Liberia - Monrovia Water Supply Project : Credit 0859 - Credit Agreement - Conformed

CREDIT NUMBER 859 LBR Development Credit Agreement (Monrovia Water Supply Project) between REPUBLIC OF LIBERIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated January 8, 1979 CREDIT NUMBER 859 LBR DEVELOPMENT CREDIT AGREEMENT -AGREEMENT, dated January 8, 1979, between REPUBLIC OF LIBERIA (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 Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Project will be carried out by Liberia Water and Sewer Corporation with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Liberia Water and Sewer Corporation the proceeds of the Credit as hereinafter provided; and (C) the African Development Bank (hereinafter called the ADB) has agreed to the Borrower's request to assist in financing the Project in an aggregate amount of two million one hundred fifty-one thousand (2,151,000) Units of Account as defined in ADB's Articles of Agreement on the terms and conditions set forth in the agreements dated January 23, 1978 between the Borrower and ADB; and (D) the Borrower intends to contract from the Commonwealth Development Corporation a loan in an amount equivalent to two million dollars ($2,000,000) to assist in financing Part A of the Project on terms and conditions set forth in a loan agreement to be entered into between the Borrower and the Commonwealth Devel- opment Corporation; and (E) the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and Liberia Water and Sewer Corporation; 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 -2- Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association 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) "Project Agreement" meant the agreement between the Association and Liberia Water and Sewer Corporation of even date herewith, as the same may be amended from time to time; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and Liberia Water and Sewer Corporation pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time; (c) "Liberia Water and Sewer Corporation" or "LWSC" means the Liberia Water and Sewer Corporation established by Chapter 88 of the Public Authorities Law and operating under the laws of the Borrower; and (d) "LWSC Laws" means the Public Authorities Law and the Liberia Corporation Law, as amended to the date of this Agreement. 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 equiva- lent to eight million dollars ($8,000,000). 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 may be amended from time to time by agreement between the Borrower and the Associ- ation, 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 out of the proceeds of the Credit. -3- Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be governed by the provisions set forth or referred to in Section 2.03 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1982 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. 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 semiannually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each January 1 and July 1 commencing anuary 1, 1989, and ending July 1, 2028, each installment to ind including the installment payable on July 1, 1998, 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 Managing Director of LWSC 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 Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause LWSC to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take -4- and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable LWSC 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 relend the proceeds of the Credit to LWSC under a subsidiary loan agreement to be entered into between the Borrower and LWSC under terms and conditions which shall have been approved by the Association including the following: (i) an annual rate of interest of 7.50%; and (ii) repayment in 20 years including 5 years grace period. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. Without limitation or restriction on the Borrower's obligations under Section 3.01 above, the Borrower shall take all necessary measures to strengthen LWSC's financial position and shall in particular: (a) pay its water and sewerage bills within two months after billing and assume responsibility for the payment of, and be billed for, water consumed at all public standpipes and water consumed by agencies of the Borrower and public institutions; (b) provide LWSC with amounts sufficient to cover the annual operating deficits of its Sewer Division until such time as the findings and recommendations of the water and sewerage tariff study required under Section 4.06 of the Project Agreement shall have been carried out; (c) make during 1978 an equity contribution of $226,000 to LWSC as working capital for its Sewer Division; (d) make such further equity contributions to LWSC as it may require, within the limits specified in Section 4.09 of the Project Agreement, to carry out its Sewer Division's investment program; (e) make equity contributions to LWSC during 1978 through 1.'2 in amounts sufficient to cover the counterpart fund require- ments of the investment program of LWSC's Water Division which cannot be generated from LWSC's revenues; (f) cover all operating deficits (including depreciation and interest payment) plus any shortfall resulting from the repayment of principal on the debt fok all urban water supply systems outside Monrovia until such time as other arrangements satisfac- tory to the Association shall have been made with respect to such coverage; and (g) subject to Section 5.01 hereof, deposit or cause to be deposited in advance and on a quarterly basis in LWSC's bank account the estimated amount, based on quarterly financial fore- casts prepared by LWSC, of all payments and contributions to be made under this Section. Section 3.03. (a) The Borrower shall make appointments to LWSC's Board of Directors consistent with the Public Authorities Law. (b) The Borrower shall no later than March 31, 1979 transfer to LWSC assets and liabilities (not already vested in LWSC) of all urban water supply systems outside Monrovia. (c) The Borrower shall ensure that LWSC complies with the limitations on additional investments referred to in Section 4.09 of the Project Agreement. (d) The Borrower shall assist LWSC in enforcing all water and sewerage connection rules, regulations and by-laws. (e) The Borrower shall assist LWSC in the carrying out of the findings and recommendations of the water and sewerage tariff study required under Section 4.06 of the Project Agreement. (f) The Borrower shall inform the Association reasonably in advance prior to making any proposed appointment to the position of Managing Director of LWSC. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: -6- (a) a default shall occur in the performance of any obliga- tion of LWSC under the Project Agreement; (b) a default shall occur in the performance of any obliga- tion of the Borrower or LWSC under the Subsidiary Loan Agreement; (c) any of the LWSC Laws shall have been repealed, amended or waived so as to affect materially and adversely the operations or financial condition of LWSC or the carrying out of the Project; (d) LWSC shall be unable to pay its debts as they mature or any action or proceeding shall have been undertaken whereby any of the property of LWSC shall or may be distributed among its creditors; (e) the Borrower or any other authority having jurisdic- tion shall have taken any action for the dissolution or dis- establishment of LWSC or for the suspension of its operations; and (f) (i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any loan made to the Borrower for the financing of the Project shall have been suspended, cancelled 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: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consis- tent with the obligations of the Borrower unde: this Agreement. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: -7- (a) the events specified in paragraphs (a), (b) and (f) (i) (B) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower and LWSC; (b) the event specified in paragraph (d) of Section 4.01 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 LWSC; and (c) the events specified in paragraphs (c), (e) and (f) (i) (B) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, the deposit by the Borrower in LWSC's bank account of equity contributions and operating subsidies for 1978 and 1979 amounting to $2,000,000. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or op:tnions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by LWSC, and is legally binding upon LWSC in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly. authorized or ratified by the Borrower and LWSC and is legally binding upon the Borrower and LWSC in accordance with its terms. Section 5.03. The date April 9, 1979 is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. -8- Section 6.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Minister of Finance Ministry of Finance Monrovia Liberia Cable address: Telex: MINFIN 4221 LI Monrovia For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto,' acting through their representatives thereunto duly authorized, have -caused this Agreement 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. REPUBLIC OF LIBERIA By Is/ Francis Dennis Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Is! Roger Chaufournier Regional Vice President Western Africa -9- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Plant, equipment 5,082,000 100% of foreign and materials /1 expenditures or 90% of local expenditures for items im- ported and pro- cured locally (2) Civil works /1 756,000 24% (3) Consulting 984,000 100% of foreign services, tech- expenditures nical assistance and training (4) Unallocated 1,178,000 TOTAL 8,000,000 /1 Other than raw water pipeline, discharge header and distribu- tions components, under Part A (7) of the Project. 2. For the purposes of this Schedule: (a) the term "foreign expenditures" 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; provided, howevt -:, that if the currency of the Bor- rower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expendi- tures"; and - 10 - (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit 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, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association 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 policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expendi- tures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. 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 this 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 Associ- ation's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 11 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: A. Civil Works (1) Construction of about 15,000 ft raw water pipeline (36 in. diameter) from the intake of Mt. Coffee power- house to Mt. White Plains water treatment plant. (2) Construction of an 8 million gallons per day extension to the White Plains water treatment plant including: (i) construction of sedimentation, filtration and chemical dosing facilities; (ii) provision of additional 1.5 million gallons treated water storage capacity and a new discharge header; and (iii) improvement of existing water treatment facilities and installation of addi- tional electrical control and alarm facilities. (3) Construction of about 27,000 ft trunk distribution main (Freeway main) (16 in. diameter). (4) Construction of a booster pumping station with a 0.25 million gallons wet well, centrifugal high lift pumps and associated pipeworks to serve the Mamba high eleva- tion service area in Monrovia. (5) Reinforcement, minor extensions and improvements of Monrovia's primary and secondary water supply distribu- tion system. (6) Installation of about 100 public standpipes and associ- ated distribution piL eworks in the high density slum areas of Monrovia. (7) Construction of a distribution system for the Organiza- tion of African Unity conference complex. (8) Supply of about 3,000 water meters. B. Engineering, Technical Assistance and Training (1) Design and supervision of construction of Part A above, utilizing about 35 man-months of engineering services. - 12 - (2) A management improvement program including a comprehen- sive review of LWSC's organizational structure, its management, staffing and training requirements and its operating practices, utilizing about 8 man-months of consulting services. (3) A water supply sector study for Liberia (not including Monrovia), utilizing about 10 man-months of consulting services. (4) A water demand and distribution study for Greater Monrovia, utilizing about 18 man-months of consulting services. (5) *A block mapping survey to provide a comprehensive set of records of consumer location and service connections, utilizing about 54 man-months of consulting services. (6) A management level technical assistance program for LWSC, utilizing about 11 man-years' expert services to be provided by a Project Manager, a Water Supply Opera- tions Manager, a Distribution Engineer, a Commercial Director and an Information Systems Manager. (7) Design and execution of a training program for LWSC's subprofessional staff. The Project is expected to be completed by June 30, 1982.