Jordan - Amman Water Supply And Sewerage Project III : Credit 0780 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 780 JO Project Agreement (Amman Water Supply and Sewerage Project III) between INTERNATIONAL DEVELOPMENT ASSOCIATION and AMMAN WATER AND SEWERAGE AUTHORITY Dated May 19, 1978 CREDIT NUMBER 780 JO PRGJECT AGREEMENT AGREEMENT, dated May 19, 1978, between INTERNATIONAL DEVELOP- MENT ASSOCIATION (hereinafter called the Association) and AMMAN WATER AND SEWERAGE AUTHORITY (hereinafter called AWSA). WHEREAS by the Development Credit Agreement of even date herewith between the Hashemite Kingdom ok Jordan (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to fourteen million dollars ($14,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that AWSA agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and AWSA, the proceeds of the credit provided for under the Development Credit Agreement will be made available to AWSA on the terms and conditions therein set forth; and WHEREAS AWSA, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. AWSA shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, ser- vices and other resources required for the purpose. - 2 - Section 2.02. (a) In order to assist AWSA in the preparation of plans and specifications for, in the preparation of bidding documents for, and in the supervision of the construction, of the Project, AWSA shall continue to employ engineering consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. (b) Notwithstanding the provisions of paragraph (a) of this Section, AWSA undertakes to supervise, through its own permanent staff, the carrying out of the obligations of the contractors who are parties to the contracts listed in Schedule 2 to this Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.04. (a) AWSA undertakes to insure, or make adequate provision for the insurance of, the imported goods to be fina.,ed out of the proceeds of the Credit relent 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 AWSA to replace or repair such goods. (b) Except as the Association may otherwise agree, AWSA shall cause all goods and services financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for the Project. Section 2.05. (a) AWSA shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) AWSA: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits derived from it), to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower and to disclose their use in the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Association's representatives to visit - 3 - the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits derived from it, the expenditures of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. (c) Promptly after completion 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 Borrower and the Association, AWSA shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by AWSA and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (d) AWSA shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of AWSA and any relevant records and documents. Section 2.06. AWSA shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, AWSA shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any pro- vision thereof. Section 2.07. (a) AWSA shall at the request of the Associa- tion, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) AWSA shall promptly inform the Association of any condition which interferes or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by AWSA of its obligations under this Agreement and under the Subsidiary Loan Agreement. -4- ARTICLE III Management and Operations of AWSA Section 3.01. AWSA shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with appropriate admin- istrative, financial, engineering and public utility practices and under the supervision of experienced and competent management assisted by qualified and competent staff. (b) Without limitation or restriction to the generality of the provisions of the foregoing paragraph (a) of this Section: (i) AWSA shall appoint by September 30, 1978, or such other date as the Association may agree, and shall thereafter maintain a qual- ified and experienced senior engineer whose responsibilities shall include, inter alia, coordination of, and direct responsibility for the carrying out of, a program for reducing unaccounted for water consisting of (A) the enforcement of leak detection meas- ures, (B) the calibration and testing of production meters and (C) the supervision of meter replacement staff; and (ii) on or before December 31, 1978, or such other date as the Association may agree, AWSA shall undertake a review of its staffing require- ments through 1984, prepare a report on such requirements and discuss the recommendations included in such report with the Association prior to implementing said recommendations, it being understood that, until the effective implementation of said recommendations, AWSA shall maintain the number of its staff under 1,100. Section 3.02. AWSA shall adequately maintain the works, installations and equipment under its jurisdiction and promptly make all necessary renewals and repairs thereof, all in accordance with sound engineering standards and practices. Section 3.03. AWSA shall at all times take all steps neces- sary to maintain its rights to carry on its operations, and shall, except as the Association shall otherwise agree, take all steps necessary to acquire and retain such land, interest in land and properties and to acquire, maintain and renew such licenses, consents, franchises and other rights, as may be necessary or useful for carrying out the Project and to avoid delays in Project implementation. Section 3.04. AWSA shall take out and maintain with respon- sible insurers, or make other provisions satisfactory to the -5- Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.05. AWSA shall maintain and whenever necessary review its salary structure so as to provide salaries and career development prospects that will enable it to attract and retain sufficient qualified staff in line with other organizations, authorities and corporations in Jordan. Section 3.06. (a) AWSA shall enforce the requirements of the Amman Public Sewerage Law No. 48 of 1977, as amended from time to time, regarding connections. To that end, AWSA shall take all necessary steps to ensure that all premises for which sewer laterals are constructed under Part B (i) of the Project shall have service connections made not later than nine months fol- lowing completion of said sewer laterals. (b) AWSA shall levy a sewerage surcharge on properties which are not connected to the sewerage system within the statutory three-month period provided under such law. Section 3.07. By September 30, 1978, or such other date as the Association may agree, AWSA shall establish and thereafter AWSA shall carry out, until December 31, 1980, a meter replacement program whereunder not less than 750 water meters per month shall be replaced within the area wherein AWSA operates. Section 3.08. AWSA shall carry out the staff training program included in Part D of the Project in accordance with a timetable, acceptable to the Association and to be submitted to the Associa- tion by September 30, 1978, or such other date as the Association may agree. ARTICLE IV Financial Covenants Section 4.01. AWSA shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. AWSA shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by - 6 - independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such yen , (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of AWSA and the audit thereof as the Association shall from time to time reason- ably request. Section 4.03. Except as the Association shall otherwise agree, ASWA shall, on or before September 30, 1979, review its rates for the supply of water and, as from January 1, 1980, AWSA: (a) shall establish and maintain, and thereafter whenever necessary, adjust rates for the supply of water at such levels as shall provide revenues sufficient: (i) to cover in each fiscal year all operating expenses including employee compensation, administrative and overhead costs, adequate maintenance costs, inter- est and other charges on debt and adequate provi- sion for taxes and other contributions provided by law, if any, but excluding depreciation, all on account of water supply services rendered; (ii) to cover in each fiscal year all repayments of principal of debt related to water supply facil- ities; (iii) to provide in each fiscal year for adequate increases in working capital; and (iv) for the fiscal years 1978 through 1981 to finance not less than 10% of the estimated average cost of investments in water supply and sewerage facili- ties, including interest during construction, to be made during such years, and for each fiscal year thereafter to finance not less than 20% of the estimated average cost of inve-tment in water supply facilities, including interest during construction, for the three-year period comprising such fiscal year, the fiscal year immediately preceding and the next following fiscal year; -7- (b) shall ensure that rates for sewerage services shall be fixed so as to yield sufficient revenue to meet operating and maintenance costs aotributable to such services, including provi- sion for depreciation, and debt service requirements to the extent they exceed the provision for depreciation; (c) shall for purposes of the foregoing and as part of such information as may be requested under subparagraph (ii) of para- graph (a) of Section 9.01 of the General Conditions, within the first six months of each year: (i) prepare and furnish to the Association an updated statement of sources and application of funds covering (A) for purposes of paragraph (a) of this Section in every case (I) until the year 1981, the period 1978-1981 and (II) thereafter the current year and the following two years and (B) for purposes of paragraph (b) of this Section the current year; and (ii) prepare and furnish to the Association all other relevant information concerning the steps taken or planned to be taken by AWSA in order to comply with its obligations under paragraph (a) of this Section. Section 4.04. Except as the Association shall otherwise agree, AWSA shall not incur any debt without prior approval of the Association, unless its net. revenues for the fiscal year next preceding the date of such incurrence or for any later twelve- month period ended prior to the date of such incurrence, shall be not less than 1.5 times the maximum debt service requirement in any succeeding fiscal year (including the fiscal year in which such debt is to be incurred) on all debt including the debt to be incurred. For the purposes of this Section: (a) the term "debt" shall mean all indebtedness of AWSA, including debt incurred by others on behalf of AWSA but for the service of which AWSA is responsible, maturing by its terms more than one year after the date on which it is originally incurred; (b) debt shall be deemed to be incurred on the date of execution and delivery of a contract, loan agreement or other instrument providing for such debt; - 8 - (c) the term "net revenues" shall mean gross revenues from all sources, adjusted to take account of AWSA's rates in effect at the time of the incurrence of debt even though they were not in effect during all or a part of the fiscal year or twelve-month period to which such revenues relate, less all operating and administrative expenses and provision for taxes, if any, but before provision for depreciation, interest and other charges on debt; (d) the term "debt service requirement" shall mean the aggregate amount of amortization (including sinking fund payments, if any), interest and other charges on debt; and (e) whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt or, if such other currency is not so obtainable, at the rate of exchange that will be reasonably determined by the Association. ARTICLE V Amendment to the 1973 Project Agreement Section 5.01. The Prior Loan Agreement is hereby amended by deleting the provisions of Sections 3.06 and 3.09 of the 1973 Project Agreement, by substituting the provisions of Section 4.03 of this Agreement for Section 3.06 and renumbering Section 3.10 and following as required. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 6.02. (a) This Agreement and all obligations of the Association and of AWSA thereunder shall terminate on the earlier of the following two dates: - 9 - (1) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 17 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accor- dance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify AWSA of this event. Section 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions Section 7.01. 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 hereinafter 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 Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 10 - For AWSA: P.O. Box 2412 Amman, Jordan Cable address: Amman Water and Sewerage Authority Amman, Jordan Section 7.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of AWSA may be taken or executed by the Chairman of the Board of Directors of AWSA or such other person or persons as he shall designate in writing. Section 7.03. AWSA shall furnish to the Association suffi- cient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of AWSA, take any action or execute any documents required or permitted to be taken or executed by AWSA pursuant to any of the provisions of this Agreement. Section 7.04. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Munir P. Benjenk Regional Vice President Europe, Middle East and North Africa AMMAN WATER AND SEWERAGE AUTHORITY By Is/ Abdullah Salah Authorized Representative - 11 - SCHEDULE 1 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods or for civil works shall be procured in accor- dance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Cred- its" published by the Bank in March 1977 (hereinafter 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 under the Project, AWSA shall prepare and forward to the Association as soon as possible, and in any event normally not later than 60 days prior to the date of avail- ability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procure- ment notice, in such form and detail and containing such informa- tion as the Association shall reasonably request; the Association will arrange for The publication of such notice in order to pro- vide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. AWSA shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of interna- tional competitive bidding. B. Other Procurement Procedures Notwithstanding the provisions of paragraph A.1 above con- tracts for civil works, materials and equipment estimated to cost less than the equivalent of $200,000 may be awarded on the basis of local advertising only and in accordance with competitive bid- ding procedures of the Borrower; provided, however, that the aggregate amount of all contracts to be so awarded shall not exceed the equivalent of $1,000,000 and that such competitive bidding procedures of the Borrower are acceptable to the Associ- at:, -n. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance - 12 - 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 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 purchaser of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Jordan may be granted a margin of preference 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 information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Jordan if the bidder shall have established to the satisfaction of Jordan and the Association that the manufacturing cost of such goods includes a value added in Jordan equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Jordan. (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 - 13 - shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the 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 Association 1. Review of prequalification. AWSA shall, before qualification is invited, inform the Association in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any appli- cant for prequalification shall be furnished by AWSA to the Association for its comments before the applicants are notified of the AWSA decision, and AWSA shall make such additions to, dele- tions from, or modifications in, the said list as the Association shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works and purchase of materials and equipment estimated to cost the equivalent of $200,000 or more: (a) Before bids are invited, AWSA shall furnish to the Asso- ciation, 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 Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, AWSA shall, before a final decision on the award is made, inform the - 14 - Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report, by the con- sultants referred to in Section 2.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said consultants and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform AWSA and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association'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 Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding para- graph, AWSA shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit 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 Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform AWSA and the Borrower and state the reasons for such determination. - 15 - SCHEDULE 2 Construction Contracts to be Supervised Directly by AWSA (Section 2.02 (b)) - Contract N2S - Supply and laying of Sanitary Sewers in Smisani and Nuzha - Contract N3WS - Laying of water pipes in jebel Hussein, in Jebel Amman and Sport City. Supply and laying of sanitary sewer in the same area.