Loan Number 4009 RU
LOAN AGREEMENT
(COMMUNITY SOCIAL INFRASTRUCTURE PROJECT)
BETWEEN RUSSIAN FEDERATION AND INTERNATIONAL BANK
FOR RECONSTRUCTION AND DEVELOPMENT
(Washington, 27.VIII.1996)
Agreement, dated August 27, 1996, between the Russian
Federation (the Borrower) and International Bank for
Reconstruction and Development (the Bank).
Whereas the Borrower, having satisfied itself as to the
feasibility and priority of the Project described in Schedule 2 to
this Agreement, has requested the Bank to assist in the financing
of the Project;
Whereas the Bank has agreed, on the basis, inter alia, of the
foregoing, to extend the Loan to the Borrower upon the terms and
conditions set forth in this Agreement.
How therefore the parties hereto hereby agree as follows:
Article I
General Conditions; Definitions
Section 1.01. The "General Conditions Applicable to Loan and
Guarantee Agreements for Single Currency Loans" of the Bank, dated
May 30, 1995, (the General Conditions) constitute an integral part
of this Agreement.
Section 1.02. 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 additional terms have the following
meanings:
(a) "Advisory Board" means the board referred to in paragraph 1
(b) of Part I D of Schedule 7 to this Agreement;
(b) "CPIU" means the Central Project Implementation Unit to be
established by the Borrower in Moscow pursuant to Section 6.01 (b)
of this Agreement;
(c) "MINNAT" means the Ministry of Nationalities and Federal
Affairs of the Borrower, and includes any successor or successors
thereto;
(d) "Novosibirsk Region" means Novosibirsk Region, a subject of
the Russian Federation, and includes any successor or successors
thereto;
(e) "Novosibirsk Subsidiary Loan Agreement" means the agreement
to be entered into between the Borrower and Novosibirsk Region
referred to in Section 3.01 (c) of this Agreement, as the same may
be amended from time to time, and such term includes all schedules
and agreements supplemental to the Novosibirsk Subsidiary Loan
Agreement;
(f) "Project Account" means each of the accounts referred to in
paragraph 1 (c) of Part I D of Schedule 7 to this Agreement;
(g) "Project Bureau" means each of the Project bureaus to be
established in each of Rostov Region and Novosibirsk Region
referred to in paragraph 1 (a) of Part I D of Schedule 7 to this
Agreement;
(h) "Project Manual" means the project manual to be submitted
to the Bank by the Borrower and referred to in paragraph 3 of
Schedule 5 to this Agreement establishing criteria for the
selection, appraisal and implementation of Sub-projects;
(i) "Project Preparation Advance" means the project preparation
advance granted by the Bank to the Borrower pursuant to an
exchange of letters dated November 20, 1995 and April 5, 1996
between the Borrower and the Bank;
(j) "Project Sector" means each of the:
(i) education;
(ii) health and
(iii) water supply and sanitation sectors to be financed
under the Project;
(k) "Region" means each of Novosibirsk Region and Rostov Region
(as hereinafter defined);
(l) "Rostov Region" means Rostov Region, a subject of the
Russian Federation, and includes any successor or successors
thereto;
(m) "Rostov Subsidiary Loan Agreement" means the agreement to
be entered into between the Borrower and Rostov Region referred to
in Section 3.01 (c) of this Agreement, as the same may be amended
from time to time , and such term includes all schedules and
agreements supplemental to the Rostov Subsidiary Loan Agreement;
(n) "Special Account" means the account referred to in Section
2.02 (b) of this Agreement;
(o) "Sub-borrower" means a sub-region, municipality, vodokanal
(as hereinafter defined) or other entity to which Rostov Region or
Novosibirsk Region proposes to make or has made a Sub-loan;
(p) "Sub-loan" means a loan made or proposed to be made by a
Region to a Sub-borrower for a Sub-project (as hereinafter
defined) on the terms and conditions set out in Part II of
Schedule 7 to this Agreement out of the equivalent of the proceeds
of the Loan relent to the Region under a Subsidiary Loan Agreement
(as hereinafter defined);
(q) "Sub-project" means a specific project in any Project
Sector under Part A or Part B of the Project to be carried out by
a Sub-borrower utilizing the proceeds of a Sub-loan in accordance
with the procedures and criteria referred to in Part II of
Schedule 7 to this Agreement;
(r) "Subsidiary Loan Agreements" means the Rostov Subsidiary
Loan Agreement and the Novosibirsk Subsidiary Loan Agreement and
the term "Subsidiary Loan" means each loan provided thereunder;
and
(s) "Vodokanal" means a public corporation responsible for
water supply and sanitation utilities in Rostov Region or
Novosibirsk Region.
Article II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, on the
terms and conditions set forth or referred to in the Loan
Agreement, an amount equal to two hundred million dollars
(200,000,000 USD).
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 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 described in Schedule 2 to this
Agreement and to be financed out of the proceeds of the Loan.
(b) The Borrower may, for the purposes of the Project, open and
maintain in Dollars a special deposit account in a commercial bank
on terms and conditions satisfactory to the Bank, including
appropriate protection against set-off, seizure or attachment.
Deposits into, and payments out of, the Special Account shall be
made in accordance with the provisions of Schedule 6 to this
Agreement.
(c) Promptly after the Effective Date, the Bank shall, on
behalf of the Borrower, withdraw from the Loan Account and pay to
itself the amount required to repay the principal amount of the
Project Preparation Advance withdrawn and outstanding as of such
date and to pay all unpaid charges thereon. The unwithdrawn
balance of the authorized amount of the Project Preparation
Advance shall thereupon be canceled.
Section 2.03. The Closing Date shall be December 31, 2002 or
such later date as the Bank shall establish. The Bank shall
promptly notify the Borrower of such later date.
Section 2.04. 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 2.05. (a) The Borrower shall pay interest on the
principal amount of the Loan withdrawn and outstanding from time
to time, at a rate for each Interest Period equal to LIBOR Base
Rate plus LIBOR Total Spread.
(b) For the purposes of this Section:
(i) "Interest Period" means the initial period from and
including the date of this Agreement to, but excluding, the
first Interest Payment Date occurring thereafter, and after
the initial period, each period from and including an Interest
Payment Date to, but excluding the next following Interest
Payment Date.
(ii) "Interest Payment Date" means any date specified in
Section 2.06 of this Agreement.
(iii) "LIBOR Base Rate" means, for each Interest Period,
the London interbank offered rate for six-month deposits in
dollars for value the first day of such Interest Period (or,
in the case of the initial Interest Period, for value the
Interest Payment Date occurring on or next preceding the first
day of such Interest Period), as reasonably determined by the
Bank and expressed as a percentage per annum.
(iv) "LIBOR Total Spread" means, for each Interest Period:
(A) one half of one percent (1/2 of 1%);
(B) minus (or plus) the weighted average margin, for
such Interest Period, below (or above) the London
interbank offered rates, or other reference rates, for
six-month deposits, in respect of the Bank's outstanding
borrowings or portions thereof allocated by the Bank to
fund single currency loans or portions thereof made by it
that include the Loan; as reasonably determined by the
Bank and expressed as a percentage per annum.
(c) The Bank shall notify the Borrower of LIBOR Base Rate and
LIBOR Total Spread for each Interest Period, promptly upon the
determination thereof.
(d) Whenever, in light of changes in market practice affecting
the determination of the interest rates referred to in this
Section 2.05, the Bank determines that it is in the interest of
its borrowers as a whole and of the Bank to apply a basis for
determining the interest rates applicable to the Loan other than
as provided in said Section, the Bank may modify the basis for
determining the interest rates applicable to amounts of the Loan
not yet withdrawn upon not less than six (6) months' notice to the
Borrower of the new basis. The basis shall become effective on the
expiry of the notice period unless the Borrower notifies the Bank
during said period of its objection thereto, in which case said
modification shall not apply to the Loan.
Section 2.06. Interest and other charges shall be payable April
15 and October 15 in each year.
Section 2.07. 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 declares its commitment to the
objectives of the Project as set forth in Schedule 2 to this
Agreement, and, to this end:
(i) shall carry out Part C of the Project, and
(ii) shall cause each of Rostov Region and Novosibirsk
Region to carry out Parts A and B, respectively, of the
Project with due diligence and in conformity with appropriate
administrative and financial practices and shall provide,
promptly as needed, the funds, facilities, services and other
resources required for such Parts of the Project.
(b) Without limitation to the provisions of paragraph (a) of
this Section, and except as the Bank shall otherwise agree, the
Borrower shall carry out Part C of the Project and cause each of
Rostov Region and Novosibirsk Region to carry out Parts A and B,
respectively, of the Project in accordance with the Project
Implementation Schedule referred to in paragraph 2 of Part I B of
Schedule 7 to this Agreement.
(c) The Borrower shall relend out of the proceeds of the Loan:
(i) the amounts allocated from time to time under
Categories 1 (a) and (c), 2 (a) and (c), 3 (a), 4 (a), 5 (a)
and 6 (a) to Rostov Region; and
(ii) the amounts allocated from time to time under
Categories 1 (b) and (d), 2 (b) and (d), 3 (b), 4 (b), 5 (b)
and 6 (b) to Novosibirsk Region under Subsidiary Loan
Agreements to be entered into between the Borrower and each of
Rostov Region and Novosibirsk Region under terms and
conditions satisfactory to the Bank, including, without
limitation, the terms and conditions specified in Part I of
Schedule 7 to this Agreement.
(d) The Borrower shall exercise its rights under the Subsidiary
Loan Agreements in such manner as to protect the interests of the
Borrower and the Bank and to accomplish the purposes of the Loan,
and, except as the Bank shall otherwise agree, the Borrower shall
not assign, amend, abrogate or waive the Subsidiary Loan
Agreements or any provision thereof.
Section 3.02. Except as the Bank shall otherwise agree,
procurement of the goods, works and consultants' services required
for the Project and to be financed out of the proceeds of the Loan
shall be governed by the provisions of Schedule 4 to this
Agreement.
Section 3.03. The Borrower shall:
(a) maintain policies and procedures adequate to enable it to
monitor and evaluate on a continuous basis, in accordance with
indicators satisfactory to the Bank, the carrying out of the
Project and the achievement of the objectives thereof;
(b) prepare, under terms of reference satisfactory to the Bank,
and furnish to the Bank on or about June 1, 1998, a report
integrating the results of the monitoring and evaluation
activities performed pursuant to paragraph (a) of this Section, on
the progress achieved in the carrying out of the Project during
the period preceding the date of said report and setting out the
measures recommended to ensure the efficient carrying out of the
Project and the achievement of the objectives thereof during the
period following such date; and
(c) review with the Bank by September 1, 1998, or such later
date as the Bank shall request, the report referred to in
paragraph (b) of this Section, and, thereafter, take all measures
required to ensure the efficient completion of the Project and the
achievement of the objectives thereof, based on the conclusions
and recommendations of the said report and the Bank's views on the
matter.
Section 3.04. For the purposes of Section 9.07 of the General
Conditions, and without limitation thereto, the Borrower shall:
(a) prepare, on the basis of guidelines acceptable to the Bank,
and furnish to the Bank not later than six (6) months after the
Closing Date or such later date as may be agreed for this purpose
between the Borrower and the Bank a plan for the future operation
of the Project; and
(b) afford the Bank a reasonable opportunity to exchange views
with the Borrower on said plan.
Article IV
Financial and Other Covenants
Section 4.01. (a) The Borrower shall maintain or cause to be
maintained records and accounts adequate to reflect in accordance
with sound accounting practices the operations, resources and
expenditures in respect of the Project of the departments or
agencies of the Borrower responsible for carrying out the Project
or any part thereof.
(b) The Borrower shall:
(i) have the records and accounts referred to in paragraph
(a) of this Section and those for the Special Account 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 six (6) months after the end of each such
year, the report of such audit by such 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 said records and accounts and the audit thereof as
the Bank shall from time to time reasonably request.
Section 4.02. (a) For all expenditures with respect to which
withdrawals from the Loan Account were made on the basis of
statements of expenditure, the Borrower shall:
(i) maintain or cause to be maintained in accordance with
sound accounting practices, records and accounts reflecting
such expenditures;
(ii) retain and ensure that all records (contracts,
orders, invoices, bills, receipts and other documents)
evidencing such expenditures are retained until at least one
year after the Bank has received the audit report for the
fiscal year in which the last withdrawal from the Loan Account
was made;
(iii) enable the Bank's representatives to examine such
records; and
(iv) ensure that such records and accounts are included in
the annual audit referred to in paragraph (b) of this Section
and that the report of such audit contains a separate opinion
by said auditors as to whether the statements of expenditure
submitted during such Fiscal year, together with the
procedures and internal controls involved in their
preparation, can be relied upon to support the related
withdrawals.
Section 4.03. The Borrower shall ensure that Novosibirsk Region
and Rostov Region shall, within one year of the date of
effectiveness of this Loan Agreement, establish an investment
mechanism acceptable to the Bank for financing pilot Sub-projects
in the health sector.
Section 4.04. The Borrower shall cause each Region to ensure
that:
(a) the aggregate amount of Loan proceeds utilized for Sub-
projects in any one Project Sector shall constitute not more than
40% nor less than 25% of the aggregate amount allocated to
Categories 1, 2 (a), (b), (c) and (d) and 8 (a) and (b) in
Schedule 1 to the Loan Agreement; and
(b) not more than 50% of the aggregate amount utilized for Sub-
projects in any one Project Sector shall be in respect of Sub-
projects located in the capital city of the Region.
Article V
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (l) of the General
Conditions, the following additional events are specified:
(a) Rostov Region or Novosibirsk Region shall have failed to
perform any of its obligations under the Rostov Subsidiary Loan
Agreement or the Novosibirsk Subsidiary Loan Agreement,
respectively; and
(b) as a result of events which have occurred after the date of
the Loan Agreement, an extraordinary situation shall have arisen
which shall make it improbable that Rostov Region or Novosibirsk
Region will be able to perform its obligations under the Rostov
Subsidiary Loan Agreement or the Novosibirsk Subsidiary Loan
Agreement, respectively.
Section 5.02. Pursuant to Section 7.01 (h) of the General
Conditions, the following additional event is specified: the event
specified in paragraph (a) of Section 5.01 of this Agreement shall
occur and shall continue for a period of sixty (60) days after
notice thereof shall have been given by the Bank to the Borrower.
Article VI
Effective Date; Termination
Section 6.01. The following events are specified as additional
conditions, to the effectiveness of the Loan Agreement within the
meaning of Section 12.01 (c) of the General Conditions:
(a) at least one Subsidiary Loan Agreement has been executed
and become effective in accordance with its terms; and
(b) the CPIU has been established with separate juridical
status to coordinate Project related activities among other
federal agencies, ministries and regions, and a director and key
personnel of the CPIU have been appointed with qualifications and
experience satisfactory to the Bank.
Section 6.02. The following is specified as an additional
matter, within the meaning of Section 12.02 (c) of the General
Conditions, to be included in the opinion or opinions to be
furnished to the Bank: that the Subsidiary Loan Agreement referred
to in Section 6.01 (a) has been duly authorized or ratified by the
Borrower and the Region, and is legally binding upon the Borrower
and the Region in accordance with its terms.
Section 6.03. The date ninety (90) days after the date of this
Agreement is hereby specified for the purposes of Section 12.04 of
the General Conditions.
Article VII
Representatives of the Borrower; Addresses
Section 7.01. The Minister of Finance or the Deputy Minister of
Finance of the Borrower is designated as representative of the
Borrower for the purposes of Section 11.03 of the General
Conditions.
Section 7.02. The following addresses are specified for the
purposes of Section 11.01 of the General Conditions:
For the Borrower:
Ministry of Finance
Ul Ilyinka 9
103097 Moscow
Russian Federation
Telex: 112008
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 197688 (TRT),
Washington, D.C. 248423 (RCA),
64145 (WUI) or
82987 (FTCC)
In witness whereof, the parties hereto, acting through their
duly authorized representatives, 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.
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:
--------------------------------T--------------T-----------------¬
¦ Category ¦Amount of the ¦ % of ¦
¦ ¦Loan Allocated¦ Expenditures ¦
¦ ¦ (Expressed ¦ to be Financed ¦
¦ ¦ in Dollar ¦ ¦
¦ ¦ Equivalent) ¦ ¦
+-------------------------------+--------------+-----------------+
¦(1) Civil Works ¦ ¦75% ¦
¦ (a) Part A1 of the Project ¦ 37,630,000 ¦ ¦
¦ (b) Part B1 of the Project ¦ 37,060,000 ¦ ¦
¦ (c) Part A2 of the Project ¦ 12,630,000 ¦ ¦
¦ (d) Part B2 of the Project ¦ 12,630,000 ¦ ¦
¦ (e) Part C of the Project ¦ 50,000 ¦ ¦
¦(2) Goods ¦ ¦100% of foreign ¦
¦ (a) Part A1 of the Project ¦ 18,690,000 ¦expenditures ¦
¦ (b) Part B1 of the Project ¦ 19,650,000 ¦100% of local ¦
¦ (c) Part A2 of the Project ¦ 5,800,000 ¦expenditures ¦
¦ (d) Part B2 of the Project ¦ 5,800,000 ¦(ex-factory cost)¦
¦ (e) Part C of the Project ¦ 60,000 ¦and 75% of local ¦
¦ ¦ ¦expenditures ¦
¦ ¦ ¦for other items ¦
¦ ¦ ¦procured locally ¦
¦(3) Consultants' services ¦ ¦100% of foreign ¦
¦ (a) Part A1 of the Project ¦ 8,350,000 ¦expenditures ¦
¦ (b) Part B1 of the Project ¦ 9,230,000 ¦65% of local ¦
¦ (c) Part C of the Project ¦ 4,620,000 ¦expenditures ¦
¦(4) Training ¦ ¦100% ¦
¦ (a) Part A1 of the Project ¦ 2,230,000 ¦ ¦
¦ (b) Part B1 of the Project ¦ 2,600,000 ¦ ¦
¦ (c) Part C of the Project ¦ 170,000 ¦ ¦
¦(5) Health Sector Consumables ¦ ¦100% of foreign ¦
¦ (a) Part A1 of the Project ¦ 5,150,000 ¦expenditures ¦
¦ (b) Part B1 of the Project ¦ 5,850,000 ¦75% of local ¦
¦ ¦ ¦expenditures ¦
¦(6) Incremental Operating Costs¦ ¦100% ¦
¦ (a) Part A1 of the Project ¦ 620,000 ¦ ¦
¦ (b) Part B1 of the Project ¦ 620,000 ¦ ¦
¦ (c) Part C of the Project ¦ 760,000 ¦ ¦
¦(7) Refunding of Project ¦ 1,500,000 ¦Amount due ¦
¦ Preparation Advance ¦ ¦pursuant to ¦
¦ ¦ ¦Section 2.02 (c) ¦
¦ ¦ ¦of this Agreement¦
¦(8) Unallocated ¦ ¦ ¦
¦ (a) Part A1 of the Project ¦ 4,000,000 ¦ ¦
¦ (b) Part B1 of the Project ¦ 4,050,000 ¦ ¦
¦ (c) Part C of the Project ¦ 250,000 ¦ ¦
+-------------------------------+--------------+-----------------+
¦Total ¦ 200,000,000 ¦ ¦
L-------------------------------+--------------+------------------
2. For the purposes of this Schedule:
(a) the term "foreign expenditures" means expenditures in the
currency of any country other than that of the Borrower for goods
or services supplied from the territory of any country other than
that of the Borrower;
(b) the term "local expenditures" means expenditures in the
currency of the Borrower or for goods or services supplied from
the territory of the Borrower;
(c) the term "health sector consumables" means incremental
costs of consumable health supplies required for the operation of
the equipment provided under the Project; and
(d) the term "incremental operating costs" means incremental
operating costs (other than health sector consumables), utilities
and maintenance; office accommodation and equipment, accessories,
maintenance and consumable supplies; advertising, printing,
communications and transportation costs.
3. Notwithstanding the provisions of paragraph 1 above, no
withdrawals shall be made in respect of:
(a) any payments made for expenditures under Categories 1 (a)
and (b), 2 (a), (b) and (e), 3 (a), (b) and (c) and 4 (a), (b) and
(c) under the Project prior to the date of this Agreement, except
that withdrawals, in an aggregate amount not exceeding the
equivalent of 15,000,000 USD, may be made in respect of Categories
1 (a) and (b), 2 (a), (b) and (e), 3 (a), (b) and (c) and 4 (a),
(b) and (c) on account of payments made for expenditures before
that date but after October 1, 1995;
(b) any payments made for expenditures under Categories 1 (c)
and (d) and 2 (c) and (d) under the Project prior to the date of
this Agreement;
(c) any payments made for expenditures under Categories 1 (a),
(b), (c) and (d), 2 (a), (b), (c) and (d), 3 (a) and (b), 4 (a)
and (b), 5 (a) and (b), 6 (a) and (b) and 8 (a) and (b) to a
Region unless the Subsidiary Loan Agreement between the Borrower
and the Region has become effective; and
(d) any payments made for expenditures under Categories 1 (c)
and (d) and 2 (c) and (d) under the Project unless the Sub-loan
for such Sub-project shall have been approved by the Bank and such
expenditures shall have been made not earlier than ninety days
prior to the date on which the Bank shall have received the
application and information required under paragraph 2 of Part II
of Schedule 7 to this Agreement in respect of such Sub-loan.
4. The Bank may require withdrawals from the Loan Account to be
made on the basis of statements of expenditure for expenditures
for goods, works and services under contracts not exceeding 50,000
USD equivalent, under such terms and conditions as the Bank shall
specify by notice to the Borrower.
SCHEDULE 2
DESCRIPTION OF THE PROJECT
The objectives of the Project are to:
(i) reduce the deterioration of health, education and water
supply and sanitation facilities in Rostov and Novosibirsk
Regions;
(ii) improve the efficiency in managing public resources in
Rostov and "Novosibirsk Regions;
(iii) foster private sector development in Rostov and
Novosibirsk Regions;
(iv) promote participation, including non-governmental
participation, in decision-making in the education, health and
water supply and sanitation sectors in Rostov and Novosibirsk
Regions; and
(v) monitor the effectiveness of new financial, procurement,
and participatory practices in the education, health and water
supply and sanitation sectors and disseminate the results in order
to promote the use of these practices in similar activities in the
territory of the Borrower.
The Project consists of the following parts, subject to such
modifications thereof as the Borrower and the Bank may agree upon
from time to time to achieve such objectives:
Part A. ROSTOV REGION
Part A1
Provision of goods and services and carrying out of works for
Sub-projects through Sub-loans, which have been identified by the
Borrower as at the date of this Agreement and have been approved
by the Bank, comprising:
1. Education
(i) Rehabilitation of school facilities and provision of
equipment to schools in Rostov Region providing general education,
the expansion of capacity in schools in Rostov Region and the
construction of new schools in Rostov Region; and
(ii) provision of training and consultants' services to improve
project management in school facilities, including the
identification, preparation and implementation of Sub-projects.
2. Health
(i) Provision of goods and carrying out of works for the
rehabilitation and upgrading of the core functions of selected
municipal and emergency hospitals and polyclinics in Rostov
Region;
(ii) provision of consultants' services to assist in developing
new financial mechanisms in Rostov Region on a pilot basis in
order to improve the process of selecting and financing medical
investments; and
(iii) provision of training to selected health sector
specialists in Rostov Region and consultants' services for the
design and supervision of project facilities.
3. Water Supply and Sanitation
(i) Provision of goods and carrying out of works for the
rehabilitation, refurbishment and renewal of the existing water
supply and sanitation infrastructure in Rostov Region and for
construction of new water supply and sanitation infrastructure in
Rostov Region;
(ii) provision of consultants' services and training in all
aspects of design, construction, operation and institutional and
financial management of water supply and sanitation services; and
(iii) provision of consultants" services to appraise the
management and operation of the structure and activities of the
water supply and sanitation sectors.
4. Budget and Expenditure Management
Provision of consultants' services, training and goods to
assist regional and sub-regional governments in improving
budgetary management and expenditure and to reform financial and
managerial practices.
5. Project Bureau
Support to the Project Bureau in Rostov through the provision
of consultants' services, training and goods.
Part A2
Provision of goods and carrying out of works for Sub-projects
through Sub-loans within the education, health and water supply
and sanitation sectors in Rostov Region.
Part B. NOVOSIBIRSK REGION
Part B1
Provision of goods and services and carrying out of works for
Sub-projects through Sub-loans, which have been identified by the
Borrower as at the date of this Agreement and have been approved
by the Bank, comprising:
1. Education
(i) Rehabilitation of school facilities and provision of
equipment to the schools in the Novosibirsk Region providing
general education and the construction of new schools in
Novosibirsk Region;
(ii) provision of training and consultants' services to improve
project management in school facilities, including the
identification, preparation and implementation of Sub-projects;
and
(iii) provision of equipment, training and consultants'
services to develop a management information system (MIS Program)
for school facilities to improve the planning, management and
operation of school facilities in the Novosibirsk municipality.
2. Health
(i) Provision of goods and carrying out of works for the
rehabilitation and upgrading of the core functions of selected
municipal and emergency hospitals and polyclinics in Novosibirsk
Region;
(ii) provision of consultants' services to assist in developing
new financial mechanisms on a pilot basis in order to improve the
process of selecting and financing medical investment; and
(iii) provision of training to selected health sector
specialists in Novosibirsk Region and consultants' services for
the design and supervision of project facilities.
3. Water Supply and Sanitation
(i) Provision of goods and carrying out of works for the
rehabilitation, refurbishment and renewal of the existing water
supply and sanitation infrastructure in Novosibirsk Region and for
construction of new water supply and sanitation infrastructure in
Novosibirsk Region;
(ii) provision of consultants' services and training in all
aspects of design, construction, operation and institutional and
financial management of water supply and sanitation services to
establish financial mechanisms to achieve cost-recovery from the
major vodokanals; and
(iii) provision of consultants' services to appraise the
management and operation of the structure and activities of the
water supply and sanitation sectors.
4. Budget and Expenditure Management
Provision of training, consultants' services and goods to
assist regional and sub-regional governments in improving
budgetary management and expenditure and to reform financial and
managerial practices.
5. Project Bureau
Support to the Project Bureau in Novosibirsk through the
provision of consultants' services, training and goods.
Part B2
Provision of goods and carrying out of works for Sub-projects
through Sub-loans within the education, health and water supply
and sanitation sectors in Novosibirsk Region.
Part C
CPIU and Monitoring and Evaluation
Support to the CPIU through the provision of consultants'
services, training and goods and provision of consultants'
services to monitor and evaluate the Project, to prepare the
Project Manual and to assist in the replication of the Project in
other regions.
* * *
The Project is expected to be completed by June 30, 2002.
SCHEDULE 3
AMORTIZATION SCHEDULE
----------------------------------T------------------------------¬
¦ Date Payment Due ¦ Payment of Principal ¦
¦ ¦ (expressed in dollars) <*> ¦
+---------------------------------+------------------------------+
¦On each April 15 and October 15 ¦ ¦
¦ beginning October 15, 2001 ¦ ¦
¦ through April 15, 2012 ¦ 8,335,000 ¦
¦On April 15, 2013 ¦ 8,295,000 ¦
L---------------------------------+-------------------------------
--------------------------------
<*> The figures in this column represent the amount in dollars
to be repaid, except as provided in Section 4.04 (d) of the
General Conditions.
SCHEDULE 4
PROCUREMENT AND CONSULTANTS' SERVICES
Section I. PROCUREMENT OF GOODS AND WORKS
Part A
General
Goods and works shall be procured in accordance with the
provisions of Section I of the "Guidelines for Procurement under
IBRD Loans and IDA Credits" published by the Bank in January 1995
(the Guidelines) and the following provisions of this Section, as
applicable.
Part B
International Competitive Bidding
1. Except as otherwise provided in Part C of this Section,
goods and works shall be procured under contracts awarded in
accordance with the provisions of Section II of the Guidelines and
paragraph 5 of Appendix 1 thereto.
2. The provisions of paragraphs 2.54 and 2.55 of the Guidelines
and Appendix 2 thereto shall apply to goods manufactured in the
territory of the Borrower.
3. Notwithstanding the provisions of paragraph 1 of Part C of
this Schedule 4, items or groups of items for works for the
installation of chlorination systems in Novosibirsk Region and for
installation of specific water supply equipment in Rostov Region,
involving installation techniques or equipment estimated to cost
more than the equivalent of 1,000,000 USD per contract shall be
procured under contracts awarded in accordance with the provisions
of Section II of the Guidelines and paragraph 5 of Appendix 1
thereto.
Part C
Other Procurement Procedures
National Competitive Bidding
1. Except as provided in paragraph 3 of Part B of this Schedule
4, items or groups of items for works estimated to cost the
equivalent of 2,000,000 USD or less per contract up to an
aggregate amount not to exceed 58,000,000 USD, may be procured
under contracts awarded in accordance with the provisions of
paragraphs 3.3 and 3.4 of the Guidelines.
2. Items or groups of items for goods (other than vehicles)
estimated to cost the equivalent of 300,000 USD or less per
contract up to an aggregate amount not to exceed tile equivalent
of 1,000,000 USD, may be procured under contracts awarded in
accordance with the provisions of paragraphs 3.3 and 3.4 of the
Guidelines.
National Shopping
3. Items or groups of items for goods estimated to cost the
equivalent of less than 50,000 USD per contract, up to an
aggregate amount not to exceed the equivalent of 500,000 USD, may
be procured under contracts awarded on the basis of national
shopping procedures in accordance with the provisions of
paragraphs 3.5 and 3.6 of the Guidelines.
4. Contracts for cesspit emptying vehicles up to an aggregate
amount not to exceed the equivalent of 800,000 USD may be awarded
in accordance with the provisions of paragraphs 3.5 and 3.6 of the
Guidelines.
Direct Contracting
5. Contracts for specialized medical equipment which are of a
proprietary nature not to exceed the equivalent of 500,000 USD in
the aggregate, may, with the Bank's prior agreement, be procured
in accordance with the provisions of paragraph 3.7 of the
Guidelines.
Part D
Review by the Bank of Procurement Decisions
1. Procurement Planning
Prior to the issuance of any invitations to prequalify for
bidding or to bid for contracts, the proposed procurement plan for
the Project shall be furnished to the Bank for its review and
approval, in accordance with the provisions of paragraph 1 of
Appendix 1 to the Guidelines. Procurement of all goods and works
shall be undertaken in accordance with such procurement plan as
shall have been approved by the Bank, and with the provisions of
said paragraph 1.
2. Prior Review
With respect to:
(i) each contract estimated to cost the equivalent of 1.000.000
USD or more;
(ii) each contract awarded on the basis of Part A of this
Schedule; and
(iii) each of the first two contracts awarded on the basis of
Parts C1 and C3 of this Schedule, the procedures set forth in
paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply.
3. Post Review
With respect to each contract not governed by paragraph 2 of
this Part, the procedures set forth in paragraph 4 of Appendix 1
to the Guidelines shall apply.
Section II. EMPLOYMENT OF CONSULTANTS
1. Consultants' services shall be procured under contracts
awarded in accordance with the provisions of the "Guidelines for
the Use of Consultants by World Bank Borrowers and by The World
Bank as Executing Agency" published by the Bank in August 1981
(the "Consultant Guidelines"). Such contracts shall be based on
the standard form of contract for consultants' services issued by
the Bank, with such modifications thereto as shall have been
agreed by the Bank. Where no relevant standard contract documents
have been issued by the Bank, other standard forms acceptable to
the Bank shall be used.
2. Notwithstanding the provisions of paragraph 1 of this
Section, the provisions of the Consultant Guidelines requiring
prior Bank review or approval of budgets, short lists, selection
procedures, letters of invitation, proposals, evaluation reports
and contracts, shall not apply to:
(a) contracts for the employment of consulting firms estimated
to cost less than 100,000 USD equivalent each; or
(b) contracts for the employment of individual consultants
estimated to cost less than 50,000 USD equivalent each. However,
said exceptions to prior Bank review shall not apply to:
(a) the terms of reference for such contracts;
(b) single-source selection of consulting firms;
(c) assignments of a critical nature, as reasonably
determined by the Bank;
(d) amendments to contracts for the employment of
consulting firms raising the contract value to 100,000 USD
equivalent or above; or
(e) amendments to contracts for the employment of
individual consultants raising the contract value to
50,000 USD equivalent or above.
SCHEDULE 5
IMPLEMENTATION PROGRAM
1. The Borrower shall establish and maintain the CPIU in Moscow
with separate juridical status with terms of reference
satisfactory to the Bank and shall ensure that the CPIU is
adequately staffed by key personnel with qualifications, terms of
reference and experience satisfactory to the Bank.
2. The Borrower, through MINNAT, shall establish and maintain
an interministerial working group with representatives from the
Ministries of Education, Health, Construction, Finance. Economy
and Environment and from each Region, chaired by a representative
from MINNAT and attended by the director of the CPIU, to oversee
the overall implementation of the Project.
3. The Borrower shall, prior to September 1, 1998, and in
consultation with the Project Bureau in each Region, prepare and
submit the Project Manual to the Bank for its approval.
SCHEDULE 6
SPECIAL ACCOUNT
1. For the purposes of this Schedule:
(a) the term "eligible Categories" means Categories 1, 2, 3, 4,
5 and 6 set forth in the table in paragraph 1 of Schedule 1 to
this Agreement;
(b) the term "eligible expenditures" means expenditures in
respect of the reasonable cost of goods, works and services
required for the Project and to be financed out of the proceeds of
the Loan allocated from time to time to the eligible Categories in
accordance with the provisions of Schedule 1 to this Agreement;
and
(c) the term "Authorized Allocation" means an amount equivalent
to 15,000,000 USD to be withdrawn from the Loan Account and
deposited into the Special Account pursuant to paragraph 3 (a) of
this Schedule, provided, however, that unless the Bank shall
otherwise agree, the Authorized Allocation shall be limited to an
amount equivalent to 5,000,000 USD until the aggregate amount of
withdrawals from the Loan Account plus the total amount of all
outstanding special commitments entered into by the Bank pursuant
to Section 5.02 of the General Conditions shall be equal to or
exceed the equivalent of 20,000,000 USD.
2. Payments out of the Special Account shall be made
exclusively for eligible expenditures in accordance with the
provisions of this Schedule.
3. After the Bank has received evidence satisfactory to it that
the Special Account has been duly opened, withdrawals of the
Authorized Allocation and subsequent withdrawals to replenish the
Special Account shall be made as follows:
(a) For withdrawals of the Authorized Allocation, the Borrower
shall furnish to the Bank a request or requests for deposit into
the Special Account of an amount or amounts which do not exceed
the aggregate amount of the Authorized Allocation. On the basis of
such request or requests, the Bank shall, on behalf of the
Borrower, withdraw from the Loan Account and deposit into the
Special Account such amount or amounts as the Borrower shall have
requested.
(b) (i) For replenishment of the Special Account, the
Borrower shall furnish to the Bank requests for deposits into
the Special Account at such intervals as the Bank shall
specify.
(ii) Prior to or at the time of each such request, the
Borrower shall furnish to the Bank the documents and other
evidence required pursuant to paragraph 4 of this Schedule for
the payment or payments in respect of which replenishment is
requested. On the basis of each such request, the Bank shall,
on behalf of the Borrower, withdraw from the Loan Account and
deposit into the Special Account such amount as the Borrower
shall have requested and as shall have been shown by said
documents and other evidence to have been paid out of the
Special Account for eligible expenditures.
All such deposits shall be withdrawn by the Bank from the Loan
Account under the respective eligible Categories, and in the
respective equivalent amounts, as shall have been justified by
said documents and other evidence.
4. For each payment made by the Borrower out of the Special
Account, the Borrower shall, at such time as the Bank shall
reasonably request, furnish to the Bank such documents and other
evidence showing that such payment was made exclusively for
eligible expenditures.
5. Notwithstanding the provisions of paragraph 3 of this
Schedule, the Bank shall not be required to make further deposits
into the Special Account:
(a) if, at any time, the Bank shall have determined that all
further withdrawals should be made by the Borrower directly from
the Loan Account in accordance with the provisions of Article V of
the General Conditions and paragraph (a) of Section 2.02 of this
Agreement;
(b) if the Borrower shall have failed to furnish to the Bank,
within the period of time specified in Section 4.01 (b) (ii) of
this Agreement, any of the audit reports required to be furnished
to the Bank pursuant to said Section in respect of the audit of
the records and accounts for the Special Account;
(c) if, at any time, the Bank shall have notified the Borrower
of its intention to suspend in whole or in part the right of the
Borrower to make withdrawals from the Loan Account pursuant to the
provisions of Section 6.02 of the General Conditions; or
(d) once the total unwithdrawn amount of the Loan allocated to
the eligible Categories, minus the total amount of all outstanding
special commitments entered into by the Bank pursuant to Section
5.02 of the General Conditions with respect to the Project, shall
equal the equivalent of twice the amount of the Authorized
Allocation. Thereafter, withdrawal from the Loan Account of the
remaining unwithdrawn amount of the Loan allocated to the eligible
Categories shall follow such procedures as the Bank shall specify
by notice to the Borrower. Such further withdrawals shall be made
only after and to the extent that the Bank shall have been
satisfied that all such amounts remaining on deposit in the
Special Account as of the date of such notice will be utilized in
making payments for eligible expenditures.
6. (a) If the Bank shall have determined at any time that any
payment out of the Special Account:
(i) was made for an expenditure or in an amount not
eligible pursuant to paragraph 2 of this Schedule; or
(ii) was not justified by the evidence furnished to the
Bank, the Borrower shall, promptly upon notice from the Bank:
(A) provide such additional evidence as the Bank may
request; or
(B) deposit into the Special Account (or, if the Bank
shall so request, refund to the Bank) an amount equal to
the amount of such payment or the portion thereof not so
eligible or justified. Unless the Bank shall otherwise
agree, no further deposit by the Bank into the Special
Account shall be made until the Borrower has provided such
evidence or made such deposit or refund, as the case may
be.
(b) If the Bank shall have determined at any time that any
amount outstanding in the Special Account will not be required to
cover further payments for eligible expenditures, the Borrower
shall, promptly upon notice from the Bank, refund to the Bank such
outstanding amount.
(c) The Borrower may, upon notice to the Bank, refund to the
Bank all or any portion of the funds on deposit in the Special
Account.
(d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b)
and (c) of this Schedule shall be credited to the Loan Account for
subsequent withdrawal or for cancellation in accordance with the
relevant provisions of this Agreement, including the General
Conditions.
SCHEDULE 7
TERMS AND CONDITIONS OF ON-LENDING
Part I. PRINCIPAL TERMS AND CONDITIONS
OF SUBSIDIARY LOAN AGREEMENTS
The following principal terms and conditions shall apply for
purposes of the Subsidiary Loan Agreements entered into pursuant
to Section 3.01 (c) of this Agreement:
Section A
Terms
1. The principal amount of each Sub-loan to a Region shall be
denominated and be the equivalent in Dollars (determined as of the
date or respective dates of withdrawal from the Loan Account or
payment out of the Special Account) of the value of the currency
or currencies so withdrawn or paid on account of goods or services
financed out of the proceeds of the Loan.
2. The Region shall pay interest on the principal amount of the
Sub-loan withdrawn and outstanding from time to time, at a
floating rate up to the equivalent of 250 basis points above the
interest rate determined in accordance with the provisions of
Section 2.05 of this Agreement.
3. The amount of the Sub-loan shall be repaid by the Region
over a term of twelve (12) years, inclusive of a grace period of
three (3) years.
Section B
Obligation to Carry Out Project Activities
1. The Region shall declare its commitment to the objectives of
the Project as set forth in Schedule 2 to this Agreement, and, to
this end, shall carry out, with the Borrower's assistance, the
activities related to the Region as described in Part A or Part B
of the Project, as the case may be. with due diligence and
efficiency and in conformity with appropriate administrative,
financial and engineering practices, and shall provide, or cause
to be provided, promptly as needed, the funds, facilities,
services and other resources required for its Part of the Project.
2. The Region shall carry out its respective Part of the
Project in accordance with a Project Implementation Schedule
agreed with the Bank.
3. The Region shall duly perform all its obligations under the
Subsidiary Loan Agreement. Except as the Bank shall otherwise
agree, the Region shall not take or concur in any action which
would have the effect of amending, abrogating, assigning or
waiving the Subsidiary Loan Agreement or any provision thereof.
4. (a) The Region shall, at the request of the Bank, exchange
views with the Bank with regard to the progress of its respective
Part of the Project, the performance of its obligations under this
Agreement and under the Subsidiary Loan Agreement, and other
matters relating to the purposes of the Loan.
(b) The Region shall promptly inform the Bank of any condition
which interferes or threatens to interfere with the progress of
its respective Part of the Project, the accomplishment of the
purposes of the Loan, or the performance by the Region of its
obligations under the Subsidiary Loan Agreement.
Section C
Financial Covenants
1. (a) The Region shall maintain or cause to be maintained
records and accounts adequate to reflect in accordance with sound
accounting practices the operations, resources and expenditures in
respect of its respective Part of the Project of the departments
or agencies of the Region responsible for carrying out its
respective Part of the Project.
(b) The Region shall:
(i) have the records and accounts referred to in paragraph
(a) of this Section including those for the Special Account
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 six (6) months after the end of each such
year:
(A) certified copies of its financial statements for
such year as so audited; and
(B) the report of such audit by said auditors, of such
scope and in such detail as the Bank shall have reasonably
requested; and
(iii) furnish to the Bank such other information
concerning such records, accounts and financial statements and
the audit thereof as the Bank shall from time to time
reasonably request.
Section D
Implementation Conditions
1. The Borrower shall cause each Region to:
(a) establish, as a condition to effectiveness of its
Subsidiary Loan Agreement, and maintain, a Project Bureau in the
capital city of the Region with separate juridical status, and
shall ensure that the Project Bureau is at all times staffed by
key personnel with qualifications, terms of reference and
experience satisfactory to the Bank;
(b) establish, as a condition to effectiveness of its
Subsidiary Loan Agreement, and maintain an Advisory Board chaired
by the First Deputy Governor of the Region, with board members
selected from representatives of the local community, including,
but without limitation, trade unions, local government beneficiary
groups and non-governmental organizations, and with ex-officio
members from MINNAT, CPILJ, and the Project Bureau, to meet and
review the implementation of the Project Sub-Projects on a semi-
annual basis until June 1, 1998; and
(c) within one month of the date of effectiveness of the
relevant Subsidiary Loan Agreement, open two project bank accounts
in a commercial bank:
(i) in local currency; and
(ii) in dollars or any other freely exchangeable currency
and, until completion of the Project, maintain such accounts.
2. Each Region shall, at periodic intervals agreed with the
Borrower and the Bank, deposit into its Project Account held in
local currency, such amounts in local currency as shall be agreed
under a payment schedule agreed annually with the Borrower and the
Bank.
3. Except as the Bank shall otherwise agree, each Region shall
select and appraise sub-projects to be included in its respective
Part of the Project in accordance with criteria and procedures
agreed with the Bank.
4. Except as the Bank shall otherwise agree, the Region shall
make Sub-loans under the Project in accordance with the procedures
and on the terms and conditions set forth or referred to in Part
II of this Schedule 7.
5. Each Region shall, by December 31, 1998, carry out a mid-
term review, in consultation with the Bank. for evaluating the
overall progress in the implementation of its respective Part of
the Project and adopting such measures as may be necessary to
resolve any issues in respect thereof.
6. Each Region shall, by April 1, 1998, submit to the CPRJ, a
draft operational manual setting out criteria and procedures for
selecting and appraising Sub-projects including the criteria and
procedures agreed with the Bank under paragraph 3 of this Part I D
of Schedule 7.
Part II. PRINCIPAL TERMS AND CONDITIONS OF SUB-LOANS
1. No expenditures for goods, works or services required for a
Sub-project shall be eligible for financing out of the proceeds of
the Loan unless the Sub-loan for such Sub-project shall have been
approved by the Bank and such expenditures shall have been made
not earlier than ninety (90) days prior to the date on which the
Bank shall have received the application and information required
under paragraph 2 of Part II of this Schedule in respect of such
Sub-loan.
2. (a) When presenting a Sub-loan to the Bank for approval,
each Region shall furnish to the Bank an application, in form and
substance satisfactory to the Bank, together with:
(i) an appraisal of the Sub-Project, including a
description of the expenditures proposed to be financed out of
the proceeds of the Sub-loan;
(ii) the proposed terms and conditions of the Sub-loan,
including the schedule of amortization of the Sub-loan or of
repayment of the amount of the Loan to be used for the
Sub-loan;
(iii) with respect to a Sub-borrower in the water sector,
financial projections, acceptable to the Bank, showing that
the projected revenues of the Sub-borrower (including
budgetary subsidies) shall cover its costs of operation and
maintenance and showing, to the extent permitted under the
laws of the Borrower, a plan for the progressive reduction in
budgetary subsidies, leading to the projected elimination of
such subsidies in 2005; and
(iv) such other information as the Bank shall reasonably
request.
(b) Applications and requests made pursuant to the provisions
of sub-paragraph (a) of this paragraph shall be presented to the
Bank on or before July 1, 2000.
3. Sub-loans shall be made on terms whereby the Region shall
obtain, by written contract with the Sub-borrower or by other
appropriate legal means, rights adequate to protect the interests
of the Bank and the Region, including, in the case of any Sub-loan
the right to:
(a) require the beneficiary to carry out and operate the Sub-
Project with due diligence and efficiency and in accordance with
sound technical, financial and managerial standards and to
maintain adequate records;
(b) require that:
(i) the goods, works and services to be financed out of
the proceeds of the Loan shall be procured in accordance with
the provisions of Schedule 4 to this Agreement; and
(ii) such goods, works and services shall be used
exclusively in the carrying out of the Sub-Project;
(c) inspect, by itself or jointly with representatives of the
Bank if the Bank shall so request, such goods, works, plants and
construction included in the Sub-Project, the operation thereof,
and any relevant records and documents;
(d) obtain all such information as the Bank or the Region shall
reasonably request relating to the foregoing and to the
administration, operations and financial condition of the
beneficiary and to the benefits to be derived from the Sub-
Project; and
(e) suspend or terminate the right of the beneficiary to the
use of the proceeds of the Loan upon failure by such beneficiary
to perform its obligations under its contract with the Region.
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