Malawi - Lilongwe Water Supply Engineering Project : Credit 1272 - Project Agreement - Conformed

OFFICIAL CREDIT NUMBER 1272 MAI DOCUMENTS Project Agreement (Lilongwe Water Supply Engineering Project) between INTERNATIONAL DEVELOPHENT ASSOCIATION and LILONGWE WATER BOARD Dated , 1982 CREDIT NUMBER 1272 MAI PROJECT AGREEMENT AGREEMENT, dated )AJAA fA + , 1982, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and LILONGWE WATER BOARD (hereinafter called LWB). WHEREAS by the Development Credit Agreement of even date herewith between The Republic of Malawi (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to three million six hundred thousand Special Drawing Rights (SDR 3,600,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that LWB agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by a Subsidiary Loan Agreement to be entered into between the Borrower and LWB, part of the proceeds of the Credit provided for under the Development Credit Agreement will be made available to LWB on the terms and conditions therein set forth; and WHEREAS LWB, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. LWB shall carry out Parts A, B and D (i) of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. - 2 - Section 2.02. In order to assist LWB in carrying out Parts A and B of the Project, LWB shall employ consultants whose selection, qualifications, experience and terms and conditions of employment shall be satisfactory to the Association in accordance with the principles and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 2.03. (a) LWB undertakes to insure or make adequate provision for the insurance of the imported goods, to be financed out of the proceeds of the Credit relent to it by the Borrower, against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by LWB to replace or repair such goods. (b) LWB shall cause all goods and services financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for the purposes of the Project until its com- pletion. Section 2.04. (a) LWB shall, with respect to Parts A, B and D (i) of the Project, furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project and any material modifications thereof or additions thereto in such detail as the Association shall reasonably request. (b) LWB shall, with respect to Perts A, B and D (i) of the Project: (i) maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to dis- close their use in the Project; (ii) enab'Le the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and docu- ments; and (iii) furnish to the 4ssociation at regular intervals all such information as the Assoctation shall reasonably request concerning the Project, its cost arid, where appropriate, the benefits to be derived from it, the expenditures of such proceeds and the goods and services financed out of such proceeds. -3- (c) Upon the award by LWB of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) LWB shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, pro- perty and equipment of LWB and any relevant records and docu- ments. Section 2.05. LWB shall: (a) furnish to the Borrower and the Association the interim report on the master plan under Part A of the Project for their review and approval prior to the implementation of Part B of the Project; (b) furnish the draft feasibility study under Part B of the Project to the Borrower and the Association for their comments and approval. Section 2.06. LWB shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, LWB shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.07. (a) LWB shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement and other matters relating to the purposes of the Credit. (b) LWB shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by LWB of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of LWB Section 3.01. LWB shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, -4- and engineering practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. To that end, LWB shall employ not later than Decem- ber 31, 1982, an Engineer/Manager and Chief Accountant whose qualifications and exper.ence shall be acceptable to the Association. Section 3.02. LWB shall at all times operate and maintain its plant, machinery, equipment and other property and, from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and public utility practices. Section 3.03. LWB shall take out and maintain with respon- sible insurers or make other provisions satisfactory to the Association for insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. LWB shall maintain records adequate to reflect, in accordance with consistently maintained appropriate accounting practices, its operations and financial condition. Section 4.02. LWB shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptible to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year: (A) certi- fied copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have rea- sonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial state- ments of LWB and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspeaion Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. -5- Section 5.02. (a) This Agreement and all obligations of the Association and of LWB thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify LWB of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand, mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) -6- For Lilongwe Water Board: Lilongwe Water Board P. 0. Box 30196 Lilongwe 3 The Republic of Malawi Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of LWB may be taken or executed by the Engineer/Manager or such other person or persons as the Engineer/ Manager shall designate in writing, and the Engineer/Manager shall furnish to the Association sufficie.,,t evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa LILONGWE WATER BOARD By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness wher.ol I have signed this Certifi- cate and affixed the Seal of the Association thereunto the /7 day of 198121 C, RE A FOR SECRETARY