Botswana - Gaborone-Lobatse Water Supply Project : Credit 0233 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 233 BT Development Credit Agreement (Gaborone-Lobatse Water Supply Project) BETWEEN REPUBLIC OF BOTSWANA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED FEBRUARY 10, 1971 CONFORMED COPY CREDIT NUMBER 233 BT Development Credit Agreement (Gaborone-Lobatse Water Supply Project) BETWEEN REPUBLIC OF BOTSWANA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED FEBRUARY 10, 1971 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated February 10, 1971, between REPUBLIC OF BOTSWANA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) The Project will be carried out by the Water Utilities Corporation with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Water Utilities Corporation the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and the Water Utilities Corporation; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) Section 5.01 is deleted; (b) the words "or the Project Agreement" are added after the words "the Development Credit Agreement" in Section 8.02; and (c) paragraph (h) of Section 6.02 is deleted and paragraph (i) of said Section is relettered as paragraph (h). 4 Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "BMC" means Botswana Meat Commission, a statutory entity established under Botswana Meat Commission Law (No. 22), 1965 of Botswana; (b) "Gaborone-Lobatse Division" means the operating organization within the Water Corporation providing water supply services to the Gaborone and Lobatse areas; (c) "Project Agreement" means the agreement between the Association and the Water Corporation of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (d) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and the Water Corporation 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 Subsidiary Loan Agreement; and (e) "Water Corporation" means the Water Utilities Corporation, a statutory corporation established under the Water Utilities Corporation Act, 1970 as amended in November 1970, of the Borrower. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to three million dollars ($3,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule shall be amended from time to time, 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 under the Development Credit Agreement; provided, however, that, except as the Association .hall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. 5 Section 2.03. The Closing Date shall be December 31, 1973, or such other date as shall be agreed between the Borrower and the Association. Section 2.04. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.05. Service charges shall be payable semi-annually on June I and December I in each year. Section 2.06. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payable on each June I and Docember 1 commencing June 1, 1981 and ending December 1, 2020, each installment to and including the installment payable on December 1, 1990 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.07. The currency of ihe United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall cause the Water Corporation to carry out the Project with due diligence and efficiency and in conformity with sound administrative, engineering, financial and public utility practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall relend the proceeds of the Credit to the Water Corporation under a subsidiary loan agreement to be entered into between the Borrower and the Water Corporation under terms and conditions which shall have been approved by the Association. (c) The Borrower shall exercise its rights under the 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, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. 6 (d) The Borrower shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable the Water Corporation to perform all of its obligations under the Project Agreement and the Subsidiary Loan Agreement and shall not take or permit to be taken any action which might interfere with such performance. (e) Without limiting or restricting the Borrower's obligations under paragraph (d) of this Section, the Borrower specifically undertakes to enable the Water Corporation to establish and maintain tariffs at such levels as may be necessary for the Water Corporation to fulfill the requirements of Section 4.03 of the Project Agreement. Section 3.02. In order to assist th Water Corporation in carrying out the Project, the Borrower shall cause the Water Corporation to employ consultants acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.03. The Borrower shall cause the Water Corporation in carrying out the Project to employ contractors acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.04. (a) Except as the Association shall otherwise agree, the goods and services required for the Project and to be financed out of the proceeds of the Credit shall be procured pursuant to the provisions set forth or referred to in Section 2.05 (a) of the Project Agreement. (b) The Borrower shall cause the Water Corporation to insure, or to make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against marine, transit and other hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Water Corporation to replace or repair such goods. (c) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.05. (a) The Borrower shall cause to be furnished to the Association, promptly upon their preparation, the plans, specifications, contract documents and construction schedules for the Project, and any material modifications or amplifications thereof, in such detail as the Association shall reasonably request. 7 (b) The Borrower shall or shall cause the Water Corporation to: (i) maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project; (ii) enable the Association's representatives to inspect the Project, the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause the Water Corporation (i) to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Water Corporation, and (ii) to establish and maintain separate accounts for the Gaborone-Lobatse Division. (b) The Borrower shall cause the Water Corporation to: (i) have its accounts and financial statements, including the separate accounts for the Gaborone-Lobatse Division, (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound 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 five 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 Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of the Water Corporation and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause the Water Corporation to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound practice. Section 4.03. (a) The Borrower shall cause BMC (i) to complete, within twelve months after the date of this Agreement, a study on the proper and efficient 8 methods and procedures for the treatment of the abattoir effluent, and (ii) to complete and operate, within thirty months after the date of this Agreement, adequate facilities for the treatment of the abattoir effluent so as to keep any surface or ground water pollution within limits acceptable to the Association. (b) In the event the treated water is used for aquifer recharge, the Borrower shall take all necessary measures to control such recharge so as to avoid excessive concentration of dissolved solids. Section 4.04. The Borrower undertakes to transfer the total suni of its rights to the system for the supply of water in the Gaborone-Lobatse Division to the Water Corporation, effective January 1, 1971, on conditions which are acceptable to the Association. This shall be taken to include ownership of all moveable corporeal assets and all permanent assets forming part of the system but not the ownership of the land on which the Gaborone, Notwane and Nuane Dams are situated. Such assets shall be transferred at a valuation of Rands 2,550,000 in the currency of the Borrower. Except as the Association shall otherwise agree, the Water Corporation shall make ten consecutive equal semi-annual payments to the Borrower of Rands 89,250 in the currency of the Borrower commencing on July 1, 1971, and thereafter shall make fifty consecutive equal semi-annual payments to the Borrower of Rands 108,716 in the currency of the Borrower. The Water Corporation shall have the right to administer the whole system without further charges by the Borrower. The monies directed to be transferred in terms of Section 3 of the Gaborone Water and Electricity Project Fund (Dissolution) Act, 1970, and the claims vested in terms of the Water Utilities Corporation (Vesting of Claims) Notice, 1970, shall be regarded as unredeemable capital of the government invested in the corporation which shall bear no interest prior to January 1, 1978, and thereafter shall bear interest at a rate not exceeding seven per cent (7%) per annum, to be specified annually by the Borrower with the concurrence of the Association. Section 4.05. The Borrower shall take all necessary action to abolish, by April 30, 1971, the allowance for free water supply to its civil servants. ARTICLE V Consultation, Information and Inspection Section 5.01. The Borrower and the Assoiation shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: 9 (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by the Water Corporation of its obligations under the Project Agreement, the administration, operations and financial condition of the Water Corporation and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the operations and financial condition of the Water Corporation and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, or the performance by the Borrower of its other obligations under the Development Credit Agreement or the performance by the Water Corporation of its obligations under the Project Agreement and the Subsidiary Loan Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to inspect all plants, sites, works, property and equipment of the Water Corporation and to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions Section 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. 10 Section 6.02. The Development Credit Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 6.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association Section 7.01. If any event specified in Section 7.01 of the General Conditions or in Section 7.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 7.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) A default shall occur in the performance of any obligation on the part of the Water Corporation under the Project Agreement. (b) A default shall occur in the performance of any obligation Linder the Subsidiary Loan Agreement by the parties thereto. (c) The Water Corporation shall have become unable to pay its debts as they mature or any action or proceeding shall have been taken by the Water Corporation or by others whereby any of the property of the Water Corporation shall or may be distributed among its creditors. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of the Water Corporation or for the suspension of its operations. (e) The Water Utilities Corporation Act, 1970 of the Borrower, as amended in November 1970, shall have been amended, suspended or abrogated in such a 11 way as to materi .ly and adversely affect the ability of the Water Corporation to carry out the covenants, agreements and obligations set forth in the Project Agreement or in the Subsidiary Loan Agreement. (f) An extraordinary situation shall have arisen which shall make it improbable that the Water Corporation will be able to perform its obligations under the Project Agreement or under the Subsidiary Loan Agreement. Section 7.03. For the purposes of Section 7.01 of the General Conditions, the following events are specified: (a) Any event specified in Section 7.02 (a), (b) or (e) of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and the Water Corporation. (b) Any event specified in Section 7.02 (c) or (d) of this Agreement shall occur. ARTICLE VIII Effective Date; Termination Section 8.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01 (b) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of the Water Corporation have been duly authorized or ratified by all necessary corporate and governmental action. (b) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and the Water Corporation, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. (c) The Water Corporation shall have made arrangements satisfactory to the Association with the Department of Water Affairs of the Borrower under which the Department of Water Affairs shall provide managerial and technical staff to assist the Water Corporation in carrying out the Project and in managing the business and conducting the operations of the Water Corporation. 12 (d) The Water Corporation shall have made arrangements satisfactory to the Association for: (i) the management of the accounting affairs of the Water Corporation; and (ii) the water meter-reading and billing. Section 8.02. The following are specified as additional matters, within the meaning of Section 10.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Water Corporation, and constitutes a valid and binding obligation of the Water Corporation in accordance with its terms. (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and the Water Corporation, respectively, and constitutes a valid and binding obligation of the Borrower and the Water Corporation in accordance with its terms. Section 8.03. The date May 14, 1971 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.04. The obligations of the Borrower under Sections 3.01 (c), 3.05 (b), 4.01 (a), 4.01 (b) and 5.02 (a) of this Agreement and the provisions of Section 7.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date thirty years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. The Minister for the time being responsible for Finance and Development Planning of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: 13 For the Borrower: Ministry of Finance and Development Planning Private Bag No. 8 Gaborone, Botswana Cable address: Finance Gaborone For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF BOTSWANA By /s / Chief Linchwe II Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. Burke Knapp Vice President 14 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 amounts of the Credit to each category and the percentage of eligible expenditures so to be financed in each category: Amount of the Credit Allocated (Expressed in % of Expenditures Category Dollar Equivalent) to be Financed I. Pipeline, equipment, 1,830,000 100% of foreign ex- materials, supplies penditures and vehicles II. Civil works 390,000 90% of total expendi- tures III. Consultants' services 280,000 100% of total expendi- tures IV. Unallocated 500,000 TOTAL 3,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any member of the Bank (other than the Borrower) or of Switzerland; (b) the term "local expenditures" means expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; provided, however, that if the currency of the Borrower is also that of another member of the Bank in the territories of which goods are produced or from the territories of which services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and 15 (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Category III on account of expenditures incurred after August 1, 1970 in an aggregate amount not exceeding $100,000 equivalent; and (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, the percentage set forth in the third column of the table in paragraph I above in respect of such expenditures shall be applied to the amount of such increase, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under Category II shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 16 SCHEDULE 2 Description of the Project The Project consists of the improvement and expansion of the water supply facilities of, and managerial assistance to, the Water Corporation in the Gaborone and Lobatse areas, including: A. the construction of a pipeline between Gaborone Dam and Nuane waterworks (about 32 miles), together with related pumping stations and ancillary works; B. the construction in Gaborone of a 2 lMgd treatment plant, a 3 IMg reservoir, raw and clean water pumping stations and mains, distribution extensions, pipe work and associated equipment; C. the construction of a 1.25 IMg storage reservoir in Lobatse, togetl.:- with transmission mains, distribution extensions and ancillary equipment; and D. the provision of technical assistance, housing, vehicles, workshop, laboratory, main laying and miscellaneous equipment. The Project is expected to be completed by December 31, 1972.