Cameroon - Fourth Railway Project : Loan 1734 - Loan Agreement - 1 - Conformed

긔 011 LOAN NUMBER 1734 CM LOAN AGREEMENT AGREEMENT, dated August 23, 1979, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and REGIE NATIONAJ-4E DES CHEMINS DE FER DU CAMEROUN (hereinafter called the Borrower). WHEREAS (A) 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; (B) by an agreement of even date herewith (the Guarantee Agreement) between the United Republic of Cameroon (the Guarantor) and the Bank, the Guarantor has agreed to guarantee the Loan and to undertake certain obligations with respect to the Project; (C) the Guarantor has also requested the International Development Association (hereinafter called the Association) to provide additional financial assistance towards the financing of the Pro ect and by an agreement of even date herewith between the Guarantor and the Association (hereinafter called the Devel- opment Credit Agreement), the Association is agreeing to provide such assistance in an aggregate principal amount equivalent to twenty million dollars ($20,000,000) (hereinafter called the Credit) which the Guarantor will make available to the Borrower as provided in the Development Credit Agreement; (D) the Guarantor and the Bank intend, to the extent practicable, that the proceeds of the Credit be disbursed on account of expenditures on the Project before disbursements of the proceeds of the Loan provided for in this Agreement are made; (E) by a loan agreement dated June 25, 1976 (hereinafter called the 1976 Loan Agreement) between the Borrower and the Bank, the Bank made a loan (No. S-4 CM: hereinafter called the 1976 Loan) to the Borrower in various currencies equivalent to two million three hundred thousand dollars ($2,300,000) to assist in financing consultantst services required for the preparation and design of Part A of the Project; (F) the Bank is prepared to refund the outstanding amount of the 1976 Loan out of the proceeds of the Loan provided for herein; t -2- (G) pursuant to loan agreements dated June 9, 1970, and September 18, 1974, the Bank had previously made two loans (No. 687 CM and No. 1038 CM, respectively) to the Borrower to assist in financing two prior railway projects; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "REGIFERCAM Decree" means the Guarantor's Decree No. 74/1011 dated December 24, 1974, together with the Cahier des Charges financieres et techniques of the Borrower attached to the Guarantor's Decree No. 65/DF/367 of August 18, 1965, providing for the establishment, organization and powers of the Borrower, as the same may be amended from time to time; (b) "1974 Loan Agreement" means the loan agreement between the Bank and the Borrower dated September 18, 1974, refeired to in Recital (G) of the Preamble to this Agreement; (c) "CFA francs" and the letters "CFAF" mean the currency of the Guarantor; (d) "Development Credit Agreement" means the agreement of even date herewith between the Guarantor and the Association for the purpose of the Project, as such agreement may be amended from -3- time to time; and such term includes the General Conditions Appli- cable to Development Credit Agreements of the Association, dated March 15, 1974, as made applicable to such agreement and any agreement supplemental to the Development Credit Agreement; (e) "Credit" means the development credit provided for in the Development Credit Agreement; and (f) "Subsidiary Loan Agreement" means the agreement to be entered into between the Guarantor and the Borrower pursuant to Section 3.01 (b) of the Development Credit Agreement, as defined in Section 1.02 (d) of said Agreement. 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 twenty seven million dollars ($27,000,000). Section 2.02. (a) 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 amended 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 and to be financed out of the proceeds of the Loan. (b) As of the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount required to repay the principal amount of the 1976 Loan withdrawn and outstanding as of such date and to pay all unpaid charges thereon. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1983, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. 77 -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 seven and nine-tenths per cent (7.90%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other ch, rges shall be payable semiannually on March 1 and September 1 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. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, economic, financial, engineering and railways management practices. Section 3.02. In order to secure assistance in supervising the works under Parts A, C and D and in carrying out Parts E and F of the Project, the Borrower shall employ consultants and experts whose qualifications, experience and terms and con- ditions of employment shall be satisfactory to the Bank and the Borrower. 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 Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installat on, 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 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. -5- 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 Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to visit the facili- ties and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any rele- vant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank 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 Loan 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 Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank 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 Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. (d) The Borrower shall enable the Bank's representatives to examine all installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and docu- ments. Section 3.05. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such lani and rights in respect of land as shall be required for the construction and operation of the facilities included in the Project and shall furnish to the Bank, at its request, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project. 71 -6 - Section 3.06. In order to carry out Part E (iii) of the Project, the Borrower shall: (i) not later than June 30, 1980, submit to the Bank for its review and comments a proposed manpower development plan designed to match the qualifications and number of its personnel with its operational needs, and carry out such plan over the following five years; (ii) annually furnish to the Bank a report on the progress realized towards the objectives of such plan; and (iii) ensure that any increase in the total number of its staff be limited, until such plan is being carried out, to peremptory operational requirements. Section 3.07. By December 31, 1980, the Borrower shall make appropriate arrangements to construct an adequate passenger station building and access roads for the passenger station facilities included in Part A (ii) of the Project. Section 3.08. The Borrower shall: (i) not later than December 31, 1979, set up the three units included in Part E (ii) of the Project with such organization, functions and responsibili- ties as shall be satisfactory to the Bank; and (ii) assign qualified and experienced Cameroonians in adequate numbers to the experts assisting in the carrying out of said Part of the Project. ARTICLE IV Management and Operations of the Borrower Section 4.01. (a) The Borrower shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with sound business, financial, engineering and railway practices and under the supervision of competent and experienced management. (b) The Borrower shall promptly take all steps necessary to acquire, maintain and renew all licenses, consents and other rights which are necessary or useful in the conduct of its business. (c) The Borrower shall at all times operate and maintain its lines, workshops, telecommunication system, rolling stock, machinery, equipment and other property, and make promptly all necessary repairs and renewals thereof, in accordance with sound engineering practices, with due regard to economic and financial considerations. I-II -7- (d) Except in the normal course of business, the Borrower shall not, without the prior approval of the Bank, sell, transfer or otherwise dispose of any of its property or assets. Section 4.02. The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 4.03. Before the start of each fiscal year until completion of the Project, the Borrower shall review, in consul- tation with the Bank, its technical assistance requirements for such fiscal year, as well as the arrangements made or to be made in order to meet such requirements so as to enable the Borrower to perform its obligations under Sections 3.01 and 4.01 (a) of this Agreement. Section 4.04. In order to ensure satisfactory growth of its traffic volume and to increase the efficiency of its operations, the Borrower shall promptly take all steps necessary to carry out the measures and to meet the objectives and targets set forth in an Action Plan agreed upon between the Bank and the Borrower, and the Borrower shall use its best efforts to obtain from the Guarantor or its agencies or entities such approvals, consents and decisions as may be required from time to time for this purpose. ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.02. The Borrower 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 independent auditors. acceptable to the Bank; (ii) furnish to th. Bank as soon as available, but in any case not later than six 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 request,ed; and (iii) furnish to the Bank such other information -71 -8- concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reason- ably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satis- factory to the Bank to secure the payment of the principal of, and interest and other charges OLI, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property, or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 5.04. (a) In order to determine the annual deprecia- tion allowances on its fixed assets to be covered from its oper- ating revenues, the Borrower shall provide for the following allowances: (i) an annual depreciation allowance on its fixed assets based on the acquisition cost and the average service life of such assets; and (ii) in respect of its motive power and rolling stock and, starting in its fiscal year 1981/82, its track material, an additional allowance based on the difference between the replacement cost and the acquisition cost of such items, taking into account their average service life. (b) For purposes of subparagraph (a) (ii) of this Section, the Borrower shall promptly determine the replacement cost of its motive power and rolling stock and, during its fiscal year 1981/82, of its track material, and shall thereafter update the replacement cost of all such items at least every three years. Section 5.05. The Borrower shall assess the economic and financial justification and the appropriate pricing of its ser- vices by line, commodity and type of service on a continuing basis. To that end, the Borrower shall maintain and improve its current costing system so that it shall at all times be satis- factory to the Bank, and use it inter alia to establish, on a regular basis, the total as well as the long- and short-term marginal costs of its services. Section 5.06. The Borrower shall take all appropriate steps required on its part (including, without limitation, appropriate tariff increases) to ensure that, as from December 31, 1980, gross revenues from passenger services on its entire network and from freight services on its Western line cover at least 60% of the total cost of such services. The Borrower shall furnish to the Bank, not later than June 30, 1981, a study of the measures which will enable the Borrower to cover the long-term marginal costs of such services through operating revenues from such services, including any necessary adjustments of the percentage specified in this Section. Section 5.07. (a) For its fiscal year 1980/81 and each tiscal year thereafter, the Borrower shall prepare an investment and corresponding financing plan covering all capital investments to be made by the Borrower as well as any other capital invest- ments for railways in the Guarantor's territory during such fiscal year, regardless of the source of financing thereof. (b) Until five years after completion of the Project, the Borrower shall furnish to the Bank, for review and comment, the Borrower's proposed operating budget and investment plan for each fiscal year, as well as any subsequent proposals for modifications of such investment plans, not later than thirty days prior to con- sideration of such proposed budgets, plans or modifications by the Borrower's Board of Directors or, in the case of annual budgets or plans, the beginning of such fiscal year, whichever is earlier. Section 5.08. (a) Until completion of the Project, the Bor- rower shall not undertake any capital investment other than the Project estimated to cost in the aggregate more than the equiva- lent of two million five hundred thousand dollars ($2,500,000) without the prior approval .of the Bank. - 10 - (b) In addition to its obligations pursuant to paragraph (a) of this Section and without any limitation thereon, the Borrower shall not undertake or cause to be undertaken, without prior con- sultation with the Bank, any new capital investment on its Western line estimated to cost more than the equivalent of two hundred fifty thousand dollars ($250,000) within a twelve-month period. Section 5.09. (a) The Borrower shall obtain the Bank's prior approval before incurring any long-term debt, unless the debt to be incurred shall be within the aggregate amount (if any) of new borrowings by the Borrower which may be agreed upon from Lime to time between the Bank and the Borrower with regard to this Section. (b) For the purposes of this Section, the term "long-term debt" means all debt of the Borrower, including debt for the service of which the Borrower is responsible, maturing by its terms more than one year after the date on which it is originally incurred. Section 5.10. The Borrower shall use bank overdraft facili- ties only in exceptional circumstances and for limited time periods and shall not, after December 31, 1979, maintain at any time an aggregate amount of bank overdrafts in excess of eight hundred million CFA francs (CFAF800,000,000). Section 5.11. (a) Except as the Bank may otherwise agree, the Borrower shall take all such action (including, without limitation, appropriate tariff increases) as shall be required to enable the Borrower to maintain a working ratio of not more than 0.75 in its fiscal year 1979/80, not more than 0.72 in its fiscal year 1980/81, not more than 0.70 in any subsequent fiscal year until completion of construction of the new paved Douala-Yaounde highway, and not more than 0.75 in any fiscal year thereafter. (b) For the purposes of this Section: (i) the working ratio for each fiscal year shall be calculated by dividing the working expenses of the Borrower during such year by the Borrower's operating revenue for such year; (ii) the term "working expenses" means all expenses for operating and maintaining the facilities of the Borrower, including administrative expenses related thereto and taxes, if any, but excluding depreciation and debt service requirements; and - 11 - (iii) the term "operating revenue" means the gross operating revenue resulting from the Borrower's services. Section 5.12. (a) The 1974 Loan Agreement is amended as follows: (i) Sections 5.04, 5.05, 5.08, 5.09 and 5.11 of this Agreement, as such Sections may be amended from time to time by agreement between the Bank and the Borrower, supersede Sections 5.04, 5.05 (a), 5.07, 5.08 and 5.10, respectively, of the 1974 Loan Agreement; and (ii) Sections 5.09 and 5.11 of the 1974 Loan Agreement are deleted, without prejudice to the obligations of the Borrower pursuant to Section 4.01 (a) of this Agreement. (b) The amendments to the 1974 Loan Agreement set forth in paragraph (a) of this Section shall likewise apply to the 1976 Loan Agreement in respect of any Section of the 1974 Loan Agree- ment referred io in said paragraph and incorporated by reference into the 1976 Loan Agreement. ARTICLE V1 Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) The REGIFERCAM Decree or any other legislation or regu- lation of the Guarantor governing the establishment, organization and powers of the Borrower shall, without the prior approval of the Bank, have been amended, suspended, abrogated, repealed, waived, or shall cease to be enforced, so as to materially and adveri&ly affect the operations and financial condition of the BorrcRer or the performance, by the Borrower of its obligations under the Loan Agreement. (b) The Guarantor shall have failed to perform any of its obligations under the Development Credit Agreement other than the payment of principal, interest and other charges due thereunder. A II________________I_____1______1_____1 _____ _____II________I__ - 12 - (c) The Borrower shall have failed to perform any covenant, agreement or obligation of the Borrower under the Subsidiary Loan Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) Any event specified in paragraph (a) of Section 6.01 of this Agreement shall occur. (b) Any event specified in paragraph (b) or (c) of Section 6.01 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 Guarantor or the Borrower, as the case may require. ARTICLE VII Effective Date; Termination Section 7.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, that all conditions precedent to the effectiveness of the Development Credit Agreement, other than fulfillment of the conditions precedent to the Loan Agreement, have been met. Section 7.02. The date October 22, 1979, is hereby speci- fied for the purpose of Section 12.04 of the General Conditions. ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 13 - Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Borrower: Regie Nationale des Chemins de Fer du Cameroun B.P. 304 Douala, Cameroun Cable address: Telex: REGIFERCAM 5607 KN Douala 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is/ Roger Chaufournier Regional Vice President Western Africa REGIE NATIONALE DES CHEMINS DE FER DU CAMEROUN By /s/ Michael T. Kima Authorized Representative - 14 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan and of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan and of the Credit, the allocation of amounts of such proceeds to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan and of the Credit % of Allocated (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works and 18,600,000 80% signalling, tele- communications, water supply and electrical works, including equip- ment therefor (under contracts) (2) Railway materials 7,960,000 100% of foreign and equipment expenditures and (other than locomo- 85% of local tive spare parts, expenditures ballast, rails and - sleepers), includ- ing installation thereof, and furniture, equip- ment and material for training (3) Locomotive spare 340,000 50% of foreign parts expenditures (4) Consultants and 5,220,000 85% experts' services IHMi I I Al A I MI -15- Amount of the Loan and of the Credit % of Allocated (Expressed in Expenditures Category Dollar Equivalent) to be Financed (5) Refunding of 2,000,000 the 1976 Loan (6) Unallocated 12,880,000 TOTAL 47,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor; provided, however, that if the currency of the Guarantor is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor and for goods or services supplied from the territory of the Guarantor. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank and the Association that no proceeds of the Loan or of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor 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 Loan or of the Credit decreases or increases, the Bank or 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 Bank and the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made: - 16 - (a) for expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $350,000 may be made in respect of Category (4) on account of payments made for such expenditures before that date but after March 1, 1979; and (b) for expenditures under Categories (1) and (2) on account of Part D of the Project, until the Borrower shall have furnished to the Bank design and engineering plans for the facilities to be constructed under said Part of the Project and a proposal for the Borrower's future maintenance policy for motive power and rolling stock which are satisfactory to the Bank. 5. Except as the Bank and the Borrower shall otherwise agree and until all amounts of the Credit shall have been withdrawn or committed, no withdrawals shall be made from the Loan Account except: (i) under commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions; and (ii) under Cate- gory (5). 6. Notwithstanding the allocation of an amount of the Loan and of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank or the Association has reasonably estimated that the amount of the Loan and of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank or 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 Loan or of the Credit, as the case may be, which are then allocated to another Category and which in the opinion of the Bank and the Association are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 7. If the Bank or the Association shall have reasonably deter- mined that the procurement of any item in any Category is incon- sistent 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 Loan or of the Credit and the Bank or the Association may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement or of the Association under the Development Credit Agreement, - 17 - by notice to the Borrower and, in the case of action taken by the Association, to the Guarantor, cancel such amount of the Loan or of the Credit (as the case may be) as, in the Bank's or the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan or of the Credit. - 18 - SCHEDULE 2 Description of the Project The Project is designed to increase the capacity and the efficiency of the Borrower's traffic handling facilities in the Douala area; to provide the Borrower with adequate locomotive and rolling stock maintenance facilities; to improve the efficiency of the Borrower's management and operations; to provide locomotive spare parts and railway equipment to the Borrower; and to improve and expand the Borrower's training facilities, to reorganize the Borrower's training department and to improve the Borrower's training programs. The Project consists of the following Parts: Part A: New Douala Station Construction of a new railway station in Douala, including: (i) a marshalling yard with 2 sets of tracks for freight traffic, a platform and surfaced areas for cargo-handling, including required service sidings and a rail bridge, and a warehouse and its service tracks; (ii) tracks and platforms for a passenger station, and a set of tracks for servicing and parking passenger coaches; (iii) a public road connection to the freight station and marshalling yard, internal service roads and parking areas, and a road bridge to replace the present level-crossing on the Douala-Yaounde road; and (iv) a wagon maintenance shed, service buildings and fixed ins tallat ions, including in particular a signalling system, and other related station facilities, including water supply and telephone and electrical installations. Part B: Railway Equipment Provision of railway equipment, including: - 19 - (i) track maintenance equipment (5 gang-cars with trailer, 2. inspection cars, 1 test rail car, and 1 road/rail mechanical diesel shovel), and a fire truck; (ii) about' 50 turnouts, for renewal and service sidings, and about 50 bogies for freight cars; and (iii) locomotive spare parts. Part C: Douala Workshop (i) Construction of workshop facilities in Douala, including a storage building for major locomotive spare parts and assemblies (about 1,250 m2), a cleaning plant for locomotive bogies and heavy spare parts, a workshop for maintenance and repair of track maintenance machinery (about 810 m2), a platform for -locomotive cleaning, a storage buildin for spare parts and supplies (about 2,000 m ), an office for the administration of railway stores (about 650 m2), a locomotive test bench, expansion of the diesel locomotive workshop (about 1,215 m2), drainage improvements and expansion of the utility networks and service tracks. (ii) Construction of a service station with refueling facilities (including a storage tank with a capa- city of about 150 m3). (iii) Provision of additional machine-tools, cleaning equipment, lifting equipment and equipment for the locomotive test bench (3.600 h.p.). Part D: Yaounde Locomotive Running Shed and Rolling Stock Maintenance Facilities Construction in Yaounde of: (i) a complete locomotive running shed to perform the running maintenance of all diesel locomotives operating on the line of the "Transcamerounais"; and - 20 - (ii) a workshop to perform routine checks and mainte- nance of freight cars and passenger coaches, a cleaning platform and the necessary access roads. Part E: Operations and Management Assistance (i) Strengthening of the Borrower's financial and management services. (ii) Setting-up and initial operation of organization and methods units in the technical departments of the Borrower responsible for mechanical engineer- ing, operations and permanent way. (iii) Finalization of a manpower development plan of the Borrower and improvement of the Borrower's personnel management systems. (iv) Technical studies required for Part D of the Project. (v) Feasibility and engineering studies required for a subsequent second phase of the expansion of the Borrower's workshops. Part F: Training (i) Provision of furniture, equipment and materials required for the Borrower's training activities. (ii) Renovation of existing buildings and construction of additional classrooms and offices required for the Borrower's training activities. (iii) Improvement of the efficiency of the organization, the programs, the administration and the training of management staff and instructors of the Bor- rower's training activities. The Project is expected to be completed by December 31, 1982. - 21 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March l and September 1 beginning March 1, 1985 through September 1, 1999 900,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollaf equivalents determined as for purposes of withdrawal. - 22 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.20% More than three years but not more than six years before maturity 2.35% More than six years but not more than eleven years before maturity 4.35% More than eleven years but not more than sixteen years before maturity 6.30% More than sixteen years but not more than eighteen years before maturity 7.10% More than eighteen years before maturity 7.90% - 23 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, goods and civil works 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 civil works to be procured on the basis of international competitive bidding, and in addition to the re2quire- ments of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank 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 documents relating thereto a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to pro- vide timely notification to prospective bidders of the opportunity to bid for the goods and civil works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or civil works remain to be procured on the basis of international competitive bidding. 3. 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. B. Other Procurement Procedures 1. Notification of diplomatic and trade representatives as described in paragraph 1.2 of Part A of the Guidelines shall not be required in respect of contracts for the construction of II - 24 - buildings under Parts A (iv) and C (ii) and for civil works under Part F (ii) of the Project. 2. Critical spare parts for locomotives may be purchased from the original manufacturers, and the purchase of all other spare parts for locomotives shall be based on price quotations from such manufacturers and other established part manufacturers, all subject to approval by the Bank. C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts, with respect to all contracts estimated to cost the equivalent of $250,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, 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 Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank'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 Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank 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 Bank's concurrence, materially differ from those on which bids were asked. (d) One original and one copy of the contract shall be tur- nished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. - 25 - 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, one original and one copy of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank 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. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting a material 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 15% of the original price, the Borrower shall inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, 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. 11F1