Conformed Copy - L3388 - Food Security Project - Project Agreement 1

Page 1 CONFORMED COPY LOAN NUMBER 3388 CM (Food Security Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and CREDIT FONCIER DU CAMEROUN Dated September 16, 1991 LOAN NUMBER 3388 CM CFC PROJECT AGREEMENT AGREEMENT, dated September 16, 1991, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and CREDIT FONCIER DU CAMEROUN (CFC). WHEREAS (A) by the Loan Agreement of even date herewith between Republic of Cameroon (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to twenty-three million dollars ($23,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that CFC agree to undertake such obligations toward the Bank as are set forth in this Agreement; (B) by a CFC subsidiary loan agreement to be entered into between the Borrower and CFC, part of the proceeds of the Loan provided for under the Loan Agreement will be relent to CFC on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS CFC, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; Page 2 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 Loan 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) CFC declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement and, to this end, shall carry out Part D of the Project, in cooperation with MINAT, with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for Part D of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Bank and CFC shall otherwise agree, CFC shall carry out the program of Sub-loans included in Part D (a) of the Project in accordance with the policies and procedures set forth in the Schedule to this Agreement. Section 2.02. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for Part D of the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to the Loan Agreement. Section 2.03. CFC shall carry out the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 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 the Project Agreement and Part D of the Project. Section 2.04. CFC shall duly perform all its obligations under the CFC Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, CFC shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the CFC Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) CFC shall, at the request of the Bank, exchange views with the Bank with regard to the progress of Part D of the project, the performance of its obligations under this Agreement and under the CFC Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) CFC shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of Part D of the Project, the accomplishment of the purposes of the Loan, or the performance by CFC of its obligations under this Agreement and under the CFC Subsidiary Loan Agreement. ARTICLE III Management and Operations of CFC Section 3.01. CFC shall carry on its operations and conduct its affairs in accordance with sound administrative, economic and financial practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. CFC shall at all times operate and maintain its 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, financial and management practices. Section 3.03. CFC shall take out and maintain with responsible insurers, or make Page 3 other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) CFC shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) CFC shall: (i) have its records, 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 Bank; (ii) furnish to the Bank 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Bank 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 becomes effective. Section 5.02. This Agreement and all obligations of the Bank and of CFC thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify CFC thereof. 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 Page 4 Cable address: Telex: INTBAFRAD 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) For CFC: Credit Foncier du Cameroun (CFC) B. P. 1531 Yaounde Republic of Cameroon Telex: 8368 KN 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 CFC may be taken or executed by its Directeur General or such other person or persons as CFC shall designate in writing, and CFC shall furnish to the Bank 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 collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Edward V.K. Jaycox Regional Vice President Africa CREDIT FONCIER DU CAMEROUN By /s/ Georges Ngango Authorized Representative SCHEDULE Policies and Procedures for the Execution of Part D (a) of the Project Except as the Bank shall otherwise agree, Part D (a) of the Project shall be carried out in accordance with the following operating policies and procedures: A. Sub-project Identification and Appraisal Proposed Sub-projects, previously selected by MINAT, shall be submitted to CFC which shall arrange for their appraisal in cooperation with MINAT. The appraisal report for each Sub-project shall include: (a) the technical feasibility, financial viability, economic justification Page 5 including land aspects (location, acquisition and compensation) and, where applicable, commercial soundness and availability of markets; (b) an economic rate of return calculation in accordance with methods acceptable to the Bank; only Sub-projects with an economic rate of return of at least 15% shall be approved; (c) appropriate consideration of the technical and managerial capability of the rural or urban commune (the commune) proposed to carry out the Sub-project and the choice of technology, timing, location and justification thereof, including environmental concerns and proposed solutions; and (d) the adequacy of the arrangements for the recovery of service charges, and the responsibilities for provision of site access, water, electricity, management and maintenance. B. Terms and Conditions of Sub-projects 1. The estimated cost of any Sub-project shall not exceed $300,000 equivalent. 2. The commune proposed to carry out the Sub-project shall contribute, out of its own funds, not less than thirty percent (30%) of the estimated total costs of each Sub-project. 3. Sub-loans shall be made for a maximum term of ten (10) years with a grace period of not more than two (2) years. 4. Sub-loans shall carry interest at an annual rate equal to at least thirteen percent (13%) on the principal withdrawn and outstanding from time to time. 5. Sub-loans shall be made and be repayable in CFA Francs. C. Sub-project Approval 1. All Sub-projects shall be submitted for approval to CFC and, when estimated to cost the equivalent of $150,000 or more each, to the Bank. 2. (a) When presenting a Sub-loan for a Sub-project estimated to cost the equivalent of $150,000 or more to the Bank for approval, CFC shall furnish to the Bank an application, in a form satisfactory to the Bank, together with: (i) a description of the commune to carry out the Sub-project and an appraisal thereof, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the proposed terms and conditions of the Sub-loan, including the schedule of amortization of the Sub-loan; and (iii) such other information as the Bank shall reasonably request. (b) Each request by CFC for authorization to make withdrawals from the Loan Account in respect of a Sub-loan for a Sub-project estimated to cost less than $150,000 equivalent shall contain: (i) a summary description of the Sub-project and the commune to carry it out, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; and (ii) the terms and conditions of the Sub-loan. (c) Except as the Bank and CFC shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (a) and (b) above shall be presented to the Bank on or before December 31, 1997. Sub-project Arrangements 1. The communes selected to carry out the Sub-projects shall promptly enter into written arrangements with CFC, on terms and conditions satisfactory to the Bank, pursuant to which CFC shall, inter alia, obtain rights adequate to protect the interests of the Bank and CFC, including the right of CFC to: (a) require the commune to carry out and operate the Sub-project with due Page 6 diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (b) require that: (i) the works, goods and services to be financed out of the proceeds of the Loan shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery, efficiency and reliability of the goods, availability of maintenance facilities and spare parts therefor and, in the case of services, of their quality and the competence of the parties rendering them; provided, however, that: (A) goods and works estimated to cost more than the equivalent of $50,000 per contract, shall be procured on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank, and: (1) all bids shall be opened in public and bidders' representatives shall be allowed to be present; (2) criteria for evaluating bids shall be set out clearly and communicated to all bidders; and (3) foreign companies shall not be required to be incorporated in Cameroon in order to participate in the bidding; and (B) goods and works estimated to cost the equivalent of $50,000 or less per contract, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers and contractors eligible under the Guidelines, in accordance with procedures acceptable to the Bank; and (ii) Such goods and services shall be used exclusively in the carrying out of the Sub-project; (c) inspect, by itself or jointly, with representatives of the Bank and CFC if the Bank and CFC shall so request, such goods and the sites, works, plants and construction included in the Sub-project, the operation thereof, and any relevant records and documents; (d) obtain all such information as the Bank or CFC shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the commune carrying out the Sub-project, if appropriate, and to the benefits to be derived therefrom; and (e) suspend or terminate the right of the commune carrying out the Sub-project to the use of the proceeds of the Loan upon failure by such commune to perform its obligations under its arrangements with CFC. 2. CFC shall exercise its rights in relation to each Sub-project in such manner as to: (i) protect the interests of the Bank and CFC; (ii) comply with its obligations under this Agreement; and (iii) achieve the purposes of the Project.