Haiti - Second Power Project : Credit 0895 - Development Credit Agreement - Conformed

CONFORMED COPY SPECIAL ACTION CREDIT NUMBER 4 HA ecial Action Credit Agreement (Second Power Project) between REPUBLIC OF HAITI and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL ACTION ACCOUNT established with funds contributed by the MEMBER STATES of the EUROPEAN ECONOMIC COMMUNITY Dated May 31, 1979 SPECIAL ACTION CREDIT NUMBER 4 HA SPECIAL ACTION CREDIT AGREEMENT AGREEMENT, dated May 31, 1979, between REPUBLIC OF HAITI (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINIS- TRATOR of the SPECIAL ACTION ACCOUNT established with funds contributed by the MEMBER STATES of the EUROPEAN ECONOMIC COMMU- NITY. WHEREAS by the Agreement, dated May 2, 1978, between the International Development Association (the Association) and the European Economic Community and its Member States there has been established by the Association a Special Action Account consti- tuted by the funds which shall be contributed by the Member States of the European Economic Community and administered by the Associ- ation, acting as Administrator of such Special Action Account, for the purpose of, and in accordance with, the provisions of said Agreement; WHEREAS the Borrower has requested the Administrator for assistance from the resources of the Special Action Account in the financing of the project described in Schedule 2 to this Agreement and the Administrator has determined that such assistance would be in accordance with the provisions of the Agreement of May 2, 1978 referred to above; WHEREAS by an agreement of even date herewith (hereinafter called the IDA Credit Agreement), the Association has agreed to make a development credit (hereinafter called the IDA Credit) to the Borrower in an aggregate principal amount equivalent to sixteen million five hundred thousand dollars ($16,500,000) to assist in the financing of the Project on the terms and conditions therein set forth; WHEREAS the Borrower intends to contract from the Canadian International Development Agency (hereinafter called CIDA) a grant in an amount of seventeen million one hundred thousand Canadian dollars (Can$17,100,000) (hereinafter called the CIDA Grant) to assist in the financing of the Project on the terms and conditions set forth in a Grant Agreement (hereinafter called the CIDA Grant Agreement) to be entered into between the Borrower and CIDA; WHEREAS the Project will be carried out by Electricite d'Haiti with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Electricite -2 - the proceeds of the Special Action Credit as hereinafter provided; and WHEREAS the Association, the Administrator and EdH have entered into an agreement of even date herewith, (hereinafter called the Joint Project Agreement), providing for the use of the proceeds of the IDA Credit and of the Special Action Credit and execution of the Project, as well as other matters relating thereto; 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 International Development Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the folloting modifications thereof (said General Conditions Applicable to Development Credit Agreements of the International Development Association, as so modified, being hereinafter called the General Conditions): (a) the term "Association", wherever used in the General Conditions, means the International Development Association acting as the Administrator of the Special Action Account referred to in the Preamble to this Special Action Credit Agreement; (b) the terms "Development Credit Agreement" and "Credit", wherever used in the General Conditions are amended to read "Special Action Credit Agreement" and "Special Action Credit", respectively; (c) Sections 4.01, 4.02, 4.03, 4.04 and the second sentence of Section 5.01 are deleted; and (d) in Sections 6.02 and 7.01, the term "Association" shall also include the International Development Association acting in its own capacity. Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the -3- General CondiLtions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Member States" means the Member States of the European Economic Community, i.e. Belgium, Denmark, The Federal Republic of Germany, France, Ireland, Italy, Luxembourg, The Netherlands and The United Kingdom; (b) "Administrator" means the International Development Association acting as Administrator of the Special Action Account referred to in the Preamble to this Special Account Credit Agreement; (c) "EdH" means Electricite d'Haiti, an autonomous agency of the Borrower established by, and operating under the Borrower's Loi-Cadre dated July 29, 1971, as amended by the Decree dated April 9, 1977 and published in the Moniteur on June 16, 1977; and (d) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and Edh pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules in the Subsidiary Loan Agreement. ARTICLE II The Special Action Credit Section 2.01. The Administrator agrees to lend to the Borrower on the terms and conditions in the Special Action Credit Agreement set forth or referred to, the following currency amounts: seven million three hundred Belgian francs (BF7,318,000); eighteen thousand nine hundred eleven thousand Danish kroner (DK911,000); three million five hundred Deutsche marks (DM3,517,000); seventeen thousand three million seven hundred French francs (FF3,718,000); eighteen thousand eight thousand one hundred Irish pounds (IrE8,100); -4- four hundred thirty-one million Italian Lire (ItL431,484,000); four hundred eighty-four thousand two hundred thirty thousand Luxembourg (LF230,000); francs nine hundred seventy-two Netherlands (Dfl 972,000); thousand guilders and eight hundred ninety-six Pounds (;E896,700). thousand seven hundred sterling Section 2.02. (a) The amount of the Special Action Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Ag'reement, as such Schedule may be amended from time to time by agreement between the Borrower and the Administrator, for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the reasonable cosit of goods and services required for the Project and to be financed out of the proceeds of the Special Action Credit. (b) Withdrawals shall be made only on account of expen- ditures in the currency of the Borrower, or for goods produced in, or services supplied from, (i) any of the Member States and (ii) any developing country which is a member of the International Development Association and could be the recipient of a Special Action Credit, as determined by the Administrator. (c) Withdrawals from the Credit Account shall be made in the respective currencies in which the expenditures to be financed out of the proceeds of the Special Action Credit have been paid or are payable or, at the option of the Administrator, in such currency or currencies as the Administrator shall from time to time select. Section 2.03. Except as the Administrator shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Special Action Credit shall be governed by the provisions set forth or referred to in Section 2.03 of the Joint Project Agreement. Section 2.04. The Closing Date shall be June 30, 1983, or such later date as the Administrator shall establish. The Administrator shall promptly notify the Borrower of such later date. - 5 - Section 2.05. (a) The Borrower shall pay to the Administrator a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum, on each of the various currency amounts with- drawn from the Credit Account and outstanding from time to time. The amounts of service charge in various currencies so found, and additional service charges (if any) payable pursuant to Section 3.02 of the General Conditions, shall be payable in the currency of the United States of America or in another currency selected by the Administrator in accordance with the provisions of para- graph (b) of this Section, after their conversion into such currency on the basis of exchange rates determined accordance with the provisions of Section 4.05 of the Genera2 Conditions. (b) If the Administrator shall at any time determine that the currency so specified or selected is not freely convertible or freely exchangeable by the International Development Associ- ation for currencies of other members of the International Deve- lopment Association for the purposes of its operations, service charges shall be payable in such other currency as the Admini- strator may select for such purposes and shall notify in writing to the Borrower, whereupon, commencing thirty days after the date of such notice, service charges shall be payable in such other currency. Section 2.06. Service charges shall be payable semiannually on May I and November 1 in each year. Section 2.07. (a) The Borrower shall repay the principal amount of the Special Action Credit in semiannual installments payable on each May 1 and November 1 commencing May 1, 1989 and ending November 1, 2028, each installment to and including the installment payable on November 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. (b) Each of the installments payable pursuant to paragraph (a) of this Section shall be the aggregate of such amounts in the various currencies withdrawn from the Credit Account as shall be found by multiplying the total amount in each currency so with- drawn by the applicable installment percentage as specified in paragraph (a) of this Section, unless the Administrator shall otherwise specify by notice to the Borrower prior to each payment date for the purpose of avoiding the payment of fractional cur- rency amounts. -6- (c) If withdrawal shall have been made in a currency which the Administrator shall have purchased with one or more other currencies for the purpose of such withdrawal, the portion of the Special Action Credit so withdrawn shall, for the purpose of paragraph (b) above, be deemed to have been withdrawn in the currency or currencies used by the Administrator for such purchase in the amounts of such currency or currencies so used. (d) The Administrator will, at the request of the Borrower and on such terms and conditions as the Administrator shall determine, use its best efforts to purchase any currency needed by the Borrower for payment of principal required under this Agree- ment upon payment by the Borrower of sufficient funds therefor in a currency or currencies to be specified by the Administrator from time to time. In purchasing the currencies required the Adminis- trator shall be acting as agent of the Borrower and the Borrower shall be deemed to have made any payment required under this Agreement only when and to the extent that the Administrator has received such payment in the currency or currencies required. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Special Action Credit Agreement, the Borrower shall cause EdH to perform in accordance with the provisions of the Joint Project Agreement and the Subsi- diary Loan 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 EdH 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 Special Action Credit to EdH under a subsidiary loan agreement to be entered into between the borrower and EdH under terms and condi- tions which shall have been approved by the Administrator inclu- ding the following principal terms and conditions: (i) the principal amount of the loan r payable by EdH shall be the equivalent (determined as of the date, or respective dates, of repayment) of the value of the currency or currencies withdrawn from the -7- Credit Account expressed in terms of United States dollars at the time of withdrawal from the Credit Account; (ii) the loan will be repaid by EdH to the Borrower in thirty-two semiannual installments over twenty years (including four years of grace); and (iii) interest shall be charged at the rate of eight per cent (8%) per annum on the outstanding balance of the loan. (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 Administrator and to accomplish the purposes of the Special Action Credit, and except as the Administrator shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower shall cause EdH to carry out the study included in Part (E) of the Project under terms of reference satisfactory to the Administrator and shall furnish to the Admin- istrator its findings and recommendations thereof not later than December 31, 1979. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall not undertake, or permit EdH to undertake, prior to the completion of the Project, any investment in the power sector exceeding the equivalent of one per cent (1%) of the net value of EdH's fixed assets in operation without the Administrator's prior approval. (b) For the purpose of Sub-section (a) above, the term "net value of fixed assets in operation" means the gross value of fixed assets in operation less the related accumulated depreciation, all as revalued in accordance with Section 4.04 of the Joint Project Agreement. Section 4.02. Except as the Administrator shall otherwise agree, the Borrower shall, from time to time, take all steps necessary or desirable (including but not limited to adjustments -8- of EdH's tariffs) to enable EdH to earn the annual rate of return specified in Section 4.03 of the Joint Project Agreement. Section 4.03. The Borrower shall take -ll measures necessary on its part to ensure that electricity bills owed EdH by the Borrower's departments and agencies are settled and paid in time under arrangements satisfactory to the Borrower and the Adminis- trator. Section 4.04. In order to ensure the timely execution of Part (C) of the Project, the Borrower shall: (i) cause Telecommunica- tions d'Haiti, S.A.M. (Teleco) and Tele Haiti to rehabilitate respectively the sections of the telephone and television networks in Port-au-Prince utilizing EdH's power distribution facilities to be rehabilitated under the Project; (ii) provide, or cause to be provided, promptly as needed all the funds required by Teleco for that purpose; and (iii) cause Tele Haiti to provide promptly as needed all the funds required for that purpose. Section 4.05. The Borrower undertakes to assume the debt incurred by EdH from the Borrower's Office Nationale d'Assurance for the financing of the Peligre hydro station. Section 4.06. The Borrower shall, under arrangements satic- factory to the Administrator and on the basis of the findings and recommendations of the study to be carried out pursuant to Section 3.02 of this Agreement, cause the Peligre dam, reservoir banks, waterways and associated structures to be annually inspected in accordance with appropriate engineering practices in order to determine whether there are any deficiencies in their condition or in the quality or adequacy of their maintenance or the methods of their operation which may endanger their safety, and, in the event that any such deficiency or potential deficiency is discovered, the Borrower shall promptly take all steps required to correct such deficiency or to eliminate such potential deficiency. Section 4.07. The Borrower shall take all measures necessary on its part to ensure that EdH shall not use its resources for any purpose other than the financing of its investment program and its operational expenses and for the servicing of its debt. ARTICLE V Remedies of the Administrator Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: -9- (a) EdH shall have failed to perform any covenant, agreement or obligation of EdH under the Joint Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that EdI will be able to perform its obli- gations under the Joint Project Agreement; (c) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution of EdH or for the suspension of its operations; (d) the Decree dated April 9, 1977 referred to in Section 1.02 (a) of this Agreement shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of EdH to carry out the covenants, agreements and obligations set forth in the Joint Project Agree- ment; and (e) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the CIDA Grant or the IDA Credit shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the CIDA Grant Agreement or the IDA Credit Agreement, respectively; or (B) the IDA Credit 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 or EdH from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement and of EdH under the Joint Project Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: - 10 - (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Administrator to the Borrower and EdH; and (b) any event specified in paragraphs (c), (d), or (e) (i) (B) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Special Action Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) all conditions precedent to the effectiveness of the IDA Credit Agreement, except only the effectiveness of this Agreement, have been fulfilled; (b) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and EdH; (c) the CIDA Grant Agreement has been executcd and delivered and all conditions precedent to its effectiveness or to the right to make withdrawals thereunder, except only the effectiveness of this Agreement, have been fulfilled. Section 6.02. 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 opinions to be furnished to the Administrator: (a) that the Joint Project Agreement has been duly autho- rized or ratified by EdH, and is legally binding upon EdH in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly author- ized or ratified by the Borrower and EdH and is legally binding upon the Borrower and EdH in accordance with its terms. Section 6.03. The date August 31, 1979, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. - 11 - Section 6.04. The obligations of the Borrower under Article IV of this Agreement and the provisions of paragraph (b) of Section 5.02 of this Agreement shall cease and determine on the date on which the Special Action Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Secretary of State for Finance and Economic Affairs of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Condi- tionF. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secretairerie d'Etat des Finances et des Affaires Economique Palais des Finances Port-au-Prince Haiti Cable address: Secretairerie d'Etat des Finances et des Affaires Economique Port-au-Prince Haiti For the Administrator: Administrator of the Special Action Account (International Development Association) 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 12 - 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 HAITI By Is/ Emmanuel Bros Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL ACTION ACCOUNT established with funds contributed by the MEMBER STATES of the EUROPEAN ECONOMIC COMMUNITY By /s/ Nicolas Ardito Barletta Regional Vice PresidenL Latin America and the Caribbean - 13 - SCHEDULE 1 Withdrawals of the Proceeds of the Special Action Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Special Action Credit, the allocation of the amounts of the Special Action Credit to each Category and the percentage for items so to be financed in each Category: Amount of the Special Action Credit % of Allocated (Expressed Expenditures Category in Dollar Equivalents) to be Financed (1) One diesel 4,400,000 100% of foreign unit (7.7 MW) expenditures and ancillary and 30% of works and local expendi- services under tures Part (A) (i) of the Project (2) Transmission and 1,000,000 100% of foreign distribution expenditures equipment under Parts (B) (iv), (B) (vi) and (C) (i) of the Project (3) Unallocated 600,000 TOTAL 6,000,000 2. The total dollar amount shown in the foregoing table shall be adjusted from time to time as required to reflect the aggregate dollar equivalent of the unwithdrawn currency amounts in the Credit Account; the unallocated dollar amount shall be adjusted accordingly. 14 3. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the cirrency of, and for goods produced in or services supplied from, (i) any of the Member States and (ii) any developing country other than the Borrower which is a member of the International Development Association and could be the recipient of a Special Action Credit, as determined by the Administrator; (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. 'I."-e in c m The disbursement percentages have been calculated in com- pliance with the policy of the Administrator that no proceeds of the Special Action, 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, procure- ment 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 Special Action Credit decreases or increases, the Administrator 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 Administrator. 5. 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 Special Action Credit Agreement. 6. Notwithstanding the allocation of an amount of the Special Action Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Administrator has reasonably estimated that the amount of the Special Action Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Administrator may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Special Action Credit which are then allocated to another Category and which in the opinion of the Administrator are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expen- ditures in order that further withdrawals under such Category may continue until all expenditures there,.nder shall have been made. ff - 15 - 7. If the Administrator shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedur,- set forth or referred to in this Special Action Credit Agreement, no expenditures for such item shall be financed out of the proceeds of the Special Action Credit and the Admin- istrator may, without in any way restricting or limiting any other right, power or remedy of the Administrator under the Special Action Credit Agreement, by notice to the Borrower, cancel such currency amounts of the Special Action Credit as, in the Adminis- trator's reasonable opinion, represent the currency amounts which would otherwise have been eligible for withdrawal out of the proceeds of the Special Action Credit in respect of such expendi- tures. - 16 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part (A): (i) The expansion of the Varreux Power Station in Port-au- Prince by the addition of three diesel units with a total capacity of about 22 MW; (ii) the provision of four diesel units with a total capacity of about 3400 kW for the new power station at Cap Haitien; (iii) construction of a power station at Port-de-Paix includ- ing four diesel units with a total capacity of about 1 MW; (iv) construction of a power station at Miragoane including two diesel units with a total capacity of about 250 kW; and (v) associated ancillary works and services for Parts (A) (i) to (A) (iv) above. Part (B): (i) The expansion of two 115/69-kV and five 69-kV sub- stations in the Port-au-Prince area; (ii) the construction and equipping of three 69-kV substa- tions at Petionville, Carrefour and Croix-des Bouquets; (iii) the construction of about 27 km of 69-kV lines in the Port-au-Prince area; (iv) the expansion of the Varreux Substation at Port-au- Prince; (v) the provision of telecommunication equipment, network and workshop tools and equipment and utility vehicles; and - 17 - (vi) aril1cry equipment and works for Part (B) (i) to (B) (- above. Part (C) (i) The rehabilitation of about 30% of the distribution network in Port-au-Prince; and (ii) the renovation and expansion of the distribution networks at Port-de-Paix (about 16 km of lines and 300 kVA in transformer capacity), Miragoane (about 18 km of lines and 275 kVA in transformer capacity), and Les Cayes (about 10 km of lines and 600 kVA in trans- former capacity). Part (D): (i) The provision of consultants' and experts' services to assist in, and carry out studies related to the Project and to the management and operations of EdH, to assist in the training of its staff, and in the preparation of a preliminary design of a new head office building for EdH; and (ii) the carrying out of a program for the training of EdH's staff. Part (E): The carrying out of a study to determine the proper mainten- ance and monitoring procedures of the Peligre dam. The Project is expected to be completed by June 1982.