Senegal - Third Railway Project : Loan 1518 - Guarantee Agreement - Conformed

CONFORMED COPY LOAJN NUMBER 1518 SE Guarantee Agreement (Third Railway Project) between REPUBLIC OF SENEGAL and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated March 17, 1978 LOAN NUMBER 1518 SE GUARANTEE AGREEMENT AGREEMENT, dated March 17, 1978, between REPUBLIC OF SENEGAL (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and R&gie des Chemins de Fer du Sen&gal (hereinafter called the Borrower) the Bank has agreed to make to the Borrower a loan in various currencies equivalent to eleven million dollars ($11,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein, (said General Conditions Applicable to Loan and Guarantee Agree- ments, 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 and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee; Provision of Funds Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as primary obligor -2- and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan and the punctual performance of all the other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically undertakes: (a) whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet (i) the estimated expenditures required for the carrying out of the Project, (ii) or the Borrower's debt service requirements, as defined in Section 5.04 of the Loan Agreement, to make arrange- ments, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures or such requirements; (b) to maintain at all times within the Borrower's organiza- tion a qualified and experienced General Manager and Assistant General Manager; the qualifications and experience of the latter shall be satisfactory to the Bank; (c) to take all such action as may be required on its part to carry out or cause to be carried out the Plan of Action set forth in Schedule 5 to the Loan Agreement; (d) to take all such action as may be required or appro- priate on its part to enable the Borrower to carry out its obliga- tions set forth in Sections 3.03 and 5.08 of the Loan Agreement; (e) to take promptly as required, all necessary steps (including without limitation the establishment and maintenance of tariffs at the required levels and the provision of funds) on its part to enable the Borrower to meet its obligations under Sections 5.05 and 5.09 of the Loan Agreement; and (f) to maintain at all times the Borrower's organization in a form satisfactory to the Bank. Section 2.03. (a) the Guarantor shall take or cause the Borrower to take such action as shall be reasonable to facilitate railway operations between its territories and the territories of the Republic of Mali, in accordance with the International Traffic -3- Agreement, the Customs Agreement and the Railway Convention. Neither of such Agreement shall be amended without the prior approval of the Bank. (b) The Guarantor shall carry out, in accordance with a timetable acceptable to the Bank and in cooperation with the Borrower, programs based on the recommendations of the studies carried out under Parts F (i) and F (ii) of the Project and shall exchange views with the Bank on the carrying out of such programs. (c) In carrying out the provisions of paragraph (b) of this Section and except as the Bank shall otherwise agree, the Guaran- tor shall reach a decision, on the allocation of groundnut traffic within its territories between road transport and rail transport through its Comit6 Directeur des Transports du Matfriel et des Produits Agricoles on the basis of the recommendations of the study carried out under Part F (ii) of the Project, as such recommendations have been approved by the Guarantor in consulta- tion with the Bank. (d) The Guarantor shall exchange views with the Government of the Republic of Mali on the implementation of those recommenda- tions affecting railway operations in the Republic of Mali result- ing from the study prepared under Part F (i) of the Project. Section 2.04. Without limitation or restriction to the gen- erality of the provisions of Section 2.01 of this Agreement, the Guarantor shall take all such measures as may be necessary as appropriate to enable the Borrower to meet its obligations under Section 3.04 of the Loan Agreement. ARTICLE III Other Covenants Section 3.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, specific security from the member con- cerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distri- bution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, -4- realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto, and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Guarantor, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Guarantor shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for 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. (c) As used in this Section, the term "public assets" means assets of the Guarantor, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Guarantor or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Minister of Finance of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Ministere des Finances et des Affaires Economiques Rue Charles Laing B. P. 4017 Dakar, Sfn6gal -5- Cable address: MINIFINANCES Dakar For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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. REPUBLIC OF SENEGAL By /s/ Andre Coulbary Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ X. de la Renaudiere Acting Regional Vice President Western Africa