CONFORMED COPY CREDIT NUMBER 457 SU Development Credit Agreement (Third Railways Project) BETWEEN THE DEMOCRATIC REPUBLIC OF THE SUDAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JANUARY 31, 1974 CONFORMED COPY CREDIT NUMBER 457 SU Development Credit Agreement (Third Railways Project) BETWEEN THE DEMOCRATIC REPUBLIC OF THE SUDAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JANUARY 31, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated January 31, 1974, between THE DEMOCRATIC REPUBLIC OF THE SUDAN (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided, (B) The Project will be carried out in part by the Sudan Railways Corporation with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Sudan Railw:ys Corporation the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and the Sudan Railways Corporation; 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 Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the deletion of Sections 5.01 and 6.02(h) thereof and to the renumbering of Section 6.02(i) into 6.02(h) thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: 4 (a) "Project Agreement" means the agreement between the Association and ihe Sudan Railways Corporation of even date herewith, as the same may be imended from time to time, and such term includes all schedules to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and the Sudan Railways Corporation pursuant to Section 3.01(c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; and (c) "Sudan Railways Corporation" or "SRC" means the Sudan Railways Corporation established by the Sudan Railways Corporation Act, 1973 of the Borrower and operating tinder the laws of the Borrower. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to twenty-four million dollars ($24,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under this Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services required for the Project and to be financed out of the proceeds of the Credit shall be procured pursuant to the provisions set forth or referred to in Section 2.02 of the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1977 or such other date as shall be agreed between the Borrower and th. Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. 5 Section 2.06. Service charges shall be payable semi-annually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each January I and July 1 commencing July 1, 1984 and ending January 1, 2024, each installment to and including the installment payable on January 1, 1994 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. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. The General Manager of SRC is with respect to Part A of the Project 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) The Borrower shall carry out Parts B to E of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Until such time as a port authority is established to operate Port Sudan, the Borrower shall carry out Part B of the Project through SRC. (c) Without any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall cause SRC to perfonn in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable SRC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (d) The Borrower shall relend the proceeds of the Credit relating to (ii), (iii), (v) and (vii) of Part A of the Project to SRC under a subsidiary loan agreement to be entered into between the Borrower and SRC under terms and conditions satisfactory to the Association including interest at the rate of seven and one-quarter 6 per cent (7-1/4%) per annum and repayment over twenty-five years (including four years of grace). (e) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. For the purpose of carrying out Parts B, C and D of the Project, the Borrower shall employ or cause to be employed consultants acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.03. The Borrower shall take steps adequate to ensure that (i) the accounts payable to SRC by the Borrower's departments and other agencies (including public corporations) which are overdue are fully paid by June 30, 1977 or earlier, and (ii) with effect from February 1, 1974 accounts payable to SRC by such departments and agencies are paid on a monthly basis. Section 3.04. Where a review under Section 4.04(b) of the Project Agreement of SRC's financial position indicates a need for remedial action, the Borrower shall consult with the Association as to the action appropriate. Section 3.05. The Borrower shall by July 1, 1975 establish an independent port authority to operate Port Sudan and shall transfer to the port authority on its establishment ownership of the facilities and items included in Part B of the Project on terms and conditions satisfactory to the Association. Section 3.06. (a) The Borrower shall ensure that the charges for the services provided at Port Sudan are set at such a level as will yield a reasonable return on the investments in Port Sudan. Such return and the basis of its calculation shall be agreed by the Borrower and the Association by July 1, 1975 or such other date as may be agreed by the Borrower and the Association. (b) The Borrower shall: (i) engage insurance experts to advise it on the cover on insurable risks which is appropriate to the operation of Port Sudan; and (ii) after reviewing the recommendations of such experts with the Association, take out and maintain not later than January 1, 1975 or such other date as the Borrower and the Association may agree, 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. 7 Section 3.07. The Borrower shall by July 1, 1976 review the tariffs for Port Sudan in consultation with the Association. ARTICLE IV Consultation, Inforniation and Inspection Section 4.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the perfon-nance by SRC of its obligations under the Project Agreement, the administration, operations, resources and expenditures of SRC and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 4.02. (a) The Borrower shall furnish or cause to be furnished to the As,ociation all such information as the Association shall reasonably request concerning the administration, operations, resources and expenditures of SRC and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly infonn each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under this Agreement or the performance by SRC of its obligations under the Project Agreement and the Subsidiary Loan Agreement. Section 4.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. 8 ARTICLE V Taxes and Restrictions Section 5.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 5.02. This Agreement, the Project Agreement and the Subsidiary Loan Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 5.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VI Remedies of the Association Section 6.01. If any event specified in Section 7.01 of the General Conditions or in Section 6.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in this Agreement notwithstanding. Section 6.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) SRC shall have failed to perform any of its obligations under the Project Agreement; (b) an extraordinary situation shall have arisen which makes it improbable that SRC will be able to perform its obligations under the Project Agreement; (c) the Sudan Railways Corporation Act, 1973 of the Borrower shall have been amended, suspended, abrogated, repealed or waived in such a way as to 9 materially and adversely affect the ability of SRC to carry out its obligations under the Project Agreement; and (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of SRC or for the suspension of its operations. Section 6.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) or (d) of Section 6.02 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraph (c) of Section 6.02 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 10.01(b) of the General Cor ":tions: (a) the execution and delivery of the Project Agreement on behalf of SRC have been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and SRC, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. Section 7.02. The following are specified as additional matters, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, SRC, and constitutes a valid and binding obligation of SRC in accordance with its terms; and 10 (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and SRC, respectively, and constitutes a valid and binding obligation of the Borrower and SRC in accordance with its terms. Section 7.03. The date May 1, 1974 is hereby specified for the purposes of Section 10.04 of the General Conditions. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The Commissioner General for Development of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 8.02. The following addresses arc specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: National Planning Commission The Democratic Republic of the Sudan P.O. Box 2092 Khartoum, Sudan Cable address: EIMAR Khartoum, Sudan For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. 11 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, hve caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. THE DEMOCRATIC REPUBLIC OF THE SUDAN By /s/ Mohamed Osman El Nigoumi Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Michael L. Lejeune Director, Countif Programs Departnent Easteni Africa Regional Office 12 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and the allocation of amounts of the Credit to each Category: Amount of the Credit Allocated (Expressed in Category Dollar Equivalent) I. Railway workshops and 2,870,000 communications equipment II. Freight wagons 10,790,000 and components III. Central Railway Training 1,000,000 School IV. Port Sudan equipment and 3,800,000 improvements (including consultancy services) V. River Transport Corpora- 1,200,000 tion (equipment and tech- nical assistance) VI. Airport development 1,000,000 studies VII. Training of staff of 160,000 Auditor General ViII. Unallocated 3,180,000 TOTAL 24,000,000 2. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; 13 (b) expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Category VI on account of expenditures incurred after November 1. 1973 in an aggregate amount not exceeding the equivalent of $250,000; and (c) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. 3. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and (c) if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 14 SCHEDULE 2 Description of the Project The Project consists of the following: A. SRC's investment program for 1973-1975 which comprises: (i) track renewal, drainage improvements and siding installations; (ii) additions and improvements to buildings and workshops and to workshop equipment and handling facilities; (iii) improvement of communications, principally between Port Sudan and Khartoum; (iv) rehabilitation of existing diesel locomotives and purchase of about 10 mainline and 20 shunting locomotives; (v) improvements to existing freight wagons and the purchase and assembly of about 1,000 new freight wagons; (vi) improvements to existing, and purchase of new, passenger coaches and service vehicles; and (vii) the establishment at Atbara of a central railway training school. B. Purchase of equipment for, and physical improvements to, Port Sudan; and provision of consultancy services for the improvement of operations at Port Sudan and for long term port planning. C. Purchase of equipment for, and provision of technical assistance to, the Borrower's River Transport Corporation. D. Feasibility studies for airport development in the Sudan and, subject to prior agreement between the Borrower and the Association, detailed engineering arising from such studies. E. Training of staff of the Auditor General of the Sudan. * * * * The Project is expected to be completed by September 30, 1976.