Somalia - Mogadiscio Port Extension Project : Credit 0586 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 586 SO Project Agreement (Mogadiscio Port Extension Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND SOMALI PORT AUTHORITY DATED OCTOBER 15, 1975 PROJECT AGREEMENT AGREEMENT, dated October 15, 1975, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the SOMALI PORT AUTHORITY (hereinafter called SPA). WHEREAS by the Development Credit Agreement of even date herewith between Somali Democratic Republic (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 two hundred thousand dollars ($5,200,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that SPA agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement between the Borrower and SPA, funds equivalent to the proceeds of the credit provided for under the Development Credit Agreement will be made available to SPA; and WHEREAS SPA, 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. SPA shall assist the Borrower in carrying out the Project described in Schedule 2 to the Development Credit Agreement. 4 Section 2.02. In order to assist SPA in port management, accounting and training of port personnel, SPA shall appoint management consultants acceptable to the Association upon terms and conditions satisfactory to the Association. Section 2.03. Except as the Association may otherwise agree, SPA 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 2.04. (a) SPA: (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 l'inanced out of such proceeds. (b) SPA shall enable the Association's representatives to examine all installations, sites, works, buildings, property and equipment of SPA and any relevant records alnd documents. Section 2.05. SPA shall duly perform all its obligations undler the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, SPA 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 2.06. (a) SPA 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 01' the Credit. (b) SPA 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 SPA of its obligations under this Agreement and under the Suhsidiary Loan Agreement. 5 ARTICLE 111 Management and Operations of SPA Section 3.01. SPA shall take out and maintain with responsible insurers insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.02. SPA shall, during the period of construction of the Project, take all such measures as shall be necessary or advisable to ensure, to the satisfaction of the Association, the continued and efficient use of the present harbor at Mogadiscio. Section 3.03. SPA shall at all times carry on its operations under qualified and experienced managerial staff, with sufficient supporting staff, in accordance with sound port operating practices. Section 3.04. SPA shall adequately maintain the works, installations and equipment used in SPA's port operations at Mogadiscio and in all other ports under SPA's jurisdiction, and promptly make all necessary renewals and repairs thereof, * all in accordance with sound engineering and port management standards and practices. Section 3.05. SPA shall at all times take all steps necessary to maintain its right to carry on its operations, including the Project, and shall, except as the Association shall otherwise agree, take all steps necessary to acluire and retain such land, interests in land and properties, and to acquire, maintain and renew such licenses, consents, franchises and other rights, as may be necessary or useful for the construction of the Project and the cariying on of SPA's operations. ARTICLE IV Financial Covenants Section 4.01. SPA shall maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition. Section 4.02, SPA 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 6 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 SPA and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. SPA undertakes that, in financing any capital investment, it shall not incur any debt unless its net revenue for the fiscal year next preceding the date of such incurrence or for a later twelve-month period ending prior to the date of such incurrence, whichever is greater, shall be not less than 1.5 times the maximum debt service requirements for any succeeding year on all its debt, including the debt to be incurred. For the purposes of this Section: (a) the term "debt" means all debt, including debt assumed or guaranteed by SPA, except debt incurred in the ordinary course of business and maturing by its terms on demand or less than one year after its incurrence, (b) debt shall be deemed to be incurred on the date on which a contract or loan agreement or guarantee agreement is executed; (c) the term "net revenue" means gross operating revenue of SPA, adjusted to account of 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 period to which such revenue relates, less all operating expenses, including adequate maintenance, and administrative expenses, but before provision for depreciation, and interest and other charges on debt; (d) the term "debt service requirements" means the aggregate amount of amortization (including sinkingy fund provisions), interest and other charges on debt; an d (e) whenever it shall be necessary to value in the currency used in the territory 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 curIrTency is obtainable by SPA, at the time such valuation is made, for the puIposes of servicing such debt, or if such other currency is not obtainable, at a rate of exchange reasonably determined by the Association. 7 Section 4.04. (a) Except as the Borrower and the Association shall otherwise agree, SPA shall from time to time take all necessary measures, including but not limited to adjustments in its tariffs, as shall be required to enable SPA to earn an annual rate of return of not less than 4.5% in 1977 and not less than 5% for each year thereafter. (b) The provisions of paragraph (a) above supersede those set forth in Section 4.03(a) of the Project Agreement (Mogadiscio Port Project) dated March 15, 1973 between the Association and SPA. For the purposes of this Section: (i) the annual rate of return shall be calculated in respect of each fiscal year by relating the operating surplus for that year to the average of the value of the net fixed assets in operation at the beginning and at the end of that year; (ii) the term "operating surplus" shall mean the difference between (A) operating revenue and (B) operating and administrative expenses, including adequate maintenance and depreciation, but excluding interest and other charges on debt and income taxes (if any); and (iii) the term "value of net fixed assets in operation" shall mean the gross value of fixed assets in operation less the accumulated depreciation, both as valued from time to time in accordance with sound and consistently maintained methods of valuation acceptable to the Association. Section 4.05. Subject to the requirements of Section 4.04 hereof, SPA shall, by January 1, 1976, or such later date as shall be agreed by the Association, take all necessary measures to introduce and maintain tariffs of CLues and rates, on the following basis: (a) dues and rates will be set as far as practicable for each port individually; (t.) CLues and rates will be levied for all ships and goods using the ports' facilities and services: and (c) except as SPA and the Association shall otherwise agree, CLues and rates for services and facilities will be based on, and cover not less than, the costs of those services and facilities, and will take into account the desirability of ensuring 8 that economic benefits (particularly those enjoyed by ships) resulting from the port investments accrue to the economy of the Borrower. 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 Agr,,,rnent and all obligations of the Association and of SPA thereunder shall terminate on the date on which the Development Credit Agreement shall terminate in accordance with its terms, except that the obligations of SPA under Articles III and IV of this Agreement shall cease and determine 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 thirty 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 SPA 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 Development Credit Agreement. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made inder 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 dluly 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: 0 S 9 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 SPA: Somali Port Authority Mogadiscio Somali Democratic Republic Cable address: SOMALPORT Mogadiscio 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 SPA may be taken or executed by the Director General. or such other person or persons as he shall designate in writing. Section 6.03. SPA shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of SPA, take any action or execute any documents required or permitted to be taken or executed by SPA 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. 10 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 / S. Shahid Husain Reginnal Vice President Eastern Africa SOMALI PORT AUTHORITY By /s / Abdullahi Ahmed Addou Authorized Representative