Cameroon - Douala And Yaounde Water Supply Project : Loan 0604 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 604 CM Guarantee Agreement (Douala and Yaounde Water Supply Project) BETWEEN FEDERAL REPUBLIC OF CAMEROON AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JUNE 2, 1969 CONFORMED COPY LOAN NUMBER 604 CM Guarantee Agreement (Douala and Yaounde Water Supply Project) BETWEEN FEDERAL REPUBLIC OF CAMEROON AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JUNE 2, 1969 I (Onarauter Agireement AGREEMENT, dated June 2, 1969, between the FEDERAL REPUBLIC OF CAMEROON (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVEL- OPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Societe Nationale des Eaux du Cameroun (hereinafter called the Borrower), the Bank has agreed to make to the Borrower a loan in various cur- rencies equivalent to five million dollars ($5,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I SECTION 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated Janu- ary 31, 1969 with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements being hereinafter called the General Conditions). SECTION 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth. 4 ARTICLE II SECTION 2.01. Without limitation or restriction upon any of its other covenants in the Guarantee Agreement con- tained, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan and the Bonds, the premium, if any, on the prepayment of the Loan or the redemption of the Bonds prior to their maturity and the punctual perform- ance of all the obligations of the Borrower, all as set forth in the Loan Agreement and in the Bonds. SECTION 2.02. Without limitation or restriction upon the provisions of Section 2.01 of this Agreement, the Guar- antor specifically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures re- quired for the carrying out of the Project, to make arrange- ments, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures. ARTICLE III SECTION 3.01. It is the mutual intention of the Guar- antor and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on govern- mental assets. To that end, the Guarantor undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor as security for any external debt, such lien will ipso facto equalll qnd ratably secure the payment of the principal of, and inkrest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing provi- sions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as secu- rity for the payment of the purchase price of such property; or (ii) any lien arising in the ordinary course of bank- ing transactions to secure a debt maturing not more than one year after the date on which it is originally incurred. The term "assets of the Guarantor" as used in this Section includes assets of the Guarantor or of any of its political subdivisions or of any agency of the Guarantor or of any such political subdivision. SECTION 3.02. (a) The Guarantor and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall fur- nish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Guarantor, such information shall include information with respect to financial and economic con- ditions in the territory of the Guarantor and the interna- tional balance of payments position of the Guarantor. (b) The Guarantor and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Guarantor shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Guarantor shall afford all reasonable oppor- tunity for accredited representatives of the Bank to visit any part of the territory of the Guarantor for purposes relating to the Loan. SECTION 3.03. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes imposed under the laws of the Guarantor or laws in effect in its territory and free from all restrictions imposed under such laws; pro- vided, however, that the provisions of this Section shall not 6 apply to taxation of payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guar- antor. SECTION 3.04. The Guarantee Agreement, the Loan Agreement and the Bonds shall be free from any taxes that shall be imposed under the laws of the Guarantor or laws in effect in its territory on or in connection with the execution, issue, delivery or registration thereof. SECTION 3.05. Without limiting or restricting the Guar- antor's obligations under Section 2.01 of this Agreement, the Guarantor covenants that it shall cause to be taken all measures required to enable the Borrower to acquire all rights to lands and rights-of-way which shall be neces- sary to carry out the Project, and, except as the Bank may otherwise agree, that it shall not permit any use or abstrac- tion of water which would adversely affect the water sup- ply and distribution systems of Douala and Yaounde, and in particular, that it shall not permit any pollution of the Mefou watershed upstream of the Mopfou Dam nor of the Dibamba River which would endanger the quality of the water of such water supply and distribution systems. SECTION 3.06. Not later than at the time of the settle- ment of all accounts under the Gerance agreements pro- viding for the operation of the water systems in Cameroon prior to the establishment of the Borrower, the Guarantor shall cause all such accounts to be transferred to, or as- sumed by, the Borrower, to be audited by qualified account- ants satisfactory to the Bank, and the Guarantor shall cause a signed copy of the auditors' reports to be trans- mitted to the Bank promptly after their preparation. SECTION 3.07. The Guarantor covenants that it shall from time to time review the tariff policies and structure of the Borrower with the Bank and the Borrower and that 7 it shall enable the Borrower to carry out its obligations under Section 5.07 of the Loan Agreement. SECTION 3.08. With reference to Section 5.10 of the Loan Agreement, the Guarantor shall take all measures necessary to ensure the payment to the Borrower promptly as required of all water charges due by the Guarantor or by any of its political subdivisions and billed by the Borrower. ARTICLE IV SECTION 4.01. The Guarantor shall endorse, in accord- ance with the provisions of the General Conditions, its guarantee on the Bonds to be executed and delivered by the Borrower. The Finance Minister of the Guarantor and such person or persons as he shall appoint in writing are desig- nated as authorized representatives of the Guarantor for the purposes of Section 8.10 of the General Conditions. ARTICLE V SECTION 5.01. The Ministre du Plan et du D'veloppe- ment of the Guarantor is designated as representative of the Guarantor for the purposes of Section 10.03 of the General Conditions. SECTION 5.02. The following addresses are specified for the purposes of Section 10.01 of the General Conditions: For the Guarantor: Ministere du Plan et du Developpement Yaounde Federal Republic of Cameroon Cable address: Minplan Yaound6 8 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Intbafrad Washington, D.C. IN WITNESS WHEREOF the parties hereto, acting through their representatives thereunto duly authorized, have caused the Guarantee Agreement to be signed in their re- spective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. FEDERAL REPUBLIC OF CAMEROON By /s/ JOSEPH N. OWONO Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ J. BURKE KNAPP Vice President