Romania - Post Earthquake Construction Assistance : Loan 1581 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1581 RO Loan Agreement (Post Earthquake Construction Assistance Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANCA DE INVESTITII Dated June 12, 1978 LOAN NUMBER 1581 RO LOAN AGREEMENT AGREEMENT, dated June 12, 1978, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and BANCA DE INVEST.TII (hereinafter called the Borrower). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loat) 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 Gen- eral Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Romania" and "Guarantor" both mean The Socialist Republic of Romania; (b) "Foreign Trade Bank" means the Romanian Bank for Foreign Trade, established by Law No. 16/1968 of Romania; (c) "Charter" means the Charter of the Borrower as approved by Decree No. 314/1971 of the Council of State of Romania, and Decree No. 125/1970 concerning the organization and operations of the Borrower, ratified by Law No. 22/1970 of Romania, as amended by Decree No. 314/1971 of the Council of State of Romania, as amended from time to time; and (d) "Project Enterprise" means any State Enterprise whose facilities shall be or shall have been reconstructed, equipped or otherwise assisted under the Project. 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 -2- to, an amount in various currencies equivalent to sixty million dollars ($60,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Bank and the Borrower, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods, components, and services required for the Project described in Schedule 2 to this Agreement which the Bank and the Borrower have agreed are to be financed out of the proceeds of the Loan. (b) The Foreign Trade Bank is designated as representative of the Borrower for the purpose of taking any action required or permitted to be taken under the provisions of paragraph (a) of this Section and Article V of the General Conditions. Section 2.03. Except as the Bank and the Borrower shall otherwise agree, contracts for the purchase of goods, components, and services for the Project and to be financed out of the pro- ceeds of the Loan shall be awarded in accordance with the provi- sions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1981 or such other date as shall be agreed between the Bank and the Borrower. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of 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 March 1 and September 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. -3- ARTICLE III Execution of the Project Section 3.01. The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with appropriate engineering, financial, ecological, environ- mental and administrative practices; shall cause the contracts for the goods, components, and services to be financed out of the proceeds of the Loan to be procured and awarded in accordance with the provisions of Schedule 4 to this Agreement; and shall super- vise the execution of the Project, including the procurement of the goods, components, and services required therefor. Section 3.02. (a) The Borrower shall cause adequate provision to be made for the insurance of the imported goods and components to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of importation into the territory of Romania, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods and com- ponents. (b) Except as the Bank and the Borrower shall otherwise agree, all goods, components, and services financed out of the proceeds of the Loan shall be used exclusively for the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Bank and the Borrower agree that, in order to realize the purposes of the Project, it shall be necessary (i) for each Project Enterprise to manage its affairs, to carry on its operations, and to operate and maintain the installations and other property managed or operated by that Enterprise, all in accordance with appropriate engineering, financial, ecological, environmental and administrative practices; and (ii) for each industrial or manufacturing enterprise listed in the Annex to Schedule 2 to this Agreement to ensure that in any year after 1981 the repayments by each Project Enterprise to the Borrower for goods and components procured from the proceeds of the Loan for use by such enterprise shall be at least sufficient to cover the sum of (A) the equivalent in Lei of the payments of the principal of, and charges on the Loan other than interest on, -4- the portion of the Loan which has been withdrawn for the benefit of each such enterprise and which the Borrower is required to make to the Bank that same year and (B) ten per cent of the average principal amount of the portion of the Loan which has been with- drawn for the benefit of each such enterprise and is outstanding that same year; for the purposes of this paragraph (ii), the term "Lei" means Lei in currency of Romania. (b) The Borrower shall, to the extent that it is authorized under the laws of Romania, ensure that the requirements set forth in this Section will be met. ARTICLE V Management and Operations of the Borrower; Financial Covenants Section 5.01. The Borrower shall manage and conduct its operations and affairs in accordance with appropriate administra- tive and financial standards and practices and in accordance with the Charter. Section 5.02. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations in respect of the Project. Section 5.03. (a) It is not the practice of the Borrower to create liens as security for debt. Accordingly, the Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) For the event that, notwithstanding the foregoing, a lien shall be created on any of the Borrower's assets as security for any debt, the Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create the lien, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if the lien shall be created by law, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan. Section 5.04. The Bank and the Borrower agree that in carry- ing out the provisions of this Agreement the Borrower shall take -5- such measures as shall be necessary according to the State Plan of Romania and the applicable laws in order to achieve the purposes of the Project. ARTICLE VI Cooperation and Information; Financial Data Section 6.01. The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end: (a) the Bank and the Borrower shall from time to time at the request of either party exchange views through their representa- tives with regard to the progress of the Project, the benefits derived from .he Project, the performance of their respective obligations under the Loan Agreement, the compliance by the appropriate foreign trade enterprise with the requirements of Schedule 4 to this Agreement, the fulfillment of the requirements set forth in Section 4.01 of this Agreement and other matters relating to the purposes of the Loan; and the Borrower shall enable the Bank's representatives to exchange views with repre- sentatives of each Project Enterprise and each foreign trade enterprise with regard to its activities under the Project, the benefits derived from the Project, the resources and investment expenditures of such Project Enterprise and the compliance by such Enterprise with the requirements set forth in Section 4.01 of this Agreement; (b) the Borrower shall obtain from each Project Enterprise and the other agencies of Romania concerned with the Project, and furnish, upon their preparation to the Bank, with respect to the Project and in such detail as the Bank and the Borrower shall agree, the following: the technical specifications, evaluation reports, contract documents, plans, and construction and procure- ment schedules, and the material modifications thereof or addi- tions thereto; (c) the Borrower: (i) shall maintain or cause to be main- tained records adequate to record the progress of the Project (including the cost thereof) and to identify the goods, compo- nents, and services financed out of the proceeds of the Loan and to disclose the use thereof in the Project; and (ii) shall furnish to the Bank within forty-five calendar days after each calendar - 6 - quarter a report, of such scope and in such detail as the Bank and the Borrower shall agree, on the progress of the Project during such quarter; (d) the Borrower shall enable the Bank's representatives to visit and examine the goods and components financed out of the proceeds of the Loan, plants, installations, sites, works, build- ings and equipment relating to the Project of each Project Enter- prise, the factories, installations, sites and works in Romania where equipment required for the Project is manufactured insofar as the Project is concerned, and all records and documents relat- ing to the Project; (e) the Borrower shall: (i) furnish to the Bank not later than three months after the end of each of its fiscal years, (A) certified copies of its financial statements (balance sheets, statements of income and expenses and related statements, as agreed between the Bank and the Borrower) for such fiscal year submitted to an independent audit conducted, in accordance with appropriate auditing principles consistently applied, by the Ministry of Finance of Romania, and (B) the report of such audit by said auditor of such scope and in such detail as the Bank and the Guarantor shall agree; and (ii) furnish to the Bank such other information concerning the beforementioned financial statements of the Borrower and the audit thereof as the Bank shall reasonably request; .) the Bank and the Borrower shall from time to time furnish to each other such additional information as the other party shall reasIably request with regard to the progress of the Project, the expenditure of the proceeds of the Loan, the goods, components, and services financed out of such proceeds, the operations, resources and investment expenditures of each Project Enterprise, the benefits derived from the Project and the general status of the Loan; and (g) promptly after completion of the Project, but in any event not later than six months after the Closing Date, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank and the Borrower shall reasonably agree, 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 Bank and the Borrower of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. - 7 - Section 6.02. The Bank and the Borrower shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Loan, the maintenance of the service thereof or the performance by either party of its obliga- tions under the Loan Agreement. ARTICLE VII Effective Date; Termination Section 7.01. The date September 12, 1978, is hereby speci- fied for the purpose of Section 12.04 of the General Conditions. ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United Statem of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) 64145 (WUI) For the Borrower: Banca de Investitii Str. Doamnei No. 4 Bucharest Romania Telex: 011238 BINVR 011239 BINVR 011188 BINVR -8- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ M. P. Bart Acting Regional Vice President Europe, Middle East and North Africa BANCA DE INVESTITII By /s/ Nicolae M. Nicolae Authorized Representative -9- SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Category of items to be financed out of the proceeds of the Loan, the allocation of the amount of the Loan to such Category and the percentage of expenditures for items so to be financed in such Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed Imported equipment 60,000,000 100% of foreign and components expenditures TOTAL 60,000,000 2. For the purposes of this Schedule thp term "foreign expendi- tures" means expenditures for goods, components, or services supplied from the territory and in the currency of any country other than Romania. 3. The disbursement percentage has been calculated in compli- ance wi' the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, Romania on goods, components, or services, or on the importation, manufacture, procurement or supply thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Loan, the Bank may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 5. Each contract with respect to which a withdrawal request is made shall be accompanied by a certificate issued by the Borrower by which the Borrower certifies that the procurement of the goods and components which are the subject of such contract has been - 10 - approved by the authority competent to give such approval under Romanian law; the certificate shall be in a form agreed upon between the Bank and the Borrower. 6. Notwithstanding the disbursement percentage set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan will be insufficient to finance the agreed percentage of all expenditures in the Category, the Bank may, by notice to the Borrower, reduce the disbursement percentage then applicable to such expenditures in order that further with- drawals under the Category may continue until all expenditures thereunder shall have been made. 7. If the Bank shall have reasonably determined that the procurement of any item is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting 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 expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 11 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: Earthquake Damaged Facilities Technically feasible and economically justifiable investments in earthquake damaged enterprises to replace and repair earthquake damaged machinery, and the provision of equipment to assist in reconstruction of the Computer Center serving the Ministry of Transport and Telecommunications. Part B: Development and Research - Technically feasible and economically justifiable investments in enterprises manufacturing building material and equipment to produce such material. Development of better designs and standards for buildings by providing to Institul de Cercetari in Constructii si Economia Constructiilor essential equipment for earthquake engineering and research. Part C: Manufacture of Construction Equipment Components for incorporation into construction equipment manufactured by industrial and manufacturing enterprises. The enterprises to be assisted are listed in the Annex to this Schedule. All the machinery and equipment to be financed under the Project is expected to be in operation by December 31, 1980. - 12 - ANNEX TO SCHEDULE 2 List of Enterprises Part A 1. Intreprinderea "Viscofil" - Bucuresti 2. Intreprinderea de Masini Unelte si Agregate - Bucuresti 3. Centrul de Calcul - Bucuresti Part B 1. Fabrica de Ciment - Medgidia 2. Fabrica de Ciment - Alesd 3. Intreprinderea de Materiale de Constructii - Buzau 4. Intreprinderea de Utilaj Greu - Iasi 5. Intreprinderea de Masini Grele - Bucuresti 6. Intreprinderea de Masini Unelte si Agregate - Bucuresti 7. Intreprinderea de Utilaj Greu - Braila 8. Institul de Cercetari in Constructii si Economia Con- structiilor Part C 1. Intreprinderea de Utilaj Greu - Iasi 2. Intreprinderea de Utilaj Greu - Braila 3. Intreprinderea de Autocamioane - Brasov 4. Uzina Mecanica - Timisoara - 13 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning March 1, 1982 through September 1, 1993 2,500,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 14 - 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 1.50% More than three years but not more than six years before maturity 3.00% More than six years but not more than eleven years before maturity 5.50% More than eleven years but not more than thirteen years before maturity 6.50% More than thirteen years before maturity 7.50% - 15 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in paragraph 3 of this Part A, goods and components shall be procured 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 and components 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, or cause to be prepared, 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 prequalificatiun documents relating thereto, as the case may be, a general procure- ment notice, in such form and detail and containing such informa- tion 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, components, and works, if any, in question. The Bor- rower shall provide, or cause to be provided, the ne!essary information to update such notice annually so long as any goods, components, or works, if any, remain to be procured on the basis of international competitive bidding. 3. (a) Contracts for components and small items of equipment which cannot be grouped together in accordance with paragraph 4 of this Part A and which are estimated to cost less than $300,000 equivalent shall, after solicitation of bids from potential suppliers from at least three member countries of the Bank (which for these purposes shall include Switzerland) on the basis of bid invitations consistent with the provisions of the Guidelines, be awarded in accordance with the provisions of paragraphs 3.4 through 3.11 of the Guidelines, provided the aggregate amount of contracts let pursuant to the procedures permitted by this para- graph 3 (a) shall not exceed $16,000,000 equivalent. (b) Contracts for specialized equipment and components for construction machinery, not to exceed an aggregate of $10,000,000 - 16 - equivalent, shall be procured and awarded pursuant to the provi- sions set forth in paragraph 3 (a) above; provided that, prior to award of a contract, the Borrower shall submit, or cause to be submitted, to the Bank for review, the technical specifications, list of suppliers solicited, basis for selection, applicable bidding documents, evaluations and draft contract. (c) Contracts for components of a proprietary nature, up to an aggregate of $5,000,000 equivalent may be awarded through commercial channels. 4. Identical or similar items to be procured for the Project shall be grouped together, wherever practicable, for the purpose of bidding and procurement, and such grouping of items shall be subject to agreement between the Bank and the Borrower. B. Evaluation and Comparison of Bids for Goods and Components For the purpose of evaluation and comparison of bids for the supply of goods and components to be procured in accordance with Part A of this Schedule: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods and components; (ii) customs duties and other import taxes on imported goods and components shall be excluded; and (iii) the cost of inland freight and other expenditures incidental to the delivery of goods and components to the place of their use or installation shall be included. C. Review of Procurement Decisions by the Bank 1. With respect to all contracts estimated to cost the equiva- lent of $300,000 or more: (a) Before bids are invited, the Borrower shall cause the appropriate foreign trade enterprise to furnish to the Bank, for its comments, the text of the invitations to bid and the specifi- cations and other bidding documents, and shall make such modifica- tions in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) Promptly after the bids have been opened, the Borrower shall cause the appropriate foreign trade enterprise to inform the Bank of the names of the bidders and the respective amounts of the bids. - 17 - (c) After bids have been evaluated, the Borrower shall cause the appropriate foreign trade enterprise, before a final decision on the award is made, to inform the Bank of the name of the bidder to which the contract is intended to be awarded 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 inconsis- tent with the Guidelines or this Schedule, promptly inform the appropriate foreign trade enterprise and state the reasons for such determination. (d) 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. (e) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion 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 estimated to cost less than the equivalent of $300,000 and to be financed out of the proceeds of the Loan, the Borrower shall cause the appropriate foreign trade enterprise to 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 a list of the parties invited to bid or to submit quotations, the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. In addition, the Borrower or the appropriate foreign trade enter- prise, as the case may be, shall retain all records necessary for monitoring and review of the Project by the Bank. 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 the Enterprise involved and state the reasons for such deter- mination.