Nicaragua - Earthquake Reconstruction Project : Credit 0389 - Project Agreement - 2 - Conformed

CONFORMED COPY CREDIT NUMBER 389 NI Part B Project Agreement (Earthquake Reconstruction Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND EMPRESA AGUADORA DE MANAGUA DATED JUNE 6, 1973 CONFORMED COPY CREDIT NUMBER 389 NI Part B Project Agreement (Earthquake Reconstruction Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND EMPRESA AGUADORA DE MANAGUA DATED JUNE 6, 1973 PART B PROJECT AGREEMENT AGREEMENT, dated June 6, 1973, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and EMPRESA AGUADORA DE MANAGUA (hereinafter called AGUADORA). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Nicaragua (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twenty million dollars ($20,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that AGUADORA agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and AGUADORA, part of the proceeds of the Credit provided for under the Development Credit Agreement will be made available to AGUADORA on the terms and conditions therein set forth; and WHEREAS AGUADORA, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. AGUADORA shall carry out Part B of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and 4 efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices. Section 2.02. In carrying out Part B of the Project, except for installations which, in the reasonable judgment of the Association, are of a simple nature, AGUADORA shall employ contractors acceptable to the Association upon terms and conditions satisfactory to the Association. Section 2.03. Except as the Association shall otherwise agree, the goods and services (other than services of consultants) required for Part B of the Project and to be financed out of the proceeds of the Credit, shall be procured on the basis of international competition under procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, as revised in October 1972, and in accordance with, and subject to, the provisions set forth in Schedule 3 to the Development Credit Agreement. Section 2.04. (a) AGUADORA undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit relent to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by AGUADORA to replace or repair such goods. (b) Except as the Association shall otherwise agree, AGUADORA shall cause all goods and services financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for Part B of the Project. Section 2.05. (a) AGUADORA shall furnish to the Association promptly upon their preparation, the plans, specifications, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) AGUADORA shall: (i) maintain records adequate to record the progress of Part B of the Project (including the cost thereof), to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower, and to disclose the use thereof in the Project; (ii) without limitation upon the provisions of Section 5.03 of this Agreement, enable the Association's representatives to examine Part B of the Project, the goods financed out of such proceeds and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning Part B of the Project, the expenditure of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. 5 Section 2.06. AGUADORA shall duly perform all its obligations ander the Part B Subsidiary Loan Agreement and, except as the Association shall otherwise agree, shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Part B Subsidiary Loan Agreement or any provision thereof. Section 2.07. AGUADORA shall take all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction and operation of the facilities included in Part B of the Project. ARTICLE III Management and Operations of Aguadora Section 3.01. (a) AGUADORA shall at all times maintain its existence and right to carry on operations and, except as the Association shall otherwise agree, shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. (b) AGUADORA shall operate and maintain all its plants, equipment and property and from time to time make all necessary renewals and repairs thereof in accordance with sound engineering standards, and at all times manage its affairs, operate its plants and equipment and maintain its financial position, in accordance with sound business and public utility practices, under the supervision of experienced and competent management. (c) AGUADORA shall afford the Association a reasonable opportunity to exchange views on any appointment to the post of Sub-Gerente of AGUADORA to be made after the date of this Agreement. Section 3.02. AGUADORA shall take all feasible measures to ensure that the execution and operation of Part B of the Project are carried out with due regard to ecological and environmental factors, especially concerning the protection of the quality of AGUADORA's water sources. Section 3.03. AGUADORA shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. 6 ARTICLE IV Financial Covenants Section 4.01. AGUADORA shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. AGUADORA shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of AGUADORA and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. Except as the Association shall otherwise agree, AGUADORA undertakes towards the Association the obligations set forth in Sections 5.04 and 5.05 of the Loan Agreement (Second Managua Water Supply Project) between the Bank and Empresa Aguadora de Managua dated March 17, 1972. ARTICLE V Consultation, Information and Inspection Section 5.01. The Association and AGUADORA shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and Aguadora shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the performance by AGUADORA of its obligations under the Part B Subsidiary Loan Agreement, the administration, operations and financial condition of AGUADORA and other matters relating to the purposes of the Credit. Section 5.02. The Association and AGUADORA shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the performance by either of them 7 of its obligations under this Agreement or the performance by the Borrower or AGUADORA of their respective obligations under the Part B Subsidiary Loan Agreement. Section 5.03. AGUADORA shall enable the Association's representatives to examine all plants, sites, works, properties and equipment of AGUADORA and any relevant records and documents. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the Effective Date. Section 6.02. (a) This Agreement and all obligations of the Association and of AGUADORA thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date when the Part B Subsidiary Loan, together with interest and all other charges thereon, shall have been paid. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a)(ii) of this Section, the Association shall promptly notify AGUADORA of this event and, upon the giving of such notice, this Agreement and all obligations of the parties hereunder shall forthwith terminate. Section 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions Section 7.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated 8 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 Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. For AGUADORA: Empresa Aguadora de Managua Apartado Postal 3599 Managua, D.N. Nicaragua, C.A. Cable address: AGUADORA Managua, Nicaragua Section 7.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of AGUADORA may be taken or executed by the Administrador or Gerente General of AGUADORA or such other person or persons as he shall designate in writing. Section 7.03. AGUADORA shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of AGUADORA, take any action or execute any documents required or permitted to be taken or executed by AGUADORA pursuant to any of the provisions of this Agreement. 9 Section 7.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 'N WITNESS WHEREOF, the parties hereto, acting through their * :"~ 'tatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Gerald Alter Regional Vice President Latin America and the Caribbean EMPRESA AGUADORA DE MANAGUA By /s/ Gustavo Escoto Goenaga Authorized Representative