Conformed Copy - C2055 - Geothermal Development Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2055 DJI (Geothermal Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and ELECTRICITE DE DJIBOUTI Dated October 16, 1989 CREDIT NUMBER 2055 DJI PROJECT AGREEMENT AGREEMENT, dated October 16, 1989, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the "Association") and ELECTRICITE DE DJIBOUTI ("EdD"). WHEREAS (A) by the Development Credit Agreement of even date herewith between the Republic of Djibouti (the "Borrower") and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to seven million one hundred thousand Special Drawing Rights (SDR 7,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that EdD agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and EdD, the proceeds of the credit provided for under the Development Credit Agreement will be made available to EdD on the terms and conditions set forth in said Subsidiary Loan Agreement; and Page 2 WHEREAS EdD, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. EdD declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, economic, engineering, environmental and public utility practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 2.02. 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 the Schedule to this Agreement. Section 2.03. EdD shall carry out 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 insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement. Section 2.04. EdD shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, EdD shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) EdD shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) EdD shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by EdD of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.06. Among the information to be furnished to the Association by EdD pursuant to Section 2.03 of this Agreement and Section 9.06 of the General Conditions, EdD shall furnish to the Association the following reports in a format acceptable to the Association: (a) at monthly intervals during the carrying out of the studies under Part A (a) of the Project, progress reports on such activities; (b) at least once weekly during the carrying out of development drilling, a communication on such activities; and Page 3 (c) as soon as possible after completion of the drilling of each well, a drilling report. Section 2.07. In order to carry out Part C of the Project, EdD shall: (a) prior to the beginning of operations, submit to the Association a development drilling plan satisfactory to the Association; (b) promptly update such plan in accordance with the results of the drillings and other studies; (c) study the selection of any new drilling site under the plan in consultation with the Association; and (d) obtain the Association's consent with regard to the selection of any new drilling site under the plan, provided however that such consent shall not be required if the Association and EdD shall have agreed on a geothermal development area in Assal Field which shall be updated, if necessary, in accordance with the results of the drillings by mutual agreement between the Association and EdD.. ARTICLE III Management and Operations of EdD Section 3.01. EdD shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, economic and public utility practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. EdD shall at all times operate and maintain its plant, machinery, equipment and other property and, from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial, economic and public utility practices. Section 3.03. EdD shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) EdD shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) EdD shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year: (A) certified copies of its financial statements for such year as so audited; and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and * (iii) furnish to the Association such other information concerning said records, accounts and financial Page 4 statements as well as the audit thereof, as the Association shall from time to time reasonably request. Section 4.02. EdM shall: (a) not later than June 30, 1990, submit an evaluation of its fixed assets, carried out in accordance with sound and consistent methods of accounting, inclusive, if said evaluation shows its necessity, of a revaluation action program satisfactory to the Association; (b) promptly thereafter carry out the actions contained in such action program agreed upon with the Association; and (c) at all times thereafter make adequate annual provisions for depreciation and renewals of its fixed assets in accordance with sound and consistent accounting practices satisfactory to the Association. Section 4.03. EdD shall take such steps as shall be necessary to ensure that the level of its total receivables overdue in the twelve preceding months, excluding the overdue receivables from the Borrower and from entities receiving subsidies from the Borrower, not exceed two points five months' billings by not later than December 31, 1991 and two months' billings by not later than December 31, 1992. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of EdD thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date twenty years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in para- graph (a) (ii) of this Section, the Association shall promptly notify EdD of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association Page 5 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) For EdD: B.P. 175 Djibouti Republic of Djibouti Cable address: Telex: Djibelec-Djibouti 5842 DJIBELEC Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of EdD, or by EdD on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by its General Manager (Directeur d'Electricite) or such other person or persons as EdD shall designate in writing, and EdD shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Edward V.K. Jaycox Regional Vice President Africa ELECTRICITE DE DJIBOUTI By /s/ Robley Olhayeh Oudine Authorized Representative SCHEDULE Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part B hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the "Guidelines"). Page 6 Part B: Other Procurement Procedures Small lots of equipment, spare parts, materials and consumables estimated, after grouping into economical bidding packages, to cost not more than $200,000 equivalent, up to an aggregate amount of $2,000,000 equivalent, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. Part C: Review by the Association of Procurement Decisions 1. With respect to each contract estimated to cost the equivalent of more than $200,000, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. 2. With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. 3. The figure of 10% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II: Employment of Consultants For the purposes of execution of the Project, EdD shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of 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.