Bolivia - Water Supply And Sewerage Project : Loan 1324 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1324 BO LOAN AGREEMENT (Urban and Rural Communities Water Supply and Sewerage Project) between REPUBLIC OF BOLIVIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated October 15, 1976 LOAN AGREEMENT AGREEMENT, dated October 15, 1976, between REPUBLIC OF BOLIVIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECON- STRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) the Project will be carried out by the Borrower and by Administracion Autonoma de Obras Sanitarias de Potosi, Empresa Local de Agua Potable X Alcantarillado de Sucre and Corporacion de Agua Potable Y Alcantarillado with the Borrower's assistance and, as part of such assistance, the Borrower will nake available to Administracion Autonoma de Obras Sanitarias de Potosi, Empresa Local de Agua Potable Y Alcantarillado de Sucre and Corporacion de Aga Potable Y Alcantarillado the proceeds of the Loan as here- inafter provided; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set forth hereinafter and in project agree- ments of even date herewith between the Bank and Administracion Autonoma de Obras Sanitarias de Potosi, Empresa Local de Agua Potable Y Alcantarillado de Sucre and Corporacion de Agua Pota- ble y Alcantarillado, respectively; NOW THEREFORE the parties hereto hereby agree as follows: -2- 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 Guar- antee 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 Gen- eral Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: 0 (a) "AAPOS" means Administracion Autonoma de Obras Sanitar- ias de Potosi, a decentralized public service institution under the authority of the Ministerio de Urbanismo y Vivienda, estab- lished under Decreto Supremo No. 10221 dated April 21, 1972 of the Borrower; (b) "ELAPAS" means Empresa Local de Agua Potable y Alcan- tarillado de Sucre, a decentralized public service institution un- der the authority of the Ministerio de Urbanismo Vivienda, estab- lished under Decreto Supremo No. 10601 dated November 24, 1972 of the Borrower; (c) "CORPAGUAS" means Corporacion de Agua Potable y Alcan- tarillado, a decentralized public service entity under the authority -3- of the MiniE erio de Urbanismo y Vivienda, established under Decreto Supremo No. 07942 dated March 8, 1967 of the Borrower; (d) "Project Companies" means collectively AAPOS, ELAPAS and CORPAGUAS, and "Project Company" means any one of them; (e) "Part A Project Agreement" means the agreement between the Bank and AAPOS of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Part A Project Agreement and all agreements supplemental to the Part A Project Agreement; (f) "Part A Subsidiary Loan Agreement" means the agreement W to be entered into between the Borrower and AAPOS pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Part A Subsidiary Loan Agreement; (g) "Part B Project Agreement" means the agreement between the Bank and ELAPAS of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Part B Project Agreement and all agreements supplemental to the Part B Project Agreement; (h) "Part B Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ELAPAS pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Part B Subsidiary Loan Agreement; -4- (i) "Part C Project Agreement" means the agreement between the Bank and CORPAGUAS of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Part C Project Agreement and all agreements supplemental to the Part C Project Agreement; (a) "Financing Agreement" means the agreement to be entered into between the Borrower and CORPAGUAS pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Financing Agree- ment; (k) "Project Agreements" means collectively the agreements defined in paragraphs (6), (g) and (i) hereof; (1) "Subsidiary Loan Agreements" means collectively the agreements defined in paragraphs (f) and (h) hereof; (m) "NUV" means the Borrower's Ministerio de Urbanismo Vivienda; (n) "DIU" means MUV's Direcci6n de Ingenierfa Urbana (o) "Project Evaluation Unit" means the unit maintained within DIU, as required by Section 4.03 (a) of this Agreement; (p) "DDO" means any of the Departmental Developm Orga- nizations in the Borrower's nine administrative Departments, established and operating pursuant to the laws of the Borrower; -5- (q) "CODEPO" means Comite D2partamental de Desarrollo L Obras Publicas de Potosi, the DDO operating in the Department of Potosi; (r) "CODECHO" means Comite Departamental de Desarrollo . Obras Publicas de Chuuisaca, the DDO operating in the Department of Chuquisaca; (s) "CNT" means the Borrower's Consejo Nacional de Tarifas, established and operating under Decreto Supremo No. 11104 of the Borrower dated October 5, 1973; (t) "CWC" means Community Water Committee or Cooperative, an entity established in a rural community and charged with the administration and operation of the water supply system in such community; and (u) "Bolivian Pesos" and "$b" means the currency of the Bor- rower. -6- 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 re- ferred to, an amount in various currencies equivalent to eleven million five hundred thousand dollars ($11,500,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expen- ditures made (or, if the.Bank shall so agree, to be made) in re- spect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan; provided, however, that, except as the Bank shall otherwise agree, no withdrawal shall be made on account of: (a) expenditures under Part A of the Project, until evi- dence satisfactory to the Bank shall have been furnished to the Bank: (i) that the execution and delivery of the Part A Project Agreement on behalf of AAPOS have been authorized or ratified by all necessary corporate and governmental action; -7- (ii) that the execution and delivery of the Part A Sub- sidiary Loan Agreement on behalf of the Borrower and AAPOS, respectively, have been duly authorized or ratified by all necessary corporate and govern- mental action; (iii) the Bank has been furnished with an opinion or opinions satisfactory to the Bank of counsel ac- ceptable to the Bank showing that the Part A Proj- ect Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, AAPOS, and constitutes a valid and binding obligation of AAPOS in accordance with its terms and that the Part A Subsidiary Loan Agreement has been duly au- thorized or ratified by, and executed and delivered on behalf of, the Borrower and AAPOS, respectively, and constitutes a valid and binding obligation of the Borrower and AAPOS in accordance with its terms; (iv) that AAPOS has increased its tariffs as required by Section 4.03 (a) of the Part A Project Agreement; and (v) that AAPOS has presented to the Bank the plan re- ferred to in Section 3.06 of the Part A Project Agreement; (b) expenditures under Part B of the Project, until evi- dence satisfactory to the Bank shall have been furnished to the Bank: -8- (i) that the execution and delivery of the Part B Proj- ect Agreement on behalf of ELAPAS have been autho- rized or ratified by all necessary corporate and governmental action; (ii) that the execution and delivery of the Part B Sub- sidiary Loan Agreement on behalf of the Borrower and ELAPAS, respectively, have been duly authorized or ratified by all necessary corporate and govern- mental action; (iii) the Bank has been furnished with an opinion or opinions satisfactory to the Bank of counsel ac- ceptable to the Bank showing that the Part B Proj- ect Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ELAPAS, and constitutes a valid and binding obligation of ELAPAS in accordance with its terms and that the Part B Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and deliv- ered on behalf of, the Borrower and ELAPAS, respec- tively, and constitutes a valid and binding obli- gation of the Borrower and ELAPAS in accordance with its terms; (iv) that ELAPAS has increased its tariffs and charges as required by Section 4.03 (a) of the Part B Project Agreement; and -9- (v) with respect to the sewerage component of Part B of the Project, that the necessary measures have been taken by the Borrower to enact the tax for the financing of the extension of the severage system in Sucre; (c) expenditures under Part C of the Project, until evidence satisfactory to the Bank shall have been furnished to the Bank: (i) that the execution and delivery of the Part C Proj- ect Agreement on behalf of CORPAGUAS have been authorized or ratified by all necessary corporate and governmental action; (ii) that the execution and delivery of the Financing Agreement on behalf of the Borrover and CORPAGUAS, respectively, have been duly authorized or ratified by all necessary corporate and governmental action; and (iii) the Bank has been furnished with an opinion or opinions satisfactory to the Bank of counsel ac- ceptable to the Bank showing that the Part C Proj- ect Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, CORPA- GUAS, and constitutes a valid and binding obliga- tion of CORPAGUAS in accordance with its terms and that the Financing Agreement has been duly autho- rized or ratified by, and executed and delivered - 10 - on behalf of, the Borrower and CORPAGUAS, respec- tively, and constitutes a valid and binding obli- gation of the Borrower and CORPAGUAS in accordance with its terms. Section 2.03. Except as the Bank shall otherwise agree, con- tracts for the purchase of goods or for civil works to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 1 to the Project Agreements. Section 2.04. The Closing Date shall be June 30, 1981 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 commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of tb- Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and ninety hundredths per cent (8.90%) per annum on the principal amount of the Loan wit'drawn and outstanding from time to time. Section 2.07. Interest and other rlerges shall be payable semi-annually on March 1 and September 1 in each year. Secticr 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. -11 - Section 2.09. AAPOS in respect of Part A, ELAPAS in respect of Part B and CORPAGUAS in respect of Part C of the Project are designated as representatives of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. - 12 - ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Part D of the Project through MUV with due diligence and efficiency and in con- formity with appropriate administrative, financial and public util- ity practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause AAPOS, ELAPAS and CORPAGUAS to perform in accordance with the provisions of their respective Project Agreements all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable AAPOS, ELAPAS and CORPAGUAS to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall relend such proceeds of the Loan as AAPOS and ELAPAS shall require to carry out Part A and Part B of the Project, respectively, under subsidiary loan agreements to be entered into between the Borrower and AAPOS and ELAPAS, respec- tively, under terms and conditions which shall have been approved by the Bank including inter alia those set forth in Schedule 4 to this Agreement. - 13 - (d) The Borrower shall make available such proceeds of the Loan to CORPAGUAS as CORPAGUAS shall require to carry out Part C of the Project under a financing agreement to be entered into be- tween the Borrower and CORPAGUAS, under terms and conditions which shall have been approved by the Bank. (e) The Borrower shall exercise its rights under each of the Subsidiary Loan Agreements and the Financing Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreements or the Financing Agreement or any provision thereof. Section 3.02. Without any limitation upon the generality of Section 3.01 (b) hereof, the Borrower shall: (a) provide CORPAGUAS, during the execution of the Project, with an aggregate amount of about fifty million Bolivian Pesos ($b50,000,000), by way of its annual budgetary allocations, to enable CORPAGUAS to establish an adequate technical and adminis- trative structure for the carrying out of Part C of the Project; and (b) cause CODEPO to provide AAPOS and CODECHO to provide ELAPAS, by way of grants for the carrying out of their respective parts of the Project, with aggregate amounts of about ten million Bolivian Pesos ($b 10,000,000) and about forty million Bolivian Pesos ($b 40,000,000), respectively. Section 3.03. In order to assist the Borrower in the carry- ing out of Part D of the Project, the Borrower shall employ con- sultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.04. Except as the Bank shall otherwise agree, the Borrower shall cause all services included in Part D of the Proj- ect and financed out of the proceeds of the Loan to be used ex- clusively for such Part D. Section 3.05. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the reports, contract documents and work schedules for Part D of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of Part D of the Project (including the cost thereof) and to identify the services included in Part D of the Project and financed out of the proceeds of the Loan, and to dis- close the use thereof in such Part D; (ii) shall enable the Bank's accredited representatives to examine any records and documents relevant to Part D of the Project; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning Part D of the Project, the expenditure of the proceeds of the Loan and the services financed out of such proceeds. - 15 - 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, special 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 for- eign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or per- mitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or admini- strative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other char- ges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely - 16 - as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrover, of any political or administrative subdi- vision thereof and of any entity owned or controlled by, or oper- ating for the account or benefit of, the Borrower or any such sub- division, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Bor- rower. Section 4.02. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with con- sistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Section 4.03. The Borrower shall, not later than December 31, 1976 or such other later date as the Bank shall agree: (a) establish and thereafter maintain within DIU a Project Evaluation Unit to be in charge, with regard to urban communities with a population of 10,000 persons or more, of (i) evaluating water supply and seve.rage projects in such communities for their technical and economic feasibility, (ii) recommending to the CNT - 17 - such tariffs, charges and financial policies as are required to meet specified national standards, and (iii) advising on the allo- cation of external and domestic funds for projects in the water and sewerage sector; and (b) issue or cause MUV to issue a ministerial regulation which shall require any public entity seeking Bolivian or foreign funds for water supply or sewerage projects in communities re- ferred to in paragraph (a) of this Section, to obtain the prior approval of (i) the Project Evaluation Unit with regard to the scope of the project and the amount of financing, and (ii) the CNT with regard to the level of proposed tariffs and charges for the services derived from such project. - 18 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (k) thereof, provided, however, that if any event referred to in paragraphs (a) or (b) of this Section shall have occurred and be continuing, the suspension of the right to make withdrawals from the Loan Account shall be limited to amounts required for the part of the Project to be carried out by the Proj- ect Company concerned by such event: (a) any of the Project Companies shall have failed to per- form any covenant, agreement or obligation of such Project Com- pany under the Project Agreement to which it is a party; (b) any of the Project Companies shall have failed to per- form any covenant, agreement or obligation of such Project Com- pany under the Subsidiary Loan Agreement or Financing Agreement to which it is a party; (c) the Decretos Supremos Nos. 10221, 10601, and 07942 of the Borrover shall have been amended, suspended, abrogated, re- pealed or waived in such a way as to materially and adversely af- fect the ability of any of the Project Companies to carry out the covenants, agreements and obligations set forth in the Project Agreements to which it is a party; and - 19 - (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of any of the Project Companies or for the suspension of its operations. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any event specified in paragraphs (a) or (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrover and the respective Project Company; and (b) any event specified in paragraphs (c) or (d) of Section 5.01 of this Agreement shall occur. - 20 - ARTICLE VI Terminat:!on Section 6.01. The date January 13, 1977 is hereby specified for the purposes of Section 12.04 of the General Conditions. - 21 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministerio de Finanzas La Paz Bolivia Cable address: Telex: MINFINANZAS BX5332 La Paz 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 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 22 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above vritten. REPUBLIC OF BOLIVIA By /s/ Alberto Crespo Gutierrez Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ S.M.L. van der Meer Acting Regional Vice President Latin America and the Caribbean - 23 - 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 ex- penditures 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) Equipment and materials (a) For Part A of 1,100,000 100% of foreign the Project expenditures or 60% of local ex- penditures (b) For Part B of 2,500,000 100% of foreign the Project expenditures or 60% of local ex- penditures (c) For Part C of 3,300,000 100% of foreign the Project expenditures or 60% of local ex- penditures (2) Civil works (a) For Part A of 275,000 100% of foreign the Project expenditures or 60% of local ex- penditures Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (b) For Part B of 1,660,000 100% of foreign the Project expenditures or 60% of local ex- penditures (c) For Part C of 800,000 100% of foreign the Project expenditures or 60% of local ex- penditures (3) Consultants' services 370,000 100% (4) Unallocated 1,495,000 TOTAL 11,500,000 - 25 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compli- ance 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 the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan de- creases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $100,000, may be made in respect of Category (3) on account of payments made by ELAPAS for such expenditures before that date but after July 1, . 1975. 266 - 26 - 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 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 Cate- gory, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated short- fall, 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 per- centage then applicable to such expenditures in order that fur- ther withdrawals under such Category may continue until all ex- penditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- ditures for such item shall be financed out of the proceeds of tA, Loan and the Bank may, without in any way restricting or lim- iting 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. - 27 - SCHEDULE 2 Description of the Project The Project is the improvement and extension of the water supply system in the cities of Potosi and Sucre, the construction of water supply systems in about seventy rural communities and the extension of the sewerage system in the city of Sucre. It consists of the following: Part A: Potosi Water Supply 1. Repair of dikes and construction of infiltration gal- leries at Pati Pati and San Jose. 2. Lining and improvement of the Pati Pati and San Jose canals to reduce water losses. 3. Installation of an additional filter unit and an addi- tional sedimentation basin at the treatment works. 4. Extension of the distribution network and installation of new consumer connections. 5. Purchase and installation of meters or other control devices at the sources and at not less than 80% of the consumer connections. II - 28 - 6. Establishment of a program to locate and reduce leakage to at least 25% of total supply. 7. Survey of consumers to ascertain the number and size of connections. 8. Technical assistance to improve the organization and the financial management and accounting of AAPOS. Part B: Sucre Water Supply and Sewerage (a) Water Supply: 1. Construction of protective masonry works, tunnels and access roads for the Ravelo Canal. 2. Provision of spare parts for the treatment plant to ensure its continuous operation. 3. Strengthening of the distribution network in the central area of the city and expansion thereof to new areas, and construction of an additional storage reservoir. 4. Installation of new consumer connections and meters. 5. Technical assistance to improve the financial man- agement and accounting of ELAPAS. - 29 - (b) Severage: 1. Repair and improvement of the combined severs in the Casco Viejo area and installation of new col- lectors functioning as sanitary severs. 2. Construction of house connections and laterals, street severs and trunk mains in new areas of the city. 3. Building of a stabilization pond type treatment plant. Part C: Rural Water Supply Construction of water supply systems in about seventy rural communities located in the Borrower's territory, including: 1. Development of spring, infiltration gallery, deep well, stream or other suitable sources of water. 2. Construction of storage and distribution tanks. 3. Installation of distribution networks with house con- nections and public stand pipes. 4. Installation of chlorinators. 5. Technical assistance to: - 30 - (a) improve the financial accounting of CORPAGUAS; (b) prepare a plan of action to transfer the responsi- bilities of CORPAGUAS in connection with the con- struction and maintenance of rural water systems to the DDOs; (c) prepare standard designs and bills of materials for the construction of rural water systems; (d) prepare maintenance and operating manuals; and (e) prepare procedures for the coordination of supplies and bulk purchase of imported materials by the DDOs. Part D: Technical Assistance to DIU 1. Training of DIU personnel. 2. Studies on tariffs for water and charges for sewerage services and the effects of metering water consumption. * * * * The Project is expected to be completed by December 31, 1980. - 31 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 370,000 Beginning September 1, 1981 through March 1, 1996 On September 1, 1996 400,0 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 equiva- lents determined as for purposes of withdrawal. - 32 - Premiums on Prepayment The following percentages are specified as the premiums pay- able 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 1.35% More than three years but not more than six years before maturity 2.65% More than six years bvt not more than eleven years before maturity 4.90% More than eleven years but not more than sixteen years before maturity 7.10% More than sixteen years but not more than eighteen years before maturity 8.00% More than eighteen years before maturity 8.90% - 33 - SCHEDuLE 4 Terms of Lending under the Subsidiary Loan Agreements Term of Loan Part of Sub- including Grace the Project Borrower Grace Period Period Rate of Interest* (years) A AAPOS 22 3 no interest to accrue during the grace period; 8.90% thereafter B ELAPAS 22 3 no interest to accrue during the grace period; 8.90% thereafter (*) Per annum, on principal outstanding.