Somali - Second Mogadishu Water Supply Project : Credit 1236 - Credit Agreement - Conformed

CREDIT NUMBER 1236 SO Development Credit Agreement (Second Mogadishu Water Supply Project) between SOMALI DEMOCRATIC REPUBLIC and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1982 CREDIT NUMBER 1236 SO DEVELOPMENT CREDIT AGREEMENT AGREEME,t, dated ay ; 6 , 1981, between SOMALI DEMOCRATIC REPUBLIC (fereinafter 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 Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Project will be carried out by Mogadishu Water Agency with the Borrower's assistance and, as part of such assist- ance, the Borrower will make available to Mogadishu Water Agency the proceeds of the Credit as hereinafter provided; (C) the Borrower has obtained from the Arab Fund for Economic and Social Development a loan (hereinafter called the Arab Fund Loan) in an amount of about seventeen million five hundred thousand dollars ($17,500,000) equivalent, to assist in financing the Project on the terms and conditions set forth in an agreement (hereinafter called the Arab Fund Agreement) to be entered into between the Borrower and the Arab Fund for Economic and Social Development; and (D) the Borrower intends to obtain from the European Development Fund a grant (hereinafter called the EDF Grant) in an amount of about five million five hundred thousand dollars ($5,500,000) equivalent, to assist in financing the Project on the terms and conditions set forth in an agreement (hereinafter called the EDF Agreement) to be entered into between the Borrower and the European Development Fund. 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 Mogadishu Water Agency; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this A6reement 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 Agreements 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meaning: (a) "Project Agreement" mcans the agreement between the Association and MWA of even date herewith, as the same may be amended from time to time, and such term includes the Schedule to the Project Agreement and all agreements supplemental to the Project Agreement; (b) "Subs! liary Loan Agreement" means the agreement to be entered into between the Borrower and MWA pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time; (c) "MWA" means the Mogadishu Water Agency, an autonomous agency of the Borrower established pursuant to Borrower's Decree No. 18 of April 6, 1978; (d) the "First Project" means the Mogadishu Water Supply Project, as described in Schedule 2 to the Development Credit Agreement (the "First Project Agreement") dated June 30, 1978 between the Borrower and the Association (Credit No. 822 SO); and (e) "SO Sh" or "Somali Shillings" means the currency of the Borrower. -3- 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 amount in various currencies equiva- lent to thirteen million four hundred thousand Special Drawing Rights (SDR 13,400,000). 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 t.,me to tiaLe 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. Except as the Association shall otherwise agree, procurement of the civil works to be financed out of the proceeds of the Credit shall be governed by the provisions set forth or referred to in the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1985 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 annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each January 1 and July 1 commencing July 1, 1992, and ending January 1, 2032, each installment to and including the installment payable on January 1, 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. -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 MWA 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 MWA to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resource?, necessary or appropriate to enable MWA to perform such obligations, and shall not take or permit to be taken any acLion which would prevent or interfere with such performance. (b) The Borrower shall enter into an agreement (the Subsid- iary Loan Agreement) with MWA on terms and conditions acceptable to the Association, providing, inter alia, that: (i) the Borrower shall relend the proceeds of the Credit to MWA on a term of twenty years, including a grace period of three years during which interest will be capitalized, and payment of interest at the rate of 10% per annum; and (ii) the Borrower shall lend to MWA twelve million five hundred thousand Somali Shillings (12,500,000 SO Sh) on a term of twenty years, including a grace period of three years during which interest will be capitalized, and payment of interest at the rate of 10% per annum. (c) In order to make the funds specified in paragraph (b) (ii) hereof available to MWA, the Borrower shall: (i) open a special bank account for the Project in the name of MWA and - 5- deposit an initial amount of 6 million Somali Shillings therein by September 30, 1982 or such other date as the Association may agree; and (ii) deposit the remainder into such bank account promptly as MWA shall request for the carrying out of the Project. (d) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of 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 shall take all action required on its part (including, without limitation, the authorization of adjustments of water tariffs) to enable MWA to meet its obliga- tions under Section 4.04 of the Project Agreement. Section 3.03. The Borrower shall ensure that any adjustments in the level or structure of MWA's water tariffs in Mogadishu shall take into account the recommendations made in the study of MWA's water tariffs that was carried out under the First Project and the Association's comments on such recommendations. Section 3.04. The Borrower shall take all action necessary on its part to ensure that by September 30, 1982 or such other date as the Association may agrre the charges for services rendered by MWA to the Borrower's ministries, departments and agencies will be reduced to and thereafter maintained at a level not exceeding 60 days of MWA's total water sales to all such institutions during the preceding year. Section 3.05. The Borrower shall take, or cause MWA .o take, all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction (and operation) of the facilities included in the Project and shall furnish, or cause MWA to furnish, to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are made available to MWA for purposes related to the Project. Section 3.06. After completion of the Project, the Borrower shall take and cause MWA to take all measures, determined in consultation with the Associatijn, to assure full economic and -6- productive use of the investments included in the Project for the purposes for which they were intended. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof, namely: (a) MWA shall have failed to perform any covenant, agreement or obligation of MWA under the Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that MWA will be able to perform its obliga- tions under the Project Agreement; (c) Decree No. 18 of April 6, 1978 of the Borrower shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of MWA to carry out the covenants, agreements and obligations set forth in the Project Agreement; (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of MWA or for the suspension of its operations; and (e) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the Arab Fund Loan or the EDF Grant made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the Arab Fund Agree- ment or the EDF Agreement; or (B) the Arab Fund Loan shall have 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 -7- obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions con- sistent with the obligations of the Bori:ower under this Agreement. Section 4.02. For the purposes of Section 7.01 of the General 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 60 days after notice thereof shall have been given by the Associa- tion to the Borrower and MWA; and (b) any event specified in paragraphs (c), (d) or (e) (i) (B) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional conditions to the effectiveness of the Developmert Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Loan Agreement ras been executed on behalf of the Borrower and MWA; (b) all conditions precedent to the effeztiveness of the Arab Fund Agreement and the EDF Agreement other than the effectiveness of this Agreement shall have been fulfilled; and (c) the study of MWA's tariff structure and level of charges to be carried out under the First Project shall have been completed and copies thereof in the English language shall have been furnished to the Association. 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: -8- (a) that the Project Agreement has been duly authorized by MWA, and is legally binding upon MWA in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been U'ly authorized or ratified by the Borrower and MWA and is legally binding upon the Borrower and MWA in accordance with its terms; Section 5.03. The date 4 t4 1' 26) 1" l is hereby speci- fied for the purposes of Secti V 12.04 of the General Conditions. Section 5.04. The provisions of Sections 3.06 and 4.02 (b) of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Except as provided in Section 2.09 of this Agreement, 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 Mogadishu, Somalia Cable address: MINFINANCE Mogadishu For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America -9- 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 Agree- ment 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. SOMALI DEMOCRATIC REPUBLIC Autho*ied Representative INTERNATIONAL DEVELOPMENT ASSOCIATION 1 Regiona &Vice PresVent Eastern Africa '10 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 percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil works: (a) Well construc- 6,280,000 100% tion under Part A.1 of the Project and test drilling under Part D.2 (b) of the Project (b) Construction 1,920,000 32% of roads, mains and other well- field works under Part A.2 of the Project and construction of reservoirs, a pump station, trunk mains and other works in Moga- dishu under Part B.2 (2) Advisors under 320,000 40% of foreign Part D.1 of the expenditures Project - 11 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (3) Consultants' ser- vices for: (a) Accounting 70,000 100% of foreign under Part expenditures D.5 of the Project (b) Construction 380,000 50% of foreign supervision expenditures under Part D of the Project (c) Water resource 1,990,000 100% of foreign investiga- expenditures tions under Part D.2 (a) and design engineering under Part D.4 of the Project (4) Unallocated 2,440,000 TOTAL 13,400,000 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. - 12 - 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 disbursement percentagn 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 April 27, 1982 except that withdrawals in an aggregate amount not exceeding the equivalent of $100,000 may be made under Category 3 (c) in respect of Part D.2 (a) of the Project on account of payments made before that date but after March 1, 1982. 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 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 the procedures set forth or referred to in this Agreement, no expenditures 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 Borrower, 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. - 13 - SCHEDULE 2 Description of the Project The Proje6t's objectives are to increase MWA's water produc- tion capacity and management capability, to extend Mogadishu's existing water distribution system, to investigate water resources for meeting Mogadishu's future water supply needs, and to investi- gate the feas:.bility of introducing low-cost sanitation facilities in Mogadishu, The Project consists of the following Parts: A. Facilities at Afgoi Road Wellfield 1. Construction of about 24 production wells having a total production capacity of about 30,000 cubic meters per day and about 3 wel3f.leld observation wells; 2. Ccn.-truction of access roads and miscellaneous wellfield civil works and the supply and installation of well collector mains totallirg about 8,000 meters in length; 3. Surly and installation of a pumping plant, equipment and piping Et each of the production well sites, and the supply and installa-:ion of chlorination equipment; and 4. Provision for increase in power supply capacity to 24,000 kVA ty the supply and installation of an engine-generator set, switchy,ids, transformers and switchgear, power transmission lines and punp control system. B. Facilit;.es in Mogadishu 1. Coitstruction of about 60,000 m of water distribution mains and alpirtenances, about 100 public taps, the creation of two additiora.. pressure zones and the supply of miscellaneous materials ano. 3upplies; 2. Construction of two additional reservoirs having a total storage capa-ity of about 14,000 cu m, miscellaneous civil works, and a pump slation and trunk mains to serve the Tower Zone; and -14 - 3. Installation of an electrical and mechanical pumping plant, equipment and piping at the Tower Zone pump station. C. Equipment and Supplies Procurement of water meters, vehicles, tools, office equip- ment and equipment for inspection and repair of MWA's water distribution system. D. Studies and Technical Assistance 1. Strengthening of management and operations of the MWA by the employment of advisors; 2. Carrying out of water resource investigations consisting of: (a) Engineering studies of the Shebelli River and regional groundwater resources to identify economic sources of supply for meeting Mogadishu's future water needs; (b) Geophysical investigations and test drilling in support of the engineering studies; 3. Supervision of all construction works related to water supply to be carried out under the Project; 4. Design engineering of facilities for a future Mogadishu water supply project; and 5. Implementation of a new accounting system and accounting Dlan for MWA. E. Low-Cost Sanitation Carrying out of studies of low-cost sanitation in Mogadishu. The Project is expected to be completed by June 30, 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 PJ lo day of W %0 -, 198 . FOR SECRETARY