Benin - Cotonou Water-Sanitation Engineering : Credit 1171 - Project Agreement - Conformed

r-~ OFFIC1L DOCUMENTS CREDIT NUMBER 1171 BEN Proect Agreement (Cotonou Water/Sanitation Engineering Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and SOCIETE BENINOISE D'ELECTRICITE ET D'EAU Dated Cg ,ýr 1981 CREDIT NUMBER 1171 BEN PROJECT AGREEMENT AGREEMENT, dated ) A , 1981, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and SOCIETE BENINOISE D'ELECTRICITE ET D'EAU (here- inafter called SBEE). WHEREAS by the Development Credit Agreement of even date herewith between the PEOPLE'S REPUBLIC OF BENIN (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to four million one hundred thousand Special A Drawing Rights (SDR 4,100,000), on the terms and cond-.tions set forth in the Development Credit Agreement, but only on condition that SBEE agree to undertake such obligations toward the Associa- tion as are hereinafter set forth; and WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and SBEE, the Borrower will make available to SBEE an amount equivalent to $2,800,000 out of the proceeds of the . credit provided for under the Development Credit Agreement on the terms and conditions therein set forth; and WHEREAS SBEE, 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. ARTICLE II Execution of the Project Section 2.01. (a) SBEE shall carry out Part A (1) and Parts B (1) through B (4) of the Project and shall supervise the carrying out of Parts A (2) and A (3) and Part B (6) of the Project with due diligence: and efficiency and in conformity with appropriate -2- administrative, financial, engineering and public utility practices. (b) In order to carry out its obligations pursuant to paragraph (a) of this Section and without limitation or restric- tion upon such obligations, SBEE shall provide, promptly as needed, out of its own financial resources, the funds required for carrying out Part A (1) and Parts B (1) through B (4) of the Project; such funds shall be additional to the funds relent to it by the Borrower under the Subsidiary Loan Agreement. Section 2.02. (a) In order to assist SBEE in carrying out Parts B (1) through B (4) of the Project, SBEE shall employ con- sultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. (b) With respect to the evaluation and implementation of the recommendations and other conclusions contained in the studies and other documents prepared for Parts B (1) through B .(4) of the Project by the consultants referred to in paragraph (a) of this Section, SBEE shall: (i) during the carrying out of said Parts of the Project, from time to time exchange views with the Borrower and the Association on said recom- mendations and conclusions; and (ii) upon completion of said Parts of the Project, review with the Borrower and the Association the recommendations and conclusions relating thereto with a view to their implementation. Section 2.03. Upon completion of Part A (1) the Project SBEE shall connect all existing standpipes in Ciu.nou to the water supply system and thereafter maintain in operation or ensure the continued operation of said standpipes. Section 2.04. Except as the Association shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.05. (a) SBEE undertakes to insure, or make adequate provision for. the insurance of, the goods to be financed out of the proceeds of the Credit relent to it by the Borrower against -3- hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such in- surance any indemnity shall be payable in a currency freely usable by SBEE to replace or repair such goods. (b) Except as the Association may otherwise agree, SBEE shall cause all goods and services financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for Part A (1) and Parts B (1) through B (4) of the Project. Section 2.06. (a) SBEE shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and procurement schedules for Part A (1) and Parts B (1) through B (4) of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) SBEE: (i) shall maintain records and procedures adequate to record and monitor the progress of Part A (1) and Parts B (1) through B (4) of the Project (including their &pst and the benefits to be derived from them), to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower, and to disclose their use in the Project; (ii) shall enable 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 the proceeds of the Credit relent to it by the Borrower and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information 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 such proceeds and the goods and services financed out of such proceeds. (c) SBEE shall prepare the report referred to in Section 3.06 (c) of the Development Credit Agreement with respect to Part A, Parts B (1) through B (4) and Part B (6) of the Project and shall furnish to the Borrower any information required for pur- poses of such report regarding said Parts of the Project. (d) SBEE shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of SBEE and any relevant records and documents. -4- Section 2.07. SBEE shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, SBEE shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.08. (a) SBEE shall, at the request of the Associa- tion, exchange views with the Association with regard to the progress of Part A, Parts B (1) through B (4) and Part B (6) of the Project, the performance of its obligations under this Agree- ment and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) SBEE shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of Part A, Parts B (1) through B (4) and Part B (6) of the Project, the accomplishment of the purposes of the Credit, or the performance by SBEE of its obligations under this Agreement and under the Subslidiary Loan Agreement. ARTICLE III Management and Operations of SBEE Section 3.01. (a) SBEE shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with appropriate administrative, commercial, financial, engineering and public utility practices under the supervision of experienced and 'com- petent management assisted by experienced and competent staff ,in adequate numbers. (b) Without limitation to the generality of paragraph (a) of this Section, SBEE shall take all such action, including the provision of funds and resources, as shall be necessary to ensure that its facilities, equipment and property are adequately operated, maintained, renewed and repaired. Section 3.02. (a) SBEE shall take all steps necessary to maintain its legal existence and right to carry on its operations and shall take all steps necessary to acquire, maintain and renew such licenses, consents, franchises or other rights as may be necessary or useful for its operations. -5- (b) Except as the Association shall otherwise agree, SBEE shall not sell, lease, transfer or otherwise dispose of any of its property or assets which shall be required for the efficient conduct of its daily operations. Section 3.03. SBEE shall take out and maintain with responsi- ble 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. ARTICLE IV Financial Covenants Section 4.01. SBEE shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. (a) Until completion of the study on water tariffs provided for under Part B (3) of the Project SBEE shall take all measures necessary (including but not limited to pro- posals to the Borrower for adjustments in its water supply tariffs) to enable SBEE to earn sufficient revenues to cover: (i) the cash operating expenses of its water supply operations; and (ii) its debt service requirements. (b) For the purposes of this Section: (i) the term "cash operating expenses" means all costs of operation by SBEE of its water supply facili- ties, including adequate maintenance expenses, taxes or payments to the Borrower in lieu of taxes, if any, but excluding provision for depreciation of fixed assets and amortization of, and interest and other charges on, debt; and (ii) the term "debt service requirements" means the aggregate amount of amortization (including sinking or purchase fund payments, if any) of, and interest and other charges on, debt. (c) Upon completion of the study referred to in paragraph (a) of this Section, SBEE shall review with the Association the recommendations and conclusions resulting from said study and shall take all measures necessary in the light of said review to adjust its water supply tariffs; such measures shall include but not be limited to proposals to the Borrower for adjustment in said tariffs. Section 4.03. SBEE 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 independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six 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 auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of SBEE and the audit thereof as the Association shall from time to time reason- ably 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 SBEE 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 10 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify SBEE 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. -7- 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 SBEE: Socift& Bfninoise d'Electriciti et d'Eau P.O. Box 123 Cotonou People's Republic of Benin Cable address: Telex: BENINELEC 5223 or Cotonou 5225 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 SBEE may be taken or executed by the Director General of SBEE or such other person or persons as SBEE shall designate in writing, and SBEE shall furnish to the Association sufficient evidence of the authority and the authenti- cated specimen signature of each such person. Section 6.03. 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 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 SOCIETE BENINOISE D'ELECTRICITE ET D'EAU ByA r Rpenai Authorized Representative I 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 0 day of 198. FOR SECRETARY