South Africa - Third Escom Project : Loan 0305 - Loan Agreement - Conformed

LOAN NUMBER 305 SA Loan Agreement (Third Escom Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DE'ELOPMENT AND ELECTRICITY SUPPLY COMMISSION DATED DECEMBER 1, 1961 LOAN NUMBER 305 SA Loan Agreement (Third Escom Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND ELECTRICITY SUPPLY COMMISSION DATED DECEMBER 1, 1961 AGREEMENT, dated December 1, 1961, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and ELECTRICITY SUPPLY CoMMIssIoN (hereinafter called the Borrower). ARTICLE I Loan Regulations; Special Definition SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated February 15, 1961, subject, however, to the modifica- tion. thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. For the purposes of this Agreement, any reference herein or in the Loan Regulations (including any Schedules thereto) to the "territories" of the Guarantor shall be construed to include a reference to any territory administered by the Guarantor. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to fourteen million dollars ($14,000,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided 4 in, and subject to the rights of cancellation and suspension set forth in, this Agreement and the Loan Regulations. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. SECTION 2.04. The Borrower shall pay interest at the rate of five and three-fourths per cent (534%) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Except as the Bank and the Borrower shall otherwise agree, the charge payable for special commit- ments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (/9 of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be payable semi-annually on June 1 and December 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall apply the proceeds of the Loan exclusively to financing the cost of goods required to carry out the Project described in Schedule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan shall be determined by agreement between the Bank and the Borrower, subject to modification 5 by further agreement between them, and the methods and procedures for procurement of such goods shall be satis- factory to the Bank. SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be imported into the territories of the Guarantor and there to be used exclusively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. Any member of the Borrower and such person or persons as he shall appoint in writing are desig- nated as authorized representatives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications and con- struction schedules for the Project and any material modi- fications subsequently made therein, in such detail as the Bank shall from time to time request. (c) The Borrower shall maintain records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and 6 to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Borrower; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such informa- tion as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the goods, and the operations and financial condition of the Borrower. SECTION 5.02. (a) The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. (b) The Bank and the Borrower shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no other debt shall enjoy any priority over the Loan by way of a lien on assets of the Borrower. To that end, the Borrower specifically undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing pro- visions of this Section shall not apply to any lien created on property, at the time of purchase thereof, solely as 7 security for the payment of the purchase price of such property. SECTION 5.04. The Borrower shall pay or cause to be paid all taxes or fees, if any, imposed under the laws of the Guarantor or laws in effect in the territories of the Guar- antor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an indi- vidual or corporate resident of the Guarantor. SECTION 5.05. The Borrower shall pay or cause to be paid all taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.06. (a) Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall insure or cause to be insured with responsible insurers all goods financed with the proceeds of the Loan. Such insur- ance shall cover such marine, transit and other hazards incident to purchase and importation of the goods into the territories of the Guarantor and to delivery thereof to their sites in the Project, and shall be for such amounts as shall be consistent with sound commercial practice. Such insur- ance shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable. (b) In addition, the Borrower shall insure against such risks and in such amounts as shall be consistent with sound business and public utility practices. 8 SECTION 5.07. (a) The Borrower shall at all times main- tain its existence and right to carry on operations and shall, except as the Bank shall otherwise agree, take all steps necessary to maintain and renew all rights, powers, privi- leges and franchises which are necessary or useful in the conduct of its business. (b) The Borrower shall operate and maintain its plants, equipment and property, and from time to time make all necessary renewals and repairs thereof, all in accordance with sound engineering standards; and shall at all times operate its plants and equipment and maintain its financial position in accordance with sound business and public utility practices and the requirements of Section 14 of the Elec- tricity Act, 1958 of the Guarantor. (c) The Borrower shall not, without the prior consent of the Bank, sell or otherwise dispose of all or substantially all of its assets and property or all or substantially all of the property included in the Project, unless the Borrower shall first redeem and pay, or make adequate provision satisfactory to the Bank for redemption and payment of, all of the Loan which shall then be outstanding and unpaid. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a), paragraph (b), paragraph (e) or paragraph (f) of Sec- tion 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations or in Section 6.02 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continu- ance thereof, the Bank, at its option, may declare the 9 principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. SECTION 6.02. The following is specified as an additional event for the purposes of Section 5.02 (j) of the Loan Regulations: A default shall have occurred in the performance of any covenant or agreement (other than for the payment of money) on the part of the Borrower or the Guarantor under the Loan Agreements between the Bank and the Borrower dated January 23, 1951 and August 28, 1953 or the Guar- antee Agreements of the same dates between the Guarantor and the Bank, or any of the Bonds provided for in such Loan Agreements. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be June 30, 1963, or such other date as may from time to time be agreed between the Borrower and the Bank. SECTION 7.02. The following is specified as an additional matter, within the meaning of Section 9.02 (c) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: That the Borrower has the power and obligation under Section 14 of the Electricity Act, 1958, as amended, to adjust its charges from time to time, with- out obtaining the approval of the Electricity Control Board or anyone else, in order to cover the costs and other amounts referred to in such Section. 10 SECTION 7.03. A date sixty days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SECTION 7.04. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. For the Borrower: Electricity Supply Commission Escom Center 204 Smit Street Johannesburg Republic of South Africa Alternative address for cablegrams and radiograms: Escom Johannesburg South Africa IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective 11 names and delivered in 'the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ EUGENE R. BLACK President ELECTRICITY SUPPLY COMMISSION By /s/ C. A. F. BLAIR Authorized Representative 12 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* December 1, 1963 $ 650,000 June 1, 1964 669,000 December 1, 1964 688,000 June 1, 1965 708,000 December 1, 1965 728,000 June 1, 1966 749,000 December 1, 1966 771,000 June 1, 1967 793,000 December 1, 1967 816,000 June 1, 1968 839,000 December 1, 1968 863,000 June 1, 1969 888,000 December 1, 1969 913,000 June 1, 1970 940,000 December 1, 1970 967,000 June 1, 1971 995,000 December 1, 1971 1,023,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.03), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 13 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than two years before ma- turity ........................ of 1 More than two years but not more than four years before maturity ..... 2% More than four years but not more than six years before maturity....... .3 % More than six years but not more than eight years before maturity .... 43/4% More than eight years before maturity. . 53/4% 14 SCHEDULE 2 Description of the Project The Project is that part of a 5-year expansion program being carried out by the Borrower which relates to the interconnected electric power system formed by the Bor- rower's Cape Northern, Rand and Orange Free State and Eastern Transvaal undertakings. The Project consists of the completion of (a) the first stage of the Komati thermal power station now under construction, (b) the expansion of the Highveld thermal power station, and (c) the construe- tion of about 314 circuit miles of high tension transmission lines with the necessary step-down substations. A. Komati Power Station The new Komati power station will be in Eastern Transvaal at the mouth of the Blinkpan colliery, which will supply the necessary coal for the station. It is designed for an ultimate capacity of 1,000 MW but the first stage will have an installed capacity of 750 MW, comprised of five 100 MW and two 125 MW generating units with matching boilers. These seven units will be brought into operation progressively over the period of the Project, with the last unit scheduled to be in operation in August 1964. B. Expansion of Highveld Power Station The Highveld Power Station in the Orange Free State, now operating six 60 MW units, will be expanded by the installation of two additional 60 MW generating units with boilers to match. The additional units are scheduled to be in operation in March 1963. C. Transmission Lines and Substations About 314 circuit miles of 275 KV transmission lines will be constructed, running from the Komati Pow er Station via the Highveld Power Station to the Scafell substation. 15 New step-down substations will be provided at Nevis, Snowdon and Scafell, having a combined initial capacity of 1170 MVA. These lines and substations are scheduled to be brought into operation progressively, with full operation scheduled for early 1963. 16 SCHEDULE 3 Modifications of Loan Regulations No. 4 For the purposes of this Agreement the provisions of Loan Regulations No. 4 of the Bank, dated February 15, 1961, shall be deemed to be modified as follows: The eighth paragraph of the Form of Bond set forth in Schedule 1, the seventh paragraph of the Form of Bond set forth in Schedule 2 and the first paragraph of the Form of Guarantee set forth in Schedule 3 are amended by inserting, after the word "territories" in each such paragraph, the following: "(including terri- tories administered by it)".