Conformed Copy - L2829 - Second National Highways Sector Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 2829 CO (Second National Highways Sector Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and FONDO VIAL NACIONAL Dated October 8, 1987 LOAN NUMBER 2829 CO LOAN AGREEMENT AGREEMENT, dated October 8, 1987 between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and FONDO VIAL NACIONAL (the Borrower). WHEREAS (A) the Bank has received a letter dated May 11, 1987 from the Guarantor, describing the Guarantor's policies for the development of its transport sector for the years 1987 through 1993 (the Transport Sector Development Letter). (B) Republic of Colombia (the Guarantor) and the Borrower, having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, have requested the Bank to assist in the financing of the Project; (C) by an agreement (the Guarantee Agreement) of even date herewith 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 such other obligations as set forth in the Guarantee Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to Page 2 extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. 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) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "Sub-project" means any sub-project included in Parts A and B of the Project and to be partially financed out of the proceeds of the Loan; (c) "MOPT" means the Guarantor's Ministry of Public Works and Transportation; (d) "Estatuto" means the estatutos of the Borrower enacted by Law No. 64 dated December 27, 1967 and Decree No. 2862 dated November 20, 1968 and as such Law and Decree may be amended from time to time; (e) "1987-1993 Highways Program" means the MOPT's Highways Sector Program, as agreed between the Borrower and the Bank; (f) "Annual Highways Program" means the MOPT's annual highway program for 1987, as agreed between the Bank and the Borrower, and each highways program prepared annually by the Borrower and accepted by the Bank pursuant to Section 3.01 (c)(i) of this Agreement; (g) "Action Plan" means the plan of actions that MOPT shall take or cause to be taken towards achieving the objectives defined in the Transport Sector Development Letter, regarding the highways sub-sector, as agreed between the Guarantor and the Bank, and as such plan may be amended from time to time by agreement between the Guarantor and the Bank*; and (h) "Prior Loan Agreement" means the loan agreement for Loan No. 2121 CO (Highway Sector Project) of May 13, 1982, between the Bank and the Borrower. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount in various currencies equivalent to one hundred eighty million three hundred thousand dollars ($180,300,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account in Banco de la Republica on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account Page 3 shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be December 31, 1993 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one-half of one percent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Guarantor and the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six-month period commencing on each date specified in Section 2.06 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost of the outstanding borrowings of the Bank drawn down after June 30, 1982, expressed as a percentage per annum, as reasonably determined by the Bank. (iii) "Semester" means the first six months or the second six months of a calendar year. Section 2.06. Interest and other charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.07. 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. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and to this end, shall carry out the Project with due diligence and efficiency and in conformity with appropriate engineering, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Bank and the Borrower shall otherwise agree, the Borrower shall carry out the Project in accordance with the 1987-1993 Highways Program and the Annual Highways Programs. (c) Without any limitation to the provisions of paragraph (a) of this Section, the Borrower shall: (i) furnish to the Bank, not later than September 30, 1987 and every year thereafter, the Annual Highways Program for the following year, satisfactory to the Bank, which shall include, inter alia, the detailed physical annual program and corresponding detailed financing plans, and an update of the 1987-1993 Highways Program; (ii) not later than March 31 of each year, exchange views with the Bank Page 4 with regard to the progress of the 1987-1993 Highways Program; (iii) submit each Sub-project for the Bank's approval, with an application in a form satisfactory to the Bank, containing: (A) a description and analysis of the respective Sub-project, including: (1) final cost estimates; (2) final implementation schedule; and (3) economic evaluation; and (B) such other information as the Bank shall reasonably request; (iv) carry out Part C of the Project in accordance with the training program agreed upon between the Borrower and the Bank; and (v) submit to the Bank, for the Bank's approval, the terms of reference for each study under Part D.1 of the Project. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and engineering practices under the supervision of qualified and experienced management assisted by competent staff 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. ARTICLE V Financial Covenants Section 5.01. (a) The Borrower shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition, including separate records and accounts for the Project. (b) The Borrower shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) and the records and accounts for the Special Account 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 fiscal year 1987, five months after the end of fiscal year 1988, and four months after the end of each fiscal year thereafter: (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 said records, accounts and financial statements as well as the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain, in accordance with paragraph (a) of this Section, Page 5 records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE VI Amendment to the Prior Loan Agreement Section 6.01. The Prior Loan Agreement is hereby amended by deletion of the text of Section 5.02 thereof and the substitution therefor of the text of Section 5.01 (b) of this Agreement. ARTICLE VII Remedies of the Bank Section 7.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional events are specified: (a) that the Estatutos of the Borrower or any provision thereof shall have been amended, suspended or abrogated in a manner which would affect, materially and adversely, the operations and financial condition of the Borrower or the performance by the Borrower of its obligations under this Agreement; (b) that an event has occurred which makes it unlikely that the policies described in the Transport Sector Development Letter will be adopted or that they have in fact not been implemented; and (c) that an event has occurred which makes it unlikely that the Action Plan, or a significant part thereof, will be carried out or that the Action Plan, or a significant part thereof, has not been carried out. Section 7.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional event is specified, namely, that the events specified in Section 7.01 shall have occurred. ARTICLE VIII Termination Section 8.01. The date January 6, 1988, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE IX Addresses Section 9.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: Page 6 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: Fondo Vial Nacional MOPT-CAN Bogota Colombia Telex: MOPT-FVN 45656-0 MOPT-CO IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ S. Shahid Husain Regional Vice President Latin America and the Caribbean FONDO VIAL NACIONAL By /s/ Ximena Andrade de Casalino Authorized Representative 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) Works under Parts A (2), (3), (4) and B of the Project: Page 7 (a) advances made 42,500,000 100% to contractors up to amounts not exceeding 20% of the value of each contract awarded after January 1, 1987 (b) payments, other 46,800,000 28% than those for (a) above, for contracts awarded after January 1, 1987 (c) payments for 35,300,000 42% contracts awarded prior to January 1, 1987 (2) Consultants' 8,100,000 42% services under Part A (6) of the Project (3) Goods, except for 32,000,000 100% of foreign Part C (b) of the expenditures and Project 90% of local expenditures (4) (a) Works, goods 1,100,000 65% and consultants' services under Part C of the Project (b) Scholarships 400,000 100% of foreign under Part C expenditures and of the Project 65% of local expenditures (5) Consultants' 2,000,000 100% of foreign services under expenditures and Part D.1 of the 30% of local Project expenditures (6) Unallocated 12,100,000 ____________ TOTAL 180,300,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Guarantor for goods or services supplied from the territory of any country other than that of the Guarantor; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor or for goods or services supplied from the territory of the Guarantor. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $5,000,000, may be made in respect of payments made for expenditures before that date but after January 1, 1987; (b) payments made for expenditures for the Page 8 Project, unless the Bank shall have approved the updated Action Plan pursuant to Section 3.03 of the Guarantee Agreement; (c) payments made for expenditures for a Sub-project, unless the Sub-project is part of the Annual Highways Program accepted by the Bank pursuant to Section 3.01 (c)(i) of this Agreement and the Bank shall have approved such Sub-project pursuant to Section 3.01 (c)(iii) of this Agreement; and (d) payments made in respect of each study under Part D.1 of the Project, unless the Bank shall have approved the terms of reference for such study pursuant to Section 3.01(c) (v) of this Agreement. 4. Notwithstanding the disbursement percentage set forth in the Categories of the table in paragraph 1 above, the Bank may, without in any way limiting its rights under Section 5.04 of the General Conditions, until the Closing Date, by notice to the Borrower, increase or reduce such percentages, from time to time, in order to ensure that the Bank's participation in the financing of the 1987-1993 Highways Program does not exceed 21% of such program's total cost. SCHEDULE 2 Description of the Project The Project comprises the Borrower's 1987-1993 Highways Program and its main objective is to assist the Borrower in the execution of such program by: (a) financing the execution of technically and economically feasible Sub-projects; and (b) providing technical assistance. The Project consists of the following parts, subject to such modifications thereof as the Bank and the Borrower may agree upon from time to time to achieve such objectives: Part A: Highway Improvements (1) Construction of new roads, (2) rehabilitation of paved roads and gravel roads, (3) paving of gravel roads, (4) execution of periodic maintenance of paved roads, (5) execution of routine maintenance, (6) provision of technical assistance to assist the Borrower in the supervision of road rehabilitation, paving and periodic maintenance civil works; and (7) acquisition and utilization of road maintenance equipment and spare parts, vehicle weighing scales and communications equipment. Part B: Road Safety Carrying out of a road safety program, including the acquisition and utilization of materials and equipment. Part C: Training Execution of a training program for the Borrower's professional staff, including: (a) construction and rehabilitation of training facilities, (b) acquisition and utilization of training equipment and materials, and (c) provision of scholarships abroad. Part D: Studies 1. Carrying out of studies on: (a) road transport regulation, (b) investment planning, (c) budget programming and execution, (d) highway administration, (e) slope analysis, (f) pavement analysis, (g) technical specifications, and (h) maintenance management; and Page 9 2. Carrying out of additional studies as required to foster the objectives of the Project. * * * * The Project is expected to be completed by June 30, 1993. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning March 1, 1992 through March 1, 2004 6,935,000 On September 1, 2004 6,925,000 __________________ * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment The following premiums are specified for the purposes of Section 3.04 (b) of the General Conditions: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) applicable to the balance out- standing on the Loan on the day of prepayment multiplied by: Not more than three years 0.18 before maturity More than three years but 0.35 not more than six years before maturity Page 10 More than six years but 0.65 not more than 11 years before maturity More than 11 years but not 0.88 more than 15 years before maturity More than 15 years before 1.00 maturity SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part C hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in Colombia may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures (a) Contracts for civil works estimated to cost less than the equivalent of $3,000,000 may be awarded in accordance with competitive bidding procedures locally advertised, satisfactory to the Bank, provided however that awards shall be made to the lowest evaluated bidders. (b) Spare parts under Part A (7) of the Project and training equipment under Part C of the Project, estimated to cost in the aggregate not more than the equivalent of $5,500,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Bank. Part D: Without limitations upon the provisions of the Guidelines, in respect of procurement of goods or works under contracts awarded in accordance with the procedures referred to in Part A hereof: 1. No requirement of local agents for bidders shall be made. 2. No prior registration of bidders shall be required. 3. No provision regarding minimum number of bidders shall be applied. 4. Bids for goods shall be evaluated on a C.I.F. basis. 5. Freight costs quoted freely by each bidder shall be used for purposes of bid evaluation. 6. Awards shall be made to the lowest evaluated bidders. Page 11 Part E: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for: (i) civil works estimated to cost the equivalent of $3,000,000 or more; and (ii) goods estimated to cost the equivalent of $1,000,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Bank pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 5 to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Bank has authorized withdrawals from the Loan Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 5.01 (c) (ii) of this Agreement. 2. The figure of 20% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories means the Categories of items to be financed out of the proceeds of the loan as set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures 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 allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $9,000,000 to be withdrawn from the Loan Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Bank shall otherwise agree, payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent Page 12 withdrawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Bank requests for replenishment of the Special Account at such intervals as the Bank shall specify. On the basis of such requests, the Bank shall withdraw from the Loan Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Bank, prior to or at the time of such request, such documents and other evidence as the Bank shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Bank when either of the following situations first arises: (i) the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Loan allocated to the eligible Categories, minus the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Bank, deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Bank into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount for crediting to the Loan Account and immediate cancellation. Page 13