Tunisia - Second Natural Gas Pipeline Project : Loan 1864 - Loan Agreement - 1 - Conformed

O I LOAN NUMBER 1864 TUN DOCUMNTS V (Amendment) Loan Agreement (Second Natural Gas Pipeline Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and SOCIETE TUNISIENNE DE L'ELECTRICITE ET DU GAZ Dated October 22, 1980 As amended on , 1981 LOAN NUMBER 1864 TUN (Amendment) AGREEMENT AMENDING LOAN AGREEMENT AGREEMENT, dated , 1981, amending Loan Agreement, dated October 22, 198 , between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and SOCIETE TUNISIENNE DE L'ELECTRICITE ET DU GAZ (hereinafter called the Borrower), an Etablissement Public a Caractare Industriel et Commercial or the Republic of Tunisia (hereinafter called the Guarantor) established and operating under the Guarantor's Decree-Law No. 62-8 of April 3, 1962, as amended by the Guarantor's Law No. 70-58 of December 2, 1970 (hereinafter collectively called the STEG Law) as the same has been or may be amended further from time to time. WHEREAS (A) by a Loan Agreement dated October 22, 1980, between the Bank and the Borrower, the Bank agreed to make a loan to the Borrower in various currencies equivalent to thirty- seven million dollars ($37,000,000) to assist the Borrower in the financing of part of the foreign exchange cost of the Project described in Schedule 2 to the said Loan Agreement; (B) by a Guarantee Agreement dated October 22, 1980, between the Guarantor and the Bank, the Guarantor agreed to guarantee the obligations of the Borrower and to undertake certain other obligations pursuant to the terms and conditions set forth in the said Guarantee Agreement; (C) the Guarantor and the Borrower have now requested the Bank, prior to the Effective Date of the said Loan and Guarantee Agreements, to amend the said Loan and Guarantee Agreements; (D) an onshore and offshore intercontinental pipeline is being constructed for the transportation of natural gas, from the territory of the Democratic and Popular Republic of Algeria (hereinafter called Algeria), across the Guarantor's territory and on to the territory of the Republic of Italy (hereinafter called Italy); and (E) certain amounts of said natural gas produced in Algeria and purchased by a state-owned company incorporated in Italy shall accrue to the Guarantor as a transit fee payable in cash or in natural gas pursuant to the terms and conditions of a transit agreement (hereinafter called the Royalty Contract) providing for, inter alia, the right of the Guarantor to freely operate the - 2 - portion of the intercontinental pipeline referred to in paragraph (D) of this Preamble extending across the Guarantor's territory; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to amend the said Loan Agreement in the manner set forth below, and to amend the said Guarantee Agreement as set forth in an agreement of even date herewith amending said Guaran- tee Agreement; NOW THEREFORE the parties hereto hereby agree to amend the provisions of the said Loan Agreement, including all schedules thereto, which shall henceforth read in their entirety 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 and in the Preamble to this Agreement have the respective meanings therein set forth, and the following terms have the following meanings: (a) "Gas Directorate" means the Borrower's division respon- sible for carrying out natural gas and related operations; (b) "Tunisian Dinars" and "DT" mean the currency of the Guarantor; (c) "Royalty Gas" means the natural gas accruing to the Guarantor under the Royalty Contract; (d) "Purchased Gas" means the natural gas purchased by the Borrower including Royalty Gas so purchased and excluding natural gas supplied from El Borma; -3- (e) "Intercontinental Pipeline" means the onshore section, located on the territory of the Guarantor, of an onshore and offshore intercontinental pipeline extending from Algeria across the Mediterranean Sea to the northern part of Italy; and (f) "Prior Loan Agreement" means the loan agreement dated January 12, 1977, between the borrower and the Bank for the Second Power Project, and "Prior Guarantee Agreement" means the guarantee agreement dated January 12, 1977, between the Guarantor and the Bank, providing, inter alia, for the guarantee by the Guarantor of the loan under the Prior Loan Agreement. 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 thirty-seven million dollars ($37,000,000). 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 expendi- tures 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 doan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1985, 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. -4- Section 2.06. The Borrower shall pay interest at the rate of eight and twenty-five hundredths per cent (8.25%) 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 March 1 and September 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. (a) The Borrower shall: (i) carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices; and (ii) supervise and coordinate the activi- ties under the Project through its Gas Directorate. (b) For the purposes of financing part of the expenditures required under the Project, the Borrower shall take all such measures within its powers to obtain loans from commercial banks (hereinafter called the Commercial Loans) in an aggregate prin- cipal amount equivalent to not less than eight million two hundred thousand Tunisian Dinars (DT 8,200,000) on appropriate terms and conditions and in accordance with a timetable agreed to between the Borrower and the Bank. Section 3.02. (a) In order to assist the Borrower in: (i) carrying out the studies under Part C of the Project, (ii) imple- menting the training program under Part D of the Project, and (iii) carrying out the construction, supervision, and initial operation of the Project, and the procurement of goods and services required thereunder, the Borrower shall employ engineer- ing and management consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Bank. (b) Except as the Bank shall otherwise agree, the Borrower shall: (i) not later than December 31, 1981, employ the con- sultants to carry out Part C.1 of the Project, and not later than June 30, 1982, forward to the Bank for its review and comment, a report on the recommendations of said consultants and on the results of the study carried out under Part C.1 of the Project; and (ii) not later than June 30, 1982, employ the consultants to carry out Part C.2 of the Project, and not later than December 31, 1982, forward to the Bank, for its review and comment, a report on the recommendations of said consultants and on the results of the study carried out under Part C.2 of the Project. 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 of the Loan to be used exclusively for the Project. Section 3.04. (a) The Borrower 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) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding 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) 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 and any relevant records and documents; (iii) furnish to the Bank, at quarterly intervals, detailed reports on the progress of the Project in- cluding 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; and (iv) forward to the Bank copies of each report prepared by the consultants referred to in Section 3.02 (a) of this Agreement promptly upon completion of each such report. -6- (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Loan, the Bank may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (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 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 accom- plishment of the purposes of the Loan. (e) The Borrower shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents. Section 3.05. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire not later than July 31, 1981, or such later date as the Bank and the Borrower may otherwise agree, all such land and rights in respect of land as shall be required for the construction (and operation) of the facilities included in the Project and shall furnish to the Bank, upon its request, evidence satisfactory to the Bank that such land and rights in respect of land are available for pur- poses related to the Project. Section 3.06. Not later than March 31, 1982, the Borrower shall have completed the recruitment and training under Part D of the Project of all such staff within the Gas Directorate as shall be required for the execution of Parts A and B of the Project in accordance with a staffing program agreed to between the Bank and the Borrower. ARTICLE IV Management and Operations of the Borrower Section 4.01. (a) The Borrower shall, at all times, carry out its operations, manage its affairs, plan its future expansion and maintain its financial position, all in accordance with -7- appropriate engineering, business, financial and public utility practices, and under the supervision of experienced and competent staff. (b) The Borrower shall at all times maintain its corporate existence and right to carry on its operations, and 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 and for the execution and operation of the Project. (c) Except as the Borrower and the Bank shall otherwise agree, the Borrower shall not take any corporate or other action within its power or control, or concur in any action, which would have the effect of terminating or assigning, or adversely inter- fering with, the natural gas operations undertaken or to be undertaken by the Borrower. Section 4.02. The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 4.03. The Borrower shall, in accordance with appro- priate engineering and public utility practices: (i) operate and maintain its plant, equipment and properties; (ii) make all necessary renewals and repairs thereof; and (iii) cause its natural gas pipeline network to be periodically inspected. Section 4.04. (a) Except as the Bank shall otherwise agree, the Borrower shall obtain title to all goods financed out of the proceeds of the Loan free and clear of all encumbrances. (b) Except in the normal course of its business, the Borrower shall not, without the prior approval of the Bank, sell, lease, transfer or otherwise dispose of any of its property or assets which shall be required for the efficient operation of its business and undertaking. Section 4.05. The Borrower shall: (i) inform the Bank of any measure it proposes to take which would materially affect the Borrower's structure or organization and take into account the Bank's comments in implementing such measure; and (ii) period- ically inform the Bank of any other modification of its structure affecting its management or operations. -8- ARTICLE V Financial Covenants Section 5.01. (a) The Borrower shall maintain records ade- quate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. (b) Without limitation or restriction upon the generality of Section 5.01 (a) of this Agreement and for the purposes of computing its income and expenditures pursuant to the provisions set forth in Sections 5.01 (e), 5.02 (b), 5.04, 5.05 and 5.06 of this Agreement, not later than January 1, 1983, the Borrower shall establish and thereafter maintain internal non-statutory itemized accounts (including separate annual cash accounts) and financial statements (balance sheets, statements of income and expenses and related statements) for: (A) the operations relating to Purchased Gas supplied to customers as natural gas (such accounts and financial statements being hereinafter called the Purchased Gas Accounts); (B) the gas operations relating to gas supplied from El Borma; and (C) all other operations of the Borrower, including operations relating to Cap Bon gas and manufactured gas supplied to Tunis. (c) Not later than April 1, 1982, the Borrower shall establish and thereafter apply at all times a bill collection system ensuring that amounts charged by the Borrower to its customers for Purchased Gas shall be paid to the Borrower within a time period compatible with the Borrower's payment obligations to its suppliers. (d) Not later than July 1, 1982, the Borrower shall: (i) measure periodically the heating value of Purchased Gas received by the Borrower; and (ii) ensure that all permanent modifications in said heating value of such Purchased Gas be reflected promptly in the price charged by the Borrower for the corresponding amount of Purchased Gas delivered to its customers. -9- (e) Not later than December 31, 1981, or such later date as the Bank and the Borrower shall otherwise agree, the Borrower and the Bank shall consult with each other so as to determine the principles and procedures to be applied by the Borrower in establishing and maintaining its Purchased Gas Accounts. Section 5.02. (a) The Borrower shall: (i) have its accounts and financial statements relating thereto (balance sheets, state- ments of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing 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 six months after the end of each such year, (A) certified copies of its accounts and financial statements related thereto 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 the Borrower and the audit thereof as the Bank shall from time to time reasonably request. (b) Beginning in its fiscal year 1983 and in each fiscal year thereafter, the Borrower shall: (i) have its Purchased Gas Accounts audited by independent auditors acceptable to the Bank certifying that said Purchased Gas Accounts have been established and thereafter maintained in accordance with such accounting principles and procedures as shall have been agreed to between the Borrower and the Bank pursuant to Section 5.01 (e) of this Agreement; (ii) furnish to the Bank as soon as available, but in any case not later than nine months after the end of each such year, (A) certified copies of its Purchased Gas Accounts and financial statements related thereto 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 con- cerning the Purchased Gas Accounts of the Borrower - 10 - and the audit thereof as the Bank shall from time to time reasonably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt except as otherwise currently reported to the Bank or stated in writing. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, 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 any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower shall grant, at no cost to the Bank, an equivalent lien satisfac- tory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this paragraph shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. Section 5.04. (a) Except as the Bank shall otherwise agree, the Borrower shall promptly take all such measures within its powers (including, in particular, adjustments of its charges for Purchased Gas) as shall be required to produce revenues generated from Purchased Gas operations sufficient: (i) to earn a rate of return of not less than eight per cent (8%) per annum on the average current net value of the Borrower's fixed assets in operation for Purchased Gas, commencing with the year beginning January 1, 1983; and (ii) to enable the Borrower, out of its internally- generated resources: (A) to meet the Borrower's interest and amortization of debt incurred for Purchased Gas operations; (B) to maintain adequate working capital; (C) to establish and maintain reserves adequate to meet contingencies; and (D) to finance the cost of renewal or replacement of - 11 - plant and equipment and, to the extent possible, a portion of the cost of major expansion and development works. (b) For the purposes of this Section: (i) the annual rate of return shall be calculated by dividing the Borrower's net operating income for the fiscal year in question by one-half of the sum of the current net value of the Borrower's fixed assets in service at the beginning and at the end of that fiscal year, such annual rate of return to be expressed as a percentage; (ii) the term "net operating income" means gross revenues generated from the sale of Purchased Gas less all expenses accountable to Purchased Gas operations, including transportation, administra- tion, adequate maintenance and taxes or any payments in lieu of taxes, and provision for depreciation on a straight-line basis at a rate of not less than 5% per annum of the average current gross value of the Borrower's fixed assets in service; it being understood that, for the purposes of this Section, interest and other charges on debt are not considered to be operating expenses; and (iii) the term "current net value of the Borrower's fixed assets in service" means the gross value of the Borrower's fixed assets in service relating to its Purchased Gas operations less the amount of accumulated depreciation, both revalued not later than December 31, 1982, and annually thereafter on the basis of a methodology acceptable to the Bank. (c) The Borrower shall ensure that the surplus funds accruing from natural gas operations shall be applied to purposes unrelated to gas operations only after ensuring that sufficient funds are available to meet the requirements set forth in Section 5.04 (a) of this Agreement. Section 5.05. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur any debt for or pertaining to its operations related to Purchased Gas in any year unless a reasonable forecast of the Borrower's projected net - 12 - revenues for each year during the term of the debt to be incurred shall be, for each year commencing with 1983, not less than 1.2 times its projected debt service requirements for such year, on all debt of the Borrower including the debt to be incurred. For the purpose of this Section: (a) the term "debt" means all debt, including debt assumed or guaranteed by the Borrower for or pertaining to Purchased Gas operations, except debt incurred in the ordinary course of business and maturing by its terms on demand or less than one year after the incurrence thereof; (b) debt shall be deemed to be incurred: (i) under a contract or loan agreement, on the date the contract or loan agreement providing for such debt is entered into; and (ii) under a guarantee agreement, on the date the agreement providing for such guarantee is entered into; (c) the term "net revenue" means the aggregate revenues generated from all operations relating to Purchased Gas less the costs of purchase of said Purchased Gas and transportation, operating and administrative expenses, excise duties, fees, taxes, rcyalties, and other levies, if any, but before provisions for depreciation and interest and other charges on debt; (d) the term "debt service requirements" means the aggre- gate amount of amortization (including sinking fund payments, if any), interest and other charges on debt; (e) the term "reasonable forecast" means a forecast prepared by the Borrower in the fiscal year in which the debt in question is to be incurred, which both the Bank and the Borrower have agreed to as being reasonable, provided no event has occurred since such agreement which has or may reasonably be expected in the future to have a material adverse effect on the financial condition or future operating results of the Borrower; and (f) whenever in connection with this Section it shall be necessary to value in terms of Tunisian Dinars debt payable in foreign currency, such valuation shall be made at the prevailing lawful rate of exchange at which such foreign currency is, at the - 13 - time of such valuation, obtainable by the Borrower for the purposes of servicing such debt. Section 5.06. Not later than July 1, 1982, the Borrower shall adjust its method of calculation under Sections 5.04 and 5.05, respectively, of the Prior Loan Agreement so as to exclude from the scope thereof all activities of the Borrower related to Purchased Gas and, as the case may be, all future activities related to new supplies of natural gas. ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) the STEG Law shall have been suspended, abrogated or terminated, repealed or materially amended without the Bank's prior written consent; (b) any event shall have occurred in connection with the transpocLaLion or supply of Royalty Gas or Purchased Gas or the terms and conditions of s-ch transportation or the terms and conditions of such supply which will affect materially and adversely the efficient use of the facilities constructed under the Project, or the operations or financial condition of the Borrower with respect to the Project or the performance by the Borrower or by the Guarantor of their respective obligations under this Agreement and the Guarantee Agreement; (c) (i) a first tranche of the Commercial Loans referred to in Section 3.01 (b) of this Agreement in an aggregate principal amount equivalent to about seven million two hundred thousand Tunisian Dinars (DT 7,200,000) shall have failed to become effective by December 31, 1981, and (ii) the balance of the Commercial Loans referred to in Section 3.01 (b) of this Agreement in an aggregate principal amount equivalent to one million Tuni- sian Dinars (DT 1,000,000) shall have failed to become effective by December 31, 1983 or such other date as may be agreed between the Borrower and the Bank, it being understood that the foregoing provisions of this paragraph (c) shall not apply if the Borrower establishes to the satisfaction of the Bank that adequate funds for the Project are available to the Borrower from other sources - 14 - on terms and conditions consistent with the obligations of the Borrower under this Agreement; and (d) (i) subject to sub-paragraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the Commercial Loans made to the Borrower for the financing of the Project as provided in Section 3.01 (b) of this Agree- ment, shall have been suspended, cancelled or terminated in whole or in part pursuant to the respective terms of the agreements provid- ing therefor; or (B) said Commercial Loans shall have become due and payable prior to their respective agreed maturities; and (ii) sub-paragraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) such suspension, cancella- tion, termination or prematuring is not caused by the failure of the Borrower to perform any of its respective obligations under such agreements; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any of the events specified in paragraph (c) of Section 6.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any of the events specified in paragraphs (a) or (b) or (d) (i) (B) of Section 6.01 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following event is specified as an addi- tional matter within the meaning of Section 12.01 (c) of the - 15 - General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that the Royalty Contract has been duly authorized and ratified by the Guarantor and any other party thereto, respectively, and executed and delivered on behalf of the Guarantor and any such party, respectively, and is legally binding upon the Guarantor and any such party in accordance with its terms and conditions. Section 7.02. The date6i( L-Q /s 'go, is hereby speci- fied for the purpose of Section 12.02 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: 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: Soci6te Tunisienne de 1'Electricite et du Gaz 38 rue Kemal Ataturk Tunis Tunisia Cable address: Telex: GAZELEC 12020 Tunis - 16 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement amending the Loan Agreement referred to in paragraph (A) of the Preamble hereto 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 Vice President Europe, Middle East and North Africa SOCIETE TUNISIENNE DE L'ELECTRICITE ET DU GAZ By Authorized Representative - 17 - 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) Pipelaying works 6,000,000 100% of foreign under Parts Al, expenditures, A2, A3, A4 and and 50% of A7 of the local expendi- Project tures (2) Linepipe for 6,000,000 100% of foreign Parts Al, A2, expenditures A3 and A4 of the Project (3) Engineering, 9,500,000 100% of foreign equipment and expenditures construction and installa- tion works under Parts A5, A6, A8, A9 and A10 of the Project (4) Pipelaying works 6,500,000 100% of foreign under Parts Bl, expenditures B2, B3 and B5 of and 50% of local the Project expenditures (5) Linepipe for 2,000,000 25% of foreign Parts Bl, B2 expenditures and B3 of the Project - 18 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Engineering, 2,000,000 100% of foreign equipment and expenditures construction and installa- tion works under Parts B4, B6, B7 and B8 of the Project (7) Studies under 500,000 100% of foreign Part C of the expenditures Project (8) Unallocated 4,500,000 TOTAL 37,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor and for goods or services supplied from the territory of the Guarantor. 3. The disbursement percentages have been calculated in compliance 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 Guarantor 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 - 19 - to the Borrower, decrease the disbursement percentage then appli- cable to such item as required to be consistent with the afore- mentioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of payments made for expenditures prior to October 22, 1980. 5. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made: (a) with respect to expenditures under and related to Part B.1 of the Project, until such time as the Bank shall have been satisfied with the economic justification of the investments proposed to be carried out under Part B.1 of the Project; (b) with respect to expenditures under and related to Part B.2 of the Project, until such time as the Bank shall have been satisfied with the economic justification of the investments proposed to be carried out under Part B.2 of the Project; and (c) with respect to expenditures under Part A.3 of the Project, until such time as the installation of a gas turbine planned by the Borrower for the manufacturing of electricity in the Kasserine area shall have been completed or the condition prior to disbursements provided for in paragraph (a) above shall have been satisfied. 6. 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 expendi- tures in that Category, the Bank may, by notice to the Borrower 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. 7. 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 it, any way restricting or limiting any other right, vower or remedy of the Bank under - 20 - 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. - 21 - SCHEDULE 2 Description of the Project The purpose of the Project is to expand the Borrower's onshore natural gas pipeline distribution network and to connect said network to the Intercontinental Pipeline. The Project con- sists of the following Parts: Part A: (1) Engineering for, and acquisition, construction and installation of a 20-inch diameter buried pipeline (including the installation of tie-ins for compressors) measuring about 85 km extending from a point on the Intercontinental Pipeline north to the Tunis metropolitan area. (2) Engineering for, and acquisition, construction and installation of a 10-inch diameter buried pipeline measuring about 55 km and extending from a point on the Intercontinental Pipeline south to Cap Bon. (3) Engineering for, and acquisition, construction and installation of an 8-inch diameter buried pipeline measuring about 13 km from a point on the Intercontinental Pipeline north to Kasserine. (4) Engineering for, and acquisition, construction and installation of a distribution system to consumers connected to the pipeline network constructed under Parts A (1), (2) and (3) of the Project, comprising about 40 km of lateral pipes. (5) Engineering, acquisition of equipment and installation works for: (i) about 100 delivery terminals for pressure reduc- tion, straining and metering; (ii) block valves to be installed about every 20 km on the pipelines and at the branching points of the latefal pipes constructed under Parts A (1), (2) and (3) of the Project; and (iii) scraper trap assemblies to be installed at both ends of each section of the pipeline network constructed under Parts A (1), (2) and (3) of the Project. (6) Construction of 3 injection terminals and acquisition and installation of metering equipment and filtration facilities. - 22 - (7) Engineering for, and acquisition and installation of a cathodic protection system for the pipeline network constructed under Part A of the Project. (8) Engineering for conversion equipment for the Borrower and for other consumers connected to the pipeline network con- structed under Part A of the Project. (9) Acquisition and installation of conversion equipment for the Borrower's power and town gas plants connected to the pipeline network constructed under Part A of the Project. (10) Acquisition and installation of conversion equipment for other consumers connected to the pipeline network constructed under Part A of the Project, including consumers in the city of Tunis. Part B: (1) Engineering for, and acquisition, construction and installation of an 8-inch diameter buried pipeline measuring about 77 km and extending from Kasserine north to Tadjerouine. (2) Engineering for, and acquisition, construction and installation of a 20-inch diameter buried pipeline measuring about 70 km and extending from a point on the Intercontinental Pipeline south to Sousse. (3) Engineering for, and acquisition, construction and installation of a distribution system to consumers connected to the pipeline network constructed under Parts B (1) and (2) of the Project, comprising about 50 km of lateral pipes. (4) Engineering, acquisition of equipment and installation works for: (i) about 50 delivery terminals for pressure reduction, straining and metering; (ii) block valves to be installed about every 20 km on the pipelines and at the branching points of the lateral pipes constructed under Parts B (1) and (2) of the Project; and (iii) scraper trap assemblies to be installed at both ends of each section of the pipeline network constructed under Parts B (1) and (2) of the Project. (5) Engineering for, and acquisition and installation of a cathodic protection system for the pipeline network constructed under Part B of the Project. - 23 - (6) Engineering for conversion equipment for the Borrower and other consumers connected to the pipeline network constructed under Part B of the Project. (7) Acquisition and installation of conversion equipment for the Borrower's power plants connected to the pipeline network constructed under Part B of the Project. (8) Acquisition and installation of conversion equipment for other consumers to the pipeline network constructed under Part B of the Project. Part C: (1) Feasibility studies for the supply of natural gas to households and small-scale industrial consumers in selected areas in Tunisia. (2) A feasibility and optimization study to prepare a future project for the further expansion of Tunisia's onshore pipeline network. Part D: Carrying out of a training program in Tunisia and abroad for management, technical and operational staff as required for the purposes of the Project. The Project is expected to be completed by June 30, 1985. - 24 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning September 1, 1984 through September 1, 1996 1,425,000 On March 1, 1997 1,375,000 * 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. - 25 -. 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 before maturity 1.45% More than three years but not more than six years before maturity 2.90% More than six years but not more than eleven years before maturity 5.35% More than eleven years but not more than fifteen years before maturity 7.30% More than fifteen years before maturity 8.25% - 26 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (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, and in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and .Lorward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating there- to, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the 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. 3 With respect to the procurement of civil works under Parts A and B of the Project: (i) bidders shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines; and (ii) contracts shall be grouped, to the extent practi- cable, to form four bid packages. 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 the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or - 27 - delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Tunisia may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the 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. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in the Republic of Tunisia 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 Tunisia 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. 3. 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. 4. If, as a result of the comparison under paragraph 3 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 - 28 - comparison only, an amount equal to: (i) the amount of customw 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 3 is the lowest evaluat-ed bid shall be selected. C. Review of Procurement Decisions by the Bank 1. The Borrower shall, before qualification is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifi- cations in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: (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 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 the Borrower and state the reasons for such determination. - 29 - (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 submission to the Bank of the first application for withdradal of funds from the Loan Account in respect of such contract. 3. With respect to each contract not governed by the preceding paragraph, 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 con- tract, together with the analysis of the respective bids, recom- mendations 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. 4. 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 issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 25% of the original price, the Borrower 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 Agreement, shall promptly inform the Borrower and state the reasons for its 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 -day of , 1981. FOR SECRETARY