Liberia - Second Water Supply Project : Credit 1563 - Credit Agreement - Conformed

OFFICIAL CREDIT NUMBER 1563 LBR Development Credit Agreement (Second Water Supply Project) between REPUBLIC OF LIBERIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1985 CREDIT NUMBER 1563 LBR DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1985, between REPUBLIC OF LIBERIA (hereinafter called the Borrower) and INTER- NATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Associa- tion). 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 the Liberia Water and Sewer Corporation (hereinafter called LWSC) with the Bor- rower's assistance and, as part of such assistance, the Borrower will make available to LWSC the proceeds of the Credit as herein- after provided; (C) by an agreement (hereinafter called the AfDB Loan Agreement) to be entered into by the Borrower and the African Development Bank (hereinafter called AfDB), AfDB intends to make a loan (hereinafter called the AfDB Loan) to the Borrower in an aggregate principal amount equivalent to four million dollars ($4,000,000) to assist in the financing of the Project; (D) by an agreem nt to be entered into by Deutsche Gesell- schaft fuer Technische Zusammenarbeit GmbH (hereinafter called GTZ), GTZ intends to make a grant (hereinafter called the GTZ Grant) in an aggregate principal amount of three million eight hundred thirty thousand deutsche mark (DM 3,830,000) to assist in the financing of the Project; and 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 between the Association and LWSC; 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 -2- 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" means the agreement between the Association and LWSC 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; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and LWSC 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 to the Subsidiary Loan Agreement; (c) "LWSC" means Liberia Water and Sewer Corporation, a statutory corporation established by Chapter 88 of the Public Authorities Law and operating under the laws of the Borrower; (d) "LWSC Laws" means the Public Authorities Law (including LWSC's By-laws adopted by its Board of Directors on October 28, 1984) and the Liberian Corporation Law all as amended to the date of this Agreement; (e) IVProject Account" means the account referred to in Section 2.01 (b) of the Project Agreement; (f) "Special Account" means the Account to be opened and maintained pursuant to Section 2.02 (c) of this Agreement; and (g) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated December 23, 1982 and April 27, 1983 between the Borrower and the Association. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in -3- this Agreement, an amount in various currencies equivalent to five million one hundred thousand Special Drawing Rights (SDR 5,100,000). Section 2.02. (a) 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 Association, 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. (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. (c) The Borrower shall, for the purposes of the Project, open and thereafter maintain in dollars a special account in the National Bank of Liberia on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Proiect and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1990 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. 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 -4- 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 restrictions 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 May 1 and November 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 1 and November 1 commencing May 1, 1995, and ending November 1, 2034, each installment to and including the installment payable on November 1, 2004, 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. ARTICLE 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 to this Agreement, and, to this end, without any limitation or restric- tion upon any of its other obligations under the Development Credit Agreement, shall cause LWSC 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, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable LWSC to perform -5- 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 the proceeds of the Credit available 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. The Subsidiary Loan Agreement shall provide for an amount equivalent to three million dollars ($3,000,000) out of the proceeds of the Credit to be made available as equity contributions of the Borrower to LWSC and the remaining proceeds of the Credit to be relent by the Borrower to LWSC at an interest rate of ten per cent (10%) per annum with principal repayable in 20 years including a grace period of 5 years for both principal and interest. Interest payable during the grace period shall be capitalized. (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. (a) The Borrower shall at all times: (i) make provisions in its budgets for sums sufficient to pay the water and sewerage bills of the Borrower and its agencies; and (ii) pay, or cause to be paid, such bills no later than 60 days after the receipt thereof. (b) The Borrower shall at all times provide LWSC with funds sufficient to cover the operating deficits relating to outstation operations carried out by LWSC on behalf of the Borrower. 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: (a) LWSC shall have failed to perform any of its obliga- tions under the Project Agreement; (b) The Borrower or LWSC shall have failed to perform any of its obligations under the Subsidiary Loan Agreement; -6- (c) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that LWSC will be able to perform its obligations under the Project Agree- ment. (d) The LWSC Laws shall have been amended, suspended, abro- gated, repealed or waived so as to affect materially and adverse- ly the ability of LWSC to perform any of its obligations under the Project Agreement. (e) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of LWSC or for the suspension of its operations. (f) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of LWSC to withdraw the proceeds of any loan or grant made to LWSC for the financing of the Project (including the AfDB Loan and the GTZ Grant) 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 pay- able prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if LWSC establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of LWSC to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to LWSC from other sources on terms and con- ditions consistent with the obligations of LWSC under the Project 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) any event specified in Section 4.01 (a) or (b) above 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; and (b) any event specified in Section 4.01 (d), (e) or (f) (i) (B) above shall occur, subject in the case of the event specified in Section 4.01 (f) (i) (B) to the proviso of subparagraph (ii) of paragraph (f). 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 execution of the Subsidiary Loan Agreement on behalf of the Borrower and LWSC; (b) the fulfilment of all conditions precedent to the effectiveness of, or initial disbursements under, the AfDB Loan Agreement and the GTZ Grant Agreement; (c) the signing of an agreement satisfactory to the Asso- ciation by the Borrower and LWSC for the conversion of LWSC's overdue debt service payments to the Borrower into equity contributions of the Borrower to LWSC; (d) the opening of the Special Account; (e) the appointment of an adequate number of suitably- qualified counterparts to work with the consultants, experts and specialists to assist LWSC in carrying out the Project; and (f) the appointment by LWSC of a controller or chief accountant of LWSC whose qualifications and experience shall be satisfactory to the Association. 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 opinions to be furnished to the Association: - 8 (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 5cldvt 2.00 1V.Ve is hereby specified 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. 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) 9 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 Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By A Regional Vice President Western 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 Expeznditures Category SDR Equivalent) to be Financed (1) Equipment and 2,080,000 100% of foreign supplies expenditures (2) Civil works 390,000 50% (3) Consultants, 1,990,000 100% of foreign experts and expenditures specialists, training and fellowships (4) Special Account 50,000 Amounts to be deposited pur- suant to Section 2.02 (c) of this Agreement (5) Refunding of 460,000 Amount due under Project Prepara- Section 2.02 (b) tion Advance of this Agreement (6) Unallocated 130,000 TOTAL 5,100,000 2. For the purposes of this Schedule, the term "foreign expen- ditures" means e penditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any tountry other than that of the Borrower. - 11 - 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that the proceeds of the Credit shall not 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; on this basis, 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- tibned 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 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 expen- ditures in order that further withdrawals under such Category fmay 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 expen- diture 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 objectives of the Project are to assist LWSC in: (i) the efficient management and use of its financial, human and other resources; (ii) the maintenance and rehabilitation of its distribution system, and (iii) the improvement of its billing and collection operations. The Project consists of the following Parts: Part A: Strengthening LWSC's Operations and Management (1) A program to strengthen LWSC's operations and manage- ment including: (i) establishment of a system of financial planning and control; (ii) establishment of guidelines for improvement of LWSC's operations; (iii) improvement of LWSC's services through corrosion prevention, leak detection and better maintenance of LWSC's distribution system; (iv) strengthening of LWSC's personnel training unit; (v) installation of an automated accounting system for LWSC; (vi) rehabilitation of LWSC's equipment; (vii) establishment of a meter repair shop and a vehicle repiir workshop; and (viii) on-the-job training for LWSC's staff.- (2) Acquisition of equipment, vehicles and other items necessary for carrying out the Project, including data processing equipment, tools and spare parts for the motor vehicle and meter repair shops, chemical dosage equipment and bulk chemicals to improve water treatment processes. Part B: Studies and Designs (1) Design and supervision of construction of distribution and transmission facilities included in Part C of the Project. (2) (a) Revision of the management improvement program studies carried out under the Monrovia Water Supply Project (Credit No. 859 LBR) financed by the Association. (b) Identification, cataloguing and revaluation of LWSC's fixed assets. (c) Identification of an appropriate data processing system for LWSC and acquisition of hardware and software required to operate the system. - 13 - (d) Studies of LWSC's water treatment plant processes and of its groundwater exploration and public relations operation. Part C: Distribution and Transmission (1) Laying of about 10 km of 8-inch and 12-inch diameter pipes in the Congotown, Sinkor and Mamba point areas of Monrovia to strengthen water pressure in the areas. (2) Construction of a 19,000 m3 distribution storage reser- voir of reinforced or prestressed concrete construction in Paynesville to store and regulate the transmission of water from the White Plains treatment plant into Monrovia. (3) Installation of 11 large zonal meters to allow monitor- ing of consumption in various districts of greater Monrovia. (4) Repair and rehabilitation of valves, hydrants and standpipes. (5) Purchase of about 5,000 service meters together with pipes and fittings for about 6,000 house connections and supply of spare meter parts and pipes. The Project is expected to be completed by December 31, 1989. - 14 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures 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 allocated from time to time to Categories (1), (2) and (3) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount in dollars equivalent to the amount allocated to Category (4) which is to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclu- sively for eligible expenditures in accordance with the provi- sions of this Schedule. 3. (a) For purposes of withdrawal of the Authorized Alloca- tion, the Association shall, on the basis of a request or requests by the Borrower and evidence satisfactory to the Asso- ciation that the Special Account has been duly opened, withdraw on behalf of the Borrower from the Credit Account and deposit in the Special Account such amount or amounts of the Authorized Allocation as the Borrower shall have requested, up to the total of the Authorized Allocation. (b) For purposes of withdrawal of proceeds of the Credit to replenish the Special Account, the Association shall, on the basis of requests by the Borrower furnished to the Association at such intervals as the Association shall specify, withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible expenditures. Except as the Associa- tion may otherwise agree, each such deposit shall be withdrawn by the Association from the Credit Account under the respective - 15 - Categories (1), (2) and (3), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. Prior to or at the time of each request by the Borrower for a deposit by the Association into the Special Account pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Association shall reasonably request, showing that such pay- ment was made for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, no further deposit into the Special Account shall be made by the Association: (a) when the Association shall have determined at any time that all further withdrawals can be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement, or (b) unless otherwise agreed by the Association, when the total unwithdrawn amount of the Credit allocated to Categories (1), (2) and (3) for the Project, less the amount of any qualified agreement to reimburse made by the Association and of any special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to an amount equivalent to twice the amount of the Authorized Allocation, whichever shall be sooner. Withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Categories (1), (2) and (3) shall follow buh procedures as the Association shall specify by notice to the Borrower and shall, except as the Association shall otherwise agree, be made only after and to the extent the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. If the Association shall have determined at any time that: (a) any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association and, unless otherwise agreed by the Association, prior to any further deposit into the Special Account by the Association, deposit into - 16 - the Special Account or, if the Association shall so request, refund to the Association, an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or (b) any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, and unless otherwise agreed by the Association, refund to the Association such amount then outstanding in the Special Account. 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 C 198F S FOR SECRETARY