Somali - Fourth Port Project : Credit 0838 - Development Credit Agreement - Conformed

 I q-~ CONFORMED COPY CREDIT NUMBER 838 SO Development Credit Agreement (Fourth Port Project) between SOMALI DEMOCRATIC REPUBLIC and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated August 23, 1978  CREDIT NUMBER 838 SO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated August 23, 1978, between SOMALI DEMOCRATIC REPUBLIC (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) by a development credit agreement (Detailed Engi- neering and Accounting Assistance Project) dated March 3, 1969, between the Borrower and the Association, the Association made to the Borrower a credit in various currencies equivalent to five hundred fifty thousand dollars ($550,000) to assist in the financ- ing of detailed engineering of Mogadishu Port works and the establishment of commercial account procedures for the Somali Port Authority, a public agency established and operating under Law No. 1 of January 7, 1973 of the Borrower (hereinafter called SPA); (B) by a development credit agreement (Mogadiscio Port Project) dated March 15, 1973, between the Borrower and the Association (hereinafter called the 1973 Credit Agreement), the Association made to the Borrower a credit in various currencies equivalent to twelve million nine hundred fifty thousand dollars ($12,950,000) to assist in the modernization of the Port of Mogadishu; (C) by a development credit agreement (Mogadiscio Port Extension Project) dated October 15, 1975, between the Borrower and the Association (hereinafter called the 1975 Credit Agree- ment), the Association made to the Borrower a credit in various currencies equivalent to five million two hundred thousand dollars ($5,200,000) to assist in the expansion of cargo handling facili- ties at the Port of Mogadishu; (D) the Borrower will relend to SPA funds equivalent to the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and SPA; NOW THEREFORE the parties hereto hereby agree as follows:  -2- 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 Agree- ments 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and SPA of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and SPA 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; (c) "Previous Projects" means the project financed by the Association under the 1973 Credit Agreement and the project financed by the Association under the 1975 Credit Agreement; (d) "Advance" means the amount provided by the Association to the Borrower for the preparation of the Project under an agree- ment constituted by an exchange of letters between the Borrower and the Association dated December 21, 1977, and February 10, 1978; and (e) "Somali Shillings" and "So.Sh." mean the currency of the Borrower.  -3- 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 equiva- lent to five million five hundred thousand dollars ($5,500,000). Section 2.02. (a) 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 by agreement between the Borrower and the Associa- tion, 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 and to be financed out of the proceeds of the Credit. (b) On the date the Development Credit Agreement shall enter into force and effect, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself out of the proceeds of the Credit allocated to Category (3) in the table set forth in Schedule 1 to this Agreement, an amount equiva- lent to the principal amount withdrawn by the Borrower out of the Advance, and service charges thereon, outstanding on such date. The unwithdrawn balance of the authorized amount of the Advance shall be cancelled as of the same date. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1981 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. 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 semiannually on May 15 and November 15 in each year.  -4- Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1988, and ending May 15, 2028, each installment to and including the installment payable on May 15, 1998, to be one-half of one per cent (1/2 of 1%) of be one such principal amount, and each installment thereafter to and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America of the is hereby specified for the purposes of Section 4.02 General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall, on behalf of SPA, carry out the Project with due diligence and efficiency and in confor- mity with appropriate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other 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 SPA to perform in accordance with the provi- sions of the Project Agreement and the Subsidiary Loan Agreement to be all the obligations therein set forth, shall take and cause taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable to SPA to perform such obligations, and shall not take or permit be taken any action which would prevent or interfere with such performance. to (c) The Borrower shall relend the proceeds of the Credit SPA under a subsidiary loan agreement to be entered into between the the Borrower and SPA under terms and conditions acceptable to Association which shall include, inter alia, the amortization per annum period of twenty years, interest at the rate of 7-1/2% on amounts withdrawn from the subsidiary loan and the payment by SPA of any additional service charges payable pursuant to this Agreement. (d) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the inter- ests of the Borrower and the Association and to accomplish the  -5- 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. Section 3.02. In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ engineering consul- tants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards inci- dent 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 the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish or cause to be furnished to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construc- tion and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records and proce- dures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) shall enable the Association'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 Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. The Borrower shall issue promptly as needed import licenses, visas, permits and other necessary documents and take any other action required to facilitate the import by the contractors and consultants employed for the purposes of the Project of the goods required for the Project. Section 3.06. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire, as and when needed, all such land and rights in respect of land as shall be required for carrying out Part II of the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained appropriate 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. Section 4.02. The Borrower shall, as and when each of the facilities included in the Project is completed, deliver the title to each such facility to SPA for operation by SPA, such delivery to be made free and clear of all encumbrances on the title thereto. Section 4.03. The Borrower shall take or cause to be taken all reasonable measures to ensure that the execution and operation of the Project are carried out with due regard to ecological and environmental factors.  -7- Section 4.04. Except as the Association shall otherwise agree, the Borrower shall: (i) inform the Association of any intention to modify its Law No. 58 of 1972 relating to Finances of Public Enterprises and Agencies in such manner as to affect materially and adversely the ability of SPA to meet its obligations under the Project Agreement in sufficient time to afford the Associa- tion a reasonable opportunity to express its views thereon; (ii) promptly provide the Association with copies of all regulations or rules relating to the affairs of SPA issued by the Ministry of Finance, or any other authority having jurisdiction thereon; (iii) ensure that before SPA enters into any planned cen- tralized capital investments as defined in Law No. 58 of 1972 of the Borrower, the Association is informed of such proposed investment in sufficient time to enable the Association to express its views thereon; and (iv) inform the Association of any intention to modify its Law No. 1 of January 7, 1973, relating to the operations of SPA in sufficient time to afford the Association a reasonable opportunity to express its views thereon. Section 4.05. The Borrower undertakes to make the necessary arrangements to allow SPA to retain sufficient funds from SPA's annual surplus earnings to meet its debt service requirements. Section 4.06. The Borrower shall cause the pipelines included in Part II (b) of the Project to be constructed in a timely manner for the efficient operation of the facilities financed under the Credit. To this end, the Borrower shall promptly provide all funds, facilities and resources required for such purpose. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof:  (a) SPA shall have failed to perform any covenant, agreement or obligation under the Project Agreement or the Subsidiary Loan Agreement; (b) Law No. 1 of January 7, 1973, 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 SPA to carry out the covenants, agreements and obligations set forth in the Project Agreement; (c) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of SPA or for the suspension of its operations; and (d) an extraordinary situation shall have arisen which shall make it improbable that SPA will be able to perform its obliga- tions under the Project Agreement or the Subsidiary Loan Agree- ment. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (a) of Section 5.01 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 SPA; and (b) any event specified in paragraph (b) or (c) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Subsidiary Loan Agreement has been executed on behalf of the Borrower and SPA. Section 6.02. 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:  -9- authorized (a) that the Project Agreement has been duly or ratified by, and executed and delivered on behalf of, SPA and is legally binding upon SPA in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by, and executed and delivered on behalf of, the Borrower and SPA and is legally binding upon the Borrower and SPA in accordance with its terms. Section 6.03. The date November 21, 1978 is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Article IV and Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agree- ment, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is of designated as representative of the Borrower for the purposes Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Minister of Finance Government of the Somali Democratic Republic Mogadishu Somali Democratic Republic Cable address: MINFIN Mbgadishu  -10- For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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. SOMALI DEMOCRATIC REPUBLIC By /s/ Abdullahi Ahmed Addou Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. Wapenhans Regional Vice President Eastern Africa  - 11 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit to be 1. The table below sets forth the Categories of items of the financed out of the proceeds of the Credit, the allocation 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 3,500,000 80% (excluding Part II (b) of the Project) (2) Consultants' 600,000 100% services (3) Repayment of 500,000 100% Advance (4) Unallocated 900,000 TOTAL 5,500,000 2. The disbursement percentages have been calculated in com- of the pliance with the policy of the Association that no proceeds 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 the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then the applicable to such item as required to be consistent with aforementioned policy of the Association.  - 12 - 3. Subject to Section 2.02 (b) of this Agreement, but notwith- standing the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 4. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 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 expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. 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 proceeds of the Credit and the Association may, without in any way restric- ting or limiting any other right, power or remedy of the Associa- tion under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit.  - 13 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part I: The construction, equipping and operation of a tanker pier in Mogadishu harbour, for the purpose of serving crude oil tankers of about 50,000 deadweight tons and small products tankers, with: (a) a platform for loading and unloading; and (b) berthing and mooring platforms connected to on- shore facilities by, as appropriate, a causeway and/or trestles to support crude oil and petroleum products pipelines and a roadway for light trucks. Part II: (a) The installation of pipelines within Mogadishu port-limits; and (b) the completion of the installation of petroleum products pipelines between the said port and the refinery at Gezira. Part III: The carrying out, in respect of civil works included in Part I and wherever applicable, in Part II, of the Project, of: (a) hydraulic model tests; (b) site investigations; (c) detailed engineering; (d) preparation of tender documents, tendering and bid evaluation; and (e) supervision of the construction of civil works. Part IV: The carrying out of: (a) site investigations;  - 14 - (b) detailed engineering; and (c) preparation of tender documents, tendering and bid evaluation for the extension of the Mogadishu * banana quay by 210 meters for general traffic. The Project is expected to be completed by October 31, 1980.  - 15 - SCHEDULE 3 Procurement International Competitive Bidding 1. Civil works financed under the Project (except Parts II (b) and IV) shall be procured under a single contract 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 March 1977 (hereinafter called the Guidelines), on the basis of international competitive bid- ding as described in Part A of the Guidelines. The contract shall provide that the Borrower may, at his option to be exercised as early as possible prior to completion of Part I of the Project, require the relevant contractor to carry out the construction of the extension to the banana quay provided for under Part IV of the Project. 2. The Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating to said civil works, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reason- ably request; the Association will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the said works. 3. Bidders for the said works shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. Review of Procurement Decisions by the Association 1. The Borrower shall, before qualification is invited, inform the Association in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequal- ification and for such eligibility shall be furnished by the Borrower to the Association for its comments before the appli- cants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request.  - 16 - 2. (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invita- tions 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, the Bor- rower 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 shall furnish to the Association, in sufficient time for its review, a detailed report, by the con- sultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations 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 with- drawal of funds from the Credit Account in respect of such con- tract. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 5% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination.