Conformed Copy - L3651 - Energy Sector Adjustment Loan - Amendment

Page 1 April 16, 1996 H.E. Rima Khalaf Hunaidi Minister of Planning Ministry of Planning P.O. Box 1220 Amman The Hashemite Kingdom of Jordan Re: Loan No. 3651 JO (Energy Sector Adjustment Loan) Amendment to the Loan Agreement Excellency: We refer to the Loan Agreement between us for the above Loan, dated November 24, 1993 (the Loan Agreement). The Executive Directors of the International Bank for Reconstruction and Development (the "Bank") have recently approved a proposal to simplify disbursements under adjustment operations, and ongoing operations are eligible to benefit from these new procedures. We are pleased to inform you that we hereby agree to amend the Loan Agreement as follows: 1. The words "the financing of urgently needed imports and services required" in WHEREAS (A) of the Preamble are deleted and the words "support of the Program" are substituted therefor. 2. Paragraphs (a) through (e) of Section 1.01 are deleted and the following paragraphs are substituted therefor: "(a) Section 2.01, paragraph 11, is modified to read: "'Project' means the Program, referred to in the Preamble to the Loan Agreement, in support of which the Loan is made."; (b) The last sentence of Section 3.02 is deleted; (c) Section 4.01 is modified to read: "Except as the Bank and the Borrower shall otherwise agree, withdrawals from the Loan Account shall be made in the currency of the deposit account specified in Section 2.02 of the Loan Agreement." (d) Section 5.01 is modified to read: "The Borrower shall be entitled to withdraw the proceeds of the Loan from the Loan Account in accordance with the provisions of the Loan Agreement and of these General Conditions. Except as the Bank and the Borrower shall otherwise agree, no withdrawals shall be made: (a) on account of expenditures in the territories of any country which is not a member of the Bank or for goods produced in, or services supplied from, such territories; or (b) for the purpose of any payment to persons or entities, or for any import of goods, if such payment or import, to the knowledge of the Bank, is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." (e) The last sentence of Section 5.03 is deleted; (f) In Section 6.02, subparagraph (k) is relettered as sub- Page 2 paragraph (l) and a new subparagraph (k) is added to read: "(k) An extraordinary situation shall have arisen under which any further withdrawals under the Loan would be inconsistent with the provisions of Article III, Section 3 of the Bank's Articles of Agreement."; (g) Section 9.07 (c) shall be modified to read: "(c) Not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution of the program referred to in the Preamble to the Loan Agreement, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan."; and (h) Section 9.05 is deleted and Sections 9.06, 9.07 (as modified above), 9.08 and 9.09 are renumbered, respectively, Sections 9.05, 9.06, 9.07 and 9.08." 3. The following new paragraph (n) is added to Section 1.02: "(n) 'Deposit Account' means the account referred to in Section 2.02 (b) of this Agreement." 4. Paragraphs (a) and (b) of Section 2.02 are deleted and the following paragraphs are substituted therefor: "(a) Subject to the provisions of paragraphs (b) (c) (d) and (e) of this Section, the Borrower shall be entitled to withdraw the proceeds of the Loan from the Loan Account in support of the Program." (b) The Borrower shall open, prior to furnishing to the Bank the first request for withdrawal from the Loan Account, and thereafter maintain in its central bank, a deposit account in US Dollars on terms and conditions satisfactory to the Bank. All withdrawals from the Loan Account shall be deposited by the Bank into the Deposit Account. 5. The following new paragraphs (c) (d) and (e) are added to Section 2.02: (c) The Borrower undertakes that the proceeds of the Loan shall not be used to finance expenditures excluded pursuant to the provisions of Schedule 1 to this Agreement. If the Bank shall have determined at any time that any proceeds of the Loan shall have been used to make a payment for an expenditure so excluded, the Borrower shall, promptly upon notice from the Bank, (i) deposit into the Deposit Account an amount equal to the amount of said payment, or (ii) if the Bank shall so request, refund such amount to the Bank. Amounts refunded to the Bank upon such request shall be credited to the Loan Account for cancellation. (d) No withdrawal shall be made from the Loan Account after the aggregate of the proceeds of the Loan withdrawn from the Loan Account shall have reached the equivalent of $40,000,000, unless the Bank shall be satisfied, after a exchange of views as described in Section 3.01 of this Agreement based on evidence satisfactory to the Bank: (i) with the progress achieved by the Borrower in the carrying out of the Program; and (ii) that the actions described in Part A of Schedule 3 to this Agreement have been taken. If, after said exchange of views, the Bank shall have given notice to the Borrower that the progress achieved and actions taken are not satisfactory and, within 90 days after such notice, the Borrower shall not have achieved progress and taken actions satisfactory to the Page 3 Bank, then the Bank may, by notice to the Borrower, cancel the unwithdrawn amount of the Loan or any part thereof. (e) No withdrawal shall be made from the Loan Account after the aggregate of the proceeds of the Loan withdrawn from the Loan Account shall have reached the equivalent of $60,000,000, unless the Bank shall be satisfied, after a exchange of views as described in Section 3.01 of this Agreement based on evidence satisfactory to the Bank: (i) with the progress achieved by the Borrower in the carrying out of the Program; and (ii) that the actions described in Part B of Schedule 3 to this Agreement have been taken. If, after said exchange of views, the Bank shall have given notice to the Borrower that the progress achieved and actions taken are not satisfactory and, within 90 days after such notice, the Borrower shall not have achieved progress and taken actions satisfactory to the Bank, then the Bank may, by notice to the Borrower, cancel the unwithdrawn amount of the Loan or any part thereof. 6. Section 3.02 is amended as follows: "Section 3.02 Except as the Bank shall otherwise agree, procurement of the services to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 3 to this Agreement." 7. Section 3.03 (b) (i) is amended as follows: "Section 3.03 (b) (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Deposit Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank." 8. Schedule 1 is deleted and the new Schedule 1 set forth in the Attachment to this Amendment is substituted therefor. 9. Schedule 3 is amended by deleting paragraphs 1 through 6, and paragraph 7 is renumbered as paragraph 1. 10. The title for Part A of Schedule 4 is revised to read: "Actions Referred to in Section 2.02(d) of this Agreement." The title for Part B of Schedule 4 is revised to read "Actions Referred to in Section 2.02 (e) of this Agreement." 11. Schedule 5 is deleted. Please confirm your agreement to the foregoing by signing, dating and returning to us the form of confirmation on the enclosed copy of this letter. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Inder K. Sud Inder K. Sud Director Country Department II Middle East and North Africa Region CONFIRMED: HASHEMITE KINGDOM OF JORDAN By /s/ Rima Khalaf Hunaidi Page 4 Authorized Representative Date: June 3, 1996 SCHEDULE 1 Excluded Expenditures For purposes of Section 2.02(c) of this Agreement, the proceeds of the Loan shall not be used to finance any of the following expenditures: 1. expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower; 2. expenditures for goods or services supplied under a contract which any national or international financing institution or agency other than the Bank or the Association shall have financed or agreed to finance, or which the Bank or the Association shall have financed or agreed to finance under another loan or a credit; 3. expenditures for goods included in the following SITC groups or sub-groups, or any successor groups or sub-groups under future revisions to the SITC, as designated by the Bank by notice to the Borrower: Group Sub-group Description of Items 112 - Alcoholic beverages 121 - Tobacco, unmanufactured, tobacco refuse 122 - Tobacco, manufactured (whether or not containing tobacco substitutes) 525 - Radioactive and associated materials 667 - Pearls, precious and semi-precious stones, unworked or worked 718 718.7 Nuclear reactors, and parts thereof; fuel elements (cartridges), non- irradiated, for nuclear reactors 728.43 - Tobacco processing machinery 897 897.3 Jewelry of gold, silver or platinum group metals (except watches and watch cases) and goldsmiths' or silversmiths' wares (including set gems) 971 - Gold, non-monetary (excluding gold ires and concentrates) 4. expenditures for goods intended for a military or para-military purpose or for luxury consumption; 5. expenditures for environmentally hazardous goods for purposes of this paragraph the term "environmentally hazardous goods" means goods, the manufacture, use or import of which is prohibited under the laws of the Borrower or international agreements to which the Borrower is a party, and any other goods designated as environmentally hazardous by agreement between the Borrower and the Bank; and 6. in furtherance of the purposes of Section 5.01 of the General Conditions, expenditures (a) in the territories of any country which is not a member of the Bank or for goods procured in, or services supplied from, such territories or (b) on account of any payment to persons or entities, or any import of goods, if such payment or import is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations. 7. Subject to the provisions set forth or referred to in this Schedule, Page 5 the proceeds of the Loan may be withdrawn from the Loan Account for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of services, limited to an amount not exceeding the equivalent of $1,500,000, on account of consultants' services which shall be required, in the judgment of the Borrower and with the agreement of the Bank, to assist the Borrower in the preparation of the Power Sub-sector Plan, energy conservation, the MEMR Reorganization Plan and the Environmental Regulations.