Niger - Industrial Development Project : Credit 1225 - Project Agreement - Conformed

w ICJ 'CREDIT NUMBER 1225 NIR Project Agreement (Industrial Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANQUE DE DEVELOPPEMENT DE LA REPUBLIQUE DU NIGER Date / K,1982 CREDIT NUMBER 1225 NIR PROJEC AGREEMENT AGREEMENT, dated - k-6 a 2 C) , 1982, between the INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the BANQUE DE DEVELOPPEMENT DE LA REPUBLIQUE DU NIGER (hereinafter called BDRN), a company established and operating under the laws of the Republic of Niger (hereinafter called the Borrower). WHEREAS by the Development Credit Agreement of even date herewith between the Borrower and the Association, the Association has agreed to lend to the Borrower, for relending, in part, to BDRN, an amount in various currencies equivalent to fourteen million Special Drawing Rights (SDR 14,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BDRN agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS BDRN, 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; Management and Operations of BDRN Section 2.01. BDRN shall carry out Part A of the Project, described in Schedule 2 to the Development Credit Agreement, and conduct its operations and affairs, with due diligence and efficiency and in conformity with appropriate economic, financial -2- and investment standards and practices, with qualified and experienced management and in accordance with its Statutes, By-laws, and the Schedule to this Agreement. Section 2.02. (.a) In accordance with and subject to the provisions of the Development Credit Agreement, BDRN shall present Investment Projects to the Association for approval or for autho- rization for withdrawals to be made from the Credit Account. (b) (i) When presenting a Sub-loan (other than a free-limit Sub-loan) or an Investment to the Association for approval, BDRN shall furnish to the Association an application, in form satisfactory to the Association, together with a description of the Investment Enterprise and of the Investment Project to be financed thereunder (including a description of the expendi- tures for such Investment Project proposed to be financed by BDRN and an appraisal of the Investment Project) and the proposed terms and conditions of the Sub-loan or Investment, including the schedule of amortization of the Sub-loan, or of repayment to the Borrower of the amount to be used for the Investment, and such other information as the Association shall reasonably request; and (ii) such appraisals will include the amount invested per job created and a calculation of the internal financial rate of return and of the economic rate of return, such calculations to be in accordance with guidelines satisfactory to the Association. (c) Each request by BDRN for authorization to make with- drawals from the Credit Account in respect of a free-limit Sub-loan shall contain a summary description of the Invest- ment Enterprise and the Investment Project (including a descrip- tion of the expenditures proposed to be financed out of the proceeds of the Credit) and the terms and conditions of such free-limit Sub-loan, including the schedule of amortization therefor, a calculation of the internal financial rate of return and, in the case of the first Investmer Project in a specific economic sector, the calculation of the economic rate of return of such Investment Project, such calculations to be in accordance with guidelines satisfactory to the Association. (d) The amortization schedule applicable to each Investment Project shall provide for an appropriate period of grace, and, unless the Association and the Borrower shall otherwise agree, (i) shall not extend beyond fifteen years from the date of approval by the Association of such Investment Project or of authorization by the Association to make withdrawals from the Credit Account -3- in respect of such Investment Project, and (ii) shall provide for approximately equal semi-annual, or more frequent, aggregate payments of principal and interest or ap,proximately equal semi- annual, or more frequent, payments of principal. (e) Except as the Association and BDRN shall otherwise agree, BDRN shall submit applications for approval of Investment Projects pursuant to the provisions of paragragh (b) of this Section and requests for authorizations to withdraw from the Credit Account pursuant to the provisions of paragraph (c) of this Section on or before December 31, 1986. Section 2.03. (a) BDRN undertakes that unless the Association shall otherwise agree, any Sub-loan or Investment will be made on terms whereby BDRN shall obtain, by written agreement or other appropriate legal means, rights adequate to protect the interests of the Association and of BDRN, including, in the case of any such Sub-loan and to the extent that it shall be appropriate in the case of any such Investment: (i) the right to require the Invest- ment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) the right to require that the goods and services to be financed out of the proceeds of the Sub-loan or Investment be used exclusively in the carrying out of the Investment Project; (iii) the right of the Association and of BDRN to inspect such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) the right to require that the Investment Enterprise take out and maintain such insurance, against such risks and in such amounts, as shall be consistent with sound business practice and that, without any limitation upon the foregoing, such insurance cover hazards incident to the acquisition, transportation and delivery of the goods financed out of the proceeds of the Sub-loan or Investment to the place of use or installation, and that any indemnity thereunder be payable in a currency freely usable by the Invest- ment Enterprise to replace or repair such goods; (v) the right to obtain all such information as the Association or BDRN shall reasonably request relating to the foregoing, to the admini- stration, operations and financial condition of the Investment Enterprise and the benefits to be derived from the Investment Projects; and (vi) the right of BDRN to suspend or terminate the right of the Investment Enterprise to the use of the proceeds of -4- the Sub-loan upon failure by such Investment Enterprise to perform its obligations under its agreement with BDRN. (b) BDRN shall exercise its rights in relation to each Investment Project in such manner as to (i) protect the interests of the Association and of BDRN, (ii) comply with its obligations under this Agreement and the Subsidiary Loan Agreement and (iii) achieve the purposes of the Project. Section 2.04. BDRN shall furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Sub-loans and Investments, Part A of the Project, the Investment Enterprises, the Investment Projects, the Sub-loans and the Investments. Section 2.05. BDRN shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, BDRN shall not take or concur in any action which would have the effect of assigning, or amending, abrogating or waiving any provision of, the Subsidiary Loan Agreement. Section 2.06. Except as the Association and BDRN shall otherwise agree, BDRN: (a) shall not sell, lease, transfer or otherwise dispose of any of its property or assets, except in the ordinary course of business; and (b) shall take all action necessary to maintain its corporate existence and right to carry on operations and to acquire, maintain and renew all rights, powers, privileges and franchises necessary or useful in the conduct of its business. Section 2.07. BDRN shall cause each of its Subsidiaries (if any) to observe and perform the obligations of BDRN under this Agreement to the extent to which the same may be made applicable thereto as though such obligations were binding upon each of such Subsidiaries, Section 2.08. BDRN shall not amend its By-laws except in agreement with the Association, and shall exchange views with the Association on any proposal to modify its Statutes. Section 2.09. In order to assist BDRN in the carrying out of Part A.2 of the Project, BDRN shall employ consultants and advisers whose selection qualifications, experience and terms and conditions of employment shall be satisfactory to the Association in accordance with principles and procedures described in the -5- "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. ARTICLE III Financial Covenants Section 3.01. BDRN shall maintain procedures and records adequate to monitor and record the progress of Part A of the Project and of each Investment Project (including its cost and the benefits to be derived from it) and to reflect in accordance with consistently maintained appropriate accounting practices the operations and financial condition of BDRN and shall enable the Association's representatives to examine such records. Section 3.02. BDRN 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 BDRN and the audit thereof as the Association shall from time to time reason- ably request. Section 3.03. Except as the Association and BDRN shall otherwise agree, BDRN shall not incur or permit any Subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of BDRN and all its Subsidiaries then incurred and outstanding would exceed four times the consolidated capital and surplus of BDRN and all its Subsidiaries. For the purpose of this Section: (a) The term "debt" means any debt incurred by BDRN or any Subsidiary maturing more than one year after the date on which it is originally incurred, including debt assumed or guaranteed by BDRN or by a Subsidiary and excluding debt contracted by BDRN as agent of the Borrower. -6- (b) Wherever reference is made in this Section to the incurring of debt, such reference shall include any modification of the terms of payment of such debt. Debt shall be deemed to be incurred (i) under a loan contract or agreement on the date and to the extent the loan is drawn down pursuant to such loan contract or agreement and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent the guaranteed debt is outstanding. (c) Whenever in connection with this Section it shall be necessary to value in terms of BDRN debt payable in foreign currency, such valuation shall be made at the prevailing lawful rate of exchange at which such foreign currency is, at the time of such valuation, obtainable in Niger for the purposes of servicing such debt. (d) The term "consolidated debt of BDRN and all its Sub- sidiaries" means the total amount of debt of BDRN and all its Subsidiaries excluding (i) debt owed by BDRN to any Subsidiary or by any Subsidiary to BDRN or to any other Subsidiary and (ii) debt referred to in paragraph (e) (ii) of this Section. (e) The term "consolidated capital and surplus of BDRN and all its Subsidiaries" means the aggregate of (i) the total unimpaired paid-in capital, surplus and free reserves of BDRN and of all its Subsidiaries after excluding therefrom such amounts as shall represent equity interests of BDRN in any Subsidiary, or of any such Subsidiary in BDRN or in any other Subsidiary, and (ii) such amount of any other loan which the Association may determine to be included in the consolidated capital and surplus of the Borrower. Section 3.04. Except as the Association and BDRN shall otherwise agree, BDRN shall not make any repayment in advance of maturity in respect of any of its borrowings (other than deposits) having an original term exceeding one year. Section 3.05. BDRN shall take such steps satisfactory to the Association as shall be necessary to protect itself against risk of loss resulting from changes in the rates of exchange between the various currencies (including CFA Francs) used in its bor- rowing and lending operations. -7- ARTICLE IV Consultation, Information and Inspection Section 4.01. (a) The Association and BDRN shall cooperate fully to assure that the purposes of the Credit will be accom- plished. To that end, the Association and BDRN shall from time to time, at the request of either party, exchange views through their representatives with regard to the progress of Part A of the Project, the performance by BDRN of its obligations under this Agreement and the Subsidiary Loan Agreement, the administration, operations and financial condition of BDRN and other matters relating to the purpose of the Credit. (b) BDRN shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the expenditures of the proceeds of the Credit, Part A of the Project, the Investment Enterprises, the Investment Projects, the Sub-loans and Investments and, where appropriate, the benefits to be derived from the foregoing. (c) BDRN shall furnish to the Borrower all such information in respect of Part A of the Project as the Borrower will require for purposes of Section 3.04 (d) of the Development Credit Agree- ment. Section 4.02. BDRN shall promptly inform the Association 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 or the performance by BDRN of its obligations under this Agreement or the Subsidiary Loan Agreement. Section 4.03. BDRN shall enable the Association's repre- sentatives to inspect the records referred to in Section 3.01 of this Agreement and any relevant documents. 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. -8- Section 5.02. (a) This Agreement and all obligations of the Association and of BDRN thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate; or (ii) a date eighteen years after the date of this Agreement. (b) If the Development Credit Agreement terminates before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BDRN of this event, and upon the giving of such notice, this Agreement and all obligations of the parties thereunder shall forthwith terminate. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under Article VI of 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 herein- after 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 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) -9m For BDRN: Banque de Dfveloppement de la Rfpublique du Niger B8ite Postale 227 Niamey Rfpublique du Niger Telex: 5213 NI SONIBANK Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement or under Section 2.03 of the Development Credit Agreement on behalf of or by BDRN may be taken or executed by its Directeur G6nfral, or by such other person or persons as the Directeur GSn&ral shall designate in writing, and BDRN shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. 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 city of Niamey, Niger, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By President BANQUE DE DEVELOPPEMENT DE LA REPUBLIQUE DU NIGER Byiz 6epresntativ Author ized Representative - 10 - SCHEDULE Lending Policies and Procedures 1. BDRN shall require small-scale Investment Enterprises and Investment Enterprises which propose to carry out labour intensive Investment Projects to finance at least 10% of each Investment Project from sources other than Sub-loans or Investments, such percentage to be at least 30% of each Investment Project in all other cases. 2. Sub-loans shall have terms between three and fifteen years, including a grace period between one and three years. 3. Each Sub-loan shall bear interest at an annual rate of at least three percentage points higher than the annual interest rate payable by BDRN to the Borrower on the funds used to finance such Sub-loan, provided, however, that Sub-loans subject to interest rate ceilings imposed by the Central Bank for the Western African States shall bear interest at the highest permissible level. 4. Each investment Enterprise shall be required to pay an annual commitment fee of 0.50% on the unwithdrawn amount of the Sub-loan, and an exchange risk assumption fee of 0.50% per annum on the amount of the Sub-loan withdrawn and outstanding. 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 FOR SECRETARY