Conformed Copy - L3278 - Public Sector Reform Loan - Japanese Grant Agreement

Page 1 CONFORMED COPY JAPANESE GRANT RELATED TO LOAN NUMBER 3278-CO (Public Sector Reform Loan) between REPUBLIC OF COLOMBIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT as Administrator of Grant Funds provided by JAPAN Dated March 16, 1992 JAPANESE GRANT RELATED TO LOAN NUMBER 3278-CO JAPANESE GRANT AGREEMENT AGREEMENT, dated March 16, 1992, between REPUBLIC OF COLOMBIA (the Recipient) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) acting as Administrator (the Administrator) of grant funds provided by JAPAN (Japan). WHEREAS (A) pursuant to a Loan Agreement (Public Sector Reform Loan), dated December 28, 1990, between the Recipient and the Bank (the IBRD Loan Agreement), the Bank has agreed to extend to the Recipient a loan in an amount in various currencies equivalent to three hundred and four million dollars ($304,000,000) to assist in the financing of the Technical Assistance Program described in Schedule 8 to the IBRD Loan Agreement; WHEREAS (B) pursuant to a letter agreement dated July 30, 1990 between Japan and the Bank and International Development Association (the Association), Japan has requested the Bank and the Association, and the Bank and the Association have agreed, to administer grant funds to be made available by Japan for the financing of certain programs and projects supported by the Bank and the Association, as the case may be, in accordance with the provisions of such letter agreement; Page 2 WHEREAS (C) Japan has agreed to make available to the Recipient a grant out of said grant funds (the Grant) to assist the Recipient in carrying out the activities described in Schedule 2 to this Agreement (hereinafter the Project) on the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. (a) The following provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 1, 1985, with the modifications set forth in paragraph (b) of this Section (the General Conditions) constitute an integral part of this Agreement: (i) Article I; (ii) Sections 2.01 (1), (2), (3), (4), (6), (8), (9), (10), (11), (18) and (20), 2.02 and 2.03; (iii) Section 3.01; (iv) Section 4.01 and the first sentence of Section 4.09; (v) Article V; (vi) Sections 6.01, 6.02 (a), (c), (d), (e), (f), (i) and (k), 6.03, 6.04 and 6.06; (vii) Section 8.01 (b); (viii) Sections 9.01 (a) and (c), 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09; (ix) Sections 10.01, 10.03 and 10.04; and (x) Article XI. (b) The General Conditions shall be modified as follows: (i) the term "Bank", wherever used in the General Conditions, other than in Sections 2.01 (8) and 6.02 (f) thereof and the last use of such term in Section 5.01 thereof, means the International Bank for Reconstruction and Development acting as Administrator of the Grant pursuant to the letter agreement between Japan and the Bank and the Association referred to in Recital (B) of this Agreement, except that in Section 6.02, the term "Bank" shall also include the International Bank for Reconstruction and Development acting in its own capacity; (ii) the term "Borrower", wherever used in the General Conditions, means the Recipient; (iii) the term "Loan Agreement", wherever used in the General Conditions, means this Agreement except that in Section 6.02 (a), the term "Loan Agreement" means the IBRD Loan Agreement; (iv) the term "Loan", wherever used in the General Conditions, means the Grant; (v) the term "Loan Account", wherever used in the General Conditions means the Grant Account, an account opened by the Administrator on its books in the name of the Recipient to which the amount of the Grant is credited; and (vi) Section 4.01 shall be modified to read: Page 3 "Withdrawals from the Grant Account shall be made in yen; provided, however, that if the expenditures to be financed out of the Grant have been paid or are payable in another currency, the Administrator shall, at the request of the Recipient, purchase such currency with the proceeds of such withdrawal." Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions, in the Recitals to this Agreement and in the IBRD Loan Agreement have the respective meanings therein set forth; and the terms "yen" and "c" mean the currency of Japan . ARTICLE II The Grant Section 2.01. The Administrator agrees to make available to the Recipient, on the terms and conditions set forth or referred to in this Agreement, a grant in an amount of one hundred and forty million yen (c140,000,000). Section 2.02. The amount of the Grant may be withdrawn from the Grant 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 Recipient and the Administrator, for expenditures made (or, if the Administrator shall so agree, to be made) in respect of the reasonable cost of services required for the Project and to be financed out of the Grant. Section 2.03. The Closing Date shall be June 30, 1992 or such later date as the Administrator shall establish. The Administrator shall promptly notify the Recipient of such later date. ARTICLE III Execution of the Project Section 3.01. The Recipient shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 3.02. For purposes of carrying out the Project, the Recipient shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Administrator. Such consultants shall be selected in accordance with the principles and procedures satisfactory to the Administrator on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Administrator in August 1981. Section 3.03. (a) The Recipient shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Recipient responsible for carrying out the Project or any part thereof. (b) The Recipient shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Administrator; (ii) furnish to the Administrator as soon as available, but in any case not later than four months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Administrator shall have reasonably requested; and (iii) furnish to the Administrator such other information concerning Page 4 said records and accounts and the audit thereof as the Administrator shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Grant Account were made on the basis of statements of expenditure, the Recipient shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Administrator has received the audit report for the fiscal year in which the last withdrawal from the Grant Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Administrator's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the proce-dures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 3.04. Except as otherwise expressly provided herein, Article IV of the IBRD Loan Agreement, is hereby incorporated into this Agreement with the same force and effect as if it were fully set forth herein, it being understood that all references in said Articles to the "Bank" shall be deemed to be references to the Bank as Administrator of the Grant under this Agreement, all references to the "Borrower" shall be deemed to be references to the Recipient, and all references to the "Loan" and the "Loan Account" shall be deemed to be references to the Grant and the Grant Account, respectively. ARTICLE IV Effectiveness Section 4.01. This Agreement shall become effective upon its execution by the parties thereto. Section 4.02. This Agreement shall continue in effect until the Grant has been fully disbursed and the parties to this Agreement have fulfilled their obligations hereunder. ARTICLE V Representation Section 5.01. The Minister of Finance and Public Credit of the Recipient is designated as representative of the Recipient for the purposes of Section 11.03 of the General Conditions. Section 5.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Recipient: Ministerio de Hacienda y Credito Publico Palacio de los Ministerios Bogota, Colombia Cable address: Telex: MINHACIENDA 44473 MHACCO Page 5 For the Administrator: Director Country Department III Latin America and the Caribbean 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) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names as of the day and year first above written. REPUBLIC OF COLOMBIA By /s/ Rudolf Hommes Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT as Administrator of the Grant By /s/ Yoshiaki Abe Acting Regional Vice President Latin America and the Caribbean SCHEDULE 1 Withdrawal of the Grant 1. The table below sets forth the Category to be financed out of the Grant, the allocation of the amount of the Grant to such Category and the percentage of expenditures for the item to be financed thereunder: Amount of the Grant Allocated % of (Expressed Expenditures Category in Yen) to be Financed Consultants' 140,000,000 100% services ___________ TOTAL 140,000,000 =========== 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be Page 6 made in respect of payments made for expenditures prior to the date of the IBRD Loan Agreement. SCHEDULE 2 Technical Assistance Program 1. Technical assistance for purposes of the preparation of performance plans for decentralized entities which are subjected to the PPES and specific sector reform programs. 2. Technical assistance for purposes of the implementation of performance plans for decentralized entities which are subjected to the PPES and specific sector reform programs, including, inter alia: (a) A study for the establishment of a management cost accounting system for the Borrower's Empresa Colombiana de Petroleos (ECOPETROL); (b) Preparation of a restructuring program for the Borrower's Empresa Colombiana de Telecomunicaciones (TELECOM), including the development of a cost accounting system, review of its current tariff structure and the review of its managerial and corporate structure to enable it to operate on a commercial basis; and (c) Development of a management information system for the Borrower's Instituto Colombiano de Hidrologia y Adecuacion de Tierra (HIMAT). 3. Studies to define the institutional and regulatory framework, including tariff, compensation, and licensing for the ports sector.