Somalia - Fisheries Exploration-Pilot Project : Credit 1465 - Credit Agreement - Conformed

DOFFC AL CREDIT NUMBER 1465 SO DOCUMNENTS Development Credit Agreement (Fisheries Exploration/Pilot Project) between SOMALI DEMOCRATIC REPUBLIC and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1984 CREDIT NUMBEIR 1465 SO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated NA ^--, 1984, between SOMALI DEMOCRATIC REPUBLIC (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by,extending the Credit as hereinafter provided; (B) the Borrower intends to contract from Arab Fund for Economic and Social Development (hereinafter called Arab Fund) a loan (hereinafter called the Arab Fund Loan) in an amount equiva- lent to three million five hundred thousand United States dollars (USS3,500,000) to assist in financing part of the Project on the terms and conditions set forth in an agreement (hereinafter called the Arab Fund Loan Agreement) to be entered into between the Borrower and the Arab Fund; (C) the Project will be carried out by the North East Coast Fisheries Enterprise (hereinafter called the Enterprise) with the Borrowar's assistance and, as part of such assistance, the Bor- rower will make available to the Enterprise 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; 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 Development Credit Agreements of the Association, dated June 30, 1980, 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 - 2 - respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "Project Area" means the area located in the eastern part of the north coast of Somalia along the gulf of Aden, including the districts of Alula, Candala and Bossaso. (b) "Project Preparation Advance" means the project prepa- ration advance granted by the Association to the Borrower pursuant to an exchange of letters dated December 12, 1981 and January 27, 1982 between the Borrower and the Association. (c) "Project Agreement" means the agreement between the Association and the Enterprise 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 supple- mental to the Project Agreement. (d) "Subsidiary Loan Agreement" means the agreement to be entered by the Borrower and the Enterprise pursuant to Sec- tion 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Sub- sidiary Loan Agreement. ARTfLE II The Credit Section 2,01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various curren- cies equivalent to twelve million nine hundred thousand Special Drawing Rights (SDR 12,900,000). 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 Association, 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) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit -3- 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 unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be December 31, 1987 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association snall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. 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. Commitment charges and service charges shall be payable semiannually on May 15 and November 15 in each year. 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 May 15, 1994, and ending November 15, 2033, each installment to and including the installment payable on November 15, 2003, 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. -4- Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. The General Manager of the Enterprise and such uthei person or persons as he shall designate in writing are designated as representatives of the Borrower for the purpose of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restric- tion upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause the Enterprise to perform in accordance with the provisions of the Project Agree- ment all th,, obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facili- ties, services and other resources, necessary or appropriate to enable the Enterprise to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the proceeds of the Credit available to the Enterprise under a subsidiary loan agreement (the Subsidiary Loan Agreement) to be entered into between the Borrower and the Enterprise under terms and conditions which shall have been approved by the Association, including: (i) an interest rate of 12% per annum; (ii) the foreign exchange risk to be borne by the Borrower; and (iii) no payment of interest and repayment of principal to be made by the Enterprise before a financing plan has been completed pursuant to Section 3.03 of this Agreement. (c) Upon completion of the financing plan referred to in Section 3.03 of this Agreement, the Borrower shall decide, in consultation with the Association and the Enterprise (i) on the interest payments and repayment period under the Subsidiary Loan Agreement, and (ii) whether the Borrower transforms parts of the proceeds made available under the Subsidiary Loan Agreement into equity of the Enterprise. - 5 - (d) The Borrower shall exercise its rig'its 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 thereof. Section 3.02. By June 30, 1985, the Borrower shall cause the Somali Development Bank to assign to the Enterprise a qualified and experienced loan officer to assist the Enterprise in carrying out the Enterprise's credit program to fishermen included in Part A.7 of the Project. Section 3.03. By June 30, 1987, or such later date as the Association may agree, the Borrower shall: (a) based on the results of the test program included in Part B.1 of the Project and in consultation with the Association, decide future invest- ments of the Borrower in harbor and fisheries facilities in the Project Area; and (b) submit a financing plan therefor to the Association. Section 3.04. By December 31, 1985, the Borrower shall construct a cold storage facility with storage capacity of at least 400 tons at Berbera. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) The Enterprise shall have failed to perform any of its obligations under the Project Agreement. (b) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that the Enterprise will be able to perform its obligations under the Project Agreement. (c) Law No. 13 of March 4, 1984 establishing the Enter- prise as 4n Autonomous Enterprise shall have been amended, sus- pended, a -c.gated, repealed or waived so as to affect materially -6- and adversely the ability of the Enterprise to perform any of its obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of the Enterprise or for the suspension of its operations. (e) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of the Arab Fund Loan shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the Arab Fund Loan Agreement, or (B) The Arab Fund Loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, can- cellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 4.02. 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 (a) of Section 4.01 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 (b) any event specified in paragraphs (c), (d) and (e) (i) (B) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit - 7 - Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and the Enterprise; (b) an agreement between the Borrower and Danish International Development Agency (DANIDA) has been signed; such agreement to provide for funding for the construction of a cold storage facility at Berbera; and (c) the Borrower has made available to the Enterprise one of its 23 m. fiberglass combination fishing vessels under arrangements satisfactory to the Association. Section 5.02. 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: (a) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and the Enterprise and is legally binding upon the Borrower and the Enterprise in accordance with its terms; and (b) that the Project Agreement has been duly authorized or ratified by the Enterprise, and is legally binding upon the Enterprise in accordance with its terms. Section 5.03, The date ; & is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. The Minister responsible for Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. - 8 - Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Government of the Somali Democratic Republic Mogadishu, Somalia Cable address: MINFIN Mogadishu 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 J ' Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa -9- 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 Expenditures in SDR to be Category Equivalent) Financed (1) Vessels, and 2,480,000 100% of foreign operating costs expenditures and 50% of local expenditures (2) Charter of 3,820,000 100% of foreign purse seiners expenditures (3) Fishing gear, 380,000 100% of foreign vehicles and expenditures and office equip- 90% of local ment expenditures (4) Technical 4,110,000 100% of foreign assistance expenditures (5) Other materials, 670,000 100% of foreign equipment and and 50% of local services expenditures (6) Refunding of 530,000 Amount due Project Preparation Advance (7) Unallocated 910,000 TOTAL 12,900,000 - 10 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policies 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 ser- vices, 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 policies of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made: (i) for expenditures prior to the date of this Agreement; and (ii) for expenditures under Category (1), unless the proceeds of the Arab Fund Loan have been made available to the Enterprise, and the consultants to assist the Borrower in carrying out Part C.2 of the Project have been employed. 5. 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) correspondingly 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 there- under shall have been made. - 11 - 6. 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 expen- ditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restrict- ing 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. - 12 - SCHEDULE 2 Description of the Project The objectives of the Project are: (i) to determine the feasibility and financial viability of offshore catching of a variety of pelagic species in the North Somali waters, and (ii) to test critical assumptions for the development of the artisanal fisheries in the Project Area. The Project consists of the following Parts: Part A: Inshore Fisheries 1. Installation of fish receiving, processing and service facilities at Bolimog. 2. Rehabilitation of existing buildings, including 8 houses for senior staff of the Enterprise and 24 smaller houses for factory personnel at Bolimog. 3. Repairs of and extension to the existing landing places at Bolimog, Bossaso and Habo. 4. Construction of small fish receiving stations at Bossaso and Candala. 5. Modification, renovation and operation of the existing land- ing craft. 6. Acquisition and operation of a trans-shipment vessel. 7. Acquisition of up to 28 motorized fishing boats and provision of credits to fishermen operating in the Project Area to purchase such boats. 8. Provision of vehicles and equipment for the Enterprise. Part B: Offshore Fisheries 1. Carrying out of a pilot/exploratory test program of purse seine fishing in the Project Area during a period of up to 24 months, including the charter of two purse seine fishing vessels. - 13 - 2. Modification, renovation and operation of a small fleet combination fishing vessel for the support of offshore fishing operations. Part C: Technical Assistance 1. Strangthening of the management of the Erterprise. 2. Planning and analysis of the operations under Part A above. 3. Planning and analysis of the carrying out of Part B.1 above. 4. Design of an institutional training program in the fisheries sector. 5. Engineering, design and feasibility studies for a future project consisting of the construction of harbor and fisheries facilities. The Project is expected to be completed by June 30, 1987. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the -u2, day of 198 . FOR SECRETARY