Conformed Copy - C1928 - Ilmenite Mining Engineering Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 1928 MAG (Ilmenite Mining Engineering Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and OFFICE MILITAIRE NATIONAL POUR LES INDUSTRIES STRATEGIQUES Dated July 18, 1988 PROJECT AGREEMENT AGREEMENT, dated July 18, 1988 between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and OFFICE MILITAIRE NATIONAL POUR LES INDUSTRIES STRATEGIQUES (OMNIS). 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 six million two hundred thousand Special Drawing Rights (SDR 6,200,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that OMNIS agree to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS OMNIS, 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 Page 2 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) OMNIS 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 exercise its rights, powers and remedies under the Joint Venture Agreement and the Implementation Agreement to cause QIT Madagascar to carry out the Project in accordance with the provisions of the Joint Venture Agreement and the Implementation Agreement. (b) For the purposes of carrying out the Project, OMNIS shall enter into an agreement with QIT and QIT Madagascar, on terms and conditions acceptable to the Association, which shall specify QIT's QIT Madagascar's and OMNIS financial contribution to be made for the carrying out of the Project, and QIT Madagascar's responsibilities regarding the implementation of the Project, procurement of goods and consultants services, reporting and preparation of documents and evidence required for withdrawal requests and replenishment of the Special Account. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods 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 1 to this Agreement. Section 2.03. (a) OMNIS shall carry out the obligations set forth in Section 9.08 of the General Conditions (land acquisition) in respect of the Project Agreement. (b) OMNIS shall cause QIT Madagascar to carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06 and 9.07 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and maintenance, respec- tively) in respect of the Project Agreement. Section 2.04. (a) OMNIS shall consult with the Association before any amendment of the Joint Venture Agreement during the execution of the Project. (b) Except as the Association shall otherwise agree, OMNIS shall not take or concur in any action which would have the effect of amending, abrogating, or waiving the Implementation Agreement or any provision thereof. Section 2.05. (a) OMNIS 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 other matters relating to the purposes of the Credit. (b) OMNIS 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 OMNIS of its obligations under this Agreement or the Implementation Agreement. ARTICLE III Management and Operations of OMNIS Page 3 Section 3.01. OMNIS shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, and engineering practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. OMNIS 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 financial and engineering practices. Section 3.03. OMNIS shall take out and maintain with responsible 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. ARTICLE IV Financial Covenants Section 4.01. (a) OMNIS shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition and shall cause QIT Madagascar to maintain and furnish to OMNIS records and accounts to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project. (b) OMNIS shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) and the records and accounts in respect of the Project referred to in paragraph (a) of this Section 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 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. 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 OMNIS 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 10 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in Page 4 accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify OMNIS of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation 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: 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 OMNIS: Office Militaire National pour les Industries Strategiques 21, Lalana Razanakombana B.P. 1 Bis Antananarivo, Madagascar Cable address: Telex: OMNIS 22 370 OMNIS-MG Antananarivo 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 OMNIS may be taken or executed by the Director General or such other person or persons as the Director General shall designate in writing, and OMNIS 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 collectively but one instrument. 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 Page 5 By /s/ Paul Isenman Acting Regional Vice President Africa OFFICE MILITAIRE NATIONAL POUR LES INDUSTRIES STRATEGIQUES By /s/ Leon Rajaobelina Authorized Representative SCHEDULE Procurement and Consultants' Services Section I: Part A: Procurement of Goods Goods shall be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids invited from a list of at least three qualified suppliers eligible under the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines) and in accordance with the procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). Part B: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $50,000 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 said paragraph 2 (d) 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 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 required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence 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 Association has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (a) (ii) of the Development Credit Agreement. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II: Employment of Consultants Page 6 In order to assist in carrying out the Project, consultants shall be employed 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 satisfactory 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.