Colombia - Rural Roads Project : Loan 1966 - Loan Agreement - Conformed

OF h LOAN NUMBER 1966-CO DOCUJMENTS Loan Agreement (Rural Roads Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and FONDO NACIONAL DE CAMINOS VECINALES Dated c240 , 1981 LOAN NUMBER 1966-CO LOAN AGREEMENT AGREEMENT, dated eSra& u. , 1981, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and FONDO NACIONAL DE CAMINOS VECINALES (hereinafter called the Borrower). 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, as so modified, being hereinafter called the General Conditions). Section 11.03 is amended to read as follows: "Section 11.03. Action on behalf of the Borrower or Guarantor. Any action required or permitted to be taken, and any documents required or permitted to to executed, pursuant to the Loan Agreement or the Guarantee Agreement, on behalf of the Borrower or the Guarantor, may be taken or executed by the representa- tive of the Borrower, or of the Guarantor designated in the Guarantee Agreement for the purposes of this Section, or any person thereunto authorized in writing by such representative. Any modification or amplification of the provisions of the Loan Agreement or the Guarantee Agreement may be agreed to on behalf of the Borrower or the Guarantor by written instrument executed on behalf of the Borrower or the Guarantor by such representatives or any person thereunto authorized in writing by him; provided that such modification or amplification is reasonable in the circumstances and will not substantially increase the obligations of the Borrower under the Loan Agreement or of the Guarantor under the Guarantee Agreement." 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: -2- (a) "Special Account" means the account to be opened by the Borrower pursuant to Section 3.01 (c) of this Agreement. (b) "Manual" means the "Metodologia y Criterios para la Selecci6n de Caminos", Document 0.P. No. 031 dated September 1980, published by the Borrower, as amended from time to time by agreement between the Bank and the Borrower. (c) "Physical Programming Division" means the Divisi6n de Programaci6n Fisica of the Borrower. (d) "General Directorate" means the Direcci6n General of the Borrower. (e) "Investment Program" means the Borrover's investment program for the years 1981 through 1984 as set forth in the Acta of the Junta Directiva of the Borrower dated March 5, 1981, as such program may be amended from time to time by agreement between the Bank and the Borrower. (f) "Estatutos" means the estatutos of the Borrower approved by Decree No. 366 dated February 27, 1978, as amended by Decree No. 1411 dated June 15, 1979 and as such estatutos may be a-mended from time to time. (g) "Acuerdo de Gastos" means the acuerdo referred to in Article 81 of Decree Law No. 294, dated February 28, 1973. (h) "MOPT" means the Ministerio de Obras PGblicas of the Guarantor. (i) "pesos" and "Col$" mean the currency of the Guarantor. 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 three million dollars ($33,000,000). Section 2.02. (a) 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 -3- time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. (b) The Bank shall, promptly after the compliance by the Borrower with the condition of disbursement established in para- graph 4 (b) of Schedule 1 to this Agreement, withdraw, at the request and on behalf of the Borrower, from the Loan Account and deposit in the Special Account the amount allocated under Category (5) of paragraph 1 of such Schedule. (c) Thereafter, the Bank shall, at the request of the Borrower, withdraw, on behalf of the Borrower, from the Loan Account and deposit in the Special Account the proceeds of the Loan allocated to Parts (1) and (2) of the Project in accordance with the provisions of paragraph (a) above. (d) Prior to or at the time of each request for a deposit by the Bank into the Special Account, the Borrower shall furnish to the Bank in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Bank shall reasonably request, showing that the payment was made on account of the reasonable cost of goods or services required for Part (1) or (2) of the Project and to be financed out of the proceeds of the Loan in accordance with Schedule 1 to this Agreement. (e) If the Bank shall have determined that any payment out of the Special Account (1) was made for any expenditure or in any amount not eligible for financing out of the proceeds of the Loan, or (ii) was not supported by the evidence furnished pursuant to paragraph (d) of this Section, the Borrower shall, promptly upon notice from the Bank and, unless otherwise deter- mined by the Bank, prior to any further deposit in the Special Account by the Bank, deposit in the Special Account an amount equal to the amount of such payment or the portion thereof not so eligible or justified; (f) Notwithstanding the provision of paragraph (a) of this Section, no further deposit in the Special Account shall be made by the Bank when the Bank shall have determined that all further withdrawals from the Loan Account can be made directly by the Borrower from the Loan Account under paragraph (a) of this Section, or when the total amount remaining unwithdrawn under -4- Category (1) of Schedule 1 to this Agreement less the amount of any qualified agreement to reimburse made by the Bank and of any special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions under such Category, shall have reached the equivalent of $2,700,000 whichever shall be sooner. Withdrawal from the Loan Account of the remaining amount of the Loan assigned under said Category (1) shall follow such procedures as shall be agreed between the Borrower and the Bank and shall be made only to the extent that the Bank shall be satisfied by the evidence submitted in support of the applications for such withdrawal that all payments by the Borrower out of the Special Account were made on account of the reasonable cost of works or services required for Part (1) or (2) of the Project and to be financed out of the proceeds of the Loan in accordance with Schedule 1 to this Agreement. 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 June 30, 1985 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of nine and three-fifths per cent (9-3/5%) per annum on the principal amount of the Loan withdrawn and outstanding from ,time to time. Section 2.07. Interest and other charges shall be payable semiannually on April 15 and October 15 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 carry out the Project with due diligence and efficiency and in conformity with appro- priate administrative and engineering practices. -5- (b) The Borrower shall: (i) select the roads to be constructed and rehabilitated under Parts (1) and (2) of the Project, respectively, in accordance with the criteria and methodology established therefor in the Manual including, inter alia, a rate of return for the works to be executed in such roads of not less than 11%; and (ii) furnish to the Bank, for its approval, a detailed report on each of the road sections the Borrower intends to select for purposes of Parts (1) and (2) of the Project, such report to include, inter alia, the economic justification for the selection of such road sections. (c) The Borrower shall, for the purposes of Parts (1) and (2) of the Project, open a Special Account on terms and conditions satisfactory to the Bank in a bank acceptable to the Bank. Payments out of the Special Account shall be made exclusively to pay the reasonable costs of works and services required to carry out Parts (1) and (2) of the Project. (d) Without limitation of its obligations under paragraph (a) above, the Borrower shall: (i) not later than 30 days after the deposit by the Bank, on behalf of the Borrower, of the amount referred to in Section 2.02 (b) of this Agreement, deposit in the Special Account an initial amount equivalent to $1,650,000; (ii) thereafter, not later than 60 days after each deposit made by the Bank in the Special Account pursuant to Section 2.02 (c) of this Agreement, deposit in such Account an amount equal to the aggregate payments made from such Account for the expenditures for which the Bank has made the deposit referred to above less the amount of such deposit; (iii) at all times, take all action necessary to deposit into the Special Account such funds as shall be sufficient to permit a timely and efficient execu- tion of Parts (1) and (2) of the Project; and (iv) by February 28 and August 31 of each year, agree with the Guarantor and the Bank on the provision of fund requirements for a timely and efficient execution of Parts (1) and (2) of the Project for the next following six-month period. -6- Section 3.02. In order to assist the Borrower in the carrying out of Part (4) of the Project, the Borrower shall employ, not later than January 1, 1982, consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, all goods and services financed out of the proceeds of the Loan shall be used exclusively for the Project until its completion. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall 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) 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; and (iv) shall furnish to the Bank quarterly reports containing in respect of each road section included under Parts (1) and (2) of the Project, information on the contracts awarded and the aggregate amount of expenditures incurred for each such section, in such detail as the Bank shall reasonably request. -7- (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) The Borrower shall: (i) by January 31 and September 30 of each year, exchange views with the Bank on the extent to which the Borrower has achieved the objectives of its Investment Program and on the progress of the Project; and (ii) by September 30 of each year, furnish to the Bank its proposed budget for the following year and exchange views with the Bank thereon. (e) 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 project completion report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. (f) The Borrower shall enable the Bank's representatives to examine such plants, installations, sites, works, buildings, property and equipment of the Borrower and such relevant records and documents as the Bank shall reasonably request. Section 3.05. The Borrower shall take all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project. ARTICLE IV Management and Operations of the Borrower Section 4.01. The Borrower shall conduct its business and operations in accordance with appropriate engineering, financial and administrative practices and under the supervision of expe- rienced and competent management assisted by adequate, experienced and competent staff. -8- 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 by June 30, 1982, inform the Bank of the Borrower's recruitment and training policies in respect of its personnel and afford the Bank a reasonable oppor- tunity to comment thereon. Section 4.04. The Borrower shall: (a) by June 30, 1981, confer upon its Physical Programming Division responsibilities for the road maintenance planning of the rural roads network assigned to the Borrower; (b) promptly after the Effective Date, confer and maintain the control and administration of the road maintenance equipment to be acquired under Part (3) of the Project to its General Directorate; (c) by November 30, 1981, complete a detailed inventory of the existing rural roads network assigned to the Borrower, and, thereafter, by June 30 of each year update such inventory; (d) by December 31, 1981, carry out a program to scrap about forty-seven units of obsolete maintenance equipment; and (e) by September 30, 1982, carry out a program to scrap about fifty-two additional units of obsolete maintenance equipment and to dispose of existing obsolete spare parts at the Borrower's central storehouse in Bogota. Section 4.05. The Borrower shall, by June 30, 1981, estab- lish, and thereafter maintain, a three-person working group in charge of identifying any technical difficulties arising in the carrying out of its operations and proposing to the Borrower's management appropriate solutions therefor. Section 4.06. (a) The Borrower shall carry out its Invest- ment Program in accordance with appropriate administrative and engineering practices including, iter alia, the establishment of an adequate balance between its construction, rehabilitation and maintenance activities in order to maintain the Guarantor's rural roads network for which the Borrower is responsible at an adequate level. -9 (b) the Borrower shall furnish to the Bank promptly after its request all such information as the Bank shall reasonably request concerning the Investment Program. ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 5.02. (a) The Borrower shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, certified copiec of its financial statements for such year as so audited; (iii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested including, without limitation to the foregoing, a separate opinion by said auditors as to whether the proceeds of the Loan withdrawn from the Loan Account (other than those proceeds deposited in the Special Account) on the basis of certificates of expenditures were used to make payment for goods received, or works or services performed, and that such goods, works or services were eligible for financing under this Agreement; and (iv) 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) Without limitation to the provisions of paragraph (a) above, the Borrower shall in respect of the Special Account: (i) have such Account audited in accordance with appropriate auditing principles consistenatly applied, by independent auditors acceptable to the Bank, on June 30 and December 31 of each year; (ii) furnish to the Bank as soon as available, but in any case not later than three months after the end - 10 - of each auditing period, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested, in- cluding without limitation to the foregoing a separate opinion by said auditors as to whether the proceeds of the Loan withdrawn from the Special Account on the basis of certificates of expendi- tures were used to make payments for goods received, or works or services performed, and that such goods, works or services were eligible for financing under this Agreement and were used in the carrying out of Parts (1) and (2) of the Project; (iii) furnish to the Bank each month certified statements of the Special Account and such other information concerning such Account and the said certificates of expenditures and the audit thereof as the Bank shall from time to time reasonably request. (c) The Borrower shall retain, until two years after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures for the Project on account of which withdrawals are requested from the Loan Account on the basis of certificates of expenditures and enable the Bank's accredited representatives to examine such records. 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 or disclosed in writing by the Borrower to the Bank. (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 satis- factory 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 - 11 - 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. ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (k) thereof, namely, that the Estatutos of the Borrower or any provision thereof shall have been amended, suspended or abrogated which would affect, materially and adversely, the operation or financial condition of the Borrower or the performance by the Borrower of its obligations under this Agreement. ARTICLE VII Termination Section 7.01. The date)Ub-Au, 3 /, is hereby specified for the purpose of Section 12.04 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: 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) - 12 - For the Borrower: Fondo Nacional de Caminos Vecinales Avenida Caracas 6357 Bogota, D.E. Colombia Telex: 45866 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorizea, 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 Vice President Latin America and the Caribbean FONDO NACIONAL DE CAMINOS VECINALES By Authorized Representative - 13 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works and 22,730,000 consultants' services for Parts (1) and (2) of the Project: (a) carried out 45% under con- tracting (b) carried out 32% by force account (2) Equipment and 8,740,000 spare parts (a) directly 100% of imported foreign expenditures (b) imported and 80% procured locally (c) locally 90% of ex- manufactured factory cost (3) Hand tools 90,000 45% - 14 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (4) Consultants' 90,000 87% services for Part (4) of the Project (5) Initial deposit 1,350,000 pursuant to Section 2.02 (b) of this Agreement TOTAL 33,000,000 2. For the purposes of this Schedule; 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. 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 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: (a) in respect of payments made for expenditures prior to the date of this Agreement; (b) under Category (5) of such paragraph, until the Borrower has provided to the Bank: (i) evidence, satisfactory to the Bank, - 15 - of the establishment of the Special Account; and (ii) a certified copy of the Acuerdo de Gastos providing for the order of payment of an amount equivalent to $1,650,000, corresponding to the counterpart funds referred to in Section 3.01 (d) (i) of this Agreement; (c) in respect of payments made for expenditures under Category (1) of such paragraph, unless the Borrower furnishes to the Bank: (i) evidence, satisfactory to the Bank, that it has deposited in the Special Account the counterpart funds referred to in Section 3.01 (d) (ii) of this Agreement; and (ii) a certified copy of the Acuerdo de Gastos providing for the order of payment of the counterpart funds to be deposited by the Borrower in the Special Account pursuant to Section 3.01 (d) (ii) of this Agree- ment; (d) under Categories (1) and (2) of such paragraph, unless the Bank has approved the reports on the respective road section for which withdrawals from the Loan Account are being requested by the Borrower, pursuant to Section 3.01 (b) (ii) of the Loan Agreement; (e) in respect of the expenditures for spare parts included under .ategory (2) of such paragraph for an amount exceeding 10% of the payments made for the equipment included under such Category; (f) in respect of expenditures for civil works executed by force account for amounts exceeding the Borrower's official cost estimates for such works; and (g) in respect of payments made for expenditures under Category (1) of such paragraph, unless the Guarantor, the Bank and the Borrower have reached the agreement for the provision of funds to the Special Account referred to in Section 3.01 (d) (iv) of this Agreement within the dates specified therein. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the.Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to - 16 - 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. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 17 - SCHEDULE 2 Description of the Project The Project is part of the Borrower's Investment Program whose basic objectives are the following: (i) gradual increase in the proportion of rehabilitation works within the Borrower's total working program; (ii) establish the basis for a routine maintenance program; and (iii) strengthen the Borrower's capabili- ties in the areas of planning, management and control. The Project will consist of the following: Part (1) Construction of about 710 kms of roads. Part (2) Rehabilitation of about 710 kms of roads. Part (3) A program of routine maintenance of rural roads including, inter alia, the acquisition and utilization of hand tools and about 250 units of equipment. Part (4) Provision of technical assistance to strengthen the Borrower's administrative structure and, especially, its management information system. T P * * The Project is expected to be completed by December 31, 1984. - 18 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each April 15 and October 15 beginning October 15, 1985 through October 15, 1997 1,270,000 On April 15, 1998 1,250,000 * 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 equiva- lents determined as for purposes of withdrawal. - 19 - 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 1.70% More than three years but not more than six years before maturity 3.40% More than six years but not more than eleven years before maturity 6.20% More than eleven years but not more than fifteen years before maturity 8.50% More than fifteen years before maturity 9.60% - 20 SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Parts C and E hereof, 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, 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 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 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. 3. 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 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 Colombia may be granted a margin of preference in accordance with, and subject to, the following provisions: - 21 - 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 Colombia 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 Colombia 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 taces 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 evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall.be selected for the award. 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 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 3 is the lowest evaluated bid shall be selected. - 22 - C. Other Procurement Procedures 1. Contracts for goods estimated to cost, after grouping in accordance with paragraph 1.1 of Part A of the Guidelines the equivalent of less than $50,000, and up to an aggregate amount equivalent to $500,000, shall be procured in accordance with local competitive bidding procedures. 2. Contracts for civil works, included under Parts (1) and (2) of the Project and hand tools for purposes of Part (3) of the Project shall be procured in accordance with local competitive bidding procedures. D. Review of Procurement Decisions by the Bank 1. With respect to all contracts foTr civil works estimated to cost the equivalent of $700,000 or more: (a) 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. (b) 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. (c) 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 withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract for civil works 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 contract. The Borrower shall retain, until two years after the Closing Date, all records evidencing the analysis of the respective bids, recommendations for award and such other - 23 - information as the Bank shall reasonably request and enable the Bank's accredited representatives to examine such records. 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. 3. With respect to all contracts for goods estimated to cost the equivalent of $50,000 or more; (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower 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. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the sub- mission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 4. With respect to each contract for goods 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 contract, together with the analysis of the respective bids, - 24 - recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 5. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension 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 5% 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. E. Procurement Without Contracting Civil works for Parts (1) and (2) of the Project, up to an aggregate amount equivalent to $1,000,000 in respect of Part (1) and of $3,000,000 in respect of Parts (1) and (2) of the Project, may be executed by the Borrower by force account, provided, however, that the Borrower shall so execute such works after completion of a procurement procedure in which no acceptable bid or quotation was presented. 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*, 198 _ FOR SECRETARY