Madagascar - Third Railway Project : Credit 1694 - Project Agreement - Conformed

… & 뾔 ’구棕驪 ·，：。，7。：．汕님赫ER，。，。 Project Agreement (Third Rail달ay Project) be t날een INTEHll^TIO·Al. 】며르VELOP쪄」乙IIT ASSOCIATION and 覲麒1쓺E^ll N^TIO·＾L DE$ Q비n《INS DE FEEt HALAGASY 加t:ed 飾꺽椰 ,19恥 …－-&－헵－－■■－---－■■－-－■－■－…－ - -－■－--－■－－·－--－■－－·■－■－■■－■－－■■…－-.-－■…－ CREDIT NUMBER 1694 MAG PROJECT AGREEMENT AGREEMENT, dated N a4 @I ) 1986, between INTERNATIONAL DEVELOPMENT ASSOCIATIbN (the Association) and RESEAU NATIONAL DES CHEMINS DE FER MALAGASY (RNCFM). WHEREAS (A) by the Development Credit Agreement of even date herewith between Democratic Republic of Madagascar (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to ten million four hundred thousand Special Drawing Rights (SDR 10,400,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that RNCFM agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and RNCFM., part of the proceeds of the Credit provided for under the Development Credit Agreement 'Will be made available to RNCFM on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS RNCFM, in consideration of the Association's enter- ing into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTIGLE II Execution of the Project Section 2.01. RNCFM declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out the Project with due diligence and efficiency and in conformity -2- with appropriate administrative, financial, and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and 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 2.03. RNCFM shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of Parts A through H of the Project. Section 2.04. RNCFM shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, RNCFM 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 provi- sion thereof. Section 2.05. (a) RNCFM shall, at the request of the Asso- ciation, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement and other matters relating to the purposes of the Credit. (b) RNCFM shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by RNCFM of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.06. RNCFM shall take all measures necessary on its part to implement the action plan referred to in Section 3.03 of the Development Credit Agreement. ARTICLE III Management and Operations of RNCFM Section 3.01. RNCFM shall carry on its operations and conduct its affairs in accordance with sound administrative, -3- financial, and engineering practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. RNCFM shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering and financial practices. Section 3.03. RNCFM shall take out and maintain with respon- sible insurers, or make other provision 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. (a) RNCFM shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) RNCFM shall: (i) have its accounts and financial statements (ba- lance sheets, statements of income and expenses and related statements) and all transactions involving the Special Account 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, including a statement by the auditors on the compliance of RNCFM with the provisions of Sec- tions 4.03 through 4.08 of this Agreement; and (iii) furnish to the Association such other information concerning said accounts and financial statements as well as the audit thereof and said records, as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, RNCFM shall: (i) maintain, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures, including all transactions involving the Special Account; (ii) retain, until at least one year after the Associa- tion has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by said auditors as to whether the pro- ceeds of the Credit withdrawn in respect of such expenditures were used for the purposes for which they were provided. Section 4.02. Until the Project shall have been completed, RNCFM shall not undertake any investments which are not included in its 1985-1990 Investment Plan unless the economic justifica- tion of such investment has been established by RNCFM in consul- tation with the Association. The Investment Plan will be reviewed annually by RNCFM and the Association and shall be, if needed, adjusted by RNCFM in agreement with the Association. Section 4.03. (a) Except as the Association shall have otherwise agreed, RNCFM shall, from time to time, take all such measures (including but not limited to adjustments of its tariffs -5- and tariff structure) as shall be required to obtain rates of return of not less than 3.0% during each year of execution of the Project. (b) For the purposes of this Section: (i) The annual rate of return shall be calculated by relating the net income for the year in question to the average of the values of net fixed assets in operation at the beginning and at the end of each year. (ii) The term "value of net fixed assets in operation" shall mean the gross book value of such assets, less the amount of accumulated depreciation, both as valued from time to time in accordance with sound and consistently maintained methods of valuation acceptable to the Association. (iii) The term "net income" shall mean the difference between: (A) gross operating revenue accruing from services; and (B) the operating and administration expenses, taxes (if any) and adequate maintenance and depreciation, including interest and other charges on debt but excluding non-operating expenses and extraordinary items. Section 4.04. Except as the Association shall otherwise agree, RNCFM shall not incur any debt if, after the incurrence of such debt, the aggregate principal amount of debt of RNCFM then incurred and outstanding would be greater than 1.25 times the equity of RNCFM. For the purposes of this Section: (a) The term "debt" means any indebtedness of RNCFM maturing by its terms more than one year after the date on which it is originally incurred. (b) Debt shall be deemed to be incurred: (i) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date of -6- such contract, agreement or instrument; and (ii) under a guaran- tee agreement, on the date the agreement providing for such gua- rantee has been entered into but only to the extent that the guaranteed debt is outstanding. (c) The term "equity of RNCFM" means the sum of the total unimpaired paid-up capital, retained earnings and reserves of RNCFM not allocated to cover specific liabilities. (d) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Association. Section 4.05. Except as the Association shall otherwise agree, RNCFM shall maintain a ratio of current assets to current liabilities of not less than 2.5:1. For the purposes of this Section: (a) The term "current assets" means cash, accounts receiv- able due within twelve months, marketable securities, inventories convertible to saleable goods within twelve months, prepaid expenses properly chargeable to operating expenses within the next twelve months following the date in which such prepaid expenses were made, and all other assets which could, in the ordinary course of business, be converted into cash within twelve months. (b) The term "current liabilities" means accounts payable within twelve months, customer advances, income taxes, dividends, bonuses and all other liabilities (including debt) which, pur- suant to their terms, will become due and payable or could under circumstances then existing, be called for payment within twelve months. Section 4.06. Except as the Association may otherwise agree, RNCFM shall, from time to time, take all such measures within its power (including, without limitation, adjustments to the struc- ture or level of its railway tariffs) as shall be required to enable RNCFM to meet, as of its Fiscal Year beginning January 1, 1986, and in each Fiscal Year thereafter, a working ratio of not more than 65%. For the purposes of this Section: - 5 - and tariff structure) as shall be required to obtain rates of return of not less than 3.0% during each year of execution of the Project. (b) For the purposes of this Section: (i) The annual rate of return shall be calculated by relating the net income for the year in question to the average of the values of net fixed assets in operation at the beginning and at the end of each year. (ii) The term "value of net fixed assets in operation" shall mean the gross book value of such assets, less the amount of accumulated depreciation, both as valued from time to time in accordance with sound and consistently maintained methods of valuation acceptable to the Association. (iii) The term "net income" shall mean the difference between: (A) gross operating revenue accruing from services; and (B) the operating and administration expenses, taxes (if any) and adequate maintenance and depreciation, including interest and other charges on debt but excluding non-operating expenses and extraordinary items. Section 4.04. Except as the Association shall otherwise agree, RNCFM shall not incur any debt if, after the incurrence of such debt, the aggregate principal amount of debt of RNCFM then incurred and outstanding would be greater than 1.25 times the equity of RNCFM. For the purposes of this Section: (a) The term "debt" means any indebtedness of RNCFM maturing by its terms more than one year after the date on which it is originally incurred. (b) Debt shall be deemed to be incurred: (i) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date of -6- such contract, agreement or instrument; and (ii) under a guaran- tee agreement, on the date the agreement providing for such gua- rantee has been entered into but only to the extent that the guaranteed debt is outstanding. (c) The term "equity of RNCFM" means the sum of the total unimpaired paid-up capital, retained earnings and reserves of RNCFM not allocated to cover specific liabilities. (d) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Association. Section 4.05. Except as the Association shall otherwise agree, RNCFM shall maintain a ratio of current assets to current liabilities of not lers than 2.5:1. For the purposes of this Section: (a) The term "current assets" means cash, accounts receiv- able due within twelve months, marketable securities, inventories convertible to saleable goods within twelve months, prepaid expenses properly chargeable to operating expenses within the next twelve months following the date in which such prepaid expenses were made, and all other assets which could, in the ordinary course of business, be converted into cash within twelve months. (b) The term "current liabilities" means accounts payable within twelve months, customer advances, income taxes, dividends, bonuses and all other liabilities (including debt) which, pur- suant to their terms, will become due and payable or could under circumstances then existing, be called for payment within twelve months. Section 4.06. Except as the Association may otherwise agree, RNCFM shall, from time to time, take all such measures within its power (including, without limitation, adjustments to the struc- ture or level of its railway tariffs) as shall be required to enable RNCFM to meet, as of its Fiscal Year beginning January 1, 1986, and in each Fiscal Year thereafter, a working ratio of not more than 65%. For the purposes of this Section: -7- (a) the term "working ratio" means the total working expenses divided by the total operating revenues; (b) the term "total working expenses" means the sum of all operating costs and administrative expenses of RNCFM related to its railway operations, including adequate maintenance and taxes (if any) but excluding depreciation and interest and other charges on debt; and (c) the term "total operating revenues" means the sum of gross revenues from all sources accruing to RNCFM from its rail- way operations. Section 4.07. During execution of the Project, RNCFM shall take measures necessary to ensure that no customer shall incur arrears for services rendered in excess of 60 days from the bill- ing date; such measures shall include the discontinuation of services to customers whose accounts are overdue by more than 90 days. Section 4.08. RNCFM shall take all measures necessary, including adjustment of its tariff structure, to ensure that, at all times, the income attributable to each service is above the avoidable cost of such service. For the purposes of this Section, "avoidable cost" means any and all costs RNCFM would not incur if such service were not provided. 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 RNCFM 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) the date 15 years after the date of this Agree- ment. -8- (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 RNCFM of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion 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 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 RNCFM: R6seau National des Chemins de Fer Malagasy B.P. 259 101 Antananarivo -7- (a) the term "working ratio" means the total working expenses divided by the total operating revenues; (b) the term "total working expenses" means the sum of all operating costs and administrative expenses of RNCFM related to its railway operations, including adequate maintenance and taxes (if any) but excluding depreciation and interest and other charges on debt; and (c) the term "total operating revenues" means the sum of gross revenues from all sources accruing to RNCFM from its rail- way operations. Section 4.07. During execution of the Project, RNCFM shall take measures necessary to ensure that no customer shall incur arrears for services rendered in excess of 60 days from the bill- ing date; such measures shall include the discontinuation of services to customers whose accounts are overdue by more than 90 days. Section 4.08. RNCFM shall take all measures necessary, including adjustment of its tariff structure, to ensure that, at all times, the income attributable to each service is above the avoidable cost of such service. For the purposes of this Section, "avoidable cost" means any and all costs RNCFM would not incur if such service were not provided. 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 RNCFM 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) the date 15 years after the date of this Agree- ment. -8- (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 RNCFM of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion 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 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 RNCFM: Reseau National des Chemins de Fer Malagasy B.P. 259 101 Antananarivo -9- Cable address: Telex: 222 33 TN MG 222 33 TN MG Section 6.02. Any action required or permitted to be taken, and any documenz required or permitted to be executed, under this Agreement on behalf of RNCFM, may be taken or executed by the Directeur General or such other person or persons as the Directeur General shall designate in writing, and RNCFM shall furnish to the Association sufficient evidence of the authority and the authenticated 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 col- lectively but one instrument. - 10 - IN WITNESS WHEREOF, the parties iereto, acting through their duly authorized representatives, 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 DEVELOPMENT ASSOCIATION By f" XAV w - Regional Vice President Eastern and Southern Africa RESEAU NATIONAL DES CHEMINS DE FER MALGASY By Luthorized Representative 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 198O S FOR SECRETARY