Morocco - Doukkala II Irrigation Project : Loan 1416 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1416 MOR Loan Agreement (Doukkala II Irrigation Project) between KINGDOM OF MOROCCO and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 16, 1977 LOAN AGREEMENT AGREEMENT, dated June 16, 1977, between KINGDOM OF MOROCCO (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS the Borrower has requested the Bank to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; and WHEREAS the Bank has agreed to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE 1 General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank 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 term has the following meaning: "ORMVAD" means thM Office Rigional de Mise en Valeur Agricole des Doukkala, an agency of the Borrower responsible for agricultural development in the Doukkala. -3- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to forty-one million dollars ($41,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be ameLded from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank 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 Loan. Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works required for the Project and to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1984 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. -4- Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and two-tenths per cent (8.20%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -5 - ARTICLE III Execution of the Project Section 3.01. The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with appropriate agricultural, technical, administrative and financial practices, as follows: (a) Parts A and C (1) of the Project, except for the schools, by ORMVAD; (b) Part B (1) of the Project by the Ministry of Public Works and Communications; (c) Part B (2) of the Project by the national electricity authority of the Borrower; (d) The schools in Part C (1) of the Project by the Ministry of Primary and Secondary Education; (e) Part C (2) of the Project by the Agricultural Research Directorate of the Ministry of Agriculture and Agrarian Reform; (f) Part D (1) of the Project by the national agricultural credit bank of the Borrower; and (g) Part D (2) of the Project by the Borrower's competent authority. The Borrower shall provide, promptly as needed, the funds facilities, services and other resources required for the purpose. -6 - Section 3.02. In order to assist ORMVAD in its activities under the Project, the Borrower shall cause ORMVAD to employ engineering consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.03. (a) The Borrower shall cause adequate provision to be made for the insurance of the imported goods to be financed out of the proceeds of the Loan 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 to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Bank, 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 Bank shall reasonably request. (b) The Eorrower: (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 -7- proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds, -8- ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assetLu of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. -9- (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall cause ORMVAD to: (i) have its accounts and financial statements (current and capital accounts) for each fiscal year audited, in accordance with appropriate auditing - 10 - principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of ORMVAD and the audit thereof as the Bank shall from time to time reasonably request. (c) Without limitation upon paragraph (a) of this Section, the Borrower shall cause ORMVAD to maintain separate accounts of its receipts from each of the charges described in Section 4.03 of this Agreement and its expenditures for construction, operation and maintenance of the irrigation system included in the Project. Section 4.03. The Borrower shall cause ORMVAD to levy and collect from the start of irrigation, and thereafter review on its own initiative or at the request of the Bank, the water charge (taux d'6quilibre) and the supplementary pumping charge (redevance suppl6mentaire pour frais de pompage) referred to in Dahir No. 1-69-25 dated July 25, 1969 formant code des investissements agricoles and in D6cret No. 2-69-37 dated July 25, 1969 relatif aux conditions de distribution et d'utilisation -11 - de l'eau dans les p6rimatres d'irrigation, in order to recover from such charges each year, beginning in the fifth year of irrigation, all actual operating and maintenance costs of the irrigation facilities provided under the Project and, taking into account beneficiaries' incentives and capacity to pay, to recover over the life of the facilities from such charges, and from the betterment levy (participation directe A la mise en valeur des terres irrigu6es) referred to in the said Dahir, a reasonable portion of the actual capital costs thereof as provided for in such Dahir. Section 4.04. The Borrower shall ensure that: (a) ORMVAD will continuously monitor agricultural production in the areas benefitting from the Project in accordance with a program to be submitted to the Bank before December 31, 1979, and will carry out in 1983 and thereafter in 1988 sample surveys of production and income of representative farms in the areas benefitting from the Project for the purpose of evaluating the actual benefits of the Project; and (b) the system of telecommunications connecting ORMVAD with its operational offices and field locations will be promptly and gradually improved for the purpose of assisting in carrying out the Project. - 12 - Section 4.05. The Borrower shall cause ORMVAD at all times to be managed and operated according to appropriate agricultural, technical, administrative and financial policies and practices under qualified and experienced management assisted by competent staff in adequate numbers. Section 4.06. The Borrower shall cause: (a) the Ministry of Primary and Secondary Education to operate and maintain at all times the schools included in the Project in accordance with appropriate financial, administrative and educational practices, and to provide such schools with adequate teaching, administrative and maintenance staff and facilities; (b) the Ministry of Public Works and Communications to maintain the asphalt roads included in the Project in accordance with appropriate financial, administrative and highway practices; (c) the national electricity authority of the Borrower to operate and maintain the power facilities included in the Project in accordance with appropriate financial, administrative and public utility practices; and (d) ORMVAD to operate and maintain the Project facilities constructed by it in accordance with appropriate financial, administrative and agricultural practices. Section 4.07. The Borrower shall ensure that ORMVAD will employ such agricultural extension, supervisory and management staff as shall be necessary to carry out its activities under the Project. - 13 - ARTICLE V Remedies of the Bank Section 5.01. For the purpose of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) Dahir No. 1-69-25 of July 25, 1969 of the Borrower formant code des investissements agricoles, the lois particuliares or d6cret d'application promulgated in connection therewith or any provision thereof shall have been materially amended, suspended, abrogated, repealed or waived so as to affect the Project adversely; and (b) the laws of the Borrower establishing ORMVAD and defining the scope of its powers and activities (including D&cret No. 827-66 of October 22, 1966 establishing ORMVAD) shall have been materially amended, suspended, abrogated, repealed or waived so as to affect the Project adversely. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely that any event specified in paragraph (a) or (b) of Section 5.01 of this Agreement shall occur. - 14 - ARTICLE VI Effective Date; Termination Section 6.01. The date September 14, 1977, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions.