Loan Agreement. Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1518 SE. Public Disclosure Authorized. (Third Railway Project)

Transcription

1 Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1518 SE Public Disclosure Authorized Loan Agreement (Third Railway Project) Public Disclosure Authorized between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and REGIE DES CHEMINS DE FER DU SENEGAL Public Disclosure Authorized Dated March 17, 1978

2 LOAN NUMBER 1518 SE LOAN AGREEMENT AGREEMENT, dated March 17, 1978, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and REGIE DES CHEMINS DE FER DU SENEGAL, an agency of the Republic of Senegal (hereinafter called the Borrower). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; and (B) the Republic of Senegal (hereinafter called the Guarantor), in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to guarantee the obligations of the Borrower as set forth in this Agreement; WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "1966 Development Credit Agreement" means the development credit agreement dated September 29, 1966 between the Guarantor and the Association, as the same may be amended from time to time;

3 -2- (b) "1966 Project Agreement" means the project agreement dated September 29, 1966 between the Association and the Borrower, as the same may be amended from time to time; (c) "1972 Development Credit Agreement" means the Development Credit Agreement dated June 23, 1972, between the Guarantor and the Association, as such agreement may be amended from time to time; and such term includes the General Conditions Applicable to Development Credit Agreements of the Association dated January 31, 1969, as made applicable to such agreement, all agreements supplemental to the 1972 Development Credit Agreement and all schedules to the 1972 Development Credit Agreement; (d) "1972 Project Agreement" means the agreement dated June 23, 1972, between the Association and the Borrower, as such agreement may be amended from time to time; and such term includes all agreements supplemental to the 1972 Project Agreement and all schedules to the 1972 Project Agreement; (e) "Prior Loan Agreement" means the Loan Agreement, dated June 23, 1972, between the Borrower and the Bank, and "Prior Guarantee Agreement" means the Guarantee Agreement of even date therewith between the Guarantor and the Bank as such agreement may be amended from time to time; and such term includes the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated January 31, 1969, as made applicable to such agreement, all agreements supplemental to the Prior Loan Agreement and all schedules to the Prior Loan Agreement; (f) "Railways" means the railways owned, operated or administered by the Borrower and includes all railway property, equipment and materials owned, operated or administered by the Borrower; (g) "International Traffic Agreement" means the agreement dated1 June 8, 1963, as amended, between the Guarantor and the Republic of Mali relating to international railway traffic, as the same may be further amended from time to time; (h) "Customs Agreement" means the Accord Douanier dated June 8, 1963, between the Guarantor and the Republic of Mali, as the same may be amended from time to time; (i) "Railway Convention" means the Convention dated June 8, 1963, between the Borrower and the Rfgie des Chemins de Fer du Mali, as the same may be amended from time to time;

4 (j) "Statutes" means the Decree No of February 5, 1976, published in the Journal Officiel No of February 28, 1976, of the Guarantor, relating to the organization and operation of the Rfgie des Chemins de Fer du Sfnfgal; and (k) "CFAF" means the currency of the Guarantor. ARTICLE II The Loan Section The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to eleven million dollars ($11,000,000). Section The amount of the Loan may be withdrawn from the Loan 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 Bank, for expenditures made (or, if the Bank 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 Loan. Section Except as the Bank shall otherwise agree, procurement of the goods and civil works required for the Project and ti be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section The Closing Date shall be December 31, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section The Borrower shall pay interest at the rate of seven and forty-five hundredths per cent (7.45%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time.

5 -4- Section Interest and other charges shall be payable semiannually on March 1 and September 1 in each year. Section The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and railway practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section (a) In order to carry out Parts E and F of the Project, the Borrower shall employ, an assistant general manager, training advisors, and consultantc whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) For the purpose of carrying out Part E of the Project the Borrower shall make available an appropriate number of experienced and qualified staff for training. Section The Borrower shall, under the authority of the Guarantor, exchange views with the Rgie des Chemins de Fer du Mali on the implementation of the recommendations affecting railway operations in the Republic of Mali resulting from the study carried out under Part F (i) of the Project. Section The Borrower shall carry out a program acceptable to the Bank to recruit and retain qualified Senegalese nationals through the introduction and maintenance of appropriate incentives and adequate career development schemes. Such programs shall include inter alia a timetable for gradual replacement of expatriate technical assistants with qualified and experienced Senegalese personnel. Without limitation or restriction upon the generality of the foregoing provisions, the Borrower shall by March 15 of each year, exchange views with the Bank on such program and shall make such modifications in said program as shall be mutually agreed between the Borrower and the Bank.

6 -5- Section (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to t2e acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the Project, its cost and where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Promptly after completion 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 Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan.

7 -6- (d) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents. Section The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction and operation of the facilities included in the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project. ARTICLE IV Management and Operations of the Borrower Section (a) The Borrower shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with sound administrative, financial and engineering practices and under the supervision of experienced and competent management assisted by qualified and competent staff in adequate numbers. (b) Without limitation or restriction upon the provisions of paragraph (a) of this Section and except as the Bank shall otherwise agree the Borrower shall: (i) carry out its freight transport operations (A) for the transportation of phosphates in accordance with a phosphate transport plan acceptable to the Bank and with the agreement dated November, 1977 between the Borrower and Companie Sfnfgalaise des Phosphates de Taiba and (B) for the transportation of other commodities such as groundnuts, petroleum products, salt and fertilizer, in accordance with a transport plan acceptable to the Bank; such plan to include a determination of the required number of trains, types of locomotive and types and number of wagons for each commodity to be transported; (ii) submit to the Bank as part of the information to be provided pursuant to Section 3.06 of the Loan Agreement, until December 31, 1981, at the end of

8 -7- each calendar month, a report in such scope and in such detail as the Bank may reasonably request including, but without limitation the information listed in Schedule 6 to this Agreement as such Schedule may be amended by agreement between the Bank and the Borrower; (iii) carry out its operations inter alia in accordance with (A) locomotive and railcar maintenance schedules including spare parts supply schedules, (B) daily utilization plans for locomotives and railcars, (C) priority lists for replacement of motive power in case of their shortfall; and (D) an information system identifying main wagon turnaround bottlenecks, all to be acceptable to the Bank; (iv) conduct its passenger operations in accordance with a plan of action acceptable to the Bank; (v) for the purpose of carrying out its obligations under subparagraph (i) of this paragraph (b) of this Section, employ qualified and experienced staff in adequate numbers responsible for optimizing commodities transport and exchange views from time to time with the Bank on the plans referred to in sa-d subparagraph (i); for the purpose of the foregoing, such staff shall include, inter alia, at least one supervisor assigned to each of the Borrower's three main traffic categories - international traffic - phosphate traffic - and groundnut traffic -, one staff member responsible for achievement of rolling stock target availability, and one staff member responsible for the preparatior and updating of spare parts lists and their timely ordering; and (vi) to maintain at all times within its organization qualified and experienced Directors and Deputy Directors and head of the railway training division and before replacing any of the individuals in such position to afford the Bank a reasonable opportunity to comment thereon. (c) The Borrower shall take all such action as shall be necessary on its part to meet the operational targets set forth

9 -8- in Schedule 5 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank. Section The Borrower shall at all times operate and maintain the Railways and promptly make all necessary renewals and repairs thereof, all in accordance with sound engineering practices. Section The Borrower shall take such action as shall be reasonable in the circumstances to facilitate railway operations between the territories of the Guarantor and the territories of the Republic of Mali, in accordance with the International Traffic Agreement, the Customs Agreement and the Railway Convention. Section The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section (a) The Borrower shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. (b) Except as the Bank shall otherwise agree, the Borrower shall obtain title to all goods financed out of the proceeds of the Loan free and clear of all encumbrances. (c) The Borrower shall not, without prior consultation with the Bank, sell, lease, transfer or otherwise dispose of any of its property or assets which shall be required for the efficient operation of its business and undertaking. ARTICLE V Financial Covenants Section (a) The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. (b) The Borrower's accounts shall for each fiscal year be maintained so as to include a detailed breakdown of income and expenses by nature, and to provide cost data by types of railway operations.

10 - 9 - Section The Borrower 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 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 the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03, (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section Except as the Bank shall otherwise agree, the Borrower shall not incur any debt unless the amount of its net cash revenue for its fiscal year next precediig the date of such incurrence or for a later twelve-month period ended prior to the date of such incurrence, whichever amount is the greater, shall be not less than 1.5 times the maximum debt service requirements for

11 any succeeding fiscal year on all its debt including the debt to be incurred. For the purposes of this Section: (a) "debt" means all debt, except debt incurred in the ordinary course of business and maturing by its terms on demand or less 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, on the date and to the extent it is drawn down and outstanding 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 that the underlying debt is outstanding; (c) the term "net cash revenue" means gross operating revenue from all sources, (but excluding subsidies covering operating losses of the Borrower to be provided by the Guarantor) adjusted to take account of the Borrower's tariffs in effect at the time of the incurrence of debt even though they were not in effect during the entire fiscal year or twelve-month period to which such revenues relate, less all operating expenses, including adequate maintenance, taxes, if any, and administrative expenses, but before provision for depreciation and debt service requirements; (d) the term "debt service requirements" means the aggregate amount of amortization (including sinking fund payments, if any), interest and other charges on debt; and (e) whenever in connection with this Section it shall be necessary to value in the currency of the Borrower debt payable in another currency, such valuation shall be made on the basis of the rate of exchange at which such other currency is obtainable by the Borrower, at the time such valuation is made, for the purposes of servicing such debt or, if such other currency is not so obtainable, at the rate of exchange that will be reasonably determined by the Bank. Section The Borrower shall take all such steps as are necessary to maintain its working capital at all times at a level sufficient to cover starting on June 30, 1982 the aggregate of 1/6 of annual costs of personnel, 1/2 of annual expenses for materials, excluding fuels and lubricants, 1/4 of annual expenses for utilities and other contracted services and 1/4 of the debt

12 service requirements (as defined in Section 5.04 of this Agreement) of the Borrower for the following twelve months. Section The Borrower shall by December 31, 1978, or such other date as the Bank may agree, make an inventory of its fixed assets and by no later than June 30, 1979, revise its books in order to reflect separately the change in the values of its fixed assets in service (including without limitation those acquired under the Project) and in its accumulated provisions for depreciation of those assets, as of June 30, 1979, and shall thereafter in consultation with the Bank revise its books whenever necessary, all to be in accordance with valuation and revaluation principles and rates of depreciation acceptable to the Bank. Section Notwithstanding the provisions of Sections 5.04, 5.05 and 5.09 of this Agreement, the Borrower shall, whenever it shall fail to meet or whenever it is likely that it shall fail to meet, the requirements therein set forth, promptly demand that the Guarantor provide the Borrower, or cause the Borrower to be provided, with such funds, as shall be necessary to enable the Borrower to meet those requirements, all to be on terms and conditions satisfactory to the Bank. Section By March 15 in each year until the completion of the Project, the Borrower shall exchange views with the Bank on its estimated financial results for such year and on its draft budget for the following year. Promptly thereafter and prior to presentation of such budget to its Board of Directors, the Borrower shall, in agreement with the Bank, take such steps as shall be necessary or advisable to remedy any deficiency in such budget. Section The Borrower shall take such steps, including adjustments in its tariffs, as shall be necessary to maintain working ratios not exceeding 87% for the fiscal year , 83% for the fiscal year , 81% for the fiscal year , 79% for the fiscal year , and 78% for the fiscal year For the purposes of this Section: (a) "working ratio" means the ratio of operating expenses to gross operating revenue; (b) "operating expenses" means the aggregate of operating expenses and expenses of maintenance of fixed assets in operation and taxes, if any, but excluding provisions for depreciation of such assets and debt-service requirements; and

13 (c) "gross operating revenue" means gross revenue derived from the services of the Borrower excluding subsidies against operating losses provided by the Guarantor pursuant to the provisions of paragraph (a) (ii) of Section 2.02 of the Guarantee Agreement. Section If the completion of the Project is hindered or delayed, or is threatened with hindrance or delay, because the funds available to the Borrower are inadequate to insure its completion, or if the funds available to the Borrower are insufficient to meet the requirements set forth in Sections 5.05 and 5.09 of this Agreement or to meet its debt service requirements, as defined in Section 5.04 of this Agreement, the Borrower shall promptly demand the Guarantor to provide the Borrower, or cause the Borrower to be provided, with the necessary funds on terms and conditions satisfactory to the Bank as and when required. Section The Borrower shall take all such action as may be required to ensure that the proportion of its expenditures in any fiscal year on account of salaries and other related costs for its personnel shall be progressively reduced so as to reach by June 30, 1982, or such other date as the Bank may agree not more than 64% of its total operating expenses, excluding depreciation, as defined in Section 5.09 of this Agreement. ARTICLE VI Remedies of the Bank Section For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) A default shall occur under the 1972 Development Credit Agreement, the 1966 Development Credit Agreement or under the Prior Loan Agreement other than in respect of the payment of principal, or interest, service charges or any other payment required thereunder; (b) The Statutes shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the conduct of the Borrower's operations or its financial condition, or the ability of the Guarantor or the Borrower to carry out the covenants or agreements set forth in

14 this Agreement, the Guarantee Agreement, the 1972 Development Credit Agreement, the 1966 Development Credit Agreement, the 1972 Project Agreement, the 1966 Project Agreement or, the Prior Loan Agreement or the Prior Guarantee Agreement; (c) Railway traffic between the territories of the Guarantor and the territories of the Republic of Mali shall have been substantially interrupted for other than technical reasons, unless such reasons shall be manifestly beyonvd the Guarantor's control, or such interruption is the result of necessary measures taken by the Guarantor to safeguard its national independence or the integrity of its territory; and (d) Any part of the principal amount of any loan to the Borrower having an original maturity of one year or more shall, in accordance with its terms, have become due and payable in advance of maturity as pr.vided in the relative contractual instruments, or any security for any such loan shall have become enforceable. Section For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any event specified in paragraph (a) of Section 6.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraphs (b), (c) or (d) of Section 6.01 of this Agreement shall occur. ARTICLE VII Termination Section The date July 17, 1978, is hereby specified for the purpose of Section of the General Conditions. ARTICLE VIII Amendment to the Prior Loan Agreement Section The Prior Loan Agreement is hereby amended as follows:

15 (a) by deleting the words "and IV" in Section 3.02 of the Prior Loan Agreement and by adding the word "and" between the letters "II" and "III"; and (b) by adding a new paragraph (c) in Section 3.02 of the Prior Loan Agreement which reads as follows: "The provisions of Article V of the Loan Agreement (Third Railway Project) dated March 17, 1978 between the Bank and the Borrower are hereby incorporated into this Agreement with the same force and effect as if it were originally fully set forth herein." ARTICLE IX Addresses Section The following addresses are specified for the purposes of Section of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: INTBAFRAD Washington, D.C. Telex: (ITT) (RCA) or (WUI) For the Borrower: R&gie des Chemins de Fer du Senegal Thies S&negal Cable address: FERSENEGAL Thies Senegal

16 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is/ X. de la Renaudiere Acting Regional Vice President Western Africa REGIE DES CHEMINS DE FER DU SENEGAL By /s/ Andre Coulbary Authorized Representative

17 -16- SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) About 60 km of 2,538, % of foreign Track renewal expenditures and including pur- 35% of local chase of related expenditures equipment and materials (2) Track mainte- 1,653, % of foreign nance equipment expenditures and material (3) Improvement of 771, % of foreign railways facil- expenditures and ities in the 35% of local Dakar Area expenditures (4) Spare parts for 2,483, % of foreign motive power, expenditures rolling stock and workshop equipment (5) Training 1,431, % of foreign expenditures and 35% of local expenditures (6) Consulting 443, % of foreign services expenditures

18 Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (7) Groundnut study 100,000 75% under Part F (ii) of the Project (8) Unallocated 1,581,000 TOTAL 11,000, For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor; provided, however, that if the currency of the Guarantor is also ty-it of another country from the territory of which goods or serices are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor and for goods or services supplied from the territory of the Guarantor. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made: (i) for expenditures prior to the date of this Agreement; and (ii) for

19 expenditures under Category (1) of the table of Allocation of the Proceeds of the Loan set forth in paragraph 1 of this Schedule until the Borrower has satisfied the Bank that it has made improvements acceptable to the Bank to the tracks renewed under the Project described in Schedule 2 to the 1972 Development Credit Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank 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 Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan.

20 SCHEDULE 2 Description of the Project The Project is part of the Borrower's 1978/ /81 investment plan aimed at improving its efficiency in carrying international and national railways traffic and consists of the following parts: Part A: Carrying out of a program of track renewal, involving about 60 km of track on its international line starting on km 271,and including the purchase of necessary materials and equipment. Part B: Part C: Purchase of track maintenance equipment and materials. Improvement of railways facilities in the Dakar area including the construction of additional track, rehabilitation of existing track of the Bel Air Marshalling yard, and purchase and installation of telecommunications equipment and eight switches. Part D: Purchase of spare parts for motive power and rolling stock and for workshop equipment. Part E: A training program aimed at improving the standard of railway operation and maintenance by training and retraining about 300 laborers and selected middle and high level managers. Such program shall include inter alia: (i) the establishment of a new training center at Thies including inter alia, the purchase of equipment and if need be the construction of buildings; (ii) the purchase of related equipment; (iii) the training of ten to twelve Senegalese technicians both in Thies and abroad to become instructors; and (iv) the training of middle and high level management personnel in Thies and abroad.

21 Part F: Carrying out of studies on: (i) the organizational structure, legal status and ownership of the Borrower; and (ii) groundnut transport from production centers to the oil processing plants and the role of the Railways in such transport. The Project is expected to be completed by June 30, 1981.

22 SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars)* On each March l and September 1 beginning September 1, 1983 through September 1, ,000 On March 1, ,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal.

23 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.10% More than three years but not more than six years before maturity 2.25% More than six years but not more than eleven years before maturity 4.10% More than eleven years but not more than sixteen years before maturity 5.95% More than sixteen years but not more than eighteen years before maturity 6.70% More than eighteen years before maturity 7.45%

24 SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B and/or C hereof, contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of international competitive bidding under the Project, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the proposed date of availability to the public of the first tender documents relating thereto, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospect.v( bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. Contracts for similar items shall, to the extent practicable, be grouped into one single bid. B. Other Procurement Procedures Notwithstanding the provisions of paragraph A.1 above: (a) contracts for civil works (including the demolition and reconstruction of the wagon repair shop at Bel Air under Part C of the Project and works for the training center at Thies under Part E of the Project), and contracts for goods (including provision of furniture, equipment and trucks) may be awarded on the basis of local advertising only and in accordance with competitive bidding procedures of the Borrower; provided, however, that the aggregate amount of all contracts to be so awarded shall not exceed the equivalent of $1,200,000 and that such competitive bidding procedures of the Borrower are acceptable to the Bank;.

25 (b) the Borrower may, pursuant to the provisions of paragraph 4.2 (e) of the Guidelines and in order to achieve a reasonable degree of standardization with existing equipment of the Borrower, purchase, after approval of the Bank, directly critical spare parts for tampers under Part B of the Project and for motive power and rolling stock under Part D of the Project directly from original suppliers; provided, however, that the aggregate amount of all contracts to be so awarded shall not exceed the equivalent of $3,000,000; and (c) contracts for track maintenance equipment under Part B of the Project and contracts for small tools and equipment under Part D of the Project estimated to cost less than the equivalent of $10,000 each may be awarded directly to foreign or national suppliers provided that awards so made are made with the approval of the Bank and on the basis of local advertising only and in accordance with local competitive bidding procedures of the Borrower, or on the basis of at least three quotations from foreign and national suppliers and further provided that the amount of contracts to be so awarded shall not exceed the equivalent of $380,000 in the aggregate. C. Procurement Without Contracting Works carried out on account of track renewal under Part A of the Project and of track construction and rehabilitation at the Bel Air Yard under Part C of the Project may be carried out by force account; provided, however, that the cost of works to be so carried out shall not exceed in the aggregate the equivalent of $3,800,000. D. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts to cost each the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request.

26 Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.

27 SCHEDULE 5 Operational Targets for the Borrower The Borrower shall take all such action as may be needed to meet the following annual targets. Actual ---- Objectives Targets Year Year Year 1975/ / /81 1. Availability of mainline locomotives (%) Types of locomotives BB BB BB BB CC Average Locomotive breakdowns per year and per locomotive in stock Locomotive-km per day and per locomotive available Ton-km per one available locomotive horsepower per year 19,663 21,134 21, Tons hauled by one available locomotive horsepower per year Availability of railcars (%) Railcar-km per day and per railcar available

28 27 - Actual ---- Objectives ---- Targets Year Year Year 1975/ / /81 8. Availability of wagons (%) n.a Average load per wagon in tons (excluding phosphate traffic) Turnaround time for oil tank wagons (days) Staff productivity in traffic units per employee ('000)

29 SCHEDULE 6 Content of Monthly Reports to be submitted pursuant to the provisions of Section 4.01 (b) (iii) of this Agreement The following information shall be airmailed to the Bank at the end of each month by the Borrower: (a) freight traffic by commodity in tons and ton-km; (b) reasons for traffic shortfalls per commodity in comparison with target traffic; (c) actions taken by the appointed supervisor and management to avoid such shortfalls; (d) success of the actions taken; (e) passenger traffic in passengers and pass-km; (f) number of train delays, reasons for the delays grouped in categories, actions taken by the appointed supervisor and management to reduce delays and success of the actions taken; (g) availability of motive power and rolling stock on a type-by-type basis (e.g. BB500, AA10, tank wagons, coaches), reasons for any default of agreed target availability, actions taken by the appointed supervisor and management, success of the actions taken; (h) line locomotive and railcar mileage per day and unit available, ton-km performed by each line locomotive, available pass-km performed by each railcar available, actions taken by supervisors and management, success of actions taken; (i) number of locomotive failures per type of locomotive; (j) workshop repairs of motive power and rolling stock scheduled and actual; and

30 (k) wagon turnaround times for different types of wagons used for main commodities, description and qualification of reasons increasing this time, actions taken by the appointed supervisor and management, and success of actions taken.