Malawi - Blantyre Water Supply Project : Credit 0711 - Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 711 MAI Development Credit Agreement (Blantyre Water Supply Project) between REPUBLIC OF MALAWI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 3, 1977 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 3, 1977, between REPUBLIC OF MALAWI (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 Borrower intends to contract a loan from the African Development Fund (AfDF) on the terms and conditions set forth in an agreement to be entered into between the Borrower and AfDF, and to relend the proceeds of said loan to the Blantyre Water Board (BWB) to assist in the financing of the Project; (C) BWB intends to contract a loan from the Commonwealth Development Corporation (CDC) to assist in the financing of the Project on the terms and conditions set forth in an agreement to be entered into between CDC and BWB; (D) the Project will be carried out by BWB with the Borrower's assistance and, as part of such assistance, the Borrower will make available to BWB the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and BWB; 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 Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association 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 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 Blantyre Water Board of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; and (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and Blantyre Water Board pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time. -3- 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 seven million dollars ($7,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, 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 Association shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions set forth or referred to in Section 2.04 of the Project Agreement. Section 2.04. The Closing Date shall be March 31, 1982 or such later date as the Association shall establish. The -4- Association shall promptly notify the Borrower of such later date. 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 May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 1 and November 1 commencing November 1, 1987, and ending May 1, 2027, each installment to and including the installment payable on May 1, 1997, 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 Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. -5- ARTICLE III Execution of the Project Section 3.01.(a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause BWB to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable BWB to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Credit to BWB under a subsidiary loan agreement to be entered into between the Borrower and BWB under terms and conditions which shall have been approved by the Association and.which shall include repayment within 24 years including 4 years of grace, and interest at the rate of 8-1/2% per annum. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the -6- 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, amend, abrogate, waive or fail to enforce the Subsidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower shall take, from time to time, all action required on its part to enable BWB to obtain the revenues referred to in Section 4.03 of the Project Agreement. -7- 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) BWB shall have failed to perform any covenant, agreement or obligation of BWB under the Project Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that BWB will be able to perform its obligations under the Project Agreement. (c) The laws of the Borrower shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of BWB to carry out the covenants, agreements and obligations set forth in the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of BWB or for the suspension of its operations without having made arrangements satisfactory to the Association for the transfer of its operations to another entity. (e) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower or BWB to withdraw the proceeds of any loan made to the Borrower or BWB for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower or BWB establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower or BWB to perform any of its obligations under such agreement, and (B) adequate funds for the Project are available to the Borrower or BWB from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement and of BWB under the Project Agreement. -9- Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any of the events specified in paragraphs (a), (b) and (d) of 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 Blantyre Water Board; and (b) any of the events specified in paragraphs (c) and (e) (i) (B) of Section 4.01 of this Agreement shall occur. - 10 - 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 of the Project Agreement on behalf of BWB has been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution of the Subsidiary Loan Agreement on behalf of the Borrower and BWB, respectively, has been duly authorized or ratified by all necessary corporate and governmental action; and (c) all conditions precedent to the effectiveness of agreements referred to in Recitals (B) and (C) of the Preamble hereto, and all conditions precedent to the first disbursement of the proceeds of the loans provided thereunder, if any, except for the effectiveness of this Agreement, have been fulfilled. 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: - 11 - (a) that the Project Agreement has been duly authorized or ratified by BWB, and is legally binding upon BWB in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and BWB, and is legally binding upon the Borower and BWB in accordance with its terms. Section 5.03. The date October 3, 1977 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Article III of this Agreement and the provisions of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 24 years after the date of this Agreement, whichever shall be the earlier. - 12 - ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of the Borrower at the time responsible for Finance 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: Ministry of Finance P.O. Box 30049 Capital City Lilongwe 3 Malawi Cable address: FINANCE Lilongwe 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. - 13 - 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 MALAWI By Is/ D.Y.J. Kalilangwe Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Willi A. Wapenhans Regional Vice President Eastern Africa - 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 the amount of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Credit Allocated % of ( Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 2,300,000 65% (2) Pumping equip- ment, spare parts, work- shop equipment and vehicles (a) directly 2,200,000 100% of foreign imported expenditures (b) locally 100,000 90% of local purchased expenditures (3) Services of 600,000 100% of foreign engineering expenditures consultants (4) Unallocated 1,800,000 TOTAL 7,000,000 - 15 - 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 as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount - 16 - of the Credit then allocated to any Category will be insufficent to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 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. - 17 - SCHEDULE 2 Description of the Project The Project consists of the following: Part A: Improvements and extensions to existing facilities at Walker's Ferry, including raw water pumping plant and water treatment plant, so as to increase the capacity of such facilities from 10 to 14 million imperial gallons per day. Part B: Construction of the following additions to the Walker's Ferry system: (i) about 15,000 feet of treated water supply main, parallel to the existing pipeline; (ii) balancing tanks and pumping plants at Walker's Ferry, at Chileka, and at an intermediate site; and (iii) a new terminus of the pipeline in the Blantyre area. Part C: Improvements in the distribution system, including creation of seven new pressure zones; modification or relocation of two existing pump stations; and construction of the following additional elements: nine service reservoirs, one pump station, and about 35 miles of transmission and distribution mains. - 18 - Part D: Construction of staff housing, and workshop building, and provision of office equipment, including data processing equipment, vehicles, tools and shop equipment. Part E: - A study to evaluate and improve BWB's accounting practices. - Studies to determine the most economic mode of future operation of the Walker's Ferry Water Supply system. Part F: Training of BWB's staff in engineering and accountancy. The Project is expected to be completed by December 31, 1980.