Jordan - Amman Water Supply Project : Credit 0018 - Project Agreement - Conformed

CREDIT NUMBER 18 JO Project Agreement (Amman Water Supply Project) BETWEEN THE MUNICIPALITY OF AMMAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED DECEMBER 22, 1961 CREDIT NUMBER 18 JO Project Agreement (Amman Water Supply Project) BETWEEN THE MUNICIPALITY OF AMMAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED DECEMBER 22, 1961 AGREEMENT, dated December 22, 1961, between the MUNICIPALITY oF AMMAN (hereinafter called Amman) and INTERNATIONAL DEVELOPMENT AssociATioN (hereinafter called the Association). WHEREAs by a development credit agreement of even date herewith (hereinafter called the Credit Agreement) between The Hashemite Kingdom of Jordan (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower a develop- ment credit in various currencies equivalent to two million dollars ($2,000,000), on the terms and conditions set forth in the Credit Agreement, but only on condition that Amman agree to undertake certain obligations to the Association as hereinafter in this Project Agreement set forth; and WHEREAS Amman, in consideration of the Association's entering into the Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions SECTION 1.01. Wherever used in this Project Agreement, unless the context shall otherwise require, the several terms defined in the Credit Agreement and in the Regulations (as so defined) shall have the respective meanings therein set forth. ARTICLE II Particular Covenants of Amman SECTION 2.01. (a) Amman shall carry out the Project with due diligence and efficiency and in conformity with sound engineering, financial and public utility practices. 4 (b) Amman shall make available promptly as needed all sums which shall be required for the carrying out of the Project. SECTION 2.02. Amman covenants that, except as .the Association shall otherwise agree: (a) in the construction of the facilities included in the Project, Amman will at all times employ competent and experienced consultants acceptable to, and upon terms and conditions satisfactory to, Amman and the Association; and (b) all works included in the Project to be constructed under contract will be constructed by contractors acceptable to Amman and the Association, employed under contracts satisfactory to Amman and the Association. SECTION 2.03. (a) Amman shall at all times carry on its operations and conduct its affairs in respect of its water supply plant and facilities (i) under capable and efficient management satisfactory to the Association and (ii) in accordance with sound business, financial and public utility practices. (b) Amman will operate, maintain, renew and repair its water supply plant and facilities in accordance with sound engineering and public utility practices. SECTION 2.04. Except as Amman and the Association shall otherwise agree, (i) Amman shall cause all goods purchased in whole or in part with the proceeds of the Credit to be used exclusively in the carrying out and operation of the Project and (ii) Amman shall obtain title to all such goods free and clear of all encumbrances. SECTION 2.05. Upon request from time to time by the Association, Amman shall promptly furnish or cause to be furnished to the Association the plans, specifications and work schedules for the Project and any material modifica- tions subsequently made therein, in such detail as the Asso- ciation shall reasonably request. 5 SECTION 2.06. Amman shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Credit, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof), and to reflect in accordance with consist- ently maintained sound accounting practices all financial transactions between the Borrower and Amman with respect to the Project and the operations and financial condition with respect to the Project of the department of Amman responsible for the carrying out of the Project or any part thereof ; shall enable the Association's representatives to inspect the Project, the goods, all water supply plant and facilities operated by Amman and any relevant records and documents; and shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Credit, the Project, the goods, all financial transactions between the Borrower and Amman with respect to the Project and the operations and financial condition with respect to the Project of the department of Amman responsible for the carrying out of the Project or any part thereof. SECTION 2.07. (a) Amman and the Association shall co- operate fully to assure that the purposes of the Credit will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request. (b) Amman and the Association shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Credit. Amman shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the per- formance by Amman of its obligations under this Project Agreement or the obligations to be performed by it pur- suant to the provisions of the Credit Agreement, or which shall increase or threaten to increase materially the esti- mated cost of the Project. 6 SECTION 2.08. Amman shall at all times maintain water rates adequate to provide sufficient revenue: (a) to cover operating expenses, including taxes, if any, and interest payments on borrowings, and to provide for adequate maintenance and depreciation based on realistic valuations of assets; (b) to meet repayments on long-term indebtedness to the extent that any such repayments exceed the provisions for depreciation; (c) to finance the normal year to year extensions of the water supply system and to provide a reasonable part of the cost of future major expansion. SECTION 2.09. Amman undertakes that, for the purpose of carrying out and operating the Project and of operating its water supply plant and facilities, Amman will establish a department of Amman which will at all times (a) function under rules or regulations in form and substance satisfac- tory to the Association and (b) have such powers, separa- tion of accounts and functions, management and staff as are necessary for the diligent and efficient carrying out and operation of the Project and the operation of such plant and facilities. SECTION 2.10. (a) Amman shall insure or cause to be insured with responsible insurers all goods financed out of the proceeds of the Credit. Such insurance shall cover such marine, transit and other hazards incident to purchase and importation of the goods into the territories of the Bor- rower and delivery thereof to the site of the Project, and shall be for such amounts, as shall be consistent with sound commercial practices. Such insurance shall be payable in the currency in which the cost of the goods insured there- under shall be payable or in a freely convertible currency. (b) Amman shall take out and maintain, with good and reputable insurance companies, insurance against such risks and in such amounts as shall be consistent with sound public utility and business practices. 7 SECTION 2.11. Except as the Association shall otherwise agree, Amman shall not undertake the construction of the water treatment plants and related supply lines and facili- ties described in part B of Schedule 1 of the Credit Agree- ment until evidence satisfactory to the Association shall have been furnished to it establishing the need for such plants in the Project. SECTION 2.12. Amman shall not, during a period of ten years from the date of this Agreement, permit its depart- ment established pursuant to Section 2.09 to undertake any major works not included in the Project, except to the extent that any such works shall be undertaken pursuant to a sound financial plan approved by the Association. ARTICLE III Effective Date; Termination SECTION 3.01. This Project Agreement shall come into force and effect on the Effective Date. If, pursuant to Section 8.04 of the Regulations, the Association shall termi- nate the Credit Agreement, the Association shall promptly notify Amman thereof and, upon the giving of such notice, this Project Agreement and all obligations of the parties hereunder shall forthwith terminate. SECTION.3.02. If and when the entire principal amount of the Credit shall have been paid or caused to be paid by the Borrower (or shall have been cancelled), together with service charges which shall have accrued on the Credit, this Project Agreement and all obligations of Amman and of the Association hereunder shall forthwith terminate. ARTICLE IV Miscellaneous Provisions SECTION 4.01. Any notice or request required or per- mitted to be given or made under this Project Agreement and any agreement between the parties contemplated by 8 this Project Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable or radiogram to the party to which it is required or permitted to be given or made at its address hereinafter specified, or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are- (a) For Amman: The Lord Mayor of Amman Amman Jordan Alternative address for cablegrams and radiograms: Amman Municipality Amman (b) For the Association: International Development Association 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Indevas Washington, D. C. SECTION 4.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Project Agreement on behalf of Amman may be taken or executed by the Lord Mayor of Amman or such other person or persons as he shall desig- nate in writing. SECTION 4.03. Amman shall furnish to the Association sufficient evidence of the authority of the person or persons who will, on behalf of Amman, take any action or execute 9 any documents required or permitted to be taken or exe- cuted by Amman pursuant to any of the provisions of this Project Agreement and the authenticated specimen signa- ture of each such person. SECTION 4.04. This Project Agreement may be executed in several counterparts, each of which shall be an original and all collectively but one instrument. IN WITNESS WHEREOF the parties hereto have caused this Project Agreement to be signed in their respective names by their representatives thereunto duly authorized and delivered in the District of Columbia, United States of America, as of the day and year first above written. THE MUNICIPALITY OF AMMAN By Y. HAIKAL Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By W. A. B. ILIFF Vice-President