Ecuador - Second Guayaquil Port Project : Loan 1255 - Loan Agreement - Conformed

LOAN NUMBER 1255 EC LOAN AGREEMENT (Second Guayaquil Port Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and AUTORIDAD PORTUARIA DE GUAYAQUIL Dated , 1976 LOAN AGREEMENT AGREEMENT, dated 0, 1976, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and AUTORIDAD PORTUARIA DE GUAYAQUIL (herein- after called the Borrover). -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, u,less the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "SECAP" means Servicio Ecuatoriano de Capacitaci6n Profesional; (b) "First Loan Agreement" means the agreement between the Bank and the Borrower (Port of Guayaquil Project) dated October 9, 1958; (c) "First Guarantor's Loan Contract" means a contract satis- factory to the Bank providing for the loan referred to in Section 2.02 (a) (i) of the Guarantee Agreement; such loan to be hereinafter called the "First Guarantor's Loan"; -3- (d) "Second Guarantor's Loan Contract" means a contract satisfactory to the Bank providing for the loan referred to in Section 2.02 (a) (ii) of the Guarantee Agreement; such loan to be hereinafter called the "Second Guarantor's Loan"; (e) "Regulations" means the Guarantor's Decree No. 289,. entitled Ley General de Puertos, dated April 12, 1976 and the Guarantor's Decree No. 290 entitled 1!ELde R6gimen Administrativo Fortuario, dated April 12, 1976, as such Decrees may be amended from time to time; and (f) "Sucres" means the currency of the Guarantor. 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 thirty- three million five hundred thousand dollars ($33,500,000). 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 The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between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 Bank and the Borrower, 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, the goods, works and services (other than consultants' services) for the Project shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1981 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 2.05. 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 the Loan not vitkUravn from tim to time. Section 2.06. The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per ann= on the principal amount of the Loan vithdran and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on February 1 and August 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set fbrth in Schedule 3 to this Agreement. -6- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appro- priate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, ser- vices and other rerources required for tne purpose. (b) Unless the Bank shall otherwise agree, the Borrower shall enter into the First Guarantor's Loan Contract and, not later than December 31, 1977, the Second Guarantor's Loan Con- tract, and exercise its rights and comply with its obligations thereunder in such manner as to protect the interests of the Bank and the Borrower, and shall not take or concur in any ac- tion which would have the effect of amending, abrogating, as- signing, waiving or failing to enforce such First Guarantor's Loan Contract or Second Guarantor's Loan Contract, or any pro- vision thereof. Section 3.02. In order to assist the Borrower in the pro- curement of goods and services for the Project and the supervi- sion of the construction of facilities and installation of equip- ment for the Project, the Borrower shall employ engineering consultants whose qualifications, experience and terms and con- ditions of employment shall be satisfactory to the Bank. Section 3.03. In order to assist the Borrower in carrying out Part E of the Project, the Borrower shall (a) enter into a technical assistance agreement, satisfactory to the Bank, with -7- SECAP or other suitable institution acceptable to the Bank; (b) employ training experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank; and (c) afford the Bank a reasonable opportunity to review the format and contents of the program included in Part E of the Project. Section 3.04. In order to assist the Borrower in the opera- tion of the bulk cargo terminal to be constructed under Part B of the Project and in the carrying out of Part F of the Project, the Borrower shall: (a) employ management and engineering experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank; and (b) cause the Borrower's staff to take over the responsibilities of said experts when the Bank and the Borrower shall have agreed that such staff is ade- quately trained. Section 3.05. In order to assist the Borrower in its daily port management operations and for the purpose of carrying out Part G of the Project and the study referred to in Section 4.04 of this Agreement, the Borrower shall, not later than December 31, 1976, or such other date as shall be agreed with the Bank, employ port operations experts whose qualifications, experience and terms of reference shall be satisfactory to the Bank. Section 3.06. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the -8- 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 seririces financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.07 (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, re- ports, contract documents and construction and procurement sched- ules 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 maintain records adequate to re- cord the progress of the Project (including the cost thereof), 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, without limitation upon the provisions of paragraph (c) of this Section, enable the Bank's 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 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. -9- (c) The Borrover shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, prop- erty and equipment of the Borrover and any relevant records and documents. Section 3.08. Until Parts A, B and C of the Project are com- pleted, the Borrover shall not undertake the construction of a fourth berth, in addition to the three berths to be constructed under Part A of the Project, unless the Borrover shall have estab- lished, to the satisfactlin of the Bank, the economic justification of such berth and made appropriate arrangements for the financing thereof. - 10 - ARTICLE IV Management and Operations of the Borrower Section 4.01. 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 4.02. 'The Borrower shall operate and maintain the port facilities all in accordance with sound engineering and fi- nancial practices. Section 4.03. The Borrower shall establish such system of salaries and fringe benefits for its top and middle management positions as shall be consistent with the Borrower's need to em- ploy qualified and experienced personnel for such positions. Section 4.04. The Borrower shall:(i) not later than June 30, 1977, carry out, with the assistance of the experts referred to in Section 3.05 of this Agreement, a study on the impact of the conditions of employment applicable to the different categories of workers rendering services at the Guayaquil Port upon the ef- ficiency of the operations at such Port; and (ii) after consulta- tion with the Bank, take all necessary steps to implement the re- commendations of such study. Section 4.05. In order to improve port operating efficiency, the Borrower shall promptly take all action required on its part - 11 - to: (a) reduce the free storage period in Guayaquil Port from ten to seven days; (b) charge storage tariffs on a daily basis; and (c) maintain at all times such tariffs at a level sufficient to encourage users promptly to remove goods from the port area. - 12 - ARTICLE-V Financial Covenants Section 5.01. The Borrower shall maintain records adequete to reflect in accordance with consistently maintained appropriate ac- counting practices its operations and financial condition. Section 5.02. The Borrower 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 Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four annths after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the rep,rt 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 the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03. The Borrower shall, in the case of (i) below, with the assistance of consultants or specialists whose qualific- ations and terms and conditions of employment shall be satisfac- tory to the Bank and, in the case of (ii) below, with the assis- tance of the Borrower's external auditors, establish, not later than December 31, 1976 or such other date as shall be agreed with - 13 - the Bank, and maintain thereafter:(i) statistical and cost account- ing systems adequate to furnish to the Borrower spuropriate infor- mation for tariff-setting purposes; and (ii) improved internal audit procedures, including inter alia a system of inventory controls. Section 5.04. (a) The Borrover represents that at the date of this Agreement no lien exists on any of its assets as security for any debt, except as otherwise disclosed in writing to the Bank. (b) The Borrover undertakes that, except as the Bank shall otherwise agree:(i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien vill equally and ratably secure the payment of the principal of, and interest ad other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provi- sions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. (c) This Section supersedes Section 5.03 of the First Loan Agreement. - 14 - Section 5.05. (a) Except as the Bank shall otherwise agree, the Borrower shall from time to time effect such adjustments in its port tariffs as shall be required to achieve an annual rate of return for the Borrover's fiscal year 1980 and thereafter of not less than eight per cent (8%) on its net fixed assets in service. For purposes of this Section: (i) The annual rate of return shall be calculated as a percentage which shall be determined by dividing the net operating income for the fiscal year in question by one half of the sum of the value of the net fixed assets in service (as valued in (iii) below) at the beginning of such fiscal year plus the value of such assets at the end of such fiscal year. (ii) The term "net operating income" means gross re- venues from all sources related to port operations less all expenses of operation, administration, adequate maintenance, taxes and any payments in lieu of taxes and provision for straight-line depreciation at an average rate of not less than 3% per annum of the average gross fixed assets in service as valued in (iii) below, but before pro- vision for interest and other charges on debt. (iii) The term "value of the net fixed assets in service" means the gross value of the fixed assets in serv- ice, valued from time to time in accordance with - 15 - sound and consistently maintained methods of valuation or revaluation acceptable to the Bank, less the amount of accumulated depreciation; pro- vided that, when a major asset shall be brought into operation during the fiscal year, the value of such asset shall be included in the foregoing computation only in respect of that part of the fiscal year during which such asset has been in operation. (b) This Section supersedes Section 5.08 of the First Loan Agreement. Section 5.06. Not later than December 31, 1976 or such other date as shall be agreed with the Bank, the Borrower shall, with the technical assistance of professionals whose qualifications, experience and terms of reference shall be satisfactory to the Bank, conduct a revaluation of its assets and prepare a realistic depreciation schedule for financial and cost accounting purposes. Section 5.07. (a) Except as the Bank shall otherwise agree, the Borrower shall not incur any debt unless the Borrower's net re- venues for any twelve consecutive months within the fifteen anths next preceding such incurrence shall be at least 1.5 times the maximum debt service requirement for any succeeding fiscal year on all debt, including the debt to be incurred. For purposes of this Section: - 16 - (1) "Debt" eans any debt aturing by its tezs more than one year after the date on which it is orig- inally incurred. (ii) Debt shall be deemed to be incurred on the date of execution and delivery of a contract or loan agree- ment or guarantee agreement providing for such debt or for the guarantee thereof, but in the case of guarantee of debt, only to the extent that the guaranteed debt is outstanding. "Net revenues" means gross revenues from all sources, adjusted to take account of the Borrower's port tariffs in effect at the time of incurrence of debt even though such tariffs were not in effect during the Borrower's fiscal year or the twelve-month period to which such revenues relate, less all operating, maintenance and administrative expenses and including provision for taxes, if any, but be- fore provision for depreciation, bad debts, in- terest and other charges on debt. (iv) "Debt service requirement" means the aggregate amount of amortization (including sinking fund contributions, if any), interest and other charges on debt . (v) Whenever it shall be necessary to value, in terms of the currency of the Guarantor, debt payable in - 17 - another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable by the Borrower for the purpose of servicing such debt, or if such other currency is not so obtainable, at the rate of exchange that will be reasonably determined by the Bank. (b) This Section supersedes Section 5.08 of the First Loan Agreement. 0A - 18 - ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) the Regulations shall have been amended, suspended, ab- rogated, repealed or waived, so as to materially and adversely af- fect the conduct of the Borrower's operations or its financial condition or the performance of its obligations under this Agree- ment; and (b) the right of the Borrower to utilize the First Guarantor's Loan or the Second Guarantor's Loan or any money borrowed by the Borrower for purposes of the Project, shall have been suspended or cancelled in whole or in part. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to para- graph (h) thereof: (a) the event specified in paragraph (a) of Section 6.01 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 Borrower; and - 19 - (b) the First Guarantor's Loan, the Second Guarantor's Loan or any other indebtedness for mney borroved by the Borrower for purposes of the Project with an original maturity of one year or more, shall have become due and payable before its maturity in accordance with the terms thereof. - 20 - ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the First Guarantor's Loan Contract has been duly signed on terms and conditions satisfactory to the Bank, and con- ditions precedent to initial disbursements, if any, under sucn First Guarantor's Loan Contract, except for the effectiveness of this Agreement, have been fulfilled; and (b) that all necessary acts, consents and approvals to be performed or given by the Guarantor, by its political subdivisions or agencies (including Banco Central del Ecuador), by any agency of any such political subdivision, or otherwise to be performed or given in order to authorize the carrying out of the Project and to enable the Guarantor and the Borrower to perform all of the obli- gations of the Guarantor and of the Borrower in the Guarantee Agreement and in this Agreement contained, respectively, together with all necessary powers and rights in connection therewith, have been performed or given. Section 7.02. The following are specified as additional mat- ters, within the meaning of Section 12.02(c) of the General Condi- tions, to be included in the opinion or certificate to be furnished to the Bank: - 21 - (a) that the execution and delivery of the First Guarantor's Loan Contract has been duly authorized or ratified by all necessary corporate and governmental action, and that such First Guarantor's Loan Contract is legally binding upon the Guarantor and the Borrower respectively, in accordance with its terms; and (b) that all acts, consents and approvals referred to in Sec- tion 6.01 (b) of this Agreement, together with all necessary powers and rights in connection therewith, have been duly and validly per- formed or given and that no other such acts, consents or approvals are required in order to authorize the carrying out of the Project and to enable the Guarantor and the Borrower to perform all of the obligations of the Guarantor and of the Borrower in the Guarantee Agreoment and in this Agreement contained, respectively. Section 7.03. The date of 4"19 t-' is hereby specified for the purposes of Section 12.04 of the General Conditions. - 22 - ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. For the Borrower: Autoridad Portuaria de Guayaquil Casilla 5739 Guayaquil Ecuador Cable address: APORTUARIA Ecuador - 23 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be sigmed 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 AUTORIDAD PORTUARIA DE GUAYAQUIL By Authorized Representative SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be fi- nanced out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expen- ditures 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 18,000,000 60% of foreign expenditures (2) Equipment 6,800,000 60% of foreign expenditures (3) Consultants and technical assis- tance for: (a) supervision of 1,350,000 60% of foreign construction expenditures of port facil- ities and pro- curement of equipment therefor (Parts A through D of the Project) - 25 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (b) management, 350,000 60% of foreign operation and expenditures maintenance of bulk cargo terminal ,equip- ment and ?art F of the Proj- ect ) Unallocated 7,000,000 TOTAL 33,500,000 - 26 - 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of a country other than the Guarantor and for goods or services supplied from the terri- tory of any country other than the Guarantor. 3. The disbursement percentages have been calculated in com- pliance 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 Guarantor 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 expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $180,000, may be made in respect of Category (3) (a) of paragraph 1 of this Schedule, on account of payments made for such expenditures befbre that date but after January 1, 1976. 5. Notvithstanding 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 Category, - 27 - 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 ap- plicable 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 procure- ment of any item in any Category is inconsistent with the proce- dures 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 ex- penditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 28 - SCHEDULE 2 Description of the Project The purpose of the Project is to increase the capacity and operational efficiency of the Guayaquil Pbrt. The Project con- sists of the following Parts: Part A: Construction of three deepwater marginal berths, about 180 m long each, three transit sheds, about T,200 a2 each, one container consolidation shed, workshops and maintenance facilities, access and paved areas, buil- dings, utilities and services. Part B: Construction of a bulk cargo terminal comprising one bulk pier about 150 m long, mechanized sugar loading and pneumatic wheat unloading facilities and storage facilities for sugar, wheat, molasses and edible oils. Part C: Relocation of the small boat mooring facilities from their present location to an area between the general cargo vharves and the bulk pier to be constructed under Part B of the Project. Part D: Acquisition and utilization of cargo handling, workshop and maintenance equipment. Part E: A training program to improve the skills of shore labor, stevedores and equipment operators. - 29 - Part F: A program to train the Borrower's staff in the operation and maintenance of the bulk cargo terminal to be con- structed under Part B of the Project. Part G: A program to train the Borrower's Operations Department staff. T P * * The Project is expected to be completed by June 30, 1981. SCIDULIR 3 Amortisatico Schedule Paqment of Principal Date Pawmnt Due (expressed in dollars)* August 1, 1980 330,000 February 1, 1981 345,000 August 1, 1981 360.000 February 1, 1982 380,000 August 1, 1982 390,000 February 1, 1983 3.10,000 August 1, 1983 425,000 February 1, 1984 465,000 August 1, 1984 465,000 February 1. 1985 480,000 August 1, 1985 505,000 February 1, 1986 .525,000 August 1, 1986 550,000 February 1, 1987 570,000 August 1, 1987 595,000 February 1, 1988 620,000 August 1, 1988 645,000 February 1, 1989 675,000 August 1, 1989 700,000 February 1, 1990 735,000 August 1, 1990 765,000 February 1, 1991 795,000 August 1, 1991 830,000 February 1, 1992 865,000 August 1, 1992 900,000 February 1, 1993 940,000 August 1, 1993 980,000 February 1, 1994 1,025,000 August 1. 1994 1,065,000 February 1, 1995 1,110,000 August 1, 1995 1,155,000 * 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 colum represent dollar equivalents determined as for purposes of vithdrawal. -31- Pagment of Principal Date Payment Due (expressed in dollars)* February 1, 1996 1,210,000 August 1, 1996 1,260,000 February 1, 1997 1,310,000 August 1, 1997 1,365,000 February 1, 1998 1,30,000 August 1, 1998 1,485,000 February 1, 1999 1,550,000 August 1, 1999- 1,615,000 February 1, 2000 1,695,000 To the extent that any portion of the Loan is repqable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiv- alents determined as for purposes of withdraval. .32- Fremiums on Prepayment The folloving percentages are specified as the premiums pay- able on repament 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 Prepament 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 years before maturity 7-1/4% More than twenty years but not more than twenty-two years before maturity 8% More than twenty-two years before maturity 8-1/2% - 33 - SCHEDULE 4 Procurement 1. Contracts for civil works and equipment 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 August 1975 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. With respect to any contract for civil works: (a) Bidders shall be required to prequalify and at least 45 days shall be allowed for submission of prequalification documents. The Borrower shall, before prequalification 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 list of prequalified bidders, together with a state- ment 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 befbre the applicants are notified and the Borrower shall make such additions to or deletions from the said list as the Bank shall reasonably request. (b) Before bids are invited, the Borrower shall furnish to the Bank fbr 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. The bidding documents shall include a price variation ~31 formula satisfactory to the Bank, substantially as set forth in Annex A to this Schedule. The Borrower shall make such modifica- tions in the said documents or procedures as the Bank shall rea- sonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (c) The firms invited to bid shall be allowed at least 60 days for the submission of their proposals. The bidding documents shall be accompanied by a bid bond or bank guarantee amounting to not less than 2% of the estimated contract value. (d) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to whom it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and compari- son of the bids received, together with the recommendations for award of the said consultants and the Borrower, and the reasons for the intended award. The Bank shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in this Schedule, promptly inform the Borrower and state the reasons for such determination. (e) The successful bidder shall, at the Borrower's option, furnish either a performance bond or a bank guarantee in an amount of not less than 5% of the contract price, which bond or guarantee shall remain in effect until the final acceptance of the - 35 - works provided for in the contract. In addition, the contract shall provide for retention of not less than 5% of the cost of works on each monthly invoice. One-half of the retention monies shall be released when all the work has been provisionally accepted, and the other half upon final acceptance of the works. (f) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked. (g) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of any such contract. 01 - 36 - ANNEX A TO SCHEDULE 4 Price Variation Formula for Civil Works Contracts Price Adjustment All monthly payments made to each contractor in Sucres and foreign currency in respect of work carried out within the original term set for the execution of the contract entered into by the Borrower and such contractor (the Contract) will be subject to adjustment to offset variations in the cost of materials, equip- ment and labor. Such adjustment will be calculated or the basic- of the fol- lowing formula in respect of the Sucres component: Pre = Ps (A Si + B Ti + C Ui + D Vi + E) So To Uo Vo Where: Pre - Adjusted amount of the Sucres component of each monthly statement of work and of other services performed by such contractor. Ps = Amount of the Sucres component of each monthly statement of work executed, calculated at the unit prices of the Contract. (1) Si/So = the adjustment ratio for labor; (2) Ti/To = the adjustment ratio for equipment; - 37 - (3) Ui /Uo = the adjustment ratio for fuel; and (4) Vi/Vo = the adjustment ratio for local construction materials. The formula to be used for the foreign currency component will be as follows: Prd = Pd (F Si + G Ti + H Ri + J Wi + K Pi + L Xi + M) So To Ro Wo Po Xo Where: Prd = Adjusted amount of the foreign-currency component of each monthly statement work executed by such contractor. Pd = Amount of the foreign-exchange component of each monthly statement of work executed by such contractor, calculated at the unit prices of the Contract. (1) Si/So = the adjustment ratio for labor; (2) Ti/To = the adjustment ratio for equipment; (3) Ri/Ro = the adjustment ratio for steel; (4) Wi/Wo = the adjustment ratio for cement; (5) Pi/Po = the adjustment ratio for other construction materials; and (6) Xi/Xo = the adjustment ratio for electrical equipment. The indicated adjustment formulae will be applied individually, as necessary to similar work categories. The categories and work items as defined in the bidding documents for Licitaci6n Inter- nacional 01-75 dated November 1975 are as follows: - 38 - Category I - items Nos. 1-6, 163-164. These are not subject to adjustment. Category II - Items Nos. 7-12, 37-55, 57-61, 162. Category III - Items Nos. 13-16. Category IV - Item No. 17. Category V - Items Nos. 18-29. Category VI - Items Nos. 30-36, 56, 62, 67, 68, 103, 107-109, 145, 151, 152. Category VII - Items Nos. 63-66, 69-88. Category VIII - Items Nos. 89-101. Category IX - Items Nos. 137-144, 146-150, 153-161. Category X - Items Nos. 102, 1o4-106, 110-136, 165. The following figures will be used as coefficients in the indicated formulae: Category A B C D E F G H J K L M I Items Excluded II .19 .17 .05 .22 .37 .34 .38 0 0 0 0 .28 III .25 .04 .04 .28 .39 .18 .38 0 .24 0 0 .20 IV .59 .19 .02 0 .20 .06 .05 .64 0 0 0 .25 V .22 .11 .03 .26 .38 .24 .29 .16 .11 0 0 .20 VI .44 .23 .04 .05 .24 .10 .12 0 0 .57 0 .21 VII .26 .12 .04 .24 .38 .24 .23 0 0 .31 0 .22 - 39 - Category A B C D E F G H J K L M VIII .40 .13 .05 .10 .32 .12 .09 0 0 0 .58 .21 IX .13 .09 .02 .31 .45 .30 .24 0 0 .20 0 .26 X .34 .25 .06 .09 .26 .09 .08 0 0 .58 0 .25 The adjustment index for both components will be understood to be the figure between parentheses in each of the formulae. Sub-index "i" refers to the index published, available and existing as of the last day of the month to which the statement refers. Sub-index "o" refers to the index published, available and existing as of the last day of the month in which the bids are submitted. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this 2 day of 197g. FOR SECRETARY