Public Disclosure Authorized Public Disclosure Authorized OFFICI SPECIAL ACTION CREDIT NUMBER 45 COB DOCUMENTS Special Action Credit Agreement (Railway Project) Public Disclosure Authorized between THE PEOPLE'S REPUBLIC OF THE CONGO and Public Disclosure Authorized INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL ACTION ACCOUNT established with funds contributed by the MEMBER STATES of Lhe EUROPEAN ECONOMIC COMMUNITY Dated \, 1980
SPECIAL ACTION CREDIT NUMBER 45 COB SPECIAL ACTION CREDIT AGREEMENT AGREEMENT, dated, 1980, between THE PEOPLE'S REPUBLIC OF THE CONGO (the Borrower or the Congo), and INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the Special Action Account established with funds contributed by the MEMBER STATES of the EUROPEAN ECONOMIC COMMUNITY. WHEREAS by the Agreement, dated May 2, 1978, between the International Development Association (hereinafter called IDA) and the European Economic Community and its Member States there has been established by IDA a Special Action Account constituted by the funds which shall be contributed by the Member States of the European Economic Community and administered by IDA, acting as Administrator of such Special Action Account, for the purpose of, and in accordance with, the provisions of said Agreement; WHEREAS by a loan agreement (hereinafter called the 1976 Loan Agreement) dated April 12, 1976 between the International Bank for Reconstruction and Development (hereinafter called the Bank) and Agence Transcongolaise des Communications (hereinafter called ATC), the Bank has agreed to make to ATC a loan in various currencies equivalent to thirty-eight million dollars ($38,000,000) to assist in financing part of the Project described in Schedule 2 to the 1976 Loan Agreement (hereinafter called the Second Railway Project), on the terms and conditions therein set forth; WHEREAS supplemental financing is now necessary to enable ATC to continue the carrying out of the Second Railway Project; WHEREAS the Borrower has requested the Administrator for assistance from the resources of the Special Action Account in the said supplemental financing to cover the cost of the items described in Schedule 2 to this Agreement which are part of the Second Railway Project (said items hereinafter called the Project), and the Administrator has determined that such assistance would be in accordance with the provisions of the Agreement of May 2, 1978 referred to above; WHEREAS the Project will be carried out by ATC with the Borrower's assistance and, as part of such assistance, the Borrower will make available to ATC the proceeds of the Special Action Credit as hereinafter provided; and
-2- WHEREAS the Administrator has agreed, on the basis inter alia of the foregoing, to extend the Special Action Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Administrator and ATC. NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the International Development Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the International Development Association, as so modified, being hereinafter called the General Conditions): (a) The term "Association", wherever used in the General Conditions, means the International Development Association acting as the Administrator of the Special Action Account referred to in the Preamble to this Special Action Credit Agreement. (b) The terms "Development Credit Agreement" and "Credit", wherever used in the General Conditions, are amended to read "Special Action Credit Agreement" and "Special Action Credit", respectively. (c) Sections 4.01, 4.02, 4.03, 4.04 and the second sentence of Section 5.01 are deleted. (d) In Sections 6.02 and 7.01, the term "Association" shall also include the International Development Association acting in its own capacity. Section 1.02. 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:
-3- (a) "Member States" means the Member States of the European Economic Community, i.e. Belgium, Denmark, The Federal Republic of Germany, France, Ireland, Italy, Luxembourg, The Netherlands and The United Kingdom. (b) "Administrator" means the International Development Association acting as Administrator of the Special Action Account referred to in the Preamble to this Special Action Credit Agreement. (c) "Project Agreement" means the agreement between the Administrator and ATC of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement. (d) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ATC pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement. (e) "CFA Franc" and "CFAF" mean the currency of the Borrower. (f) "foreign currency" means any currency other than the currency of the Borrower, including CFA Franc in countries other than the People's Republic of the Congo where such currency is also the national currency. (g) "Sections" means ATC's operating sections set forth in Article 3 of the Borrower's Decree No. 70/38 dated February 11, 1970 regulating ATC. (h) "CFCO" means ATC's Section Chemin de Fer Congo-Oc6an. (i) "Port and River Transport Assets" means all present and future property and assets (including any rights, powers, privileges and franchises) of ATC required for the efficient management and operation of the Ports of Pointe Noire, Brazzaville and secondary river ports and for its river transport operations. (j) "Railway Assets" means all present and future property and assets (including any rights, powers, privileges and franchises) of ATC required for the efficient management and operation of the CFCO Railway.
-4- ARTICLE II The Special Action Credit Section 2.01. The Administrator agrees to lend to the Borrower on the terms and conditions in the Special Action Credit Agreement set forth or referred to, the following currency amounts: Five million seven hundred eighty-three thousand Belgian francs (BF5,783,000); Seven hundred twenty thousand Danish kroner (DK720,000); Two million seven hundred eighty thousand Deutsche Mark (DM2,780,000); Two million nine hundred thirty-eight thousand French francs (FF2,938,000); Six thousand four hundred Irish pounds (IrE6,400); Three hundred forty million nine hundred sixty-three thousand Italian lire (ItL340,963,000); One hundred eighty-two thousand Luxembourg francs (LF182,000); Seven hundred sixty-eight Netherlands (Dfl 768,000); thousand guilders and Seven hundred eight thousand six hundred Pounds sterling (9708,600). Section 2.02. (a) The proceeds of the Special Action Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and
-5- the Administrator, for expenditures made (or, if the Administrator 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 Special Action Credit. (b) Withdrawals shall be made only on account of expenditures (i) in the currency of the Borrower, or (ii) for goods produced in, or services supplied from, (A) any of the Member States and (B) any developing country which is a member of the International Development Association and could be the recipient of a Special Action Credit, as determined by the Administrator. (c) Withdrawals from the Credit Account shall be made in the respective currencies in which the expenditures to be financed out of the proceeds of the Special Action Credit have been paid or are payable or, at the option of the Administrator, in such currency or currencies as the Administrator shall from time to time select. Section 2.03. Except as the Administrator shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Special Action Credit shall be governed by the provisions of the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1982 or such later date as the Administrator shall establish. The Administrator shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Administrator a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum, on each of the various currency amounts withdrawn from the Credit Account and outstanding from time to time. The amounts of service charge in various currencies so found, and additional service charges (if any) payable pursuant to Section 3.02 of the General Conditions, shall be payable in the currency of the French Republic, or in another currency selected by the Administrator in accordance with the provisions of paragraph (b) of this Section, after their conversion into such currency on the basis of exchange rates determined in accordance with the provisions of Section 4.05 of the General Conditions. (b) If the Administrator shall at any time determine that the currency so specified or selected is not freely convertible or freely exchangeable by the International Development Association
-6- for currencies of other members of the International Development Association for the purposes of its operations, service charges shall be payable in such other currency as the Administrator may select for such purposes and shall notify in writing to the Borrower, whereupon, commencing thirty days after the date of such notice, service charges shall be payable in such other currency. Section 2.06. Service charges shall be payable semiannually on May 1 and November 1 in each year. Section 2.07. (a) The Borrower shall repay the principal amount of the Special Action Credit in semiannual installments payable on each May 1 and Ncvember 1 commencing May 1, 1990 and ending November 1, 2029, each installment to and including the installment payable on November 1, 1999, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. (b) Each of the installments payable pursuant to paragraph (a) of this Section shall be the aggregate of such amounts in the various currencies withdrawn from the Credit Account as shall be found by multiplying the total amount in each currency so withdrawn by the applicable installment percentage as specified in paragraph (a) of this Section, unless the Administrator shall otherwise specify by notice to the Borrower prior to each payment date for the purpose of avoiding the payment of fractional currency amounts. (c) If withdrawal shall have been made in a currency which the Administrator shall have purchased with one or more other currencies for the purpose of such withdrawal, the portion of the Special Action Credit so withdrawn shall, for the purpose of paragraph (b) of this Section, be deemed to have been withdrawn in the currency or currencies used by the Administrator for such purchase in the amounts of such currency or currencies so used. (d) The Administrator will, at the request of the Borrower and on such terms and conditions as the Administrator shall determine, use its best effo.ts to purchase any currency needed by the Borrower for payment f principal required under this Agreement upon payment by the Borrower of sufficient funds therefor in a currency or currencies to be specified by the Administrator from time to time. In purchasing the currencies required the Administrator shall be acting as agent of the Borrower and the Borrower
-7- shall be deemed to have made any payment required under this Agreement only when and to the extent that the Administrator has received such payment in the currency or currencies required. Section 2.08. ATC is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Special Action Credit Agreement, the Borrower shall cause ATC to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth or referred to, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable ATC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Special Action Credit to ATC under a subsidiary loan agreement to be entered into between the Borrower and ATC under terms and conditions which shall have been approved by the Administrator. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Administrator and to accomplish the purposes of the Special Action Credit, and except as the Administrator shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. ARTICLE IV Other Covenants Section 4.01. (a) Without any limitation or restriction upon the provisions of paragraph (a) of Section 3.01 of this Agreement, the Borrower specifically undertakes, whenever there is reasonable cause to believe that the funds available to ATC will be inadequate to meet the estimated expenditures required for the carrying
-8- out of this Project and the Second Railway Project, and until June 30, 1982, to service ATC's debts, to make arrangements, satisfactory to the Administrator, promptly to provide ATC or cause ATC to be provided with such funds as are needed to meet such expenditures and to service such debts. (b) Without limitation- to the generality of the foregoing, the Borrower shall take all measures as shall be required to ensure that adequate borrowing and overdraft facilities are available to ATC until ATC's working capital has reached the level required under Section 5.09 of the 1976 Loan Agreement. ARTICLE V Remedies of the Administrator Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof, namely, that: (a) ATC shall have failed to perform any covenant, agreement or obligation of ATC under the Project Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that ATC will be able to perform its obligations under the Project Agreement. (c) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ATC or for the suspension of its operations. (d) The Borrower's Ordonnance No. 21/69 dated October 24, 1969 establishing ATC, the Borrower's Decree No. 70/38 dated February 11, 1970 regulating ATC or any other legislation or regulation of the Borrower governing the establishment, organization and powers of ATC shall, without the pricr approval of the Administrator, have been amended, suspended, abrogated, repealed or waived. (e) ATC shall have been divested of any of the Railway Assets or Port and River Transport Assets or the operation or management thereof. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof:
-9- (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Administrator to the Borrower and ATC; and (b) any event specified in paragraphs (c), (d) and (e) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Special Action Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) The Subsidiary Loan Agreement has been executed on behalf of the Borrower and ATC. (b) ATC has taken all the actions referred to in Section 3.02 of the Project Agreement, as provided in such Section. (c) The Borrower has, for the purpose of meeting its immediate obligations under Section 4.01 hereof made arrangements satisfactory to the Administrator to provide ATC with sufficient funds to increase its working capital by an amount of at least CFAF4,000,000,000. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Administrator: (a) that the Project Agreement has been duly authorized or ratified by ATC, and is legally binding upon ATC in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and ATC and is legally binding upon the Borrower and ATC in accordance with its terms. Section 6.03. The date L Coo IIK is hereby specified for the purposes of Section 12.04 of the General Conditions.
- 10 - Section 6.04. The obligations of the Borrower under Section 4.01 (b) of this Agreement and the provisions of Section 5.02 of this Agreement shall cease and determine on the date on which the Special Action Credit Agreement shall terminate or on a date fourteen years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Subject to the provisions of Section 2.08 of this Agreement, the Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministare des Finances de la R6publique Populaire du Congo Brazzaville B.P. 1183 Rfpublique Populaire du Congo Cable address: MINIFIINANCES Brazzaville Rpublique Populaire du Congo Telex: PRESICONGO 52 10 KG For the Administrator: Administrator of the Special Action Account (International Development Association) 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. Telex: 440098 (ITT) 248423 (RCA) or 64145 (WUI)
- 11 - 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. THE PEOPLE'S REPUBLIC OF THE CONGO By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION as ADMINISTRATOR of the SPECIAL ACTION ACCOUNT established with funds contributed by the MEMBER STATES of the EUROPEAN ECONOMIC COMMUNITY By S Regional Vice President Western Africa
- 12 - SCHEDULE 1 Withdrawals of the Proceeds of the Special Action Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Special Action Credit, the allocation of the amounts of the Special Action Credit to each Category and the percentage for items so to be financed in each Category: Amount of the Special Action Credit % of Allocated (Expressed Expenditures Category in Dollar Equivalents) to be Financed (1) Consultants' 1,420,000 100% of forservices and eign expendiequipment for tures Part A of the Project (2) Locomotive 2,660,000 100% of forspare parts eign expenditures (3) Unallocated 920,000 TOTAL 5,000,000 2. The total dollar amount shown in the foregoing table shall be adjusted from time to time as required to reflect the aggregate dollar equivalent of the unwithdrawn currency amounts in the Credit Account; the unallocated dollar amount shall be adjusted accordingly. 3. For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of, and for goods produced in or services supplied from, (i) any of the Member States and (ii) any developing country, other than the Borrower, which is a member of the International Development Association and could be the recipient of a Special Action Credit, as determined by the Administrator; provided, however, that if the currency of
- 13 - the Borrower is also that of another country in the territory of which goods are produced or from the territory of which services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures". 4. The disbursement percentages have been calculated in compliance with the policy of the Administrator that no proceeds of the Special Action Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower 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 Special Action Credit decreases or increases, the Administrator 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 Administrator. 5. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: and (a) expenditures prior to the date of this Agreement; (b) expenditures for locomotive spare parts in respect of Category (2) unless ATC shall have furnished to the Administrator, in a format acceptable to the Administrator, comprehensive lists of said spare parts, prior to undertaking the procurement thereof, including their estimated quantity, nature, c. and f. price, and proposed procurement procedures applicable thereto, and the Administrator shall have reviewed and approved said lists. 6. Notwithstanding the allocation of an amount of the Special Action Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Administrator has reasonably estimated that the amount of the Special Action Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Administrator may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Special Action Credit which are then allocated to another Crtegory and which in the opinion of the Administrator 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
- 14 - expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 7. If the Administrator 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 Special Action Credit Agreement, no expenditures for such item shall be financed out of the proceeds of the Special Action Credit and the Administrator may, without in any way restricting or limiting any other right, power or remedy of the Administrator under the Special Action Credit Agreement, by notice to the Borrower, cancel such currency amounts of the Special Action Credit as, in the Administrator's reasonable opinion, represent the currency amounts which would otherwise have been eligible for withdrawal out of the proceeds of the Special Action Credit in respect of such expenditures.
- 15 - SCHEDULE 2 Description of the Project The Project's main purpose is to assist ATC in strenghtening its operational efficiency as anticipated in its investment program for 1974-1978, and, to that end, the Project consists of the following Parts: Part A: (a) Continuation of an on-going management, operations and training improvement program and provision of technical assistance to ATC's Mechanical Engineering Department (workshops), all through the provision of about 170 man-months of consultants' services. (b) Provision of equipment related to such foregoing program and assistance. Part B: Provision of locomotive spare parts. The Project is expected to be completed by December 31, 1981.
INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. In witness whereof I have signed this Certificate and affixed the Seal of the Association thereunto the 192SL. I / day of, FOR SECRETARY