Papua New Guinea - Ports Project : Credit 0326 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 326 PNG Development Credit Agreement (Ports Project) BETWEEN THE ADMINISTRATION OF PAPUA NEW GUINEA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 21, 1972 CONFORMED COPY CREDIT NUMBER 326 PNG Development Credit Agreement (Ports Project) BETWEEN THE ADMINISTRATION OF PAPUA NEW GUINEA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 21, 1972 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 21, 1972, between THE ADMINISTRATION OF PAPUA NEW GUINEA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the cost of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) The Project will be carried out by the Papua New Guinea Harbours Board (hereinafter called PNGHB) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to PNGHB the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter, in a project agreement of even date herewith between the Association and PNGHB, and in a letter of undertaking of even date herewith from the Commonwealth of Australia to the Association; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.0!. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the modifications thereof set forth in Schedule 3 to this Agreement (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, 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 have the respective meanings therein set forth and the following additional terms have the following meanings: 4 (a) "Project Agreement" means the agreement between the Association and PNGHB of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and PNGHB pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (c) "Ordinance" means the Papua and New Guinea Harbours Board Ordinance 1963 (No. 17 of 1964), as amended to the date of this Agreement; and (d) "PNGHB" means the Papua New Guinea Harbours Board, a body corporate established and existing under the Ordinance. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to nine million two hundred thousand dollars ($9,200,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services required for the Project and to be financed out of the proceeds of the Credit shall be procured pursuant to the provisions set forth or referred to in Section 2.04 of the Project Agreement. Section 2.04. The Closing Date shall be September 30, 1977 or such other date as shall be agreed between the Borrower and the Association. 5 Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 15 and October 15 commencing October 15, 1982 and ending April 15, 2022, each installment to and including the installment payable on April 15, 1992 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without iy limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause PNGHB to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable PNGHB to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Credit to PNGHB under a subsidiary loan agreement to be entered into between the Borrower and PNGHB under terms and conditions which shall have been approved by the Association. The Subsidiary Loan Agreement shall provide, inter alia, for relending of the proceeds of the Credit to PNGHB for a term of twenty-five years, including four years of grace, and for payment of interest by PNGHB at the rate of 7-1/4% per annum on amounts withdrawn and outstanding from time to time. (c) The Borrower shall provide to PNGHB, promptly as needed, any additional funds, facilities, services and other resources required by PNGHB to enable it to carry out the Project. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the 6 Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower shall take all such action as shall be necessary for PNGHB to acquire by a date not later than June 30, 1972, or such later date as shall be agreed to by the Association, all such land and rights in respect of land and water as shall be required for the construction and operation of the ports and related facilities presently under the jurisdiction of PNGHB or included in the Project. Section 3.03. The Borrower shall, promptly as required, take all steps necessary on its part to enable PNGHB to set and maintain its tariffs at the levels required by Sections 4.03 and 4.04 of the Project Agreement. ARTICLE IV Consultation, Information and Inspection Section 4.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall .rom time to time, at the request of either party: (a) exchange views throtfh their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by PNGHB of its obligations under the Project Agreement, the appointment of the chief executive or chief financial officer of PNGHB, the administration, operations and financial condition of PNGHB and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 4.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request 7 concerning the administration, operations and financial condition of PNGHB and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement or the performance by PNGHB of its obligations under the Project Agreement and the Subsidiary Loan Agreement. Section 4.03. The Borrower shall afford ail reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE V Taxes and Restrictions Section 5.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 5.02. The Development Credit Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 5.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VI Remedies of the Association Section 6.01. If any event specified in Section 7.01 of the General 'Conditions or in Section 6.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately 8 together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 6.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) PNGHB shall have failed to perform any covenant, agreement or obligation of PNGHB under the Project Agreement. (b) PNGHB shall have become unable to pay any of its debts as they mature. (c) The Ordinance shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of PNGHB to carry out the covenants, agreements and obligations set forth in the Project Agreement or the Subsidiary Loan Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of PNGHB or for the suspension of its operations. (e) An extraordinary situation shall have arisen which shall make it improbable that PNGHB will be able to perform its obligations under the Project Agreement or the Subsidiary Loan Agreement. Section 6.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) any event specified in paragraph (a) of Section 6.02 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and PNGHB; (b) any event specified in paragraph (b) of Section 6.02 of this Agreement shall occur and shall continue for a period of thirty days after notice thereof shall have been given by the Association to the Borrower and PNGHB; and (c) any event specified in paragraph (c) or paragraph (d) of Section 6.02 of this Agreement shall occur. 9 ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01 (b) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of PNGHB have been duly authorized or ratified by all necessary corporate and governmental action; and (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and PNGHB, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. Section 7.02. The following are specified as additional matters, within the meaning of Section 10.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, PNGHB, and constitutes a valid and binding obligation of PNGHB in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and PNGHB, respectively, and constitutes a valid and binding obligation of the Borrower and PNGHB in accordance with its terms. Section 7.03. The date October 19, 1972 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 7.04. The obligations of the Borrower under Sections 4.01 (a) and 4.02 (a) of this Agreement and the provisions of Section 6.02 and of Section 6.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty-five years after the date of this Agreement, whichever shall be the earlier. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The Treasurer of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. 10 Section 8.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: The Treasurer The Administration of Papua New Guinea Port Moresby Papua New Guinea Cable address: Treasurer Port Moresby For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. THE ADMINISTRATION OF PAPUA NEW GUINEA By /s/ E. M. W. Visbord Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / J. Burke Knapp Vice President 11 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Civil Works 5,850,000 82% of total ex- penditures (re- presenting the estimated foreign expenditure com- ponent) II. Engineering Ser- 320,000 100% of foreign vices, Soil Inves- expenditures tigation and Hydro- graphic Studies III. Cargo-Handling 600,000 100% of foreign Equipment expenditures IV. Training and Man- 110,000 100% of foreign agement Consultant expenditures Services V. Unallocated 2,320,000 TOTAL 9,200,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; provided, however, that if the currency of 12 the Borrower is also that of another country in the territories of which goods are produced or from the territories of which services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (b) the term "total expenditures" means the aggregate of foreign expenditures and of expenditures for goods produced in, or services supplied from, the territories of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Category II on account of expenditures incurred after November 1, 1971 in an aggregate amount not exceeding the equivalent of $250,000; and (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, the percentage set forth in the third column of the table in paragraph I above in respect of such expenditures shall be applied to the amount of such increase, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and (c) if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set 13 forth or referred to in Section 2.04 of the Project Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under Category I shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 14 SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A. Civil Works (i) at Port Moresby: (a) land reclamation adjacent to the existing port, to provide approximately three acres of storage area fronting the foreshore; (b) construction of a cargo shed; and (c) provision of one acre of asphalted hard standing for open storage. (ii) at Lae: (a) construction of one deep-water berth (as an extension of the existing wharf); (b) construction of one transit shed and open storage areas and necessary ancillary facilities; and (c) construction of a mooring post and breasting dolphins for coastal tankers. (iii) at Kieta: (a) construction of two coaster berths; and (b) construction of two small cargo sheds and open storage areas and necessary ancillary facilities. (iv) at Alotau: Construction of a new port with the following facilities: (a) a deep-water berth about 300 ft long for ocean-going vessels; (b) one berth for coasters; 15 (c) one transit shed, one copra storage shed and open storage areas; and (d) necessary ancillary facilities including office buildings and workshops. Part B. Engineering, Soil Investigation and Hydrographic Studies (i) provision of detailed engineering, preparation of tender documents, and supervision of construction under Part A of the Project; and (ii) further soil investigations and hydrographic measurements required in the preparation of the final designs. Part C. Cargo-Handling Equipment Provision of cargo-handling equipment comprising: forklifts; tractors; and mobile cranes. Part D. Accounting and Management Reporting Systems Provision of improved accounting and management reporting systems in PNGHB, including necessary training of personnel to operate these systems. The Project is expected to be completed by June 30, 1976. 16 SCHEDULE 3 Modifications of General Conditions (A) Section 5.01 is deleted. (B) Section 6.02 (h) is deleted and Section 6.02 (i) becomes 6.02 (h). (C) In Section 2.01, the following paragraph is added after paragraph 12: "13. The term 'Project Agreement' has the meaning set forth in Section 1.02 of the Development Credit Agreement." (D) Paragraph 5 of Section 2.01 is deleted and the following paragraph is substituted therefor: "5. The term 'Borrower' means The Administration of Papua New Guinea." (E) The last four lines of Section 4.01 shall read as follows: "may be made in respect of expenditures in the currency of the Commonwealth of Australia or of the Borrower such withdrawals shall be made in such currency or currencies as the Association shall from time to time reasonably select." (F) Sub-paragraph (ii) of paragraph c of Section 6.02 is deleted and the following paragraph is substituted therefor: "(ii) the Bank shall have suspended in whole or in part the right of the Borrower to make withdrawals under any loan agreement with the Bank guaranteed by the Commonwealth of Australia because of a failure by the Commonwealth of Australia to perform any of its obligations under such agreement." (G) Paragraph (d) of Section 6.02 is deleted and the following paragraph is substituted therefor: "(d) An extraordinary situation shall have arisen which shall make it improbable that the Project can be carried out or that the Borrower will be able to perform its obligations under the Development Credit Agreement or there shall occur any such change in the nature and 17 constitution of the Borrower as shall make it improbable that the Borrower will be able to carry out its obligations under the Development Credit Agreement." (H) The word "Borrower" is deleted in paragraph (e) of Section 6.02 and in the sixth line of Section 7.01 (b) and the words "Commonwealth of Australia" are substituted therefor. (I) In Section 6.06, the words ", the Project Agreement" are added after the words "the Development Credit Agreement". (J) In Section 8.02, the words "or the Project Agreement" are added after the words "the Development Credit Agreement". (K) The term "or the Commonwealth of Australia, as the case may be" is added after the word "Borrower" in paragraph (k) of Section 8.03. (L) Paragraph (a) of Section 10.01 is deleted and the following paragraph is substituted therefor: "(a) the execution and delivery of the Development Credit Agreement on behalf of the Borrower have been duly authorized or ratified by all necessary governmental action, including action of the Commonwealth of Australia; and".