in support of the Program (as defined in the Appendix to this Agreement). Whereas (A) the Bank has decided to provide this financing on the basis, inter alia, of: (i) the actions which the Borrower has already taken or supported under the Program and which are described in Section I.A of Schedule I to this Agreement; and (ii) the Borrower's maintenance of an adequate macroeconomic policy framework; (B) the financing mentioned herein will be available to the Borrower in accordance with the terms of this Agreement to finance any budgeted expenditures (other than Excluded Expenditures). The Borrower and the Bank therefore hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II- LOAN 2.01. The Bank agrees to lend to the Borrower the amount of four hundred million Dollars, ($400,000,000), as such amount may be converted from time to time through a Currency Conversion ("Loan"). 2.02. The Front-end Fee is one quarter of one percent (0.25%) of the Loan amount. 2.03 The Commitment Charge is one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance. 2.04. The interest rate is the Reference Rate plus the Variable Spread or such rate as may apply following a Conversion; subject to Section 3.02(e) of the General Conditions. 2.05. The Payment Dates are April 15 and October15 in each year. -2- 2.06. The principal amount of the Loan shall be repaid in accordance with Schedule 2 to this Agreement. 2.07. Without limitation upon the provisions of Section 5.05 of the General Conditions, the Borrower shall promptly furnish to the Bank such information relating to the provisions of this Article II as the Bank may, from time to time, reasonably request. ARTICLE III - PROGRAM 3.01. The Borrower declares its commitment to the Program and its implementation. To this end, and further to Section 5.05 of the General Conditions: (a) the Borrower and the Bank shall from time to time, at the request of either party, exchange views on the Borrower's macroeconomic policy framework and the progress achieved in carrying out the Program; (b) prior to each such exchange of views, the Borrower shall furnish to the Bank for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Bank shall reasonably request; and (c) without limitation upon paragraph (a) and (b) of this Section, the Borrower shall promptly inform the Bank of any situation that would have the effect of materially reversing the objectives of the Program or any action taken under the Program including any action specified in Section I of Schedule I to this Agreement. ARTICLE IV - REMEDIES OF THE BANK 4.01. The Additional Event of Suspension consists of the following, namely, that situation has arisen which shall make it improbable that the Program, or a significant part of it, will be carried out. 4.02. The Additional Event of Acceleration consists of the following, namely that the event specified in Section 4.01 of this Agreement occurs and is continuing for a period of thirty (30) days after notice of the event has been given by the Bank to the Borrower. ARTICLE V - EFFECTIVENESS; TERMINATION 5.01. The Additional Condition of Effectiveness consists of the following, namely, that the Bank is satisfied with the progress achieved by the Borrower in carrying out the Program and with the adequacy of the Borrower's macroeconomic policy framework. -3- 5.02. The Effectiveness Deadline is the date one hundred and eighty (180) days after the Signature Date (unless the Bank, after consideration of the reasons for the delay, establishes a later Effectiveness Deadline for the purpose of Section 9.04 of the General Conditions). ARTICLE VI- REPRESENTATIVE; ADDRESSES 6.01. The Borrower's Representative is its Minister of Finance. 6.02. For purposes of Section 10.01 of the General Conditions: (a) the Borrower's address is: Ministry of Finance (Ministerio de Hacienda) Av. M6xico 45, Gazcue Santo Domingo de GuzmAn, Distrito Nacional Dominican Republic; and (b) the Borrower's Electronic Address is: Facsimile: 809-688-8838 6.03. For purposes of Section 10.01 of the General Conditions: (a) the Bank's address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Bank's Electronic Address is: Telex: Facsimile: E-mail: 248423(MCI) or 1-202-477-6391 mkerfi@)worldbank.org 64145(MCI) -4- AGREED as of the Signature Date. DOMINICAN REPUB IC By A toi Representative Name: 4I JcA Title: Wini4eC 4 1 --Rce- Date: a0 - nTa Q.O;), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Authorized Representative Michel Kerf Name: Title: Country Director Date: 14-may.-2022 -5- SCHEDULE 1 Program Actions; Availability of Loan Proceeds Section I. Actions under the Program A. Actions Taken Under the Program. The actions taken by the Borrower under the Program include the following: 1 . The Borrower has identified the responsible institutions in the energy sector and mandated them to execute specific electricity sector reforms within a specified period of time, as evidenced by Presidential Decree No. 655-21, dated October 15, 2021, and published in the Official Gazette on October 22, 2021. 2. The DGAPP has taken steps to improve the governance and performance of electricity distribution companies and the reduction of distribution losses by initiating the process to transfer the management and operation of the EDEs to private operators through the public decision to receive a proposal for such transfers, as evidenced by the DGAPP Resolution No. 89/2021, dated November 29, 2021, and published on DGAPP's website. 3. The Borrower has taken measures to improve the social sustainability of the electricity sector by: (a) reforming the social protection system for vulnerable consumers through the integration of the BonoLuz subsidy program into the national social protection program SUPERATE; and (b) creating a gender unit to mainstream gender equality in the formulation, design, implementation and monitoring of policies in the energy and mining sectors, as evidenced, respectively, by: (i) Article 5(d)(ii) of Presidential Decree No. 377-21, dated June 14, 2021, and published in the Official Gazette on June 17, 2021; and (ii) the Ministry of Energy and Mines Resolution No. R-MEM-ADM-004-2021, dated May 18, 2021, and published in the Ministry of Energy and Mines' website. 4. The Borrower has taken measures to facilitate the reduction of the carbon intensity of the electricity sector in support of its NDC implementation by: (a) setting time- bound targets to increase the share of renewable energy and reduce C02 emissions in the power sector and mandate the adoption of the necessary policies and energy planning instruments needed to meet these targets; and (b) creating a national measuring, reporting, and verification system for GHG emissions covering, among others, the energy sector, as evidenced, respectively, by: (i) the Ministry of Energy and Mines Resolution R-MEM-REG-029-2021 dated November 19, 2021, and published in the Ministry of Energy and Mines' website; and (ii) Presidential Decree No. 541-20 dated October 9, 2020, and published in the Official Gazette on October 16, 2020. -6- 5. The Borrower has taken measures to increase the share of renewable energy in the electricity mix and meet its NDC commitments by removing legal barriers for distribution companies to contract renewable energy generation, as evidenced by Presidential Decree No. 608-21, dated September 27, 2021, and published in the Official Gazette on September 30, 2021. 6. The Borrower has taken measures to promote energy efficiency by submitting to the National Assembly an energy efficiency bill which: (a) establishes energy efficiency policies and norms; (b) promotes the development of a market for energy efficient goods and services; (c) incentivizes non-fossil fuels use; and (d) establishes fiscal incentives for the implementation of energy efficiency measures, as evidenced by the bill submitted on January 13, 2022 to the Senate as initiative No. 01286-2022-PLO-SE, resubmitting initiative No. 00811-2021-PLO-SE from June 23, 2021, and published in the Senate's website. 7. The SIE has taken measures to improve the financial self-sufficiency of the sector and reduce fossil fuel subsidies through: (a) the definition of an adjustment path for end-user tariffs to reach cost-recovery levels; and (b) the approval of the first end-user tariff increase, in accordance with the adjustment path, as evidenced, respectively, by: (i) Resolution No. SIE-075-2021-TF dated September 3, 2021, as amended by Resolution No. SIE-087-TF 2021 dated September 29, 2021; and (ii) Resolution No. SIE-093-2021-TF dated October 27, 2021, as amended by Resolution No. SIE-103-2021-TF dated November 30, 2021, all published in the SIE's website. Section II. Availability of Loan Proceeds A. General. The Borrower may withdraw the proceeds of the Loan in accordance with the provisions of this Section and such additional instructions as the Bank may specify by notice to the Borrower. B. Allocation of Loan Amounts. The Loan is allocated in: (a) a single withdrawal tranche, from which the Borrower may make withdrawals of the Loan proceeds; and (b) the amounts requested by the Borrower to pay: the Front-end Fee. The allocation of the amounts of the Loan to this end is set out in the table below: Allocations Amount of the Loan Allocated (expressed in USD) (1) Single 399,000,000 Withdrawal Tranche (2) Front-end Fee 1,000,0000 TOTAL AMOUNT 400,000,000 -7- C. Withdrawal Tranche Release Conditions. 1. No withdrawal shall be made of the Single Withdrawal Tranche unless the Bank is satisfied: (a) with the Program being carried out by the Borrower; and (b) with the adequacy of the Borrower's macroeconomic policy framework. D. Deposit of Loan Amounts. 1. The Borrower, within thirty (30) days after the withdrawal of the Loan from the Loan Account, shall report to the Bank: (a) the exact sum received into the account referred to in Section 2.03 (a) of the General Conditions; (b) the details of the account to which the Dominican Pesos equivalent of the Loan proceeds will be credited; and (c) the record that an equivalent amount has been accounted for in the Borrower's budget management systems. E. Audit. Upon the Bank's request, the Borrower shall: 1. have the account referred to in Section 2.03 (a) of the General Conditions audited by independent auditors acceptable to the Bank, in accordance with consistently applied auditing standards acceptable to the Bank; 2. furnish to the Bank as soon as available, but in any case not later than four (4) months after the date of the Bank's request for such audit, a certified copy of the report of such audit, of such scope and in such detail as the Bank shall reasonably request, and make such report publicly available in a timely fashion and in a manner acceptable to the Bank; and 3. furnish to the Bank such other information concerning the account referred to in Section 2.03 (a) of the General Conditions and their audit as the Bank shall reasonably request. F. Closing Date. The Closing Date is September 30, 2023 (or such other date as the Bank shall establish, upon a request from the Borrower, by notice to the Borrower). 21 -8- SCHEDULE 2 Commitment-Linked Amortization Repayment Schedule The following table sets forth the Principal Payment Dates of the Loan and the percentage of the total principal amount of the Loan payable on each Principal Payment Date ("Installment Share"). Level Principal Repayments Principal Payment Date Installment Share On each April 15 and October 15 Beginning April 15, 2027 through April 15, 2040 3.57% On October 15, 2040 3.61% -9- APPENDIX Section I. Definitions 1. "Board of the EDEs" means Consejo Unificado de las Empresas de Distribuidoras de Electricidad, the unified board of the EDEs. 2. "BonoLuz" means the Borrower's social transfer program to provide social protection to indigent, poor, and lower-middle class households registered in the Dominican Republic's Unified Beneficiary System (SIUBEN), created pursuant to Presidential Decree No. 421-09, dated May 30, 2009, and published in the Official Gazette on May 20, 2009. 3. "CO2" means carbon dioxide. 4. "DGAPP" means Direcci6n General de Alianzas Publico-Privadas, the Public- Private Partnerships Agency created pursuant to Article 5 of Law No. 47-20, dated February 20, 2020, and published in the Official Gazette on February 21, 2020. 5. "EDEs" means energy distribution companies. 6. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for IBRD Financing, Development Policy Financing", dated December 14, 2018 (revised on August 1, 2020, December 21, 2020, April 1, 2021, and January 1, 2022). 7. "GHG" means greenhouse gas. 8. "National Assembly" means the bicameral legislature of the Borrower, consisting of two houses, the Senate and the chamber of deputies. 9. "NDC" means nationally determined contribution. 10. "Official Gazette" means Gaceta Oficial, the Dominican Republic's official journal. 11. "Program" means: the program of objectives, policies, and actions set forth or referred to in the letter dated February 21, 2022 from the Borrower to the Bank declaring the Borrower's commitment to the execution of the Program, and requesting assistance from the Bank in support of the Program during its execution and comprising actions taken or supported by the Borrower, including those set forth in Section I of Schedule 1 to this Agreement, and actions to be taken consistent with the program's objectives. 12. "Senate" means the upper house of the Borrower's National Assembly. n - 10 - 13. "SIE" means Superintendencia de la Electricidad, Superintendence of Electricity, created pursuant to Article 8 of Law No. 125-01, dated July 26, 2001, and published in the Official Gazette on July 27, 2001. 14. "Signature Date" means the later of the two dates on which the Borrower and the Bank signed this Agreement and such definition applies to all references to "the date of the Loan Agreement" in the General Conditions. 15. "Single Withdrawal Tranche" means the amount of the Loan allocated to the category entitled "Single Withdrawal Tranche" in the table set forth in Part B of Section II of Schedule 1 to this Agreement. 16. "SUPERATE" means the Borrower's national social protection program to implement a strategy to comprehensively fight against poverty in the Dominican Republic, created pursuant to the Presidential Decree No. 377-21, dated June 14, 2021, and published in the Official Gazette on June 17, 2021.