Ghana - Ports Rehabilitation Project : Credit 1674 - Project Agreement - Conformed

OFFICIAL CREDIT NUMBER 1674 GH DOCUMENTS Project Agreement (Ports Rehabilitation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and GHANA PORTS AND HARBOURS AUTHORITY Dated ,L1986 CREDIT NUMBER 1674 GB PROJECT AGREEMENT AGREEMENT, dated v4q ' , 1986, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and GHANA PORTS AND HARBOURS AUTHORITY (GPHA). WHEREAS (A) by the Development Credit Agreement of even date herewith between Republic of Ghana (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twenty-two million four hundred thousand Special Drawing Rights (SDR 22,400,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that GPHA agrees to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and GPHA, the proceeds of the credit pro- vided for under the Development Credit Agreement will be made available to GPHA on the terms and conditions set forth in the Subsidiary Loan kgreement; and WHEREAS GPHA, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) GPHA declares its commitment to the objec- tives of the Project as set forth in Schedule 2 to the Develop- ment Credit Agreement and, to this end, shall carry out the Project with due diligence and efficiency and in conformity with -2- appropriate administrative, financial, engineering and port mana- gement practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) GPHA: (i) shall no later than October 31, 1986 open at a commercial bank satisfactory to the Association and thereafter maintain with adequate funds a project account (the Project Account) to be used for expenditures under the Project; (ii) shall pay into the Project Account GPRA's contributions to the costs of the Project, including initial amounts (which GPHA shall deposit into the Project Account no later than October 31, 1986), equivalent to $100,000 in foreign currency and $250,000 in local currency; and (iii) shall until the completion of the Project maintain at all times in the Project Account minimum amounts in foreign and local currency which shall not be less than the amounts of the initial deposits required under this Section. The Borrower and GPHA estimate GPHA's contributions to the costs of the Project to amount over the Project period to at least $950,000 equivalent in foreign currency and $2,500,000 equivalent in local currency. Section 2.02. GPHA shall establish and thereafter maintain a project coordinating unit (PCU) in a form and with functions and staffing satisfactory to the Association. PCU shall be primarily concerned with ensuring: (A) effective co-ordination of repair and rehabilitation work under the Project, and (B) the timely adherence to the implementation timetables prescribed therefor. Further provisions relating to PCU are set out in Schedule 2 to this Agreement. Section 2.03. (a) GPHA: (i) shall assign capable Ghanaian counterparts to work with all consultants to be employed under the Project in advisory and line management positions before and throughout the period of the said consultants' employment; and (ii) shall at least six months before the end of the employment of all consultants employed under the Project in line management positions, appoint capable Ghanaians to assume the responsibili- ties of the said positions. (b) GPHA shall no later than June 30, 1987 prepare and furnish to the Association the terms of reference of a container operations expert who shall be employed and assigned to the new container handling company to be established pursuant to Sec- tion 4.02 of the Development Credit Agreement. 3 Section 2.04. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project -ad to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.05. GPHA shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) in respect of the Project Agreement. Section 2.06. GPHA shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, GPHA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any pro- vision thereof. Section 2.07. (a) GPHA shall, at the request of the Associa- tion, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) GPHA shall promptly iaform the Association of any con- dition which interferes or threatens to interfere with the pro- gress of the Project, the accomplishment of the purposes of the Credit, or the performance by GFiiA of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of GPHA Section 3.01. GPHA: (i) shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, engineering and port management practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers; and (ii) to that end shall prepare and carry out an action plan satisfactory to the Associa- tion to strengthen its port management and improve its port oper- ations. Section 3.02. GPHA shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and port management practices. Section 3.03. GPHA shall take out and maintain with respon- sible insurers, or make other provision satisfactory to the Asso- ciation for, insurance against such risks and in such amounts as shall be consistent with appropriate practice, including foreign reinsurance by GPHA of its floating craft and shore cranes. Section 3.04. GPHA: (i) shall no later than December 31, 1986 carry out and complete, and furnish to the Association the report of, a study satisfactory to the Association on customs and port documentation; (ii) shall no later than June 30, 1987 (using the findings and recommendations of the said study and in colla- boration with the responsible agencies of the Borrower) prepare and furnish to the Association a program (including a timetable) satisfactory to the Association for the carrying out of the study's recommendations and findings; and (iii) shall thereafter in consultation with the Borrower carry out such parts of the program as relate to GPHA in a manner satisfactory to the Asso- ciation. ARTICLE IV Financial Covenants Section 4.01. (a) GPHA shall maintain separate records and accounts (including separate records and accounts for its Tema and Takoradi port operations) adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) GPHA shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) and the Special Account for each fiscal year audited, in accordance with appropriate auditing pr.iciples consistently applied, by independent auditors acceptable to the Association; -5- (ii) furnish to the Association as soon as available, but in any case not later than five 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; and (iii) furnish to the Association such other information concerning said accounts and financial statements as well as the audit thereof and said records, as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account are made on the basis of statements of expenditure, GPHA shall: (i) maintain, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Associa- tion has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by said auditors as to whether the pro- ceeds of the Credit withdrawn in respect of such expenditures were used for the purposes for which they were provided. Section 4.02. Except as the Association shall otherwise agree, GPHA shall take all necessary measures (including adjust- ments of the structures or levels of its rates) during each of -6- its fiscal years 1986 through 1989 to generate revenues suf- ficient to cover all expenses related to port operations includ- ing administration, adequate maintenance, interest and other charges on debt and all increases in such expenses attributable to inflation. Section 4.03. Except as the Association shall otherwise agree, GPHA shall take all necessary measures (including adjust- ments of the structures or levels of its rates) to generate in each of its fiscal years after its fiscal year 1989 revenues suf- ficient to cover: (i) all port expenses related to operations, including administration and adequate maintenance; and (ii) the higher of the following, namely, either (A) aggregate amounts of debt repayments (including sinking fund payments, if any) and interest and other charges on debt, or (B) provision for depre- ciation on a straight line basis, of GPHA's fixed assets in operation as revalued in accordance with the provisions of Sec- tion 4.06 of this Agreement, or on other basis acceptable to the Association; and (iii) not less than 25% of the replacement costs of GPHA's fixed assets retired during the fiscal year next following the fiscal year in question as such costs shall be assessed by GPHA and satisfatory to the Association. Section 4.04. (a) Before November 30 in each of its fiscal years, GPHA shall, on the basis of forecasts prepared by GPHA and satisfactory to the Association review whether it would meet the requirements set forth in Sections 4.02 and 4.03 of this Agree- ment in respect of such year and the next following fiscal year and shall furnish to the Association the results of such review upon its completion. (b) If any such review shows that GPHA would not meet the requirements set forth in the said Sections 4.02 and 4.03 for GPHA's fiscal years covered by such review, GPHA shall promptly take all necessary measures (including adjustments of the struc- ture or levels of its rates) in order to meet such requirements. Section 4.05. (a) Except as the Association shall other- wise agree, GPHA: (i) shall not incur before December 31, 1990, any debt other than debt incurred to finance the costs of the Project; and (ii) shall not on or after December 31, 1990, incur any debt whatsoever, unless the net operating revenues of GPHA for the fiscal year immediately preceding the date of such incur- rence or for a later twelve-month period ended prior to the date -7- of such incurrence, whichever is the greater, shall be at least 1.25 times the estimated maximum debt service requirements of GPHA for any succeeding fiscal year on all debt of GPHA, includ- ing the debt to be incurred. (b) For the purposes of this Section: (i) the term "debt" means any indebtedness of GPHA maturing by its terms more than one year after the date on which it is originally incurred; (ii) debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment on the date of such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into. (iii) the term "net operating revenues" means total operating revenues less total operating expenses; (iv) the term "total operating revenues" means revenues from all sources related to port operations; (v) the term "total operating expenses" means all expenses related to port operations, including administration, adequate maintenance, taxes and payments in lieu of taxes, and provision for depreciation, on a straight line basis, of GPHA's fixed assets, as revalued in accordance with the provisions of Section 4.06 of this Agreement, or on other basis acceptable to the Association, but excluding interest and other charges on debt; (vi) the term "debt service requirements" means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt; and (vii) whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such - 8 - other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Association. Section 4.06. GPHA shall: (i) in accordance with sound and consistently maintained methods of valuation satisfactory to the Association and commencing in 1986 revalue its fixed assets at least once in every four years; (ii) annually between one such revaluation and another use annual cost indexing methods satis- factory to the Association to revalue GPHA's fixed assets; (iii) have the results of all such revaluations to be certified by independent auditors acceptable to the Association and regularly incorporated in GPHA's balance sheets; and (iv) promptly prepare and furnish to the Association, for its review and comments, until December 31, 1994 full and detailed reports on each reva- luation made pursuant to this Section. Section 4.07. (a) GPHA shall: (i) no later than June 30, 1987 furnish to the Association a plan satisfactory to the Asso- ciation for the improvement of GPHA's billing system and proce- dures and its credit policy; and (ii) reduce the level of its accounts receivable as a percentage of its total operating reve- nues to not more than: (A) 60% in fiscal year 1986, (B) 50% in fiscal year 1987, (C) 33% in fiscal year 1988, (D) 25% in each of the fiscal years 1988 and 1989, and (E) 20% in each fiscal year foltowing thereafter. (b) GPHA shall: (i) no later than January 1, 1987, estab- lish a cost accounting section staffed by trained local personnel to operate the cost accounting system to be installed pursuant to this Section; and (ii) no later than January 1, 1988, install a cost accounting system and a cost-oriented tariff structure satisfactory to the Association. Section 4.08. GPHA: (i) shall not undertake any fishing port projects that are unlikely to generate port revenues sufficient to cover all operating costs and debt service charges for such projects; and (ii) until January 1, 1995 shall consult the Asso- ciation before undertaking any rehabilitation and investment projects in the ports subsector not included in the Project likely to cost an amount or amounts equivalent to more than $1,000,000 a year. - 9 - ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of GPHA thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date 20 years after the date of this Agree- ment. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify GPHA of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: - 10 - For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For GPHA: Director of Marine Services P.O. Box 150 Tema, Ghana Telex: 2108 Ports GH Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of GPHA, or by GPHA on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by the Director General of GPHA or such other person or persons as GPHA shall designate in writing, and GPHA shall furnish to the Association sufficient evidence of the authority and the authen- ticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all col- lectively but one instrument. - 11 - IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 DEVELOPMENT ASSOCIATION Regional Vice President Western Africa GHANA PORTS AND HARBOURS AUTHORITY Authorized Representative - 12 - SCHEDULE 1 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part D hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). 2. Bidders for the works included in the Project shall be pre- qualified as described in paragraph 2.10 of the Guidelines. Part B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A.1 hereof, goods manufactured in Ghana may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C. Preference for Domestic Contractors In the procurement of works in accordance with the proce- dures described in Part A.1 hereof, Ghana may grant a margin of preference to domestic contractors in accordance with, and sub- ject to, the provisions of paragraphs 2.55 and 2.56 of the Guide- lines and paragraph 5 of Appendix 2 thereto. Part D: Other Procurement Procedures 1. Civil works in the ports of Tema and Takoradi estimated to cost an amount equivalent to less than $300,000 per contract (up to an aggregate amount not to exceed an amount equivalent to $1,000,000) and goods estimated to cost an amount equivalent to less than $100,000 per contract (up to an aggregate amount not to exceed an amount equivalent to $400,000) may be procured: (i) under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association; or (ii) in cases of extreme urgency, under con- tracts awarded on the basis of price quotations solicited from a - 13 - list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. 2. Proprietary items (up to an aggregate amount not to exceed an amount equivalent to $400,000) may be purchased under directly negotiated contracts satisfactory to the Association. Part E: Review by the Association of Procurement Decisions 1. Review of prequalification: With respect to the prequalification of bidders as provided in Part A.2 hereof, the procedures set forth in paragraph 1 of Appendix 1 to the Guidelines shall apply. 2. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for works and goods esti- mated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to paragraph 2 (d) of the said Appendix shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding sub-paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract, together with the other information re- quired to be furnished to the Association pursuant to said para- graph 3 shall be furnished to the Association as part of the evi- dence to be furnished pursuant to paragraph 4 of Schedule 3 to the Development Credit Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be re- tained in accordance with Section 4.01 (c) (ii) of this Agree- ment. - 14 - 3. The figure of 10% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelinc,s. Section II. Employment of Consultants In order to assist GPHA in carrying out the Project, GPRA shall employ consultants (including engineering consultants to supervise project works and a container operations expert) whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satis- factory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. - 15 - SCHEDULE 2 Project Coordinating Unit 1. PCU shall have primary responsibility for initiating the issuance of tender documents, evaluation of bids and procure- ment. It shall be concerned with ensuring proper installation of equipment, efficient execution of project works, project manage- ment and coordination. PCU's functions shall include on-the-job training of Ghanaian engineers and technicians in project super- vision and procurement and preparation of regular reports on project execution for submission to the Association and project co-financiers. PCU shall also assist in the preparation of the project completion report. 2. PCU's staff shall include a Project Coordinator, a Procure- ment Specialist, a Senior Project Accountant assisted by engi- neering consultants who will supervise civil works in the Tema and Takoradi ports. PCU shall also be assigned GPHA staff capable in dealing with project accounts, procurement and engineering supervision. 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 -i day ofAj , 198 . FOR SECRETARY