Ghana - Volta Project : Loan 0310 - Guarantee Agreement - Conformed

LOAN NUMBER 310 GH Guarantee Agreement (Volta Project) BETWEEN REPUBLIC OF GHANA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED FEBRUARY 8, 1962 LOAN NUMBER 310 GH Guarantee Agreement (Volta Project) BETWEEN REPUBLIC OF GHANA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED FEBRUARY 8, 1962 wwuranter Ag~ramnt AGREEMENT dated February 8, 1962 between REPUBLIC OF GHANA (hereinafter called the Guarantor) and INTERNA- TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank). WHEREAS by an agreement of even date herewith between the Bank and Volta River Authority (hereinafter called the Borrower), which agreement and the schedules therein referred to are hereinafter called the Loan Agreement, the Bank has agreed to make to the Borrower a loan in various currencies equivalent to forty-seven million dollars ($47,000,000) on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower; Now THEREFORE the parties hereto hereby agree as fol- lows: ARTICLE I SECTION 1.01. The parties to this Guarantee Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated February 15, 1961, subject, however, to the mod- ifications thereof set forth in Schedule 3 to the Loan Agree- mient (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. The terms defined in Section 1.02 of the Loan Agreement shall have the same meaning herein as if such Section were fully set forth herein. 4 ARTICLE II SECTION 2.01. Without limitation or restriction upon any of the other covenants on its part in this Agreement con- tained, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and the interest and other charges on, the Loan, the principal of and interest on the Bonds, the premium, if any, on the prepayment of the Loan or the redemption of the Bonds, and the punctual performance of all the covenants and agreements of the Borrower, all as set forth in the Loan Agreement and in the Bonds. SECTION 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guaran- tor specifically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower (including the funds specified in Section 23(1) and (2) of the Volta River Development Act, 1961) will be inade- quate to meet the estimated expenditures required for carrying out the Project, promptly to make arrangements, satisfactory to the Bank, to provide the Borrower or cause the Borrower to be provided with such funds as and when needed to meet such expenditures. ARTICLE III SECTION 3.01. It is the mutual intention of the Guaran- tor and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Guarantor undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor as security for any external 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 provi- 5 sions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as se- curity for the payment of the purchase price of such prop- erty; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. The term "assets of the Guarantor" as used in this Sec- tion includes assets of the Guarantor or of any of its poli- tical subdivisions or of any agency of the Guarantor or of any such political subdivision, including, without limitation, the Bank of Ghana and the Ghana Commercial Bank. SECTION 3.02 (a) The Guarantor and the Bank shall co- operate 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 re- quest with regard to the general status of the Loan. On the part of the Guarantor, such information shall include information with respect to financial and economic condi- tions in the territories of the Guarantor and the interna- tional balance of payments position of the Guarantor. (b) The Guarantor and the Bank 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 Guarantor 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. (c) The Guarantor shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any part of the territories of the Guarantor for purposes re- lated to the Loan. 6 SECTION 3.03. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes imposed under the laws of the Guarantor or laws in effect in its territories; provided, however, that the provisions of this Section shall not apply to taxation of payments under any Bond to a holder therof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 3.04. This Guarantee Agreement, the Loan Agreement and the Bonds shall be free from any taxes that shall be imposed under the laws of the Guarantor or laws in effect in its territories on or in connection with the execu- tion, issue, delivery or registration thereof. SECTION 3.05. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Guarantor or laws in effect in its territories. SECTION 3.06. (a) Except as the Bank shall otherwise agree, the Guarantor shall, to the extent that it has an in- terest therein and is obligated or entitled to do so, take all action necessary to maintain in full force and effect, and se- cure the prompt and diligent performance by the parties thereto of, the Scheduled Documents. (b) The Guarantor and the Bank shall exchange views as to any arbitration or any proceeding before the Referee or Engineer Referee contemplated or undertaken pursuant to any of the Scheduled Documents in which the Guarantor has an interest. The Guarantor shall promptly advise the Bank of any such arbitration or other proceeding contem- plated or undertaken and shall give the Bank such infor- mation as the Bank shall reasonably request to enable the Bank if it so desires to make its views thereon known to the Guarantor and in any such arbitration or other proceeding. 7 SECTION 3.07. The Guarantor shall take or cause to be taken all such action as shall be required to reorganize, and shall reorganize, the Electricity Division of the Minis- try of Works and Housing as a statutory corporation op- erating efficiently as a public utility on a sound commercial basis. Such action shall be taken, after consultation with the Bank, as promptly as practicable, and, in any event, no later than the date when the Authority shall have started to sell power. SECTION 3.08. The Guarantor, except as the Bank shall otherwise agree: (a) shall not undertake or assist in the financing of an additional major power project in its terri- tories unless (i) such project would not prevent or mate- rially interfere with the successful construction and opera- tion of the Project and (ii) there is adequate economic justification for such project, taking into account not only the said project standing by itself but also the effect of such project on the obligations assumed by the Guarantor and the Borrower in connection with the Project; and (b) shall consult with the Bank before it undertakes or assists in the financing of a major power project in its territories. SECTION 3.09. The Guarantor shall not, without the prior approval of the Bank, (a) agree to any amendment of the agreement between the Guarantor and the Export-Import Bank of Washington relating to the guarantee under cer- tain circumstances of the loan to be made pursuant to the Exim-Valco Loan Agreement, or (b) take or permit any action to be taken which shall lead to the occurrence of an Event of Guarantee under such agreement between the Guarantor and the Export-Import Bank of Washington. ARTICLE IV SECTION 4.01. The Guarantor shall endorse, in accord- ance with the provisions of the Loan Regulations, its guar- antee on the Bonds to be executed and delivered by the 8 Borrower. The Minister of Finance of the Guarantor and such person or persons as he shall designate in writing are designated as the authorized representatives of the Guaran- tor for the purposes of Section 6.12(b) of the Loan Regulations. ARTICLE V SECTION 5.01. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Secretary to the Cabinet Office of the President Accra, Ghana Alternative address for cablegrams and radiograms: Presidential Accra 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. SECTION 5.02. The Minister of Finance of the Guarantor is designated for the purposes of Section 8.03 of the Loan Regulations. 9 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Guarantee Agreement to be signed in their re- spective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF GHANA by s/ W. M. Q. HALm Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT by s/ J. BURKE KNAPP Vice President