Conformed Copy - L3626 - Power Transmission and Rehabilitation Project - Project Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3626 PH (Power Transmission and Rehabilitation Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated August 13, 1993 LOAN NUMBER 3626 PH GUARANTEE AGREEMENT AGREEMENT, dated August 13, 1993, between REPUBLIC OF THE PHILIPPINES (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS: (A) The Guarantor and National Power Corporation (the Borrower), having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to the Loan Agreement, have requested the Bank to assist in the financing of the Project; WHEREAS: (B) By the Loan Agreement of even date herewith between the Bank and the Borrower, the Bank has agreed to extend to the Borrower a loan in various currencies equivalent to one hundred and ten million dollars ($110,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as provided in this Agreement; and WHEREAS: (C) The Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower. Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth below (the General Conditions) constitute an integral part of this Agreement: (a) The last sentence of Section 3.02 is deleted. (b) In Section 6.02, sub-paragraph (k) is re-lettered as sub-paragraph (l) and a new sub-paragraph (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." Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to and Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under this Agreement, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan, and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures required for the carrying out of the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures. ARTICLE III Other Covenants Section 3.01. Without limitation or restriction upon the provisions of Article II of this Agreement, and except as the Bank shall otherwise agree, the Guarantor shall carry out a periodic review and take all such measures necessary on its part (including, but without limitation, adjustments of the structure or levels of electricity tariffs of the Borrower) as shall enable the Borrower to produce revenues sufficient to ensure that the Borrower shall comply at all times with its rate of return and debt service coverage obligations pursuant to the provisions of sections 5.02 and 5.04 of the Loan Agreement, respectively. Section 3.02. Without limitation or restriction upon the provisions of Article II of this Agreement: (a) The Guarantor and the Bank shall, from time to time at the request of either party, exchange views with regard to the Page 3 implementation of the Energy Sector Plan and the achievement of its objectives. (b) The Guarantor shall: (i) not later than October 1, in each Fiscal Year, review with the Bank and the Borrower the progress achieved by the Borrower in implementing the Power Development Program; and (ii) promptly thereafter, taking into account the Bank's views and recommendations, take all such measures as shall be necessary to enable the Borrower to carry out said Power Development Program with due diligence and efficiency so as to achieve its objectives. (c) The Guarantor shall: (i) not later than December 31, 1993, review with the Bank and the Borrower the findings and recommendations of the EOIS; and (ii) promptly thereafter take all such measures as shall be necessary to enable the Borrower to implement the recommendations which shall have been agreed upon between the Bank, the Borrower and the Guarantor, all with due diligence and efficiency. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Secretary of Finance of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Secretary of Finance Department of Finance Manila Republic of the Philippines Cable address: Telex: SECFIN 40268 Manila CB-CONF For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 248423 (RCA), Washington, D.C. 82987 (FTCC), 64145 (WUI) or 197688 (TRT) 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. REPUBLIC OF THE PHILIPPINES By /s/ Romeo Bernado Authorized Representative Page 4 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Gautam Kaji Regional Vice President East Asia and Pacific