Malawi - Lilongwe Water Supply Engineering Project : Credit 1272 - Credit Agreement - Conformed

OPICIALS CREDIT NUMBER 1272 MAI DOCUMONTS Development Credit Agreement (Lilongwe Water Supply Engineering Project) between THE REPUBLIC OF MALAWI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1982 CREDIT NUMBER 1272 MAI DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated AtJ kAA, \i- , 1982, between THE 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 cost of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) Parts A, B and D (i) of the Project will be carried out by Lilongwe Water Board with the Borrower's assistance and as part of such assistance the Borrower will make available to Lilongwe Water Board part of 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 Lilongwe Water Board; 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 June 30, 1980 with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments 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) "LWB" means Lilongwe Water Board, a statutory body of the Borrower established under Act Cap. 72:01, 1970 of the Laws of Malawi as such Act may be amended from time to time; -2- (b) "Project Agreement" means the Agreement between the Association and LWB 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 (c) "Subsidiary Loan Agreement" means the Agreement to be entered into between the Borrower and LWB 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. 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 amiunt in various currencies equivalent to three million six hundred thousand Special Drawing Rights (SDR 3,600,000). 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. The Closing Date shall be June 30, 1986 or such later date as tYe Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without -3- restriction of any kind imposed by, or in the territory of, th! Birrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. 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. Commitment and service charges shall be pay- able semiannually on June 15 and December 15 in each year. Section 2.07. The Borrower shall repay the princip - amount of the Credit in semiannual installments payable on each June 15 and December 15 commencing December 15, 1992, and ending June 15, 2032, each installment to and including the installment payable on June 15, 2002, 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 States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts C, D (ii) and E of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause LWB to perform, in accordance with the pro- visions of the Project Agreement, all the obligations therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable LWB to perform such obliga- tions, and shall not take or permit to be taken any action which would prevent or interfere with such performance. -4- (c) The Borrower shall relend an amount not exceeding three million six hundred thousand dollars ($3,600,000) equivalant from the proceeds of the Credit to LWB under the Subsidiary Loan Agreement to be entered into between the Borrower and LWB under terms and conditions which shall have been approved by the Asso- ciation and which shall provide, inter alia, that the proceeds of the Credit shall be relent at an interest rate of twelve per cent (12%) per annum for a term of 20 years, including a 5-year grace period. (d) The Borrower shall exercise its rights under the Subsi- diary Loan Agreement in such a manner as to protect the interests of the Borrower and the Association and to accomplish the pur- poses of the Credit and, except as the Association shall other- wise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. In order to assist the Borrower in carrying out Parts C and E of the Project, the Borrower shall employ an advisc , on low-cost sanitation and management c.nsultants not later than March 31, 1983, as well as training consultants, all whose selection, qualifications, uxperience and terms and condi- tions of employment shall be satisfactory to the Association and in accordance with the principles and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 3.03. Except as the Association shall otherwise agree: (a) contracts for procurement of vehicles, flow itering equipment and miscellaneous equipment and supplies of an indivi- dual value not exceeding fifty thousand dollars ($50,000) equiva- lent and a total value not exceeding four hundred thousand dol- lars ($400,000) equivalent to be financed out of the proceeds of the Credit may be procured in accordance with limited interna- tional bidding; (b) construction materials costing seventy thousand dollars ($70,000) equivalent or more to be financed out of the proceeds of the Credit may be procured in accordance with local procure- ment procedures acceptable to the Association; and -5- (c) civil works, including site investigations and con- struction of individual waste disposal units, may be carried out by force account. Section 3.04. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards inci- dent to the acquisition, transportation and dalivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the purposes of the Project until it is completed. Section 3.05. (a) The Borrower shall, with respect to Parts C and E of the Project, fur-ish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and cons tru7t.on and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall, with respect to Parts C and E of the Project: (i) maintain Lecords and procedures adequate to record and monitor the. progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's representatives to v-ait the facilities and confitruction sites included in the Project and to examine the boods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. -6- Section 3.06. The Borrower shall consult with the Ansocia- tion concerning the findings of the Studies carried out under Part E of the Project. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the Gen- eral Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) LWB shall have failed to perform any of its obligations under the Project Agreement; (b) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that LWB will be able to perform its obligations under the Project Agree- ment; (c) Act Cap. 72:01, 1970 of the Laws of Malawi shall liave been amended, suspended, abrr-3ated, repealed or waived so as to affect materially and adversel the ability of LWB to perform any of its obligations under the Project Agreement; and (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of LWB or for the suspension of its operations. Section 4.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (a) of Section 4.01 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 and LWB; and (b) any event spec! in paragraphs (c) and (d) of Sec- tion 4.01 of this AgreemenL snall occur. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development -7- Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Subsidiary Loan Agreement has been executed on behalf of the Borr(.qer and LWB. 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: (a) that the Project Agreement has been duly authorized or ratified by LWB, and is legally binding upon LWB in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and LWB and is legally binding upon the Borrower and LWB in accordance with its terms. Section 5.03. The date AA \ is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of paragraphs (a) and (b) 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 twenty years after the date of this Agreement whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Finance of the Borrower 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 purpose of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance P.O. Box 30049 Capital City Lilongwe 3 The Republic of Malawi -8- Cable address: Telex: FINANCE 4407 Lilongwe For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 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 REPUBLIC OF MALAWI By Authorized Rep iesentative INTERNATIONAL DEVELOPMENT ASSOCIATION Regional Vice President Eastern Africa -9- 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 and the allocation of amounts of the Credit to each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Supply of: (a) construction 70,000 100% of foreign materials expenditures or 90% of local expenditures (b) vehicles, flow 360,000 100% of foreign metering equip- expenditures or ment and mis- 90% of local cellaneous expenditures equipment and supplies (2) Consultants' and 100% of foreign advisor's services expenditures and management staff support: (a) for Parts A, B 2,490i00 and D (i) of the Project (b) for Parts C, D (ii) 330,000 and E of the Pro- ject (3) Unallocated 350,000 TOTAL 3,600,000 - 10 - 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 com- pliance 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 dis- bursement 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 expen- ditures 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 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 nictice 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 the - 11 - procedures set forth or referred to in this Agreement, no expend- !-ures 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 Bor- rower, 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. -12- SCHEDULE 2 Description of the Project The Project consists of studies to assist in the future development of the Borrower's water supply and waste disposal sector and is comprised of the following main components: Part A: A master plan for the long-range development of water supply sewerage and sanitation in Lilongwe. Part B: A feasibility study, including field investigation, detailed engineering designs and preparation of con- tract documents for the initial stage of a Lilongwe water supply project. Part C: A pilot project to demonstrate appropriate low-cost sanitation facilities and practices. Part D: Provision of Management staff support for: (i) Lilongwe Water Board; and (ii) other entities in the water supply and waste dis- posal sector. Part E: Studies to assess the needs of the Borrower's water supply and waste disposal sector relative to organiza- tion, manpower and training. The Project is expected to be completed by December 31, 1985. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the / day of 198 A. FOR SECRETARY