conformed copy loan number 1262 yu vodovod …€¦ · vodovod project agreement agreement, dated...
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CONFORMED COPY
LOAN NUMBER 1262 YU
VODOVOD PROJECT AGREEMENT
(Morava Region Development Project:Water Supply, Sewerage and Water Resources)
between
INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT
and
VSKUPSTINA OPSTINE CACAK
(The City Assembly of Cacak)
and
KOMUNALNA ORGANIZACIJA UDRUZENOGRADA ZA VODOVOD I KANALIZACIJU
"VODOVOD" CACAK(Communal Organization of Associated
Labor for Water Supply and Sewerage Systems"Vodovod" Cacak)
Dated June 14, 1976
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VODOVOD PROJECT AGREEMENT
AGREEMENT, dated June 14, 1976, between INTERNATIONAL BANK
FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank)
and SKUPSTINA OPSTINE CACAK (The City Assembly of Cacak) (herein-
after called Cacak) and KOMUNALNA ORGANICACIJA UDRUZENOG RADA ZA
VODOVOD I KANALIZACIJU "VODOVOD" CACAK (Communal Organization of
Associated Labor for Water Supply and Sewerage Systems "Vodovod"
Cacak) (hereinafter called Vodovod).
WHEREAS by the Loan Agreement of even date herewith between
Republicki Fond Voda (Republic Water Fund) (hereinafter called
the Borrower) and the Bank, the Bank has agreed to make available
to the Borrower an amount in various currencies equivalent to twenty
million dollars ($20,000,000), on the terms and conditions set
forth in the Loan Agreement, but only on condition that Vodovod
agree to undertake such obligations toward the Bank as hereinafter
set forth; and
WHEREAS Vodovod, an Organization of Associated Labor estab-
lished and existing in accordance with its Statutes dated May 28,
1973, is responsible, inter alia, for water supply, sewerage and
drainage systems in the city of Cacak;
WHEREAS by a subsidiary loan agreement to be entered into be-
tween the Borrower and Vodovod, the proceeds of the loan provided
for under the Loan Agreement will be made available to Vodovod on
the terms and conditions therein set forth; and
01
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WHEREAS Cacak and Vodovod, in consideration of the Bank's
entering into the Loan Agreement with the Borrower, have agreed
to undertake the obligations hereinafter set forth;
NOW THEREFORE the parties hereto hereby agree as follows:
0 -3-
ARTICLE I
Definitions
Section 1.01. Wherever used in this Agreement, unless the
context shall otherwise require, the several terms defined in
the Loan Agreement, the Preamble to this Agreement and the Gen-
eral Conditions (as so defined) have the respective meanings
therein set forth.
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ARTICLE II
Execution of the Project
Section 2.01. Vodovod shall carry out Part F of the Project
described in Schedule 2 to the Loan Agreement with dae 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, ser-
vices and other resources required for the purpose.
Section 2.02. (a) In order to assist Vodovod in the prepara-
tion of plans and specifications for, in the preparation of bid-
ding documents for, and in the supervision of the construction of,
Parts F(1), F(2) and F(3) of the Project, Vodovod shall employ,
no later than September 30, 1976, or such other date as the Bank
may agree, engineering consultants whose qualifications, experi-
ence and terms and conditions of employment shall be satisfactory
to the Bank.
(b) In order to assist Vodovod in the prepa& tion of final
designs of a wastewater plant for Cacak under Part F(5) of the
Project to be located near the Zapadna Morava river, Vodovod shall
employ, no later than September 30, 1976, or such other date as
the Bank may agree, engineering consultants whose qualifications,
experience and terms and conditions of employment shall be satis-
factory to the Bank.
(c) Except as the Bank shall otherwise agree, in order to
assist Vodovod in the carrying out of Part F(4) of the Project, to
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be completed within eighteen months from the date of the Loan Agree-
ment, Vodovod shall employ no later than December 31, 1976 consul-
tants whose qualifications, experience and terms and conditions of
employment shall be satisfactory to the Bank.
Section 2.03. Except as the Bank shall otherwise agree, the
goods and works for Part F of the Project shall be procured by
Vodovod in accordance with the provisions of Schedule 4 to the
Loan Agreement.
Section 2.04. (a) Vodovod undertakes to insure, or make ade-
quate provision for the insurance of, the imported goods to be fi-
nanced out of the proceeds of the Loan relent to it by the Borrower
against hazards incident to the acquisition, transportation and
delivery thereof to the place of use or installation, and for such
insurance any indemnity shall be payable in a currency freely us-
able by Vodovod to replace or repair such goods.
(b) Except as the Bank may otherwise agree, Vodovod shall
cause all goods and services financed out of the proceeds of the
Loan relent to it by the Borrower to be used exclusively for the
Project.
Section 2.05. (a) Vodovod shall furnish to the Bank, promptly
upon their preparation, the plans, specifications, reports, con-
tract documents and work and procurement schedules for Part F of
the Project, and any material modifications thereof or additions
thereto, in such detail as the Bank shall reasonably request.
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(b) Vodovod: (i) shall maintain records adequate to record
the progress of Part F of the Project (including the cost thereof)
and to identify the goods, works and services financed out of the
proceeds of the Loan relent to it by the Borrower, and to disclose
the use thereof in Part F of the Project; (ii) shall, without limi-
tation upon the provisions of paragraph (c) of this Section, enable
the Bank's repreosentatives to visit the facilities and construction
sites included in Part F of the Project and to examine the goods
financed out of such proceeds and any relevant records and docu-
ments; (iii) shall furnish to the Bank within forty-five calendar
days after each calendar quarter a report, of such scope and in
such detail as the Bank shall reasonably request on the progress
of Part F of the Project, during such quarter; and (iv) shall fur-
nish to the Bank all such information as the Bank shall reasonably
request concerning Part F of the Project, the expenditure of the
proceeds of the Loan so relent to it and the goods, works and ser-
vices financed out of such proceeds.
(c) Vodovod shall enable the Bank's representatives to ex-
amine all plants, installations, sites, works, buildings, property
and equipment of Vodovod and any relevant records and documents,
as the Bank shall reasonably request.
Section 2.06. Vodovod shall duly perform all its obligations
under the Subsidiary Loan Agreement. Except as the Bank shall
otherwise agree, Vodovod 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.
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Section 2.07. (a) Vodovod shall, at the request of the Bank,
exchange views with the Bank with regard to the progress of Part
F of the Project, the performance of its obligations under this
Agreement and under the Vodovod Subsidiary Loan Agreement and
other matters relating to the purposes of the Loan.
(b) Vodovod shall promptly inform the Bank of any condition
which interferes or threatens to interfere with, the progress of
Part F of the Project, the accomplishment of the purposes of the
Loan, or the performance by Vodovod of its obligations under this
Agreement and under the Vodovod Subsidiary Loan Agreement.
Section 2.08. Vodovod shall take all such action as shall be
necessary to acquire as and when needed all such land, and rights
in respect of land as shall be required for the construction (and
operation) of the facilities included in Part F of the Project and
shall furnish to the Bank, promptly after such acquisition, evidence
satisfactory to the Bank that such land and rights in respect of
land are available for purposes related to Part F of the Project.
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ARTICLE III
Management and Operations of Vodovod
Section 3.01. (a) Vodovod shall at all times manage its af-
fairs, maintain its financial position, plan its future expansion
and carry on its operations, all in accordance with sound business,
financial and public utility practices and under the supervision
of experienced and competent management, inciuding but without lim-
itation a director of Vodovod's finance department, assisted by
adequate, experienced and competent staff.
(b) Vodovod shall at all times operate, maintain, renew and
repair its facilities, plants, equipment, machinery and property
(including but not limited to all facilities, plants, equipment,
machinery and property financed out of the proceeds of the Loan),
and promptly make all necessary repairs and renewals thereof, in
accordance with sound engineering and public utility practices.
(c) Vodovod shall take all action within its power to main-
tain its existence and right to carry on operations and shall take
all steps necessary to acquire, maintain and renew all rights,
privileges and franchises which are necessary or useful in the
conduct of its business.
(d) Except as the Bank shall otherwise agree, Vodovod shall
obtain title to all goods financed out of the proceeds of the
Loan free and clear of all encumbrances.
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1.) Vodovod shall not, without the prior approval of the
Bank, sell, lease, transfer or otherwise dispose of any of its
property or assets which shall be required for the efficient
operation of its business and undertaking.
Section 3.02. Vodovod shall take out and maintain with
responsible insurers, or make other provisions satisfactory to
the Bank for, insurance against such risks and in such amounts as
shall be consistent with appropriate practices.
Section 3.03. Vodovod shall afford the Bank a reasonable
opportunity to comment on the details of any proposed reorgani-
zation of Vodovod, including but not limited to any possible as-
sociation of Vodovod with any other enterprise or organization.
Section 3.04. (a) Before undertaking or executing any major
project or development other than Part F of the Project, Vodovod
shall afford a reasonable opportunity "o the Bank to exchange views
on the recommendations of the system development study to be under-
taken under Part F(4) of the Project and on such proposed project
or development, and shall not undertake or execute, for its own
account or for the account of any third party or parties, any major
project or development other than Part F of the Project, which
would substantially and adversely affect the carrying out of Part
F of the Project, the operati'.n of the facilities included in Part
F of the Project, the conduct of Vodovod's business, the Vodovod's
financial situation, or the efficiency of the Vodovod's management
and personnel.
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(b) For the purpose of this Section, the term "major project
or development", means any project or development with an invest-
ment character resulting in estimated aggregate capital expenditures
exceeding $500,000, or the equivalent, or such other amount as
shall be agreed from time to time between the Bank and Vodovod.
* -11 -
ARTICLE IV
Financial Covenants
Section 4.01. (a) Vodovod shall maintain records adequate to
reflect in accordance with consistently maintained appropriate ac-
counting practices its operations and financial condition.
(b) Without imitation or restriction on the generality of
the provisions of the foregoing paragraph (a) of this Section
Vodovod shall: (i) maintain separate accounts adequate to reflect
in accordance with consistently maintained appropriate accounting
practices its operations and financial condition in respect of its
water supply and wastewater operations and stormvater service;
such accounts shall be maintained in such a manner so as to enable
Vodovod and the Bank to identify Vodovod water supply and waste-
water operations and stormwater service independently from its
other operations; and (ii) put into effect, no later than July 30,
1977, or such other time as the Bank may agree, modifications in
its accounting procedures so as to facilitate adequate separation
of costs between construction activities and normal operations and
maintenance.
Section 4.02. Vodovod shall: (i) have its accounts, including
but without limitation the separate accounts referred to in para-
graph (b) (i) of Section 4.01 of this Agreement, and financial
statements (balance sheets, statements of income and expenses and
related statements) for each fiscal year audited, in accordance
with appropriate auditing principles consistently applied, by the
Social Accounting Service or another competent and experienced
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independent auditing organization acceptable to the Bank; (ii)
furnish to the Bank as soon as available, but in any case not
later than four months after the end of each such year, (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 the accounts, including but without limitation the
separate accounts referred to in paragraph (b) (i) of Section
4.01 of this Agreement, and financial statements of Vodovod and
the audit thereof as the Bank shall from time to time reasonably
request.
Section 4.03. Except as the Bank shall otherwise agree, Vodo-
vod shall:
(a) implement until December 31, 1979: the tariff scale
for water supply and sewerage as set out in Schedule 1 to this
Agreement or such other tariff scales for water supply and sewer-
age as shall produce revenues at least equivalent to revenues pro-
duced by the tariffs included in the tariff scale set out in Sched-
ule 1 to this Agreement; and thereafter a modified tariff scale
which, together, with its other revenues, shall provide operating
revenues sufficient:
(i) to cover in any given year all operating expenses
including employee compensations, administrative
and overhead costs, adequate maintenance costs,
and adequate provision for taxes and other con-
tributions provided by law, if any, but excluding
depreciation;
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(ii) to cover in any given year debt amortization in-
cluding sinking funds payments, if any, and inter-
est and other charges on debt;
(iii) to provide for adequate increases in working
capital;
(iv) to make contributions as necessary to reserve and
other authorized funds; and
(v) beginning with the year 1980 to finance each year
not less than 30% of the average cost of investment
in water and sewerage facilities, including inter-
est during construction, during each consecutive
three-year period comprising the year for which the
tariffs are determined together with the year im-
mediately preceding and the year immediately follow-
ing such year for which the tariffs are determined.
(b) for purposes of the foregoing and as part of such in-
formation as may be requested under Section 2.07 of this Agree-
ment, by September 30 of each year:
(i) prepare and furnish to the Bank an updated state-
ment of sources and application of funds covering
in every case (A) until the year 1978, the period
1976-1980 and (B) thereafter the current year and
the following two years; and
(ii) prepare and furnish to the Bank all other relevant
information concerning the steps taken or planned
to be taken by Vodovod in order to comply with its
obligations under paragraph (a) of this Section.
Section 4.04. (a) Except as the Bank shall otherwise agree,
Vodovod shall not incur any debt, other than debt incurred for
purposes of Part F of the Project and referred to in Recital (I)
to the Loan Agreement, if the net revenues for the fiscal year
next preceding such incurrence shall be less than 1.5 times the
maximum debt service requirements for any succeeding fiscal year
on all of its debt then outstanding (including the debt to be
incurred).
(b) For the purposes of this Section:
(i) the term "debt" means any debt maturing by its
terms more than one year after the date on which
it is originally incurred;
(ii) debt shall be deemed to be incurred (A) under
a loan contract or agreement, on the date the
loan contract or agreement providing for such
debt or modifying its terms of payment is en-
tered into, and (B) under a guarantee agree-
ment on the date the agreement providing for
such guarantee is entered into;
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(iii) the term "net revenues" means gross revenues
from all sources adjusted to take account of
tariffs in effect at the time of calculation
even though they were not in effect during
the twelve consecutive months to which such
revenues related, less operating and administrative
expenses, in-cluding adequate maintenance, taxes
and levies, if any, or any payments in lieu thereof,
and personal remuneration, but before provision
for depreciation and debt service requirements;
(iv) the term "debt service requirements" means the
aggregate amount of amortization (including
sinking fund payments, if any), interest and
other charges on debt; and
(v) whenever it shall be necessary to value in the
currency of the Guarantor debt payable in an-
other currency, such valuation shall be made on
the basis of the rate of exchange at which
such other currency is obtainable by Vodovod,
at the time such valuation is made, for the
purposes of servicing such debt or, if such
other currency is not so obtainable, at the
rate of exchange that will be reasonably de-
termined by the Bank.
Section 4.05. Except as the Bank shall otherwise agree, if
Vodovod shall prepay part, or all, of the principal amount out-
standing of any debt of Vodovod, Vodovod shall prepay a propor-
tionate part, or all, as the case may be, of the loan provided
for under the Vodovod Subsidiary Loan Agreement.
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Section 4.06. If the completion of Part F of the Project is
hindered or delayed, or is threatened with hindrance or delay,
because the funds available to Vodovod are inadequate to insure
its completion, Vodovod shall promptly demand that Beogradska
Banka, Beograd provide Vodovod, or cause Vodovod to be provided,
with the necessary funds as and when required, in accordance with
the provisions of the Agreement referred to in Recital (I) of the
Preamble of the Loan Agreement.
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ARTICLE V
Undertakings of Cacak
Section 5.01. Cacak unconditionally undertakes, whenever there
is reasonable cause to believe that the funds available to Vodovod
will be inadequate to meet the estimated expenditures required for
the carrying out of Part F of the Project, to make arrangements,
satisfactory to the Bank, promptly to provide Vodovod or cause
Vodovod to be provided, with such funds as are needed to meet such
expenditures.
Section 5.02. (a) Cacak covenants that it will not take or
cause or permit any of its organs to take any action which would
prevent or interfere with the performance by Vodovod of any of
its obligations contained in this Agreement and will take or cause
to be taken all reasonable action necessary or appropriate to en-
able Vodovod to perform such obligations.
(b) Without limitation on the provisions of paragraph (a) of
this Section 5.02, Cacak shall take all such action, including the
approval of applications on the part of Vodovod for tariff increases,
as shall be required to enable Vodovod, to meet the requirements
of Section 4.03 of this Agreement.
Section 5.03. (a) Cacak shall, at the request of the Bank,
exchange views with the Bank with regard to the progress of Part
F of the Project, the performance of its obligations under this
Agreement, and other matters relating to the purposes of the Loan.
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(b) Cacak shall promptly inform the Bank of any condition
which interferes or threatens to interfere with, the progress of
Part F of the Project, the accomplishment of the purposes of the
Loan, or the performance by Cacak of its obligations under this
Agreement.
Section 5.04. Cacak shall make arrangements to reimburse
Vodovod promptly and in full for all expenses incurred in the op-
eration, maintenance and administration of all storm drainage
facilities, and for meeting all related debt service obligations.
Section 5.05. Cacak shall take all such action as may be
required to assign to Vodovod as of September 1, 1976, or such
other date as the Bank may agree, exclusive responsibility for
construction, operation and maintenance of all facilities, plants,
equipment, machinery and property financed out of the proceeds of
the Loan.
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ARTICLE VI
Effective Date; Termination;Cancellation and Suspension
Section 6.01. This Agreement shall come into force and effect
on the Cate upon which the Loan Agreement becomes effective.
Section 6.02. (a) This Agreement and all obligations of the
Bank and of Cacak and Vodovod, respectively, thereunder shall ter-
minate on the earlier of the following two dates:
(i) the date on which the Loan Agreement shall
terminate in accordance with its terms; or
(ii) a date 20 years after the date of this
Agreement.
(b) If the Loan Agreement terminates in accordance with its
terms before the date specified in paragraph (a) (ii) of this
Section, the Bank shall promptly notify Cacak and Todovod, re-
spectively, of this event.
Section 6.03. All the provisions of this Agreement shall con-
tinue in full force and effect notwithstanding any cancellation or
suspension under the Loan Agreement.
Section 6.04. Cacak and Vodovod: (i) represent that all obli-
gations of Cacak and Vodovod under the Vodovod Project Agreement
and under the Vodovod Subsidiary Loan Agreement, respectively,
which shall or may require for its performance the approval, coop-
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eration or financial assistance of any governmental authorities
having jurisdiction, are undertaken with the consent and full
support of such authorities; and (ii) agree that no action or
failure to act by such authorities shall excuse the performance
of such obligation by Cacak and Vodovod or limit the remedies of
the Bank under the Loan Agreement in respect of any default in the
performance of such obligations.
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ARTICLE VII
Miscellaneous Provisions
Section 7.01. Any notice or request required or permitted to
be given or made under this Agreement and any agreement between
the parties contemplated by this Agreement shal' be in writing.
Such notice or request shall be deemed to have been duly given
or made when it shall be delivered by hand or by mail, telegram,
cable, telex or radiogram to the party to which it is required or
permitted to be given or made at such party's address hereinafter
specified or at such other address as such party shall have des-ignated by notice to the party giving such notice or making suchrequest. The addresses so specified are:
For the Bank:
International Bank forReconstruction and Development
1818 H Street, N.W.Washington, D.C. 20433United States of America
Cable address:
INTBAFRADWashington, D.C.
For Cacak:
Skupstina Opstine CacakCacak, Yugoslavia
Cable address:
Skupstina Opstine CacakCacak
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For Vodovod:
Komunalna Organizacija UdruzenogRada za Vodovod i Kanalizaciju"Vodovod" Cacak
Cacak, Yugoslavia
Cable address:
"Vodovod"Cacak
Section 7.02. Any action required or permitted to be taken,
and any documents required or permitted to be executed, under this
Agreement on behalf of Cacak and Vodovod, respectively, may be
taken or executed by the President of the City Assembly of Cacak
and the Direktor of Vodovod, respectively, or such other person
or persons as such President and Direktor, respectively, shall
designate in writing.
Section 7.03. Cacak and Vodovod shall each furnish to the
Bank sufficient evidence of the authority and the authenticated
specimen signature of the person or persons who will, on behalf
of Cacak and Vodovod, respectively, take any action or execute any
documents required or permitted to be taken or executed by Cacak
and Vodovod, respectively, pursuant to any of the provisions of
this Agreement.
Section 7.04. This Agreement may be executed in several coun-
terparts, each of which shall be an original, and all collectively
but one instrument.
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IN WITNESS WHEREOF, the parties hereto, acting through their
representatives thereunto duly authorized, have caused this Agree-
ment to be signed in their respective names in the District of
Columbia, United States of America, as of the day and year first
above written.
INTERNATIONAL BANK FORRECONSTRUCTION AND DEVELOPMENT
By /s/ Willi A. WapenhansRegional Vice President
Europe, Middle East and North Africa
SKUPSTINA OPSTINE CACAK
By /s/ Naum AckovskiAuthorized Representative
KOMUNALNA ORGANIZACIJA UDRUZENOGRADA ZA VODOVOD I KANALIZACIJU"VODOVOD" CACAK
By /s/ Naum AckovskiAuthorized Representative
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SCHEDULE 1
Water Supply and Sewerage Tariffs
1976-1988
Water Supply Sewerage
3 .3Price: Din per m Surcharge: Din per m
other other
Date Household consumers Household Consumers
July 1, 1976 1.70 4.00 0.40 0.85
July 1, 1977 2.05 4.85 0.50 1.00
July 1, 1978 2.45 5.80 0.60 1.20
July 1, 1979 2.95 6.95 0.75 1.45