Nicaragua - Earthquake Reconstruction Project : Credit 0389 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 389 NI Development Credit Agreement (Earthquake Reconstruction Project) BETWEEN REPUBLIC OF NICARAGUA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 6, 1973 CONFORMED COPY CREDIT NUMBER 389 NI Development Credit Agreement (Earthquake Reconstruction Project) BETWEEN REPUBLIC OF NICARAGUA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 6, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 6, 1973, between REPUBLIC OF NICARAGUA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) The Project will be carried out by the Borrower and by Banco de la Virienca c/e Nicaragua, Empresa Aguadora de Managua, Enpresa Nacional c/e Lu: Y Fuerza, and Instituto de Fomento Nacional, all of them with the Borrower's assistance and, as part of such assistance, the Borrower will make available to them several parts of the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in the project agreements of even (late herewith between the Association and Banco de la Vivienda de Nicaragua, Em71presa Aguadora de M'Ianaguai, Emnpresa Aacional de Luz Y Fuerza, and Instituto c/e Fomento Nacional, respectively; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of thp General Conditions Applicable to Development Credit Agreements of the Association, dated January 3 1, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the deletion of Sections 5.01 and 6.02(h) thereof and to the renurnbering of Section 6.02(i) into 6.02(h) thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: 4 (a) "BAVINIC" means Banco de la Vivienda de Nicaragua, an agency of the Borrower established by Decreto No. 1192 of the Borrower dated June 1, 1966; (b) "Part A Project Agreement" means the agreement between the Association and BAVINIC of even date herewith, as the same may be amended from time to time; (c) "Grant Agreement" means the agreement to be entered into between the Borrower and BAVINIC pursuant to Section 3.02(a)(i) of this Agreement, as the same may be amended from time to time; (d) "AGUADORA" means Empresa Aguadora de Managua, an agency of the Borrower established by Decreto No. 17B of the Borrower dated June 29, 1963, as amended pursuant to Decreto No. 292 of the Borrower, dated February 16, 1972. (e) "Part B Project Agreement" means the agreement between the Association and AGUADORA of even date herewith, as the same may be amended from time to time; (f) "Part B Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and AGUADORA pursuan, to Section 3.02(a)(ii) of this Agreement, as the same may be amended from time to time; (g) "ENALUF" means Enpresa Nacional de Luz v Fuerza, an agency of the Borrower established by the Ley' Consttitutiva de la Empresa Nacional de Luz Y Fuerza, dated October 14, 1954; (h) "Part C Project Agreement" means the agreement between the Association and ENALUF of even date herewith, as the same may be arnended from time to time; (i) "Part C Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ENALUF pursuant to Section 3.02(a)(ii) of this Agreement, as the same may be amended from time to time; (j) "INFONAC" means Instituto de Fomento Nacional, an agency of the Borrower established by Decreto No. 54, dated November 19, 1952; (k) "Part D Project Agreement" means the agreement between the Association and INFONAC of even date herewith, as the same may be amended from time to time; * 5 (1) "Part D Subsidiary Loan Agreement" means the agreement to be entercd into between the Borrower and INFONAC pursuant to Section 3.02(a)(ii) of this Agreement, as the same may be amended from time to time; (in) "Project Agreements" means the agreements defined in paragraphs (b), (e), (h) and (k) hereof; (n) "Subsidiary Loan Agreements" means the agreements defined in paragraphs (f), (i) and (1) hereof; and (0) "sub-loan" has the meaning set forth in Section 1.01(a) of the Part D Project Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to twenty million dollars ($20,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of: (a) expenditures under Part A of the Project, until evidence satisfactory to the Association shall have been furnished to the Association: i that the execution and delivery of the Part A Project Agreement on behalf of BAVINIC have been authorized or ratified by all necessary corporate action; 00 that the execution and delivery of the Grant Agreement on behalf of the Borrower and BAVINIC, respectively, have been duly authorized or ratified by all necessary corporate and governmental action; and (iii) the Association has been furnished with an opinion or opinions satisfactory to the Association of counsel acceptable to the 6 Association showing that the Part A Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of BAVINIC, and constitutes a valid and binding obligation of BAVINIC in accordance with its terms and that the Grant Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and BAVINIC, respectively, and constitutes a valid and binding obligation of the Borrower and BAVINIC in accordance with its terms; (b) expenditures tinder Part B of the Project, until evidence satisfactory to the Association shall have been furnished to the Association: (i) that the execution and delivery of the Part B Project Agreement on behalf of AGUADORA have been authorized or ratified by all necessary corporate and governmental action; (ii) that the execution and delivery of the Part B Subsidiary Loan Agreement on behalf of the Borrower and AGUADORA respectively, have been duly authorized or ratified by all necessary corporate and governmental action; and (iii) the Association has been furnished with an opinion or opinions satisfactory to the Association of counsel acceptable to the Association showing that the Part B Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of AGUADORA and constitutes a valid and binding obligation of AGUADORA in accordance with its terms and that the Part B Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and AGUADORA, respectively, and constitutes a valid and binding obligation of the Borrower and AGUADORA in accordance with its terms; (c) expenditures under Part C of the Project, until evidence satisfactory to the Association shall have been furnished to the Association: (i) that the execution and delivery of the Part C Project Agreement on behalf of ENALUF have been authorized or ratified by all necessary corporate and governmental action; (ii) that the execution and delivery of the Part C Subsidiary Loan Agreement on behalf of the Borrower and ENALUF, 7 respectively, have been duly authorized or ratified by all necessary corporate and governmental action; and (iii) the Association has been furnished with an opinion or opinions satisfactory to the Association of counsel acceptable to the Association showing that the Part C Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of ENALUF, and constitutes a valid and binding obligation of ENALUF in accordance with its terms and that the Part C Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ENALUF, respectively, and constitutes a valid and binding obligation of the Borrower and ENALUF in accordance with its terms; (d) expenditures under Part D of the Project, until evidence satisfactory to the Association shall have been furnished to the Association: (i) that the execution and delivery of the Part D Project Agreement on behalf of INFONAC have been authorized or ratified by all necessary corporate and governmental action, (ii) that the execution and delivery of the Part D Subsidiary Loan Agreement on behalf of the Borrower and INFONAC, respectively, have been duly authorized or ratified by all necessary corporate and governmental action; and (iii) the Association has been furnished with an opinion or opinions satisfactory to the Association of counsel acceptable to the Association showing that the Part D Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of INFONAC, and constitutes a valid and binding obligation of INFONAC in accordance with its terms and that the Part D Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and INFONAC, respectively, and constitutes a valid and binding obligation of the Borrower and INFONAC in accordance with its terms; (e) expenditures under Part D(ii) of the Project until the investments to be financed thereunder shall have been approved by the Association; (f) expenditures under Part E. 3 of the Project until evidence satisfactory to the Association shall have been furnished to the Association that the Borrower 8 has made arrangements to obtain technical and financial assistance to plan and start operations of the technical institute and to procure equipment for it, both such technical and financial assistance to be provided by such parties and under such terms and conditions as shall be satisfactory to the Association; and (g) expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services (other than services of consultants) required for the Project and to be financed out of the proceeds of the Credit, shall be procured on the basis of international competition under procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, as revised in October 1972, and in accordance with, and subject to, the provisions set forth in Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1976, or such other date as shall be agreed between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on June I and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 1 and December 1 commencing June 1, 1983 and ending December 1, 2022, each installment to and including the installment payable on December 1, 1992 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. 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. ARTICLE III Execution of Parts A, B, C and D of the Project Section 3.01. Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall: (i) cause 9 BAVINIC, AGUADORA, ENALUF and INFONAC to perform, in accordance with the provisions of their respective Project Agreements and the Grant or Subsidiary Loan Agreements, as the case may be, all the obligations therein set forth, (ii) take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable them to perform such obligations, and (iii) not take, or permit to be taken, any action which would prevent or interfere with such performance. Section 3.02. (a) The Borrower shall, out of the proceeds of the Credit, (i) make available the equivalent of eight million dollars ($8,000,000) to BAVINIC under an agreement to be entered into between the Borrower and BAVINIC, under terms and conditions which shall have been approved by the Association (herein called the Grant Agreement); and (ii) relend the equivalent of two million five hundred thousand dollars ($2,500,000) to AGUADORA, the equivalent of five million dollars ($5,000,000) to ENALUF, and the equivalent of two million five hundred thousand dollars ($2,500,000) to INFONAC, respectively, under subsidiary loan agreements to be entered into between the Borrower and each of" them respectively under terms and conditions which shall have been approved by the Association and which shall inter alia include those set forth in Schedule 4 to this Agreement. (b) The Borrower shall exercise its rights under the Grant Agreement and each Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association 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 any provision of the Grant Agreement or of the Subsidiary Loan Agreements. Section 3.03. The Borrower shall: (i) take all such action as shall be necessary to acquire all such land and rights in respect of land as shall be required for the timely execution of Part A of the Project- (ii) transfer to BAVINIC free of charge, title, possession and all other ancillary rights to the land to be used for Parts A.1 and A.2 of the Project; and (iii) furnish to the Association, promptly after such acquisition and upon request, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to such Part of the Project. ARTICLE IV Execution of Part E of the Project Section 4.01. The Borrower shall carry out Part E of the Project with due diligence and efficiency and in conformity with appropriate administrative, 10 financial, educational and architectural practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 4.02. To assist in carrying out Part E of the Project, the Borrower shall maintain the Project Unit established pursuant to Section 5.01(d) of the Loan Agreement (Education Project) between the Borrower and the Bank, dated April 10, 1968, such unit to be responsible for the proper execution and supervision of Part E of the Project. Section 4.03. In the carrying out of Part E of the Project the Borrower shall employ qualified and experienced architectural consultants, and the services of an expert in school construction and related procurement, all acceptable to the Borrower and the Association, to an extent and upon terms and conditions satisfactory to the Association. Section 4.04. Except as the Association shall otherwise agree, the Borrower shall, in the carrying out of Part E of the Project, employ contractors acceptable to the Association to an extent and upon terms and conditions satisfactory to the Association. Section 4.05. Except as the Association shall otherwise agree, the BorrowLr shall furnish to the Association, for its approval, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Part E of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. Section 4.06. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit and to be used in the execution of Part E of the Project, against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit for the carrying out of Part E of the Project to be used exclusively for such Part of the Project. Section 4.07. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained sound accounting 11 practices the operations, resources and expenditures, in respect of Part E of the Project, of the departments or agencies of the Borrower responsible for carrying out said part of the Project or any part thereof. Section 4.08. (a) The Borrower shall promptly take all steps required under the Borrower's laws on expropriation of land for purposes of public use in order to acquire, not later than December 31, 1973, or such other date as shall be agreed between the Borrower and the Association, the ownership of all land not otherwise acquired by the Borrower which shall be required for the educational institutions included in Part E of the Project. (b) Except as the Borrower and the Association shall otherwise agree, the Borrower shall not award any construction contract concerning any of the educational institutions included in Part E of the Project until it shall fully own all land required for such construction. ARTICLE V Other Covenants Section 5.01. The Borrower shall, for the purposes set forth in Section 2.04 of the Part A Project Agreement, make available to BAVINIC such amounts as are due, from time to time, to the Borrower from AGUADORA, ENALUF and INFONAC, pursuant to the respective Subsidiary Loan Agreements therewith. Section 5.02. The Borrower shall: (i) maintain or cause to be maintained records adequate to record the progress of the Project (including the cost thereof), to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project, (ii) enable the Association's accredited representatives to examine the Project, the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 5.03. The Borrower shall (i) operate the educational institutions included in Parts A.3 and E of the Project at their designed capacity and in accordance with sound administrative and educational policies and practices with due regard to economy so as to promote the educational objectives of the Borrowei, and (ii) cause said institutions to be staffed with teachers and administrators in adequate numbers. 12 Section 5.04. The Borrower shall: (i) cause the buildings, furniture, and equipment of the community facilities included in Part A.3 of the Project, and the educational institutions included in Parts A.3 and E of the Project to be adequately maintained; (ii) cause all necessary renewals and repairs to be made thereto; and (iii) provide, promptly as needed, the funds, facilities, services and other rescarces required for the purpose. Section 5.05. The Borrower shall: (a) submit to the Association, for consultation, by December 31, 1973, or such other date as shall be agreed between the Borrower and the Association, a comprehensive proposal for the reconstruction and development of the city of Managua and the surrounding region, in relation to the growth of other cit,s in Nicaragua, and exchange views thereon with a panel of experts to be appointed by the Borrower, the Association and such other international organizations as shall be agreed between the Borrower and the Association; (b) not permit the construction of any administrative buildings, schools, hospitals, markets, commercial centers, high-rise buildings or high-density buildings in the city of Managua until the Borrower shall have adopted a definitive plan taking into consideration the proposal and exchange of views referred to in paragraph (a) of this Section; and (c) carry out or cause to be carried out studies (i) to identify areas the geology of which carries less risk of seismological damage than the Managua area, and to compare the cost of building in such places with the cost of reconstruction in the Managua area, and (ii) to analyze the sub-soil conditions of the Managua area, especially the downtown area of the city of Managua. ARTICLE VI Consultation, Information and Inspection Section 6.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by BAVINIC, AGUADORA, ENALUF and INFONAC 13 of their respective obligations under the Project Agreements, the Grant Agreement and the Subsidiary Loan Agreements to which each of them is a party, the administration, operations, resources and expenditures of BAVINIC, AGUADORA, ENALUF and INFONAC, and in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 6.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations, resources and expenditures of BAVINIC, AGUADORA, ENALUF and INFONAC and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement or the performance by BAVINIC, AGUADORA, ENALUF and INFONAC of their respective obligations Linder the Project Agreements, the Grant Agreement and the Subsidiary Loan Agreements to which each of them is a party. Section 6.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VII Taxes and Restrictions Section 7.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. 14 Section 7.02. This Agreement and the Project Agreements shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 7.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VIII Remedies of the Association Section 8.01. If any event specified in Section 7.01 of the General Conditions or in Section 8.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in this Agreement notwithstanding. Section 8.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) BAVINIC, AGUADORA. ENALUF or INFONAC shall have failed to perform any of its obligations under the respective Project Agreements, or the Grant Agreement or the Subsidiary Loan Agreements to which it is a party. (b) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of BAVINIC, AGUADORA, ENALUF or INFONAC or for the suspension of its operations. (c) An extraordinary situation shall have arisen which shall make it improbable that BAVINIC, AGUADORA, ENALUF or INFONAC will be able to perform its obligations under the respective Project Agreement to which it is a party. Section 8.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) any of the events specified in paragraph (a) of Section 8.02 of this Agreement shall occur and shall continue for a period of 60 days after notice 15 thereof shall have been given by the Association to the Borrower and the respective institution. (b) any event specified in Section 8.02(b) of this Agreement shall occur. ARTICLE IX Termination Section 9.01. The date of August 7, 1973 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 9.02. The obligations of the Borrower under Sections 5.03 and 5.04 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 25 years after the date of this Agreement, whichever shall be the earlier. ARTICLE X Representative of the Borrower; Addresses Section 10.01. The Ainistro de Ilacienda Y Crddito Phlico of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 10.02. The following addresses are specified for the purposes ,f' Section 9.01 of the General Conditions: For the Borrower: Ministerio de Hacienda y Crdito Pblico Palacio Nacional Managua, D.N. Nicaragua, C.A. Cable address: MINI HACIENDA Managua, Nicaragua For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America 16 Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF NICARAGUA By /s/ Guillermo Sevilla Sacasa Au thorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Gerald Alter Regional Vice President Latin America and the Caribbean 17 SCHEDULE I 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 amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed Part A of the Project I. Civil works and 7,230,000 60% of total Construction expenditures materials 11. Consultants' 770,000 100 of foreign services expenditures or 60% of total expenditures Part B of the Project III. Repair and 675,000 80% of total rehabilitation expenditures work IV. Equipment and 200,000 100% of foreign materials expenditures or 95% of local expenditures V. Civil works under 1,260,000 55% of total Part B.3 expenditures Part C of the Project VI. Civil works 370,000 40% of total expenditures VII. Equipment and 4,230,000 100% of foreign materials expenditures or 95% of local expenditures 18 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed Part D of the Project ViII. Sub-loans 2,500,000 50% of amounts disbursed under the sub-loans Part E of the Project IX. Civil works: (a) For Part E.1 of 425,000 90% of total the Project expenditures (b) For Part E.2 and 910,000 57% of total 3 of the Project expenditures X. Consultants' 90,000 57% of total services expenditures XI. Technical 15,000 100% of foreign assistance expenditures XIl. Equipment and 260,000 100% of foreign furniture expenditures or 90% of total expenditures XIII. Unallocated Part B 365,000 Part C 400,000 Part E 300,000 TOTAL 20,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; 19 (b) the term "local expenditures" means expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; and (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement, except that withdrawals may be made on account of expenditures (i) under Parts B.1 and 2 of the Project in an aggregate amount not exceeding the equivalent of $800,000; (ii) under Part C.1 of the Project in an aggregate amount not exceeding the equivalent of $900,000; and (iii) under Part E.1 of the Project in an aggregate amount not exceeding the equivalent of $150,000; provided that they have been incurred prior to such date but after January 1, 1973; (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I a ove in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, the percentage set forth in the third column of the table in paragraph I above in respect of such expenditures shall be applied to the amount of such increase, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and 20 (c) if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimated total expenditures under Categories I, II, III, V, VI, IX, X or XII or the estimated local expenditures under Categories IV or VII shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 21 SCHEDULE 2 Description of the Project The Project is part of the Borrower's program to reconstruct and rehabilitate its economy after the earthquake which partially destroyed Managua on December 23, 1972. It consists of: Part A: Sites and Services 1. Development of about 5,900 serviced residential sites and construction thereon of shelter core units. Each site of about 105 square meters will be serviced by individual electricity, water connections, and sanitary sewers, as well as overall storm water drainage, street lighting and bituminous roads. The development of the sites includes construction, on each site, of a 20 square meters earthquake-resistant shelter and a sanitary core unit with a washing unit (pilar), a shower and a toilet. Approximately 2,250 sites will be located in the city of Managua; 850 sites in the city of Masaya; 870 sites in the city of Granada; 830 sites in the city of Le6n; 700 sites in the department of Carazo; and 400 sites in such city or cities as shall be agreed between the Borrower and the Association. 2. Development of about 500 serviced residential sites in Managua, as described in the preceding paragraph, without shelter units, and provision of credit to the beneficiaries of such sites to purchase building materials to build shelters. 3. Construction of community facilities for the sites referred in paragraphs 1 and 2 above, including primary schools, health clinics, community centers with sanitary facilities, administrative space, meeting rooms and market areas with washing facilities. The specific location of sites and facilities within each city or department shall be determined by agreement between the Borrower and the Association. Part B: Water Supply 1. Emergency repair and rehabilitation of existing installations: construction of three steel reservoirs, repair of four concrete reservoirs, stabilization of the Laguna Asososca embankment, construction of a maintenance building and chlorination station, and carrying out of a leakage survey. 22 2. Procurement and use of equipment and materials required for repair, rehabilitation and maintenance work. 3. The carrying out of the civil works under Parts A, B, C and E of the Project described in Schedule 2 to the Loan Agreement between the Bank and Empresa Aguadora de Managua (Second Managua Water Supply Project) dated March 17, 1972. Part C: Power 1. Emergency repair and rehabilitation of existing installations: (a) Power Plant and Substations: (i) repair of three generating units, boilers and other equipment and the Managua steam plant building; and (ii) replacement of damaged equipment in the sub-stations and repair of the indoor substation of the Managua steam plant. (b) Distribution: (i) replacement of damaged equipment and materials to serve the outlying areas of the city of Managua; and (ii) dismantling and withdrawal of damaged components of the distribution network. (c) Approximately 15,000 consumer connections, including replacement of damaged equipment and materials, and new measuring transformers meters, insulators, switches and fuses. 2. Construction of an extension to the primary and secondary network, and installation of the corresponding consumer connections, to provide electric service to provisional housing units in the outlying areas of the city of Managua. 3. Construction of additions to the Oriental substation at the city of Managua and the substations at the cities of Masaya, Jinotepe and Chichigalpa and procurement and putting into service of 2 mobile 15 MVA substations. 4. Annual Work Program for 1973-1974: (a) Expansion of the primary and secondary distribution networks and public lighting facilities in various localities throughout the country. (b) Expansion of the Sosacloro substation at Managua. (c) Construction and improvement of office facilities, warehouses and workshops and acquisition of vehicles, communications equipment and spare parts therefor. 23 Part D: Industry The provision of credit to finance (i) the procurement of fixed capital assets for medium-sized industries, and (ii) the development of serviced industrial sites, both to be located in cities other than Managua. Part E: Education Construction, in Managua, of: 1. Prefabricated facilities for four general secondary schools, with an aggregate capacity of about 4,000 student places; 2. Two multilateral secondary schools, with an aggregate capacity of about 2,900 student places, including furnishing and equipping. 3. One technical institute, with a capacity of about 500 student places, including furnishing. The location and site for each of the above educational institutions shall be selected by agreement between the Borrower and the Association. The Project is expected to be completed by December 31, 1975. 24 SCHEDULE 3 Procurement A. International Competitive Bidding for Civil Works 1. With respect to any contract for civil works, other than those referred to in paragraphs C.1 and C.2 of this Schedule, estimated to cost the equivalent of $100,000 or more: (a) If contractors or suppliers are required to prequalify, before qualification is invited, the Association shall be informed of the procedure to be followed and such modifications shall be introduced in said procedure as the Association shall reasonably request. The list of prequalified contractors and suppliers, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification, shall be furnished to the Association for its comments before the applicants are notified and such additions to or deletions from the list shall be made as the Association shall reasonably request. (b) Before bids are invited, the Association shall be furnished, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and such modifications shall be made in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders; provided that for the purpose of bidding, the civil works under Part A.1 and 2 shall be divided into 5 bidding lots to be tendered simultaneously, either singly or in combination. (c) After bids have been received and evaluated, the Association shall be informed, before a final decision on the award is made, of the name of the bidder to whom it is intended to award the contract and the Association shall be furnished, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and BAVINIC or ENALUF, as the case may be, state the reasons for such determination and advise the Borrower of any cancellation pursuant to the provisions of paragraph (c) of Schedule 1 to this Agreement. 25 (d) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (e) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the delivery to the Association of ',he first application for withdrawal of funds from the Credit Account in respect of any such contract. 2. With respect to any contract for civil works, other than those referred to in paragraphs C. 1 and C.2 of this Schedule, estimated to cost less than the equivalent of $100,000, the Association shall be furnished, promptly after the execution of any such contract and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect thereof, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably req uest. The Association shall, if it determines that the award of the contract is not consistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and BAVINIC or ENALUF, as the case may be, state the reasons for such determination and advise the Borrower of any cancellation pursuant to the provisions of paragraph (c) of Schedule 1 to this Agreement. B. International Competitive Bidding for Materials, Furniture and Equipnent 1. With respect to any contract for naterials, furniture or equipment, other than those referred to in paragraph C.2 of this Schedule, estimated to cost the equivalent of $25,000 or more, the provisions of paragraph A.1 of this Schedule shall apply. 2. With respect to any contract for materials, furniture or equipment, other than those referred to in paragraph C.2 of this Schedule, estimated to cost less than the equivalent of $25,000 the provisions of paragraph A.2 of this Schedule shall apply. 3. For the purpose of evaluation and comparison of bids for materials, furniture or equipment, customs duties and other import taxes on imported goods, and sales and similar taxes on locally produced goods, shall be excluded, except to the extent hereinafter provided, and bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for locally produced goods. The cost to the Borrower of inland freight and other expenditures incidental .to the delivery of goods to the place of their use or installation shall be taken into account in the evaluation of bids in accordance with paragraph 4.7 of the Guidelines for Procurement. 26 4. Bids shall be compared in accordance with the following rules: (a) the term "Central American Bid" means a bid submitted by a manufacturer established in the territories of the Central American Common Market for goods manufactured or processed to a substantial extent (as reasonably determined by the Association) in such territories; any other bid shall be deemed to be a "Non-Central American Bid"; (b) the bid price under a Central American Bid will be the sum of the following amounts: (i) the ex-factory price of such goods; and (ii) freight, insurance and other costs of delivery of such goods to the site designated in the specifications; (c) for the purpose of comparing any Non-Central American Bid with any Central American Bid, the price under a Non-Central American Bid will be the sum of the following amounts: (i) the c.i.f. (port of entry) price of such goods; (ii) half the amount of any taxes on the importation of such goods into the territories of the Borrower which generally apply to non-exempt importers, or 15% of the amount specified in (i) above, whichever shall be the lower; and (iii) freight, insurance and other costs of delivery of such goods from the port of entry to the site designated in the specifications. 5. The bidding documents shall clearly indicate the margin of preference to be granted. C. Special Provisions 1. Goods and services required for Part B.3 of the Project shall be procured in accordance with the provisions of the Loan Agreement between the Bank and Empresa Aguadora de Managua (Second Managua Water Supply Project) dated March 17, 1972. 2. Contracts for goods and services required for Parts B.1 and 2 and C.1 and 2 of the Project shall be awarded on a negotiated basis and with the prior approval of the Association. 27 3. Goods and services required for Part D of the Project shall be procured in accordance with the provisions of Section 2.04(a)(ii)(1) of the Part D Project Agreement. 4. The provisions of sub-paragraph A.1(e) of this Schedule shall apply to any contract awarded under this paragraph C. 5. Goods and services required for Part E of the Project shall be procured in accordance with the provisions of Section 3.01 of the Loan Agreement (Education Project) between the Borrower and the Bank, dated April 10, 1968 and the letter supplemental thereto entitled "Procurement", of even date therewith. I- 28 SCHEDULE 4 Terms of lending under the Subsidiary Loan Agreements Term of Loan Part of Sub- including Grace the Project Borrower Grace Period Period Rate of Interest* (years) B AGUADORA 20 6 no interest to accrue during the grace period; 7.25% thereafter C ENALUF 20 5 no interest to accrue during the grace period; 7.25% thereafter D INFONAC 12 3 no interest to accrue during the grace period; 6.75% thereafter (*) Per annum, on principal outstanding.