Madagascar - Port Rehabilitation Project : Credit 1752 - Project Agreement - Conformed

OFF C!AL LOAN NUMBER 1752 MAG Project Agreement (Port Rehabilitation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and SOCIETE D'EXPLOITATION DU PORT DE TOAMASINA Dated ,1987 LOAN NUMBER 1752 MAG PROJECT AGREEMENT AGREEMENT, dated V AAA , 1987, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and SOCIETE D'EXPLOITATION DU PORT DE TOAMASINA (SEPT). WHEREAS (A) by the Development Credit Agreement of even date herewith between Democratic Republic of Madagascar (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to thirteen million two hundred thousand Special Drawing Rights (SDR 13,200,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that SEPT agree 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 SEPT, a part of the proceeds of the credit provided for under the Development Credit Agreement will be made available to SEPT on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS SEPT, 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. SEPT declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out Part II thereof with due diligence and efficiency and in conformity with -2- appropriate administrative, financial, engineering and port practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.03. SEPT 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, respectively) in respect of the Project Agreement and Part II of the Project. Section 2.04. SEPT shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, SEPT 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 provision thereof. Section 2.05. (a) SEPT shall, at the request of the Association, 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) SEPT shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by SEPT of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of SEPT Section 3.01. SEPT shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and port practices under the supervision of a Directeur Gngral with adequate qualification and experience and other qualified -3- and experienced management assisted by competent staff in adequate numbers. Section 3.02. SEPT 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 utility practices. Section 3.03. SEPT shall take out and maintain with respon- sible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.04. (a) SEPT shall implement the Action Plan, agreed upon with the Association and shall not make substantial amendments of such Action Plan without the prior approval of the Association. (b) By June 30 of each year during execution of the Project, SEPT shall review with the Association the progress made in the implementation of the Action Plan and shall consult with the Association on the content and scope of the Action Plan for the following three-year period. ARTICLE IV Financial Covenants Section 4.01. (a) SEPT shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) SEPT shall: i have its records, accounts and financial state- ments (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 Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after -4- 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 records, accounts and financial statements as well as the audit thereof, as the Association shall from time to time reasonably request. Section 4.02. (a) Except as the Association shall otherwise agree, SEPT shall, from time to time, take all such measures (including, without limitation, adjustments of the structure or levels of its port tariffs) as shall be required to produce, for each of its fiscal years, starting in 1988 and thereafter, gross revenues from all sources equivalent to not less than the total operating expenses of SEPT. (b) Before June 30 in each of its fiscal years, SEPT shall, on the basis of forecasts prepared by SEPT and satisfactory to the Association, review the adequacy of its tariffs to meet the requirements set forth in the preceding paragraph (a) in respect of such year and the next following fiscal year, and shall fur- nish to the Association the results of such review upon its completion. (c) For the purposes of this Section: (i) The term "gross revenues from all sources " means the sum of revenues from all sources related to SEPT operations, net non-operating income and any reductions in no-cash working capital. (ii) The term "total operating expenses" means the sum of all expenses related to SEPT's operations, including maintenance and administration, depre- ciation on periodically revalued assets and other non-cash operating charges, interest and other charges on debt (excluding interest financed under a loan contract), repayment of loans (including sinking fund payments, if any), all taxes or payment in lieu of taxes, all cash dividends and other cash distributions of surplus, increase in -5- net working capital other than cash, and any other cash outflows other than capital expenditures related to SEPT's operations. Section 4.03. SEPT shall not undertake any investment not included in the Project estimated to cost the equivalent of $300,000 or more without prior approval of the Association. 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 SEPT 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 SEPT 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, -6- 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: 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 SEPT: Sociftf d'Exploitation du Port de Toamasina B.P. 492 Toamasina Madagascar Telex: 55619 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 SEPT may be taken or executed by the Directeur Gfnfral or such other person or persons as the Direc- teur Gfnfral shall designate in writing, and SEPT shall furnish to the Association sufficient evidence of the authority and the authenticated 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. -7- 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 By ),,I qA" W" ACkito~Regional Vice President Ea tern and Southern Africa SOCIETE D'EXPLOITATION DU PORT DE TOAMASINA By Aixthorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY