Romania - Flood Recovery Project : Loan 1170 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1170 RO Loan Agreement (Flood Recovery Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND BANCA DE INVESTITII DATED NOVEMBER 12, 1975 CONFORMED COPY LOAN NUMBER 1170 RO Loan Agreement (Flood Recovery Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND BANCA DE INVESTITI DATED NOVEMBER 12, 1975 LOAN AGREEMENT AGREEMENT, dated November 12, 1975, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and BANCA DE INVESTITII (hereinafter called the Borrower). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). 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: (a) "Romania" and "Guarantor" both mean The Socialist Republic of Romania; (b) "Foreign Trade Bank" means the Romanian Bank for Foreign Trade, established by Law No. 16/1968 of Romania; (c) "Charter" means the Charter of the Borrower as approved by Decree No. 314 of 1971 of the Council of State of Romania, and Decree No. 125 of 1970 concerning the organization and operations of the Borrower, ratified by Law No. 22 of 1970 of Romania, as amended by Decree No. 314 of 1971 of the Council of State of Romania, as amended from time to time; and (d) "Project Enterprise" means any State Enterprise whose facilities shall be or shall have been reconstructed or repaired under the Project. 4 ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty million dollars ($20,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Bank and the Borrower, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services selected by agreement between the Bank and the Borrower, required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower may designate the Foreign Trade Bank as repiesentative of the Borrower for the purpose of taking any action required or permitted to be taken under the provisions of paragraph (a) of this Section and Article V of the General Conditions. Section 2.03. Except as the Bank and the Borrower shall otherwise agree, contracts for the purchase of goods and for the carrying out of works or services (other than consultants' services) for the Project and to be financed out of the proceeds of the Loan shall be awarded in accordance with the provisions of Schedule 4 of this Agreement. Section 2.04. The Closing Date shall be March 31, 1977, or such other date as shall be agreed between the Bank and the Borrower. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on May 15 and November 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. 5 ARTICLE III Execution of the Project Section 3.01. The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with appropriate engineering, financial and administrative practices, and shall cause the goods and services to be financed out of the proceeds of the Loan to be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 3.02. The Borrower shall cause adequate provision to be made for the insurance of the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of importation into the territory of Romania, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. Section 3.03. Except as the Bank and the Borrower shall otherwise agree, all goods and services financed out of the proceeds of the Loan shall be used exclusively for the Project. ARTICLE IV Achievement of the Purposes of the Project Section 4.01. The Bank and the Borrower agree that, in order to realize the purposes of the Project, it shall be necessary for each Project Enterprise to manage its affairs, to carry on its operations, and to operate and maintain the installations and other property managed or operated by that Enterprise, all in accordance with appropriate administrative, financial and engineering practices. The Borrower shall to the extent that it is authorized under the laws of Romania ensure that each Project Enterprise will conduct its operations in accordance with the requirements set forth in this Section. ARTICLE V Management and Operations of the Borrower Financial Covenants Section 5.01. The Borrower shall manage and conduct its operations and affairs in accordance with appropriate administrative and financial standards and practices and in accordance with the Charter. 6 Section 5.02. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.03. (a) It is not the practice of the Borrower to create liens as security for debt. Accordingly, the Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) For the event that, notwithstanding the foregoing, a lien shall be created on any of the Borrower's assets as security for any debt, the Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create the lien, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of such lien express provision will be made to that effect, at no cost to the Bank, and (ii) if the lien shall be created by law, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan. Section 5.04. The Bank and the Borrower agree that in carrying out the provisions of this Agreement the Borrower shall take such measures as shall be necessary according to the State Plan of Romania and the applicable laws in order to achieve the purposes of the Project. ARTICLE VI Cooperation and Information Financial Data Section 6.01. The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end: (a) the Bank and the Borrower shall from time to time at the request of either party exchange views through their representatives with regard to the progress of the Project, the benefits derived from the Project, the performance of their respective obligations under the Loan Agreement, the fulfillment of the requirements set forth in Section 4.01 of this Agreement and other matters relating to the purposes of the Loan, and, until the Closing Date, the Borrower shall enable the Bank's representatives to exchange views with representatives of each Project Enterprise with regard to its activities under the Project; (b) the Borrower: (i) shall maintain or cause to be maintained records adequate to record the progress of the Project (including the cost thereof) and 7 to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; and (ii) shall furnish to the Bank within forty-five calendar days after each calendar quarter a report, of such scope and in such detail as the Bank and the Borrower shall agree, on the progress of the Project during such quarter; (c) the Borrower shall enable the Bank's representatives to visit and examine: the goods financed out of the proceeds of the Loan; the plants, installations, sites, works, buildings and equipment of each Project Enterprise; the facilities and construction sites included in the Project; the records and documents of each Project Enterprise; and the other records and documents relating to the Project: (d) the Borrower shall: (i) furnish to the Bank not later than three months after the end of each of its fiscal years, (A) certified copies of its financial statements (balance sheets, statements of income and expenses and related statements, as agreed between the Bank and the Borrower), and until the completion of the Project certified copies of its records referred to in paragraph (b) of this Section recording the cost of the Project, for such fiscal year submitted to an independent audit conducted, in accordance with appropriate auditing principles consistently applied, by the Ministry of Finance of Romania, and (B) the report of such audit by said auditor, of such scope and in such detail as the Bank and the Guarantor shall agree; and (ii) furnish to the Bank such other information concerning the before-mentioned financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request; and (e) the Bank and the Borrower shall from time to time furnish to each other such additional information as the other party shall reasonably request with regard to the progress of the Project, the expenditure of the proceeds of the Loan, the goods and services financed out of such proceeds, the operations, resources and expenditures of any Project Enterprise, the benefits derived from the Project and the general status of the Loan. Section 6.02. The Bank and the Borrower shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Loan, the maintenance of the service thereof or the performance by either party of its obligations under the Loan Agreement. 8 ARTICLE VII Termination Section 7.01. The date January 2, 1976, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. For the Borrower: Banca de Investiti Str. Doamnei No. 4 Bucharest, Romania Telex No: 011288 BINVR 011289 BINVR 9 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s / Willi A. Wapenhans Regional Vice President Europe, Middle East and North Africa BANCA DE INVESTITII By /s/ Corneliu Bogdan Authorized Representative 10 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated %o of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment and 8,000,000 100% of foreign spare parts expenditures for industrial rehabilitation (2) Equipment for 9,000,000 100% of foreign rehabilitation expenditures and of mines and 100% of local ex- transport penditures ex- factory (3) Unallocated 3,000,000 TOTAL 20,0000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from the territory and in the currency of any country other than Romania; and 11 (b) the term "local expenditures" means expenditures in the currency of Romania and for goods and services supplied from the territory of Romania. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, Romania on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Loan, the Bank may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures incurred before August 1, 1975, on account of items included in Category (1), and other expenditures incurred prior to the date of this Agreement. 5. Each request for withdrawal from the Loan Account shall be accompanied by a certificate issued by the Borrower by which the Borrower certifies that the withdrawal is requested on account of an investment included in the Project and that such investment has been approved by the authority competent to give such approval under Romanian law; the certificate shall be in a form agreed upon between the Bank and the Borrower. 6. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category to the extent required to meet the estimated shortfall proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 7. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting 12 any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as in the Bank's reasonable opinion represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. 13 SCHEDULE 2 Description of the Project The Project consists of: 1. technically feasible and economically justifiable investments in mining and industrial enterprises selected by agreement between the Bank and the Borrower, comprising replacement of flood-damaged machinery and spare parts, repair to damaged buildings and infrastructure, reopening of mines blocked by silt, and replenishment of damaged and lost inventories, all as required to repair the production and marketing facilities that were damaged as a result of the floods that occurred in mid-1975; and 2. reconstruction of transport works damaged by said floods, consisting of about 120 km of national highways (including 18 bridges) to be reconstructed to 7-meter paved standards and about 270 km of railroads (including 20 bridges). The Project is expected to be completed by December 31, 1976. 14 SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* November 15, 1978 275,000 May 15, 1979 285,000 November 15, 1979 295,000 May 15, 1980 310,000 November 15, 1980 320,000 May 15, 1981 335,000 November 15, 1981 350,000 May 15, 1982 365,000 November 15, 1982 380,000 May 15, 1983 395,000 November 15, 1983 415,000 May 15, 1984 430,000 November 15, 1984 450,000 May 15, 1985 470,000 November 15, 1985 490,000 May 15, 1986 510,000 November 15, 1986 530,000 May 15, 1987 555,000 November 15, 1987 575,000 May 15, 1988 600,000 November 15, 1988 625,000 May 15, 1989 655,000 November 15, 1989 680,000 May 15, 1990 710,000 November 15, 1990 740,000 May 15, 1991 770,000 November 15, 1991 805,000 May 15, 1992 840,000 November 15, 1992 875,000 May 15, 1993 910,000 November 15, 1993 950,000 May 15, 1994 990,000 November 15, 1994 1,035,000 May 15, 1995 1,080,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 15 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05(b) of the General Conditions: Time of Prepayment Premium Not more than three years 1-1/4% before maturity More than three years but 2-1/2% not more than six years before maturity More than six years but not 4-1/2% more than eleven years before maturity More than eleven years but 6-3/4% not more than sixteen years before maturity More than sixteen years but 7-1/2% not more than eighteen years before maturity More than eighteen years 8-1/2% before maturity 16 SCHEDULE 4 Procurement A. General Procedures 1. Contracts for equipment for rehabilitation of mines and transport shall be awarded under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. Other contracts. All other equipment and spare parts shall be of at least the same technical standards as those which they shall replace. Contracts for such items shall, after solicitation of bids from potential suppliers from at least three countries other than Romania on the basis of bid invitations consistent with the provisions of the Guidelines, be awarded in accordance with the provisions of paragraphs 4.3 through 4.10 of the Guidelines, unless this would be technically impossible, in which event such items shall be procured by prudent shopping. 3. Grouping of bids. Identical or similar items to be procured for the Project shall be grouped together, wherever practicable, for the purpose of bidding and procurement. B. Evaluation and Comparison of Bids fbr Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) 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 domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods shall be excluded; and (iii) the cost of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Romania may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 17 (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Romania if the bidder shall have established to the satisfaction- of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Romania equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Romania. (3) Group C: bids offering goods manufactured outside Romania. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15%/c of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the lowest evaluated bid from group C shall be selected. C. Review of Procurement Decisions by Bank 1. Review of invitation to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Romanian foreign trade enterprise concerned shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the procedures to be followed for the bidding, and, under the 18 procedures described in Part A.2 of this Schedule, a list of the suppliers from which bids are to be solicited, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been evaluated, the foreign trade enterprise concerned shall, before a final decision on the award is made, inform the Bank of the names of the bidders and the respective amounts of their bids and of the name of the bidder to which the contract is intended to be awarded and the reasons for the intended award and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommendation for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the foreign trade enterprise concerned and state the reasons for such determination. (c) The terms and conditions of the contract shall not without the Bank's concurrence materially differ from those on which bids were asked or prequalification was invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Ba-.nIk of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the foreign trade enterprise concerned shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with an analysis of all bids received, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the foreign trade enterprise concerned and state the reasons for such determination.