CHAVIMOCHIC PROJECT

Concession of the Major Hydraulic Works component

(Third Stage)

THE PROJECT AND ITS CURRENT STATUS

I. General Description:

The project diverts waters from Santa river for irrigation of thevalleys and intervalleys of Chao, Virú, Moche and Chicama in thedepartment of La Libertad.

The Chavimochic project, when developed, will be able to supplyirrigation of approximately 160,000 hs of lands, between new landsand lands to be improved.

Additionally, the project foresees to supply drinking water to the cityof Trujillo and the development of hydroelectrical facilities.

II. Current Development:

The works of the stage I and II are in operation. These haveallowed to channel the water from Santa river to the Moche valleythroughout 150 km.

These works wew executed as public works between 1986 and1996, requiring investments of US$ 960 million to nominal values.

Source: Chavimochic Special Project

I. Projected Development:

The Regional Government of La Libertad decided to complete thedevelopment of the project through a concession under a PPP modality. Tothat end, PROINVERSIÓN was entrusted with the structuring andconduction of the process for selection of a concessionaire and land auction.

II. ConcessionDescription:

“Concession of the Major Hydraulic Works”

It will allow to complete the development of the Chavimochic Project throughthe construction of the following works and facilities:

– Palo Redondo Reservoir, with a capacity of 366 MMC

– Third crossing line of Viru River, with a length of 3.5 km and a capacity of 16.5m3/s.

– Main Channel Moche-Chicama-Urricape segment, with a length of 113 km anda variable decreasing capacity from 37.5 to 5 m3/s

– Lateral channeling for the Urricape sector, below the Main Channel

– Comprehensive remodeling of the intake system from the Main Channel in allits length

– Control, measurement and automation system with comprehensive coveragefor all the major hydraulic infrastructure of the Chavimochic Project.

PROJECTED DEVELOPMENT THROUGH PPP (1)

Main Water Intake ViewMain Water Intake View

View of the two lines of the View of the two lines of the existing Siphonexisting Siphon

II. ConcessionDescription :

Additionally the concessionaire shall have the following responsibilities:

– Operate and maintain all major hydraulic infrastructure of the project including the existing works

– Provide the water supply service to the system users: Population, agricultural and hydro-electrical

III. Benefits Expected through the Concession:

• New areas to be added 63 K hs

• Irrigated areas to be improved 48 K hs

• Private investments in agricultural development US$ 1,000 million

• Annual gross value of agricultural exportable production US$ 1,200 million

• Permanent direct jobs 200 K positions

PROJECTED DEVELOPMENT THROUGH PPP (2)

Descripción FinancieraGENERAL ASPECTS OF THE TRANSACTION (1)

General Assumptions

Concession Term 25 years

• Initial Term 1 year

• Construction 4 years

• Operation 20 years

Referential Investment Amount

US$ 596.8 MM (*)(*) VAT not included. The amount is subject to the assessment of economic and financial model.

Financing Scheme

Fort the concessipon purposes, the works of the III Stage shall be distributed in two packages1:• Package 1: Palo Redondo Reservoir, representing about the 50% of the investment amount,

shall be financed with the Government contribution (cofinancing)• Package 2: Extension the de Main Channel and the rest of the works, will be comprehensively

financed by the concessionaire (indebtedness and contribution from its shareholders) and cancount with the benefit of the advance recovery of the Value Added Tax.

Operation Period

• The concessionaire will take care of the operation and maintenance of the new works andexisting works of the I and II Stage , as well as supplying the the water service to the users for aterm of 20 years.

• Prior to the delivery of the existing works, the grantor shall carry out a tune-up program.

(1) The distribution of the financing of the investment packages is referential and may vary according to the evaluation.

Descripción Financiera

Preliminary Concession Scheme

In the previous concession it is calculated that:

• The concessionaire investments will be recovered through the payment of the AnnualInvestments Retribution (RPI) supported by revenues from the collection of water rates todifferent users of the project and by the Sovereign Guarantee of the State.

• The operation and maintenance activities and water supply service management to the usersshall be covered by the Annual Retribution for Operation and Maintenance (RPMO) duringthe years of operation of the concession

Competition Factor

It was preliminarily established that the competition factor will consist of the lowest bidders dealsregarding: (1) Co-financing, (2) the Value of the Annual Investments Retribution (RPI) and (3) by theValue of Annual Retribution for Operation and Maintenance (RPMO) .

Concession Contract

The concession contract shall recognize:• Construction prices adjustment due to the inflation (application of polynomial formulas)• Additional take-off due to unforeseen geological events in the foundations of the dam and underground works

• Recognition Certificates for geological events during construction• Work Progress Certificates (CAO)

GENERAL ASPECTS OF THE TRANSACTION (2)

Descripción Financiera

Risks Distribution

• Construction Risks: shall be assumed by the Concessionaire, except force majeure and unforeseen geological events

• Demand Risks: shall be assumed by the grantor, in cases not attributable to the concessionaire• The Grantor shall assume the insurance of all existing works

Legal Certainty

The Executive Branch shall give the Concessionaire assurances and guarantees of the State in support of the obligations and declarations of the Grantor in the concession contract

GENERAL ASPECTS OF THE TRANSACTION (3)

REFERENTIAL SCHEDULE OF THE BIDDING

ACTIVITY DATE/ PERIOD

Contest Public Call and publication of the Bidding Terms

21/03/2013

Delivery of First Draft Contract 19/06/2013

Delivery of the Final Version of the Contract approved by the Board of PROINVERSIÓN

14/10/2013

Submission of Envelopes N ° 2 and N ° 3 and opening of Envelope No. 2

11/11/2013

Announcement of the result of the evaluation of Envelope N ° 2, Opening of Envelope N ° 3 and awarding

26/11/2013

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