Dahomey - Hinvi Agricultural Development Project - Credit Agreement : Credit 0144 - 1 - Conformed

CREDIT NUMBER 144 DA Development Credit Agreement (Hinvi Agricultural Development Project) BETWEEN REPUBLIC OF DAHOMEY AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MARCH 5, 1969 CREDIT NUMBER 144 DA Development Credit Agreement (Hinvi Agricultural Development Project) BETWEEN REPUBLIC OF DAHOMEY AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MARCH 5, 1969 Brurlopmatt TrMbt Agru~mut AGREEMENT, dated March 5, 1969, between REPUB- LIC OF DAHOMEY (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT AssoCIATION (hereinafter called the Association). WHEREAS the Borrower and the Societe Nationale pour le Developpement Rurar du Dahomey, a statutory corporation of the Borrower (hereinafter called SONADER), have re- quested the Association to assist in the financing of a project which includes the establishment of ten cooperatives with about 6,000 hectares of improved oil palms and about 6,000 hectares of annual crops together with forests, live- stock, the necessary infrastructure and adequate process- ing facilities and equipment; WHEREAS the Borrower has requested the Republic of France to assist in financing such project by making a grant to it (hereinafter called the French Grant) in an aggregate principal amount equivalent to $4,600,000, the proceeds of which shall be made available to SONADER; and WHEREAS the Association is willing to make a develop- ment credit available on the terms and conditions provided herein and in a project agreement of even date herewith between the Association and SONADER; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I Credit Regulations; Definitions SECTION 1.01. The parties to this Agreement accept all the provisions of Development Credit Regulations No. 1 of the Association dated June 1, 1961, as amended Febru- ary 9, 1967, with the same force and effect as if they were 4 fully set forth herein subject, however, to the following modifications thereof (said Development Credit Regulations No. 1 as so modified being hereinafter called the Regu- lations) : (a) Sections 6.01, 6.02 and 6.03 are amended by insert- ing the words "or the Project Agreement" after the words "the Development Credit Agreement"; and the words "or SONADER" after the word "Borrower". (b) The following subparagraph is added to Section 9.01: "13. The term 'Project Agreement' shall have the meaning set forth in the Development Credit Agreement." Section 1.02. Unless the context otherwise requires, the following terms, wherever used in this Agreement or in the Regulations, shall have the following meanings: 1. "Project Agreement" means the project agreement of even date herewith between the Association and SONADER and shall include any amendments thereof made by agreement among the Borrower, the Association and SONADER. 2. "French Financing Agreement" means the agreement (Convention de Financement) between the Republic of France and the Borrower setting forth the terms and con- ditions of the French Grant and includes all agreements and arrangements, if any, incidental or supplemental there- to between the Republic of France and the Borrower. 3. "Decree" means the Borrower's Decree No. 62-SO of February 3, 1962 providing for the establishment of SONADER and the annex thereto as the same have been or may be amended from time to time. 4. " SNAHDA" means the Societe Nationale des Hui- leries du Dahomey established by Decree No. 395/PR/ MCET of December 6, 1961 of the Borrower as a Societe d'Etat. 5 ARTICLE II The Credit SECTION 2.01. The Association agrees to make available to the Borrower, on the terms and conditions in this Agree- ment set forth or referred to, a development credit in an amount in various currencies equivalent to four million six hundred thousand dollars ($4,600,000). SECTION 2.02. (a) The Association shall open a Credit Account on its books in the name of the Borrower and shall credit to such Credit Account the amount of the Credit. (b) The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, this Agreement and the Regulations and in accordance with the allocation of proceeds of the Credit set forth in Schedule 1 to this Agreement, as such allocation shall be modified from time to time pursuant to the provisions of such Schedule or by further agreement between the Borrower and the Asso- ciation. SECTION 2.03. (a) The Borrower shall be entitled to withdraw from the Credit Account in respect of the reason- able cost of goods required for the Project and to be financed under this Credit Agreement: (i) such amounts as shall have been paid (or, if the As- sociation shall so agree, shall be required to meet payments to be made) for expenditures under Cate- gories I (a) and I (b) of the allocation of the pro- ceeds of the Credit set forth in Schedule 1 to this Agreement; and (ii) the equivalent of forty-six per cent (46o) of such amounts as shall have been paid (or, if the Asso- ciation shall so agree, shall be required to meet payments to be made) for expenditures under Cate- gory II of said Schedule 1 provided, however, that if there shall be an increase in the estimate of 6 such expenditures, the Association may by notice to the Borrower adjust the above percentage as required in order that withdrawals of the amount of the Credit then allocated to such Category and not withdrawn may continue pro rata with the ex- penditures remaining to be made under such Cate- gory. (b) Except as shall be otherwise agreed between the Borrower and the Association no withdrawals shall be made on account of expenditures male prior to January 1, 1969. SECTION 2.04. The Borrower shall pay to the Associa- tion a service charge at the rate of three-fourths of one per cent (% of 17) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. SECTION 2.05. Service charges shall be payable semi- annually on March 1 and September 1 in each year. SECTION 2.06. The Borrower shall repay the principal amount of the Credit withdrawn in semi-annual install- ments payable on each March 1 and September 1 com- mencing September 1, 1979 and ending March 1, 2019, each installment to and including the installment payable on March 1, 1989 to be one-half of one per c?nt of such prin- cipal amount, and each installment thereafter to be one and one-half per cent of such principal amount. SECTION 2.07. The currency of the Republic of France is hereby specified for the purposes of paragraph (a) of Section 3.02 of the Regulations. ARTICLE III Use of Proceeds of the Credit SECTION 3.01. The Borrower shall apply the proceeds of the Credit in accordance with the provisions of this Agree- 7 ment to expenditures on Parts I and II of the Project, de- scribed in Schedule 2 to this Agreement. SECTION 3.02. Except as the Association shall otherwise agree, (i) the goods to be financed out of the proceeds of the Credit shall be procured on the basis of international competitive bidding in accordance with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in February 1968, and in accordance with such other procedures supplementary thereto as shall be agreed between the Borrower and the Association, and (ii) contracts for the procurement of such goods shall be subject to the approval of the Association. SECTION 3.03. Except as the Association shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Credit to be used exclusively in carry- ing out the Project. ARTICLE IV Particular Covenants SECTION 4.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and shall cause SONADER to conduct its operations and affairs and maintain its financial position in accordance with sound agricultural, engineering and financial practices and under capable and efficient management mutually satisfactory, at all times, to the Borrower and the Association. (b) The Borrower shall cause SONADER to employ con- sultants and managerial, financial and technical experts mutually acceptable to the Borrower and the Association, whose authority and functions shall be determined by agree- ment between the Borrower and the Association. (c) The Borrower shall take or cause to be taken all actions which shall be necessary on its part to enable SONADER to perform all its obligations under the Project 8 Agreement and shall not take, or permit any agency of the Borrower to take, any action that would prevent or interfere with the performance of such obligations by SONADER. SECTION 4.02. (a) The Borrower shall re-lend the pro- ceeds of the Credit or the equivalent thereof to SONADER on the following terms except as the Association shall otherwise agree: (i) interest at 6% per annum on the principal amount outstanding from time to time and (ii) amortization in twenty-five years including nine years of grace. (1) The Borrower shall make or cause to be made avail- able promptly as needed all lands, funds, services, facilities and resources other than the proceeds of the 0,redit which shall be required for the carrying out of the Project and all other operations of SONADER. SECTION 4.03. The Borrower shall cause Part I (a) of the Project, when completed, to be operated with due dili- gence and efficiency and in accordance with sound engineer- ing, industrial and business practices, either by SNAHDA or by a qualified management agent as may be decided at the time, by the Association. The appointment of such man- agement agent and the terms and conditions of operating Part I (a) of the Project, whether by SNAHDA or a man- agement agent as the case may be, shall be mutually agreed by the Borrower, SONADER and the Association. SECTION 4.04. (a) The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower and the international balance of payments positions of the Borrower. 9 (b) The Borrower and the Association shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Credit and the maintenance of the service thereof. The Borrower shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the main- tenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes r?lated to the Credit. SECTION 4.05. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of the Borrower or laws in effect in its territories. S ECTION 4.06. This Agreement and the Project Agree- ment shall be free from any taxes that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, delivery or registration thereof. ARTICLE V Remedies of the Association SECTION 5.01. (i) If any event specified in paragraph (c) of Section 5.02 of this Agreement shall occur, or (ii) if any event specified in paragraphs (a) or (c) of Section 5.02 of the Regulations shall occur and shall continue for a period of thirty days, or (iii) if any event specified in paragraph (b) of Section 5.02 of the Regulations or in paragraphs (d) or (e) of Section 5.02 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Asso- ciation to the Borrower, then at any subsequent time the 10 Association, at its option, may declare the principal of the Credit then outstanding to be due and payable immedi- ately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement to the contrary notwithstanding. SECTION 5.02. For the purposes of Section 5.02 (k) of the Regulations, the following additional events are specified: (a) The French Financing Agre( nent or the Project Agreement shall have been terminated (otherwise than in accordance with the terms thereof), or in any material respect amended, suspended, waived or assigned without the prior approval of the Association. (b) Any event shall have occurred which shall have operated to suspend the right of the Borrower to with- draw amounts under the French Financing Agreement. (c) Any other creditor shall in accordance with the terms of his loan agreement demand payment from the Borrower or SONADER, as the case may be, of moneys lent or made available to SONADER prior to the agreed maturity thereof. (d) A default shall have occurred in the performance of any covenant or agreement of SONADER under the Project Agreement. (e) The Decree shall have been amended, suspended, terminated or repealed so as to affect adversely the ability of SONADER to carry out the covenants and agreements set forth in the Project Agreement. ARTICLE VI Effective Date; Termination SECTION 6.01. The following events are specified as ad- ditional conditions to the eFectiveness of this Agreement within the meaning of Section 8.01 (b) of the Regulations: 11 (a) The execution and delivery of the Project Agree- ment on behalf of SONADER shall have been duly au- thorized or ratified by all necessary corporate and govern- mental action. (b) The terms and conditions for the re-lending of the proceeds of the Credit, or the equivalent thereof, in ac- cordance with Section 4.02 (a) of this Agreement shall have been accepted and agreed upon by SONADER and the Borrower. (c) The French Financing Agreement shall have been duly and validly concluded upon terms and conditions satis- factory to the Association and that the conditions prece- dent, if any, to initial disbursement under said Agree- ment shall have been fulfilled. (d) The Borrower and SONADER shall have made ar- rangements satisfactory to the Association for the ex- emption from import taxes, until the completion of the Plroject, of goods imported by SONADER for the carrying out of Parts I and II of the Project. (e) SONADER shall have certified in writing to the Association that, as of a date to be agreed between the Association and SONADER (which shall be prior to the Effective Date) there has been no material adverse change in its condition since the date of this Agreement. SECTION 6.02. The following are specified as additional matters, within the meaning of Section 8.02 (b) of the Regulations, to be included in the opinion or opinions to be furnished to the Association: (a) The Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, SONADER and constitutes a valid and binding obligation of SONADER in accordance with its terms. (b) The re-lending agreement referred to in Section 4.02 (a) of this Agreement is valid and binding on the Borrower and SONADER. I 12 (c) The French Financing Agreement constitutes a valid and binding obligation of each of the parties thereto in accordance with its terms. (d) The arrangements referred to in Section 6.01 (d) hereof shall have been duly and validly made and con- stitute a valid and binding obligation of each of the parties thereto in accordance with their terms. SECTION 6.03. The date of June 5, 1969 is hereby speci- fied for the purposes of Section 8.04 of the Regulations. SECTION 6.04. Upon termination of the Project Agree- ment in accordance with its terms, the obligations of the Borrower with respect to the Project shall forthwith terminate. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be June 30, 1976 or such other date as may from time to time be agreed between the Borrower and the Association. SECTION 7.02. The following addresses are specified for the purposes of Section 7.01 of the Regulations: For the Borrower: Monsieur le Ministre de la Prospective et du Plan Cotonou Dahomey Alternative address for cables: MINIPLAN Cotonou 13 For the Association: International Development Association 1818 H Strect, N.W. Washington, D.C. 20433 United States of America Alternative address for cables: INDEVAS Washington, D.C. SECTION 7.03. The Ministre de la Prospective et du Plan of the Borrower is designated for the purposes of Section 7.03 of the Regulations. IN WITNESS WHEREOF the parties hereto acting through their representatives thereunto duly authorized have caused this Development Credit Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. For REPUBLIC OF DAHOMEY /s/ E. D. ZiNzou President For INTERNATIONAL DEVELOPMENT ASSOCIATION /s/ ROBERT S. MONAMARA President 14 SCHEDULE 1 Allocation of Proceeds of Credit Amounts Expressed in Category US Dollar Equivalent 1. Palm oil factory and maize storage silos a. Palm oil factory: studies, build- ings, machinery, water supply 2,265,000 b. Maize storage silos and ancil- lary equipment 160,000 II. Plantations, annual crop develop- ment and infrastructure Land clearance, planting, plan- tation maintenance, cattle pur- chase, roads, buildings, imple- ments, land rent, staff training and staffing 1,775,000 III. Contingency allowance 400,000 TOTAL 4,600,000 Reallocation Upon Change in Cost Estimates 1. If the estimate of the cost of the items included in any of the Categories I and II shall decrease, the amount of the Credit then allocated to, and no longer required for, such Category will be reallocated by the Association to Category III. 2. If the estimate of the cost of the items included in any of the Categories I (a) -and I (b) shall increase, an amount equal to the portion, if any, of such increase to 15 be financed out of the proceeds of the Credit and, in the case of such an increase in Category II, an amount equal to 46o of such increase will be allocated by the Asso- ciation, at the request of the Borrower, to such Cate- gory from Category III, subject, however, to the require- ments for contingencies, as determined by the Associa- tion, in respect of the cost of the items in the other Categories. 16 SCHEDULE 2 Description of the Project The Project consists of the following: Part I. a. the studies for and construction of a palm oil factory with an ultimate capacity of 70,000 tons of palm bunches per year. b. the construction of maize storage silos with a total capacity of about 3,000 tons. Part II. a. the planting of approximately 6,000 hectares of oil palm. b. the preparation of approximately 6,000 hec- tares for annual crop production principally maize, groundnats and cotton. c. the planting of approximately 1,000 hectares of teak and cassia trees. d. the purchase of about 300 head of cattle for the development of beef production. e. the construction of the necessary roads, cen- tral facilities (equipment pool, fire fighting unit and stores) and preparation of village sites. f. the provision of training facilities for the supervisors of the Project and the managing personnel of 10 cooperatives and one Union cooperative to be created as the organizational basis of the Project. Part III. The procurement of the following goods and services needed for the implementation of Part II above: a. consulting services. b. fertilizers and pesticides. c. vehicles and irrigation, farm and miscellane- ous equipment. The Project is expected to be completed by mid 1977.