Conformed Copy - L2912 - Cocoa Rehabilitation Project - Amendment 2

Page 1 April 2, 1991 His Excellency Marcel Niat Njifendji Minister of Plan and Regional Development Ministry of Plan and Regional Development Yaounde Republic of Cameroon Re: Loan No. 2912 CM (Cocoa Rehabilitation Project) Amendments to the Loan Agreement Excellency: We refer to the above-mentioned Loan Agreement between Republic of Cameroon (the Borrower) and International Bank for Reconstruction and Development (the Bank), dated April 21, 1988, as amended by letter from the Bank dated October 19, 1988, confirmed by the Borrower on October 25, 1988. Further to discussions held with your representatives and representatives of Societe de Developpement du Cacao (SODECAO) during the July 1990 Bank mission with a view to a restructuring of the Project, we are pleased to inform you that the Bank hereby agrees to the following amendment to the Loan Agreement: 1. PREAMBLE In the Preamble, a Recital (E) is added to read: "(E) the Borrower has contracted from Caisse Centrale de Cooperation Economique (CCCE) two loans (the CCCE Loans) in an aggregate amount of one hundred eighty million French Francs (FF 180,000,000) in order to assist in financing part of the Project, on terms and conditions set forth in two agreements (the CCCE Loan Agreements) date November 27, 1985 and July 11, 1988 between the Borrower and CCCE, as subsequently amended"; 2. ARTICLE I - General Conditions: Definitions - In Section 1.02: (a) the paragraphs defining the terms (d) "FONADER Agreement", (1) "CENADEC", (n) "SOCOODER", (o) "FONADER" and (s) "Subsidiary Financing", are deleted; (b) paragraphs (c), (e), (i) and (q) are amended to read: (c) 'IRA Agreement', means the agreement to be entered into between the Borrower and IRA pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the IRA Agreement;" (e) 'Special Accounts' means the accounts referred to in Section 2.02 (b) of this Agreement;" (i) "MINDIC" means the Borrower's ministry responsible for industrial development and commerce;" (q) 'Project Account' means the SODECAO Project Account referred to in Section 3.02 of this Agreement;" 3. The Loan - In Section 2.01, the amount of the Loan is amended to read: "sixty-one million seven hundred thousand dollars ($61,700,000)." - Section 2.02 is amended to read as follows: "Section 2.02 (a) The amount of the Loan may be withdrawn from the Loan Page 2 Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower shall, for the purposes of Parts A, B and C of the Project, open and maintain in CFAF, on behalf of SODECAO, MINAGRI and IRA, respectively, three special deposit accounts in a commercial bank on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure and attachment. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 5 to this Agreement". 4. ARTICLE III - Execution of the Project In Section 3.01: (a) the beginning of paragraph (a) is amended to read: "(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, shall carry out Part B of the Project through MINAGRI and Part C of the Project through IRA, all with due diligence"... (no change thereafter); (b) Paragraph (d) is amended to read: "(d) The Borrower shall enter into an agreement with IRA (the Agreement), under terms and conditions which shall have been approved by the Bank, for the purpose of the execution of Part C of the Project al of making available, to IRA, such proceeds of the Loan, as may be allocated from time to time to Categories (8) through (10) of the table set forth in paragraph 1 of Schedule I to this Agreement." (c) paragraph (e) is deleted; and (d) paragraph (f) is amended to read as follows: "(f) The Borrower shall exercise its rights under the Financing Agreement and the IRA Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and, except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Financing Agreement or the IRA Agreement, or any provision thereof." - Section 3.02 is amended to read: "Section 3.02. Without any limitation upon any of its obligations under Section 3.01 of this Agreement, the Borrower shall establish and maintain a Project Account in the name of SODECAO in a commercial bank on terms and conditions satisfactory to the Bank to be used exclusively for the purpose of meeting expenditures not financed out of the proceed of the Loan, under Part A of the Project." - In Section 3.03 (b) (ii), "Part A.4 of the Project" is replaced by "Part A.2 of the Project". - Section 3.06 is amended to read: "Section 3.06. The Borrower shall, not later than March 31 of each year, furnish or cause to be furnished to the Bank for its approve proposed annual work programs relating to Parts B and C of the Project and budgets relating thereto." - Section 3.07 is deleted. 5. ARTICLE IV - Financial Covenants - Section 4.02 is deleted. Page 3 6. ARTICLE V - Other Covenants - Section 5.02 is deleted. 7. ARTICLE VI - Remedies of the Bank - In Section 6.01 (d), only the term "SODECAO" is to appear, and no longer CENADEC or FONADER. - In Section 6.01 (f)(i)(A), the words "and the CCCE Loans" are inserted, between the parentheses, after the words "including the GTZ Grant". Section 6.01 (g) is deleted. 8. SCHEDULE 1 - Withdrawal of the Proceeds of the Loan Schedule 1 is amended to read as shown in Annex A hereto. 9. SCHEDULE 2 - Description of the Project Schedule 2 is amended to read as shown in Annex B hereto. 10. SCHEDULE 3 - Amortization Schedule Schedule 3 is amended to read as shown in Annex C hereto. 11. SCHEDULE 4 - Procurement and Consultants' Services - In Section I: (a) the paragraph set forth under Part A: International Competitive Bidding is numbered as 1. and the following paragraph 2 is added: "2. To the extent practicable, contracts for vehicles and chemical inputs shall be bulked annually." and (b) Part C: Other Procurement Procedures is to read as follows: "Part C: Other Procurement Procedures 1. Items or groups of items for vehicles, equipment, materials and chemical inputs estimated to cost the equivalent of $100,000 or less per contract, up to an aggregate amount equivalent to $4,500,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank, provided that: (i) all bids shall be opened in public and bidders' representatives shall be allowed to be present; (ii) criteria for evaluating bids shall be set out clearly and communicated to all bidders; and (iii) foreign companies shall not be required to be incorporated in Cameroon in order to participate in the bidding. 2. Items or groups of items for equipment and materials estimated to cost the equivalent of $20,000 or less per contract, up to an aggregate amount equivalent to $1,500,000, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Bank. 3. Land preparation works under Part A.3 of the Project may be carried out by SODECAO under force account, up to an aggregate amount equivalent to $2,000,000." - The beginning of Section II, Employment of Consultants, is to read: "In order to assist MINAGRI and IRA in carrying out the Project, MINAGRI and IRA shall employ consultants whose qualifications,..." (no change Page 4 thereafter). 12. SCHEDULE 5 - Special Accounts - Paragraph l(a) is to read: "1. For the purposes of this Schedule: (a) the term 'eligible Categories' means the following Categories set forth in the table in paragraph 1 of Schedule 1 in this Agreement: (i) in the case of SODECAO, Categories (1) through (5); (ii) in the case of MINAGRI, Categories (6) and (7); and (iii) in the case of IRA, Categories (8) through (10);" - Paragraph 1(c) is to read: "(c) the term 'Authorized Allocation' means an amount equivalent to: (i) CFAF 1,000,000,000 in the case of SODECAO; (ii) CFAF 100,000,000 in the case of MINAGRI; and (iii) CFAF 50,000,000 in the case of IRA, to be withdrawn from the Loan Account and deposited into a Special Account pursuant to paragraph 3 (a) of this Schedule". - Wherever the terms "the Special Account" appear, they are to read: "each of the Special Accounts". 13. SCHEDULE 6 - Policies and Procedures for the Execution of Part D of the Project Schedule 6 is deleted. Project Agreement We further refer to the Project Agreement between the Bank and Societe de Developpement du Cacao (SODECAO) dated April 21, 1988, for the Cocoa Rehabilitation Project. By separate letter addressed to SODECAO, a copy of which is enclosed herewith, the Bank agrees to the amendments to the Project Agreement as set forth in said letter. Please indicate your agreement to the foregoing amendments by signing and dating the form of confirmation on the enclosed copy of this letter and returning it to us. It is understood that the amendments to the Loan Agreement shall come into force upon confirmation of your agreement as indicated above and upon confirmation of SODECAO's agreement to the amendments to the Project Agreement. Very truly yours, By /s/ Michael J. Gillette Director Occidental and Central Africa Department CONFIRMED: REPUBLIC OF CAMEROON By /s/ Authorized Representative Date: Annex A Page 5 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed SODECAO Expenditures (1) Vehicles 3,740,000 100% of foreign expenditures and 85% of local expenditures (2) Equipment, 1,250,000 100% of foreign and materials expenditures and (except for 85% of local Part A.3 of the expenditures Project) (3) Goods and 5,770,000 100% services for Part A.3 of the Project (4) SODECAO's 15,060,000 80% up to operating costs December 31, 1991, 75% up to December 31, 1992, 60% up to December 31, 1993, and 50% thereafter (5) Chemical inputs 27,070,000 100% II. MINAGRI Expenditures (6) Operating costs 1,640,000 90% up to for Part B of December 31, 1992 the Project and 0% thereafter (7) Consultants' 100,000 100% services III. IRA Expenditures (8) Vehicles, 440,000 100% of foreign equipment and expenditures and materials 85% of local expenditures (9) Operating costs 550,000 90% for Part C of the Project Page 6 (10) Consultants' 180,000 100% services IV. Other Expenditures (11) Unallocated 5,900,000 TOTAL 61,700,000 2. For the purposes of this Schedule: (a) the term of 'foreign expenditures' means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (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; provided, however, that if the currency of the Borrower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (c) the term "operating costs" means operation and maintenance of Project vehicles and equipment including fuel and lubricants, small office supplies, and mission travel and subsistence allowances for local and expatriate staff involved in the Project and, in the case of SODECAO, field workers' wages. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures: (i) prior to the date of this Agreement; and (ii) after October 15 of each year, unless: (A) SODECAO's targets for reduction of personnel set forth in paragraph 5(a) of the Schedule to the Project Agreement have been met in a manner satisfactory to the Bank: and (B) cocoa producer prices and prices for fungicide and antimirid treatment corresponding to the following twelve-month period have been determined in a manner satisfactory to the Bank and formally announced; (b) payments made for expenditures under Categories (8), (9) and (10), unless the IRA Agreement has been executed on behalf of the Borrower and IRA; and (c) payments made for expenditures under Category (3), unless the Borrower has adopted eligibility criteria and terms and conditions of support to be provided to SODECAO field staff under Part A. 3 of the Project, all satisfactory to the Bank. Annex B SCHEDULE 2 Description of the Project The objectives of the Project are: (a) to consolidate the modernization efforts of SODECAO in the Borrower's cocoa industry; (b) to privatize SODECAO's operations through their transfer to farm groups and private traders; and (c) to support smallholders' production in cocoa, coffee and food crops, and crop research. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives; Page 7 Part A: SODECAO 1. Reorganizing SODECAO's management and services over a four-year period so as to allow the private sector to progressively assume SODECAO's responsibilities, including the provision of technical assistance. 2. Support to SODECAO's on-going agricultural activities related to its smallholder program in SODECAO's Area of Operation consisting of: (a) provision of selected cocoa and coffee planting materials, upon smallholders' request; and (b) a pest control program in association with cocoa farmers; all including the provision of technical assistance and the acquisition of agricultural inputs. 3. Support to SODECAO field staff who have been laid off to undertake self-help farming activities. 4. Construction of about 300 km of feeder roads and carrying out of a four-year feeder road maintenance program in SODECAO's Area of Operation for about 1,400 km, including the provision of technical assistance and the acquisition of materials, equipment and vehicles therefor. 5. Carrying out of a training program in SODECAO's Area of Operation for farmers' groups in marketing, input purchase and distribution, and pest and disease control. Annex B Part B: MINAGRI Support to MINAGRI's extension services for farmers' groups in SODECAO's Area of Operation. Part C: IRA Carrying out of an adaptive research program for agronomy and pest control, including the provision of technical assistance and the acquisition of chemical inputs, equipment and vehicles therefore. *** The Project is expected to be completed by June 30, 1994. Annex C SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (Expressed in dollars)* On each May 1 and November 1 beginning November 1, 1993 through November 1, 2007 2,055,000 On May 1, 2008 2,105,000 ____________________________ Page 8 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawals. See General Conditions, Sections 3.04 and 4.03.