Philippines - Rural Water Supply And Sanitation Project : Loan 2206 - Project Agreement - Conformed

LOAN NUMBER 2206 PH Project Agreement (Rural Water Supply and Sanitation Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and RURAL WATERWORKS DEVELOPMENT CORPORATION Dated J ,1982 LOAN NUMBER 2206 PH PROJECT AGREEMENT AGREEMENT, dated ed , 1982, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank) and RURAL WATERWORKS DEVELOPMENT COR- PORATION (hereinafter called the Corporation). WHEREAS (A) by the Loan Agreement of even date herewith between Republic of the Philippines (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to thirty-five million five hundred thousand dollars ($35,500,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Corporation agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary loan agreement to be entered into between the Borrower and the Corporation, part of the proceeds of the loan provided for under the Loan Agreement will be made available to the Corporation on the terms and conditions therein set forth; and WHEREAS the Corporation, 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 seve; 1 terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth and "RWSA" means a Rural Waterworks and Sanitation Association. ARTICLE II Execution of the Project Section 2.01. The Corporation shall carry out Part A of the Project, described in Schedule 2 to the Loan Agreement, with due -2- diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility prac- tices under arrangements satisfactory to the Bank. Section 2.02. Except as the Bank shall otherwise agree, pro- curement 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 the Loan Agreement. Section 2.03. (a) The Corporation undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be pay- able in a currency freely usable by the Corporation to replace or repair such goods. (b) The Corporation shall cause all goods and services financed out of the proceeds of the Loan made available to it by the Borrower to be used exclusively for the purposes of the Pro- ject. Section 2.04. (a) The Corporation shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Part A of the Project, and any material modifica- tions thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Corporation shall: (i) maintain records and procedures adequate to record and monitor the progress of Part A 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) enable the Bank's representatives to visit the facilities and construction sites included in Part A of the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning Part A of 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. -3- (c) Upon the award by the Corporation of any contract for goods, works or services to be financed out of the proceeds of the Loan, the Bank may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of Part A 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 Corporation and the Bank, the Corporation shall prepare and fur- nish to the Bank reports, including those referred to in Section 3.05 (d) of the Loan Agreement, of such scope and in such detail as the Bank shall reasonably request, on the execution and ini- tial operation of the Project, the cost and the benefits derived and to be derived from it, the performance by the Borrower and the Corporation and the Bank of their respective obligations under the Loan Agreement and the Project Agreement and the accom- plishment of the purposes of the Loan. (e) The Corporation shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Corporation and any relevant records and documents. Section 2.05. The Corporation shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, the Corporation shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.06. The Corporation shall appoint an official, whose qualifications and experience are acceptable to the Bank, to be responsible for implementation of Part A of the Project. Section 2.07. (a) The Corporation shall, at the request of the Bank, exchange views with the Bank with regard to the pro- gress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) The Corporation shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of -4- the Loan, or the performance by the Corporation of its obliga- tions under this Agreement and under the Subsidiary Loan Agree- ment. ARTICLE III Management and Operations of the Corporation Section 3.01. The Corporation shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and public utility practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. The Corporation shall take out and maintain with responsible 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. ARTICLE IV Financial Covenants Section 4.01. (a) The Corporation shall maintain separate accounts and records adequate to reflect in accordance with con- sistently maintained appropriate accounting practices its oper- ations and financial condition, including, without limitation to the foregoing, separate accounts reflecting all expenditures *on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure. (b) The Corporation shall retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure, and shall enable the Bank's representatives to examine such records. Section 4.02. The Corporation shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles con- sistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year: -5- (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, including, without limitation to the foregoing, sepa- rate opinion by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Loan made available to it and with- drawn from the Loan Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Bank such other information concerning said accounts, financial statements, records and expenditures, as well as the audit thereof, as the Bank shall from time to time reasonably request. Section 4.03. The Corporation shall cause RWSAs to: (i) levy such charges for the Level II Systems to be installed under Part A of the Project as shall be sufficient to cover operating and maintenance costs, and debt service requirements; (ii) review with the Corporation said charges annually in November; and (iii) implement such findings of the review in January each year fol- lowing the review as shall be necessary to meet the requirements of subparagraph (i) above. Section 4.04. The Corporation shall ensure that RWSAs receiving loans from the Corporation: (i) have their accounts and financial statements for each year audited, in accordance with appropriate auditing principles; and (ii) make available for review by the Bank the report of said audit within six months of the end of each such year. 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 the Corporation thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify the Corporation thereof. - 6 - Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion 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 hereinafter 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: 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) For the Corporation: Rural Waterworks Development Corporation Vibal Building 865 E. de los Santos Avenue Diliman, Quezon City Metro Manila Philippines Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this - 7 - Agreement on behalf of the Corporation may be taken or executed by its General Manager or such other person or persons as the Corporation shall designate in writing, and the Corporation 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 col- lectively 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 District of Columbia, Unites States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By B,&ing Regional Vice President East Asia and Pacific RURAL WATERWORKS DEVELOPMENT CORPORATION Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day of ,198 Z. FOR SECRETARY