Tunisia - Second Power Project : Loan 1355 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1355 TUN GUARANTEE AGREEMENT (Second Power Project) between REPUBLIC OF TUNISIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated January 12, 1977 GUARANTEE AGREEMENT AGREEMENT, dated January 12, 1977, between REPUBLIC OF TUNISIA (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Soci4t6 Tunisienne de l'Electricitg et du Gaz (here- inafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to fourteen mil- lion five hundred thousand dollars ($1,500,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Bor- rower in respect of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's enter- ing into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said Gen- eral Conditions AppliAkble to Loan and Guarantee Agreements being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the Gen- eral Conditions and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. -3- ARTICLE II Guarantee; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inade- quate to meet the estimated expenditures required for the carry- ing out of the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures. ARTICLE III Other Covenants Section 3.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, specific security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto, and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Guarantor, in creating or permitting the creation of such lien, shall make express provi- sion to that effect; provided, however, that, if for any constitu- tional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Guarantor shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely -5- as security for payment of the purchase price of such property; and (ii) any 'ien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Guarantor. of any political or administrative sub- division thereof and of any entity owned or controlled by, or operating for the accou.t or benefit of, the Guarantor or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor. Section 3.02. The Guarantor: (i) shall not take or concur in the taking of any action terminating, amending, suspending, waiv- ing or assigning any of the Guarantor's rights under the Convention dated December 7, 1970, between the Guarantor and Soci4t4 Italo- Tunisienne d'Exploitation Petroliere without the prior approval of the Bank; and (ii) shall exercise all its rights under the said Convention as required to assure the efficient carrying out and operation of the Project. Section 3.03. The Guarantor shall exempt, in accordance with Law No. 68-3 of March 8, 1968, the Borrower from all taxes, import duties or other charges, imposed under the laws of the Guarantor or laws in effect in the territories of the Guarantor on capital goods imported for the execution of the Project. -6- Section 3.04. (a) The Guarantor undertakes to complete in accordance with terms of reference to be determined in consulta- tion with the Bank, a study to determine an appropriate pricing policy for oil and gas in its territory and for the supply of electric power, taking into consideration the Borrower's policies on the level and application of connection charges for electricity supply, to submit to the Bank by September 30, 1978 or such other date as the Bank may agree the recommendations of such study and thereafter to exchange views with the Bank on the said recommen- dations. (b) In order to assist the Guarantor in carrying out the study referred to in paragraph (a) of this Section 3.04, the Guarantor shall employ by June 30, 1977, or such other date as the Bank may agree, experts whose qualifications, experience and terms and conditions of employment shall be acceptable to the Bank. Section 3.05. Without limitation to the provisions of Section 2.01 of this Agreement the Guarantor shall take all necessary steps to ensure that the Borrower's tariffs and charges for the supply of electricity are adequate for the purposes set forth in Section 5.04 of the Loan Agreement. -7. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Ministre D$16gud auprds du Premier Ministre Charge du Plan of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Minist4re du Plan 1 Rue de B'ja Tunis, Tunisia Cable address: MINISTLRE DU PLAN 1 Rue de B4ja Tunis, Tunisia For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (wUI) -8- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 TUNISIA By /s/ Ali Hedda Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Munir Benjenk Regional Vice President Europe, Middle East and North Agrica