Djibouti - Geothermal Exploration Project : Credit 1488 - Credit Agreement - Conformed

r OFFICIAL CREDIT NUMBER 1488 DJI UUMENTS Development Credit Agreement (Geothermal Exploration Project) between REPUBLIC OF DJIBOUTI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated ( O, 1984 CREDIT NUMBER 1488 DJI DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated )wi4A , 1984, between REPUBLIC OF DJIBOUTI (hereinafter called the Borrower or Djibou- ti) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the foreign exchange cost of the Prcj- ect described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower has requested from the Republic of Italy a grant (hereinafter called the Italian Grant), in an amount equivalent to four million four hundred thousand dollars (US$4,400,000) to assist in the financing of the Project on the terms and conditions set forth in an agreement between the Borrower and the Republic of Italy; (C) the Borrower has requested from the African Development Bank (hereinafter called the ADB) a loan (hereinafter called the ADB Loan), in an amount equivalent to two million five hundred thousand dollars (US$2,500,000) to assist in financing the Project on the terms and conditions set forth in an agreement between the Borrower and the ADB; (D) the Borrower has requested from the OPEC Fund for In- ternational Development (hereinafter called OPEC Fund) a loan (hereinafter called the OPEC Fund Loau), in an amount equivalent to one million dollars (US$1,000,000), to assist in financing the Project on the terms and conditions set forth in an agreement between the Borrower and the OPEC Fund; (E) the Borrower has requested from the United Nations De- velopment Programme (hereinafter called UNDP) a grant (herein- after called the UNDP Grant), in an amount equivalent to one million dollars (US$1,000,000), to assist in financing the Project on the terms and conditions set forth in an agreement between the Borrower and UNDP; and (F) Parts A, B and C of the Project will be carried out by Institut Sup6rieur d'Etudes et de Recherches Scientifiques et Techniques, an etablissement public existing under the laws of Djibouti, (hereinafter called ISERST) and Part D by Electricitg de Djibouti, an 6tablissement public also existing under the laws of Djibouti (hereinafter called EDD), with the Borrower's -2- assistance and, as part of such assistance, the Borrower will make available to ISERST the proceeds of the Credit as herein- after provided; WHEREAS 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 among the Association, ISER5T and EDD; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Developmeat Credit Agree- ments 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "ISERST Legislation" means, collectively, the Bor- rower's Ordonnance No. 78-021 of February 23, 1978 and Dfcret No. 78-046 of June 14, 1978, as amended from time to time. (b) "EDD Legislation" means, collectively, the Borrower's D6cret No. 77-079/PR/MRI of December 20, 1977 and Arr6te No. 83-0447/PR/MIDI of March 22, 1983, as amended from time to time. (c) "Project Agreement" means the agreement among the Asso- ciation, ISERST and EDD of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement. (d) "Project Preparation Advance" means the project prepa- ration advance granted by the Association to the Borrower -3- pursuant to an exchange of letters, dated March 17, 1984, and March 27, 1984, between the Borrower and the Association. (e) "Geothermal Project Manager" means the person referred to in Section 2.01 (c) of the Project 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 cur- rencies equivalent to five million seven hundred thousand Special Drawing Rights (SDR 5,700,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of this Section and of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Asso- ciation 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. (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and works required for the Proj- ect and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to the Project Agree- ment. Section 2.04. The Closing Date shall be December 31, 1986, or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. -4- Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without re- strictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. 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 2.07. Commitment charges and service charges shall be payable semiannually on June 1 and December 1 in each year. Section 2.08. The Borrower shall repay the principal amount oi the Credit in semiannual installments payable on each June 1, and December 1 commencing June 1, 1994, and ending December 1, ? 33, each installment to and including the installment payable on December 1, 2003 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 2.09. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.10. ISERST 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. ARTICLY III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 hereto, - 5, and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agree- ment, the Borrower shall cause ISERST and EDD to perform in accordance with the provisions of the Project Agreement all their respective 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 ISERST and EDD 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 make available as a grant to ISERST, under terms and conditions satisfactory to the Association, the equivalent of the proceeds of the Credit. Section 3.02. The Borrower shall, in case of commercial dis- covery under Part A of the Project, take all appropriate steps to enable: (a) ISERST to transfer to EDD its geothermal staff and assets and to make EDD assume the costs of geothermal exploration activities under such Part of the Project, all under terms and conditions acceptable to the Association; and (b) EDD to recover the costs of geothermal exploration activities and exploitation investments under such Part of the Project, under terms and conditions acceptable to the Association (and in particular through tariff adjustments). ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the Gen- eral Conditions .the follow!ng additional events are specified pursuant to paragraph (h) thereof: (a) ISERST or EDD shall have failed to perform any of their respective obligations under the Project Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that ISERST or EDD will be able to per- form their respective obligations under the Project Agreement. (c) The ISERST Legislation or the EDD Legislation shall have been amended, suspended, abrogated, repealed or waived so as -6- to affect materially and adversely the ability of ISERST or EDD to perform any of their respective obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of ISERST or EDD or for the suspension of their respective operations. (e) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower, to withdraw the proceeds of any grant or loan (including the Italian Grant, the ADB Loan, the OPEC Fund Loan or the UNDP Grant) made to the Borrower, for the financing of the Project shall have been suspendedi- 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 pay- able prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower, to perform any of its obliga- tions under such agreement, and (B) adequate funds for the Project are available to the Borrower, from other sources on terms and conditions consistent with the obliga- tions of the Borrower under this Agreement and of ISERST and EDD under the Project Agreement. Section 4.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) The event specified in paragraph (a) of Section 4.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower, ISERST and EDD. -7- (b) Any event specified in paragraphs (c) and (d) of Sec- tion 4.01 of this Agreement shall occur. (c) The event specified in paragraph (e) (i) (B) of Sec- tion 4.01 of this Agreement shall occur, subject to the proviso of subparagraph (ii) of that paragraph. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) The Association has been notified by the Republic of Italy, the ADB, the OPEC Fund and UNDP that all conditions pre- cedent to the first disbursement of their respective loan and grants to the Borrower for the Project, except for the effective- ness of this Agreement, have been fulfilled. (b) The Borrower has made available to ISERST the equiva- lent of the proceeds of the Credit as provided in Section 3.01 (b) hereof. (c) Contracts for the works under Parts A (a) and B of the Project, satisfactory to the Association, have been entered into by ISERST with contractors acceptable to the Association and the consultants for Part C (b) of the Project have been employed as provided in Section 2.02 (b) of the Project Agreement. Section 5.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be fur- nished to the Association: The Project Agreement has been duly authorized or ratified by ISERST and EDD and is legally binding upon ISERST and EDD in accordance with its terms. Section 5.03. The date (V\0.A3 \LE \ ) is hereby specified for the purposes of Section 12.04 of the General Condi- tions. -8- Section 5.04. The provisions of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty (20) years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representatives of the Borrower; Addressis Section 6.01. Except as provided in Section 2.10 hereof, the Minister of Finances and Economy of the Borrower is designated as representative cf the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finances and Economy Djibouti Republic of Djibouti Telex: 5871 DJ 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 DJIBOUTI By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By ixV Regional Vice esident Eastern Africa - 10 - 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 SDR Equivalent) to be Financed (1) Works under Part A 3,540,000 89.4% of foreign of the Project expenditures (2) Goods under Part A 850,000 100% of foreign of the Project expenditures (3) Works under Part B 90,000 100% of foreign of the Project expenditures (4) Consultants' 70,000 100% services under Part C (f) of the Project (5) Refunding of 520,000 Amount due Project Prepara- tion Advance (6) Unallocated 630,000 TOTAL 5,700,000 2. For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods and services supplied from the territory of any country other than that of the Bor- rower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of - 11 - 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 items in any Category decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforemen- tioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of signature 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 expenditures; 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 expend- itures 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 Bor- rower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 12 - SCHEDULE 2 Description of the Project The main objectives of the Project are to explore Djibouti's indigenous sources of geothermal energy and, in particular, to prove commercialliv exploitable geothermal reserves in the Hanle-Gaggade area and to strengthen ISERST's operational capability to enable it to gradually take a more active role in geothermal exploration and exploitation activities, while preparing EDD to incorporate geothermal power production facilities into its system. To that end, the Project consists of the following Parts: Part A: Drilling in the Hanle-Gaggade area, including: (a) a program of about two temperature gradient wells (each about 450 m deep) in the Hanle graben, including necessary geological and temperature logging, and studies to integrate their results with the existing data in order to select deep drilling sites; and (b) a program of up to four exploratory wells (each about 2,000 m deep). Part B: Complementary surface exploration in the Gaggade sub-area, including: (a) geophysical works (gravity, electrical resistivity, and possibly magnetotelluric surveys if justified); and (b) studies to integrate data and determine possible alter- native drilling sites. Part C: Strengthening of ISERST, through: (a) the provision of the services of a geothermal project manager in ISERST; - 13 - (b) the provision of engineering services for the supervi- sion of the deep drilling operations and the carrying out of specialized services under Part A (b) of the Project; (c) the training of ISERST staff in Djibouti and abroad; (d) the purchase of specialized geothermal equipment to be used during the execution of the Project; (e) the provision of office eqo ipment and vehicles; and (f) the carrying out of external audits of ISERST's accounts. Part D: Detailed studies to be undertaken by EDD during the execu- tion of the Project in order to determine the technical and economic feasibility of incorporating geothermal power production facilities into its system. The Project is expected to be completed by April 30, 1987. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of O ve 198 . FOR SECRETARY