Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized OFFICIAL DOCUMENTS Ondo Projeet Agreement (Forestry Plantation Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPHENT and LOAN NUMER 1679 UNI ONDO STATE Public Disclosure Authorized Dated 1979 7.-..
0 LOAN NUMBER 1679 UNI ONDO PROJECT AGREEMENT AGREEMENT, dated L7, 1979, between INTERNATIONAL BANK FOR RECONS.PJC 9~!,EVELOPMENT (hereinafter called the Bank) and ONDO STATE WereAnafter called Ondo). WHEREAS (A) by the Loan Agreement of even date herewith between Federal Republic of Nigeria (hereitafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to thirty-one million dollars ($31,OO,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Ondo agrees to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary loan agreement to be entered into between the Borrower and Ondo, part of the proceeds of the loan provided for under the Loan Agreement will be made available to Ondo on the terms and conditions therein set forth; and WHEREAS Ondo, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth- and the following additional terms have the following meanings: (a) "ODPMU" means the Project Management Unit to be established pursuant to Section 2.01 (b) of this Agreement;' (b) "ODPMU bank account" means the bank account referred to in Section 2.01 (d) of this Agreement; (c) "CCF" means the Chief Conservator of Forests of MANR; (d) "MANR" means Ondo's Ministry of Agriculture and Natural Resources;
-2- (e) "ODBPCC" means the Budget and Policy Coordinating Comittee to be established pursuant to Section 2.01 (c) of this Agreement; and (f) "Parts of the Project" means the Parts of the Project to be carried out by Ondo under Section 2.01 (a) of this Agreement. ARTICLE II Execution of the Project Section 2.01. (a) Ondo shall.carry out Parts A (1) through (4), B and C (1) of the Project described in Schedule 2 to the Loan Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and forestry practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Ondo shall establish and thereafter maintain a Project Management Unit in a form and with membership, functions and responsibilities satisfactory to the Bank. Further provisions relating to ODPMU are set forth in Part A of the Schedule to this Agreement. (c) Ondo shall through MANR establish a Budget and Policy Coordinating Committee in a form and with membership, functions and responsibilities satisfactory to the Bank. Further provisions relating to ODBPCC are set forth in Part B of the Schedule to this Agreement. (d) Without any limitation or restriction on the obligations of Ondo under paragraph (a) above, Ondo shall: (i) establish and thereafter maintain with adequate funds (including an initial minimum deposit of N600,000) a commercial bank account to be used by ODPMU exclusively for payments for goods and services required for the Project; (ii) pay into the ODPMV bank account all stumpage fees collected from salvage logging of natural forest, plantation pulpwood and sawlogs in the Project Area and as soon as possible thereafter constitute the ODPMU bank account into a revolving fund to be
-3- operated in a form and manner satisfactory to the Bank to enable an adequate planting and maintenance program to be sustained in the Project Area; (iii) until the constitution of the revolving fund, authorize ODPMU to establish overdraft facilities equivalent to at least six months' capital requirements determined on the basis of approved annual budgets and fully guarantee payment obligations of ODPMU under the said overdraft facilities; and (iv) provide in its budgets, and pay to ODPMU at least three months in advance, quarterly contributions for the Project based on ODPMU's approved annual budget. Section 2.02. (a) Ondo shall employ for the Project the following staff whose qualifications, experience and terms and conditions of employment (including terms of reference) shall be satisfactory to the Bank, namely, a Project Manager, senior forester, chief engineer, road/clearing engineer, workshop engineer, chief accountant and farm supervisor. (b) Ondo shall ensure that: (i) its MANR gives high priority to recruitment of staff for ODPMU and that its MANR takes all necessary action promptly to second to ODPMU any technical or other staff whose secondment ODPMU may request; and (ii) any recruitment of staff described in paragraph (a) above shall be carried out in accordance with the procedures established for ongoing Bank-financed projects in Nigeria or through consultants whose qualifications, experience and terms and conditions of employment (including terms of reference) shall be satisfactory to the Bank. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to the Loan Agreement. Section 2.04. (a) Ondo undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan relent to it by the Borrower against hazards incident to the 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 Ondo to replace or repair such goods.
(b) Except as the Bank may otherwise agree, Ondo shall cause all goods and services financed out of the proceeds of the Loan relent to it by the Borrower to be used exclusively for the Project. Section 2.05. (a) Ondo shall cause ODPMU to furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for its Parts of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) Ondo shall: (i) cause ODPMU to maintain records and procedures adequate to record and monitor the progress of its Parts of the Project (including the cost of said Parts of the Project and the benefits to be derived therefrom), to identify the goods and services financed out of the proceeds of the Loan with respect to its Parts of the Project, and to disclose their use in the Project; (ii) enable the Bank's accredited representatives to visit the facilities and construction sites included in its Parts of the Project and to examine the goods financed out of the proceeds of the Loan with respect to said Parts of the Project and any relevant records and documents; and (iii) cause ODPMU to furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning its Parts of the Project, the cost thereof and, where appropriate, the benefits to be derived therefrom, the expenditure of the proceeds of the Loan with respect to said Parts of the Project 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 Ondo and the Bank, Ondo shall cause ODPMU to 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 its Parts of the Project, the cost of said Parts of the Project and the benefits derived and to be derived therefrom, the performance by Ondo and the Bank of their respective obligations under this Agreement and the accomplishment of the purposes of the Loan. (d) Ondo shall enable the Bank's representatives to examine A all plants, sites, works, buildings, property and equipment of ODPMU and any relevant records and documents.
-5- Section 2.06.. Ondo shall duly perform all its obligations under the Ondo Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, Ondo shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Ondo Subsidiary Loan Agreement or any provision thereof. Section 2.07. (a) Ondo shall, at the request of the Bank, exchange views with the Bank with regard to the progress of its Parts of the Project, the performance of its obligations under this Agreement and under the Ondo Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) Ondo shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of its Parts of the Project, the accomplishment of the purposes of the Loan, or the performance by Ondo of its obligations under this Agreement and under the Ondo Subsidiary Loan Agreement. Section 2.08. Ondo 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 carrying out its Parts of *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 III Financial Covenants Section 3.01. Ondo shall in relation to its Parts of the Project maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 3.02. Ondo shall cause ODPMU to: (i) have its accounts and financial statements (balance sheets, (if any) statements of income and expenses and related statements) for each fiscal year to be 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 four months after the end of each such year, (A) certified copies of such financial statements for such year as so audited and (B) the report of such audit by said
-6-1 auditors, of such scope and in such detail as the Bank shall have reasonably requested which shall include a statement as to whether or not the proceeds of the Loan made available to ODPMU have been used for their intended purpose; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of ODPMU and the audit thereof as the Bank shall from time to time reasonably request. Section 3.03. Ondo shall with the assistance of FDF establish and thereafter maintain a management information system satisfactory to the Bank. Section 3.04. (a) Ondo shall prepare in consultation with FDF 44 4'/and send to the Bankino later than March 31, 1980 for the Bank's 4i(a1 review and comments proposals setting out a formula for calculating the stumpage rates to be used for salvage logging of natural forest, gmelina pulpwood and sawlogs in the Project Area to ensure an optimum financial rate of return on forest plantation investments in the Project Area which in any event shall not be less than 11% in real terms. (b) Ondo shall cause to be established no later than June 30, 1980, a rate of stumpage fees in accordance witn paragraph (a) above, said fees to be collected annually by ODPMU in *the Project Area and shall review such rate of stumpage fees from time to time. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 4.02. This Agreement and all obligations of the Bank and of Ondo thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly so notify Ondo thereof. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions.
-7- ARTICLE V Miscellaneous Provisions Section 5.01. 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.U. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For Ondo: Permanent Secretary Ministry of Agriculture and Natural Resources PMB 713 Akure Ondo State Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under
-8- this Agreement on behalf of Ondo may be taken or executed by the Permanent Secretary, Ministry of Agriculture and Natural Resources or such other person or persons as the said Permanent Secretary shall designate in writing, and Ondo shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. 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 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 Regional Vice President Western Africa ONDO STATE By Authorized Representative
SCHEDULE Part A: Ondo Project Management Unit 1. ODPMU shall be responsible for the day-to-day management and technical operation of the Ondo's Parts of Project. 2. ODPMU shall be headed by a Project Manager responsible to the CCF. 3. (1) ODPMU's duties shall include: (a) execution of the Project in Ondo; (b) preparation of annual budgets and cash flows for approval by ODBPCC; (c) operation of the bank account to be opened under Section 2.01 (d) of this Agreement; (d) control and operation of the Project's revolving fund; (e) recruitment of staff; (f) advertising, negotiating, inviting tenders for civil works, supply of goods and services; (g) preparation of reimbursement clai to the Bank; and for transmittal (h) preparation of quarterly and annual reports for transmittal to ODBPCC, the Borrower and the Bank. (2) ODPMU shall in carrying out the Project follow guidelines laid down by the Bank and policies decided by ODBPCC in consultation with the CCF. (3) ODPMU shall prepare quarterly cash flow statements for transmission to ODBPCC and the CCF. ODPMU shall send to the Planning, Budgeting and Monitoring Division (PBMD) of MANR cash flow statements indicating any changes in requirements for funds from Ondo which result from expected changes in expenditures and inflow anticipated from other sources. ODPMU's Project Manager shall be
-10- authorized to make proposed expenditures 3 weeks after the dispatch of such statements to PBMD unless otherwise informed by ODBPCC. (4) ODPMU shall operate the Project's revolving fund with due regard to project fund allocations from collected stumpage fees agreed by ODBPCC. (5) ODPMU shall consult the CCF in the recruitment of junior staff and obtain the approval of ODBPCC before recruiting any senior staff. (6) ODPMU shall carry out its duties relating to tenders after consultation with the CCF. ODPMU may on its own enter into contracts valued at less than 30,000 Naira. It may enter into contracts valued at 30,000 Naira or more only with the prior approval of ODBPCC. (7) At least four months before the beginning of each fiscal year, ODPMU's management shall send ODPMU's proposed annual budgets as approved by ODBPCC to FDF, MANR and the Bank. Part B: Ondo Budget and Policy Coordinating Committee 1. ODBPCC's duties shall include: (a). review of and recommendations on Project-related agricultural development policies in Ondo, including policies related to forestry tariffs; (b) approval of annual project budgets and cash flow statements; ensuring availability for the Project of funds from Ondo, approval of auditors; ODPMU bank account; pricing of agricultural inputs and farm interest rates; (c) transfer and secondment of senior project staff, their terms and conditions of employment and the appointment of consultants (including consultancy firms); (d) award with the advice of the Project Manager of contracts valued at 30,000 Naira or more in accordance with the procurement procedures of Ondo but subject in every case to the provisions governing procurement of goods and services set out or referred to in Schedule 4 to the Loan Agreement; and
- 11 (e) coordination and integration of Project activities and institutions. 2. Permanent Secretary, MANR or his representative shall be the chairman of ODBPCC. ODBPCC shall meet not less frequently than once in every four months. The ODPMU's Project Manager may request a meeting of ODBPCC whenever he considers this necessary. 3. ODBPCC's membership shall normally comprise: (i) Permanent Secretary, MANR - Chairman (ii) Chief Agricultural Planning Officer - Secretary (iii) Chief Agricultural Officer (iv) Chief Agricultural Engineer (v) Chief Conservator of Forests (vi) Representative, Ministry of Finance and Economic Development (vii) Project Manager, ODPMU (viii) Project Managers, Other Bank-financed Projects (ix) Representative, Federal Ministry of Agriculture and Water Resources.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development. In witness whereof I have signed this Certificate and affixed the Seal of the Bank thereunto this, 9 day of.,197. FOR SECRETARY i'