Honduras - Seventh Highway Project : Loan 1341 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1341 HO LOAN AGREEMENT (Seventh Highway Project) between REPUBLIC OF HONDURAS and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated December 16, 1976 LOAN AGREEMENT AGREEMENT, dated December 16, 1976, between REPUBLIC OF HONDURAS (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan (hereinafter called the Standard Loan) as hereinafter provided; (B) the Borrower has also requested the Bank to provide ad- ditional assistance towards the financing of the Project under the Interest Subsidy Fund for the Third Window established by Resolu- tion No. 75-111 of the Executive Directors of the Bank, and by an agreement of even date herewith between the Borrower and the Bank (hereinafter called the Third Window Loan Agreement) the Bank is agreeing to provide such assistance in an aggregate principal amount equivalent to seven million dollars ($7,000,000) (hereinafter called the Third Window Loan); and (C) the Borrower and the Bank intend that the proceeds of this Loan and of the Third Window Loan be disbursed ro rata on the basis of a 4:1 ratio; WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Standard Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- 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 Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said Gen- eral 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 con- text otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respec- tive meanings therein set forth and the following additional terms have the following meanings: (a) "Obras Pfblicas" means the Borrower's Secretarfa de Com- unicaciones, Obras Publicas y Transporte, or any successor thereto; (b) "Recursos Naturales" means the Borrower's SecretarTa de Recursos Naturales, or any successor thereto; (c) "DGR" and "DGRM" mean, respectively, the Directorate General for Roads and the Directorate General for Road and Airport Maintenance, both administrative divisions of Obras Pfiblicas, or any successor thereto; (d) "Cgmara" means C9mara Hondureia de la Industria de la Construcci6n; -3 (e) "Project Unit" means the unit to be established within DGH as required by Section 3.03 of this Agreement; (f) "FAO" means the Food and Agriculture Organization, a specialized agency of the United Nations, or any successor thereto; and (g) "FAO/BANK Cooperative Program" means the cooperative program described in the memorandum of agreement signed, between, inter alia, FAO and the Bank, dated April 2, 1964., as amended; (h) "Roads" means all roads that are included in the term carretera, as that term is defined in Article 1 of Decree No. 173 of the Borrower, entitled Ley de Vias de Communicacon Terrestre, dated May 20, 1959; and (i) "National roads" means all roads defined in Articles 2, 3 and 4 of Decree No. 173 of the Borrower, entitled Ley de Vias de CommunicacTon Terrestre, dated May 20, 1959. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Standard Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty-eight million dollars ($28,000,000). Section 2.02. The amount of the Standard Loan may be withdrawn from the Loan Account in accordance with the provisions of Sched- ule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expen- ditures made (or, if the Bank shall so agree, to be made) .n re- spect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Standard Loan. Section 2.03. Except as the Bank shall otherwise agree, con- tracts for the purchase of goods or for civil works to be financed out of the proceeds of the Standard Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1981 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. 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 Standard Loan not withdrawn from time to time. -5- Section 2.06. The Borrower shall pay interest at the rate of eight and seventy hundredths per cent (8.70%) per annum on the principal amount of the Standard Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on May 1 and November 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Standard Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -6- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out Parts A, B, C, D, E and F of the Project through Obras P6blicas, and Part G of the Project through Recursos Naturales, substantially in accordance with an implementation schedule satisfactory to the Bank, with due diligence and efficiency and in conformity wi7.h appropriate engi- neering, administrative and financial practices and shall provide, promptly as needed, the funds, facilities, services and other re- sources required for the purpose. Section 3.02. In order to assist the Borrower in the supervi- sion of Parts A and B of the Project and in the carrying out of Parts C through G or the Project, the Borrower shall employ engi- neering and agricultural consultants acceptable to the Bank, whose qualifications, terms of reference, and terms and conditions of employment shall be satisfactory to the Bank; provided, however, that for purposes of Part G of the Project, the terms of reference for the studies to be carried out thereunder shall be prepared by the Borrower with the assistance of FAO under the FAO/BANK Coop- erative Program and shall be acceptable to the Bank. Section 3.03. Except as the Bank shall otherwise agree and for the purpose of carrying out Parts A through F of the Project, the Borrower shall: * -7- (a) continue to operate until the Closing Date a Project Unit within DGR, which shall perform such functions as are set forth in Schedule 5 to this agreement; and (b) employ at all times within such Project Unit not less than three highway engineers and two administrators, all of them with such experience and qualifications as shall be satisfactory to the Bank. Section 3.04. In order to provide for Canara's cooperation with the Borrower in the carrying out of Part F (1) of the Project, the Borrower shall, not later than June 30, 1977 or on such later date as the Bank shall agree, enter with Camara into a contract satisfactory to the Bank, and, unless the Bank shall otherwise agree, the Borrower shall not change or fail to enforce such con- tract or any provision thereof. Section 3.05. (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 Standard Loan 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 Bor- rower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Standard Loan to be used exclusively for the Project. (c) Except as the Bank shall otherwise agree, maintenance equipment financed out of the proceeds of the Standard Loan shall be used solely for road maintenance purposes. Section 3.06. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to re- cord the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Standard Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Standard Loan and any relevant records and documents; and (iii) shall fur- nish to the Bank all such information as the Bank shall reasonably request concerning the proceeds of the Standard Loan and the goods and services financed out of such proceeds. Section 3.07. The Borrower shall take all such action as shall be necessary to acquire, before commencing any construction work for Parts A and B of the Project, all such land and rights in res- pect of land as shall be required for carrying out such construc- tion work and shall furnish to the Bank, promptly after each such -9 - acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes of each such construction work. Section 3.08. Except as the Bank shall otherwise agree, the Borrower shall: (a) not later than June 30, 1977, submit to the Bank a de- tailed plan setting forth the action to be taken by the Borrower, including, without limitation, the provision of adequate incentives, in order to recruit and retain the services of qualified personnel for DGR and DGRM; and (b) prior to the effectiveness of such plan, allow the Bank a reasonable opportunity to comment upon the plan and upon the steps to be taken for putting the plan into effect. -10 0 ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of for- eign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, Standard Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provi- sion to that effect; provided, however, that, if for any constitu- tional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or adminittrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges e the Standard Loan by an equivalent lien on other public assets s7tisfactory to the Bank. * -11 - (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdi- vision thereof and of any entity owned or controlled by, or oper- ating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with con- sistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carry- ing out the Project or any part thereof. Section 4.03. (a) The Borrower shall: (i) cause all national roads of the Borrower to be adequately maintained and cause all necessary repairs thereof to be made, all in accordance with sound engineering practices; (ii) cause all road maintenance equipment of the Borrower to be adequately maintained and cause all necessary repairs and renewals thereof to be made, all in accordance with 01 -12- sound engineering practices; (iii) cause existing repair workshops to be adequately maintained, particularly by improving, not later than December 31, 1977 and in a manner satisfactory to the Bank, the equipment repair and laboratory facilities at Tegucigalpa and San Pedro Sula (including disposal of obsolete equipment presently stockpiled therein); and (iv) provide, promptly as needed, the funds, facilities, services and other resources required for the foregoing. (b) Without limiting the generality of the foregoing, the Borrower shall take all necessary action to: (i) not later than June 30, 1977 or such other date as shall be acceptable to the Bank, cause the dimensions and weight of the vehicles using the national roads of the Borrower to be kept within the limits pro- vided by the laws and regulations of the Borrower; and (ii) ex- change views with the Bank on any proposal to amend or supplement such limits. (c) To assist in planning the development of the Borrower's road system, the Borrower shall establish and maintain facilities to collect and record such data as shall be required to assess the technical, economic and financial aspects of the Borrower's road system, and shall from time to time exchange views with the Bank regarding the plans for development of its road system. -13 - ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Standard Loan Agreement with- in the meaning of Section 12.01 (c) of the General Conditions: (a) that all the conditions precedent to the effectiveness of the Third Window Loan Agreement, other than the effectiveness of this Agreement, shall have been fulfilled; and (b) that the Borrower has established within DGR the Project Unit which is described in Section 3.03, and whose functions are set forth in Schedule 5, of this Agreement. Section 5.02. The date of March 16, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Secretary of Finance and Public Credit of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secretarfa de Hacienda y Credito Publico Tegucigalpa, D.C. Honduras Cable address: Minihacienda Tegucigalpa Honduras For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washihgton, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. -15 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 HONDURAS By /s/ Roberto Lazarus Bernhard Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Enrique Lerdau Acting Regional Vice President Latin America and the Caribbean - 16- 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 Standard Loan and of the Third Window Loan, the allocation of the amounts of the Standard Loan and of the Third Window Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 21,000,000 68% (represent- ing the estimated foreign expendi- ture component) (2) Equipment for 2,000,000 Part C of the Project (other than workshop and laboratory equipment included respectively, in Categories (3) and (14)) (a) Imported 100% of foreign expenditures (b) Imported but 90% locally procured -17 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (3) Workshop 400,000 equipment (a) Imported 100% of foreign expenditures (b) Imported but 90% locally procured (4) Laboratory 100,000 equipment (a) Imported 100% of foreign expenditures (b) Imported but 90% locally procured (5) Consultants' services (a) Parts A and B 1,300,000 50% (represent- of the Project ing the estimated foreign expendi- ture component) (b) Part D of the 300,000 80% (represent- Project ing the estimated foreign expendi- ture component) (c) Part E of the 300,000 80% (represent- Project (includ- ing the estimated ing fellowships foreign expendi- for DGH and ture component) DGHM's personnel) - 18 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (d) Part F of the 100,000 80% (represent- Project ing the estimated foreign expendi- ture component) (e) Part G of 500,000 80% (represent- the Project ing the estimated foreign expendi- ture component) (6) Unallocated 9,000,000 TOTAL 35,000,000 -19- 2. For the purposes of this Schedule, the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the ter- ritory of any country other than the Borrower. 3. The disbursement percentages have been calculated in compli- ance 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, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made: (a) 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 $40,000, may be made in respect of Category (5) (b) on account of expenditures incurred before that date but after September 1, 1976; and (b) in respect of expenditures under C&tegories (3) and (4) of paragraph 1 of this Schedule unless the Borrower shall have pro- vided adequate facilities, satisfactory to the Bank, for the installation of the respective equipment to be financed under such Categories. -20- 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank hes 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 appli- cable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- ditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or lim- iting 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. -21- SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: Construction of a two lane paved road between Talanga and Juticalpa, about 114 kms long, the design standards thereof to be as specified in Annex A to this Schedule. Part B: Construction of a two lane paved road between Juticalpa and Catacamas, about 41 kw- long, the design standards thereof to be as specified in Annex A to this Schedule. Part C: Improvement of Obras Pfblicas' maintenance and control operations by means of the acquisition and utilization of: (1) maintenance equipment (including spare parts there- for); (2) workshop equipment; and (3) laboratory equipment. Part D: Review and improvement of the Borrower's road transport planning,including, inter alia, the preparation of a plan (the Borrower's Highway Magster Plan), for the pur- pose of determining (i) an economically and financially feasible program of road construction; (ii) the basic data therefor and the methods for collection of such data (including road inventory); and (iii) the institu- tional organization required for the foregoing and for the timely updating of such plan and of the relevant data base. Part E: A program for training of: (1) DGR's personnel, in the fields of highway design, supervision of road construction, and laboratory controls, including fellowships abroad as determined from time to time by the Bank and the Borrower; and (2) DGRM's personnel, including on-the-job training in one of DGRM's districts with a view to extending the program to DGRM's other districts, and fellow- ships abroad as determined from time to time by the Bank and the Borrower. Part F: A program to: (1) improve the capabilities of the Borrower's con- -struction industry, including, inter alia: (a) review of the capacity, structures and methods thereof; and -23- (b) provision of technical assistance in the areas of bidding, cost control, financial planning and management, site operations and equipment management. (2) improve the business relationship between the Borrower and the domestic construction industry through a critical analysis of the Borrower's laws and regulations concerning such industry, including, inter alia: (a) review of Borrower's prequalification, bidding, bid evaluation and contract award procedures; (b) review of Borrower's procedures for supervi- sion of works, payment to contractors and settlement of disputes with respect to con- tracts; and (c) recommendation of specific measures to be taken by the Borrower with a view to improving such industry's operational efficiency. Part G: A program of studies, under terms of reference satis- factory to the Bank, in the area of influence of the Talanga-Juticalpa-Catacamas road (Guayape Valley) with a view to the integrated rural development of such area. Tet * The Proj ect is expected to be completed by June 30, 1981. -24- ANNEX A TO SCHEDULE 2 Design Standards for Roads Included in Parts A and B of the Project Design Elements Terrain Flat Rolling Mountainous Part A of the Project Design speed (km/h) 100 70 50 Pavement width (m) 7.30 7.30 7.30 Lanes (no.) 2 2 2 Shoulders (m) 1.85 1.85 1.85 Minimum horizontal radius (m) 300 100 60 Maximum gradient (%) 4 6 8 Width of right-of-way (m) 4o 4o 4o Design loading for bridges (AASHTO)* HS - 20 - 44 Pavemen type-Design Asphalt concrete carpet - 5 cm axle load = 8 tons thick Part B of the Project Design speed (km/h) 90 60 4o Pavement width (m) 7.0 7.0 7.0 Lanes (no.) 2 2 2 Shoulders (m) 1.50 1.50 1.50 Minimum horizontal radius (m) 280 100 50 Maximum gradient (%) 4 6 8 Width of right-of-way (m) 40 4o 4o Design loading .for bridges (AASHTO)* - 20 - 44 Pavement type-Design Double surface treatment axle load = 8 tons * American Association of State Highway and Transportation Officials * -25 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each May 1 and November 1 beginning November 1, 1981 through May 1, 1996 $905,000 On November 1, 1996 $850,000 9T7o 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 equiva- lents determined as for purposes of withdrawal. -26- Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Standard Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.30% More than three years but not more than six years before maturity 2.60% More than six years but not more than eleven years before maturity 4.80% More than eleven years but not more than sixteen years before maturity 6.95% More than sixteen years but not more than eighteen years before maturity 7.85% More then eighteen years before maturity 8.70% * -27 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the pur- chase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guide- lines), on the basis of international competitive bidding. 2. Bidders for the works included in Parts A and B of the Proj- ect shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. 3. For bidding purposes, construction works under Part A of the Project shall be divided in three sections, namely: Talanga-Guaimaca; Guaimaca-Guayape River; and Guayape River-Juticalpa; and Part B of the Project shall be considered as a fourth bidding section. The invitations to bid for such works shall, inter alia, specify that: (i) bidders may submit bids for one or more sections; (ii) all bids shall be opened simultaneously; (iii) awards shall be made on the basis of the lower of:, -28- (A) the lowest evaluated bid for the four sections; or (B) the lowest combination of lowest evaluated bids for each section. 4. For bidding evaluation purposes for equipment under Part C of the Project, adequate consideration shall be given to the avail- ability, in the Borrower's territories, of spare parts and services for such equipment, as well as to the advantages of standardization with the existing Borrower's equipment. 5. Equipment under Part C of the Project shall be grouped so as to permit such bulk procurement as shall be consistent with appro- priate technical and procurement practices. Whenever possible, each bid package for such items shall be for an estimated amount of not less than the equivalent of $30,000. B. Other Procurement Procedures 1. Subject to Part A (4) hereof, spare parts and laboratory equip- ment for Part C of the Project may be procured in accordance with the Borrower's ordinary procedures; provided, however, that the aggregate cost of the spare parts and laboratory equipment so procured shall not exceed the equivalent of $300,000. 2. Equipment under Part C of the Project, other than the equip- ment referred to in paragraph B.1 above, which cannot be grouped in bid packages estimated to cost the equivalent of $30,000 or -29 - more may be procured in accordance with the Borrower's ordinary procedures, provided, however, that the aggregate cost of the equipment so procured shall not exceed the equivalent of $300,000. C. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower shall, before quali- fication is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modi- fications in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: (a) Before bids are invited, the Borrower 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 advertising procedures to be followed for the bidding, and shall make such modifications in the said docu- ments 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. -31 - SCHEDULE 5 Project Unit The Project Unit will have, inter alia, the following functions: (i) Assist Obras P'6blicas in: (A) the processing of proposals from consultants concerning the Project, analysis of such proposals, and recommendations for award of contracts; (B) all activities related to the purchase and delivery of equipment and spare parts required for the Project; (C) the preparation of progress reports concerning the Project; and (D) the financial control of the Project. (ii) Oversee the consultants' work and check compliance of the consultants with the agreed terms of refe- rence; (iii) Review the monthly statements to be submitted to Obras PGblicas by consultants and by contractors for disbursement purposes; and (iv) Coordinate the carrying out of the Project.