Chad - Lake Chad Polders Project : Credit 0592 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 592 CD Project Agreement (Lake Chad Polders Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND SOCIETE DE DEVELOPPEMENT DU LAC DATED NOVEMBER 26, 1975 PROJECT AGREEMENT AGREEMENT, dated November 26, 1975, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and SOCIETE DE DEVELOPPEMENT DU LAC (hereinafter called SODELAC). WHEREAS by the Development Credit Agreement of even date herewith between Republic of Chad (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to five million dollars ($5,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that SODELAC agree to uindertake such obligations toward the Association as hereinafter set forth; and WHEREAS the Borrower has agreed to make available to SODELAC the proceeds of the credit provided for under the Development Credit Agreement, in accordance with Section 3.01(b) of the Development Credit Agreement; and WHEREAS SODELAC, 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: 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. ARTICLE II Execution of the Project Section 2.01. SODELAC 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, irrigation, agricultural and engineering practices. 4 Section 2.02. (a) For the purpose of day-to-day management and coordination in carrying out the Project, SODELAC shall establish the Project Unit, with such organization, responsibilities, power and staff as are specified in Schedule 2 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower, SODELAC and the Association. (b) Until the consultant's recommendations referred to in Section 3.03(b) of this Agreement, and the timetable for their implementation, shall have been approved by the Borrower and the Association, the Project Unit shall remain administratively and financially independent from SODELAC's other activities. (c) After the completion of the Project, the Project Unit's responsibilities shall be transferred to SODELAC. Section 2.03. (a) In order to assist SODELAC (i) in analyzing bids for the Project and in supervising the construction of irrigation works under the Project; (ii) in training local counterparts; and (iii) in providing, under Part 11(b) of the Project, the staff required by the Project Unit for the functions set forth in paragraph 1, of Schedule 2 to this Agreement, SODELAC shall select an engineering and agricultural consulting company acceptable to the Association to provide experts to be employed upon terms and conditions satisfactory to the Association. (b) In order to assist SODELAC in carrying out Part V of the Project, SODELAC shall employ experts who qualifications and experience shall be satisfactory to the Association. Section 2.04. Except as the Association shall otherwise agree, the goods, works or services (other than consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions of Schedule I to this Agreement. Section 2.05. (a) SODELAC 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 SODELAC to replace or repair such goods. (b) Except as the Association may otherwise agree, SODELAC 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. 5 Section 2.06. (a) SODELAC shall furnish to the Association promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) SODELAC: (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 "n it and the goods and services financed out of such proceeds. (c) SODELAC shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of SODELAC and any relevant records and documents. Section 2.07. (a) SODELAC 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 other matters relating to the purposes of the Credit. (b) SODELAC 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 SODELAC of its obligations under this Agreement. Section 2,08. In organizing the settlement of farmers on the newly developed polder lands, SODELAC shall: (a) seek the Association's approval prior to allotting an area of more than two hectares to any farming family; and (b) make such allotments to farmers on terms and conditions satisfactory to the Borrower and the Association. Section 2.09. SODELAC shall provide agricultural credit to farmers under Part 111(b) of the Project for the purpose, inter alia, of purchasing farm inputs 6 and equipment, under procedures and on terms and conditions satisfactory to the Borrower and the Association. Section 2.10. (a) In order to ensure adequate marketing for wheat produced by the farmers under the Project, SODELAC shall, on behalf of said farmers, enter into a long-term agreement with the company Grands Moulins diu Tchad (hereinafter called GMT) providing that GMT shall purchase all wheat marketed by aforesaid farmers at a price based on a formula to be established pursuant to paragraph (b) of this Section. (b) SODELAC shall take all steps required on its part for the establishment, in agreement with GMT and not later than December 31, 1976, or such later date as the Association may agree, of a wheat price formula which shall (i) reflect the current economic value of the wheat produced on the newly developed lands, taking into account GMr's milling costs; and (ii) be acceptable to the Association. Section 2.11. (a) In order to ensure adequate marketing for cotton produced by the farmers under the Project, SODELAC shall, on behalf of said farmers, enter into a long-term agreement with Societe Cotonnie-re du Tchad (hereinafter called COTONTCHAD) providing that COTONTCHAD shall purchase all cotton marketed by aforesaid farmers at a price determined in accordance with paragraph (b) of r this Section. (b) The price to be paid by COTONTCHAD for cotton produced under the Project shall be at a level acceptable to the Association and shall at all times (i) be equivalent to prices applicable to rainfed short staple cotton augmented by reasonable premiums for products with longer staple and of better quality and adjusted to take account of the low transportation costs due to the ginnery's proximity; and (ii) be consistent with the current world market price of' cotton. Section 2.12. SODELAC shall pay to farmers under the Project for their wheat and cotton the prices determined as specified in Sections 2.10 and 2.11 of this Agreement without deduction other than for the cost of transportation of such wheat and cotton and the cost-recovery charges referred to in Section 4.03 of this Agreement. ARTICLE III Management and Operations of SODELAC Section 3.01. (a) SODELAC shall at all times manage its affairs, maintain its financial position, and carry on its operations, all in accordance with appropriate 7 administrative, financial, engineering, agricultural and irrigation practices and under the supervision of qualified and experienced management and staff. (b) SODELAC shall adequately maintain the works, installations and equipment used in its operations and promptly make all necessary renewals and repairs thereof, all in accordance with sound engineering, irrigation and agricultural practices. (c) SODELAC shall at all times take all such action as shall be necessary on its part to acquire, maintain and renew all rights which are necessary or useful for the purpose of carrying out its obligations under this Agreement. Section 3.02. SODELAC shall 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 appropriate practice. Section 3.03. (a) In order to assist SODELAC in its reorganization under Part 11(a) of the Project, SODELAC shall within six months after the Effective Date, or such later date as the Association shall agree, employ a consultant acceptable to the Association upon terms and conditions satisfactory to the Association. (b) SODELAC shall, not later than one year after the appointment of the consultant referred to in paragraph (a) of this Section, submit said consultant's recommendations to the Borrower and the Association for their review in order to enable the Borrower, the Association and SODELAC to establish, in consultation with each other, a timetable for the implementation of said recommendations. ARTICLE IV Financial Covenants Section 4.01. (a) SODELAC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. (b) SODELAC shall maintain, or shall cause the Project Unit to maintain, separate accounts for the Project Unit. Section 4,02. SODELAC shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements), as 8 well as those of the Project Unit, 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 said 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 SODELAC and the Project Unit and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. In accordance with procedures satisfactory to the Association, SODELAC shall take all necessary measures to collect annually from the farmers under the Project beginning not later than twelve months after the settlement of any such farmers, a consolidated cost-recovery charge at a level (i) initially set provisionally at CFAF130,000 per hectare; (ii) to be acceptable at all times to the Borrower and the Association; and (iii) to be reviewed annually by the Borrower, the Association and SODELAC until a mutually satisfactory formula for determining such charge shall have been established. 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 SODELAC 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 twenty-five 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 SODELAC 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 Article VI of the General Conditions. 9 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 this 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 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 SODELAC: Soci'dt de Developpement du Lac P. 0. Box 782 N'Diamena Republic of Chad Cable address: SODELAC N'Djamena Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed under this Agreement on behalf of SODELAC may be taken or executed by SODELAC or such other person or persons as SODELAC shall designate in writing. Section 6.03. SODELAC shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons 10 who will, on behalf of SODELAC, take any action or execute any documents required or permitted to be taken or executed by SODELAC pursuant to any of the provisions of this Agreement. Section 6.04. This 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 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 / Xavier de la Renaudiere Director, Country Programs Department Western Africa Regional Office SOCIETE DE DEVELOPPEMENT DU LAC By /s / B. Alingue Authorized Representative 11 SCHEDULE 1 Procurement A. Procurement of Goods 1. Except as provided in Part A.3 hereof, equipment, cement, vehicles and chemicals shall be procured under contracts to be awarded 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 April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding, 2. Contracts shall be grouped so as to permit bulk procurement consistent with appropriate technical standards and procurement practices. 3. With respect to any contract for individual items of equipment, cement, vehicles and chemicals or any bulk contract for such items estimated to cost less than S25,000, SODELAC may, up to an aggregate amount of $500,000 to be financed out of the proceeds of the Credit, award such contracts on the basis of competitive bidding advertised locally and in accordance with local procedures acceptable to the Association. B. Review of Procurement Decisions by Association 1. Review of invitation to bid and of proposed awards and final contracts. With respect to all contracts for equipment, cement, vehicles and chemicals estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, SODELAC 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, SODELAC shall, before a final decision on the award is made, inform the Association of the narie of the bidder to which it intends to award the contract and the reasons for the intended award and shall furnish to the Association, in sufficient time for its review, 12 a detailed report by the Project Unit on the evaluation and comparison of the bids received, together with the recommendation for award 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 SODELAC 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 wer, 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. 2. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, SODELAC 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 bids, recommendations for award and such other information as the Association shall 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 SODELAC and state the reascns for such determination. 13 SCHEDULE 2 Project Unit Staff and Responsibilities 1. Staffing The Project Unit shall consist of the following staff: (a) a Project Unit Manager (b) a Director of Field Operations (c) a Rural Engineer (d) a Chief Mechanic (e) a Topographer (f) a Director of Administration and Marketing (g) a Manager of Mechanized Agricultural Section (h) a Senior Extension Officer (i) a General Foreman (j) a Foreman 2. Responsibilities (a) The Project Unit Manager shall be responsiWle, inter alia, for the following, under the authority of SODELAC's President Directeur General: (i) coordination of all Project activities; (ii) monitoring payments to contractors and suppliers; (iii) all Project personnel matters; (iv) coordination with local authorities, particularly with respect to the selection of settlers; and 14 (v) design and implementation of training programs for local staff assigned to the Project. (b) The Director of Field Operations shall, under the authority of the Project Manager, be responsible for all agricultural aspects of the Project, including, inter alia, the following: (i) preparation of operating field budgets for the Project Unit's rollover commercial cropping program and for smallholder operations; (ii) organization of seed multiplication in association with the Institute for Cotton and Textile Research and the Research Unit at Matafo; (iii) provision of mechanical and technical services for smallholders; (iv) selection of smallholders in association with the Comite de D'veloppement Prdfectoral; (v) preparation of adequate training programs for smallholders and staff assigned to the Project; (vi) arrangements for the procurement and distribution of farm inputs; and (vii) arrangements for the storage and marketing of all agricultural products from the newly developed polders. (c) The Rural Engineer shall be responsible for the following, under the authority of the Project Manager: (i) necessary arrangements for analyzing bids from and awarding contracts to contractors and suppliers; (ii) supervision and control of the execution of the irrigation works by contractors; (iii) planning and coordination of the execution of the irrigation works under force account; and (iv) supervision of the operation of the irrigation and drainage systems. 15 (d) The Chief Mechanic shall be responsible for the following, under the authority, until the irrigation works are completed, of the Rural Engineer, and thereafter of the Project Manager: (i) supervision of the operation and maintenance of all equipment and vehicles; (ii) supervision of the operation of the pumping stations and the water distribution system; (iii) operation of a workshop with the capacity to maintain equipment, vehicles and pumping stations; and (iv) arrangements for the maintenance of an adequate supply of fuel and spare parts. (e) The Topographer shall be responsible for the following under the authority of the Rural Engineer: (i) assistance to the Rural Engineer in the supervision of the irrigation works by contractors; and (ii) participation in the execution of the irrigation works under force account. (f) The Director of Administration and Marketing shall, under the authority of the Project Manager, be responsible for controlling all financial matters with respect to the Project, including, inter alia, the following: (i) drawing up a chart of accounts and keeping accounting records for the construction works and the Project Unit; (ii) preparation of budgets, cash flows and estimates of expenditures; (iii) preparation of withdrawal applications to the various sources of finance for the Project; (iv) internal auditing; (v) establishment of an efficient system of recording agricultural credit transactions; (vi) responsibility for project stores; 16 (vii) recruitment of staff and handling of personnel problems; and (viii) organization and supervision of the marketing of project crops. (g) The Manager of the Mechanized Agricultural Se-tion shall, under the authority of the Director of Field Operations, be responsible for the supervision of the production of cotton and wheat on up to 400 ha of land and the provision of mechanical services to farmers under the Project. His responsibilities will specifically include the following: (i) hiring labor; (ii) supervision of all mechanized production activities; (iii) recommending to the Director of Field Operations technical parameters requir,d for crop production; (iv) annual assessment of farm input requirements; and (v) control of machinery and equipment for both Project Unit and smallholder operations. (h) The Senior Extension Officer shall, inder the authority of the Director of Field Operations, be responsible for smallholder development, including, inter alia, the following: (i) provision of extension and credit services to smallholders; (ii) training of extension staff and project farmers; (iii) liaising with the Commercial Manager for the use of mechanized equipment; (iv) initiation of procedures for defining settlement areas and settling farmers; (v) preparation of budgets for the smalliholder development; and (vi) liaison with the research unit at Matafo on all agricultural and social research programs. (i) The General Foreman (Conclucteur c/e Tra)'aux) shall be responsible for the following under the authority of the Rural Engineer: 17 (i) organization, planning and control of the execution of irrigation works under force account; and (ii) supervision of timely procurement of equipment and supplies. (j) The Foreman shall, under the authority of the General Foreman, supervise construction crews.