Jordan - Fourth Power Project : Loan 1986 - Loan Agreement - Conformed

OFFICIAL DOCUMTS LOAN NUMBER 1986 JO Loan Agreement (Fourth Power Project) between THE HASHEMITE KINGDOM OF JORDAN and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1981 LOAN NUMBER 1986 JO LOAN AGREEMENT AGREEMENT, dated 2 , 1981, between THE HASHEMITE KINGDOM OF JORDAN (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) the Project, with the exception of Part C thereof, will be carried out by Jordan Electricity Authority (hereinafter called JEA) and Jordanian Electric Power Company Limited (hereinafter called JEPCO) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to JEA and JEPCO the proceeds of the Loan as hereinafter provided; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set fdrth hereinafter and in the Project Agreements of even date herewith between the Bank and JEA and JEPCO, respectively; 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 October 27, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank 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 the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: - 2 - (a) "Project Agreements" means the agreements between the Bank and JEA and JEPCO, respectively, of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreements and all agreements supple- mental to the Project Agreements; (b) "JEA Project Agreement" means the Project Agreement between the Bank and JEA; (c) "JEPCO Project Agreement" means the Project Agreement between the Bank and JEPCO; (d) "Subsidiary Loan Agreements" means the agreements to be entered into between the Borrower and JEA and JEPCO, respec- tively, pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreements; (e) "JEA Law" means the Jordan Electricity Authority Law No. 21 of 1967 establishing JEA, as amended by Law No. 46 of 1973 and as further amended by General Electricity Law No. 8 of 1976, and as the same may be further amended from time to time; (f) "JEPCO Concession Agreement" means the agreement dated November 12, 1962 among the Borrower, Jordanian Electric Power Company Ltd., and Jordan Central Electric Company, S.A.; and (g) "JEPCO Articles of Association" means JEPCO's Articles of Association dated September 28, 1978, as the same may be amended from time to time. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty-five million dollars ($25,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Sched- ule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in - 3 - respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of the Schedule to each of the Project Agreements. Section 2.04. The Closing Date shall be December 31, 1985 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum or the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of nine and three-fifths per cent (9-3/5%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on February 15 and August 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. Section 2.09. The Director General of JEA, or such other person as said Director General may authorize in writing, 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) The Borrower shall carry out Part C of the Project with due diligence and efficiency and in conformity with sound administrative and financial practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for this purpose. -4- (b) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause JEA and JEPCO, respectively, to perform in accordance with the provisions of the Project Agreements all the obligations therein set forth, shall take or cause to be taken all action, including the provision of funds, including the necessary foreign exchange, facilities, services and other resources, necessary or appropriate to enable JEA and JEPCO to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall relend from the proceeds of the Loan: (i) to JEA an amount not exceeding the equivalent of five million dollars ($5,000,000); and (ii) to JEPCO an amount not exceeding the equivalent of twenty million dollars ($20,000,000); under Subsidiary Loan Agreements containing terms and conditions which shall have been approved by the Bank, including that JEA and JEPCO shall bear the exchange risk on such amounts and that such amounts shall bear interest and be repayable on the same terms as the Loan. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreements in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreements or any provision thereof. Section 3.02. The Borrower shall, not later than June 30, 1982, submit to the Bank for its review and comments a plan for: (i) strengthening the planning and management of the energy sector; and (ii) improving coordination among energy-related institutions in Jordan. Section 3.03. (a) In order to assist the Borrower to carry out Part C of the Project, the Borrower shall employ not later than December 31, 1981 qualified energy consultants. (b) Not later than December 31, 1982 the Borrower shall submit to the Bank a timetable, satisfactory to the Bank, of actions to be undertaken to implement such appropriate recommen- dations as are made by the energy consultants employed under paragraph (a) of this Section. -5- ARTICLE IV Other Covenants Section 4.01. (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, special 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 Bank shall otherwise agree, ipso facto and at no cost to the Fank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, 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 Borrower 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 oth"r public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) aay 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 Borrower, of any political or administrative sub- division thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, itcluding gold and foreign exchange assets held by any institution performing the functions of a central bank or ex- change stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall take action necessary to cause its departments and agencies to pay, not later than Septem- ber 1, 1981, all outstanding electricity bills owed by them - 6 - to JEPCO and thereafter pay electricity bills, not later than six weeks after their issuance by JEPCO. Section 4.03. The Borrower shall take or cause to be taken all action necessary for JEA and JEPCO to comply with the provi- sions of Sections 4.03 and 4.04 of the JEA Project Agreement and Sections 4.03 and 4.04 of the JEPCO Project Agreement, res- pectively. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) JEA or JEPCO shall have failed to perform any covenant, agreement or obligation under the Project Agreements; (b) an extraordinary situation shall have arisen which shall make it improbable that either JEA or JEPCO will be able to perform its obligations under the Project Agreements; (c) the JEA Law, the JEPCO Concession Agreement or the JEPCO Articles of Association shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of JEA or JEPCO to carry out the covenants, agreements and obligations set forth in the Project Agreements; and (d) JEA or JEPCO shall have become unable to pay its debts as they mature or any action or proceedings shall have been taken by JEA, JEPCO or others whereby any of the property of JEA or JEPCO shall or may be distributed among its crertitors. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower, JEA and JEPCO; and -7- (b) any event specified in paragraphs (b), (c) and (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, that the Subsidiary Loan Agreements have been executed on behalf of the Borrower and JEA and JEPCO, respectively. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreements have been duly authorized or ratified by JEA and JEPCO, respectively, and are legally binding upon JEA and JEPCO in accordance with their terms; and (b) that the Subsidiary Loan Agreements have been duly authorized or ratified by the Borrower and JEA and JEPCO, respectively, and are legally binding upon the Borrower and JEA and JEPCO in accordance with their terms. Section 6.03. The date C. 4tA4A0666 1 , is hereby speci- fied for the purposes of Sectlon 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The President of the National Planning Council of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: -8- For the Borrower: National Planning Council P.O. Box 555 Amman Jordan Cable address: Telex: NPC 21319 JO Amman 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 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. THE HASHEMITE KINGDOM OF JORDAN Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ByL( 1.-1%- Regional Vice President Europe, Middle East and North Africa -9- SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Part A of the Project: (1) Rural Elec,"ri- 4,000,000 100% of for- fication eign expendi- tures and 100% of local expenditures (ex-factory) (2) Consultants' 500,000 100% of foreign services expenditures II. Part B of the Project: (3) Urban distribution 13,000,000 100% of foreign expenditures and 100% of local expendi- tures (ex- factory) (4) Rural electri- 3,400,000 100% of foreign fication expenditures and 100% of local expendi- tures (ex- factory) - 10 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (5) Low cost housing 1,300,000 100% of foreign electrification expenditures and 100% of local expendi- tures (ex- factory) (6) Consultants' 1,170,000 100% of foreign services expenditures (7) Training 130,000 100% of foreign expenditures (8) Unallocated 1,500,000 TOTAL 25,000,000 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 or 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 Bank that no proceeds of the Loan 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 Loan decreases or increases, the Bank may, by notice to - 11 - the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement, except that with- drawals, in an aggregate amount not exceeding the equivalent of $400,000 may be made in respect of Categories (2) and (6) on account of payments made for such expenditures before that date but after January 1, 1981. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank 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 Bank 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 Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 12 - SCHEDULE 2 Description of the Project The Project consists of the following parts: Part A: (1) The construction of about 160 kilometers of 132 kV double-circuit transmission lines to connect Aqaba, Quweira, East Ghor, Ashrafiya and Sahab with the national transmission networks. (2) The extension and reinforcement of transformer sub- stations at Irbid, Bayader, Hussein Power Station, Amman South and Ma'an, and the construction of trans- former substations at East Ghor, Ashrafiya, Sahab, Quweira and Aqaba. (3) The electrification of about 30 villages near Karak, Tafilah, Shoubak, Ma'an and Wadi Mousa including con- struction of 33 kV transmission lines, substations and low voltage distribution facilities. (4) The training of JEA staff. Part B: (1) The extension of an urban distribution network, includ- ing construction of about 13 kilometers of 33 kV over- head transmission lines and about 43 kilometers of 33 kV cables, about 140 MVA of 33/11 kV power transformers, and provision of equipment and materials for about 120 distribution substations and for upgrading of the existing 6 kV distribution systems to 11 kV, and related auxiliaries. (2) The electrification of about 20 villages near Amman, including construction of 33 kV transmission lines, substations and low voltage distribution facilities. (3) The electrification of housing developments at Zarqa, Marqa and Quweisma, including construction of 11 kV cables, 11 kV tranmission lines, substations and low voltage distribution facilities. - 13 - (4) The improvement of JEPCO's organizational structure and managerial practices. (5) The training of JEPCO staff. Part C: The strengthening of the Borrower's capabilities in energy pricing, demand management, conservation and indigenous energy resources development. The Project is expected to be completed by December 31, 1984. - 14 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each February 15 and August 15 beginning August 15, 1985 through August 15, 1997 960,000 On February 15, 1998 1,000,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.04), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 15 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years 1.70% before maturity More than three years but not 3.40% more than six years before maturity More than six years but not 6.20% more than eleven years before maturity More than eleven years but 8.50% not more than fifteen years before maturity More than fifteen years 9.60% before maturity 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 10 Lday of ,198 . FOR SECRETARY