Conformed Copy - C2753 - National Water Development Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2753 MAI Development Credit Agreement (National Water Development Project) between REPUBLIC OF MALAWI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated November 1, 1995 CREDIT NUMBER 2753 MAI DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated November 1, 1995, between REPUBLIC OF MALAWI (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) the Association has received a letter dated May 31, 1995, from the Borrower describing a program of actions, objectives and policies designed to improve water supply services in rural and urban areas and to reform the regulatory framework for the subsector (hereinafter called the Program) and declaring the Borrower's commitment to the execution of the Program; (C) part of the Project will be carried out by Lilongwe Water Board (LWB), with the Borrower's assistance and, as part of such assistance, the Borrower will make available to LWB a portion of the proceeds of the Credit as provided in this Agreement; and WHEREAS the Association has agreed, on the basis, inter Page 2 alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the LWB Project Agreement of even date herewith between the Association and LWB; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the modifications thereto set forth below (the General Conditions) constitute an integral part of this Agreement. (a) The last sentence of Section 3.02 is deleted. (b) The second sentence of Section 5.01 is modified to read: "Except as the Association 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 any import of goods, if such payment or import, to the knowledge of the Association is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "MLGRD" means the Borrower's Ministry of Local Government and Rural Development; (b) "MIWD" means the Borrower's Ministry of Irrigation and Water Development; (c) "WRB" means the Borrower's Water Resources Board, established pursuant to the Water Resources Act, (Cap. 72:03 of the Laws of Malawi); (d) "NWB" means Northern Region Water Board; (e) "CWB" means Central Region Water Board; (f) "SWB" means Southern Region Water Board; (g) "LWB" means Lilongwe Water Board established pursuant to the Lilongwe Waterworks Act, (Cap. 72:04 of the Laws of Malawi); (h) "BWB" means Blantyre Water Board established pursuant to the Blantyre Waterworks Act, (Cap. 72:02 of the Laws of Malawi); (i) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated September 1, 1992, September 28, 1992, January 5, 1995 and January 30, 1995 between the Borrower and the Association; (j) "MIWD Special Account" means the account which the Borrower may open and maintain for MIWD pursuant to Section 2.02 (b) of this Agreement; (k) "NWB Special Account" means the account which the Page 3 Borrower may open and maintain for NWB pursuant to Section 2.02 (b) of this Agreement; (l) "CWB Special Account" means the account which the Borrower may open and maintain for CWB pursuant to Section 2.02 (b) of this Agreement; (m) "SWB Special Account" means the account which the Borrower may open and maintain for SWB pursuant to Section 2.02 (b) of this Agreement; (n) "LWB Special Account" means the account which the Borrower may open and maintain pursuant to Section 2.02 (b) of this Agreement; (o) "Special Accounts" mean the accounts referred to in subsections (j), (k), (l), (m) and (n) above and in Section 2.02 (b) of this Agreement, and "Special Account" means each and every such account; (p) "NWB Financing Agreement" means the agreement to be entered into between the Borrower and NWB pursuant to Section 3.01 (c)(i) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the NWB Financing Agreement; (q) "CWB Financing Agreement" means the agreement to be entered into between the Borrower and CWB pursuant to Section 3.01 (c)(ii) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the CWB Financing Agreement; (r) "SWB Financing Agreement" means the agreement to be entered into between the Borrower and SWB pursuant to Section 3.01 (c)(iii) of this Agreement, as the same may be amended from time to time, and includes all schedules to the SWB Financing Agreement; (s) "LWB Financing Agreement" means the agreement to be entered into between the Borrower and LWB pursuant to Section 3.01 (c)(iv) of this Agreement, as the same may be amended from time to time, and includes all schedules to the LWB Financing Agreement; (t) "Financing Agreements" mean collectively the NWB Financing Agreement, CWB Financing Agreement and SWB Financing Agreement and "Financing Agreement" means each and every such agreement. (u) "LWB Project Agreement" means the agreement between the Association and LWB, of even date herewith, as the same may be amended from time to time and such term includes all schedules and agreements supplemental to the LWB Project Agreement; (v) "Water Board" means NWB, CWB, SWB or LWB; (w) "Implementation Manual" means the comprehensive manual for the implementation of all components of the Project referred to in paragraph 7 of Schedule 4 to this Agreement; (x) "Performance Agreement" means each of the agreements, satisfactory to the Association, to be entered into by the Borrower with NWB, CWB, SWB and LWB, respectively, referred to in paragraph 6 of Schedule 4 to this Agreement; and (y) "EIB Loan Agreement" means the agreement to be entered into between the Borrower and the European Investment Bank (EIB) to finance the Third Lilongwe Water Supply Project. ARTICLE II Page 4 The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to fifty million three hundred thousand Special Drawing Rights (SDR 50,300,000). 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 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) The Borrower may, for the purposes of the Project, open and maintain in dollars five special deposit accounts in a commercial bank for use by MIWD, NWB, CWB, SWB and LWB on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 6 to this Agreement. (c) 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 canceled. Section 2.03. The Closing Date shall be June 30, 2003 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or canceled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next payment date in that year specified in Section 2.06 of this Agreement. (c) 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 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on April 15 and October 15 in each year. Page 5 Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 15 and October 15 commencing October 15, 2005 and ending April 15, 2035. Each installment to and including the installment payable on April 15, 2015 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever: (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years, and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower