Loan Agreement Between the Republic of Vanuatu and the Asian Development Bank (Ratification) Act 1988

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THE LOAN AGREEMENT BETWEEN THE REPUBLIC OF VANUATU AND THE ASIAN DEVELOPMENT BANK (RATIFICATION) ACT
No. 2 OF 1988

To provide for the ratification of the Loan Agreement made between the Republic of Vanuatu and the Asian Development Bank signed on the 19th day of February, 1988.

1. (1) The Loan Agreement made between the Republic of Vanuatu and the Asian Development Bank signed on the 19th day of February, 1988 which is set out in the Schedule hereto is hereby approved and ratified.

(2) The Agreement referred to in subsection (1) shall be binding on the Republic of Vanuatu in accordance with the terms thereof.

2. This Act shall come into force on the date of its publication in the Gazette.

LOAN AGREEMENT dated 19 February 1980 between REPUBLIC OF VANUATU (hereinafter called the Borrower) and ASIAN DEVELOPMENT BANK (hereinafter called the Bank).

(A) the Borrower has applied to the Bank for a loan for the purposes of the Project described in Schedule 1 to this Loan Agreement;

(B) the Borrower has also applied to the Bank for technical assistance for the institutional strengthening of the Public Works Department, of the Ministry of Transport, Tourism, Public Works and Water Supply of the Borrower, and by an agreement of even date herewith between the Government of the Borrower and the Bank (hereinafter called the Technical Assistance Agreement), the Bank has agreed to provide a technical assistance grant for these purposes up to the equivalent of three hundred twenty five thousand dollars ($325,000); and

(C) the Bank has agreed to make a loan to the Borrower from the Bank's special funds resources upon the terms and conditions hereinafter set forth;

Section 1.01. All the provisions of the Special Operations Loan Regulations of the Bank, dated 7 December 1982, are hereby made applicable to this Loan Agreement with the same force and effect as if they were fully set forth herein (said Special Operations Loan Regulations being hereinafter called the Loan Regulations).

Section 1.02. Wherever used in this Loan Agreement, unless the context otherwise requires, the several terms defined in the Loan Regulations have the respective meanings therein set forth, and the following additional terms have the following meanings:

(a) "MTTPW" means the Ministry of Transport, Tourism, Public Works and Water Supply of the Borrower, and includes any successor thereto;

(b) "PMD" means the Ports and Marine Department of MTTPW, and includes any successor thereto;

(d) "Project Executing Agency" for the purposes of, and within the meaning of, the Loan Regulations means PWD, which is responsible for the carrying out of the Project; and

(e) "Project facilities" means the facilities provided or to be provided under the Project.

Section 2.01. The Bank agrees to lend to the Borrower from the Bank’s Special Funds resources an amount in various currencies equivalent to four million four hundred fifty thousand Special Drawing Rights (SDR 4,450,000).

Section 2.02. The Borrower shall pay to the Bank a service charge at the rate of one per cent (1%) per annum on the amount of the Loan withdrawn from the Loan Account and outstanding from time to time.

Section 2.03. For any special commitment entered into by the Bank at the request of the Borrower pursuant to Section 5.02 of the Loan Regulations, the Borrower shall pay to the Bank a fee at the rate of one-half of one per cent (0.5%) per annum on the principal amount of such special commitment outstanding from time to time.

Section 2.04. The service charge and any other charge on the Loan shall be payable semi-annually on 15 March and 15 September in each year.

Section 2.05. The Borrower shall repay the principal amount of the Loan withdrawn from the Loan Account in accordance with the amortization schedule set forth in Schedule 2 to this Loan Agreement.

Section 3.01. The Borrower shall cause the proceeds of the Loan to be applied to the financing of expenditures on the Project in accordance with the provisions of this Loan Agreement.

Section 3.02. The goods and services and other items of expenditure to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan among different categories of such goods and services and other items of expenditure shall be in accordance with the provisions of Schedule 3 to this Loan Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank.

Section 3.03. Except as the Borrower and the Bank shall otherwise agree, all goods and services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 and Schedule 5 to this Loan Agreement.

Section 3.04. Except as the Borrower and 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 in the carrying out of the Project.

Section 3.05. Withdrawals from the Loan Account shall be made only on account of expenditures relating to goods and services which:

(i) are produced in, or are supplied from, such member countries of the Bank as shall have been specified by the Bank from time to time as eligible sources for procurement, and

(ii) meet such gather eligibility requirements as shall have been specified by the Bank from time to time.

Section 3.06. The closing date for withdrawals from the Loan Account for the purpose of Section 8.03 of the Loan Regulations shall be 30 June 1991 or such other date as may from time to time be agreed between the Borrower and the Bank.

Section 4.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound administrative, financial, engineering and port management practices.

(b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to this Loan Agreement.

Section 4.02. The Borrower shall make available, promptly as needed, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project and for the operation and maintenance of the Project facilities.

Section 4.03. (a) In the carrying out of the project, the Borrower shall cause competent and qualified consultants and contractors acceptable to the Borrower and the Bank, to be employed to an extent and upon terms and conditions satisfactory to the Borrower and the Bank.

(b) The Borrower shall cause the Project to be carried out in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to the Borrower and the Bank. The Borrower shall furnish, or cause to be furnished, to the Bank, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as the Bank shall reasonably request.

Section 4.04. The borrower shall ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.

Section 4.05. (a) The Borrower shall make arrangements satisfactory to the Bank for insurance of the Project facilities to such extent and against such risks and in such amount as shall be consistent with sound practice.

(b) Without limiting the generality of the foregoing, the Borrower undertakes to insure, or cause to be insured, the goods to be imported for the Project and to be financed out of the proceeds of the Loan 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 payable in a currency freely usable to replace or repair such goods.

Section 4.06. (a) The Borrower shall maintain, or cause to be maintained, records and accounts adequate to identify the goods and services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting practices, the operations end financial condition (to the extent relevant to the Project) of PWD, PMD and any other agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof.

(ii) have such accounts and related financial statement audited annually, in accordance with sound auditing standards, by auditors acceptable to the Bank;

(iii) furnish to the Bank, as soon as available, but in any event not later than six (6) months after the end of each related fiscal year, unaudited copies of such accounts and financial statements, and not later than nine (9) months after the end of each related fiscal year, certified copies of such audited financial statements and the report of the auditors relating thereto, all in the English languages; and

(iv) furnish to the Bank such other information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request.

(c) The Borrower shall enable the Bank, upon the Bank's request, to discuss the Borrower's financial statements and its financial affairs relevant to the Project from time to time with the Borrower's auditors, and shall authorise and require any representative of such auditors to participate in any such discussions requested by the Bank, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree.

Section 4.07. (a) The Borrower shall furnish, or cause to be furnished, to the Bank all such reports and information as the Bank shall reasonably request concerning:

(i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof;

(iv) to the extent relevant to the Project, the administration, operations and financial condition of PWD, PMD and any other agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof:

(v) financial and economic conditions in the territory of the Borrower and the international balance-of-payments position of the Borrowers; and

(b) Without limiting the generality of the foregoing, the Borrower shall furnish, or cause to be furnished, to the Bank quarterly reports on the carrying out of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as the Bank shall reasonably request and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and the proposed program of activities and expected progress during the following quarter.

(c) Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, in such form and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the Borrower of its obligations under the Loan Agreement and the Accomplishment of the purposes of the Loan.

Section 4.08. The Borrower shall enable the Bank’s representatives to inspect the Project, the goods financed out of the proceeds of the Loan, and any relevant records and documents.

Section 4.09. The Borrower shall ensure that the Project facilities are operated, maintained and repaired in accordance with sound administrative, financial, engineering and maintenance and operational practices.

Section 4.10. (a) It is the mutual intention of the Borrower and the Bank that no other external debt owed a creditor other than the Bank shall have any priority over the Loan by way of a lien on the assets of the Borrower. To that end, 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 external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and service charge and any other charge on, the Loan and that the Borrower in creating or permitting the creation of any such lien, will make express provision to that effect.

(i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; or

(ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date.

(c) The term "assets of the Borrower" as used in paragraph (a) of this Section includes assets of any political agency of any such political subdivision, including the Central Bank of Vanuatu and any other institution performing the functions of a central bank for the Borrower.

Section 5.01. The following is specified as an additional event for suspension of the right of the Borrower to make withdrawals from the Loan Account for the purposes of Section 8.02(1) of the Loan Regulations: the Government of the Borrower shall have failed to perform any of its obligations under the Technical Assistance Agreement.

Section 5.02. The following is specified as an additional event for acceleration of maturity for the purposes of Section 8.07(d) of the Loan Regulations: the event specified in Section 5.01 of this Loan Agreement shall have occurred.

Section 6.01. The following are specified as additional conditions to the effectiveness of this Loan Agreement for the purposes of Section 9.01 (f) of the Loan Regulations:

(a) the Technical Assistance Agreement shall have been duly authorized or ratified by, and executed and delivered on behalf of, the Government of the Borrower and shall be legally binding upon the Government in accordance with its terms; and

(b) the Project Management office shall have been established, as provided in paragraph 2 of Schedule 6 to this Loan Agreement.

Section 6.02. The following is specified as an additional matter, for the purposes of Section 9.02(d) of the Loan Regulations, to be included in the opinion or opinions to be furnished to the Bank: that the Technical Assistance Agreement has been duly authorised or ratified by, and executed and delivered on behalf of, the Government of the Borrower and is legally binding upon the Government in accordance with its terms, subject only to the effectiveness of this Loan Agreement.

Section 6.03. A date ninety (90) days after the date of this Loan Agreement is specified for the effectiveness of the Loan Agreement for the purposes of Section 9.04 of the Loan Regulations.

Section 7.01. The Minister of Finance and Housing of the Borrower is designated as representative of the Borrower for the purposes of Section 11.02 of the Loan Regulations.

Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the Loan Regulations:

IN WITNESS WHEREOF the parties hereto, acting through their representatives their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respective names as of the day and year first above written.

1. The primary objective of the Project is to provide a new overseas wharf for Santo Port. The Project consists of the following components:

(i) Overseas Wharf: construction of a new earthquake resistant wharf 130 meters in length with a reinforced concrete deck suspended on a steel pipe pile structure, including a revetment mattress for erosion prevention, and reclamation and paving of the back-up area;

(ii) Ancillary Worker provision of necessary ancillary facilities, including improvements to drainage and extension of water pipes for fire fighting facilities; provision of lighting, security fencing and gates; provision of dangerous goods storage facilities; provision of eight reefer slots for refrigerated containers; basic refendering of about 30 meters of the existing overseas wharf; and relocation of the existing weighbridge and provision of an additional weighbridge; and

(iii) Consultant Services: provision of consultant services for the evaluation of tenders and construction supervision.

Date Payment due		Payment of Principal
		(expressed in Special Drawing Rights)*

15 March 1998		SDR	44,500
15 September 1998		44,500
15 March 1999		44,500
15 September 1999		44,500
15 March 2000		44,500
15 September 2000		44,500
15 March 2001		44,500
15 September 2001		44,500
15 March 2002		44,500
15 September 2002		44,500
15 March 2003		44,500
15 September 2003		44,500
15 March 2004		44,500
15 September 2004		44,500
15 March 2005		44,500
15 September 2005		44,500
15 March 2006		44,500
15 September 2006		44,500
15 March 2007		44,500
15 September 2007		44,500
15 March 2008		89,000
15 September 2008		89,000
15 March 2009		89,000
15 September 2009		89,000
15 March 2010		89,000
15 September 2010		89,000
15 March 2011		89,000
15 September 2011		89,000
15 March 2012		89,000
15 September 2012		89,000
15 March 2013		89,000
15 September 2013		89,000
15 March 2014		89,000
15 September 2014		89,000
15 March 2015		89,000
15 September 2015		89,000
15 March 2016		89,000
15 September 2016		89,000
15 March 2017		89,000
15 September 2017		89,000
15 March 2018		89,000
15 September 2018		89,000
15 March 2019		89,000
15 September 2019		89,000
15 March 2020		89,000
15 September 2020		89,000
15 March 2021		89,000
15 September 2021		89,000
15 March 2022		89,000
15 September 2022		89,000
15 March 2023		89,000
15 September 2023		89,000
15 March 2024		89,000
15 September 2024		89,000
15 March 2025		89,000
15 September 2025		89,000
15 March 2026		89,000
15 September 2026		89,000
15 March 2027		89,000
15 September 2027		89,000

	Total	SDR 4,450,000

*The figures in this column represent SDR equivalents determined as of the respective dates of withdrawal. The arrangements for payment of each maturity are subject to the provisions of sections 3.04 and 4.03 of the Loan Regulations.

1. The table attached hereto sets forth the categories of goods, services and other items to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan to each category.

2. Except as provided in this Schedule or as the Bank may otherwise agree, no withdrawals from the Loan Account shall be made in respect of any local expenditures on the Project.

3. With respect to the civil works included in Category I, the amount of SDR 2,913,000 allocated to Category I represents the presently estimated foreign currency cost of such works. Such amount is equivalent to about 69% of the presently estimated total cost of such civil works. For the purpose of withdrawals from the Loan Account in respect of such works, the figure of 69% shall apply to Category I.

4. With respect to the consultant services included in Category II, the amount of SDR269, 000 allocated to Category II represents the presently estimated foreign currency cost of such services. Such amount is equivalent to about 89% of the presently estimated total cost of such consultant services. For the purpose of withdrawals from the Loan Account in respect of such services, the figure of 89% shall apply to Category II.

5. The amount of SDR616, 000 allocated to Category III is for financing local expenditures for civil works. Such amount may be withdrawn from the Loan Account in foreign currency on the basis of 15% of each payment for expenditures for civil works, subject to the maximum amount of SDR616, 000.

6. The Bank shall be entitled to withdraw from the Account and pay to itself, on behalf of the Borrower, the amounts required to meet payments, when due, of service charge on the Loan during the construction period of the Project.

7. Notwithstanding the allocation of Loan proceeds and the withdrawal percentages set forth above:

(a) if the amount of the Loan then allocated to any Category (other than Category III) appears to be insufficient to finance all agreed expenditures in that Category, the Bank may, by notice to the borrower, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amounts of the Loan which have been allocated to another Category but, in the Opinion of the Bank, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures there under shall have been made;

(b) if the amount of the Loan then allocated to any Category appears to exceed all agreed expenditures in that Category, the Bank may, by notice to the Borrower, reallocate such excess amount to any other Category (other than Category III as required.

1. Except as the Bank may otherwise agree, the procedures set forth in the following paragraphs of this Schedule shall apply in the procurement of goods and services to be financed out of the proceeds of the loan. The term "services" in this Schedule does not include consulting services.

2. Procurement of goods and services shall be subject to the provisions of the "Guidelines for Procurement under Asian Development Bank Loans" dated May 1981, as amended from time to time, which have been furnished to the Borrower.

3. Procurement of goods and services shall be made without any restriction against, or preference for, any particular supplier or contractor or any particular class of suppliers or contractors.

4. (a) The single civil works contract combining both the construction of the overseas wharf and the ancillary works described in Schedule I to this Loan Agreement shall be awarded on the basis of international competitive bidding as described in Chapter II of the Guidelines for Procurement. Bidders for the civil works contract shall be prequalified before bidding.

(b) For the civil works contract, there shall be submitted to the Bank, as soon as possible, and in any event not later than 90 days before the issuance of either the first prequalification invitation or the first invitation to bid for the Project, a General Procurement Notice (which the Bank will arrange to publish separately) in such form and detail and containing such information as the Bank shall reasonably request.

(c) Procurement actions shall be subject to review by the Bank in accordance with the procedures set forth in Chapter IV of the Guidelines for Procurement. The draft invitation to bid, to be submitted to the Bank for approval under such procedures, shall reach the Bank at least 21 days before it is issued and shall contain such information as the Bank shall reasonably request to enable the Bank to arrange for the separate publication of such invitation.

1. The services of consultants shall be utilized in the carrying out of the Project, particularly with regard to:

The terms of reference of the consultants shall be as determined by agreement between the Bank and the Borrower.

2. The selection, engagement and services of the consultants shall be subject to the provisions of this Schedule and the provisions of the "Guidelines on the Use of Consultants by Asian Development Bank and Its Borrowers" dated April 1979, as amended from time to time, which have been furnished to the Borrower.

(b) Except as the Bank may other wise agree, the negotiation of the contract with the above-mentioned consultants shall be concluded within 90 days after the date of the Loan Agreement. If such contract cannot be successfully negotiated within such period, other consultants shall be engaged by PWD in accordance with the provisions of the Bank’s "Guidelines on the Use of Consultants" and such supplementary procedures as may be determined by the Bank.

1. PWD shall be the Executing Agency for the Project and shall be responsible for overall Project implementation.

2. Prior to the Effective Date of this Loan Agreement, a Project Management Office (PMO) shall be established within PWD under the supervision of the Director of PWD. The PMO shall be responsible for the day-to-day implementation of the Project and the coordination of Project activities, including planning, procurement, monitoring of construction and installation, liasing with consultants, maintenance of records and accounts, preparation of reports and liaising with the Bank. PWD shall appoint a Project Manager satisfactory to the Bank to supervise the activities of the PMO on a full-time basis. The Project Manager shall be supported by such technical and administrative staff as may be necessary for the successful implementation of the Project, including at least one full-time technical assistant.

3. The Borrower shall carry out an Action Plan as agreed upon with the Bank to improve the financial performance of Santo Port. The borrower shall take necessary measures (including adjustments to the structure and rates of port tariffs, as required) in a timely manner to achieve the financial targets set out in the Action Plan in accordance with the schedule set forth in the Action Plan.

4. (a) Except as the Bank may otherwise agree, for each of the fiscal years after the fiscal year ending on 31 December 1987, the Borrower shall ensure that Santo Port maintains its financial performance at least at levels which are sufficient to achieve the financial targets agreed upon in the Action Plan, on a national basis, including the following operating ratios;

(i) The term "operating ratio" shall be calculated by dividing "total operating expenses" by "total operating revenues".

(ii) The term "total operating expenses" means all expenses related to the operations of Santo Port, including administration, adequate maintenance and depreciation on assets. Depreciation on assets shall be calculated in accordance with the provisions of the Action Plan.

(iii) The term "total operating revenues" means revenues from all sources related to the operations of Santo Port.

(c) The above operating ratios shall be reviewed as necessary from time to time between the Borrower and the Bank to take account of any changes in policies or events affecting the operations of Santo Port.

5. The Borrower shall ensure that all land, rights in land, and other rights and privileges required for the Project are promptly acquired or otherwise made available so as to avoid any delay in Project implementation.

6. PMD shall be responsible for the proper operation and maintenance of the Project facilities. Without limiting the generality of Section 4.02 of this Loan Agreement, the Borrower shall make available through its annual budgetary process, promptly as needed, any funds required by PMD for Project operations and maintenance. The Borrower shall also appoint in a timely manner all staff, including professional, technical and supporting staff, as may be required for the operation and maintenance of the Project facilities.

7. The PMO shall be responsible for maintaining the financial records, accounts and reports required under Section 4.06 of this Loan Agreement and PMD shall maintain the records and accounts required under the Action Plan. If any of the financial statements or projections to be produced by PMD under the Action Plan indicate that Santo Port will not meet the financial targets described in the Action Plan or in paragraph 4 of this Schedule, the Borrower shall promptly furnish to the Bank a written report summarizing the necessary measures to be taken in order to meet such financial targets.

8. Without limiting the generality of the Borrower’s obligations under Section 4.02 of this Loan Agreement, the Borrower shall ensure that allocations adequate to cover all local currency costs of the Project which are not financial under the Loan are included on a timely basis in the national budgets, beginning with the national budget for the 1988 fiscal year.

9. The Borrower shall ensure that adequate attention is given to minimizing any adverse environmental effects of the Project. Provisions to this effect shall be included in tender specifications for construction of the Project facilities.

Category	Amount Allocated (SDR Equivalent)
I. Civil Works	SDR 2,913,000
II. Consultant Services	269,000
III. Local Expenditures for Civil Works	616,000
IV. Service Charge During Construction	63,000
V. Unallocated	589,000
Total	SDR 4,450,000

1988	1989	1990 onwards
85%	75%	70%

Vanuatu Sessional Legislation

Loan Agreement Between the Republic of Vanuatu and the Asian Development Bank (Ratification) Act 1988