Clean Technology Fund Loan Agreement

Transcription

1 Public Disclosure Authorized OFFICIAL DOCUMENTS CTF LOAN NUMBER TF Public Disclosure Authorized Clean Technology Fund Loan Agreement Public Disclosure Authorized (Renewable Energy Integration Project) between T0RKiYE ELEKTRIK ILETIM A.$. and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized acting as an implementing entity of the Clean Technology Fund Dated U LI O, 2014

2 CLEAN TECHNOLOGY FUND LOAN AGREEMENT CTF LOAN NUMBER TF AGREEMENT dated 30 to, 2014, entered into between TORKYE ELEKTRIK ILETIM A.$. ("Borrower") and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("World Bank"), acting not in its individual capacity but solely in its capacity as an implementing entity of the Clean Technology Fund ("CTF"). WHEREAS: (A) the Republic of Turkey ("Guarantor") and the Borrower, having been satisfied as to the feasibility and priority of the Project described in Schedule I to this Agreement, has requested the CTF to assist in the financing of Parts I and 2 of the Project; (B) by an agreement ("CTF Guarantee Agreement") of even date herewith between the Guarantor and the World Bank, the Guarantor has agreed to guarantee the Loan Payment obligations of the Borrower in respect of the Loan; and (C) by an agreement of even date herewith ("IBRD Loan Agreement"), the World Bank has agreed to make a loan ("IBRD Loan") to the Borrower in the amount of two hundred and seventeen million six hundred thousand Euros (EUR 217,600,000), to assist in financing the Project and the Guarantor has agreed to guarantee the IBRD Loan Payment obligations of the Borrower under the IBRD Loan as set forth in the IBRD Guarantee Agreement of even date herewith; and WHEREAS the World Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; The Borrower and the World Bank hereby agree as follows: Article I Standalrd Conditions; Definitions The Standard Conditions (as defined in the Appendix to this Agreement) constitute an integral part of this Agreement Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Standard Conditions or in the Appendix to this Agreement.

3 Article II Ioan The World Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, the amount of fifty million United States Dollars ($50,000,000) ("Loan"), to assist in financing Parts I and 2 of the project described in Schedule I to this Agreement ("Project") The Borrower may withdraw the proceeds of the Loan in accordance with Section IV of Schedule 2 to this Agreement The Loan is funded out of the resources made available to the World Bank as an implementing entity of the CTF. In accordance with Section 3.02 of the Standard Conditions (as defined in the Appendix to this Agreement), the World Bank's payment obligations in connection with this Agreement are limited to the amount of funds made available to it from the CTF trust find, and the Borrower's right to withdraw the Loan proceeds is subject to the availability of such funds The Management Fee payable by the Borrower, pursuant to Section 4.01(a) of the Standard Conditions, shall be equal to forty-five one-hundredth of one percent (0.45%) of the Loan amount. The Borrower shall pay the Management Fee not later than sixty (60) days after the Effective Date The Service Charge payable by the Borrower on the Withdrawn Loan Balance shall be equal to three-fourths of one percent (3/4 of 1%) per annum The Payment Dates are April 15 and October 15 in each year The principal amount of the Loan shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement The Payment Currency is USD. Article III The Project The Borrower declares its commitment to the objectives of the Project. To this end, the Borrower shall carry out the Project in accordance with the provisions of Article 11 of the Standard Conditions Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Borrower, the Guarantor and the World Bank shall otherwise agree, the Borrower shall ensure that the Projeot is carried out in accordance with the provisions of Schedule 2 to this Agreement. -2-

4 Article IV Effectiveness; Termination The Additional Condition of Effectiveness consists of the following, namely, the IBRD Loan Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Borrower to make withdrawals under it (other than the effectiveness of this Agreement) have been fulfilled or waived by the World Bank The Effectiveness Deadline is the date one hundred twenty days (120) days after the date of this Agreement. Article V Borrower's Representative; Addresses The Borrower's Representative referred to in Section of the Standard Conditions is its General Manager The Borrower's Address referred to in Section of the Standard Conditions is: Tirkiye Elektrik letim A.S. Genel MOdOrltigil Nasuh Akar Mahallesi Turkocagi Caddesi No: 12 PK Balgat/Cankaya Ankara, Turkey Facsimile: (312) The World Bank's Address referred to in Section of the Standard Conditions is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable: Telex: Facsimile: INTBAFRAD (MCI) or Washington, D.C (MCI) -3-

5 AGREED at Ankara, Republic of Turkey, as of the day and year first above written. TORKYE ELEKTRIK ILETIM A.S. By Authorized Representative Name: Title: (VL (",CA 4 CA INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT acting as an implementing entity of the Clean Technology Fund By Authorized Representative Name: tc Title: CLK. (I C -4-

6 SCHEDULE ] Project Description The objective of the Project is to assist the Republic of Turkey in meeting its increased power demand by strengthening the transmission system and facilitating largescale renewable energy generation. The Project consists of the following parts: Part. Development of transmission infrastructure Construction and equipping of highly digitalized substations, namely Can Basin 380 kv, Izmir Basin 380 kv, and Vize Basin 380 kv substations and any other substations agreed with the World Bank, together with associated grid connection structures for evacuation of wind power in the Selected Provinces. Part 2. Smart-grid investments Carry out investments that enable the Borrower to monitor the transmission grid network status in real-time and to operate the entire network reliably and securely, including: (a) (b) (c) (d) Upgrading the hardware and software of the existing Supervisory Control and Data Acquisition ("SCADA") system at the National Control Center, the Emergency National Control Center and nine (9) Regional Control Centers and addition of a Renewable Energy Resource ("RER") Operator Desk on the SCADA system. Installation of Remote Terminal Units ("RTU") in substations and power plants to facilitate acquisition of real-time transmission network data. Installation of digital protection relays in the power grid to accelerate fault clearing and minimize network disturbances and outage area. Installation of shunt reactors in the bulk-transmission network to control load flow and to secure appropriate system voltage. -5-

7 Part 3. Lapseki 2-Sutluce 2 submarine power cable Strait. Part Construction of a second double-circuit submarine cable across the Dardanelles Strengthening of transmission networks Carry out investments to strengthen the transmission networks, including: (a) (b) (c) (d) Construction of an underground cable to connect the Yeni Ambarli substation to the Yeni Bosna substation. Construction of four (4) 380/154/33 kv substations and related facilities in the province of Istanbul, Antalya and Urgup. Construction of four (4) 154/33 kv substations and related facilities in the provinces Istanbul and Antalya. Construction of four (4) 154 kv underground cables in the provinces of Istanbul and Izmir.

8 SCHEDULE 2 Project Execution Section 1. Institutional and Other Arraniements A. Institutional Arrangements Except as the World Bank shall otherwise agree, until completion of the Project, the Borrower shall maintain the Project Coordination Unit within its Research, Planning and Coordination Department with responsibility to oversee and coordinate Project implementation and with necessary and appropriate staffing and budgetary resources satisfactory to the World Bank. B. Anti-Corruption The Borrower shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines.. C. Safeguards 1. The Borrower shall implement the Environmental Review Framework Document ("ERFD"), and before the Borrower commences any work or installation under the Project or the construction (regardless of financing source) of access roads from the substations under Part I of the Project to the existing main roads and energy transmission lines from the substations under Part I of the Project to the national grid, the Borrower shall: (a) (b) (c) (d) screen for impacts from the proposed work, installation and construction, including impacts on the environment, physical cultural resources, and natural habitats, all in accordance with the principles and procedures set forth in the ERFD; prepare an environment management plan (including management of impact on environment, physical cultural resources, and natural habitat, as the case may be) for said work, installation or construction in accordance with the principles and procedures set forth in the ERFD; thereafter, provide said plan to the World Bank for review; and implement such plan as shall have been accepted by the World Bank as being satisfactory, as well as implement the Lapseki 2-Sutluce 2 EMP. -7-

9 2. The Borrower shall: (a) (b) when carrying out the Project and related activities, in accordance with the provisions of World Bank's Operation Policy 4.12, the Borrower shall take all necessary actions to minimize, to the extent possible, any involuntary taking of land; and for this purpose, whenever Project activities (including construction of substations under Part I of the Project and the interface points for the Lapseki 2-Sutluce 2 submarine power cable under Part 3 of the Project) or construction by the Borrower (regardless of financing source) of access roads from the substations under Part I of the Project to the existing main roads and the first energy transmission lines from the substations under Part I of the Project to the national grid would give rise to Project Affected Persons, before starting any work, installation or construction, the Borrower shall: (i) (ii) apply the LAPF and prepare, and cause to be prepared, a land acquisition action plan in accordance with the principles and procedures set forth in the LAPF; thereafter, provide said plan to the World Bank for review; and (iii) implement such land acquisition action plan (including disclosure of the plan) as shall have been accepted by the World Bank as being satisfactory. 3. (a) With respect to any transmission line to be constructed by a private developer for connection of a wind power project to any of the substations to be constructed or constructed under. Part I of the Project, the Borrower shall during Project implementation: (i) make the following information available in a timely and documented manner at a place accessible to land owners whose land (which term includes any interest in land, such as an easement). may be affected by said transmission line: (A) that land owners may negotiate and agree with said private developer for use of the affected land by the private developer or decline such offer for use, in which event the land may be acquired by the Borrower and the Borrower shall apply the provisions of the LAPF; (B) a copy of the LAPF, together with a simplified information package that sets out the processes, procedures and compensation available under the LAPF; and (C) the mechanism (including contact information) for land owners to seek clarification on any of the foregoing;

10 (ii) (iii) apply the LAPF in the event that the Borrower acquires the land for use by the private developer: (A) where the land owner has declined the offer of the private developer or (B) where the private developer requests the Borrower to acquire the land for purposes of constructing said transmission line; and carry out spot checks on transmission lines constructed by private developers and the spot checks shall: (A) determine the terms and conditions of the agreement between the private developer and the land owner for use of the affected land by the private developer; and (B) report on and document any unresolved claims by any land owner and the status of the claim. (b) During Project implementation, the Borrower shall: (i) (ii) consult with the Bank when considering transmission lines for connection to any of the substations to be constructed or constructed under Part I of the Project and finalize the routing studies for the transmission lines by not interfering with the No Go Places defined in the ESDD report; and furnish to the World Bank the list (including site locations and maps) of wind power projects other than the Planned WPPs that meet the criteria for connection to any of the substations to be constructed under Part I of the Project and which list shall be furnished to the World Bank when the Borrower provides such list to the Electricity Market Regulatory Agency during the prelicensing stage. 4. The Borrower shall: (a) (b) ensure that the ERFD, LAPF, the Lapseki 2-Sutluce 2 EMP, EMPs and LAAPs and any provision thereof, shall not be amended, suspended, abrogated, terminated or waived or permitted to be amended, suspended, abrogated, terminated or waived, except with the prior written consent of the World Bank; maintain policies and procedures adequate to enable them to monitor and evaluate, in accordance with guidelines acceptable to the World Bank, the implementation of any of the ERFD, LAPF, the Lapseki 2-Sutluce 2 EMP, EMPs, and LAAPs and the achievement of the objectives of said frameworks and plans; and -9-

11 (c) include in the Project Report, which is to be prepared under Section ILA paragraph I of this Schedule, the results of the monitoring and evaluation activities with respect to the plans referred to in sub-paragraph (a) above. Section H1. Project Monitoring. Reporting and Evaluation A. Project Reports; Completion Report 1I The Borrower shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis of indicators acceptable to the World Bank. Each Project Report shall cover the period of one calendar quarter, and shall be furnished to the World Bank not later than forty-five (45) days after the end of the period covered by such report. 2. The Borrower shall prepare the Completion Report in accordance with the provisions of Section 2.06 of the Standard Conditions. The Completion Report shall be furnished to the World Bank not later than six (6) months after the Closing Date. B. Financial Management; Financial Reports; Audits.- The Borrower shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.07 of the Standard Conditions. 2. The Borrower shall ensure that interim unaudited financial reports for the Project are prepared and furnished to the World Bank not later than forty-five (45) days after the end of each calendar quarter, covering the quarter, in form and substance satisfactory to the World Bank. 3. The Borrower shall have: (a) (b) the Financial Statements (for the Project and as defined in the Standard Conditions) audited in accordance with the provisions of Section 2.07(b) of the Standard Conditions. Each such audit of the Financial Statements shall cover the period of one (1) fiscal year of the Borrower. The audited Financial Statements for each such period shall be furnished to the World Bank not later than six (6) months after the end of such period; and its entity financial statements audited in accordance with standards set out in of Section 2.07(b) of the Standard Conditions. Each audit of such entity financial statements shall cover the period of one (1) fiscal year of the Borrower and be furnished to the World Bank not later than eight (8) months after the end of such period

12 Section III. Procurement A. General 1. Goods and Non-consulting Services. All goods (including supply and installation) and non-consulting services required for Parts I and 2 of the Project and to be financed out of the proceeds of the Loan shall be procured in accordance with the requirements set forth or referred to in Section I of the Procurement Guidelines, and with the provisions of this Section. 2. Definitions. The capitalized terms used below in this Section to describe particular procurement methods or methods of review by the World Bank of particular contracts, refer to the corresponding method described in Sections 11 and III of the Procurement Guidelines. B. Particular Methods of Procurement of Goods and Non-consulting Services I. International Competitive Bidding. Except as otherwise provided in paragraph 2 below, goods (including supply and installation) and non-consulting services shall be procured under contracts awarded on the basis of International Competitive Bidding. 2. Other Methods of Procurement of Goods and Non-consulting Services. The following methods, other than International Competitive Bidding, may be used for procurement of goods and non-consulting services for those contracts specified in the Procurement Plan: (a) Direct Contracting; and (b) Shopping. C. Review by the World Bank of Procurement Decisions The Procurement Plan shall set forth those contracts which shall be subject to the World Bank's Prior Review. All other contracts shall be subject to Post Review by the World Bank. Section IV. Withdrawal of Loan Proceeds A. General 1, The Borrower may withdraw the proceeds of the Loan in accordance with the provisions of: (a) Article Il of the Standard Conditions; (b) this Section; and (c) such additional instructions as the World Bank may specify by notice to the Borrower (including the "World Bank Disbursement Guidelines for Projects" dated May 2006, as revised from time to time by the World Bank and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the table in paragraph 2 below.

13 2. The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Loan ("Category"), the allocations of the amounts of the Loan to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Category Amount of the Percentage of Expenditures to Loan Allocated be Financed (expressed in USD) (exclusive of Value Added Tax) (1) Goods (including supply and installation) and nonconsulting services for Parts I 50,000,000 50% and 2 of the Project TOTAL AMOUNT B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) (b) (c) from the Loan Account until the World Bank has received payment in full of the Management Fee; or for payments made prior to the date of this Agreement, except that withdrawals up to an aggregate amount not to exceed $10,000,000 may be made for payments made prior to this date but on or after March 20, 2014, for Eligible Expenditures under Category (1); or for any payment for Value Added Taxes levied by or in the territory of the Member Country in respect of goods and non-consulting services. 2. The Closing Date is June 30, Section V. Other Undertakings I. Except as the World Bank shall otherwise agree, the Borrower shall: (a) (i) produce, for each of its Fiscal Years, funds from internal sources equivalent to not less than 35% for the Fiscal Year 2015 and in - 12-

14 each succeeding Fiscal Year of the Borrower's capital expenditures during the Fiscal Year concerned; (ii) maintain, beginning with the Fiscal Year 2015, a ratio of current assets to current liabilities of not less than 1.0; and (iii) ensure that the Borrower's net revenues shall be at least 1.5 times in 2015 and each succeeding Fiscal Year, the estimated maximum debt service requirements of the Borrower for any such Fiscal Year on all debt of the Borrower. (b) If any fiscal projections show that the Borrower would not meet the requirements set forth in sub-paragraph (a) of this paragraph I for the Borrower's Fiscal Years covered by such review, the Borrower shall promptly take all measures necessary on its part in order to meet such requirements. (c) For the purposes of this paragraph 1: (i) The term "funds from internal sources" means the difference between: (A) the sum of revenues from all sources related to operations, customer deposits and customer contributions in aid of construction, net non-operating income and any reduction in working capital other than cash; and (B) the sum of all expenses related to operations, including administration, license fees, adequate maintenance and taxes and payments in lieu of taxes (excluding provision for depreciation and other non-cash operating charges and income taxes), debt service requirements, all cash dividends and other cash outflows other than capital expenditures, increase in working capital other than cash. (ii) The term "net non-operating income" means the difference between: (A) (B) revenues from all sources other than those related to operations; and expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above

15 (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) The term "working capital other than cash" means the difference between current assets, excluding cash, and current liabilities at the end of each Fiscal Year. The term "current assets excluding cash" means all assets other than cash which could in the ordinary course of business be converted into cash within twelve (12) months, including accounts receivable, marketable securities, inventories and prepaid expenses properly chargeable to operating expenses within the next Fiscal Year. The term "current liabilities" means all liabilities which will become due and payable or could under circumstances then existing be called for payment within twelve (12) months, including accounts payable, customer advances, debt service requirements, taxes and payments in lieu of taxes, and dividends. The term "debt service requirements" means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt. The term "capital expenditures" means all expenditures incurred on account of fixed assets, including interest charged to construction, related to operations, averaged over a three (3) year period covering the year concerned and the year preceding and the year succeeding such year. The term "current assets" means cash, all assets which could in the ordinary course of business be converted into cash within twelve (12) months, including accounts receivable, marketable securities, inventories and prepaid expenses properly chargeable to operating expenses within the next Fiscal Year. The term "debt" means any indebtedness of the Borrower maturing by its terms more than one year after the date on which it is originally incurred. The term "net revenues" means the difference between: (A) the sum of revenues from all sources related to operations and net non-operating income; and (B) the sum of all expenses related to operations, including license fees, administration, adequate maintenance, taxes and payments in lieu of taxes, but excluding provision

16 for depreciation, other non-cash operating charges and interest and other charges on debt. (xi) Whenever for the purposes of this paragraph I it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the World Bank

17 SCHEDULE 3 Repayment Schedule Date Payment Due Principal Amount of the Loan repayable (expressed as a percentage) On each April 15 and October 15, commencing October 5% 15, 2024, to and including April 15,

18 APPENDIX Definitions 1. "Anti-Corruption Guidelines" means the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January "Category" means a category set forth in the table in Section IV of Schedule 2 to this Agreement. 3. "ERFD" means the Environmental Review Framework Document satisfactory to the World Bank, and disclosed on the Borrower's website on March 4, 2014, and the World Bank's Infoshop on March 5, 2014, which framework sets out, inter alia policies and procedures for: the preliminary screening (including impact on physical cultural resources and natural habitat and exclusion of investments classified as Category A) of proposed Project activities; preparation of environmental assessment and environment management plans therefor; consultation and disclosure and monitoring and reporting during the implementation of the Project, as said framework may be amended from time to time with the prior concurrence of the World Bank. 4. "EMP" means a site-specific environmental management plan prepared for specific investment activities under the Project in accordance with the requirements set out in the ERFD and accepted by the World Bank as being satisfactory; and "EMPs" means, collectively, all such EMPs. 5. "ESDD Report" means the Environmental and Social Due Diligence Report dated September 2013, which sets out the approach and methodology used for the environmental and social due diligence conducted on the substations to be constructed under Component I and its associated facilities (access roads and electric transmission lines) as well as the Planned WPPs, and the results of the due diligence. 6. "Fiscal Year" means the fiscal year of the Borrower starting on January I and ending on December 31 of each year. 7. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for Loans", dated March 12, "IBRD Loan Agreement" means an agreement of even date with this Agreement between the Borrower and the World Bank pursuant to which the World Bank has agreed to make a loan to the Borrower in the amount of two hundred and seventeen million six hundred thousand Euros (EUR 217,600,000), to assist in financing the Project

19 9. "LAAP" means a site-specific land acquisition action plan prepared for specific investment activities under the Project in accordance with the requirements set out in the LAPF and accepted by the World Bank as being satisfactory; and "LAAPs" mean, collectively, all such LAAPs. 10. "LAPF" means the Land Acquisition Policy Framework, satisfactory to the World Bank and disclosed on the Borrower's website on March 19, 2014, and in the World Bank's Infoshop on March 19, 2014, which sets out the policies and procedures for land acquisition, resettlement, compensation and rehabilitation of Project Affected Persons, preparation of resettlement action plans therefor, consultation, disclosure, grievance redress, and monitoring and reporting during Project implementation, as said framework may be revised from time to time with the prior agreement of the World Bank. I1:, "Lapseki 2-Sutluce 2 EMP" means the Environmental Management Plan for 380 kv Lapseki 2-Sutluce 2 Submarine Cable dated September 2013, satisfactory to the World Bank and disclosed locally on October 13, 2013 and in the World Bank's Infoshop on November 13, "Planned WPPs" means collectively, the following planned wind power projects, being developed by the private sector and which will be connected to the respective substations to be constructed under Part I of the Project: (a) For Canakkale substation: Ucpinar, Kocalar and Koru wind power projects. (b) For Vize Substation: Evrencik, Airres, and Vize 2 wind power projects. (c) For Izmir substation: Bergres and Kinik wind power projects. 13. "Procurement Guidelines" means the "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January "Procurement Plan" means the Borrower's procurement plan for the Project, dated March 21, 2014, and referred to in paragraph 1.18 of the Procurement Guidelines, as the same shall be updated from time to time in accordance with the provisions of said paragraphs. 15. "Project Affected Persons" means persons who, on account of the execution of the Project, have experienced or would experience direct economic and social impacts caused by: (a) the involuntary taking of land, resulting in (i) relocation or loss of shelter; (ii) loss of assets or access to assets; or (iii) loss of income sources or means of livelihood, whether or not such persons must move to another location; or (b) the involuntary restriction of access to legally designated parks - 18-

20 and protected areas, resulting in adverse impacts on the livelihood of such persons; and a "Project Affected Person" means any of such Project Affected Persons. 16. "Selected Provinces" means the Provinces of Canakkale, Izmir, Kirklareli and any other provinces selected by the Borrower in agreement with the World Bank. 17. "Standard Conditions" means the Standard Conditions for Loans Made by the World Bank Out of the Climate Investment Funds, dated February 18,