Sudan - Power Project : Loan 0522 - Loan Agreement - Conformed

LOAN NUMBER 522 SU Loan Agreement (Power Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND CENTRAL ELECTRICITY AND WATER CORPORATION DATED JANUARY 15, 1968 LOAN NUMBER 522 SU Loan Agreement (Power Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND CENTRAL ELECTRICITY AND WATER CORPORATION DATED JANUARY 15, 1968 fitan Agruemut AGREEMENT, dated January 15, 1968, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and CENTRAL ELECTRICITY AND WATER CORPORATION (hereinafter called the Borrower) established under The Central Electricity and Water Cor- poration Act, 1966 of The Republic of The Sudan (herein- after called the Guarantor). ARTICLE I Loan Regulations SECTION 1.01. The parties to this Agreement accept all the provisions of Loan Regulations No. 4 of the Bank, dated February 15, 1961, as amended February 9, 1967, with the same force and effect as if they were fully set forth herein (said Loan Regulations No. 4 being herein- after called the Loan Regulations). ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower an amount in various currencies equivalent to twenty-four million dollars ($24,000,000). 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 The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to the rights of cancellation and sus- pension set forth in, this Agreement and the Loan Regula- tions. 4 SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (% of 1%1) per annum on the principal amount of the Loan not withdrawn from time to time from the Loan Account. SECTION 2.04. The Borrower shall pay interest at the rate of six and one-fourth per cent (61/4%o) per annum on the principal amount of the Loan so withdrawn and out- standing from time to time. SECTION 2.05. Except as the Bank and the Borrower shall otherwise agree, the charge payable for special com- mitments 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 (1/2 of 1%) per annum on the principal amount of any such special commitment outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on January 1 and July 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 allocation of the proceeds of the Loan and the methods and procedures for procurement of the goods to be financed out of such proceeds shall be deter- mined by agreement between the Bank and the Borrower, subject to modification by further agreement between them. 5 SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be used exclu- sively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. If and as the Bank shall from time to time request, the Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in Article VI of the Loan Regulations. SECTION 4.02. The General Manager of the Borrower is designated as authorized representative of the Borrower for the purposes of Section 6.12 (a) of the Loan Regula- tions. The Borrower may designate by resolution notified in writing to the Bank additional or '.r representatives for such purposes. 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) In the carrying out of the Project, the Borrower shall employ qualified and experienced consultants accept- able to the Bank, upon terms and conditions satisfactory to the Bank. (c) Upon request from time to time by the Bank, the Borrower shall furnish or cause to be furnished to the Bank, promptly upon their preparation, the plans and specifications and work schedules for the Project and any material modifications subsequently made therein, in such detail as the Bank shall from time to time request. (d) The Borrower shall maintain records adequatc to identify the goods financed out of the proceeds of the Loan, 6 to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting practices, the operations and financial condition of the Borrower; shall submit annually to the Bank, not later than five moiths after the end of the fiscal year of the Borrower, the audited financial statements of the Borrow- er; and shall enable the Bank's representatives to inspect the Project, the goods and all other plants, sites, works, property, equipment and operations of the Borrower and any relevant records and documents. SECTION 5.02. The Borrower shall conduct its business and carry on its operations in accordance with sound public utility practices and to that end shall employ at all times qualified and experienced management. SECTION 5.03. (a) The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, the Bank and the Bor- rower shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of its obligations under this Agreement, the administration, operations and financial condition of the Borrower and other matters relating to the purposes of the Loan. (b) The Borrower shall furnish to the Bank all such in- formation as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the goods, the Project and the administration, operations and finan- cial condition of the Borrower. (c) The Borrower shall promptly inform the Bank of any condition which interferes with, or threatens to inter- fere with, the accomplishment of the purposes of the Loan, the maintenance of the service thereof or the performance by the Borrower of its obligations under this Agreement. 7 SECTIO 5.04. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur any long-term indebtedness unless the Borrower's net revenues for the fiscal year, or a later twelve consecutive months' period, immediately preceding the date of such incurrence shall be at least 1.5 times the maximum debt service re- quirements in any succeeding fiscal year, including the fiscal year in which the debt is to be incurred, on all the Borrower's long-term indebtedness (including the debt to be incurred) and the outstanding Guarantor's advances to the Borrower. For the purposes of this Section: (i) the term "long-term indebtedness" shall mean any debt maturing more than one year after the date on which it is originally incurred, other than Guarantor's advances to the Borrower; (ii) debt shall be deemed to be incurred on the date of execution and delivery of the contract or loan agreement providing for such debt; (iii) the term "net revenues" shall mean gross revenues from all sources adjusted to take into account rates in effect at the time of incurrence of such debt even though they were not in effect during the twelve consecutive months to which such revenues related, less operating and administrative expenses, including provision for taxes, if any, but excluding provision for depreciation and interest and other charges on debt; (iv) the term "debt service requirements" shall mean the aggregate amount of amortization (including sinking fund contributions, if any), intereW and other charges on debt; and (v) whenever it shall be necessary to value in currency of the Guarantor debt payable in another currency, such valuption shall be made on the basis of the rate of exchange 0 8 at which such other currency is obtainable by the Bor- rower, at the time such valuation is made, for the purposes of servicing such debt or, if such currency is not so obtain- able, at the rate of exchange that will be reasonably deter- mined by the Bank. SECTION 5.05. The Borrower 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; pro- vided, however, that the foregoing provisions of this Sec- tion shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. SECTION 5.06. Subject to such exemptions as shall be conferred by the provisins of Sections 3.03 and 3.04 of the Guarantee Agreement, the Borrower shall pay or cause to be paid all taxes, 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 the Loan 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 taxa- tion of payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 5.07. The Borrower shall pay or cause to be paid all taxes, if any, imposed under the laws of the coun- 9 try 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 execu- tion, issue, delivery or registration of the Loan Agreement, the Guarantee Agreement or the Bonds. SECTION 5.08. (a) The Borrower shall take out and maintain with responsible insurers or make other provi- sion satisfactory to the Bank for insurance against such risks and in such amount as shall be consistent with sound practice. (b) Without limiting the generality of the foregoing, the Borrower undertakes to insure the imported goods to be financed out of the proceeds of the Loan against marine, transit and other hazards incident to acquisition, transpor- tation and delivery thereof to the place of use or installa- tion and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. SEcTIoN 5.09. 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; shall, except as the Bank shall otherwise agree, take all practical steps which may be reasonably necessary to maintain and renew all rights, powers, privileges and franchises which are nec- essary or useful in the conduct of its business; and shall at all times operate its plants and equipment in accordance with sound public utility practices. SECTION 5.10. The Borrower shall have its accounts reg- ularly audited, at least once a year, by independent audi- tors acceptable to the Bank and shall send to the Bank, together with the Borrower's audited financi-d statements, the auditors' report thereon. 10 SECTION 5.11. The Borrower shall establish and main- tain tariffs for the supply of electricity and water which will provide revenue sufficient: (a) to cover operating expenses, including taxes, if any, and to provide ;Aequate maintenance and deprecia- tion; and (b) to produce a reasonable return on the total value of the Borrower's net fixed assets in operation. SECTION 5.12. The Borrower shall not repay any amount of the Guarantor's advances to the Borrower until the Guarantor and the Bank shall agree that the financial con- dition of the Borrower warrants such repayment. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a), paragraph (e) or paragraph (f) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if a default shall occur in the payment of principal or interest or any other payment re- quired under any other loan agreement between the Bank and the Borrower or under any bond delivered pursuant thereto or under any credit agreement between the Asso- ciation and the Borrower and such default shall continue for a period of thirty days, or (iii) if a default shall occur in the payment of principal or interest or any other pay- ment required under any loan agreement or under any guarantee agreement between the Guarantor and the Bank or under any bond delivered pursuant to any such agree- ment or under any credit agreement between the Associa- tion and the Guarantor under circumstances which would make it unlikely that the Guarantor would meet its obliga- tions uider the Guarantee Agreement and such default shall continue for a period of thirty days, or (iv) if any event specified in Section 6.02 of this Agreement shall 11 occur, or (v) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations 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 continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and pay- able immediately, and upon any such declaration such principal shall become due and payable immediately, any- thing in this Agreement or in the Bonds to the contrary notwithstanding. SECTION 6.02. Pursuant to paragraph (1) of Section 5.02 of the Loan Regulations the following event is speci- fied as an, additional event for the purpo;,es of said Section: The Central Electricity and Water Corporation Act, 1966 of the Guarantor shall have been suspended or abrogated or so amended as to impair the ability of the Borrower to carry out its obligations under the Loan Agreement. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1972 or such later date as may be agreed by the Bank. SECTION 7.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Central Electricity and Water Corporation P.O. Box 1380 Khartoum The Sudan Alternative address for cables: Ampere Khartoum 12 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Alternative address for cables: Intbafrad Washington, D.C. SECTION 7.03. The date of March 8, 1968 is specified for the purposes of Section 9.04 of the Loan Regulations. IN WITNEsS WHEREOF, the parties hereto, acting through their representative thereunto duly authorized, have caused this Agreement to be signed in their respective 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 SIMON ALDEWEELD Vice President CENTRAL ELECTRICITY AND WATER CORPORATION By AHMED MOHAMED NUR Authorized Representative 13 SCHEDULE 1 Amortization Schedue Payment of Principal Date Payment Due (expressed in dollars)* January 1, 1973 295,000 July 1, 1973 305,000 January 1, 1974 315,000 July 1, 1974 325,000 January 1, 1975 ,335,000 July 1, 1975 345,000 January 1, 1976 355,000 July 1, 1976 370,000 January 1, 1977 380,000 July 1, 1977 390,000 January 1, 1978 405,000 July 1, 1978 415,000 January 1, 1979 430,000 July 1, 1979 440,000 January 1, 1980 455,000 July 1, 1980 470,000 January 1, 1981 485,000 July 1, 1981 500,000 January 1, 1982 515,000 July 1, 1982 530,000 January 1, 1983 550,000 July 1, 1983 565,000 January 1, 1984 585,000 July 1, 1984 600,000 January 1, 1985 620,000 July 1, 1985 640,000 January 1, 1986 660,000 July 1, 1986 680,000 January 1, 1987 700,000 July 1, 1987 725,000 January 1, 1988 745,000 July 1, 1988 770,000 January 1, 1989 795,000 July 1, 1989 820,000 January 1, 1990 845,000 July 1, 1990 870,000 January 1, 1991 895,000 July 1, 1991 925,000 January 1, 1992 955,000 July 1, 1992 985,000 January 1, 1993 1,010,000 * 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. 14 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 Premimn Not more than three years before maturity 12%7 More than three years but not more than six years before maturity ............. 1% More than six years but not more than eleven years before maturity ........... 2% More than eleven years but not more than sixteen years before maturity .......... 3% More than sixteen years but not more than twenty-one years before maturity ...... 4% More than twenty-one years but not more than twenty-three years before maturity 5% More than twenty-three years before maturity ............................ 61/4% 15 SCHEDULE 2 Description of Project The Project, which forms part of the Borrower's expan- sion program during the fiscal years 1968 through 1973, consists of: (a) the construction of a superstructure on the existing foundation of a powerhouse at the Roseires Dam and the installation of three Kaplan turbine generating units each of about 30 MW rated capacity operating under a head ranging from 17 to 48 meters, together with associated electrical and mechanical equipment; (b) (i) the construction of a 220 KY transmission system consisting of a single circuit 220 KV transmission line, about 490 km long, fron the power house to Khartoum and substation equipment for the Khartoum and Meringan substations, and (ii) the extension of the existing 110 KV transmission system consisting of a double circuit 110 KV transmission line, about 16 im long, from the Khartoum substation to a new substa- tion to be built at Khartoum North and substation equipment for these substations; (c) the installation of a gas turbine generating unit of about 15 MW rated capacity at Khartoum; and (d) the improvement of the management and organization of the Borrower. It is expected that the Project will be completed by the middle of 1971.