E "FFICI A CREDIT NUMBER 1320 MAL DOCU M ENTS$ Project Agreement (Second Fisheries Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE TRADING ORGANIZATION Dated ,1983 CREDIT NUMBER 1320 MAL PROJECT AGREEMENT AGREEMENT, dated 4-> , 1983, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and STATE TRADING ORGANIZATION (hereinafter called STO). WHEREAS (A) by the Development Credit Agreement of even date herewith between the Republic of Maldives (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equi- valent to four million eight hundred thousand Special Drawing Rights (SDR 4,800,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that STO agrees to undertake such obligations toward the Association as are hereinafter set forth; (B) the Borrower has applied to the International Fund for Agricultural Development (hereinafter called the Fund) for a loan (hereinafter called the Fund Loan) in an amount equiva- lent to one million nine hundred thousand Special Drawing Rights (SDR 1,900,000) to assist in financing the Project described in the Development Credit Agreement on the terms and conditions set forth in an agreement (hereinafter called the Fund Loan Agree- ment) between the Borrower and the Fund; (C) the Fund intends to appoint the Association as Cooper- ating Institution to administer the Fund Loan in accordance with the provisions of the Development Credit Agreement, and the Asso- ciation is prepared to accept such appointment; (D) by a subsidiary loan agreement to be entered into between the Borrower and STO, the proceeds of the credit provided for under the Development Credit Agreement will be made available to STO on the terms and conditions therein set forth; and WHEREAS STO, in consideration of the foregoing, 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 -2- Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth and the following term, namely that, the Fisheries Advisory Board means the Board established by the Presidential Decree No. IE/30/79/136 dated September 29, 1979. ARTICLE II Execution of the Project Section 2.01. STO shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and fisheries practices. Section 2.02. STO shall by May 31, 1983, establish and, thereafter maintain, (a) a Fish Marketing Division responsible for collection, freezing and marketing of fish and (b) a Fuel Distribution Division responsible for distributing fuel. Section 2.03. STO shall determine fish prices for different varieties of fish, taking into account the quality and handling costs involved, in accordance with the criteria recommended by the Fisheries Advisory Board. Section 2.04. STO shall prepare a financing plan, satis- factory to the Association for the purpose of transferring owner- ship of STO'S fishing vessels, acquired under the Project, to private operators. Section 2.05. STO shall ensure that the Association shall be given an opportunity to comment on the specifications and contract terms and conditions of the refrigeration plant to be financed by the Norwegian Grant prior to the awarding of its contract. Section 2.06. STO shall make fuel readily available to all mechanized vessels in the Project Area at a price consistent with the criteria provided under Section 4.03 of the Development Credit Agreement by February 28, 1985. Section 2.07. In order to assist STO in carrying out the Project, STO shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such consultants to be selected in accordance with the principles and procedures satisfactory to -3- the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981, and as set forth in Schedule 1 to this Agreement. Section 2.08. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit, shall be governed by the provisions of Schedule 4 to the Develop- ment Credit Agreement. Section 2.09. (a) STO undertakes to insure, or make adequate provision for the insurance of, the goods to be financed out of the proceeds of the Credit or the Fund Loan made available 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 pay- able in a currency freely usable by STO to replace or repair such goods. (b) STO shall cause all goods and services financed out of the proceeds of the Credit or the Fund Loan made available to it by the Borrower to be used exclusively for the purposes of the Project. Section 2.10. (a) STO shall furnish to the Association and the Fund, promptly upon their preparation, the plans, specifica- tions, reports, contract documents and construction, work and procurement schedules for the Project, and any material modifica- tions thereof or additions thereto, in such detail as the Asso- ciation shall reasonably request. (b) STO shall: (i) maintain records and procedures to record adequate and monitor the progress of the Project (includ- ing its cost and, where appropriate, the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit or the Fund Loan, and to disclose their use in the Project; (ii) shall enable the Association's and the Fund's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit or the Fund Loan and any rele- vant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, -4- the expenditure of the proceeds of the Credit and the Fund Loan and the goods and services financed out of such proceeds. (c) Upon the award by STO of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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 STO and the Association, STO shall prepare and furnish to the Association and the Fund a report, of such scope and in such detail as the Asso- ciation 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 STO and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit and the Fund Loan. (e) STO shall enable the Association's and the Fund's representatives to examine all plants, installations, sites, works, buildings, property and equipment of STO and any relevant records and documents. Section 2.11. STO shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, STO shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.12. (a) STO shall at the request of the Associa- tion, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit and the Fund Loan. (b) STO shall promptly inform the Association of any con- dition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit or the Fund Loan, or the performance by STO of its obligations under this Agreement and under the Subsidiary Loan Agreement. -5- ARTICLE III Management and Operations of STO Section 3.01. STO shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, engineering and fisheries practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. STO shall at .all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering and fisheries practices. Section 3.03. (a) STO shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. (b) Without limitation to the foregoing, STO shall insure or cause private operators to insure vessels provided under the Project against hazards incident to their operation. ARTICLE IV Financial Covenants Section 4.01. (a) STO shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition, including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account or the Fund Loan Account on the basis of statements of expenditure. (b) STO shall retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account or the Fund Loan Account on the basis of statements of expenditure, and shall enable the Association's and the Fund's representatives to examine such records. -6- Section 4.02. STO shall: (a) 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 Association; (b) furnish to the Association and the Fund as soon as available, but in any case not later than six months after the end of each such year, (i) certified copies of its financial statements for such year as so audited, and (ii) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including, with- out limitation to the foregoing, separate opinions by said audi- tors: (A) on the separate accounts referred to in Section 4.01 (a) of this Agreement; and (B) in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Credit and the Fund Loan made avail- able to it and withdrawn from the Credit Account and the Fund Loan Account respectively on the basis of statements of expendi- ture have been used for the purpose for which they were provided; and (c) furnish to the Association such other information con- cerning said accounts, financial statements, records and expendi- tures, as well as the audit thereof, as the Association shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which either the Development Credit Agreement or the Fund Loan Agreement becomes effective, whichever shall be the earlier. Section 5.02. (a) This Agreement and all obligations of the Association and of STO thereunder shall terminate on the earlier of the following two dates: (i) the earliest date on which both the Development Credit Agreement and the Fund Loan Agreement shall -7- have terminated in accordance with their respec- tive terms; or (ii) a date 15 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify STO of this event. (c) If either the Development Credit Agrement, or the Fund Loan Agreement, terminates in accordance with its terms before tht date specified in paragraph (a) (ii) of this Section and the other Agreement remains in force, all obligations under this Pro- ject Agreement of STO and of the lender under that other Agree- ment shall remain in force. (d) If the Association shall notify STO that its appoint- ment as Cooperating Institution under the Fund Loan Agreement has terminated, all references in this Agreement to the Fund, to the Fund Loan and to the Fund Loan Agreement shall, with respect to the responsibilities of the Association as such Cooperating Institution, be deemed to be deleted. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: -8- For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For STO: State Trading Organization Male 20-01 Maldives Cable address: Telex: STO-MALE 66006 STO-MF 77014 STO-MF Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of STO may be taken or executed by its Managing Director or such other person or persons as he shall designate in writing, and STO shall furnish to the Association sufficient evidence of the authority and the authenticated speci- men signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District -9- of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By A Regional Vice President South Asia STATE TRADING ORGANIZATION By Authorized Representative -10- SCHEDULE 1 Consultants The following consultants shall be employed by the dates specified below: (a) training consultant to assist STO in training project staff by June, 1983; (b) a team of management consultants to help STO operate the Fish Marketing Division by August 31, 1983; (c) a fuel distribution specialist to help STO operate the Fuel Distribution Division by August 31, 1983. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the / tF day of 198. FOR SECRETARY