Turkey - Grain Storage Project : Loan 1742 - Project Agreement - 2 - Conformed

IFII CONFORMED COPY LOAN NUMBER 1742 TU Project Agreement (Grain Storage Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and TURKIYE CUMHURIYETI DEVLET DEMIRYOLLARI Dated July 2, 1979 LOAN NUMBER 1742 TU PROJECT AGREEMENT AGREEMENT, dated July 2, 1979, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and TURKIYE CUMHURIYETI DEVLET DEMIRYOLLARI (hereinafter called TCDD). WHEREAS (A) by the Loan Agreement of even date herewith between the Republic of Turkey (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Bor- rower an amount in various currencies equivalent to eighty five million dollars ($85,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that TCDD agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary loan agreement to be entered into between the Borrower and TCDD, a portion of the proceeds of the loan provided for under the Loan Agreement will be made available to TCDD on the terms and conditions therein set forth; and WHEREAS TCDD, in consideration of the Bank's entering into the Loan 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 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 the Project Section 2.01. TCDD shall carry out Part B of the Project described in Schedule 2 to the Loan Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and transportation practices, and shall -2- provide, or cause to be provided, promptly as needed, the 'inds, facilities, services and other resources required for the purposq. Section 2.02. (a) TCDD shall design the grain rail hopper wagons provided for under Part B of the Project in accordance with appropriate international standards and specifications to be mutually agreed with TMO. (b) TCDD shall promptly and prior to the manufacture of grain rail hopper wagons furnish to the Bank for its approval information on such design as agreed upon with TMO, of such scope and in such detail as the Bank shall have reasonably requested. Section 2.03. TCDD shall put 150 grain rail hopper wagons constructed under Part B of the Project into operation not later than December 31, 1980, and the remaining 150 grain rail hopper wagons not later than December 31, 1981, or such other dates as may be agreed between TCDD and the Bank. Section 2.04. TCDD, in agreement with TMO, shall prepare a program for efficient operation and maintenance of the grain rail hopper wagons and furnish such program to the Bank for its approval not later than September 30, 1980, and promptly implement such program after its approval. Section 2.05. Except as the Bank shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Loan shall be governed by the provisions of the Schedule to this Agreement. Section 2.06. TCDD 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, transporta- tion 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 TCDD to replace or repair such goods. Section 2.07. Except as the Bank may otherwise agree, TCDD: (i) shall use all goods and services financed out of the proceeds of the Loan made available to TCDD exclusively for Part B of the Project; and (ii) shall use grain rail hopper wagons manufactured under Part B of the Project or cause such wagons to be used exclusively for grain transport. -3- Section 2.08. (a) TCDD shall furnish to the Bank, promptly upon their preparation, the plans, specifications, 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) TCDD: (i) shall maintain records and procedures adequate to record and monitor the progress of Part B 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 enable the Bank's accredited representatives to visit the faci- lities and construction sites included in Part B of the Project and to see the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) TCDD shall furnish to TMO promptly as needed for pur- poses of its completion report under Section 2.05 (c) of the TMO Project Agreement all such information as TMO shall reasonably request concerning Part B of the Project and the operation and maintenance of the grain rail hopper wagons manufactured under said Part of the Project with respect to Section 2.04 of this Agreement, the Project cost and the benefits derived and to be derived from it, the performance by TCDD and the Bank of their respective obligations under the Project Agreement and the accom- plishment of the purposes of the Loan. (d) TCDD shall enable the Bank's representatives to see all plants, installations, sites, works, buildings, property and equipment of TCDD and any relevant records and documents. Section 2.09. TCDD shall duly perform all its obligations under the TCDD Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, TCDD 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 provision thereof. Section 2.10. (a) TCDD shall, at the request of the Bank, exchange views with the Bank with regard to the progress of the Project, the performance of its obligations under this Agreement -4- and under the TCDD Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (b) TCDD shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by TCDD of its obligations under this Agreement and under the TCDD Subsidiary Loan Agreement. ARTICLE III Management and Operations of TCDD Section 3.01. TCDD shall take out and maintain with respon- sible insurers, or make other provisions satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.02. TCDD shall at all times maintain its right to carry on its operations and shall take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. Section 3.03. TCDD shall at all times manage its affairs, plan its investments and maintain its financial position, all in accordance with appropriate business and transportation practices under the supervision of experienced and qualified management. Section 3.04. TCDD shall at all times operate and maintain its property, facilities and equipment and from time to time make all necessary repairs and renewals thereof, all ina accordance with appropriaLe practices. ARTICLE IV Financial Covenants Section 4.01. TCDD shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. TCDD shall with respect to Part B of the Project: (i) have its accounts and financial statements for each fiscal year audited in accordance with appropriate auditing -5- principles consistently applied, by independent auditors accept- able to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than seven months after the end of each such year, (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 Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of TCDD and the audit thereof as the Bank shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effec- tive. Section 5.02. This Agreement and all obligations of the Bank and of TCDD thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly so notify TCDD thereof. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. 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: - 6 - -6- 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) For TCDD: TCDD Isletmesi Genel MdUrlUgU Gar, Ankara Turkey Cable address: Telex: DEMIRYOL 42571 TCDD TR Ankara Section 6.02. Any action required or pernitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of TCDD may be taken or executed by its Director General or such other person or persons as the Director General shall designate in writing, and TCDD shall furnish-to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. IN WITNESS W7HEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the -7- District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Munir P. Benjenk Regional Vice President Europe, Middle East and North Africa TURKIYE CUMHURIYETI DEVLET DEMIRYOLLARI By /s/ Alaeddin T. YUrük Authorized Representative J SCHEDULE Procurement A. International Competitive Bidding 1. Goods 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 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, TCDD 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 availability to the public of the first tender 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 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. TCDD shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basit of international competi- tive bidding. 3. (a) Except as the Bank shall otherwise agree, no goods other than brake pneumatic equipment, wheel sets, drawbars, buffer equipment, screw couplings and axle bearings shall be procured under Part B of the Project. (b) Goods to be procured under Part B of the Project as specified in paragraph (a) above shall be grouped together in bid packages to the extent practical, under arrangements satisfactory to the Bank. (c) Delivery time of goods procured under Part B of the Project as specified in paragraph (a) above shall be in line with TCDD's manufacturing schedule for grain rail hopper wagons. 4. 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 TCDD of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. B. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: (a) Before bids are invited, TCDD 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, TCDD 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 on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform TCDD and state the reasons for such determination. (c) The terms and conditions of the contract shall rot, without the Bank's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion of the stipulated time for performance of such contract, or - 10 - issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 10% of the original price, TCDD shall 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 Agree- ment, shall promptly inform TCDD and state the reasons for its determination.