Mali - Third Railway Project : Credit 0713 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 713-MLI Project Agreement (Third Railway Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and REGIE DU CHEMIN DE FER DU MALI Dated June 10, 1977 PROJECT AGREEMENT AGREEMENT, dated June 10, 1977 between INTERNATIONAL DEVELOP- MENT ASSOCIATION (hereinafter called the Association) and the REGIE DU CHEMIN DE FER DU MALI (hereinafter called the R6gie). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Mali (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to ten million five hundred thousand dollars ($10,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Regie agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by the Subsidiary Loan Agreement to be entered into between the Borrower and the R6gie, the proceeds of the credit provided for under the Development Credit Agreement will be made available to the R6gie on the terms and conditions therein set forth; and WHEREAS the R6gie, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. -3- ARTICLE II Execution of the Project Section 2.01. The R6gie shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. Section 2.02. In order to assist the R6gie in carrying out the Project, the R6gie shall employ consultants and other experts, whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions of the Schedule to this Agreement. Section 2.04. (a) The Regie undertakes to insure, or 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 the Regie to replace or repair such goods. -4- (b) Except as the Association may otherwise agree, the R6gie shall cause all goods and services financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for the Project. Section 2.05. (a) The R6gie shall furnish to the Association, 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 Association shall reasonably request. (b) The R6gie: (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 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 paragraph (c) of this Section, enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. -5- (c) The R6gie shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the R6gie and any relevant records and documents. Section 2.06. The R6gie shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, the R6gie 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. Section 2.07. (a) The R6gie shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) The R6gie shall promptly inform the Association of any condition which interferes or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by the R6gie of its obligations under this Agreement and under the Subsidiary Loan Agreement. -6- Section 2.08. In carrying out Part I of the Project, the R6gie shall (i) make available sufficient experienced Malian personnel for training as instructors, (ii) make arrangements satisfactory to the Association for the training of senior instructors and supervisory staff and (iii) insure that sufficient numbers of personnel are released from individual departments for training. -7- ARTICLE III Management and Operations of the RSgie Section 3.01. The R6gie shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with appropriate administrative, financial, engineering and railway practices and under the supervision of qualified and experienced management assisted by qualified and experienced staff in adequate numbers. Section 3.02. The R4gie shall at all times operate and maintain the Railways and promptly make all necessary renewals and repairs, all in accordance with appropriate engineering and railway practices. Section 3.03. The R6gie shall take out and maintain with responsible insurers or make other provision satisfactory to the Association for insurance against such risks and in such amount as shall be consistent with sound practice. Section 3.04. The Rggie shall take such action as shall be reasonable in the circumstances to facilite railway operations between the territories of the Borrower and the territories of the Republic of Senegal, in accordance with the International Traffic Agreement, the Customs Agreement and the Railway Convention. -8- Section 3.05. By November 15 in each year until the completion of the Project, the R6gie shall exchange views with the Association on its estimated financial results for such year and on its draft budget for the following year. Promptly thereafter and prior to presentation of such budget to its Board of Directors, the R6gie shall, in agreement with the Association, take such steps as shall be necessary or advisable to remedy any deficiency. Section 3.06. The R6gie shall promptly implement a program satisfactory to the Association to ensure the regular collection of fares from all passengers subject thereto under applicable tariffs. -9- ARTICLE IV Financial Covenants Section 4.01. The R6gie shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial conditions. Section 4.02. The Regie 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 six 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 the R6gie and the audit thereof as the Assocation shall from time to time reasonably request. - 10 - Section 4.03. Except as the Association shall otherwise agree, the R&gie shall not incur any debt unless the amount of its net cash revenue for its fiscal year next preceding the date of such incurrence or for a later twelve-month period ended prior to the date of such incurrence, whichever amount is the greater, shall be not less than 1.5 times the maximum debt service requirements for any succeeding fiscal year on all its debt including the debt to be incurred. For the purposes of this Section: (a) "debt" means all debt, except debt incurred in the ordinary course of business and maturing by its terms on demand or less than one year after the date on which it is originally incurred; (b) debt shall be deemed to be incurred (i) under a loan contract or agreement, on the date and to the extent it is drawn down and outstanding pursuant to such loan contract or agreement; and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into; (c) the term "net cash revenue" means gross operating revenue from all sources, adjusted to take account of the Rggie's tariffs in effect at the time of the incurrence of debt even though they were not in effect during the entire fiscal year or twelve-month - 11 - period to which such revenue relates, less all operating expenses, including adequate maintenance, taxes, if any, and administrative expenses, but before provision for depreciation and debt service requirements; (d) the term "debt service requirements" means the aggregate amount of amortization (including sinking fund payments, if any), interest and other charges on debt; (e) whenever in connection with this Section it shall be necessary to value in the currency of the Borrower debt payable in another currency, such valuation shall be made on the basis of the rate of exchange at which such other currency is obtainable by the R6gie, at the time such valuation is made, for the purposes of servicing such debt or, if such other currency is not so obtainable, at the rate of exchange that will be reasonably determined by the Association; and (f) the provisions of this Section supersede all prior agreements with the Association in respect of the incurring of debt by the R6gie. Section 4.04. The R6gie shall take such steps, including adjustments in its tariffs, as shall be necessary to maintain working ratios not exceeding 67% for 1977, 70% for 1978, 61% for 1979, 64% for 1980 and 60% for 1981 and 1982. For the purposes of this Section: - 12 - (a) "working ratio" means the ratio of operating expenses to operating revenue; (b) "operating expenses" means the aggregate of operating expenses and expenses of maintenance of fixed assets in operation including taxes, if any, but excluding depreciation of such assets and debt-service requirements; and (c) "operating revenue" means gross revenue derived from the services of the R6gie. Section 4.05. The R6gie shall take such steps as are necessary to maintain its working capital at all times at a level sufficient to cover the aggregate of 1/6 of annual costs of personnel, 1/2 of annual expenses for materials, excluding fuels and lubricants, 1/4 of annual expenses for utilities and other contracted services and 1/4 of the debt-service requirements of the R6gie for the following twelve months. Section 4.06. Pursuant to Section 4.01 of this Agreement the R6gie shall (i) revalue its fixed assets as of December 31, 1976 and incorporate the resulting values in its accounts for 1977, (ii) thereafter make such subsequent revaluations thereof as shall be considered appropriate following consultation with the Association and (iii) not later than December 31, 1977, write off obsolete items of inventory. - 13 - Section 4.07. Not later than January 1, 1978 or such later date as the Association shall agree, the Rggie shall implement a cost-based tariff system based upon the existing recommendations of consultants as modified in agreement with the Association. - 14 - ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of the Rdgie thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify the Rdgie of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. - 15 - ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by the 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 hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address here- inafter 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the R6gie: R6gie du Chemin de Fer du Mali Bamako Mali Cable address: Telex: FERMALI 586 Bamako Mali - 16 - Section 6.02. (a) Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of the Rggie or under Section 2.09 of the Development Credit Agreement by the Rdgie on behalf of the Borrower, may be taken or executed by the Director of the Rdgie or such other person or persons as the R6gie shall designate in writing. (b) The Rfgie shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will act under paragraph (a) of this Section. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. - 17 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement 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 DEVELOPMENT ASSOCIATION By /s/ Roger Chaufournier REGIE DU CHEMIN DE FER DU MALI By /s/ Ibrahima Sima Authorized Representative - 18 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. Bidders for the works comprising Part E of the Project shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. B. Other Procurement Procedures 1. Minor works related to the repair and strengthening of bridges up to a total value equivalent to $940,000 may be carried out by force account. 2. Individual items of equipmment not exceeding $50,000 equivalent required in carrying out Parts B and I of the Project may be purchased locally. C. Review of Procurement Decisions by the Association 1. Review of prequalification for Part E of the Project: The Borrower shall, before qualification is invited, inform the Association in detail of the procedure to be followed, and shall - 19 - introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Association for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request. 2. With respect to all contracts estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, the R6gie shall furnish to the Association, 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 documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the R6gie shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award - 20 - the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the R6gie and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association'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 Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph the Rdgie shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit 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 Association shall - 21 - reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the R6gie and state the reasons for such determination.