Jordan - Second Hussein Thermal Power Project : Credit 0570 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 570 JO Development Credit Agreement (Second Hussein Thermal Power Project) BETWEEN THE HASHEMITE KINGDOM OF JORDAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 7, 1975 CONFORMED COPY CREDIT NUMBER 570 JO Development Credit Agreement (Second Hussein Thermal Power Project) BETWEEN THE HASHEMITE KINGDOM OF JORDAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 7, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 7, 1975, between THE HASHEMITE KINGDOM OF JORDAN (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement; (B) The Project will be carried out by Jordan Electricity Authority (hereinafter called JEA), a corporate body established by the Jordan Electricity Law No. 21 of 1967, with the Borrower's assistance and, as part of such assistance, the Borrower will make available to JEA. the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and JEA: NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definkions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and JEA of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; 4 (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and JEA pursuant to Section 3.01(b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (c) "JEA Law" means the Jordan Electricity Authority Law No. 21 of 1967 establishing JEA, as amended by Law No. 46 of 1973 and as the same may be amended again from time to time; (d) "First Power Development Credit Agreement" means the Development Credit Agreement (Hussein Thermal Power Project) No. 386 JO between the Borrower and the Association dated May 24, 1973; (e) "First Power Project Agreement" means the Project Agreement (Hussein Thermal Power Project) No. 386 JO between JEA and the Association dated May 24, 1973; and (f) "JD" means dinars in the currency of the Borrower. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to five million dollars ($5,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time, 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. Section 2.03. Except as the Association shall otherwise agree, the goods, works and services (other than consultants' services) for the Project shall be procured in accordance with the provisions set forth or referred to in Section 2.03 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1979 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. 5 Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 1 and November 1 commencing November 1, 1985 and ending May 1, 2025, each installment to and including the installment payable on May 1, 1995 to be one-half of one per cent (1/2 of 1%) of such principal anount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. The Chairman of the Board of Directors of JEA or such other person as he may appoint in writing is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause JEA to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable JEA to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. To that end, the Borrower shall make arrangements satisfactory to the Association for the provision of funds required to complete the Project and JEA's associated expansion program related to transmission and other facilities. (b) The Borrower shall relend the proceeds of the Credit under a subsidiary loan agreement to be entered into between the Borrower and JEA under terms and conditions which shall have been approved by the Association and which shall, 6 unless the Association shall otherwise agree, provide for JEA (i) to pay to the Borrower a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount so relent and not withdrawn by JEA from time to time, (ii) to pay to the Borrower interest at a rate of eight and one-half per cent (8-1/2%) per annum on the principal amount so relent and withdrawn by JEA and outstanding from time to time, and (iii) to repay to the Borrower the principal amount so relent over a period of 25 years from the date of this Agreement, including therein a period of grace of three and one-half years. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. (a) Parties to this Agreement have agreed in Section 2.03 of the First Power Project Agreement that JEA shall employ tariff specialists acceptable to the Association under terms of reference and on conditions satisfactory to the Association to study and make recommendations to JEA not later than December 31, 1974 for its wholesale tariff structure, and to the Government for a retail tariff structure to be implemented throughout Jordan. The Borrower shall promptly discuss and cause JEA to discuss with the Association, the final recommendations of the tariff studies referred to in Section 2.03 of the First Power Project Agreement. (b) The Borrower shall cause all necessary actions to be taken to implement the new tariff structure agreed to between the Borrower and the Association following the discussions referred to in paragraph (a) of this Section not later than March 31, 1976. The tariffs shall be further reviewed and discussed with the Association not later than June 30, 1977, for implementation of the necessary changes, if any, by September 30, 1977. Section 3.03. (a) The Borrower shall promptly take and cause JEA to take a final decision not later than March 31, 1976, whether the power station at Marqa shall be operated as a "selected station" in accordance with the JEA Law, or whether said power station shall be acquired by JEA. (b) If it is decided that the power station at Marqa shall be operated as a "selected station" in accordance with the JEA Law, a contract acceptable to the Association shall be executed between JEA and the Jordanian Electricity Power Company (hereinafter referred to as JEPCO) before June 30, 1976. 7 (c) If it is decided that the power station at Marqa is to be acquired by JEA, all necessary legal action shall be completed by June 30, 1976 or such other date as the Borrower and the Association shall agree, and the actual transfer of all assets to JEA shall be accomplished by December 31, 1976 or such other date as the Borrower and the Association shall agree. (d) Section 3.08 of the First Power Development Credit Agreement shall be amended to read as provided in paragraphs (a), (b) and (c) of this Section. Section 3.04. The Borrower shall ensure that reconditioning of the diesel generating units installed on or before 1970 at the power station at Marqa, shall be accomplished by, or under guidance and supervision of, JEA. Section 3.05. Unless the Association shall otherwise agree, the Borrower shall prohibit the declaration or payment of dividends by JEA prior to January 1, 1979, unless in the opinion of the Association such a distribution would not be prejudicial to JEA's requirements for financing its expansion program. Section 3.06. The Borrower shall: (a) Present its proposals to the Legislature for enactment of a General Electricity Law to regulate the power sector on or before December 31, 1975; such law to set out the principles and basic requirements for inter alia generation, transmission and distribution of power (including concessions and licenses), tariffs, easements, inspection and testing, a unified accounting system, the collection of statistics and the preparation of technical information. (b) Make available to the Association its proposals for the said Law sufficiently in advance for the Association's comments. (c) Formulate such regulations or bylaws as may be necessary to achieve the objectives of said Law including the delegation to JEA of regulatory functions of a technical nature. Section 3.07. The Borrower shall consult the Association before presenting its proposals to amend the JEA Law to the Legislature. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: 8 (a) JEA shall have failed to carry out any of its obligations under the Project Agreement or the Subsidiary Loan Agreement; (b) JEA shall have become unable to pay its debts as they mature or any action or proceedings shall have been taken by JEA or by others whereby any of the property of JEA shall or may be distributed among its creditors; (c) The JEA Law shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of JEA to fulfill its functions; and (d)(i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower or JEA to withdraw the proceeds of any grant or loan made to the Borrower or JEA for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower or JEA establishes to the satisfaction of the Association thaL; (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower or JEA to perform any of its obligations under such agreement, and (B) adequate funds for the Project are available to the Borrower or JEA from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement and of JEA under the Project Agreement. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) the event specified in paragraph (a) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; and (b) the events specified in paragraphs (b) and (d) of Section 4.01 of this Agreement shall occur. 9 ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01(b) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of JEA have been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and JEA, respectively, have been duly authorized or ratified by all necessary corporate and governmental action; (c) the introduction of adequate provisions, satisfactory to the Association, as agreed by parties to this Agreement in Section 3.04 of the First Power Development Credit Agreement, empowering JEA to adjust its charges for the sale of electricity to cover additional operating expenses resulting from variations in the price paid by JEA for residual fuel oil above an average price of JD7.5 per ton; and, if considered appropriate, will allow the retail charges for the sale of electricity to be adjusted accordingly; and (d) the Borrower's assurance satisfactory to the Association that funds have been allocated for the financing of engineering and consultants' services for the Project. Section 5.02. The following are specified as additional matters within the meaning of Section 12.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, JEA, and is legally binding upon JEA in accordance with its terms; and (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and JEA, is legally binding upon the Borrower and JEA in accordance with its terms. Section 5.03. The date October 15, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. 10 ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The President of the National Planning Council of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: National Planning Council P.O. Box 555 Amman Hashemite Kingdom of Jordan Cable address: NPC Amman For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 11 in their respective names in the District of Columbia, United States of America, as of the day and year first above written. THE HASHEMITE KINGDOM OF JORDAN By /s/ Abdullah Salah Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ M. P. Benjenk Regional Vice President Europe, Middle East and North Afica 12 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of imported items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil Works 300,000 10% (2) Electrical- and 4,20000 30% of foreign Mechanical-Works, expenditures and Associated Ser- vices for Part A. 1 of the Project (Zarqa construction) (3) Study described in 50,000 25% of foreign Part B of the Pro- expenditures ject (4) Consultants' Ser- 150,000 15% of foreign vices expenditures (5) Unallocated 300,000 TOTAL 5,000,000 2. For the purposes of this Schedule the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 13 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Categories (3) and (4) on account of expenditures incurred after March 1, 1975 in an aggregate amount not exceeding the equivalent of $100,000. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph I above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 14 SCHEDULE 2 Description of the Project The Project consists of the following: A. Generation 1. Construction of a steam-electric generating unit at Zarqa with an aggregate generating capacity of about 33 MW; associated facilities including those for fuel transfer from the adjacent refinery and storage facilities, a substation and personnel housing. 2. Reconditioning the diesel-electric power station at Marqa. B. Studies The South Jordan Power Development Study. The Project is expected to be completed by June 30, 1978.