Benin - Second Water Supply Project : Credit 1721 - Credit Agreement - Conformed

CFFICIAL CREDIT NUMBER 1721 BEN Development Credit Agreement (Second Water Supply Project) between PEOPLE'S REPUBLIC OF BENIN and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1987 CREDIT NUMBER 1721 BEN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated TLAV) , 1987, between PEOPLE'S REPUBLIC OF BENIN (the Borrower) and INTERNATIONAL DEVELOPHENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in SchedulR 2 to this Agreement, has requested the Association to assist in t..e financing of the Project; (B) the Project will be carried out by Socifte B&ninoise d'Electricit& et d'Eau (SBEE) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to SBEE the proceeds of the Credit as provided in this Agreement; (C) By agreement dated October 22, 1986 (the OEC Fund Loan Agreement), the OPEC Fund for International Development (the OPEC "and) has agreed to make a loan to the Borrower in an amount of two million seven hundred and fifty thousand US Dollars (US$ 2,750,000) (the OPEC Fund Loan) to assist in financing part of the Project on the terms and conditions set forth in the OPEC Fund Loan Agreement; (D) SBEE intends to contract from Caisse Centrale de Coop6ration Economique (CCCE) a loan in an approximate amount of sixty-five million French francs (FF 65,000,000) (the CCCE Loan), and the Borrower intends to contract from European Investment Bank (EIB) a loan in an approximate amount equivalent to six million four hundred thousand European Units of Account (ECU 6,400,000) (the EIB Loan) to assist in financing part of the Project on the terms and conditions set forth in an agreement (the CCCE Loan Agreement) to be entered into between SBEE and CCCE and in an agreement (the EIB Loan Agreement) to be entered into between the Borrower and EIB; 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 set forth in this Agreement and in the Project Agreement of even date herewith between the Association and SBEE; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. 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: (a) "SBEE" means Societe Beninoise d'Electricite et d'Eau, a public enterprise established by the Borrower's Ordonnance No. 73-13 of February 7, 1973; and "SBEE Statutes" means the Statutes of SBEt approved by the Borrower's Decret No. 83-339 of September 27, 1983, as such statutes may be amended from time to time; (b) "Project Agreement" means the agreement between the Association and SBEE of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and SBEE 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; (d) "Enterprise-Contract" means the contract dated December 1, 1986 between the Borrower and SBEE, setting forth the rights and obligations of the parties thereto for the three-year period 1987-1990, and such term includes all schedules and agreements supplemental to the Enterprise-Contract; (e) "Special Account" means the account referred to in Section 2.01 (b) of the Project Agreement; and (f) "CFA Franc" or "CFAF" means the Franc de la Communaute Financiere Africaine, the common currency of the Borrower and the other members of the West African Monetary Union. -3- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to eight million six hundred thousand Special Drawing Rights (SDR 8,600,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I 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 December 31, 1993 or such later date as the Association shall establish. The Asso- ciation 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 withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit kgreement 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 restrictions of any kind imposed by, or in the territory of, the Borrower; 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. -4 Section 2.06. Commitment charges and service charges shall be payable semiannually on April 1 and October 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 1 and October 1 commencing October 1, 1997, and ending April 1, 2037. Each installment to and including the installment payable on April 1, 2007 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. SBEE 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 declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause SBEE to perform in accordance with the provisions of the Project Agreement all the obligations of SBEE therein set forth (including the obligations set forth in Section 4.06 of, and paragraph 3 of Schedule 2 to, the Project Agree- ment), shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable SBEE to perform such obliga- tions, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall: (i) relend the proceeds of the Credit allocated to Categories (1), (2) and (4) of the table set forth in paragraph I of Schedule 1 to this Agreement to SBE under a subsidiary loan agreement to be entered into between the Borrower and SBEE, under -5- terms and conditions which shall have been approved by the Association which shall include repayment terms over a period of twenty years, including a five-year grace period, at an annual rate of interest of eight and one half per cent (8-1/2)% and the foreign exchange risk being borne by the Borrower; and (ii) make available to SBEE as a grant the proceeds of the Credit allocated to Category (3) of the table referred to in paragraph (i) above. (c) 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 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. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to in- surance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by SBEE pursuant to Section 2.03 of the Project Agreement. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall: (i) provide amounts acceptable to the Association, in its annual national budget, sufficient to cover the electricity and water consumption costs of each of its ministries and agencies whose expenditures are directly covered by the national budget; and (ii) ensure that local collectivities and other autonomous agencies shall provide amounts acceptable to the Association, i, their respective annual budgets, sufficient to cover the electricity and water consump- tion costs of each of said collectivities and agencies. -6- (b) The amounts referred to in above sub-paragraphs (i) and (ii) shall be respectively determined by the Borrower, the local collectivities qnd other autonomous agencies in collaboration with SBEE and, thereafter, reviewed by the Association not later than September 30 of each year. Section 4.02. The Borrower shall perform all its obligations under the Enterprise-Contract with due diligence and efficiency and shall cause SBEE to perform all its obligations therein set forth. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 ) of the General Conditions, the following additional events are specified: (a) SBEE 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 Cr2dit Agreement, an extraordinary situation shall have arisen vnich shall make iL improbable that SBEE will be able to perform its obligations under the Project Agreement. (c) The Borrower's Ordonnance No. 73-13 of February 7, 1973 or SBEE Statutes shall have been amended, susp aded, abrogated, repealed or waived so as to affect materially and adversely the ability of SBEE to perform any of its obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of S3EE or for the suspension of its operations. (e) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower or SBEE to withdraw the proceeds of any loan (including the CCCE Loan, the EIB Loan and the OPEC Fund Loan) or grant made to the Borrower or SBEE for the financing of the Project shall have been -7- ing is not caused by the failure of the Borrower or SBEE to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower or SBEE from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement and of SBEE under the Project Agreement. (f) Any representation made by SBEE in or pursuant to the Project Agreement, or any statement furnished in connection therewith, and intended to be relied upon by the Association in making the Credit, shall have been incorrect in any material respect. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 5.01 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; (b) the events specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur; and (c) the event specified in paragraph (e) (i) (B) of Section 5.01 of this Agreement shall occur, subject to the proviso of paragraph (e) (ii) of that Section. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and SBEE; (b) the CCCE Loan Agreement, the EIB Loan Agreement and the OPEC Fund Loan Agreement have been duly signed and condi- tions precedent to initial disbursements, if any, except for the effectiveness of this Agreement, have been fulfilled; and (c) SBEE Raglement G&n6ral de la Distribution d'Eau en Zone Urbaine has become effective and the introduction of the entire water tariff structure and the first adjustment of water tariffs provided in annex 2 thereto have taken place. Section 6.02. 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 SBEE and is legally binding upon SBEE in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and SBEE and is legally binding upon the Borrower and SBEE in accordance with its terms. Section 6.03. The date 120 days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Sec- tion 4.01 of this Agreement and the provisions of paragraphs (a) and (b) of Section 5.02 of this Agreement shall cease and deter- mine on the date on which the Development Credit Agreement shall terminate or on the date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister of the Borrower responsible for finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. - 9 - Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance and Economy P.O. Box 302 Cotonou People's Republic of Benin Cable address: Telex: XINIFINANCES MIFIN 5009 or Cotonou 5289 or MININDART 5252 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) - 10 - IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. PEOPLE'S REPUBLIC OF BENIN By /.S / CO V S+Q. no A ko( Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION sy // E ward\l.k. tJay coy By/ V Regional Vice President Africa - 11 - SCHEDULE I 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) Works for: Part B (d) of the Project 1,000,000 90% (2) Equipment: (a) Part A of the 2,100,000 100% Project (b) Part B of the 250,000 100% Project (3) Spare parts for 2,550,000 100% Part C of the Project (4) Technical assis- tance, consultants' services and training: (a) Part A(f) of 700,000 60% the Project (b) Part B of 1,400,000 100% the Project (5) Unallocated 600,000 TOTAL 8,600,000 - 12 - 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. - 13 - SCHEDULE 2 Description of the Project The objectives of the Project are: (a) to improve the finan- cial viability of the urban water supply sector through low cost expansions of the water supply systems in the cities of Cotonou and Porto Novo; (b) to promote sale of water through domestic connections; (c) to introduce tariff setting policies to reflect long-term marginal costs; and (d) to strengthen SBEE's management capability, including the implementation of sound commercial practices to reverse accumulation of unpaid bills. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Expansion of water supply facilities in Cotonou and Porto Novo including: (a) drilling of about ten boreholes; (b) extension of two neutralization plants and construction of a third one; (c) construction of three storage reservoirs and rehabi- litation of three reservoirs; (d) supply and laying of feeders (about 23 km) and distri- bution pipes (about 275 km); (e) installation of small domestic connections (about 11,500); and (f) supervision of construction. Part B: Strengthening of SBEE's management capability through: (a) training of intermediate and higher level staff; (b) consultancy services for organization, accounting and data processing; (c) technical assistance to SBEE's depcrtments in charge of water, finance, data processing and training; and (d) construction of, and equipment for, office facilities for SBEE's headquarters. - 14 - Part C: Acquisition of spare parts for SBEE's operations. The Project is expected to be completed by June 30, 1993. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY