Conformed Copy - C1906 - Office du Niger Consolidation Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 1906 MLI Project Agreement (Office du Niger Consolidation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and OFFICE DU NIGER and BANQUE NATIONALE DE DEVELOPPEMENT AGRICOLE Dated July 11, 1988 CREDIT NUMBER 1906 MLI PROJECT AGREEMENT AGREEMENT, dated July 11, 1988, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and OFFICE DU NIGER (ON) and BANQUE NATIONALE DE DEVELOPPEMENT AGRICOLE (BNDA). WHEREAS (A) by the Development Credit Agreement of even date herewith between the Borrower and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to thirty-one million Special Drawing Rights (SDR 31,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that ON and BNDA agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by the African Facility Credit Agreement of even date herewith between the Borrower and the Administrator, the Administrator has agreed to make available to the Borrower an amount in various currencies equivalent to seven million one hundred thousand Special Drawing Rights (SDR 7,100,000), on the terms and conditions set forth in the African Facility Credit Agreement, but only on condition that ON and BNDA agree to undertake such obligations toward the Administrator as are set forth in this Agreement; Page 2 (C) by Subsidiary Loan Agreements to be entered into between the Borrower and ON, and the Borrower and BNDA, respectively, part of the proceeds of the Credits provided for under the Development Credit Agreement and under the African Facility Credit Agreement will be made available to ON and BNDA on the terms and conditions set forth in said Subsidiary Loan Agreements; and WHEREAS ON and BNDA, in consideration of the Association entering into the Development Credit Agreement and the Administrator entering into the African Facility Credit Agreement with the Borrower, have 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 African Facility Credit Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) ON and BNDA declare their commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and to this end, (i) ON shall carry out Parts A.2, 3, 4, B, C and D of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for said Parts of the Project; and (ii) BNDA shall carry out Part E of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, and banking practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for said Part of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and ON shall otherwise agree, ON shall carry out its Parts of the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement. Section 2.02. (a) ON shall open and maintain in CFAF in a commercial bank on terms and conditions satisfactory to the Association: (i) a Special Account (hereinafter referred to as "Special Account A") for the purposes of Parts A.2, B, C and D of the Project; and (ii) a Special Account (hereinafter referred to as "Special Account B") for the purposes of Parts A.2, B.2, C.1, C.4, C.5 and D.3 of the Project to be financed under the African Facility Credit. Deposits into, and payments out of, Special Accounts A and B shall be made in accordance with the provisions of Schedule 3 to this Agreement. (b) BNDA shall, for the purposes of Part E of the Project, open and maintain in CFAF a Special Account (hereinafter referred to as "Special Account C") in BNDA on terms and conditions satisfactory to the Association. Deposits into, and payments out of, Special Account C shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. 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 1 to this Agreement. Section 2.04. ON and BNDA 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 Parts of the Project carried out by them. Page 3 Section 2.05. ON and BNDA shall duly perform all their respective obligations under the Subsidiary Loan Agreements* Except as the Association shall otherwise agree, ON or BNDA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the ON or BNDA Subsidiary Loan Agreements or any provision thereof. Section 2.06. (a) ON and BNDA shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of their respective obligations under this Agreement and under the ON and BNDA Subsidiary Loan Agreements and other matters relating to the purposes of the Credit and the African Facility Credit. (b) ON and BNDA 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 and the African Facility Credit, or the performance by ON and BNDA of their respective obligations under this Agreement and under the Subsidiary Loan Agreements. Section 2.07. ON shall: (a) implement the Contract-plan; (b) not later than November 30 of each year review with the Borrower and the Association the progress achieved in implementing the Contract-plan; (c) (i) assess the progress achieved in the execution of Part B.1 of the Project and explore all relevant ways (including privatization of the Maintenance Unit referred to in Part B of the Project) to ensure efficient maintenance of the irrigation network; and (ii) by December 31, 1990 submit to the Association for its review and approval the results and recommendations of said assessment; (d) implement by June 30, 1989: (i) a new administrative and operational structure satisfactory to the Association; and (ii) the recommendations of the studies referred to in Part A.2 (iii) and (iv) of the Project as they shall have been reviewed and agreed upon with the Association; (e) examine with the Association in the context of the annual review of implementation of the Contract-plan under paragraph (b) above, all investment proposals and proceed with any such investment only if its economic, financial and technical justification has been established; (f) take all action necessary on its part to conclude by June 30, 1989 or such other date as shall be agreed upon with the Association an agreement satisfactory to the Association with a comparable irrigation authority to provide ad hoc engineering services, training and technical assistance support when and as required; and (g) make an agreement satisfactory to the Association with Institut d'Economie Rurale providing for the terms of reference and modalities of its collaboration to carry out Part D.1 of the Project. Section 2.08. BNDA shall provide agricultural credit in the Project Area in accordance with the terms and conditions referred to in Schedule 2 to this Agreement. ARTICLE III Management and Operations of ON and BNDA Section 3.01. ON and BNDA shall carry out their respective operations and conduct their affairs in accordance with sound administrative, financial, agricultural and banking practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. ON shall at all times operate and maintain its plants, machinery, equipment and other property and from time to time, promptly as Page 4 needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial, and agricultural practices. Section 3.03. ON 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) ON and BNDA shall maintain separate records and accounts adequate to reflect in accordance with sound accounting practices their operations and financial condition. (b) ON and BNDA shall: (i) have their records, 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 Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year: (A) certified copies of their financial statements for such year as so audited; and (B) the report of such audits by said auditors, of such scope and in such detail as the Association shall have reasonably requested; (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; and (iv) without any limitation to the provisions of subparagraph (i) above ON shall during the first two years of Project implementation have the accounts referred to in said subparagraph (i) audited semiannually and shall submit the report of such interim audit to the Association not later than one month after its completion. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, ON shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the completion of the audit 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 records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Page 5 Section 4.02. (a) Except as the Association shall otherwise agree, ON shall maintain, for each of its fiscal years after its fiscal year ending on April 30, 1990, a ratio of total operating expenses to total operating revenues not higher than 0.85:1. (b) Before May 1 in each of its fiscal years, ON shall, on the basis of forecasts prepared by ON and satisfactory to the Association, ascertain whether it would meet the requirements set forth in paragraph (a) 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. (c) If any such review shows that ON would not meet the requirements set forth in paragraph (a) for ON's fiscal years covered by such review, ON shall promptly take all necessary measures (including, without limitation, adjustments of the structure or levels of its prices) in order to meet such requirements. (d) For the purposes of this Section: (i) The term "total operating expenses" means all expenses related to operations, including administration, adequate maintenance, taxes and payments in lieu of taxes, and provisions for depreciation on a basis acceptable to the Association, but excluding interest and other charges on debt. (ii) The term "total operating revenues" means revenues from all sources related to operations. Section 4.03. (a) Except as the Association shall otherwise agree, ON shall not incur any debt, unless the net revenues of ON for the fiscal year immediately preceding the date of such incurrence or for a later twelve- month period ended prior to the date of such incurrence, whichever is the greater, shall be at least 1.5 times the estimated maximum debt service requirements of ON for any succeeding fiscal year on all debt of ON, including the debt to be incurred. (b) For the purposes of this Section: (i) The term "debt" means any indebtedness of ON 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 revenues" means the difference between: (A) the sum of revenues from all sources related to operations adjusted to take account of ON's prices in effect at the time of the incurrence of debt even though they were not in effect during the twelve-month period to which such revenues relate and net nonoperating income; and (B) the sum of all expenses related to operations including administration, adequate maintenance, taxes and payments in lieu of taxes, but excluding provisions for depreciation, other non-cash operating charges and interest and other charges on debt. (iv) The term "net non-operating income" means the difference between: (A) revenues from all sources other than those related to operations; and Page 6 (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in subparagraph (A) above. (v) 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. 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, ON and BNDA 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 30 years after the date of this Agreement. (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 ON and BNDA 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, 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 ON: Office du Niger B.P. 106 Segou Mali Cable address: NIGEROFI Segou, Mali Page 7 For BNDA: Banque Nationale de Developpement Agricole B. P. 2424 Bamako Mali Cable address: Telex: BNDA 2638 BNDA Bamako, Mali 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 either ON or BNDA, or by either ON or BNDA on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by either ON's or BNDA's Director General, as the case may be, or such other person or persons as either ON's or BNDA's Director General, as the case may be, shall designate in writing, and ON and BNDA 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 By /s/ Callisto Madavo Acting Regional Vice President Africa OFFICE DU NIGER By /s/ Nouhoum Samassekou Authorized Representative BANQUE NATIONALE DE DEVELOPPEMENT By /s/ Nouhoum Samassekou Authorized Representative 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). Page 8 2. Except as otherwise agreed with the Association, contracts for vehicles and equipment shall be grouped into packages estimated to cost the equivalent of $100,000 or more so as to permit bulk procurement. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.1 hereof, goods manufactured in Mali 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 I through 4 of Appendix 2 thereto. Part C: Preference for Domestic Contractors In the procurement of works in accordance with the procedures described in Part A (1) hereof, ON may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part D: Other Procurement Procedures 1. Contracts for vehicles and equipment estimated to cost less than $100,000 may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Items or groups of items estimated to cost less than the equivalent of $30,000 per contract up to an aggregate amount not to exceed the equivalent of $500,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three reputable suppliers. Part E: Review by the Association of Procurement Decisions Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for civil works and each contract for vehicles and equipment estimated 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 contracts are to be made out of any of the Special Accounts, such procedures shall be modified to ensure that the two conformed copies of each 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 such Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contracts are to be made out of any of the Special Accounts, such procedures shall be modified to ensure that the two conformed copies of each 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 this 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 (c) of this Agreement. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II: Employment of Consultants In order to assist ON and BNDA in carrying out the Project, ON and BNDA shall employ consultants whose qualifications, experience and terms and Page 9 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. SCHEDULE 2 Lending Terms and Conditions BNDA shall, in the Project Area, follow lending terms and conditions set forth in this Schedule in carrying out Part E of the Project. A. Purpose BNDA shall make credits to: (i) individual farmers and VAs for agricultural inputs and equipment; (ii) VAs for village equipment and village investments; and (iii) VAs for agricultural equipment and work oxen for lending to individual farmers. B. Eligibility In order to be eligible to receive a credit, farmers and VAs shall meet lending policies established by BNDA, satisfactory to the Association. C. Terms and Conditions 1. BNDA shall charge an annual interest rate on the amount withdrawn and outstanding under each credit as provided below: (a) Credits to individual farmers: for short-term credits, 10% per annum; for medium-term credits, 9% per annum; (b) Credits to VAs: for short-term credits, 9% per annum; for medium-term credits, 8% per annum. 2. Credits beneficiaries (individual farmers and VAs) shall be required to provide at least 5% in cash of the total cost of equipment financed under medium-term credits. 3. Short-term credits to individual farmers and VAs shall be repaid in equal installments over a period of up to 12 months and 18 months respectively with no grace period. 4. Medium-term credits to individual farmers and VAs shall be repaid in equal installments over a period of up to 60 months including a 12-month grace period. 5. BNDA shall have the right to suspend or terminate access by the borrowers to the use of the proceeds of the credits if the borrowers fail to perform any of their obligations under the respective credit agreements. SCHEDULE 3 Special Accounts 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (4) for Special Account A, and Category 5 for Special Account C, of the Categories set forth in the table in paragraph 1 of Schedule 1 to the. Development Credit Agreement, and Categories (1) through (5) set forth in the table in paragraph 1 of Schedule 1 of the African Facility Credit Agreement for Special Account B; (b) the term "eligible expenditures" means expenditures 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 or the African Facility Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to the Development Credit Agreement or the African Facility Credit Agreement; and Page 10 (c) the term "Authorized Allocations" means two amounts, equivalent to CFAF 200,000,000 for Special Account A and CFAF 100,000,000 for Special Account C, to be withdrawn respectively from the Credit Account and an amount equivalent to CFAF 100,000,000 for Special Account B, to be withdrawn from the African Facility Credit Account and deposited into the respective Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association or the Administrator shall otherwise agree, payments out of the respective Special Accounts shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association or the Administrator has received evidence satisfactory to it that the relevant Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the relevant Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association or the Administrator shall, on behalf of the Borrower, withdraw from the Credit Account or the African Facility Credit Account, as the case may be, and deposit into the relevant Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association or the Administrator requests for replenishment of the relevant Special Account at such intervals as the Association or the Administrator shall specify. on the basis of such requests, the Association or the Administrator shall withdraw from the Credit Account or the African Facility Credit Account and deposit into the relevant Special Account such amounts as shall be required to replenish the relevant Special Account with amounts not exceeding the amount of payments made out of the relevant Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association or the Administrator from the Credit Account or the African Facility Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the relevant Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association or the Administrator, prior to or at the time of such request, such documents and other evidence as the Association or the Administrator shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the relevant Special Account shall be made by the Association or the Administrator when either of the following situations first arises: (i) the Association or the Administrator shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account or the African Facility Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit or the African Facility Credit allocated to the eligible Categories minus the amount of any outstanding special commitment entered into by the Association or the Administrator pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the relevant Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account or the African Facility Credit Account of the remaining unwithdrawn amount of the Credit or the African Facility Credit allocated to the eligible Categories shall follow such procedures as the Association or the Administrator shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association or the Administrator shall have been Page 11 satisfied that all such amounts remaining on deposit in the relevant Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association or the Administrator shall have determined at any time that any payment out of the relevant Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association or the Administrator, deposit into the relevant Special Account (or, if the Association or the Administrator shall so request, refund to the Association or the Administrator) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the relevant Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association or the Administrator shall have determined at any time that any amount outstanding in the relevant Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association or the Administrator, refund to the Association or the Administrator such outstanding amount for crediting to the Credit Account or the African Facility Credit Account.