Ceylon - Aberdeen-Laksapana Project : Loan 0101 - Loan Agreement - Conformed

LOAN NUMBER 101CE Loan Agreement (Aberdeen-Laksapana Project) BETWEEN GOVERNMENT OF CEYLON AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JULY 9, 1954 Ean Agrerment AGREEMENT, dated July 9, 1954, between the Gov- ERNMENT OF CEYLON (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank). ARTICLE I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 3 of the Bank dated October 15, 1952, subject, however, to the modifica- tions thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 3 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. For the purposes of this Agreement wherever the context so permits, the term "Borrower" shall be deemed to include Ceylon. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to nineteen million one hundred ten thousand dollars ($19,110,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations, provided, however, that 4 before the first withdrawal shall be made from the Loan Account, the Borrower shall furnish to the Bank a certi- ficate of a competent authority that the debt limitation provided in the Ceylon Development Loans Act, No. 6 of 1954, as amended, has not been exceeded. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (% of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. The date specified for the purposes of Section 2.02 of the Loan Regulations is the Effective Date or a date 60 days after the datd of this Agreement, whichever shall be the earlier. SECTION 2.04. The Borrower shall pay interest at the rate of four and three-fourths per cent (4% %) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Except as the Borrower and the Bank shall otherwise agree, the charge payable for special com- mitments entered into 'by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent ( of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on January 15 and July 15 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. 5 ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively to financing the cost of goods required to carry out the Project described in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be used in the territories of the Borrower exclusively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Minister of Finance of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representatives of the Bor- rower for the purposes of Section 6.12 of the Loan Regu- lations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out and completed, and the operations of the Electrical Undertakings Department to be carried on, with due diligence and efficiency and in conformity with sound engineering and financial practices. 6 (b) The Borrower shall from time to time promptly fur- nish to the Bank, in such detail as it shall request, the cur- rent plans and specifications for the Project and the con- struction schedule therefor; it shall promptly notify the Bank of any material modifications made therein. (c) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, and to record the progress of the Project (in- cluding the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the financial condition and operations of the agency or agencies of the Borrower responsible for the construction or opera- tion of the Project or any part th zeof; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, and the goods, and the financial condition and operations of the agency or agencies of the Borrower responsible for the construction or operation of the Project or any part thereof. SECTION 5.02. (a) The Borrower and the Bank shall co- operate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall 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 the Borrower, such information shall include information with respect to financial and economic conditions in the ter- ritories of the Borrower and the international balance of payments position of the Borrower. (b) The Borrower and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which interferes 7 with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Bank to visit any part of the territories of the Borrower for purposes related to the Loan. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien 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 that in the creation of any such lien express provision will be made to that effect, pro- vided, however, that the foregoing provisions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on commercial goods .to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. The term "assets of the Borrower" as used in this Sec- tion includes assets of the Borrower or any of its political subdivisions or any agency of the Borrower or of any such political subdivision, including assets of the Central Bank of Ceylon. SECTION 5.04. 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 or fees imposed 8 under the laws of the Borrower or laws in effect in its terri- tories; provided, however, that the provisions of this Sec- tion shall not apply to taxation of, or fees upon, 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 the Borrower. SECTION 5.05. The Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof and the Borrower shall pay all such taxes and fees, if any, imposed under the laws of the coun- try or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such coun- try or countries. SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Borrower or laws in effect in its territories. SECTION 5.07. The Borrower shall satisfy the Bank that adequate arrangements have been made to insure the goods financed with the proceeds of the Loan against risks inci- dent to their purchase and importation into the territories of the Borrower. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, 9 may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1958. SECTION 7.02. A date 60 days after the date of this Agree- ment is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SECTION 7.03. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Ministry of Finance The Secretariat Colombo 1, Ceylon For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D.C. United States of America SECTION 7.04. The Minister of Finance of the Borrower is designated for the purposes of Section 8.03 of the Loan Regulations. IN WITNESs WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respec- 10 tive names, and delivered in the District of Columbia, United States of America, as of the day and year first above written. GOVERNOR-GENERAL, ACTING IN THE NAME AND ON BEHALF OF THE GOVERNMENT OF CEYLON By SOULBURY Governor-General INTFRNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By W. A. B. ILIFF Assistant to the President 0 11 SCHEDULE 1 Amortization Schedule Principal Amount Payment of Outstanding After Principal Each Payment (expressed (expressed Date Payment Due in dollars)* in dollars)* July 15, 1958 $19,110,000 January 15, 1959 $270,000 18,840,000 July 15, 1959 276,000 18,564,000 January 15, 1960 283,000 18,281,000 July 15, 1960 290,000 17,991,000 January 15, 1961 297,000 17,694,000 July 15, 1961 304,000 17,390,000 January 15, 1962 311,000 17,079,000 July 15, 1962 318,000 16,761,000 January 15, 1963 326,000 16,435,000 July 15, 1963 334,000 16,101,000 January 15, 1964 342,000 15,759,000 July 15, 1964 350,000 15,409,000 January 15, 1965 358,000 15,051,000 July 15, 1965 366,000 14,685,000 January 15, 1966 375,000 14,310,000 July 15, 1966 384,000 13,926,000 January 15, 1967 393,000 13,533,000 July 15, 1967 403,000 13,130,000 January 15, 1968 412,000 12,718,000 July 15, 1968 422,000 12,296,000 January 15, 1969 432,000 11,864,000 July 15, 1969 442,000 11,422,000 January 15, 1970 453,000 10,969,000 July 15, 1970 464,000 10,505,000 January 15, 1971 475,000 10,030,000 July 15, 1971 486,000 9,544,000 January 15, 1972 497,000 9,047,000 July 15, 1972 509,000 8,538,000 January 15, 1973 521,000 8,017,000 July 15, 1973 534,000 7,483,000 January 15, 1974 546,000 6,937,000 July 15, 1974 559,000 6,378,000 January 15, 1975 573,000 5,805,000 July 15, 1975 586,000 5,219,000 January 15, 1976 600,000 4,619,000 July 15, 1976 614,000 4,005,000 January 15, 1977 629,000 3,376,000 July 15, 1977 644,000 2,732,000 January 15, 1978 659,000 2,073,000 July 15, 1978 675,000 1,398,000 January 15, 1979 691,000 707,000 July 15, 1979 707,000 * To the extent that any part of the Loan is repayable in a cur- rency other than dollars (see Loan Regulations, Section 3.02), the figures in these columns represent dollar equivalents determined as for purposes of withdrawal. 12 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 5 years before maturity %0 More than 5 years but not more than 10 years before maturity 1% More than 10 yeaTs but not more than 15 years before maturity 1/% More than 15 years but not more than 20 years before maturity 2% fore than 20 years before maturity 21%/ 13 SCHEDULE 2 Description of the Project The Project is a part of the Aberdeen-Laksapana hydro- electric scheme of the Borrower and includes the construc- tion, across, the Kehelgamu Oya at Castlereagh in the Aber- deen Valley, of a dam which will regulate the flow o' water from the reservoir created by that dam to the existing Nor- ton Bridge barrage, which will divert the water through the existing tunnel between the Aberdeen and Laksapana Val- leys; and the expansion of the capacity of the existing power plant at Laksapana by 25,000 kw, together with the con- struction of additional transmission and distribution lines and facilities. Castlereagh Dam The dam, of mass concrete construction, will be located at Castlereagh, in the Aberdeen Valley, approximately 5 miles above the existing Norton Bridge diversion barrage. It will be 730 feet in length, have a 470 foot long spillway with a crest 130 feet above the present river bed, and will create a reservoir capable of storing about 2,250 million cubic feet of water. This part of the Project will include the main dam, spillways, stilling pool, access houses, galleries and ladders, gates, roller gatehouse, needle valve with jet disperser, control valve house and reinforced concrete main highway bridge. Waterways Additional screens will be installed in the gatehouse at the Norton Bridge diversion barrage, and water from the storage dam at Castlereagh will flow through the existing tunnel from Norton Bridge to the existing surge chamber above the existing Laksapana hydroelectric plant. Addi- tional valves will be installed in the valve house, and pen- stocks suitable for carrying a total capacity of 250 cubic feet of water per second under an approximate head of 14 1,580 feet will be installed from the tunnel outlet to the existing Laksapana powerhouse. Laksapana Power Plant The. existing power plant with a capacity of 25,000'kw will be expanded and two 12,500 kw waterwheel generators will be installed. The outdoor substation will be enlarged to contain switchgear and transformers to supply voltages of 66 kv and 132 kv. Transmission System The high voltage transmission system will include an expansion of the Colombo receiving station, the construe- tion of smaller substations at Kurunegala, Nuwara Eliya, Badulla and Bolawatta and the following transmission lines: 1. Laksapana to Colombo 50 miles 132 kv 2. Peradeniya to Kurunegala 18 miles 132 kv 3. Colombo to Bolawatta 30 miles 132 kv 4. Norton Bridge to Badulla 42 miles 66 kv The lines from Peradeniya to Kurunegala and from Colombo to Bolawatta will be designed for initial operation at 66 kv. The secondary voltage transmission system will include approximately 325 miles of 11 kv and 33 kv lines and ap- proximately 160 substations. The south ring of the Colombo network will be converted from 11 kv to 33 kv, and new substations will be constructed. Distribution System Additional low voltage distribution facilities to connect new customers will be installed. The Project is expected to be completed by January 1, 1958. 15 SCHEDULE 3 Modifications of Loan Regulations No. 3 For the purposes of this Agreement, Loan Regulations No. 3 of the Bank, dated October 15, 1952, shall be deemed to be modified as follows: (a) Section 5.02 (g) of the Loan Regulations shall be deemed to read as follows: " (g) After the date of the Loan Agreement and prior to the Effective Date, any action shall have been taken which would have constituted a violation of any covenant contained in the Loan Agreement relating to the creation of liens as security for debt if the Loan Agreement had been effective on the date such action was taken." (b) Section 7.03 (i) of the Loan Regulations shall be deemed to read as follows: " (i) The parties shall fix the amount of the remun- eration of the arbitrators and such other persons as shall be required for the conduct of the arbitration pro- ceeding. If the parties shall not agree on such amount before the Arbitral Tribunal shall convene, the Arbitral Tribunal shall fix such amount as shall be reasonable under the circumstances. Each party shall defray its own expenses in the arbitration proceedings. The costs of the Arbitral Tribunal shall be divided and borne equally by the parties. Any question concerning the division of the costs of the Arbitral Tribunal or the procedure for payment of such costs shall be deter- mined by the Arbitral Tribunal." (c) Section 9.01 of the Loan Regulations shall be deemed to read as follows: 16 "SECTION 9.01. Conditions Precedent to Effective- ness of Loan Agreement. The Loan Agreement shall not become effective until: (a) the Borrower has notified the Bank that (i) the execution and delivery of the Loan Agreement on behalf of the Borrower have been duly authorized or ratified by all necessary governmental action, and (ii) all other events specified in the Loan Agreement as conditions to its effectiveness have occurred; (b) the Borrower has furnished to the Bank evi- dence thereof satisfactory to the Bank; and (c) the Bank has given the notification provided for in Section 9.03 of these Regulations."