Page 1 CONFORMED COPY LOAN NUMBER 7868-VN Loan Agreement (First Power Sector Reform Development Policy Operation) between SOCIALIST REPUBLIC OF VIETNAM and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated May 25, 2010 Page 2 LOAN AGREEMENT AGREEMENT dated May 25, 2010, entered into between SOCIALIST REPUBLIC OF VIETNAM (“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). The Bank has decided to provide this financing on the basis, inter alia, of: (a) the actions which the Borrower has already taken under the Program and which are described in Section I of Schedule 1 to this Agreement, and (b) the Borrower’s maintenance of an appropriate macroeconomic policy framework. 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) constitute an integral 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, on the terms and conditions set forth or referred to in this Agreement, the amount of two hundred million Dollars ($200,000,000), as such amount may be converted from time to time through a Currency Conversion in accordance with the provisions of Section 2.07 of this Agreement (“Loan”). 2.02. The Borrower may withdraw the proceeds of the Loan in support of the Program in accordance with Section II of Schedule 1 to this Agreement. 2.03. The Front-end Fee payable by the Borrower shall be equal to one quarter of one percent (0.25%) of the Loan amount. 2.04. The interest payable by the Borrower for each Interest Period shall be at a rate equal to LIBOR for the Loan Currency plus the Variable Spread; provided, that upon a Conversion of all or any portion of the principal amount of the Loan, the interest payable by the Borrower during the Conversion Period on such amount shall be determined in accordance with the relevant provisions of Article IV of the General Conditions. Notwithstanding the foregoing, if any amount of the Withdrawn Loan Balance remains unpaid when due and such non-payment continues for a period of thirty (30) days, then the interest payable by the Page 3 2 Borrower shall instead be calculated as provided in Section 3.02(d) of the General Conditions. 2.05. The Payment Dates are February 15 and August 15 in each year. 2.06. The principal amount of the Loan shall be repaid in accordance with the amortization schedule set forth in Schedule 2 to this Agreement. 2.07. (a) The Borrower may at any time request any of the following Conversions of the terms of the Loan in order to facilitate prudent debt management: (i) a change of the Loan Currency of all or any portion of the principal amount of the Loan, withdrawn or un-withdrawn, to an Approved Currency; (ii) a change of the interest rate basis applicable to all or any portion of the principal amount of the Loan withdrawn and outstanding from a Variable Rate to a Fixed Rate, or vice versa; and (iii) the setting of limits on the Variable Rate applicable to all or any portion of the principal amount of the Loan withdrawn and outstanding by the establishment of an Interest Rate Cap or Interest Rate Collar on the Variable Rate. (b) Any conversion requested pursuant to paragraph (a) of this Section that is accepted by the Bank shall be considered a “Conversion”, as defined in the General Conditions, and shall be effected in accordance with the provisions of Article IV of the General Conditions and of the Conversion Guidelines. 2.08. Without limitation upon the provisions of Section 5.08 of the General Conditions (renumbered as such pursuant to paragraph 4 of Section II of the Appendix to this Agreement and relating to Cooperation and Consultation ), 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 5.08 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 Page 4 3 (c) without limitation upon the provisions of paragraphs (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 1 to this Agreement. ARTICLE IV — REMEDIES OF THE BANK 4.01. The Additional Event of Suspension consist of the following, namely that a situation has arisen which shall make it improbable that the Program, or a significant part of it, will be carried out. ARTICLE V — EFFECTIVENESS; TERMINATION 5.01. The Additional Conditions of Effectiveness consist of the following: (a) 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. (b) The Financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Borrower to make withdrawals under it (other than the effectiveness of this Agreement) have been fulfilled. 5.02. The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement. ARTICLE VI — REPRESENTATIVE; ADDRESSES 6.01. The Borrower’s Representative is the Governor, or a Deputy Governor, of the State Bank of Vietnam. 6.02. The Borrower’s Address is: State Bank of Vietnam 49 Lý Thái T Hà N i Socialist Republic of Vietnam Cable: Telex: Facsimile: VIETBANK 412248 (84-4) 3825-0612 Page 5 4 Hanoi NHTWVT 6.03. The Bank’s Address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: Facsimile: INTBAFRAD 248423(MCI) or (1-202) 477-6391 Washington, D.C. 64145(MCI) AGREED at Hanoi, Socialist Republic of Vietnam, as of the day and year first above written. SOCIALIST REPUBLIC OF VIETNAM By: /s/ Nguyen Van Giau Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By: /s/ Victoria Kwakwa Page 6 5 Authorized Representative Page 7 6 SCHEDULE 1 Program Actions; Availability of Loan Proceeds Section I. Actions Under the Program Actions Taken Under the Program . The actions taken by the Borrower under the Program include the following: Power Market Development 1. The Borrower has, through the MOIT, issued a Decision (No. 6713-QD-BCT dated December 31, 2009) establishing design principles for the implementation of the VCGM. 2. The Borrower has, through the MOIT, issued a Circular (No. 27/2009/TT-BCT dated September 25, 2009) establishing metering systems standards and procedures for generation plants participating in the VCGM. Power Sector Restructuring 3. The Borrower has, through the OOG, issued a Notice (No. 232/TB-VPCP dated July 31, 2009) establishing a sector structure to allow for the introduction of the VCGM. Electricity Tariff Reform 4. The Borrower has, through the Prime Minister, issued a Decision (No. 21/2009/QD-TTg dated February 12, 2009): (a) increasing the average tariff in 2009 to Vietnamese Dong 948 / kWh; and (b) implementing transparent annual tariff-setting from 2010-12 based on cost recovery principles, including the unbundling of the average retail tariff into power supply cost components and the delegation of tariff changes of less than five percent (5%) to the MOIT. 5. The Borrower has, through the Prime Minister, issued a Decision (No. 21/2009/QD-TTg dated February 12, 2009) restructuring the residential block tariff system to establish the principle of the subsidy to the consumer as a percentage of production cost and extend the subsidy mechanism and residential tariff structure to local distribution utilities. Demand-Side Energy Efficiency Improvement 6. The Borrower has, through the MOST, issued Decisions (No. 2740/QD-BKHCN dated December 9, 2008 and No. 632/QD-BKHCN dated April 20, 2009) Page 8 7 establishing energy efficiency standards for consumer goods accounting for large quantities of electricity consumption. 7. The Borrower has, through the MOIT, issued a Circular (No. 05/2009/TT-BCT dated February 26, 2009) introducing time-of-use tariffs for industrial zones and commercial, industrial, and irrigation consumer categories. 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 (except for amounts required to pay the Front-end Fee) is allocated in a single withdrawal tranche, from which the Borrower may make withdrawals of the Loan proceeds. 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 U.S. Dollars) (1) Single Withdrawal Tranche 199,500,000 (2) Front-end Fee 500,000 TOTAL AMOUNT 200,000,000 C. Withdrawal Tranche Release Conditions. 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 appropriateness of the Borrower’s macroeconomic policy framework. D. Deposit of Loan Amounts. Except as the Bank may otherwise agree: 1. all withdrawals from the Loan Account shall be deposited by the Bank into an account designated by the Borrower and acceptable to the Bank; and 2. the Borrower shall ensure that upon each deposit of an amount of the Loan into this account, an equivalent amount is accounted for in the Page 9 8 Borrower’s budget management system, in a manner acceptable to the Bank. E. Audit. Upon the Bank’s request, the Borrower shall: 1. have such account 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 3. furnish to the Bank such other information concerning such account and its audit as the Bank shall reasonably request. F. Excluded Expenditures . The Borrower undertakes that the proceeds of the Loan shall not be used to finance Excluded Expenditures. If the Bank determines at any time that an amount of the Loan was used to make a payment for an Excluded Expenditure, the Borrower shall, promptly upon notice from the Bank, refund an amount equal to the amount of such payment to the Bank. Amounts refunded to the Bank upon such request shall be cancelled. G. Closing Date. The Closing Date is August 31, 2011. Page 10 9 SCHEDULE 2 Amortization Schedule 1. 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”). If the proceeds of the Loan have been fully withdrawn as of the first Principal Payment Date, the principal amount of the Loan repayable by the Borrower on each Principal Payment Date shall be determined by the Bank by multiplying: (a) the Withdrawn Loan Balance as of the first Principal Payment Date; by (b) the Installment Share for each Principal Payment Date, such repayable amount to be adjusted, as necessary, to deduct any amounts referred to in paragraph 4 of this Schedule, to which a Currency Conversion applies. Principal Payment Date Installment Share (Expressed as a Percentage) On each February 15 and August 15 Beginning February 15, 2021 Through August 15, 2034 3.45% On February 15, 2035 3.40% 2. If the proceeds of the Loan have not been fully withdrawn as of the first Principal Payment Date, the principal amount of the Loan repayable by the Borrower on each Principal Payment Date shall be determined as follows: (a) To the extent that any proceeds of the Loan have been withdrawn as of the first Principal Payment Date, the Borrower shall repay the Withdrawn Loan Balance as of such date in accordance with paragraph 1 of this Schedule. (b) Any amount withdrawn after the first Principal Payment Date shall be repaid on each Principal Payment Date falling after the date of such withdrawal in amounts determined by the Bank by multiplying the amount of each such withdrawal by a fraction, the numerator of which is the original Installment Share specified in the table in paragraph 1 of this Schedule for said Principal Payment Date (“Original Installment Share”) and the denominator of which is the sum of all remaining Original Installment Shares for Principal Payment Dates falling on or after such date, such amounts repayable to be adjusted, as necessary, to deduct any amounts referred to in paragraph 4 of this Schedule, to which a Currency Conversion applies. Page 11 10 3. (a) Amounts of the Loan withdrawn within two (2) calendar months prior to any Principal Payment Date shall, for the purposes solely of calculating the principal amounts payable on any Principal Payment Date, be treated as withdrawn and outstanding on the second Principal Payment Date following the date of withdrawal and shall be repayable on each Principal Payment Date commencing with the second Principal Payment Date following the date of withdrawal. (b) Notwithstanding the provisions of sub-paragraph (a) of this paragraph, if at any time the Bank adopts a due date billing system under which invoices are issued on or after the respective Principal Payment Date, the provisions of such sub-paragraph shall no longer apply to any withdrawals made after the adoption of such billing system. 4. Notwithstanding the provisions of paragraphs 1 and 2 of this Schedule, upon a Currency Conversion of all or any portion of the Withdrawn Loan Balance to an Approved Currency, the amount so converted in the Approved Currency that is repayable on any Principal Payment Date occurring during the Conversion Period, shall be determined by the Bank by multiplying such amount in its currency of denomination immediately prior to the Conversion by either: (i) the exchange rate that reflects the amounts of principal in the Approved Currency payable by the Bank under the Currency Hedge Transaction relating to the Conversion; or (ii) if the Bank so determines in accordance with the Conversion Guidelines, the exchange rate component of the Screen Rate. Page 12 11 APPENDIX Section I. Definitions 1. “Circular” means a regulation issued by a minister or the head of a ministerial- level government agency and which is enforceable under the Borrower’s legal system. 2. “Decision” means a regulation issued by: (a) the Prime Minister and which is enforceable under the Borrower’s legal system; or (b) a minister or the head of a ministerial-level government agency on a specific issue under the legal mandate of the relevant ministry or agency and which is legally binding upon such ministry or agency. 3. “Excluded Expenditure” means any expenditure: (a) for goods or services supplied under a contract which any national or international financing institution or agency other than the Bank or the Association has financed or agreed to finance, or which the Bank or the Association has financed or agreed to finance under another loan, credit, or grant; (b) for goods included in the following groups or sub-groups of the Standard International Trade Classification, Revision 3 (SITC, Rev.3), published by the United Nations in Statistical Papers, Series M, No. 34/Rev.3 (1986) (the SITC), or any successor groups or subgroups under future revisions to the SITC, as designated by the Bank by notice to the Borrower: Group Sub-group Description of Item 112 Alcoholic beverages 121 Tobacco, un- manufactured, tobacco refuse 122 Tobacco, manufactured (whether or not containing tobacco substitutes) 525 Radioactive and associated materials 667 Pearls, precious and semiprecious stones, un- worked or worked 718 718.7 Nuclear reactors, and parts thereof; fuel elements Page 13 12 (cartridges), non- irradiated, for nuclear reactors 728 728.43 Tobacco processing machinery 897 897.3 Jewelry of gold, silver or platinum group metals (except watches and watch cases) and goldsmiths’ or silversmiths’ wares (including set gems) 971 Gold, non-monetary (excluding gold ores and concentrates) (c) for goods intended for a military or paramilitary purpose or for luxury consumption; (d) for environmentally hazardous goods, the manufacture, use or import of which is prohibited under the laws of the Borrower or international agreements to which the Borrower is a party; (e) on account of any payment prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations; and (f) with respect to which the Bank determines that corrupt, fraudulent, collusive or coercive practices were engaged in by representatives of the Borrower or other recipient of the Loan proceeds, without the Borrower (or other such recipient) having taken timely and appropriate action satisfactory to the Bank to address such practices when they occur. 4. “Financing Agreement” means the financing agreement between the Borrower and the Association providing for a financing in support of the Program, as such agreement may be amended from time to time. “Financing Agreement” includes all appendices, schedules, and agreements supplemental to such agreement. 5. “General Conditions” means the “International Bank for Reconstruction and Development General Conditions for Loans”, dated July 1, 2005 (as amended through February 12, 2008) with the modifications set forth in Section II of this Appendix. 6. “MOIT” means the Borrower’s Ministry of Industry and Trade or any successor thereto. Page 14 13 7. “MOST” means the Borrower’s Ministry of Science and Technology or any successor thereto. 8. “Notice” means an operational document issued by the OOG (as hereinafter defined) providing instructions to the Recipient’s ministries and agencies and which is enforceable under the Borrower’s legal system. 9. “OOG” means the Borrower’s Office of Government or any successor thereto. 10. “Prime Minister” means the Borrower’s head of government or any successor thereto. 11. “Program” means the program of actions, objectives, and policies designed to support the development of a competitive power market, the restructuring of the power sector, the reform of electricity tariffs, and the improvement of demand- side energy efficiency, and set forth or referred to in the letter dated March 1, 2010 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. 12. “Single Withdrawal Tranche” means the amount of the Financing allocated to the category entitled “Single Withdrawal Tranche” in the table set forth in Section II.B of Schedule 1 to this Agreement. 13. “VCGM” means the Vietnam Competitive Generation Market, the Borrower’s electricity generation market established and operating pursuant to the Borrower’s Decision No. 6713/QD-BCT dated December 31, 2009. 14. “Vietnamese Dong” means the official currency of the Borrower. Section II. Modifications to the General Conditions The modifications to the General Conditions are as follows: 1. The last sentence of paragraph (a) of Section 2.03 (relating to Applications for Withdrawal) is deleted in its entirety. 2. Sections 2.04 ( Designated Accounts) and 2.05 ( Eligible Expenditures ) are deleted in their entirety, and the remaining Sections in Article II are renumbered accordingly. 3. Paragraph (a) of Section 2.05 (renumbered as such pursuant to paragraph 2 above) is modified to read as follows: Page 15 14 “Section 2.05. Refinancing Preparation Advance; Capitalizing Front-end Fee and Interest (a) If the Loan Agreement provides for the repayment out of the proceeds of the Loan of an advance made by the Bank or the Association (“Preparation Advance”), the Bank shall, on behalf of such Loan Party, withdraw from the Loan Account on or after the Effective Date the amount required to repay the withdrawn and outstanding balance of the advance as at the date of such withdrawal from the Loan Account and to pay all accrued and unpaid charges, if any, on the advance as at such date. The Bank shall pay the amount so withdrawn to itself or the Association, as the case may be, and shall cancel the remaining un-withdrawn amount of the advance.” 4. Sections 5.01 ( Project Execution Generally ), and 5.09 ( Financial Management; Financial Statements; Audits ) are deleted in their entirety, and the remaining Sections in Article V are renumbered accordingly. 5. Paragraph (a) of Section 5.05 (renumbered as such pursuant to paragraph 4 above and relating to Use of Goods, Works and Services ) is deleted in its entirety. 6. Paragraph (c) of Section 5.06 (renumbered as such pursuant to paragraph 4 above) is modified to read as follows: “Section 5.06. Plans; Documents; Records … (c) The Borrower shall retain all records (contracts, orders, invoices, bills, receipts and other documents) evidencing expenditures under the Loan until two years after the Closing Date. The Borrower shall enable the Bank’s representatives to examine such records.” 7. Paragraph (c) of Section 5.07 (renumbered as such pursuant to paragraph 4 above) is modified to read as follows: Section 5.07. Program Monitoring and Evaluation … (c) The Borrower shall prepare, or cause to be prepared, and furnish to the Bank not later than six months after the Closing Date, a report of such scope and in such detail as the Bank shall reasonably request, on the execution of the Program, the performance by the Loan Parties and the Bank of their respective obligations under the Legal Agreements and the accomplishment of the purposes of the Loan. 8. The following terms and definitions set forth in the Appendix are modified or deleted as follows, and the following new terms and definitions are added in Page 16 15 alphabetical order to the Appendix as follows, with the terms being renumbered accordingly: (a) The definition of the term “Conversion Date” is modified to read as follows: “‘Conversion Date’ means, in respect of a Conversion, the Execution Date (as herein defined) or such other date as requested by the Borrower and accepted by the Bank, on which the Conversion enters into effect, and as further specified in the Conversion Guidelines.” (b) The definition of the term “Eligible Expenditure” is modified to read as follows: “‘Eligible Expenditure’ means any use to which the Loan is put in support of the Program, other than to finance expenditures excluded pursuant to the Loan Agreement.” (c) The term “Financial Statements” and its definition are deleted in their entirety. (d) The term “Project” is modified to read “Program” and its definition is modified to read as follows (and all references to “Project” throughout these General Conditions are deemed to be references to “Program”): “‘Program’ means the program referred to in the Loan Agreement in support of which the Loan is made.”