Morocco - Sidi Cheho - Al Massira Project : Loan 1299 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1299 MOR LOAN AGREEMENT (Sidi Cheho - Al Massira Project) between KINGDOM OF MOROCCO and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated July 2, 1976 LOAN AGREEMENT AGREEMENT, dated July 2, 1976, between the KINGDOM OF MOROCCO (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RE- CONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) part of the Project will be carried out by the Office National de 1'Electricite with the Borrower's assistance and, as nart of such assistance, the Borrower will make available to such Office a portion of the proceeds of the Loan as hereinafter pro- vided; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Bank and the Office National de L'Electricit6; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the orovisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said Gen- eral Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the con- text otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respec- tive meanings therein set forth and the following additional terms have the following meanings: (a) "ONE" means the National Electricity Authority of the Borrower (Office National de "'Electricite), organized and operat- ing pursuant to Dahir No. 1-63-226 of August 5, 1963 and its Regu- lations (Cahier des Charges) approved by Decree No. 2-73-533 of November 29, 1973; (b) "Department" means the Direction de 1'Hydraulique within the Borrower's Ministry of Public Works and Communications; (c) "Project Agreement" means the agreement between the Bank and ONE of even date herewith, as the same may be amended from time to time, and such term includes all agreements supplemental to the Project Agreement; and -3- (d) "Subsidiary Loan Agreement" means the agreement between the Borrower and ONE referred to in Section 3.01 (b) of this Agreement. -4- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to forty nine mil- lion dollars ($49,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expendi- tures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Proj- ect and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, con- tracts for the purchase of goods or for civil works to be financed out of the proceeds of the Loan, shall be procured in atcordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. L -5 - Section 2.06. The Borrower shall pay interest at the rate of eight and eighty-five hundredths per cent (8.85%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.08. The Borrower shall repay the principal amunt of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -6- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts A and E of the Project through the Department and shall cause ONE to carry out Parts B, C and D thereof with due diligence and efficiency and in conformity with appropriate administrative, financial, engi- neering and public utility practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Pursuant to paragraph (a) of this Section, the Borrower shall relend to ONE the proceeds of the Loan allocated to expendi- tures under Parts B, C and D of the Project, under a Subsidiary Loan Agreement providing for the same term and rate of interest as the Loan and containing such other terms and conditions, in- cluding those requiring ONE to carry out the Project as herein set forth, as shall be satisfactory to the Bank. (c) The Borrower shall cause ONE 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 necessary or appropriate to enable ONE to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (d) The Borrower shall exercise its rights under the Subsid- iary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower, shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. In order to assist the Borrower in supervising the construction included in Part A of the Project and in carrying out Part E thereof, the Borrower shall employ engineering consul- tants, whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to re- place or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, re- ports, contract documents and construction and procurement sched- ules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. -8- (b) The Borrower: (i) shall maintain records adequate to re- cord the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant rec- ords and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. -9- ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of for- eign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that ef- fect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdi- visions, the Borrower shall promptly and at no cost to the Bank se- cure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. - 10 - (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdi- vision thereof and of any entity owned or controlled by, or oper- ating for the account or benefit of, the Borrower or any such sub- division, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or ex- change stabilization fund, or similar functions, for the Borrower. Section 4.02 The Borrower shall cause the Department to main- tain records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations and fi- nancial conditions with respect to the Project of the Department. Section 4.03. The Borrower shall take such steps as shall be necessary to formulate, by July 31, 1977 or such later date as the Bank may agree, recommendations for the electricity sector's organ- izational improvement and, on the basis of proposals by ONE, for the adoption of an appropriate tariff structure and shall exchange views from time to time with the Bank on the progress being made towards such goals and on the proposals being developed for the purpose. I -11 - Section 4.04. The Borrower shall: (a) cause its agencies interested in the use of the waters below the Al Massira Dam to agree with the Department on rule curves for the management of such waters prior to the commissioning of the Dam; (b) have the facilities included in Part A of the Project regularly and periodically inspected by the Department according to sound engineering practices; and (c) cause ONE and the Department, prior to the commissioning of the facilities included in Part A of the Project, to enter into an agreement defining their respective roles in the inspection, maintenance and operation of such facilities in such manner as to ensure the efficiency of such inspection, maintenance and operation. Section 4.05. The Borrower shall ensure through its Ministry responsible for public health that the Sidi Cheho reservoir and its connecting waters be monitored for vector snails, that such area be monitored for bilharzia and that any measures necessary to prevent any increase in the incidence of the disease in such area be taken. Section 4.06. The Borrower shall ensure that amounts due to ONE but unpaid by agencies and administrative subdivisions of the Borrower on account of sales to them of electricity and related services shall not at any time exceed an amount equal to one-sixth of the total of such sales during the previous fiscal year of ONE. - 12 - Section 4.07. The Borrower shall cause ONE to pass on in full to its customers through automatic tariff adjustments any changes in the prices of fuel used to generate electricity, from their levels of January 1, 1976. - 13 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) ONE shall have failed to perform any obligation under the Subsidiary Loan Agreement or under the Project Agreement; (b) Dahir No. 1-63-226 of August 5, 1963 or the Cahier des Charges approved by Decree no. 2-73-533 of November 29, 1973 shall have been amended, abrogated or supplemented in a manner which may have an adverse effect on the ability of ONE to carry out the Project or on its operations or financial condition; and (c) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower or of ONE to withdraw the proceeds of any loan made to the Borrower or ONE for the financing of the Project shall have been suspended, can- celled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) Any 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 Borrower establishes to the satisfaction of the Bank that adequate funds for the Project are available to the Borrower or ONE from other sources on terms and conditions consistent with the obligations of the Borrower and ONE under this Agreement and the Subsidiary Loan Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to para- graph (h) thereof: (a) any event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraphs (b) or (c)(i)(B) of Section 5.01 of this Agreement shall occur. - 15 - ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, the Subsidiary Loan Agreement has been entered into between the Borrower and ONE. Section 6.02. The following are specified as additional mat- ters, within the meaning of Section 12.02 (c) of the General Con- ditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by, and executed on behalf of, ONE, and is legally bind- ing upon ONE in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by, and executed on behalf of, the Borrower and ONE, respectively, and is legally binding upon the Borrower and ONE in accordance with its terms. Section 6.03. The date September 30, 1976, is hereby sDeci- fied for the purposes of Section 12.Ch of the General Conditions. - 16 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. (a) Except as provided in paragraph (b) of this Section, the Minister of the Borrower responsible for finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. (b) ONE is hereby irrevocably designated as representative of the Borrower for the purposes of Article V of the General Con- ditions in respect of Parts B, C and D of the Project. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Minist4re des Finances Rabat Kingdom of Morocco Cable address: Telex: MINISTERE FINANCES 31936 Rabat 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 440098 (ITT) Washington, D.C. 248424 (RCA) or 64145 (wUI) -17- IN WITNESS WHEREOF, the parties hereto, acting through their renresentatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. KINGDOM OF MOROCCO By /s/ Abdelhadi Boutaleb Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is! W. A. Wapenhans Regional Vice President Europe, Middle East and North Africa - 18 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of ex- penditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment, civil 33,600,000 100% of foreign works and associ- expenditures or ated services for 50% of total Part B of the expenditures Project (representing the estimated foreign exchange component) (2) (a) Equipment and 5,500,000 100% of foreign materials for expenditures or Part C of the of local expendi- Project tures for ex- factory price of equipment pro- cured locally (b) Civil works 900,000 20% and erection for Part C of the Project - 19 - Amount of the Loan Allocated % of (Expressed in Exnenditures Category Dollar Equivalent) to be Financed (3) Consultants' ser- 5,700,000 100% of foreign vices, Parts B, D expenditures and E of the Proj- ect (4) Unallocated 3,300,000 TOTAL 49,o00,000 - 20 - 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, -f the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policO of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $5,000,000 may be made in respect of Categories 1 and 3 on account of payments made for such expenditures before that date but after September 30, 1975. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, -21- the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then appli- cable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- ditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or lim- iting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 22 - SCHEDULE 2 Description of the Project The Project is part of the Borrower's program to develop the water resources of the On er Rbia River to meet growing demands for electric power and potable, industrial and irrigation water. The Project comprises the following Parts: Part A: Construction of the Al Massira concrete buttress dam at Sidi Cheho on the Oum er Rbia river, and ancillary works; Part B: Construction of a 120-MW power station at the foot of the dam and adjacent 225-kV substation and ancillary works; Part C: The construction of about 200 km of 225-kV transmission lines and the upgrading to 225-kV of substations to be connected to such lines; Part D: Preparation of preliminary designs for the Merija power station and of bidding documents for the construction thereof; and Part E: Preparation of preliminary designs for the Merija com- pensating dam and of bidding documents for its construc- tion. * * * The Project is expected to be completed by September 30, 1980. - 23 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* March 15, 1981 765,000 September 15, 1981 800,000 March 15, 1982 835,000 September 15, 1982 875,000 March 15, 1983 910,000 September 15, 1983 955,000 March 15, 1984 990,000 September 15, 1984 1,,oo0ooo March 15, 1985 1,085,000 September 15, 1985 1.130,000 March 15, 1986 1,185,000 September 15, 1986 1,235,000 March 15, 1987 1,285,000 September 15, 1987 1,350,000 March 15, 1988 1,1405,000 September 15, 1988 1,465,000 March 15, 1989 1,535,000 September 15, 1989 1,600,000 March 15, 1990 1,670,000 September 15, 1990 1,745,000 March 15, 1991 1,825,000 September 15, 1991 1,905,000 March 15, 1992 1,985,000 Sentember 15, 1992 2,075,000 March 15, 1993 2,170,000 Sentember 15, 1993 2,260,000 March 15, 1994 2,365,000 September 15, 1994 2,470,000 March 15, 1995 2,575,000 September 15, 1995 2,690o000 March 15, 1996 2,820,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions. Section 4.02), the figures in this column represent dollar equiva- lents determined as for Durroses of withdrawal. - 24- Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of PrepaNMent Premium Not more than three years 1.35% before maturity More than three years but 2.65% not more than six years before maturity More than six years but not 4.85% more than eleven years before maturity More than eleven years but 7.10% not more than sixteen years before maturity More than sixteen years but 7.95% not more than eighteen years before maturity More than eighteen years 8.85% before maturity - 25 - SCHEDULE 4 Procurement A. International Competitive Bidding Contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" Dublished by the Bank in August 1975 (here- inafter called the Guidelines), on the basis of international com- petitive bidding. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purnose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (Dort of entry) price for imported goods, or the ex-factory price for domestically-manufacture( goods; (ii) customs duties and other import taxes on imported goods, and sales and sim- ilar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and*other expen- ditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Morocco may be granted a margin of preference in accordance with, and subject to, the following pro- visions: - 26 - (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- lowed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Morocco if the bidder shall have established to the satis- faction of the Borrower and the Bank that the manu- facturing cost of such goods includes a value added in Morocco equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Morocco. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supnlied domestically, to determine the lowest evalu- ated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. - 27 - (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this fur- ther comparison only, an amount equal to (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. C. Review of Procurement Decisions by the Bank Review of invitations to bid and of proposed awards and final contracts: 1. With respect to all contracts estimated to cost the equiva- lent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said docu- ments or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. - 28 - (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, with- out the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Loan and not governed by the preceding paragraph 1, the Borrower shall furnish to the Bank, promptly after its execu- tion and prior to the submission to the Bank of the first applica- tion for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably re- quest. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such de- termination.