Haiti - Second Power Project : Credit 0895 - Credit Agreement - Conformed

u5 CONFORMED COPY CREDIT NUMBER 895 HA Development Credit Agreement (Second Power Project) between REPUBLIC OF HAITI and INTERNATIONAL DEVELOPMENT ASSOCIATION 4t ej Dated May 31, 1979 CREDIT NUMBER 895 HA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated May 31, 1979, between REPUBLIC OF HAITI (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 foreign exchange cost of the Project described in Schedule 2 to this Agreem4nt by extending the Credit as hereinafter provided; (B) by an agreement of even date herewith (hereinafter / called the Special Action Credit Agreement) between the Borrower and the Association as Administrator of the Special Action Account established with funds contributed by the Member States of the GI '.European Economic C6mmunity (hereinafter called the Admini- strater), the Administrator has agreed to make a special action credit (hereinafter called the Special Action Credit) to the Borrower in an aggregate principal amount i(a various currencies equivalent to six million dollars ($6,000,(60b) to assist in the financing of the Project, on the terms and conditions therein set forth; (C) the Borrower intends to contract from the Canadian International Development Agency (hereinafter called CIDA) a grant in an amount of seventeen million one hundred thousand Canadian dollars (Can$17,100,000) (hereinafter called the CIDA Grant) to assist in the financing of the"Project, on the terms and conditions set forth in a Grant Agreement (hereinafter called, the CIDA Grant Agreement) to be entered into between the Borrower and CIDA; (D) the, Project will be carried out by Electricitg d'Haiti with the Borrower 's assistance and, as part of such assistance, the Borrower will make available to Electricite d'Haiti the proceeds of the Credit as hereinafter provided; and (E) the Association, the Administrator and Electricit6 d'Haiti have entered into an agreement of even date herewith (hereinafter called the Joint Project Agreement) providing for the use of the Credit and of the Special Action Credit and execution of the Project as well as other matters relating thereto; WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon f / -2- the terms and conditions hereinafter set forth and in the Joint Project Agreement; 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 (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). f Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the a General Conditions and in the Preamble to this Agreement have6, the respective meahings therein set forth and the foll6wing additional terms have the following Ineanings: (a) "EdH" means Electricite d'Haiti, an autonomous agency of the Borrower established by, and operating under the Borrower's LoiCadre dated July 29, 1971, as amended by the Decree dated April 9, 1977 and published in the Moniteur on June 16, 1977; (b) "Joint Project Agreement" means the agreement between the Asfociation, the Administrator and EdH of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Joint Project Agreement and all agreements supplementa, lthereto; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and EdH 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 a (d) "First Credit Agreement" means the Development Ciedit Agreement (Power Project) dated July 2, 1976, between the Associ- ation and the Borrower as the same may be amended from time to time.- ft0 -3 ARTICLE II The Credit Section 2.01. The Association agrees to lend to, the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various curren- cies equivalent to sixteen million five hundred thousand dollars ($16,500,000). 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 Associ- ation, kor expenditures made (or, if the Associatidn 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, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions set forth or referred to in Section 2.03 of the Joint Project Agreement. Section 2.04. The Closing Date shall be June 30, 1983 or such later date as the Association shall establish. The 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 ahnum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on February 15 and August 15 in each year. Section 2.07., The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Febru- ary 15 and August 15 commencing August 15, 1989, and ending February 15, 2029, each installment to and including the install- ment payable dn February 15, 1999, 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. T'I. -4- 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 General Manager of EdH 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) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause EdH to perform in accordance with the provisions of the Joint Project Agreement and the Sub- sidiary Loan Agreement 'all the obligations therein set forth, shall take and cause to be taken all action, including the provi- sion of funds, facilities, services and other resources, necessary or appropriate to enable EdH to perform such (bligations, 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 (except those allocated under Category (6) of the table set forth in paragraph 1 of Schedule 1 to this Agreement) to EdH under a subsidiary loan agreement to be entered into between the Borrower and EdH under terms and conditions which shall have been approved by the Association including the following principal terms and conditions: (i) the principal amount of the loan repayable by EdH shall be the equivalent (determined as of the date, or respective dates, of repayment) of the value of the currency or currencies withdrawn from the Credit Account expressed in terms of United States dollars at the time of withdrawal from the Credit Account; (ii) the loan will be repaid by EdH to the Borrower in thirty-two semiannual installments over twenty years (including four years of grace); and -5- (iii) interest shall be charged at the rate of eight per cent (8%) per annum on the outstanding balance of the loan. (c) The Borrower shall exercise its rights under the Subsidiary Lodn Agreement in such manner as to protect the interests of i 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 or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower shll,cause EdH to carry out the study included in Part E of the Project under terms of reference satisfactory to the Association and to furnish to the Associ- ation the findings and recommendations thereof not later than December 31, 1979. ARTICLE IV Other Covenants Section 401. (a) The Borrower shall not undertake, or 0ermit EdH to undertake, prior to the completion of the Project, any investment in the power sector exceeding the equivalent of one per cent (1%) of the net value of EdH's fixed assets in operation without the Association's prior approval. (b) For the purpose of Sub-section (a) above, the term "net value of fixed assets in operation" means the gross value of fixed assets in operation less the related accumulated depreciation, all as revalued in accordance with Section 4.04 of the Joint Project Agreement. Section 4.02. Except as the Association shall otherwise agree, the Borrower shall, from time to time, take all steps necessary or desirable (including but not limited to adjustments of EdH's tariffs) to enable EdH to earn the annual rate of return specified in Section 4.03 of the Joint Project Agreement. Section 4.03. The Borrower shall take all measures necessary on its part to ensure that electricity bills owed EdH by the Borrower's departments and agencies are settled and paid in time under arrangements satisfactory to the Borrower and. the Associ- atione -6- Section 4.04. In order to ensure the timely execution of Part (C) of the Project, the Borrower shall: (i) cause Telecom- munications d'Haiti S.A.M.(Teleco) and Tele Haiti to rehabilitate, respectively, the sections of the telephone and television networks in Port-au-Prince utilizing EdH's power distribution facilities to be rehabilitated under the Project; (ii) provide, or cause to be provided, promptly)as needed all the funds required by Teleco for that purpose; and (iii) cause Tele Haiti to provide promptly as needed all the funds required for that purpose. Section 4.05. The Borrower undertakes to assume the debt incurred by EdH from the Borrower's Office Nationale d'Assurance for the financing of the Peligre hydro station. Section 4.06. The Borrower shall, under arrangements satis- factory to the Association and on the basis of the findings and recommendations of the study to be carried out pursuant to Section 3.02 of this Agreement, cause the Peligre dam, reservoir banks, waterways and associated structures to be annually inspected in accordance with appropriate engineering practices in order to determine whether there are any deficiencies or potential defi- ciencies in their condition or in the quality or adequacy of their maintenance or the methods of their operation which may endanger their safety, and, in the event that any such deficiency or potential deficiency is discovered, the Borrower shall promptly take all steps required to correct such deficiency or to eliminate such potential deficiency. Section 4.07. The Borrbwer shall take all measures necessary on its part to ensure that-EdH shall not use its resources for any purpose other than the financing of its investment program and its ope,a tional expenses and for the servicing of its debt. ARTICLE V Amendment of First Credit Agreement Section 5.01. (a) The text of Section 4.02 of the First Credit A&eement is hereby substituted by the text of Section 4.01 of this Agreement. (b) The amendment specified in Sub-section (a) above shall apply as of the Borrower's fiscal year 1979/1980. -7- ARTICLE VI Remedies of the Association Section 6.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) EdH shall have failed to perform any covenant, agreement or obligation of EdH under the Joint Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that EdH will be able to perform its obli- gations under the Joint Project Agreement; (c) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution of EdH or for the suspension of its operations; (d) the Decree dated April 9, 1977 referred to in Section 1.02 (a) of this Agreement shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of EdH to carry out the covenants,, agreements and obligations set forth in the Joint Project Agree- ment; and (e) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the CIDA Grant or the Special Action Credit shall have been suspended, cancelled OP terminated in whole or in part, pursuant to -the terms of the CIDA Grant Agreement, or the Special Action Credit Agreement, respectively; or (B) the Special Action Credit has become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to,the Borrower -8- or EdH from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement and, of EdH under the Joint Project Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) the event specified in paragrapiD (a) of Section 6.01 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 andEdi; and (b) any event specified in paragraphs (c) or (d) or (e) (i) (B) of Section 6.01 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) Of the General Conditions: (a) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and EdH; (b) the CIDA Grant Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right to make withdrawals thereunder, except only the effectiveness of this Agreement, have been fulfilled; and (c) all conditions precedent to the effectiveness of the Special Action Credit Agreement, except only the effectiveness of this Agreement, have been fulfilled. Section 7.02. The following aro 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 Asspciation: (a) that the Joint Project Agreement has been duly autho- rized or ratified by EdH, and is legally binding upon EdH in accordance with its terms; and 0W1 9 (b) that the Subsidiary Loan Agreement has been duly author- ized or ratified by the Borrower and EdH and is legally binding upon the Borrower and EdH In accordance with its terms. Section 7.03. The date August, 31, 1979 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 7.04. The obligations of the Borrower under Article IV of this Agreement and the provisions of paragraph (b) of Section 6.02 of this Agreement shall°,cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the 'arlier.. ARTICLE VIII ORepresentative of the Borrower; Addresses Section 8.01. The Secretary of State for Finance and Economic Affairs of the Borrower is designated as representative of the ,orrower for the purposes of Section 11.03 of the General Condi- Ions. Section 8.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secrétairerie d'Etat des,Finances et des Affaires Economique Palais des Finances Port-au-Prince Haiti a, Cable address: Secrétairerie d'Etat des Finances et des Affaires Economique Port-au-Prince Haiti For the Association: International Development Association 1818 R Street, N.W. Washington, D.C. 20433 United States of America Cable acdress: Telex: INDEVAS 440098 (ITT) Washington, D.C41 248423 (RCA) or 64145 (WUI) 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 yea/ first above written. REPUBLIC OF HAITI jil By ls/ Emmanuel Bros Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By ls/ Nicolås Ardito Barletta Regional Vice President Latin America and the Caribbean Ä1 -. 11 - 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 percent,age of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expreäped in Expenditures Category Dollar Eqäuvalent) to be Financed (1) Four diesel units 8,200,000 100% of foreign and ancillary works expenditures and services under Part (A) (i) and (ii) of the Project (2) Materials and equip- 3,800,000 100% of foreign ment for Parts (B) expenditures (iv), (v) and (vi) and (C) (1) of the Project (3) Civil works for 200,000 50% Parts (A) (i) and (ii), (B) (iv) and (C) (i),of the Project (4) Consultants' services 2,300,000 100% of foreign for design and super- expenditures visionand for Part (D) (i) of the Project (5) Training under Part 300,000 100% of foreign (D) (11) of the Proj- expenditures ect (6), Study under Part (E) 450,000 100% of foreign of the Project expenditures (7) Unallocated 1,250,000 T0,AL 16,500,000 4 -12- 2. For the purposes of this Schedule the term "foreign expendi- tures" 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. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that nb 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 expendi- tures prior to the date of this - Agreement, except that: (i) withdrawals, in an aggregate amount not exceeding the equivalent of $600,000 may be made in respect of Category (1) on account of payments made for expenditures on account of Part (A) (ii) of the Project; and (ii) withdrawals in an aggregate amount not exceeding the equivalent of $500,000 may be made in respect of Category (4) on account of payments made for such expenditures before that date but after June 1, 1978. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient 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 expendi- tures; 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 V. -o. -13- th orocedures set cforth or referred to in this Agreement, no expenritures 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 temedy of the Association under the Development Credit Agreement, by notice to the Borrower, cargcel such amount of the Credit as, in the Associ- ation's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceedå of the Credit. - 14 - 11 SCHEDUt E 2 Doscription of the Project The Project consists of the following Parts: Part (A) (1) The ex'ansion of the Varreux Power Station in Port-au- Prince by the addition of three diesel units with a total capacity of about 22 MW; (ii) the provision of four diesel units with a total capäcity of about 3400 kW for the new power station at Cap Haitien; (iii) coristruction of a power station at Port-de-Paix includ- ing four diesel units with a total capacity of about 1 MW; (iv) construction of a power station at Miragoane including two diesel units with a total capacity of about 250 kW; and (v) associated ancillary works and services for Part (A) (i) to (A) (iv) above. (3 Part (B): (i) The expansion of two 115/69 kV and five 69 kV sub- stations in"the Port-au-Prince area; (ii) the construction and equipping of three 69 kV substa- tions at Petionville, Carrefour and Croix-des Bouquets; (iii) the construction of about 27 km of 69 kV lines in the Port-au-Prince area; (iv) the expansion of the Varreux Substation at "Port-au- Prince; (v) the provision of telecommunication equipment, network and workshop tools and equipment and utility vehicles; and j - 15 - (vi) ancillary equipment and works for Part (B) (1) to (B) (v) above. Part (C): (1) The rehabilitation of about 30% of the distribution network in Port-au-Prince; and (ii) the renovation and expansion of the distribution networks at Port-de-Paix (about 16 km of lines and 300 kVA in transformer capacity); Miragoane (about 18 km of lines and 275 kVA in transformer capacity); and Les Cayes (about 10 km of lines and 600 kVA in trans- former capacity) Part (D) (i) The provision of consultants' and expert s' services to assist in, and carry out studies related to, the Project and to the management and operations of EdH, to assist in the training of its staff, and in the preparation of a preliminary design of a new head office building for EdH; and (1) the carrying out of a program for the trainihg of EdH's staff. Part (E): The carrying out of a study to determine the proper mainten- ance and monitoring procedures of the Peligre dam. * * * The Project is expected to be completed by June 1982. * r