Cameroon - Western Highlands Rural Development Project : Credit 0784 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 784 CM Project Agreement (Western Highlands Rural Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and UNION DES COOPERATIVES DE CAFE ARABICA DE L'OUEST Dated April 17, 1978 CREDIT NUMBER 784 CM PROJECT AGREEMENT AGREEMENT, dated April 17, 1978, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and UNION DES COOPERATIVES DE CAFE ARABICA DE L'OUEST (hereinafter called UCCAO). WHEREAS by the Development Credit Agreement of even date herewith between United Republic of Cameroon (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to thirteen million dollars ($13,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that UCCAO agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS UCCAO, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth and the term "subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by UCCAO or by any one or more subsidiaries of UCCAO or by UCCAO and one or more of its subsidiaries. ARTICLE II Execution of the Project Section 2.01. (a) UCCAO shall carry out Parts A through G (i) of the Project described in Schedule 2 to the Development Credit Agreement or cause said Parts of the Project to be carried out with due diligence and efficiency and in conformity with appro- priate administrative, financial, economic, agricultural and engineering practices. -2- (b) In order to carry out its obligations pursuant to paragraph (a) of this Section and without any limitation or restriction upon such obligations, UCCAO shall: (i) provide, out of its own financial resources, (A) an aggregate amount of not less than one billion three hundred fifty million CFA francs (CFAFl,350,000,000) for the carrying out of Parts B and D of the Project, and (B) an aggregate amount of not less than three hundred nineteen million CFA francs (CFAF319,000,000) for the Revolving Credit Fund to be established pursuant to Section 2.08 of this Agreement for purposes of Part C of the Project; and (ii) enter into Project execution arrangements satis- factory to the Association: (A) with the Borrower's Office National de la Recherche Scientifigue et Technique (ONAREST), for the carrying out of Part A (iii) of the Project by the Institut de Recherches Agricoles et Forestieres (IRAF); and (B) with Genie Rural, for the carrying out of the civil works under Parts E and F of the Project by the services of Genie Rural in the Western Province. (c) Except as the Association may otherwise agree, the Project execution arrangements to be entered into by UCCAO pursuant to paragraph (b) (ii) of this Section shall be made not later than December 31, 1978, and shall provide inter alia: (i) for the establishment of special operational units with separate accounts and budgets by the agencies and services of the Borrower concerned in order to carry out their respective obligations under the Project; (ii) for the preparation and presentation to UCCAO for approval of annual work programs and budgets in respect of the activities to be carried out by such units under the Project; (iii) for UCCAO to make available to the agencies and services of the Borrower concerned the funds required to enable the units referred to in - 3 - subparagraph (i) of this paragraph to carry out their respective obligations under the Project; (iv) for procurement by UCCAO of all goods and services to be financed out of the proceeds of the Credit made available to it by the Borrower, and for UCCAO to make available such goods and services to the agencies and services of the Borrower concerned as and to the extent required to enable the units referred to in subparagraph (i) of this paragraph to carry out their respective obligations under the Project; and (v) for the right of UCCAO to audit, or arrange for the audit of, the accounts of the units referred to in subparagraph (i) of this paragraph and to control the use by such units of the resources made avail- able to the agencies and services of the Borrower concerned for the purposes of carrying out the Project. (d) For the purpose of carrying out Parts A, E, F and G (i) of the Project, UCCAO shall open not later than September 1, 1978, and maintain until completion of the Project, in a banking insti- tution and under arrangements satisfactory to the Association, a Project Advance Account to be used exclusively by UCCAO for meeting expenditures under said Parts of the Project. Section 2.02. In order to secure assistance in carrying out Parts A through G (i) of the Project, UCCAO shall employ specialists whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association for the positions of: (i) Director of the Production Department; (ii) chief of extension and demonstration services, serving as deputy of the Director of the Production Department; (iii) chief of seed production services; (iv) chief of training services; (v) chief of the demonstration unit to be established under Part A (i) of the Project within UCCAO's extension and demonstration services; and (vi) financial controller. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. -4- Section 2.04. (a) UCCAO undertakes to insure, or make ade- quate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or instal- lation, and for such insurance any indemnity shall be payable in a currency freely usable by UCCAO to replace or repair such goods. (b) Except as the Association may otherwise agree, UCCAO shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclusively for Parts A through G (i) of the Project. Section 2.05. (a) UCCAO shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction, work and procure- ment schedules for Parts A through G (i) of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) UCCAO: (i) shall maintain records and procedures ade- quate to record and monitor the progress of Parts A through G (i) of the Project (including their cost and the benefits to be derived from them), to identify the goods and services financed out of the proceeds of the Credit made available to it by the Borrower, and to disclose their use in said Parts of the Project; (ii) shall, without limitation upon the provisions of paragraph (d) of this Section, enable the Association's representatives to visit the facilities and construction sites included in said Parts of the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such infor- mation as the Association shall reasonably request concerning said Parts of the Project, their cost and, where appropriate, the benefits to be derived from them, the expenditure of the proceeds of the Credit so made available to it and the goods and services financed out of such proceeds. (c) Promptly after completion of Parts A through G (i) of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Association and UCCAO, UCCAO shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of said Parts of the Project, their cost and -5- the benefits derived and to be derived from them, the performance by the Association and UCCAO of their respective obligations under the Project Agreement, the performance by the agencies and services of the Borrower referred to in Section 2.01 (b) (ii) of this Agreement of their respective obligations for the execution of said Parts of the Project, and the accomplishment of the purposes of the Credit. (d) UCCAO shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of UCCAO and any relevant records and documents. Section 2.06. (a) UCCAO shall, at the request of the Associ- ation, exchange views with the Association with regard to the progress of Parts A through G (i) of the Project, the performance of its obligations under this Agreement, and other matters relat- ing to the purposes of the Credit, and shall concurrently inform the Borrower of such exchanges of view. (b) UCCAO shall promptly inform the Borrower and the Association of any condition which interferes, or threatens to interfere with, the progress of Parts A through G (i) of the Project, the accomplishment of the purposes of the Credit, or the performance by UCCAO of its obligations under this Agreement. Section 2.07. UCCAO shall take all such action as shall be necessary to obtain, as and when needed, all such land and rights in respect of land as shall be required for the construction and operation of the facilities included in Parts A through G (i) of the Project and shall furnish to the Association, at its request, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to said Parts of the Project. Section 2.08. (a) In order to carry out Part C of the Project, UCCAO shall establish, operate and maintain a Revolving Credit Fund with the funds referred to in Section 2.01 (b) (i) (B) of this Agreement and those made available to UCCAO pursuant to Section 3.02 (b) of the Development Credit Agreement. (b) UCCAO shall ensure that any credit for agricultural inputs and equipment made available to members of UCCAO member cooperatives under Part C of the Project shall bear interest at a rate of not less than nine per cent (9%) per annum. -6- (c) UCCAO shall deposit the amounts received on account of the repayment of credit under Part C of the Project in the Revolv- ing Credit Fund in order to finance further credit operations under said Part of the Project. Section 2.09. UCCAO shall make available the bottomlands developed under Part F of the Project to farmers pursuant to con- tracts substantially in accordance with a model form of contract satisfactory to the Association and providing, inter alia, for recovery of the investment and maintenance costs of the works carried out under said Part of the Project in accordance with the provisions of Section 4.02 of the Development Credit Agreement. ARTICLE III Management and Operations of UCCAO Section 3.01. (a) UCCAO shall at all times carry on its operations, manage its affairs, plan the future development of its business and maintain its financial position in accordance with appropriate agricultural, commercial, economic, financial and administrative practices, and under an experienced and qualified management assisted by competent staff in adequate numbers. (b) Without limitation to the generality of paragraph (a) of this Section, UCCAO shall operate and maintain its equipment and facilities and make all necessary renewals and repairs thereof in accordance with appropriate agricultural and management practices. Section 3.02. UCCAO shall take out and maintain with respon- sible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.03. UCCAO shall at all times take all steps neces- sary to maintain its corporate existence and right to carry on its operations, including the Parts of the Project for which it is responsible, and shall take all steps necessary to acquire and to retain such land, interests in land and properties, and to acquire, maintain and renew such licenses, consents, franchises or other rights, as may be necessary or useful for the execution and operation of said Parts of the Project and the conduct of its business. - 7 - Section 3.04. (a) Before UCCAO shall take any action to establish or acquire any subsidiary, UCCAO shall first satisfy the Association that such action would not affect materially and adversely the operations and financial position of UCCAO. (b) If UCCAO establishes or acquires any subsidiary, UCCAO shall cause such subsidiary to observe and perform the obligations of UCCAO under this Agreement to the extent to which such obliga- tions shall or can be applicable thereto, as though such obliga- tions were binding upon such subsidiary. Section 3.05. Not later than six months after the date of this Agreement, UCCAO shall furnish to the Association, for review and concurrence by the Association, a program for the training of UCCAO management staff in order to replace expatriate personnel. Section 3.06. Not later than June 30, 1982, UCCA0 shall review the operations and organization of its seed production unit in order to determine the feasibility of converting it into an autonomous commercial enterprise and furnish the results of such review to the Borrower and the Association. ARTICLE IV Financial Covenants Section 4.01. (a) UCCAO shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition, including, without limitation to the foregoing, separate accounts reflecting all expenditures for Parts A through G (i) of the Project. (b) UCCAO shall retain, until one year after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures for Parts A through G (i) of the Project on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditures, and shall enable the Association's accredited representatives to examine such records. Section 4.02. UCCAO shall: (a) have its accounts and financial statements (f lance sheets, statements of income and expenses and related statements) -8- for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (b) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year: (i) certified copies of its financial statements for such year as so audited; and (ii) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including, without limitation to the foregoing, separate opinions by said auditors: (A) on the separate Project accounts referred to in Section 4.01 (a) of this Agreement; and (B) in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Credit made available to UCCAO and withdrawn from the Credit Account on the basis of certificates of expendi- tures have been used for the purpose for which they were provided; and (c) furnish to the Association such other information concerning the accounts and financial statements of UCCAO and 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 UCCAO 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) a date fifteen years after the date of this Agree- ment. (b) If the Development Credit Agreement terminates in accor- dance with its terms before the date specified in paragraph (a) - 9 - (ii) of this Section, the Association shall promptly notify UCCAO of this event. Section 5.03. All the provisions of this Agreement shall con- tinue 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 des- ignated 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 UCCAO: Union des Cooperatives de Cafe Arabica de l'Ouest B.P. 1002 Bafoussam United Republic of Cameroon - 10 - Cable address: Telex: UCCAO 5343 KN Bafoussam 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 UCCAO may be taken or executed by the Directeur General of UCCAO or such other person or persons as the Directeur Gfneral shall designate in writing. Section 6.03. UCCAO shall furnish to the Association suffi- cient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of UCCAO, take any action or execute any documents required or permitted to be taken or executed by UCCAO pursuant to any of the provisions of this Agreement. Section 6.04. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 Regional Vice' President Western Africa UNION DES COOPERATIVES DE CAFE ARABICA DE L'OUEST By Authorized Representative