Conformed Copy - L2998 - Electric Power Sector Project - Project Agreement

Page 1 CONFORMED COPY LOAN NUMBER 2998 AR (Electric Power Sector Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and ENTIDAD BINACIONAL YACYRETA Dated November 18, 1988 LOAN NUMBER 2998 AR PROJECT AGREEMENT AGREEMENT, dated November 18, 1988, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and ENTIDAD BINACIONAL YACYRETA (EBY). WHEREAS (A) by the Loan Agreement of even date herewith between the Argentine Republic (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to two hundred fifty two million dollars ($252,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that EBY agree to undertake such obligations toward the Bank as are set forth in this Agreement; (B) EBY will carry out or cause to be carried out Part A.1 of the Project, as defined in Schedule 2 to the Loan Agreement; (C) by a subsidiary loan agreement to be entered into between the Borrower and EBY, a portion of the proceeds of the loan provided for under the Loan Agreement will be made available to EBY on the terms and conditions set forth in said Subsidiary Loan Agreement; and Page 2 WHEREAS EBY, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth and the term "Yacyreta Project Agreement" means the Project Agreement, dated November 6, 1979, between the Bank and EBY, as amended. ARTICLE II Execution of the Project Section 2.01. (a) EBY declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement in respect of Part A.1 of the Project, and, to this end, shall carry out such Part of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for Part A.1 of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Bank and EBY shall otherwise agree, EBY shall carry out Part A.1 of the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement. Section 2.02. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for Part A.1 of the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.03. EBY shall carry out the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 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 the Project Agreement and Part A.1 of the Project. Section 2.04. EBY shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, EBY 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 2.05. (a) EBY shall, at the request of the Bank, exchange views with the Bank with regard to the progress of the Yacyreta Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the Yacyreta Project. (b) EBY shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Yacyreta Project, the accomplishment of the purposes of the Loan, or the performance by EBY of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.06. (a) EBY shall take all reasonable measures to ensure that the execution and operation of the Yacyreta Project is carried out with due regard to ecological and environmental factors. (b) EBY shall take all such action as shall be necessary to acquire, as and when needed, all such land and rights in respect of land as shall be required for carrying out the Yacyreta Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Yacyreta Project. (c) Without limitation to paragraphs (a) and (b) of this Section, EBY shall carry out the plan of action set forth in Schedule 3 hereto relating to environmental Page 3 and resettlement aspects of the Yacyreta Project. EBY shall promptly furnish to the Bank all such evidence as the Bank shall reasonably request concerning the adherence of EBY to such plan of action. Section 2.07. EBY shall maintain the panel of experts which has been appointed under Section 2.02 (b) of the Yacyreta Project Agreement, and shall cause such panel of experts to conduct periodic reviews of dam safety in accordance with a program to be submitted to the Bank not later than January 1, 1990. Such program shall cover the entire useful life of the Yacyreta Project and shall be satisfactory to the Bank. Section 2.08. (a) EBY shall furnish to the Bank: plans, specifications, reports, contract documents and construction and procurement schedules for the Yacyreta Project, which have not already been provided to the Bank pursuant to the Yacyreta Project Agreement, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) EBY: (i) shall maintain records and procedures adequate to record and monitor the progress of the Yacyreta Project (including their cost and the benefits to be derived from them), to identify the services financed out of the proceeds of the Loan, and to disclose their use in such Part of the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Yacyreta Project and any relevant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the Yacyreta Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of such proceeds and the services financed therewith. (c) Promptly after completion of the Yacyreta Project, EBY shall prepare and furnish to the Bank a report of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Yacyreta Project, its cost and the benefits derived and to be derived from it, the performance by EBY and the Bank of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Yacyreta Project. (d) EBY shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of EBY and any relevant records and documents. ARTICLE III Management and Operations of EBY Section 3.01. EBY shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges, concessions and franchises which are necessary or useful in the conduct of its business. Section 3.02. EBY shall: (a) operate and maintain its plants, equipment and property, and from time to time, make all necessary renewals and repairs thereof, all in accordance with appropriate engineering, and public utility practices; and (b) under arrangements satisfactory to the Bank, cause the dam and related structures referred to in Section 3.02 (b) of the Yacyreta Project Agreement to be periodically inspected in accordance with sound engineering practice in order to determine whether there are any deficiencies in the condition of such dam and structures or in the quality and adequacy of maintenance or methods of operations of the same, which may endanger their safety. To this end, EBY shall propose to the Bank appropriate arrangements for the Bank's review no later than one year before the expected completion of such dam and structures. Section 3.03. EBY shall not sell, lease, transfer or otherwise dispose of any of its properties or assets required for the efficient carrying out of its business and undertaking, including the carrying out of the Yacyreta Project, except in the normal course of its business or with the prior agreement of the Bank. Section 3.04. EBY shall at all times carry on its operations, manage its affairs, maintain its financial position, all in accordance with appropriate business, financial and public utility practices and under experienced and competent management assisted by adequate and competent staff. Page 4 Section 3.05. EBY shall, during the carrying out of the Yacyreta Project and after its completion, take out and maintain with responsible insurers, or make other provisions satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate public utility practices. ARTICLE IV Financial Covenants Section 4.01. (a) EBY shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) EBY shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses, statements of sources of funds and their application and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year: (A) certified 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 Bank shall have reasonably requested; (iii) furnish to the Bank such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Bank shall from time to time reasonably request; and (iv) not later than October 31 each year, furnish to the Bank evidence, satisfactory to the Bank, that it has employed the auditors referred to in paragraph (b)(i) of this Section. Section 4.02. (a) EBY shall: (i) by October 31 in each year during the execution of the Yacyreta Project furnish to the Bank a report on the long-term debt contracted by EBY during the previous twelve months and the long-term debt proposed to be contracted by EBY during the following twelve month-period, such report to be in such detail as the Bank shall reasonably request; and (ii) exchange views with the Bank thereon. (b) Except as the Bank shall otherwise agree, EBY shall not incur short-term debt unless the short-term debt to be incurred, when added to the total short-term debt of EBY, does not exceed the higher of 10% of the total debt of EBY, including the short-term debt to be incurred, or 100% of the long-term debt contracted by EBY with private banks, exclusive of export credits, and not yet drawn down. For purposes of this Section: (i) "long-term debt" means any debt incurred by EBY and maturing by its terms more than one year after the date on which it is originally incurred; (ii) "short-term debt" means any overdraft or debt incurred by EBY and maturing by its terms one year or less than one year after the date on which it is originally incurred; (iii) "debt" means the total of long-term and short-term debt; and (iv) long-term and short-term debt shall be deemed to be incurred (1) under a loan agreement, on the date it is drawn down but only to the extent that it is outstanding, and (2) under a guarantee agreement, on the date such agreement is entered into. ARTICLE V Effective Date; Termination; Cancellation and Suspension Page 5 Section 5.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 5.O2. This Agreement and all obligations of the Bank and of EBY thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify EBY thereof. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Loan Agreement. ARTICLE VI Enforceability of Project Agreement Failure to Exercise Rights; Arbitration Section 6.01. The rights and obligations of the Bank and EBY under this Agreement shall be valid and enforceable in accordance with their terms notwithstanding the law of any state or political subdivision thereof, to the contrary. Section 6.02. No delay in xercising, or omission to exercise, any right, power or remedy accruing to any party under this Agreement upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof of an acquiescence in such default, nor shall any action of such party in respect of any default, or any acquiescence by it in any default, affect or impair any right, power or remedy of such party in respect of any other or subsequent default. Section 6.03. Arbitration. (a) Any controversy between the Bank and EBY and any claim by the Bank against EBY or by EBY against the Bank arising under this Agreement which shall not be determined by agreement of the parties shall be submitted to arbitration by an Arbitral Tribunal as hereinafter provided. (b) The parties to such arbitration shall be the Bank, on the one side, and EBY, on the other side. (c) The Arbitral Tribunal shall consist of three arbitrators appointed as follows: one arbitrator shall be appointed by the Bank; one arbitrator shall be appointed by EBY; and the third arbitrator (hereinafter sometimes called the Umpire) shall be appointed by agreement of the parties or, if they shall not agree, by the President of the International Court of Justice or, failing appointment by him, by the Secretary-General of the United Nations. If the Bank shall fail to appoint its arbitrator, such arbitrator shall be appointed by the Umpire. In case any arbitrator appointed in accordance with this Section shall resign, die or become unable to act, a successor arbitrator shall be appointed in the same manner as herein prescribed for the appointment of the original arbitrator and such successor shall have all the powers and duties of such original arbitrator. (d) An arbitration proceeding may be instituted under this Section upon notice by the party instituting such proceeding to the other parties. Such notice shall contain a statement setting forth the nature of the controversy or claim to be submitted to arbitration and the nature of the relief sought. Within thirty (30) days after the giving of such notice, each side shall notify the other side of the arbitrator appointed by it. (e) If within sixty (60) days after the giving of such notice instituting the arbitration proceeding the parties shall not have agreed upon an Umpire, any party may request the appointment of an Umpire as provided in paragraph (c) of this Section. (f) The Arbitral Tribunal shall convene at such time and place as shall be fixed by the Umpire. Thereafter, the Arbitral Tribunal shall determine where and when it shall sit. (g) Subject to the provisions of this Section and except as the parties shall otherwise agree, the Arbitral Tribunal shall decide all questions relating to its competence and shall determine its procedure. All decisions of the Arbitral Tribunal shall be by majority vote. (h) The Arbitral Tribunal shall afford to all parties a fair hearing and shall render its award in writing. Such award may be rendered by default. An award signed by a majority of the Arbitral Tribunal shall constitute the award of such Tribunal. A signed counterpart of the award shall be transmitted to each party. Any such award Page 6 rendered in accordance with the provisions of this Section shall be final and binding upon the parties to this Agreement. Each party shall abide by and comply with any such award rendered by the Arbitral Tribunal in accordance with the provisions of this Section. (i) The parties shall fix the amount of the remuneration of the arbitrators and such other persons as shall be required for the conduct of the arbitration proceedings. If the parties shall not agree on such amount before the Arbitral Tribunal shall convene, the Arbitral Tribunal shall fix such amount as shall be reasonable under the circumstances. The Bank and EBY shall defray their own respective expenses in the arbitration proceedings. The costs of the Arbitral Tribunal shall be divided between and borne equally by the Bank, on the one side, and EBY, on the other. Any question concerning the division of the costs of the Arbitral Tribunal or the procedure for payment of such costs shall be determined by the Arbitral Tribunal. (j) The provisions for arbitration set forth in this Section shall be in lieu of any other procedure for the determination of controversies between the parties to this Agreement or any claim by the Bank against EBY or by EBY against the Bank arising hereunder. (k) If within thirty (30) days after counterparts of the award shall be delivered to the parties the award shall not be complied with, any party may enter judgement upon, or institute a proceeding to enforce, the award in any court of competent jurisdiction against any other party, may enforce such judgement by execution or may pursue any other appropriate remedy against such other party for the enforcement of the award or the provisions of this Agreement. (l) Service of any notice or process in connection with any proceeding under this Section or in connection with any proceeding to enforce any award rendered pursuant to this Section may be made upon the parties to this Agreement in the manner provided in Section 7.01 of this Agreement. The parties to this Agreement waive any and all other requirements for the service of any such notice or process. ARTICLE VII Miscellaneous Provisions Section 7.01. 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 or by 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 Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For EBY: (1) Entidad Binacional Yacyreta Madero 942 (1106) Buenos Aires Argentina Cable address: Telex: YACYRETA 22659 YAC AR Baires Page 7 (2) Entidad Binacional Yacyreta Humaita 357 Asuncion Paraguay Cable address: Telex: YACYRETA 268-PY YACYRETA Asuncion Section 7.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of EBY, or by EBY on behalf of the Borrower under the Loan Agreement, may be taken or executed jointly by the Director Ejecutivo and the Director or such other person or persons as the Director Ejecutivo and the Director shall designate in writing, and EBY shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 7.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Shahid Husain Regional Vice President Latin America and the Caribbean ENTIDAD BINACIONAL YACYRETA By /s/ Raul Alberto Capucci /s/ Jorge Pablo Kirsch Authorized Representative SCHEDULE 1 Procurement and Consultants' Services Section I: Procurement of Goods and Works under Part A.1 of the Project Part A: International Competitive Bidding Goods and works shall be procured in accordance with the procedures set forth in Schedule 2 to the Yacyreta Project Agreement. Section II: Employment of Consultants Whenever consultants are employed to assist in the carrying out of Part A.1 of the Project, such consultants shall have qualifications, experience and terms and conditions of employment satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank 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. SCHEDULE 2 Implementation Program Start Conclusion Page 8 A. Civil Works of Dams - Right bank * 2nd quarter 1992 - Yacyreta Island * 1st quarter 1991 - Left bank * 2nd quarter 1992 B. River Closure - Main Branch 2nd quarter 1989 2nd quarter 1992 - Ana Cua Branch 2nd quarter 1990 2nd quarter 1992 C. Civil Works of Spillways - Main Branch * 4th quarter 1992 - Ana Cua Branch * 4th quarter 1992 D. Power House Construction - First Stage * 2nd quarter 1992 - Second Stage 2nd quarter 1990 4th quarter 1994 E. Irrigation Intakes 2nd quarter 1990 4th quarter 1991 F. Electromechanical Equipment - Navigation Lock * 2nd quarter 1989 - Spillways and Gates 1st quarter 1989 4th quarter 1991 - Turbines and Generators 2nd quarter 1990 3rd quarter 1996 G. Relocation of Infrastructure Works * 4th quarter 1992 H. Resettlement of Displaced Population * 4th quarter 1992 * Started prior to 3rd quarter 1988. SCHEDULE 3 EBY's Environmental and Resettlement Plan of Action Item Description Date 1. Resettlement Staff Agreement between the Bank and EBY on number and participation schedule of staff hired or to be hired and on the budget for every year in the period 1989-1992 for the environmental and resettlement component. 10/30/88 C 2. Training Agreement between the Bank and EBY on a training program for the staff, including courses, seminars and workshops and international on-the-job training. 10/30/88 C 3. Panel of Experts on Environment Agreement between the Bank and EBY on the composition and schedule of meetings. 10/30/88 C 4. Fisheries Page 9 Completion of economic, social and nutritional studies. 5/30/89 C Installation of fish station, left bank. 5/30/90 C 5. Fauna Sanctuary Agreement between the Bank and EBY on schedule and budget for completion and operation. 5/30/89 C 6. Urban Areas Completion of Master Plan for the city of Encarnacion. 11/30/89 C Implementation of Master Plan for Encarnacion. 6/30/90 S Completion of sanitation plan for the city of Posadas. 6/30/89 C 7. Population not included in Original Survey of the Population to be Resettled Provision to the Bank of an evaluation of the extent of the problems. 5/30/89 C 8. Clay Industries (Olerias) Provision to the Bank of a proposal for solution. 5/30/89 C C = Completion Date S = Starting Date