Tanzania - Kidatu Hydroelectric Project-Second Stage : Loan 1306 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1306 T-TA LOAN AGREEMENT (Kidatu Hydroelectric Project - Second Stage) between UNITED REPUBLIC OF TANZANIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated August 12, 1976 LOAN AGREEMENT AGREEMENT, dated August 12, 1976, between UNITED REPUBLIC OF TANZANIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Kingdom of Sweden (hereinafter called Sweden), the Kreditanstalt fur Wiederaufbau (hereinafter called KfW) and the Bank to assist in the financing of the Project (as hereinafter defined); (B) The Bank has determined that the Borrower is eligible to receive this Loan as an intermediate term loan, as that term is defined in Resolution No. 75-111 of the Executive Directors of the Bank establishing an Interest Subsidy Fund for the Third Window (hereinafter called the Fund) and upon the terms and conditions set forth in such Resolution; (C) The Administrator of the Fund (hereinafter called the Administrator), subject to the terms and conditions set forth in the Resolution referred to in (B) above, is obligated to pay to the Bank semi-annually from the resources of the Fund an amount equal to four per cent (4%) per annum of the outstanding amounts of principal on intermediate loans, of which this Loan is one; (D) By a development co-operation agreement of even date herewith between Sweden and the Borrower (hereinafter called the Swedish Agreement), Sweden has agreed to grant to the Borrower, S -2- for the purpose of assisting in the financing of the Project (as hereinafter defined), eighty million Swedish Kronor (SKr8O,000,000) (hereinafter called the Swedish Grant), upon the terms and condi- tions set forth in the Swedish Agreement; (E) The Borrower has requested from KfW a loan in the prin- cipal amount of sixty million German Marks (DM60,000,000) (here- inafter called the KfW Loan) for the purpose of assisting in the financing of the Project (as hereinafter defined); (F) The Project will be carried out by Tanzania Electric Supply Company Limited (hereinafter called TANESCO) with the Bor- rower's assistance and, as part of such assistance, the Borrower will make available to TANESCO the proceeds of the Swedish Grant, the KfW Loan and the Loan hereinafter provided, all on terms and conditions satisfactory to the Borrower, TANESCO, Sweden, KfW and the Bank; (G) By an agreement of even date herewith (hereinafter called the Joint Financing Agreement), the Borrower, Sweden, the Bank and TANESCO have inter alia agreed (i) on the allocation, withdrawal, and use of the proceeds of the Swedish Grant and of the Loan here- inafter provided, and (ii) on the exe. tion of the Project described in Schedule 1 to the Joint Financing Agreement; and (H) WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -3- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Schedule 2 to this Agreement (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being herein- after called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the Gen- - eral Conditions and in the Preamble to this Agreement have the respective meanings therein set forth; the term "Subsidiary Loan Agreement" means the agreement to be entered into between the Bor- rower and TANESCO pursuant to Section 3.01(b) of this Agreement, as the same may be amended from time to time; and the term "KfW Agreement" means the loan and project agreement that would be entered into between the Borrower and KfW, providing for the KfW Loan referred to in Recital (E) to the Preamble of this Agreement. -4- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to thirty million dollars ($30,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of can- cellation and suspension set forth in, this Loan Agreement and in accordance with Article II of the Joint Financing Agreement; pro- vided, however, that, except as the Bank shall otherwise agree, no withdrawals from the Bank Loan Account shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Bank shall otherwise agree, the goods and civil works for the Project, to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions set forth or referred to in Schedule 3 to the Joint Financing Agreement. Section 2.04. The Closing Date shall be December 31, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. -5- Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of four and eighty-five hundredths per cent (4.85%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time; provided, however, that if the Administrator shall at any time determine that the resources of the Fund shall not be suffi- cient to pay to the Bank at the next succeeding semi-annual inter- est payment date of the Loan the amount scheduled to be paid by the Administrator at that interest payment date as specified in paragraph (C) of the Preamble to this Agreement, the Borrower shall, upon notification by the Administrator of such determination and the amount of the resulting shortfall, pay additional interest on such principal amount of the Loan equal to such shortfall. Section 2.07. Interest and other charges shall be payable semi-annually on January 15 and July 15 in each year. Section 2.08. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. Section 2.09. TANESCO is designated as representative of the Borrower for the purposes of taking any action required or per- mitted to be taken under the provisions of Section 2.02 of thi3 Agreement and Article V of the General Conditions. -6 ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause TANESCO to perform in accordance with the provisions of the Joint Financing 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 TANESCO to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Loan to TANESCO under a subsidiary loan agreement to be entered into between the Borrower and TANESCO, under terms and conditions which shall have been approved by the Bank. (c) The Borrower shall exercise its rights under the Subsid- iary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. -7- ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall other- wise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the crea- tion of such lien, shall make express provision to that effect. (b) The foregoing 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 trans- actions and securing a debt maturing not more than one year after its date; and (iii) any charges on the General Fund of the East African Community (hereinafter called the Community) securing a debt of the Community where the amount of the debt service on such debt in any financial year together with other debt service on other debt of the Community payable from such General Fund in such -8- financial year does not exceed 2% of the average of customs duties and excise duties collected by the East African Customs and Excise Department in the three financial years preceding such incurrence. For the purposes of this paragraph, "debt service" shall include payments of the principal of, and interest and other charges on, debt; and any reference to incurring of debt shall include the assumption and guarantee of debt and any renewal, extension or mod- ification of the terms of the debt or of the assumption or guar- antee thereof. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdi- vision thereof and of any entity owned or controlled by, or oper- ating for the account or benefit of, the Borrower or any such sub- division, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or ex- change stabilization fund, or similar functions, for the Borrower. -9- ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (k) thereof: (a) either the Borrower or TANESCO shall have failed to perform any of its respective covenants, agreements or obligations under the Joint Financing Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that TANESCO will be able to perform its obliga- tions under the Joint Financing Agreement; (c) The Electricity (Tanganyika Electric Supply Company Lim- ited) License, 1957 or the Agreement dated February 28, 1957, be- tween the governor of Tanganyika and TANESCO shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of TANESCO to carry out the covenants, agreements and obligations set forth in the Joint Financing Agreement; (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of TANESCO or for the suspension of its operations; - 10 - (e)(i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the Swedish Grant or the KfW Loan for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the Swedish Agreement or the KfW Agreement as the case may be, or (B) the KfW 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 establishes to the satiifaction of the Bank that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower or TANESCO to perform any of its obligations under the Swedish Agreement, the KfW Agreement or the Joint Financing Agreement, as the case may be, and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agree- ment and of the Borrower and TANESCO under the Joint Financing Agreement; and (f) a change shall have been made in TANESCO's Memorandum or Articles of Agreement which will adversely affect the operations or financial condition of TANESCO or the carrying out of the Proj- ect. - 11 - Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to paragraph (h) thereof: (a) any event specified in paragraphs (a), (b), (c), (d) or (f) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraph (e)(i)(B) of Section 5.01 of this Agreement shall occur. - 12 - AR. CLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01(c) of the General Conditions: (a) the execution and delivery of the Joint Financing Agree- ment on behalf of the Borrower and TANESCO have been duly author- ized or ratified by all necessary corporate and governmental action; (b) the execution and delivery of the Subsidiary Loan Agree- ment on behalf of the Borrower and TANESCO, respectively, have been duly authorized or ratified by all necessary corporate and govern- mental action; (c) the execution and delivery of the Swedish Agreement and of the KfW Agreement on behalf of the Borrower have been duly au- thorized or ratified by all necessary governmental or corporate action; and (d) the execution and delivery on behalf of the Borrower and TANESCO of the agreements pursuant to which the proceeds of the Swedish Grant and the KfW Loan will be made available by the Bor- rower to TANESCO, have been duly authorized or ratified by all nec- essary governmental or corporate action. - 13 - Section 6.02. The following are specified as additional mat- ters, within the meaning of Section 12.02(c) of the General Condi- tions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Joint Financing Agreement has been duly author- ized or ratified by, and executed and delivered on behalf of, the Borrower and TANESCO, and is legally binding upon the Borrower and TANESCO in accordance with its terms; (b) that the Swedish Agreement and the KfW Agreement have been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and are legally binding upon the Borrower in accordance with their terms; and (c) that the Subsidiary Loan Agreement and the agreements referred to in Section 6.01(d) of this Agreement have been duly au- thorized or ratified by, and executed and delivered on behalf of, the Borrower and TANESCO, respectively, and are legally binding upon the Borrower and TANESCO in accordance with their terms. Section 6.03. The date November 15, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. - 14 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time respon- sible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Principal Secretary The Ministry of Finance and Planning P.O. Box 9111 Dar es Salaam United Republic of Tanzania Cable address: TREASURY Dar es Salaam 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. - 15 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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. UNITED REPUBLIC OF TANZANIA By /s/ Hamza Az . Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Michael H. Wiehen Acting Regional Vice President Eastern Africa - 16 - SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* January 15, 1983 505,000 July 15, 1983 525,000 January 15, 1984 535,000 July 15, 1984 545,000 January 15, 1985 565,000 July 15, 1985 575,000 January 15, 1986 585,000 July 15, 1986 605,000 January 15, 1987 615,000 July 15, 1987 635,000 January 15, 1988 650,000 July 15, 1988 660,000 January 15, 1989 680,000 July 15, 1989 695,000 January 15, 1990 715,000 July 15, 1990 730,000 January 15, 1991 750,000 July 15, 1991 765,000 January 15, 1992 785,000 July 15, 1992 805,000 January 15, 1993 820,000 July 15, 1993 845,000 January 15, 1994 865,000 July 15, 1994 885,000 January 15, 1995 905,000 July 15, 1995 930,000 January 15, 1996 950,000 July 15, 1996 970,000 January 15, 1997 1,000,000 July 15, 1997 1,020,000 January 15, 1998 1,045,000 July 15, 1998 1,075,000 - 17 - Paymuent of Principal Date Payment Due (expressed in dollars)* January 15, 1999 1,095,000 July 15, 1999 1,125,000 January 15, 2000 1,150,000 July 15, 2000 1,180,000 January 15, 2001 1,215,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 18 - Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05(b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.05% More than three years but not more than six years before maturity 2.10% More than six years but not more than eleven years before maturity 3.90% More than eleven years but not more than sixteen years before maturity 5.65% More than sixteen years but not more than twenty-one years before maturity 7.45% More than twenty-one years but not more than twenty-three years before maturity 8.15% More than twenty-three years before maturity 8.85% - 19 - SCHEDULE 2 Modifications of General Conditions For the purpose of this Agreement, the provisions of the Gen- eral Conditions are modified as follows: (1) The words "Joint Financing Agreement" are substituted for the words "Loan Agreement" in paragraph 11 of Section 2.01. (2) Sections 5.01, 5.03, 5.05, 5.06 and 5.07 are deleted. (3) The words "Joint Financing Agreement" are substituted for the words "Guarantee Agreement" whenever they appear in Sections 10.01 and 10.03.