Ecuador - Vocational Training Project : Loan 1157 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1157 EC Loan Agreement (Vocational Training Project) BETWEEN REPUBLIC OF ECUADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED SEPTEMBER 3, 1975 CONFORMED COPY LOAN NUMBER 1157 EC Loan Agreement (Vocational Training Project) BETWEEN REPUBLIC OF ECUADOR AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED SEPTEMBER 3, 1975 LOAN AGREEMENT AGREEMENT, dated September 3, 1975, between REPUBLIC OF ECUADOR (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the term "SECAP" means Servicio Ecuatoriano de Capacitaci6n Profesional, an agency of the Borrower, and such term includes any successor thereto. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to four million dollars ($4,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time, for expenditures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 and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, goods, works and services (other than consultants' services) for the Project to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. 4 Section 2.04. The Closing Date shall be September 30, 1978 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.08. 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. The Borrower shall carry out the Project through SECAP with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, architectural and educational practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. The Borrower shall cause the Director Nacional of SECAP to be responsible for the coordination of the various activities related to the carrying out of the Project and for providing liaison with all entities involved in the Project. The Director Nacional of SECAP shall be assisted by the Subdirector Tecnico and the Subdirector Administrativo of SECAP, who shall be well qualified professionals and shall be supported by competent staff as required for the carrying out of the Project. Section 3.03. In carrying out Parts A and B of the Project, the Borrower shall cause SECAP to employ contractors acceptable to the Bank upon terms and conditions satisfactory to the Bank. Section 3.04. (a) The Borrower shall cause SECAP to insure, or make adequate provision for the insurance of, the imported goods to be financed out 5 of the proceeds of the Loan 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 the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.05. (a) The Borrower shall cause to be furnished to the Bank for approval, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall cause SECAP to maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish or cause to be furnished to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. Section 3.06. The Borrower shall take or cause to be taken 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 the Project and shall furnish or cause to be furnished to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project. ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, specific security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, the Borrower and Banco Central del Ecuador undertake that, except as the Bank 6 shall otherwise agree, if any lien shall be created on any assets of the Borrower, or of Banco Central del Ecuador or any other institution acting as the central bank of the Borrower, as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and that in the creation of any such lien express provision will be made to that effect; provided, however, that within the limits of its constitutional powers, the Borrower will make the foregoing undertaking effective with respect to liens on assets of any of the Borrower's agencies including agencies granted autonomy by the Constitution of Ecuador (other than Banco Central del Ecuador), of any other institution acting as the central bank of the Borrower, or of any of the Borrower's political subdivisions or of any agency of any such political subdivisions, and to the extent that the Borrower is unable within the limits of its constitutional powers to make such undertaking effective, the Borrower will give to the Bank an equivalent lien satisfactory to the Bank. The Borrower shall promptly inform the Bank of the creation of any such lien. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date; and (iii) any lien solely upon revenues or receipts in currency of the Borrower which is given by a political subdivision (concefo provincial or municipalidad) or by an agency of a political subdivision of the Borrower under arrangements containing no provisions which would result in priority in the allocation or realization of foreign exchange. Section 4.02. The Borrower shall cause SECAP to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations and financial condition of SECAP. Section 4.03. The Borrower shall cause SECAP to take out and maintain with responsible insurers, or to 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. (a) The Borrower shall cause SECAP to operate the training institutions and facilities included in the Project in accordance with appropriate administrative and educational policies and practices and with due regard to economy, and shall make or cause to be made such annual budget allocations for each institution and facility as shall be necessary for the operation of each such institution and facility. 7 (b) The Borrower shall cause SECAP to cause (i) the buildings, equipment and furniture of the training institutions included in the Project to be adequately maintained and (ii) all necessary repairs and renewals thereof to be made in accordance with sound administrative and technical standards. Section 4.05. The Borrower shall cause SECAP to submit to the Bank for its review, not later than March 31, 1977, or such other date as the Bank shall agree: (i) a draft of the procedure for selection of apprentices to be trained in the centers included in Parts A and B of the Project; (ii) samples of (1) the programs for (A) accelerated training courses for unemployed adults and dropouts from the education system, (B) upgrading of employed workers, (C) short supplementary courses to prepare graduates from the formal technical schools for specific middle-level technician occupations, and (D) apprentice training courses; (2) the standards to be met in the training for recognized skilled occupations; and (3) the tests to measure skill levels; (iii) plans for the operation of a placement service for the trainees of such centers, a tracer system to follow-up the career development of such trainees and evaluation procedures to assess the suitability and efficiency of the training programs of such centers; (iv) a plan for the training of instructors and supervisors to operate such centers and the mobile vocational training units included in Part C of te Project. Section 4.06. The Borrower shall cause SECAP to review, at intervals of about one year, jointly with the Bank, its plans and programs for vocational training. ARTICLE V Termination Section 5.01. The date December 3, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. 8 ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Director Nacional of SECAP is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Botiower: Servicio Ecuatoriano de Capacitaci6n Profesional Santa Prisca, 310 - Apartado 2221 Quito Ecuador Cable address: SECAP Quito For the Bank: International Bank foi Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 9 in their respective names in the District of Columbia, United States of America, as of the day and year first above written, and Banco Central del Ecuador, acting through its duly authorized representative, has evidenced its acceptance of its obligations under Section 4.01 of this Agreement. REPUBLIC OF ECUADOR By /s / Jaime Moncayo Garcia Authorized Representative BANCO CENTRAL DEL ECUADOR By /s / Jos6 C. Cardenas Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s / Enrique Lerdau Acting Regional Vice President Latin America and the Caribbean 10 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 Dollar Equivalent) to be Financed (1) Civil works 1,450,000 40% (2) (a) Mobile units 1,549,000 100% of foreign and equipment expenditures (b) Project ad- 21,000 100% of foreign ministration expenditures (3) Furniture 160,000 45% (4) Unallocated 820,000 TOTAL 4,000,000 2. For the purposes of this Schedule the term "foreign expenditures" means expenditures for goods or services supplied from, the territory, and in the currency, of any country other than the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Loan, the Bank may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 11 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures rrior to the date of this Agreement, except that withdrawals may be made in respect of civil works, equipment, furniture and Project administration on account of expenditures incurred after June 1, 1974 in an aggregate amount not exceeding the equivalent of $120,000. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any * item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. 12 SCHEDULE 2 Description of the Project The Project consists of the expansion of SECAP's vocational training programs to meet specific manpower requirements in priority sectors of the economy and to increase the productivity of the labor force. The Project includes the following Parts: A. Expansion and additional furnishing and equipping of a vocational training center in Quito, with an increase from 390 to about 1,110 trainee places. B. Construction, furnishing and equipping of a new vocational training center in Guayaquil with about 1,245 trainee places. C. Purchase of two mobile vocational training units to provide training opportunities to about 500 trainees annually in small towns and rural communities. The Project is expected to be completed by March 31, 1978. 13 SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* September 15, 1980 40,000 March 15, 1981 40,000 September 15, 1981 45,000 March 15, 1982 45,000 September 15, 1982 45,000 March 15, 1983 50,0 September 15, 1983 50,000 March 15, 1984 55,000 September 15, 1984 55,000 March 15, 1985 600 September 15, 1985 60,000 March 15, 1986 65,000 September 15, 1986 65,000 March 15, 1987 70,000 September 15, 1987 70,0 March 15, 1988 75,000 September 15, 1988 75,00 March 15, 1989 80,0 September 15, 1989 85,000 March 15, 1990 85,000 September 15, 1990 90,000 March 15, 1991 95,000 September 15, 1991 iarch 15, 1992 105,000 September 15, 1992 110,0 March 15, 1993 110,000 September 15, 1993 115,000 March 15, 1994 120,000 September 15, 1994 125,000 March 15, 1995 135,000 September 15, 1995 140,0 March 15, 1996 145,000 September 15, 1996 150,000 March 15, 1997 155,000 September 15, 1997 165,000 March 15, 1998 170,000 September 15, 1998 180,000 March 15, 1999 185,000 September 15, 1999 195,000 March 15,3 2000 195,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 14 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05(b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1% More than three years but not more than six years before maturity 2-1/4% More than six years but not more than eleven years before maturity 4% More than eleven years but not more than sixteen years before maturity 5-1/2% More than sixteen years but not more than twenty-one years before maturity 7-1/4% More than twenty-one years but not more than twenty-three years before maturity 8% More than twenty-three years before maturity 8-1/2% 15 SCHEDULE 4 Procurement A. General Procedures 1. Except as provided in Parts A.3 and A.4 hereof, contracts shall be let under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. Furniture and equipment shall be grouped so as to permit such bulk procurement as shall be consistent with appropriate technical and procurement practices. Whenever possible, each bid package for such items shall be for not less than the equivalent of $40,000. 3. Bidders for civil works shall be prequalified. The invitation for prequalification shall be advertised locally, provided, however, that copies of such * advertisement shall be transmitted to local representatives of the member countries of the Bank and Switzerland, which are potential suppliers of such services. Foreign contractors shall not be precluded from bidding. 4. Furniture and equipment which cannot be grouped in lots estimated to cost the equivalent of $40,000 or more may be procured in accordance with the Borrower's regular procurement procedures, provided that the total cost of the furniture and equipment so procured shall not exceed the equivalent of $200,000. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Ecuador may be granted a margin of preference in accordance with, and subject to, the following provisions: 16 (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Ecuador if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Ecuador equal to at least 20% of the ox-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Ecuador. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. The lowest evauated bid of each group shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the lowest evaluated bid from group C shall be selected. C. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower shall, before qualification is invited, inform the Bank in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Bank shall reasonably request. The 17 list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. 2. Review of invitation to bid. Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request, Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. 3. Review of proposed bid awards and final contracts. With respect to all contracts for civil works estimated to cost the equivalent of $100,000 or more and to all contracts for furniture and equipment estimated to cost the equivalent of $25,000 or more: (a) Promptly after the bids have been received, the Borrower shall inform the Bank of the names of the bidders and the respective amounts of the bids. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and the reasons for the intended award and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommendation for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the rCasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 4. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish 18 to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with this Schedule, promptly inform the Borrower and state the reasons for such determination.