Ecuador - Railway Project : Loan 0181 - Loan Agreement - Conformed

LOAN NUMBER 181 EC Loan Agreement (Railway Project) BETWEEN THE REPUBLIC OF ECUADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED NOVEMBER 1, 1957 LOAN NUMBER 181 EC Loan Agreement (Railway Project) BETWEEN THE REPUBLIC OF ECUADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED NOVEMBER 1, 1957 1' xat Nrurmut AGREEMENT, dated November 1, 1957, between the RE- PUBLIC OF ECUADOR (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP- MENT (hereinafter called the Bank). WHEREAS the Bank has agreed to make to the Borrower a loan in various currencies equivalent to six hundred thousand dollars ($600,000) on the terms and conditions hereinafter set forth, but only on condition that the Banco Central del Ecuador accept its obligations under Section 5.03 of this Agreement; and WHEREAS the Banco Central del Ecuador, in considera- tion of the Bank's entering into this Agreement with the Borrower, has agreed to accept such obligations of Banco Central del Ecuador and to evidence its acceptance thereof by causing this Agreement to be signed by its duly author- ized representative; Now THEREFORE the parties hereto hereby agree as fol- lows: ARTICLE I Loan Regulations; Special Definition SECTION 1.01. The parties to this Loan Agreement ac- cept all the provisions of Loan Regulations No. 3 of the Bank dated June 15, 1956, subject, however, to the modifica- tions thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 3 as so modified being herein- after called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Except where the context otherwise re- quires, the term Railways, wherever used in this Agree- ment, shall mean the Empresa de los Ferrocarriles del Estado of the Borrower, an institution of Public Law organ- ized and existing under the laws of the Borrower as an 4 autonomous juridical person, and shall include any suc- cessor to the Empresa de los Ferrocarriles del Estado. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amonit in various currencies equivalent to six hundred thousand dollars ($600,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. Such commit- ment charge shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrower shall pay interest at the rate of six per cent (6%) per annum on the principal amount of the Loan so withdrawn and- outstanding from time to time. SECTION 2.05. Except as the Borrower and the Bank shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations 5 shall be at the rate of one-half of one per cent (/ of 1%) 1)er annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on May 1 and November 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively to financing the cost of gocds required to carry out the Project described in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan and the methods and proce- dures for procurement of such goods shall be determined by agreement between the Borrower and the Bank, subject to modification by further agreement between them. SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be used in the territories of the Borrower exclusively in the carrying out of the Project. ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Ministro del Tesoro of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representatives of the Bor- rower for the p.urposes of Section 6.12 of the Loan Regula- tions. 6 ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound railway, engineering and financial practices. (b) The Borrower shall cause to be furnished to the Bank, promptly upon their preparation, the plans and specifications for the Project and any material modifica- tions subsequently made therein, in such detail as the Bank shall from time to time request. (c) The Borrower shall maintain or cause to be main- tained records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, and to record the progress of the Project (in- cluding the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Railways; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, and the goods, and the operations and financial condition of the Railways. SECTION 5.02. (a) The Borrower and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall fur- nish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Borrower, such information shall include information with respect to financial Lnd economic condi- tions in the territories of the Borrower and the interna- tional balance of payments position of the Borrower. (b) The Borrower and the Bank shall from time to time exchange views through their representatives with regard 7 to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes .f the Loan or the maintenance of the service thereof. (c) The Borrower shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any part of the territories of the Borrower for purposes related to the Loan. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no external debt shall enjoy any priority over the Loan by way of a lien hereafter created on govern- mental assets (including any priority in the allocation or realization of foreign exchange). To that end, the Bor- rower and Banco Central del Ecuador undertake that, ex- cept as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower or of the Banco Central del Ecuador, as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect. Within the limits of its constitutional powers, the Borrower will make the foregoing undertaking effective with respect to liens on assets of any of the Borrower's agencies including agencies granted autonomy by the Constitution of Ecuador (other than Banco Central del Ecuador), or any of the Borrower's political subdivisions or of any agency of any such political subdivision, and to the extent that the Bor- rower is unable within the limits of its constitutional pow- ers to make such undertaking effective, the Borrower will give to the Bank an equivalent lien satisfactory to the Bank. The foregoing provisions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien on commercial goods 8 to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds of sale of such commercial goods; (iii) any lien arising in the ordinary course of banking transactions to secure a debt maturing not more than one year after the date on which it is originally incurred; or (iv) any lien solely upon revenues or receipts in currency of the Borrower which is given by a political subdivision (consejo provincial or municipalidad) or by an agency of a political subdivision of the Borrower under arrange- ments containing no provisions which would result in priority in the allocation or realization of foreign exchange. SECTION 5.04. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Borrower or laws in effect in its ter- ritories; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, pay- ments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individ- ual or corporate resident of the Borrower. SECTIoN 5.05. The Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof and the Borrower shall pay all such taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries. SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Borrower or laws in effect in its territories. 9 SECTION 5.07. The Borrower shall satisfy the Bank that adequate arrangements have been made to insure the goods financed out of the proceeds of the Loan against risks inci- dent to their purchase and importation into the territories of the Borrower. SECTIo< 5.08. Whenever the funds available to the Rail- ways will be inadequate to meet the expenditures in cur- rency of the Borrower required for the operation and main- tenance of the Duran-Quito branch of the Railways, the Borrower shall make arrangements promptly to provide the Railways or cause the Railways to be provided with such funds as are needed to meet such expenditures. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regula- tions shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and pay- able immediately, and upon any such declaration such prin- cipal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary not- withstanding. ARTICLE VII Effective Date; Termination SECTION 7.01. The following events are specified as ad- ditional conditions to the effectiveness of this Agreement within the meaning of Section 9.01 (b) of the Loan Regu- lations: 10 (a) the Borrower shall have furnished to the Bank evi- dence satisfactory to the Bank that the undertakings by Banco Central del Ecuador in Section 5.03 of this Agreement contained, are valid and binding obliga- tions of Banco Central del Ecuador; (b) the Borrower shall have furnished to the Bank evi- dence satisfactory to the Bank that after the date of this Agreement and prior to the Effective Date Banco Central del Ecuador shall have taken no action which would have constituted a violation of the provisions of Section 5.03 of this Agreement had it been effective on the date such action was taken; and (c) arrangements satisfactory to the Baak shall have been made by the Borrower and. the Railways for the acquisition and use by the Railways of the goods financed with the proceeds of the Loan. SECTION 7,02. Tke following are specified as additional matters, within the meaning of Section 9.02 (c) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: That the undertakings by Banco Central del Ecuador in Section 5.03 of the Loan Agreement contained, con- stitute valid and binding obligations of Banco Central del Ecuador in accordance with their terms. SECTION 7.03. A date 60 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be November 30, 1958. 11 SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Republic of Ecuador Ministerio de Obras Publicas y Comunicaciones Calle Chile No. 1267 Quito, Ecuador Alternative address for cablegrams and radiograms: Minobras Quito For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. Unitud States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. SECTION 8.03. The Ministro de Obras PU"blicas y Co- mUnicaciones of the Borrower is designated for the pur- poses of Section 8.03 of the Loan Regulations; provided, however, that, notwithstanding any provisions herein or in the Loan Regulations contained, applications for the with- drawal of amounts from the Loan Account shall be signed jointly by the Ministro de Obras P'blicas y Comunicaciones of the Borrower and the Administrador General of the Railways or any person thereunto jointly authorized in writing by them. IN WITNESS WHEREOF, the Borrower and the Bank, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their 12 respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written, and Banco Central del Ecuador, acting through its duly authorized representative, has evidenced its accept- ance of its obligations under Section 5.03 of this Agree- ment. REPUBLIC OF ECUADOR By JosE' R. CHIRIBOGA V. Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By W. A. B.ILIFF Vice President BANCO CENTRAL DEL ECUADOR By JosE R. CHIRIBOGA V. Authorized Representative 13 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* May 1, 1959 $ 93,000 November 1, 1959 96,000 May 1, 1960 98,000 November 1, 1960 101,000 May 1, 1961 104,000 November 1, 1961 108,000 * To the extent that any part of the Loan is rerayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 14 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05(b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than one year before maturity 1/2% More than one year but not more than two years before maturity . 2% More than two years but not more than three years before maturity . 4% More than three years before maturity 6% S 15 SCHEDULE 2 Description of Project The Project consists of the acquisition and use by the Railways in the repair of the facilities of the Dura'n-Quito branch of the Railways of railway equipment, spare parts and materials; and the acquisition and use by the Railways of eight tank cars for the transportation of petroleum products. The Project includes also the services of experts to assist in improving administrative procedures of the Railways. 16 SCHEDULE 3 Modifications of Loan Regulations No. 3 For the purposes of this Agreement the provisions of Loan Regulations No. 3 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: (a) By the deletion of Section 2.02. (b) By the deletion of paragraph (c) of Section 5.02 and the substitution therefor of a new paragraph (c) as follows: "A default shall have occurred in the performance of any other covenant or agreement on the part of the Borrower under the Loan Agreement or the Bonds, or on the part of Banco Central del Ecuador under Section 5.03 of the Loan Agree- ment."