Ghana - Oil Palm Project : Credit 0531 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 531 GH Development Credit Agreement (Oil Palm Project) BETWEEN REPUBLIC OF GHANA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MARCH 5, 1975 CONFORMED COPY CREDIT NUMBER 531 GH Development Credit Agreement (Oil Palm Project) BETWEEN REPUBLIC OF GHANA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MARCH 5, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated March 5, 1975, between REPUBLIC OF GHANA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) The Project will be carried out primarily by Ghana Oil Palm Development Corporation with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Ghana Oil Palm Development Corporation most of the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and Ghana Oil Palm Development 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 March 15, 1974, 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) "Agricultural Development Bank" means the statutory corporation established pursuant to Act 286 of the Borrower for the purpose inter alia of providing credit to farmers; 4 (b) "GOPD" means Ghana Oil Palm Development Corporation, a statutory corporation established under the Statutory Corporations Act, 1964 (Act 232) of the Borrower; (c) "Nucleus Plantation Area" means an area of about 10,000 acres around Kwae approximately within the boundaries shown on the Bank's Map No. IBRD 10271 ("Kade Oil Palm Project," January 1973); (d) "Nucleus Plantation" means the oil palm plantation to be established in the Nucleus Plantation Area; (e) "Outgrower" means a person or association cultivating, or proposing to cultivate, oil palms in the Project Area; (f) "Project Agreement" means the agreement between the Association and GOPD of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (g) "Project Area" means all land, excluding forest reserves, within a radius of about 15 miles of the town of Kwae; and (h) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and GOPD pursuant to Section 3.01(c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan 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 set forth or referred to, an amount in various currencies equivalent to thirteen million six hundred thousand dollars ($13,600,000). 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, 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. 5 Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or the carrying out of works or services (other than consultants' services) for the Project and to be financed out of the proceeds of the Credit, shall be awarded in accordance with the provisions set forth or referred to in Section 2.05 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1983 or such other date as shall be agreed between the Borrower and the Association. 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 semi-annually on June 15 and December 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 15 and December 15 commencing December 15, 1984 and ending June 15, 2024, each installment to and including the installment payable on June 15, 1994 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. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts F and G of the Project with due diligence and efficiency and in conformity with appropriate engineering practices, and shall provide, promptly as needed, the funds, facilities, services and othe- resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause GOPD 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 action, including the provision of land, funds, facilities, services and other resources necessary or appropriate to enable GOPD to perform such obligations, and shall not take or permit to be taken any action which would 6 prevent or interfere with such performance. Without limitation to its obligations under this Section, the Borrower undertakes to provide GOPD quarterly with such funds as will be required to meet GOPD's budgeted expenditures for the three month period beginning with the date funds are made available to GOPD, taking into account unencumbered funds of GOPD held at the time and funds to be provided from sources other than the Borrower. Such funds shall be provided in accordance with the financial arrangements referred to in Section 3.03 of the Project Agreement. (c) Except as the Association shall otherwise agree, the Borrower shall make the proceeds of the Credit for Parts A to E inclusive of the Project available to GOPD under terms and conditions which shall have been approved by the Association pursuant to a Subsidiary Loan Agreement to be entered into between the Borrower and GOPD. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect its interests and those of 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. (e) For the purposes of carrying out Part G of the Project, (i) the Borrower will retain, or will cause the Agricultural Development Bank to retain, on terms and conditions satisfactory to the Association, the services of the consultants who were employed to carry out Part C of the Sugar Rehabilitation Project, as defined in the Development Credit Agreement between the Borrower and the Association, dated January 29, 1973; and (ii) the Borrower shall cause the Agricultural Development Bank to comply with the requirements of Section 3.02(b) of the Project Agreement between the Association and such Bank in connection with the continued employment of such consultants as if such consultants had been financed by the Association pursuant to the aforementioned Development Credit Agreement, dated January 29, 1973. Section 3.02. The Borrower shall promptly take all requisite steps for the acquisition and retention by GOPD of all such land, interests in land and other rights in respect of land as are required for Part A of the Project and ensure that good title to such land is vested in GOPD by June 30, 1976 free from all encumbrances, adverse claims, or any other form of interference. The Borrower shall take appropriate action to ensure that the proprietary interest of each Outgrower in land to be planted under Part B of the Project is duly defined and recorded with the office of the District Administrative Officer, Kade, prior to the participation of such Outgrower in Part B of the Project. 7 Section 3.03. The Borrower shall inform the Association of any policy changes in respect of its fertilizer subsidy program. Section 3.04. Except as the Association shall otherwise agree, the Borrower shall ensure that arrangements acceptable to the Association are made for (a) the engineering and construction of the road to be constructed as Part F of the Project and (b) for the maintenance of all roads in the Project Area (other than in the Nucleus Plantation) to a standard which will enable a seven-ton lorry to use them at all times. Section 3.05. The Borrower shall establish an appropriate Committee for the purpose of: (a) prescribing the formula for determining the price to be paid by GOPD to the Outgrowers for palm fruit; (b) reviewing from time to time the price so paid to Outgrowers; and (c) advising GOPD as to the proportion to be paid as bonuses to Outgrowers pursuant to Section 3.07(b) of the Project Agreement. The formula for the price of palm fruit so prescribed shall at all times be acceptable to the Borrower and the Association. Section 3.06. The Borrower shall appoint a Managing Director of GOPD acceptable to the Association and shall maintain in such office at all times a person with qualifications and experience acceptable to the Association. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) GOPD shall have failed to perform any covenant, agreement or obligation of GOPD under the Project Agreement or the Subsidiary Loan Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that GOPD will be able to perform its obligations under the Project Agreement. (c) Legislative Instrument No. 1000 of 1975 of the Borrower shall have been amended, suspended, abrogated, repealed or waived in such a way as to affect materially and adversely the ability of GOPD to carry out the covenants, agreements and obligations set forth in the Project Agreement. 8 (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of GOPD or for the suspension of its operations. (e) GOPD shall have sold, leased, transferred or otherwise disposed of a substantial portion of its property or assets financed in part out of the proceeds of the Credit, other than in the ordinary course of business, without the prior consent of the Association. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 4.01 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 (b) any event specified in paragraphs (c), (d) and (e) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01(b) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of GOPD have been duly authorized or ratified by all necessary corporate and governmental action. (b) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and GOPD have been duly authorized or ratified by all necessary corporate and governmental action. (c) The Borrower shall have acquired and transferred to GOPD not less than about 3,000 acres of land suitable for oil palm planting in the Nucleus Plantation Area. (d) GOPD shall have entered into a contract with a plant breeding consultant as provided in Section 2.02(c) of the Project Agreement. 9 (e) GOPD shall have entered into a contract with a firm of consultants experienced in oil palm planting and management as provided in Section 2.02(b) of the Project Agreement. (f) GOPD's form of loan agreement to be concluded with Outgrowers for the supply of credit under Part B of the Project shall have been approved by the Association. (g) An agreement acceptable to the Association shall have been entered into between the Borrower and GOPD for providing the Borrower's funds for the Project to GOPD. (h) A person acceptable to the Association shall have assumed full time the duties of Managing Director of GOPD. Section 5.02. 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, and executed and delivered on behalf of, GOPD, and constitutes a legally binding obligation of GOPD in accordance with its terms. (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and GOPD and constitutes a legally binding obligation of the Borrower and GOPD in accordance with its terms. Section 5.03. The date June 13, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. (a) The obligations of the Borrower under Sections 3.01(a), 3.02 and 3.04 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 25 years after the date of this Agreement, whichever shall be the earlier. (b) The obligations of the Borrower under Section 3.06 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date ten years after the date of this Agreement, whichever shall be the earlier. 10 ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Senior Principal Secretary, Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Principal Secretary Ministry of Economic Planning P.O. Box M76 Accra, Ghana Cable address: ECONOMICOM Accra 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. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 11 in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF GHANA By /s/ Samuel Ernest Quarm Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ R. Chaufournier 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 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 Category Dollar Equivalent) to be Financed (1) Civil works and 1,790,000 58% housing (2) Vehicles, equip- 300,0 100% of foreign ment and agricul- expenditures tural inputs (3) Seedlings, cover 1,590,000 53% crop, GOPD ex- penses and local salaries (4) GOPD expatriate 430,000 100% of foreign salaries and ex- expenditures and penses 73% of local ex- penditures (5) Technical assis- 80,000 100% of foreign tance and train- expenditures and ing in connection 50% of local ex- with Parts A penditures through E of the Project (6) Technical assis- 200,000 100% of foreign tance referred expenditures to in Part G of the Project (7) Unallocated 5,710,000 TOTAL 13,600,000 13 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from the territory, and in the currency, of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower, and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance 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 any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Credit, the Association may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement, except that withdrawals may be made (i) in respect of Categories 1, 2, 3, 4 and 5 on account of expenditures incurred after June 1, 1974 in an aggregate amount not exceeding the equivalent of $600,000 and (ii) in respect of Category 6 on account of expenditures incurred after July 31, 1974 in an aggregate amount not exceeding the equivalent of $200,000. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph I 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: (i) 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, 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 14 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. 15 SCHEDULE 2 Description of the Project The Project is the first phase of the Borrower's oil palm development program to be carried out over an area of approximately 13,000 acres and consists of the following components: Part A: Establishing and operating an oil palm plantation of about 10,000 acres in the Nucleus Plantation Area; Part B: Provision of technical services and credit facilities to develop about 3,000 acres of Outgrower plantings adjacent to motorable roads leading to the Nucleus Plantation; Part C: Construction and operation of a palm oil mill with a capacity of 10 tons of oil palm fruit bunch per hour to be located on the Nucleus Plantation, and establishing a fruit collection system for Outgrowers; Part D: Training Outgrowers and GOPD personnel; Part E: Implementation of field trials with oil palms; Part F: Building a road of about 10 miles' length in the vicinity of the Nucleus Plantation connecting such points, and pursuant to such specifications, as the Association shall approve; and Part G: Technical Assistance to the Agricultural Development Bank in implementing improved credit accounting and control, reviewing its financial position, advising on credit policies and procedures and assisting in staff training. * * * * The Project is expected to be completed by December 31, 1982.