Tunisia - First Urban Sewerage Project : Loan 1088 - Project Agreement - 2 - Conformed

CONFORMED COPY LOAN NUMBER 1088 TUN Project Agreement (First Urban Sewerage Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND OFFICE NATIONAL DE L'ASSAINISSEMENT DATED FEBRUARY 18, 1975 CONFORMED COPY LOAN NUMBER 1088 TUN Project Agreement (First Urban Sewerage Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND OFFICE NATIONAL DE L'ASSAINISSEMENT DATED FEBRUARY 18, 1975 PROJECT AGREEMENT AGREEMENT, dated February 18, 1975, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and OFFICE NATIONAL DE L'ASSAINISSEMENT (hereinafter called ONAS). WHEREAS ONAS is an tablissement public a caract re industriel et commercial established and operating in accordance with the Borrower's Law No. 74-73, dated August 3, 1974; WHEREAS by the Loan Agreement of even date herewith between Republic of Tunisia (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to twenty-eight million dollars ($28,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that ONAS agree tb undertake such obligations toward the Bank as hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and ONAS, a portion of the proceeds of the loan provided for under the Loan Agreement will be made available to ONAS on the terms and conditions therein set forth; and WHEREAS ONAS, in consideration of the Bank's entering into the Loan Agreement with the Borrwer, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan 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. ONAS shall carry out Parts A through G of the Project described in Schedule 2 to the Loan Agreement with due diligence and efficiency 90 4 and in conformity with appropriate administrative, financial, engineering and public utility practices. Section 2.02. In order to assist ONAS (i) in the preparation of plans and specifications for Parts A, B, D and F of the Project, in the preparation of bidding documents for Parts A, B, D and F of the Project, in the supervision of the construction of Parts A, B, D and F of the Project, (ii) in the carrying out of Part G of the Project, and (iii) in the establishment of its organization under Part A of the Project, ONAS shall employ consultants whose qualifications, experience and terms and conditions of employment shall be acceptable to the Bank. Section 2.03. 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 1 to this Agreement. Section 2.04. (a) ONAS undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan relent to it by the Borrower 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 by ONAS to replace or repair such goods. (b) Except as the Bank may otherwise agree, ONAS shall cause all goods and services financed out of the proceeds of the Loan relent to it by the Borrower to be used exclusively for the Project. Section 2.05. (a) ONAS shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Parts A through G of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) ONAS: (i) shall maintain records adequate to record the progress of Parts A through G of the Project (including the cost thereof), to identify the goods and services financed out of the proceeds of the Loan relent to it by the Borrower, 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 representatives to visit the facilities and construction sites included in Parts A through G of the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning Parts A through G of the Project, 5 the expenditure of the proceeds of the Loan so relent to it and the goods and services financed out of such proceeds. (c) ONAS shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of ONAS and any relevant records and documents. Section 2.06. ONAS shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, ONAS shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.07. (a) ONAS shall, at the request of the Bank, exchange views with the Bank with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) Without limitation or restriction on the generality of the provisions of the foregoing paragraph (a) of this Section ONAS shall, in order to monitor project performance against targets, no later than six months after the date of this Agreement (or such other date as the Bank may agree), prepare in consultation with the Bank a monitoring program, thereafter implement such a program, collect data from all available sources, and include all such information in quarterly reports to be made to the Bank, the first of such quarterly reports to be submitted to the Bank no later than December 31, 1975. Such monitoring program shall cover, inter alia, the items contained in Schedule 2 to this Agreement. (c) ONAS shall promptly inform the Bank of any condition which interferes or threatens to interfere with, the progress of Parts A through G of the Project, the accomplishment of the purposes of the Loan, or the performance by ONAS of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.08. (a) ONAS shall, as and when potential customers shall so request, make arrangements to install or cause to be installed sewerage connections and extensions in areas served by ONAS sewerage infrastructure, and shall charge customers such investment costs as are incurred by ONAS. (b) As and when potential low-income customers of ONAS located in areas served by ONAS' sewerage infrastructure shall so request, ONAS shall when making the arrangements for installation of the facilities referred to under the foregoing 6 paragraph (a) of this Section provide adequate financing to such customers for the cost of the installation of said facilities and shall collect through installments said cost from said customers. Section 2.09. ONAS shall, no later than four months after the date of this Agreement (as such other date as the Bank may agree) enter into an agreement, acceptable to the Bank, with the District as provided under Section 2.05 of the District Project Agreement. Section 2.10. ONAS shall take all such action as shall be necessary to acquire as and when needed all such land, and rights in respect of land as shall be required for the construction and operation of the facilities included in Parts A through G of the Project and shall furnish, as and when the Bank shall so reasonably request, to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to Parts A through G of the Project. ARTICLE III Management and Operations of ONAS Section 3.01. (a) ONAS shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with sound business, financial and public utility practices and under the supervision of competent management, and shall exchange views with the Bank before making any material modifications in its organization and administrative structure. (b) ONAS shall recruit, appoint and maintain sufficient qualified staff to enable it to conduct its operations efficiently. (c) ONAS shall no later than one year after the date of this Agreement (or such other date as the Bank may agree) establish a training unit within its organization, and exchange views with the Bank on its detailed personnel training program. Section 3.02. Unless the Bank and ONAS shall otherwise agree: (a) ONAS shall create and maintain inter alia within its organization the position of Deputy Director General and the position of Director of Finance and Administration and shall, after consultation with the Bank appoint (i) no later than four months after the date of this Agreement (or such other date as the 7 Bank may agree) the Director of Finance and Administration, and (ii) no later than one year after the date of this Agreement (or such other date as the Bank may agree) the Deputy Director General; and (b) during the period the Project is being carried out and before making any new appointment to the positions referred to under paragraph (a) of this Section, ONAS shall afford the Bank a reasonable opportunity to exchange views on such proposed appointment. Section 3.03. ONAS shall take out and maintain with responsible insurers, insurance against such risks and in such amounts as shall be consistent with appropriate practice or shall make other provisions against such risks and in such amounts as shall be satisfactory to the Bank. Section 3.04. (a) ONAS shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. (b) ONAS shall at all times operate and maintain its plants, equipment and property, and promptly make all necessary repairs and renewals thereof, in accordance with sound engineering and public utility practices. (c) Except as the Bank shall otherwise agree, ONAS shall obtain title to all goods financed out of the proceeds of the Loan relent to it by the Borrower free and clear of all encumbrances. (d) ONAS shall not, without the prior approval of the Bank, 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. ARTICLE IV Financial Covenants Section 4.01. ONAS shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. ONAS shall: (i) have its 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 Bank; (ii) furnish 8 to the Bank as soon as available, but in any case not later than six 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 Bank shall h4-e reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of ONAS and the audit thereof as the Bank shall from time to time reasonably request. Section 4.03. ONAS shall make arrangements with SONEDE acceptable to the Borrower and the Bank for the purpose of establishing a joint billing and tariff collection mechanism. Section 4.04. Except as the Bank shall otherwise agree, ONAS shall set and maintain tariffs for its sewerage services at such levels and thereafter take all such steps as shall be necessary (including, but without limitation, adjustments of its tariffs), to provide, during each fiscal year, ONAS, with funds from internal sources equivalent to at least 4% of the net value of its fixed assets including work in progress. For the purpose of this Section: (i) "funds from internal sources" shall be calculated in respect of each fiscal year by subtracting from gross revenues the sum of the following: all costs of operation (excluding depreciation), adequate maintenance and administration; interest and other charges on debt; repayment of loans (including sinking fund payments, if any); increases in working capital other than cash; and all taxes or payments in lieu of taxes not included in operating expenses; (ii) "net value of its fixed assets including work in progress" shall mean the average between the gross value of fixed assets at the beginning and at the end of each fiscal year as determined for each fiscal year in accordance with sound and consistently maintained methods of valuation and revaluation acceptable to the Bank, less accumulated depreciation but including the value of investment in assets not yet in service; and (iii) "gross revenues" includes: all revenues accruing to ONAS from all sources relating to sewerage operations (including revenues derived from the collection of tariffs and related revenues), the Levies, and the Subsidies. 9 Section 4.05. (a) Except as the Borrower and the Bank shall otherwise agree, ONAS shall not incur any debt unless its net revenue for the fiscal year next preceding the date of such incurrence or for a later twelve-month period ending prior to the date of such incurrence, whichever is greater, shall not be less than 1.5 times the maximum debt service requirements for any succeeding year on all the debt of ONAS, including the debt to be incurred. (b) For the purposes of this Section: (i) the term "debt" means all debt, including debt assumed or guaranteed by ONAS, except debt incurred in the ordinary course of business and maturing by its terms on demand or less than one year after its incurrence; (ii) debt shall be deemed to be incurred on the date of execution and delivery of a contract, loan agreement or other instrument providing for such debt; (iii) the term "net revenue" means gross revenue of ONAS, adjusted to take account of tariffs, Subsidies and Levies in effect at the time of the incurrence of debt even though they were not in effect during the entire fiscal year or twelve-month period to which such revenue relates, less all operating expenses, including adequate maintenance, taxes, if any, and administrative expenses, but before depreciation, and interest and other charges on debt; (iv) the term "debt service requirements" means the aggregate amount of amortization (including sinking fund provisions), interest and other charges on debt; and (v) whenever it shall be necessary to value in the currency of the Borrower debt payable in another currency, such valuation shall be made on the basis of the rate of exchange at which such other currency is obtainable by ONAS at the time such valuation is made, for the purposes of servicing such debt, or if such other currency is not obtainable, at a rate of exchange reasonably determined by the Borrower and the Bank. Section 4.06. ONAS shall: (a) establish an inventory of all assets transferred to it by the Borrower in accordance with paragraph (b) of Section 3.04 of the Loan Agreement, as and when such transfer is made, and such inventory shall be valued in accordance with methods of valuation acceptable to the Bank and 10 the Borrower within two years (or such other date as the Borrower and the Bank may agree) of their takeover by ONAS; and (b) thereafter from time to time revalue its assets, including, but without limitation, those referred to in paragraph (a) of this Section, in accordance with methods of revaluation as shall be consistent with appropriate public utility practice of the Borrower. Section 4.07. If the completion of the Project is hindered or delayed, or is threatened with hindrance or delay, because the funds available to ONAS are inadequate to ensure its completion, ONAS shall promptly request that the Borrower provide ONAS, or cause ONAS to be provided, with the necessary funds as and when required, in accordance with the provisions of the Loan Agreement. Section 4.08. ONAS shall take all such action as may be required on its part to collect the Levies. 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 Loan Agreement becomes effective. Section 5.02. This Agreement and all obligations of the Bank and of ONAS thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms. 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: 11 For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. For ONAS: Office National de l'Assainissement 8 Rue du Senegal Tunis Cable address: ONASTU Tunis Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of ONAS or under the Loan Agreement by ONAS on behalf of the Borrower may be taken or executed by its President Directeur General or such other person or persons as such President Directeur General shall designate in writing. Section 6.03. ONAS shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of ONAS, take any action or execute any documents required or permitted to be taken or executed by ONAS pursuant to any of the provisions of this Agreement. Section 6.04. 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 representatives thereunto duly authorized, have caused this Agreement to be signed 12 in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ M:nir P. Benjenk Regional Vice President Europe, Middle East and North Africa OFFICE NATIONAL DE L'ASSAINISSEMENT By /s / Ali Hedda Authorized Representative 13 SCHEDULE 1 Procurement A. General Procedures 1. Except as provided in Part A.2 hereof, 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 Pank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. (a) Contracts for civil works and equipment for the renovation and increase in capacity of the Cherguia sewage treatment plant referred to under Part D of the Project may be entered into with the original contractors for such plant, provided, however, that the amount of all works and equipment to be so contracted shall not exceed in the aggregate the amount of Dtl,500,000 equivalent. (b) Minor contracts for maintenance and supply of equipment estimated to cost the equivalent of Dt25,000 or less, may be procured on the basis of competitive bidding procedures advertised locally provided, however, that the amount of all items to be procured in accordance with such procedures shall not exceed in the aggregate the amount of Dt250,000 equivalent. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 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 ONAS of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Tunisia shall be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which shall 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. 14 (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Tunisia if the bidder shall have established to the satisfaction of ONAS and the Bank that the manufacturing cost of such goods includes a value added in Tunisia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Tunisia. (3) Group C: bids offering any other goods. (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. C. Review of Procurement Decisions by Bank 1. Review of invitation to bid and of proposed awards and final contracts: With respect to all contracts for the supply of equipment and of pipes estimated to cost the equivalent of Dt20,000 or more, and for civil works estimated to cost the equivalent of Dtl00,000 or more: (a) Before bids are invited, ONAS shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding 15 documents, together with a description of the advertising procedures to be followed for the bidding, 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) Promptly after the bids have been received, ONAS shall inform the Bank of the names of the bidders and the respective amounts of the bids. (c) After bids have been received and evaluated, ONAS 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 arid 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 ONAS and state the reasons for such determination. (d) 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 (if any). (e) Two conformed copies of the contract shall be fuirnished to the Bank promptly after its execution and prior to the submission to ihe Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, ONAS shall furnish 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, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform ONAS and state the reasons for such determination. 16 SCHEDULE 2 Summary of Monitoring Criteria The following criteria shall amongst others be monitored to determine whether the Project is fulfilling its objectives: A. Physical Criteria - total cumulative sewer connections - percentage of urban water customers served by ONAS - variations in dissolved oxygen levels in the Lake of Tunis B. Public Health Criteria - incidence of typhoid and paratyphoid in Tunisia and in the Greater Tunis area. C. Financial Criteria - rate of return - internal cash generation - average operating expenses per: (a) sewer connection (b) cubic meters of water consumed by connected customers - variations in the value of land surrounding the Lake of Tunis