Afghanistan - Kabul Water Supply And Sanitation Project : Credit 0563 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 563 AF Development Credit Agreement (Kabul Water Supply and Sanitation Project) BETWEEN REPUBLIC OF AFGHANISTAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 23, 1975 CONFORMED COPY CREDIT NUMBER 563 AF Development Credit Agreement (Kabul Water Supply and Sanitation Project) BETWEEN REPUBLIC OF AFGHANISTAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 23, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 23, 1975, between REPUBLIC OF AFGHANISTAN (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 partly y the Borrower and partly by Da Afghanistan Da Obo Rasawalo Aow Canalization Moassasa, a Government enterprise existing under the laws of the Borrower, (hereinafter called Moassasa) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Moassasa part of the proceeds of the Credit as hereinafter provided; (C) The Borrower intends to enter into an agreement with the Canadian International Development Authority and the World Health Organization, or to make other arrangements, for the financing of a portion of the cost of Part D of the Project; and (D) 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 Moassasa; 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 March 15, 1974, 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): 4 (a) Paragraph (i) of Section 9.01 is deleted and the following paragraph is substituted therefor: "(i) exchange views through their representatives with regard to the progress of the Project, the benefits derived therefrom, the implementation of the Tripartite Agreement, the performance of their respective obligations under the Development Credit Agreement, the performance by Moassasa of its obligations under the Project Agreement and the Subsidiary Agreement, and other matters relating to the purposes of the Credit; and". (b) Paragraph (b) of Section 9.01 is deleted and the following paragraph is substituted therefor: "The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by any of them of its obligations under the Development Credit Agreement, or the performance by the Moassasa of its obligations under the Project Agreement and the Subsidiary Agreement". 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) "Project Agreement" means the agreement between the Association and Moassasa of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (b) "Subsidiary Agreement" means the agreement to be entered into between the Borrower and Moassasa 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 Subsidiary Agreement; (c) Charter means the Charter of the Moassasa as approved by the Cabinet on February 18, 1975 and published in the Gazette on May 31, 1975; (d) "Afghani" means the currency of the Borrower, (e) "Municipality" means the Municipality of Kabul; 5 (f) "Tripartite Agreement" means the agreement that may be made between the Borrower, World Health Organization and the Canadian International Development Authority to finance, among others, technical services for the detailed engineering, bid preparation and evaluation included in the Project; and (g) "Borrower's fiscal year" means the year commencing March 21 and ending March 20 next. 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 nine million dollars ($9,000,000). 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 may 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 out of the proceeds of the Credit. Section 2.03. Except as the Borrower and the Association shall otherwise agree, contracts for the purchase of goods or for the carrying out of works or services (other than consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be awarded in accordance with the provisions set forth or referred to in Section 2.03 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1980 or such other date as shall be agreed between the Borrower and the Association. Section 2.05. 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 2.06. Service charges shall be payable semi-annually on June 15 and December 1 5 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 15 and December 15 commencing June 15, 1985 and ending December 15, 2024, each installment to 6 and including the installment payable on December 15, 1994 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 2.08. 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. The Minister of Planning of the Borrower or the President of Moassasa is designated as representative of the Borrower 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 shall carry out Part C of the Project through the Municipality with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause Moassasa to perform in accordance with the provisions of the Project Agreement and the Subsidiary Agreement all the obligations 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 Moassasa to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall relend an amount in various currencies equivalent to $2,928,000 out of the proceeds of the Credit, or forty per cent (40%) of such amount as may be allocated to Categories 1(a), 2(a), 1(b), 2(b) and 3 of the table set forth in Paragraph I of Schedule I to this Agreement, to Moassasa, under an agreement to be entered into between the Borrower and Moassasa on terms and conditions satisfactory to the Borrower and the Association. (d) The Borrower shall make available an amount equal to $4,392,000 out of the proceeds of the Credit or sixty per cent (60%) of such amount as may be allocated to Categories 1(a), 2(a), 1(b), 2(b) and 3 of the said table, to Moassasa, as the Borrower's subscription to Moassasa's capital, Under the Subsidiary 7 Agreement and on terms and conditions satisfactory to the Borrower and the Association. (e) The Borrower shall make available an amount equivalent to $230,000 out of the proceeds of the Credit, or such other amount as may be allocated to Categories 1(c) and 2(c) of the said table, to Municipality. (f) Whenever in connection with this Section it shall be necessary to value the proceeds of the Credit in terms of Afghanis, such valuation shall be made on the basis of Da Afghanistan Bank free market rate of exchange. If, at any time, the Borrower or the Association considers that circumstances have arisen as a result of which such valuation has ceased to be possible, the parties shall consult together about what action is necessary for such valuation. (g) The Borrower shall exercise its rights under the Subsidiary 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 Borrower and the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Agreement or any provision thereof. A Section 3.02. The Borrower shall (i) ensure that the positions of the President, Vice President (technical), General Director of Accounting and General Director for Kabul of Moassasa, shall at all times be filled by qualified and experienced persons, (ii) inform as soon as possible the Association of the name, qualifications and experience of any person appointed to such position, whereupon the Association will inform the Borrower of its views as to the conformity of the management arrangements with the obligations of Moassasa under Section 3.02(c) of the Project Agreement, and (iii) ensure that Moassasa is adequately staffed at all times. Section 3.03. (a) The Borrower shall, not later than March 21, 1976, or such other date as shall be agreed between the Borrower and the Association, completely transfer to Moassasa, as Borrower's subscription to Moassasa's capital, existing public water supply properties and installations in Kabul except those specified in Section 3 of the Decree No. 1222 of February 22, 1975 (HOOT 1,1353) of the Borrower. (b) The Borrower shall continue to service all loans relating to the financing of the public water supply properties and installations referred to in paragraph (a) of this Section. Section 3.04. Except as the Borrower and the Associatioii shall otherwise agree, the Borrower shall take and cause to be taken from time to time all necessary 8 measures (including but not limited to adjustments of the tariffs of the water supply services of Moassasa for the Kabul city) as shall be required to enable Moassasa to comply with the provisions of Sections 4.05 and 4.06 of the Project Agreement. Section 3.05. Commencing in the Borrowers' fiscal year 1355, the Borrower shall, except as the Borrower and the Association shall otherwise agree, pay annually to Moassasa Afghanis 7,500 for each public standpipe and Afghanis 3,000 for each fire hydrant in service. The said payments shall cease whenever the Borrower enables Moassasa to meet the costs of these facilities through Moassasa's tariffs or other appropriate measures taken by the Borrower. Section 3.06. Without restriction or limitation upon the generality of the provisions of Section 3.01(b) of this Agreement, the Borrower shall (a) until Moassasa fully assumes responsibility for various services outside Kabul city, reimburse Moassasa for the cost of such services; and (b) promptly provide to Moassasa funds necessary to meet Moassasa's estimated expenditures for the Borrower's fiscal year 1354. Section 3.07. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the part of the proceeds of the Credit allocated to Part C of the Project against 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 Borrower to replace or repair such goods. (b) 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 3.08. (a) The Borrower shall furnish, or cause to be furnished, to the Association, promptly upon their preparation, the drawings, specifications, reports, contract documents and construction and procurement schedules for Part C of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall: (i) maintain or cause to be maintained records adequate to record the progress of Part C 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 accredited representatives to visit the facilities and construction sites included in Part C of the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish or caused to be furnished 9 to the Association all such information as the Association shall reasonably request concerning Part C of the Projcct, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 3.09. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required by Moassasa for carrying out Parts A and B of the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Borrower and the Association that such land and rights in respect of land are available for purposes related to Parts A and B of the Project. Section 3.10. The Borrower shall, not later than March 21, 1976 or such other date as shall be agreed between the Borrower and the Association, cause Moassasa to take over full responsibility for (i) the operation and maintenance of the water supply system of Kabul city and (ii) the collection of revenue in respect of the said system. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) Moassasa shall have failed to perform any of its respective covenants, agreements or obligations under the Project Agreement or the Subsidiary Agreement; (b) The Charter shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the carrying out by Moassasa of its covenants, agreements and obligations set forth in the Project Agreement; and (c) (i) Subject to subparagraph (ii) of this paragraph, the right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower under Tripartite Agreement or under the relevant alternative arrangement, shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms thereof. (ii) Subparagraph () of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association 10 that: (A) such suspension, cancellation or termination is not caused by the failure of the Borrower to perform any of its obligations under the Tripartite Agreement or said alternative arrangement, and (B) adequate funds are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement to cover the works or services under the Tripartite Agreement or said alternative arrangement. Section 4.02. For the purposes of Section 7.01 (d) of the General Conditions, the following additional event is specified: Any of the events specified in Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower and Moassasa. ARTICLE V Effective Date; Termination Section 5.01. 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) the execution and delivery of the Project Agreement on behalf of Moassasa have been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution and delivery of the Subsidiary Agreement on behalf of the Borrower and Moassasa, respectively, have been duly authorized or ratified by all necessary corporate and governmental action, (c) the Tripartite Agreement has come into force and effect or the Borrower has made other arrangement, satisfactory to the Association, for the carrying out of Parts D(i) and D(ii) of the Project; and (d) Moassasa has appointed personnel to the four positions referred to in Section 3.02 of this Agreement and has informed the Association of the appointments. 11 Section 5.02. 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 Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Moassasa, and is legally binding upon Moassasa in accordance with its terms: (b) That the Subsidiary Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and Moassasa, and is legally binding upon the Borrower and Moassasa in accordance with its terms. Section 5.03. The date October 24, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Sections 3.02, 3.04 and 3.05 of this Agreement and the provisions of Sections 4.01 and 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty five years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Planning of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Ministry of Planning Kabul Afghanistan Cable address: MINISTRY OF PLANNING Kabul 12 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 in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF AFGHANISTAN By /s/ A. Malikyar Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. A. Wapenhans Acting Regional Vice President Europe, Middle East and North Africa 13 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 Dollar Equivalent) to be Financed (1) Civil Works: (a) under Part A 400,000 60% of the Project (b) under 800,000 60% Part B of the Project (c) under Part C 100,000 75% of the Project (2) Equipment and Materials (a) for Part A of 2,050,000 100% of foreign the Project expenditures or, if procured locally 100% of local expenditures representing ex-factory price (b) for Part B of 3,950,000 100% of foreign the Project expenditures or, if procured locally, 100% of local expend- itures representing ex-factory price 14 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (c) for Part C of 130,000 100% of foreign the Project expenditures or, if procured locally, 100% of local expenditures representing ex-factory price (3) Consultants' serv- 120,000 100% of foreign ices for supervision expenditures of construction (4) Unallocated 1,450,000 TOTAL 9,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item. S 15 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made (i) in respect of expenditures prior to the date of this Agreement; (ii) from Category 1(a) or 2(a) unless the Borrower shall have made arrangements satisfactory to the Association for the supply of water to Khair Khana area; and (iii) in respect of civil works comprising water supply house connections. 5. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 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; and (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. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 7. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of expenditures under Category 1 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 is to improve, expand and extend the water supply system of Kabul and to assist in removing human waste from certain parts of Kabul (hereinafter called the Old City). The Project consists of the following parts: PART A Water Supply System - Khair Khana (i) The provision and installation of trunk water main. (ii) The provision and installation of distribution piping together with small diameter local piping. (iii) Construction of a 5,000 imn3 capacity storage reservoir and provision and installation of related equipment. (iv) Installation of service connections and the provision and installation of water meters. PART B Water Supply System - General (i) Drilling and equipping of 10 deep boreholes in the Logar well-field and drilling of a further 10 deep boreholes in that well-field. (ii) Construction and equipping of a high lift pumping station with chlorination facilities and the laying of collector pipeline to convey water thereto. (iii) Installation of a transmission pipeline to convey up to 35,000 m3/a day from the pumping station to the city of Kabul and to storage facilities in Sia Sung amd elsewhere. (iv) Construction of a storage reservoir at Sia Sung with a capacity of 5,000 m3 and installation of related equipment. 17 (v) Improvement to and expansion of the distribution system in the Old City and in the areas of Wazir Akbar Khan, Shashdruk including the installation of pipes of varying diameter. (vi) Installation of metered connections in Wazir Akbar Khan and Shashdruk. (vii) Installation of standpipes in the Old City. PART C Sanitation (i) Purchase and utilization of vehicles and trailers to collect night soil. (ii) Improvements to about 8,000 latrine vaults in the Old City. (iii) Establishment of a coniposting site. PART D Technical Services including assistance for: (i) Preparation of detailed engineering, and bid documents; (ii) evaluation of bids; (iii) supervision of construction The Project is expected to be completed by December 3 1, 1979.