Malawi - Third Power Project : Credit 0691 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 691 MAI DEVELOPMENT CREDIT AGREEMENT (Third Power Project) between REPUBLIC OF MALAWI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 28, 1977 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 28, 1977, between REPUBLIC OF MALAWI (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association.) WHEREAS (A) By the Loan Agreement (Third Power Project) of even date herewith between International Bank for Reconstruction and Development (hereinafter called the Bank) and Electricity Supply Commission of Malawi (hereinafter called ESCOM) (said agreement hereinafter called the Loan Agreement), the Bank has agreed to lend to ESCOM an amount in various currencies equivalent to nine million dollars ($9,000,000) on the terms and conditions set forth in the Loan Agreement, for purposes of the Project described in Schedule 2 to the said Loan Agreement (hereinafter called the Project); (B) the Borrower has requested the Association to assist in the financing of the Project by granting the Credit as hereinafter provided; (C) by the Loan Agreement of even date herewith between Republic of Malawi and the Bank (hereinafter called the Intermediate Term Loan Agreement), the Bank has agreed to lend to the Borrower a loan (hereinafter called the Intermediate Term Loan) in an amount in various currencies equivalent to - 2 - eight million dollars ($8,000,000) on the terms and conditions set forth in the Intermediate Term Loan Agreement, to assist in the financing of the Project; (D) the Project will be carried out by ESCOM with the Borrower's assistance and, as part of such assistance, the Borrower will make available to ESCOM the proceeds of the Credit as hereinafter provided, and the proceeds of the Intermediate Term Loan; (E) the Borrower and ESCOM have requested the Federal Republic of Germany, the African Development Bank, the Commonwealth Development Corporation, and the European Development Fund to assist in the financing of the Project by making available additional financing for this purpose; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to grant the Credit 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 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the term "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ESCOM pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time. -4- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to eight million dollars ($8,000,000). 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 by agreement between the Borrower and the Association, 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, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions of Schedule 4 to the Loan Agreement. Section 2.04. The Closing Date shall be December 31, 1980 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. 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 June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 1 and December 1 commencing June 1, 1987, and ending December 1, 2026, each installment to and including the installment payable on December 1, 1996, to be one-half of one per cent (1/2 of 1%) of such principal amount, 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 Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. ESCOM 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. -6- 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 ESCOM to perform in accordance with the provisions of Articles III, IV and V (except Section 5.05 of the Loan 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 ESCOM 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 Credit to ESCOM under a subsidiary loan agreement to be entered into between the Borrower and ESCOM under terms and conditions which shall have been approved by the Association and which shall include repayment of principal within 24-1/2 years, including a 4-1/2 year-grace period, and an interest rate of 8-1/2% per annum on the outstanding principal. -7- (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, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower undertakes toward the Association, mutatis mutandis, the obligations set forth in Sections 3.02, 3.03, 3.04 and 3.05 of the Guarantee Agreement (Third Power Project) between the Republic of Malawi and the Bank, of even date herewith, with the same force and effect as if they were fully set forth herein. -8- ARTICLE IV Remedies of the Association Section 4.01. The events specified in Sections 6.01 and 6.02 of the Loan Agreement are specified as additional events for purposes of Sections 6.02 and 7.01 of the General Conditions, respectively; provided, however, that the references made in the Loan Agreement to the Borrower and the Guarantor will, in this Agreement, be deemed to be references to ESCOM and the Borrower, respectively. -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 Subsidiary Loan Agreement on behalf of the Borrower and ESCOM, has been duly authorized or ratified by all necessary corporate and governmental action; and (b) all conditions precedent to the effectiveness of the Loan Agreement and the Intermediate Term Loan Agreement have been fulfilled. Section 5.02. The following is specified as an additional matter, 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, namely, that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and ESCOM and is legally binding upon the Borrower and ESCOM in accordance with its terms. - 10 - Section 5.03. The date August 25, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Article III of this Agreement and the provisions of Article IV shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 25 years after the date of this Agreement, whichever shall be the earlier. - 11 - ARTICLE VI Representative of the Borrower; Action on behalf of the Association; Addresses Section 6.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. Any action taken by the Bank regarding the provisions contained in Sections 3.02, 3.03, 3.04, 3.05, 6.01 and 6.02 of the Loan Agreement and in Schedules 2 and 4 to the Loan Agreement shall, unless the contrary is stated, be deemed to be taken also on behalf of the Association. Section 6.03. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance P.O. Box 30049 Capital City Lilongwe 3, Malawi Cable address: FINANCE Lilongwe For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 12 - Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) Nå= - 13 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives therunto duly authorized, have caused this Agreement 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. REPUBLIC OF MALAWI By /s/ D.Y.J. Kalilangwe Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Willi A. Wapenhans Regional Vice President Eastern Africa - 14 - 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 and the allocation of the amount of the Credit to each Category: Amount of the Credit Allocated (Expressed in Category Dollar Equivalent) (1) Civil works 7,900,000 (2) Training 100,000 program TOTAL 8,000,000 - 15 - 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower; (b) payments made for expenditures prior to the date of this Agreement; and (c) 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. 3. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficent to finance of all expenditures in that Category, the Association may, by notice to the Borrower, reallocate to such Category, to the extent required to meet such 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. 4. 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 - 16 - 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.