Haiti - Power Project : Credit 0645 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 645 HA PROJECT AGREEMENT (Power Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and ELECTRICITE D 'HAITI Dated July 2, 1976 PROJECT AGREEMENT AGREEMENT, dated July 2, 1976, between INTERNATIONAL DEVELOP- MENT ASSOCIATION (hereinafter called the Association) and ELEC- TRICITE D'HAITI (hereinafter called EdH). WHEREAS by the Development Credi't Agreement of even date herewith between REPUBLIC OF HAITI (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to sixteen million dollars ($16,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condi- tion that EdH agree to undertake such obligations toward the As- sociation as hereinafter set forth; WHEREAS the Borrower has'agreed to make available to EdH the proceeds of the Credit provided for under the Development Credit Agreement on terms and conditions satisfactory to the Association; and WHEREAS EdH, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Pevelopment Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. -3- ARTICLE II Execution of the Project Section 2.01. EdH shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices. Section 2.02. In order to assist EdH in the preparation of plans, specifications and bidding documents and evaluation of the bids for Part A and Part B of the Project, in the supervision of equipmert fabrication and construction of Part A and Part B of the Project, EdH shall ,.iploy, or continue to employ, as the case - may be, engineering consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 2.03. Except as the Association shall otherwise agree, the goods, works and services (other than consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions of the Sched- ule to this Agreement. Section 2.04. (a) EdH undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower against hazards incident to the acquisition, transporta- tion 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 EdH to replace or repair such goods. Idl 14 (b) Except as the Association may otherwise agree, EdH shall cause all goods, works and services financed out of the proceeds of the Credit made available to it by the Borrower to be used ex- clusively for the Project. Section 2,05. (a) EdH shall furnish to the Association promptly upon their preparation, the plans, specifications, reports, con- tract documents and construction and procurement schedules for the Project, and any material modifications thereof or additioas thereto, in such detail as the Association shall reasonably request. (b) EdH shall: (i) maintain records adequate to record the progress of the Project (including the cost thereof) and to identi- fy the goods, works and services financed out of the proceeds of the Credit made available to it by the Borrower, and to disclose the use thereof in the Project; (ii) without limitation upon the provisions of paragraph (c) of this Section, enable the Associa- tion's representatives to visit the facilities and construction sites included in the Project, and to examine the goods financed out of such proceeds 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 so made available to it ind the goods, works and services financed out of such proceeds. (c) EdH shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, prop- erty and equipment of EdH and any relevant records and documents. 5 Section 2.06. (a) EdH shall, at the request of the Associa- tion, exchange views with the Association with regard to the prog- ress of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) EdH shall promptly inform the Association of any condi- tion which interferes or threatens to interfere with, the progress of. the Project, the accomplishment of the purposes of the Credit, or the performance by EdH of its obligations under this Agreement. Section 2.07. EdH shall take all reasonable measures to en- sure that the Project is carried out and operated with due regarl, to health, ecological and environmental factors. -6- ARTICLE III Management and Operations of EDH Section 3.01. (a) EdH shall at all times carry out its oper- ations, manage its affairs, plan its future expansion and maintain its financial position in accordance with appropriate engineering, business, financial and public utility principles and practices and under the supervision of experienced and competent management, assisted by qualified and competent staff in adequate numbers. (b) For the purpose of paragraph (a) of this Section, EdH shall: (i) maintain in their functions a Director General, a Tech- nical Manager and an Administrative Manager whose qualifications shall be satisfactory to the Borrower, the Association and EdH; (ii) not later than July 31, 1976, appoint a training officer and a system planning officer, acceptable to the Association, who shall be directly responsible to the Technical Manager of EdH, and two assistants for budgeting and financial planning,.accept- able to the Association, who shall be directly responsible to the Administrative Manager of EdH; and (iii) request the Borrower to take all legislative action as shall be required accordingly and as set forth in Section 4.04 of the Development Credit Agree- ment. Section 3.02. EdH shall take all measures required to system- atically reduce losses of electricity pursuant to targets estab- lished in consultation with the Association and shall monitor decreases in such losses. 7 Section 3.03. (a) EdH shall operate and maintain its plants, equipment and property, and from time to time make all necessary renewals and repairs thereof, in accordance with appropriate en- gineering and public utility practices. (b) Except a3 the Association shall otherwise agree, EdH shall not sell, lease, transfer, assign or otherwise dispose of any of its rights, property or assets except in the ordinary course of business. Section 3.04. EdH shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.05. In January 1977 and, thereafter, at two-year intervals through 1983, EdH shall jointly review with the Asso- ciation the power and energy demand forecasts for the metropolitan area of Port-au-Prince. Section 3.06. EdH shall take or cause to be taken all such action as to be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction (and operation) of the facilities included in the Project. ARTICLE IV Financial Covenants Section 4.01. EdH shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. EdH shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements including source and application of funds state- ments) 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 four 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 EdH and the audit thereof as the Associa- tion shall from time to time reasonably request. Section 4.03. (a) Except as the Association shall otherwise agree, EdH shall from time to time take all steps necessary or desirable to obtain such adjustments in its power tariffs, as shall be required to earn an annual rate of return at least of five per cent (5%) in fiscal year 1976, seven per cent (7o) in each of ;is- cal years 1977 through 1979, seven and one-half per cent (7.57) in fiscal year 1960 and eight per cent (87) in fiscal year 1981 and thereafter. - 9 - (b) For the purposes of this Section: (i) the annual rate of return shall be calculated in respect of each fiscal year by relating the net operating revenue for that year to the average of the net value of fixed assets in operation at the beginning and at the end of that year; (ii) the term "net operating revenue" means gross oper- ating revenues less operating and administrative expenses, including adequate maintenance, straight- line depreciation based on the useful life of assets and taxes, if any, but excluding interest and other charges on debt; and (iii) the term "net value of fixed assets in operation" means the gross value of fixed assets in operation less the accumulated depreciation, all as revalued in accordance with Section 4.04 of this Agreement. Section 4.04. Except as the Association shall otherwise agree, EdH shall: (a) revalue its fixed assets annually, to such extent as shall be necessary to reflect adequately, at the time of each such revaluation, the current value thereof, in accordance with a sound and consistently applied method of revaluation acceptable to the Association; and (b) register, annually, the result of such revaluation on its books. Section 4.05. Except as the Association shall otherwise agree, EdH shall not incur: - 10 - (a) any long-term debt, unless its internally generated funds for the fiscal year next preceding such incurrence or for avlater twelve-month period ended prior to such incurrence, whichever is the greater, shall be not less than 1.5 times the maximum long- term debt service requirements for any succeeding fiscal year on all long-term debt of EdH (including the long-term debt to be in- ,curred). For the purposes of this Section: (i) the term "long-term debt" means all indebtedness of EdH maturing by its terms one year or more after the date on which it is originally incurred; (ii) the term "internally generated funds" means the aggregate revenues from all sources, adjusted to take account of EdH's power tariffs in effect at the time of incurrence of debt even though they were not in effect during the-twelve consecutive months to which such revenues related, less orer- ating and administrative expenses, including ade- quate maintenance, taxes, if any, but before pro- vision for depreciation and interest and other charges on long-term debt; and (iii) the term "debt service requirements" means the aggregate amount of amortization (including sink- ing fund payments, if any), interest and other charges in respect of debt. -11- (b) any short-term debt, unless the aggregate of all short- term debt incurred by EdH, including the short-term debt to be incurred, is equal to or less than one-sixth (1/6) of the operat- ing, maintenance and administrative expenses (excluding deprecia- tion and other non-cash provisions) of EdH for the twelve-month period preceding such incurrence. For the purpose of this para- graph the term "short-term debt" means all debt of EdH for money borrowed, including bank overdrafts, maturing by its terms on de- mand or less than one year after the date on which it was incurred. For the purposes of this Section, debt shall be deemed to be incurred on the date of execution and delivery of a contract, loan agreement or other instrument providing for such debt; provided, however, that in the case of guarantee of debt, debt shall be deemed to be incurred on the day the agreement guaranteeing such debt has been entered into but only to the extent that the guar- anteed debt is outstanding. - 12 - ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of EdH thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date twenty-five years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accord- ance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify EdH of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. -13 - ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have desig- nated by notice to the party giving such notice or making such request. The addresses so specified are: 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. For EdH: Electricit4 d'Haiti Port-au-Prince Botte Postale D Haiti Cable address: ELECDHA Port-au-Prince Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of EdH may be taken or executed by its Direc- tor General or such other person or persons as such Director Gen- eral shall designate in writing. Section 6.03. EdH shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of EdH, take any ac- tion or execute any documents required or permitted to be taken or executed by EdH pursuant to any of the provisions of this Agree- ment. Section 6.04. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. -15- 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Enrique Lerdau Acting Regional Vice President Latin America and the Caribbean ELECTRICITE D'HAITI By /s/ Ferr I Laurin Authorized Representative -16 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part A.2, Part A.3 and Part A.4 hereof, contracts shall be let under procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines), on the basis of international comnetitive bidding. 2. Small civil works contracts estimated to cost not more than $400,000 equivalent in the aggregate shall be awarded on the basis of competitive bidding in accordance with procedures acceptable to the Association. 3. Training equipment contracts estimated to cost not more than $100,000 equivalent in the aggregate shall be awarded after soli- citation of quotations from at least three suppliers, provided that all terms and conditions thereof are satisfactory to the Association. 4. Special equipment such as relays and telecommunications and control equipment, which are modifications or extensions of exist- ing equipment, estimated to cost less than $200,000 equivalent in the aggregate, may be purchased from the original suppliers, provided that all terms and conditions of the purchase are satis- factory to the Association. -17- B. Review of Procurement Decisions by the Association 1. Review of invitation to bid and of proposed awards and final contracts. With respect to all contracts for works (except contracts re- ferred to in Part A.2 of this Schedule) and to contracts for mate- rials or equipment estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, EdH shall furnish to the Asso- ciation, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, EdH shall, before a final decision on the award is made, inform the Associa- tion of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report, by the consultants referred to in Section 2.02 of this Agreement, on the evaluation and compari- son of the bids received, together with the recommendations for award of the said consultants and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with - 18- the Guidelines or this Schedule, promptly inform EdH and state the reasons for such determination. (c) The terms and conditions of the contract shall not, with- out the Association's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Credit and not gcverned by the preceding paragraph, EdH shall furnish to the Association, promptly after its execu- tion and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the con- tract was not consistent with the Guidelines or this Schedule, promptly inform EdH and state the reasons for such determination.