Togo - Phosphate Engineering & Technical Assistance : Credit 1169 - Credit Agreement - Conformed

OFFIC1AL MFIUMTS CREDIT NUMBER 1169 TO * LDOUME~NTSJ Development Credit Agreement (Phosphate Engineering and Technical Assistance Project) between REPUBLIC 'OF TOGO and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1981 CREDIT NUMBER 1169 TO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated Q):4;o , 1981, between REPUBLIC OF TOGO (hereinafter called the Borrower) and INTERNATIONAL DEVEL- OPMENT ASSOCIATION (hereinafter called the Association). 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) any financing so provided by the Association would be refunded, if the Association so requests, out of the proceeds of any credit by the Association or loan by the International Bank for Reconstruction and Development which may later be granted to the Borrower, or any political subdivision thereof, or any enter- prise owned or controlled by, or operating for the account or benefit of the Borrower or of any such subdivision or any subsi- diary of such enterprise, for the carrying out of any project for which studies or designs have been carried out under the Project; (C) the Project will be carried out by the Office Togoiais des Phosphates with the Borrower's assistance and, as part of such assistance, the Borrower will relend to the Office Togolais des Phosphates the proceeds of the Credit as hereinafter provided; .(D) pursuant to an exchange of letters dated June 8 , 1981, and July 20, 1981, between the Borrower and the Association, the Association has granted to the Borrower an advance in various currencies equivalent to seven hundred thousand dollars ($700,000) (9 for the purpose of assisting the Borrower and the Office Togolais des Phosphates in the preparation of the 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 hereinafter set forth and in the Project Agreement of even date herewith between the Association and the Office Togolais des Phosphates; 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 -2- 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 Agreements of the Association 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: (a) "Project Agreement" means the agreement between the Association and the. Office Togolais des Phosphates of even date herewith, as the same may be amended from time to time, and such term includes the Schedule to the Project Agreement and all agreements supplemental to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and the Office Togolais des Phosphates pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time; (c) "OTP" means the Office Togolais des Phosphates, a wholly government-owned company established and existing under the laws of the Borrower. (d) "Project Unit" means the project unit to be established within OTP in accordance with the provisions of Section 3.02 (a) of the Project Agreement. (e) "Phosphate Fertilizer Project" means a project for the manufacture and export of phosphoric acid and phosphate ferti- lizers on the basis of the phosphate deposits at Dagbati and low-grade phosphate slimes recovered from existing rock beneficia- tion operations, the economic and technical viability of which is to be determined on the basis of the studies and activities under the Project. (f) "Advance" means the advance in various currencies equivalent to. seven hundred thousand dollars ($700,000) granted to the Borrower by the Association pursuant to an exchange of letters dated June 8, 1981 and July 20, 1981. -3- 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 equiva- lent to four million eight hundred thousand Special Drawing Rights (SDR 4,800,000). Section 2.02. (a) 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 Associa- tion, 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. (b) After the Effective Date of this Agreement, the Associa- tion shall withdraw from the Credit Account and pay to itself, on behalf of the Borrower, the amount required to repay the principal amount of the Advance withdrawn and outstanding, together with the accrued service charges and other charges, if any, thereon. Any amount of the Advance remaining unwithdrawn shall automatically be cancelled on the same date. Section 2.03. Except as the Association shall otherwise agree, procurement of the 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, 1983 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 15 and November 15 in each year. -4- 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 15, 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. The Chairman of the Board of OTP is designated as representative of the Borrower for the purposes 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) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause OTP 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 actions necessary or appropriate to enable OTP 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 OTP under a subsidiary loan agreement to be entered into between the Borrower and OTP under terms and conditions which shall have been approved by the Association. Such terms and conditions shall include, inter alia, that the proceeds of the Credit shall be relent to OTP for a term of 10 years, includ-ing a grace period of three years, at an interest rate of eleven per cent (11%) per annum, and that the proceeds of the Credit so relent shall be used by OTP for the purposes of the Project and in accordance with Section 2.03 of the Project Agreement. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the -5- 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. (d) To the extent that the aggregate of the proceeds of the Credit relent to OTP pursuant to paragraph (b) of this Section and the amount to be contributed by OTP out of its own resources pursuant to Section 2.01 (b) of the Project Agreement is insuffi- cient to meet all expenditures necessary to complete the Project, the Borrower shall make, or cause to be made, available to OTP all necessary funds promptly as needed. Section 3.02. Upon completion of Parts B.1, .2 and 3 (a) of the Project, the Borrower shall consult with OTP and the Asso- ciation on the conclusions and recommendations relating thereto and shall exchange views with the Association on any proposed implementation of the Phosphate Fertilizer Project, including pre-contracting activities, and its financing. ARTICLE IV Financial Covenant Section 4.01. The Borrower shall take no action which would, on the basis of a reasonable forecast of the revenues and expen- ditures of OTP, cause the projected internal cash generation of OTP for any fiscal year during the execution of the Project to be less than 1.3 times the projected debt service of OTP in such fiscal year on all debt of OTP. For the purposes of this Section: (a) "debt" means any debt incurred by OTP maturing more than one year after the date on which it is originally incurred; (b) "internal cash generation of OTP" means gross income of OTP from all sources less all operating and administrative expenses of OTP excluding depreciation of assets and interest and other charges on debt; (c) "debt service" means the aggregate amount of amortiza- tion (including sinking fund payments, if any) of, and interest and other charges on debt; and (d) the term "reasonable forecast" means a forecast by OTP for each fiscal year prior to the start of such fiscal year -6- prepared on the basis of a draft forecast submitted to the Association for review and which duly takes into account the Association's comments, if any, on such draft, provided that no event has occurred since the preparation of such draft forecast which has or may reasonably be expected in the future to have a material adverse effect on the financial condition or future operating results of OTP. 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, namely, that: (a) OTP shall have failed to perform any covenant, agreement or obligation of OTP under the Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that OTP will be able to perform its obliga- tions under the Project Agreement; (c) the statutes of OTP dated July 10, 1974, as amended by Ordonnance No. 80-17 dated February 4, 1980, shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of OTP to carry out the covenants, agreements and obligations set forth in the Project Agreement; and (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of OTP or for the suspension of its operations. 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 60 days after notice thereof shall have been given by the Association to the Borrower and OTP; and (b) any events specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur. -7- 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 signed on behalf of the Borrower and OTP; and (b) the Project Unit has been established in accordance with the provisions of Section 3.02 (a) of the Project Agreement and the Project Manager and the mining and beneficiation engineer referred to in Section 3.02 (b) of the Project Agreement have taken up their positions. 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 Association: (a) that the Project Agreement has been duly authorized or ratified by the Board of Directors of OTP and the Minister of the Borrower at the time responsible for mines, and is legally binding upon OTP in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and the Board of Directors of OTP and the Minister of the Borrower at the time responsible for mines, and is legally binding upon the Borrower and OTP in accordance with its terms. Section 6.03. The date 0 is hereby speci- fied for the purposes of Se tion 12.0 of the Ge eral Conditions. Section 6.04. The obligations of the Borrower under Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date on which the Project Agreement shall terminate, whichever shall be the earlier. -8- ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister of the Borrower at the time responsible for economy and finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Condi- tions. Section 7.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: ) For the Borrower: Ministere de 'Economie et des Finances B.P. 387 Lome, Togo Cable address: Telex: MINFINANCES 5286 Lome, Togo 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 OTP: Botte Postale 379 Lome Togo Cable address: Telex: Phosphat - Lome 5214 FOSFAT - TO IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 TOGO By Authorized Representat e INTERNATIONAL DEVELOPMENT ASSOCIATION By )s/ A>x cC k& x Regional Vice President Western Africa - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be finapced out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures 0 Category SDR Equivalent) to be Financed (1) Equipment for Part 420,000 100% of for- B.4 of the Project eign expendi- tures and, if procured lo- cally, 90% of local expen- ditures (2) Consultants and experts' 420,000 100% of for- services for Part A eign expendi- of the Project tures (3) Consultants and 2,510,000 100% of for- experts' services eign expendi- for Part B of the tures Project (4) Refunding of the Advance 590,000 100% of amount outstanding (5) Unallocated 860,000 TOTAL 4,800,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; provided, however, that if the currency of the Borrower is also that of - 11 -. another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of 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 disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures: (a) prior to June 30, 1981; and (b) under Categories 1 and 3 until: (i) the Association shall be satisfied, on the basis of the studies and activities carried out under Part A of the Project and of such other con- siderations as it shall deem relevant, that the Phosphate Ferti- lizer Project appears technically and econcmically viable; and .(ii) OTP shall have appointed engineering consultants to assist it in carrying out Part B of the Project in accordance with Section 2.02 of the Project Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower, reallocate to such Category, to the extent required to meet the 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. 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 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. 0 SCHEDULE 2 Description of the Project The principal purpose of the Project is to assist the Bor- rower in determining the technical and economic viability of the Phosphate Fertilizer Project. The Project consists of: Part A: Phase I 1. Rock Tests on the Phosphate Deposits at Dagbati (a) Preliminary and comprehensive tests on the physical and chemical properties of the phosphate deposits. (b) Tests to determine the optimal beneficiation process. 2. Mining Studies On the basis of currently known reserves of phosphate depos- its at Dagbati: (a) establishment of a mining plan; (b) estimation of requirements for mining equipment and rock transport facilities; and (c) estimation of overall investment and production costs for the mining, transport and beneficiation of the rock in said deposits. 3. Preliminary Studies for Phosphate Fertilizer Project (a) Preliminary assessment of technical and economic viability of the Phosphate Fertilizer Project, particularly in light of the possibility of directly exporting the Dagbati rock, and determination of optimum project size and product mix. (b) Determination of preliminary design criteria of facilities for the manufacture of phosphoric acid and phosphate fertilizers. IL4I - 14 - (c) Evaluation of principal requirements for offsite facilities and infrastructure, including utilities and effluent disposal. (d) Preparation of a report to assess the results of the Phase I activities and studies and, if necessary, to recommend and draw up terms of reference for further studiei and experi- mental work. Part B: Phase II . 1. Infrastructure for the Phosphate Fertilizer Project (a) Determination of optimum site location. for the phos- phoric acid and phosphate fertilizer plants, port and railway facilities. (b) Assessment of needs and supplies of power and fresh and salt water. - (c) Evaluation of the environmental impact of effluent disposal of gypsum and fluorine compounds. 2. Market Studies (a) Review of world markets for phosphoric acid and phos- phate fertilizers and development of an export marketing strategy. (b) Review of the supplies of sulphur in the world and determination of the most promising sources of sulphur supply for the 2hosphate Fertilizer Project. (c) Review and evaluation of alternative arrangements for shipping phosphoric acid. 3. Feasibility Report and Initial Implementation of the Phcsphate Fertilizer Project (a) Preparation of a complete feasibility report for the Phosphate Fertilizer Project, including, inter alia: (i) basic engineering design; (ii) detailed capital cost estimates (including the mine, processing plants, and infrastructure and utility facilities); (iii) detailed estimates of operating costs; (iv) detailed economic and financial analyses; and (v) organizational arrangements and time schedules. (b) Pre-contracting activities for the Phosphate Fertilizer Project including, inter alia, preparation of bid and cc-ract documents, prequalification of bidders, evaluation of bids and recommendation of contract -awards. 4. Evaluation of Potential Phosphate Reserves Geological surveys, core drillings, beneficiation and rock tests to assess the quantity and quality of potential phosphate reserves near the main known deposits with a view to determining the long-term strategy for the phosphate sector. The Project is expected to be completed by July 31, 1983. 41 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 day of 198 L. FOR SECRETARY