Tunisia - Sidi Salem Multipurpose Project : Loan 1431 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1431 TUN Umn Agreement (Sidi Salem Multipurpose Project) between REPUBLIC OF TUNISIA and INTIRNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated July 5, 1977 LOAN AGREEMENT AGREEMENT, dated July 5, 1977, between REPUBLIC OF TUNISIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of a portion of the foreign exchange cost of Parts B (i), C, D, G (a), G (c), G (d), G (e), and H of the Project des- cribed in Schedule 2 to this Agreement and for Part G (b) of the Project by making the Loan as hereinafter provided; (B) Parts A, B (i), D and F of the Project will be carried out by the Borrower through its Direction Ggngrale (as this term is hereinafter defined), Part H of the Project will be carried out by its DEGTH (as this term is hereinafter defined) and Parts B (ii), C and E of the Project will be carried out by SNCFT, SONEDE and STEG, respectively, (as those terms are hereinafter defined); (C) Part G of the Project will be carried out by OMVVM (as this term is hereinafter defined) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to OMVM a portion of the proceeds of the Loan as hereinafter pro- vided; (D) The Borrower has represented to the Bank that: -2- (i) it intends to contract from Kreditanstalt fMr Wiederaufbau (hereinafter called Kreditanstalt), a K6rperschaft des Offentlichen Rechts existing under the laws of the Federal Republic of Germany, a loan (hereinafter called the KfW Loan) in a principal amount of seventy million German Marks (DM 70,000,000) to assist in the financing of the foreign exchange cost of Part A of the Project, on the terms and conditions set forth in an agreement (hereinafter called the KfW Loan Agreement) to be entered into between the Borrower and KfW; (ii) by agreement dated January 9, 1974, (hereinafter called the First Iran Loan Agreement), which Agree- ment is in full force and effect, Iran has agreed to make a loan (hereinafter called the First Iran Loan) to the Borrower in an aggregate principal amount of twenty million French Francs (FF 20,000,000) and by agreement dated October 7, 1976, (hereinafter called the Second Iran Loan Agreement), which Agree- ment is in full force and effect, Iran has agreed to make a loan (hereinafter called the Second Iran Loan) to the Borro,er in a principal amount in various currencies equivalent to ten million five hundred thousand dollars ($10,500,000), all to as- sist in the financing of the carrying out of Part A of the Project on tt. terms and conditions therein set forth; - 3 - (iii) by agreement dated August 27, 1972, the People's Republic of China has agreed to make a loan (here- inafter called the Chinese Loan) to the Borrower in an aggregate principal amount of eighty million Yuan (Ya 80,000,000) which amount has been increased, by agreement dated February 15, 1977, to an aggre- gate principal amount of one hundred ten million Yuan (Ya 110,000,000) (hereinafter called the Chinese Loan Agreement) which agreement, as amended, is in full force and effect, all to assist in the financing of Part F of the Project on the terms and conditions set forth in such Chinese Loan Agreement; and (iv) it intends to contract during the year 1979 from another source outside of Tunisia a loan (hereinafter called the Other Loan) in a principal amount suffi- cient to meet at least the foreign exchange require- ments for the carrying out of Part G (b) of the Project on the terms and conditions set forth in an agreement (hereinafter called the Other Loan Agreement) to be entered into between the Borrower and such other source; (E) The Borrower has informed the Bank that it intends to carry out in the area to be serviced by the facilities to be con- structed under the Project, a comprehensive land reform program in accordance with, and within the meaning of the Borrower's Law No. 63-8 dated May 27', 1963, as amended by its Law No. 71-9 dated February 16, 1971; and (F) The Bank is willing to make a portion of the loan avail- able to OMVVM upon the terms and conditions set forth hereinafter and in the Project Agreement of even date herewith between the Bank and OMVVM; WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: - 5 - 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "OMVVM" means "Office de la Mise en Valeur de la Vallge de la Mederda et des Primetres Publics Irrigues" an 6tablissement public '. caractere industriel et commercial established and operat- ing pursuant to the Borrower's Laws No. 58/63 of June 11, 1958, and No. 58/76 of July 9, 1958, and Decree-Law No. 70/10 of September 28, 1970, including any successor thereto; (b) "Project Agreement" means the agreement between the Bank and OMVVM of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; -6- (c) "SNCFT Agreement" means the agreement to be entered into between the Borrower and SNCFT pursuant to Section 3.04 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the SNCFT Agreement; (d) "STEG Agreement" means the agreement to be entered into between the Borrower and STEG pursuant to Section 3.03 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the STEG Agreement; (e) "Dt" means dinars in the currency of the Borrower; (C) "Project Area Farmer" means a proprietor or assignee of irrigable land, which has benefited, or is expected to benefit, from public investments carried out by the Borrower under Part G of the Project permitting the irrigation of this land; (g) "DEGTH" means the Direction des Etudes et Grands Travaux Hydrauliques, a directorate established and operating within the Borrower's Ministry of Agriculture including any successor thereto; (h) "Direction Ggngrale" means the Direction Ggngrale des Grands Travaux Hydrauliques, a directorate established and oper- ating within the Borrower's Ministry of Public Works (MinistZre de 1'Equipement); (i) "DAFL" means the Direction des Affaires Foncibres et de LAgislation, a directorate established and operating within the Borrower's Ministry of Agriculture in accordance with Article 12 -7- of the Borrower's Decree No. 70-104 of March 28, 1970, as the same may be amended from time to time, including any successor thvl,to; (j) "Investment Contributions" means contributions towards public investments to irrigate land in public irrigation areas, as those contributions are defined in Section 1 of the Borrow. Law No. 63-18 of May 27, 1963 (as amended by the Borrower's . aw No. 71-9 of February 16, 1971), including the Decrees to be taken pursuant thereto as provided in paragraph (c) of Section 4.02 of the Loan Agreemen-Z., which are to be applicable in the area where Part G of the Project is to be carried out- (k) "Contr6leur Financier" means the agent referred to in Article 19 of the Borrower's Law No. 58-76 of July 9, 1958, and in Article 11 of the Borrower's Decree No. 73-391 of August 2, 1973; (1) "Attestation" means the certificate referred to in Article 7 of the Borrower's Law No. 74-53 of June 10, 1974, and delivered by the Borrower's Minister of Agriculture to settlers, or assignees of land pursuant to the Borrower's Law No. 58-63 of June 11, 1958, (as amended by Law No. 6-60 of July 26, 1960) Gc. of Law No. 63-18 of May 27, 1963 (as amended by Law No. 71-9 of February 16, 1971; (m) "SONEDE" means Soci6tg Nationale d'Exploitation et de Distribution des Eaux, an 4tablissement public a caract re industriel et commercial established and operating pursuant to the Borrower's Law No. 68-22, dated July 2, 1968, including any successor thereto; - 8 - (n) "STEG" means Societg Tunisienne de L'Electricitg et du Gaz, an 4tablissement Public a caractere industriel et commercial established and operating pursuant to the Borrower's Decree-Law No. 62-8 dated April 3, 1962, including any successor thereto; (o) "SNCFT" means Soci4t4 Nationale des Chemins de Fer Tunisiens, an 4tablissement public &, caractere industriel et commercial established and operating pursuant to its statuts ap- proved by the Borrower's Law No. 69-31, dated May 9, 1969, in- cluding any successor thereto; (p) "Project Coordination Committee" means the committee referred to in Section 3.06 of this Agreement; (q) "Project Area" means the agricultural area in the Bor- rower's territory benefitting from the facilities to be established, constructed or installed under the Project; and (r) "SONEDE Agreement" means the agreement to be entered into between the Borrower and SONEDE pursuant to Section 3.03 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the SONEDE Agreement. - 9- 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 ze- ferred to, an amount in various currencies equivalent to forty-two million dollars ($42,000,000). 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 expendi- tures 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, 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 4 to this Loan Agreement. Section 2.04. The Closing Date shall be June 30, 1984 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. - 10 - Section 2.06. The Borrower shall pay interest at the rate of eight and two-tenths per cent (8.20%) per annum on the principal amount of the Loan withdrawn anl 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. - 1 - ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts A, B (i). D aad F of the Icoject through its Direction Ggngrale, Part L f the Project through DEGTH, and shall cause SNCFT, SONEDE aid STEG to carry out, urder arrangements acceptable to the Bank, Parts B (ii), C and E, respectively, of the Project, all with due diligence and efficiency and in conformity with appropriate engineering, financial and aaministrative practices, and shall provide, or cause to be provided, 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 OMVVM to perform in accordance with the provisions of the Project Agreement, all the obligations therein set forth and shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or ap- propriate to enable OMVVM to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. Section 3.02. Without limitation to the generality of the provisions of Section 3.01 of this Agreement, the Borrower shall make availabl. to OMVVM: (i) that portion of the proceeds of the Loan allocated to expenditures required for the carrying out of Parts G (a), G (c), G (d), and G (e) of the Project, including the amounts allocated from time to time to Category (2) of the - 12 - Allocation of the Proceeds of the Loan set forth in paragraph 1 of Schedule 1 to the Loan Agreement; and (ii) whenever there is reason- able cause to believe that the funds available to OMVVM will be inadequate to meet the estimated expenditures required for the carrying out of Part G of the Project, make arrangements, satisfac- tory to the Bank, promptly to provide OMVVM or cause OMVVM to be provided with such funds as are needed to meet such expenditures. Section 3.03. The Borrower shall enter into an agreement with STEG and with SONEDE, each, in form and substance satisfactory to the Bank providing, inter alia for an undertaking by: (A) STEG and by SONEDE: (i) to carry out Part E and Part C, respectively of the Project with due diligence and efficiency and in conformity with appropriate administrative, engineering, public utility and finan- cial practices; (ii) to provide promptly as needed, the funds, facilities, services and other resources required for the purpose; (iii) to take all steps within its power necessary to acquire, as part of its equity, title to all such goods, facilities and land and rights in respect of land as may be needed for the carrying out of Part E and Part C, respectively, of the Project, free and clear of all encumbrances; (iv) to furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, and work and procurement schedules for, and promptly upon the Bank's request the contract documents for, Part E and Part C, respectively, of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request; (v) to establish and thereafter to maintain records and accounts adequate to reflect separately in accordance with consistently maintained appropriate accounting practices its resources and expenditures on account of the Project, and to record the progress of Part E and Part C, respectively, of the Project (including the - 13 - cost thereoj.); (vi) to furnish to the Bank, as soon as available, but in any -ase not later than six months after the end of each fiscal yeaz such accounts and the certified financial statements related to such accounts of such scope and in such detail as the Bank shall have reasonably requested; (vii) to enable the Bank's representatives to visit the facilities and construction site included in Part E and Part C, respectively, of the Project and to examine any relevant records and documents; (viii) to furnish to the Bank within forty-five calendar days after each calendar quarter a report of such scope and in such detail as the Bank shall reasonably request on the progress of Part E and Part C, respec- tively, of the Project during such quarter; (ix) to pay to the Borrower through DEGTH such portion of the operation and maintenance costs of, and such portion of the amortization of, the facilities constructed under Parts A, C and F of the Project as are, to the satisfaction of the Bank, attributable to the electricity genera- tion function and to the water supply function, respectively, of such facilities to be determined as provided in paragraph (b) of Section 4.05 of this Agreement; and (x) to furnish to the Bank all such information as the Bank shall reasonably request con- cerning Part E and Part C, respectively, of the Project; and (B) by the Borrower to make available to SONEDE under arrangements satis- factory to the Bank that portion of the proceeds of the Loan allo- cated to expenditures required for the carrying out of Part C of the Project, including the amounts allocated from time to time to Category (4) of the Allocation of the Proceeds of the Loan set forth in paragraph 1 of Schedule 1 to the Loan Agreement as the same may be amended from time to time by agreement between the Borrower and the Bank, and such additional amounts as may be required for the carrying out of Part C of the Project. Section 3.04. The Borrower shall enter into an agreement with SNCFT in form and substance satisfactory to the Bank providing, inter alia, for an undertaking by SNCFT: (i) to carry out in accor- dance with a timetable satisfactory to the Bank to be submitted to the Bank by October 30, 1977, or such other date as the Bank may agree, Part B (ii) of the Project with due diligence and efficiency and in conformity with appropriate administrative, engineering, public utility and financial practices; (ii) to use the funds, and to provide the facilities, services and other resources required for the purpose all promptly as needed; (iii) to take all steps within its power necessary to acquire out of funds earmarked for that purpose, as part of its equity, title to all such goods, facilities and land and rights in respect of land as may be needed for the carrying out of Part B (ii) of the Project, free and clear of all encumbrances; (iv) to furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, and work and procurement schedules for, and promptly upon the Bank's re- quest the contract documents for, Part B (ii) of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request; (v) to establish and thereafter to maintain records and accounts adequate to reflect separately in accordance with consistently maintained appropriate accounting practices its resources and expenditures on account of the Project, and to record the progress of Part B (ii) of the Project (including the cost thereof); (vi) to furnish to the Bank, as soon as available, but in any case not later than six months after the end of each fiscal year such accounts and the certified financial statements related to such accounts of such scope and in such detail as the Bank shall have reasonably requested; (vii) to enable the Bank's representatives to visit the facilities and construction sites included in Part B (ii) of the Project and - 15 - to examine any relevant records and documents; (viii) to furnish to the Bank within forty-five calendar days after each calendar quarter a report of such scope and in such detail as the Bank shall reasonably request on the progress of Part B (ii) of the Project during such quarter; (ix) to furnish to the Bank all such information as the Bank shall reasonably request concerning Part B (ii) of ;he Project; and (x) to maintain at all times an experienced and qual- ified full-time Project Manager responsible for all works to be carried out by SNCFT under Part B (ii) of the Project and for liaison with the Direction Gengrale for works to be carried out under Part B (i) of the Project, such Project Manager to be assisted by experienced and qualified personnel in adequate numbers. Section 3.05. In order to assist its Direction G'norale in the preparation of plans and specifications for such Parts of the Project as are to be carried out by its Direction Ggngrale, in the preparation of bidding documents for such Parts of the Project, in the evaluation of bids for such Parts of the Project, in the supervision of the construction of such Parts of the Project, and in order to assist its DEGTH in the training of its operation and maintenance personnel, the Borrower shall employ a firm of engi- neering consultants, whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.06. The Borrower shall: (a) establish and thereafter, until the completion of the Project, operate and maintain a Project Coordination Committee that is charged with the coordination of the activities, under the Project, of the Borrower's departments and agencies responsible for the execution of the Project or any part thereof, that will - 16 - have such powers, functions and responsibilities as shall be satis- factory to the Bank, and that shall function under the chairmanship of a senior officer of the Borrower's Ministry of Planning; (b) provide the Project Coordinating Committee promptly as needed, with such qualified and experienced supporting staff, facilities, funds and other resources as shall be required for the efficient discharge of its functions and responsibilities; and (c) cause such Project Coordinating Committee to hold meetings as and when needed, but in any event at least every three months in order to perform its functions and responsibilities, and to provide to the Bank promptly after each such meeting a report on such meeting in such detail as the Bank may reasonably request. Section 3.07. Without limitation to the generality of the pro- visions of Sections 3.01 and 3.10 of this Agreement, the Borrower shall carry out Part F of the Project in accordance with a timetable, and in accordance with plans, designs and specifications, all to be satisfactory to the Bank and referred to in paragraph (h) of Section 6.01 of this Agreement. Section 3.08. The Borrower shall establish and thereafter maintain or cause its Direction G6n6rale to establish and there- after to maintain separate accounts and records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, financial resources and expenditures of its Direction Gfnfrale in respect of Parts A, B (i), D and F of the Project. - 17 - Section 3.09. (a) The Borrover 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 place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the recipient of such goods 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 3.10. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Parts A, B (i) and D of the Project, and any material modifica- tions 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 Parts A, B (i), D, F and H 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 Parts A, B (i), D and H of the Project; (ii) shall enable the Bank's accredited representatives to visit the facili- ties and construction sites included in Parts A, B (i), D and F of the Project and to examine the goods financed out of the pro- ceeds of the Loan and any relevant records and documents; (iii) shall furnish to the Bank within forty-five calendar days after each calendar quarter a report, of such scope and in such detail - 18 - as the Bank shall reasonably request on the progress of Parts A, B (i), D, F and H of the Project, during such quarter; and (iv) shall furnish to the Bank all such information as the Bank shall reasonably request concerning Parts A, B (i), D, F and H of the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. Section 3.11. (a) 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 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. (b) Without limitation or restriction to the provisions of paragraph (a) of Section 3.11 of this Agreement, the Borrower shall make appropriate arrangements to relocate the residents of the land required for the construction and operation of the facilities under Part A of the Project or to adequately compensate such resi- dents, all to be in accordance with a timetable and a plan of action satisfactory to the Bank. Section 3.12. The Borrower shall cause its Direction Generale to be at all times adequately staffed with qualified and experienced personnel in adequate numbers, under the supervision of a qualified and experienced Director. - 19 - Section 3.13. (a) In order to assist the Borrower in the car- rying out of the studies under Part H of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (b) On the basis of a study under Part H of the Project to be completed by December 31, 1979, or such other date as the Bank may agree, the Borrower shall establish on or before December 31, 1980, or such other date as the Bank may agree, appropriate oper- ating rules acceptable to the Bank for the Sidi Salem reservoir to be constructed under Part A of the Project. (c) Without limitation or restriction to the provisions of paragraph (a) of this Section, and no later than December 31, 1978, or such other date as the Bank may agree, the Borrower shall com- plete under Part H of the Project a study under terms of reference satisfactory to the Bank on the proposed allocation among expected users of the water from the Medjerda River basin, including without limitation the water from the reservoir constructed under Part A of the Project, and of the investment costs of the facilities constructed under the Project and shall promptly thereafter submit to the Bank the recommendations of such study and exchange views with the Bank thereon. Such allocation of investment costs re- sulting from such recommendations shall be used inter alia as the basis for the calculations of the charges to be levied upon STEG and SONEDE as provided, respectively, in paragraph (ix) of Section 3.03 of, and in Section 4.05 of, this Agreement; - 20 - (d) The Borrower shall, with the assistance of engineerirg consultants whose qualifications, experience and terms of employ- ment shall be satisfactory to the Bank and to be employed by the Borrower not later than December 31, 1978, or such other date as the Bank may agree: (i) complete by December 31, 1979, or such other date as the Bank may agree a study referred to under Part H (b) of the Project; (ii) prepare on the basis of the recommenda- tions of said study carried out under Part H (b) of the Project, by no later than December 31, 1980, or such other date as the Bank may agree, an action program acceptable to the Bank, for monitoring continuously relevant water quality parameters for the water of the Medjerda River so that adequate measures may be taken as and when required to maintain the quality of such water; and (iii) thereafter to carry out such program. (e) Without limitation to the generality of the provisions of this Section and before reaching a decision to elevate the water level in the reservoir to be constructed under Part A of the Project to more than 105 meters, the Borrower shall submit to the Bank a report, in such detail as the Bank may reasonably re- quest, on the reasons for carrying out such elevation and on the conditions under which such elevation of the water level would take place and shall thereafter afford the Bank a reasonable oppor- tunity to comment on such report. - 21 - 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 charges on, the Loan by an equivalent lien on other public assets satisfac- tory to the Bank. (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; - 22 - 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 Borrower, 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 subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a -tral bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. (a) Without limitation or restriction to the provisions of Section 3.01 of this Agreement, the Borrower shall complete through its DEGTH or such other organ as the Borrower shall designate by December 31, 1978, or such other date as the Bank may agree, an irrigation infrastructure cost recovery policy study to be carried out under terms of reference satisfactory to the Bank. (b) For the purpose of determining the level of Investment Contributions as provided in sub-paragraph (c) (iii) of this Sec- tion 4.02 of this Agreement, the Borrower shall by December 31, 1978, or such other date as the Bank may agree, submit to the Bank, recomendations based on the proposals of the study referred to in paragraph (a) of this Section 4.02 of this Agreement for the introduction of a comprehensive system of Investment Contributions under which as much as possible of irrigation infrastructure investment costs are recovered consistent with the ability to pay of Project Area Farmers. - 23 - (c) Pursuant to the Borrower's Law No. 63-18 of May 27, 1963 (as amended by the Borrower's Law No. 71-9 of February 16, 19'1), the Borrower shall, by March 31, 1979, or such other date as the Bank may agree, take and thereafter maintain at all times, all such measures in form and substance satisfactory to the Bank, as may be necessary, including without limitation the issuance of decrees: (i) to establish public irrigation areas (pgrimetres publics irrigu's) within the meaning of the said Law, as amended, covering the whole area that is served by the facilities included in Part G of the Project; (ii) to determine within the meaning of Article 8 of the said Law, as amended, the maximum and minimum area of land to be held by any one landholder or group of landholders; provided, however, that the maximum of any such holding located in the area served (A) by the facilities included in Part G (a) of the Project shall not exceed 15 hectares in the case of high intensity cropping land, and 50 hectares in case of other types of land, and (B) by the facilities included in Parts G (b) and G (c) of the Project shall be determined so as to encourage optimal use of available irrigation 4ater; and (iii) to determine the level or levels of Investment Contributions to be charged and collected from Project Area Farmers in all said public irrigation - 24~ areas; provided, however, that the average amount of such Investment Contributions shall be not less than 100 Dt per hectare and that such Investment Contributions shall be payable in annual install- ments, each of such annual installments to increase progressively during the first five years. (d) The Borrower shall take, or cause to be taken, all such action as may be necessary in accordance with a plan of action and a timetable acceptable to the Bank: (i) to carry out land consolidation in the Project Area; (ii) to prepare and to deliver to each Project Area Far- mer an Attestation; (iii) to issute pursuant to the Borrower's Law No. 63-18 of May 27, 1963, as amended by the Borrower's Law No. 71-9 of February 16, 1971, to each Project Area Farmer a Ministerial Order (Arrete) charging each such Project Area Farmer with his individual Invest- ment Contributions, such Investment Contributions to be payable by each Project Area Farmer in progressive annual installments, and thereafter promptly to collect from each such Project Area Farmer, as and when due, each annual installment of such Investment Contributions; - 25 - (iv) to implement the limitations on the size of land holdings referred to in paragraph (b) (iii) of this Section; and (v) to implement the requirements imposed under the provisions of Articles 19 through 21 of the Bor- rower's Law, as amended, referred to in paragraph (b) of this Section on Project Area Farmers to irrigate, at all times, not less than two-thirds of their irrigable land as planned by cropping plans. (e) The Borrower shall not make any change in the timetable referred to in paragraph (d) of this Section, without the Bank's prior concurrence. (f) The Borrower shall cause DAFL: (i) to establish and thereafter to maintain accounts and records adequate to reflect separately in accordance with consistently maintained appropriate accounting practices the revenues derived from the collection of the Investment Contributions; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each calendar year, certified copies of such accounts of such scope and in such detail as the Bank shall have reason- ably requested; and (iii) furnish to the Bank such other informa- tion concerning said accounts and records thereof as the Bank shall from time to time reasonably request. Section 4.03. (a) Except as the Bank shall otherwise agree, the Borrower shall charge and collect, or cause OMVVM to collect, - 26 - from Project Area Farmers water charges at levels, satisfactory to the Bank, to be determined on the basis of the recommendations of the study referred to in paragraph (a) of Section 4.02 of this Agreement, provided, however, that such charges shall be set at a rate of not less than Dt 0,006 per cubic meter of irrigation water delivered to the Project Area Farmers serviced by the facilities constructed under Part G (a) and (b) of the Project and at a rate of not less than Dt 0,012 per cubic meter of irrigation water delivered to the Project Area Farmers serviced by the facilities constructed under Part G (c) of the Project. (b) Without limitation or restriction on the provisions of the foregoing paragraph (a) of this Section and unless the Bank shall otherwise agree, the Borrower shall, from time to time, but in any case not less than once in every three years, adjust in a manner satisfactory to the Bank, its water charges referred to in paragraph (a) of this Section; the first of such adjustments shall be made on January 1, 1985, or such other date as the Bank may agree. (c) The Borrower shall promptly inform the Bank of any ad- justments of irrigation water charges made in accordance with the provisions of paragraphs (a) and (b) of this Section. Section 4.04. (a) The Borrower shall at all times operate, maintain, renew and repair the facilities constructed under Part D of the Project through its Directorate of Roads and Bridges within its Ministry of Public Works and the facilities constructed under Parts A, and F of the Project through its DEGTH, including but - 27 - without limitation the dam and reservoir to be constructed under Part A of the Project, and promptly make all necess-ry r-psi s and renewals thereof, in accordance with appropriate engineering and public utility practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Except as the Bank shall otherwise agree, the Borrower shall obtain title to all goods financed out of the proceeds of the Loan under Parts A, B (i), D, and F of the Project free and clear of all encumbrances. (c) Without limiting the generality of the provisions of the preceding paragraph (d) of this Section, and of Section 3.13 of this Agreement, the Borrower shall: (i) with the assistance of engineering consultants whose qualifications, experience and terms of employment shall be satisfactory to the Bank, cause the dams, waterways, earthworks and reservoir banks and their appurtenant structures constructed under Part A of the Project to be periodi- cally inspected, at intervals of not less than one year and in accordance with appropriate engineering practice, in order to determine whether there are any deficiencies in the condition of such structures and earthworks, or in the quality and adequacy of maintenance or methods of operation of such structures and earthworks which may endanger the safety of such structures and earthworks, the first of such inspections to start no later than January 1, 1982, or such other date as the Bank may agree; (ii) to submit promptly after each such inspection to the Bank, the con- clusion of such engineering consultants; (iii) to make, promptly - 28 - after each such inspection, all necessary repairs of such structurt and earthworks; and (iv) make all necessary modifications in the quality and adequacy of maintenance or methods of operations of such structures and earthworks, all to be in accordance with ap- propriate engineering practice. Section 4.05. The Borrower undertakes to enter, through its DEGTH, by December 31, 1980, or such other date as the Bank may agree, into an agreement with SONEDE, to be in form and substance satisfactory to the Bank providing, inter alia, for an undertaking by DEGTH to charge to SONEDE, and for SONEDE to pay the Borrower through DEGTH, such portion of the operation and maintenance costs of, and such portion of the amortization of, the facilities con- structed under Parts A and F of the Project, as are attributable to the potable and industrial water use of such facilities; the Borrower shall, through DEGTH, exercise its rights under the said agreement in such manner as to protect the interest of the Borrower, SONEDE and the Bank and to accomplish the purpose of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive such agreement or any part thereof. Section 4.06. The Borrower shall at all times take all such measures as may be required to provide to Project Area Far- mers, or cause such Project Area Farmers to be provided Vrith medium- and short-term credits sufficient to cover the development needs of the Project Area, all on terms and conditions satisfac- tory to the Bank. - 29 - Section 4.07. Without limitation to the provisions of Sections 3.01 and 3.08 of this Agreement, the Borrower shL... (i) maintain or cause to be maintained accounts and records adequate to reflect, separately, in accordance with consistently main- tained appropriate 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; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, such accounts of such scope and in such detail as the Bank shall have reasonably requested; and (iii) fur- nish to the Bank such other information concerning said accounts as the Bank shall from time to time reasonably request. Section 4.08. The Borrower shall cause DEGTH 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, for the facilities constructed under Parts A and F of the Project. Section 4.09. Without limitation or restriction to the gene- rality of the provision of Section 4.04 of this Agreement, the Borrower shall, for the purpose of operating and maintaining the facilities constructed under Parts A and F of the Project, by December 31, 1981, or such other date as the Bank may agree, take all such measures as may be required to strengthen its DEGTH ope- ration and maintenance staff, including the employment of additional experienced and qualified operation and maintenance personnel in adequate numbers. - 30 - Section 4.10. Without limitation to the provisions of para- graph (b) of Section 3.01 of this Agreement, the Borrower shall, for the purpose of ensuring a rational use of the land of its Office des Terres Domaniales in the Project Area by December 31, 1979, or such other date as the Bank may agree, cause its Office des Terres Domaniales to take all such measures as may be required to strengthen its operation, maintenance and extension staff includ- ing the employment of additional experienced and qualified opera- tion, maintenance and extension staff in adequate numbers. - 31 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) OMVVM shall have failed to perform any of the covenants, agreements or obligations of OMVVM under the Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that OMVVM will be able to perform any of its obligations under the Project Agreement; (c) the Borrower, STEG, SONEDE or SNCFT shall have failed to perform any of its respective covenants, agreements or obli- gations under the STEG Agreement, under the SONEDE Agreement, or under the SNCFT Agreement, respectively; (d) the STEG Agreement, the SONEDE Agreement or the SNCFT Agreement, or any provision thereof has been assigned, amended, abrogated or waived without the prior consent of the Bank; (e) Laws No. 58/63 of June 11, 1958, and No. 58/76 of July 9, 1958, as well as Decree Law No. 70/10 of September 28, 1970, shall have been amended, suspended, abrogated, repealed or waived in such a way as materially and adversely to affect the ability of OMVvM to carry out the covenants, agreements and obligations set forth in the Project Agreement; - 32 - (f) the Borrower's Law No. 63-18 dated May 27, 1963, as amended by the Borrower's Law No. 71-9 dated February 16, 1971, has been amended, suspended, abrogated, repealed or waived in such a way as materially and adversely to affect the ability of the Borrower to carry out the covenants, agreements and obligations set forth in the Loan Agreement; (g) (1) Subject to subparagraph (2) of this paragraph: (A) the right of the Borrower to withdraw the pro- ceeds of the KfW Loan, shall have been sus- pended, cancelled or terminated in whole or in part, pursuant to the terms of the KfW Loan Agreement, or (B) the KfW Loan shall have become due and payable prior to the agreed maturity thereof. (2) Subparagraph (1) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its ob- ligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consis- tent with the obligations of the Borrower under this Agreement or of OMVVM under the Project Agree- ment, and of STEG, SONEDE or SNCFT under the STEG Agreement, under the SONEDE Agreement, or under the SNCFT Agreement, respectively; and - 33 - (h) The Borrower has been unable to withdraw any amount of any of the loans referred to in paragraphs (ii) and (iii) of Recital (D) to the Preamble of the Loan Agreement to meet expendi- tures for the Project as they occur, and other arrangements satis- factory to the Bank to meet such expenditures have not been made. 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 events specified in paragraphs (a), (c), (d), (e) and (f) 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 Borrower; and (b) any event specified in paragraphs (g) and (h) of Section 5.01 of this Agreement shall occur. - 34- ARTICLE VI Effective Date; Termination Section 6.01. 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) the execution and delivery of the Project Agreement on behalf of OMVVM, have been duly authorized or ratiLfied by all necessary corporate and governmental action; (b) the execution and delivery of the STEG Agreement on be- half of the Borrower and STEG, respectively, have been duly autho- rized or approved by all necessary corporate and governmental ac- tion; (c) the execution and delivery of the SNCFT Agreement on behalf of the Borrower and SNCFT, respectively, have been duly authorized or approved by all necessary corporate and governmental action; (d) the conditions precedent to the first disbursement of the KfW Loan have been fulfilled, subject only to the effective- ness of this Loan Agreement; (e) the Project Coordination Committee has been established in accordance with the provisions of Section 3.06 (a) of this Agreement; - 35 - (f) SNCFT has appointed an experienced and qualified full- time Project Manager responsible for all works to be carried out by SNCFT under Part B (ii) of the Project and for liaison with the Direction G4n4rale for works to be carried out under Part B (i) of the Project, and such Project Manager has taken up his duties; (g) the execution and delivery of the SONEDE Agreement on behalf of the Borrower and SONEDE, respectively, have been duly authorized or approved by all necessary corporate and governmental action; and (h) the Borrower has furnished to the Bank the timetable and the plans, designs, and specifications for the carrying out of Part F of the Project, all to be satisfactory to the Bank. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be fur- nished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by OMVVM and is legally binding upon OMVVM in accor- dance with its terms; (b) that the STEG Agreement has been duly authorized or approved by, and executed and delivered on behalf of the Borrower and STEG and is legally binding upon the Borrower and STEG in ac- cordance with its terms; (c) that the SNCFT Agreement has been duly authorized or approved by, and executed and delivered on behalf of, the Borrower - 36 - and SNCFT, respectively, and is legally binding upon the Borrower and SNCFT, respectively, in accordance with its terms; (d) that the SONEDE Agreement has been duly authorized or approved by, and executed and delivered on behalf of, the Borrower and SONEDE, respectively, and is legally binding upon the Borrower and SONEDE, respectively, in accordance with its terms; and (e) The Project Coordination Committee has been duly and effectively established under the Borrower's laws and regulations. Section 6.03. The date November 2, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 37 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministre Dfl4gu a,prgs du Premier Ministre Chargg du Plan 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: Ministre du Plan Ministere du Plan 1 Rue de B6ja Tunis, Tunisia Cable address: MINISTERE DU PLAN 1 Rue de B6ja Tunis 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 (wI) - 38 - 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 Tunis, Republic of Tunisia, as of the day and year first above written. REPUBLIC OF TUNISIA By /s/ Moustapha Zaanouni Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Maurice P. Bart Acting Regional Vice President Europe, Middle East and North Africa - 39 - SCHEDULE 1 Withdrawal of -he 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) Civil works for Part 10,000,000 55% (representing B (i) of the Project the estimated foreign expend- iture component) (2) Part G of the Project (a) Civil works for: (i) Part G (a) 8,200,000 50% (representing of the Proj- the estimated ect foreign expendi- ture component) (ii) Part G (c) 2,000,000 50% (representing of the the estimated Project foreign expend- iture component) - 4o - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (b) Equipment and materials for: (i) Part G (a) 5,000,000 100% of foreign and G (d) of expenditures and the Project 100% of the ex- factory cost of locally manufac- tured equipment and materials (ii) Part G (c) 1,000,000 100% of foreign of the expenditures and Project 100% of the ex- factory cost of locally manufac- tured equipment and materials (c) Consulting ser- 2,000,000 100% of foreign vices and train- expenditures ing (3) Consulting services 1,000,000 100% of foreign for the Direction expenditures Generale for Part B (i) of the Project and for DEGTH under Part H of the Proj- ect (4) Civil works for 6,000,000 50% (reDresent- Part C of the Proj- ing the estimated ect foreign exchange expenditures) - 41 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (5) Civil works for 500,000 50% (represent- Part D of the ing the estimated Project foreign exchange expenditures) (6) Unallocated 6,300,000 TOTAL 42,000,000 - 42- 2. For the purposes of this Schedule, the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the ter- ritory of any country other than 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: (i) for expenditures prior to the date of this Agree- ment, except that withdrawals, in an aggregate amount not exceeding the equivalent of $200,000, may be made in respect of Categories (2) (c) and (3), before that date but after January 1, 1976; (ii) for expenditures under sub-categories (a) (ii) and (b) (ii) of Category (2) of the Table of Allocation of the Proceeds of the Loan set forth in paragraph 1 of this Schedule until the Borrower has satisfied - )43- the Bank that the works under Part F of the Project have been started in accordance with the timetable, designs and specifications referred to in Section 3.07 of the Loan Agreement. 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 or Sub-category will be insufficient to finance the agreed percentage of all expenditures in that Category or Sub-category, the Bank may, by notice to the Borrower: (i) reallocate to such Category or Sub-category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category or Sub-category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such realloc&tion cannot fully meet the estimated shortfall, reduce the disbursement percentage then appli- cable to such expenditures in order that further withdrawals under such Category or Sub-category may continue until all expenditures 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 the 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 Agreerent, 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. SCHEDULE 2 Description of the Project The Project represents the first phase of the execution of the Water Master Plan for Northern Tunisia. The objectives of the Project are: (1) to contribute to satisfying potable and industrial water requirements for the Tunis, Cap Bon and Sousse areas within the Borrower's territory; (2) to prevent decline in the production of about 6,000 ha of citrus plantations in the said Cap Bon area; (3) to improve agricultural production in areas already equipped for irrigation in the Lower Medjerda Valley within the Borrower's territory through an increase of the quantity and quality of water available in summer; (4) to increase agricultural production in the Borrower's irrigated areas by increasing the said irrigated areas by about 10,600 ha; (5) to control floods on the Medjerda River within the Borrower's territory; and (6) to generate elec- tricity. The Project consists of the following Parts: Part A. Construction of the Sidi Salem Dam to be carried out by the Direction Gen9rale Civil works for the construction of: (i) a 57 m high rockfill dam with clay core on the Medjeda River at Sidi Salem about 10 km upstream from Testour including a cofferdam about 50 m high and precofferdam about 17 m high in the dam body, and of two 8.2 m diameter diversion tunnels, one as part of an emergency spillway with a discharge capacity of - 45- up to 760 m3 per second and the other as a bottom outlet; (ii) a surface spillway capable of releasing about 4,100 M3 per second of water; (iii) a storage reservoir with a utilizable capacity of about 550 Mm3; and (iv) a power plant at the upstream toe of the above dam. Part B. Relocation of a railroad segment to be carried out by the Direction G9n9rale and by SNCFT Relocation of a portion of the Tunis-Ghardimaou railroad line which is to be submerged as a result of the carrying out of Part A of the Project, consisting of: (i) Works to be carried out by the Direction G9n4rale Substructure works for the construction of a new railway line section, about 26 kilometers long, from near Oued Zarga to a point located about 4 km from Ksar Mezouar and about 14 km from B9ja on the existing Ksar Mezouar-Bgja line. (ii) Works to be carried out by SNC72 (a) Superstructure works for the construction of the line referred to in Part B (i) of the Project, as well as station, signalling, tele- communications and all other works made neces- sary by the relocation of the said line; and (b) works for the overhaul and for any necessary realignment of about 27 kilometers of the - 46 -I existing railroad line from the point referred to under Part B (i) of the Project where the new section joins the Mastouta B6ja line, including station, signalling, telecommunica- tions and other works made necessary by the relocation of the said line. Part C. Relocation of a potable water supply pipeline to be carried out by SONEDE Relocation of about 17.8 km of potable water supply pipe- lines linking the Kasseb and Ben Metir reservoirs with the Gdir el Goulla reservoir. Part D. Relocation of a highway segment to be carried out by the Direction G6nrale Relocation of about six km of highway number GP6 near Oued Zarga. Part E. Installation of hydropower equipment and power supply works, to be carried out by STEG Procurement of equipment for, and installation of such equipment in, the 25 MW capacity power plant to be constructed under Part A (iv) of the Project and construction and in- stallation of: (i) power transmission lines, including 20 km of 30 KY transmission lines, 4 km of 90 KV lines and two trans- former units, for the purpose of supplying power to the three pumping stations to be constructed under Part G (a) (i) of the Project; and (ii) 5 km of 90 KV transmission line and a 5 MVA transformer unit supplying the two pumping stations referred to under Part G (c) (ii) of the Project. Part F. Construction of an Interconnection Canal to be carried out by the Direction Gengrale Construction of, and purchase and installation of equip- ment for, a concrete lined Interconnection Canal about 126 km long, between El Aroussia and the Cap Bon area within the Borrower's territory, including without limitation the con- struction and installation of bridges, culverts, water dis- charge structures, automatic constant downstream water level gates and overflow structures, two relift pumps with a total installed power capacity of 5,200 KW and six intakes to supply water to the Cap Bon Subproject and citrus plantations irri- gated areas, referred to under Part G of the Project. Part G. Irrigation Component to be carried out by OMVVM (a) Testour and Medjez el Bab Subproject: (i) Construction and installation of (A) two fixed pumping stations with automatic controls with a total installed capacity of about 5,350 KW on the right bank of the Medjerda River to feed through five regulating pressure basins about 5,200 ha in the Testour and in the Medjez el Bab areas within - 48 - the Borrower's territory, and (B) a secondary pumping station with a capacity of about 20 KW to serve about 70 ha on high ground in the said Testour area. (ii) Construction of an underground irrigation water distribution network consisting of: (a) 150 mm to 800 mm diameter pipes serving irrigation units of about 40 ha each through hydrants located about 60 m and 72 m apart in the said Testour and Medjez el Bab areas, respectively; and (b) a sprinkler irrigation system with a 12 m by 12 m sprinkler pattern for the said Testour and Medjez el Bab areas including portable laterals with 16 to 18 sprinklers of about 200 m for Testour and about 220 m for Medjez el Bab, respectively. (iii) Construction of surface drainage facilities with a total length of about 125 km for the said Testour and Medjez el Bab areas. (iv) Construction of about 35 km of gravel roads and of about 320 km of farm roads with a width vary- ing from four to eight meters. (v) Land preparation, including subsoiling and removal of thorny shrubs, filling of small gullies and minor topographic irregularities and installation of windbreaks, consisting of double or multiple rows of trees, serving an area of about 5,200 ha -149- in the aggregate in the said Testour and Medjez el Bab areas. (vi) Construction of buildings for operation and main- tenance of the facilities described under Part G (a) of the Project, and construction of housing for OMVVM personnel required to operate and main- tain the said facilities and construction of three milk collection centers, including standard storage and cooling facilities. (b) Cap Bon Subproject: (i) Construction on the Interconnection Canal referred to under Part F of the Project, of five intakes and associated main pipeline supplying five irri- gation sectors totalling about 5,400 ha. (ii) Construction of: (a) an underground irrigation water distribution network serving irrigation units of about 21 ha each; and (b) turnouts at intervals of 45 m each feeding a set of furrows with a maximum length of 200 m each at a working pressure of 0.2 atmospheres. (iii) Land levelling consisting of earthmoving of about 500 m3 per ha on a total area of about 5,400 ha, land preparation, including subsoiling and removal of thorny shrubs, filling of small gullies and minor topographic irregularities and installation - 50 - of windbreaks, consisting of double or multiple rows of trees serving an area of about 5,400 ha. (iv) Construction of a drainage network with a total length of about 390 km consisting of tertiary drains spaced at 388 or at 194 meters. (v) Construction of about 60 km of gravel roads and of about 350 km of farm roads with a width vary- ing from four to eight meters. (vi) Construction of buildings for operation and main- tenance of the facilities described under Part G (b) of the Project and construction of housing for OMVVM personnel required to service the said facilities. (c) Rehabilitation works for Safeguard of Citrus Plantations in the Cap Bon Area: (i) Construction on the Interconnection Canal referred to in Part F of the Project of two intakes and associated pipelines to bring water to the two pumping stations referred to in Part G (c)(ii) of the Project. (ii) Installation of two additional pumps with an in- stalled capacity of 600 KW at the existing pump- ing station located at Soliman and construction and installation of a new pumping station to be - 51 - located at Belli with an installed capacity of 1,650 KW. (iii) Construction of a low pressure underground terti- ary irrigation network covering about 935 ha in the citrus plantation area. (d) Purchase of equipment and vehicles for operation, main- tenance, construction, supervision and provision of ex- tension and other services, by OMVVM. (e) Training of OMVVM personnel. Part H. Studies Studies or updating of existing studies on: (a) The water resources of the Medjerda River and their optimal utilization. (b) The protection of Medjerda River water against pollution. (c) The Recovery of investment, operating and maintenance costs related to hydraulic infrastructure. The Project is expected to be completed by December 31, 1983. - 52 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 15 and September 15 beginning March 15, 1981 through September 15, 1996 1,275,000 On March 15, 1997 1,200,000 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 equiva- lents determined as for purposes of withdrawal. - 53 - 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 1.25% More than three years but not more than six years before maturity 2.45% More than six years but not more than eleven years before maturity 4.50% More than eleven years but not more than sixteen years before maturity 6*55% More than sixteen years but not more than eighteen years before maturity 7.40% More than eighteen years before maturity 8.20% - 514 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Parts B and D hereof, contracts for the purchase of goods or for civil works financed out of the proceeds of the Loan shall be procured in accordance with procedures con- sistent with those set forth in Part A of the "Guidelines for Pro- curement 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. Contracts for similar items shall, to the extent practicable, be grouped into one single bid. B. Other Procurement Procedures Notwithstanding the provisions of paragraph A.1 above: (i) contracts for small equipment such as motorcycles and survey equip- ment estimated to cost less than the equivalent of $50,000, may be awarded on the basis of local advertising only and in accordance with competitive bidding procedures of the Borrower; provided, however, that the aggregate amount of all contracts to be so awarded shall not exceed the equivalent of $100,000; (ii) contracts for civil works estimated to cost less than the equivalent of - 55 - $1,000,000, may be awarded on the basis of local advertising only and in accordance with competitive bidding procedurei a-el 'le to the Bank, provided, however, that the aggregate amount of all contracts to be so awarded shall not exceed the equivalent of $2,000,000. C. Evaluation and Comparison of Bids for Goods; Preferenr for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with local procedures: (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 uties and other import taxes on imported goods, and sales and sim- ilar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expen- ditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Tunisia may be granted a margin of pref- erence in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- lowed in the evaluation and comparison of bids. - 56 - (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Tunisia if the bidder shall have established to the satis- faction of the Borrower and the Bank that the manu- facturing cost of such goods includes a value added in Tunisia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Tunisia. (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 evalu- ated bid of each group. Such lowest evaluated bids 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 - 57 - goods offered in each group C bid, for the purpose of this fur- ther comparison only, an amount equal to: (i) the amount of cus- toms 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 bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower or OMVVM, as appro- priate shall, before qualification is invited for works to be carried out under Part B (i) of, and Part G of, respectively, the Project, inform the Bank in detail of the procedure to be fol- lowed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The 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 or OMVM, as appropriate to the Bank for its comments before the applicants are notified of the Borrower's, or OMVVM's, as appropriate, decision, and the Borrower, or OMVVM, as appropriate, shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. - 58 - 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for equipment and civil works estimated to cost the equivalent of $200,000 or more: (a) Before bids are invited, the Borrower, OMVVM, or SONEDE, as appropriate, 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 mod- ifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding docu- ments shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower, OMVVM, or SONEDE, as appropriate, 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 shall furnish to the Bank, in sufficient time for its review, a detailed report which in the case of the Borrower, OMVVM and SONEDE shall include the report, prepared with the assistance of the consultants re- ferred to in Section 3.06 of this Agreement and in Section 2.02 of the Project Agreement, respectively, on the evaluation and com- parison of the bids received, together with the recommendations for award of the said consultants 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, OMVVM, or SONEDE, as appropriate, and state the reasons for such determination. - 59 - (c) The terms and conditions of the contract shall not, with- out 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 submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 3. With respect to each contract to be financed out of the pro- ceeds of the Loan and not governed by the preceding paragraph, the Borrower, OMVVM, or SONEDE, as appropriate, shall furnish 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 the respective 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 the Guidelines or this Schedule, promptly inform the Borrower, OMVVM, or SONEDE, as appropriate, and state the reasons for such determination.