Burundi - Energy Sector Rehabilitaton Project : Credit 2230 - Project Agreement - Conformed

CREDIT NUMBER 2230 BU Project Agreement (Energy Sector Rehabilitation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and REGIE DE PRODUCTION ET DE DISTRIBUTION D'EAU ET D'ELECTRICITE Dated , 1991 CREDIT NUMBER 2230 BU PROJECT AGREEMENT AGREEMENT, dated , 1991, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and REGIE DE PRODUCTION ET DE DISTRIBUTION D'EAU ET D'ELECTRICITE (REGIDESO). WHEREAS (A) by a Development Credit Agreement of even date herewith between the Republic of Burundi (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to sixteen million three hundred thousand Special Drawing Rights (SDR 16,300,000), on the terms and conditions set forth in the Develop- ment Credit Agreement, but only on condition that REGIDESO agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and REGIDESO, part of the proceeds of the credit provided for under the Development Credit Agreement will be made available to REGIDESO on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS REGIDESO, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. REGIDESO declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and to this end, shall carry out Parts A.1, A.2 and D of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, environ- -2- mental, engineering and technical practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for such parts of the Project. Section 2.02. Except as the Associatirn shall otherwise agree, procurement of the goods, works and consultants' services required for Parts A.1, A.2 and D of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.03. REGIDESO shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement and Parts A.1, A.2 and D of the Project. Section 2.04. REGIDESO shall duly perform all its obligations under Subsidiary Loan Agreement. Except as the Association shall otherwise agree, REGIDESO shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) REGIDESO shall, at the request of the Association, exchange views with the Association with regard to the progress of Parts A.1, A.2 and D of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) REGIDESO shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of Parts A.1, A.2 and D of the Project, the accomplishment of the purposes of the Credit, or the performance by REGIDESO of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.06. REGIDESO shall appoint and employ for the duration of the Project competent chief officers to head its Accounting and Internal Auditing Units. -3- Section 2.07. REGIDESO shall, by September 30, 1991, furnish to the Association the following documeatation in form and substance satisfactory to the Association: (a) a plan of action to reduce technical and non-technical losses of electricity; (b) a preventive maintenance plan for REGIDESO's electric systems; (c) the recommendation of a manpower study carried out under terms of reference acceptable to the Association including a plan of action to reduce personnel and increase productivity; (d) a personnel training program; (e) a billing and revenue collection improvement program; and (f) a proposal for the construction of a new administrative building and for other required improvements in facilities. Section 2.08. REGIDESO shall, for the purposes of carrying out Part D of the Project, establish and thereafter maintain for the duration of the Project a project implementation unit with staff, organization and functions satisfactory to the Association. ARTICLE III Management and Operations of REGIDESO Section 3.01. REGIDESO shall carry on its operations and conduct its affairs in accordance with sound administrative, f .nancial and technical practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. REGIDESO shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and electrical practices. Section 3.03. REGIDESO shall take out and maintain with responsible insurers, or make other provision satisfactory to the -4- Association for insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) REGIDESO shall maintain records and accounts, including separate accounts for its water operations and separate accounts for its electricity operations, adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) REGIDESO sUall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as socn as available, but in any case not later than f ix months after the end of each such year, (A) ..ertified copies of its financial statements for such year as so audited including, in respect ef the financial statements for the fiscal year ending December 31, 1990, the recommendations of the study on the revaluation of assets financed from the proceeds of a credit (Credit No. 1593-BU) granted by the Association to the Borrower, by an Agreement dated June 14, 1985 to assist in the financing of a Power Transmission and Distribution Project, and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Association shall from time to time reasonably request. -5- Section 4.02. (a) Except as the Association shall otherwise agree, REGIDESO shall produce for its fiscal year ending on December 31, 1991, funds from internal sources equivalent to not less than 20%, and for each of its fiscal years thereafter equivalent to not less than 30%, of the annual average of REGIDESO's capital expenditures incurred, or expected to be incurred, for that year. (b) Before November 30 in each of its fiscal years starting in 1991 REGIDESO shall, on the basis of forecasts prepared by REGIDESO and satisfactory to the Association, review whether it would meet the requirements set forth in paragraph (a) in respect of such year and the next following fiscal year and shall furnish to the Association a copy of such review upon its completion. (c) If any such review shows that REGIDESO would not meet the requirements set forth in paragraph (a) for REGIDESO's fiscal years covered by such review, REGIDESO shall promptly take all necessary measures (including, without limitation, adjustments of the structure or levels of its rates) in order to meet such requirements. (d) For the purposes of this Section: (i) The term "funds from internal sources" means the difference between: (A) the sum of revenues from all sources related to operations, consumer deposits and consumer contributions in aid of construction, net non-operating income and any reduction in working capital other than cash; and (B) the sum of all expenses related to operations, including administration, ade- quate maintenance and taxes and payments in lieu of taxes (excluding provision for depreciation and other non-cash operating charges), debt service requirements, all cash dividends and other cash distributions of surplus, increase in working capital other than cash and other cash outflows other than capital expenditures. -6- (ii) The term "net non-operating income" means the difference between: (A) revenues from all sources other than those related to operations; and (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above. Section 4.03. (a) Except as the Association shall otherwise agree, REGIDESO shall not incur any debt, unless the net revenues of REGIDESO for the fiscal year immediately preceding the date of such incurrence or for a later twelve-month period ended prior to the date of such incurrence, whichever is the greater, shall in 1991 be at least 1.2 times, and thereafter at least 1.5 times the esti- mated maximum debt service requirements of REGIDESO for any succeeding fiscal year on all debt of REGIDESO, including the debt to be incurred. (b) For the purposes of this Section: (i) The term "debt" means any indebtedness of REGIDESO maturing by its terms more than one year after the date on which it is originally incurred. (ii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date of such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into. (iii) The term "net revenues" means the difference between: (A) the sum of revenues from all sources related to operations adjusted to take account of REGIDESO's tariffs in effect at the time of the incurrence of debt, even though they were not in effect during the -7- twelve-month period to which such revenues relate, and net non-operating income; and (B) the sum of all expenses related to operations including administration, ade- quate maintennace, taxes and payments in lieu of taxes, but excluding provision for depreciation, other non-cash operating charges and interest and other charges on debt. (iv) The term "net non-operating income" means the difference between: (A) revenues from all sources other than those related to operations; and (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above. Section 4.04. Except as the Association shall otherwise agree, REGIDESO: (a) shall not undertake any new investment having an economic rate of return of less than 10% or a financial rate of return of less than 8%, both as calculated using a method of calculation acceptable to the Association; and (b) shall not undertake any investment exceeding in the aggregate the equivalent of $650,000 without the prior consent of the Association. Section 4.05. REGIDESO shall systematically cut off the supply of electricity to all consumers, including agencies of the Borrower and Municipalities, having invoices outstanding for sixty days or more and shall take all other steps as shall be necessary to reduce the average age of receivables from the private sector to five months' billing by December 31, 1991 and to three months' billing by December 31, 1992 and thereafter. -8- ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of REGIDESO thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date twenty years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify REGIDESO of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this 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, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified -9- 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: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) For REGIDESO: Telex: 3 Avenue de la Science 5006 BDI B.P. 660 Bujumbura Republic of Burundi Facsimile No: 00257 226563 Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of REGIDESO, or by REGIDESO on behalf of REGIDESO under the Development Credit Agreement, may be taken or executed by the General Manager or such other person or persons as the General Manager shall designate in writing, and REGIDESO shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. - 10 - IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. INTERNATIONAL DEVELOPMENT ASSOCIATION ' Regional Vice President Africa REGIE DE PRODUCTION ET DE DISTRIBUTION D'EAU ET D'ELECTRICITE Authorized Representative - 11 - SCHEDULE 1 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part D hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in Burundi may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Preference for Domestic Contractors In the procurement of works in accordance with the procedures described in Part A hereof, REGIDESO may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part D: Other Procurement Procedures 1. Items or groups of items estimated to cost the equivalent of $100,000 or less per contract, up to an aggregate amount not to exceed the equivalent of $500,000, may be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids obtained from at least three qualified suppliers eligible under the Guidelines and in accordance with procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55, 2.56 thereof). 2. Items or groups of items estimated to cost the equivalent of $100,000 or less per contract, up to an aggregate amount not to exceed the equivalent of $700,000, may be procured under contracts - 12 - awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 3. Items or groups of items estimated to cost the equivalent of $100,000 or less per contract, up to an aggregate amount not to exceed the equivalent of $1,000,000, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers from at least two different countries eligible under the Guidelines, in accordance with procedures acceptable to the Association. Part E: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. 2. The figure of 15 is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II: Employment of Consultants In order to assist REGIDESO in carrying out Parts A.1, A.2 and D of the Project, REGIDESO shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by The World Bank as Executing Agency" published by the Bank in August 1981. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOP, SECRETARY