Colombia - Second Catagena Urban Development : Loan 1694 - Project Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1694 CO Project Agreement (Second (Cartagena) Urban Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and INSTITUTO DE CREDITO TERRITORIAL Dated August 31, 1979 LOAN NUMBER 1694 Co PROJECT AGREEMENT AGREEMENT, dated August 31, 1979, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and INSTITUTO DE CREDITO TERRITORIAL (hereinafter called ICT). WHEREAS (A) by the Loan Agreement of even date herewith between Republic of Colombia (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to thirteen million five hundred thousand dollars ($13,500,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that ICT agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) the proceeds of the loan provided for under the Loan Agreement will be made available by the Borrower to ICT and the agencies and entities participating in the carrying out of the Project; and WHEREAS ICT, 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: 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 and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01 (a) ICT, with the participation of the Minis- terios and the Participating Entities, shall carry out the Project described in Schedule 2 to the Loan Agreement with due diligence and efficiency and in conformity with appropriate urban develop- ment, health, nutritional, educational, administrative, economic, - 2-- -2- engineering and financial practices, and shall provide, or cause the Participating Entities to provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. The Ministerios and the Participating Entities shall participate with ICT in the carrying out of the Project as indicated in the Annex to Schedule 2 to the Loan Agreement as such Annex may be amended by agreement between the Borrower and the Bank. (b) For the carrying out of the Project, ICT shall: (i) until completion of the Project, maintain and operate, to the satisfaction of the Bank, a Project Management Unit in its office in the city of Cartagena; (ii) provide, or cause to be provided, such unit, promptly as needed, with such qualified and experienced staff (including extension field staff), faci- lities, funds and other resources as shall be required for the efficient operation thereof; (iii) without limitation upon the provisions in (ii) hereof, employ in such unit a manager for the Project, a director in charge of social programs and a director in charge of monitoring and evaluation, all of whom shall have qualifications and experience satisfactory to the Bank; and (iv) take all such action as shall be necessary or advisable on its part to ensure that each Sede included in Part A of the Project is provided, promptly as needed, with such qualified and experienced staff (including one coordinator, two social workers, one loan promoter and one small enterprises promoter), facilities, funds and other resources as shall be required for the efficient operation thereof. (c) ICT shall make loans under Part B (d) of the Project which shall include, inter alia, the following terms and condi- tions: (i) interest on the outstanding principal of each loan will be payable at the rate of fourteen per cent (14%) per annum, inclusive of all applicable commissions, taxes, charges or fees of any kind whatsoever; (ii) the repayment term will be not less than fifteen years; (iii) the amount of the monthly repayment installments will be gradually increased over the life of - 3-i -3- the loan at a rate not exceeding five per cent (5%) per annum; (iv) the purchase price of lots financed by the loans will be determined in accordance with criteria satisfactory to the Bank; and (v) in matters other than those mentioned in subpara- graphs (i), (ii) and (iii) hereof, the applicable provisions of Acuerdo No. 004 of 1977, Resoluci6n No. 1679, dated September 20, 1977 and Resoluci6n No. 1946, dated October 23, 1977, will apply. (d) In the carrying out of the Project, ICT undertakes to: (i) follow at all times Decreto No. 184 of July 21, 1978, of the Alcalde Mayor de Cartagena (Plan de Desarrollo del Municipio de Cartagena 1978-1990); and (ii) take all such action as shall be necessary or advisable to obtain such exemptions therefrom as shall be appropriate for the carrying out of the Project. Section 2.02. (a) ICT shall enter into contracts, satis- factory to the Bank, with each of the Ministerios and the Partici- pating Entities, for defining in detail the responsibilities (including financial responsibilities), functions and admini- strative procedures of ICT and each of such Ministerios and Participating Entities in respect of the carrying out of the Project. (b) Pursuant to paragraph (a) above, ICT shall enter into a contract, satisfactory to the Bank, with INSFOPAL and EPMC and shall include in such contract provisions for: (i) defining in detail the responsibilities (including financial responsibilities), functions and admin- istrative procedures of ICT, INSFOPAL and EPMC, respectively, in respect of the carrying out of Part B (b) of thz Project; (ii) making available to ICT such portion of the amounts made available by the Borrower to INSFOPAL in accordance with the provisions of paragraph (c) of Section 3.01 of the Loan Agreement as shall be necessary, in addition to the own resources of EPMC, to cover the expenses of ICT in respect of the carrying out of Part B (b) of the Project; -4- (iii) transferring by ICT to EPMC, free of charge, upon completion of Part B (b) of the Project, the water supply and sewerage facilities included therein; (iv) upon completion of such transfer, requiring EPMC to: (a) repay to INSFOPAL an amount equivalent to 40% of the certified construction costs of the facilities referred to in (iii) above as a loan at an annual interest rate of eighteen per cent (18%) per annum, inclusive of all applicable commissions, taxes, charges or fees of any kind whatsoever, over a period of seventeen years, including four years of grace; and (b) register on its books, as an equity contribution from INSFOPAL, an amount equivalent to the difference between (1) the balance of the certified construction costs of the facilities referred to in paragraph (iii) above and (2) 20% of the certified construction costs of the water trunk main included in Part B (b) (i) of the Project; (v) requiring EPMC to establish and maintain water supply and sewerage tariffs and other charges for its services at levels sufficient to generate enough revenues to cover EPMC's investment, oper- ating and maintenance costs; and (vi) without limiting the generality of the provisions in (v) above, incorporating into such contract all agreements regarding rates of return and tariffs between EPMC and INSFOPAL on account of funds made or to be made available to EPMC out of the proceeds of any loan made by the Bank to INSFOPAL. (c) ICT undertakes that it shall include in the contracts referred to in paragraph (a) above provisions to ensure employ- ment by the Ministerios and the Participating Entities of such qualified and experienced staff as shall be required for the efficient and timely carrying out of the Project. (d) ICT shall exercise its rights under each of the con- tracts referred to in paragraph (a) above in such manner as to protect the interests of the Bank and ICT and to accomplish the purposes of the Project and the Loan, and except as the Bank shall otherwise agree, ICT shall not assign, nor amend, abrogate or waive such contracts or any provision thereof. -5- Section 2.03. In order to assist ICT in the carrying out of (i) the engineering and supervision of the works included in Part B (b) of the Project, and (ii) the studies and training included in Part D of the Project, ICT shall employ, or cause to be employed, consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank and ICT. Section 2.04. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of the Schedule to this Agreement. Section 2.05. (a) ICT undertakes to insure, or cause to be insured, 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 insured party to replace or repair such goods. (b) Except as the Bank-may otherwise agree,. ICT shall cause all goods and services financed out of the proceeds..of the Loan to be used exclusively for the Project. Section 2.06. (a) ICT shall furnish or cause to be furnished, to the Bank, promptly upon their preparation, the plans, specifi- cations, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) ICT: (i) shall maintain, or cause to be maintained, 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, or cause them to be enabled, to visit the facilities and construc- tion 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 concerning the Project, its cost and, -6- where appropriate, the benefits to be derived from it, the expen- diture of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) ICT shall: (i) pr.epare quarterly reports, of such scope and in such detail as the Bank shall reasonably request, on the carrying out of the Project; and (ii) furnish to the Bank such reports promptly after their completion. (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 ICT and the Bank, ICT shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on: (i) the execution and initial operation of the Project; (ii) its cost and the benefits derived and to be derived from it; (iii) the performance by ICT and the Bank of their respective obligations under the Project Agreement; (iv) the performance by ICT and each of the other parties to the contracts referred to in paragraph (a) of Section 2.02 of this Agreement of their respective obligations under the applicable contract; (v) the performance by INSFOPAL and EPMC of their respective obli- gations under the contract referred to in Section 2.03 of this Agreement; and (vi) the accomplishment of the purposes of the Project and the Loan. Section 2.07. (a) ICT 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 the construction and operation of the facilities included in the Project. (b) ICT shall: (i) by October 1, 1979, prepare a program, satisfactory to the Bank, for the transfer to residents in the Project Area, of land in such Area; and (ii) by January 1, 1981, start implementing the transfers of land under such program. Section 2.08. (a) ICT shall, at the request of the Bank, exchange views, or cause the Participating Entities to exchange views, with the Bank with regard to the progress of the Project, the performance of their respective obligations under this Agree- ment and the contracts referred to in Section 2.02 of this Agree- ment, and other matters relating to the purposes of the Project and the Loan. -7- (b) ICT shall promptly inform, or cause the Participating Entities to inform, the Bank, of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, the performance by ICT of its obligations under this Agreement or the performance by the parties to the contracts referred to in Sections 2.02 and 2.03 of this Agreement of their obligations under such contracts. ARTICLE III Management and Operations of ICT Section 3.01. (a) ICT shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations in accordance with appropriate administra- tive, financial and urban development practices and under the supervision of experienced and competent management assisted by adequate, experienced and competent staff. (b) ICT shall afford the Bank a reasonable opportunity to comm.-,!t on any proposed reorganization of ICT which may affect adversely the operations or financial condition of ICT or the carrying out of the Project. Section 3.02. ICT shall take out and maintain with responsi- ble 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 3.03. ICT shall, jointly with the Borrower, carry out a study of the alternatives available to it for strengthening its financial condition, and, not later than January 1, 1981, prepare a program for strengthening ICT's financial condition, taking into account the conclusions of such study. ARTICLE IV Financial Covenants Section 4.01. ICT shall maintain records adequate to reflect in accordance with consistently maintained.appropriate accounting practices its operations and financial condition. Section 4.02. ICT shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and -8- 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) furnish to the Bank such other information concerning the accounts and financial statements of ICT and the audit thereof as the Bank shall from time to time reasonably request. Section 4.03. ICT shall include in the contracts to be entered into with the Ministerios pursuant to Section 2.02 of this Agreement, such provisions as shall be necessary to ensure that the Ministerios shall establish and maintain records adequate to reflect, in accordance with consistently maintained sound account- ing practices, their operations, resources and expenditures in respect of the Project. Section 4.04. ICT shall include in the contracts referred to in Section 2.02 of this Agreement such provisions as shall be necessary to ensure that each Participating Entity shall: (a) establish and maintain separate accounts on its records to be used exclusively for the Project and to register in such accounts all its receipts and payments for or in connection with the Project, in accordance with sound accounting principles and procedures consistently applied; and (b) (i) have the accounts referred to in paragraph (a) above and related statements for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank and ICT, as soon as available, but in any case not later than four months after the end of such entity's fiscal year, (A) certified copies of such accounts and related 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 -9- (iii) furnish to the Bank and ICT such other information concerning such accounts and related statements of such entity and audit thereof as the Bank shall from time to time reasonably request. Section 4.05. ICT shall take, and cause the Participating Entities to take, all action, including the provision of funds and resources, to ensure that the facilities and equipment included in the Project are adequately operated, maintained, renewed and repaired. 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 effec- tive. Section 5.02. This Agreement and all obligations of the Bank and of ICT thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly so notify ICT thereof. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. 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 herein- after specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: - 10 - For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. For ICT: Instituto de Credito Territorial Carrera 13, No. 18-51 Bogotg, D.E., Colombia Cable address: INSCREDIAL BOGOTA Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of ICT, may be taken or executed by its Gerente General or such other person or persons as ICT shall designate in writing, and ICT shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. 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 - 11 - District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Is/ Alberto Favilla Authorized Representative INSTITUTO DE CREDITO TERRITORIAL By /s/ Virgilio Barco Authorized Representative - 12 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part B below, goods and civil works 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 and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, ICT 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 avail- ability to the public of the first tender 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 and works in question. ICT shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3* For the purpose of evaluation and comparison of bids for the supply of goods to be procured in accordance with the provi- sions of paragraph 1 above: (i) bidders shall be required to state in their bid the c.i.f. Cartagena 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 ICT (or the Ministerio or Participating Entity, as the case may be) of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 4. For bidding purposes, goods to be procured in accordance with the provisions of paragraph 1 above shall be grouped in such manner as shall be agreed between the Bank and ICT prior to issuing the invitation to bid. - 13 - B. Other Procurement Procedures 1. Contracts for civil works estimated to cost not more than the equivalent of $750,000 shall be procured in accordance with local competitive bidding procedures satisfactory to the Bank. 2. Contracts for the purchase of goods (other than contracts for the purchase of water meters) estimated to cost not more than the equivalent of $150,000, up to an aggregate amount of $2,000,000 equivalent, shall be procured in accordance with local competitive bidding procedures satisfactory to the Bank. 3. Notwithstanding the provisions in paragraph 1 above, civil works under Part A (a) of the Project may be contracted on a negotiated basis (after obtaining bids from at least three con- tractors) or may be carried out by ICT by force account. C. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Colombia 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 information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Colombia if the bidder shall have established to the satisfaction of ICT and the Bank that the manufacturing cost of such goods includes a value added in Colombia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Colombia. (3) Group C: bids offering any other goods. ItL -14- 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 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 evaluated 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. D. 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 estimated to cost the equivalent of $750,000 or more and all contracts for goods estimated to cost the equivalent of $150,000 or more: (a) Before bids are invited, ICT 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 documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, ICT 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 - 15 - 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 ICT 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. (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 not governed by the preceding paragraph, ICT shall furnish 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, two conformed copies of such con- tract, together with the analysis of the respective bids, recom- mendations 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 ICT and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion 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 15% of the original price, ICT 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 ICT and state the reasons for its determination.