Brazil - Urban Transport Project : Loan 1563 - Project Agreement - 4 - Conformed

CONFORMED COPY LOAN NUMBER 1563 BR Project Agreement (Urban Transport Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and STATE OF MINAS GERAIS and SUPERINTENDENCIA DE DESENVOLVIMENTO DA REGIAO METROPOLITANA - PLAMBEL and MUNICIPALITY OF BELO HORIZONTE and EMPRESA BRASILEIRA DOS TRANSPORTES URBANOS - EBTU Dated May 22, 1978 LOAN NO. 1563 BR PROJECT AGREEMENT AGREEMENT, dated May 22, 1978, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, party of the first part (such party of the first part hereinafter called the Bank), and STATE OF MINAS GERAIS (hereinafter sometimes called the State), SUPERINTENDENCIA DE DESENVOLVIMENTO DA REGIAO METROPOLITANA - PLAMBEL (hereinafter sometimes called PLAMBEL), MUNICIPALITY OF BELO HORIZONTE (hereinafter sometimes called the Municipality), parties of the second part (any of such parties of the second part hereinafter sometimes individually called an Executing Entity and all such parties of the second part hereinafter sometimes collectively called the Executing Entities), and EMPRESA BRASILEIRA DOS TRANSPORTES URBANOS - EBTU, party of the third part (such party of the third part hereinafter called EBTU). WHEREAS (A) by the Loan Agreement of even date herewith between Federative Republic of Brazil (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to eighty- eight million dollars ($88,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition inter alia that the Executing Entities and EBTU agree to undertake such obligations toward the Bank as are hereinafter and in the EBTU Project Agreement (as this term is defined in the Loan Agreement) set forth; (B) by a Convenio (as this term is defined in the Loan Agreement) to be entered into between the Borrower, acting through SEPLAN/PR, CNPU (as those terms are defined in the Loan Agreement) and the Ministry of Transport, the Executing Entities and EBTU, the portion of the proceeds of the loan provided under the Loan Agreement for the carrying out of Part A of the Project, as such part is described in Schedule 1 to this Agreement, will be made available to the Executing Entities on the terms and conditions therein set forth; and WHEREAS the Executing Entities and EBTU, in consideration of the Bank's entering into the Loan Agreement with the Borrower, have agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: - 2 - ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of Part A of the Project Section 2.01. The Executing Entities shall carry out Part A of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and urban transport practices, and the State and the Municipality shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 2.02. In order to assist the Executing Entities in the execution of final engineering designs, the Executing Entities shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 2 to this Agreement. Section 2.04. (a) Each of the Executing Entities undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by such Executing Entity to replace or repair such goods. (b) Except as the Bank may otherwise agree, each of the Executing Entities shall cause all goods and services financed out of the proceeds of the Loan made available to it by the Borrower to be used exclusively for Part A of the Project. -3- Section 2.05. (a) The Executing Entities, acting through EBTU, shall furnish to the Bank, promptly upon their preparation, such plans, specifications, reports, contracts documents and construction and procurement schedules for Part A of the Project, and any material modifications thereof or additions thereto, as the Bank shall reasonably request. (b) Each of the Executing Entities: (i) shall maintain records and procedures adequate to record and monitor the progress of Part A of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan made available to it by the Borrower, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to visit the faci- lities and construction sites included in Part A of the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish, acting through EBTU, to the Bank at regular intervals all such informa- tion as the Bank shall reasonably request concerning Part A of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan so made available to it and the goods and services financed out of such proceeds. (c) Promptly after completion of Part A of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Executing Entities and the Bank, the Executing Entities shall prepare and furnish, acting through EBTU, to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of Part A of the Project, its cost and the benefits derived and to be derived from it, the performance by the Executing Entities, EBTU and the Bank of their respective obligations under this Agreement and the accomplishment of the purposes of the Loan. Section 2.06. Each of the Executing Entities shall duly perform all its obligations under the Convenio. Except as the Bank shall otherwise agree, the Executing Entities shall not take or concur In any action which would have the effect of amending, abrogating, assigning or waiving the Convenio or any provision thereof. Section 2.07. (a) Each of the Executing Entities shall, at the request of the Bank (notice of which shall have been given to EBTU), exchange views with the Bank and EBTU with regard to the progress of Part A of the Project, the performance of its obliga- tions under this Agreement and under the ConvAnio, and other matters relating to the purposes of the Loan. (b) Each of the Executing Entities, acting through EBTU, shall promptly inform the Bank of any condition which interferes or threatens to interfere with, the progress of Part A of the Project, the accomplishment of the purposes of the Loan, or the performance by such Executing Entity of its obligations under this Agreement and under the Convenio. ARTICLE III Particular Covenants of the State Section 3.01. The State shall cause PLAMBEL at all times to carry on its operationsi manage its affairs and maintain its financial position in accordance with appropriate administrative and financial principles and practices, under the supervision of qualified and experienced management. Section 3.02. The State shall appoint and maintain, during the execution of Part A of the Project, a coordinator selected by the Conselho Deliberativo of the metropolitan region and cause such coordinator to cooperate closely with EBTU through the general coordinator appointed by EBTU for the purposes of the Project. ARTICLE IV Particular Covenant of PLAMBEL Section 4.01. PLAMBEL shall supervise the execution of Part A of the Project. ARTICLE V Particular Covenant of the Municipality Section 5.01. The Municipality shall, upon completion of Part A of the Project, take appropriate steps, following proce- dures prescribed by the applicable legislation, to revise the valuation for tax purposes of properties whose values shall have been affected by Part A of the Project. - 5 - ARTICLE VI Particular Covenants of EBTU Section 6.01. EBTU shall provide the Executing Entities with the assistance required for the carrying out of Part A of the Project. To that end, EBTU shall through its general coordinator closely cooperate with the coordinator appointed at the metropoli- tan level by the State. Section 6.02. EBTU shall make available to the Executing Entities such experts employed under Part F of the Project as may be necessary to assist the Executing Entities in the carrying out of Part A of the Project. Section 6.03. EBTU shall assist PLAMBEL in the development of procedures necessary for the monitoring program referred to in Section 3.06 of the EBTU Project Agreement and provide PLAMBEL with the funds required for such purpose. ARTICLE VII Financial Covenants Section 7.01. (a) Each of the State, PLAMBEL and the Munici- pality shall maintain or cause to be maintained separate records and accounts adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of Part A of the Project, of PLAMBEL and of the departments or agencies of the State and the Municipality, respectively, responsible for carrying out Part A of the Project or any part thereof. (b) Each of the State, PLAMBEL and the Municipality shall promptly furnish to EBTU the records and accounts referred to in paragraph (a) of this Section Ind other information concerning such records and accounts to enable EBTU to comply with the requirements of Section 4.02 (b) of the EBTU Project Agreement. ARTICLE VIII Effective Date; Termination; Cancellation and Suspension Section 8.01. This Agreement shall come into force and effect pursuant to the provisions of Sections 6.01 and 6.02 of - 6 - the Loan Agreement on the date upon which the Loan Agreement becomes effective, or on the date upon which the Bank dispatches to the Borrower, the State, PLAMBEL, the Municipality and EBTU notice of its acceptance of the evidence required pursuant to paragraph 4 (d) (i) of Schedule 1 to the Loan Agreement. Section 8.02. This Agreement and all obligations of the Bank and of the Executing Entities and EBTU thereunder shall terminate on the date on which the Loan Agreement shall terminate in accor- dance with its terms, and the Bank shall promptly notify the Executing Entities and EBTU thereof. Section 8.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE IX Miscellaneous Provisions Section 9.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address herein- after specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) -7- For the State: Palacio dos Despachos Praga de Liberdade 30000 Belo Horizonte, Minas Gerais Brazil Telex: 0311190 For PLAMBEL: Superintendencia de Desenvolvimento da Regigo Metropolitana - PLAMBEL Avenida Brasil 688 30000 Belo Horizonte, Minas Gerais Brazil For the Municipality: Prefeitura Municipal de Belo Horizonte Avenida Afonso Pena 1212 30000 Belo Horizonte, Minas Gerais Brazil Telex: 0311397 For EBTU: Empresa Brasileira dos Transportes Urbanos - EBTU Edificio Toufic 70000 Brasilia, D.F. Brazil Telex: 611604 Section 9.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of the parties hereto, other than the Bank, may be taken or executed separately by the Governor of Minas Gerais (on behalf of the State), the President of PLAMBEL (on - 8 - behalf of PLAMBEL), the Mayor of Belo Horizonte (on behalf of the Municipality) and the President of EBTU (on behalf of EBTU) or such other person or persons as each of them shall designate in writing, and each of them shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 9.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the City of Brasilia, D.F., Federative Republic of Brazil, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Humayun Mirza Authorized Representative STATE OF MINAS GERAIS By /s/ Helio BrAz de Oliveira Martes Authorized Representative SUPERINTENDENCIA DE DESENVOLVIMENTO DA REGIAO METROPOLITANA - PLAMBEL By /s/ Roberto Vicchi Authorized Representative -9- MUNICIPALITY OF BELO HORIZONTE By /s/ Luiz Verano Authorized Representative EMPRESA BRASILEIRA DOS TRANSPORTES URBANOS - EBTU By /s/ Alberto Silva Authorized Representative By /s/ Gil Cesar Moreira Abreu Authorized Representative - 10 - SCHEDULE 1 Description of Part A of the Project 1. Establishment of bus lanes in radial corridors connecting the central area of the city with its peripheral zones (to be carried out by PLAMBEL and the Municipality). 2. Introduction of traffic management and engineering measures which will synchronize and coordinate traffic signals and improve traffic flow while favoring buses and will discourage long-term parking in the city's downtown area, to increase the effective capacity of the radial corridors and the central area (to be carried out by PLAMBEL and the Municipality). 3. Construction of the new road link required for the imple- mentation of the radial corridor improvements referred to in paragraph 1 above (to be carried out by the Municipality). 4. Paving of bus routes in low-income neighborhoods (to be carried out by the Municipality). - 11 - SCHEDULE 2 Procurement A. International Competitive Bidding 1. Goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (here- inafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Executing Entities shall prepare and, acting through EBTU, forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequal- ification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the oppor- tunity to bid for the goods and works in question. The Executing Entities shall provide the necessary information to update such notice annually so long as any goods or works remain to be pro- cured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding, (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Executing Entities of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Brazil - 12 - may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the inf or- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following two groups: (a) Group A: bids offering goods manufactured in Brazil if the bidder shall have established to the satisfaction of the Executing Entities and the Bank that such goods contain components manufactured in Brazil equal to at least 50% of the value of the complete goods. (b) Group B: bids offering any other goods. 3. All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes (including merchant fleet renewal and port improvement 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 is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group B, all group B bids shall be further compared with the lowest evaluated bid from group A after adding: (i) to the c.i.f. bid price of the imported goods offered in each group B bid, for the purpose of this further comparison only, an amount equal to (A) the amount of customs duties and other imported taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group B bid; or (B) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price; and (ii) to the ex-factory bid price of the domestically supplied goods offered in each Group B bid an amount equal to (A) the amount of customs duties and other import taxes which would be levied on such goods if they originated from the same foreign country as the goods - 13 - included in a group B bid which enjoy the lowest customs duties and other import taxe3, or (B) 15% of the ex-factory price of such goods if said custows 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 B which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works and equipment estimated to cost the equivalent of $1,500,000 or more: (a) Before bids are invited, the Executing Entities shall furnish, acting through EBTU, to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Exe- cuting Entities 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, acting through EBTU, to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank ohall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Executing Entities and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. - 14 - 2. With respect to each contract not governed by the preceding paragraph, the Executing Entities shall furnish to EBTU, promptly after its execution and prior to the delivery by EBTU 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 and such other information as the Bank shall reasonably request. The analysis of the respective bids, recommendations for award and other information shall be furnished to the procurement unit within EBTU to enable EBTU to prepare a semiannual procure- ment report for the Bank. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Executing Entities and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 20% of the original price, the Executing Entities shall, through EBTU, inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Executing Entities and state the reasons for its determination.