Tanzania - Kidatu Hydroelectric Project : Loan 0715 - Guarantee Agreement - Conformed

LOAN NUMBER 715 TA Guarantee Agreement (Kidatu Hydroelectric Project) BETWEEN UNITED REPUBLIC OF TANZANIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 14, 1970 LOAN NUMBER 715 TA Guarantee Agreement (Kidatu Hydroelectric Project) BETWEEN UNITED REPUBLIC OF TANZANIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 14, 1970 GUARANTEE AGREEMENT AGREEMENT, dated December 14, 1970, between UNITED REPUBLIC OF TANZANIA (hereinafter called Tanzania) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) by a development credit agreement of even date herewith, the Kingdom of Sweden has agreed to make available to Tanzania a credit in a principal amount of sixty-three million Swedish Kronor (SKr63,000,000) equivalent at present parity rate as nearly as possible to twelve million dollars ($12,000,000) on the terms and conditions set forth in the said agreement; (B) by an agreement of even date herewith between the Bank and Tanzania Electric Supply Company Limited (hereinafter called the Company) which said agreement is hereinafter called the Loan Agreement, the Bank has agreed to make to the Company a Loan in various currencies equivalent to thirty million dollars ($30,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Tanzania agrees to guarantee the obligations of the Company in respect of such Loan as hereinafter provided; (C) by an agreement of even date herewith between Tanzania, the Kingdom of Sweden, the Bank and the Company, which said agreement is hereinafter called the Joint Financing Agreement, the parties thereto have agreed on the allocation, withdrawals and use of the proceeds of the said credit and Loan and on the execution of the project to be financed thereby, as well as on other matters; and (D) Tanzania, in consideration of the Bank's entering into the Loan Agreement with the Company, has agreed to gUarantee the obligations of the Company; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Guarantee Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth 4 in Schedule 2 to the Loan Agreement (said General Conditions Applicable to Loan and Guarantee Agreements, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Guarantee Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in Section 1.02 and Schedule 2 to the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee; Bonds; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, Tanzania 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 Bonds, the premium, if any, on the prepayment of the Loan or the redemption of the Bonds prior to their maturity and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement, the Bonds and in the Joint Financing Agreement. Section 2.02. Tanzania shall endorse, in accordance with the provisions of the General Conditions, its guarantee on the Bonds executed and delivered by the Company. The Minister of Tanzania for the time being responsible for finance and such other person or persons as he shall appoint in writing are designated as authorized representatives of Tanzania for the purposes of Section 8.10 of the General Conditions. ARTICLE III Other Covenants Section 3.01. Tanzania shall duly perform all its obligations as set forth in the Joint Financing Agreement. Section 3.02. (a) It is the mutual intention of Tanzania and the Bank that no other external debt shall enjoy any priority over the Loan or the Bonds by way of a lien on governmental assets. (b) To that end Tanzania (i) represents that at the date of this Agreement no lien exists on any governmental assets as security for any external debt except 5 as otherwise disclosed in writing by Tanzania to the Bank, and (ii) undertakes that if any such lien shall be created, it will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds and in the creation of any such lien express provision will be made to that effect. Tanzania shall promptly inform the Bank of the creation of any such lien. (c) The foregoing representation and undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. As used in this Section, the term "governmental assets" means assets of Tanzania, of any of its political subdivisions, of any agency of Tanzania or of any such political subdivision, and assets of the Bank of Tanzania or any institution performing the functions of a central bank for Tanzania. ARTICLE IV Consultation and Information Section 4.01. Tanzania and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end Tanzania and the Bank shall from time to time, at the reauest of either party: (i) exchange views through their representatives with regawd to the performance of their respective obligations under the Guarantee Agreement and other matters relating to the purposes of the Loan; and (ii) furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of Tanzania, such information shall include information with respect to financial and economic conditions in the territories of Tanzania, including its balance of payments, and the external debt of Tanzania, of any of its political subdivisions and of any agency of Tanzania or of any such political subdivision. Section 4.02. (a) Tanzania shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. (b) Tanzania shall afford all reasonable opportunity for accredited representatives of the Bank to visit any part of the territories of Tanzania for purposes related to the Loan. 6 ARTICLE V Taxes and Restrictions Section 5.01. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes imposed under the laws of Tanzania or laws in effect in its territories; provided, however, that the foregoing shall not apply to taxation of payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of Tanzania. Section 5.02. This Agreement, the Loan Agreement, the Joint Financing Agreement and the Bonds shall be free from any taxes that shall be imposed under the laws of Tanzania or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof. Section 5.03. The payment of the principal of, and interest and other charges on, the Loan and the Bonds shall be free from all restrictions, regulations, controls or moratoria of any nature imposed under the laws of Tanzania or laws in effect in its territories. ARTICLE VI Representative of Tanzania; Addresses Section 6.01. The Minister of Tanzania for the time being responsible for finance is designated as representative of Tanzania for the purposes of Section 10.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 10.01 of the General Conditions: For Tanzania: Principal Secretary The Treasury P. 0. Box 9111 Dar es Salaam, Tanzania Cable address: Treasury Dar es Salaam 7 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Intbafrad Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. UNITED REPUBLIC OF TANZANIA By /s/ G.M. Rutabanzibwa Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ J. Burke Knapp Vice President