Romania - Bucsani-buzau-siret-Prut Irrigation Project : Loan 1938 - Loan Agreement - Conformed

CUMENTS LOAN NUMBER 1938 RO Loan Agreement Bucsani - Buzau - Siret - Prut Irrigation Project between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and BANCA PENTRU AGRICULTURA SI INDUSTRIE ALIMENTARA Dated / , 1981 LOAN NUMBER 1938 RO LOAN AGREEMENT AGREEMENT, dated 9, 1981, between INTERNATIONAL BANK FO ECONSTRUC N AND DEVELOPMENT (hereinafter called the Bank) ad BANCA P TRU AGRICULTURA SI INDUSTRIE ALIMENTARA (hereinafter called the Borrower). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the loan as hereinafter provided; and (B) the Borrower intends to contract loans from foreign lending i-s-itutions up to an approximate aggregate amount equivalent to one hundred million dollars ($100,000,000) to assist further in the financing of the said Project; NOW THEREFORE, the parties hereto hereby agree as follows: 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 October 27, 1980, 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) "Romania" and "Guarantor" both mean the Socialist Republic of Romania; (b) "MAFI" means the Ministry of Agriculture and Food Industry of Romania; (c) "DGEIFCA" means the Economic General Directorate for Land Reclamation and Agricultural Construction in MAFI, estab- lished by Decree No. 298/1979 of the State Council of Romania; 2- (d) "MEE" means the Ministry of Electrical Energy of Romania; (e) "ROMAGRIMEX" means the Romanian Foreign Trade Enterprise of the Ministry of Agriculture and Food Industry of Romania, established under Law No. 11 of 1971 of Romania, and operating under Decision No. 938 of August 14, 1972 of the Council of Ministers of Romania, as amended from time to time; (f) "Foreign Trade Bank" means the Romanian Bank for Foreign Trade, established by Law No. 16/1968 of Romania; (g) "Charter" means the Charter of the Borrower approved by Decree No. 55 of 1970 of the State Council of Romania, approved by Law No. 15 of 1970 of Romania, as amended from time to time; (h) "CCM" means Centrala Pentru Valorificacea Cerealela (Central for Cereals Marketing) established by Decree 298 of 1979 of the State Council of Romania; (i) "BAFI-loan" means a loan made or proposed to be made by the Borrower to a Loan Beneficiary for an Investment Project; (j) "Loan Beneficiary" means Intreprinderea de Valorificare a Cerealelor si Plantelor Tchnia under CCM to which a BAFI-loan is proposed to be made or has been made; (k) "Investment Project" means a project for the construc- tion and installation of grain silos, which is to be carried out by a Loan Beneficiary under Part F of the Project utilizing the proceeds of a BAFI-loan; and (1) "Lei" means the national currency of Romania. 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 seventy-five million dollars ($75,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of -3- Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Bank and the Borrower, on account of: (i) expenditures made (or if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and ser- vices required for the Project and to be financed out of the proceeds of the Loan; and (ii) disbursements made by the Borrower under BAFI-loans for technically feasible and financially viable Investment Projects. (b) The Foreign Trade Bank is designated as representative of the Borrower for the purpose of taking any action required or permitted to be taken under the provisions of paragraph (a) of this Section and Article V of the General Conditions. Section 2.03. Except as the Bank and the Borrower shall otherwise agree, contracts for the purchase of goods and services required for the Project, selected by agreement between the Bank and the Borrower and to be financed out of the proceeds of the Loan, shall be awarded in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1988 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor 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 nine and one fourth per cent (9-1/4%) per annum on the prin- cipal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on January 1 and July 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with appropriate agricultural, engineering, financial and adminis- trative practices as follows: (a) The Borrower, with the participation of MAFI, DGEIFCA and MEE, shall supervise the execution of the Project, including the procurement of the goods and services required therefor; (b) DGEIFCA shall make or cause to be made a timely supply of the general engineering services required for the Project, and make timely arrangements with the appropriate construction organi- zations of Romania as required for the civil works and the in- stallations included in the Project; (c) DGEIFCA shall have the responsibility for the overall coordination of the carrying out of the Project and Project- related activities; and (d) ROMAGRIMEX s)hall make suitable arrangements for the procurement of the goods and services referred to in Section 2.03 of this Agreement. Section 3.02. (a) For each Investment Project the Borrower shall make a BAFI-loan to the Loan Beneficiary that is to carry out such Investment Project for all or part of the cost of such Investment Project. (b) Each BAFI-loan shall bear interest at a rate which shall be equal to the interest rate then charged by the Borrower in respect of loans for the same type of investments and shall be repaid over such period, after such grace period, as shall be consistent with the expected implementation period and yields of such Investment Project and the repayment capacity of the Loan Beneficiary. (c) The first Investment Project shall be submitted by the Borrower to the Bank for its approval. (d) The Borrower undertakes that, unless the Bank shall otherwise agree, each BAFI-loan will be made on termq whereby the Borrower shall have rights adequate to protect the interests of the Bank and the Borrower, including the right of the Borrower to: (i) require the Loan Beneficiary to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, agricultural, financial and managerial standards and to maintain adequate records; (ii) require that (A) notwithstanding the provisions of Section 2.03 of the Loan Agreement, the goods and services to be financed out of the proceeds of the BAFI-loan shall be purchased at a reasonable price, accoint being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor and, in the case of services, of their quality and competence of the parties rendering them, and (B) such goods and services shall be used exclusively in the carrying out of the Investment Project; (iii) inspect and enable representatives of the Bank if the Bank shall so request, to examine, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) obtain all such information as the Bank or the Borrower shall reasonably request relating to the foregoing and to the adminis- tration, operations and financial condition of the Loan Bene- ficiary; and (v) suspend or terminate the right of the Loan Beneficiary to the use of the proceeds of the BAFI-loan upon failure by such Loan Beneficiary to perform its obligations under its contract with the Borrower. (e) The Borrower shall exercise its rights in relation to the Loan Beneficiary in such manner as to: (i) protect the interests of the Bank and the Borrower; (ii) comply with its obligations under this Agreement; and (iii) achieve the purposes of the Project. Section 3.03. Part G of the Project shall be carried out in accordance with such program as shall have been agreed upon between the Bank and the Borrower. Section 3.04. The Borrower shall cause adequate provision to be made for the insurance of the imported goods referred to in Section 2.03 of this Agreement against hazards incident to the acquisition, transportation and delivery thereof to the place of importation into the territory of Romania, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. -6- Section 3.05. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan or any BAFI-loan to be used exclusively for the Project. ARTICLE IV Achievement of the Purposes of the Project Section 4.01. The Bank and the Borrower agree that, in order to realize the purposes of the Project, it shall be necessary that: (a) the irrigation and drainage facilities constructed or installed under the Project will be operated and maintained by MAFI in close cooperation with the farms cultivating the Project Area, and the electric power facilities serving the irrigation and drainage facilities constructed or installed under the Project will be operated and maintained by the competent electric power enterprises of Romania, and all necessary repairs and renewals of such facilities will be made from time to time, all in accordance with appropriate agricultural, engineering and administrative practices; (b) the cultivators of the area covered by the Project will be supplied with agricultural, technical and advisory services, seeds, fertilizers, pesticides, agricultural financing and market- ing facilities, and other agricultural inputs, all as required to make optimal productive use of such area; (c) adequate equipment for the application of pesticides, herbicides and fertilizers will be supplied for use in the area covered by the Project; (d) the construction of the Arcesti and Strejesti dams on the Olt river will be completed by December 31, 1981, to permit timely irrigation of the area covered by Part A of the Project; (e) the deepening and widening of the lower reach of the Beica stream will be completed by December 31, 1983, to enable proper drainage of the area covered by Part A of the Project; (f) the construction of the Siriu dam on the Buzau river will be completed by December 31, 1983, to permit timely irriga- tion of the area covered by Part B of the Project; -7- (g) the training of the Birlad river below the Galati-Tecuci railway will be completed by December 31, 1982, to enable proper drainage of the area covered by Part C of the Project; and (h) (i) prior to completing the construction of the Arcesti, Strejesti and Siriu Dams, the concept of the dams and its associated structures and the adequacy of their design will be reviewed by a panel of three independent experts, whose qualifi- cations and experience will be acceptable to the Bank; (ii) periodic reviews will be conducted by the said panel of experts during the construction of the dams; and (iii) following completion of construction of the dams and its associated structures, periodic inspection, under a program satisfactory to the Bank, will be made of these and the other completed dams on the Olt and the Buzau Rivers in accordance with sound engineering practices, in order to determine whether there are any deficiencies or potential deficiencies in the condition of such dams and associated structures, or in the quality and adequacy of maintenance or methods of operation of such dams and associated structures, which may endanger their safety. The Borrower shall, to the extent that it is authorized under the laws of Romania, ensure that the requirements set forth in this Section will be met. ARTICLE V 'Management and Operations of the Borrower; Financial Covenants Section 5.01. The Borrower shall manage and conduct its operations and affairs in accordance with appropriate adminis- trative and financial standards and practices and in accordance with the Charter. Section 5.02. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. -8- Section 5.03. (a) It is not the practice of the Borrower to create liens as security for debt. Accordingly, the Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) In the event that, notwithstanding the foregoing, a lien shall be created on any of the Borrower's assets as security for any debt, the Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create the lien, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; 'and (ii) if the lien shall be created by law, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfactory to the Bank to secure the payment of the principal of, and interest and nther charges on, the Loan. Section 5.04. The Bank and the Borrower agree that in carrying out the provisions of this Agreement the Borrower shall take such measures as shall be necessary according to the State Plan of Romania and the applicable laws in order to achieve the purposes of the Project. ARTICLE VI Cooperation and Information; Financial Data Section 6.01. The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accom- plished. To that end: (a) the Bank and the Borrower shall from time to time at the request of either party exchange views through their repre- sentatives with regard to the progress of the Project, the bene- fits derived from the Project, the performance of their respective obligations under the Loan Agreement, the fulfillment of the requirements set forth in Section 4.01 of this Agreement and other matters relating to the purposes of the Loan, and the Borrower shall enable the Bank's representatives to exchange views with representatives of the MAFI, MEE and the farms served by the Project, and the other agencies concerned of Romania with regard to the Project, the benefits derived from the Project and the -9- fulfillment of the requirements set forth in Section 4.01 of this Agreement; (b) the Borrower shall obtain from MAFI, NEE and the other agencies of Romania concerned with the Project, and 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 and the Borrower shall agree; (c) the Borrower: (i) shall maintain, or cause to be main- tained, (A) accounts adequate to independently record all Project expenditures and Project-related financial transactions, and (B) procedures adequate to monitor a- id record 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; and (ii) shall furnish to the Bank within forty-five calendar days after each calendar quarter, a report, of such scope and in such detail as the Bank and the Borrower shall agree, on the progress of the Project during such quarter; (d) the Borrower shall enable the Bank's representatives to visit and examine the goods financed out of the proceeds of the Loan, the facilities and construction sites included in the Project and the records and documents relating to the Project of MAFI, MEE and of other departments and agencies of Romania respon- sible for the Project or any part thereof; (e) the Borrower shall: (i) furnish to the Bank not later than six months after the end of each of its fiscal years, certified copies of its financial statements (balance sheets, statements of income and expenses and related statements, as agreed between the Bank and the Borrower), and until the com- pletion of the Project certified copies of its accounts referred to in paragraph (c) of this Section, for such fiscal year, both the statements and the accounts to be in the form in which they shall be audited; (ii) submit such statements and accounts includ- ing all records supporting certificates referred to in paragraph 5 of Schedule 1 to this Agreement to an independent audit conducted, in accordance with appropriate auditing principles consistently applied, by the Ministry of Finance of Romania, and the report of such audit by said auditor, of such scope and in such detail as the Guarantor and the Bank shall agree, including a separate - 10 - opinion by said auditor in respect of the said certificates showing whether the proceeds of the Loan withdrawn on the basis of such certificates have been used for the purpose for which they were provided; and (iii) furnish to the Bank such other inform- ation concerning the before-mentioned financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request; (f) the Bank and the Borrower shall from time to time furnish to each other such additional information as the other party shall reasonably request with regard to the progress of the Project, the expenditure of the proceeds of the Loan, the goods and services financed out of such proceeds, the operations, the benefits derived from the Project and the general status of the Loan; and (g) promptly after completion of the Project, but in any event not later than December 31, 1988, or such later date as may be agreed for this purpose between the Bank and the Borrower, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank and the Borrower shall reasonably agree, on the execution and initial operation of the Project, its cost and the benefits derived anii to be derived from it, the performance by the Bank and the Borrower of their respective obligations under the Loan Agreement and the accom- plishment of the purposes of the Loan. Section 6.02. The Bank and the Borrower shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Loan, the maintenance of the service thereof or the performance by either party of its obliga- tions under the Loan Agreement. ARTICLE VII Termination Section 7.01. The date / is hereby specified for the purpose of Section 2.04 of the General Conditions. ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: - 11 - 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 the -Borrower: Banca pentru Agricultura si Industrie Alimentara Strada Smirdan No. 3 Bucharest, Romania Cable address: Telex: AGROBANK 11622 Bucharest 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional e President Europe, Middle East North Africa BANCA PENTRU AGRICULTURA SI INDUSTRIE ALIMENTARA By 4 Authorized Representative - 12 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Category 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) Equipment, materials 67,000,000 100% of for- and spare parts eign expendi- tures and 100% of local ex- penditures ex- factory (2) Disbursements under 3,500,000 25% BAFI-loans (3) Goods, buildings and 1,000,000 25% services for Part G of the Project (4) Unallocated 3,500,000 TOTAL 75,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from the territory and in the currency of any country other than Romania; and (b) the term "local expenditures" means expenditures in the currency of Romania and for goods or services supplied from the territory of Romania. - 13 - 3. 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, Romania 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, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) any BAFI-loan unless the first Investment Project has been approved by the Bank pursuant to Section 3.02 (c) of this Agreement; (c) disbursements under any BAFI-loan, the loan contract of which was signed before the date of this Agreement; (d) any BAFI-loan until the Bank shall have been satisfied that the approval required under the laws of Romania for the implementation of the Investment Project to be financed out of the proceeds of such BAFI-loan has been granted; and (e) payments made for expenditures under _rt G of the Project until the Bank shall have approved the program referred to in Section 3.03 of this Agreement, including an implementation timetable, design and location of laboratories, equipment, staff- ing and training. 5. Each request for withdrawal from the Loan Account in respect of a BAFI-loan shall be accompanied by a certificate issued by the Borrower by which the Borrower certifies that the disbursement on account of which the withdrawal is requested has been made for an Investment Project; the certificate shall be in such form as shall have been agreed upon between the Bank and the Borrower. 6. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in para- graph 1 above, if the Bank has reasonably estimated that the - 14 - amount of the Loan then allocated to any Category will be insuf- ficient 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. 7. If the Bank shall have reasonably determined that the pro- curement of any item referred to in Section 2.03 of this Agreement 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 the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 15 - SCHEDULE 2 Description of the Project The Project is to provide irrigation and drainage facilities, erosion control, soil reclamation and other miscellaneous works and farm machinery and equipment to serve adequately a total area of about 158,485 hectares in four distinct and geographically separate sub-projects. The Project consists of: Part A: Bucsani Sub-project Construction and installation of permanent irrigation and drainage facilities, and of erosion control, soil reclamation and other miscellaneous works in the Olt and Vilcea Districts, as follows: (a) a system of open canals about 17.7 kilometers long and pipe conduits about 16 kilometers long in the flood plain and on the higher level plateau; (b) four repumping stations to lift the water from the main canals flowing by gravity from the Olt River to the plateau areas; (c) twenty-one pressure pumping stations for feeding an underground irrigation pipe network, to serve six irrigation systems covering an area of about 36,800 hectares; (d) surface drainage works to serve an area of about 40,100 hectares; (e) tile drainage works for an area of about 7,000 hectares; (f) soil erosion control works to protect an area of about 10,400 hectares; and (g) valley training in a length of about 80.5 kilometers. Part B: Buzau Sub-project Construction and installation of permanent irrigation and drainage facilities, and of erosion control, soil reclamation and other miscellaneous works in the Buzau and Prahova Districts, as follows: - 16 - (a) a system of open canals about 76 kilometers long and pipe conduits about 9.8 kilometers long; (b) two repumping stations, to lift the water in the main canals to lands at higher contours; (c) fifty-seven pressure pumping stations for feeding an underground irrigation pipe network, to serve an area of about 59,800 hectares; (d) surface drainage works to serve an area of about 46,200 hectares; (e) tile drainage works for an area of about 12,600 hectares; (f) reclamation of saline soil covering an area of about 12,600 hectares; and (g) valley training in a length of about 225 kilometers. Part C: Siret Sub-project Construction and installation of permanent irrigation and drainage facilities, and of erosion control, soil reclamation and other miscellaneous works in the Galati District, as follows: (a) two fixed pumping stations on the Siret River to lift water into the main irrigation canals in the flood plain; (b) a system of open canals about 30 kilometers long and pipe conduits about 65 kilometers long; (c) eight pressure pumping stations for feeding an under- ground irrigation pipe network, to serve an area of about 15,700 hectares; (d) surface drainage works to serve an area of about 15,700 hectares; (e) tile drainage works for an area of about 6,800 hectares; (f) reclamation of saline soil covering an area of about 3,800 hectares; and - 17 - (g) valley training-in a length of about 15 kilometers. Part D: Prut Sub-project Construction and installation of permanent irrigation and drainage facilities, and of erosion control, soil reclamation and other miscellaneous works in the Galati District, as follows: (a) three repumping stations and a system of open canals about 30 kilometers long and pipe conduits about 96 kilometers long; (b) twelve pressure pumping stations for feeding an under- ground irrigation pipe network, to serve an area of about 29,900 hectares; (c) surface drainage works to serve an area of about 23,300 hectares; (d) tile drainage works for an area of about 7,100 hectares; (e) reclamation of saline soil covering an area of about 200 hectares; and (f) soil erosion control works to protect an area of about 900 hectares. Part E: Equipment and Farm Machinery Acquisition and utilization of equipment for the operation and maintenance of the irrigation and drainage works included in the Project, and of farm machinery to intensify agriculture on the area irrigated under the Project. Part F: Grain Storage Construction of concrete silos each with a capacity of between 22,000 and 46,000 tons and with a total capacity not exceeding 180,000 tons for handling the incremental production from the area covered by the Project. Part G: Research (a) Strengthening of the cereal and industrial crops' research station at Caracal to enable it to undertake additional research in irrigation methods, fertilizer application and green - 18 - house production, including the acquisition and utilization of storage, transport and research equipment, and of technical books and magazines, and the provision of training, scholarships and fellowships to the research staff; and (b) establishment of new research facilities at Tirgu Bujor on the Covurlui plateau for meeting the specific needs of this plateau area. The Project is expected to be completed by December 31, 1987. - 19 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each January 1 and July 1 beginning July 1, 1984 through January 1, 1996 3,125,000 To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.04), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 20 - 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 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years 1.85% bef ore maturity More than three years but not 3.70% more than six years before maturity More than six years but not 6.80% more than eleven years before maturity More than eleven years but not 8.00% more than thirteen years before maturity More than thirteen years 925% before maturity - 21 - SCHEDULE 4 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 under the Project and in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than sixty days prior to the date of avail- ability to the public of the first tender, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notifi- cation to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. B. 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: (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 of other goods, offered in such bid; and (ii) custom duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods shall not be taken into account in the evaluation of the bids. 2. Goods manufactured in Romania 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 Romania 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 Romania equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. (c) In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest evalu- ated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated 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. - 23 - C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $200,000 or more: (a) Before bids are invited, ROMAGRIMEX 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) Promptly after the bids have been received, ROMAGRIMEX shall inform the Bank of the names of the bidders and the respec- tive amounts of the bids, and shall indicate those items for which only one bid was received. (c) After bids have been evaluated, ROMAGRIMEX shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which the contract is intended to be awarded and the reason for the intended award and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommendations for award 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 ROMAGRIMEX and state the reasons for such determination. (d) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked. (e) 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 paragraph, - 24 - ROMAGRIMEX 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 ROMAGRIMEX and state the reasons for such determination. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this I L day of 198 L. FOR SECRETARY