Somalia - Trans-Juba Livestock Project : Credit 0462 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 462 SO Development Credit Agreement (Trans-Juba Livestock Project) BETWEEN SOMALI DEMOCRATIC REPUBLIC AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED FEBRUARY 20, 1974 0 CONFORMED COPY CREDIT NUMBER 462 SO Development Credit Agreement (Trans-Juba Livestock Project) BETWEEN SOMALI DEMOCRATIC REPUBLIC AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED FEBRUARY 20, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated February 20, 1974, between SOMALI DEMOCRATIC REPUBLIC (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) Parts A, B, C and E of the Project will be carried out by the Livestock Development Agency with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Livestock Development Agency the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and the Livestock Development Agency; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) Section 5.01 is deleted; and (b) Section 6.02(h) is deleted and Section 6.02(i) becomes 6.02(h). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: 4 (a) "LDA" means the Livestock Development Agency of the Borrower responsible for coordination and promotion of livestock development and marketing as established by Decree Law No. 2 of February 16, 1966, konverted in law by Law No. 3 of March 21, 1966 as such law may be amended from time to time; (b) "Project Agreement" means the agreement between the Association and LDA of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and LDA pursuant to Section 3.01(b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (d) "Project Area" means the area of approximately 65,000 km2 bounded on the east by the Juba River, on the north and west by Kenya and on the southeast by the Indian Ocean; and (e) "Guidelines for Procurement" means the Guidelines for Procurement under World Bank Loans and IDA Credits published by the Bank in April 1972, as revised in October 1973. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to ten million dollars ($10,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association 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 under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services required for the Project and to be financed out of the proceeds of the 5 Credit shall be procured pursuant to the provisions set forth or referred to in Section 2.05 of the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1980 or such other date as shall be agreed -between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on June 1 and December I in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 1 and December 1 commencing June 1, 1984 and ending December 1, 2023, each installment to and including the installment payable on December 1, 1993 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each inst1ilment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause LDA to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable LDA to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Credit to LDA for Parts A, B, C and E of the Project under a subsidiary loan agreement to be entered into between the Borrower and LDA, such agreement to provide inter alia that LDA shall borrow said amount at 7-1/4% per annum interest and to mature in twenty years including a five year grace period and to be under such other terms and conditions which shall have been approved by the Association. 6 (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower shall not later than one year from the date of this Agreernent or such other date as may be acceptable to the Borrower and the Association, take all necessary measures to enact laws for regulating the use of Juba Waters, such laws to provide inter alia that water rights for irrigation shall be allocated on the basis of prior use. Section 3.03. The Borrower shall, prior to implementation of Part C of the Project, obtain the Association's agreement on the engineering consultants' recommendations for the design of irrigation facilities, such recommendation to include adequate measures for prevention of Bilharzia and Malaria in the area served by Part C of the Project. Section 3.04. Prior to preparation of feasibility studies to be carried out under Part F of the Project, the Borrower shall consult with the Association and obtain its concurrence on its specific proposals. Section 3.05. The Borrower shall, as and when needed, cause the Somali Development Bank to provide LDA with an overdraft not exceeding two-thirds of the value of livestock in the Project held by LDA. Section 3.06. The Borrower shall within three years after this Agreement becomes effective or such other date acceptable to the Borrower and the Association expand its meat factory at Kisnayu to handle the cattle production under the Project and shall take all such other measures to improve the vetefinary standards and sanitary practices at said factory. Section 3.07. The Borrower shall formulate a training program for the staff of its Ministry of Livestock, Forestry and Range, Kismayu Meat Factory and LDA and obtain the Association's agreement prior to implementation of said program. Section 3.08. The Borrower shall issue promptly as needed import licences, visas and work permits and shall take any other necessary action required to facilitate the import by the contractors and consultants of the goods required for the Project. 7 ARTICLE IV Consultation, Information and Inspection Section 4.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with/regard to the performance of their respective obligations under the Development Credit Agreement, the performance by LDA of its obligations under the Project Agreement, the administration, operations and financial position of LDA and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 4.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial position of LDA and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement or the performance by LDA of its obligations under the Project Agreement and the Subsidiary Loan Agreement. (c) The Borrower and the Association shall, in respect of the Project, exchange views annually on the Borrower's pricing of cattle and beef. 8 Section 4.03. The Borrower shall consult with the Association prior to any proposed change in or appointment to the position of the General Manager of LDA sufficiently in advance for the Association to have adequate opportunity to comment thereon. Section 4.04. The Borrower shall afford all reasoi,able opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE V Taxes and Restrictions Section 5.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 5.02. The Development Credit Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 5.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VI Remedies of the Association Section 6.01. If any event specified in Section 7.01 of the General Conditions shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 6.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: 9 (a) LDA shall have failed to perform any covenant, agreement or obligation of LDA under the Project Agreement or the Subsidiary Loan Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that LDA will be able to perform its obligations under the Project Agreement or the Subsidiary Loan Agreement. (c) Decree Law No. 2 of February 16, 1966 as converted in law by Law No. 3 of March 21, 1966 of the Borrower shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of LDA to carry out the covenants, agreements and obligations set forth in the Project Agreement or the Subsidiary Loan Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of LDA or for the suspension of its operations. Section 6.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 6.02 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraphs (b), (c) or (d) of Section 6.02 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions: (a) The execution and delivery of the Project Agreement on behalf of LDA have been duly authorized or ratified by all necessary corporate and governmental action. (b) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and LDA, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. 10 (c) The Borrower shall make available to LDA for its exclusive use about 1,900 km of land in the Project Area at no charge for an unlimited period. (d) LDA's first audited financial statements for the year ending December 31, 1972 shall have been submitted to the Association. (e) LDA shall have appointed the staff specified in paragraph 1(a), (b), (e) and (f) of Schedule 2 to the Project Agreement. Section 7.02. The following are specified as additional matters, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, LDA, and constitutes a valid and binding obligation of LDA in accordance with its terms. (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and LDA, respectively, and constitutes a valid and binding obligation of the Borrower and LDA in accordance with its terms. (c) That the Borrower has made available to LDA about 1,900 km2 of land in the Project Area by means of a valid and binding legal instrument in accordance with its laws. Section 7.03. The date June 21, 1974 is hereby specified for the purposes of Section 10.04 of the General Conditions. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The Secretary of State for Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: 11 For the Borrower: The Secretary of State for Finance Government of the Somali Democratic Republic Mogadiscio Somali Democratic Republic Cable address: MINFIN Mogadiscio For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. SOMALI DEMOCRATIC REPUBLIC By /s / Abdullahi Ahmed Addou Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / Bernard R. Bell Regional Vice President Eastern Africa 12 SCHEDULE I Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Civil Works for 1,550,000 92% of total Irrigation and expenditures Associated En- gineering Serv- ices II. Other Civil Works 1,750,000 92% of total for Markets, Stock- expenditures routes, Two Grazing Ranches and Irri- gated Fodder Farrn and Feedlot Ill. Vehicles 1,250,000 92% of total expenditures IV. Equipment and 870,000 92% of total Building Mate- expenditures rials V. Consultants for 800,000 92% of total LDA's Management expenditures VI. Training of (a) LDA Staff 180,000 92% of total expenditures (b) Government 90,000 70% of total Staff expenditures VII. Feasibility Studies 210,000 70% of total for Part F of the expenditures Project VIII. LDA Operating Costs 1,300,000 70% of total expenditures IX. Unallocated 2,000,000 TOTAL 10,000,000 13 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; and (b) the term "total expenditures" means the aggregate of foreign expenditures and of expenditures for goods produced in, or services supplied from, the territories of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by * the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes; and (c) expenditures under Category VIII three years after this Credit becomes effective or such other date acceptable to the Borrower and the Association. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, the percentage set forth in the third column of the table in paragraph I above in respect of such expLnditures shall be applied to the amount of such increase, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and 15 SCHEDULE 2 Description of the Project The Project is part of the Borrower's program to promote the improvement of cattle marketing and fattening in the Trans-Juba area over a period of five years, and consists of the following components: Part A: (i) construction and operation of permanent cattle markets at Tabda, Maskati, Gelib, Lugh Ferrandi and Busar; (ii) construction and operation of about 20,000 ha new holding ground near Afrnadu; (iii) development of water supplies and staging points on over 1,000 km of existing stockroutes; (iv) bush clearing of over 12,000 ha and development of two water points on the existing LDA cattle holding ground near Kisrnayu; and (v) purchase of vehicles and equipment for the LDA cattle marketing teams in the Project Area; Part B: construction and operation of two grazing ranches of about 80,000 ha each, located in the vicinity of the irrigated fodder farm and Afmadu holding ground respectively; Part C: construction and operation of one pum-irrigated fodder farm for feed production on about 1,200 ha and a feedlot with a capacity of 5,200 head located near the fodder farm; Part D: construction and operation of a regional veterinary center at Kismayu, district veterinary centers at Afmadu, Gelib, Gimama and Brava, and veterinary dispensaries at Bulo Haji, Goba, Anjail, Beles Gogani and Tabda; Part E: technical services for the Project administration and training including overseas training; and Part F: feasibility studies for the preparation of future agricultural projects. The Project is expected to be completed by December 31, 1979.