Tunisia - Fourth Water Supply Project : Loan 1445 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1445 TUN Loan Agreement (Fourth Water Supply Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and SOCIETE NATIONALE D'EXPLOITATION ET DE DISTRIBUTION DES EAUX Dated July 5, 1977 LOAN AGREEMENT AGREEMENT, dated July 5, 1977, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and SOCIETE NATIONALE D'EXPLOITATION ET DE DISTRIBUTION DES EAUX (hereinafter called the Borrower). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of a portion of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) The Borrower has represented to the Bank that it has requested additional loans from other lenders outside Tunisia in such aggregate amount as it shall require for the efficient execution of Part B of the Project on terms and conditions that will enable the Borrower to carry out Part B of the Project and its operations in accordance with appropriate financial practices, and the Guarantor (as this term is hereinafter defined) will assist such Borrower to obtain such loans (hereinafter called the Other Loan); and (c) by an agreement of even date herewith between the Republic of Tunisia (hereinafter called the Guarantor) and the Bank (hereinafter called the Guarantee Agreement), the Guarantor has agreed to guarantee the obligations of the Borrower under the Loan Agreement; -2- WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: - 3 - ARTICLE I General Conditions; Definitions 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 (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Previous Development Credit Agreement" means the Agreement No. 209 TUN dated June 30, 1970, entered into between the Republic of Tunisia and the Association for purposes of a Second Water Supply Project; (b) "Previous Loan Agreements" means the Loan Agreement No. 581 TUN, dated January 16, 1969, and the Loan Agreement No. 989 TUN, dated May 29, 1974, both between the Bank and the Borrower; (c) "D" means Dinar in the currency of the Guarantor; -4- (d) "Statuts" means the Guarantor's Law No. 68-22, dated July 2, 1968, (as amended by Law No. 72-37, dated April 27, 1972, and by Law No. 74-73, dated August 3, 1974) establishing the Borrower; and (e) "District" means District de Tunis, an 6tablissement public established and operating in accordance with the Guarantor's Law No. 72-1 of February 15, 1972, and the Guarantor's Decrees No. 72-49 of February 18, 1972, and No. 73-604 of November 25, 1973. - 5 - 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 twenty-one million dollars ($21,000,000). Section 2.02. 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 by agreement between the Borrower and the Bank, 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 and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1982, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. -6- 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 withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and two-tenths per cent (8.20%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on March 1 and September 1 in each year. 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. - 7 - ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate engineering, financial and public utility practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) In order to assist the Borrower in the preparation of plans and specifications for, in the preparation of bidding documents for, and in the supervision of the construction of, Part A of the Project, the Borrower shall employ engineering consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) In order to assist the Borrower in carrying out the study included under Part D of the Project, the Borrower shall employ consultants whose qualifications, experience and terms of reference shall be satisfactory to the Bank, and shall furnish such studies to the Bank not later than June 30, 1978, or such later date as shall be agreed between the Bank and the Borrower. -8- Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods 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 by the Borrower to replace or repair such goods. (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 work 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 financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives 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 - 9 - the 3ank 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 take or cause to be taken 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 the Project and shall furnish 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 the Project. Section 3.06. No later than December 31, 1977, or such other date as the Bank may agree, the Borrower shall, pursuant to paragraph 3 of Article 7 of the Guarantor's Decree No. 73-604 of November 25, 1973, enter into an agreement in form and substance acceptable to the Bank, with the District for the purpose of coordinating their activities in carrying out the part of the Project to be executed in the District, and shall thereafter carry out such agreement in accordance with its terms. - 10 - ARTICLE IV Management and Operations of the Borrower Section 4.01. (a) The Borrower shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with appropriate business, financial and public utility practices and under the supervision of experienced and competent management, and shall consult with the Bank before making any basic modifications in its organization and administrative structure. (b) The Borrower shall continue to appoint, retain and promote sufficient qualified and experienced staff to enable the Borrower to conduct its operations efficiently. Section 4.02. 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. Section 4.03. (a) The Borrower 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, including the right to use the volumes of water referred to in Section 3.06 of the Guarantee Agreement. - 11 - (b) The Borrower 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, the Borrower shall obtain title to all goods financed out of the proceeds of the Loan free and clear of all encumbrances. (d) The Borrower 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 and shall not without the mutual consent of the Guarantor and the Bank assign its exclusive rights for the distribution of water within the Guarantor's territories pursuant to Article 2 of the Guarantor's Law No. 68-22, dated July 2, 1968. Section 4.04. (a) Without limitation to the provisions of Section 3.04 of the Loan Agreement, the Borrower shall complete and furnish to the Bank by December 31, 1977, or such other date as the Bank may agree a system of key indicators and targets envisaged for its operations (including technical, financial and administrative criteria) satisfactory to the Guarantor and the Bank, and shall thereafter monitor the progress of the execution of the Project and of the attainment of its objectives on the - 12 - basis of said key indicators and targets and shall furnish to the Bank for its comments, at the end of each calendar quarter until the Project has been completed and thereafter at the end of each fiscal year of the Borrower during the five years immediately succeeding such completion, a report in such detail as the Bank shall reasonably request showing the results of its operationb In terms of such key indicators and targets. (b) The Borrower shall promptly take all such steps as the Bank may reasonably request to meet the targets referred to in paragraph (a) of this Section. Section 4.05. Without limiting the generality of the provi- sions of paragraph (b) of Section 4.03 of this Agreement, the Borrower shall: (i) with the assistance of engineering consultants whose qualifications, experience and terms of employment shall be satisfactory to the Bank, cause the dam at Saida and its appurte- nant structures constructed under Part A (ii) of the Project to be periodically inspected, at least once in every year and in accordance with appropriate engineering practices, in order to determine whether there are any deficiencies in the condition of such dam and appurtenant structures which may endanger the safety thereof, the first of such inspections to start not later than July 1, 1983, or such other date as the Bank may agree; (ii) to submit promptly after each such inspection to the Bank, the - 13 -- conclusion of such engineering consultants; and (iii) to make, promptly after each such inspection, all necessary repairs of such dam and appurtenant structures. - 14 - ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.02. The Borrower 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 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 have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. - 15 - (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will 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; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; 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; or (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. Section 5.04. Except as the Bank shall otherwise agree, the Borrower shall not incur any debt, other than for money borrowed to finance the Project, unless its net revenues for the fiscal year next preceding such incurrence or for a later twelve-month - 16 - period ended prior to such incurrence, whichever is the greater, shall be not less than 1.5 times the maximum debt service requirement for any succeeding fiscal year on all debt including the debt to be incurred. For the purposes of this Section: (a) The term "debt" shall mean all indebtedness of the Borrower including debt for the service of which the Borrower is responsible in accordance with Article 22 of Law No. 68-22 of the Guarantor dated July 2, 1968, maturing by its terms more than one year after the date on which it is originally incurred. (b) 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. (c) The term "net revenues" shall mean gross revenues from all sources, adjusted to take account of the Borrower's rates in effect at the time of the incurrence of debt even though they were not in effect during the fiscal year or twelve-month period to which such revenues relate, less all operating and administrative expenses and provision for taxes, if any, but before provision covering depreciation and interest and other charges on debt. - 17 - (d) The term "debt service requirement" shall mean the aggregate amount of amortization (including sinking fund payments, if any), interest and other charges on debt. (e) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Guarantor, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt. Section 5.05 (a) Unless otherwise agreed by the Bank, the Borrower shall set and maintain water rates and other charges for its services and shall from time to time take all other necessary or desirable action which will provide revenues sufficient: (i) to cover all operating and administrative expenses of the Borrower (including adequate maintenance and provision for depreciation of assets at an average rate of not less than 2.5% per annum) and taxes and payments in lieu of taxes; and (ii) to produce out of its own funds, a reasonable annual rate of return on the Borrower's net fixed assets in operation that will enable the Borrower to meet amortization and interest payments on all its debt (including debt for the service of which the Borrower is responsible in accordance with Article 22 of Law No. 68-22 of the Guarantor dated July 2, 1968) as they become due and to finance a reasonable amount of the cost of future investments. - 18 - (b) Unless the Bank shall otherwise agree, such annual return on the Borrower's net fixed assets in operation shall be at a rate of not less than 7.5% for the year 1978 and each year thereafter. (c) Such rate of return on the Borrower's net fixed assets in operation shall be calculated in each year by using as the numerator the total revenues arising from the Borrower's operations, less all operating and administrative costs (including adequate maintenance and provision for depreciation and for taxes and payments in lieu of taxes, if any, but excluding interest and other charges on debt) and as the denominator the average between the net current value of fixed assets in operation at the beginning and at the end of each year in question. (d) "Net current value of fixed assets in operation" shall mean the gross value of the Borrower's fixed assets in operation less the accumulated gross value of fixed assets in operation in communities with less than 2,000 inhabitants, and less the amount of accumulated depreciation on all fixed assets in operation, all as valued from time to time in accordance with consistently applied appropriate methods of valuation or revaluation acceptable to the Bank, and less the accumulated value of the contributions made by customers towards the original investment cost of the Borrower's assets. - 19 - ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) any provision of the Statuts shall have been amended, suspended, abrogated or waived so as materially and adversely to affect the operations or financial condition of the Borrower or the performance by the Borrower of its obligations under the Loan Agreement; (b) a default shall have occurred under any of the Previous Loan Agreements or under the Previous Development Credit Agreement other than in respect of the payment of the principal or interest or any other payment required thereunder; and (c) (i) subject to subparagraph (ii) of this paragraph: (A) conditions precedent to initial disbursements under the Other Loan shall not be fulfilled by March 31, 1978, or (B) the right of the Borrower to withdraw the proceeds of the Other Loan made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to - 20 - the terms of the agreement or agreements providing therefor, or (C) the Other Loan shall have become due and payable prior to the agreed maturity thereof; (ii) subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) the event specified in subparagraphs (A), (B) or (C), as the case may be, of paragraph (c) (i) of this Section is not caused by the failure of the Borrower and the Guarantor to perform any of their respective obligations under such agreement or agreements, and (B) adequate funds for Part B of the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any event specified in paragraph (b) of Section 6.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower and the Guarantor; and - 21 - (b) the events specified in paragraphs (a) and (c)(i)(C) of Section 6.01 of this Agreement shall occur. - 22 - ARTICLE VII Effective Date; Termination Section 7.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, that the agreement or agreements providing for the Other Loan have been duly signed by all the parties thereto. Section 7.02. The date November 2, 1977, is hereby specified for the purpose of Section 12.04 of the General Conditions. - 23 - ARTICLE VIII Amendments to the Previous Loan Agreements Section 8.01. As of January 1, 1978, the provisions of Section 5.09 of the Loan Agreement No. 581 TUN, dated January 16, 1969, as amended, and of Section 5.06 of the Loan Agreement No. 989 TUN, dated May 29, 1974, both between the Bank and the Borrower are deleted and substituted by Section 5.05 of this Agreement. - 24 - ARTICLE IX Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Borrower: Sociftf Nationale d'Exploitation et de Distribution des Eaux 23, J. Nehru Tunis, Tunisia Cable address: Telex: SONEDE 12262 TN SONEDE Tunis - 25 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in Tunis, Republic of Tunisia, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Maurice P. Bart Acting Regional Vice President Europe, Middle East and North Africa SOCIETE NATIONALE D'EXPLOITATION ET DE DISTRIBUTION DES EAUX By /s/ A. Frih Authorized Representative - 26 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 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 (1) Pipes, equipment 6,100,000 100% of foreign and materials for expenditures Part A of the Project (2) Civil Works 9,100,000 39% under Part A of the Proj- ect (3) Consultant 1,200,000 100% of foreign services for expenditures studies and construction supervision for Part A of the Project (4) Unallocated 4,600,000 TOTAL 21,000,000 - 27 - 2. For the purposes of this Schedule, the term "foreign expenditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that - 28 - Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which 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 disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. 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. - 29 - SCHEDULE 2 Description of the Project The Project constitutes the first stage of a master plan conceived to meet water supply needs in five northern provinces: B6jA, Jendouba, Nabeul, Tunis and Tunis Sud, up to the year 2,000. The Project consists of the following parts: Part A: Production Facilities (i) Construction of a pumping station of about 1,700-HP to draw raw water from the Medjerda/Cap Bon canal to be constructed under the Guarantor's Northern Tunisia Water Master Plan. (ii) Construction of an earth dam to be located at Saida to create a reservoir of about 12 mm3 to be used to mix water of varying levels of salinity from the said Medjerda/Cap Bon canal with fresh water originating from Kasseb. (iii) Installation of a transmission pipeline of about 1,250-mm from the Medjerda/Cap Bon pumping station referred to under Part A (i) of the Project to a distribution basin. - 30 - (iv) Laying of a pipeline of about 1,100-mm between the said distribution basin and the existing Gdir El Goulla treatment plant, and of a pipeline of about 800/600-mm from the said basin to the Saida reservoir referred to under Part A (ii) of the Project. (v) Construction of a water treatment plant module of about 1.4-M3/sec to be located at Gdir El Goulla. (vi) Construction of a pumping station of about 2,320-HP to feed raw water from the said Saida reservoir to the said treatment plant. (vii) Installation of a transmission pipeline of about 1,600-mm between the said Saida pumping station and the said treatment plant. Part B: Distribution System of Greater Tunis (i) Laying of a primary main of about 1,250/1,000-mm to supply the northern part of the Tunis area. (ii) Installation of a primary main of about 1,400/1,000-mm to serve the southern Tunis area. (iii) Increase and improvement of booster pumping stations for the Tunis area. (iv) Expansion and improvement of the secondary distribution network in the Tunis area. - 31 - Part C: Distribution Systems in Other Areas (i) Expansion of the primary systems in the cities of BdJA, Medjez-E1-Bab, Port du Fahs, and in South Cap Bon. (ii) Increase of storage and booster pumping in the said areas. (iii) Expansion and improvement of the secondary distribution networks in the said areas. Part D: Study Study to assist the Borrower in developing and adapting its management structures (including its computer and information systems) in accordance with the needs of its future expansion. The Project is expected to be completed by June 30, 1982. - 32 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning March 1, 1981 through September 1, 1993 780,000 On March 1, 1994 720,000 * 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 equiva- lents determined as for purposes of withdrawal. - 33 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.45% More than three years but not more than six years before maturity 2.90% More than six years but not more than eleven years before maturity 5.30% More than eleven years but not more than fifteen years before maturity 7.25% More than fifteen years before maturity 8.20% - 34 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and I"A Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. Identical or similar items shall to the extent possible be consolidated in a single invitation for the purpose of bidding. B. Other Procurement Procedures Notwithstanding the provisions of Part A of this Schedule, contracts for: (i) pipes, equipment and materials estimated to cost less than the equivalent of $150,000 each; and (ii) or civil works estimated to cost less than the equivalent of $450,000 each, may be awarded on the basis of local advertising only and in accordance with the usual competitive bidding procedures of the Borrower provided, however, that the aggregate amount of all contracts to be so awarded shall not exceed, in the aggregate, the equivalent of $1,500,000. - 35 - C. 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 except those to be procured in accordance with local procedures: (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. 2. Goods manufactured in Tunisia may 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 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. (b) After evaluation, responsive bids will be classified in one of the following three groups: - 36 - (1) Group A: bids offering goods manufactured in Tunisia if the bidder shall have established to the satisfaction of the Borrower 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 manufr-tured 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. Such lowest evaluated bids 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 - 37 - 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 bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower shall, before qualifiation is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications, and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: - 38 - With respect to all contracts for pipes, materials and equipment estimated to cost the equivalent of $150,000, and all contracts for civil works estimated to Lst the equivalent of $450,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, togethc 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) 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 shall furnish to the Bank, in sufficient time for its review, a detailed report, on the evaluation and comparison of the bids received, 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. - 39 - (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. 3. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower 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 the respective 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 the Borrower and state the reasons for such determination.