Conformed Copy - L3250 - Rural Development Investment Project - Project Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3250-CO (Rural Development Investment Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and FONDO DE DESARROLLO RURAL INTEGRADO Dated September 14, 1990 LOAN NUMBER 3250-CO PROJECT AGREEMENT AGREEMENT, dated September 14, 1990, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and FONDO DE DESARROLLO RURAL INTEGRADO (DRI). WHEREAS (A) by the Loan Agreement of even date herewith between the Republic of Colombia (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to seventy-five million dollars ($75,000,000) on the terms and conditions set forth in the Loan Agreement, but only on condition that DRI agree to undertake such obligations toward the Bank as are set forth in this Agreement; (B) by a Subsidiary Agreement to be entered into between the Borrower and DRI, the proceeds of the loan provided for under the Loan Agreement will be made available to DRI on the terms and conditions set forth in said Subsidiary Agreement; and WHEREAS DRI, in consideration of the Bank's entering into the Loan Agreement Page 2 with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several 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. ARTICLE II Execution of the Project Section 2.01. (a) DRI declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, shall carry out the Project with the participation of the DRI Municipalities and Implementing Entities with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, construction, agricultural, environmental and road safety practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) As part of, and without limitation to, the foregoing DRI shall, for purposes of the execution of each subproject, enter into an agreement, satisfactory to the Bank, with the participating DRI Municipality and the participating Implementing Entity, as the case may be, such agreement to contain the cofinancing arrangements and terms and provisions as set forth in the Operational Manual including, inter alia, those in Schedule 1 of this Agreement. (c) Unless the Bank shall otherwise agree, DRI shall not abrogate, waive, assign or fail to enforce the Contratos de Cofinanciacion or any provision thereof. Section 2.02. Without any limitation upon the provisions of this Agreement and except as the Bank and DRI shall otherwise agree, DRI shall carry out the Project in accordance with the Implementation Program as set forth in Schedule 2 to this Agreement. Section 2.03. (a) Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services 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. (b) DRI shall submit to the Bank for its approval standard bidding documents to be utilized for the procurement of works and goods under the procedures set forth in Part C.1 of Schedule 4 of the Loan Agreement. Section 2.04. DRI shall: (a) not later than June 30, 1991, furnish to the Bank a base line survey, satisfactory to the Bank, in the Project Area, (b) not later than June 30, 1995, employ, with qualifications, experience and under terms of reference satisfactory to the Bank, consultants to assist DRI to carry out a base line survey additional to the one referred to in (a) above in the Project Area and an impact evaluation of the Project, and (c) not later than October 30, 1995, furnish to the Bank the base line survey and impact evaluation referred to in (b) above. Section 2.05. DRI shall not later than September 30, 1990, employ, with qualifications experience, and under terms of reference, satisfactory to the Bank, a consultant to assist DRI in the coordination of the training activities to be carried out under the Project. Unless otherwise agreed by the Bank, such consultant shall be employed by DRI for, at least, a three month term in each year commencing in 1990 until 1993 inclusive. Section 2.06. DRI shall carry out and, as applicable, cause the DRI Municipalities and Implementing Entities to carry out the obligations set forth in Page 3 Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) with respect to the Project. Section 2.07. Unless the Bank shall otherwise agree, DRI shall not repeal, amend, suspend, abrogate or fail to apply the Operational Manual or any provision thereof and shall not amend any Contrato de Cofinanciacion in respect of the terms and conditions set forth in the Operational Manual including those in Schedule 1 to this Agreement. Section 2.08. (a) DRI shall, at the request of the Bank, exchange views with the Bank with regard to progress of the Project, the performance of its obligations under this Agreement, the Subsidiary Agreement, the Contratos de Cofinanciacion and the ICA Agreement, and other matters relating to the purposes of the Loan. (b) Without limitation to (a) above, DRI shall, during the month of September of each year of Project execution, review the progress of Loan disbursements and IDB Loan disbursements with the Bank. Pursuant to such disbursements progress reviews, the Bank and DRI shall agree on any actions and measures to ensure that withdrawal of the proceeds of the Loan be made pari-passu and at the rate of approximately 50/50 with the withdrawal of proceeds under IDB Loan Agreement. (c) DRI 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 the Loan, or the performance by DRI of its obligations under this Agreement, the Subsidiary Agreement, the Contratos de Cofinanciacion and the ICA Agreement. Section 2.09. DRI shall duly perform all its obligations under the Subsidiary Agreement and the ICA Agreement. Except as the Bank shall otherwise agree, DRI shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving such agreements or any provision thereof. ARTICLE III Management and Operations of DRI Section 3.01. DRI shall carry on its operations and conduct its affairs in accordance with sound administrative, construction, engineering, agricultural, financial and managerial practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. DRI shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and construction practices. Section 3.03. DRI shall take out and maintain with responsible insurers, or make other provision 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) DRI shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition, including separate records and accounts for the Project and shall cause each DRI Municipality and Implementing Entity to maintain separate records and accounts in respect of the part of the Project in which such DRI Municipility and Implementing Entity participates. (b) DRI shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related Page 4 statements) and the separate records and accounts referred to in (a) above 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 six 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 said records, accounts and financial statements as well as the audit thereof, as the Bank shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 5.02. This Agreement and all obligations of the Bank and of DRI thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify DRI 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 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 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) For DRI: Edificio Bachue Carrera 10 No. 27-27 Piso 11 Bogota Colombia Telex: Page 5 42237 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 DRI, or by DRI on behalf of the Borrower under the Loan Agreement, may be taken or executed by the Gerente General of DRI or such other person or persons as the Gerente General of DRI shall designate in writing, and the Gerente General of DRI 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 collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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/ Rainer B. Steckhan Acting Regional Vice President Latin America and the Caribbean FONDO DE DESARROLLO RURAL INTEGRADO By /s/ Victor Mosquesa Chaux Authorized Representative SCHEDULE 1 Terms and Conditions of the Contratos de Cofinanciacion 1. Each DRI Municipality and Implementing Entity, as the case may be, shall declare its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, shall cofinance and/or execute the respective Subproject or Subprojects in accordance with the provisions of the Operational Manual and with due diligence and efficiency and in conformity with appropriate administrative, financial, managerial, technical, construction, and agricultural practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for such Subproject or Subprojects. 2. Procurement of the goods, works and consultants' services required for the relevant Subproject or Subprojects and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to the Loan Agreement. 3. (a) Each DRI Municipality and Implementing Entity as the case may be, shall carry out the obligations set forth in Section 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Subproject or Subprojects carried out by such DRI Municipality and Implementing Entity. Page 6 (b) (i) In respect of Subprojects under Part A.8 of the Project, the respective DRI Municipality shall provide for the routine and periodic maintenance of the rural roads to be constructed, rehabilitated or improved under the relevant Subproject, and for such purposes shall allocate in its budget and spend amounts in the terms and conditions agreed between DRI and the Bank as set forth in the letter of even date herewith; (ii) failure by a DRI Municipality to comply with the provision in (b) (i) above, will preclude the inclusion in an Annual Operating Plan of any Subproject under Parts A.1, A.2, A.6 and A.8 of the Project, in respect of the affected DRI Municipality. 4. (a) Each DRI Municipality and Implementing Entity, as the case may be, shall, at the request of the Bank, the Borrower or DRI, exchange views with the Bank, the Borrower or DRI, as the case may be, with regard to progress of the Subproject or Subprojects carried out by such DRI Municipality and Implementing Entity, the performance of its obligations under the relevant Contratos de Cofinanciacion, as the case may be, and other matters relating to the purposes of the Loan. (b) Each DRI Municipality and Implementing Entity, as the case may be, shall promptly inform the Bank, the Borrower and DRI of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by such DRI Municipality and Imple- menting Entity of its obligations under the relevant Contratos de Cofinanciacion, as the case may be. 5. Each DRI Municipality and Implementing Entity shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, environmental, construction, technical and agricultural practices under the supervision of qualified and experienced management assisted by competent staff. 6. Each DRI Municipality and Implementing Entity shall at all times operate and maintain its facilities, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and agricultural practices. 7. Each DRI Municipality and Implementing Entity, as the case may be, shall take out, maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. 8. Each DRI Municipality and Implementing Entity, as the case may be, shall maintain records and accounts adequate to reflect in accordance with consistently maintained sound accounting practices its operations and financial condition and separate records and accounts to record all resources and expenditures in respect to the Subproject or Subprojects in respect of which it participates. 9. Each DRI Municipality and Implementing Entity, as the case may be, shall: (i) have the records and accounts referred to in paragraph (8) above for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to DRI as soon as available, but in any case not later than six months after the end of each such year: (A) certified copies of such records and accounts and of their financial statements for such year, both as so audited; and (B) the report of such audit by said auditors of such scope and in such detail as DRI shall have reasonably requested; and (iii) furnish to DRI such other information concerning said records, accounts and financial statements as well as the audit thereof, as DRI shall from time to time reasonably request. Page 7 10. (a) The right of any DRI Municipality and Implementing Entity to the use of the proceeds of the Loan shall be subject to suspension or termination by DRI and the Bank upon failure by such DRI Municipality and Implementing Entity to perform its obligations under the respective Contratos de Cofinanciacion. (b) Without limitation to (a) above, if significant deficiencies in the carrying out of the Subproject or Subprojects are noted by the audit reports referred to in paragraph 9 above or during the Bank's or DRI's supervision of the relevant Subprojects, DRI shall: (a) suspend disbursements to the affected DRI Municipality or Implementing Entity, and (b) condition the resumption of disbursements, and the inclusion of any Subproject by the affected DRI Municipality or Implementing Entity in the Annual Operating Plan, to the assurance, by means of a special audit report carried out by independent auditors acceptable to the Bank and DRI, that the deficiencies in question have been corrected by the affected DRI Municipality or Implementing Entity. 11. All the provisions of the Contratos de Cofinanciacion shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions or suspension or termination referred to in paragraph 10 above. SCHEDULE 2 Implementation Program 1. Without limitation upon its obligations under Sections 9.06 and 9.07 of the General Conditions, DRI shall: (a) not later than September 30 in each year during the execution of the Project, prepare and furnish to the Bank for approval, a detailed annual operating plan for the immediately following calendar year (the Annual Operating Plan), such Annual Operating Plan to be of such scope and detail as the Bank shall reasonably request including, inter alia: (i) a list of the proposed Subprojects which meet the eligibility criteria set forth in the Operational Manual; and (ii) a list of those Subprojects, in a preparatory stage, which require preinvestment studies such as prefeasibility, feasibility and design studies and further environmental impact analysis; (b) not later than September 30 in each year of the execution of the Project, furnish to the Bank for its review and comment a progress report, in such detail and of such scope as the Bank may reasonably request, on the execution of the Project; (c) not later than December 31 and June 30 in each year of the execution of the Project, furnish to the Bank for its review and comment a summarized report identifying critical issues and problems resulting from the execution of the Project; (d) inform to the Bank, for its review and comments, any changes to each of the Annual Operating Plans referred to in (a) above. 2. DRI shall not include in the Annual Operating Plans (a) Subprojects under Parts A.6 (a) and A.5 (b) of the Project, unless the Bank has received an evaluation, satisfactory to the Bank, of inter alia, the viability of such Subprojects and the mechanisms for recovering the operation and maintenance costs thereof and (b) Subprojects under Part A.7 of the Project, with the exception of those Subprojects approved by the Bank for financing in 1990, unless DRI has (i) carried out an assessment survey, satisfactory to the Bank, of the socio-economic needs of the rural women's groups established under the Project and (ii) based on the results of the survey in (i) above and the Bank's comments thereon, prepared and furnished to the Bank an action plan, satisfactory to the Bank, to discontinue the financial assistance to those rural women's groups which are able to manage independently their operations. 3. Subprojects shall be eligible for financing under the Loan if (i) such Subproject is included in an Annual Operating Plan approved by the Bank, (ii) the Subproject has been selected taking into account, in terms satisfactory to the Bank, the accessibility for purposes of execution and supervision of the areas where the Subproject is to be carried out and (iii) the Borrower is not receiving other external financing (including other Bank loans) for such Subprojects. 4. DRI shall: (a) maintain staff, in number and positions satisfactory to the Bank, Page 8 to adequately manage and supervise the implementation of the Project; (b) without limitation to (a) above, maintain the following staff with qualifications and experience satisfactory to the Bank: (i) a Project Coordinator and two professionals to assist the Project Coordinator, (ii) two consultants to assist in the preparation and review of Subprojects under Part A.4 of the Project, (iii) three economists to assist DRI to monitor the compliance by DRI Municipalities and Implementing Entities with the procedures and criteria set forth in the Operational Manual, and (iv) a consultant to assist DRI in the carrying out of environmental assessments for the watershed management subprojects under Part A.4 of the Project; and (c) maintain, under conditions satisfactory to the Bank, the Monitoring System. 5. DRI shall implement, in a manner and under a timetable satisfactory to the Bank, (a) the action plan referred to in paragraph 2 (b) (ii) of this Schedule, (b) the action plan referred to in Section 3.04 (c) of the Loan Agreement, and (c) not later than September 30, 1992, the graduation policy and criteria referred to in Section 3.05 (c) of the Loan Agreement.