OFFICIAL CREDIT NUMBER 1601 GR

D0CUMENTS

Project Agreement(Road Rehabilitation and Maintenance Project)

between

INTERNATIONAL DEVELOPMENT ASSOCIATION

and

BANK FOR HOUSING AND CONSTRUCTION

Dated , 1985

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CREDIT NUMBER 1601 GH

PROJECT AGREEMENT

AGREEMENT, dated k , 1985, betweenthe INTERNATIONAL DEV PMENT ASSOCIATION (the Association) andBANK FOR HOUSING AND CONSTRUCTION (BHC).

WHEREAS (A) by the Development Credit Agreement of even dateherewith between the Republic of Ghana (the Borrower) and theAssociation, the Association has agreed to lend to the Borroweran amount in various currencies equivalent to forty million fourhundred thousand Special Drawing Rights (SDR 40,400,000), on theterms and conditions set forth in the Development Credit Agree-ment, but only on condition that BHC agree to undertake suchobligations toward the Association as are set forth in thisAgreement;

(B) by a subsidiary loan agreement to be entered intobetween the Borrower and BHC, part of the proceeds of the creditprovided for under the Development Credit Agreement will be madeavailable to BHC on terms and conditions set forth in saidSubsidiary Loan Agreement; and

WHEREAS BHC, in consideration of the Association's enteringinto the Development Credit Agreement with the Borrower, hasagreed 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, theseveral terms defined in the Development Credit Agreement and inthe General Conditions (as so defined) have the respectivemeanings therein set forth.

ARTICLE II

Execution of the Project;

Management and Operations of BHC

Section 2.01. BHC declares its commitment to the objectivesof the Project as set forth in Schedule 2 to the DevelopmentCredit Agreement and, to this end, shall carry out Part C of the

-2-

Project in close cooperation with GHA and PMU and conduct itsoperations and affairs with due diligence and efficiency and inconformity with appropriate economic, financial and investmentstandards and practices, with qualified and experienced manage-ment and in accordance with its Decree and By-laws, and shallprovide, or cause to be provided, promptly as needed, the funds,facilities, services and other resources required for Part C ofthe Project.

Section 2.02. (a) In accordance with and subject to theprovisions of the Development Credit Agreement, BHC shall submitInvestment Projects to the Association for approval or for autho-rization for withdrawals to be made from the Credit Account.

(b) When presenting an Investment Project (other than afree-limit Investment Project) to the Association for approval,BHC shall furnish to the Association an application, in formsatisfactory to the Association, together with: (i) a descriptionof the Investment Enterprise (including an analysis of theoperational performance, management, and financial position inaccordance with guidelines satisfactory to the Association) andan appraisal of the Investment Project, including a descriptionof the expenditures proposed to be financed out of the proceedsof the Credit; (ii) the proposed terms and conditions of the loanto the Investment Enterprise, including the schedule of amortiza-tion of said loan; and (iii) such other information as the Asso-ciation shall reasonably request.

(c) Each request by BHC for authorization to make with-drawals from the Credit Account in respect of a free-limitInvestment Project shall contain: (i) a summary description ofthe Investment Enterprise and the Investment Project, including adescription of the expenditures proposed to be financed out ofthe proceeds of the Credit; and (ii) the terms and conditions ofthe loan to the Investment Enterprise, including the schedule ofamortization therefor.

(d) Except as the Association and BHC shall otherwiseagree, applications and requests made pursuant to the provisionsof paragraph (b) or (c) of this Section shall be presented to theAssociation on or before December 31, 1989.

Section 2.03. (a) BHC undertakes that unless the Associationshall otherwise agree, any loans on account of InvestmentProjects will be made on terms whereby BHC shall obtain, by

-3-

written agreement or other appropriate legal means, rightsadequate to protect the interests of the Association and of BHC,including the rights set forth in Schedule 1 to this Agreement.

(b) BHC shall exercise its rights in relation to eachInvestment Project in such manner as to: (i) protect theinterests of the Association and of BHC; (ii) comply with itsobligations under this Agreement and the Subsidiary LoanAgreement; and (iii) achieve the purposes of the Project.

Section 2.04. Except as the Association shall otherwiseagree, procurement of the goods and consultants' servicesrequired for Part C of the Project and to be financed out of theproceeds of the Credit shall be governed by the provisions ofSchedule 3 to the Development Credit Agreement.

Section 2.05. BHC shall carry out the obligations set forthin Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the GeneralConditions (relating to insurance, use of goods and services,plans and schedules, records and reports, maintenance and landacquisition) in respect of the BHC Project Agreement and Part Cof the Project.

Section 2.06. BHC shall duly perform all its obligationsunder the Subsidiary Loan Agreement. Except as the Associationshall otherwise agree, BHC shall not take or concur in any actionwhich would have the effect of assigning, amending, abrogating orwaiving the Subsidiary Loan Agreement or any provision thereof.

Section 2.07. (a) BHC shall, at the request of the Associa-tion, exchange views with the Association with regard to theprogress of the Project, the performance of its obligations underthis Agreement and under the Subsidiary Loan Agreement, and othermatters relating to the purposes of the Credit.

(b) BHC shall furnish to the Association all such informa-tion as the Association shall reasonably request concerning theexpenditure of the proceeds of the loans to InvestmentEnterprises, the Investment Enterprises, the Investment Projects,and the administration, operations and financial condition ofBHC.

(c) BHC shall promptly inform the Association of anycondition which interferes or threatens to interfere with theprogress of Part C of the Project, the accomplishment of the

-4-

purposes of the Credit, or the performance by BHC of its

obligations under this Agreement and under the Subsidiary LoanAgreement.

Section 2.08. BHC shall duly perform all its obligations in

agreements under which funds have been lent or otherwise put atthe disposal of BHC by the Borrower or its agencies or others forrelending, investment or management. BHC shall promptly inform

the Association of any action which would have the effect ofassigning, or of amending, abrogating or waiving any materialprovision of, any such agreement.

Section 2.09. BHC shall cause each of its Subsidiaries (if

any) to observe and perform the obligations of BHC under thisAgreement to the extent to which such obligations may be made

applicable thereto as though such obligations were binding upon

each of such Subsidiaries.

Section 2.10. BHC shall not amend its Decree or By-laws

except in agreement with the Association, and shall exchange

views with the Association on any proposal to modify its Decreeor By-laws.

Section 2.11. Except as the Association shall otherwise

agree, BHC: (i) shall not sell, lease, transfer or otherwise

dispose of any of its property or assets, except in the ordinarycourse of business; and (ii) shall take all action necessary tomaintain its corporate existence and right to carry on its opera-

tions and to acquire, maintain and renew all rights, powers,

privileges and franchises necessary or useful in the conduct ofits business.

Section 2.12. BHC shall cause Plant Pool to make availableto GHA, DFR and contractors and quarry operators for the purposes

of the Project equipment and materials financed out of the

proceeds of the Credit through sale or hire on terms acceptableto the Association.

Section 2.13. BHC shall, and shall cause Plant Pool to, take

out and maintain with responsible insurers insurance against such

risks and in such amounts as shall be consistent with appropriate

practice, including reinsurance abroad for warehoused spare parts

so as to ensure that any indemnity shall be payable in a freelyusable currency.

5-

Section 2.14. BHC shall, in cooperation with the Borrower:(i) adopt an action program acceptable to the Association bySeptember 30, 1985 for strengthening its financial condition andoperational and financial management capabilities; and (ii)thereafter carry out such action program with due diligence andefficiency.

Article III

Financial Covenants

Section 3.01. (a) BHC shall maintain procedures and recordsadequate to monitor and record the progress of Part C of theProject and of each Investment Project (including its cost andthe benefits to be derived from it) and to reflect in accordancewith consistently maintained sound accounting practices theoperations and financial condition of BHC, including, withoutlimitation to the foregoing, separate accounts reflecting theoperations, resources and expenditures in respect of Part C ofthe Project, and shall enable the Association's representativesto examine such records.

(b) BHC shall:

(i) have its accounts and financial statements(balance sheets, statements of income and expensesand related statements) for each fiscal yearaudited, in accordance with appropriate auditingprinciples consistently applied, by independentauditors acceptable to the Association;

(ii) furnish to the Association, as soon as availablebut in any case not later than four months afterthe end of each such year, (A) certified copies ofits financial statements for such year as soaudited (including copies of Management/InternalControl Letters); and (B) the report of such auditby said auditors, of such scope and in such formatand detail as the Association shall have reason-ably requested; and

(iii) furnish to the Association such other informationconcerning said accounts and financial statementsas well as the audit thereof and said records asthe Association shall from time to time reasonablyrequest.

-6-

(c) For all expenditures with respect to which withdrawalsare requested from the Credit Account on the basis of statementsof expenditure, BHC shall, and shall cause Plant Pool to:

(i) maintain, in accordance with paragraph (a) of this

Section, separate records and accounts reflectingsuch expenditures;

(ii) retain, until one year after the Closing Date, allrecords (contracts, orders, invoices, bills,receipts and other documents) evidencing suchexpenditures;

(iii) enable the Association's representatives toexamine such records; and

(iv) ensure that such separate accounts are included inthe annual audit referred to in paragraph (b) ofthis Section and that the report thereof contains,in respect of such separate accounts, a separateopinion by the said auditors as to whether theproceeds of the Credit withdrawn in respect ofsuch expenditures have been used for the purposefor which they were provided.

Section 3.02. Except as the Association shall otherwise

agree, BHC shall not make any repayment in advance of maturity inrespect of any of its debt which, in the judgment of the Associa-

tion, would materially affect BHC's ability to meet its financialobligations.

Section 3.03. BHC shall take such steps satisfactory to the

Association as shall be necessary to protect itself against riskof loss resulting from changes in the rates of exchange betweenthe various currencies (including Cedis) used in its lending andborrowing operations.

Section 3.04. (a) Except as the Association shall otherwiseagree, BHC shall not incur any debt, if after the incurrence ofsuch debt the ratio of debt to equity shall be greater than

10 to 1.

(b) For purposes of this Section:

- 7 -

(i) The term "debt" means any indebtedness of BHCmaturing by its terms more than one year after thedate on which it is originally incurred.

(ii) Debt shall be deemed to be incurred: (A) under aloan contract or agreement or other instrumentproviding for such debt or for the modification ofits terms of payment, on the date, and to theextent, the amount of such debt has become out-standing pursuant to such contract, agreement orinstrument; and (B) under a guarantee agreement,on the date the agreement providing for such gua-rantee has been entered into but only to theextent that the guaranteed debt is outstanding.

(iii) The term "equity" means the sum of the totalunimpaired paid-up capital, quasi equity, retainedearnings and reserves of BHC not allocated tocover specific liabilities.

(iv) The term "quasi equity" means the specialassistance provided to BHC by the Bank of Ghanapursuant to the special assistance agreementreferred to in the letter dated March 4, 1985 bythe Bank of Ghana to the World Bank, or anysimilar arrangement.

(v) Whenever for the purposes of this Section it shallbe necessary to value, in Cedis, debt payable inanother currency, such valuation shall be made onthe basis of the prevailing lawful rate ofexchange at which such other currency is, at thetime of such valuation, obtainable for the pur-poses of servicing such debt, or, in the absenceof such rate, on the basis of a rate of exchangeacceptable to the Association.

ARTICLE IV

Effective Date; TerminationCancellation and Suspension

Section 4.01. This Agreement shall come into force andeffect on the date upon which the Development Credit Agreementbecomes effective.

-8-

Section 4.02. (a) This Agreement and all obligations of theAssociation and of BHC thereunder shall terminate on the earlierof the following two dates:

(i) the date on which the Development Credit Agreementshall terminate; or

(ii) a date 12 years after the date of this Agreement.

(b) If the Development Credit Agreement terminates beforethe date specified in paragraph (a) (ii) of this Section, theAssociation shall promptly notify BHC of this event.

Section. 4.03. All the provisions of this Agreement shallcontinue in full force and effect notwithstanding any cancella-tion or suspension under the General Conditions.

ARTICLE V

Miscellaneous Provisions

Section 5.01. Any notice or request required or permitted tobe given or made under this Agreement and any agreement betweenthe parties contemplated by this Agreement rhall be in writing.Such notice or request shall be deemed to have been duly given ormade when it shall be deliVered by hand or by mail, telegram,cable, telex or radiogram to the party to which it is required orpermitted to be given or made at such party's address hereinafterspecified or at such other addresses as such party shall havedesignated by notice to the party giving such notice or makingsuch request. The addresses so specified are:

For the Association:

International Development Association1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address: Telex:

INDEVAS 440098 (ITT)Washington, D.C. 248423 (RCA) or

64145 (WUI)

-9-

For BHC:

Bank for Housing and ConstructionP. 0. Box M

AccraGhana

Cable address Telex:

BANKHOUSE 2096

Accra

Section 5.02. Any action required or permitted to be taken,

and any documents required or permitted to be executed, under

this Agreement on behalf of BHC, may be taken or executed by its

Managing Director, or by such other person or persons as BHC

shall designate in writing, and BHC shall furnish to the

Association 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 b,xt 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 ~ 4 ~ o aRegional Vice President

Western Africa

BANK FOR HOUSING AND CONSTRUCTION

ByAuthorized Representative

- 10 -

SCHEDULE I

Loans on Account of Investment Projects

A. Terms and Conditions of Loans on Account of Investment

Projects

1. Loans to Investment Enterprises will include, inter alia,the following terms and conditions:

(i) Repayment

(a) The repayment period is not to exceed 12 years,including a grace period not exceeding 2 years.

(b) The amortization schedule applicable to each loanwill provide for a grace period of not more than3 years.

(c) Investment Enterprises shall carry the foreignexchange risk..

(d) No loan may be repaid in advance of maturityduring the first two years of the term of suchloan.

(ii) Interest Rate

Interest on the principal amount of each loan outstandingfrom time to time will be parable at a rate of 20% per annum,which rate shall be subject to review and modifir!ation from timeto time upon agreement between the Borrower, BHC and theAssociation.

(iii) Other Conditions

(a) A commitment fee of not more than one per cent perannum may be charged to Investment Enterprises byBHC on the undisbursed principal amount of eachloan.

(b) Equipment and materials financed by BHC shall onlybe used for the purposes of the Project.

- 11 -

2. Except as the Association shall otherwise agree, BHC shallobtain, inter alia, in respect of loans to Investment Enterprisesthe right to:

(a) require the Investment Enterprise to carry out andoperate the Investment Project with due diligence and efficiencyand in accordance with sound technical, financial and managerialstandards and to maintain adequate records;

(b) inspect, by itself or jointly with representatives ofthe Association i the Association shall so request, such goods,works, and construction included in the Investment Project, theoperation thereof, and any relevant records and documents;

(c) obtain all such information as the Association or theBorrower shall reasonably request relating to the foregoing andto the administration, operations and financial condition of theInvestment Enterprise and to the benefits to be derived from theInvestment Project; and

(d) suspend or terminate the right of the Investment Enter-prise to the use of the proceeds of the Credit upon failure bysuch Investment Enterprise to perform its obligations under itsagreement with BHC.

B. Plant Pool

BHC shall cause Plant Pool to obtain, as a condition ofloans for Investment Projects, insurance for warehoused spareparts against such risks and in such amounts as shall beconsistent with appropriate practice, including reinsuranceabroad so as to ensure that any indemnity shall be payable in afreely usable currency to replace or repair such goods.

INTERNATIONAL DEVELOPMENT ASSOCIATION

CERTIFICATE

I hereby certify that the foregoing is a true

copy of the original in the archives of the Interne-

tional Development Association.

In witness whereof I have signed this Certifi-

cate and affixed the Seal of the Association

thereunto the day of

198 S

FOR SECRETARY