Conformed Copy - L3652 - Second Shanghai Metropolitan Transport Project - Project Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3652 CHA (Second Shanghai Metropolitan Transport Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and SHANGHAI MUNICIPALITY Dated December 15, 1993 LOAN NUMBER 3652 CHA PROJECT AGREEMENT AGREEMENT, dated December 15, 1993, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and SHANGHAI MUNICIPALITY (SM). WHEREAS by the Loan Agreement of even date herewith between People's Republic of China (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to one hundred fifty million dollars ($150,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that SM agrees to undertake such obligations toward the Bank as are set forth in this Agreement; WHEREAS SM, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Page 2 Section 1.01. Unless the context otherwise requires, the several terms defined in the Loan Agreement, the General Conditions (as so defined) and the preamble to this Agreement have the respective meanings therein and herein set forth. ARTICLE II Execution of the Project Section 2.01. (a) SM declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, and engineering practices, and shall provide, or cause to be provided, 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 SM shall otherwise agree, SM shall carry out the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement. Section 2.02. 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 1 to this Agreement. Section 2.03. SM shall carry out the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement. Section 2.04. (a) SM shall, at the request of the Bank, exchange views with the Bank with regard to progress of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Loan. (b) SM shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of Loan, or the performance by SM of its obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) SM shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of SM responsible for carrying out the Project or any part thereof. (b) SM shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, 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 and accounts and the audit thereof as the Bank shall from time to time reasonably request. ARTICLE IV Page 3 Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 4.02. This Agreement and all obligations of the Bank and of SM thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify SM thereof. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: 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 248423 (RCA), Washington, D.C. 82987 (FTCC), 64145 (WUI) or 197688 (TRT) For SM: Shanghai Municipal Finance Bureau 60 Jiu Jiang Road Shanghai People's Republic of China Telex: 33685 SMFB Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of SM, or by SM on behalf of the Borrower under the Loan Agreement, may be taken or executed by the Mayor of Shanghai or such other person or persons as the Mayor shall designate in writing, and SM shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in Page 4 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/ Gautam S. Kaji Regional Vice President East Asia and Pacific SHANGHAI MUNICIPALITY By /s/ Li Daoyu Authorized Representative SCHEDULE 1 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part D hereof, goods, under Parts A and B of the Project, and works, under Part A of the Project, 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 1992 (the Guidelines). (a) For fixed-price contracts, the invitation to bid referred to in paragraph 2.13 of the Guidelines shall provide that, when contract award is delayed beyond the original bid validity period, the successful bidder's bid price will be increased for each week of delay by two predisclosed correction factors acceptable to the Bank, one to be applied to all foreign currency components and the other to the local currency component of the bid price. Such an increase shall not be taken into account in the bid evaluation. (b) In the procurement of goods and works in accordance with this Part A, the Borrower shall use the relevant standard bidding documents issued by the Bank, with such modifications thereto as the Bank shall have agreed to be necessary for the purposes of the Project. Where no relevant standard bidding documents have been issued by the Bank, the Borrower shall use bidding documents based on other internationally recognized standard forms agreed with the Bank. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in the People's Republic of China 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: Preference for Domestic Contractors In the procurement of works in accordance with the procedures described in Part A hereof, the Borrower may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Page 5 Guidelines and paragraph 5 of Appendix 2 thereto. Part D: Other Procurement Procedures 1. Maintenance equipment under Part A of the Project, estimated to cost in the aggregate an amount not exceeding the equivalent of $1,800,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. 2. (a) Equipment under Part B.1 of the Project, estimated to cost in the aggregate an amount not exceeding the equivalent of $2,200,000, may be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids obtained from at least three qualified suppliers eligible under the Guidelines and in accordance with procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55, 2.56 thereof). (b) Equipment under Parts B.2 and C of the Project, estimated to cost less than the equivalent of $200,000 per contract, up to an aggregate amount not exceeding the equivalent of $3,200,000, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Bank. 3. Civil works under Part A of the Project, estimated to cost in the aggregate an amount not exceeding the equivalent of $31,200,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. 4. (a) Except as provided in subparagraph (b) hereof, civil works under Parts B.3 and C of the Project shall be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. (b) Civil works under Parts B.3 and C of the Project, estimated to cost the equivalent of $2,000,000 or less per contract, up to an aggregate amount not exceeding the equivalent of $11,200,000, may be carried out by force account. 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 goods, estimated to cost the equivalent of $200,000 or more, and civil works, estimated to cost the equivalent of $10,000,000 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 4 to the Loan Agreement. (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which withdrawals from the Loan Account are to be made on the basis of statements of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Page 6 Section II: Employment of Consultants In order to assist SM in carrying out the Project, SM 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. For complex, time-based assignments, the Borrower shall employ such consultants under contracts using the standard form of contract for consultants' services issued by the Bank, with such modifications as shall have been agreed by the Bank. Where no relevant standard contract documents have been issued by the Bank, the Borrower shall use other standard forms agreed with the Bank. SCHEDULE 2 Implementation Program 1. SM shall, under the general supervision and guidance of the Borrower, carry out the Project, with the assistance of such departments and agencies and project management team, acceptable to the Bank, in accordance with an implementation plan agreed to by the Bank. 2. SM shall select, design and implement Subprojects (including applicable environmental action plans and resettlement action plans in respect thereof) in accordance with criteria and procedures satisfactory to the Bank. 3. SM shall, taking into account the findings of the technical assistance provided in respect of the reform of Shanghai Transit Company (STC) under the Shanghai Metropolitan Transport Project (Credit Number 2296 CHA), prepare a time-based and costed program for the reform of STC and thereafter take appropriate steps to implement it in consultation with the Bank. 4. SM shall: (a) prepare time-based and costed plans for: (i) implementing a vehicle inspection and maintenance program, and (ii) reducing damaging vehicle emissions, (b) by December 31, 1994 furnish the said plans to the Bank, and (c) thereafter take appropriate steps to implement both plans in consultation with the Bank. 5. SM declares its commitment to the preservation of the environment and, to this end, shall, in respect of Part A of the Project, carry out: (a) the environmental protection measures stipulated in the Environmental Action Plan dated January 1993 and Supplement thereto dated July 1993, both prepared by the Shanghai Environmental Sciences Research Institute (SESRI), and (b) the environmental monitoring program set out in the Environmental Monitoring Plan, dated January 1993 and Supplement thereto dated May 1993, both prepared by SESRI, in a manner satisfactory to the Bank. 6. SM declares its commitment to the Bank's policy on resettlement, and, to this end, shall carry out the land acquisition and resettlement activities in respect of Parts A and C of the Project pursuant to two Resettlement Action Plans (entitled: "Inner Ring Road Project Stage 2, Resettlement Action Plan and Implementation Procedures" and "The Plan and Steps of Implementation for Land Requisition and Demolition of STC's Projects under STMP II" respectively), both dated June 1993 and prepared by Shanghai Municipal Engineering Construction Company and Shanghai Transit Company respectively, in a manner satisfactory to the Bank. 7. SM shall carry out the technical assistance and training under Part D of the Project in a manner satisfactory to the Bank. 8. SM shall furnish to the Bank: (a) by June 30, 1994, its current medium-term transportation investment plan, and thereafter (b) by June 30 of every year until completion of the Project, its annual transportation investment plan. Page 7