Morocco - Rabat Urban Development Project : Loan 1528 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1528 MOR Loan Agreement (Rabat Urban Development Project) between KINGDOM OF MOROCCO and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated March 31, 1978 LOAN NUMBER 1528 MOR LOAN AGREEMENT AGREEMENT, dated March 31, 1978, between KINGDOM OF MOROCCO (hereinafter sometimes called the Borrower or Morocco) and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). 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 Guarantee 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 General Conditions have the respective meanings therein set forth, and the following additional terms have the following meanings: (a) "Municipality" means the municipality of Rabat. (b) "Borrower-Municipality Convention" means the convention to be entered into between the Borrower and the Municipality as set out in Section 3.07 (a) (i) of this Agreement. (c) "BCP" means the Borrower's Banque Centrale Populaire. (d) "Borrower-BCP Convention" means the convention to be entered into between the Borrower and BCP as set out in Section 3.07 (a) (iii) of this Agreement. (e) "MEN" means the Borrower's ministry responsible for education (fducation nationale). (f) "MOF" means the Borrower's ministry responsible for finances (finances). (g) "MSP" means the Borrower's ministry responsible for public health (sant& publique). -2- (h) "MTFP" means the Borrower's ministry responsible for labor and professional training (travail et formation profession- nelle). (i) "MHAT" means the Borrower's ministry responsible for housing and regional planning (habitat et am&nagement du territoire). (j) "MASA" means the Borrower's ministry responsible for social affairs and handicraft (affaires sociales et artisanat). (k) "MJS" means the Borrower's ministry responsible for youth and sports (jeunesse et sports). (1) "MEPN" mans the Borrower's ministry responsible for publics works (6guipement et promotion nationale). (m) "MDI" means the Borrower's ministry responsible for the interior (int6rieur). (n) "RED" means the Rigie Autonome Intercommunale de distribution d'Eau et d'Electricite de Rabat-Salf. (o) "Borrower-RED Convention" means the convention to be entered into between the Borrower and RED pursuant to Section 3.07 (b) (ii) of this Agreement. (p) "Project Directorate" means the directorate referred to in Section 3.01 (b) (i) (C) of this Agreement. (q) "Project Director" means the permanent secretary of the Project Steering Committee. (r) "Project Steering Committee" means the committee refer- red to in Section 3.01 (b) (i) (A) of this Agreement. (s) "Interministerial Project Coordination Committee" means the committee referred to in Section 3.01 (b) (i) (B) of this Agreement. (t) "Economic Activities Unit" means the unit to be estab- lished pursuant to Section 3.01 (c) of this Agreement. (u) "Sous-Habitat Upgrading Unit" means the unit to be established within MHAT pursuant to Section 3.01 (d) (i) of this Agreement. -3- (v) "Project area" means the whole area which, at the date hereof, corresponds to the jurisdiction of the Municipality's seventh ward. 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 referred to, an amount in various currencies equivalent to eighteen million dollars ($18,000,000). 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 expenditures 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, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be March 31, 1982 or such later date as the Bank shall otherwise 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. Section 2.06. The Borrower shall pay interest at the rate of seven and forty-five hundredths per cent (7.45%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on April 1 and October 1 in each year. -4- 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. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project through MHAT, MOF, MSP, MTFP, MEN, MASA, MJS, and the Prffecture of Rabat-Salf and with the assistance of BCP, RED, and the Muni- cipality, with due diligence and efficiency, in conformity with appropriate administrative, financial, engineering and urban development practices and with the construction standards set out in Schedule 7 hereto and in accordance with the provisions of Schedule 2 hereto and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. With respect to the provision of funds and other resources required for the Project the respective responsibilities of the Borrower's ministries shall be as follows: (i) MHAT shall be responsible for financing the con- sultants' services required under Section 3.02 (a) hereof and Part E (a) of the Project, Project management, land acquisition, the infrastructure required for squatter upgrading, the experimental sites and services housing scheme and the land to be developed under Part C (a) (i) of the Project, the construction of all housing, commercial and industrial installations and all pre-school instal- lations (M'sid), the purchase of equipment and the supply of construction materials required for the Project, Part E (c) of the Project and the Economic Activities Unit. (ii) MEN shall be responsible for financing the con- struction and equipping of primary schools required for the Project. (iii) MSP shall be responsible for financing the con- struction and equipping of dispensaries required for the Project. (iv) MOF shall be responsible for financing Parts D and E (b) and (e) of the Project and for providing, -5- through BCP, credit facilities under Part C (a) (i) of the Project; it being understood that such credit facilities shall be repaid into a revolving fund to be established within the framework of the Borrower's Finance Law (Loi de finances) for 1979, or within the framework of such other Borrower's Finance Law as the Borrower and the Bank may agree upon, and, thereafter, to be maintained in opera- tion, under terms and conditions satisfactory to the Bank. (v) MTFP shall be responsible for financing the con- struction and equipping of the vocational training center included in Part C (b) (i) of the Project and the program included in Part E (d) of the Project. (vi) MASA shall be responsible for financing the con- struction and equipping of the young women's center for education and work and the day care nursery included in Part C (b) (ii) of the Project. (vii) MJS shall be responsible for financing the con- struction and equipping of the youth centers required for the Project. (b) (i) The Borrower shall maintain in operation at all times an implementation organization for the Project which shall consist of the following: (A) a Project Steering Committee, under the chair- manship of the governor of the Pr6fecture of Rabat-Sal&, which shall meet periodically and review and set the criteria for the implemen- tation of the Project; such Committee shall consist of representatives of MHAT, MOF, MSP, MTFP, MEN, MASA, MJS, MEPN and BCP, respec- tively, the general manager of RED, the Rabat City Municipal Engineer and municipal council members from the Project area, and shall have a permanent secretary who shall be the Project Director. (B) an Interministerial Project Coordination Committee which shall meet as and when the -6- solution of a problem related to the Project requires the direct intervention of the Borrower's central departments; such Committee shall consist inter alia of representatives of MOF, MHAT, MSP, MTFP, MEN, MASA, MDI and MJS, respectively. (C) a Project Directorate under the authority of the Project Director which shall be responsi- ble for preparing, on or before May 15, 1978, (or such other date as the Bank may agree) a detailed implementation timetable for, and thereasfter, managing the implementation of, all Project components (except for economic activities promotion, vocational training, urban upgrading planning and housing finance reforms); it being understood that MEN, MSP, MTFP, MASA and MJS will continue to manage, with their own staff, the construction and equipping of the Project facilities which come under their respective jurisdictions, such construction and equipping to be subject to the supervision of the Project Directorate; said Directorate shall comprise, as and when it shall become necessary, two civil engi- neers, two architects, two surveyors, eight technical inspectors, four materials clerks and two accountants. (ii) The foregoing Committees and Directorate shall continue to operate under terms and conditions satisfactory to the Borrower and the Bank; it being understood that such terms and conditions and the composition of such Committees and Directorate may be modified from time to time by agreement between the Bank and the Borrower. (c) The Borrower shall establish under the authority of the Project Steering Committee, and thereafter maintain in operation, an Economic Activities Unit for the purpose of carrying out Part C (a) (ii) of the Project, assisting BCP in carrying out Part C (a) (i) of the Project and ensuring that vocational training under Part C (b) of the Project be responsive to market demand; such Unit shall operate under terms and conditions satisfactory to the Bank. -7- (d) (i) On or before September 30, 1978 (or such other date as the Bank may agree) the Borrower shall establish within MHAT, and thereafter maintain in operation, an Sous-Habitat Upgrading Unit for the purpose of providing technical guidance and monitoring capability for the Project; such Unit shall operate under terms and conditions satisfactory to the Bank. (ii) On or before November 30, 1978 (or such other date as the Bank may agree) the Borrower shall prepare an initial work program outline for the Sous- Habitat Upgrading Unit. (e) On or before September 30, 1978 (or such other date as the Bank may agree) che Borrower shall establish within MOF, and thereafter maintain in operation, a special group for the purpose of preparing an institutional and procedural basis for a savings and loan system in Morocco; such group shall operate pursuant to a work-program satisfactory to the bank and the Borrower. (f) On or before November 30, 1978 (or such other date as the Bank may agree) the Borrower shall, through MTFP, prepare the training curricula, program outlines and related procedural arrangements and timetables necessary for the operation of the vocational center included in Part C (b) (i) of the Project. Section 3.02. In order to assist the Borrower (a) in pre- paring detailed engineering and carrying !ut cadastral surveys required for the Project and (b) in carrying out the technical assistance services included in Part E of the Project, the Borrower shall employ or continue to employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds -8- of the Loan to be used exclusively for the Project; it being further specified that the equipment included in Part D of the Project shall be used exclusively in the Project area. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, quarterly progress reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain such records, pro- cedures and separate accounts in each of MHAT, MOF, MSP, MTFP, MEN, MASA and MJS, as shall be adequate to record and monitor the progress 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, and to disclose their use in the Project; (ii) shall have such accounts for each fiscal year audited by MOF in accordance with appropriate auditing principles consistently applied; (iii) shall furnish to the Bank as soon as available, but in any case not later than four months after the end of such year, the report of such audit by MOF of such scope and such detail as the Bank shall have reasonably requested; (iv) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan, such accounts and any relevant records and documents; and (v) shall furnish to the Bank all such information as the Bank shall reason- ably request concerning such accounts, the Project, its cost and, where appropriate, the bes,'fits to be derived from it, the expen- diture of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) The Borrower shall through the Sous-Habitat Upgrading Unit and with the assistance of the Economic Activities Unit, devise on or before December 31, 1978 (or such other date as the Bank may agree) measures of effectiveness and procedures for monitoring and evaluating the benefits and effects of the Project with respect to the development of economic activities, the changes in housing patterns and conditions, school enrollment and literacy rates, skills and employment, nutritional intake and rates of incidence of selected diseases and all pertinent changes in other socio-economic factors in the Project area, as shall have been reasonably requested by the Bank for such monitoring and evaluation of the Project; the Economic Activities Unit shall be -9 - responsible for monitoring and evaluating the development of the economic activities in the Project area whereas the Sous-Habitat Upgrading Unit shall be entrusted with all the other aspects of the monitoring and the evaluation of the Project. (d) 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 Bank, the Borrower shall through the Sous-Habitat Upgrad- ing Unit and with the assistance of the Economic Activities Unit, prepare and furnish 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 the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. Section 3.05. (a) The Borrower shall issue, pursuant to Article 9 of the Borrower's Dahir of July 30, 1952 (as amended thereafter), a plan de zonage for the seventh ward of the Munici- pality, such plan to be satisfactory to the Bank. (b) Upon expiration of the initial plan de zonage, the Bor- rower shall take all action to ensure that the measures included in such plan be, at all times, in full force and effect vis-a-vis all parties concerned, such action to be satisfactory to the Bank. Section 3.06. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire, as and when needed, all such rights in respect of land as shall be required for carrying out the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such rights in respect of land are available for such purposes. Section 3.07. (a) The Borrower shall enter into separate Conventions with the Municipality, BCP and RED under terms and conditions satisfactory to the Bank which shall include inter alia that: (i) under the Borrower-Municipality Convention, $3,800,000 equivalent shall be lent to the Muni- cipality by the Borrower for a period of 15 years (including a grace period of 4 years) at an interest rate of 9% per annum; - 10 - (ii) under the Borrower-RED Convention, RED shall (A) procure materials for the water and electricity supply network extensions in compliance with the provisions of paragraphs A, C and E of Schedule 4 hereto and (B) install such extensions, at prime costs, under the supervision of the Project Directorate in compliance with the provisions of paragraph D of said Schedule; and (iii) under the Borrower-BCP Convention, (A) on or before March 31, 1979 (or such other date as the Bank may agree), BCP shall establish and, there- after, maintain in operation, under terms and conditions satisfactory to the Bank, a branch office in the Prcject area; and (B) compensation, pricing and cost recovery principles and related charges to Projecc beneficiaries, satisfactory to the Bank (as set out in Schedule 5 to this Agree- ment) as well as financial and technical assistance eligibility criteria for commercial and industrial enterprises in the Project area and appraisal guidelines for credit applications by such enter- prises (as set out in Schedule 6 to this Agreement) shall be provided. (b) The Borrower shall duly perform all its obliga6ions under the Borrower-BCP, the Borrower-RED and the Borrower- Municipality Conventions; except as the Bank shall otherwise agree, the Borrower shall not take or concur in any action which would have the effect of assigning, amending, abrogating or waiving any of those Conventions or any provision thereof. Section 3.08. On or before September 30, 1978 (or such other date as the Bank may agree) the Borrower shall prepare and submit to the Bank, for its approval, model forms of the lease contracts to be entered into between beneficiaries of the Project and the Borrower and the arrangements required for the administration of such contracts. Thereafter the Borrower shall not modify the forms of such contracts or arrangements without the Bank's prior consent. 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 - 11 - 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 foreign 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 permitting 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 administrative 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 satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means as%ets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating 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 central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall: (i) operate, or cause to be operated, the public facilities, infrastructure and equipment included in the Project in accordance with appropriate adminis- trative, health and educational policies and public utility practices and with due regard to economy; (ii) make, or cause to be made, arrangements satisfactory to the Bank to provide at all times such facilities with experienced and qualified personnel, in such numbers as shall be necessary for their efficient operation, - 12 - and the funds necessary for the efficient operation, maintenance and repair of said facilities and for providing an adequate remuneration to said personnel; and (iii) make, or cause to be made, from time to time, all necessary renewals and repairs of such facilities, equipment and infrastructure, all in accordance with appropriate engineering, construction and public utility practices. 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, namely, that: (a) The Borrower-Municipality Convention, Borrower-BCP Convention or Borrower-RED Convention shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of the Municipality, BCP or RED, as the case may be, to carry out its respective covenants, agreements and obligations set forth in its Conven- tion. (b) An extraordinary situation shall have arisen which shall make it improbable that the Borrower, the Municipality, BCP or RED, as the case may be, shall be able to perform its respec- tive obligations under the Borrower-Municipality Convention, Borrower-BCP Convention or Borrower-RED Convention, as the case may be. (c) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of the Municipality, BCP or RED, or for the suspension of the respective operations of any such entity. (d) The Borrower, the Municipality, BCP or RED, as the case may be, shall have failed to perform any of its respective cove- nants, agreements or obligations under the Borrower-Municipality Convention, Borrower-BCP Convention or Borrower-RED Convention, as the case may be. (e) The pertinent provisions of the Borrower's Dahir of July 30, 1952 (as amended thereafter) or the legislation and administrative regulations pertaining to envoi en possession - 13 - provisoire in Morocco shall have been amended, suspended, abro- gated, rescinded, repealed or waived in such a way as to mate- rially and adversely affect the ability of the Borrower to fulfill its obligations under this Agreement or to prevent the Borrower from enjoying all the benefits and privileges arising from the judicial ordinance or ordinances of envoi en possession provisoire to be issued pursuant to Section 6.01 (a) hereof. 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) the event specified in paragraph (d) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraphs (a), (b), (c) or (e) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions, namely, that: (a) a judicial ordinance or ordinances of envoi en posses- sion provisoire concerning the rights in respect of land, as shall be required for carrying out Parts A, B and C (a) (i) of the Project shall have been issued; it being understood that such ordinance or ordinances shall be in full force and effect until the Borrower shall acquire such land and rights in respect of land and shall furnish to the Bank evidence of such acquisition satis- factory to the Bank; and (b) the Borrower shall have furnished to the Bank all evidence satisfactory to the Bank showing that (i) the deputy to the Project Director, one civil engineer, one surveyor, two technical inspectors and one accountant have been designated for the purpose of assuming their respective functions within the Project Directorate, (ii) the plan de zonage referred to in - 14 - Section 3.05 (a) has been issued pursuant to the provisions of said Section, and (iii) the Borrower-Municipality, Borrower-RED and Borrower-BCP Conventions have been entered into by all parties concerned pursuant to the provisions of Section 3.07 (a) hereof. 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, namely, that (i) the ordinance or ordinances referred to in Section 6.01 (a) hereof has or have been duly issued under the applicable laws of Morocco and pursuant to the provisions of such Section, (ii) the plan de zonage referred to in Section 6.01 (b) (ii) hereof has been duly issued under the appli- cable laws of Morocco and is in full force and effect vis-a-vis all parties concerned, and (iii) the Conventions referred to in Section 6.01 (b) (iii) hereof have been duly entered into by, and are legally binding upon, in accordance with their respective terms, all parties concerned. Section 6.03. The date June 30, 1978, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time responsible for Finance 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: Minist&re des Finances Rabat, Morocco Cable address: Telex: MINISTERE FINANCES 31936M Rabat - 15 - 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) 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 District of Columbia, United States of America, as of the day and year first above written. KINGDOM OF MOROCCO By Is/ Ali Benjelloun Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Maurice P. Bart Acting Regional Vice President Europe, Middle East and North Africa - 16 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures 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, 9,250,000 57% buildings and construction materials (2) Consultant services 350,000 60% (3) Credits for Part C 2,450,000 83% of amounts (a) (i) of the disbursed Project (4) Equipment 1,500,000 90% (5) Technical assis- 450,000 90% tance (6) Unallocated 4,000,000 TOTAL 18,000,000 2. The disbursement percentages have been calculated in com- pliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the 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 decreases or increases, the Bank may, by notice to the Borrower, - 17 - increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 3. Notwithstanding the provisions of paragraph 1 above: (a) no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equiva- lent of $250,000, may be made in respect of Category (2) on account of payments made for such expenditures before that date but after January 1, 1977; and (b) withdrawals in respect of Category (3) shall be made only as and when the Borrower shall have furnished to the Bank evidence satisfactory to the Bank showing that the Economic Activities Unit has been established pursuant to the provisions of Section 3.01 (c) hereof, it being specified that the appli- cations for such withdrawals shall be consolidated on a quarterly basis and, then, submitted to the Bank. 4. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents - 18 - the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. 6. If the Borrower does not fulfill the condition referred to in subparagraph 3 (b) of this Schedule on or before December 31, 1978, or such other date as the Bank may agree, the Bank may by notice to the Borrower terminate the right of the Borrower to make withdrawals with respect to said Category. Upon the giving of such notice, the amount of the Loan corresponding to the Category concerned, as determined by the Bank, shall be cancelled. - 19 - SCHEDULE 2 Description of the Project The Project, which represents an integrated appproach to deal simultaneously with the upgrading of housing, infrastructure and community services and the improvement of the employment level in a whole urban district, will be carried out in the whole area which, at the date hereof, corresponds to the jurisdiction of the Municipality of Rabat's seventh ward. The Project consists of the following Parts: A. Squatter Upgrading (a) Integrated upgrading in Douars Doum, Maadid and Hajja which will require about 900 households, in the aggregate, to be relocated under Part B of the Project. (b) This upgrading will include rehabilitation and exten- sion of infrastructure, improvement and expansion of commercial installations, home improvements through self-help with construc- tion materials and equipment to be provided under the Project. B. Experimental Sites and Services Housing Scheme Plots will be developed on a terrain within 15% slopes (about 12 hectares), called La Butte, and provided with contractor-built core units. C. Employment Generation Program In order to create about 2,500 jobs in the Project area the following actions will be carried out: (a) (i) Provision of about 11 hectares of land to be developed, and of credit facilities for construc- tion of buildings, equipment purchase and working capital; (ii) Provision of technical assistance in market- ing, production and management by the Economic Activities Unit. - 20 - (b) Arrangements for vocational training and skills upgrad- ing will be provided as follows: (i) A vocational center will be established to serve needs of men and women alike for upgrading skills; this center will have sufficient capacity to train about 360 trainees annually; and (ii) A separate center for education and work will be established to provide functional literacy programs and skills to young women with inadequate educational background; this center will accom- modate about 250 trainees; combined with this center, there will be a day-care nursery with a capacity of about 400 children to enable mothers who are household neads to leave their children during the day while at work; the nursery will include a facility for advising mothers on child care with special services to monitor child development. D. Community Services Equipment Special vehicles, including ancillary equipment, will be provided to supplement the existing Municipality vehicle fleet to better meet basic service requirements pertaining to garbage disposal, fire fighting and ambulance services. E. Technical Assistance (a) Program to assist MHAT, and more specifically the Sous-Habitat Upgrading Unit, in analytical work and in training local counterparts of such ministry and unit in the financial and technical analysis of urban upgrading projects, through the provision of 32 man-months of technical assistance. (b) Guidance to the personnel of MOF in sector reviews and technical know-how in preparing recommendations for housing finance reforms, through the provision of 8 man-months of tech- nical assistance. (c) General guidance to the Economic Activities Unit, through the provision of 30 man-months of technical assistance. - 21 - (d) Program for developing vocational training capabilities in MTFP, through the provision of 20 man-months of technical assistance. (e) Guidance to the personnel of the Municipality in using and maintaining the municipal. equipment, through the provision of 20 man-months of technical assistance. The Project is expected to be completed by March 31, 1981. - 22 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each April 1 and October 1 beginning October 1, 1983 through April 1, 1998 600,000 * 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. - 23 - Premiums on Prepayment The following percentages are specified as the premiums payable 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 1.10% More than three years but not more than six years before maturity 2.25% More than six years but not more than eleven years before maturity 4.10% More than eleven years but not more than sixteen years before maturity 5.95% More than sixteen years but not more than eighteen years before maturity 6.70% More than eighteen years before maturity 7.45% -24- SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Parts B and D hereof, contracts for the purchase of goods shall be procured 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 (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, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event 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 pro- curement 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 opportunity to bid for the goods and works in question. The Borrower 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 international competitive bidding. B. Other Procurement Procedures 1. All contracts for civil works will be awarded on the basis of local procurement procedures (including local advertising) acceptable to the Bank. 2. Individual purchases of goods not exceeding the equivalent of $75,000 per contract and $1,000,000 in the aggregate may be awarded on the basis of local procurement procedures (including local advertising) acceptable to the Bank. 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 for those to be procured on the basis - 25 - of 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 Borrower 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 Morocco 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 Morocco if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Morocco equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Morocco. (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 evaluated 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 - 26 - 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. Installation Without Contracting As and when the water and electricity supply network exten- sions shall have been procured, as provided in this Schedule, they will be installed through force account work by RED at prime costs. E. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and finl contracts: With respect to all contracts estimated to cost the equiva- lent of $100,000 or more: (a) Before bids are invited, the Borrower 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 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 Bor- rower 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, by the consultants referred to in Section 3.02 hereof, on the evaluation and comparison of the bids received, together with the recommendations for award of said - 27 - consultants, and such other information as the Bank shall reason- ably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower 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 sub- mission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding para- graph, the Borrower 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 and state the reasons for such determination. - 28 - SCHEDULE 5 Compensation, Pricing and Recovery Principles A. Compensation 1. Owners of buildings to be torn down for infrastructure work purpose will be compensated. The value of the compensation will be appraised on the basis of the current value of the building materials of which the building to be torn down is made up; 20% will be added to the value arrived at to account for labor cost. 2. Compensation will not be in cash but considered as down payment on the value of the plot on which the owner of the torn- down building would like to be relocated. B. Pricing 1. Residential plots in Douar Hajia and Douar Maadid. The price of lots will be calculated on the basis of actually incurred land development costs. Costs of the following elements will be included: (a) Total developed land area, at purchase price, excluding the land area reserved for infrastructure and open space, (b) Cadastral survey, (c) Compensation, (d) Resettlement costs incurred to relocate displaced households, (e) On-site infrastructure, (f) Pre-elementary schools including equipment, (g) Detailed engineering costs incurred for the design of the on-site infrastructure, (h) Management costs incurred for the upgrading of each settlement, and - 29 - (i) Pro-rated share of interest during construction on the proceeds of the Loan for the above costs. The total aggregated cost will be divided by the total number of plots (residential and commercial) in each settlement. The figure arrived at will be the standard price for a plot in both settlements. 2. Residential plots in Douar Doum. The selling price of resi- dential plots in Douar Doum will be based on about 45% of the actually incurred land development costs (as calculated in paragraph B.1). 3. Commercial plots in Douar Doum, Hajja and Maadid. The price of commercial plots will be calculated as follows: Land development cost for Douar Doum will be computed as in B (a). This cost will be reduced by the value arrived at in multiplying the total number of plots in Douar Doum by the selling price resulting from the calculation in B.2 above. This reduced development cost will then be divided by the total number of commercial plots in the three settlements. The figure arrived at will be the standard price increase for commercial plots. The price of commercial plots in each settlement will then be computed by adding the standard price increase for commercial plots to the price of residential plots in the sites where these commercial plots are located. 4. Residential plots in La Butte (a) The price of plots will be calculated on the basis of actually incurred land development costs (D), as set out in paragraph B.1, and including the costs of site preparation. (b) On the basis of the site layout the total net usable land will be calculated by totalling the net area assigned to the following uses: Use Area in square meters Residential R Community facilities C Commercial area M - 30 - (c) The development cost per square meter (p) for residen- tial plots will be arrived at by applying the following formula: p D K + xC + yM To the cost p will be added the cost of land per square meter (L) - The price of plots will then be calculated as follows: For prime located plots their price per square meter (v) will be: v = z (p + L) For non-prime located plots their price per square meter (w) will be: (R - 1.3U) w = (p + L) x R-U R - U where U is the total area used by prime located plots. Then the price of each plot will be determined by multiplying the surface of the plot by the price per square meter arrived at as indicated above. 5. Commercial plots in La Butte The price of commercial plots (pC) in La Butte will be set as follows: pC - (5p + L) Z where Z is the plot size in square meters. 6. Industrial plots The price of industrial plots will be calculated on the basis of actually incurred land development cost. Costs of elements as in B.4 (a) above including land price will be included. The total development costs including land price will be divided by the total net area of the industrial site to arrive at a price per square meter. Price of industrial plots will thus be computed by multiplying the price per square meter by their size. - 31 - C. Cost Recovery 1. Residential Elots Price of residential plots arrived at in B.1, B.2, B.4 will be recovered over 20 years at a rate of 7% per annum. Compensation given to relocated plot allottees (as determined in A) will be deducted from the plot price to be recovered. 2. Commercial plots Price of commercial plots arrived at in B.3, B.5 will be recovered over 10 years at a rate of 8% per annum. 3. Industrial plots Price of industrial plots arrived at in B.6 will be recov- ered over 10 years at a rate of at least 8.5% per annum. 4. Core units Price of contractor built core units will be recovered in full over 20 years at a rate of 7% per annum. 5. Commercial installation Price of commercial installation will be recovered in full over 10 years at a rate of 8% per annum. 6. Building material Price of building material will be recovered in full, over a 10-year period, at a rate of 7% per annum. - 32 - SCHEDULE 6 Financial and Technical Assistance to Enterprises Eligibility Criteria and Appraisal Guidelines 1. The Borrower shall implement a scheme of financial and technical assistance to economic activities in the Project area. Technical assistance will be available to any enterprise already established or which intends to establish itself in the Prujec area. Financial assistance will be limited to enterprises with an estimated investmeut cost per new or maintained job of no more than 25,000 Dirhams; the maximum total amount of credit granted to any enterprise shall not exceed 1,000,000 Dirhams and, the terms and conditions of said credit shall include, inter alia, the following: (a) Equity financing of the proposed investment by the enterprise concerned: no less than 20% of such invest- ment for new enterprises and no less than 15% for the expansion of enterprises already established in the Project area. (b) Interest rate: 8.5% per annum. (c) Amortization periods to be no more than 10 years for the purchase of land and construction of buildings, 5 years for equipment purchase, and 3 years for working capital; it being understood that the amortization period for a credit, which is used to finance several or all of the foregoing items eligible for financing, will be computed on the basis, inter alia, of the weighted average of the respective amortization periods applicable to said items. 2. The Borrower shall take full responsibility for promoting and financing economic activities in the Project area in accordance with the following: (a) The Borrower shall receive applications for financial assistance from enterprises, through BCP, within the framework of the Borrower-BCP Convention. - 33 - (b) The Borrower shall cause such credit applications to be appraised by BCP, with the assistance of the Economic Activities Unit, under a simplified procedure acceptable to BCP, the Bank and the Borrower; it being understood that such procedure shall enable BCP to appraise the technical, financial, economic and management viability of the enterprise concerned. (c) Credits to enterprises in the Project area exceeding 100,000 Dirhams shall be approved by the Project Steering Committee. (d) Disbursements of all credits and collection of credit repayments shall be made by the Borrower, through BCP, within the framework of the Borrower-BCP Convention. -34 - SCREDULE 7 Construction Standards 1. Roads and Pedestrian Zones: 1.1 Douar Doum Carriageway Sidewalks Pavement (compacted sub-grade) Access Road 6m 2x2m 20 cm subbase 15 cm base 5 cm premix Ringroad 4m lx2m 20 cm subbase 15 cm base 5 cm premix Market Road 5m 2x2m 20 cm subbase 15 cm base 5 cm premix Goundafa Road 7m 2x2m repaving 5 cm premix New Footpaths 4m n.a. 15 cm base (except those double bi- sections where tuminous sur- steps are neces- face treatment sary) 1.2 La Butte Ringroad 6-7m - repaving 5 cm premix Internal Roads 4-7m 2x2m 20 cm subbase or 15 cm base 2x2.5m double bitum- inous surface treatment - 35 - Carriageway Sidewalks Pavement (compacted sub-grade) Footpaths 4m n.a. 20 cm base single bitum- inous surface treatment 1.3 Douar Hajja Ringroad 4m lx2m 20 cm subbase 15 cm base 5 cm premix Access Road 6m 2x2m repaving 5 cm premix 1.4 Douar Maadid Fetouski Road 6m 2x2m repaving 5 cm premix Internal Roads 4-6m 2x2m 20 cm subbase 15 cm base 5 cm premix Through route 7m - 25 cm subbase in Wadi Valley 20 cm base 5 cm premix 1.5 Industrial Zone Ringroad 6-7m - repaving 5 cm premix Internal Roads 6-7m 2x2m 25 cm subbase 20 cm base 5 cm premix 2. Community Facilities 2.1 Maximum covered areas: Pre-elementary schools 100 r2 - 36 - Elementary schools 2,350 m2 Dispensaries 250 m2 Youth centers 900 m2 Women training center 2,400 m2 Vocational center 4,500 m2 2.2 Distribution of community facilities: Douar Douar Douar Indus- Doum La Butte Hajja Maadid trial Zone Pre-elementary Schools - Rehabilitation 4 - 7 5 - - Construction 10 8 7 9 - Elementary schools 1 1 1 1 - Dispensaries 1 1 1 1 - Youth activities 1 1 - - Women training - - 1 - - center Vocational center - - - - 1 3. Housing and Commercial Installations 3.1 Housing core units: 820 units of 16.8 m2 and 80 units with 17.5 m2 covered area. 3.2 Commercial installations: 520 units with 15 m2 covered area (on average). - 37 - 4. Site Layouts 4.1 Douar Dou 24-hectare built-u area with maximum 10 community squares of 350-400 m each. 4.2 La Butte 12-hectares developed area, of which about: 50% residen- tial land (520 plots of 60m2, 300 plots of 70m2, and 80 plots of 80m ), 14% land for community facilities, 5% land for commercial and industrial use, 21% land for road-pedestrian areas, and 10% open space. 4.3 Douar Hajja 19-hectare built-up area; no land use change. 4.4 Douar Maadid 20-hectare built-up area; no land use change. 4.5 Industrial zone 11-hectare developed area, of which: 8 hectares for industrial plots and the vocational center and 3 hect- ares for roads and footpaths. 5. Water Supply, Sewerage and Electricity Supply 5.1 Water Supply Douar Doum: primary and secondary network fully installed; individual connections upon request; 1 standpipe per population of 450. La Butte, Douar Hajja and Douar Maadid: primary and secondary network and individual connections installed. Industrial Zone: primary and secondary systems installed. - 38 - 5.2 Sewerage All residential areas: combined system. Industrial zone: separate system. 5.3 Electricity Supply All zones: primary and secondary system fully installed.