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CONFORMED COPY
GRANT NUMBER TF052350
Tripartite Arrangement
for the Administration by
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
of Grant Funds to be made available by the
GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
to the
PEOPLE’S REPUBLIC OF CHINA
For the Basic Education in Western Areas Project
Dated November 11, 2003
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GRANT NUMBER TF052350
TRIPARTITE ARRANGEMENT
Arrangement, dated November 11, 2003, among the Government of the United Kingdom of Great Britain and Northern Ireland, acting through the Department for International Development (DFID), International Bank for Reconstruction and Development (Bank) and People’s Republic of China (China), to provide for the administration by the Bank of certain funds to be made available by DFID to be used for the benefit of China in respect of the Basic Education in Western Areas Project (defined below).
WHEREAS (A) by a Loan Agreement (Loan Agreement) of even date herewith between China and the Bank, the Bank has agreed to lend to China an amount equal to one hundred million Dollars (US$100,000,000) (Loan) to assist in the financing of the project described in Schedule 2 to the Loan Agreement (Basic Education Project in Western Areas);
(B)for purposes of assisting China in reducing the cost of the Loan, DFID has decided to provide a grant in an amount not exceeding thirty-four million four hundred thousand Dollars (US$34,400,000) (DFID Grant) to be made available to China for prepayment of part of the principal amount of the Loan,on the terms and conditions set forth in this Arrangement; in accordance with the provisions of this Arrangement and those set forth in Schedule 3 to the Loan Agreement;
(C)DFID has requested the Bank, and the Bank has agreed, to administer the DFID Grant. For the defrayment of the Bank’s administration costs, DFID has decided to make a contribution of one hundred thirty-eight thousand one hundred fifty-seven Dollars (US$138,157) to be made available to the Bank pursuant to Section 3.02(a) of this Arrangement, thereby bringing DFID’s total contribution under this Arrangement to an amount not exceeding thirty-four million five hundred thirty-eight thousand one hundred fifty-seven Dollars (US$34,538,157) (DFID Contribution); and
(D)China has requested the Bank, and the Bank has agreed, to apply the proceeds of the DFID Grant to prepay part of the Loan, on the terms and conditions set forth in this Arrangement,
NOW THEREFORE: the parties
I
General
Section 1.01. The DFID Grant will be provided by DFID to China and administered by the Bank in accordance with the provisions of this Arrangement.
II
Deposits and Withdrawals of Funds
Section 2.01. (a) DFID will deposit the DFID Grant into the Bank’s “T” Account, Account Number 2000192003489 (ABA Number: 026005092; SWIFT Address: PNBPUS3NNYC) maintained at Wachovia Bank NA, New York, 11 Penn Plaza, Floor 4, New York, NY 10038, United States of America (“T” Account), at the times and in the amounts set forth in paragraphs (b) through (g) of this Section.
(b)Within thirty (30) calendar days following the date of this Arrangement, China and the Bank will determine for the period following the date on which the Loan is expected to be declared effective and up to the date on which the first interest payment is due under the Loan Agreement (March 15, 2004), the aggregate of the following (First Projected Disbursement):
(i)six hundred fifty-six thousand Dollars ($656,000), which is the amount of the front end fee payable by China pursuant to Section 2.04(b) of the Loan Agreement;
(ii)six million seven hundred thousand Dollars ($6,700,000), which is the aggregate of the amounts of Authorized Allocation to be deposited into the five (5) Special Accounts pursuant to paragraph 3(a) of Schedule 6 to the Loan Agreement;
(iii)the amounts of replenishment to be made by the Bank into the Special Accounts pursuant to paragraph 3(b)(ii) of Schedule 6 to the Loan Agreement;
(iv)the amounts of disbursement, if any, to be made by the Bank to suppliers in respect of direct payment contracts; and
(v)the amounts, if any, for which the Bank will be requested to issue special commitments pursuant to Section 5.02 of the General Conditions.
(c)Upon receipt of a written request from China, the Bank will send a notice to DFID, in the form of Annex A, requesting that DFID make an initial deposit into the “T” Account in an amount equal to the aggregate of the following (First DFID Deposit):
(i)an amount equal to thirty-four and four tenths of one percent (34.4%) of the First Projected Disbursement; plus
(ii)an amount equal to thirty-four and four tenths of one percent (34.4%) of the total contract amount of each direct payment contract referred to in paragraph (b)(iv) of this Section 2.01 minus the amount of each direct payment contract included in the First Projected Disbursement pursuant to subparagraph (b)(iv) of this Section 2.01; plus
(iii)an amount equal to thirty-four and four tenths of one percent (34.4%) of the full amount of each special commitment referred to in subparagraph (b)(v) of this Section 2.01 minus the amount of each special commitment included in the First Projected Disbursement pursuant to subparagraph (b)(v) of this Section2.01.
DFID will make said initial deposit into the “T” Account within fourteen (14) calendar days of the date of the said notice.
(d)After the said initial deposit, DFID will replenish the “T” Account by making subsequent deposits on a semi-annual basis on March 15 and September 15 (collectively, referred to as “Deposit Dates” and, individually, referred to as a “Deposit Date”) in each calendar year, commencing on March 15, 2004, until the full amount of the DFID Grant has been disbursed in accordance with the provisions of this Arrangement. The amount of each subsequent deposit will be notified to DFID in accordance with paragraph (h) of this Section.
(e)To the extent that disbursements from the Loan Account occur after June 30, 2009 (the Closing Date, as the term is defined in the General Conditions), and up to July 15, 2011 (two months prior to the First Principal Payment Date as the term is defined in the Loan Agreement), the last Deposit Date will be June 30, 2009, and will cover the twenty-five and one half month period of projected disbursements between June 30, 2009, and July 15, 2011, inclusive.
(f)To the extent that the Closing Date is extended pursuant to the Loan Agreement the Deposit Dates will be adjusted accordingly and the relevant provisions of the Tripartite Arrangement will be revised accordingly.
(g)Twenty-one (21) calendar days prior to each Deposit Date, taking into account the indicative amounts of Loan disbursement for the six-month period following said Deposit Date (which indicative amounts of Loan disbursement are set forth in Annex B to this Arrangement), China and the Bank will determine for the said period the aggregate of the following (Subsequent Projected Disbursement):
(i)the amounts of replenishment to be made by the Bank into the Special Accounts pursuant to paragraph 3(b)(ii) of Schedule 6 to the Loan Agreement;
(ii)the amounts of disbursement, if any, to be made by the Bank to suppliers in respect of direct payment contracts; and
(iii)the amounts, if any, for which the Bank will be requested to issue special commitments pursuant to Section 5.02 of the General Conditions.
(h)Fourteen (14) calendar days prior to each Deposit Date, the Bank will send a notice to DFID in the form of Annex A, requesting that DFID make a deposit into the “T” Account of an amount equal to the aggregate of the following (Subsequent DFID Deposit):
(i)an amount equal to thirty-four and four tenths of one percent (34.4%) of the Subsequent Projected Disbursement; plus
(ii)an amount equal to thirty-four and four tenths of one percent (34.4%) of the total contract amount of each direct payment contract referred to in paragraph (g)(ii) of this Section 2.01 minus the amount of each direct payment contract included in the Subsequent Projected Disbursement pursuant to subparagraph (g)(ii) of this Section 2.01; plus
(iii)an amount equal to thirty-four and four tenths of one percent (34.4%) of the full amount of each special commitment referred to in subparagraph (g)(iii) of this Section 2.01 minus the amount of each special commitment included in the Subsequent Projected Disbursement pursuant to subparagraph (g)(iii) of this Section 2.01.
(i)Notwithstanding the foregoing:
(i)In the event that the aggregate of actual Loan disbursements made for a six-month period would be higher than the First Projected Disbursement or the Subsequent Projected Disbursement determined in accordance with the provisions in paragraphs (b) and (g), respectively, of this Section 2.01, the Bank will send a notice in the form of Annex A to DFID, notifying DFID about the amount of the resulting shortfall in DFID’s deposit and within fourteen (14) calendar days of receipt of said notice, DFID will deposit an amount equal to thirty-four and four tenths of one percent (34.4%) of said shortfall in the “T” Account.
(ii)In the event that: (A) the aggregate of actual Loan disbursements made for a six-month period is lower than the First Projected Disbursement or Subsequent Projected Disbursement determined in accordance with the provisions in paragraphs (b) and (g), respectively, of this Sections 2.01, or (B) in the event that a refund or refunds of Loan proceeds are made by China to the Bank pursuant to paragraphs 6(a), 6(b) or 6(c) of Schedule 6 to the Loan Agreement, the Bank will send a notice to DFID, notifying DFID about the amount of the resulting excess in DFID’s deposit and deduct said excess from the deposit to be made by DFID in the following six-month period.
Section 2.02. (a) DFID hereby irrevocably instructs the Bank:
(i)to withdraw from the “T” Account on March 15 and September 15 of each calendar year, commencing on March 15, 2004, and thereafter until June 30, 2009, or until the full amount of the DFID Grant has been withdrawn from the “T” Account, whichever isearlier, amounts representing thirty-four and four tenths of one percent (34.4%) of the aggregate of actual Loan disbursements made by the Bank during the six-month period preceding each such withdrawal from the “T” Account; and
(ii)to use such amounts withdrawn to prepay a portion of the principal amount of the Loan, disbursed and outstanding, pursuant to the instructions made by China under Section 5.01 of this Arrangement.
(b)To the extent that disbursements from the Loan Account occur after June 30, 2009 (the Closing Date as the term is defined in the General Conditions), up to July 15, 2011 (two months prior to the First Principal Payment Date as the term is defined in the Loan Agreement), DFID hereby irrevocably instructs the Bank to withdraw from the “T” Account, amounts representing thirty-four and four tenths of one percent (34.4%) of the aggregate of actual Loan disbursements made by the Bank during such twenty-five and one half month period (June 30, 2009, up to July 15, 2011), and apply the amount so withdrawn from the “T” Account to prepay a portion of the principal amount of the Loan disbursed and outstanding as of July 15, 2011, pursuant to the instructions made by China under Section 5.01 of this Arrangement.
(c) To the extent that disbursements from the Loan Account occur in any six-month period commencing on July 15, 2011, and thereafter, DFID hereby irrevocably instructs the Bank to withdraw from the “T” Account, on January 15 and July 15 of each calendar year, beginning January 15, 2012, and until the full amount of the DFID Grant has been withdrawn from the “T” Account, an amount representing thirty-four and four tenths of one percent (34.4%) of the aggregate of withdrawals from the Loan Account made in any such six-month period consisting of the two months immediately prior to and the four months immediately following any one Principal Payment Date (as the term is defined in the Loan Agreement) and to apply the amount so withdrawn from the “T” Account to prepay a portion of the principal amount of the Loan disbursed and outstanding immediately following the said Principal Payment Date, pursuant to the instructions made by China under Section 5.01 of this Arrangement.
(d)To the extent that the Closing Date is amended in accordance with Section 2.03 of the Loan Agreement, the provisions of paragraphs (b) and (c) of this Section will be adjusted and revised accordingly.
(e) Notwithstanding the foregoing, DFID hereby irrevocably instructs the Bank:
(i)to withdraw on the date on which the Loan Agreement is declared effective, two hundred twenty-five thousand six hundred sixty-four Dollars (US$225,664) from the “T” Account, which amount represents thirty-four and four tenths of one percent (34.4%) of the front end fee payable by China pursuant to Section 2.04(b) of the Loan Agreement; and
(ii)on the same date to use said amount to prepay a portion of the principal amount of the Loan disbursed and outstanding.
Section 2.03. For purposes of this Arrangement the following terms have the following meanings:
(a)“Special Accounts” means the accounts referred to in Section 2.02(b) of the Loan Agreement.
(b)“General Conditions” means “General Conditions Applicable to Loan and Guarantee Agreements for Fixed-Spread Loans” of the Bank dated September 1, 1999 (the General Conditions), with the modifications set forth in Section 1.01 of the Loan Agreement.
III
Administration
Section 3.01. (a) The Bank shall be responsible only for performing those functions specifically set forth in this Arrangement and shall not be subject to any other duties or responsibilities to DFID, including, without limitation, any duties or obligations that might otherwise apply to a fiduciary or trustee under general principles of trust or fiduciary law. Nothing in this Arrangement shall be considered a waiver of any privileges or immunities of the Bank under its Articles of Agreement or any applicable law, all of which are expressly reserved.
(b)Otherwise than for failure to perform its obligations set forth in this Agreement, DFID shall not be liable for damages or loss caused to the Bank or third parties as a result of the Bank’s discharge of its functions under this Arrangement. Accordingly, the Bank shall not submit any claim to DFID for compensation or for restoration of any such damage or loss.
Section 3.02. (a) In order to assist in the defrayment of the costs of administration of this Arrangement, the Bank is hereby entitled to collect and receive from DFID an administrative fee equal, in the aggregate, to 0.4% of the DFID Contribution.
(b)DFID will pay to the Bank the administrative fee referred to in paragraph (a) of this Section by semi-annual deposits into the “T” Account, simultaneously with the deposits of DFID Grant funds referred to in Section 2.01 of this Arrangement.
Section 3.03. The Bank may invest or re-invest the DFID Grant monies in the “T” Account pending their disbursement. Any interest or income accrued from the investment or re-investment of the DFID Grant monies will be used for prepayment of a portion of the principal amount of the Loan in accordance with Section 2.02 of this Arrangement, such prepayment to be done concurrently with the last prepayment or promptly thereafter.
IV
Cooperation and Consultation
Section 4.01. The Bank will:
(a)maintain separate records and accounts in respect of the funds deposited in the “T” Account and disbursed by the Bank pursuant to the provisions of this Arrangement. Within 90 days of each March 31, June 30, September 30 and December31, for as long as any DFID Grant funds remain in the “T” Account, the Bank will prepare a financial statement with respect to the said funds and forward a copy to DFID.
(b)provide China and DFID annually with a management assertion together with an attestation from the Bank’s external auditors on the satisfactory performance of the procedures and controls used by the Bank in administering trust funds. The costs of such attestations will be borne by the Bank. In addition, upon the request of DFID, the Bank will cause the annual financial statements prepared by the Bank with respect to the DFID Grant funds to be audited by the Bank’s external auditors and will forward a copy of the auditors’ report to DFID. The cost of such audits will be borne by DFID.
Section 4.02. DFID, the Bank and China will consult, from time to time, at the request of any party, on all matters arising out of this Arrangement and on other matters of common interest to them in the administration of the DFID Grant.
V
Prepayment of the Loan
Section 5.01. China hereby irrevocably:
(a)agrees with and directs the Bank to use the proceeds of the DFID Grant to prepay part of the principal amount of the Loan in accordance with the provisions of this Arrangement;
(b)gives notice, for purposes of Section 3.05(a) of the “General Conditions Applicable to Loan and Guarantee Agreements for Fixed-Spread Loans” of the Bank dated September 1, 1999, of its intention to prepay part of the principal amount of the Loan in accordance with the provisions of this Arrangement;
(c)directs the Bank that up to July 15, 2011 (two months prior to the First Principal Payment Date, as the term is defined in the Loan Agreement), each withdrawal made by the Bank from the “T” Account pursuant to Section 2.02 (a)(i) and (b) of this Arrangement shall be applied to reduce by the amount of such withdrawal the principal amount of the Loan disbursed and outstanding as of the date of such prepayment; and