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CONFORMED COPY
CREDIT NUMBER 3470 SE
SONES Project Agreement
(Long Term Water Sector Project)
between
INTERNATIONAL DEVELOPMENT ASSOCIATION
and
SOCIETE NATIONALE DES EAUX DU SENEGAL
Dated May 10, 2001
CREDIT NUMBER 3470 SE
PROJECT AGREEMENT
AGREEMENT, dated May 10, 2001, between INTERNATIONAL DEVELOPMENT ASSOCIATION 
(the Association) and SOCIETE NATIONALE DES EAUX DU SENEGAL (SONES).
WHEREAS (A) by the Development Credit Agreement of even date herewith between 
Republic of Senegal (the Borrower) and the Association, the Association has agreed to 
make available to the Borrower an amount in various currencies equivalent to 
ninety-eight million Special Drawing Rights (SDR 98,000,000), on the terms and 
conditions set forth in the Development Credit Agreement, but only on condition that 
SONES agree to undertake such obligations toward the Association as are set forth in 
this Agreement;
(B)
by a Subsidiary Loan Agreement entered into between the Borrower and 
SONES, SONES has agreed to carry out Parts A and B of the Project on the terms and 
conditions set forth in said Subsidiary Loan Agreement; and
WHEREAS SONES, in consideration of the Association’s entering into the 
Development Credit Agreement with the Borrower, has agreed to undertake the 
obligations set forth in this Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
Definitions
Section 1.01. Unless the context otherwise requires, the several terms defined 
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in the Development Credit Agreement, the Preamble to this Agreement and in the General 
Conditions (as so defined) have the respective meanings therein set forth.
ARTICLE II
Execution of the Project
Section 2.01. (a) SONES declares its commitment to the objectives of the Project 
as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall 
carry out Parts A and B of the Project with due diligence and efficiency and in 
conformity with appropriate administrative, financial and management practices, and 
shall provide, or cause to be provided, promptly as needed, the funds, facilities, 
services and other resources required for Parts A and B of the Project.
(b)
Without limitation upon the provisions of paragraph (a) of this Section 
and, except as the Association and SONES shall otherwise agree, SONES shall carry out 
Parts A and B of the Project in accordance with the Implementation Program set forth 
in Schedule 4 to the Credit Agreement.
Section 2.02. Except as the Association shall otherwise agree, procurement of 
the goods, works and consultants’ services required for Parts A and B of the Project 
and to be financed out of the proceeds of the Credit shall be governed by the 
provisions of Schedule 3 to the Credit Agreement.
Section 2.03. SONES shall carry out the obligations set forth in Sections 9.03, 
9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use 
of goods and services, plans and schedules, records and reports, maintenance and land 
acquisition, respectively) in respect of the SONES Project Agreement.
Section 2.04. (a) SONES shall, at the request of the Association, exchange views 
with the Association with regard to the progress of Parts A and B of the Project, the 
performance of its obligations under this Agreement and other matters relating to the 
purposes of the Credit.
(b)
SONES shall promptly inform the Association of any condition which 
interferes or threatens to interfere with the progress of Parts A and B of the 
Project, the accomplishment of the purposes of the Credit, or the performance by SONES 
of its obligations under this Agreement.
Section 2.05. SONES shall: (i) in conjunction with the Borrower and the 
Association, participate in the annual review and the mid-term review respectively, 
referred to in paragraphs 12 and 15 of Schedule 4 to the Development Credit Agreement; 
and (ii) promptly after completing such reviews, carry out recommendations arising out 
of said reviews, with due diligence and efficiency and in accordance with appropriate 
practices.
Section 2.06. SONES shall furnish to the Borrower, for its review and approval:
(a)
before the beginning of each Project year, a proposed annual work 
program, in respect of Parts A and B of the Project, including a proposed budget and 
financing plan, for the forthcoming fiscal year; and
(b)
semiannual and annual progress reports on the status of Parts A and B of 
the Project, including regular beneficiary feedback. 
ARTICLE III
Management and Operations of SONES
Section 3.01. SONES shall carry on its operations and conduct its affairs in 
accordance with sound administrative, financial and management practices under the 
supervision of qualified and experienced management assisted by competent staff in 
adequate numbers.
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Section 3.02. SONES 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, financial and educational practices.
Section 3.03. SONES shall take out and maintain with responsible insurers, or 
make other provision satisfactory to the Association for, insurance against such risks 
and in such amounts as shall be consistent with appropriate practice.
ARTICLE IV
Financial Covenants
Section 4.01. (a) SONES shall maintain records and accounts adequate to reflect, 
in accordance with sound accounting practices its operations, resources and 
expenditures and financial condition in respect of Parts A and B of the Project.
(b)
SONES shall:
(i)
have the records, 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;
(ii)
furnish to the Association as soon as available, but in any case 
not later than six (6) 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 Association shall have 
reasonably requested; and
(iii)
furnish to the Association such other information concerning said 
records, accounts and financial statements as well as the audit 
thereof, as the Association shall from time to time reasonably 
request.
Section 4.02. (a) Without limitation upon the provisions of Section 4.01 of this 
Agreement, SONES shall carry out a time-bound action plan acceptable to the 
Association for the strengthening of the financial management system referred to in 
paragraph (a) of said Section 4.01 in order to enable SONES, not later than 18 months 
after the Effective Date, or such later date as the Association shall agree, to 
prepare quarterly Project management reports, acceptable to the Association, each of 
which:
(i) 
(A) sets forth actual sources and applications of funds for Parts 
A and B of the Project, both cumulatively and for the period 
covered by said report, and projected sources and applications of 
funds for Parts A and B of the Project for the six-month period 
following the period covered by said report, and (B) shows 
separately expenditures financed out of the proceeds of the Credit 
during the period covered by said report and expenditures proposed 
to be financed out of the proceeds of the Credit during the 
six-month period following the period covered by said report;
(ii)
(A) describes physical progress in the implementation of Parts A 
and B of the Project, both cumulatively and for the period covered 
by said report, and (B) explains variances between the actual and 
previously forecast implementation targets; and
(iii) sets forth the status of procurement under Parts A and B of the 
Project and expenditures under contracts financed out of the 
proceeds of the Credit, as at the end of the period covered by 
said report.
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(b)
Upon the completion of the action plan referred to in paragraph (a) of 
this Section, SONES shall prepare, in accordance with guidelines acceptable to the 
Association, and furnish to the Association not later than 45 days after the end of 
each calendar quarter a Project Management Report for such period.
ARTICLE V
Effective Date; Termination;
Cancellation and Suspension
Section 5.01. This Agreement shall come into force and effect on the date upon 
which the Development Credit Agreement becomes effective.
Section 5.02. (a) This Agreement and all obligations of the Association and of 
SONES thereunder shall terminate on the earlier of the following two dates:
(i)
the date on which the Development Credit Agreement shall terminate 
in accordance with its terms; or
(ii)
the 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 SONES of this event.
Section 5.03. All the provisions of this Agreement shall continue in full force 
and effect notwithstanding any cancellation 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:
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INDEVAS
248423 (MCI) or
(202) 477 6391
Washington, D.C.
 64145 (MCI) 
For SONES:
Société Nationale des Eaux du Sénégal
97, av. A. Peytavin
Dakar
Senegal
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 SONES, or by 
SONES on behalf of the Borrower under the Development Credit Agreement, may be taken 
or executed by its Director General or such other person or persons as the Director 
General shall designate in writing, and SONES shall furnish to the Association 
sufficient evidence of the authority and the authenticated specimen signature of each 
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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 duly authorized 
representatives, 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 DEVELOPMENT ASSOCIATION
By /s/ Callisto Madavo
Regional Vice President
Africa
SOCIETE NATIONALE DES EAUX DU SENEGAL
By /s/ Mamadou Mansour Seck
Authorized Representative