Ceylon - Grandpass Thermal Project : Loan 0209 - Loan Agreement - Conformed

LOAN NUMBER 209 CE Loan Agreement (Grandpass Thermal Project) BETWEEN GOVERNMENT OF CEYLON AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED SEPTEMBER 17, 1958 LOAN NUMBER 209 CE Loan Agreement (Grandpass Thermal Project) BETWEEN GOVERNMENT OF CEYLON AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED SEPTEMBER 17, 1958 AGREEMENT, dated September 17, 1958, between GOVERNMENT OF CEYLON (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by a Loan Agreement dated July 9, 1954, be- tween the Borrower and the Bank (hereinafter called the First Loan Agreement), the Bank made a loan to the Bor- rower for the purpose of financing the foreign exchange costs of a project forming part of an electric power scheme in Ceylon; and TWHEREAS the Borrower has requested the Bank to assist in financing a further part of such scheme; Now THEREFORE, the parties hereto agree as follows: ARTICLE I Loan Regulations; Special Definition SECTION 1.01. The parties to this Loan Agreement ac- cept all the provisions of Loan Regulations No. 3 of the Bank dated June 15, 1956, subject, howevcr, to the modifica- tions thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 3 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. For the purposes of this Agreement, wher- ever the context so permits, the term "Borrower'" shall be deemed to include Ceylon. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or 4 referred to, an amount in various currencies equivalent to seven million four hundred thousand dollars ($7,400,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations; provided, however, that before the first withdrawal shall be made from the Loan Account, the Borrower shall furnish to the Bank a certifi- cate of a competent authority that the debt limitation pro- vided in the Ceylon Development Loans Act, No. 6 of 1954, as amended, has not been exceeded. SECTION 2.03. 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 so withdrawn from time to time. Such commit- ment charge shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrower shall pay interest at the rate of five and three-eighths per cent (5% ) per annum on the principal amount of the Loan so withdrawn and out- standing from time to time. SECTION 2.05. Except as the Borrower and the Bank shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (/ of 1% ) 5 per annum on the principal amount of any such special com- mitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on May 1 and November 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively to financing the cost of goods required to carry out the Project described in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan and the methods and pro- cedures for procurement of such goods shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be used in the territories of the Borrower exclusively in the carryig out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute anid deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Governor-General of the Island of Ceylon and such person or persons as he shall appoint in writing are designated as authorized representatives of the Borrower for the purposes of Section 6.12 of the Loan Regulations. 6 ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out and its electricity undertakings to be man- aged and operated with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) Except as shall be otherwise agreed between the Bor- rower and the Bank in respect of any part of the Project, the Borrower shall employ or cause the agency or entity which will carry out the Project to employ qualified and competent engineering consultants and contractors for the carrying out of the Project. (c) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans and specifica- tions for the Project and any material modifications subse- quently made therein, in such detail as the Bank shall from time to time request. (d) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, and to record the progress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the agency or entity responsible for the construction or operation of the Project or any part thereof; shall enable the Bank's representatives to inspect the Project, the goods, the properties, equipment and operations of the agency or entity responsible for the construction or operation of the Project or any part thereof, and any relevant records and documents; and shall furnish to the Bank all such information as the Bank shall reason- ably request concerning the expenditure of the proceeds of the Loan, the Project, the goods and the operations and financial condition of the agency or entity responsible for the construction or operation of the Project or any part thereof. 7 SECTION 5.02. (a) The Borrower and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Borrower, such information shall include information with respect to financial and economic condi- tions in the territories of the Borrower and the interna- tional balance of payments position of the Borrower. (b) The Borrower and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Borrower shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any part of the territories of the Borrower for purposes related to the Loan. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing provi- sions of this Section shall not apply to: (i) .any lien created on property, at the time of purchase thereof, solely as secu- rity for the payment of the purchase price of such property; (ii) any lien on commercial goods to secure a debt matur- ing not more than one year after the date on which it is 8 originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. The term "assets of the Borrower" as used in this Section includes assets of the Borrower or of any of its political subdivisions or of any agency of the Borrower or of any such political subdivision, including assets of the Central Bank of Ceylon. SECTION 5.04. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Borrower or laws in effect in its ter- ritories; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, pay- ments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Borrower. SECTION 5.05. The Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the ex-cution, issue, delivery or registration thereof, and the Borrower shall pay all such taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries. SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Borrower or laws in effect in its territories. SECTION 5.07. The Borrower shall satisfy the Bank that adequate arrangements have been made to insure the goods 9 financed out of the proceeds of the Loan against risks incident to their purchase and importation into the terri- tories of the Borrower. SECTION 5.08. In the event of the establishment of an agency or entity to carry out the Project or to operate the electricity undertakings now administered by the Bor- rower's Department of Electrical Undertakings, the Bor- rower shall take all steps necessary to ensure that the establishment of such agency or entity and the transfer to it of any such electricity undertaking will be on a basis not inconsistent with the performance of obligations under this Agreement. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regula- tions shall occur and shall continue for a period of thirty days, or (ii) if any event specified or referred to in Section 6.01 of the First Loan Agreement shall have occurred and shall have continued for the period specified therein, or (iii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. SECTION 6.02. For the purposes of Section 5.02 (h) of the Loan Regulations, the following events are specified: If there shall have occurred any event specified or referred to in Section 6.01 of the First Loan Agreement. 10 ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be May 1, 1962. SECTION 7.02. A date sixty days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SECTION 7.03. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Ministry of Finance The Secretariat Colombo 1, Ceylon Alternative address for cablegrams and radiograms: Seefin Colombo, Ceylon For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. SECTION 7.04. The Governor-General of the Island of Ceylon is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused 11 this Loan Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. GOVERNOR-GENERAL, ACTING IN THE NAME AND ON EALF OF THE GOvERNMENT OF CEYLON By 0. E. GOONETILLEKE Governor-General of the Island of Ceylon INTERNATIONAL BANK FOR RECONSTRTCTION AND DEVELOPIENT By W. A. B. ILIFF Vice President 12 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* November 1, 1961 $136,000 May 1, 1962 140,000 November 1, 1962 143,000 May 1, 1963 147,000 November 1, 1963 151,000 May 1, 1964 155,000 November 1, 1964 159,000 May 1, 1965 164,000 November 1, 1965 168,000 May 1, 1966 173,000 November 1, 1966 177,000 May 1, 1967 182,000 November 1, 1967 187,000 May 1, 1968 192,000 November 1, 1968 197,000 May 1, 1969 202,000 November 1, 1969 208,000 May 1, 1970 213,000 November 1, 1970 219,000 May 1, 1971 225,000 November 1, 1971 231,000 May 1, 1972 237,000 November 1, 1972 243,000 May 1, 1973 250,000 November 1, 1973 257,000 May 1, 1974 264,000 November 1, 1974 271,000 May 1, 1975 278,000 November 1, 1975 285,000 May 1, 1976 293,000 November 1, 1976 301,000 May 1, 1977 309,000 November 1, 1977 317,000 May 1, 1978 326,000 *To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 13 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 3 years before maturity. . of 1% More than 3 years but not more than 6 years before maturity ............. 1%% More than 6 years but not more than 11 years before maturity............. .2% % More than 11 years but not more than 16 years before maturity........... 3% More than 16 years but not more than 18 years before maturity ............ ..43/s% More than 18 years before maturity. .......5%% 14 SCHEDULE 2 Description of Project Grandpass Thermal Plant The site of the plant will be on the left bank of the Kelani river in the northern part of Colombo. The powerhouse will be a brick and steel structure. In addition to the turbogenerator room it will include a work- shop, storerooms, a laboratory and office space. The single turbogenerator unit will have a capacity of 25,000 kw and will be designed to operate at a pressure of about 900 p.s.i. and at a temperature of about 900'F. It will be equipped with regenerative feed heating, surface condenser and neces- sary auxiliary equipment. The single boiler will be of the outdoor type and designed to produce 250,000 pounds of steam per hour. It will be fired by oil fuel. Cooling water will be drawn from the Kelani river through a culvert approximately 1,100 feet long and discharged again through a second culvert approximately 1,400 feet long. Feed water will be drawn from the city mains. Suitable water treatment plant and storage tanks will be provided. Oil fuel will be delivered to the site through branch-offs from the existing dual pipeline connecting the oil harbor with the main storage tanks at Kolonnawa. Two storage tanks, each with a capacity of 4,000 tons, and two service tanks will be provided. One 32 MVA, 11/132 kv 3-phase transformer will be installed in the outdoor substation, which will be equipped with necessary switchgear, control equipment and aux- iliaries. Transmission Line and Distribution A 132 kv transmission line about 1.5 miles long will be constructed to connect the Grandpass thermal plant with 15 the existing substation at Kolonnawa, which will be expanded by installation of a third 30 MVA, 132/33 kv, 3-phase transformer with associated switchgear. The 33 kv network will be extended by construction of approximately 178 miles of transmission lines and installa- tion of about 200 transformers. The distribution network in Colombo will be reinforced by the laying of additional 33 kv and 11 kv cables and installation of switchboards and distributors. It is expected that construction of all parts of the Project will be completed by February 1962. 16 SCHEDULE 3 Modifications of Loan Regulations No. 3 For the purposes of this Agreement the provisions of Loan Regulations No. 3 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: SECTION 2.02 shall be deleted.