Sri Lanka - Fifth Power Project : Credit 0372 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 372 CE Development Credit Agreement (Fifth Power Project) BETWEEN THE REPUBLIC OF SRI LANKA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED APRIL 18, 1973 CONFORMED COPY CREDIT NUMBER 372 CE Development Credit Agreement (Fifth Power Project) BETWEEN THE REPUBLIC OF SRI LANKA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED APRIL 18, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 18, 1973, between the REPUBLIC OF SRI LANKA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) The Project will be carried out by the Ceylon Electricity Board with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the said Board the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and the Ceylon Electricity Board; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the deletion of Sections 5.01 and 6.02(h) thereof and to the renumbering of Section 6.02(i) into 6.02(h) thereof (said General Cond!*ions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "The Board" means the Ceylon Electricity Board, a statutory authority established pursuant to the Ceylon Electricity Board Act; 4 (b) "The Ceylon Electricity Board Act" means the Ceylon Electricity Board Act, No. 17 of 1969; (c) "Project Agreement" means the agreement between the Association and the Board of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; and (d) "Joint Scheme" means any joint scheme for the generation of electrical energy, the irrigation of land, the control of floods or other like purposes as referred to in Section 12(1) of the Ceylon Electricity Board Act. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to six million dollars ($6,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services required for the Project and to be financed out of the proceeds of the Credit shall be procured pursuant to the provisions set forth or referred to in Section 2.02 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1976 or such other date as shall be agreed between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on March 15 and September 15 in each year. 5 Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 15 and September 15 commencing September 15, 1983 and ending March 15, 2023, each installment to and including the installment payable on March 15, 1993 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. The Chairman of the Board and such other person or persons as he shall appoint in writing is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project and Other Covenants Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause the Board to perform in accordance with the provisions of the Project Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable the Board to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall take all such action as may be necessary on its part (including, but without limitation, all necessary authorizations) to enable the Board to effect such adjustments in its tariffs as shall be required to comply with the provisions of Section 4.04 of the Project Agreement. (c) The Borrower shall relend the proceeds of the Credit to the Board in accordance with the provisions of Schedule 3 hereto. Section 3.02. (a) The Borrower shall ensure that the Board shall be given the opportunity to participate fully in the formulation of each Joint Scheme and to enter into the same on terms and conditions consistent with the performance by the Board of its obligations under the Project Agreement. 6 (b) The Borrower shall furnish or cause to be furnished to the Board (i) on or prior to the commencement of each fiscal year of the Board, an estimate of all capital expenditures to be incurred under each Joint Scheme in respect of such year, revising the same from time to time as necessary; and (ii) as soon as reasonably practicable after the end of each such year, a statement of all such capital expenditures incurred in respect thereof. (c) The Borrower shall take such action as may be necessary to enable the Board to supervise and control the design, construction and operation of the assets referred to in sub-section (d) of this Section pending their transfer to the Board as therein mentioned and shall furnish, or cause to be furnished, to the Board all data, information, facilities and other assistance required for such purpose. (d) The Borrower shall transfer, or cause to be transferred, to the Board upon terms and conditions satisfactory to the Borrower, the Board and the Association all assets relating to the generation, transmission or distribution of electricity financed under, or constructed or installed for the purpose of, or otherwise included in any Joint Scheme entered or to be entered into by the Board, not later than the coming into operation of such assets. Section 3.03. The Borrower shall ensure that all foreign exchange required by the Board to repair or replace any asset to be insured by it under Section 3.01 of the Project Agreement shall be promptly made available to the Board for such purpose. ARTICLE IV Consultation, Information and Inspection Section 4.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by the Board of its obligations under the Project 7 Agreement, the administration, operations and financial condition of the Board and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, and of any agency of the Borrower. Section 4.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial condition of the Board and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement or the performance by the Board of its obligations under the Project Agreement. Section 4.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE V Taxes and Restrictions Section 5.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 5.02. The Development Credit Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. 8 Section 5.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VI Remedies of the Association Section 6.01. If any event specified in Section 7.01 of the General Conditions or in Section 6.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then, at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 6.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) The Board shall have failed to perform any covenant, agreement or obligation of the Board under the Project Agreement. (b) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of the Board or for the suspension of its operations. (c) The Ceylon Electricity Board Act shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of the Board to carry out the covenants, agreements and obligations set forth in the Project Agreement. (d) An extraordinary situation shall have arisen which shall make it improbable that the Board will be able to perform its obligations under the Project Agreement. Section 6.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 6.02 of this Agreement shall occur and shall continue for a period of 30 days after notice thereof shall have been given by the Association to the Borrower and the Board. 9 (b) any event specified in paragraphs (b) or (c) of Section 6.02 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following event is specified as additional condition to the effectivene- AF the Development Credit Agreement within the meaning of Section 10.01Q, of the General Conditions: The execution and delivery of the Project Agreement on behalf of the Board have been duly authorized or ratified by all necessary corporate and governmental action. Section 7.02. The following is specified as an additional matter, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Board, and constitutes a valid and binding obligation of the Board in accordance with its terms. Section 7.03. The date July 18, 1973 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 7.04. The obligations of the Borrower under Section 3.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The Secretary of the Ministry of Planning and Employment of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: 10 For the Borrower: The Secretary Ministry of Planning and Employment Colombo Sri Lanka Cable address: SECMINPLAN Colombo, Sri Lanka For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF SRI LANKA By /s/ Neville Kanakaratne Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ I.P.M. Cargill Regional Vice President Asia 11 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of imported items to be financed out of the proceeds of the Credit and the allocation of amounts of the Credit to each Category: Amount of the Credit Allocated (Expressed in Category Dollar Equivalent) 1. Equipment, materials and 4,700,000 installations for the 132 kV and 33 kV transmission systems II. Equipment, materials and 700,000 installations for the 11 kV distribution system III. Vehicles and service equipment 100,000 IV. Unallocated 500,000 TOTAL 6,000,000 2. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; (b) expenditures prior to the date of this Agreement; and (c) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. 12 3. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and (c) if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.02 of the Project Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 13 SCHEDULE 2 Description of the Project The Project consists of the extension of the electricity transmission and distribution system in Sri Lanka and comprises: 1. The extension of the existing 132 kV system by the construction of approximately 90 miles of 132 kV lines and the construction, extension, installation and equipping of associated substations, facilities and equipment. 2. The extension of the existing 33 kV system by the construction of approximately 400 miles of main and spur 33 kV lines and the construction, installation and equipping of associated substations, facilities and equipment. 3, The extension of the existing Colombo 11 kV system by the installation of substations, switchgear, transformers and associated facilities and equipment. The Project is expected to be completed by June 30, 1976. 14 SCHEDULE 3 Subsidiary Loan to the Board 1. The Borrower will lend to the Board on the terms and conditions set forth or referred to in this Schedule an amount in various currencies equivalent to $6,000,000, together with an amount equal to the cost of Foreign Exchange Entitlement Certificates, if any, referred to in paragraph 2 hereof. 2. The amount of each withdrawal by the Borrower from the Credit Account will be credited to and withdrawn from a Subsidiary Loan Account to be maintained in the currency of Sri Lanka by the Borrower on its books in the name of the Board. Each amount withdrawn from the Subsidiary Loan Account will be the amount in the currency of Sri Lanka equivalent to the amount in the currency or currencies withdrawn from the Credit Account valued on the basis of the prevailing lawful rates of exchange at which such other currency or currencies are, at the date of each withdrawal, obtainable by the Board, or, if any such other currency is not so obtainable, at such rate of exchange as at that date as shall be reasonably determined by the Borrower. In addition upon each withdrawal from the Credit Account there will be credited to and withdrawn from the Subsidiary Loan Account the cost of the Foreign Exchange Entitlement Certificates, if any, acquired by the Board in respect of the amount withdrawn from the Credit Account at the rate then prevailing. The aggregate amount withdrawn from the Subsidiary Loan Account as aforesaid is herein referred to as the Subsidiary Loan. 3. The Board will pay to the Borrower interest on the principal amount of the Subsidiary Loan withdrawn and outstanding from time to time at the rate of 7-1/4% per annum. 4. The Board shall pay to the Borrower the equivalent in the cuirency of Sri Lanka of all amounts which the Borrower shall be obligated to pay to the Association on account of charges for special commitments pursuant to Section 3.02 of the General Conditions. 5. Interest and other charges will be paid in the currency of Sri Lanka semi-annually on March I and September 1, in each year. 6. (a) Save as the Borrower, the Board and the Association shall otherwise agree, the Board shall repay the principal amount of the Subsidiary Loan in the currency of Sri Lanka in 34 consecutive equal semi-annual installments of principal and interest, the first of such payments to be made on September 1, 1976. 15 (b) The Board shall have the right at any time to make prepayment of the principal amount of the Subsidiary Loan without payment of premium.