Senegal - Phosphate Industry Development Engineering Project : Credit 1360 - Credit Agreement - Conformed

OFFICIAL DOCUMENTS CREDIT NUMBER 1360 SE Development Credit Agreement (Phosphate Industry Development Engineering Project) between REPUBLIC OF SENEGAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1983 CREDIT NUMBER 1360 SE DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1983, between REPUBLIC OF SENEGAL (hereinafteF called the Borrower) and INTER- NATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) any financing so provided by the Association would be refunded, if the Association so requests, out of the proceeds of any credit by the Association or loan by the International Bank for Reconstruction and Development which may later be granted to the Borrower or any other party for the purpose of exploiting the Borrower's phosphate resources; and (C) Parts A and B of the Project will be carried out by ICS and CSPT, respectively, with the assistance of the Borrower and PROMOPHOS, and, as part of such assistance, the Borrower will make available to PROMOPHOS, and PROMOPHOS will in turn make available to ICS and CSPT, part of the proceeds of the Credit as hereinafter provided; WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and PROMOPHOS; 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 June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). - 2 - 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: (a) "ICS" means Industries Chimiques du Senegal, a company established and operating under the laws of the Borrower; (b) "ICS Statutes" means (i) the Statuts of ICS dated November 25, 1976 as amended on November 18, 1977, November 18, 1980 and July 30, 1981, and (ii) the Convention d'Etablisssement between the Borrower and ICS dated April 21, 1981, both as amended from time to time; (c) "CSPT" means Compagnie Senegalaise des Phosphates de Taiba, a company established and operating under the laws of the Borrower; (d) "CSPT Statutes" means (i) the Statuts of CSPT dated August 21, 1979, and (ii) the Convention d'Etablissement dated June 10, 1958 as amended on November 16, 1968 both as amended from time to time; (e) "PROMOPHOS" means Societe de Promotion des Phosphates du Senegal, a limited liability company (Societg a responsabilite limit6e) established and operating under the laws of the Borrower and held in equal shares by the Borrower, ICS and CSPT; (f) "PROMOPHOS Statutes" means the Statuts of PROMOPHOS dated March 9, 1983 as amended from time to time; (g) "Project Agreement" means the agreement between the Association and PROMOPHOS, ICS and CSPT of even date herewith, as the same may ba amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (h) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and PROMOPHOS pursuant to SeC- tion 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (i) "CSPT Financing Agreement" means the agreement to be entered into between PROMOPHOS and CSPT in accordance with the -3- provisions of Schedule 3 to this Agreement, as such agreement may be amended from time to time, and such term includes all sched- ules to the CSPT Financing Agreement; (j) "ICS Financing Agreement" means the agreement to be entered into between PROMOPHOS and ICS in accordance with the provisions of Schedule 3 to this Agreement, as such agreement may be amended from time to time, and such term includes all sched- ules to the ICS Financing Agreement; and (k) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated February 12, 1983 and March 8, 1983 between the Borrower and the Association. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to seven million one hundred thousand Special Drawing Rights (SDR 7,100,000). Section 2.02. (a) 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 may be amended from time to time by agreement between the Borrower and the Association, 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 and to be financed out of the proceeds of the Credit. (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and works required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be March 31, 1988 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. 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 2.07. Commitment charges and service charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 15 and September 15 commencing September 15, 1993, and ending March 15, 2033, each installment to and including the installment payable on March 15, 2003, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.09. The currency of the Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. -5- Section 2.10. The Managing Director of PROMOPHOS is desig- nated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions for the purposes of the carrying out of Parts A and B of the Project. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Part C of the Project with due diligence and efficiency and in cc.iformity with appropriate financial, administrative, engineering and industrial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall exercise its rights and powers as a shareholder of PROMOPHOS, ICS and CSPT and every other right, power or remedy available to it to permit or cause PROMOPHOS, ICS and CSPT to perform all their obligations under the Project Agreement, and it shall not take, nor cause or permit any of its political subdivisions or any of its agencies or any agency of any such political subdivisions to take, any action which would prevent or interfere with the performance by PROMOPHOS, ICS and CSPT of their obligations contained in the Project Agreement. (c) The Borrower shall relend the proceeds of the Credit allocated from time to time to Categories (1), (2), (3), (4) and (6) of the table set forth in paragraph 1 of Schedule 1 to this Agreement to PROMOPHOS under a subsidiary loan agreement to be entered into between the Borrower and PROMOPHOS under terms and conditions which shall have been approved by the Association and which shall, except as the Association may otherwise agree, inter alia, include the terms and conditions set forth in Part I of Schedule 3 to this Agreement. (d) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the pur- poses of the Credit, and except as the Association shall other- wise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. - 6 - (e) Without limitation or restriction upon the provisions of Section 2.01 of the Project Agreement, the Borrower specifi- cally undertakes, whenever there is reasonable cause to believe that the funds available to ICS or CSPT will be inadequate to meet the estimated expenditures required for the carrying out of Parts A or B of the Project, to make arrangements, satisfactory to the Association, promptly to provide ICS or CSPT or cause ICS or CSPT to be provided with such funds as are needed to meet such expenditures. Section 3.02. In order to assist the Borrower in carrying out Part C of tne Project, the Borrower shall employ experts and consultants whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association, such consultants to be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "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. Section 3.03. The Borrower shall cause all services financed out of the proceeds of the Credit for Part C of the Project to be used exclusively for the purposes of the Project until its completion. Section 3.04. (a) The Borrower shall furnish to PROMOPHOS all necessary information in respect of Part C of the Project to enable PROMOPHOS to carry out its obligations under Section 2.05 (a) of the Project Agreement. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of Part C of the Pro- ject (including its cost and the benefits to be derived from it), to identify the services financed out of the proceeds of the Credit, and to disclose their use in Part C of the Project; (ii) enale the Association's representatives to visit the facilities and sites included in Part C of the Project and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning Part C of 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. -(c) Upon the award by the Borrower of any contract for services to be financed out of the proceeds of the Credit, the -7- Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of Part C 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 Borrower and the Association, the Borrower shall prepare with the assistance of PROMOPHOS as and when req-tred and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and ini- tial operation of Part C of the Project, its cost and the bene- fits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under this Agreement and the accomplishment of the purposes of the Credit. ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained appropriate accounting practices the opera- tions, resources and expenditures, in respect of Part C of the Project, of the departments or agencies of the Borrower respons- ible for carrying out Part C of the Project or any part thereof. Section 4.02. The Borrower shall not, without the Associa- tion's prior approval, (A) consent to any modification of the PROMOPHOS Statutes, or (B) sell, pledge or otherwise dispose of any of its share of PROMOPHOS or permit a change in the percen- tage of its holdings of such shares. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the Gen- eral Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) PROMOPHOS, ICS or CSPT shall have failed to perform any of its obligations under the Project Agreement; -8- (b) as a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that PROMO- PHOS, ICS or CSPT will be able to perform their respective obli- gations under the Project Agreement; (c) the PROMOPHOS Statutes, the ICS Statutes or the CSPT Statutes shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of PROMOPHOS, ICS or CSPT to perform any of their respective obliga- tions under the Project Agreement; and (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of PROMOPHOS, ICS or CSPT or for the suspension of their operations. Section 5.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Associa- tion to the Borrower, PROMOPHOS, and ICS or CSPT; and (b) any events specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of PROMOPHOS, ICS and CSPT have been duly authorized or ratified by all necessary corporate action; (b) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and PROMOPHOS; -9- (c) the ICS Financing Agreement has been executed on behalf of PROMOPHOS and ICS; and (d) the CSPT Financing Agreement has been executed on behalf of PROMOPHOS and CSPT. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (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 PROMOPHOS, ICS and CSPT, and is legally binding upon PROMOPHOS, ICS and CSPT in accordance with its terms; (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and PROMOPHOS and is legally binding upon the Borrower and PROMOPHOS in accordance with its terms; (c) that the ICS Financing Agreement has been duly author- ized or satisfied by PROMOPHOS and ICS and is legally binding upon PROMOPHOS and ICS in accordance with its terms; and (d) that the CSPT Financing Agreement has been duly author- ized or ratified by PROMOPHOS and CSPT and is legally binding upon PROMOPHOS and CSPT in accordance with its terms. Section 6.03. The d,te C) A.., VY83 , is hereby specified for the purposes of Section 12.04 of the General Condi- tions. Section 6.04. The obligations of the Borrower under Article IV of this Agreement and the provisions of Article V of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.10 of this Agreement, the Minister of Finance of the Borrower is designated - 10 - as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Ministere de l'Economie et des Finances Rue Charles Laine Dakar B.P. 4017 Cable address: Telex: MINFINANCES 3203 SG Dakar 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) 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. REPUBLIC OF SENEGAL By jS/ Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Western Af-:ica - 11 - SCHEDULE 1 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 and the allocation of amounts of the Credit to each Category: Amount of the Credit Allocated (Expressed in Category SDR Equivalent) (1) Consultants' and experts' 260,000 services for activities set forth in paragraphs (A) 1, 2 and 3 of the Exhibit to Schedule 2 to the Development Credit Agreement (2) Construction and operation 4,460,000 of the slime recovery plant referred to in paragraph (A) 4 of said Exhibit (3) Consultants' and experts' 340,000 services for Part B of the Project (4) Equipment for activities set 320,000 forth in paragraphs (B) 3 and 4 of said Exhibit (5) Consultants' and experts' 250,000 services for Part C of the Project (6) Refunding of Project 730,000 Preparation Advance (7) Unallocated 740,000 TOTAL 7,100,000 - 12 - 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures for goods or services supplied from the territory of the Borrower; (b) payments made for expenditures prior to the date of this Agreement; (c) payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manu- facture, procurement or supply thereof; and (d) payments made for expenditures under Category (2) until the Association shall have notified PROMOPHOS that it is satis- fied, on the basis of studies and tests to be carried out under Part A of the Project, that the construction of a pilot plant shall be technically and economically justified. 3. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance all expenditures in that Category, the Association may, by notice to the Borrower, reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures. 4. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Asso- ciation's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 13 - SCHEDULE 2 Description of the Project The Project consists of the following parts: Part A: Processing Tests, studies and, if justified on the basis of the foregoing, development, construction and operation of a pIlot plant to carry out further tests, to determine the commercial scale viability of recovering slimes produced by CSPT into feed material for ICS' phosphoric acid plant. Part B: Phosphate mining and beneficiation Tests and studies to assist CSPT in optimizing the overall long-term P205 recovery rate of its mining and beneficiation operations at CSPT, taking into account ICS' future phosphoric acid and phosphate fertilizer production capacity. Part C: Planning Tests and studies of the Borrower's phosphate deposits at Matam and Thies to assist the Borrower in defining a long-term program for the development of phosphate resources. The detailed features of the Project shall be as set forth in the Exhibit to this Schedule, as such Exhibit may be amended from time to time. The Project is expected to be completed by June 30, 1987. - 14 - Exhibit to Schedule 2 Detailed Features of the Project The detailed features of the Project shall be as follows: (A) Part A of the Project 1. Laboratory tests- of cadmium removal from phosphoric acid. 2. Studies and laboratory tests to: (a) select optimal microhydrocyclone type and size for slime recovery; (b) produce phosphoric acid from recovered slimes; (c) determine settling, handling and dewatering characteristics of recovered slimes; (d) engineer a 1/4 scale slime recovery pilot plant. 3. Feasibility studies for the purposes set forth in Section 3.05 of the Project Agreement. 4. Construction and operation of a 1/4 scale slime recovery pilot plant. (B) Part B of the Project 1. Laboratory tests for cadmium removal from phosphate rock. 2. Studies and tests for improving (a) the P205 recovery in CSPT beneficiation plant, and (b) the operating efficiency of that plant. 3. Installation of sampling equipment and instrumentation to control product flows in CSPT beneficiation plant and to determine P205 losses. 4. (a) Drillings and analyses to estimate slimes reserves in the deposit at Keur Mor Fall; and - 15 - (b) mining tests to establish the mineability of CSPT stock-piled slimes, and chemical tests to assess the potential for manufacturing granular direct application products from stock-piled slimes. 5. Studies and laboratory tests for slimes beneficiation with processes other than hydrocyclone. 6. Feasibility studies for the purposes referred to in Section 3.06 of the Project Agreement. (C) Part C of the Project 1. Review and consolidation of existing studies on the deposits at Matam and Thies. 2. Preliminary bench scale beneficiation tests for phosphate rock from the deposit at Matam and deter- mination of P205 vs. size distribution in ore and beneficiated products. 3. Review and tests of beneficiation and phosphoric acid production methods for phosphate rock from the deposits at Thies. 4. Preparation of a long-term development plan for the Borrower's phosphate resources. - 16 - SCHEDULE 3 Terms and Conditions of the Subsidiary Loan Agreement, the ICS Financing Agreement and the CSPT Financing Agreement; Responsibilities of PROMOPHOS I. Subsidiary Loan Agreement The Subsidiary Loan Agreement to be concluded between the Borrower and PROMOPHOS pursuant to Section 3.01 (c) of the Development Credit Agreement shall, inter alia, provide for the following: (a) The Borrower shall relend to PROMOPHOS the proceeds of the Credit allocated to Categories (1), (2), (3), (4) and (6) of the table set forth in paragraph 1 of Schedule 1 to the Development Credit Agreement. (b) PROMOPHOS shall repay all amounts relent to it out of the proceeds of the Credit and shall pay interest and other charges thereon on the same respective terms as PROMOPHOS shall be required to apply to ICS and CSPT in accordance with the provisions of Part II (b) and (c) of this Schedule. (c) PROMOPHOS shall undertake to further relend (i) to ICS all amounts allocated to Categories (1) and (2) of the table set forth in paragraph 1 of Schedule 1 to the Development Credit Agreement and such amounts allocated to Category (6) of said table as shall be disbursed in respect of Part A of the Project under a financing agreement (the ICS Financing Agreement) to be entered into between PROMOPHOS and ICS, and (ii) to CSPT all amounts allocated to Categories (3) and (4) of said table and such amounts allocated to Category (6) of said table as shall be disbursed in respect of Part B of the Project under a financing agreement (the CSPT Financing Agreement) to be entered into between PROMOPHOS and CSPT. Said Financing Agreements shall include, inter alia, the terms and conditions set forth in Part II below. (d) PROMOPHOS shall undertake to exercise the responsibi- lities set forth in Part III hereof and to duly perform its obligations provided for or referred to in the Project Agreement. - 17 - II. ICS Financing Agreement and CSPT Financing Agreement The agreements to be concluded pursuant to paragraph (c) of Part I above shall, inter alia, provide for the following: (a) PROMOPHOS shall relend to ICS and CSPT the amounts referred to in paragraphs (c) (i) and (c) (ii), respec- tively, of Part I of this Schedule. (b) The terms and conditions applicable to the relending of said amounts to ICS and CSPT shall be as follows: (i) Subject to the provisions of sub-paragraph (ii) below, ICS and CSPT shall each repay the amounts of the Credit relent to them by PROMOPHOS over a period not exceeding 15 years, including a grace period of 3 years, all counted from the date referred to in Section 3.05 (b) of the Project Agreement. ICS and CSPT shall each pay to PROMOPHOS interest at the rate of 12.7% per annum on amounts withdrawn by them and outstanding from time to time, it being understood, however, that, until the date referred to in Section 3.05 (b) of the Project Agreement, (A) no such interest shall accrue and (B) ICS and CSPT shall each pay to PROMOPHOS a service charge at the rate of 0.75% per annum on the amounts withdrawn and outstanding from time to time. (ii) In the event that Part A of the Project shall not result in commercial operations, then the terms set forth in sub-paragraph (i) above shall not apply to amounts relent to ICS and CSPT but the following terms shall apply: ICS and CSPT shall then each repay the amounts of the Credit relent to them by PROMOPHOS over a period not exceeding 20 years, including a grace period of 7 years from the date of this Agreement. Each shall also pay to PROMOPHOS a service charge at the rate of 0.75% per annum on the amounts withdrawn by them and outstanding from time to time as well as all other charges which the Borrower may have to pay to the Association in respect of said amounts. - 18 - (iii) For the purpose of this paragraph, the term "commercial operations" shall have the following meaning: Part A of the Project shall be deemed not to have resulted in commercial operations if the feasibility report to be prepared pursuant to Section 3.05 (b) of the Project Agreement shall have established, on the basis of criteria satis- factory to the Association, that the recovery of phosphate slimes shall be discontinued because (A) the technical specifications of phosphoric acid produced with recovered slimes are inadequate for purposes of exporting such phosphoric acid, or (B) the level of production costs of export grade phosphoric acid makes its production uneconomic. It is understood however that should ICS decide at a later date prior to June 30, 1991, to proceed with commercial recovery of slimes, then the terms set forth in sub-paragraph (i) above shall apply with retroactive effect. (c) ICS and CSPT shall each undertake to pay to PROMOPHOS all other charges which shall be payable by the Borrower to the Association in respect of proceeds of the Credit onlent to PROMOPHOS and which shall in turn be payable by PROMOPHOS to the Borrower. (d) ICS and CSPT shall each undertake to obtain, as and when required, the approval of, or to consult with, PROMOPHOS as provided for in paragraphs (a), (b), (c) and (d) of Part III below. III. Responsibilities of PROMOPHOS PROMOPHOS shall further exercise the following functions with respect to the Project: (a) Preparation of detailed terms of reference for the studies and the tests to be carried out. (b) Supervision and approval of the selection and employ- ment of experts and consultants and all procurement. (c) Approval of any modification in the terms of reference and conditions of employment referred to in the preced- ing paragraphs (a) and (b). - 19 - (d) Collection, on a continuing basis, of all results of studies and tests under the Project and communication of such results, together with PROMOPHOS' comments hereon, to the Borrower, ICS and CSPT. (e) Preparation of the feasibility reports referred to in Sections 3.05, 3.06 and 3.07 of the Project Agreement. (f) Developing recommendations on ICS' and CSPT's future investments in phosphate beneficiation and processing. 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 1983 FOR SECRETARY