Somalia - Mogadiscio Port Project : Credit 0359 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 359 SO Project Agreement (Mogadiscio Port Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND SOMALI PORT AUTHORITY DATED MARCH 15, 1973 CONFORMED COPY CREDIT NUMBER 359 SO Project Agreement (Mogadiscio Port Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND SOMALI PORT AUTHORITY DATED MARCH 15, 1973 PROJECT AGREEMENT AGREEMENT, dated March 15, 1973, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the SOMALI PORT AUTHORITY (hereinafter called SPA). WHEREAS by the Development Credit Agreement of even date herewith between SOMALI DEMOCRATIC REPUBLIC (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twelve million nine hundred fifty thousand dollars ($12,950,000), on the terms and conditions set forth in the Development Credit Agreement and in the Administration Agreement of even date herewith between the Borrower and the European Economic Community through its Commission as Administrator of the European Development Fund (hereinafter called the Commission) and the Association, but only on condition that SPA agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a Subsidiary Loan Agreement between the Borrower and SPA, the proceeds of the credit provided for under the Development Credit Agreement will be relent to SPA on the terms and conditions therein set forth; and WHEREAS SPA, in consideration of the Association's entering into the Development Credit Agreement with the Borrower and into the Administration Agreement with the Commission and the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Project Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement, the Administration Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. 4 ARTICLE II Execution of the Project Section 2.01. SPA shall carry out or cause Parts E and F of the Project described in Schedule I to the Administration Agreement to be carried out with due diligence and efficiency and in conformity with sound administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, funds, facilities, services and other resources required for the Project. Section 2.02. Except as the Association shall otherwise agree, the Goods (other than services of consultants) required for carrying out Part E of the Project and to be financed out of the proceeds of the Credit, shall be procured on the basis of international competition under procedures consistent with the provisions of the Commission Agreement and the Association Agreement, and with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, and in accordance with, and subject to, the provisions set forth in Schedule 2 to the Development Credit Agreement. Section 2.03. (a) SPA undertakes to make adequate provision for the insurance of the imported goods to be financed out of the proceeds of the Credit relent to it by the Borrower 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 SPA to replace or repair such goods. (b) Except as the Association may otherwise agree, SPA shall cause all Goods financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for the Project. Section 2.04. (a) SPA shall furnish or cause to be furnished to the Association promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Parts E and F of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) SPA: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the Goods financed out of the proceeds of the Credit relent to it by the Borrower, and to disclose the use thereof in the Project; (ii) shall, without limitation upon the provisions of Section 5.03 of this Project Agreement, enable the Association's representatives to inspect the Project, the Goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association all such information as 5 the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit so relent to it and the Goods financed out of such proceeds. Section 2.05. SPA shall borrow the proceeds of the Credit from the Borrower under such terms and conditions as set forth in a Subsidiary Loan Agreement satisfactory to the Association and such other terms as the Association shall approve, and shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, SPA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. ARTICLE III Management and Operations of SPA Section 3.01. SPA shall, during the period of construction of the Project, take all such measures as shall be necessary or advisable to ensure, to the satisfaction of the Association, the improvement and the continued and efficient use of the present harbor at Mogadiscio. Section 3.02. SPA shall at all times carry on its operations under qualified and experienced managerial staff. Section 3.03. In order to carry out Part F of the Project SPA shall employ management consultants mutually acceptable to the Borrower, the Commission and the Association upon terms and conditions satisfactory to the Borrower, the Commission and the Association. Section 3.04. SPA shall adequately maintain the works, installations and equipment used in SPA's port operations at Mogadiscio and in all other ports under SPA's jurisdiction, and promptly make all necessary renewals and repairs thereof, all in accordance with sound engineering and po!t management standards and practices. Section 3.05. SPA shall at all times take all steps necessary to maintain its right to carry on its operations, including the Project, and shall, except as the Association shall otherwise agree, take all steps necessary to acquire and retain such land, interests in land and properties, and to acquire, maintain and renew such licenses, consents, franchises and other rights, as may be necessary or useful for the construction of the Project and the carrying on of SPA's operations. 6 Section 3.06. SPA shall promptly employ insurance experts to assist SPA in determining the insurable risks now being borne by SPA; and March 31, 1974 take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound practice. ARTICLE IV Financial Covenants Section 4.01. SPA shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition. Section 4.02. SPA 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 sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of SPA and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. (a) Except as the Association and the Borrower shall otherwise agree, SPA shall from time to time take all necessary measures, including but not limited to adjustments in its tariffs, as shall be required to enable SPA to earn an annual rate of return of not less than five per cent (5%); and (b) For the purposes of this Section: (i) the annual rate of return shall be calculated in respect of each fiscal year by relating the operating surplus for that year to the average of the value of the net fixed assets in operation at the beginning and at the end of that year; (ii) the term "operating surplus" shall mean the difference between (A) operating revenue and (B) operating and administrative expenses, including adequate maintenance and depreciation, but 7 excluding interest and other charges on debt and income taxes (if any); and (iii) the term "value of net fixed assets in operation" shall mean the gross value of fixed assets in operation less the accumulated depreciation, both as valued from time to time in accordance with sound and consistently maintained methods of valuation acceptable to the Association. Section 4.04. Subject to the requirements of Section 4.03 SPA shall by a date not later than January 1, 1976 or such later date as shall be agreed by the Association, take all necessary measures to introduce and maintain tariffs of dues and rates, on the following basis: (i) dues and rates will be set as far as practicable for each port individually; (ii) dues and rates will be levied for all ships and goods using the ports' facilities and services; and (iii) except as the SPA and the Association shall otherwise agree, dues and rates for services and facilities will be based on, and cover not less than the economic costs of those services and facilities, and will take into account the desirability of ensuring that economic benefits (particularly those enjoyed by ships) resulting from the port investments accrue to the economy of Somalia. Section 4.05. Except as the Association shall otherwise agree, SPA shall not create or permit to be created any mortgage, pledge, charge, or other lien on any of its property or assets; provided, however, that the foregoing provisions of this Section shall not apply to (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property, and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. ARTICLE V Consultation, Information and Inspection Section 5.01. The Association and SPA shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association 8 and SPA shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Project Agreement or of SPA's obligations under the Subsidiary Loan Agreement, and concerning the administration, operations, financial condition of SPA, and other matters relating to the purpose of the Credit. Section 5.02. The Association and SPA shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, or the performance by either of them of its obligations under this Project Agreement or the performance by the Borrower and SPA of their respective obligations under the Subsidiary Loan Agreement. Section 5.03. SPA shall enable the Association's representatives to inspect all plants, sites, works properties and equipment of SPA related to the Project and any relevant records and documents. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Project Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 6.02. This Project Agreement and all obligations of the Association and of SPA thereunder shall terminate on the date on which the Development Credit Agreement shall terminate in accordance with its terms. Section 6.03. All the provisions of this Project Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions Section 7.01. Any notice or request required or permitted to be given or made under this Project Agreement and any agreement between the parties contemplated by this Project Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by 9 hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. For SPA: Somali Port Authority Mogadiscio Somali Democratic Republic Cable address: SOMPORT Mogadiscio Somali Democratic Republic Section 7.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Project Agreement on behalf of SPA may be taken or executed by the General Manager or such other person or persons as he shall designate in writing. Section 7.03. SPA shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of SPA, take any action or execute any documents required or permitted to be taken or executed by SPA pursuant to any of the provisions of this Project Agreement. 10 Section 7.04. This Project Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Project Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / Bernard R. Bell Regional Vice President Eastern Africa SOMALI PORT AUTHORITY By /s/ A. A. Addou Authorized Representative