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

CONFORMED COPY CREDIT NUMBER 531 GH Project Agreement (Oil Palm Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND GHANA OIL PALM DEVELOPMENT CORPORATION DATED MARCH 5, 1975 PROJECT AGREEMENT AGREEMENT, dated March 5, 1975, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and GHANA OIL PALM DEVELOPMENT CORPORATION (hereinafter called GOPD). WHEREAS by the Development Credit Agreement of even date herewith between Republic of Ghana (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to thirteen million six hundred thousand dollars ($13,600,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that GOPD agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a Subsidiary Loan Agreement between the Borrower and GOPD, most of the proceeds of the credit provided for under the Development Credit Agreement will be made available to GOPD on the terms and conditions therein set forth; and WHEREAS GOPD, 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. GOPD shall carry out Parts A to E inclusive of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices. 4 Section 2.02. (a) In order to assist GOPD in the preparation of bidding documents for Part C of the Project and the supervision and implementation of the works thereunder, GOPD shall employ engineering consultants acceptable to the Association upon terms and conditions satisfactory to the Association. (b) In order to assist GOPD in its management and training of its staff, GOPD shall employ consultants experienced in oil palm planting and management acceptable to the Association on terms and conditions acceptable to the Association. (c) In order to assist GOPD in its planting program, GOPD shall employ a plant breeding consultant acceptable to the Association on terms and conditions acceptable to the Association. Section 2.03. GOPD shall prepare, in consultation with the Borrower, a program for the training of Ghanaian staff within six months of the Effective Date with a view to replacing non-Ghanaian staff according to a schedule to be reviewed from time to time in consultation with the Borrower and the Association. Section 2.04. In carrying out Part C of the Project, GOPD shall employ contractors acceptable to the Association upon terms and conditions satisfactory to the Association. Section 2.05. 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 of the Schedule to this Agreement. Section 2.06. (a) GOPD undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available 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 GOPD to replace or repair such goods. (b) Except as the Association may otherwise agree, all goods and services financed out of the proceeds of the Credit shall be used exclusively for the Project until its completion. Section 2.07. (a) GOPD shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. 5 (b) GOPD: (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 made available 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 made available to it and the goods and services financed out of such proceeds. (c) GOPD shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of GOPD and any relevant records and documents. Section 2.08. GOPD shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, GOPD 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 2.09. (a) GOPD shall, at the request of the Association: (i) 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 of the Credit; and (ii) furnish to the Association all such information as the Association shall reasonably request in respect of the Project. (b) GOPD 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 GOPD of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.10. GOPD shall cooperate with the agricultural research agencies of the Borrower in carrying out Part E of the Project. Section 2.11. GOPD shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. 6 Section 2.12. Except as the Association shall otherwise agree, (a) GOPD shall not engage in any business other than the carrying out of Parts A to E inclusive of the Project for a period of five years commencing on the Effective Date; and (b) GOPD shall carry out palm fruit collection from Outgrowers through its own employees. ARTICLE III Financial Covenants Sec- )n 3.01. GOPD shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 3.02. GOPD shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each financial 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 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 GOPD and the audit thereof as the Association shall from time to time reasonably request. Section 3.03. (a) The financing of GOPD shall be carried out in accordance with the agreement referred to in Section 5.01(g) of the Development Credit Agreement. (b) GOPD shall obtain the approval of the Association prior to effecting (i) any changes in such agreement, (ii) other financial arrangements with the Borrower, or (iii) participation in its equity by others. Section 3.04. GOPD shall set the initial millgate price for its palm oil at a level acceptable to the Borrower and the Association and shall thereafter from time to time consult with the Association on its palm oil pricing policy. Section 3.05. In carrying out Part B of the Project GOPD shall: (a) provide loans repayable within 21 years, including a nine year grace period as to principal, to Outgrowers at an interest rate of not less than 8% per annum, said interest to be capitalized during the first nine years, pursuant to loan 7 agreements substantially in the form of agreement referred to in Section 5.01(f) of the Development Credit Agreement; and (b) obtain the Association's concurrence prior to making any changes in its lending policy and other arrangements for Outgrowers' credit. Section 3.06. GOPD shall establish an Outgrower loan committee, to be responsible for approving credit applications by Outgrowers, consisting of the Nucleus Plantation Manager (as chairman), head of the Outgrower Section, the Senior Accountant, and a representative of the Ministry of Agriculture of the Borrower, and the Agricultural Development Bank; provided, that no credit application shall be approved if, as a result, the total oil palm planting of a single Outgrower family aided by loans from GOPD would exceed 20 acres. For purposes of this Section, "family" means a unit including a father or mother or both, and his, her or their dependents, the purpose of so defining "family" being that the total acreage involved in the aggregate of such loans to a father and mother having the same or substantially the same dependents shall not exceed 20 acres. Notwithstanding the foregoing, in the case of a family comprising a man with more than one wife and at least 20 dependents, the total acreage involved in the aggregate of such loans may exceed 20, but shall not exceed 30, acres. Section 3.07. (a) The price paid Outgrowers for palm fruit by GOPD shall be based on the formula referred to in Section 3.05 of the Development Credit Agreement. (b) GOPD shall pay bonuses to Outgrowers, based on the amount of palm fruit the Outgrower has sold to GOPD, when its profits exceed a certain level. The level of profits at which bonuses shall become payable and the proportion of profits in excess of such level which shall be paid to Outgrowers shall be set before Outgrower holdings come into production at levels acceptable to GOPD and the Association. In determining the portion of the profits to be paid as bonuses to Outgrowers, the Board of Directors of GOPD shall have due regard to the comments of the Committee referred to in Section 3.05 of the Development Credit Agreement on the recommendations of the management of GOPD in this regard, which shall have been submitted to the said Committee prior to such determination. 8 ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of GOPD 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 25 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 GOPD of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE V Miscellaneous Provisions Section 5.01. 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 9 Cable address: INDEVAS Washington, D.C. For GOPD: c/o Ministry of Economic Planning P.O. Box M76 Accra Ghana Cable address: ECONOMICAL For Ghana Oil Palm Development Corp. Accra Section 5.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of GOPD may be taken or executed by its Managing Director or such other person or persons as the Board of Directors of GOPD shall designate in writing. Section 5.03. GOPD 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 GOPD, take any action or execute any documents required or permitted to be taken or executed by GOPD pursuant to any of the provisions of this Agreement. Section 5.04. 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/ R. Chaufournier Regional Vice President Western Africa GHANA OIL PALM DEVELOPMENT CORPORATION By /s / Samuel Ernest Quarm Authorized Representative 10 SCHEDULE Procurement A. General Procedures 1. Except as provided in Part A.3 hereof, contracts shall be let under 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. (a) Bidders shall not be prequalified. (b) In order to encourage competitive bidding, contracts under the Project shall be grouped insofar as practicable. 3. (a) Contracts for road construction under Part F of the Project and contracts for procurement of goods and services costing less than $20,000 equivalent each may be awarded on the basis of local competitive bidding in accordance with the Guidelines or such other contracting procedures as are acceptable to the Association. (b) Contracts for the procurement of goods and services costing less than $5,000 equivalent may be let pursuant to such competitive practices as are appropriate to the circumstances. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Ghana may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish 11 the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Ghana if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Ghana equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Ghana. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. The lowest evaluated bid of each group shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the lowest evaluated bid from group C shall be selected. C. Review of Procurement Decisions by Association Review of invitation to bid and of proposed awards and final contracts: 1. With respect to all contracts for civil works, vehicles, equipment and supplies estimated to cost the equivalent of $20,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and 12 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, the Borrower shall, before a final decision on the award is made, inform the Association of the name 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, a detailed report, by the consultants referred to in Section 2.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendation for award of the said consultants 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 the Borrower 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 were 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, the Borrower 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 the Borrower and state the reasons for such determination.