Benin - Cotonou Port Project : Credit 0826 - Development Credit Agreement - Conformed

CONFROMED COPY CREDIT NUMBER 826 BEN Development Credit Agreement (Cotonou Port Project) between PEOPLE'S REPUBLIC OF BENIN and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated October 6, 1978 CREDIT NUMBER 826 BEN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated October 6, 1978, between PEOPLE'S REPUBLIC OF BENIN (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Associa- tion). WHEREAS (A) the Borrower has requested the Association to assist in the financing of Parts A, D, G, H, I and J of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Project will be carried out by the Borrower for the benefit of the Port Autonome de Cotonou (hereinafter called PAC), the Office Beninois des Manutentions Portuaires (hereinafter called OBEMAP) and the Organisation Commune Benin-Niger des Chemins de Fer et des Transports (hereinafter called OCBN); (C) the Borrower intends to contract with the Abu Dhabi Fund (hereinafter called Abu Dhabi) for a loan (hereinafter called the Abu Dhabi Loan) in an amount equivalent to approximately $2,620,000 to assist in financing Part F of the Project on the terms and conditions set forth in an agreement to be entered into between Abu Dhabi and the Borrower (hereinafter called the Abu Dhabi Loan Agreement); (D) the Borrower intends to contract with the Arab Bank for Economic Development in Africa (hereinafter called BADEA) for a loan (hereinafter called the BADEA Loan) in an amount equivalent to approximately $4,600,000 to assist, inter alia, in financing Part C of the Project on the terms and conditions set forth in an agreement to be entered into between BADEA and the Borrower (hereinafter called the BADEA Loan Agreement); (E) PAC intends to contract with the Caisse Centrale de Coop&ration Economique (hereinafter called CCCE) for a loan (hereinafter called the CCCE Loan) in an amount of 15,280,000 French francs, equivalent to approximately $3,120,000, to assist in financing Part E of the Project on the terms and conditions set forth in an agreement to be entered into between CCCE and PAC (hereinafter called the CCCE Loan Agreement); (F) the Borrower intends to contract with CCCE so as to guarantee the obligations of PAC under the CCCE Loan Agreement; -2- (G) the Borrower intends to contract with the Government of Canada, acting through the Canadian International Development Agency (hereinafter called CIDA) for a grant (hereinafter called the CIDA Grant) in an amount of $11,000,000 Canadian dollars, equivalent to approximately $10,000,000, to assist in financing Part B of the Project on the terms and conditions set forth in an agreement to be entered into between CIDA and the Borrower (here- inafter called the CIDA Grant Agreement); (H) the Borrower intends to contract with the Fonds d'Aide et de Coop&ration (hereinafter called FAC) for a grant (herein- after called the FAC Grant) in an amount equivalent to approxi- mately $1,500,000 to assist in financing Part A of the Project on the terms and conditions set forth in an agreement to be entered into between FAC and the Borrower (hereinafter called the FAC Grant Agreement); (I) PAC intendr to contract with the African Development Bank (hereinafter cailed ADB), as agent for the Nigerian Trust Fund, for a loan (hereinafter called the ADB Loan) in an amount equivalent to approximately $2,r40,000 to assist in financing Part A of the Project on the terms and conditions set forth in an agreement to be entered into between ADB and PAC (hereinafter called the ADB Loan Agreement); (J) the Borrower intends to contract with ADB so as to guarantee the obligations of PAC under the ADB Loan Agreement; (K) the Kingdom of Norway is to assist in the financing of Parts A and D of the Project in an amount provided to the Borrower on a grant basis equivalent to eight million three hundred thou- sand dollars ($8,300,000) pursuant to the Agreement between the Kingdom of Norway and the Association of even date herewith; the proceeds of such grant shall be applied, pro rata and as of the date of their withdrawal by the Association from the special account to be opened for this purpose by the Kingdom of Norway, towards discharging the liability of the Borrower to the Associa- tion for repayment of a corresponding portion of each outstanding maturity of the Credit and, consequently, no service charges shall accrue in respect of such portions of the Credit as from the date of such withdrawal; 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 set forth hereinafter; NOW THEREFORE the parties hereto hereby agree as follows: -3- 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 and in the General Conditions, unless the context otherwice requires, the several terms defined in the General Conditions and in the Pre- amble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and PAC pursuant to Section 3.04 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (b) "CFA francs" and "CFAF" mean francs in the currency of the Borrower; (c) "PAC Statuts" means the statutes of PAC as pro- mulgated by Ordinance No. 76-55 of the Borrower dated October 11, 1976, as such statutes may be further amended from time to time; (d) "Project Preparation Advance" means collectively the two project preparation advances granted by the Association to the Borrower pursuant to two exchanges of letters dated October 12 and 27, 1976 and March 29 and April 18, 1977 between the Borrower and the Association; and (e) "Ad Hoc Commission" means the Commission established by Decree No. 77-315 of the Borrower dated December 10, 1977. 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 nineteen million three hundred thousand dollars ($19,300,000). 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 Associ- ation, 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) As of the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwith- drawn balance of the authorized amount of the Project Preparation 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 March 31, 1982 or such later date as the Association shall establish. The Association 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. -5- 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 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 Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall cause the Project to be carried out, through its Ministry of Transport and under the supervision of its Ad Hoc Commission, with due diligence and efficiency and in conformity with appropriate administrative, financial, accouncing and engineering practices, and shall pro- vide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) In order to assist in supervising the execution of the civil works included in Parts A through F of the Project and in carrying out Parts G, I and J of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. (b) By November 30, 1978 or such later date as may be agreeable to the Association, the Borrower shall second senior members of its staff with qualifications and experience satisfac- tory to the Association, to the staff of the consultants employed to assist in supervising the execution of the civil works included in Parts A through F of the Project. Section 3.03. (a) In order to assist the Borrower in carrying out Part H of the Project, the Borrower shall, by March 31, 1979 or such later date as may be agreeable to the Association, employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. (b) In order to assist in implementing the Project, the Borrower shall employ a Project Coordinator whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association; such Project Coordinator shall be assisted by a Beninois counterpart whose qualifications, experi- ence and terms and conditions of employment shall be satisfactory to the Association. Section 3.04. (a) The Borrower shall relend to PAC such amounts in various currencies out of the proceeds of the Credit as may be allocated from time to time to Categories (1), (2) and (3) of the table set forth in paragraph I of Schedule 1 to this Agreement, under a subsidiary loan agreement (the Subsidiary Loan Agreement) to be entered into between the Borrower and PAC under terms and conditions satisfactory to the Borrower and the Associa- tion, including, inter alia, the terms and conditions set forth in paragraph (b) of this Section. (b) The Subsidiary Loan Agreement shall provide that the amounts so relent to PAC shall be repaid over a period of twenty years, including five years of grace, and shall bear interest at the rate of seven and one-half per cent (7.50%) per annum on the principal amount withdrawn and outstanding from time to time. (c) The proceeds of the Credit allocated to Categories (5) and (6) of said table shall be made available by the Borrower to OBEMAP and OCBN, respectively, in the form of grants. Section 3.05. The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and 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 of the Subsidiary Loan Agreement. Section 3.06. The Borrower shall take or cause to be taken all such action as shall be necessary to provide as and when needed all such land and rights in respect of land as shall be required in order to enable the carrying out of Parts A through F of the Project. Section 3.07. Upon the completion of each of the tariff studies to be carried out under the Project, the Borrower shall furnish to the Association copies of the final reports recording the results of such studies together with the Borrower's proposals to carry out any of the recommendations emanating from such studies, and the Association shall be afforded a reasonable opportunity to comment thereon before any such recommendation shall be implemented. Section 3.08. By March 31, 1980 or such later date as may be agreeable to the Association, the Borrower shall, in accordance with terms of reference acceptable to the Association, have completed the Coastal Protection Works Study included in Part H of the Project. Section 3.09. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proc-ads of the Credit 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 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 3.10. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the reports, contract documents and work schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (including the costs thereof), to estimate the benefits to be derived therefrom and to identify the goods and services financed out of the proceeds of the Credit; (ii) enable the Association's accredited representatives to visit and examine all equipment, installations, construction sites, works, buildings and property related to the Project and to examine any relevant records and documents, all so as to enable the proper execution of the Project; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its costs and, where appropriate, the benefits to be derived therefrom, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. -8- (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 costs and the benefits derived and to be derived therefrom, 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 with respect to the Project. Section 3.11. The Borrower shall ensure that, upon the com- pletion of Parts A through G of the Project, title to the physical assets provided under such Parts of the Project will have been transferred to PAC and that the accounts and financial statements of PAC will duly reflect the values of all assets provided under such Parts of the Project based on the costs incurred by the Borrower on account of such assets, including the costs of con- sulting services incurred in respect of physical assets; provided, however, that, by December 31, 1981, title to all assets completed or placed into service on or before that date shall have been transferred to PAC and the accounts and financial statements of PAC shall duly reflect the values of such assets based on their before-mentioned costs. Section 3.12. Upon completion of the study of roll-on/roll- off facilities under Part G (g) of the Project, the Borrower shall furnish to the Association copies of the final report recording the results of such study together with its proposals to carry out any of the recommendations emanating from such study, and the Association shall be afforded a reasonable opportunity to comment thereon before any such recommendation shall be implemented. ARTICLE IV Other Obligations of the Borrower Section 4.01. The Borrower shall, after a study, submit to the Association, by June 30, 1979 or such later date as may be agreeable to the Association, a plan of action to improve the average time of transshipment and to increase the capacity of the transshipment facilities at the road/rail terminal at Parakou in order to meet traffic demand and shall take all measures necessary to ensure that such improvement and increase will be effective by December 31, 1980. -9- Section 4.02. The Borrower shall ensure that, by a date six months after the first day that all facilities constructed under the Project become fully operational or such later date as may be agreeable to the Association, the rate of productivity of the general cargo handling operations within the Port of Cotonou has increased to, and that thereafter such rate is maintained at, a minimum of ten metric tons per gang/hour. Section 4.03. The Borrower shall take all steps necessary to ensure that, from December 31, 1979 or such later date as may be agreeable to the Association onwards, title to all assets used by PAC in its operations shall be duly and effectively vested in PAC. Section 4.04. The Borrower shall cause all its services, agencies and enterprises charged with the handling, transportation or clearance of goods passing through, or charged with the provi- sion of services required for the efficient operation of the facilities of, the Port of Cotonou at all times to manage their affairs, to conduct their operations, and to maintain, repair and renew the equipment and facilities operated by them, all in accordance with appropriate administrative, engineering, finan- cial, port management, cargo handling and transport standards and practices. 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) the PAC Statuts shall, without the prior approval of the Association, have been amended, suspended, abrogated, repealed, waived, or shall cease to be enforced, so as to affect materially and adversely the operations or financial condition of PAC; (b) the Borrower or PAC shall have failed to perform any of its respective covenants, agreements or obligations set forth in the Subsidiary Loan Agreement; (c) the Borrower or any other authority having jurisdiction shall have dissolved, disestablished or suspended the operations of PAC; - 10 - (d) the Abu Dhabi Loan Agreement has not been signed by January 31, 1979 or has not become effective by April 30, 1979; (e) the CCCE Loan Agreement has not been signed by Janu- ary 31, 1979 or has not become effective by February 28, 1979; and (f) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of any grant or loan made to assist in financing any Part of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the recipient of such grant or loan to perform any of its obligations under such agreement, and (B) adequate funds for all Parts of the Project are available to such recipient from other sources on terms and conditions consistent with the obliga- tions of the Bcrrower under this Development Credit Agreement. 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) the event specified in paragraph (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraphs (a), (c) and (f) (i) (B) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit - 11 - Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution of the Subsidiary Loan Agreement on behalf of the Borrower and PAC, respectively, has occurred and has been duly authorized or ratified by all appropriate authorities; (b) engineering consultants required for the supervision of the civil works included in the Project, with qualifications, experience and terms and conditions of employment that are satisfactory to the Association, have been appointed; (c) the Project Coordinator referred to in Section 3.03 (b) of this Agreement has been appointed in accordance with the provisions of that Section; (d) all of the conditions of effectiveness of the BADEA Loan Agreement, the CIDA Grant Agreement, the FAC Grant Agreement and the ADB Loan Agreement, with the exception.of the effectiveness of any other such agreement or the Development Credit Agreement, have been fulfilled; and (e) the Abu Dhabi Loan and the CCCE Loan have been duly authorized by Abu Dhabi and CCCE, respectively. Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditi:ons, to be included in the opinion or opinions to be furnished to the Association, namely, that the execution of the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and PAC and the Subsidiary Loan Agreement is legally binding upon the Borrower and PAC in accordance with its terms. Section 6.03. The date January 4, 1979, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Article IV of this Agreement and the provisions of 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 Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. - 12 - Section 7.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance P.O. Box 302 Cotonou People's Republic of Benin Cable address: Telex: MINIFINANCES 522 MINECOP Cotonou 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. PEOPLE'S REPUBLIC OF BENIN By Is/ Thomas Boya Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Is/ Roger Chaufournier Regional Vice President Western Africa - 13 - 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 under 13,450,000 75% Parts A and D of the Project (2) Supervision and 1,700,000 85% coordination ser- vices under Parts A through F of the Project (3) Consulting ser- 810,000 85% vices under Part G of the Project (4) Consulting ser- 510,000 85% vices under Part H of the Project (5) Consulting ser- 810,000 85% vices under Part I of the Project (6) Consulting ser- 170,000 85% vices under Part J of the Project - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (7) Refunding of Project 500,000 amounts Preparation Advance disbursed (8) Unallocated 1,350,000 TOTAL 19,300,000 2. The disbursement percentages have been calculated in com- pliance 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 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 applicable to such item as required to be consistent with the aforementioned policy of the Association. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures 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 expendi- tures, 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. - 15 - 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 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 Associ- ation's reasonable opinion, represents the amount of such expen- ditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 16 - SCHEDULE 2 Description of the Project The purposes of the Project are: (i) to increase the general cargo handling capacity of the Port of Cotonou through renovation and expan- sion of the port's facilities and improvement in port and cargo handling operations; (ii) to study and set competitive port and related tariffs in order to maximize returns to the Borrower; (iii) to improve OCBN's operations along the "Benin Route"; and (iv) to provide a proper basis for long-term investment planning for coastal protection. The Project consists of the following Parts: Part A: (a) Construction of approximately 660 m of berths, including protection of the northern edge of the new port basin; and (b) provision of a roll-on/roll-off facility. Part B: (a) Dredging of the entrance channel; (b) dredging of a sand/silt trap; (c) dredging of the existing port basin; (d) dredging of the new port basin; and (e) filling to required levels: (i) the area behind the berthface constructed under Part A of the Project; and (ii) the southern edge of the port basin. - 17 - Part C: (a) Demolition of approximately 320 m of the existing west breakwater; and (b) construction of a cut-off breakwater projecting seawards from the west breakwater. Part D: Construction behind the berthface of: (a) drainage facilities, a water distribution system, fire hydrants and public sanitary facilities; (b) paved areas, roadways, sidewalks and entrances and exits; (c) a weighbridge; (d) railway trackwork; and (e) customs fencing to enclose the new works under Parts A, D and E of the Project. Part E: Construction of two transit sheds (120 x 50 m each). Part F: Provision and installation of all floodlighting and electri- cal works required to serve the facilities constructed under Parts A, C and D of the Project, including replacement of floodlighting at the port entry and on the east and west breakwaters. Part G: Strengthening of PAC's management, operations and financial position with the assistance of consulting services, through: (a) training its management in port operations and control; - 18 - (b) reorganizing its accounting system, introducing cost control, strengthening its internal audit, revaluing its fixed assets, and imparting the staff training necessary for proper accounting and financial management; (c) implementing a suitable scheduled maintenance program in its engineering section; (d) establishing and carrying out training programs within the port confines for PAC employees engaged in the handling and berthing of vessels, and for the mechanics and technicians responsible for the running of the port's vessels and mechanical equipment; (e) establishment of appropriate policies on pilotage charges and on the training of pilots; (f) a study of the tariffs set and to be set by PAC for its services; and (g) a study of appropriate roll-on/roll-off facilities for the Port of Cotonou. Part H: A study of protection works for the coastal regions adjacent to the port, to be carried out by the Borrower with the assistance of consulting services, so as to propose the measures required to ensure protection of the shoreline, to provide a detailed plan of action and program of coastal protection works, and to provide cost estimates of such works. Part I: Strengthening of OBEMAP's management, operations and finan- cial position, with the assistance of consulting services, through: (a) developing training programs for all levels of its staff; (b) training of suitable candidates to fill the vacant positions of assistant chief stevedores, berth super- intendents, transit shed supervisors, and berth gang foremen; - 19 - (c) study and implementation of a program of regular equipment maintenance and renewal, including the recruitment and training of workshop personnel and supervisors; (d) a study of the tariffs set and to be set by OBEMAP for its services; and (e) reorganizing its accounting system, introducing cost control, strengthening its internal audit, revaluing its fixed assets, and imparting the staff training necessary for proper accounting and financial management. Part J: Strengthening of OCBN's management, operations and financial position, with the assistance of consulting services through: (a) a study of the Parakou railway terminal to improve its marshalling yard and transshipment facilities; (b) designing and implementing measures for the improve- ment of operations at the Parakou railway terminal, including staff training and re-training; (c) reviewing traffic forecasts and determining the invest- ments needed to cope with expected railway demand over the next decade; (d) designing and implementing measures for the improvement of its operations and management; (e) strengthening its training and policies; and (f) a study of the tariffs set and to be set by OCBN for its services including road transport. The Project is expected to be completed by December 31, 1980. - 20 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Goods and civil works for Parts A and D of the Project shall be procured under contracts 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 bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, 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 thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably 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 goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competi- tive bidding. 3. Bidders for the civil works for Parts A and D of the Project shall be prequalified in accordance with the provisions of para- graph 1.3 of Part A of the Guidelines. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (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. - 21 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in the territory of the Borrower may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish 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. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in the territory of the Borrower 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 the territory of the Borrower equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in the territory of the Borrower. (3) Group C: bids offering any other goods. 3. 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. Such lowest evaluated bids 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. 4. If, as a result of the comparison under paragraph 3 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 - 22 - 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 bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works to be procured in accordance with the procedures described in Part A of this Schedule, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accor- dance with, and subject to, the following provisions: 1. Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying for such preference shall be asked to provide, as part of the data for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic pre-Frence. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. 2. After bids have been received and reviewed by the Borrower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. D. Review of Procurement Decisions by the Association 1. Review of prequalification. The Borrower shall, before quali- fication is invited, inform the Association in detail of the procedure to be followed, and shall introduce such modifications - 23 - in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and, where applicable, of their eligibility for domestic preference under Part C above and of the reasons for the exclusion of any applicant for prequalification and for such eligibility shall be furnished by the Borrower to the Association for its comments before the applicants are notified of the Bor- rower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Associa- tion shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: (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 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, on the evalua- tion and comparison of the bids received, together with the recommendations for award 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. -24- 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 5.0% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. If the Association deter- mines that the proposal would be inconsistent with the provisions of this Agreement, it shall promptly inform the Borrower and state the reasons for its determination. - 25 - SCHEDULE 4 Management and Operations of PAC 1. PAC shall at all times, in close cooperation and coordination with OBEMAP, manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with appropriate business, administrative, financial, engineering and port management practices and under the supervi- sion of experienced and competent management assisted by qualified and competent staff. 2. PAC shall adequately maintain the works, installations and equipment used in its operations and promptly make all necessary renewals and repairs thereof, all in accordance with sound engi- neering and port management standards and practices. 3. PAC shall at all times take all such action as shall be necessary on its part to acquire 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 purpose of carrying out Parts A through F of the Project and the carrying on of its operations. 4. PAC shall take out and maintain with responsible insurers insurance against such risks and in such amounts as shall be consistent with appropriate practice, taking into account the asset values reflected in its balance sheets as such values shall be revised from time to time in accordance with generally accepted and consistently maintained methods of valuation acceptable to the Association. 5. Except as the Association may otherwise agree, PAC shall not sell, lease, transfer, assign or otherwise dispose of any of its rights or assets except in the ordinary course of business. 6. In operating its facilities, PAC shall take or cause to be taken all measures within its powers as shall be necessary to provide appropriate environmental protection within the limits of the Port of Cotonou. 7. PAC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. - 26 - 8. PAC 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 appropriate auditing principles consistently applied, by indepen- dent auditors proposed by the Borrower and 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, including the assessment of said auditors of its financial management; and (iii) furnish to the Association such other information concerning the accounts and financial statements of PAC and the audit thereof as the Asso- ciation shall from time to time reasonably request. 9. PAC shall, in its accounts and financial statements for its fiscal year ending December 31, 1979, incorporate, on the basis of a physical inventory, the value of all fixed assets in use by PAC. 10. (a) Except as the Borrower and the Association may otherwise agree, PAC shall from time to time take all necessary measures, including but not limited to adjustments in its tariffs, as shall be required to enable PAC to earn an annual rate of return of not less than 5.0% for its fiscal year 1980 and not less than 8.0% for each fiscal year thereafter. (b) For the purposes of this Section: (i) the annual rate of return shall be calculated in respect of each fiscal year by dividing the net operating revenue for that year by the average of the net value of the fixed assets in operation at the beginning and at the end of that year, expressed in terms of a percentage; (ii) the term "net operating revenue" shall mean the difference between (A) all gross operating revenue resulting from PAC's services and (B) operating and administrative expenses, including maintenance and taxes (if any) and adequate provision for depreciation based on the replacement cost of assets, but excluding interest and other charges on debt and "imp8ts sur les benefices" (if any); - 27 - (iii) the term "net value of 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 generally accepted and consistently maintained methods of valuation; and (iv) the assets and their accumulated depreciation shall be revalued on the basis of the replacement cost of the assets at appropriate intervals of not more than five years, the first reevaluation to take place not later than December 31, 1979. 11. Except as the Association may otherwise agree, PAC shall not make expenditures, or commitments for expenditures, for fixed or capital assets (including investments in or loans to other entities) except: (a) expenditures, or commitments for expenditures, required for the carrying out of Parts A through F of the Project; (b) expenditures, or commitments for expenditures, required for repairs, maintenance or replacement of its assets; and (c) other expenditures, or commitments for expenditures, for such assets not exceeding in the aggregate the equivalent of one hundred million CFA francs (CFAF100,000,000) in each fiscal year of PAC up to and including December 31, 1985. 12. By December 31, 1979 or such other date as may be agreeable to the Association, PAC shall reduce and thereafter maintain the balance of its receivables at not more than the equivalent of twenty per cent (20%) of PAC's annual gross operating revenue by taking such measures as may be necessary, including, if necessary, the introduction of a system of advance deposits.