Conformed Copy - C2467 - National Electrification Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2467 GH Development Credit Agreement (National Electrification Project) between REPUBLIC OF GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 9, 1993 CREDIT NUMBER 2467 GH DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 9, 1993, between REPUBLIC OF GHANA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) the Borrower intends to contract from the Caisse Centrale de Cooperation Economique (CCCE) a grant (the CCCE Grant) in an amount equivalent to $5,000,000 to assist in financing the Project on the terms and conditions set forth in an agreement (the CCCE Grant Agreement) to be entered into between the Borrower and CCCE; and (C) Parts A and B of the Project will be carried out by the Electricity Corporation of Ghana (ECG) and Parts C and D of the Project will be carried out by the Volta River Authority (VRA), all with the Borrower's assistance and, as part of such assistance, the Borrower will make available to ECG and VRA the proceeds of the Credit as provided in this Agreement; and Page 2 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, the ECG Project Agreement of even date herewith between the Association and ECG, and the VRA Project Agreement of even date herewith between the Association and VRA; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Clearing House System" means the Cross-Debt Clearing House System, established pursuant to the Letter of Intent, dated April 4, 1989, among the Borrower, ECG, VRA and the Ghana Water and Sewerage Corporation; (b) "ECG" means the Electricity Corporation of Ghana, a corporate entity established and operating pursuant to the Borrower's Electricity Corporation of Ghana Decree, 1967 (N.L.C.D. 125), as amended; (c) "ECG Project Agreement" means the agreement between the Association and ECG, 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 ECG Project Agreement; (d) "ECG Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (e) "ECG Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ECG 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 ECG Subsidiary Loan Agreement; (f) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated January 16, 1992 and January 17, 1992 between the Borrower and the Association; (g) "Special Accounts" means the accounts referred to in Sections 2.02 (b) and (c) of this Agreement; (h) "Tariffs" means the tariffs applied by ECG and VRA for the provision of electricity to their customers (other than exports, and sales to the Volta Aluminum Company, by VRA); (i) "Tariff Formula" means the formula and procedures for establishing the average revenue from Tariffs for each customer category, as agreed upon with the Association; (j) "VRA" means the Volta River Authority, a body corporate established and operating pursuant to the Borrower's Volta River Development Act, 1961 (Act 46), as amended; (k) "VRA Project Agreement" means the agreement between the Association and VRA 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 VRA Project Agreement; Page 3 (l) "VRA Special Account" means the account referred to in Section 2.02 (c) of this Agreement; and (m) "VRA Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and VRA pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the VRA Subsidiary Loan Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to fifty-five million two hundred thousand Special Drawing Rights (SDR 55,200,000). 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 reasonable 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 Parts A and B of the Project, open and maintain in the name of ECG a special deposit account in Dollars in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, such special deposit account shall be made in accordance with the provisions of Schedule 3 to this Agreement. (c) The Borrower shall, for the purposes of Parts C and D o f the Project, open and maintain in the name of VRA a special deposit account in Dollars in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, such special deposit account shall be made in accordance with the provisions of Schedule 4 to this Agreement. (d) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be September 30, 1998 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 on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next payment date in that year specified in Section 2.06 of this Agreement. (c) The commitment charge shall be paid: (i) at such places Page 4 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 February 15 and August 15 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi- annual installments payable on each February 15 and August 15, commencing August 15, 2003 and ending February 15, 2033. Each installment to and including the installment payable on February 15, 2013 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years, and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. 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. (a) ECG is designated as representative of the Borrower in respect of Parts A and B of the Project 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. (b) VRA is designated as representative of the Borrower in respect of Parts C and D of the Project 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 Page 5 Agreement and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause ECG and VRA to perform in accordance with the provisions of the ECG Project Agreement and the VRA Project Agreement, respectively, all the obligations of ECG and VRA therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable ECG and VRA to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend a portion of the proceeds of the Credit to ECG under a subsidiary loan agreement to be entered into between the Borrower and ECG, under terms and conditions which shall have been approved by the Association which shall include provisions requiring the repayment by ECG of principal in 20 years, including 5 years of grace, payment of interest at the rate of 7.60% per annum, and the foreign exchange risk to be borne by ECG. (c) The Borrower shall relend a portion of the proceeds of the Credit to VRA under a subsidiary loan agreement to be entered into between the Borrower and VRA, under terms and conditions which shall have been approved by the Association which shall include provisions requiring the repayment by VRA of principal in 20 years, including 5 years of grace, payment of interest at the rate of 7.60% per annum, and the foreign exchange risk to be borne by VRA. (d) The Borrower shall exercise its rights under the ECG Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and, except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the ECG Subsidiary Loan Agreement or any provision thereof. (e) The Borrower shall exercise its rights under the VRA Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and, except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the VRA Subsidiary Loan Agreement or any provision thereof. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the ECG Project Agreement and the VRA Project Agreement. Section 3.03. The Association and the Borrower 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: (a) Parts A and B of the Project shall be carried out by ECG pursuant to Section 2.03 of the ECG Project Agreement; and (b) Parts C and D of the Project shall be carried out by VRA pursuant to Section 2.03 of the VRA Project Agreement. Section 3.04. The Borrower shall settle all bills payable through the Clearing House System on a monthly basis. Section 3.05. The Borrower shall establish, not later than December 31, 1993, and thereafter implement, a scheme for the financing of internal house wiring, with terms of reference satisfactory to the Association. Section 3.06. (a) The Borrower shall carry out, jointly with the Association, VRA and ECG, not earlier than 22 months and not later than 28 months following the Effective Date, a mid-term review of the progress made in carrying out the Project. This review shall cover, among other things: (i) the performance of ECG and VRA in carrying out the Project; (ii) the extent to which the institutional objectives of the Project have been achieved; (iii) the performance Page 6 of the management contractor employed by ECG under the Project; (iv) compliance with the financial, audit and other obligations of the Borrower, ECG and VRA included in this Agreement, the ECG Project Agreement and the VRA Project Agreement; (v) the structure and level of Tariffs; (vi) the evolution of key performance indicators; (vii) procurement under the Project; (viii) the provision of funds for the Project by the Borrower, ECG and VRA; (ix) the recommendations of the scheme of service study to be carried out under Part A.1(d) of the Project; (x) progress in executing the Borrower's Power Sector Master Planning Study; and (xi) plans for the further implementation of the Borrower's National Electrification Scheme. (b) The Borrower shall transmit to the Association, at least 30 days prior to such review, a report, in scope and detail satisfactory to the Association, prepared by ECG and VRA, describing the status of progress regarding the items listed in paragraph (a) above and of Project implementation generally. (c) Based on such review, the Borrower shall, jointly with VRA and ECG, promptly prepare an action plan, acceptable to the Association, for the further implementation of the Project, and shall thereafter implement such action plan. ARTICLE IV Financial Covenants Section 4.01. (a) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) cause to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made; and (iii) enable the Association's representatives to examine such records. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) (i) of this Section and those for the Special Accounts 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 the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including 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; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from time to time reasonably request. Page 7 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) ECG or VRA shall have failed to perform any of its obligations under the ECG Project Agreement or VRA Project Agreement, respectively; (b) as a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that ECG or VRA will be able to perform its obligations under the ECG Project Agreement or VRA Project Agreement, respectively; (c) the Electricity Corporation of Ghana Decree, 1967 (N.L.C.D. 125), as amended to September 30, 1992, shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of ECG to perform any of its obligations under the ECG Project Agreement; (d) the Volta River Development Act, 1961 (Act 46), as amended to September 30, 1992, shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of VRA to perform any of its obligations under the VRA Project Agreement; (e) the Borrower or any other authority having juris- diction shall have taken any action for the dissolution or disestablishment of ECG or for the suspension of its operations; (f) the Borrower or any other authority having juris- diction shall have taken any action for the dissolution or disestablishment of VRA or for the suspension of its operations; and (g) (i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any loan or grant made to the Borrower for the financing of Part A of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms thereof, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof; and (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 paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association Page 8 to the Borrower; and (b) events specified in paragraphs (c) through (g) of Section 5.01 of this Agreement shall occur, subject in the case of paragraph (g) of that Section to the proviso of subparagraph (ii) of said paragraph (g). ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) ECG shall have entered into a contract satisfactory to the Association for the employment of a utility and/or a utility consulting firm to manage its commercial operations; (b) all conditions precedent to the effectiveness of the CCCE Grant Agreement shall have been fulfilled, other than those related to the effectiveness of this Agreement; (c) the ECG Subsidiary Loan Agreement shall have been executed on behalf of the Borrower and ECG; (d) the VRA Subsidiary Loan Agreement shall have been executed on behalf of the Borrower and VRA; and (e) all obligations due to the Clearing House System shall have been reconciled, and settled in full accordingly, in a manner satisfactory to the Association. 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 ECG Project Agreement has been duly authorized or ratified by ECG, and is legally binding upon ECG in accordance with its terms; (b) that the VRA Project Agreement has been duly authorized or ratified by VRA, and is legally binding upon VRA in accordance with its terms; (c) that the ECG Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and ECG and is legally binding upon the Borrower and ECG in accordance with its terms; and (d) that the VRA Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and VRA and is legally binding upon the Borrower and VRA in accordance with its terms. Section 6.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister for Finance and Economic Planning 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: Page 9 Minister for Finance and Economic Planning Ministry of Finance and Economic Planning P.O. Box M40 Accra, Ghana Cable address: Telex: ECONOMICON 2205 MIFAEP GH Accra For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF GHANA By /s/ Joseph Abbey Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Francis X. Colaco Acting Regional Vice President Africa 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 Parts A and B of the Project: ECG (1) Sub-station, 100% of foreign Sub-transmission expenditures and Distribution Construction and Rehabilitation: Page 10 (a) for Part B.1 4,400,000 of the Project (b) for Part B.2 5,370,000 of the Project (2) Equipment: 100% of foreign expenditures (a) for Part B.1(e) 1,380,000 of the Project (b) for Part B.2(b) 8,580,000 of the Project (3) Spare Parts for 690,000 100% of foreign Part B.1(f) of the expenditures Project (4) Civil Works for 280,000 40% Part B.1(d) of the Project Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (5) Consultants' 100% of foreign Services: expenditures (a) for Part B.1 1,580,000 of the Project (b) for Part B.2 560,000 of the Project (6) Training, Related 1,730,000 100% of foreign Computer Equipment expenditures and Studies Parts C and D of the Project: VRA (7) Sub-station, 17,400,000 100% of foreign Sub-transmission expenditures and Distribution Construction and Rehabilitation (8) Equipment for 920,000 100% of foreign Part D(e) of the expenditures Project (9) Spare Parts for 350,000 100% of foreign Part D(f) of the expenditures Project (10) Civil Works for 190,000 40% Part D(d) of the Project (11) Consultants' 1,200,000 100% of foreign Services for Part D expenditures of the Project Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (12) Training and 1,040,000 100% of foreign Page 11 Related Computer expenditures equipment (13) Refunding of 560,000 Amount due Project pursuant to Preparation Section 2.02 (d) Advance of this Agreement (14) Unallocated 8,970,000 ---------- TOTAL 55,200,000 ========== 2. For the purposes of this Schedule: (a) 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; (b) the term "substation, sub-transmission and distribution construction and rehabilitation" means costs for works and equipment required for the erection and rehabilitation of substations and sub- transmission and distribution lines; and (c) the term "training" means expenditures for conferences, workshops, courses and other forms of training, each as are approved by the Association. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. SCHEDULE 2 Description of the Project The objectives of the Project are to assist in: (i) providing electricity from the Borrower's national power grid to small urban centers, district capitals and rural areas through a systematic electrification program; (ii) improving service reliability in ECG's existing network; and (iii) reforming and strengthening ECG's commercial operations and improving its operational efficiency. 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: ECG's Management Structure and Institutional Capacity Improving the efficiency of ECG's commercial operations, including: (a) the establishment within ECG of a Consumers Services Directorate centralizing its commercial and technical activities; (b) staff training in the following areas: finance, audit, systems planning, corporate planning, and utility management; (c) the design and implementation of a pilot program to promote productive uses of electricity; and (d) a study of the scheme of service of power sector utilities. Part B: Extension and Rehabilitation of ECG's Distribution Network 1. Execution by ECG, in connection with the Borrower's National Electrification Scheme, of a systematic electrification program in Page 12 ECG's service areas to provide electricity from the national power grid to small urban centers, district capitals and rural areas, including, in particular: (a) the construction of about 1,200 km of medium voltage and low voltage lines and cables; (b) the installation of distribution transformers, breakers, reclosers and other related equipment; (c) the installation of service connections to about 69,000 households; (d) the construction of distribution service centers at the district level in areas connected under the Project; (e) the acquisition of vehicles, tools and specialized equipment for operating and maintaining the distribution network in areas connected under the Project; and (f) the acquisition of spare parts to maintain the distribution network. 2. The reinforcement of ECG's distribution network through the execution of distribution works to expand substations, build and replace major links between substations and to back the loss reduction program, including: (a) the reinforcement and extension of the key sub- transmission links in Accra, Kumasi, Takoradi, Koforidua, Tema and Cape Coast, including the supply and erection of high voltage sub-transmission lines and cables, transformers and associated switchgear; and (b) the acquisition of service cables, meters and related accessories needed to connect new consumers and to replace faulty equipment. Part C: VRA's Institutional Capacity Strengthening VRA's management capacity, including staff training in the following areas: finance, audit, systems planning, corporate planning, and utility management. Part D: Extension of VRA's Distribution Network Execution by VRA, in connection with the Borrower's National Electrification Scheme, of a systematic electrification program in VRA's service areas to provide electricity from the national power grid to small urban centers, district capitals and rural areas, including, in particular: (a) the construction of about 1000 km of medium voltage and low voltage lines and cables; (b) the installation of distribution transformers, breakers, reclosers and other related equipment; (c) the installation of service connections to about 50,000 households; (d) the construction of distribution service centers at the district level in areas connected under the Project; (e) the acquisition of vehicles, tools and specialized equipment for operating and maintaining the distribution network in areas connected under the Project; and (f) the acquisition of spare parts to maintain the distribution network. Page 13 * * * The Project is expected to be completed by March 31, 1998. SCHEDULE 3 ECG Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1), (2), (3), (4), (5) and (6) set forth in the table in paragraph 1 of Schedule 1 to the Development Credit Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Parts A and 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 the Development Credit Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $2,000,000 to be withdrawn from the Credit Account and deposited into the ECG Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the ECG Special Account 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 the ECG Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the ECG Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the ECG Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the ECG Special Account, the Borrower shall furnish to the Association requests for deposits into the ECG Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the ECG Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the ECG Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the ECG Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for Page 14 eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the ECG Special Account: (a) if, at any time, 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 the Development Credit Agreement; or (b) once the total unwithdrawn amount of the Credit allocated to the eligible Categories for Parts A and B of the Project, less 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 A and B of the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories for Parts A and 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 the ECG Special Account 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 the ECG Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the ECG Special Account (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. Unless the Association shall otherwise agree, no further deposit by the Association into the ECG Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association shall have determined at any time that any amount outstanding in the ECG Special Account 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. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the ECG Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of the Development Credit Agreement, including the General Conditions. SCHEDULE 4 VRA Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (7), (8), (9), (10), (11) and (12) set forth in the table in paragraph 1 of Schedule 1 to the Development Credit Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Page 15 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 Categories in accordance with the provisions of Schedule 1 to the Development Credit Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $2,000,000 to be withdrawn from the Credit Account and deposited into the VRA Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the VRA Special Account shall be made exclusively for eligible expenditures in accordance with theprovisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the VRA Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the VRA Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the VRA Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the VRA Special Account, the Borrower shall furnish to the Association requests for deposits into the VRA Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the VRA Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the VRA Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the VRA Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the VRA Special Account: (a) if, at any time, 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 the Development Credit Agreement; or (b) once the total unwithdrawn amount of the Credit allocated to the eligible Categories for Parts C and D of the Project, less 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 equal the equivalent Page 16 of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories 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 the VRA Special Account 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 the VRA Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the VRA Special Account (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. Unless the Association shall otherwise agree, no further deposit by the Association into the VRA Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association shall have determined at any time that any amount outstanding in the VRA Special Account 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. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the VRA Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of the Development Credit Agreement, including the General Conditions.