Tunisia - Second Natural Gas Pipeline Project : Loan 1864 - Guarantee Agreement - 2 - Conformed

OFFICIAL DOCUMENTI LOAN NUMBER 1864 TUN Guarantee Agreement (Second Natural Gas Pipeline Project) between REPUBLIC OF TUNISIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1980 LOAN NUMBER 1864 TUN GUARANTEE AGREEMENT AGREEMENT, dated ( 6, 1980, between REPUBLIC OF TUNISIA (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Societe Tunisienne de l'Electricitg et du Gaz (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to thirty- seven million dollars ($37,000,000), 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 Borrower in respect of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's entering 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: 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 Guarantee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agree- ments 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 and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. 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 -2- 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. (a) 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 inadequate to meet the estimated expenditures required for the carrying 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. (b) Without limitation or restriction upon the provisions of Section 2.02 (a) of this Agreement, the Guarantor specifically undertakes to: (i) make available to the Borrower funds required to enable the Borrower to meet certain expenditures in respect of the Project, such funds to be provided by way of contributions to the Borrower's equity in an amount of not less than ten million Tunisian Dinars (DT 10,000,000) in accordance with a timetable agreed to between the Guarantor and the Bank; and (ii) take all such measures within its power, including the issuance of authorizations, as shall be required to enable and facilitate the Borrower's obtaining of loans from commercial banks pur- suant to the provisions set forth in Section 3.01 (b) of the Loan Agreement. 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 -3- 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 provision to that effect; provided, however, that, if for any constitutional 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 as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions 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 subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Guarantor or any such subdivision, including gold and 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. (a) The Guarantor shall take all necessary steps within its powers to enable the Borrower to meet the rate of return and cash generation requirements set forth in Section 5.04 (a) and 5.04 (b), respectively, of the Loan Agreement. (b) Without limiting or restricting the provisions of Section 3.02 (a) of this Agreement, the Guarantor shall carry out semi-annual reviews on the adequacy of the Borrower's charges for imported gas to be applied during the next succeeding six- month period, and shall take all such measures as shall be appro- priate, pursuant to Sections 5.04 (a) and 5.04 (b) of the Loan Agreement, taking into account, as appropriate, the results of the study carried out under Section 3.04 (a) of the Prior Guarantee Agreement, it being understood that the first such review shall be carried out in July 1981 and every six months thereafter. -4- Section 3.03. The Guarantor shall take all such measures as shall be required to ensure that the prices charged to the Borrower for Royalty Gas provided to the Borrower shall pro- gressively be increased to achieve parity with the prices due by the Borrower for the Purchase Gas, such parity to be reached within a period of 5 years from January 1, 1982, or within such other reasonable period from January 1, 1982, as shall be agreed upon between the Guarantor and the Bank. Section 3.04. Without limitation or restricting upon any of its obligations pursuant to the provisions of this Agreement, the Guarantor shall take all such measures as shall be required to ensure that, whenever natural gas replaces or is intended to replace fuel oil, the domestic selling price of fuel oil shall be at least equivalent to the domestic selling price of natural gas. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Minister of Planning and Finance 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: Ministare du Plan et des Finances 1, rue de Beja Tunis, Tunisia Cable address: Telex: Ministre du Plan MIPLAN - 12117 et des Finances TN Tunis -5- 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) IN WITNESS WHEREOF, the parties hereto, acting through their represencatives 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 TUNISIA By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Byer L4 Z Regional Vice President Europe, Middle East and North Africa INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this "-d-day of 1 , 9t2. FOR SECRETARY