Bolivia - Major Cities Water Supply And Sewerae Rehabilitation Project : Credit 2187 - Credit Agreement - Conformed

CREDIT NUMBER2 f7-BO Development Credit Agreement (Major Cities Water Supply and Sewerage Rehabilitation Project) between REPUBLIC OF BOLIVIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated Da 7i , 1990 CREDIT NumBE2f7- BO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated DXrC/MA3e1Z /7 , 1990, between REPUBLIC OF BOLIVIA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of all Parts of the Project other than Part A.3 thereof; (B) the Borrower intends to contract from the Federal Republic of Germany, through the Kreditanstalt far Wiederaufbau (KfW) a loan (the KfW Loan) in the amount of twenty million deutsche marks (DM 20,000,000) to assist in financing Part A.3 of the Project on the terms and conditions set forth in an agreement (the KfW Loan Agreement) to be entered into between the Borrower and KfW; (C) the Project will be carried out in part by Servicio Aut6nomo Municipal e Agua Potable y Alcantarillado (SAMAPA), Cooperativa de Servicios Pablicos, Santa Cruz Limitada "SAGUAPAC" (SAGUAPAC), and Servicio de Agua Potable y Alcantarillado (SEMAPA), with the Borrower's assistance and, as part of such assistance, the Borrower will make available to SAMAPA, SAGUAPAC and SEMAPA, through Fondo Nacional de Desarrollo Regional, part of the proceeds of the Credit as provided in this Agreement; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreements of even date herewith between the Association and SAMAPA, SAGUAPAC and SEMAPA, respectively; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. -2- 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) "Boliviano" means the unit of currency of the Borrower; (b) "SAMAPA" means Servicio Aut6nomo Municipal de Afua Potable y Alcantarillado, a municipal public utility with juris- diction in the city of La Paz and El Alto, established by the SAMAPA Decree (as hereinafter defined); (c) "SAGUAPAC" means Cooperativa de Servicios PMblicos, Santa Cruz Limitada, "SAGUAPAC", a cooperative with jurisdiction in the city of Santa Cruz de la Sierra, established by the SAGUAPAC Decree (as hereinafter defined); (d) "SEMAPA" means Servicio de Agua Potable y Alcanta- rillado, a public utility with jurisdiction in the city of Cochabamba, established by the SEMAPA Decree (as hereinafter defined); (e) "Executing Agencies" means, collectively, SAMAPA, SAGUAPAC and SEMAPA; (f) "SAMAPA Project Agreement" means the agreement between the Association and SAMAPA of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the SAMAPA Project Agreement; (g) "SAGUAPAC Project Agreement" means the agreement between the Association and SAGUAPAC of even date herewith, as the samet may be amended from time to time, and such term includes all schedules and agreements supplemental to the SAGUAPAC Project Agreement; (h) "SEMAPA Project Agreement" means the agreement between the Association and SEMAPA of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the SEMAPA Project Agreement; (i) "Project Agreements" means collectively the SAMAPA Project Agreement, the SAGUAPAC Project Agreement, and the SEMAPA Project Agreement; -3- (j) "SAMAPA Subsidiary Loan Agreement" means the agreement to be entered into between the FNDR and SAMAPA pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time; (k) "SAGUAPAC Subsidiary Loan Agreement" means the agreement to be entered into between FNDR and SAGUAPAC pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time; (1) "SEMAPA Subsidiary Loan Agreement" means the agreement to be entered into between FNDR and SEMAPA pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time; (m) "Executing Agencies Subsidiary Loan Agreements" means collectively the SAMAPA Subsidiary Loan Agreement, the SAGUAPAC Subsidiary Loan Agreement, and the SEMAPA Subsidiary Loan Agree- ment and "Executing Agencies Subsidiary Loan" means each sub- sidiary loan made pursuant to the provisions of the Executing Agencies Subsidiary Loan Agreements; (n) "SAMAPA Decree" means the Borrower's Decreto Ley No. 7597 dated April 20, 1966, as amended by Decreto Lev No. 12547 dated June 4, 1975 and Decreto Supremo No. 21021 dated August 5, 1985; (o) "SAGUAPAC Decree" means the Borrower's Decreto Supremo No. 16139, dated February 1, 1979; (p) "SEMAPA Decree" means the Borrower's Decreto Supremo No. 8048, dated July 12, 1967, as amended by Decreto Supremo No. 10597, dated November 24, 1972 and Decreto Supremo No. 21021 dated August 5, 1985; (q) "Fiscal Year" means the fiscal year of the Borrower and the Executing Agencies which commences on January 1 in each calendar year; (r) "FNDR" means Fondo Nacional de Desarrollo Regional, an agency of the Borrower established pursuant to the FNDR Law (as hereinafter defined); (s) "FNDR Law" means the Borrower's Law No. 926 of March 25, 1987 and Decreto Supremo No. 21964 dated July 1, 1988; (t) "FND:R Subsidiary Agreement" means the agreement to be entered into between the Borrower and FNDR pursuant to the pro- visions of Section 3.01 (c) of this Agreement, as the same may be amended from time to time; and "FNDR Subsidiary Loan" means the Subsidiary Loan made under the FNDR Subsidiary Agreement; (u) "KfW" means Kreditanstalt fdr Wiederaufbau, an agency of the government of the Federal Republic of Germany; (v) "LIBOR" means the six (6) months London Interbank Offered Rate as published in a newspaper of wide distribution acceptable to the Association; (w) "MPC" means the Borrower's Ministry of Planning and Coordination; (x) "MUA" means the Borrower's Ministry of Urban Affairs; (y) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated May 19, 1987, and August 28, 1987, between the Borrower and the Association, as amended on September 21, 1989, for purposes of financing the preparation of Parts A, B and C of the Project; and (z) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to twenty-five million two hundred thousand Special Drawing Rights (SDR 25,200,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the reason- able cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. -5- (b) The Borrower shall, for the purposes of all Parts of the Project other than Part A.3 thereof, open and maintain in dollars a special account in its Central Bank or a commercial bank satis- factory to the Association on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. (c) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and out- standing as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be June 30, 1996 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not with- drawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date and at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next date in that year speci- fied in Section 2.06 of this Agreement. (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restric- tions of any kind imposed by, or in t.he territory of, the Bor- rower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. -6- Section 2.05. The Borrower shall pay to the Associ-tion a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on May 1 and November 1 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 1 and November 1 commencing May 1, 2001, and ending November 1, 2030. Each install- ment to and including the installment payable on November 1, 2010, shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever: (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 equivalent in price for 1985 dollar for five consecutive years; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Bor- rower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the prin- cipal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. -7- Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. Section 2.09. FNDR is designated as representative of the Borrower for the purposes of taking any action required or per- mitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. 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: (i) carry out Part D (other than D.1 (c) thereof) of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, water supply and sanitary practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for Part D of the Project; (ii) without any limitation or restriction upon any of its other obligations under this Development Credit Agreement, the Borrower shall cause SAMAPA, SAGUAPAC and SEMAPA to perform in accordance with the provisions of the SAMAPA Project Agreement, SAGUAPAC Project Agreement and SEMAPA Project Agreement, respectively, all the obligations of SAMAPA, SAGUAPAC and SEMAPA therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appro- priate to enable SAMAPA, SAGUAPAC and SEMAPA to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance; and (iii) cause FNDR: (A) to carry out Part D.1 (c) of the Project; and (B) to act as financial.agent of the Borrower in respect of Parts A, B and C of the Project, all in accordance with the provisions of the FNDR Subsidiary Agreement. -8- (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and the Borrower shall otherwise agree, the Borrower shall carry out Part D (other than D.1 (c)) of the Project, and cause FNDR to carry out Part D.1 (c) of the Project, all Jn accordance with the implementation program set forth in Schedule 5 to this Agreement. (c) The Borrower shall relend the proceeds of the Credit required by SAMAPA, SAGUAPAC and SEMAPA for carrying out Parts A (other than A.3 thereof), B and C of the Project, in an aggregate amount in dollars equivalent to SDR 24,250,000, to FNDR under a subsidiary agreement to be entered into between the Borrower and FNDR, under terms and conditions which shall have been approved by the Association and which shall include the following: (i) that the FNDR Subsidiary Loan shall be denominated in dollars and repaid in Bolivianos at the official rate of exchange as determined by the Central Bank as of the date each repayment JF_3 made; (ii) that FNDR shall pay interest on the outstanding balance of the FNDR Subsidiary Loan at a rate per annum equal to 1.5 percentage points below the average mean of the two LIBOR rates prevailing during the period in which such annual rate is calculated; (iii) that the proceeds of the FNDR Subsidiary Loan shall be repaid over a period not to exceed twenty (20) years, including therein a grace period of five (5) years; and (iv) that FNDR shall: (A) carry out Part D.1 (c) of the Project; (B) act as financial agent of the Borrower for Parts A, B, and C of the Project; and (C) relend to SEMAPA, SAGUAPAC and SAMAPA the proceeds of the Credit relent to FNDR under the FNDR Subsidiary Agreement in accordance with the provisions of Section 3.01 (d) of this Agreement; all in accor- dance with the provisions of this Agreement. (d) The Borrower shall cause FNDR to relend the proceeds of the Credit required by SAMAPA, SAGUAPAC and SEMAPA for carrying out Parts A (other than A.3), B and C of the Project, respective- ly, under three subsidiary loan agreements to be entered into between FNDR and SAMAPA, FNDR and SAGUAPAC, and FNDR and SEMAPA, -9- respectively, under terms and conditions which shall have been approved by the Association and which shall include, inter alia, the following: (i) that the Executing Agencies Subsidiary Loan shall be denominated in dollars and repaid in Bolivianos at the official rate of exchange as determined by the Central Bank as of the date each repayment is made; (ii) that the Executing Agencies shall pay interest on the outstanding balance of the Executing Agencies Subsidiary Loan at a rate per annum equal to the average mean of the two LIBOR rates prevailing during the period in which such annual rate is calculated plus 1 percentage point; and (iii) that the proceeds of the Executing Agencies Sub- sidiary Loan shall be repaid over a period not to exceed twenty (20) years, including therein a grace period of five (5) years. (e) The Borrower shall exercise its rights under the FNDR Subsidiary Agreement and shall cause FNDR to exercise its rights under the Executing Agencies Subsidiary Loan Agreements in such manner as to protect the interests of the Borrower and the Asso- ciation and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the FNDR Subsidiary Agreement or any provision thereof and shall cause FNDR not to assign, amend, abrogate or waive any of the Executing Agencies Subsidiary Loan Agreements or the FNDR Subsidiary Agreement or any provision thereof. Section 3.02. Except as the Association 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 Credit shall be governed by the provisions of Schedule 4 to this Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) shall be carried out by SAMAPA, in respect of Part A of the Project, SAGUAPAC, in respect of Part B of the Project, and SEMAPA, in - 10 - respect of Part C of the Project, pursuant to Sections 2.03 of the SAMAPA Project Agreement, SAGUAPAC Project Agreement and SEMAPA Project Agreement, respectively. Section 3.04. The Borrower shall: (a) by October 1 of each year, review with the Executing Agencies, FNDR, KfW and the Asso- ciation the status of implementation of the Project, including the Borrower's, FNDR's and the Executing Agencies' compliance with the provisions of this Agreement and the Project Agreements, res- pectively, and any actions that, in the opinion of the Associa- tion, need to be taken by the Borrower or the Executing Agencies in the event of any shortcomings in such implementation; and (b) promptly thereafter take or cause to be taken such actions. Section 3.05. (a) The Borrower shall enter, and cause the Executing Agencies, other than SAGUAPAC, to enter into contractual arrangements, satisfactory to the Association, with a procurement agent or agents acceptable to the Association, for the purposes of providing procurement services for the Project on behalf of the Borrower, including the contracting of consultants and procurement of goods to be financed from the proceeds of the Credit. (b) The Borrower shall exercise its rights and cause the Executing Agencies concerned to exercise their respective rights under the contractual arrangements referred to in paragraph (a) of this Section in such a manner as to protect the interests of the Borrower and the Association, and to accomplish the purposes of the Credit. Section 3.06. The Borrower shall: (a) not later than Decem- ber 31, 1992, furnish to, and discuss with, the Association a plan to allocate water resources between agriculture and other uses (including human consumption) in the Cochabamba azea so as to satisfy the water supply requirements of the city of Cochabamba; and (b) not later than June 30, 1993, commence implementation of such agreed plan, in a manner satisfactory to the Association, taking into account, to its satisfaction, the comments, if any, made by the Association. Section 3.07. Except as the Association shall otherwise agree, the Borrower shall neither commit itself to nor make, and shall cause its agencies and entities not to make commitments for, or make, any capital expenditures for the construction and opera- tion of any water scheme in the Departments of La Paz, Santa Cruz and Cochabamba with an estimated cost of over US$10,000,000 equi- valent unless the Association has been furnished with evidence, satisfactory to the Association, that the proposed expenditures are economically and technically justified. - 11 - Section 3.08. The Borrower shall, not later than: (a) December 31, 1991, furnish to the Association a proposal, satis- factory to the Association, for the reorganization of its water supply sector based on the results of studies currently being carried out by the Borrower; and (b) June 30, 1992, commence implementation of the reorganization described in such proposal, taking into account the comments, if any, made by the Associati-n. ARTICLE .V Financial and Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained separate records a.d accounts adequate to reflect in accordance with sound accounting practice the operations, re- sources and expenditures in respect of Part D of the Project. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section and those for the Special Account for each Fiscal Year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than five months after the end of each such Year the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditures, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; - 12 - (ii) retain, until at least one year after the Asso- ciation has received the audit for the Fiscal Year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association'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 proce- dures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.02. Without any limitation or restriction upon its other obligations under this Agreement, the Borrower shall, promptly as required, take all actions necessary to enable: (a) SAMAPA to fulfill its obligations under Sections 2.06, 4.02, 4.03, 4.04 and 4.05 of the SAMAPA Project Agreement; (b) SAGUAPAC to fulfill its obligations under Sections 2.06, 4.02, 4.03, 4.04 and 4.05 of the SAGUAPAC Project Agreement; and (c) SEMAPA to fulfill its obligations under Sections 2.06, 4.02, 4.03, 4.04 and 4.05 of the SEMAPA Project Agreement. ARTICLE V Remedies of the A.:,iation Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) SAMAPA, SAGUAPAC or SEMAPA shall have failed to perform any of their obligations under any of the Project Agreements. (b) As a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that SAMAPA, SAGUAPAC or SEMAPA will be able to perform its obligations under its respective Project Agreement. - 13 - (c) The SAMAPA Decree, the SAGUAPAC Decree or the SEMAPA Decree shall have been amended, suspended, abrogated, repealed or waived so as to, in the opinion of the Association, affect materially and adversely the ability of SAMAPA, SAGUAPAC or SEMAPA, respectively, to perform any of its obligations under its respective Project Agreement or to limit its management and operational autonomy. (d) The Borrower or any other authority having jurisdiction shall have taken any action: (i) for the dissolution or dis- establishment of SAMAPA, SAGUAPAC or SEMAPA or for the suspension of its operations; or (ii) that shall affect materially and adversely the ability of SAMAPA, SAGUAPAC or SEMAPA to perform any of its obligations under its respective Project Agreement. (e) The KfW Agreement shall have failed to become effective by June 30, 1991, or such later date as the Association may agree; provided, however, that the provisions of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that 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. (f) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of the KfW Loan or of any 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 the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agrecd maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, can- cellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) ade- quate 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 -14 - (g) FNDR shall have failed to perform any of its obligations under the FNDIR Subsidiary Agreement. (h) As a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen which shall make it improbable that FNDR will be able to perform its obligations under the FNDR Subsidiary Agreement. (i) The FNDR Law shall have been amended, suspended, abro- gated, repealed or waived so as to, in the opinion of the Asso- ciation, affect materially and adversely the ability of FNDR to perform any of its obligations under this Agreement or the FNDR Subsidiary Agreement. (j) The Borrower or any other authority having jurisdiction shall have taken any action: (i) for the dissolution or disestab- lishment of FNDR or for the suspension of its operations; or (ii) that shall affect materially and adversely the ability of FNDR to perform any of its obligations under the FNDR Subsidiary Agreement. (k) a Municipality or any other authority having juris- diction other than the Borrower pursuant to the provisions of Decree-Law No. 10460 dated September 22, 1972, shall have taken, or omitied to take, any action whereby the autonomy of SAMAPA, SAGUAPAC or SEMAPA to set their tariffs shalI have been restricted or impaired. (1) Supreme Decree No. 22627 dated October 24, 1990, shall have been amended, suspended, abrogated, repealed or waived. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) any of the events specified in paragraph (a) or (g) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; (b) the events specified in paragraph (c) or (d) or (i) or (j) or (k) of Section 5.01 of this Agreement shall occur; and (c) the event specified in subparagraph (f) (i) (B) of Section 5.01 of this Agreement shall occur, subject to the proviso in subparagraph (f) (ii) of that Section. - 15 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the FNDR Subsidiary Agreement has been executed on behalf of the Borrower and FNDR; (b) the Executing Agencies Subsidiary Loan Agreements have been executed on behalf of FNDR and SAMAPA, SAGUAPAC and SEMAPA, respectively; and (c) the KfW Loan has been approved by KfW's Board. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreements have been duly authorized or ratified by the Executing Agencies, and are legally binding upon the Executing Agencies in accordance with their terms; (b) that the FNDR Subsidiary Agreement has been duly authorized or ratified by the Borrower and FNDR and is legally binding upon the Borrower and FNDR in accordance with its terms; and (c) that the Executing Agencies Subsidiary Loan Agreements have been duly authorized or ratified by FNDR and the Executing Agencies and are legally binding upon FNDR and the Executing Agencies in accordance with their terms. Section 6.03. The date #74C/ J8, /99/ is hereby specified for the purposes of Section 12.04 of the General Conditions. - 16 - Section 6.04. The obligations of the Borrower under Sec- tion 4.02 of this Agreement and the provisions of paragraphs (a) and (b) of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Minister of Planning and Coordination of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Minister of Planning and Coordination Ministerio de Planeamiento y Coordinaci6n Avda. Arce 2147 La Paz, Bolivia Cable address: Telex: MINCORD 3280 MINCORD BV La Paz, Bolivia For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 17 - 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. REPUBLIC OF BOLIVIA By Au ized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Latin America and the Caribbean - 18 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil works: (a) for Part A 400,000 25% (other than A.3) of the Project (b) for Part B 2,900,000 60% of the Project (c) for Part C 2,500,000 50% of the Project (2) Materials and Equipment: (a) for Part A 2,700,000 ) (other than ) A.3) of the ) Project ) 100% of foreign ) expenditures and (b) for Part B 4,200,000 ) 100% of local of the ) expenditures Project ) (ex-factory cost) (c) for Part C 4,000,000 ) of the ) Project ) - 19 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (3) Consultants' services and training: (a) for Part A 900,000 ) (other than ) A.3) of the ) Project ) (b) for Part B 600,000 ) 100% of the ) Project ) (c) for Part C 1,800,000 ) of the ) Project ) (4) Consultants' 725,000 100% services and training for Part D of the Project (5) Equipment for 75,000 100% of foreign Part D of the expenditures Project and 100% of local expenditures (ex-factory cost) (6) Refunding of 550,000 Amount due pur- Project Prepara- suant to Section tion Advance 2.02 (c) of this Agreement (7) Unallocated: 3,850,000 TOTAL 25,200,000 - 20 - 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 Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. 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, except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 1,100,000 may be made on account of payments made for expenditures before that date but after May 4, 1990. - 21 - SCHEDULE 2 Description of the Project The objectives of the Project are: (i) to improve and expand the water supply and sanitation services in the cities of La Paz, Santa Cruz and Cochabamba; (ii) to improve the operational efficiency and management systems of the water utilities respon- sible for services in the above cities; (iii) to improve the framework of sector policies and institutional arrangements to accelerate the development of the water supply and sanitation sector country-wide; (iv) to improve the institutional capabili- ties of the Borrower's departments in overseeing agencies opera- ting in the water sector; and (v) to improve the coordination between the Borrower and external donors in preparing and financing sector-wide projects. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: SAMAPA 1. Improvement and expansion of SAMAPA's water supply systems including: (a) expansion of the Pampahasi water treatment plant to increase its capacity from 400 liters per second to 700 liters per second; (b) construction of a storage tank; (c) construction of a water transmission line from the Pampahasi water treatment plant to the localities of Calacoto, Chasquipampa and Caiconi in southern La Paz; and (d) construction of water distribution infrastructure in an area of about 240 hectares. 2. Institutional strengthening of SAMAPA, including: (a) preparation of the final designs for the transmission lines and distribution infrastructure referred to in paragraphs (b) and (c) abo,te respectively; - 22 - (b) advisory services to SAMAPA to strengthen its management systems, and training to SAMAPA staff in management, operation and maintenance, and commercial and financial administration; and (c) acquisition and utilization of equipment and computer systems for improving its operational, commercial and financial management. 3. Rehabilitation of El Alto sewerage system, including: (a) construction of sewerage networks, including con- nections, covering an area of about 300 hectares in the municipality of El Alto; and (b) construction of a sewage treatment plant in El Alto. Part B: SAGUAPAC 1. Expansion of SAGUAPAC's water and sewerage systems, including: (a) expansion of the water system in the northern area of the city of Santa Cruz de la Sierra, including drilling and equipment of two deep wells, construction of a storage tank and pumping station and installation of distribution infrastructure; (b) expansion of the water system -I. the southern area of the city of Santa Cruz de la Sierra, including drilling and equipment of two deep wells, construction of a storage tank and pumping station and installation of distribution infrastructure; (c) expansion of the water system in the eastern area of the city of Santa Cruz de la Sierra, including drilling and equipment of one deep well, construction of a storage tank and installation of distribution infrastructure; (d) rehabilitation of production and distribution facilities (including replacement of about one hundred kilometers of pipe); (e) rehabilitation of a sewage treatment pond; and (f) construction of a sewerage network for about one hundred hectares under low-cost technology. - 23 - 2. Institutional strengthening of SAGUAPAC, including: (a) preparation of final designs for investments under Part C.1 of the Project; (b) consultants' services to SAGUAPAC to improve its management systems, and training of SAGUAPAC's staff in management, operation and maintenance, and commercial and financial administration; (c) acquisition and utilization of equipment, including computer systems, for improving its operational, commercial and financial management; and (d) construction of an office building. Part C: SEMAPA 1. Rehabilitation and expansion of SEMAPA's water supply system, including: (a) rehabilitation of the Wara Wara reservoir including construction of transmission main and storage tank and installa- tion of filters to increase water flow by about 100 liters per second; (b) rehabilitation of the Vinto wellfield including instal- lation of transmission main nd construction of a treatment plant to increase water production capacity by about 100 liters per second; (c) rehabilitation of the Chungara water systems, including construction of transmission main and storage tank and installa- tion of filters to reach a water production capacity of about 60 liters per second; (d) rehabilitation of the Cala Cala water treatment plant to increase its capacity to about 400 liters per second; (e) rehabilitation of the Cofia - Cofia pumping station; (f) expansion of distribution infrastructure throughout Cochabamba including the construction of storage tanks and the installation of distribution networks of water connections and meters; and -24- (g) construction and equipment of four deepwells and construction of a 13 kilometer transmission main for a production capacity of about 20C liters per second. 2. Institutional strengthening of SEMAPA, including: (a) preparation of: (i) final designs for investments under Part B.1 of the Project; and (ii) a water supply master plan; (b) advisory services to SEMAPA to strengthen its management systems, and training to SEMAPA's staff in management, operation and maintenance, and commercial and financial administration; and (c) acquisition and utilization of equipment, including computer systems, for improving its operational, commercial and financial management. Part D: Institutional development of the Borrower's water suply and sanitation sector 1. Provision of technical assistance to prepare the following: (a) guidelines for the analysis of water supply and sanita- tion projects to be applied by MPC; (b) a framework of tariff policies and a system of indica- tors for MUA to monitor the performance of agencies operating in the urban sub-sector; and (c) FNDR's operating manuals, and FNDR models of institu- tional, technical, financial and economic analysis. 2. Acquisition and utilization of data processing equipment for MPC and MUA. 3. Training of staff of FNDR, MPC and MUA and other agencies- -both urban and rural--operating in the Borrower's water sector but not carrying out investments under this Project, in management, operation and maintenance, and commercial and financial administration. - 25 - 4. Carrying out of a study to define a follow-up sector-wide operation including the identification of potential investment priorities in the urban sub-sector. The Project is expected to be completed by September 30, 1995. - 26 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (5) 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 Credit 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 of $2,000,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. - 27 - (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Sche- dule, the Association shall not be required to make further deposits into the Special Account: (a) if, at any time, the Association shall have determined that all further withdrawalr should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Credit allo- cated to the eligible Categories, less the amount of any out- standing special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall - 28 - 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 Association shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; and (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the Special Account (or, if the Association shall so request, refund to the Associa-tion) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association 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 Association, refund to the Association such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accor- dance with the relevant provisions of this Agreement, including the General Conditions. - 29 - 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 Bolivia 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 1. Local Competitive Bidding: Contracts for civil works estimated to cost the equivalent of $500,000 or less, up to an aggregate amount not to exceed the equivalent of $1,000,000 for each of the Executing Agencies, and contracts for goods estimated to cost less than the equivalent of $100,000, up to an aggregate amount not to exceed the equivalent of: (a) $500,000 for each of the Executing Agencies; and (b) $200,000 for goods for Part D of the Project, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Shopping: Goods for Parts A, B and C of the Project estimated to cost the equivalent of $20,000 or less per contract, up to an aggregate amount not to exceed the equivalent of: (a) $100,000 per Executing Agency; and (b) $200,000 for goods under Part D of the Project, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three sup- pliers eligible under the Guidelines, in accordance with proce- dures acceptable to the Association. - 30 - Part D: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to: (i) each contract for goods and works procured under the provisions of Part A hereof; and (ii) the first two contracts for goods and for works for each Executing Agency and for the Borrower in respect of Part D of the Project procured under the provisions of Part C.1 hereof, 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 Association pursuant to said paragraph 2 (d) shall be furnished to the Association 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 pre- ceding 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 Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 3 to the Development Credit Agreement. (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which the Association has authorized withdrawals on the basis of statements of expenditure. 3. The figure of 20% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II: Employment of Consultants In order to assist the Borrower, SAMAPA, SAGUAPAC and SEMAPA in carrying out the Project, the Borrower, SAMAPA, SAGUAPAC and SEMAPA shall employ consultants uhose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by Worle Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. - 31 - SCHEDULE 5 Implementation Program I. Actions to be taken by the Borrower By (date) 1. Contract consultancy to assist March 31, 1991 in preparing and implementing investment guidelines, a framework for approving tariffs and an information system to monitor the urban sub-sector 2. Implement the systems proposed March 31, 1991 under the above consultancy as agreed by the Borrower and the Association II. Actions to be taken by FNDR 1. Contract consultancy to assist March 31, 1991 in preparing and implementing operational manuals and systems to assess projects 2. Contract consultancy to improve March 31, 1991 management systems 3. Employ managerial and technical At all times staff (including an engineer for water and sanitation) with qualifications and experience satisfactory to the Association INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY