Tunisia - Rural Roads Project : Loan 1601 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1601 TUN Loan Agreement (Rural Roads Project) between REPUBLIC OF TUNISIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated July 24, 1978 LOAN NUMBER 1601 TUN LOAN AGREEMENT AGREEMENT, dated July 24, 1978, bet;een REPUBLIC OF TUNISIA (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 Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) by the Loan Agreement dated December 17, 1976 between the Bank and Banque Nationale de Tunisie (hereinafter called BNT), the bank made a loan (Loan No. 1340-TUN) to BNT to assist in the financing of the Second Agricultural Credit Project in an amount in various currencies equivalent to twelve million dollars ($12,000,000), upon the terms and conditions set forth in the said Loan Agreement; (C) BNT has represented, inter alia, to the Borrower and the Bank that it is agreeable to use up to an aggregate amount of three million three hundred thousand dollars ($3,300,000) out of the proceeds of Loan No. 1340-TUN allocated to Part A and Part B ot the Second Agricultural Credit Project to the extent that said proceeds are available (provided, however, that the proceeds allocated to Part B of the said Project and to be so used shall not exceed an aggregate amount of one million dollars ($1,000,000) equivalent) for the provision of medium- and long-term credit to farmers included in Part D (2) of this Project, and for such purpose BNT will enter into an Agreement with the Borrower on terms and conditions satisfactory to the Borrower, the Bank and BNT; WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFOKE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions 01 Lie GeeLdl CutiditionS Applicablc to Loan -2- 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Rural Road" means a road, under Part A of the Project, carrying predominantly agriculture-related traffic, generally unpaved, irrespective of its classification as primary, secondary or tertiary road by the MPW, and located outside urban areas in the Borrower's territory; (b) "MPW"' means the Borrower's Ministry of Public Works (Ministere de l'Equipement); (c) "DPC" means the Direction des Ponts et Chaussees, a directorate established and operating within MPW; (d) "MA" means the Borrower's Ministry of Agriculture; (e) "DPA" means the Direction de la Production Agricole, a directorate established and operating within MA; (f) "DPAEP" means the Direction du Plan, de l'Analyse Economique et des Projets, a directorate established and operating within MA; (g) "CRDAs" mean the Commissariats R6gionaux de Deve- loppement Agricole, provincial field divisions established and operating within MA; (h) "Tunisian Dinars" and the letter "D" mean dinars in the currency of the Borrower; (i) "BNT Agreement" means the agreement to be entered into between the Borrower and BNT pursuant to Recital C of the Preamble to, and Section 3.02 of, this Agreement, as the same may be amended from time to time, and such term includes all schedules to the BNT Agreement; -3- (j) "BNT Statutes" means the statutes of BNT as the same may be amended from time to time; (k) "Sub-loan" means a loan made or proposed to be made by BNT to a Sub-borrower for short-term credit in accordance with the provisions of the Short-term Credit Convention or fcr an Investment Project in accordance with the provisions of Schedule 5 to this Agreement; (1) "Sub-borrower" means the recipient of a Sub-loan; (m) "Investment Project" means a specific project for any of the investments included in Part D (2) and (3) of the Project, to be carried out by a Sub-borrower utilizing the pro- ceeds of a Sub-loan; (n) "Project Coordination Committee" means the committee referred to in paragraph (b) of Section 3.01 of this Agreement; (o) "Controleur Financier" means the agent referred to in Article 19 of the Borrower's Law No. 58-76 of July 9, 1958, and in Article 11 of the Borrower's Decree No. 73-391 of August 2, 1973; (p) "service cooperative" means a cooperative providing tractor and harvesting services to small and medium farmers; and (q) "Short-term Credit Convention" means the agreement dated September 10, 1974, between the Borrower and BNT for the provision of short-term credit to small and medium farmers. 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 thirty-two million dollars ($32,000,000). Section 2.02. 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 Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1984 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 Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of seven and one-half per cent (7.50%) 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 semiannually on June 1 and December 1 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. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall: (i) carry out Parts A, B and E of the Project through DPC; (ii) carry out Part C of the Project through DPA; and (iii) cause BNT to carry out Part D of the Project in accordance with the provisions of the BNT Agreement; - 5 - all under the overall supervision of MPW with due diligence and efficiency and in conformity with appropriate financial, administrative, agricultural and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required.for the purpose. (b) For the purpose of coordinating the activities of the Borrower's departments and agencies, of BNT and of any other entities responsible for, or involved in, the execution of the Project or any part thereof, the Borrower shall establish and thereafter, until the completion of the Project, operate and maintain a Project Coordination Committee, with such powers, functions and responsibilities as shall be satisfactory to the Bank, and in accordance with the provisions of Schedule 6 to this Agreement. Section 3.02. Without any limitation on the generality of the provisions of Section 3.01 of this Agreement, the Borrower shall enter into an Agreement with BNT, in form and substance satisfac- tory to the Bank, providing, inter alia: (i) for an undertaking by the Borrower to make avail- able out of its own resources to BNT, as and when needed, such amoupts as BNT shall require towards the financing of Sub-loans under Part D (2) of the Project and such dther amounts as BNT shall require to make grants to Sub-borrowers, who are small and medium farmers, under said Part D (2), such grants representing for each category of Investment Project up to the percentage of its total cost specified in paragraph C.1 (i) of Schedule 5 to this Agreement; (ii) for an undertaking by the Borrower to make avail- able to BNT up to an amount of four million eight hundred thousand dollars ($4,800,000) equivalent out of the proceeds of the Loan for the financing in part of the Sub-loans under Part D (3) of the Project, and an amount equivalent one million six hundred thousand dollars ($1,600,000), approxi- mately, out of its own resources, for the financing of said Sub-loans; (iii) for an undertaking by the Borrower to reimburse, at intervals of twelve months, to BNT: (A) amounts - 6 - equal to the difference between the amounts of interest and other charges on Loan No. 1340-TUN, paid by BNT to the Bank, and the amounts due to BNT as interest on Sub-loans financed in part out of the proceeds of Loan No. 1340-TUN; and (B) a commission equal to 3% per annum of the aggregate principal amount of the Sub-loans outstanding from time to time under Part D (2) and (3) of the Project; (iv) for an undertaking by BNT to contribute up to five million eight hundred thousand dollars ($5,800,000) equivalent towards the financing of Sub-loans under Part D (1) of the Project in accordance with the provisions of the Short-term Credit Convention; (v) for an undertaking by BNT to maintain, in respect of each Sub-loan under Part D of the Project, separate sets of accounts (for each zone of influ- ence of the Rural Roads) adequate to reflect in accordance with consistently maintained sound accounting practices: (A) the nature of the funds made available to BNT by the Borrower for the purpose. of enabling BNT to make each Sub-loan; (B) the &:ounts disbursed under each Sub-loan; (C) the amounts of principal, interest and other charges due in respect of each Sub-loan; and (D) the amounts of principal, interest and other charges payable to BNT on account of each Sub-loan and overdue by two years or more; (vi) for an undertaking by BNT pursuant to which any Sub-loan under Part D (1) of the Project will be made in accordance with the provisions of the Short-term Credit Convention and any Sub-loan under Part D (2) and (3) of the Project will be made on terms and conditions consistent with the lending policies and procedures set forth in Schedule 5 to this Agreement, and in accordance with the provi- sions of Section 3.03 of the Loan Agreement for the Second Agricultural Credit Project; (vii) for an undertaking by BNT to provide, promptly as needed, the funds, facilities, services and other resources required for the strengthening of its -7- branches in the zones of influence of the Rural Roads; and (viii) for an undertaking by BNT (1) to furnish to the Bank as soon as available, but in any case not later than six months after the end of each fiscal year, (A) certified copies of its financial state- ments for such year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank 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 (2) to furnish to the Bank such other information concern- ing its accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request. Section 3.03. The Borrower, through the Project Coordination Committee, shall promptly make arrangements acceptable to the Bank: (i) with the entities involved in the carrying out of the Investment Projects under Part D (3) of the Project or any part thereof, such as Office des C&reales for grain facilities, Societe Tunisienne d'Industries Laitieres for milk facilities, Societe Nationale de Motoculture or service cooperatives for workshops for the rental and maintenance of agricultural equipment and the purchase, by service cooperatives, of machinery and equipment for agricultural production; and (ii) with the entities involved in the carrying out of Part C of the Project or any part thereof, such as Office de la Mise en Valeur de la Vallee de la Medjerda et des Perimetres Publics Irrigu6s, Office de la Mise en Valeur de Nebhana and Office de Mise en Valeur de Lakhmes for extension services within their jurisdiction and Office National de 1'Elevage et des Paturages for livestock improvement and fodder crop production. Section 3.04. In order to assist DPA in the introduction of new cropping patterns and in the complementary training of exten- sion agents under Part C of the Project, and in order to assist DPC in the carrying out of Part E of the Project, the Borrower shall employ experts and consultants whose qualifications, experi- ence and terms and conditions of employment shall be satisfactory to the Bank. Section 3.05. In the carrying out of Part C of the Project, the Borrower shall ensure that qualified and experienced agri- cultural extension engineers and technicians are promptly assigned - 8 - in sufficient numbers, and to make available or cause to make available to said engineers and technicians necessary resources so that they carry out the recommendations of the respective extension manuals applicable to the zones of influence of the Rural Roads with due diligence and efficiency. Section 3.06. For the carrying out of Part A (2) of the Project and the portion of Parts C and D relating to said Part A (2) of the Project, the Borrower shall ensure that the following procedures are complied with: (a) if not yet submitted, a report shall be submitted, as soon as available, by the Project Coordination Committee to the Bank for its review and comments, evidencing that, on the basis of an initial screening of a rural road or a group of rural roads and agricultural investments related thereto, further preparation and economic and financial analyses thereof may be processed; (b) all Rural Road sections under Part A (2) of the Project together with agricultural investments related thereto shall be grouped to the extent feasible. The Project Coordination Committee shall submit to the Bank for its approval, in respect of each such group: (i) a report covering, for each Rural Road section, preliminary engineering and cost estimates of construction and periodic and routine maintenance; (ii) a report on present and estimated future traffic in the zone of influence of each Rural Road included in each such group, and on proposed agricultural investments related to each such group, showing, inter alia, an economic return and an implementa- tion schedule therefor, all acceptable to the Borrower and the Bank; (iii) a proposed extension manual, including a specific action program for recommended actions, production goals to be attained and monitoring procedures, applicable to the zone of influence of each such Rural Road; an* (iv) computer input and output data for each such Rural Road of such scope and in such detail as the data for Rural Roads under Part A (1) of the Project. -9- Section 3.07. The Borrower shall make, and maintain in effect, arrangements satisfactory to the Bank to protect BNT against losses in connection with the payment of interest or other charges on, or the repayment of principal of, Loan No. 1340-TUN or the proceeds of this Loan, resulting from changes in the rate of exchange between Tunisian dinars and the currency or currencies in which such payments are to be made. Section 3.08. (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 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 Borrower 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 Loan to be used exclusively for the Project. Section 3.09. (a) The Borrower shall furnish or cause to be furnished to the Bank, promptly upon their preparation, the planr,, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifica- tions thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) s'..l maintain or cause to be main- tained records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use 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 Loan and any relevant records and documents; and (iii) shall furnish or cause to be furnished to the Bank at regular intervals all such information as the Bank shall reasonably request concern- ing the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Without any limitation on the generality of tho fore- going and except as the Bank may otherwise agree: (i) the Bor- rower, through the Project Coordination Committee, shall furnish - 10 - to the Bank a progress report on all Project activities, of such detail and in such scope as the Bank shall reasonably request, within six months after the Effective Date for the first time, and thereafter within forty-five calendar days after each calendar quarter; and (ii) beginning in 1979, not later than September 30 of each calendar year, the Borrower, through the Project Coordina- tion Committee, shall furnish to the Bank for its review and comments annual operating plans with respect to all Project activities for each following calendar year. The DPC field divi- sions, CRDAs, BNT, the Borrower's departments and agencies and any other entities responsible for, or involved in, the carrying out of the Project or any part thereof, shall respectively prepare said operating plans and forward them to the Project Coordination Committee for its approval before their transmittal to the Bank. (d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. Section 3.10. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for carrying out Part A and the Investment Projects under Part D (3) of the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project. 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 distri- bution of foreign exchange held under the control or for the - 11 - 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 allo- cation, 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, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and ia!terest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (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 transactions 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 subdivision thereof and of any entity owned or controlled by, or operating 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: (a) maintain or cause to be maintained accounts and records adequate to reflect, separ- ately, in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower and any other entity involved in the carrying out of the Project or any part thereof; and (b) cause the entities involved in the carrying out of Part C of the Project to: (i) have their accounts and financial state- ments (balance sheets, statements of income and expenses and related statements) for each fiscal year verified, in accordance - 12 - with appropriate accounting principles consistently applied, by Contr8leurs Financiers; (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 said financial statements for such year as so verified and (B) the report of such verification by said Contr^leurs Financiers, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the said accounts and financial statements and the verification thereof as the Bank shall from time to time reasonably request. Section 4.03. The Borrower shall cause all the Rural Roads as well as the other improved rural roads offering an appropriate level of service to be adequately maintained and shall cause all necessary repairs thereof promptly to be made, all in accordance with sound engineering practices, and shall provide, promptly as needed, the funds, facilities, equipment, services and other resources required for the foregoing. Section 4.04. The Borrower shall continue to collect or cause to be collected in accordance with appropriate statistical methods and procedures such other technical, economic and finan- cial information as shall be reasonably required for the proper planning of maintenance, improvements and extensions of the rural road network of the Bo,:rower together with agricultural invest- ments related thereto and shall furnish to the Bank such informa- tion in respect thereof as the Bank shall reasonably request. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) the Borrower or BNT shall have failed to perform any of its respective covenants, agreements or obligations under the BNT Agreement; (b) the BNT Agreement, or any provision thereof, has been assigned, amended, abrogated or waived without the prior consent of the Bank; - 13 - (c) the BNT Statutes shall have been amended or repealed so as to affect materially and adversely the operations or financial condition of BNT; and (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of BNT or for the suspension of its operations. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraphs (b), (c) and (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the execution and delivery of the BNT Agreement on behalf of the Borrower and BNT, respectively, have been duly authorized or approved by all necessary corporate and governmental action; and (b) the Project Coordination Committee has been established in accordance with the provisions of Section 3.01 (b) of this Agreement. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the BNT Agreement has been duly authorized or approved by, and executed and delivered on behalf of the Borrower and BNT and is legally binding upon the Borrower and BNT in accordance with its terms; and - 14 - (b) the Project Coordination Committee has been duly and effectively established under the Borrower's laws and regula- tions. Section 6.03. The date November 22, 1978, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministre D616gus aupres du Premier Ministre Charg6 du Plan of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere du Plan 1, rue de Beja Tunis, Tunisia Cable address: Telex: MINISTERE DU PLAN MIPLAN 12117 Tunis TN 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 (WUI) - 15 - 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. REPUBLIC OF TUNISIA By /s/ Ali Hedda Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Munir P. Benjenk Regional Vice President Europe, Middle East and North Africa - 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 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 % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works for 15,100,000 40% Part A of the Project (2) Materials and 3,500,000 100% of foreign equipment for expenditures Part B of the and 80% of local Project expenditures (3) Equipment for 1,300,000 55% Part C of the Project (4) Investment Projects 4,800,000 100% of foreign under Part D (3) of expenditures or the Project 75% of amounts disbursed by BNT against Sub-loans (5) Technical assistance 100,000 75% under Part C of the Project (6) Technical assistance 700,000 75% under Part E of the Project (7) Unallocated 6,500,000 TOTAL 32,000,000 - 17 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods and services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The total percentage of expenditures to be financed under Category (4) for any Investment Project under Part D (3) of the Project shall not exceed 75% of the total amount disbursed by BNT against the Sub-loan for any such Investment Project. 4. 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. 5. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement. 6. 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 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 Cate- gory, 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. - 18 - 7. 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 limiting 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. - 19 - SCHEDULE 2 Description of the Project The Project is part of the Borrower's program under its Fifth Development Plan to improve its rural road network in order to help increasing agricultural production and raising the farmers' standards of living. Its objectives are to establish a pilot scheme for the development of the Borrower's rural road network and the improvement of its maintenance, together with the strengthening of agricultural extension services and the provision of agricultural credit for complementary investments in the zones of influence of the Rural Roads. The Project consists of the following Parts: A. Rural Road Improvement. Rehabilitation, upgrading or construction of the following Rural Road sections totalling about 1,000 kms, in accordance with the design standards specified in Annex I to this Schedule: (1) 18 Rural Road sections totalling about 400 kms, as more detailed in Annex II to this Schedule; and (2) about 40 Rural Road sections totalling about 600 kms, as more detailed in Annex II to this Schedule and as agreed from time to time between the Borrower and the Bank. B. Purchase of rural road maintenance equipment, spare parts and workshop machine tools. C. Strengthening of agricultural extension services in the zones of influence of the Rural Roads including, inter alia, the purchase of equipment, the recruitment of specialized extension agents in communications with farmers and the provision of techni- cal assistance for the introduction of new cropping patterns (about 12 man-months' services) and for complementary training of extension agents through seminars (about 6 man-months' services) and short-term traineeships abroad. D. Provision by BNT of Sub-loans for: (1) short-term credit to farmers for the purchase of inputs; (2) medium- and long-term credit to farmers for Investment Projects; and (3) medium- and - 20 - long-term credit to Sociftf Tunisienne d'Industries Laitieres, Office des C6rfales, Sociftf Nationale de Motoculture and service cooperatives, inter alia, for Investment Projects such as the construction and equipping of milk and grain collection facilities and of workshops for the rental and maintenance of agricultural equipment, respectively, and to service cooperatives for the purchase of machinery and equipment for agricultural production. E. Economic, technical and financial analyses of about 2,500 kms of additional selected rural roads to be improved together with agricultural investments related thereto, with the assistance of about 130 man-months' consultant services therefor. The Project is expected to be completed by December 31, 1983. - 21 - ANNEX I TO SCHEDULE 2 Design and Structural Standards The Borrower shall improve the Rural Road sections included in Part A of the Project in accordance with the design and struc- tural standards set out below: GEOMETRIC DESIGN STANDARDS Design Speed km/hr 40 60 80 100 Absolute minimum radius m 40 120 240 425 Desirable minimum radius m 120 240 425 665 Absolute maximum grade % 10 9 8 7 Desirable maximum grade % 8 7 6 5 RURAL ROAD DESIGN STANDARDS Traffic Class (ADT)* Item 50 50-100 100-300 300-19000 Roadway Width m Carriageway 5 6 6.0 6.0 Shoulder 0 0 1.5 2.5 Design Speed, km/hr Flat terrain ) no formal 80 100 Rolling terrain ) design 60 80 Mountainous terrain ) speed 40 60 * ADT = Average Daily Traffic. - 22 - ROADWAY STRUCTURES Soil Traffic Class (ADT)* Associate 50 50-100 100-300 300-1,000** Average Subbase Base Subbase Base Subbase Base Subbase Base CBR*** Class % mm mm mm mm mm mm mm mm S1 5 0 250 150 150 250 150 300 150 S2 9 0 200 0 250 200 150 250 150 S3 22 0 150 0 200 150 150 200 150 S4 37 0 150 0 150 0 150 150 150 * ADT - Average Daily Traffic. ** Bituminous surface treatment provided. * CBR California Bearing Ratio. - 23 - ANNEX II TO SCHEDULE 2 List of Rural Road Sections I. Sections to be Improved under Part A (1) of the Project Improvement Province Road Number Approximate Length (km) Le Kef 101 29.2 103 11.2 104 17.0 106-7-8 29.4 109 13.5 110 6.5 Siliana 201 13.7 202 38.0 203 74.0 Kairouan 401 i6.2 402 11.6 404 37.4 405 20.7 406 36.4 407 16.6 408 54.5 II. Proposed Sections under Par- A (2) of the Project Improvement Province Road Number Approximate Length (km) Nabeul 301 9.3 302 5.5 303 12.6 304 5.2 305 10.4 306 3.0 307 4.5 308 43.2 Kasserine 501 25.2 502 27.3 503 45.2 504 22.1 506 32.1 507 18.6 - 24 - Improvement Province Road Number Apprcximate Length (km) Sidi Bouzid 601 8.3 602 26.0 604 9.7 606 6.4 607 16.6 651 31.0 652 31.8 655 15.2 656 11.6 657 6.5 658 27.5 659 36.9 660 18.1 661 21.4 Gafsa 701 4.1 702 9.4 703 3.8 704 10.0 705 9.4 706 29.0 Gabès 801 7.5 802 42.0 803 5.2 804 45.5 806 5.4 - 25 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each June 1 and December 1 beginning December 1, 1982 through December 1, 1994 1,230,000 On June 1, 1995 1,250,000 * 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 equiva- lents determined as for purpcses of withdrawal. - 26 - 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 before maturity 1.30% More than three years but not more than six years before maturity 2.65% More than six years but not more than eleven years before maturity 4.85% More than eleven years but not more than fifteen years before maturity 6.60% More than fifteen years before maturity 7.50% - 27 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereunder, goods and civil works for Parts A and B of the Project shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of inter- national competitive bidding. 3. With respect to contracts for civil works included in Part A of the Project: (i) bidders shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines; and (ii) for bidding purposes, construction work shall be divided in lots. Lots shall be packaged in groups whose respective estimated amount shall be D2,500,000 or more, approxirately. Bids for all lots in each group shall be called simultaneously. Bidders may bid for one or several lots or a group of lots, and contracts, each to be based on a unit-price, shall be awarded, on the basis of the lowest evaluated bid for any possible combination of such lots within a group. - 28 - 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding, (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 similar taxes on domestically supplied goods, shall be excluded; and (iii) 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 included. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Tunisia and specified in Category (2) under the table set forth in Schedule 1 to the Loan Agreement may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. 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 followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Tunisia 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 Tunisia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Tunisia. (3) Group C: bids offering any other goods. 3. 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 29 - 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. 4. If, as a result of the comparison under paragraph 3 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% 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 bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures (i) Contracts for civil works included in the Investment Projects under Part D (3) of the Project may be awarded on the basis of local advertising in accordance with competitive bidding procedures acceptable to the Bank. (ii) Machinery and equipment included in Part C and in the Investment Projects under Part D (3) of the Project may be procured by MA or its relevant departments or agencies or the Sub-borrowers through local commercial channels, after obtaining price quotations from not less than three suppliers. D. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower through DPC shall, before qualification is invited for works to be carried out under Part A of the Project, 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 qualifi- cations and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank - 30 - for its comments before the applicants are notified of the Borrow- er's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts, under Parts A and B of the Project, for (i) civil works estimated to cost the equivalent of $200,000 or more, and (ii) equipment estimated to cost the equiva- lent of $50,000 or more: (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. (b) After bids have been received and evaluated, the Bor- rower 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, together with the recommendations 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 Borrower 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 invited. (d) Two conformed copies of the contract shall. be furnished to the Bank promptly after its execution and pri, o the submis- sion to the Bank of the first application f *ithdrawal of funds from the Loan Account in respect of such c itract. 3. With respect to each contract not governed by the preceding paragraph, the Borrower and BNT, as may be appropriate, shall - 31 - 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 the analysis of the respective bids and recommendations for award, if appropriate, 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 Borrower and state the reasons for such determination. 4. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 25% of the original price, the Borrower shall inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. - 32 - SCHEDULE 5 Lending Policies and Procedures for Part D of the Project A. General 1. BNT's technical staff shall: (a) assist, as and when needed, proposed Sub-borrowers in preparing Sub-loan applications; (b) appraise all Sub-loan applications, taking into con- sideration the technical feasibility, financial viability, com- mercial soundness, economic justification, and in addition for the Investment Project, availability of markets and inputs; and (c) supervise all Sub-loans. 2. For all Sub-loans under Part D (3) of the Project and for Sub-loans to small and medium farmers under Part D (2) of the Project, BNT's technical staff shall be assisted, in the perfor- mance of its functions referred to in paragraph 1 above, by the field staff of MPW and MA and any other relevant Borrower's departments and agencies and any other entities involved in the carrying out of the Project or any part thereof. B. Eligibility for Sub-loans under Part D of the Project 1. Sub-loans shall only be made to Sub-borrowers located in a zone of influence of a Rural Road (except for a Sub-borrower under Part D (3) of the Project whose Investment Project may be located elsewhere so as to serve several zones of influence of Rural Roads), and at a time appropriate vis-a-vis the improvement of Rural Road sections. 2. Sub-loans under Part D (1) and (2) of the Project shall only be made to Sub-borrowers whose income is mainly provided by their agricultural activities. 3. Sub-loans under Part D (2) of the Project to small and medium farmers shall be made on the basis of, inter alia: (a) farm size; (b) nature of the investment; - 33 - (c) crop pattern; and (d) level of annual income per farm family, not to exceed D600 in 1976 prices. 4. The aggregate amount of Sub-loans to small and medium farmers under Part D (2) of the Project or of such sub-loans and any other loans, the terms and conditions of which are similar to those of Sub-loans to small and medium farmers under Part D (2) of the Project, made to any one Sub-borrower shall not exceed D5,000. 5. No payments out of the proceeds of Loan No. 1340-TUN shall be made by BNT to finance any Sub-loan of more than D50,000 to a commercial farmer under Part D (2) of the Project, unless such Sub-loan shall have been approved by the Bank. 6. No payments out of the proceeds of this Loan shall be made by BNT to finance any Sub-loan of more than D100,000 for agro- industrial facilities under Part D (3) of the Project, unless such Sub-loan shall have been approved by the Bank. 7. Any Sub-loan for workshops and workshop equipment or for agro-industrial facilities, under Part D (3) of the Project, shall be made in accordance with the investments included in the rele- vant report already furnished to the Bank or to be furnished to the Bank as set forth in Section 3.06 (b) (ii) of this Agreement, unless otherwise agreed between the Bank, the Project Coordination Committee and BNT. C. Terms and Conditions of Sub-loans under Part D (2) and (3) of the Project 1. Sub-loans under Part D (2) and (3) of the Project shall be subject to the terms and conditions set forth below: (i) Medium- and Long-term Credit to Small and Medium Farmers under Part D (2) of the Project Own Contri- Interest Type of Sub-loan Grant butions (% per Term (Grace) Investment (%) (%) (%) annum) Year Project Not more Not more Not less Not less Not more 1- Irrigation (a) New wells 70 10 20 6 7 (2) and pumps -34 - Own Contri- Interest Type of Sub-loan Grant butions (% per Term (Grace) Investment (%) (%) (%) annum) Year Project Not more Not more Not less Not less Not more (b) New deep 50 40 10 6 20 (2) wells (c) Deepening 60 20 20 6 10 (2) of wells* 2- Crop estab- lishment (a) Cactus 60 20 20 6 (0)*** 10-15 (5-8) planting** and tree crop es- tablish- ment (b) Medicago introduction* - Farms of 10 30 65 5 6 5 ha or less - Farms of 30 50 20 6 5 more than 10 ha 3- Livestock and pasture improvement (a) Seeds 50 30 20 6 (0)*** 2 (1) (b) Grazing 50 30 20 6 (0)*** 5 (1) (c) Cattle 65 15 20 6 5 (dairy cows) * Type of Investment Project not included in Loan No. 1340-TUN. ** To improve land already used as range. * During grace period. - 35 - Own Contri- Interest Type of Sub-loan Grant butions (% per Term (Grace) Investment (%) (%) (%) annum) Year Project Not more Not more Not less Not less Not more (d) Buildings 65 15 20 6 5-15 (2) and equip- ment (sheds for cows and sheep) (e) Sheep 65 15 20 6 3 4- Light agricul- 70 10 20 6 3-10 (2) tural machinery and equipment (ii) Medium- and Long-term Credit to Commercial Farmers under Part D (2) of the Project Type of Grace Maximum Repayment Investment Interest Period Period after Grace Project (% per annum) (Year) (Year) General farm 7 1-3 5-7 development (iii) Medium- and Long-term Credit under Part D (3) of the Project Own Contri- Interest Type of Sub-loan butions (% per Term (Grace) Investment (%) (%) annum) Year Project Not more Not less Not less Not more 1- Workshops 70 30 6 to be agreed and workshop on a case-by- equipment for case basis Societe Nationale de Motoculture and service cooperatives - 36 - Own Contri- Interest Type of Sub-loan butions (% per Term (Grace) Investment (%) (%) annum) Year Project Not more Not less Not less Not more 2- Agricultural 70 30 6 3-7 (2) machinery and equipment for service co- operatives 3- Agro-industrial 70 30 8 to be agreed facilities in- on a case-by- cluding, inter case basis alia, facili- ties for grain storage and milk collection 2. A grant shall not be given in the case of Investment Projects, listed in sub-paragraph (i) above, consisting of the rehabili- tation of existing investments which have already been amortized. 3. Risk. (a) BNT shall bear the full risk of default on all Sub-loans to commercial farmers under Part D (2) of the Project, referred to in sub-paragraph (ii) above, and all Sub-loans for agro-industrial facilities under Part D (3) of the Project, referred to in sub- paragraph (iii) above; (b) With respect to Sub-loans to small and medium farmers under Part D (2) of the Project, partially financed out of the proceeds of Loan No. 1340-TUN, and referred to in sub-paragraph (i) above, BNT shall bear at least 10% of the risk of default on any of such Sub-loans, made not later than two years after the Effective Date (July 19, 1977) of Loan No. 1340-TUN and at least 25% of such risk on any of such Sub-loans made thereafter. The Borrower shall pay, at intervals of twelve months, to BNT, no more than 90% of amounts overdue by two years or more to BNT on account of such Sub-loans made not later than two years after the Effective Date (July 19, 1977) of Loan No. 1340-TUN and no more than 75% of such amounts on account of such Sub-loans made after such date. - 37 - (c) With respect to Sub-loans under Part D (3) of the Project, referred to in sub-paragraph (iii) above (other than Sub-loans for agro-industrial facilities), BNT shall bear at least 10% of the risk of default on any of such Sub-loans, made not later than two years after the Effective Date of this Loan and at least 25% of such risk on any of such Sub-loans made thereafter. The Borrower shall pay, at intervals of twelve months to BNT, no more than 90% of amounts overdue by two years or more to BNT on account of such Sub-loans made not later than two years after the Effective Date of this Loan and no more than 75% of such amounts on account of such Sub-loans made after such date. D. Security Arrangements A certificat de possession shall be accepted as adequate title for purposes of creating a lien on the land subject of such certificat as security for the repayment of a Sub-loan. For purposes of this paragraph "certificat de possession" means the certificate described in Law No. 74-53 of the Borrower, dated June 10, 1974. - 38 - SCHEDULE 6 Project Administration 1. The MPW shall be responsible for the overall supervision of the Project in cooperation with the Project Coordination Committee (the Committee) which shall coordinate all Project activities and review the implementation of the Project. 2. The Committee shall be chaired by a senior official of MPW and shall further include, inter alios, senior officials from the Ministry of Planning, DPC, DPA, DPAEP, the Ministry of Interior and BNT. In the performance of its functions, the Committee shall be assisted by qualified supporting staff. 3. The Committee shall meet as required, but at least once every three months. Representatives from the Borrower's departments and agencies and any other entities involved in the carrying out of the Project or any part thereof may be invited to attend any meeting. 4. Amongst its functions, the Committee shall, in cooperation with MPW, and directly or with the assistance of the Borrower's departments and agencies and any other entities involved in the carrying out of the Project: (a) ensure the proper and timely planning and implementation of all Project activities; (b) promptly enter into the arrangements referred to in Section 3.03 of this Agreement; (c) review and furi-"sh to the Bank the reports and documents referred to in Section 3.06 of this Agreement; (d) review quarterly progress reports to be prepared by the provincial field divisions of MPW and CRDAs with respect to their relevant Project activities, consolidate said reports into a single report and furnish the consolidated report to the Bank; (e) coordinate the preparation of annual operating plans to be prepared by the Borrower's departmrnts and agencies and other entities involved in the carrying out of the Project with respect to their relevant Project activities planned for the following calendar year together with estimated expenditures - 39 - related thereto; review the said plans, approve them and once approved, furnish them to the Bank; (f) ensure that bidding documents are prepared, bids are evaluated and contracts for civil works and equipment are awarded, all with due diligence and efficiency and in compliance with procurement procedures set forth in this Agreement; (g) ensure that accounts and records are maintained and made available or furnished to the Bank in accordance with Section 4.02 of this Agreement; and (h) act as liaison between the Bank and the Borrower's departments and agencies and any other entity involved in the carrying out of the Project or any part thereof.