Cameroon - Northern Province Rural Development Project : Loan 1919 - Project Agreement - Conformed

;OFFICIAL LOAN NUMBER 1919 CM DOCUMENTS CREDIT NUMBER 1075 CM Project Agreement (Northern Province Rural Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and INTERNATIONAL DEVELOPMENT ASSOCIATION and SOCIETE DE DEVELOPPEMENT DU COTON DU CAMEROUN Dated 70A 4 A , 1981 LOAN NUMBER 1919 CM CREDIT NUMBER 1075 CM PROJECT AGREEMENT AGREEMENT, dated O26'r a 7 , 1981, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association), on the one part, and SOCIETE DE DEVELOPPEMENT DU COTON DU CAMEROUN (hereinafter called SODE- COTON), on the other part. WHEREAS (A) by the Loan Agreement of even date herewith between United Republic of Cameroon (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to twenty-five million dollars ($25,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that SODECOTON agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) 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 nine million five hundred thousand Special Drawing Rights (SDR 9,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that SODECOTON agree to undertake such obligations toward the Association as are hereinafter set forth; (C) by a financing agreement to be entered into between the Borrower and SODECOTON, part of the proceeds of the loan provided for under the Loan Agreement and of the Credit provided for under the Development Credit Agreement will be made available to SODE- COTON on the terms and conditions therein set forth; and WHEREAS SODECOTON, in consideration of the Bank's entering into the Loan Agreement and 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 -2- the Loan Agreement, in the Development Credit Agreement and in the respective General Conditions (as so defined in each of said Agreements) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) SODECOTON shall carry out Parts A (i) and (ii) and B and, jointly with FONADER, Part A (iii) of the Project described in Schedule 2 to the Loan Agreement with due dili- gence and efficiency and in conformity with appropriate adminis- trative, economic, financial, agricultural, engineering and training practices. (b) SODECOTON shall assist in the execution of Part C of the Project by MIDEVIV, Parts D and E (i) of the Project by IRA, Parts E (ii) and (iii) of the Project by FNFP, Part F of the Project by MINAGRI and Part G of the Project by MINEP's Northern Province Economic Division, pursuant to protocols to be entered into between SODECOTON and each of said parties on terms and conditions satisfactory to the Bank and the Association. (c) Except as the Bank and the Association may otherwise agree, the protocols to be entered into by SODECOTON pursuant to paragraph (b) of this Section shall provide inter alia: (i) for the preparation and presentation to the PCC for approval of a proposed annual work program and budget regarding the execution of the Parts of the Project referred to in said paragraph by each of the respective agencies or services of the Borrower responsible therefor; in the case of IRA, such proposed work programs and budgets shall be reviewed by the subcommittee referred to in Section 3.06 (c) of the Loan Agreement before they are finalized and presented to the PCC; (ii) for the submission of such programs and budgets, upon approval by the PCC and not later than four months before the beginning of the fiscal year covered by such programs and budgets, to SODECOTON; (iii) for the administration by SODECOTON of the funds to be made available by the Borrower for the -3- execution of said Parts of the Project, to be released by SODECOTON on the basis of the Project budgets referred to above; (iv) for the procurement by SODECOTON of all contracts for the purchase of goods or the carrying out of civil works which are required for the execution of said Parts of the Project and are to be financed out of the proceeds of the Loan or of the Credit made available to SODECOTON by the Borrower; and (v) for the right of SODECOTON to audit or cause to be audited the accounts relating to said Parts of the Project of the respective agencies and services of the Borrower responsible for the execution thereof. Section 2.02. In order to carry out, jointly with FONADER, Part A (iii) of the Project, SODECOTON shall: (a) enter into a credit administration protocol with FONAD9R on terms and conditions satisfactory to the Bank and the Association (including, inter alia, those specified in Section 3,03 (a) of the Loan Agreement); and (b) as agent of FONADER, provide draft animals and agricultural and artisanal equipment, on credit, to farmers in the Project Area in accordance with the provisions of the FONADER Protocol. Section 2.03. In order to ensure adequate technical standards and coordination in the execution of Part B (iii) of the Project, SODECOTON shall enter into an agreement with MINEQ, on terms and conditions satisfactory to the Bank and the Association and not later than March 31, 1981, establishing their respective responsi- bilities and providing for appropriate ways of coordination and cooperation between MINEQ and SODECOTON with respect to the construction, maintenance and supervision of road works in the Project Area during the Project period. Section 2.04. (a) In order to carry out its obligations under Section 2.01 of this Agreement and without limitation or -4- restriction upon such obligations, SODECOTON shall employ addi- tional qualified local personnel as required for the diligent and efficient performance of such obligations, including, inter alia, key staff as provided in Part A of the Schedule to this Agreement. (b) In order to secure assistance in the carrying out of its obligations under Section 2.01 of this Agreement, SODECOTON shall employ specialists whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank and the Association, as provided in Part B of the Schedule to this Agreement. Section 2.05. Except as the Bank and the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan and of the Credit made available to SODECOTON shall be governed by the provisions of Schedule 4 to the Loan Agreement. Section 2.06. SODECOTON shall: (a) prepare and submit to the PCC for approval, for each fiscal year until completion of the Project, a proposed work program and budget for Parts A (ii) and (iii) and B of the Project; (b) after approval by the PCC and not later than four months before the beginning of such fiscal year, furnish such program and budget as well as the programs and budgets referred to in paragraph (c) (ii) of Section 2.01 of this Agreement to MINEP for inclusion in the budgets of the Borrower; and (c) make such approved work programs and budgets available to the Bank or the Association at their request. Section 2.07. (a) SODECOTON undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan and 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 installation, and for such insurance any indemnity shall be payable in a currency freely usable by SODECOTON to replace or repair such goods. (b) Except as the Bank and the Association may otherwise agree, SODECOTON shall cause all goods and services financed out -5- of the proceeds of the Loan and of the Credit made available to it by the Borrower to be used exclusively for the Project. Section 2.08. (a) SODECOTON shall furnish to the Bank and the Association, promptly upon their preparation, the plans, specifications, contract documents and construction and procure- ment schedules for Parts A (ii) through G of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank or the Association shall reasonably request. (b) SODECOTON: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan and of the Credit allocated thereto, and to disclose their use in the Project; (ii) shall enable the Bank's and the Association's accredited 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 Bank and the Association at regular intervals all such information as the Bank or the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of such proceeds and the goods and services financed out of such proceeds, including, without limitation to the foregoing, quarterly and annual progress reports on the execution of the Project, to be furnished to the Bank and the Association within two months after the end of each quarter and fiscal year, respectively. (c) SODECOTON shall assist the Borrower in the preparation of the Project completion report referred to in Section 3.09 (b) of the Loan Agreement, in particular with respect to Parts A and B of the Project. (d) SODECOTON shall enable the Bank's and the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of SODECOTON and any relevant records and documents. Section 2.09. SODECOTON shall duly perform all its obliga- tions under the SODECOTON Financing Agreement and the FONADER Protocol. Except as the Bank and the Association shall otherwise agree, SODECOTON shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving said Agreement or Protocol or any provision thereof. -6- Section 2.10. (a) SODECOTON shall, at the request of the Bank or the Association, exchange views with the Bank and the Association with regard to the progress of the Project, the performance of its obligations under this Agreement, the SODECOTON Financing Agreement, the FONADER Protocol and other matters relating to the purposes of the Loan and the Credit. (b) SODECOTON shall promptly inform the Bank and the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan and the Credit, or the performance by SODECOTON of its obligations under this Agreement, the SODECOTON Financing Agreement or the FONADER Protocol. ARTICLE III Management and Operations of SODECOTON Section 3.01. (a) SODECOTON 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 number. (b) Without limitation to the generality of paragraph (a) of this Section, SODECOTON shall operate and maintain its plants, equipment, properties and facilities, and make all necessary repairs and renewals thereof, all in accordance with appropriate agricultural and management practices. Section 3.02. SODECOTON shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Bank and the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.03. Except as the Bank and the Association may otherwise agree, SODECOTON shall not sell, lease, transfer or otherwise dispose of any of its property and assets except in the ordinary course of business. Section 3.04. SODECOTON shall at all times take all steps necessary to maintain its corporate existence and right to carry on its operations, including its functions with respect to the -7- execution of the Project, 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 concessions, licenses, consents, franchises or other rights, as may be necessary or useful for the conduct of its business and the execution and operation of the Parts of the Project for which it is responsible. Section 3.05. SODECOTON shall use its best efforts to take such measures as may be required from time to time to ensure the marketing of food crop surpluses resulting from production increases under the Project and undertakes to seek and mobilize the funds and other resources required for this purpose. ARTICLE IV Financial Covenants Section 4.01. (a) SODECOTON shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition, including separate accounts for each Part of the Project. (b) In order to carry out its obligations under paragraph (a) of this Section and without limitation or restriction upon such obligations, SODECOTON shall in particular make improvements satisfactory to the Bank and the Association in its cost account- ing system designed to permit a more accurate identification of the costs pertaining to SODECOTON's various operations and the recovery of such costs. (c) SODECOTON shall: (i) until one year after the Closing Date, retain (A) all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures for Parts A (ii) and (iii) and B of the Project on account of which withdrawals are requested from the Loan Account or the Credit Account on the basis of certificates of expenditures and (B) the documentation submitted by IRA, FNFP, MINAGRI or MINEP's Northern Province Economic Division for purposes of such withdrawals on the basis of certificates of expenditures with respect to Parts D through G of the Project; and -8- (ii) shall enable the Bank's and the Association's accredited representatives to inspect such records and documentation. Section 4.02. SODECOTON shall: (i) have its 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 an independent auditor acceptable to the Bank and the Association; (ii) furnish to the Bank and 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 its financial statements for such year as so audited and (B) the report of such audit by said auditor, of such scope and in such detail as the Bank or the Association shall have reasonably requested, including, without limitation to the foregoing, a separate opinion by said auditor in respect of the expenditures, records and documentation referred to in Section 4.01 (c) of this Agreement as to whether the proceeds of the Loan and of the Credit made available to SODECOTON and withdrawn from the Loan Account and the Credit Account on the basis of certificates of expenditures have been used for the purpose for which they were provided; and (iii) furnish to the Bank and the Association such other information concerning the accounts and financial statements of SODECOTON and the audit thereof as the Bank or 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 Loan Agreement and the Development Credit Agreement become effective. Section 5.02. (a) This Agreement and all obligations of the Bank and the Association and of SODECOTON thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Loan Agreement or the Development Credit Agreement shall terminate in accordance with its terms, provided that the other of said Agreements shall have terminated there- tofore or shall terminate on the same date; or (ii) a date twenty years after the date of this Agreement. (b) If both the Loan Agreement and the Development Credit Agreement terminate in accordance with their terms before the date specified in paragraph (a) (ii) of this Section, the Association and the Bank shall promptly notify SODECOTON 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 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 designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 10 - 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 SODECOTON: Sociftf de Dfveloppement du Coton du Cameroun B.P. 302 Garoua United Republic of Cameroon Cable address: Telex: SODECOTON 7617 KN Garoua 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 SODECOTON may be taken or executed by the Chairman of the Board (Conseil d'Administration) of SODECOTON or such other person or persons as the Chairman shall designate in writing, and SODECOTON shall furnish to the Bank and the Associa- tion sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. As long as any part of the Loan shall remain unwithdrawn or outstanding and unless SODECOTON has been notified otherwise by the Association, all action taken, including approvals given, by the Bank pursuant to the provisions of this Agreement, shall be deemed to be taken or given in the name and on behalf of both the Bank and the Association; and all information furnished by SODECOTON to the Bank pursuant to the provisions of this Agreement shall be deemed to be furnished to both the Bank and the Association. - 11 - Section 6.04. For purposes of the rights and obligations of the Association under this Agreement, all references in this Agreement to the provisions of the Loan Agreement shall be understood as references to these provisions as incorporated by reference into the Development Credit Agreement, unless otherwise agreed between the Association and SODECOTON. Section 6.05. 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 representatives thereunto duly authorized, 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT By /sf P. Sa44. E% %- -0%-4 F?c44k Regional Vice President Western Africa INTERNATIONAL DEVELOPMENT ASSOCIATION By s(t.s ; r2 facA2 Regional Vice President ;V Western Africa SOCIETE DE DEVELOPPEMENT DU COTON DU CAMEROUN Authorized Representative - 12 - SCHEDULE Key Staff and Technical Assistance (Section 2.04 of the Project Agreement) Except as the Bank and the Association may otherwise agree, SODECOTON shall in particular employ the following key staff and specialists: A. Key Staff 1. 1 deputy technical director (agronomist); 2. 1 deputy training director; 3. 3 agricultural training officers; 4. 1 industrial training officer; 5. 1 agronomist (for Part A (ii) (d) of the Project); 6. 1 deputy director of public works (for Pcrt B of the Project); 7. 1 deputy head of the garage/workshop (for Part B (iii) of the Project); 8. 1 mechanic (for Part B (iii) of the Project); 9. 2 road foremen; and 10. 1 veterinarian. B. Specialists 1. 1 development coordinator; 2. 1 director of public works (civil engineer) (for Part B of the Project); 3. 1 Project financial manager; 4. 2 agricultural training officers; 5. 1 industrial training officer; - 13 - 6. 1 manager, road construction unit; 7. 1 head of the garage/workshop (for Part B (iii) of the Project); 8. 1 mechanic (for Part B (iii) of the Project); 9. 2 road foremen; and 10. 1 livestock specialist. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 198 L. FOR SECRETARY INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this oZ:Z day of 198. FOR SECRETARY