Bolivia - Water Supply And Sewerage Project : Loan 1324 - Project Agreement - 1 - Conformed

CONFORMED COPY LOAN NUMBER 1324 BO PART A PROJECT AGREEMENT (Urban and Rural Communities Water Supply and Sewerage Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and ADMINISTRACION AUTONOMA DE OBRAS SANITARIAS DE POTOSI - AAPOS Dated October 15, 1976 PART A PROJECT AGREEMENT AGREEMENT, dated October 15, 1976, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and ADMINISTRACION AUTONOMA DE OBRAS SANITARIAS DE POTOSI - AAPOS (hereinafter called AAPOS). WHEREAS (A) by the Loan Agreement of even date herewith be- tween the Republic of Bolivia (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Bor- rower an amount in various currencies equivalent to eleven million five hundred thousand dollars ($11,500,000), on the terms and con- ditions set forth in the Loan Agreement, but only on condition, inter alia, that AAPOS agree to undertake such obligations toward the Bank as hereinafter set forth; (B) by a subsidiary loan agreement between the Borrower and AAPOS, part of the proceeds of the loan provided for under the Loan Agreement will be lent to AAPOS on the terms and conditions therein set forth; and WHEREAS AAPOS, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective menings therein set forth. -3- ARTICLE II Execution of Part A of the Project Section 2.01. AAPOS shall carry out Part A of the Project described in Schedule 2 to the Loan Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering-practices. Section 2.02. 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 Loan, shall be procured in accordance with the provisions of Schedule 1 to this Agreement. Section 2.03. (a) AAPOS undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan relent to it by the Borrower 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 AAPOS to replace or repair such goods. (b) Except as the Bank may otherwise agree, AAPOS shall cause all goods and services financed out of the proceeds of the Loan relent to it by the Borrower to be used exclusively for Part A of the Project. Section 24. (a) AAPOS shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, con- tract documents and construction and procurement schedules for Part A of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) AAPOS: (i) shall maintain records adequate to record the progress of Part A of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan relent to it by the Borrower, and to disclose the use thereof in Part A of the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Bank's representatives to visit the facilities and construction sites included in Part A of the Project and to examine the goods financed out of such proceeds and any relevant records and docu- ments; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning Part A of the Project, the expenditure of the proceeds of the Loan so relent to it and the goods and services financed out of such proceeds. (c) AAPOS shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of AAPOS and any relevant records and documents. Section 2.05. AAPOS shall duly perform all its obligations under the Part A Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, AAPOS shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Part A Subsidiary Loan Agreement or any provision thereof. - 5 - Section 2.06. (a) AAPOS shall, at the request of the Bank, exchange views with the Bank with regard to the progress of Part A of the Project, the performance of its obligations under this Agree- ment and under the Part A Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) AAPOS shall promptly inform the Bank of any condition which interferes or threatens to interfere with, the progress of Part A of the Project, the accomplishment of the purposes of the Loan, or the performance by AAPOS of its obligations under this Agreement and under the Part A Subsidiary Loan Agreement. Section 2.07. AAPOS shall take or cause to be taken all rea- sonable measures to ensure that Part A of the Project is carried out with due regard to ecological and environmental factors. Section 2.08. In order to assist AAPOS in the preparation of the engineering design for the water supply facilities included in Part A of the Project, AAPOS shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. -6- ARTICLE III Management and Operations of AAPOS Section 3.01. AAPOS shall at all times maintain its corporate existence and right to carry on its operations, and shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges, concessions and franchises which are necessary or useful in the conduct of its business. Section 3.02. AAPOS shall operate and maintain its plants, equipment and property, and from time to time make all necessary renewals and repairs thereof, all in accordance with appropriate engineering and public utility practices. Section 3.03. AAPOS shall at all times carry on its operations, manage its affairs, maintain its financial position, and plan the future expansion of its water and sewerage system, all in accor- dance with appropriate business, financial and public utility practices and under the supervision of experienced and competent management assisted by adequate competent staff. Section 3.04. AAPOS shall take out and maintain with respon- sible insurers, or make other provisions satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.05. In order to assist AAPOS in the improvement of its organization, management and financial accounting and the training of its personnel, AAPOS shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.06. AAPOS shall, not later than December 31, 1976 or such other later date as the Bank shall agree: (i) present to the Bank a program, satisfactory to the Bank, for the installation of meters or other measuring devices at the connection of not less than 80% of its consumers efficiently to control water consumption and the adoption of a tariff system based on the quantity of water actually consumed, and (ii) promptly thereafter put such program and tariff system into effect. Section 3.07. AAPOS shall, not later than April 30, 1977 or such other later date as the Bank shall agree, complete the con- sumer survey included as Part A.7 of the Project. -8- ARTICLE IV Financial Covenants Section 4.01. AAPOS shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. AAPOS shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) fur- nish to the Bank such other information concerning the accounts and financial statements of AAPOS and the audit thereof as the Bank shall from time to time reasonably request. Section 4.03. To ensure the continued operation of AAPOS' business in accordance with appropriate financial and public uti- lity practices, AAPOS shall, except as the Bank shall otherwise agree: (a) not later than December 1, 1976 and from time to time thereafter, take all such action as shall be necessary or advisable to cause AAPOS' tariffs for the sale of water to be set and main- tained at such levels as will produce revenues sufficient to enable AAPOS to cover: 9 (i) starting with calendar year 1977, at least its operating expenses (excluding depreciation of fixed assets and other non-cash operating charges), debt service payments (excluding interest on the proceeds of the Loan relent to AAPOS), and all taxes and payments in lieu of taxes; (ii) starting with calendar year 1978, at least the expenses and payments referred to in (i) above, including interest on the proceeds of the Loan relent to AAPOS; and (iii) starting with calendar year 1979, at least (1) the expenses and payments referred to in (ii) above, (2) the cost of any expansion other than a major expansion and increases in non-cash working capital requirements for the current year, and (3) ten per cent of the estimated average annual expenses for any major expansion during a period of three calendar years including the current year and the two years immediately following it. For purposes of this paragraph "major expansion" means any project or projects the aggregate expenditures for which are expected to exceed in any one year $100,000 equivalent; and - 10 - (b) before July 1 in each year, on the basis of realistic forecasts, review the adequacy of its tariffs to meet the require- ments set forth in paragraph (a) of this Section for the current year and the year immediately following it, furnish to the Bank the results of such review and afford the Bank the opportunity to comment thereon. - 11 - ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 5.02. This Agreement and all obligations of the Bank and of AAPOS thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms. Section 5.03. All the provisions of this Agreement shall con- tinue in full force and effect notwithstanding any cancellation or suspension under the Loan Agreement. - 12 - ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have desig- nated by notice to the party giving such notice or making such re- quest. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (wUl) For AAPOS: Administracion Autonoma de Obras Sanitarias de Potosi - AAPOS Potosi, Bolivia Cable address: AAPOS Potosi - 13 - Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of AAPOS may be taken or executed by its Gen- eral Manager or such other person or persons as he shall designate in writing. Section 6.03. AAPOS shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of AAPOS, take any action or execute any documents required or permitted to be taken or executed by AAPOS pursuant to any of the provisions of this Agreement. Section 6.04. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ S.M.L. van der Meer Acting Regional Vice President Latin America and the Caribbean ADMINISTRACION AUTONOMA DE OBRAS SANITARIAS DE POTOSI - AAPOS By /s/ Jaime Delgadillo Cortes Authorized Representative By Jaime Delgadillo Cortes Authorized Representative - 15 - SCHEDULE 1 Procurement A. International Competitive Bidding Contracts for the purchase of goods or for civil works shall be procured in accordance iith 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 Guidelines), on the basis of international competitive bidding. B. Evaluation and Comparison of Bids for 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, and sales and sim- ilar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to AAPOS 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 Bolivia may be granted a margin of preference in accordance with, and subject to, the following pro- visions: - 16 - (a) All.bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- loved in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Bolivia if the bidder shall have established to the satis- faction of AAPOS and the Bank that the manufacturing cost of such goods includes a value added in Bolivia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Bolivia. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first cor tred 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 evalu- ated 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. - 17 - (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 fur- ther comparison only, an amount equal to (i) the amount of cus- toms 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% of such price. If the group A bid in such further comparison is the lovest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works and equipment estimated to cost the equivalent of $50,000 or mre: (a) Before bids are invited, AAPOS shall furnish to the Bank, for its comments, the text of the invitations to bid and the speci- fications 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 documents or procedures - 18 - 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 received and evaluated, AAPOS shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, 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 AAPOS and state the reasons for such determination. (c) The terms and conditions of the contract shall not, with- out the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the delivery to the Bank 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 pro- ceeds of the Loan and not governed by the preceding paragraph, AAPOS shall furnish to the Bank, promptly after its execution and prior to the delivery to the Bank of the first application for - 19 - withdrawal of funds from the Loan Account in respect of such con- tract, two conformed copies of such contract, together with the analysis of the respective bids, 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 AAPOS and state the reasons for such determination.