Tunisia - Third Port Project : Loan 1797 - Loan Agreement - Conformed

OCUMET LOAN NUMBER 1797 TUN Loan Agreement (Third Port Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and OFFICE DES PORTS NATIONAUX Dated , U 1980 LOAN NUMBER 1797 TUN LOAN AGREEMENT AGREEMENT, dated a A..b/ 9 , 1980, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and OFFICE DES PORTS NATIONAUX (hereinafter called the Borrower), an Etablissement Public ' caractere industriel et commercial established and operating pursuant to the laws of the Republic of Tunisia (hereinafter called the Gua- rantor). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) the Borrower has received assurances that export credit financing will be made available to the Borrower under an appro- priate agreement (hereinafter called the Export Credit Agreement) for the financing of the foreign exchange cost of the goods, works and services required under the Project in an amount equivalent to not less than twenty million three hundred thousand dollars ($20,300,000); (C) by agreement of even date herewith (hereinafter called the Guarantee Agreement) between the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Loan and to undertake certain obligations in respect of the Project as therein set forth; and (D) 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: 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). -2- 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) "Law No. 65.2" means the Guarantor's Law of February 12, 1965, providing for the establishment of the Borrower, as the same has been amended on February 15, 1972 and may be further amended from time to time; (b) "Outside Debt" means the Loan, or any other loan which the Borrower might contract for the Project other than funds to be made available to the Borrower by the Guarantor; (c) "STAM" means the SocigtS Tunisienne d'Acconage et de Manutention, a sociftf anonyme established and operating under the Tunisian Commercial Code and pursuant to its Statutes dated February 1, 1961, as said Commercial Code and Statutes may be amended from time to time; (d) "Project Ports" refers collectively to the ports of La Goulette and Sfax; (e) "Ports" refers to the ports within the jurisdiction of the Borrower pursuant to the Law No. 65.2; (f) "Tunisian Dinars" and the letters "TD" mean dinars in the currency of the Guarantor; and (g) "Subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by the Borrower or by any one or more subsidiaries of the Borrower or by the Borrower and one or more of its subsidiaries. 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 equiva- lent to forty-two million five hundred thousand dollars ($42,500,000). -3- 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 civil works and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the civil works under Part A of the Project to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1985 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. 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 seven and ninety-five hundredths per cent (7.95%) 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 semiannually on February 1 and August 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. 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 appro- priate administrative, financial, engineering and port management practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. -4- Section 3.02. (a) In order to assist the Borrower in carrying out the Project, the Borrower shall, on or before July 31, 1980, or such other date as the Bank may agree, employ or continue to employ engineering, equipment maintenance and repair, and training program consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Bank. (b) Upon completion of the reports to be prepared by the equipment repair and maintenance consultants referred to in the foregoing paragraph, the Borrower shall promptly forward said reports and the recommendations included therein to the Bank for its review and comments and shall consult with the Bank prior to taking any action necessary to implement such recommendations as may be revised to take into account the Borrower's and the Bank's comments. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the goods imported under the Project against hazards incident to the acquisition, transportation and delivery thereof to the place of use or instal- lation, 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 works 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 construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and the benefits to be derived from it), to identify the works and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to examine the goods imported under the Project, to visit the facilities and construc- tion sites included in the Project and to be furnished with any relevant records and documents; and (iii) shall furnish to the -5- Bank at regular intervals all such information as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the works and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date 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, of such scope and in such detail as the Bank shall reason- ably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. (d) 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. The Borrower shall, promptly after the date of delivery of the cargo-handling equipment included in the Project, lease such equipment to cargo-handling companies (including STAM) on terms and conditions satisfactory to the Bank. Section 3.07. The Borrower shall, under arrangements satis- factory to the Bank, transfer to STAM the materials procured pursuant to Part A (j) of the Project, under terms ensuring the full recovery, by the Borrower, of the cost of such materials. -6- ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall at all times conduct its operations under the supervision of qualified and experienced management assisted by qualified and experienced personnel in adequate numbers. 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 at all times manage its affairs and maintain its financial position in accordance with appropriate port management and financial practices and, in particular, shall operate and adequately maintain all the equip- ment, property, machinery and facilities of the Ports, and promptly as required make all necessary renewals and repairs thereof. (b) Except as the Bank and the Borrower shall otherwise agree, the Borrower shall take all steps necessary to acquire, maintain and renew all licenses, consents or other rights as may be necessary or useful in the conduct of its operations. Section 4.04. Without any limitation upon the generality of the provisions of paragraph (a) of Section 4.03 hereof, the Borrower shall, promptly after the date hereof, take all appro- priate steps, in cooperation with STAM, to improve, according to the plan of action agreed upon between the Borrower and the Bank (as may be revised from time to time), the operations and effi- ciency of the Ports. Section 4.05. Before the Borrower shall take any action to create any Subsidiary, the Borrower shall first have satisfied the Bank that such action would not prejudice the interest of the Bank under this Agreement or the execution of the Project. 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. -7- Section 5.02. The Borrower shall: (a) 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; (b) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, (i) certified copies of its financial statements for such year as so audited and (ii) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (c) 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 reason- ably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as jecurity for any debt except as otherwise currently reported to the Bank or stated in writing. (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 satis- factory 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 take all action required on its part to request and obtain promptly as needed such funds as the Guarantor has undertaken to provide or cause to be provided to the Borrower under the Guarantee Agreement. -8- Section 5.05. Until the completion of the Project and except as the Borrower and the Bank shall otherwise agree, the Borrower shall not undertake or execute, for its own account or for the account of any third party or parties, investments which are not included in the investment program agreed upon between the Bor- rower and the Bank at the date hereof (and which may, hereafter, be amended from time to time by agreement between the parties hereto) unless the estimated aggregate capital expenditures incurred by the Borrower as a result of such investments does not exceed the equivalent of $2,500,000 in any fiscal year. Section 5.06. The Borrower shall: (a) review with the Bank the level of its operating costs and service charges structure (including the charges on vessels and for storage); (b) on the basis of said review and not later than December 31, 1981, estab- lish a cost related service charges structure satisfactory to the Bank and the Borrower; and (c) implement such service charges structure not later than one year following the establishment thereof (or at such -other date as the Bank may agree), it being understood that, after the establishment thereof, the Borrower shall apply at all times such service charges structure, unless the Bank shall otherwise agree. Section 5.07. Except as the Bank shall otherwise agree, the Borrower shall maintain charges for services at the Ports at such levels that they produce revenues sufficient: (a) to ensure a rate of return of at least seven per cent (7%) per annum on the average current net value of its fixed assets in operation at such Ports, after deducting all operating expenses, including administrative expenses and adequate main- tenance and depreciation. For the purposes of this paragraph, the term "average current net value of its fixed assets in operation" means the average of the gross values of fixed assets in operation at the beginning and end of each fiscal year less accumulated straight-line depreciation; it being understood that, for the purposes of this paragraph, such assets will be revalued not later than December 31, 1980, and thereafter from time to time, on the basis of a methodology acceptable to the Bank. (b) to enable the Borrower, out of its internally-generated resources: (i) to meet interest on and amortization of debt; (ii) to maintain adequate operating working capital; (iii) to establish and maintain reserves adequate to meet contingencies; and (iv) to finance the cost of renewal or replacement of plant and equipment, the cost of minor port works and a reasonable proportion of the cost of major port expansion and development works. -9- The foregoing provisions supersede any other prior agree- ment between the Borrower and the Bank on the same subject. Section 5.08. (a) Except as the Bank may otherwise agree, the Borrower shall not incur any debt, other than for Outside Debt, unless its net revenues for the fiscal year next preceding such incurrence or for a later period of twelve consecutive months ending prior to such incurrence, whichever amount is greater, shall be not less than 1.5 times the maximum debt service require- ment for any succeeding fiscal year on all debt including the debt to be incurred. (b) For the purposes of this Section: (i) the term "debt" means all debt of the Borrower, including debt assumed or guaranteed by the Borrower, maturing by its terms more than one year after the date on which it is originally incurred; (ii) debt shall be deemed to be incurred: (A) under a contract, loan agreement (including the Loan Agreement) or other instrument providing for such debt, on the date of execution and delivery of such contract, loan agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing such guarantee is entered into; (iii) the term "net revenues means gross revenues from all sources, adjusted to take account of the Borrower's charges for its services at the Ports in effect at the time of the incurrence of debt even though they were not in effect during the fiscal year or twelve-months period to which such revenues relate, less all operating and administra- tive expenses (including adequate maintenance), but before provision covering depreciation, interest and other charges on debt, and income tax or other distribution of profits, if any; (iv) the term "debt service requirement" means the aggregate amount of amortization (including sinking fund payments, if any), interest and other charges on debt; and - 10 - (v) 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 rate of exchange at which such other currency is obtainable by the Borrower, at the time such valuation is made, for the purposes of servicing such debt, or, if such other currency is not obtainable, at the rate of exchange that will be agreed between the Bank and the Borrower. Section 5.09. Except as the Bank shall otherwise agree: (a) the Borrower shall not repay in advance of maturity any part of its indebtedness other than of its Outside Debt; and (b) if the Borrower shall repay in advance of maturity any part of its Outside Debt other than the Loan, the Borrower shall simultaneously prepay in the same proportion an amount of the Loan then outstanding subject to the provisions of the General Conditions relating thereto. 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) A material change shall have been made, without the prior agreement of the Bank, in the Law No. 65-2 so as to affect materially and adversely the operations or the financial condition of the Borrower or ability of the Borrower to carry out its obligations hereunder. (b) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of any loan or credit made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or - 11 - (B) any such loan or credit 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 satis- faction of the Bank that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement, and (B) adequate funds for 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, namely, that any event specified in paragraph (a) or (b) (i) (B) of Section 6.01 of this Agreement shall occur. 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 all conditions precedent to the effectiveness of the export credit financing referred to in Recital (B) to this Agree- ment, other than (if applicable) the effectiveness of this Agree- ment, have been satisfied. Section 7.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included In the opinion or opinions to be furnished to the Bank, namely, that the Export Credit Agreement referred to in Recital (B) to this Agreement has been duly autho- rized and ratified by the Borrower, and executed and delivered on behalf of the Borrower, and is legally binding upon the Borrower in accordance with its terms. Section 7.03. The date #,A 1. , is hereby specified for the purpose of Section 12.04 of the General Condi- tions. - 12 - ARTICLE VIII 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: Office des Ports Nationaux Batiment Administratif Port de La Goulette Tunisia Cable address: Telex: OFPORNA 12386 TN Tunis 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 the District - 13 - of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By4 B ,Regional Vice President Europe, Mi le East and North Africa OFFICE DES PORTS NATIONAUX IlKll #eJcL By Authorized Representative - 14 - 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) Civil works under 29,500,000 48% Part A of the Project (2) Consultants' 2,000,000 100% of for- services and eign expen- training ditures (3) Unallocated 11,000,000 TOTAL 42,500,000 2. For the purposes of this Schedule, the term "foreign expendi- tures" means expenditures in the currency of any country other than the Guarantor and for works or services supplied from the territory of any country other than the Guarantor. 3. The disbursement percentages have been calculated in compli- ance 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 Guarantor on works or services, or on the importation, 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. - 15 - 4. Not,iithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures 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 para- graph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insuf- ficient to finance the agreed percentage of all 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, 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 realloca- tion 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. - 16 - SCHEDULE 2 Description of the Project The main objectives of the Project are to enable the Project Ports to cope with changes in shipping technology and future traffic and to increase their operational efficiency and capacity. The said objectives are to be achieved through the provision of (i) specialized facilities to accommodate roll-on/roll-off ves- sels, (ii) additional port facilities with appropriate operational and storage areas, transit sheds and warehouses, (iii) additional cargo-handling equipment, (iv) repair and maintenance facilities, and (v) technical assistance required to improve the operations of said Project Ports and to train their personnel and port workers. The Project consists of the following Parts: Part A: Civil Works, Equipment and Materials for Port of La Goulette (a) Dredging of the access channel and the south port basin to a depth of 10 m (including reclamation and disposal of material not suitable for reclamation). (b) Dredging and reclamation at the new port area to replace soft layers with suitable material. (c) Improvement of soil conditions at the new port area. (d) Construction of quays, about 350 m in length and 10 m deep, and of jetties capable of handling general cargo liners, roll-on/roll-off vessels and container ships. (e) Construction of about 30,000 m2 of transit and customs sheds. (f) Paving of open storage areas and construction of the port access road. (g) Construction of port administration and other ancillary buildings. (h) Construction of a shallow-water berth and related back-up area to handle dangerous materials. - 17 - (i) Provision of utilities (including water supply, electri- city, drainage and sewerage), as required to operate the facilities included in Part A (a) through (h) of the Project. (j) Provision of cargo-handling and workshop equipment and materials for the manufacture of about 20,000 pallets. Part B: Civil Works, Equipment and Materials for Port of Sfax (a) Construction of quays, about 515 m in length and 11 m deep, capable of handling general cargo liners and roll-on/roll-off vessels. (b) Construction of the port access road. (c) Filling, grading and paving of open storage and parking areas. (d) Construction of transit and customs sheds and ancillary buildings. (e) Provision of utilities (including water supply, electri- city, drainage and sewerage), as required to operate the facilities included in Part B (a) through (d) of the Project. (f) Provision of cargo-handling and workshop equipment. Part C: Technical Assistance (a) Supervision of civil works construction under Parts A and B of the Project and programming of the execution of the Project. (b) Reorganization of Project Ports workshops and mainte- nance procedures. (c) Development and implementation of a training program for Project Ports workers. The Project is expected to be completed by June 30, 1984. - 18 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each February 1 and August 1 beginning February 1, 1984 through August 1, 1996 1,575,000 On February 1, 1997 1,550,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 19 - 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 1.40% More than three years but not more than six years before maturity 2.80% More than six years but not more than eleven years before maturity 5.15% More than eleven years but not more than fifteen years before maturity 7.00% More than fifteen years before maturity 7.95% - 20 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA 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. For works to be procured on the basis of international competitive bidding, and in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating there- to, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the works in question. The Borrower shall provide the necessary information to update such notice annually so long as any works remain to be procured on the basis of international competitive bidding. 3. Bidders for the works shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. B. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower shall, before qualification 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 appli- cant 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 addi- tions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. - 21 - Z. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works estimated to cost the equivalent of $500,000 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, 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) after bids have been received and evaluated, the Bor- rower 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, by the relevant consultants referred to in Section 3.02 (a) of this Agreement, on the evalu- ation and comparison of the bids received, together with the recommendations for award of the said consultants and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination; (c) the terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited; and (d) two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the sub- mission 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 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 con- tract, together with the analysis of the respective bids, recom- mendations for award and such other information as the Bank shall - 22 - 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. 4. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 20% of the original price, the Borrower shall inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this h -day of , 1910. FOR SECRETARY