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CONFORMED COPY
TF023961
Trust Fund Credit Agreement
(Second Municipal Infrastructure Development Project)
between
PALESTINE LIBERATION ORGANIZATION
(for the Benefit of the Palestinian Authority)
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
(As Administrator of the Trust Fund for Gaza and West Bank)
Dated September 2, 2000
TF 023961
TRUST FUND CREDIT AGREEMENT
AGREEMENT, dated September 2, 2000, between the PALESTINE
LIBERATION ORGANIZATION (for the benefit of the Palestinian Authority)
(the Borrower) and the INTERNATIONAL DEVELOPMENT ASSOCIATION, acting as
administrator (the Administrator) of the Trust Fund for Gaza and West
Bank, established on October 19, 1993, by Resolution No. 93-11 and IDA
93-7, as amended by Resolution No. 95-6 and IDA 95-3 and Resolution No.
96-11 and IDA 96-7 and further amended by Resolution No. 99-3 and IDA
99-2, of the Executive Directors of the International Bank for
Reconstruction and Development and the International Development
Association (the Trust Fund).
WHEREAS (A) the Board of Governors of the International Bank for
Reconstruction and Development and the International Development
Association has resolved, on July 29, 1999, to, inter alia, replenish the
Trust Fund in the amount of sixty million dollars ($60,000,000), such
amount to be transferred from the surplus of the International Bank for
Reconstruction and Development and to be used for financing
rehabilitation projects in parts of the Gaza Strip (Gaza) and the West
Bank (the West Bank) which are under the jurisdiction of the Palestinian
Authority;
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(B)
the Palestine Liberation Organization and the Government of the
State of Israel have entered, on September 28, 1995, into an agreement
which, inter alia, sets out certain interim self-government arrangements
in Gaza and the West Bank (the Interim Agreement);
(C)
Section 5 (b) of Article IX of the Interim Agreement
authorizes the Palestine Liberation Organization to conduct negotiations
and, in certain cases described thereunder, sign agreements with states
and international organizations for the benefit of the Palestinian
Authority;
(D)
the Palestinian Authority, on behalf of the Borrower, has
requested the Administrator to assist in financing the Project described
in Schedule 2 to this Agreement; and
WHEREAS the Administrator has agreed, on the basis, inter alia, of
the foregoing to extend the Credit to the Palestine Liberation
Organization, for the benefit of the Palestinian Authority, upon the
terms and conditions set forth in this Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The �General Conditions� set forth in Schedule 1 to
the Trust Fund Credit Agreement between the Administrator and the
Palestinian Economic Council for Development and Reconstruction, dated
September 7, 1994, relating to the Emergency Rehabilitation Project (TF
026066-GZ), as amended, with the following modifications thereto (the
General Conditions), constitute an integral part of this Agreement.
(a)
A new paragraph (c) is added to Section 3.04 to read:
�If the Administrator shall at any time receive less than
the full amount then due
and payable to it under the Trust Fund Credit
Agreement, the Administrator shall have the
right to allocate and apply
the amount so received in any manner and for such purposes under
the
Trust Fund Credit Agreement as the Administrator shall in its sole
discretion determine.�;
(b)
The second sentence of Section 5.01 is modified to read:
�Except as the Administrator and the Borrower shall
otherwise agree, no withdrawals
shall be made: (a) on account of
expenditures in the territories of any country which is not
a
member of the Bank or for goods produced in, or services supplied from,
such territories;
or (b) for the purpose of any payment to persons or
entities, or for any import of goods, if
such payment or import, to
the knowledge of the Administrator, is prohibited by a decision
of the
United Nations Security Council taken under Chapter VII of the Charter of
the United
Nations.�;
(c)
Paragraph (g) of Section 6.02 is re-lettered as paragraph
(k) and the following new paragraphs (g) through (j) are added in said
Section 6.02:
�(g)
The Borrower or any Project implementation entity
shall, without the consent
of the Administrator, have (i) assigned
or transferred, in whole or in part, any of its
obligations
arising under the Trust Fund Credit Agreement; or (ii) sold, leased,
transferred, assigned, or otherwise disposed of any property
or assets financed wholly or in
part out of the proceeds of the Credit,
except with respect to transactions in the ordinary
course of business
which, in the opinion of the Administrator, (A) do not materially and
adversely affect the ability of the Borrower to perform any
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of its obligations under the
Trust Fund Credit Agreement or to
achieve the objectives of the Project, or the ability of
the Project
implementation entity to perform any of its obligations arising under, or
entered into pursuant to, the Trust Fund Credit Agreement,
or to achieve the objectives of
the Project; and (B) do not materially
and adversely affect the financial condition or
operation of
the Project implementation entity.
(h)
Any Project implementation entity shall have ceased
to exist in the same legal
form as that prevailing as of the date
of the Trust Fund Credit Agreement.
(i)
Any action shall have been taken for the dissolution,
disestablishment or
suspension of operations of any Project
implementation entity.
(j)
In the opinion of the Administrator, the legal
character, ownership or control
of any Project implementation entity
shall have changed from that prevailing as of the date
of the Trust
Fund Credit Agreement so as to materially and adversely affect (i) the
ability
of the Borrower to perform any of its obligations under the
Trust Fund Credit Agreement or
to achieve the objectives of the
Project; or (ii) the ability of the Project implementation
entity to
perform any of its obligations arising under, or entered into pursuant
to, the
Trust Fund Credit Agreement, or to achieve the
objectives of the Project.�;
(d)
Section 6.03 is modified to read:
�Section 6.03. Cancellation by the Administrator. If (a) the
right of the Borrower to
make withdrawals from the Credit Account shall
have been suspended with respect to any
amount of the Credit
for a continuous period of thirty days, or (b) at any time, the
Administrator determines, after consultation with the Borrower,
that an amount of the Credit
will not be required to finance the
Project�s costs to be financed out of the proceeds of
the Credit,
or (c) at any time, the Administrator determines, with respect to any
contract
to be financed out of the proceeds of the Credit, that
corrupt or fraudulent practices were
engaged in by representatives of
the Borrower or of a beneficiary of the Credit during the
procurement
or the execution of such contract, without the Borrower having taken
timely and
appropriate action satisfactory to the Administrator to
remedy the situation, and
establishes the amount of expenditures
in respect of such contract which would otherwise
have been
eligible for financing out of the proceeds of the Credit, or (d) at any
time, the
Administrator determines that the procurement of any
contract to be financed out of the
proceeds of the Credit is
inconsistent with the procedures set forth or referred to in the
Trust
Fund Credit Agreement and establishes the amount of expenditures in
respect of such
contract which would otherwise have been eligible for
financing out of the proceeds of the
Credit, or (e) after the Closing
Date, an amount of the Credit shall remain unwithdrawn from
the
Credit Account, the Administrator may, by notice to the Borrower,
terminate the right of
the Borrower to make withdrawals to such
amount. Upon the giving of such notice, such amount
of the Credit shall
be canceled.�;
(e)
Paragraph (d) of Section 7.01 is re-lettered as paragraph
(h) and the following are added as new paragraphs (d) through (g) of said
Section:
�(d)
The Borrower or any Project implementation entity
shall, without the consent
of the Administrator, have (i) assigned
or transferred, in whole or in part, any of its
obligations
arising under the Trust Fund Credit Agreement; or (ii) sold, leased,
transferred, assigned, or otherwise disposed of any property
or assets financed wholly or in
part out of the proceeds of the Credit,
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except with respect to transactions in the ordinary
course of business
which, in the opinion of the Administrator, (A) do not materially and
adversely affect the ability of the Borrower to perform any
of its obligations under the
Trust Fund Credit Agreement or to
achieve the objectives of the Project, or the ability of
the Project
implementation entity to perform any of its obligations arising under, or
entered into pursuant to, the Trust Fund Credit Agreement,
or to achieve the objectives of
the Project; and (B) do not materially
and adversely affect the financial condition or
operation of
the Project implementation entity.
(e)
Any Project implementation entity shall have ceased
to exist in the same legal
form as that prevailing as of the date
of the Trust Fund Credit Agreement.
(f)
Any action shall have been taken for the dissolution,
disestablishment or
suspension of operations of any Project
implementation entity.
(g)
In the opinion of the Administrator, the legal
character, ownership or control
of any Project implementation entity
shall have changed from that prevailing as of the date
of the Trust
Fund Credit Agreement so as to materially and adversely affect (i) the
ability
of the Borrower to perform any of its obligations under the
Trust Fund Credit Agreement or
to achieve the objectives of the
Project; or (ii) the ability of the Project implementation
entity to
perform any of its obligations arising under, or entered into pursuant
to, the
Trust Fund Credit Agreement, or to achieve the
objectives of the Project.�; and
(f)
Section 11.01 is modified by replacing, in the second
sentence, the word �radiogram� with the word �facsimile� and adding a new
sentence at the end of the said Section to read:
�Deliveries made by facsimile transmission shall also be
confirmed by mail.�
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)
�CBU� means the Capacity Building Unit within MLG;
(b)
�Eligible Categories� means categories (1) (a), (1) (b), (2)
(a), (2) (b), (3)(a), (3) (b), (4), (5) (a) and (5) (b) set forth in the
table in Part A.1 of Schedule 1 to this Agreement;
(c)
�Eligible Expenditures� means the expenditures for goods,
works and services referred to in Section 2.02 of this Agreement;
(d)
�Environmental Assessment Report� means a report to be
prepared by the PWA identifying and assessing the potential environmental
impacts of a proposed Sub-project, evaluating alternatives, and designing
appropriate mitigation, management, and monitoring measures in accordance
with terms and conditions acceptable to the Administrator;
(e)
�Environmental Management Plan� means the Palestinian
Authority�s plan, dated February 2, 2000, as such plan may be updated
from time to time by agreement of the Palestinian Authority and the
Administrator, for implementation of the Project in accordance with
appropriate environmental standards and guidelines, and includes an
environmental mitigation plan, an environmental monitoring plan and
certain institutional strengthening measures;
(f)
�Implementation Agreements� means, collectively, the
agreement to be entered into by the Palestinian Authority, through MLG,
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and each of the Selected Municipalities pursuant to Paragraph A.5 of
Schedule 4 to this Agreement, as the same may be amended from time to
time; and such term shall include all schedules to the Implementation
Agreements;
(g)
�MLG� means the Ministry of Local Government of the
Palestinian Authority;
(h)
�MPW� means the Ministry of Public Works of the Palestinian
Authority;
(i)
�PAU� means the Project Accounting Unit within MLG;
(j)
�Project Management Report� means each report prepared in
accordance with Section 4.02 of this Agreement;
(k)
�PWA� means the Palestinian Water Authority, a public
authority established and operating in Gaza and the West Bank pursuant to
a Decree of the Chairman of the Palestinian Authority, dated April 26,
1995, as the same may be amended from time to time;
(l)
�Selected Municipalities� means the municipalities of
Jabalia, Khan Younis, Tulkarem, Al-Ram, Jericho and Tarquimia;
(m)
�Special Account A� means the account referred to in Part B
of Schedule 1 to this Agreement;
(n)
�Special Account B� means the account referred to in Part B
of Schedule 1 to this Agreement;
(o)
�Special Account C� means the account referred to in Part B
of Schedule 1 to this Agreement;
(p)
�Special Accounts� means, collectively, Special Account A,
Special Account B and Special Account C;
(q)
�Sub-project� means a specific development project to be
carried out under Part A.2 of the Project, which the Bank shall consider
eligible for financing under the Project; and
(r)
�Subsidiary Agreement� means the agreement to be entered
into between the Borrower and the Palestinian Authority pursuant to
Section 3.01 (c) of this Agreement, as the same may be amended from time
to time, and such term shall include all schedules to the Subsidiary
Agreement.
ARTICLE II
The Credit
Section 2.01. The Administrator agrees to lend to the Borrower, on
the terms and conditions set forth or referred to in this Agreement, an
amount in various currencies equivalent to seven million five hundred
thousand United States dollars (US$7,500,000).
Section 2.02. The amount of the Credit may be withdrawn from the
Credit Account in accordance with the provisions of Schedule 1 to this
Agreement for expenditures made (or, if the Administrator shall so agree,
to be made) in respect of the reasonable cost of goods, works and
services required for the Project described in Schedule 2 to this
Agreement and to be financed out of the proceeds of the Credit.
Section 2.03. The Closing Date shall be December 31, 2004, or such
later date as the Administrator shall establish. The Administrator shall
promptly notify the Borrower of such later date.
Section 2.04. (a) The Borrower shall cause the Palestinian
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Authority to pay to the Administrator a commitment charge on the
principal amount of the Credit not withdrawn from time to time at a rate
to be set by the Administrator as of June 30 of each year, but not to
exceed the rate of one-half of one percent (1/2 of 1%) per annum.
Any
waiver of commitment charges with respect to credits granted by the
International Development Association shall apply to the Credit provided
for under this Agreement.
(b)
The commitment charge shall accrue: (i) from the date sixty
(60) days after the date of this Agreement (the accrual date) to the
respective dates on which amounts shall be withdrawn by the Borrower from
the Credit Account or canceled; and (ii) at the rate set as of the June
30 immediately preceding the accrual date and at such other rates as may
be set from time to time thereafter pursuant to paragraph (a) above. The
rate set as of June 30 in each year shall be applied from the next date
in that year specified in Section 2.06 of this Agreement.
(c)
The commitment charge shall be paid: (i) at such places as
the Administrator shall reasonably request; (ii) without restrictions of
any kind imposed by, or in the territory of, the Borrower; and (iii) in
the currency specified in this Agreement for the purposes of Section 4.02
of the General Conditions or in such other eligible currency or
currencies as may from time to time be designated or selected pursuant to
the provisions of that Section.
Section 2.05. The Borrower shall cause the Palestinian Authority to
pay to the Administrator a service charge at the rate of three-fourths of
one percent (3/4 of 1%) per annum on the principal amount of the Credit
withdrawn and outstanding from time to time.
Section 2.06. Commitment charges and service charges shall be
payable semi-annually on May 1 and November 1 in each year.
Section 2.07. The Borrower shall cause the Palestinian Authority to
repay the principal amount of the Credit in semi-annual installments
payable on each May 1 and November 1 commencing November 1, 2010 and
ending May 1, 2040. Each installment to and including the installment
payable on May 1, 2020, shall be one percent (1%) of such principal
amount, and each installment thereafter shall be two percent (2%) of such
principal amount.
Section 2.08. The currency of the United States of America is
hereby specified for the purposes of Section 4.02 of the General
Conditions.
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, shall carry out the Project through the Palestinian
Authority with due diligence and efficiency, in conformity with
appropriate administrative, economic, engineering, financial and
environmental practices and shall cause the Palestinian Authority to
provide, promptly as needed, the funds, facilities, services and other
resources required for the Project.
(b)
Without limitation upon the provisions of paragraph (a) of
this Section and except as the Borrower and Administrator shall otherwise
agree, the Borrower, through the Palestinian Authority, shall carry out
the Project in accordance with the Implementation Program set forth in
Schedule 4 to this Agreement and the Environmental Management Plan.
(c)
The Borrower shall make the proceeds of the Credit available
to the Palestinian Authority under a subsidiary agreement to be entered
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into between the Borrower and the Palestinian Authority under terms and
conditions which shall have been approved by the Administrator.
(d)
The Borrower shall cause the Palestinian Authority: (i) to
perform in accordance with the provisions of the Subsidiary Agreement all
of the obligations of the Palestinian Authority therein set forth; (ii)
to take all action, including the provision of funds, facilities,
services and other resources, necessary or appropriate for the carrying
out of the Project; and (iii) not to take or permit to be taken any
action which would prevent or interfere with the carrying out of the
Project.
(e)
The Borrower shall exercise its rights under the Subsidiary
Agreement in such manner as to protect the interests of the Borrower, the
Palestinian Authority and the Administrator and to accomplish the
purposes of the Credit, and, except as the Administrator shall otherwise
agree, the Borrower shall not assign, amend, abrogate or waive the
Subsidiary Agreement or any provision thereof.
Section 3.02. Except as the Administrator shall otherwise agree,
procurement of goods, works and consultants� services required for the
Project and to be financed out of the proceeds of the Credit shall be
governed by the provisions of Schedule 3 to this Agreement.
Section 3.03. For the purposes of Section 9.07 of the General
Conditions and without limitation thereto, the Borrower shall cause the
Palestinian Authority to:
(a)
prepare, on the basis of guidelines acceptable to the
Administrator, and furnish to the Administrator not later than six (6)
months after the Closing Date, or such later date as may be agreed for
this purpose between the Palestinian Authority and the Administrator, a
plan to ensure the continued achievement of the Project�s objectives; and
(b)
afford the Administrator a reasonable opportunity to
exchange views with the Palestinian Authority on said plan.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall cause the Palestinian
Authority to maintain a financial management system, including records
and accounts, and prepare financial statements in a format acceptable to
the Administrator, adequate to reflect the operations, resources and
expenditures related to the Project.
(b)
The Borrower shall cause the Palestinian Authority: (i) to
have its records, accounts and financial statements referred to in
paragraph (a) of this Section, and the records and accounts for the
Special Accounts for each fiscal year audited, in accordance with
auditing standards acceptable to the Administrator, consistently applied,
by independent auditors acceptable to the Administrator; (ii) furnish to
the Administrator, 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
the financial statements referred to in paragraph (a) of this Section for
such year as so audited, and (B) an opinion on such statements, records
and accounts and report of such audit, by said auditors, of such scope
and in such detail as the Administrator shall have reasonably requested;
and (iii) furnish to the Administrator such other information concerning
said records and accounts, and the audit thereof, as the Administrator
shall from time to time reasonably request.
(c)
For all expenditures with respect to which withdrawals from
the Credit Account were made on the basis of Project Management Reports
or statements of expenditure, the Borrower shall cause the Palestinian
Authority to: (i) maintain or cause to be maintained, in accordance with
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paragraph (a) of this Section, records and separate accounts reflecting
such expenditures; (ii) retain, until at least one year after the
Administrator has received the audit report for the fiscal year in which
the last withdrawal from the Credit Account was made, all records
(contracts, orders, invoices, bills, receipts and other documents)
evidencing such expenditures; (iii) enable the Administrator�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 Project Management
Reports or 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 4.02. (a) Without limitation upon the provisions of Section
4.01 of this Agreement, the Borrower shall cause the Palestinian
Authority to carry out a time-bound action plan acceptable to the
Administrator for the strengthening of the financial management system
referred to in paragraph (a) of said Section 4.01 in order to enable the
Palestinian Authority, not later than July 1, 2001 or such later date as
the Administrator shall agree, to prepare quarterly Project Management
Reports, acceptable to the Administrator, each of which:
(i)
(A) sets forth actual sources and applications of
funds for the Project, both
cumulatively and for the
period covered by said report, and projected sources
and
applications of funds for the Project for the six-month period following
the period covered by said report, and (B) shows
separately expenditures
financed out of the
proceeds of the Credit during the period covered by said
report and expenditures proposed to be financed out of the proceeds
of the
Credit during the six-month period
following the period covered by said
report;
(ii)
(A) describes physical progress in Project
implementation, both cumulatively
and for the period
covered by said report, and (B) explains variances between
the actual and previously forecast implementation targets; and
(iii)
sets forth the status of procurement under the
Project and expenditures under
contracts financed out of
the proceeds of the Credit, as at the end of the
period covered by said report.
(b)
Upon the completion of the action plan referred to in
paragraph (a) of this Section, the Borrower shall cause the Palestinian
Authority to prepare, in accordance with guidelines acceptable to the
Administrator, and furnish to the Administrator not later than forty-five
(45) days after the end of each calendar quarter a Project Management
Report for such period.
ARTICLE V
Effective Date; Termination
Section 5.01. The following events are specified as additional
conditions to the effectiveness of this Agreement within the meaning of
Section 12.01 of the General Conditions:
(a)
that the Subsidiary Agreement has been executed on behalf of
the Borrower and Palestinian Authority;
(b)
that the MLG has employed two accountants or an accounting
firm, all with qualifications and experience acceptable to the
Administrator, to manage the Project's accounts;
(c)
that the PAU is effectively operating in accordance with
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terms and conditions acceptable to the Administrator; and
(d)
that the MLG has employed the auditors referred to in
Section 4.01 (b) of this Agreement.
Section 5.02. The following is specified as an additional matter,
within the meaning of Section 12.02 (b) of the General Conditions, to be
included in the opinion or opinions to be furnished to the Administrator,
namely that the Subsidiary Agreement has been duly authorized or ratified
by, and executed and delivered on behalf of, the Borrower and the
Palestinian Authority and is legally binding upon the Borrower and the
Palestinian Authority in accordance with its terms.
Section 5.03. 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 VI
Representatives of the Borrower; Addresses
Section 6.01. The Minister of Finance of the Palestinian Authority
is designated as representative of the Borrower for the purposes of
Section 11.03 of the General Conditions.
Section 6.02. The following addresses are specified for the
purposes of Section 11.01 of the General Conditions:
For the Borrower:
c/o Ministry of Finance of the Palestinian Authority
P.O. Box 4007
Beirut Street, Rimal,
Gaza City, Gaza
Facsimile
072825255
For the Administrator:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
INDEVAS
248423 (MCI); or
Washington, D.C.
64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly
authorized representatives, have caused this Agreement to be signed in
their respective names in Gaza of the day, month and year first above
written.
PALESTINE LIBERATION ORGANIZATION
for the Benefit of the Palestinian Authority
By /s/ Mohammed Nashashibi
Authorized Representative
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INTERNATIONAL DEVELOPMENT ASSOCIATION
As Administrator of the Trust Fund for Gaza and West
Bank
By /s/ Joseph P. Saba
Authorized Representative
SCHEDULE 1
Withdrawal of the Proceeds of the Credit
A.
General
1.
The table below sets forth the Categories of items to be financed
out of the proceeds of the Credit, the allocation of the amounts of the
Credit to each Category and the percentage of expenditures for items so
to be financed in each Category:
Amount of the
Credit Allocated
% of Eligible
(Expressed in
Expenditures
Category
U.S. Dollar Equivalent to be
Financed
(1)
Civil works
85%
(a) under Part A.1 of the
1,800,000
Project
(b) under Part A.2 of the
450,000
Project
(2)
Goods
100% of
foreign
expenditures
and
85% of local
expenditures
(a) under Parts B.1 and
540,000
C.1 of the Project
(b) under Parts B.2 and
540,000
C.2 of the Project
(3)
Consultants' services and
100% of
foreign
training
expenditures
and
85% of local
expenditures
(a) under Parts A.1, B.1
1,620,000
and C.1 of the Project
(b) under Parts B.2 and
1,350,000
C.2 of the Project
(4)
Consultants' services under
180,000
100% of
foreign
Part A.2 of the Project
expenditures
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and
85% of local
expenditures
(5)
Incremental Operating Costs
85%
(a) under Part C.1 of the
90,000
Project
(b) under Part C.2 of the
180,000
Project
(6)
Unallocated
750,000
TOTAL
7,500,000
2.
For the purposes of this Schedule:
(a)
the term �foreign expenditures� means expenditures for goods
or services supplied from the territory of any country other than the
parts of the West Bank and Gaza under the jurisdiction of the Palestinian
Authority;
(b)
the term �local expenditures� means expenditures in the
currency used in the parts of the West Bank and Gaza under the
jurisdiction of the Palestinian Authority or for goods or services
supplied from the parts of the West Bank and Gaza under the jurisdiction
of the Palestinian Authority, provided, however, that if the currency
used in the parts of the West Bank and Gaza under the jurisdiction of the
Palestinian Authority is also that of a country from the territory of
which goods or services are supplied, expenditures in such currency for
such goods or services shall be deemed to be �foreign expenditures�; and
(c)
the term �Incremental Operating Costs� means expenditures
incurred by the Borrower, in respect of the Project, on account of
salaries, office rent, utilities, bank charges, audit expenses vehicle
operating costs, stationery, consumables, printing, translation services,
publications, communication services, travel expenses, maintenance and
acquisition of office equipment, and other related expenditures.
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals
shall be made: (a) in respect of payments made for expenditures prior to
the date of this Agreement; (b) under Categories (2) (b) and (3) (b),
unless (i) MLG has provided satisfactory evidence to the Administrator
that MLG has employed a manager, a finance expert and a management expert
whose qualifications and experience are acceptable to the Administrator
to operate the CBU; (ii) the effective operation of the CBU by MLG in
accordance with terms and conditions acceptable to the Administrator; and
(iii) the execution by MLG of the Implementation Agreements with each of
the Selected Municipalities in accordance with terms and conditions
acceptable to the Administrator; and (c) under Category (1) (b) of the
Project unless the PWA shall have first submitted to the Administrator,
in connection with a Sub-project, an Environmental Assessment Report,
procurement documents and contractual agreements in connection with such
Sub-project, in form and substance satisfactory to the Administrator and
in accordance with the Environmental Management Plan.
4.
The Administrator may require withdrawals from the Credit Account
to be made on the basis of statements of expenditure for: (i) contracts
costing less than the equivalent of $500,000 for works; (ii) contracts
costing less than the equivalent of $100,000 for goods; (iii) contracts
costing less than $100,000 equivalent per contract for services with
firms; (iv) contracts costing less than $50,000 equivalent per contract
for services with individuals; (v) contracts for local training and
studies; (vi) contracts for seminars and workshops; and (vii) Incremental
Operating Costs, all under such terms and conditions as the Administrator
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shall specify by notice to the Borrower.
B.
Special Accounts
1.
The Borrower shall open and maintain in Dollars three (3) separate
special deposit accounts (Special Account A for Parts A.1, B.1 and C.1 of
the Project, Special Account B for Part A.2 of the Project and Special
Account C for Parts B.2 and C.2 of the Project), in one or more
commercial banks, on terms and conditions satisfactory to the
Administrator, including appropriate protection against set-off, seizure
and attachment. Special Account A shall be used exclusively to finance
expenditures under Categories (1) (a), (2) (a), (3) (a) and (5) (a) set
forth in the table in paragraph A.1 of Schedule 1 to this Agreement;
Special Account B shall be used exclusively to finance expenditures under
Categories (1) (b) and (4) set forth in the table in paragraph A.1 of
Schedule 1 to this Agreement; and Special Account C shall be used
exclusively to finance expenditures under Categories (2) (b), (3) (b) and
(5) (b) set forth in the table in paragraph A.1 of Schedule 1 to this
Agreement.
2.
After the Administrator has received evidence satisfactory to it
that a Special Account has been opened, withdrawals from the Credit
Account of amounts to be deposited into said Special Account shall be
made as follows:
(a)
until the Administrator shall have received (i) the first
Project Management Report referred to in Section 4.02(b) of this
Agreement and (ii) a request from the Borrower for withdrawal on the
basis of Project Management Reports, withdrawals shall be made in
accordance with the provisions of Annex A to this Schedule 1; and
(b)
upon receipt by the Administrator of a Project Management
Report pursuant to Section 4.02(b) of this Agreement, accompanied by a
request from the Borrower for withdrawal on the basis of Project
Management Reports, all further withdrawals shall be made in accordance
with the provisions of Annex B to this Schedule 1.
3.
Payments out of each Special Account shall be made exclusively for
Eligible Expenditures. For each payment made by the Borrower out of a
Special Account, the Borrower shall, at such time as the Administrator
shall reasonably request, furnish to the Administrator such documents and
other evidence showing that such payment was made exclusively for
Eligible Expenditures.
4.
Notwithstanding the provisions of Part B.2 of this Schedule, the
Administrator shall not be required to make further deposits into any
Special Account:
(a)
if the Administrator determines at any time that any Project
Management Report does not adequately provide the information required
pursuant to Section 4.02 of this Agreement;
(b)
if the Administrator determines at any time that all further
withdrawals should be made by the Borrower directly from the Credit
Account; or
(c)
if the Borrower shall have failed to furnish to the
Administrator 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 Administrator pursuant to said Section in respect of the audit of (A)
the records and accounts for any Special Account or (B) the records and
accounts reflecting expenditures with respect to which withdrawals were
made on the basis of Project Management Reports.
5.
The Administrator shall not be required to make further deposits
into any Special Account in accordance with the provisions of Part B.2 of
this Schedule if, at any time, the Administrator shall have notified the
Page 13
Borrower of its intention to suspend in whole or in part the right of the
Borrower to make withdrawals from the Credit Account pursuant to Section
6.02 of the General Conditions. Upon such notification, the Administrator
shall determine, in its sole discretion, whether further deposits into
the Special Accounts may be made and what procedures should be followed
for making such deposits, and shall notify the Borrower of its
determination.
6.
(a)
If the Administrator determines at any time that any payment
out of any Special Account was made for an expenditure which is not an
Eligible Expenditure, or was not justified by the evidence furnished to
the Administrator, the Borrower shall, promptly upon notice from the
Administrator, provide such additional evidence as the Administrator may
request, or deposit into said Special Account (or, if the Administrator
shall so request, refund to the Administrator) an amount equal to the
amount of such payment. Unless the Administrator shall otherwise agree,
no further deposit by the Administrator into any 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 Administrator determines at any time that any amount
outstanding in any Special Account will not be required to cover payments
for Eligible Expenditures during the six-month period following such
determination, the Borrower shall, promptly upon notice from the
Administrator, refund to the Administrator such outstanding amount.
(c)
The Borrower may, upon notice to the Administrator, refund
to the Administrator all or any portion of the funds on deposit in a
Special Account.
(d)
Refunds to the Administrator made pursuant to sub-paragraph
(a), (b) or (c) of this paragraph 6 shall be credited to the Credit
Account for subsequent withdrawal or for cancellation in accordance with
the provisions of the Trust Fund Credit Agreement.
Annex A to SCHEDULE 1
Operation of Special Account When Withdrawals Are
Not Made On the Basis of Project Management Reports
1.
For the purposes of this Annex:
(a)
The term �Authorized Allocation� means: (i) in respect of
Special Account A, an amount equivalent to $500,000 to be withdrawn from
the Credit Account and deposited into Special Account A pursuant to
paragraph 2 of this Annex; (ii) in respect of Special Account B, an
amount equivalent to $50,000 to be withdrawn from the Credit Account and
deposited into Special Account B pursuant to paragraph 2 of this Annex;
and (iii) in respect of Special Account C, an amount equivalent to
$100,000 to be withdrawn from the Credit Account and deposited into
Special Account B pursuant to paragraph 2 of this Annex.
2.
Withdrawals of a Special Account�s Authorized Allocation and
subsequent withdrawals to replenish said Special Account shall be made as
follows:
(a)
For withdrawals of said Special Account�s Authorized
Allocation, the Borrower shall furnish to the Administrator a request or
requests for deposit into said Special Account of an amount or amounts
which in the aggregate do not exceed said Authorized Allocation. On the
basis of each such request, the Administrator shall, on behalf of the
Borrower, withdraw from the Credit Account and deposit into said Special
Account such amount as the Borrower shall have requested.
(b)
For replenishment of said Special Account, the Borrower
shall furnish to the Administrator requests for deposit into said Special
Account at such intervals as the Administrator shall specify. Prior to or
Page 14
at the time of each such request, the Borrower shall furnish to the
Administrator the documents and other evidence required pursuant to Part
B.3 of Schedule 1 to this Agreement for the payment or payments in
respect of which replenishment is requested. On the basis of each such
request, the Administrator shall, on behalf of the Borrower, withdraw
from the credit Account and deposit into said 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 said Special
Account for Eligible Expenditures. Each such deposit into said Special
Account shall be withdrawn by the Administrator from the Credit Account
under one or more of said Special Account�s Eligible Categories.
3.
The Administrator shall not be required to make further deposits
into a Special Account, once the total unwithdrawn amount of the Credit
allocated to said Special Account�s Eligible Categories minus the total
amount of all outstanding special commitments entered into by the
Administrator pursuant to Section 5.02 of the General Conditions in
respect of expenditures to be financed out of the proceeds of the Credit
allocated to said Categories, shall equal the equivalent of twice the
amount of said Special Account�s Authorized Allocation. Thereafter,
withdrawal from the Credit Account of the remaining unwithdrawn amount of
the Credit allocated to said Categories shall follow such procedures as
the Administrator shall specify by notice to the Borrower. Such further
withdrawals shall be made only after and to the extent that the
Administrator shall have been satisfied that all such amounts remaining
on deposit in said Special Account as of the date of such notice will be
utilized in making payments for Eligible Expenditures.
Annex B to SCHEDULE 1
Operation of Special Account When Withdrawals Are
Made On the Basis of Project Management Reports
1.
Except as the Administrator may otherwise specify by notice to the
Borrower, all withdrawals from the Credit Account shall be deposited by
the Administrator into the respective Special Account in accordance with
the provisions of Schedule 1 to this Agreement. Each such deposit into a
Special Account shall be withdrawn by the Administrator from the Credit
Account under one or more of said Special Account�s Eligible Categories.
2.
Each application for withdrawal from the Credit Account for deposit
into a Special Account shall be supported by a Project Management Report.
3.
Upon receipt of each application for withdrawal of an amount of the
Credit, the Administrator shall, on behalf of the Borrower, withdraw from
the Credit Account and deposit into the respective Special Account an
amount equal to the lesser of: (a) the amount so requested; and (b) the
amount which the Administrator has determined, based on the Project
Management Report accompanying said application, is required to be
deposited in order to finance Eligible Expenditures during the six-month
period following the date of such report; provided, however, that the
amount so deposited, when added to the amount indicated by said Project
Management Report to be remaining in said Special Account, shall not
exceed the equivalent of $600,000 in respect of Special Account A,
$100,000 in respect of Special Account B and $200,000 in respect of the
Special Account C.
SCHEDULE 2
Description of the Project
The objectives of the Project are to rehabilitate and improve
basic, high priority infrastructure and services in Gaza and the West
Bank and build management capacity at the municipal and central level.
The Project consists of the following parts, subject to such
modifications thereof as the Borrower and the Administrator may agree
Page 15
upon from time to time to achieve such objectives:
Part A:
Infrastructure Rehabilitation and Improvement
1.
Carrying out a program, consisting of the provision of goods and
consultants' services, and the execution of works, to rehabilitate and
improve the regional road network.
2.
Carrying out a program, consisting of the provision of goods and
consultants' services, and the execution of works, to rehabilitate and
improve village and municipal water, waste water and sewage systems
networks, including the development of new systems networks.
Part B:
Capacity Building Support
1.
Carrying out a program, consisting of the provision of goods,
training and consultants' services, to strengthen the institutional
capacity of the MPW to enable it to develop and implement a systematic
approach to road maintenance and establish an environmental monitoring
unit within the MPW.
2.
Carrying out a program, consisting of the provision of goods,
training and consultants' services, to strengthen the institutional
capacity of the MLG and Selected Municipalities, such program to support
the reform of MLG's accounting system and the Selected Municipalities'
investment and development programming capacity.
Part C:
Project Management Support
1.
Support to the MPW through, inter alia, the provision of consultant
services and goods, including computer hardware and software, training,
essential office equipment, materials, supplies and spare parts to ensure
effective management and coordination for the parts of the Project to be
carried out by MPW.
2.
Support to the MLG through, inter alia, the provision of consultant
services and goods, including computer hardware and software, training,
equipment, materials, essential office supplies and spare parts to ensure
effective management and coordination for the parts of the Project to be
carried out by MLG.
* * *
The Project is expected to be completed by June 30, 2004.
SCHEDULE 3
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 Administrator in January 1995 and revised in
January and August 1996, September 1997 and January 1999 (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.
Page 16
2.
Goods and works to be procured under contracts awarded in
accordance with the provisions of paragraph 1 of this Part B shall be
subject to the following provision, namely, that the provisions of
paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall
apply to goods manufactured in, and works to be carried out by domestic
contractors from, the West Bank or Gaza.
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
Works estimated to cost less than US$1,000,000 equivalent per
contract, up to an aggregate amount not to exceed US$2,900,000
equivalent, and goods estimated to cost less than US$500,000 equivalent
per contract, up to an aggregate amount not to exceed US$1,000,000
equivalent, may be procured under contracts awarded on the basis of
national competitive bidding in accordance with procedures acceptable to
the Administrator. Said procedures shall ensure, inter alia, that: (i)
tenders shall be advertised for at least two (2) consecutive days in a
local newspaper of wide circulation; (ii) prospective bidders shall be
allowed a minimum of thirty (30) days between the date upon which the
notification appears in the newspaper for the first time and the date
upon which the bid is submitted; (iii) the format of the bidding
documents shall be consistent with that of the Administrator's standard
bidding documents, or with the format of bidding documents used by United
Nations Agencies operating in the West Bank and Gaza; (iv) interested
foreign contractors and suppliers shall be allowed to bid; (v) bids shall
be submitted in sealed envelopes and shall be accepted whether mailed or
hand-carried; (vi) all bids shall be opened at the same time in public;
(vii) contracts shall be awarded to the lowest evaluated bidder; (viii)
no bidder shall be requested or permitted to modify his, her or its bid
after the bid closing date shall have elapsed; (ix) price negotiations
with the lowest evaluated bidder shall be limited to cases provided for
under the Guidelines; and (x) postqualification criteria shall, in the
absence of a prequalification process, be explicitly stated in the
bidding documents.
2.
International Shopping
Goods estimated to cost less than US$50,000 equivalent per
contract, and not to exceed US$300,000 equivalent in the aggregate, may
be procured under contracts awarded on the basis of international
shopping procedures in accordance with the provisions 3.5 and 3.6 of the
Guidelines.
3.
National Shopping
Goods estimated to cost less than US$50,000 equivalent per
contract, and not to exceed US$300,000 equivalent in the aggregate, may
be procured under contracts awarded on the basis of national shopping
procedures in accordance with the provisions 3.5 and 3.6 of the
Guidelines.
4.
Direct Contracting
Goods estimated to cost US$5,000 equivalent or less per contract,
up to an aggregate amount not to exceed US$100,000 equivalent, and works
estimated to cost US$50,000 equivalent or less per contract, up to an
aggregate amount not to exceed US$1,000,000, may, with the
Administrator�s prior agreement, be procured in accordance with the
provisions of paragraph 3.7 of the Guidelines.
5.
Force Account
Small works which meet the requirements of paragraph 3.8 of the
Guidelines and costing US$50,000 equivalent or less per contract, may,
with the Administrator�s prior agreement, be carried out by force account
Page 17
in accordance with the provisions of said paragraph of the Guidelines.
Part D:
Review by the Administrator 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 Administrator 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
Administrator, and with the provisions of said paragraph 1.
2.
Prior Review
With respect to: (i) contracts procured in accordance with direct
contracting; (ii) contracts procured in accordance with international and
national shopping procedures; (iii) contracts procured in accordance with
force account procedures; (iv) the first two (2) contracts procured in
accordance with national competitive bidding procedures; (v) contracts
for works estimated to cost the equivalent of US$500,000 or more per
contract; and (vi) contracts for goods estimated to cost the equivalent
of US$100,000 or more per contract, 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
Part A:
General
Consultants� services shall be procured in accordance with the
provisions of the Introduction and Section IV of the �Guidelines:
Selection and Employment of Consultants by World Bank Borrowers,�
published by the Administrator in January 1997 and revised in September
1997 and January 1999 (the Consultant Guidelines) and the following
provisions of Section II of this Schedule.
Part B:
Quality- and Cost-based Selection
Except as otherwise provided in Part C of this Section,
consultants� services shall be procured under contracts awarded in
accordance with the provisions of Section II of the Consultant
Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and
the provisions of paragraphs 3.13 through 3.18 thereof applicable to
quality- and cost-based selection of consultants.
Part C:
Procedures for the Selection of Consultants
1.
Quality-Based Selection
Services estimated to cost less than $100,000 equivalent per
contract may be procured under contracts awarded in accordance with the
provisions of paragraphs 3.1 through 3.4 of the Consultant Guidelines.
2.
Selection Under a Fixed Budget
Services estimated to cost less than $100,000 equivalent per
contract may be procured under contracts awarded in accordance with the
provisions of paragraphs 3.1 and 3.5 of the Consultant Guidelines.
Page 18
3.
Least-cost Selection
Services estimated to cost less than $100,000 equivalent per
contract may be procured under contracts awarded in accordance with the
provisions of paragraphs 3.1 and 3.6 of the Consultant Guidelines.
4.
Selection Based on Consultants� Qualifications
Services estimated to cost less than $50,000 equivalent per
contract may be procured under contracts awarded in accordance with the
provisions of paragraphs 3.1 and 3.7 of the Consultant Guidelines.
5.
Single Source Contracts
Services estimated to cost less than $50,000 equivalent per
contract may, with the Administrator�s prior agreement, be procured in
accordance with the provisions of paragraphs 3.8 through 3.11 of the
Consultant Guidelines.
Part D:
Review by the Administrator of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals,
the proposed plan for the selection of consultants under the Project
shall be furnished to the Administrator for its review and approval, in
accordance with the provisions of paragraph 1 of Appendix 1 to the
Consultant Guidelines. Selection of all consultants� services shall be
undertaken in accordance with such selection plan as shall have been
approved by the Administrator, and with the provisions of said paragraph
1.
2.
Prior Review
(a)
With respect to each contract for the employment of
consulting firms estimated to cost the equivalent of $100,000 or more,
the procedures set forth in paragraphs 1, 2 (other than the third
subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the Consultant
Guidelines shall apply.
(b)
With respect to any other contract for the employment of
consulting firms, the procedures set forth in paragraphs 1, 2 (other than
the second subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the
Consultant Guidelines shall apply.
(c)
With respect to: (i) each contract for the employment of
individual consultants estimated to cost $50,000 or more; (ii) contracts
for the employment of individual consultants procured in accordance with
single source procedures; and (iii) the first three (3) contracts for
services, the qualifications, experience, terms of reference and terms of
employment of the consultants shall be furnished to the Administrator for
its prior review and approval. The contract shall be awarded only after
said approval shall have been given.
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.
SCHEDULE 4
Implementation Program
A.
Project Implementation
Page 19
1.
The Borrower shall cause the Palestinian Authority to vest the
responsibility for Project implementation in MLG, MPW and PWA.
2.
MPW shall be responsible for the carrying out of Parts A.1, B.1 and
C.1 of the Project.
3.
(a)
PWA shall be responsible for the carrying out of Part A.2 of
the Project.
(b)
Without any limitations or restrictions upon Section 3.01 to
this Agreement, the PWA shall submit to the Administrator in connection
with each Sub-project, under Part A.2 of the Project, an Environmental
Assessment Report.
4.
MLG shall be responsible for: (i) overall Project coordination
including, accounting, auditing, financial monitoring and reporting; (ii)
carrying out Part B.2 through the CBU and PAU; and (iii) carrying out
part C.2 of the Project.
5.
In order to achieve the objectives of the Project and to ensure
effective capacity building and Project implementation, the Borrower
shall cause MLG to enter into an Implementation Agreement with each of
the Selected Municipalities pursuant to which, inter alia, the Selected
Municipalities shall assume certain obligations with respect to Parts B.2
and C.2 of the Project, all in accordance with terms and conditions that
shall have been approved by the Administrator.
B.
Reports and Review
1.
The Borrower, through the Palestinian Authority, shall:
(a)
maintain policies and procedures adequate to enable it to
monitor and evaluate on an ongoing basis, in accordance with the
indicators agreed upon between the Borrower and the Administrator, the
carrying out of the Project and the achievement of the objectives
thereof;
(b)
prepare, under terms of reference acceptable to the
Administrator, and furnish to the Administrator quarterly progress
reports, acceptable to the Administrator regarding the implementation of
the Project during the preceding quarter, and a work plan for the
subsequent quarter;
(c)
prepare, under terms of reference satisfactory to the
Administrator, and furnish to the Administrator, on or about July 1,
2002, 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
(d)
review with the Administrator, by September 1, 2002 or such
later date as the Administrator shall request, the report referred to in
subparagraph (b) of this paragraph, 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 Administrator views on the
matter.