Ghana - Railway Rehabilitation Project : Credit 1170 - Credit Agreement - Conformed

1 CREDIT NUMBER 1170 GH Development Credit Agreement (Railway Rehabilitation Project) between REPUBLIC OF GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1981 r2 CREDIT NUMBER 1170 GH DEVEL MENT CREDIT AGREEMENT AGREEMENT, dated Cj :2:2 ) 1981, between REPUBLIC OF GHANA (he inaf tev called the Borrower) and INTER- NATIONAL DEVELOPMENT A SOCIATION (hereinafter called the Associa- tion). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the foreign exchange 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 Ghana Railway Corporation with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Ghana Railway Corporation the proceeds of the Credit as hereinafter provided; (C) by a Loan Agreement, dated May 11, 1981 (hereinafter called the African Development Bank Loan Agreement) between the Borrower and the African Development Bank (hereinafter called AfDB), AfDB agreed to lend to the Borrower an amount of 10,000,000 Units of Account of the AfDB to assist in the financing of the same Project; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth hereinafter and in the Project Agreement of even date herewith between the Association and the Ghana Railway Corporation; 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 Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). -2- Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the folloving additional terms have the following meanings: (a) "GRC" means the Ghana Railway Corporation, a body corporate with perpetual succession and common seal, established and operating under the* Ghana Railway Corporation Decree, 1977 (3M.C.D. 95) of the Borrower, as such decree may be amended from time to time (hereinafter called the GRC Decree); (b) "Project Agreement" means the agreement between the Association and GRC of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (c) "Subsidiary Loan Agre'ement" means the agreement to be entered into between the Borrower and GRC 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; (d) "CEDIS" and "4" mean the currency of the Borrower; (e) "TPU" means the Transport Planning Unit of the Ministry of Transport and Communications of the Borrower; (f) "Fiscal Year" means a fiscal year, which begins on July 1 and ends on June 30 and is named after the year in which it ends; and (g) "Rationalization Program" means the program of action to be carried out by GRC pursuant to Section 2.08 (b) of the Project Agreement. 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 -3- set forth or referred to, an amount in various currencies equiva- lent to twenty three million three hundred thousand Special Drawing Rights (SDR 23,300,000). 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 may be amended from time to time by agreement between the Borrower and the Association, 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 out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of goods to be financed out of the proceeds of the Credit shall be governed by the provisions set forth or referred to in Section 2.03 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1985 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. 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 semiannually on May 15th and November 15th in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1991, and ending May 15, 2031, each installment to and including the installment payable on May 15th, 2001, 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. Section 2.09. Except in respect of Part H of the Project, GRC is designated as representative of the Borrower for the purposes -4- of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall cause GRC to carry out Parts A through G of the Project and shall carry out Part H of the Project, with due diligence and efficiency and in accordance with appropriate administrative, financial, engineering and transport practices, and shall provide, promptly as needed, the funds, facilities, services and other resources for the purpose. (b) The Borrower shall for the purpose of carrying out Parts A to G of the Project relend to GRC out of the proceeds of the Credit an amount in Cedis equivalent to twenty two million two hundred and fifty thousand Special Drawing Rights (SDR22,250,000) or such other amount as shall be allocated to Categorlzs 1 to 7 of Schedule 1 to this Agreement to GRC under a subsidiary loan agreement to be entered into between the Borrower and GRC under terms and conditions which shall have been approved by the Asso- ciation, providing inter alia, for relending for a term of twenty years, including five years of grace on the principal amount, at a rate of interest of nine and three-fifths per cent (9-3/5%) per annum on the principal amount withdrawn and outstanding from time to time and for the repayment thereof in the Cedis equivalent determined as of the date of withdrawal. (c) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause GRC to perform in accordance with the provi- sions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, including timber, cement and steel, necessary or appropriate to enable GRC to perform such obliga- tions, and shall not take or permit to be taken any action which would prevent or interfere with such performance. As part of the foregoing, the Borrower specifically undertakes to make capital contributions to GRC, on terms and conditions satisfactory to the Association, whenever there is reasonable cause to believe that the funds available to GRC will be inadequate to meet the estimated expenditures required for the execution of the Project, -5- such capital contributions to provide GRC with such funds as are needed to meet fully such expenditures. (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 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. In order to assist the Borrower in carrying out Part H of the Project, the Borrower shall, starting from a date not later than December 31, 1981, employ consultants whose quali- fications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 3.03. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, reports, contract documents and work schedules for Part H of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (4) shall maintain records and procedures adequate to record and monitor the progress of Part H of the Project (including its cost and the benefits to be derived from it), to identify services financed out of the proceeds of the Credit, and to disclose their use in the carrying out of Part H of the Project; (ii) shall enable the Association's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the execution of Part H of the Project, its cost and, where appropriate, the benefits to be derived from it, the expen- diture of the proceeds of the Credit and the services financed out of such proceeds. (c) Promptly after the completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution of Part H of the Project, its cost and the benefits derived and to be -6- derived from it, the performance of the Borrower and the Associa- tion under the Development Credit Agreement and the accomplishment of the purposes of the Credit. ARTICLE IV Other Covenants Section 4.01. Without any limitation or restriction upon the provisions of paragraph (a) of Section 3.01 of this Agreement, the Borrower specifically undertakes: (a) to take all necessary measures to ensure that (i) adequate funds are available to GRC, in the form of capital contributions, to meet the full local costs of the Project and (ii) GRC's requirements of foreign exchange for its normal main- tenance program are promptly met; and (b) to ensure that import licenses and letters of credit for GRC's imports shall be issued promptly and remain valid until the importation of the goods therein is completed. Section 4.02. The Borrower shall: (a) by June 30, 1982, establish a procedure for determining and settling the payments due for Fiscal Year 1978 and subsequent years between GRC and Ghana Ports Authority for services rendered by one party to the other; and (b) promptly thereafter, cause GRC and Ghana Ports Authority to settle any outstanding payments. Section 4.03. Not later than December 31, 1981, the Borrower shall take all necessary steps in order to ensure that the respon- sibility for the procurement of goods and contracts for civil works required for Parts A through G of the Project shall be entrusted entirely to GRC's Board of Directors and its General Manager. Section 4.04. The Borrower shall, not later than December 31, 1981, submit to the Parliament for approval a bill, satisfactory to the Association, introducing amendments to the GRC Decree in order to take the necessary steps to determine in specific terms the functions, powers and responsibilities of the Board and the General Manager of GRC and to establish GRC's financial objectives -7- and policies, which shall, inter alia, provide for the timely preparation and submission by GRC to the Borrower of annual accounts and budget. Section 4.05. The Borrower shall take all measures, including the provision of funds, facilities and other assistance, necessary to cause GRC and the Ghana Post and Telecommunications Corporation carry out a program, satisfactory to the Association, based on the recommendations of the study included under Part G (ii) (c) of the Project. Section 4.06. The Borrower shall make capital contributions to GRC in order to finance all its capital expenditures other than those included under the Project, such contributions to be made as required by GRC until the execution of the Project is completed. Section 4.07. (a) Until the studies included in Part G (ii) (a) and (b) of the Project shall be com1 eted as required in Section 2.08 of the Project Agreement and revised arrangements and targets for GRC's financial performance and the Borrower's future subsidies to GRC shall be agreed upon by the Borrower, the Association and GRC, the Borrower shall compensate GRC, in a manner satisfactory to the Association, for any net losses incurred by it. (b) For purposes of this Section, the term "net losses" includes any net operating deficit, excluding depreciation, but including any net finance and miscellaneous (i.e. non-operating) losses. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) GRC shall have failed to perform any covenant, agreement or obligation of GRC under the Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that GRC will be able to perform its obliga- tions under the Project Agreement; -8- (c) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of GRC or for the suspension of its operations; (d) the GRC Decree or any other legislation or regulation of the Borrower governing the establishment, organization or powers of GRC, shall have been amended, suspended, abrogated, repealed or waived in such a way that, in the judgment of the Association, will matertally and adversely affect the conduct of GRC's business or GRC's financial situation or the efficiency of GRC's management and personnel or the carrying out of the Project; (e) (i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; or (B) any such loan shall have become du.e and payable prior to the agreed maturity thereof; (ii) subparagraph (i) of this paragraph shall not apply if: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consis- tent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) the event specified in paragraph (a) of Section 5.01 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 GRC; and (b) any event specified in paragraph (c) or (d) or (e) (i) (B) of Section 5.01 of this Agreement shall occur. -9- ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Loan Agreement has been executed on behalf of the Borrower arid GRC; and (b) all conditions precedent to the effectiveness of the AfDB Loan Agreement have been fulfilled, except for the effec- tiveness of this Agreement. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Associa4ion: (a) that the Project Agreement has been duly authorized or ratified by GRC, and is legally binding upon GRC in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly author- ized or ratified by the Borrower and GRC and is legally binding upon the Borrower and GRC in accordanc with its terms. Section 6.03. The date // is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Sections 4.01, 4.02 and 4.07 of this Agreement shall cease and terminate on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Principal Secretary of the Ministry of Finance and - 10 - Economic Planning of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Principal Secretary Ministry of Finance and Economic Planning P.O. Box M40 Accra, Ghana Cable address: ECONOMICON Accra 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) 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 - 11 - of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF GHANA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Western Africa - 12 - 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 expenditures for items so to be financed in each Cateogry: Amount of the Credit allocated % of (expressed in Expenditures Category SDR equivalent) to be financed (1) Materials and equip- 4,730,000 100% of foreign ment for track re- expenditures newal, sawmill and quarry equipment (2) Spare parts and sup- 1,380,000 100% of foreign plies for locomotive expenditures repairs and rehabili- tation (3) Machinery and equip- 980,000 100% of foreign ment for freight car expenditures modernization (4) Machinery equipment 810,000 100% of foreign and plant for workshop expenditures and depot moderniza- tion (5) Telecommunication 5,380,000 100% of foreign equipment and expenditures installation (6) Training 1,920,000 100% of foreign expenditures - 13 - Amount of the Credit allocated % of (expressed in Expenditures Category SDR equivalent) to be financed (7) Technical Assistance 3,500,000 85% (repre- and Studies under senting the Parts A through G estimated of the Project foreign ex- penditure component) (8) Technical Assistance 1,050,000 85% (repre- under Part H of the senting the Project estimated foreign ex- penditure component) (9) Unallocated 3,550,000 TOTAL 23,300,000 2. For the purpose of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods and services supplied from the territory of any country other than the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disburse- ment percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made for expendi- tures prior to June 25, 1981 except that withdrawals,in an - 14 - aggregate amount not exceeding the equivalent of $400,000, may be made in respect of Category 7 on account of payments made for such expenditures before that date but after July 1, 1980. 5. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet such estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restric- ting or limiting any other right, power or remedy of the Associa- tion under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 15 - SCHEDULE 2 Description of the Project The Project is part of the GRC's 1980-84 investment plan aimed at upgrading its managerial efficiency through technical assistance and training and at improving its equipment and facilities through repairs and rehabilitation and consists of the following parts: Part A: Carrying out a program of spot track-renewil of the Western Line including the replacement of 22 turnouts and about 85 km of fastenings; purchase and utilization of equipment for the rehabilitation of the sawmill for indigenous production of timber sleepers and of quarry equipment for converting waste stone from the gold mines into ballast and of track maintenance tools and equipment. Part B: Rehabilitation and repair of GRC's fleet of about 36 diesel locomotives. Part C: Freight car modernization, involving replacement of about 1600 plain journal bearings by roller bearings and replacement of about 80 worn out bogies. Part D: Modernization of workshop and diesel locomotive depots involving acquisition and utilization of additional machinery and tools and improvements to layouts. Part E: Improvements to the Block and Telecommunications systems on the Western Line, consisting in replace- ment of bare overhead conductors by an insulated all-weather cable, part replacement and part repairs of the block instruments, and acquisition and utilization of omnibus telephone equipment and mobile wireless equipment. Part F: Establishment of a training school, including the construction and equipment of classrooms and laboratories. - 16 - Part G: A technical assistance program which includes: (i) improvement of GRC's managerial and oper- ational efficic, cy in several key sectors including traffic, accounting, maintenance and training; and (ii) a program of studies covering: (a) all traffic on Eastern and Central Lines and passenger traffic on the Western Line; (b) GRC's accounting and costing methods and tariff structure; and (c) utilization of the public microwave system for railway operations. Part H: A technical assistance program aimed at strength- ening the transport planning capabilities of the TPU. The Project is expected to be completed by June 30, 1985. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the 1ZIL day of 198 -L. FOR SECRETARY