Conformed Copy - L3952 - Santa Fe I Water Supply and Sewerage Rehabilitation Project - Loan Agreement

LOAN NUMBER 3952-CO (Floating Rate) Loan Agreement (Santa Fe I Water Supply and Sewerage Rehabilitation Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and EMPRESA DE ACUEDUCTO Y ALCANTARILLADO DE BOGOTA - E.S.P. Dated 'tau' C ,a. << x - , 199 `^  LOAN NUMBER 3952 -CO LOAN AGREEMENT i AGREEMENT, dated Q, `.0 c ; ( -) 199 between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and EMPRESA DE ACUEDUCTO Y ALCANTARILLADO DE BOGOTA - E.S.P. (the Borrower). WHEREAS (A) Republic of Colombia (the Guarantor), Distrito Capital (the District), a political subdivision of the Guarantor, and the Borrower, a public utility company operating as an industrial and commercial enterprise of the District, having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, have requested the Bank to assist in the financing of the Project; (B) by means of the Sponsor Agreement of even date herewith between the Bank and the District (the Sponsor Agreement) the District, in whose jurisdiction the Borrower renders most of its services as a public utility company, has agreed to provide certain assurances to the Bank in connection with the Borrower's obligations under this Agreement; (C) by an agreement (the Guarantee Agreement) of even date herewith between the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Loan and to undertake such other obligations as set forth in the Guarantee Agreement; (D) by another agreement of even date herewith between the Bank and the Borrower (the Fixed Rate Single Currency Loan Agreement) the Bank has agreed to provide a loan in an amount equal to $87,000,000 (the Fixed Rate Single Currency Loan) to assist in the financing of the Project described in Schedule 2 to this Agreement, on the terms and conditions set forth in the Fixed Rate Single Currency Loan Agreement; (E) by another agreement of even date herewith between the Guarantor and the Bank (the Fixed Rate Single Currency Guarantee Agreement) the Guarantor has agreed to guarantee the obligations of the Borrower in respect of the Fixed Rate Single Currency Loan and to undertake such other obligations as set forth in the Fixed Rate Single Currency Guarantee Agreement; and (F) by means of another agreement of even date herewith between the Bank and the District (the Fixed Rate Sponsor Agreement) the District has agreed to provide certain assurances to the Bank in connection with the Borrower's obligations under the Fixed Rate Single Currency Loan Agreement.  -2- WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement and in the aforesaid Agreements; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Single Currency Loan and Guarantee Agreements for Single Currency Loans" of the Bank, dated May 30, 1995, (the General Conditions) constitute an integral part of this Agreement: Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "DAMA" means Departamento Administrativo del Medio Ambiente (Administrative Department of the Environment), an administrative subdivision of the District; (b) "Decreto- j " means the Estatuto Or anico (Organizational Statute) of the District, as sanctioned by the Guarantor's Decree-Law 1421 of July 21, 1993 enacted by the Guarantor's Executive Branch pursuant to the provisions of Article 41 of the Guarantor's Constitution; (c) "District" means Distrito Capital (Capital District), the district established on the basis of the former Municipality of Santa Fe de Bogota, the Guarantor's capital, by virtue of the corresponding provisions of the Special Regime stipulated in Chapter 4 of Title XI of the Guarantor's Constitution and of the Decreto -; (d) "Estatutos" means the Borrower's By-laws adopted by the Borrower's Board of Directors under Resolution No. 011 of 1994 (September 16, 1994), as approved by Decree No. 569 of September 19, 1994 of the District's Mayor (Alcalde Mayor); (e) "First Annual Subprogram" means the initial annual subprogram to be carried out under Part H.3 of the Project as furnished to the Bank by the Borrower  -3- through its letter 4000-95-195 dated May 26, 1995 and the attachments thereto describing such subprogram; (f) "First Loan Agreement" means the loan agreement between the Bank and the Borrower for Loan No. 536-CO (Bogota Water Supply Project), of June 3, 1968; (g) "Fourth Loan Agreement" means the loan agreement between the Bank and the Borrower for Loan No. 2512-CO (Fourth Bogota Water Supply and Sewerage Project), of April 3, 1985; (h) "Law 142" means the Guarantor's Law No. 142 of July 11, 1994 (j de Servicios Publicos Domiciliarios) ; (i) "Sponsor Agreement" means the agreement between the Bank and the District, of even date herewith and signed in connection with this Loan Agreement, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Sponsor Agreement; (j) "Second Loan Agreement" means the loan agreement between the Bank and the Borrower for Loan 741-CO (Second Bogota Water Supply Project), of May 28, 1971; (k) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (1) "Subsequent Pluri-annual Subprogram" means the pluri-annual subprogram to be executed under Part H.3 of the Project as approved by the Bank pursuant to the provisions of Section 3.04 (b) (ii) of this Loan Agreement; (m) "Table" means the table set forth in paragraph 1 of Schedule 1 to this Loan Agreement; (n) "Target" means each of the targets set forth in tables 2 and 3 for the action plan attached to the letter referred to in Section 3.01 (b) of this Loan Agreement; (o) "Third Loan Agreement" means the loan agreement between the Bank and the Borrower for Loan 1697-CO (Third Bogota Water Supply, Sewerage and Drainage Project) of November 30, 1979; (p) "Total Quality Management Program" means the program of management awareness, personnel training and management development that the Borrower is pursuing  -4- as a means of enhancing organizational effectiveness and efficiency and improving management communications throughout the Borrower's organization; (q) "Transfer Agreement" means the agreement entered into between the District and the Borrower on September 15, 1994 with respect to the transfer from the former to the latter, for purposes of the Project, of an amount equivalent to not less than $117,000,000; (r) "UFW" means any quantity of water supplied by the Borrower which because of leaks, clandestine connections or otherwise, remains unbilled, and thus unaccounted for; and (s) "UFW Index" means the index obtained when the difference between quantities of water supplied and water billed, both by the Borrower, is divided by the quantity of water supplied, and the quotient is multiplied by 100. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount equal to fifty eight million dollars ($58,000,000). 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 for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan, and not financed out of the proceeds of the Fixed Rate Single Currency Loan. (b) The Borrower may, for the purposes of the Project, open and maintain in dollars a special deposit account in a commercial bank on terms and conditions satisfactory to the Bank, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. The Closing Date shall be June 30, 2003 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date.  -5- Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to LIBOR Base Rate plus LIBOR Total Spread. (b) For the purposes of this Section: (i) "Interest Period" means the initial period from and including the date of this Agreement to, but excluding, the first Interest Payment Date occurring thereafter. and after the initial period, each period from and including an Interest Payment Date to, but excluding the next following Interest Payment Date. (ii) "Interest Payment Date" means any date specified in Section 2.06 of this Agreement. (iii) "LIBOR Base Rate" means, for each Interest Period, the London interbank offered rate for six-month deposits in dollars for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the Interest Payment Date occurring on or next preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum. (iv) "LIBOR Total Spread" means, for each Interest Period: (A) one half of one percent (1/2 of 1%); (B) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six- month deposits, in respect of the Bank's outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include the Loan; as reasonably determined by the Bank and expressed as a percentage per annum. (c) The Bank shall notify the Guarantor and the Borrower of LIBOR Base Rate and LIBOR Total Spread for each Interest Period, promptly upon the determination thereof.  -6- (d) Whenever, in light of changes in market practice affecting the determination of the interest rates referred to in this Section 2.05, the Bank determines that it is in the interest of its borrowers as a whole and of the Bank to apply a basis for determining the interest rates applicable to the Loan other than as provided in said Section, the Bank may modify the basis for determining the interest rates applicable to amounts of Loan not yet withdrawn upon not less than six (6) months' notice to the Borrower of the new basis. The basis shall become effective on the expiry of the notice period unless the Borrower notifies the Bank during said period of its objection thereto, in which case said modification shall not apply to the Loan. Section 2.06. Interest and other charges shall be payable on May 15 and ^.. November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end shall carry out the Project with due diligence and efficiency and in conformity with appropriate financial, engineering, public utility and environmental practices and shall provide, promptly as needed the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section, the Borrower shall carry out the Project: (i) in accordance with the action plan; and (ii) meeting the Targets, both as set forth in the attachment to the supplemental letter from the Borrower to the Bank of even date herewith, except for changes thereto which, in the opinion of the Borrower and the Bank, shall not adversely affect the objectives of the Project. Section 3.02. 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 this Agreement. Section 3.03. For the purposes of Section 9.08 of the General Conditions, and without limitation thereto, the Borrower shall:  -7- (a) prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Bank and the Borrower, a plan designed to ensure the future operation of the Project; and (b) afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan. Section 3.04. (a) The Borrower shall take all action as shall be necessary or convenient on its part in order to coordinate with the District, through DAMA, as warranted, the carrying out of Part H.3 of the Project including but not limited to the aspects related to the obligations of the Borrower under 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) in respect of Part H.3 of the Project. (b) Without limitation or restriction upon the provisions of paragraph (a) of this Section, the Borrower in consultation with DAMA, shall: (i) begin not later than February 15, 1996 the study to be executed under Part H.3 (b) of the Project, complete said study not later than August 31, 1996, and, on the basis of the findings and recommendations of such study, and upon termination thereof, prepare and submit to the Bank for approval the pluri-annual subprogram proposed for purposes of Part H.3 (c) of the Project; and (ii) (A) take into account all Bank's comments, if any, to such subprogram and, upon Bank's approval, execute the Subsequent Pluri-annual Subprogram for purposes of Part H.3 (c) of the Project; and (B) not change the First Annual Subprogram or the Subsequent Pluri-annual Subprogram except for changes thereto, which in the opinion of the Borrower and the Bank shall not adversely affect the Subprogram in question. Section 3.05. (a) In respect of each of the works referred to in Part H.2 of the Project and without limitation or restriction upon the provisions of the following paragraphs of this Section, the Borrower shall not invite bids for the works in question, unless each of the persons to be relocated pursuant to the resettlement subprograms under such Part of the Project shall have been provided, by means of the specific actions formulated under the corresponding subprograms, with a new home or adequate compensation or both, as such person may be entitled to under such plan, and evidence thereof shall have been furnished to the Bank in a manner satisfactory to the Bank. (b) Without limitation or restriction upon the provisions of paragraphs (a) and (c) of this Section, and in respect of works under Parts A through E of the Project and the mitigating measures under Part H. 1 of the Project, the Borrower shall not invite bids  -8- for the works or measures in question, unless the detailed engineering under Part G. 1 for the Project in respect of such works or measures shall have been completed and evidence thereof shall have been furnished to the Bank, both in a manner satisfactory to the Bank. (c) Without limitation or restriction upon the provisions of the preceding paragraphs of this Section or Section 9.09 of the General Conditions, and in respect of: (i) works for Part B. 1 of the Project or, (ii) works for the construction of: (A) each sewerage interceptor, trunk sewer and storm water drainage system under Part B.2 of the Project or (B) each of the pumping stations under Part B.3 of the Project or (C) each reservoir or each of the storage tanks under Part C.2 of the Project or (D) each pumping station under Part C.3 of the Project, the Borrower shall not invite bids for the works in question, unless all the corresponding. land and rights in respect of land required for the carrying out of the such works shall have been acquired. Section 3.06. The Borrower shall establish, in form and substance satisfactory to the Bank, the committee referred to in Part F.6 of the Project on or before January 31, 1996, or by such other date as shall be agreed between the Borrower and the Bank. Section 3.07. (a) The Borrower shall, by a date not later than 90 days after the submission to the Borrower and the Bank, by the respective consultants, of the study to be carried out under Part G. 2 (a) (i) of the Project or by such later date as may be agreed with the Bank, prepare terms of reference satisfactory to the Bank for the carrying out of Part G. 2 (a) (ii) of the Project. (b) The Borrower shall, upon completion of Part G. 2 (a) (ii) of the Project, furnish to the Bank a time-table for the carrying out of the plan developed under such Part of the Project, afford the Bank a reasonable opportunity to express its views on such plan and time-table, and carry out all action under said plan in accordance with the said time table, except for changes thereto which, in the opinion of the Borrower and the Bank, shall not adversely affect the objectives of the plan. Section 3.08. The Borrower shall: (a) by a date not later than thirty days after submission to the Borrower and the Bank, by the respective consultants, of their work under Part G.2 (b) of the Project, prepare and submit to the Bank the alternatives and respective plans to be developed under said Part of the Project; (b) by a date not later than ninety days after such submission, shall review with the Bank each of the plans in question and its implications in connection with the Borrower's obligations under this Agreement; and (iii) thereafter, carry out such actions with respect to participation of the private sector in Parts A.2 and A.3 of the Project as shall be agreed upon between the Borrower and the Bank, except for changes thereto which, in the opinion of the Borrower and the Bank, shall not adversely affect the objectives of the plan in question.  -9- ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, engineering, public utility and environmental practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 4.02. The Borrower shall at all times operate and maintain its plants, 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 environmental practices. Section 4.03. The Borrower 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. Section 4.04. The Borrower shall maintain the Committee established for purposes of Part F.6 of the Project and the group under the lead of the UFW coordinator, position established by Resolution No. 1629 of October 13, 1993 of the Borrower's General Manager for purposes of the reduction of UFW, and provide them at all times with such funds, facilities, services and other resources as shall be appropriate or necessary to enable said committee and unit to discharge their respective functions. ARTICLE V Financial Covenants Section 5.01. (a) The Borrower shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition, including separate accounts to reflect the operations, resources and expenditures in respect of the Project. (b) The Borrower shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) and the records and accounts for the Special Account for each  - 10- fiscal year, audited in accordance with appropriate auditing principles consistently applied (including, in the case of such fund, annual actuarial evaluations thereof), 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 of the Borrower fiscal years 1995, 1996, and 1997, and not later than four months after the end of each of the Borrower fiscal years thereafter: (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. (c) For all expenditures with respect to which withdrawals from the Loan Account under Categories (1) through (4) of the Table were made on the basis of statements of expenditure, the Borrower shall: (i) maintain, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank'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 fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 5.02. (a) Except as the Bank shall otherwise agree, the Borrower shall maintain, for each of its fiscal year after its fiscal year ending on December 31, 1994, a  - 11 - ratio of total operating expenses to total operating revenues not higher than 45% for each of the years 1995, 1996, 1997, 1998, and 1999, and 40% for each year thereafter. (b) Before September 30 in each of its fiscal years, the Borrower shall, on the basis of forecasts prepared by the Borrower and satisfactory to the Bank, review whether it would meet the requirements set forth in paragraph (a) in respect of such year and the next following fiscal year and shall furnish to the Bank the results of such review upon its completion. (c) If any such review shows that the Borrower would not meet the requirements set forth in paragraph (a) for the Borrower's fiscal years covered by such review, the Borrower shall promptly take all necessary measures (including, without limitation, adjustments of the structure or levels of its rates) in order to meet such requirements. (d) For the purposes of this Section: (i) The term "total operating expenses" means all expenses related to operations (other than merely accounting expenses shown in the Borrower's financial statements as adjustments due to inflation and likewise), excluding interest and other charges on debt, and including administration, adequate maintenance, taxes and payments in lieu of taxes, payments to the Borrower's existing pensioners, payments made under the Borrower's medical plan, and payments in respect of (A) the Borrower's share of its employees' contributions into the corresponding public or private, as applicable, social security and medical plans; and (B) transfers by the Borrower to the administrator of the corresponding pension fund of actuarial liabilities (including accrued interest charges), related to the respective Borrower's employees retiring after December 31, 1995. (ii) The term "total operating revenues" means revenues from all sources related to operations (other than merely accounting revenues shown in the Borrower's financial statements as adjustments due to inflation and likewise) and the term "adequate maintenance" means expenses directly related to maintenance which shall not be lower than the following percentages of direct operating revenues (as denominated in the Borrower's financial statements) for the fiscal year in question: 2%, 2%, 3%, 4% and 5% for each of the Borrower's fiscal years 1995, 1996, 1997,  1998 and 1999, respectively, and 6% for each fiscal year thereafter. Section 5.03. (a) Except as the Bank shall otherwise agree, the Borrower shall maintain a ratio of current assets to current liabilities of not less than 1.00 for each of fiscal years 1996 and 1997, and 1.10 thereafter. (b) Before September 30 in each of its fiscal years, the Borrower shall, on the basis of forecasts prepared by the Borrower and satisfactory to the Bank, review whether it would meet the requirements set-forth in paragraph (a) in respect of such year and the next following fiscal year and shall furnish to the Bank the results of such review upon its completion. (c) If any such review shows that the Borrower would not meet the requirements set forth in paragraph (a) for the Borrower's fiscal years covered by such review, the Borrower shall promptly take all necessary measures (including, without limitation, adjustments of the structure of levels of its rates) in order to meet such requirements. (d) For the purposes of this Section: (i) The term "current assets" means cash, all assets which could in the ordinary course of business be converted into cash within three months (excluding from such assets at least 70% of the aggregate value of accounts receivable), all marketable securities and prepaid expenses properly chargeable to operating expenses within the next fiscal year. (ii) The term "current liabilities" means all liabilities which will become due and payable or could under circumstances then existing be called for payment within twelve months, including accounts payable, customer advances, debt service requirements, taxes and payments in lieu of taxes, and dividends. (ii) The term "debt service requirements" means the aggregate amount of repayments (including sinking fund payments if any) of, and interest and other charges on, debt. (iv) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Guarantor, debt payable in another currency, such valuation shall be made on the basis of  - 13 - the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Bank. Section 5.04. The Bank and the Borrower hereby agree that the financial covenants set forth in Sections 5.02 and 5.03 of this Agreement supersede any of the financial covenants on the matters referred to in Sections 5.03, 5.04 and 5.05 contained in the First Loan Agreement, Second Loan Agreement, Third Loan Agreement and Fourth Loan Agreement. To that effect, if any of the covenants in said Agreements may be inconsistent with the terms of the above-referenced Sections of this Agreement, the former covenants shall be deemed amended and substituted by such Sections. ARTICLE VI Remedies of the Bank Section 6.01. Pursuant to Section 6.02 (1) of the General Conditions, the following additional events are specified: (a) The Estatutos or the Decreto-Lev or Law 142 or the Transfer Agreement, or any provision thereof, shall have been amended, suspended, abrogated repealed or waived so as to affect materially and adversely in the opinion of the Bank: (i) the operations or financial position of the Borrower or (ii) the ability of the District to perform any of its obligations under the Sponsor Agreement or (iii) the carrying out of the Project; (b) The District shall have failed to perform any of its obligations under the Sponsor Agreement; (c) As a result of events which have occurred after the date of the Loan Agreement, an extraordinary situation shall have arisen which shall make it improbable that the District will be able to perform its obligations under the Sponsor Agreement. Section 6.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (b) of Section 6.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank and the Borrower; and  (b) any of the events specified in paragraph (a) of Section 6.01 of this Agreement shall occur. ARTICLE VII Termination Section 7.01. The following events are specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the execution and delivery of the Sponsor Agreement on behalf of the District have been duly authorized or ratified by all necessary government action; and (b) all the conditions precedent to the effectiveness of the Fixed Rate Single Currency Loan Agreement, other than those related to the effectiveness of this Loan Agreement, have been fulfilled. Section 7.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that the Sponsor Agreement has been duly authorized or ratified by the District, and is legally binding upon the District in accordance with its terms. Section 7.03. The date 1j^^` , ^ 1 17" ^b is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The General Manager of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions:  - 15 - 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 248423 (RCA), 64145 (WUI) or 82987 (FTCC) For the Borrower: Empresa de Acueducto y Alcantarillado Calle 22 C, No. 40-90 Santa Fe de Bogota Colombia Cable address: Telex: Cables Acueducto 43411 Bogota Colombia  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 Regional Vice President Latin America and the Caribbean EMPRESA DE ACUEDUCTO Y ALCANTARILLADO DE BOGOTA - E.S.P. 'S/ ^lrsl^t^r.'J ..il By Authorized Representative  - 17 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollars to be Financed (1) Civil Works for 17,900,000 40% Parts A.1, A.2, B.2 (a) B.3(a), B.4(a), B.5, C.1 (a), C.2(a), C.3(a) D.1(a), D.2(a), D.3(a), D.4(a), E.1(a), E.2(a), F.1, F.2, F.4, H.1 and H.3 of the Project (2) Goods for Parts A. 1, 21,100,000 40% A.2, B.2(a), B.3(a), B.4(a), B.5, C.1(a), C.2(a), C.3(a),D.1(a), D.2(a),D.3(a), D.4(a), E.1(a) E.2(a), F.1, F.2, F.4, H.1 and H.3 of the Project (3) Consulting services 8,700,000 52% for Parts F.2, H.1, H.3 and G of the Project other than Parts G.1(a)(ii), G. I (b)(ii), Part G.2(j) and G.2(k) of the Project  - 18- (4) Training under Part F.3 300,000 52% of the Project (5) Unallocated 10,000,000 TOTAL 58,000,000 2. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $5,800,000, may be made on account of payments made for expenditures before that date but after November 1, 1994; and (b) expenditures under Part H.3 of the Project: (i) unless the Bank shall have received evidence satisfactory to the Bank that the expenditures in question are included in the First Annual Subprogram or in the Subsequent Pluri-annual Subprogram, as the case may be, and that the District shall have taken or shall have committed to take, as the case may be, such action on its part as shall be required, if any, for the Borrower to incur in said expenditures or to achieve the results aimed at by the Borrower when incurring in said expenditures, or both; and (ii) that, as part of such evidence, the District or the Borrower, or both, shall have made a representation to the Bank to the effect that the action in question has been taken or committed to be taken by the District, or to the effect that no such action by the District is required. 3. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure for expenditures for: (i) goods and works under contracts not exceeding $250,000 equivalent and $4,000,000 equivalent, respectively, and under contracts other than the first two contracts to be awarded under Part C. 1 of Schedule 4 to this Agreement (or a larger number if the proviso to Part D.2 of such Schedule 4 becomes applicable); and (ii) consulting firms' services and individual consultants services under contracts estimated to cost less than $100,000 equivalent and $50,000 equivalent, respectively, except in the cases provided for in Part B of Section II of Schedule 4 to this Agreement where prior review is required; all under such terms and conditions as the Bank shall specify by notice to the Borrower. 4. Each application submitted by the Borrower for withdrawals from the Loan Account, shall be deemed submitted under a representation that the expenditures to be financed with Loan proceeds withdrawn under such application have not been, or are not in the process of being, financed with the proceeds of the Fixed Rate Single Currency Loan; provided, however, that the Borrower shall be able to request expressly that one or more given expenditures be financed partially under the Loan and partially under the Fixed Rate Single Currency Loan.  - 19 - SCHEDULE 2 Description of the Project The objectives of the Project are: (i) supporting and consolidating the transition of the Borrower from a public service agency to a commercially-run public utility company; (ii) supporting a revamped economic and tariff framework; (iii) expanding water distribution and sewerage services to the urban poor; (iv) addressing major environmental concerns of the heavily polluted Bogota River; and (v) reduce the vulnerability of the Bogota water supply and sewerage systems. The Project consists of the following parts, subject to such modifications thereof as the Bank and the Borrower may agree upon from time to time to achieve such objectives: Part A: Vulnerability Control 1. Rehabilitation of a section of about 31 kilometers (Km), between a point about 4 Km away from the Tibito water treatment plant (the Plant) and Street No. 80, of the 2 meters diameter Tibito-Casablanca pipeline that is one of the two pipelines which convey treated water from the Plant to Santa Fe de Bogota (Bogota). 2. Rehabilitation of the Plant, which presently treats, on a continuous basis, a flow of only 3.5 cubic meters (m3) per second (m3/s), so as to restore the Plant capacity to treat the nominal flow of 11m3/s. 3. Construction of the alternate Usaquen tunnel of about 2.7 Km length and 3.5 m diameter, which will serve as a backup system to convey the treated water of the Wiesner water treatment plant to the Santa Ana Reservoir in Bogota, in case of failure of the main Usaquen tunnel. Part B: Primary Sanitary and Storm Drainage Sewerage and Pollution Control 1. Construction of the first stage of the Bogota River Interceptor, the Torca-Salitre stretch of about 12.5 Km length, constructed of pipes with diameters varying between 1.8 m and 2.15 m, a stretch of box culvert with a cross section of about 2.5 m x 3 m and a section of a tunnel of about 375 m length with a 3 m diameter. 2. (a) Construction of about 35 Km of sewage interceptors, trunk sewers and storm water drainage systems, constructed of pipes with diameters varying between 0.3 m and 2 m and of box culverts with cross sections varying between 1.8 m x 2.6 m and 1.8 m x 4 m, as well as about 17 Km of drainage canals, all in the Salitre, Jaboque, Tintaland  -20- Tunjuelo drainage basins, provided, however, that only an initial part of the aforesaid works will be included in this Part B 2.(a) of the Project in respect of the Tintal basin. (b) Construction of about 27 Km of sewage interceptors, trunk sewers and storm water drainage systems, constructed of pipes and box culverts as described in Part B 2. (a) above, as well as about 12 Km of drainage canals, all in the Torca, Fucha and Tintal drainage basins, provided, however, that only the remainder of the aforesaid works for the Tintal drainage basin not carried out under Part B 2.(a) of the Project will be included in this Part B 2. (b) of the Project. 3. (a) Construction of 2 main sewage pumping stations (Gibraltar and Salitre) and expansion of 2 smaller sewage pumping stations (Villa Gladis and Fontibon) in the Tintal and Salitre drainage basins. (b) Construction of 1 main sewage pumping station (Torca) in the Torca drainage basin. 4. Construction of: (a) one storm water peak attenuation lagoon (Canal Tintal of about 3 million m3); and (b) another such lagoon (Fontibon of about 0.73 million m3). 5. Rehabilitation of dikes on the left bank of the Bogota River, in front of Bogota at Fontibon and Tintal, with a total length of about 11 Km, and average height of about l m. Part C: Primary Water Distribution System 1. Installation of: (a) about 54 Km of primary distribution mains (of diameters varying between 300 millimeters (mm) and 1,500 mm; and (b) about 56 additional Km of same type of mains. 2. (a) Construction of four storage tanks in Jalisco, Volador, Casillo and Quiba, in the southwestern sector of Bogota and with a combined capacity of about 10,800 m3. (b) Construction of three storage and compensation reservoirs: Suba (about 90,000 m3), Suba Medio Sur (about 2,000 m3) and Suba Medio Norte (about 2,000 m3), as well as rehabilitation and increasing the volume of six storage tanks in the northeastern sector of Bogota (in Santana Nuevo, Panuelito, Bosque Medina, Bosque de Pinos, Saratama and Santa Cecilia Cerro Norte) with a combined capacity of about 3,400 m3. 3. (a) Construction of two pumping stations in the southeastern and southwestern sectors of Bogota (Volador and Monteblanco Uval).  (b) Expansion of three pumping stations (Bombeos Nororientales) in the northwestern sector of Bogota. Part D : Secondary Water, Sewerage and Drainage Networks and Service Connections for Low-Income Neighborhoods 1. Construction of: (a) about 125 Km of secondary and minor water distribution mains, of diameters between 75 mm and 300 mm; and (b) about 225 additional Km of mains of the same type. 2. Construction of: (a) about 265 Km of secondary sewage collectors, of diameters between 200 mm and 400 mm; and (b) about 270 additional Km of collectors of the same type. 3. Construction of: (a) about 225 Km of storm water drains, of diameters between 250 mm and 1,500 mm; and (b) about 545 additional Km of same type of drains. 4. Installation of (a) about 70,000 water service connections and of about 100,000 sewerage service connections; and (b) about 110,000 additional water service connections and of about 100,000 additional sewerage service connections. Part E : Rehabilitation Works 1. Sewerage System: Replacement or repair, as warranted, of: (a) about 19 Km of sewage collectors; and (b) about 28 additional Km of sewage collectors; and, including in both (a) and (b) above, the respective construction of alleviation sewers, structural rehabilitation of canals, interceptors, flow equalization reservoirs and other sewer appurtenances, as well as identification and repair of erroneous connections between sewage and storm water collectors. 2. Water Supply System: Replacement and rehabilitation of (a) about 150 Km. of older water distribution pipes, of diameters between 75 mm and 150 mm; and (b) about 150 additional Km of pipes of the same type. Part F : Institutional Strengthening 1. Implementation of the UFW reduction program including: (a) reduction of technical losses in bulk and domestic meters; (b) legalization or disconnection of illicit connections; (c) reduction of physical losses through leak detection and repair and through rehabilitation and replacement of old pipes; (d) implementation of a program for dividing the water network into sectors; (e) evaluation and verification of consumption of large  -22- consumers; (f) purchase and installation of bulk meters in apartment buildings; (g) purchase and installation of about 780,000 domestic meters in low-income neighborhoods. 2. Development and execution of a water conservation program aimed at formulating guidelines for water demand management, as follows: (a) execution of pilot projects under terms of reference satisfactory to the Bank, with a demonstration purpose designed to generate the necessary experience and training required in order to realize the water- saving potential of the activities and measures included in the said pilot projects, such activities to include analysis of water consumption in the industries and measures geared to increase efficiency in the use of water by industries and households; (b) assessment of the findings and recommendations resulting from the execution of the pilot projects and ,. determination, by agreement between the Bank and the Borrower, of future testing and research activities required, if any, and measures for demand reduction, if warranted; (c) carrying out, if so determined, of said future activities under terms of reference satisfactory to the Bank; and (d) formulation and publication of the aforementioned guidelines. 3. Development and implementation of a training program aimed at improving the performance level of the Borrower's employees, as well as implementation of the Total Quality Management Program. 4. Acquisition and utilization of laboratory equipment for water quality control, hydrological and flow measurement instruments and radio communication equipment. 5. Formulation of a strategy for development of management information systems and redesign of the financial information system, (both on the basis of the findings and recommendations resulting for the carrying out of Part G. 2 (c) of the Project), and to the extent the strategy formulated is satisfactory to the Bank, acquisition and utilization, in a fashion consistent with the strategy formulated, of computer hardware and software systems for data processing. 6. Establishment of a committee pursuant to the provisions of Section 3.06 of this Agreement, and providing it with the required capacity to deal with all aspects related to environmental aspects of the Borrower's operation and to perform environmental analyses, including two permanent full time members (one environmental engineer and one environmental consultant) and as many temporary experts as required from time to time.  - 23 - Part G: Technical Assistance and Consulting and Advisory Services 1. (a) Completion of detailed engineering, including preparation of final designs and bidding documents for: (i) mitigating measures under Part H.1 of the Project and civil works included in the following Parts of the Project: A. 1, A.2, B.2(a), B.3(a), B.4(a), B.5, C. 1(a), C.2(a), C.3(a), D. 1(a), D.2(a), D.3(a), D.4(a), B. 1(a), and E.2(a); and (ii) for civil works included in the following Parts of the Project: A.3, B.1, B.2(b), B.3(b), B.4(b), C.1(b), C.2(b), C.3(b), D.1(b), D.2(b), D.3(b), D.4(b), E.1(b) and E.2(b). (b) Supervision of all works referred to: (i) in Part G.1(a) (i) of the Project (including mitigating measures under Part H. 1 of the Project); and (ii) in Part G.1(a) (ii) of the Project. 2. Execution of studies on the following matters: (a) (i) analysis of alternatives available to the Borrower for its institutional restructuring aimed at ensuring managerial autonomy and accountability, reducing political interference and enhancing operational efficiency in delivery of services, including possible adjustment of its corporate structure and/or changes in the Borrower's ownership so as to allow (A) greater participation of the private sector in the Borrower's management and operation and in the Borrower's provision of water and sewerage services and (B) addressing the requirements for large investments in development of new water supply sources for Bogota and in providing wastewater treatment, both within a broader urban development strategy; and (ii) development of a plan of action based on the findings and recommendations of (i) above; (b) development of a plan for: (i) alternatives for viable participation of the private sector in the rehabilitation of the Plant and the alternative Usaquen Tunnel (Parts A.2 and A.3 of the Project), including preparation of bidding documents, draft contracts and other instruments required to achieve such participation; and (ii) development of the Borrower's capacity to regulate and monitor said participation, if and when it materializes; (c) development of: (i) a management information system with emphasis on the financial, commercial and operational areas; (ii) a commercial plan aimed at safeguarding cash flow and improving service; and (iii) a strategic planning capacity and an adequate strategic program; all by utilizing the advisory services of a high performing foreign water utility under a twinning contract satisfactory to the Bank; (d) analysis of rate structures and levels related to cost of performing services and, on the basis of findings and recommendations of the analysis, development of a new tariff structure;  -24- (e) development of adequate schemes for community participation in water and sanitation investments in a cost effective form; (f) development of a geographical information system; (g) updating of the existing master plan for development of the primary water distribution network; (h) preparation of a water resources master plan aimed at defining a program for development of the water supply sources and production capacity required to satisfy the demand in the short and long terms, and design of the first stage works; (i) preparation ^.. of designs for rehabilitation works of the existing sewerage system other than works to be carried out under the Project; (i) preparation of the sewerage master plan for the sanitary sewerage system in the Borrower's jurisdiction; (j) preparation of complementary engineering, environmental, institutional and cost recovery analysis of the project for hydraulic rehabilitation of the Bogota River and its tributaries within the District limits aimed at improving flood protection in the Bogota area; (k) design of flood control management systems in the Tunjuelo basin; and (1) such other matters as agreed from time to time by agreement between the Bank and the Borrower. Part H: Environmental and Resettlement Aspects 1. Implementation of the mitigating measures aimed at minimizing adverse environmental impact during the execution of the different works and other activities related to the carrying out of Parts A through E above, all as recommended in the final report GC-500-43-039 titled "Environmental Impact Study of Works for Santa Fe 1 ", issued by the Borrower on January 1994, which includes a Plan de Reasentamiento (Resettlement Plan) that was revised and furnished to the Bank on January 1995. 2. Implementation of a program of specific actions for the resettlement (as per the aforesaid Resettlement Plan) of 311 persons, each to be displaced as a result of the carrying out of the Project and to be provided with a new home or an adequate compensation, or both, consisting of 3 subprograms, as follows: (a) in respect of the construction of a drainage canal in Salitre drainage basin under Part B.2.(a) of the Project,  - 25 - 7 persons living (as shown in the Resettlement Plan) in the intersection of canal (channel) Salitre and Carrera 91; (b) in respect of the construction of a storage tank in Jalisco under Part C.2.(a) of the Project, 184 persons living (as shown in the Resettlement Plan) in Jalisco; and (c) in respect of the construction of a storage tank in Volador under Part C.2.(a) of the Project, 120 persons living (as shown in the Resettlement Plan) in Volador. 3. Execution of a program of activities aimed at wetland protection in the Bogota area, divided in one initial annual subprogram and a subsequent pluri-annual subprogram, as follows: (a) execution of the First Annual Subprogram; (b) execution of a study which will enable the Borrower, in consultation with DAMA, to elaborate on and redefine DAMA's priorities on wetland protection, and to complete the design of the activities to be carried out under the Subsequent Pluri-annual Subprogram; and (c) execution of the Subsequent Pluri-annual Subprogram. The Project is expected to be completed by December 31, 2002.  -26- SCHEDULE3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars) * On each May 15 and November 15 beginning May 25, 2001 through May 15, 2012 2,415,000 ^. On November 15, 2012 2,455,000 The figures in this column represent the amount in dollars to be repaid, except as provided in Section 4.04(d) of the General Conditions.  -27- SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: General 1. Except as provided in Part C hereof, goods and works shall be procured under in accordance with the provisions Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the Guidelines) and the following provisions of this Section, as applicable: Part B: International Competitive Bidding 1. Except as otherwise provided in Part C of this Section, goods and works shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix 1 thereto. 2. The following provisions (except for (c) below) shall apply to goods and works to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B. (a) Pregualification Bidders for works estimated to cost $10,000,000 equivalent or more shall be prequalified in accordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines. (b) Grouping of contracts To the extent practicable, contracts for goods or works (including contracts to be financed out of the proceeds of the Fixed Rate Single Currency Loan) shall be grouped in bid packages estimated to cost $10,000,000 equivalent or more each. (c) Preference for domestically manufactured goods The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Guarantor.  -28- Part C: Other Procurement Procedures National Competitive Bidding Goods and works estimated to cost $250,000 equivalent or less and $4,000,000 equivalent or less, respectively, per contract and $90,000,000 equivalent or less in the aggregate (including goods and works financed out of the proceeds of the Fixed Rate Single Currency Loan), in each case, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines, as supplemented by the provisions of Part E of this Schedule 4. r. 2. International or National Shopping Goods estimated to cost $50,000 equivalent or less per contract and $15,000,000 equivalent or less in the aggregate (including goods and works financed out of the proceeds of the Fixed Rate Single Currency Loan), may be procured under contracts awarded on the basis of international or national shopping procedures, as determined by the Bank in consultation with the Borrower, in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. Bidding Documents Without limitation or restriction upon the provisions of the preceding paragraphs of this Part C, and in respect of the civil works and purchase of goods to be carried out under the Project, both under contracts to be awarded under paragraph 1 of this Part C, the Borrower shall not invite bids for any such contract unless: (a) the Borrower and the Bank have agreed on the appropriate set of standard bidding documents for inviting bids for goods or civil works, as the case may be; (b) the Borrower has adopted the set of documents corresponding to the invitation in question and has given notice to the Bank of the Borrower's commitment to use of such set with minimum changes, acceptable to the Bank, as necessary to address specific issues related to one or more specific bidding invitations; and (c) any such changes shall be introduced only through bid or contract data sheets, or through special conditions of contract, and not by introducing changes in the standard wording of the standard bidding documents adopted by the Borrower pursuant to paragraph (b) above.  -29- Part D: Review by Bank of Procurement Decisions Procurement Planning Prior to the issuance of any invitations to prequalify for bidding or to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Bank, and with the provisions of said paragraph 1. 2. Prior Review With respect to each contract awarded under Part B of this Schedule, and the two first contracts awarded under Part C. 1 of this Schedule in each year (irrespective of their estimated cost), the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply provided, however, that the Bank shall have the right to request prior review with respect to more than the two said contracts if, in respect of any of such two contracts, the Bank shall have found anything objectionable about the award procedure applied. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Part E: Procurement Provisions Concerning National Competitive Bidding 1. All bidders, irrespective of whether they are foreigners or Colombians, will be treated equally and, particularly, no preference will be granted to any bidder or group of bidders for bid evaluation purposes. Bidders shall be allowed to submit their bids by hand or through the post office or private mailing services. There shall not be any requirement for any bidder to show evidence of the bidder's registration in any public registry, chamber of commerce or similar, whether in Colombia or elsewhere, or to appoint a representative domiciled in Colombia, unless and until such bidder is awarded the corresponding contract. 2. Bids shall be opened in a public meeting to which bidders and their representatives shall be allowed to attend if they so wish. Date, time and place for the opening meeting shall be set forth in the bidding documents. Bid opening shall coincide  -30- with, or take place promptly after, the final date and time of the period for bid submission stipulated in the bidding documents. 3. Each bid shall be evaluated and the corresponding contract awarded to the responsive bidder who meets appropriate technical and financial standards of capability and whose bid has been determined to be the lowest evaluated bid. Such determination shall be made exclusively on the basis of the specifications, conditions and evaluation criteria stipulated in the bidding documents. If any factor additional to the amount or amounts of each bid is to be considered in bid evaluation, such factor or factors and the quantified manner on which they will be applied for purposes of determining the lowest evaluated bidder, shall be precisely stipulated in the bidding documents. For purposes of -.. bid evaluation and comparison, the only bid amount or amounts to be used as a factor shall be the bid amount or amounts as quoted in corresponding bid, including correction of arithmetic errors. 4. The provisions of paragraph 2.46 of the Guidelines shall fully apply and, more specifically, bids shall not be disclosed to persons other than the persons officially charged with the task of comparing and/or evaluating the bids while they are performing their official duties, without the corresponding bidder's written authorization. Moreover, bidders shall not be required to provide such authorization as a condition to be entitled to bid. This confidentiality requirement shall apply until the award of contract is notified to the successful bidder. Thereafter, confidentiality of the bids shall be limited to those bid portions for which confidentiality has been specifically requested by the bidder in question. Section II. Employment of Consultants A. Consultants' services shall be provided under contracts awarded in accordance with the provisions of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981 (the Consultant Guidelines). For complex, time-based assignments, the Borrower shall employ such consultants under contracts using the standard form of contract for consultants' services issued by the Bank, with such modifications as shall have been agreed by the Bank. Where no relevant standard contract documents have been issued by the Bank, the Borrower shall use other standard forms agreed with the Bank. B. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Bank review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts, shall not apply to: (a) contracts for the employment of consulting firms estimated to cost less than $100,000 equivalent each or (b) contracts for the employment of individuals  - 31 - estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Bank review shall not apply to: (a) the terms of reference for such contracts; (b) single- source selection of consulting firms; (c) assignments of a critical nature, as reasonably determined by the Bank; (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above; or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above.  -32- SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (4) set forth in the Table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project (other than Part H.3 thereof) and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to 4,000,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that unless the Bank shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $2,000,000 until the aggregate amount of withdrawals from the Loan Account plus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of $20,000,000. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for deposit into the Special Account of an amount or amounts which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify.  - 33 - (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; (b) if the Borrower shall have failed to furnish to the Bank, within the period of time specified in Section 5.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Bank pursuant to said Section in respect of the audit of the records and accounts for the Special Account; (c) if, at any time, the Bank shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Loan Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Loan allocated to the eligible Categories, minus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project  - 34 - other than Part H.3 thereof, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. "The original is a PDF file with no Text. We were not able to OCR and extract the Text. Error:PDF01"