Burundi - Power Transmission And Distribution Project : Credit 1593 - Credit Agreement - Conformed

OFFICIAL CREDIT NUMBER 1593 BU D)OCUMENTS Development Credit Agreement (Power Transmission and Distribution Project) between THE REPUBLIC OF BURUNDI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1985 CREDIT NUMBER 1593 BU DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated / , 1985, between THE REPUBLIC OF BURUNDI (MAe Borrower) and the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) a part of the Project will be carried out by the R6gie de distribution d'eau et d'&lectricitg (REGIDESO) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to REGIDESO the proceeds of the Credit as provided in this Agreement; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Poject Agreement of even date herewith between the Association and REGIDESO; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The General Conditions Applicable to Develop- ment Credit Agreements of the Association, dated January 1, 1985, (the General Conditions) constitute an integral part of this Agreement. Section 1.02. 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 following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and REGIDESO of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; -2- (b) "Subsidiary Loan Agreement" means the agreement entered into between the Borrower and REGIDESO pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time; (c) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated November 23, 1984, January 13, 1985 and February 6, 1985 between the Borrower and the Association; and (d) "Special Account" means the account to be maintained pursuant to Section 2.02 (c) of this Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to twelve million nine hundred thousand Special Drawing Rights (SDR 12,900,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account 'in accordance with the provisions of this Section and of Schedule 1 to this Agreement, as such Schedule may be amended fron 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. (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. (c) The Borrower shall, for the purposes of Parts A and B of the Project, cause REGIDESO to maintain in dollars a special account in the Bank of the Republic of Burundi on terms and conditions satisfactory to the Association. Deposits into, and -3- payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1989 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. 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. Commitment charges and service charges shall be payable semiannually on January 15 and July 15 in. each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Jan- uary 15 and July 15 commencing July 15, 1995, and ending January 15, 2035. Each installment to and including the installrdent payable on January 15, 2005, shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment there- after shall be one and one-half per cent (1-1/2%) of such princi- pal 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. -4- Section 2.09. Except in respect of Part C of the Project, REGIDESO 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) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall carry out Part C of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and technical practices, shall caur. REGIDESO to carry out the remainder of the Project and to perform in accordance with the provisions of the Project Agreement all the other obligations of REGIDESO 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 so to carry out such Part C of the Project and to enable REGIDESO 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, except the portion thereof allocated to Part C of the Project, to REGIDESO under a subsidiary loan agreement to be entered into between the Borrower and REGIDESO, under terms and conditions which shall have been approved by the Association, which shall include a rate of interest of 9.29 percent per annum, a term of twenty years including five years' grace and the assumption of the exchange risk by REGIDESO. (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. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services -5- required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that in respect of Parts A and B of the Project, the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by REGIDESO pursuant to Section 2.03 of the Project Agreement. ARTICLE IV Other Covenants Section 4.01. Pursuant to Section 3.01 above, the Borrower shall ensure that REGIDESO be provided as and when needed with such funds as shall be necessary to meet the costs of construction under the Project, such funds to be repaid by REGIDESO within four years. Section 4.02. Under Part C of the Project, the Borrower shall employ by December 31, 1985 an advisor to the Ministry responsible for energy to assist in formulating strategies for importing petroleum products at least cost, to develop sound pricing policies for the domestic marketing of such products and to train staff of the Ministry; such advisor and his terms of reference shall be satisfactory to the Association and he shall be selected as provided in the Schedule to the Project Agreement. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) REGIDESO shall have failed to perform any of its obligations under the Project Agreement. -6 - (b) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that REGIDESO will be able to perform its obligations under the Project Agreement. (c) Decree No. 1-196 of the Borrower, dated October 2, 1968, shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of REGIDESO to perform any of its obligations under the Project Agreement. (d) The Borrower-or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of REGIDESO or for the suspension of its operations. ARTICLE VI Effective Date; Termination Section 6.01. 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 Subsidiary Loan Agreement has been executed on behalf of the Borrower and REGIDESO; (b) the Association and REGIDESO have agreed upon a plan of action to strengthen its management, improve its administrative and financial operations and implement corrective measures, based on the results of the current management diagnosis study; (c) the Borrower, the Association and REGIDESO have agreed upon a plan of action to achieve the reduction in arrears of Government and Municipalities set forth in Section 4.08 of the Project Agreement; (d) the Association has been informed that all conditions precedent to the initial disbursement of the respective contributions of the Kingdom of Belgium, the Caisse Centrale de Coop6ration Economique, and the Federal Republic of Germany to the financing of the Project have been fulfilled; and (e) the Borrower has obtained from the Rwandese Republic and the Republic of Zaire rights sufficient to allow free access to their respective territories, as necessary, for the construc- tion, operation and maintenance of the transmission line from RUZIZI II to Bubanza. -7- Section 6.02. 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 REGIDESO. and is legally binding upon REGIDESO in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and REGIDESO, and is legally binding upon the Borrower and REGIDESO in accordance with its terms. Section 6.03. The date 90 days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The provisions of paragraph (d) of Sec- tion 5.01 of this Agreement shall cease on the date on which the Development Credit Agreement shall terminate or on the date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister of the Borrower responsible for public works, energy and mines 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: Ministry of Public Works, Energy and Mines B.P. 745 Bujumbura Burundi -8- Cable address: Telex: MINITRAP 5048 BDI BUJUMBURA 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) -9- IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 BURUNDI By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern and Southern Africa - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of 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 SDR Equivalent) to be Financed (1) Construction and 5,200,000 90% erection of sub- stations and transmission lines, Part A of the Project (2) Rehabilitation of 310,000 100% of foreign Bujumbura sub- expenditures station and Ruzizi I - Bujumbura Trans- mission line (3) Construction and 410,000 90% equipment of train- ing center, Part B of the Project (4) Engineering, manage- 2,990,000 100% of foreign ment and training expenditures consultants; studies (5) Petroleum advisor 210,000 100% of foreign and cooking stoves expenditures dissemination, Part C of the Project - 11 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Special Account 520,000 Amount to be deposited pur- suant to para- graph 3 (a) of Schedule 3 of this Agreement (7) Refunding of 970,000 Amount due under Project Preparation Section 2.02 (b) Advance of this Agreement (8) Unallocated 2,290,000 TOTAL 12,900,000 2. To the extent that the amount allocated to Category (7) above is in excess of the amount due, the excess will be reallo- cated to Category (8). 3. For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; or (b) Category (2) above until the Borrower or REGIDESO has obtained legal rights over the Bujumbura substation and the RUZIZI I to Bujumbura transmission line adequate to protect the interests of the Borrower and of the Association. - 12 - SCHEDULE 2 Description of the Project The objectives of,the Project are to improve the reliability of supply of electricity to Bujumbura and its environs, by providing transmission and distribution facilities to receive an additional source of power (Ruzizi II) to serve additional consumers, with a view towards sustaining and improving the economic growth of the industrial, commercial and domestic sectors of the country. In addition, the provision of management assistance to REGIDESO, establishment of a training center and the training of REGIDESO staff, would result in improved service and financial performance through better operating, financial and maintenance practices. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A Power transmission and distribution (1) Construction of about 83 km of 110 kV transmission line from the Ruzizi II plant to Bubanza; (2) Construction of 110/30 kV substations in Bubanza and Cibitoke, two 30 kV transmission lines (42 km) to supply the regional towns of Rugombo, Mparambo, Mpanda and Muzinda, a 15 or 30 kV feeder to Katumba and distribution networks in these tows; (3) Construction of distribution networks to consumers in six low-income districts of Bujumbura: Ewiza, Buyenzi, Cibitoke, Kamenge, Kinama and Musaga; and (4) Rehabilitation of the transmission line from RUZIZI I to Bujumbura and of the Bujumbura substation. Part B Management; training (1) Carrying out by REGIDESO of the plan of action to strengthen the management of REGIDESO described in Section 6.01 (b) of this Agreement; (2) Construction and equipment of a training center and the training of staff of REGIDESO's Technical, Administrative and Financial Departments, including vocational training in existing positions as well as training in new technologies; - 13 - (3) Carrying out by REGIDESO of a study to define standards and charges for electricity connections, a study of electricity tariffs in 1987-1988 and the preparation of a ten-year investment plan for the electricity sector, all under terms of reference satisfactory to the Association; (4) Carrying out of a reevaluation of REGIDESO's assets in 1985; and (5) Audit and revision of REGIDESO's accounts for 1984. Part C Petroleum policies of Ministry; cookstove efficiency (1) Establishment by the Ministry responsible for energy of optimum strategies for the importation of petroleum products and for their domestic resale; training of staff of the Ministry in such strategies; and (2) Continuation of the program of dissemination of improved charcoal stoves begun under the Urban Development Project financed by the Association, within the same institutional framework agreed for such project. The Project is expected to be completed by June 30, 1989. - 14 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in para- graph I of Schedule 1 to this Agreement; (b) "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Parts A or B of the Project and to be financed out of the proceeds of the Credit in accordance with the provisions of Schedule 1 to this Agreement; and (c) "Authorized Allocation" means an amount equivalent to the amount allocated to Category (6) and to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclu- sively for eligible expenditures under Categories (1) through (4) and (6), in accordance with the provisions of this Schedule. 3. (a) For purposes of withdrawal of the Authorized Alloca- tion, the Association shall, on the basis of a request or requests by REGIDESO on behalf of the Borrower and evidence satisfactory to the Assocation that the Special Account has been duly opened, withdraw on behalf of the Borrower from the Credit Account and deposit in the Special Acount such amount or amounts of the Authorized Allocation as shall have been requested, up to the total of the Authorized Allocation. (b) For purposes of withdrawal of proceeds of the Credit to replenish the Special Account, the Association shall, on the basis of requests by REGIDESO on behalf of the Borrower furnished to the Association at such intervals as the Association shall specify, withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of pay- ments made out of the Special Account for eligible expenditures. Except as the Association may otherwise agree, each such deposit shall be withdrawn by the Association from the Credit Account under the respective Categories (1) through (4) and in the respective equivalent amounts as shall have been justified by the - 15 - evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. Prior to or at the time of each request for a deposit by the Association into the Special Account pursuant to paragraph 3 (b) of this Schedule, REGIDESO shall furnish to the Association in respect of each payment made out of the Special Account such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expendi- tures. 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, no further deposit into the Special Account shall be made by the Association (a) when the Association shall have determined at any time all further withdrawals can be made directly from the Credit Account in accordance with the provisions of paragraph (a) of Section 3.02 of this Agreement, or (b) unless otherwise agreed by the Association, when the total unwithdrawn amount of the Credit allocated to Categories (1) through (4) for the Project, minus the amount of any qualified agreement to reimburse made by the Association and of any special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect of such Categories, shall be equal to the equivalent of twice the amount of the Authorized Allocation, whichever shall be sooner. Withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Categories (1) through (4) shall follow such procedures as the Association shall specify by notice to the Borrower and REGIDESO, and shall, except as the Association shall otherwise agree, be made only after and to the extent the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. If the Association shall have determined at any time that: (a) any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to para- graph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association and, unless otherwise agreed by the Association, prior to any further deposit into the Special Account by the Association, deposit into the Special Account or, if the Association shall so request, - 16 - refund to the Association, an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or (b) any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Botrower shall, promptly upon notice from the Association, and unless otherwise agreed by the Association, refund to the Association such outstanding amount. 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 whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of , 198 ___ FOR SECRETARY