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Loan Agreement
(IFFCO Fertilizer Project)
Public Disclosure Authorized
BETWEEN
AND
Loan Agreement
(IFFCO Fertilizer Project)
BETWEEN
AND
LOAN AGREEMENT
ARTICLE I
Section 1.01. The parties to this Agreement accept all the provisions of the
General Conditions Applicable to Loan and Guarantee Agreements of the
Bank,
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 Loan and Guarantee Agreements of the Bank, as so
modified, being hereinafter called the General Conditions), namely that paragraph
7 of Section 2.01 is amended to read as follows:
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:
ARTICLE II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, on the terms and
conditions in the Loan Agreement set forth or referred to, an amount in various
currencies equivalent to one hundred nine million dollars ($109,000,000).
Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan
Account in accordance with the provisions of Schedule 1 to this Agreement, as
such Schedule may be amended from time to time, for expenditures made (or,
if the Bank shall so agree, to be made) in respect of the reasonable cost of goods
and services required for the Project described in Schedule 2 to this Agreement
and to be financed out of the proceeds of the Loan and in respect of interest
and other charges on the Loan.
Section 2.03. (a) Except as the Bank shall otherwise agree, the goods, works
and services (other than consultants' services) for the Project to be financed out
of the proceeds of the Loan, shall be procured in accordance with the provisions
of Schedule 4 to this Agreement.
(b) If at any time the Bank or the Borrower determines, after consultation
with each other and the Guarantor, that any equipment or material cannot be
delivered on or prior to its scheduled delivery date, and that such delay would
adversely affect completion of the Project, the Borrower shall promptly take all
necessary action to procure such equipment or material by such procedures as
shall be satisfactory to the Guarantor and the Bank.
Section 2.04. The Closing Date shall be March 31, 1979, or such other date
as shall be agreed between the Bank and the Borrower.
Section 2.05. The Borrower shall pay to the Bank a commitment charge
at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal
amount of the Loan not !ithdrawn from time to time.
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Section 2.06. The Borrower shall pay interest at the rate of eight per cent
(8%) per annum on the principal amount of the Loan withdrawn and outstanding
from time to time.
Section 2.08. The Borrower shall repay the principal amount of the Loan
in accordance with the amortization schedule set forth in Schedule 3 to this
Agreement.
Section 2.09. The Borrower undertakes that it will pay to the Guarantor
the guarantee fee provided for in Section 3.07 of the Guarantee Agreement.
ARTICLE III
Section 3.01. The Borrower shall carry out the Project with due diligence
and efficiency and in conformity with appropriate administrative, financial and
engineering practices, and shall provide, or cause to be provided, promptly as
needed, the funds, facilities, services and other resources required for the purpose.
(b) Except as the Bank shall otherwise agree, the Borrower shall cause
all goods and services financed out of the proceeds of the Loan to be used
exclusively for the Project.
Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon
their preparation, the plans, specifications, reports, contract documents and
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construction and procurement schedules for the Project, and any material
modifications thereof or additions thereto, in such detail as the Bank shall
reasonably request.
(b) The Borrower: (i) shall maintain records adequate to record the
progress of the Project (including the cost thereof) and to identify the goods and
services financ,ed out of the proceeds of the Loan, and to disclose the use thereof
in the Project; (ii) shall, without limitation upon the provisions of paragraph (c)
of this Section, enable the Bank's representat.ves to visit the facilities and
construction sites included in the Project and to examine the goods financed out
of the proceeds of the Loan and any relevant records and documents; and (iii)
shall furnish to the Bank all such information as the Bank shall reasonably request
concerning the Project, the expenditure of the proceeds of the Loan and the goods
and services financed out of such proceeds.
(c) The Borrower shall enable the Bank's representatives to examine all
plants, installations, sites, works, buildings, property and equipment of the Borrower
and any relevant records and documents.
Section 3.05. The Borrower shall use its best endeavors to carry out the
Project:
Section 3.06. The Borrower shall acquire approximately 200 hectares of land
suitable for construction and operation of the facilities included in the Project.
Section 3.07. The Borrower shall, by Decerriber 31, 1975, make arrangements
satisfactory to the Bank with appropriate agencies and corporations for the
provision of adequate supply of fuel oil, electricity, and coal to ensure the timely
availability of such supplies in sufficient quantity and of appropriate quality for
the full utilization of the facilities to be constructed under the Project.
Section 3.08. The Borrower shall take all measures necessary to ensure that
the execution and operation of the Project is carried out with due regard to
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ecological and environmental factors, and shall comply with environmental quality
standards satisfactory to the Bank.
ARTICLE IV
Section 4.01. The Borrower shall take out and maintain with responsible
insurers, or make other provision satisfactory to the Bank for, insurance against
such risks and in such amounts as shall be consistent with appropriate practice.
(a) at all times manage its affairs, maintain its financial position, plan its
future expansion and carry on its operations in accordance with appropriate
business, financial and engineering practices and under the supervision
of
experienced and competent management assisted by adequate and competent staff;
(b) employ, for the duration of the Project, a suitably qualified and
experienced Project Manager to. be responsible for the execution
of the Project,
including, inter alia, budget and schedule control and general engineering,
procurement, and construction duties, and provide the Project Manager with
adequate staff and facilities to carry out such functions;
(c) consult with the Bank before making any change in the position of
the Project Manager in the Phulpur Unit; and
(d) appoint, after consultation with the Bank, a suitably qualified successor
if it appears that a vacancy will occur in the position of any full-time Director
of the Borrower.
Section 4.04. Except as the Bank shall otherwise agree, the Borrower shall:
(a) at all times take all steps which are necessary to maintain its existence
and its right to carry on operations and to acquire and retain ownership of
all
lands and to maintain and renew all interests in land and other properties
and
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all rights, powers, privileges and franchises which are necessary or useful in the
carrying out of the Project or in the conduct of its business;
and
(b) at all times operate and maintain its plants, machinery, equipment
other property, and promptly make all necessary repairs and renewals thereof, in
accordance with appropriate engineering practices;
(c) not sell, lease, transfer or otherwise dispose of any of its property
or assets which shall be required for the efficient operation of its business and
undertaking; and
(d) not alter its corporate structure or amend its Bye Laws in any way
that will materially and adversely affect its ability to perform its obligations under
this Agreement.
Section 4.05. In the event of any operational problems after start-up of the
facilities constructed under the Project, the Borrower shall secure such outside
operational assistance as necessary, in consultation with the Bank.
ARTICLE V
Financial Covenants
Section 5.02. The Borrower shall: (i) have the Phulpur Unit's and its accounts
and financial statements (balance sheets, statements of income and expenses and
related statements) for each fiscal year audited, in accordance with sound auditing
principles consistently applied, by independent auditors acceptable to the Bank;
(i;) except as the Bank shall otherwise agree, 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 the 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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other
information concerning the accounts and financial statements of the Phulpur Unit
and the Borrower and the audit thereof, if any, as the Bank shall from time to
time reasonably request.
Section 5.03. Except as the Bank shall otherwise agree, the Borower shall:
9
(a) maintain separate accounts for the Phulpur Unit and consolidated
accounts for all of the Borrower's operations; and
(b) furnish to the Bank as soon as available, but in any case not later
than 45 days after the end of each quarter and fiscal year:
(iii) Phulpur Unit's and the Borrower's quarterly and annual forecast
statements of production, income and cash flow.
Section 5.04. (a) The Borrower represents that, except as stated in its letter
to the Bank dated October 16, 1974, at the date of this Agreement no lien exists
on any of its assets as security for any debt.
(b) The Borrower undertakes that, except as the Bank shall otherwise
agree, it shall have all existing liens stated in its letter to the Bank dated October 16,
1974 vacated not later than June 30, 1975.
(c) The Borrower undertakes that, except as the Bank shall otherwise
agree, if any lien shall be created on any assets of the Borrower as security for
any debt, such lien will ipso facto equally and ratably secure the payment of the
principal of, and interest and other charges on, the Loan, and in the creation of
any such lien express provision will be made to that effect, at no cost to the
Bank: provided, however, that the foregoing provisions of this paragraph shall not
apply to: (A) any lien created on property, at the time of purchase thereof, solely
as security for the payment of the purchase price of such property; (B) any lien
arising in the ordinary course of banking transactions and securing a debt maturing
not more than one year after the date on which it is originally incurred; (C) any
lien created solely in favor of the Guarantor replacing liens vacated pursuant to
paragraph (b) above; or (D) any lien created on assets of the Phulpur Unit solely
in favor of the Guarantor, on terms and conditions satisfactory to the Bank, the
Borrower and the Guarantor, to secure obligations of the Borrower to the Guarantor
arising out of (i) the Guarantor's guarantee of the Loan, (ii) the Guarantor's
guarantee of other loans contracted by the Borrower pursuant to the provisions
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of Section 5.06 of this Agreement, or (iii) the Guarantor's loan to the Borrower,
if any, pursuant to the provisions of Section 2.02 of the Guarantee Agreement,
provided that the aggregate of the amount of debt (including guarantees of debt)
secured under sub-paragraphs (ii) and (iii) above shall not exceed Rsl75,000,000.
Section 5.05. Except as the Bank shall otherwise agree, the Borrower shall:
(a) take all necessary steps to maintain a debt-equity ratio not greater
than 60:40;
(c) take necessary steps to achieve on completion of the Project (as defined
in Section 2.02 of the Guarantee Agreement) and maintain thereafter for the Project
a current ratio of at least 1.5:1;
(d) not incur any additional debt if its net revenues for the fiscal year
immediately preceding its incurrence shall be less than 1.4 times the maximum
debt service requirements for any succeeding fiscal year on all its debt then
outstanding (including the debt to be incurred); and
(i) the term "debt" means any debt maturing by its terms more
than twelve months after the date on which it is originally
incurred;
(ii) the term "equity" means all unimpaired paid-in share capital
plus accumulated net earnings or losses from prior fiscal years
not set apart for specific purposes and includes subordinated
debt, if any, provided under the terms of Section 2.02 and
Section 3.05 of the Guarantee Agreement;
(iv) the term "current liabilities" means liabilities due and payable
and all other liabilities which would be due and payable, or could
be called for payment, within one year, including the portion
of debt falling due within one year; but excluding any such
liabilities relating to the construction of the " :lct or any other
capital investment, provided that such 1: dities are to be
financed by loans or external funds to be provided for such
purposes or by internal funds allocated for such purposes and
excluded from current assets as defined in (iii) above;
(vi) the term "net revenues' means gross revenues from all sources
less operating and administrative expenses, including taxes,
surcharges and other levies, if any, but before provision for
depreciation and interest and other charges on debt;
(c) enter into arrangements satisfactory to the Bank for provision by the
Guarantor of (i) a sum of approximately Rs360 million in the form of equity,
provided, that this sum may be reduced by an amount equal to the contribution,
if any, made by the Borrower from its internal resources, (ii) a sum of
approximately Rs82 million as subordinated debt, and (iii) such other funds as
the Guarantor may be obligated to make available to the Borrower under the terms
of Section 2.02 of the Guarantee Agreement.
ARTICLE VI
Section 6.01. For the purposes of Section 6.02 of the General Conditions,
the following additional event is specified, namely, that the Borrower or any other
authority having jurisdiction shall have taken any action for the dissolution or
disestablishment of the Phulpur Unit or for the suspension of its operations.
Section 6.02. For the purposes of Section 7.01 of the General Conditions,
the following additional event is specified, namely, that the event specified in
Section 6.01 of this Azreement shall occur.
ARTICLE VII
Section 7.02. The date March 31, 1975 is hereby specified for the purposes
of Section 12.04 of the General Conditions.
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ARTICLE VIII
Addresses
Section 8.01. The following addresses are specified for the purposes of
Section 11.01 of the Generai Conditions:
Cable address:
INTBAFRAD
Washington, D.C.
Cable address:
IFFCO
New Delhi
By /s / M. L. Weiner
Regional Vice President
South Asia
By /s/ T. N. Kaul
Authorized Representative
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SCHEDULE 1
1. The table below sets forth the Categories of items to be financed out of
the proceeds of the Loan, the allocation of the amounts of the Loan to each
Category and the percentage of expenditures for items so to be financed in each
Category:
Amount of the
Loan Allocated % of
(Expressed in Expenditures
Category Dollar Equivalent) to be Financed
TOTAL 109,000,000
(b) payments for taxes imposed under the laws of the Guarantor or laws
in effect in its territory on goods or services, or on the importation, manufacture,
procurement or supply thereof. To the extent that the amount represented by
the percentage set forth in the third column of the table in paragraph I above
in respect of any Category would exceed the amount payable net of all such taxes,
such percentage shall be reduced to ensure that no proceeds of the Loan will be
withdrawn on account of payments for such taxes; and
5. If the Bank 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 Agreement, no expenditures for such item shall be financed out of the
proceeds of the Loan and the Bank may, without in any way restricting or limiting
any other right, power or remedy of the Bank under the Loan Agreement, by
notice to the Borrower cancel such amount of the Loan as in the Bank's reasonable
opinion, represents the amount of such expenditures which would otherwise have
been eligible for financing out of the proceeds of the Loan.
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SCHEDULE 2
-Synthesis-gas purification;
-Ammonia storage;
SCHEDULE 3
Amortization Schedule
Payment of Principal
Date Payment Due (expressed in dollars)*
January 1, 1980 3,185,000
July 1, 1980 3,310,000
January 1, 1981 3,440,000
July 1, 1981 3,580,000
January 1, 1982 3,725,000
July 1, 1982 3,870,000
January 1, 1983 4,025,000
July 1, 1983 4,190,000
January 1, 1984 4,355,000
July 1, 1984 4,530,000
January 1, 1985 4,710,000
July 1, 1985 4,900,000
January 1, 1986 5,095,000
July 1, 1986 5,300,000
January 1, 1987 5,5 10,000
July 1, 1987 5,730,000
January 1, 1988 5,960,000
July 1, 1988 6,200,000
January 1, 1989 6,445,000
July 1, 1989 6,705,000
January 1, 1990 6,975,000
July 1, 1990 7,260,000
* To the extent that any portion of the Loan is repayable in a currency other
than dollars (see General Conditions, Section 4.02), the figures in this column
represent dollar equivalents determined as for purposes of withdrawal.
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Premiums on Prepayment
SCHEDULE 4
Procurement
A. General Procedures
1. Contracts shall be let under procedures consistent with those set forth in
the "Guidelines for Procurement under World Bank Loans and IDA Credits"
published by the Bank in April 1972, as revised in October 1972 (hereinafter called
the Guidelines), on the basis of international competitive bidding, except as
provided hereunder.
3. Except as the Bank shall otherwise agree, the Borrower shall prequalify all
bidders.
1. For the purpose of evaluation and comparison of bids for the supply of
goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry)
price for imported goods, or the ex-factory price for domestically-manufactured
goods; (ii) customs duties and other import taxes on imported goods, and sales
and similar taxes on. domestically-supplied goods, shall be excluded; and (iii) the
cost to the Borrower of inland freight and other expenditures incidental to the
delivery of goods to the place of their use or installation shall be included.
(a) All bidding docaments for the procurement of goods shall clearly
indicate any preference which will be granted, the information required to establish
the eligibility of a bid for such preference and the following methods and stages
that will be followed in the evaluation and comparison of bids.
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(c) All evaluated bids in each group shall be first compared among
themselves, excluding any customs duties and other import taxes on goods to be
imported and any sales or similar taxes on goods to be supplied domestically, to
determine the lowest evaluated bid of each group. The lowest evaluated bid of
each group shall then be compared with each other, and if, as a result of this
comparison, a bid from group A or group B is the lowest, it shall be selected
for the award.
(d) If, as a result of the comparison under paragraph (c) above, the lowest
bid is a bid from group C, all group C bids shall be further compared with the
lowest evaluated bid from group A after adding to the c.i.f. bid price of the
imported goods offered in each group C bid, for the purpose of this further
comparison only, an amount equal to (i) the amount of customs duties and other
import taxes which a non-exempt importer would have to pay for the importation
of the goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of
such goods if said customs duties and taxes exceed 15% of such price. If the group
A bid in such further comparison is the lowest, it shall be selected for the award;
if not, the lowest evaluated bid from group C shall be selected.
(a) The Borrower shall furnish to the Bank, in sufficient time for its
comments, but not being later than the date upon which invitations to bid are
issued, the text of the invitations to bid and the specifications and other bidding
documents, and shall make such modifications in the said documents or procedures
as the Bank shall reasonably request. Any further modification to the bidding
documents shall require the Bank's concurrence before it is issued to the prospective
bidders.
(b) After bids have been received and evaluated, the Borrower shall, before
a final decision on the award is made, inform the Bank of the name of the bidder
to which it intends to award the contract and the reasons for the intended award
and shall furnish to the Bank, in sufficient time for its review, a detailed report
on the evaluation and comparison of the bids received, together with the
recommendation for award and such other information as the Bank shall reasonably
request. The Bank shall, if it determines that the intended award would be
inconsistent with the Guidelines or this Schedule, promptly inform the Borrower
and state the reasons for such determination.
(c) The terms and conditions of the contract shall not, without the Bank's
concurrence, materially differ from those on which bids were asked or
prequalification invited.
(d) Two conformed copies of the contract shall be furnished to the Bank
promptly after its execution and prior to the submission to the Bank of the first
application for withdrawal of funds from the Loan Account in respect of such
contract.