Mozambique - Energy Technical Assistance And Rehabilitation Project : Credit 1806 - Credit Agreement - 2 - Conformed

OFFCIAL n_OUMENTS CREDIT NUMBER 1806 MOZ Development Credit Agreement (Energy Technical Assistance and Rehabilitation Project) between PEOPLE'S REPUBLIC OF MOZAMBIQUE and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated Q, , 1987 CREDIT NUMBER 1806 MOZ DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated 1 a A , 1987, between PEOPLE'S REPUBLIC OF MOZAMBIQUE he Borrower) and INTERNATIONAL DEVELOP- MENT 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) the Borrower intends to contract from the Government of the Kingdom of Norway grants (hereinafter called the Norwegian Grants) in an aggregate amount equivalent to five million U.S. dollars to assist in the financing of the Project on the terms and conditions set forth in agreements (hereinafter called the Norwegian Grant Agreements) to be entered into between the Borrower and the Government of the Kingdom of Norway; (C) Parts A and B of the Project will be carried out by Electricidade de Mocambique (EDM) and Empresa Nacional Petroleos de Mocambique E.E. (PETROMOC), respectively, with the Borrower's assistance and, as part of such assistance, the Borrower will make available to ED1 and PETROMOC part of 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 Project Agreements of even date herewith between the Association and EDM and PETROMOC, respectively; 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, with the last sentence of Section 3.02 deleted (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 have the -2- respective meanings therein set forth and the following additional terms have the following meanings: (a) "EDM" means Electricidade de Mocambique, an entity established and operating under Decree No. 38/77 of August 27, 1977; (b) "PETROMOC" means Ex.presa Nacional Petroleos de Mocambique E.E., an entity established and operating under Decree No. 22/77 of May 1, 1977; (c) "ENH" means Empresa Nacional de Hidrocarbonetos, an entity established and operating under Decree No. 18/81 of October 3, 1981; (d) "EDM Project Agreement" means the agreement between the Association and EDM 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 EDM Project Agreement; (e) "PETROMOC Project Agreement" means the agreement between the Association and PETROMOC 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 PETROMOC Project Agreement; (f) "EDM Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and EDM pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the EDM Subsidiary Loan Agreement; (g) "PETROMOC Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and PETROMOC pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the PETROMOC Subsidiary Loan Agreement; (h) "Special Account I", "Special Account II" and "Special Account III" mean the accounts referred to in Section 2.02 (b) of this Agreement; (i) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters, dated September 10, 1986 March 31, 1987 and April 23, 1987, between the Borrower and the Association; and -3- (j) "fiscal year" means the period from January 1 through December 31 following. 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 fifteen million six hundred thousand Special Drawing Rights (SDR 15,600,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reason- able cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project as described in Schedule 2 to this Agreement, open and maintain in U.S. dollars three special accounts in a commercial bank on terms and conditions satisfactory to the Association. Special Account I shall be opened for the purposes of Part A of the Project, Special Account II shall be opened for the purposes of Part B of the Project, and Special Account III shall be opened for the purposes of Parts C and D of the Project. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedules 4, 5 and 6, respectively, to this Agreement. (c) 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 outstand- ing 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. Section 2.03. The Closing Date shall be December 31, 1992, or such later date as the Association shall establish. The Association 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 percent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn -4- from time to time. The commitment charge shall accrue from a date sixty (60) days after the date of the Development Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The comi4ttment 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 percent (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 April 1 and October 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable cn each April 1 and October 1, commencing October 1, 1997, and ending April 1, 2037. Each installment to and including the installment payable on April 1, 2007, shall be one-half of one percent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half percent (1-1/2%) of such principal 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. Section 2.09. Banco de Mocambique 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 - 5 - upon any of its other obligations under the Development Credit Agreement: (i) shall carry out Parts C and D of the Project, or shall cause them to be carried out, with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project; and (ii) shall cause EDM and PETROMOC to perform in accordance with the provisions of the EDM Project Agreement and PETROMOC Project Agreement, respectively, all the obligations of EDM and PETROMOC 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 EDM and PETROMOC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) Without limitation upon the provisions of paragraph (a) of this Section, and except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out Parts C and D of the Project in accordance with the Implementation Program set forth in Schedule 3 to this Agreement. (c) The Borrower shall relend out of the proceeds of the Credit an amount not exceeding the equivalent of SDR 7,430,000 to EDM under a subsidiary loan agreement to be entered into between the Borrower and EDM, under terms and conditions which shall have been approved by the AssLciation and which shall include, inter alia, repayment over twenty (20) years, including five (5) years of grace, the foreign exchange risk to be borne by EDM, and (i) interest at the rate of 7.92% per annum for an amount not exceeding the equivalent of SDR 3,460,000; and (ii) a service charge at the rate of 1.75% per annum for an amount not exceeding the equivalent of SDR 3,970,000. (d) The Borrower shall relend out of the proceeds of the Credit an amount not exceeding the equivalent of SDR 6,780,000 to PETROMOC under a subsidiary loan Lgreement to be entered into between the Borrower and PETROMOC under terms and conditions which shall have been approved by the Association and which shall include, inter alia, repayment over twenty (20) years, including five (5) years of grace, the foreign exchange risk to be borne by PETROMOC, and (i) interest at the rate of 8.70% per annum for an amount not exceeding the equivalent of SDR 3,910,000; and (ii) a service charge at the rate of 1.75% per annum for an amount not exceeding the equivalent of SDR 2,870,000. - 6 - (e) The Borrower shall exercise its rights under the Subsidiary Loan Agreements 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 Agreements or any provision thereof. Section 3.02. (a) Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for Parts A and B of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to the EDM Project Agreement and P'.TROMOC Project Agreement, respectively. (b) In order to assist the Borrower in carrying out Parts C and D of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satis- factory to the Association on the basis of 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 3.03. The Borrower and the Association hereby agree that 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) in respect of Part A of the Project shall be carried out by EDM pursuant to Section 2.03 of the EDM Project Agresment, and in respect of Part B of the Project shall be carried -ut by PETROMOC pursuant to Section 2.03 of the PETROMOC Project Ag-aement. ARTICLE IV Financial and Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect, in accordance with sound accounting practices, the operations, resources and expenditures in respect of Parts C and D of the Project of the departments or agencies of the Borrower responsible for carrying out Parts C and D of the Project or any part thereof. - 7- (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section, including those for Special Account III, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable 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 certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records, accounts and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditures, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the completion of the audit for the fiscal year in which the last withdrawal from the Credit Account was made, all records, (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. - 8 - Section 4.02. The Borrower shall take, promptly as required, all action necessary on its part: (a) to enable EDM to fulfill its obligations under Sec- tions 4.02 and 4.03 of the EDM Project Agreement; and (b) to enable PETROMOC to fulfill its obligations under Sections 4.02 and 4.03 of the PETROMOC Project Agreement. Section 4.03. (a) The Borrower and the Association shall carry out a semiannual review of electricity tariffs and petroleum product prices. (b) The Borrower shall ensure that petroleum product prices are maintained at least as high as prevailing import parity prices plus internal distribution costs. Section 4.04. The Borrower shall establish, not later than December 31, 1987, the patrimony of EDM's and PETROMOC's assets. Section 4.05. The Borrower shall implement, not later than December 31, 1987, compensation packages for EDM's and PETROMOC's staff so as to enable the companies to retain skilled manpower. Section 4.06. Until the completion of the Project, the Borrower shall cause no new investment, other than expenditures under the Project, which exceeds the equivalent of $3,000,000 and is not included in the Energy Sector Priority Investment Program to 1991, as agreed upon between the Borrower and the Association, to be carried out in the energy sector without prior consultation with the Association. 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) EDM shall have failed to perform any of its obligations under the EDM Project Agreement. (b) PETROMOC shall have failed to perform any of its obligations under the PETROMOC Project Agreement. (c) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation - 9 - shall have arisen which shall make it improbable that EDM and PETROMOC, as the case may be, will be able to perform its obligations under the EDM Project Agreement or the PETROMOC Project Agreement, respectively. (d) Decree No. 38/77 of the Borrower shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of EDM to perform any of its obligations under the EDM Project Agreement. (e) Decree No. 22/77 of the Borrower shall have oeen amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of PETROMOC to perform any of its obligations under the PETROMOC Project Agreement. (f) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of EDM or PETROMOC or for the suspension of their operations. (g) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole r in part, pursuant to the terms of the agreement providing therefor, or (B) any such 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 satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; 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 Agreement. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraphs (a) and (b) of Section 5.01 of this Agreement shall occur and shall continue for a period - 10 - of sixty (60) days after notice thereof shall have been given by the Association to the Borrower; (b) the events specified in paragraphs (d), (e) and (f) of Section 5.01 of this Agreement shall occur; and (c) the evprit specified in paragraph (g) (i) (B) of Sec- tion 5.01 of this Agreement shall occur, subject to the proviso of paragraph (g) (ii) of that Section. 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 2.01 (b) of the General Conditions: (a) the EDM Subsidiary Loan Agreement has been executed on behalf of the Borrower and EDM; (b) the PETROMOC Subsidiary Loan Agreement has been executed on behalf of the Borrower and PETROMOC; (c) all conditions precedent to the effectiveness of the Norwegian Grant Agreements (other than the effectiveness of this Agreement) have been fulfilled; and (d) EDM and PETROMOC have signed contracts with inter- national accountancy organizations, acceptable to the Association, for assistance in the preparation of the documents referred to in paragraph 3 of Schedule 1 to this Agreement. 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 EDM Project Agreement and the PETROMOC Project Agreement have been duly authorized or ratified by EDM and PETROMOC, respectively, and are legally binding upon EDM and PETROMOC, respectively, in accordance with their terms; (b) that the EDM Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and EDM, and is legally binding upon the Borrower and EDM in accordance with its terms; and - 11 - (c) that the PETROMOC Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and PETROMOC, and is legally binding upon the Borrower and PETROMO% in accordance with its terms. Section 6.03. The date one hundred and twenty (120) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. 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 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Banco de Mocambique Avenida 25 de Setembro 1695 P.O. Box 423 Maputo People's Republic of Mozambique Cable address: Telex: MOBANCO 6355/7 BMMO Maputo 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) - 12 - 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. PEOPLE'S REPUBLIC OF MOZAMBIQUE By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional V ce President Africa - 13 - 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) Power system 2,300,000 100% of foreign maintenance and expenditures rehabilitation, except under Part A.1 (a) of the Project (2) Vehicles and 1,330,000 100% of foreign equipment under expenditures Part A.2 of the Project (3) Petroleum system 1,900,000 100% of foreign maintenance and expenditures rehabilitation under Part B.1 of the Project (4) Consultants' services, including external audit ser- vices, and support facilities: (a) under 3,740,000 100% of foreign Part A expenditures of the Proj ect - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (b) under 2,600,000 100% of foreign Part B expenditures of the Project (c) under 1,360,000 100% of foreign Parts C expenditures and D of the Project (5) Refunding of 770,000 Amount due pur- Project Prepara- suant to Section tion Advance 2.02 (c) of this Agreement (6) Unallocated 1,600,000 TOTAL 15,600,.000 2. 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. 3. 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; (b) expenditures under Categories (1) and (2), unless the Association has received EDM's income statements for the fiscal years 1985 and 1986 and its financial plans for the fiscal years 1987 and 1988; and (c) expenditures under Category (3), unless the Association has received PETROMOC's income statements for the fiscal years 1985 and 1986 and its financial plans for the fiscal years 1987 and 1988. - 15 - SCHEDULE 2 Description of the Project The objectives of the Project are to assist the Borrower in: (i) improving the supply and distribution of electricity and petroleum products to the main urban areas of Maputo, Beira, Nampula, Nacala and Quelimane; and (ii) strengthening the operational, management and financial planning capabilities of the energy agencies and companies. 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: Electricidade de Mocambique 1. Maintenance and rehabilitation of the power system through: (a) the supply and installation of materials and equipment for the distribution systems in Maputo, Beira, Nampula and Nacala, including connecting 4,150 houses to these systems; (b) the provision of operational maintenance equipment and materials for the transmission systems; (c) the upgrading of the existing metering laboratory in Maputo and establishment of a small metering laboratory in Beira; (d) the provision of spare parts for the Maputo Power Station operation and the re-equipping of the maintenance workshops; and (e) the repair and expansion of the radio communications network and the upgrading of the repair facilities. 2. Rehabilitation and upgrading of EDM's transportation facilities through: (a) the rehabilitation of heavy and light vehicles; (b) the provision of additional heavy and light vehicles and special-purpose vehicles for maintenance work; and (c) the improvement of EDM's radio network, including installation of new mobile VHF networks, upgrading of the radio maintenance workshops in Maputo and establishment of two radio maintenance centers in Chimoio and Nampula. - 16 - 3. Strengthening of EDM's operational, management and financial planning capabilities through the provision of consultants' services: (a) to manage the transportation fleet and operate power system facilities; and (b) to design and implement management and financial systems, to carry out technical training programs and to prepare a power system study for the main grids. Part B: Empresa Nacional Petroleos de Mocambique E.E. 1. Maintenance and rehabilitation of the petroleum product handling and distribution system through: (a) the repair of off-loading pipelines at Maputo, Quelimane and Nacala; (b) the provision of terminal and depot equipment, including safety equipment, in Maputo, Beira, Quelimane and Nacala; (c) the provision of maintenance equipment; (d) the supply of laboratory test equipment; (e) the supply, and installation of aviation. fuel handling equipment; (f) the provision of equipment for service stations; and (g) the provision of radio equipment. 2. The provision of transportation equipment, including about 24 petroleum tankers and 12 light vehicles. 3. Strengthening of PETROMOC's operational, management and financial planning capabilities through the provision of consultants' services: (a) to manage the operation, engineering and maintenance of the transportation fleet, the aviation fueling facilities and product movement; and (b) to design and implement management and financial systems, to carry out technical training programs and to prepare least-cost development programs for the supply and distribution of petroleum products. - 17 - Part C: Empresa Nacional de Hidrocarbonetos Strengthening of ENH's management and financial planning capabilities through the provision of consultants' services. Part D: Studies Preparation of a national urban household energy policy and implementation program, including: 1. a study of charcoal production technology; 2. an aerophotographic forest inventory of Southern Mozambique; 3. a study of fuelwood supply options; and 4. a study of potential for fuelwood plantations. The Project is expected to be completed by December 31, 1991. - 18 - SCHEDULE 3 Implementation Program Project Coordination 1. The Borrower's Ministry of Industry and Energy, through the project coordinator, shall be responsible for the overall coordination of all Project activities. The project coordinator shall in particular prepare, at regular intervals, reports on the progress of the various Project components, such reports based on the records and reports submitted by the Project executing agencies for their respective components, taking into account the agreed upon monitoring indicators and target dates, and submit these reports to the Association. After completion of the Project, the project coordinator shall prepare a Project completion report. 2. In the context of the overall coordination of Project activities, the Borrower shall exchange views with the Association on the findings of the various studies undertaken under the Project dealing with the sub-sectoral development issues and their implications for the Borrower's energy sector investment program. Part C of the Project 3. The Borrower shall cause ENH: (a) to submit to the Association the findings of the studies on the institutional development of ENH; (b) to exchange views with the Association on said findings; and (c) to implement thereafter, in accordance with a timetable acceptable to the Association, new systems for financial management, accounting and planning, and organization and manpower development. 4. In order to facilitate the carrying out of said studies and their subsequent implementation, the Borrower shall cause ENH to assign qualified staff as counterparts to the consultants thus working closely with the consultants and receiving training from them. - 19 - Part D of the Project 5. The Borrower shall carry out Part D of the Project through the Department of Energy in the Ministry of Industry and Energy which shall prepare, not later than December 31, 1989, a household energy policy paper based on the findings of the specific studies referred to in Part D of the Project. - 20 - SCHEDULE 4 Special Account I 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1), (2) and (4) (a) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Part A of the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in acc-rdance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to SDR 800,000 to be withdrawn from the Credit Account and deposited into Special Account I, pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of Special Account I shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that Special Account I has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish Special Account I may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into Special Account I such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of Special Account I at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into Special Account I such amounts as shall be required to replenish Special Account I with amounts not exceeding the amount of payments made out of Special Account I for eligible expen- ditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, - 21 - and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of Special Account I for which the Borrower requests replenishment, pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into Special Account I shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allocated to the eligible Categories for Part A of the Project, minus the amount of any outstanding special commitment entered into by the Association, pursuant to Section 5.02 of the General Conditions with respect to Part A of the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories for Part A of the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in Special Account I as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of Special Account I: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence - 22 - furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into Special Account I (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into Special Account I shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in Special Account I will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. - 23 - SCHEDULE 5 Special Account II 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (3) and (4) (b) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Part B of the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to SDR 800,000 to be withdrawn from the Credit Account and deposited into Special Account II, pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of Special Account II shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that Special Account II has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish Special Account II may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into Special Account II such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of Special Account II at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into Special Account II such amounts as shall be required to replenish Special Account II with amounts not exceeding the amount of payments made out of Special Account II for eligible expen- ditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, -24 - and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of Special Account II for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into Special Account II shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allocated to the eligible Categories for Part B of the Project, minus the amount of any outstanding special commitment entered into by the Association, pursuant to Section 5.02 of the General Conditions with respect to Part B of the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories for Part B of the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in Special Account II as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of Special Account II: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence - 25 - furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association, deposit into Special Account II (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into Special Account II shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in Special Account II will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. - 26 - SCHEDULE 6 Special Account III 1. For the purposes of this Schedule: (a) the term "eligible Category" means Category (4) (c) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of services required for Parts C and D of the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Category in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to SDR 200,000 to be withdrawn from the Credit Account and deposited into Special Account III, pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of Special Account III shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that Special Account III has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish Special Account III may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into Special Account III such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of Special Account III at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into Special Account III such amounts as shall be required to replenish Special Account III with amounts not exceeding the amount of payments made out of Special Account III for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Category, and in the respective equivalent amounts, as shall have - 27 - been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of Special Account III for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into Special Account III shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the eligible Category for Parts C and D of the Project, minus the amount of any outstanding special commitment entered into by the Association, pursuant to Section 5.02 of the General Conditions with respect to Parts C and D of the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Category for Parts C and D of the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in Special Account III as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of Special Account III: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 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, deposit into - 28 - Special Account III (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into Special Account III shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in Special Account III will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY