Operation Number 18221
LOAN AGREEMENT
(ST PETERSBURG FLOOD PROTECTION BARRIER)
BETWEEN THE RUSSIAN FEDERATION AND EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
(Moscow, 20.XII.2002)
Agreement dated 20 December 2002 between the Russian Federation
(the "Borrower") and European bank for reconstruction and
development (the "Bank").
Preamble
Whereas, the Bank has been established to provide financing for
specific projects to foster the transition towards open market-
oriented economies and to promote private and entrepreneurial
initiative in the Central and Eastern European countries committed
to and applying the principles of multiparty democracy, pluralism
and market economics;
whereas, the Borrower intends to implement the Project as
described in Schedule 1 which is designed to assist in completion
of the construction of the St Petersburg Flood Protection Barrier
(the "Barrier") to protect the City of St Petersburg against
flooding;
whereas, the Borrower has requested assistance from the Bank in
financing part of the Project;
whereas, Parts A1 to A9 and B1 to B3 of the Project as set
forth in Schedule 1 will be implemented by the State Committee for
Construction, Housing and Communal Complex of the Russian
Federation (the "Implementing Agency");
whereas, a federal entity, referred to as the St Petersburg
Barrier Authority (the "Barrier Authority"), which will be
responsible for operating and maintaining the Barrier, will be
established;
whereas, the Borrower intends to contract a loan from the
European Investment Bank ("EIB") in an amount equivalent to Euro
40,000,000 to assist in financing the Project, subject the terms
and conditions to be set forth in an agreement (the "EIB Co-
financing Agreement") between the Borrower and EIB;
whereas, the Borrower intends to contract a loan from the
Nordic Investment Bank ("NIB"), (together with EIB, the "Co-
financiers") in an amount equivalent to USD 40,000,000 to assist
in financing the Project, subject the terms and conditions to be
set forth in an agreement (the "NIB Co-financing Agreement"),
(together with the EIB Co-Financing Agreement, the "Co-financing
Agreements") between the Borrower and NIB;
whereas, the Borrower will provide the balance of the funds
required to finance the Project, including the additional funds
required if either or both of the Co-financing Agreements are not
signed, do not become effective or are suspended or terminated.
whereas, the Bank has agreed on the basis of, inter alia, the
foregoing to make a loan to the Borrower in the amount of United
States Dollars Two Hundred and Forty Five Million (USD
245,000,000), subject to the terms and conditions set forth or
referred to in this Agreement.
Now, therefore, the parties hereby agree as follows:
Article I. STANDARD TERMS AND CONDITIONS; DEFINITIONS
Section 1.01
Incorporation of Standard Terms and Conditions
All of the provisions of the Bank's Standard Terms and
Conditions dated February 1999 are hereby incorporated into and
made applicable to this Agreement with the same force and effect
as if they were fully set forth herein, subject, however, to the
following modifications (such provisions as so modified are
hereinafter called the "Standard Terms and Conditions"):
(a) The definition of "Unwinding Costs" in Section 2.02 of the
Standard Terms and Conditions shall, for the purposes of this
Agreement, be modified to read as follows:
"Unwinding Costs" means the amount by which the Original Income
Stream exceeds the Substitute Income Stream, where:
(a) "Original Income Stream" means the aggregate of the present
values of the payments of principal and interest which would have
become due to the Bank during the Calculation Period (as defined
below) on the portion of the Loan which is subject to a Fixed
Interest Rate if such prepayment, acceleration or cancellation had
not occurred and if interest accrued on such portion of the Loan
at the Relevant Market Interest Rate for such portion of the Loan.
(b) "Substitute Income Stream" means the sum of:
(1) the aggregate of the present values of any remaining
payments of principal and interest which, after taking into
account such prepayment, cancellation or acceleration, would
become due to the Bank during the Calculation Period on the
portion of the Loan which is subject to a Fixed Interest Rate
if interest accrued on such portion of the Loan at the
Relevant Market Interest Rate for such portion of the Loan;
and
(2) as applicable:
(A) in the case of a prepayment pursuant to Section
3.07 of the Standard Terms and Conditions, the present
value of the amount of the Loan to be prepaid, determined
by discounting such amount from the date such prepayment
becomes due to the Calculation Date (as defined below) at
the Discount Rate (as defined below); and/or
(B) in the case of any other prepayment, the amount of
the Loan which has been prepaid; and/or
(C) in the case of an acceleration, the present value
of the amount of the Loan which has been accelerated,
determined by discounting such amount from the date such
acceleration becomes effective to the Calculation Date at
the Discount Rate; and/or
(D) in the case of a cancellation, the present value
of the amount of the Loan which has been cancelled,
determined by discounting such amount from the Last
Availability Date to the Calculation Date at the Discount
Rate.
(c) For purposes of paragraphs (a) and (b)(1) above, the
present value of each payment of principal and interest shall be
determined by discounting the amount of such payment from its due
date to the Calculation Date using the Discount Rate.
(d) "Calculation Date" means:
(1) in the case of a prepayment pursuant to Section 3.07
of the Standard Terms and Conditions, the date two Business
Days prior to the date such prepayment becomes due or, at the
Bank's option, the date such prepayment becomes due;
(2) in the case of any other prepayment, the date such
prepayment is made or such later date as the Bank may select
in its discretion; and
(3) in the case of an acceleration or cancellation, the
date two Business Days prior to the date such acceleration or
cancellation becomes effective or, at the Bank's option, the
date such acceleration or cancellation becomes effective.
(e) "Calculation Period" means:
(1) in the case of a prepayment pursuant to Section 3.07
of the Standard Terms and Conditions, the period commencing on
the date such prepayment becomes due and ending on the final
Loan Repayment Date;
(2) in the case of any other prepayment, the period
commencing on the date such prepayment is made, or such later
date as the Bank may select in its discretion, and ending on
the final Loan Repayment Date; and
(3) in the case of an acceleration or cancellation, the
period commencing on the date such acceleration or
cancellation becomes effective and ending on the final Loan
Repayment Date.
(f) "Discount Rate" means the discount factor for the relevant
maturity derived from the par swap curve for the Loan Currency
which is available to the Bank in the interest rate swap and
options market on the Calculation Date."
(b) Section 3.10 of the Standard Terms and Conditions shall,
for the purposes of this Agreement, be modified to read as
follows:
"Section 3.10. Unwinding Costs
(a) If, for any reason (including, without limitation, an
acceleration pursuant to Section 7.06 of the Standard Terms and
Condition), any portion of the Loan which is subject to a Variable
Interest Rate becomes due and payable on a date other than the
last day of an Interest Period, the Borrower shall pay to the Bank
on demand the amount, if any, by which:
(1) the interest which would have accrued on such portion
of the Loan from the date on which such portion of the Loan
has become due and payable to the last day of the then current
Interest Period at a rate equal to the Relevant Market
Interest Rate for such portion of the Loan for such Interest
Period;
exceeds:
(2) the interest which the Bank would be able to obtain if
it were to place an amount equal to such portion of the Loan
on deposit with a leading bank in the London interbank market
for the period commencing on the date on which such portion of
the Loan has become due and payable and ending on the last day
of the then current Interest Period.
(b) If, at any time:
(1) the Borrower gives a notice, pursuant to Section 3.07
of the Standard Terms and Conditions, of prepayment of any
portion of the Loan which is subject to a Fixed Interest Rate
or the Borrower otherwise prepays any such portion of the
Loan;
(2) any portion of the Loan which is subject to a Fixed
Interest Rate is accelerated pursuant to Section 7.06 of the
Standard Terms and Conditions or otherwise becomes due prior
to its stated maturity; or
(3) any portion of the Loan which is subject to a Fixed
Interest Rate is cancelled pursuant to Section 3.08, 7.02 or
7.06 of the Standard Terms and Conditions or is otherwise
cancelled;
the Borrower shall, in addition to any prepayment
administrative fee, cancellation fee or other amounts payable in
connection therewith, pay to the Bank on demand the amount of any
Unwinding Costs; provided that, if the amount of such Unwinding
Costs is negative, the Bank shall, on the next Interest Payment
Date, credit to the Borrower, in the Loan Currency, the amount of
such Unwinding Costs.
(c) If any overdue amount is paid on a date other than the last
day of a Default Interest Period, the Borrower shall pay to the
Bank on demand the amount, if any, by which:
(1) the interest which would have accrued on such overdue
amount from the date of receipt of such overdue amount to the
last day of the then current Default Interest Period at a rate
equal to the rate specified in Section 3.09(a)(iii) of the
Standard Terms and Conditions for such Default Interest
Period;
exceeds:
(2) the interest which the Bank would be able to obtain if
it were to place an amount equal to such overdue amount on
deposit with a leading bank in the London interbank market for
the period commencing on the date of receipt of such overdue
amount and ending on the last day of the then current Default
Interest Period.
d) A certificate of the Bank as to any amount payable under
this Section 3.10 shall be final, conclusive and binding on the
Borrower unless shown by the Borrower to the satisfaction of the
Bank to contain manifest error."
Section 1.02
Definitions
Wherever used in this Agreement (including the Preamble and
Schedules), unless stated otherwise or the context otherwise
requires, the terms defined in the Preamble have the respective
meanings given to them therein, the terms defined in the Standard
Terms and Conditions have the respective meanings given to them
therein and the following terms have the following meanings:
"Borrower's Authorised means the Minister of Finance of the
Representative" Borrower or the Deputy Minister of
Finance of the Borrower, except as
specified in Section 2.04.
"Capital Maintenance means the costs of performing Capital
Costs" Maintenance Requirements.
"Capital Maintenance means major and infrequent maintenance
Requirements" work requiring expertise and equipment
beyond the capability of the staff of the
Barrier Authority.
"City" means the Administration of the City of
Saint Petersburg, the Russian Federation.
"Dollars" or "USD" means the lawful currency of the United
States of America.
"Environmental means the environmental action plan
Action Plan" consisting of the environmental action
plan provided by W.L. Delft Hydraulics
FEI dated 26 August 2002 and the Action
Plan for Environmental Impacts Related to
Barrier Construction and for Barrier
Operation prepared by Netherlands
Engineering Consortium dated October 2002
and delivered to the Bank by the Borrower
which includes (i) mitigation measures
for construction impacts, (ii) measures
for environmental benefits, (iii)
environmental monitoring, (iv) integrated
water resource management and (v) a
public information programme, as such
environmental action plan may be amended
from time to time with the prior written
consent of the Bank
"Environmental Impact means the environmental impact assessment
Assessment" dated 25 June 2002 prepared by W.L. Delft
Hydraulics FEI.
"Environmental means (i) prior to the Project Completion
Representative" Date, the employee of the Implementing
Agency or the PIU appointed to liase with
the Bank on environmental matters and
(ii) after the Project Completion Date,
the employee of the Barrier Authority
appointed to liase with the Bank on
environmental matters.
"Euro" or "E" means the lawful currency of the member
states of the European Union that adopt
the single currency in accordance with
the Treaty establishing the European
community, as amended by the Treaty on
European Union.
"Fiscal Year" means the Borrower's fiscal year
commencing on 1 January of each year.
"Flood Forecasting means the flood action system
System" satisfactory to the Bank consisting of
permanent operational infrastructure in
place and utilised to gather information
from continuous regional monitoring of
water levels, wind, air pressure,
temperature and ice cover, a water level
forecasting system as well as procedures
and technical infrastructure to issue
warnings to the relevant authorities.
"IAS" means International Accounting Standards
promulgated by the International
Accounting Standards Committee and
consistently applied.
"Integrated Water means a water resource and ecosystem
Resource Management" management and control approach involving
stakeholders in balancing the various
human uses of and impacts on the Lake
Ladoga-River Neva-Neva Bay-Eastern Gulf
of Finland water system, aiming at
ensuring long term sustainability of
resource use, as in detail described in
the Environmental Action Plan.
"Intercreditor means the agreement between NIB and the
Agreements" Bank which will be dated the same date as
the NIB Co-financing Agreement and the
agreement among EIB, NIB and the Bank
which will be dated the same date as the
EIB Loan Agreement.
"Interest Conversion means an Interest Payment Date selected
Date" by the Borrower in accordance with
Section 2.02(i)(2).
"Interest Fixing Date" means a Business Day selected by the
Borrower in accordance with Section 2.02
(i)(2), provided that such Business Day
shall be a day no later than two Business
Days before the relevant Interest
Conversion Date.
"Lender's Supervisor" means the consulting firm which will
represent the interests of the Bank and
the Co-financiers.
"Loan Currency" means Dollars.
"Operations and means the agreement between the City, the
Maintenance Financing Borrower and the Barrier Authority,
Agreement" satisfactory to the Bank whereby the City
agrees to implement measures to recover
the costs of the operation and
maintenance of the Barrier from the
beneficiaries of the flood protection in
accordance with the Russian budget and
tax code, which will include an agreement
by the City to provide to the Bank an
annual report on progress in implementing
cost recovery principles.
"Operation and means all regular maintenance work on the
Maintenance Barrier within the capability of the
Requirements" staff of the Barrier Authority.
"Operations means a technical cooperation project to
and Maintenance TC" assist the Borrower in ensuring the
appropriate institutional arrangements
are in place for the Barrier's
operations, including fiscal
arrangements, as well as to assist the
Borrower in maximising the involvement of
the private sector in the Barrier's
operation and maintenance.
"PIU" means the project implementation unit
referred to in Section 3.02.
"Project" means the completion of construction of
the Barrier with a programme for
operation and maintenance to be
implemented by the private sector whereby
annual operations and maintenance
expenses are funded by the City, as
further described in Schedule 1.
"Project Completion means the date on which the Lender's
Date" Supervisor confirms in writing to the
Bank that the investments required for
the Project are achieved and fully
operational in accordance with the
specifications of the relevant contracts
and in a manner satisfactory to the Bank.
"Project means the project implementation plan in
Implementation Plan" the Technical Feasibility Study dated
October 2002 prepared by the Netherlands
Engineering Consortium.
"Project Manager means the independent engineer appointed
International" by the Borrower to ensure the
completeness and quality of construction
under the various contracts that are
financed by the Loan or the Co-financing
Agreements and to assist the PIU.
"Public Information means a programme to inform the public on
Programme" the progress with and monitored
environmental impacts of the construction
and the operation of the Barrier, as in
detail described in the Environmental
Action Plan.
"Reference Page" means the display of London interbank
offered rates of major banks for deposits
in the Loan Currency designated as page
3750 on Telerate (or such other page as
may replace page 3750 on Telerate for the
purpose of displaying London interbank
offered rates for deposits in the Loan
Currency).
"Roubles" means the lawful currency of the Russian
Federation.
"Site" means the site on which the Project will
be constructed.
"Special Account" means the special deposit account
referred to in Section 2.03 and
Schedule 3.
Section 1.03
Interpretation
In this Agreement, a reference to a specified Article, Section
or Schedule shall, except where stated otherwise in this
Agreement, be construed as a reference to that specified Article
or Section of, or Schedule to, this Agreement.
Article II. PRINCIPAL TERMS OF THE LOAN
Section 2.01
Amount and Currency
The Bank agrees to lend to the Borrower, on the terms and
conditions set forth or referred to in this Agreement, the amount
of USD 245,000,000.
Section 2.02
Other Financial Terms of the Loan
(a) The Minimum Drawdown Amount shall be USD 500,000 (in
respect to any Drawdown to be applied towards Part A of the
Project) and USD 100,000 (in respect to any Drawdown to be applied
to Part В of the Project).
(b) The Minimum Prepayment Amount shall be USD 5,000,000.
(c) The Minimum Cancellation Amount shall be USD 5,000,000.
(d) The Interest Payment Dates shall be 7 June and 7 December
of each year.
(e) The Borrower shall repay the principal of the Loan on the
following dates and in the following amounts:
--------------------------------T--------------------------------¬
¦ Loan Repayment Date ¦ Principal Amount Due ¦
+-------------------------------+--------------------------------+
¦ 7 June 2007 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2007 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2008 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2008 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2009 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2009 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2010 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2010 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2011 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2011 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2012 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2012 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2013 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2013 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2014 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2014 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2015 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2015 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2016 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2016 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2017 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2017 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2018 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2018 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2019 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2019 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 June 2020 ¦ USD 8,750,000 ¦
+-------------------------------+--------------------------------+
¦ 7 December 2020 ¦ USD 8,750,000 ¦
L-------------------------------+---------------------------------
(f) The Last Availability Date shall be sixth anniversary of
the Effective Date.
(g) The rate of the Commitment Charge shall be 0.5% per annum.
(h) Subject to Section 2.02(i) below, the Loan is subject to a
Variable Interest Rate. For purposes of Section 3.04(b) of the
Standard Terms and Conditions, the Relevant Market Interest Rate
shall be the offered rate per annum for deposits in the Loan
Currency that appears on the Reference Page as of 11:00 a.m.,
London time, on the relevant Interest Determination Date for the
period which is closest to the duration of the relevant Interest
Period (or, if two periods are equally close to the duration of
the relevant Interest Period, the average of the two relevant
rates); provided that:
(1) if, for any reason, the Relevant Market Interest Rate
cannot be determined at such time by reference to the Reference
Page, the Relevant Market Interest Rate shall be the rate which
the Bank determines to be the arithmetic mean (rounded upward, if
necessary, to the nearest 1/16%) of the offered rates per annum
for deposits in the Loan Currency in an amount comparable to the
portion of the Loan scheduled to be outstanding during the
relevant Interest Period for a period equal to such Interest
Period which are advised to the Bank by three major banks active
in the London interbank market selected by the Bank; and
(2) if the Bank determines that deposits in the Loan Currency
are not being offered in the London interbank market in such
amounts or for such period, the Relevant Market Interest Rate
shall be the cost to the Bank (expressed as a rate per annum) of
funding the portion of the Loan scheduled to be outstanding during
the relevant Interest Period from whatever sources it selects.
(i) Notwithstanding the foregoing, the Borrower may, as an
alternative to paying interest at a Variable Interest Rate on all
or any portion of the Loan then outstanding, elect to pay interest
at a Fixed Interest Rate on such portion of the Loan, as follows:
(1) The Borrower may only exercise such option if:
(A) at the time of exercise no event specified in Section
7.01 of the Standard Terms and Conditions (and no event which
with notice and/or lapse of time would become such an event)
has occurred and is continuing; and
(B) the principal amount of the Loan which is being
converted from a Variable Interest Rate to a Fixed Interest
Rate is not less than USD 10,000,000.
(2) The Borrower shall exercise such option by notice to the
Bank not less than five Business Days prior to the proposed
Interest Fixing Date. Such notice shall, unless the Bank otherwise
agrees, be irrevocable and shall specify the Interest Fixing Date
and the Interest Conversion Date selected by the Borrower and the
principal amount of the Loan to be converted to a Fixed Interest
Rate.
(3) Commencing on the Interest Conversion Date, the portion of
the Loan being converted (as specified in the Borrower's notice)
shall be subject to a Fixed Interest Rate. For the purposes of
Section 3.04(a) of the Standard Terms and Conditions, the Relevant
Market Interest Rate shall be the forward fixed interest rate for
the Loan Currency which is available to the Bank in the interest
rate swap market on the Interest Fixing Date for the period
commencing on such Interest Conversion Date and ending on the
final Loan Repayment Date, taking into account the principal
repayment and interest payment schedules for the Loan. The Bank
shall determine the Fixed Interest Rate on such Interest Fixing
Date and promptly give notice thereof to the Borrower.
(4) The Bank may at any time elect to consolidate all Fixed
Interest Rates then applicable to portions of the Loan into a
single Fixed Interest Rate equal to the weighted average of the
Fixed Interest Rates then applicable to portions of the Loan. The
Bank shall determine such consolidated Fixed Interest Rate and
promptly give notice thereof to the Borrower. Such consolidated
Fixed Interest Rate shall be applicable to all portions of the
Loan then bearing interest at Fixed Interest Rates commencing on
the Interest Payment Date immediately following the notice from
the Bank to the Borrower.
Section 2.03
Drawdowns and Special Account
(a) The Available Amount may be drawn down from time to time in
accordance with the provisions of Schedule 2 to finance
expenditures made (or, if the Bank so agrees, to be made) in
respect of the reasonable cost of goods, works and services
required for the Project.
(b) The Borrower has opted not to have the Front-end Commission
paid out of the Available Amount and shall instead pay the Front-
end Commission out of its own resources.
(c) The Borrower shall, for purposes of the Project, open and
maintain a special deposit account denominated in the Loan
Currency at a commercial bank acceptable to the Bank on terms and
conditions satisfactory to the Bank, including appropriate
protection against set-off, seizure and attachment. If the
Borrower wishes to make Drawdowns for deposit into, and direct
payments out of, the Special Account (instead of Drawdowns
pursuant to Section 2.03(a)), such Drawdowns shall be made in
accordance with the provisions of Schedule 3.
Section 2.04
Authorised Representative for Drawdowns
The Borrower may, by notice in writing to the Bank, designate
any person as the Borrower's Authorised Representative for the
purpose of taking any action required or permitted to be taken
under the provisions of Section 2.03(a) and under the provisions
of Sections 3.01 and 3.02 of the Standard Terms and Conditions.
Article III. EXECUTION OF THE PROJECT
Section 3.01
Other Affirmative Project Covenants
In addition to the general undertakings set forth in Article IV
of the Standard Terms and Conditions, the Borrower shall, unless
the Bank otherwise agrees:
(a) take all action necessary to provide adequate funds for the
completion of the Project, and finance from the federal budgets
for each Fiscal Year, commencing with Fiscal Year 2003 and ending
with Fiscal Year 2008, Parts A6 to A9 of the Project, which funds
shall not be less than the equivalent in Roubles at the then
official rate of exchange of an aggregate of USD 68,000,000;
(b) enter into and maintain in full force and effect, the
Operations and Maintenance Financing Agreement as required in
Schedule 2;
(c) ensure the appropriate institutional arrangements are in
place to operate the Barrier and to maximise the involvement of
the private sector and cooperate at all times with consultants
appointed thereunder and utilise the Operations and Maintenance
TC, if available, in connection therewith;
(d) establish the Flood Forecasting System prior to 31 December
2006;
(e) cause the Project Completion Date to occur not later than
31 December 2008;
(f) finance all funding shortfalls, including shortfalls
relating to lack of finance under the Co-financing Agreements;
(g) operate and maintain the Project or cause it to be operated
and maintained in accordance with sound engineering, financial and
administrative practices;
(h) fund the Capital Maintenance Costs of the Project,
including emergency repairs, from the Borrower's own funds;
(i) develop and implement policies for contracting operations
and maintenance work to the private sector to the maximum extent
possible and to the satisfaction of the Bank with a view to making
the operations and maintenance of the Project efficient and cost
effective;
(j) prior to 31 December 2007, submit a detailed plan for
operation and maintenance, in form and substance satisfactory to
the Bank, which plan shall set out the parties responsible for the
operation and maintenance, including those duties contracted to
private sector entities, and a schedule for implementation;
(k) implement the schedule set forth in subsection (j) above,
including all necessary tenders and legal procedures in a timely
manner so that all contracts for operation and maintenance are
signed and effective on or prior to the completion of the Project;
and
(l) at all times co-operate with the Lender's Supervisor and
cause the Barrier Authority to co-operate with the Lender's
Supervisor.
Section 3.02
Project Implementation Unit
In order to coordinate, manage, monitor and evaluate all
aspects of Project implementation, including the procurement of
goods, works and services for the Project, the Borrower shall,
unless otherwise agreed with the Bank, establish prior to the
Effective Date and at all times during execution of the Project
operate a project implementation unit with adequate resources and
suitably qualified personnel, under terms of reference acceptable
to the Bank.
Section 3.03
Barrier Authority
In order to coordinate and manage the operation of and perform
all necessary maintenance for the Barrier, the Borrower shall
establish prior to the Effective Date the Barrier Authority as a
federal state unitary enterprise with responsibility for flood
protection and for all maintenance. The Barrier Authority will
oversee the outsourcing of operation and maintenance work to the
private sector with a view to maximising the participation of
private sector enterprises in the performance of the operation and
maintenance. The Borrower hereby agrees that the Barrier Authority
will have the necessary legal and administrative authority to
operate the Barrier to achieve the flood protection objectives of
the Project.
Section 3.04
Procurement
For purposes of Section 4.03 of the Standard Terms and
Conditions, the following provisions shall, except as the Bank
otherwise agrees, govern procurement of goods, works and services
required for the Project and to be financed out of the proceeds of
the Loan:
(a) Goods, works and services (other than consultants' services
which are included within Section 3.04(c)) shall be procured
through open tendering.
(b) For purposes of Section 3.04(a), the procedures for open
tendering are set out in Chapter 3 of the EBRD Procurement Rules.
(c) Consultants to be employed by the Borrower to assist in
carrying out the Project shall be selected in accordance with the
procedures set out in Chapter 5 of the EBRD Procurement Rules.
(d) All contracts shall be subject to the review procedures set
out in the Annex 1 to the EBRD Procurement Rules.
(e) For any contract in respect of which payment is to be made
out of the Special Account, procurement procedures shall be
followed that ensure that the review requirements of Section 3.04
(d) are satisfied prior to the making of the first payment out of
the Special Account in respect of such contract.
Section 3.05
Environmental Covenants
Without limiting the generality of Sections 4.02(a),
4.04(a)(iii), and 5.02(c)(iii) of the Standard Terms and
Conditionsу, the Borrower shall, unless the Bank otherwise agrees:
(a) designate an Environmental Representative.
(b) except as otherwise specified in the Environmental Action
Plan, carry out the Project in accordance with environmental
regulations and standards in effect from time to time in the
jurisdiction in which the Project is located;
(c) diligently implement and adhere to the Environmental Action
Plan;
(d) on or before 30 June 2009 and every three years thereafter,
arrange, at the expense of the Barrier Authority, for an
environmental audit of the Project to be carried out by an
independent environmental expert appointed by the Borrower under
terms of reference satisfactory to the Bank and, following each
such audit if so requested by the Bank, amend the Environmental
Action Plan to take into account any matters raised by such audit;
(e) make the Environmental Impact Assessment for the Project
available at the offices of the PIU.
Section 3.06
Consultants
(a) In order to assist in the implementation of the Project,
the Borrower shall, unless otherwise agreed with the Bank, employ
or cause to be employed, as required, and use consultants whose
qualifications, experience and terms of reference are satisfactory
to the Bank, including:
(1) the PIU consultancy;
(2) the design consultancy to prepare the final technical
designs, conduct design supervision and support the PIU; and
(3) the Project Manager International.
(b) The Borrower shall provide, without charge, to any
consultants engaged to assist in matters relating to the Project
or the operations of the Borrower all documents, materials and
other information that may be relevant to their work.
(c) The Borrower shall provide, without charge, to the Lender's
Supervisor all documents, materials and other information that may
be relevant to its work and shall permit the Lender's Supervisor
at all times to have access to the Site.
Section 3.07
Reporting Frequency and Submission Requirements
(a) Until the full amount of the Loan has been repaid or
cancelled, the Borrower shall submit to the Bank and to the
Lender's Supervisor annual reports on environmental matters
relating to the Project within 120 days after the end of the year
being reported on. Such reports shall include information on the
following specific matters:
(1) information on compliance with environmental regulations
and standards in effect from time to time in the jurisdiction in
which the Project is located, including the status of any
environmental permits required for the Project, the results of any
inspections carried out by environmental authorities, any
violations of such environmental regulations and standards and
remedial action relating thereto and any fines imposed for any
such violations;
(2) information on implementation of the Environmental Action
Plan, including any proposed changes to actions, schedules or
costs;
(3) a summary of any material notices, reports and other
communications on environmental matters submitted in respect of
the Project to any environmental authorities;
(4) information on the health and safety record of the Project,
including the rate of accidents and any initiatives in relation to
health and safety matters which have been implemented or planned;
(5) a summary of any changes in environmental, health and
safety laws which may have a material effect on the Project; and
(6) copies of environmental information regarding the Project
periodically submitted to the general public.
(b) The Borrower shall submit to the Bank and to the Lender's
Supervisor the periodic Project reports referred to in Section
4.04(a)(iv) of the Standard Terms and Conditions quarterly, within
90 days after the end of the period being reported on, until the
Project has been completed. Such reports shall include the
following specific features:
(1) The following general information:
(A) the physical progress accomplished in the
implementation of the Project to the date of report and during
the reporting period;
(B) actual or expected difficulties or delays in the
implementation of the Project and their effect on the
implementation schedule, and the actual steps taken or planned
to overcome the difficulties and avoid delays;
(C) expected changes in the Project Completion Date;
(D) key personnel changes in the staff of the PIU, the
consultants or the contractors;
(E) matters that may affect the cost of the Project; and
(F) any development or activity likely to affect the
economic viability of any Part of the Project.
(2) A bar-type progress chart, based on the Project
Implementation Plan, showing the progress in each Part of the
Project and including a planned and actual expenditure graph.
(3) Financial statements showing details of the expenditures
incurred under each Part of the Project and the Drawdowns,
together with a statement showing:
(A) original cost estimates;
(B) revised cost estimates, if any, with reasons for
changes;
(C) original estimated expenditures and actual
expenditures to date;
(D) reasons for variations of actual expenditures to date
from original estimated expenditures to date; and
(E) estimated expenditures for the remaining quarters of
the year.
(4) A brief statement for each quarter of each Fiscal Year on
the status of compliance with each of the covenants contained in
this Agreement.
(5) Quarterly and annual financial statements of the Barrier
Authority.
(c) Immediately upon the occurrence of any incident or accident
relating to the Project which is likely to have a material adverse
effect on the environment, health or safety, the Borrower shall
give the Bank notice thereof by facsimile transmission or telex
specifying the nature of such incident or accident and any steps
the Borrower is taking to remedy the same. Without limiting the
generality of the foregoing, an incident or accident is likely to
have a material adverse effect on the environment, health or
safety if any applicable law requires notification of such
incident or accident to any governmental authority, such incident
or accident involves fatality or multiple serious injuries
requiring hospitalisation or such incident or accident has become
public knowledge whether through media coverage or otherwise.
(d) The Borrower shall (i) at least 180 days prior to the end
of each Fiscal Year, submit a report informing the Bank of the
amount allocated for the Project in the draft budget of the
Borrower for the next Fiscal Year; and (ii) within 60 days after
the beginning of each Fiscal Year submit a report confirming to
the Bank the amount allocated by the Borrower for the Project in
the final approved annual budget of the Borrower for that Fiscal
Year.
Article IV. FINANCIAL COVENANTS
Section 4.01
Financial Statements, Records and Reports
(a) The Borrower shall, in respect of the Barrier Authority,
maintain procedures, records and accounts adequate to reflect in
financial statements, prepared in accordance with IAS, the
operations, resources and expenditures relating to the Project and
to monitor and record the progress of the Project (including its
costs and the benefits to be derived from it).
(b) The Borrower shall cause the Barrier Authority to:
(1) have the records and accounts referred to in Section
4.01(a) including those relating to the Special Account for each
Fiscal Year audited by independent auditors acceptable to the Bank
in accordance with IAS;
(2) furnish to the Bank as soon as available, but in any case
not later than six months after the end of each Fiscal Year,
financial statements and the report of such audit by such auditors
of such scope and in such detail as the Bank may reasonably
request; and
(3) furnish to the Bank such other information concerning such
records and accounts, and the audit thereof, as the Bank may from
time to time reasonably request.
Article V. SUSPENSION; ACCELERATION; CANCELLATION
Section 5.01
Suspension
The following are specified for purposes of Section
7.01(a)(xiv) of the Standard Terms and Conditions:
(a) the right of the Borrower to draw under both Co-financing
Agreements is not effective by 30 June 2004 or is suspended,
cancelled or terminated in whole or in part; or
(b) the Borrower fails to provide adequate funding for the
completion of the Project or fails to approve in the federal
budget for any Fiscal Year 2003 to 2008 funds for the Project in
the aggregate minimum amount of not less than the equivalent in
Roubles at the then official rate of exchange of an aggregate of
USD 68,000,000 or fails to provide funds for any funding shortfall
regardless of the reason therefor; or
(c) the Borrower fails to adopt and implement a programme of
operations and maintenance based upon the recommendations of the
Operations and Maintenance TC in which programme, as a minimum,
Operations and Maintenance Requirements and Capital Maintenance
Requirements will be outsourced by competitive procedures
embodying the principles of the EBRD Procurement Rules; or
(d) the Borrower fails to maintain the Barrier in good
operating condition including any failure to provide funds for
Capital Maintenance Costs; or
(e) the Operation and Maintenance Financing Agreement becomes
void or unenforceable or is terminated or the parties thereto
agree to material waivers or amendments.
Section 5.02
Acceleration of Maturity
The bases for suspension set forth in Section 5.01 above shall
also be specified for purposes of Section 7.06(f) of the Standard
Terms and Conditions.
Article VI. EFFECTIVENESS
Section 6.01
Conditions Precedent to Effectiveness
The following are specified for purposes of Section 9.02(c) of
the Standard Terms and Conditions as additional conditions to the
effectiveness of this Agreement:
(a) the Ministry of Finance shall have sent a letter advising
the Bank that (i) the financing of USD 325,000,000 has been
approved in the budget for the Fiscal Year 2003 of the Borrower
under its External Borrowings Programme as foreign loans and
including the specifics of the financial plan, the investment
amount to be funded by NIB, EIB and any other lenders and (ii) the
Borrower will (A) provide sufficient funds in its federal budgets
for the Fiscal Years 2003 to 2008 to complete the Project at an
estimated total cost, excluding financing costs and taxes, of USD
418,000,000 or (B) provide in its federal budgets for the Fiscal
Years 2003 to 2008 a minimum of the Rouble equivalent at an
official rate of exchange of an aggregate of USD 68,000,000 and
will arrange for the participation in the Project of an additional
co-financier to provide funding for the balance on terms and
conditions comparable to the terms and conditions hereof;
(b) the PIU, as provided for in Section 3.02, shall have been
established and be operational;
(c) the Barrier Authority shall have been established in
accordance with Section 3.03 to the satisfaction of the Bank and
shall have been given the necessary authority and powers to
operate the Project as required to minimise the risk of flooding;
and
(d) the Bank shall have received such confirmation as it
requires that (i) the contractor previously granted rights to
construct the Barrier has relinquished such rights or such rights
have been legally revoked and (ii) the Borrower has title to the
Site and all legal rights necessary to access to the Site.
Section 6.02
Legal Opinion
For purposes of Section 9.03(a) of the Standard Terms and
Conditions, the opinion or opinions of counsel shall be given on
behalf of the Borrower by the Minister of Justice.
Section 6.03
Termination for Failure to Become Effective
The date six months after the date of this Agreement is
specified for purposes of Section 9.04 of the Standard Terms and
Conditions.
Article VII. MISCELLANEOUS
Section 7.01
Notices
The following addresses are specified for purposes of Section
10.01 of the Standard Terms and Conditions:
For the Borrower:
Ministry of Finance of the Russian Federation
9 Ilinka Str.
103097 Moscow
Russian Federation
Attention: Minister of Finance
Fax: +7 095 925 0889/+7 095 913 4531
For the Bank:
European Bank for Reconstruction and Development
One Exchange Square
London EC2A 2JN
United Kingdom
Attention: Operation Administration Unit
Fax: +44-20-7338-6100
In witness whereof, the parties hereto, acting through their
duly authorised representatives, have caused this Agreement to be
signed in four copies and delivered at Moscow, the Russian
Federation as of the day and year first above written.
SCHEDULE 1
DESCRIPTION OF THE PROJECT
1. The objective of the Project is to reduce the risk of
flooding to the Saint Petersburg municipal area by completion of
the construction of the Barrier to protect Saint Petersburg from
the Design 1:1000 year flood and to prepare and initiate an
efficient and reliable operation and maintenance programme. The
operation and maintenance programme will provide for the funding
of the Operation and Maintenance Requirements by the beneficiaries
of the Barrier as set forth in the definition of the Operation and
Maintenance Financing Agreement in Section 1.02. The estimated
total cost of the Project, excluding financing costs, is USD
418,000,000.
2. The Project consists of the following Parts, subject to such
modifications thereof as the Bank and the Borrower may agree upon
from time to time:
Part A: Completion of construction of the Barrier, which will
consist of the following key components:
(A1) Concrete work for Sluice B1
(A2) Tunnel under Navigation Opening C1
(A3) Remainder of navigation opening C1, including gates and
embankment sections D3 and D4 (part)
(A4) Navigation Opening C2, including gates and bridge
(A5) Mechanical and electrical works to operate the Barrier
(A6) Remainder of Sluice B1, Sluice B2 and Embankment Sections
D1 - D2
(A7) Dredging for the navigation channel
(A8) Embankment Sections D4 (part), D5, D6, D7, D8, D9, D10 and
D11
(A9) Sluices B3, B4, B5 and B6
Part B: Project Preparation, Implementation and Supervision
Consultancies
(B1) Design and design supervision services
(B2) Management - internationally funded contracts
(B3) Contracted services of the Project Implementation Unit
3. The Project is expected to be completed by 31 December 2008.
SCHEDULE 2
CATEGORIES AND DRAWDOWNS
1. For purposes of this Schedule, the following terms shall
have the following meanings:
(a) "Foreign Expenditures" means expenditures in the Currency
of any country other than that of the Borrower.
(b) "Local Expenditures" means expenditures in the Currency of
the Borrower; provided, however, that, if the currency of the
Borrower is also that of another country from the territory of
which goods, works, or services are supplied, expenditures in such
currency for such goods, works or services shall be deemed to be
"Foreign Expenditures".
2. The table attached to this Schedule sets forth the
Categories, the amount of the Loan allocated to each Category and
the percentage of expenditures to be financed in each Category.
3. Notwithstanding the provisions of paragraph 2 above, no
Drawdown shall be made in respect of:
(a) expenditures incurred and paid for prior to the date of the
Мпбо Agreement, except that Drawdowns in an aggregate amount not
exceeding 5% of the principal amount of the Loan may be made in
respect of Parts B1, B2, B3 and A1 on account of expenditures
incurred and paid for prior to the date of the Loan Agreement but
after 1 September 2002;
(b) expenditures under Parts A2, A3, A4 and A5 until the
following conditions have been met:
(i) both the EIB Co-financing Agreement and the NIB
Co-financing Agreement have been executed and delivered and
all conditions precedent to their effectiveness or to the
right of the Borrower to make drawing thereunder have been
fulfilled or (ii) the Borrower provides adequate assurances to
the Bank that the Borrower will provide adequate funding to
complete the Project from its own funds or from alternative
financing;
(ii) the Operations and Maintenance Financing Agreement
has been signed in form and substance satisfactory to the Bank
and is fully effective between the parties thereto and a copy
delivered to the Bank;
(iii) the Bank shall have received from the Ministry of
Justice of the Borrower an opinion in form and substance
satisfactory to the Bank that the Operation and Maintenance
Financing Agreement has been properly executed by the parties
thereto and is the legal and binding agreement of such parties
and is enforceable according to its terms against each party
thereto;
(iv) the Bank shall have received (i) an environment
section within the review of the Project carried out by the
Implementing Agency and (ii) either (A) a letter from the
Ministry of Natural Resources of the Russian Federation
stating that a (re-) approval of the Project by the
federal-level State Environmental Review Committee
(Gosudarstvennaya Ekologicheskaya Expertiza) of the Ministry
of Natural Resources is not required in accordance with the
current environmental legislation, or (B) a copy of such (re-)
approval.
Attachment
to Schedule 2
------------------T----------------------T-----------------------¬
¦ Category ¦ Amount of the Loan ¦ Percentage of ¦
¦ ¦Allocated in the Loan ¦ Expenditures ¦
¦ ¦Currency (in millions)¦ to be Financed ¦
+-----------------+----------------------+-----------------------+
¦1) Civil works ¦USD 7.4 million ¦100% of contract value ¦
¦and equipment for¦ ¦ ¦
¦Parts A1 ¦ ¦ ¦
+-----------------+----------------------+-----------------------+
¦2) Civil works ¦USD 213.5 million ¦72.75% of contract ¦
¦and equipment for¦ ¦value ¦
¦Parts A2 - A5 ¦ ¦ ¦
+-----------------+----------------------+-----------------------+
¦3) Consultancies ¦USD 24.1 million ¦100% of contract value ¦
¦under Parts B1, ¦ ¦ ¦
¦B2 and B3 ¦ ¦ ¦
L-----------------+----------------------+------------------------
Notes:
1. For purposes of this table, the contract value shall be the
value of the contract net of all applicable taxes and duties.
2. The percentage of contract value in relation to Category 2
relates to the pro-rata co-financing arrangements whereby NIB and
EIB will provide the remaining 27.25%.
SCHEDULE 3
SPECIAL ACCOUNT
1. For purposes of this Schedule, the following terms shall
have the following meanings:
"Eligible Category" means Categories (1) and (2).
"Eligible means expenditures in respect of the
Expenditures" reasonable cost of goods, works and
services required for the Project which
(i) are to be financed out of the
proceeds of the Loan, (ii) are allocated
from time to time to an Eligible Category
in accordance with the provisions of
Schedule 2 and (iii) must be paid in
Roubles to a contractor resident in the
Russian Federation.
2. Payments out of the Special Account shall be made
exclusively for Eligible Expenditures in accordance with the
provisions of this Schedule.
3. Subject to the limitations specified in paragraph 6 below,
the Borrower may draw down amounts from the Available Amount and
deposit such amounts into the Special Account provided that the
Bank is satisfied that the following conditions are satisfied for
each requested Drawdown:
(a) The Special Account has been duly opened, and remains open,
in accordance with terms and conditions acceptable to the Bank,
including appropriate protection against set-off, seizure and
attachment.
(b) The Borrower shall have submitted to the Bank appropriate
evidence (including copies of the relevant invoices) satisfactory
to the Bank to demonstrate that the requested Drawdown is
necessary in order to fund specific Eligible Expenditures which
fall due for payment within 30 days after the date of the Drawdown
request.
(c) (Other than in the case of the first Drawdown into the
Special Account) the Borrower shall have submitted to the Bank
account statements and documents, and any other evidence requested
by the Bank, to demonstrate that all amounts previously disbursed
from the Special Account have been properly applied in accordance
with the terms of this Agreement.
4. The Borrower shall procure that (a) amounts disbursed by the
Bank into the Special Account are immediately applied to the
purchase of the requisite amount of Roubles required for the
payment of the relevant Eligible Expenditures for which the
relevant Drawdown was requested in accordance with paragraph 3(b)
above and (b) that such Rouble amounts are then immediately
applied to the payment of such Eligible Expenditures.
5. Without prejudice to the requirement of paragraph 3(c)
above, the Borrower shall furnish, at any time the Bank may
reasonably request, a report on the balance and other details of
the Special Account, including account statements and such other
documents and evidence as the Bank may request to show that
payments made from the Special Account have been made in
accordance with the requirements set forth in this Schedule.
6. Notwithstanding the provisions of paragraph 3 of this
Schedule, the Borrower shall not, unless the Bank otherwise
agrees, draw down funds from the Available Amount for deposit into
the Special Account if, at any time, the Bank has determined that
all further Drawdowns should be made in accordance with the
provisions of Section 2.03(a). Thereafter, Drawdowns allocated to
the Eligible Categories shall follow such procedures as the Bank
may specify by notice to the Borrower. Such further Drawdowns
shall be made only after and to the extent that the Bank has been
satisfied that all amounts remaining on deposit in the Special
Account as of the date of such notice will be utilised in making
payments for Eligible Expenditures.
7. If the Bank determines at any time that any payment out of,
or any use of, the Special Account:
(a) was made for an expenditure or in an amount not eligible
pursuant to paragraph 2 of this Schedule; or
(b) was not justified by the evidence furnished to the Bank;
then the Bank may require the Borrower to:
(1) provide such additional evidence as the Bank may
request; and/or
(2) deposit into the Special Account (or, if the Bank so
requests, repay to the Bank) an amount equal to the amount of
such payment or the portion thereof not so eligible or
justified.
In the event the Bank makes such a determination under (a) or
(b) above, no further Drawdowns shall, unless the Bank otherwise
agrees, be made for deposit into the Special Account until such
time as the Borrower has either (A) deposited into the Special
Account or repaid to the Bank an amount equal to the amount of
such payment (or portion thereof) determined not to be eligible or
justified, or (B) provided additional evidence satisfactory to the
Bank that the amounts previously disbursed from the Special
Account were applied properly.
8. If:
(a) the Bank determines at any time that any amount outstanding
in the Special Account will not be required to cover further
payments for Eligible Expenditures; or
(b) the Bank directs the Borrower to repay to the Bank an
amount pursuant to paragraph 7(2);
then the Borrower shall, promptly upon notice from the Bank,
prepay to the Bank a portion of the Loan equal to such amount. For
this purpose, the requirement that prepayments of the Loan must
occur on Interest Payment Dates shall, subject to paragraph 10
below, be waived.
9. The Borrower may, upon prior notice to the Bank given in
accordance with Section 3.07(a) of the Standard Terms and
Conditions, prepay on any Interest Payment Date all or any portion
of the funds deposited into the Special Account.
10. Any prepayment pursuant to paragraph 8 or 9 above shall be
made in accordance with Section 3.07 of the Standard Terms and
Conditions; provided, however, that (a) notwithstanding Section
3.07(c)(i)(A) of the Standard Terms and Conditions, such
prepayment shall not be subject to the Minimum Prepayment Amount,
and (b) any prepayment that is made on a date other than an
Interest Payment Date shall be subject to payment of Unwinding
Costs in accordance with Section 3.10 of the Standard Terms and
Гподйфйпоу. Any prepayment pursuant to paragraph 8 or 9 above
shall be applied by the Bank in accordance with Section
3.07(c)(ii) of the Standard Terms and Conditions.
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