CONFORMED COPY LOAN NUMBER 1380-GH LOAN AGREEMENT (Kpong Hydroelectric Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and VOLTA RIVER AUTHORITY Dated March 24, 1977 LOAN AGREEMENT AGREEMENT, dated March 24, 1977, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and VOLTA RIVER AUTHORITY (hereinafter called the Borrower), a cor- poration established under the Volta River Development Act, 1961, of the Republic of Ghana (hereinafter called the Guarantor); WHEREAS (A) the Borrower has requested the Bank to assist in the financing of part of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) The Guarantor intends to contract from the Kuwait Fund for Arab Economic Development (hereinafter called the Kuwait Fund) for relending to the Borrower a loan in an amount in Kuwaiti dinars equivalent to approximately twenty-eight million dollars ($28,000,000) towards the financing of the foreign exchange costs of the civil works required for Part A of the Project, and the Borrower intends to contract for the same purpose (i) from the Saudi Fund for Devel- opment (hereinafter called the Saudi Fund) a loan in an amount in Saudi Arabian riyals equivalent to approximately thirty million dollars ($30,000,000) and (ii) from the Arab Bank for Economic Development in Africa (hereinafter called BADEA) a loan in various currencies equivalent to fifteen million dollars ($15,000,000); the aforesaid loans to be on the terms and conditions set forth in a loan agreeLient between the Guarantor and the Kuwait Fund (hereinafter called the Kuwait Fund Loan Agreement), in a loan agreement between the Saudi Fund and the Borrower (hereinafter -2- called the Saudi Fund Loan Agreement), and in a loan agreement between BADEA and the Borrower (hereinafter called the BADEA Loan Agreement), respectively; (C) The Borrower intends to contract (i) from the European Investment Bank (hereinafter called EIB) a loan in an amount in European units of account equivalent to approximately eleven million dcllars ($11,000,000) and (ii) from the Commission of the European Communities (hereinafter called the Commission) a loan in an amount in European units of account equivalent to approxi- mately ten million dollars ($10,000,000) towards financing, jointly with the Bank, the foreign exchange cost of the equipment required for the Project; the aforesaid loans to be on the terms and condi- tions set forth in a loan agreement between EIB and the Borrower (hereinafter called EIB Loan Agreement) and in a loan agreement between the Commission and the Borrower (hereinafter called the Commission Loan Agreement), respectively; (D) The Guarantor intends to contract from the Government of Canada acting through the Canadian International Development Agency (hereinafter called CIDA) for relending to the Borrower a loan in an amount of thirty-five million Canadian dollars (Can$35,,000.,000) towards the financing of the foreign exchange costs of the engineering services, gates and hoists required for the Project; the aforesaid loan to be on the terms and conditions set forth in a loan agreement between the Guarantor and CIDA re- ferred to herein as the CIDA Loan Agreement; -3- CE) The Bank, EIB, and the Commission intend to enter into an agreement (hereinafter called the Kpong Co-financing Agreement) providing for certain matters of common interest relating to the Project; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; 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 Guar- antee Agreements of the Bank, dated March 15, 1974, 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: (a) "First Loan Agreement" means the loan agreement (Volta Project) of February 8, 1962, between the Bank and the Borrower, as amended from time to time; (b) "Second Lozn Agreement" means the loan agreement (Volta Expansion Project) of June 23, 1969, between the Bank and the Bor- rower, as amended from time to time; (c) "Co-lenders" means collectively BADEA, CIDA, EIB, the Commission, the Kuwait Fund and the Saudi Fund; (d) "Co-lending Agreements" means collectively all contract documents concluded between the Guarantor or the Borrower and any of the Co-lenders in respect of the Project; -5- (e) "power operations" means all operations and activities which are related to the generation or transmission of electric power; (f) "non-power operations" means all operations and activi- ties which are not related to the generation or transmission of electric power; (g) "Valco" means Volta Aluminium Company Limited, a company organized and existing under the Companies Code of the Guarantor; (h) "Power Contract" means the power contract of February 8, 1962 between the Borrower and Valco, as such contract is further defined in Section 1.02 (e) of the First Loan Agreement and as amended from time to time; (i) "fiscal year" means the Borrower's fiscal year ; and Cj) "Cedis" and the sign "0" mean Cedis in currency of the Guarantor. -6- 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 re- ferred to, an amount in various currencies equivalent to thirty- nine million dollars ($39,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan 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 Bank, for expendi- tures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Proj- ect and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, con- tracts for the purchase of goods or for civil works required for the Project and to be financed out of the proceeds of the Loan, shall be procured in accord4nce with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1981, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.05. The Borrower shall pafyto the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. -7- Section 2.06. The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) 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 semi-annually on April 15 and October 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. -8- ARTICLE III Execution of the Project Section 3.n1. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appro- priate engineering, financial and public utility practices. Section 3.02. (a) In order to assist the Borrower in the en- gineering, procurement of goods and services for, and supervision of consrtruction of, and management of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) The Borrower shall ensure that all contractors employed in connection with the Project shall be suitably qualified and ex- perienced. Section 3.03. (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 Loan against hazards incident to the acquisition, transportation and delivery 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 re- place or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. . 9-v -9- Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the pro- ceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and servic!es financed out of such proceeds. (c) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents. Section 3.05. The Borrower shall take or cause to be taken 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. - 10 - ARTICLE IV Management and Operations of the Borrower Section 4.01. (a) The Borrower shall have at all times quali- fied and experienced management and staff. (b) The Borrower shall make an appointment to the position of Director of Finance of the Borrower, such appointment to become effective on or before July 1, 1977, or such later date as the Bank and the Borrower may agree. Section 4.02. The Borrower shall: (i) operate and maintain its plants, equipment and prop- erty, and from time to time make all necessary re- newals and repairs thereof, all in accordance with appropriate engineering standards; (ii) except as the Bank shall otherwise agree, take all steps necessary to maintain and renew all rights, powers, privileges and franchises which are neces- sary or useful in the conduct of its business; and (iii) at all times carry on its operations and maintain its financial position in accordance with appropriate business and public utility practices, and in that connection shall act in accordance with the require- ments of the Volta River Development Act, 1961. - 11 - Section 4.03. The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate business practice. Section 4.04. The Borrower shall under arrangements satis- factory to the Bank cause the dam, earthworks, headpond and dikes constructed under the Project to be periodically inspected in ac- cordance with appropriate engineering practices in order to deter- mine whether there are any deficiencies or potential deficiencies in their condition or in the quality and adequacy of their main- tenance or the methods of their operation which may endanger their safety, and, in the event that any such deficiency or potential deficiency is discovered, the Borrower shall promptly take all steps required to correct such deficiency or to eliminate such potential deficiency. Section 4.05. The Borrower shall take such action as shall be appropriate to ensure that, as from January 1, 1978 or such other date as the Bank shall agree, all power supplied by the Borrower to the Electricity Corporation of Ghana for industrial steam production be exclusively surplus hydroelectric power. - 12 - ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.02. The Borrower shall: (i) have its 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 ap- plied, by independent auditors approved by the Auditor General of the Guarantor and acceptable to the Bank; (ii) furnish to the Bank 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 finan- cial 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any - 13 - of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutery lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien cre- ated on property, at the time of purchase thereof, solely as secu- rity for the payment of the purchase price of such property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 5.04. The Borrower shall revalue its fixed assets in service related to power operations at the end of fiscal year 1976 in accordance with a method acceptable to the Bank; such revalua- tion shall be completed by June 30, 1977 or such later date as the Bank may agree. Thereafter, the Borrower shall revalue its fixed assets in service at the end of each fiscal year in accord- ance with appropriate valuation principles and procedures accept- able to the Bank. Section 5.05. Except as the Bank and the Borrower shall other- wise agree: (a) The Borrower shall from time to time take or cause to be taken all such measures (including, without limitation, adjustments -14- in the structure or levels of its electricity rates) as shall be required to provide revenues from the Borrower's power operations sufficient to produce the following annual returns: (i) for its fiscal year 1977 a return of not less than seven per cent (7%) on the Guarantor's investment in the Borrower; (ii) for each its fiscal years 1978, 1979 and 1980 a return of not less than eight per cent (8%) on the Guarantor's investment in the Borrower; and (iii) for fiscal year 1981 and for each of its fiscal years thereafter a return of not less than nine per cent (9%) on the Guarantor's investment in I the Borrower; provided, however, that if the revaluation of the Borrower's fixed assets in service that according to Section 5.04 is to be completed by June 30, 1977, shows that, as of December 31, 1976, the value of the Borrower's net fixed assets in service is not equal to three hundred million Cedis (0300,000,000), the rate of return specified in this paragraph (a) shall be adjusted by multiplying the rate of return by a fraction composed of 300,000,000 as numerator and said value of the Borrower's net fixed assets in service (expressed in Cedis at rates of exchange in effect on December 31, 1976) as denominator. - 15 - (b) On or before July 31 of each year, the Borrower shall: (i) review on the basis of realistic estimates and forecasts whether its revenues will be sufficient to produce the annual return required by paragraph (a) of this Section for the current fiscal year and the next following fiscal year, and (ii) furnish to the Bank the results of such review. (c) For the purposes of this Section: (i) The annual return shall be calculated by dividing the Borrower's net income for the fiscal year in question by one-half of the sum of the Guarantor's investment in the Borrower at the beginning and at the end of such fiscal year; (ii) The term "Guarantor's investment in the Borrower" shall mean the book value of: (A) the Guarantor's capital contributions to the Borrower for the Borrower's electric power generation and transmission facili- ties and operations; and (B) cumulative earnings generated by and retained in the Borrower's power operations, increased by amounts corresponding to appropriate revalu- ations of the Borrower's electric power gener- ation and transmission facilities, calculated in accordance with methods agreed with the Bank. - 16 - (iii) The term "net income" shall mean the difference be- tween: (A) gross operating revenues accruing from the Bor- rower's power operations; and (B) the operating and administration expenses re- lated to such gross operating revenues, in- cluding taxes (if any), adequate maintenance, straight line depreciation at rates satisfac- tory to the Bank and interest and other charges on debt. Section 5.06. Except as the Guarantor, the Bank and the Bor- rower shall otherwise agree, if the Borrower shall repay in advance of maturity any part of its debt incurred in connection with the Project, the Borrower shall simultaneously prepay a proportionate amount of the Loan then outstanding. All the provisions of the General Conditions relating to repayment in advance of maturity shall be applicable to any prepayment by the Borrower in accordance with this Section. Section 5.07. Except as the Bank and the Borrower shall other- wise agree, the Borrower shall not incur debt unless its net re- venues for the fiscal year next preceding such incurrence or for a later twelve-month period ended prior to such incurrence, which- ever amount is the greater, shall be not less than 1.5 times the maximum debt service requirement for any succeeding fiscal year on all debt, including the debt to be incurred. For the purposes of this Section: - 17 - (a) the term "debt" shall mean all debt of the Borrower ma- turing by its terms more than one year after the date on which it is originally incurred; (b) debt shall be deemed to be incurred on the date of execu- tion and delivery of a contract or agreement providing for such debt; (c) the term "net revenues" shall mean gross revenues from all sources, adjusted to take account of electricity rates in effect at the time of the incurrence of debt even though they were not in effect during the fiscal year or twelve-month period to which such revenues relate, less all operating and administrative expenses, including provision for taxes, if any, but before provision covering depreciation, interest and other charges on debt; (d) the term "debt service requirement" shall mean the ag- gregate amount of amortization (including sinking fund payments, if any), interest and other charges on debt; and (e) debt service payable in a currency other than Cedis shall be valued at the rate of exchange at which such other currency is obtainable, on the date the additional debt is incurred, for the purpose of servicing such debt, or, if such currency is not so obtainable, at the rate of exchange as reasonably determined by the Bank. Section 5.08. Except as the Bank shall otherwise agree, the Borrower shall not, from the date of this Agreement to June 30, 1981 undertake any construction or expansion project other than - 18 - the Project involving aggregate annual expenditures exceeding $10,000,000 equivalent. Section 5.09. Except as the Bank and the Borrower shall otherwise agree, in the carrying out or expansion of its non- power operations, the Borrower shall continue to ensure that: (i) the cost, both capital and recurrent, of the non- power operations is financed without resort to the revenues of the Borrower from its power operations; (ii) the organization and the staff of the Borrower are adequate to enable the Borrower to engage in its non-power operations without detriment to the effi- cient conduct of its power operations; and (iii) under the Borrower's accounting system the accounts for each of its non-power operations are maintained separately from those for its power operations and from'each of its other non-power operations. The Borrower shall consult the Bank about arrangements which it proposes from time to time with respect to the matters specified in clauses (ii) and (iii) of this Section sufficiently in advance of the execution of such proposed arrangements for the Bank to have reasonable opportunity to express its views thereon. Section 5.10. (a) Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not (i) rescind or terminate the Power Contract or (ii) enter into an agreement to sell power - 19 - or energy so as to effect a reduction of the Contract Rate (as that term is defined in the Power Contract) under Article 25 of the Power Contract. (b) The Borrower shall perform, in accordance with the provisions of the BADEA Loan Agreement, the Saudi 7und Loan Agreement, the EIB Loan Agreement and the Commission Loan Agreement, all the obligations therein set forth, and shall not take or permit to be taken any action which would prevent or interfere with such performance. Section 5.11. Without limiting the generality of Section 9.01 of the General Conditions, the Borrower shall furnish to the Bank all such information as the Bank shall reasonably request with re- gard to the administration, operations and financial condition of the Borrower, its relations with Valco and the carrying out of the Borrower's rights and obligations under any of the Co-lending Agreements, under the Power Contract or under any other document relating to any such agreement or to the Power Contract. - 20 - ARTICLE VI Amendment of Previous Loan Agreements Section 6.01. The First Loan Agreement shall be amended by adding to that Agreement a new Section 5.13 which has the same text as Section 5.04 of this Agreement. This amendment shall super- sede the provisions of the letter agreement supplemental to Section 5.08 of the First Loan Agreement, concluded between the Bank and the Borrower on February 8, 1962. Section 6.02. The Second Loan Agreement shall be amended by replacing the text of Section 5.09 of that Agreement with the text of Section 5.05 of this Agreement. Section 6.03. The amendments specified in this Article shall apply only to the Borrower's fiscal years after 1976, except for Section 5.04 of this Agreement which shall apply for fiscal year 1976. - 21 - ARTICLE VII Remedies of the Bank Section 7.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) the Guarantor has taken any action which would prevent, or materially interfere with, the performance by the Borrower of its obligations or the assertion of its rights under the BADEA Loan Agreement, the Saudi Fund Loan Agreement, the EIB Loan Agreement, the Commission Loan Agreement or the Power Contract, and such event has continued for a period of sixty days after notice thereof has been given by the Bank to the Guarantor and the Borrower; (b) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of any loan 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 agree- ment providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. - 22 - (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its ob- ligations under such agreement, and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consis- tent with the obligations of the Borrower under this Agreement. Section 7.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to para- graph (h) thereof: (a) the event specified in paragraph (a) of Section 7.01 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 Guarantor and the Borrower; and (b) the event specified in paragraph (b) (i) (B) of Section 7.01 of this Agreement shall occur. - 23 - ARTICLE VIII Effective Date; Termination Section 8.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) each of the Co-lending Agreements has been executed and delivered and all conditions precedent to its effectiveness or to the right to make withdrawals thereunder, except only the effec- tiveness of any other of the Co-lending Agreements or the Loan Agreement, have been fulfilled; (b) all agreements between the Guarantor and the Borrower which are required to permit the Borrower to utilize the proceeds of any of the loans made by the Co-lenders for the Project have been executed and delivered and all conditions precedent to the effectiveness of such agreements or to the right to make withdrawals thereunder, except only the effectiveness of any of the Co-lending Agreements or the Loan Agreement, have been fulfilled; (c) an agreement, acceptable to the Bank, has been executed and delivered between the Borrower and Valco to amend the electri- city rate provided for in the Power Contract and that agreement has become effective; and (d) the program referred to in Part B of the Project descrip- tion in Schedule 2 to this Agreement has been furnished to the Bank and is acceptable to the Bank. - 214- Section 8.02. The following are specified as additional mat- ters, within the meaning of Section 12.02 (c) of the General Con- ditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that the agreements specified in paragraphs (a), (b) and (c) of Section 8.01 of this Agreement have been duly executed and delivered and are legally binding upon the Guarantor or the Borrower, as the case may be. Section 8.03. The date June 24, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 25 - ARTICLE IX Addresses Section 9.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D. C. For the Borrower: Volta River Authority P.O. Box M77 Accra, Ghana Cable address: VOLTA Accra - 26 - 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ R. Chaufournier Regional Vice President Western Africa VOLTA RIVER AUTHORITY By /s/ S. Quarm Authorized Representative -27- 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 ex- penditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) (a) Equipment, 30,4o,ooo 62% of foreign materials and expenditures supplies for Part A, Part C and Part E of the Project, ex- cept for gates and hoists (b) Engineering ser- vices for Part C and Part E of the Project (2) Part D of the Project 2,700,000 100% of foreign expenditures (a) Equipment, mate- rials and instal- lation costs (b) Engineering ser- vices - 28 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (3) Review engineering 200,000 62% of foreign board for Part A of expenditures the Project (4) Construction equipment 2,200,000 100% of foreign and vehicles for pre- expenditures liminary works and re- settlement, and spare parts therefor, included in Part A and Part B of the Project (5) Unallocated 3,500,000 TOTAL 39,000,000 - 29 - 2. For the purposes of this Schedule, the term "foreign expendi- tures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor. 3. The disbursement percentages have been calculated in compli- ance 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 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: (a) no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding $1,000,000 equiv- alent, may be made under Category (Y on account of expenditures made before that date but after September 1, 1976; and (b) no withdrawals shall be made under Category (2) (a) in re- spect of payments made for expenditures on account of Part D of the Project until the Bank has agreed, in the basis of an engi- neering study, to the design specifications for Part D of the Project. - 30 - 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 appli- cable 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 pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- ditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or lim- iting 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. - 31 - SCHEDULE 2 Description of the Project The Project consists of the following: Part A: (1) Construction of an earth and rockfill dam at Kpong (about 24 km downstream from the Akosombo dam), formed by an integral concrete intake-powerhouse structure, a gated concrete overflow spillway in- cluding gates and hoists, and an embankment river dam across the Volta river with earthen forebay dikes with a combined length of about 6 km; (2) installation of four vertical electric power gener- ating units of 40 MW each, with a combined installed capacity of 160 MW, together with the necessary ancillary equipment; (3) construction of a main substation adjacent to the powerhouse to distribute the powerhouse output to the Borrower's 161-kV transmission system; (4) installation of a double circuit 161-kV transmis- sion line connecting the main substation included in paragraph (3) hereof with the Borrower's grid at Tema, including the extension of the substation at Tema; and - 32 - (5) construction of the necessary access roads and of- fice and housing facilities. Part B: Resettlement of the inhabitants and commercial enter- prises of the area which will be covered by said head- pond in accordance with a program acceptable to the Bank. Part C: Provision of additional reactive power compensation to the Borrower's 161-kV grid by installation of a 25 MVAR synchronous cohdenser at Prestea and a 25 MVAR static condenser at Kumasi. Part D: Installation, in accordance with design specifications satisfactory to the Bank, of a transmission line about 80 km long, connecting the Borrower's grid near Dunkwa with the Sefwi-Wiawso-Bibiani area, including construc- tion of the necessary substations. Part E: Installation of an additional transmission line between the Volta substation at Tema and the Achimota substation at Accra including necessary extensions at both substa- tions. * * * The Project is expected to be completed by June 30, 1981. - 33 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each April 15 and October 15 beginning April 15, 1982 through October 15, 1996 1,260,000 On April 15, 1997 1,200,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 34 - Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1-1/4% More than three years but not more than six years before maturity 2-1/2% More than six years but not more than eleven years before maturity 4-1/2% More than eleven years but not more than sixteen years before maturity 6-3/4% More than sixteen years but not more than eighteen years before maturity 7-1/2% More than eighteen years before maturity 8-1/2% -35 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines), on the basis of interna- tional competitive bidding. 2. Bidders for construction equipment and vehicles shall be re- quired to submit to the Borrower together with their bids evidence that they already can provide adequate maintenance service and spare parts facilities for such equipment in Ghana. 3. Notwithstanding the provisions of paragraph 3.8 of Part A of the Guidelines, the rates of exchange to be used in the valuation in terms of a single currency of bid prices offered for Parts A.2, A.3, A.4, Part C or Part E of the Project shall be the selling rates published by the Bank of Ghana, and applicable to similar transactions on the day bids are opened, regardless of a subsequent change in any such rate. - 36 - B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and sim- ilar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expen- ditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Ghana may be granted a margin of pref- erence in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- lowed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Ghana if the bidder shall have established to the satis- faction of the Borrower and the Bank that the manu- facturing cost of such goods includes a value added - 37 - in Ghana equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Ghana. (3) Group C: bido offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evalu- ated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this fur- ther comparison only, an amount equal to: (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. - 38 - C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said docu- ments or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.02 (a) of this Agreement, on the evaluation and compari- son of the bids received, together with the recommendations for award of the said consultants and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the rea- sons for such determination. - 39 - (c) The terms and conditions of the contract shall not, with- out the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execu- tion and prior to the submission to the Bank of the first applica- tion for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably re- quest. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such de- termination.