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CONFORMED COPY
CREDIT NUMBER 3211 VN
Development Credit Agreement
(Three Cities Sanitation Project)
between
SOCIALIST REPUBLIC OF VIETNAM
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated August 3, 1999
CREDIT NUMBER 3211 VN 
DEVELOPMENT CREDIT AGREEMENT 
AGREEMENT, dated August 3, 1999, between the SOCIALIST REPUBLIC OF VIETNAM (the 
Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). 
WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and 
priority of the Project described in Schedule 2 to this Agreement, has requested the 
Association to assist in the financing of the Project; 
(B)
the Project will be carried out by the Cam Pha Urban Environmental 
Company, the Danang Urban Environmental Company, the Haiphong Sewerage and Drainage 
Company, and the Ha Long Urban Environmental Company (hereinafter “the Sanitation and 
Drainage Companies”) with the assistance of the Borrower and the Project Cities and 
Province, and as part of such assistance, the Borrower will make available to the 
Sanitation and Drainage Companies part of the proceeds of the Credit as provided in 
this Agreement;
(C)
the Borrower intends to contract from the Government of the Kingdom of 
Denmark (Denmark) a grant (the Danish Grant) in an aggregate principal amount of up to 
eighty one million nine hundred thousand Danish Kroners (Danish Kroner 81,900,000) to 
assist in financing the Project on the terms and conditions set forth in the agreement 
to be entered into between Denmark and the Borrower (the Danish Grant Agreement), 
providing therein for: (1) an amount out of the proceeds of the Danish Grant 
equivalent to Danish Kroner 37,100,000 to be provided directly by Denmark to the 
Borrower to assist in financing Parts B.1 and B.4 of the Project;  and  (2) an 
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aggregate amount of Danish Kroner 44,800,000 to be provided to the Borrower on the 
terms an conditions set forth in the agreement to be entered into between the Borrower 
and the Association as administrator of those grant funds received from Denmark (the 
Danish Trust Fund Grant Agreement), and to be earmarked as follows: (a) an amount out 
of the proceeds of the Danish Grant equivalent to Danish Kroner 37,800,000 to be 
earmarked to assist in financing Parts A.1 and A.4 of the Project; and  (b) an amount 
out of the proceeds of the Danish Grant equivalent to Danish Kroner 7,000,000 to be 
earmarked to assist in financing the Danida-Sanitation Sub-loans under Part C of the 
Project.
(D)
the Borrower intends to contract from the Government of Finland (Finland) 
a grant (the Finnish Grant) in an aggregate principal amount equivalent to Finish Mark 
32,000,000 to assist in financing Parts B.3 and the Finnida-Sanitation Sub-projects 
under  Part C of  the Project on the terms and conditions set forth in an agreement 
(the Finnish Grant Agreement) to be entered into between the Borrower and Finland; and
(E)
the Borrower intends to contract from the Australian Agency for 
International Development (AusAID) a grant (the Australian Grant) in an aggregate 
principal amount equivalent to Australian Dollars 2,000,000 to assist in financing 
Part B.2 of the Project on the terms and conditions set forth in an agreement (the 
Australian Grant Agreement) to be entered into between the Borrower and AusAID; 
WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to 
extend the Credit to the Borrower upon the terms and conditions set forth in this 
Agreement and in the Project Agreement  of even date herewith between the Association 
and the Sanitation and Drainage Companies;
NOW THEREFORE the parties hereto hereby agree as follows: 
ARTICLE I 
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Development Credit 
Agreements” of the Association, dated January 1, 1985 (as amended through December 2, 
1997), with the modifications set forth below (the General Conditions) constitute an 
integral part of this Agreement:
(a)
A new paragraph (12) is added to Section 2.01 to read as set forth below, 
and the existing paragraphs (12) through (14) of said Section are accordingly 
renumbered as paragraphs (13) through (15): 
“12.
 “Participating Country” means any country that the Association 
determines 
meets the requirements set forth in Section 10 of Resolution No. 
183 of the Board of 
Governors of the Association, adopted on June 26, 
1996; and the ‘Participating Countries’ 
means, collectively, all such 
countries.”
(b)
The Second sentence of Section 5.01 is modified to read:
“Except as the Borrower and the Association shall otherwise agree, no 
withdrawals 
shall be made: (a) on account of expenditures in the territories 
of any country which is not 
a Participating Country or for goods produced in, or 
services supplied from, such 
territories; or (b) for the purposes of 
any payment to persons or entities, or for any 
import of goods, if such 
payment or import, to the knowledge of the Association, is 
prohibited by a 
decision of the United Nations Security Council taken under Chapter VII of 
the 
Charter of the United Nations.”
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 wherever used in this Agreement: 
(a)
“Affected Person” means a person who on account of the execution of the 
Project had or would have his or her: (i)  standard of living adversely affected; or 
(ii) right, title or interest in any house, or interest in or right to use any land 
(including premises, agricultural and grazing land), or right in  annual or perennial 
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crops and trees or any other fixed or movable asset, acquired or possessed, 
temporarily or permanently; or (iii) business, occupation, work or place of residence 
or habitat adversely affected temporarily or permanently, and “Affected Persons” 
means, collectively, all persons who qualify as an Affected Person. 
(b)
“Cam Pha Urban Environmental Company” means the Cam Pha Urban 
Environmental Company, a state enterprise established and operating under the 
Borrower’s State Enterprise Law of 1994, and the Decision No. 1800 QD/UB of the Quang 
Ninh Provincial People’s Committee City dated June 4, 1997, and any successor thereto.  
(c)
“Category” means a category set out in the table in paragraph 1 of 
Schedule 1 to this Agreement.
(d)
“Constituent Document” means, for each Sanitation and Drainage Company, 
the Decision of the People’s Committees establishing said Sanitation and Drainage 
Company, as referred to in Section 1.02 (b), (h), (n) and (p) of this Agreement. 
(e)
“Danang Project Management Unit” and “Danang PMU” mean the project 
management unit established by the Danang City People's Committee on June 12, 1997, 
and thereafter assigned to the Danang Urban Environmental Company for the purpose of 
managing Danang Urban Environmental Company’s Respective Part of the Project. 
(f)
“Danang Resettlement Action Plan” and “Danang RAP” mean the Plan for the 
resettlement and rehabilitation of the Affected Persons under Part A.2 of the Project, 
satisfactory to the Association, prepared by the Danang Urban Environmental Company 
and approved by the People’s Committee of Danang City on March 16, 1999, by the Prime 
Minister’s Decisions No. 397/CP-CN dated April 20, 1999 and  by the Decision No. 
1837-QD-UB dated April 20, 1999 issued by Chairman of the People’s Committee of Danang 
City as such Plan  may be amended from time to time by agreement among the Borrower, 
the Association, the People’s Committee of Danang City and the Danang Urban 
Environmental  Company. 
(g)
“Danang Parts A and B Special Account” means the account referred to in 
Section 2.02 (b)(i) of this Agreement, and "Danang Part C Special Account" means the 
account referred to in Section 2.02 (b)(ii) of this Agreement. 
(h)
“Danang Urban Environmental Company” means the Danang Urban Environmental 
Company, a state enterprise established and operating pursuant under the Borrower’s 
State Enterprise Law of 1994 and the Decision No. 37/1999//QD-UB of the Danang 
People’s Committee dated March 16, 1999, and any successor thereto. 
(i)   “Dong” means the currency of the Borrower.
(j)
“Environmental Management Plan” means each of the environmental 
management plans setting out measures to mitigate adverse environmental affects of the 
implementation of the Project: (i) for Parts A1.and A.4 of the Project (Cam Pha and 
Halong) dated December 1998; (ii) for Part A.2 of the Project (Danang) dated February 
1999; (iii) for Part A.3 of the Project (Haiphong) dated December 1998, as each such 
plan may be amended from time to time by agreement between the Association and the 
respective Sanitation and Drainage Company.  
(k)  
“Fiscal Year” means the Borrower’s fiscal year commencing on  January 1 
and ending December 31.  
(l)
“Haiphong Project Management Unit” and “Haiphong PMU” mean the project 
management unit established by the Haiphong City People's Committee on March 8, 1997, 
and thereafter assigned to the Haiphong Sewerage and Drainage Company for the purpose 
of managing Haiphong Sewerage and Drainage Company’s Respective Part of the Project. 
(m)
“Haiphong Resettlement Action Plan” and “Haiphong RAP” mean the Plan for 
the resettlement and rehabilitation of the Affected Persons under Part A.3 of the 
Project, satisfactory to the Association, prepared by the Haiphong Sewerage and 
Drainage Company and approved by the People’s Committee of Haiphong City on February 
27, 1999, by the Prime Minister’s Decision No. 398/CP-CN dated April 20, 1999 and by 
the Decision No. 649-QD-UB dated April 21, 1999 issued by the Vice-Chairman of the 
People’s Committee of Haiphong City, as such Plan may be amended from time to time by 
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agreement among the Borrower, the Association, the People’s Committee of Haiphong City 
and the Haiphong Sewerage and Drainage Company. 
(n)
“Haiphong Sewerage and Drainage Company” means the Haiphong Sewerage and 
Drainage Company, a state enterprise of the Borrower, established and operating under 
the Borrower’s State Enterprise Law of 1994 and Decision No. 524/QD-UB of the People’s 
Committee of Haiphong City dated March 30, 1999, and any successor thereto. 
(o)
“Haiphong Special Account” means the account referred to in Section 2.02 
(b)(iii) of this Agreement.  
(p)
“Ha Long Urban Environmental Company” means the Ha Long Urban 
Environmental Company, a state enterprise of the Borrower, established and operating  
under the Borrower’s State Enterprise Law of 1994, and the Decision No. 1798 QD/UB of 
the Quang Ninh Provincial People’s Committee City dated June 4, 1997, and any 
successor thereto. 
(q)
“Ministry of Finance” and the acronym “MOF” mean the Borrower’s Ministry 
of Finance, and any successor thereto. 
(r)
“MOF Instructions” means the instructions issued by MOF to the Sanitation 
and Drainage Companies, as provided for in Section 3.01(b) of this Agreement.
(s)
“Project Agreement” means the agreement among the Association and the Cam 
Pha Urban Environmental Company, the Danang Urban Environmental Company, the Haiphong 
Sewerage and Drainage Company, and the Ha Long Urban Environmental Company, of even 
date herewith, as the same may be amended from time to time, and such term includes 
all schedules and agreements supplemental to the Project Agreement. 
(t)
“Project Cities and Province” means the Borrower’s Cities of Danang and 
Haiphong  and the Borrower’s Province of Quang Ninh. 
(u)
“Project Management Units” and the acronym “PMUs” mean, collectively, the 
Danang PMU, the Haiphong PMU and the Quang Ninh PMU, and “Project Management Unit” and 
the acronym “PMU” means any one of them. 
(v)   “Quang Ninh Project Management Unit” and “Quang Ninh PMU” mean the project 
management unit established by the Quang Ninh Provincial People’s Committee on 
February 3, 1999, assigned to the Cam Pha Urban Environmental Company and Halong Urban 
Environmental Company, and maintained in accordance with Section 3.05 of this 
Agreement and for the purposes therein set forth.
(w)
 “Quang Ninh Special Account” means the account referred to in Section 
2.02 (b)(iv) of this Agreement. 
(x) 
“Quang Ninh Resettlement Action Plan” and “Quang Ninh RAP” mean the Plan 
for the resettlement and rehabilitation of the Affected Persons under Parts A.1 and 
A.4 of the Project, satisfactory to the Association, prepared by the Cam Pha Urban 
Environmental Company and Halong Urban Environmental Company and approved by the Quang 
Ninh Provincial People’s Committee on March 12, 1999, by the Prime Minister’s Decision 
No. 399/CP-CP dated April 20, 1999 and by the Decision No. 912 QD-UB dated April 21, 
1999 issued by the Vice-Chairman of the Quang Ninh Provincial People’s Committee, as 
such Plan  may be amended from time to time by agreement among the Borrower, the 
Association, the Quang Ninh Provincial People’s Committee and the Cam Pha Urban 
Environmental Company and Halong Urban Environmental  Company.  
(y)
“Resettlement Action Plans” means, collectively, the Danang Resettlement 
Action Plan, the Haiphong Resettlement Action Plan and the Quang Ninh Resettlement 
Action Plan.
(z)
“Resettlement Committees” means each of the Committees established by the 
People’s Committees of the Project Cities and Province pursuant to each of the 
Resettlement Action Plans for purposes of planning and implementing such Action Plans. 
(aa)
“Respective Parts of the Project” means, for each SDCO, the parts of the 
Project or portions thereof,  which such SDCO shall carry out in accordance with 
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Section 2.01(a) of the Project Agreement.  
(bb)
“Sanitation and Drainage Companies” and the acronym “SDCOs” mean, 
collectively, the Danang Urban Environmental Company, the Haiphong Sewerage and 
Drainage Company, the Ha Long Urban Environmental Company and the Cam Pha Urban 
Environmental Company, and “Sanitation and Drainage Company” means any of the SDCOs. 
(cc)
“Sanitation Revolving Fund” means collectively the Cam Pha Sanitation 
Revolving Fund, the Danang Sanitation Revolving Fund, the Haiphong Sanitation 
Revolving Fund, and the Halong Sanitation Revolving Fund, all established pursuant to 
paragraph 1 of Schedule 1 to the Project Agreement.
(dd)
“IDA-Sanitation Sub-loan” means a loan in Dong made or proposed to be 
made by the Danang Urban Environmental Company, through the Danang City Women's Union, 
to a household or households, residing in Danang,  for a Sanitation Sub-project out of 
the proceeds of the Credit made available to the Danang Urban Environmental Company 
pursuant to Section 3.01(b) of this Agreement, and from the proceeds of the Danang 
Sanitation Revolving Fund, and the term "IDA-Sanitation Sub-loans” means, 
collectively, all of such IDA-Sanitation Sub-loans.
(ee)
“DANIDA-Sanitation Sub-loan” means a loan in Dong made or proposed to be 
made by the Quang  Ninh PMU, through the Quang Ninh Provincial Women's Union, to a 
household or households, residing in either Cam Pha or Ha Long, for a  Sanitation 
Sub-project out of the proceeds of the Danish Grant made available to the Quang  Ninh 
PMU pursuant to the Danish Trust Fund Grant Agreement, and the term “DANIDA-Sanitation 
Sub-loans” means, collectively, all of such DANIDA-Sanitation Sub-loans.
(ff)
“FINNIDA-Sanitation Sub-loan” means a loan in Dong made or proposed to be 
made by the Haiphong Sewerage and Drainage Company, through the Haiphong City Women's 
Union, to a household or households, residing in Haiphong for a Sanitation Sub-project 
out of the proceeds of the Finish Grant made available to the Haiphong Sewerage and 
Drainage Company pursuant to the provisions of the Finish Grant Agreement, and the 
term “FINNIDA-Sanitation Sub-loans” means, collectively, all of such 
FINNIDA-Sanitation Sub-loans.
(gg)
“Sanitation Sub-loans” means, collectively, the IDA-Sanitation Sub-loans, 
the DANIDA-Sanitation Sub-loans and the FINNIDA-Sanitation Sub-loans.
(hh)
“Sanitation Sub-project” means an investment project to construct on-site 
sanitation facilities, including toilets, septic tanks and connections to existing 
combined public sewers/drains, to be carried out by a household or households residing 
in either Danang, Cam Pha, Halong or Haiphong utilizing the proceeds of an 
IDA-Sanitation Sub-loan, DANIDA-Sanitation Sub-loan, or FINNIDA-Sanitation Sub-loan, 
respectively, and the term “Sanitation Sub-projects” means, collectively, all of such 
Sanitation Sub-projects.
(ii)
"Special Accounts” means, collectively, the Danang Parts A and B Special 
Account, the Danang Part C Special Account, the Haiphong Special Account,  and the 
Quang Ninh Special Account;  and “Special Account” means any of the Special Accounts.  
(jj)
“Danang City Women's Union”,  "Haiphong City Women's Union", and "Quang 
Ninh Province Women's Union", and any successor thereto, mean the Vietnam Women's 
Union in the Project Cities and Province; and the term "Vietnam Women's Union means 
the social organization established on October 20, 1950.
ARTICLE II 
The Credit 
Section 2.01. The Association agrees to lend to the Borrower, on the terms and 
conditions set forth or referred to in the Development Credit Agreement, an amount in 
various currencies equivalent to fifty nine million four hundred thousand Special 
Drawing Rights (SDR 59,400,000). 
Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit 
Account in accordance with the provisions of Schedule 1 to this Agreement for 
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expenditures made (or, if the Association shall so agree, to be made) in respect of 
the reasonable cost of goods and services required for the Project described in 
Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit.
(b)
The Borrower may, for the purposes of  the Project, open and maintain in 
dollars the following four special deposit accounts, each in a commercial bank 
acceptable to the Association, on terms and conditions satisfactory to the 
Association, including appropriate protection against set-off, seizure or attachment: 
(i) one for purposes of Danang Respective Parts A and B of the Project (the Danang 
Parts A and B  Special Account); (ii) one for purposes of Danang Respective Part C of 
the Project (the Danang Part C  Special Account); (iii) one for purposes of Haiphong 
Respective Parts of the Project (the Haiphong Special Account);  and (iv) one for 
purposes of Quang Ninh Respective Parts of the Project (the Quang Ninh Special 
Account).  Deposits into, and payments out of, the Special Accounts shall be made in 
accordance with the provisions of Schedule 3 to this Agreement.
Section 2.03. The Closing Date shall be June 30, 2005 or such later date as the 
Association shall establish. The Association shall promptly notify the Borrower of 
such later date. 
Section 2.04. (a) The Borrower shall pay to the Association a commitment charge 
on the principal amount of the Credit not withdrawn from time to time at a rate to be 
set by the Association 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.
(b)
The commitment charge shall accrue: (i) from the date sixty 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  \0cset 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 
Association 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 pay to the Association 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 April 1 and October 1 in each year. 
Section 2.07. (a)  Subject to paragraphs (b), (c) and (d) below, the Borrower 
shall repay the principal amount of the Credit in semiannual installments payable on 
each April 1 and October 1 commencing October 1, 2009 and ending April 1, 2039. Each 
installment to and including the installment payable on April 1, 2019 shall be one 
percent (1%) of such principal amount, and each installment thereafter shall be two 
percent (2%) of such principal amount.
(b)
Whenever: (i) the Borrower's per capita gross national product (GNP), as 
determined by the Association, shall have exceeded for three consecutive years  the 
level established annually by the Association for determining eligibility to access 
the Association's resources; and (ii) the Bank shall consider the Borrower 
creditworthy for Bank lending, the Association may, subsequent to the review and 
approval thereof by the Executive Directors of the Association and after due 
consideration by them of the development of the Borrower's economy, modify the 
repayment of installments under paragraph (a) above by: (A) requiring the Borrower to 
repay twice the amount of each such installment not yet due until the principal amount 
of the Credit shall have been repaid; and (B) requiring the Borrower to commence 
repayment of the principal amount of the Credit as of the first semiannual payment 
date referred to in paragraph (a) above falling six months or more after the date on 
which the Association notifies the Borrower that the events set out in this paragraph 
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(b) have occurred, provided, however, that there shall be a grace period of a minimum 
of five years on such repayment of principal.
(c)
If so requested by the Borrower, the Association may revise the 
modification referred to in paragraph (b) above to include, in lieu of some or all of 
the increase in the amounts of such installments, the payment of interest at an annual 
rate agreed with the Association on the principal amount of the Credit withdrawn and 
outstanding from time to time, provided that, in the judgment of the Association, such 
revision shall not change the grant element obtained under the above-mentioned 
repayment modification. 
(d)
If, at any time after a modification of terms pursuant to paragraph (b) 
above, the Association determines that the Borrower's economic condition has 
deteriorated significantly, the Association may, if so requested by the Borrower, 
further modify the terms of repayment to conform to the schedule of installments as 
provided in paragraph (a) above. 
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 cause 
each Sanitation and Drainage Company to perform in accordance with the provisions of 
the Project Agreement all of its obligations therein set forth, shall take and cause 
to be taken all action, including the provision of funds, facilities, services and 
other resources, necessary or appropriate to enable each of the Sanitation and 
Drainage Companies to perform such obligations, and shall not take or permit to be 
taken any action which would prevent or interfere with such performance. 
(b)
The Borrower shall, through MOF, make available, on a grant basis, the 
proceeds of the Credit to the SDCOs, under instructions to be issued by MOF, 
satisfactory to the Association. The amount  of the proceeds of the Credit so made 
available to each of the SDCOs shall be the amounts allocated to and withdrawn from 
the following Categories: (i) Cam Pha Urban Environmental Company, Categories (1)(a) 
and 2(a); (ii) Danang Urban Environmental Company, Categories (1)(b), (2)(b), (3); (4) 
and (5); (iii) Haiphong Sewerage and Drainage Company, Categories (1)(c) and (2)(c); 
and  (iv) Halong Urban Environmental Company, Categories  (1)(d) and (2)(d). (c)
Except as the Association shall otherwise agree, the Borrower shall not amend, 
abrogate or waive any of the MOF Instructions or any provision thereof.
Section 3.02. Except as the Association shall otherwise agree: (a) procurement 
of the goods, works and consultants’ services required for Parts A and B of the 
Project and to be financed out of the proceeds of the Credit shall be governed by the 
provisions of Schedule 2 to the Project Agreement; and (b) procurement of works, goods 
and  services for the Sanitation Sub-projects financed by an IDA-Sanitation Sub-loan 
shall be governed by the provisions of paragraph 6(b) of Schedule 3 to the Project 
Agreement. 
Section 3.03. The Borrower and the Association hereby agree that the obligations 
set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General conditions 
(relating to insurance, use of goods and services, plans and schedules, records and 
reports, maintenance and land acquisition, respectively) in respect of  the Project 
shall be carried out by each of the Sanitation and Drainage Companies pursuant to 
Section 2.03 of the Project Agreement.
Section 3.04. Without limitation to the provisions of Section 3.01(a) of this 
Agreement, the Borrower shall cause each of the People’s Committees of the Project 
Cities and Province to:
(a)
promptly provide to its respective Sanitation and Drainage Company the 
required counterpart funds for carrying out the Respective Parts of the Project;
(b) 
take all such action as shall be necessary to enable its respective 
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Sanitation and Drainage Company to comply with all its obligations under the Project 
Agreement, in particular the Financial Covenants under Article IV of the Project 
Agreement, and the implementation of its respective Resettlement Action Plan and 
Environmental  Management Plan; and
(c) 
take all such action as shall be necessary for the effective and timely 
compliance of its obligations set forth in the respective Resettlement Action Plan.
Section 3.05. The Borrower shall cause the Quang Ninh Provincial People's 
Committee to maintain at all times during the implementation of the Project the  Quang  
Ninh PMU, headed by a qualified manager and assigned with such functions, 
responsibilities and funds satisfactory to the Association, and with competent staff 
in adequate numbers as shall be required for purposes of managing the Respective Parts  
of the Project of Cam Pha Urban Environmental Company and Halong Urban Environmental 
Company, including a civil engineer, a professional accountant, and a  procurement and 
project management specialist, each with qualifications, experience and terms and 
conditions of employment satisfactory to the Association;
Section 3.06.  The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with indicators satisfactory to the 
Association, the carrying out of the Project and the achievement of the objectives 
thereof;
(b)
prepare, under terms of reference satisfactory to the Association, and 
furnish to the Association, on or about July 31, 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
(c)
review with the Association, by September 30, 2002, or such later date as 
the Association shall request, the report referred to in paragraph (b) of this 
Section, and, thereafter, take all measures required to ensure the efficient 
completion of the Project and the achievement of the objectives thereof, based on the 
conclusions and recommendations of the said report and the Association’s views on the 
matter.
Section 3.07. For the purposes of Section 9.07 of the General Conditions and 
without limitation thereto, the Borrower shall:
(a)
prepare, on the basis of guidelines acceptable to the Association, and 
furnish to the Association not later than six (6) months after the Closing Date or 
such later date as may be agreed for this purpose between the Borrower and the 
Association, a plan for the future operation of the Project; and 
(b)
afford the Association a reasonable opportunity to exchange views with 
the Borrower on said plan.
ARTICLE IV 
Financial Covenants
Section 4.01.  (a) For all expenditures with respect to which withdrawals from 
the Credit Account were made on the basis of statements of expenditure, the Borrower 
shall: 
(i)
maintain in accordance with paragraph (a) of this Section, records 
and 
accounts reflecting such expenditures; 
(ii)
retain, until at least one year after the Association 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; 
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(iii)
enable the Association’s representatives to examine such records; 
and 
(iv)
ensure that such records and accounts are included in the annual 
audit 
referred to in paragraph (b) of this Section and that the 
report of such audit 
contains a separate opinion by said auditors 
as to whether the statements of 
expenditure submitted during such fiscal 
year, together with the procedures 
and internal controls involved in 
their preparation, can be relied upon to 
support the related 
withdrawals.
(b)
The Borrower shall: 
(i)
have the records and accounts referred to in paragraph (a)(i) of 
this Section, 
and the records and accounts for the Special 
Accounts, for each fiscal year 
audited, in accordance with appropriate 
auditing principles consistently 
applied, by independent auditors 
acceptable to the Association; 
(ii)
furnish to the Association as soon as available, but in any case 
not later 
than six months after the end of each such year, the 
report of such audit by 
said auditors, of such scope and in such 
detail as the Bank shall have 
reasonably requested; and 
(iii)
furnish to the Bank such other information concerning said records 
and 
accounts and the audit thereof as the Bank shall from time 
to time reasonably 
request.  
ARTICLE V
Remedies of the Association
Section 5.01. Pursuant to Section 6.02 (l) of the General Conditions, the 
following additional events are specified:
(a)
As a result of events which have occurred after the date of the 
Development Credit Agreement, an extraordinary situation shall have arisen which will 
make it improbable that any Sanitation and Drainage Company will be able to perform 
its obligations under the Project Agreement.
(b)
The Constituent Document of any Sanitation and Drainage Company shall 
have been amended, suspended, abrogated, repealed or waived so as to affect materially 
and adversely the ability of such Sanitation and Drainage Company to perform any of 
its obligations under the Project Agreement.
(c)
(i)
Subject to subparagraph (ii) of this paragraph, the right of the 
Borrower to 
withdraw the proceeds of any grant made to the Borrower for 
the financing of 
the Project shall have been suspended, canceled or 
terminated in whole or in 
part, pursuant to the terms of the agreement 
providing therefor.
(ii)   Subparagraph (i) of this paragraph shall not apply if the Borrower 
establishes to the satisfaction of the Association 
that: (A) such suspension, 
cancellation or termination is not 
caused by the failure of the Borrower to 
perform any of its 
obligations under such agreement; and (B) adequate funds 
for the 
Project are available to the Borrower from other sources on terms and 
conditions consistent with the obligations of the Borrower under this 
Agreement.
Section 5.02. Pursuant to Section 7.01(h) of the General Conditions, the 
following additional events are specified: 
(a)
any event specified in paragraph (b) of Section 5.01 of this Agreement 
shall occur; and 
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(b)
the event specified in paragraph (c) (i) of Section 5.01 of this 
Agreement shall occur, subject to the proviso of paragraph (c) (ii) of that Section.
ARTICLE VI 
Effective Date; Termination
Section 6.01. The following events are specified as additional conditions to the 
effectiveness of the Development Credit Agreement within the meaning of Section 12.01 
(b) of the General Conditions: 
(a)
the Danish Grant Agreement, the Finnish Grant Agreement and the 
Australian Grant Agreement, shall have been executed and delivered and all conditions 
precedent to the effectiveness or to the right of the Borrower to make withdrawals 
thereunder, except only the effectiveness of the Development Credit Agreement, have 
been fulfilled; 
(b)
the Resettlement Committees shall have been established by each of the 
People’s Committees of the Project Cities and Province pursuant to the provisions of 
the Resettlement Action Plans; 
(c)
wastewater charges have been adopted by each of the Cam Pha Urban 
Environmental Company, Ha Long Urban Environmental Company and Haiphong Sewerage and 
Drainage Company;
(d)
the MOF Instructions have been issued pursuant to Section 3.01(b) of this 
Agreement;
(e)
each PMU shall have employed the services of a civil engineer, a 
professional accountant, and a procurement and management specialist pursuant to the 
provisions of Section 3.05 of this Agreement in respect of the Quang Ninh PMU, and 
paragraph A.2 of Schedule 1 to the Project Agreement in respect of the Danang PMU; and 
Haiphong PMU; and
(f)
each PMU shall have adopted a manual on accounting and administrative 
policies and procedures, and an accounting system acceptable to the Association in 
accordance with paragraph A.4 of Schedule 1 to the Project Agreement.
Section 6.02. The following are specified as additional matters, 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 Association: 
(a)
that the Project Agreement has been duly authorized or ratified by each 
of Sanitation and Drainage Companies and is legally binding upon them in accordance 
with its terms; and
(b)
that the provisions of the Resettlement Action Plans are legally valid 
and enforceable in accordance with Vietnamese laws.
Section 6.03. The date ninety (90) days after the date of this Agreement is 
hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VII
Representative of the Borrower; Addresses 
Section 7.01. The Governor or any of the Deputy Governors of the State Bank of 
Vietnam of the Borrower is designated as representative of the Borrower for the 
purposes of Section 11.03 of the General Conditions.
Section 7.02. The following addresses are specified for the purposes of Section 
11.01 of the General Conditions:
For the Borrower:
State Bank of Vietnam
49 Ly Thai To
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Hanoi
Socialist Republic of Vietnam
Cable address:
Telex:
VIETBANK
412248 NHTWVT
Hanoi
For the Association: 
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 
Hanoi, Socialist Republic of Vietnam, as of the day and year first above written.
SOCIALIST REPUBLIC OF VIETNAM
By /s/ Le Duc Thuy, 
Deputy Governor, 
State Bank of Vietnam 
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Andrew Steer, 
Country Director
Authorized Representative
SCHEDULE 1
Withdrawal of the Proceeds of the Credit
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
(Expressed in
Expenditures
Category
SDR Equivalent)
to be Financed
(1)
Works:
80%
(a) under Part A.1 of
the Project
   5,600,000
(b) under Part A.2 of
the Project
  15,400,000
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(c) under Part A.3 of
the Project
  16,900,000
(d) under Part A.4 of 
the Project
   5,200,000
(2)
Goods:
100% of foreign
expenditures, 100%
of local expen-
(a) under Part A.1 of
ditures (ex-factory
the Project
   1,200,000
cost) and 65% of local
(b) under Part A.2 of
expenditures for other
the Project
   2,400,000
items procured locally
(c) under Part A.3 of
the Project
   1,400,000
(d) under Part A.4 of 
the Project
   1,600,000
(3)
Consultants’
services:
100%
(a) under Part B.2(a)
   1,300,000
of the Project
(b) under Part B.2(b)
of the Project
   1,800,000
(4)
Sanitation Sub-loans
     600,000
100% of amounts 
disbursed
(5)
Operating Costs under 
     100,000
100%
Part C of the Project
(6)
Unallocated
   5,900,000
  __________
  59,400,000
TOTAL
  ========== 
2.
For the purposes of this Schedule: 
(a)
the term “foreign expenditures” means expenditures in the currency of any 
country other than that of the Borrower for goods or services supplied from the 
territory of any country other than that of the Borrower;  
(b)
the term “local expenditures” means expenditures in the currency of the 
Borrower or for goods or services supplied from the territory of the Borrower; and 
(c)
the term “operating costs” means the administrative costs incurred by the 
Danang City Women's Union, Haiphong City Women's Union and Quang Ninh Province Women's 
Union to assist in implementing Part C of the Project, excluding salaries and 
allowances of its staff.
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be 
made in respect of: 
(a)
 payments for expenditures prior to the date of this Agreement;
(b)   payments for expenditures under Categories (1)(a) and (2)(a) unless and 
until the Cam Pha Urban Environmental Company shall have retained the services of a 
construction management consultant pursuant to the provisions of paragraph A.1 of 
Schedule 1 to the Project Agreement;
(c)   payments for expenditures under Categories (1)(b) and (2)(b) unless and 
until the Danang Urban Environmental Company shall have retained the services of a 
construction management consultant pursuant to the provisions of paragraph A.1 of 
Schedule 1 to the Project Agreement;
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(d)   payments for expenditures under Categories (1)(c) and (2)(c) unless and 
until the Haiphong Sewerage and Drainage Company shall have retained the services of a 
construction management consultant pursuant to the provisions of paragraph A.1 of 
Schedule 1 to the Project Agreement; 
(e)   payments for expenditures under Categories (1)(d) and (2)(d) unless and 
until the Halong Urban Environmental Company shall have retained the services of a 
construction management consultant pursuant to the provisions of paragraph A.1 of 
Schedule 1 to the Project Agreement;
(f) 
payments for expenditures under Category (1)(d) in respect of the civil 
works contract for Bai Chay, unless and until the proceeds of the Grant provided under 
the Danish Trust Fund Grant Agreement, earmarked to finance eligible expenditures 
under such civil works contract, shall have been fully disbursed in accordance with 
the provisions of the Danish Trust Fund Grant Agreement; and
(g) 
in respect of an IDA-Sanitation Sub-loan unless: (i) an operations manual 
for IDA-Sanitation Sub-loans, acceptable to the Association, shall have been furnished 
to the Association in accordance with paragraph 1 of Schedule 3 to the Project 
Agreement; and (ii) such IDA-Sanitation Sub-loan has been made in accordance with the 
procedures and on the terms and conditions set forth in Schedule 3 to the Project 
Agreement.
4.
The Association may require withdrawals from the Credit Account to be made on 
the basis of statements of expenditure for expenditures for: (a) IDA-Sanitation 
Sub-loans and Operating Costs; (b) goods and works under contracts costing less than 
$200,000 equivalent each; (c) consulting services under contracts awarded to 
consulting firms costing less than $100,000 equivalent each; and (d) consulting 
services under contracts awarded to individual consultants costing less than $50,000 
equivalent each; all under such terms and conditions as the Association shall specify 
by notice to the Borrower.
SCHEDULE 2
Description of the Project
The objective of the Project is to assist the Borrower to improve urban 
environmental sanitation infrastructure and services in the Project Cities and 
Province through: (a) reducing pollution of drains, rivers and the sea; (b) reducing 
flooding; (c) improving collection and disposal of solid waste; and (d) establishing 
and operating financially viable sanitation and drainage companies.
The Project consists of the following parts, subject to such modifications 
thereof as the Borrower and the Association may agree upon from time to time to 
achieve such objectives:
PART A: 
1.
Rehabilitation and expansion of the following sanitation infrastructure and 
services in Cam Pha: (i) drainage: cleaning and rehabilitating about 26 km of main 
combined sewers, constructing about 8 km of new and replacement sewers and repairing 
about 10 sets of tidal gates; (ii) sewerage and sewage treatment: constructing a 
septage treatment pond at the municipal sanitary landfill and provision of specialized 
equipment for emptying septic tanks and cleaning sewers by high-pressure jetting; and 
(iii) solid waste management: construction of transfer stations and constructing a new 
sanitary landfill, including access roads, weighbridges, surface water diversion 
drains, leachate treatment facilities, and operators facilities and small workshop, 
and the closing and sealing of an existing waste dump; provision of new solid waste 
collection vehicles and bins, and a track mounted bucket/dozer.
2.
Rehabilitation and expansion of the following sanitation infrastructure and 
services in Danang: (i) drainage: (A) cleaning and safe disposal of about 81,500 cubic 
meters of silt from existing drains; (B) upgrading of about 14 kilometers and 
construction of about 18 kilometers of new drains and related manholes, and upgrading 
roadside entry pits and grit traps; (ii) sewerage and sewage treatment: construction 
of about 17 kilometers of interceptors sewers, about 21 small submersible pumping 
stations, about 21 km of rising mains and four low-cost waste water treatment plants 
Page  14
with a total capacity of about 89,200 cubic meters/day, and fifty public toilets; 
(iii) solid waste management: construction of about 14 small solid waste transfer 
stations, a new sanitary landfill, including access roads, weighbridges, surface water 
diversion drains, leachate treatment facilities; operators facilities and small 
workshop; provision of about six solid waste collection trucks, about six lift on-off 
trucks with associated containers, and mobile coverage storage bins, and a track 
mounted bucket/dozer.
3.
Rehabilitation and expansion of the following sanitation infrastructure and 
services in Haiphong:  (i) drainage: (A) rehabilitating and lining embankments of 
about 6 km of large open drains, rehabilitating the banks of 7 storm retention lakes, 
including access for maintenance, (B) repairing 8 sets of tidal gates and the dredging 
and safe disposal of approximately 100,000 cubic meters of accumulated sludge from 7 
storm retention lakes and about 6 km of large open drains, and (C) cleaning and 
rehabilitating about 70 km of main combined sewers and related manholes, and 
constructing about 20 km of new and replacement sewers; and (ii) sewerage and sewage 
treatment:  constructing about 4 km of interceptor sewers, cleaning and rehabilitating 
about 100 km of secondary and tertiary sewers and related manholes, and the 
construction of a septage treatment pond at the sanitary landfill.
4.
Rehabilitation and expansion of the following sanitation infrastructure and 
services in Ha Long: (i) drainage rehabilitation about 19 km of existing drainage 
channels and the construction of about 16 km  new drainage channels and associated 
structures; (ii) sewerage and sewage treatment: constructing about 9 km of interceptor 
sewers, rehabilitating 2 existing and building 6 new, small pumping stations, and a 
wastewater treatment facility (oxidation ponds) in Bai Chay, combining existing short 
sea outfalls to longer outfalls discharging below low-tide level in Hon Gai, 
construction of about 2 septage treatment facilities; and provision of specialized 
equipment for emptying septic tanks and cleaning sewers by high-pressure jetting and; 
(iii) solid waste management:  upgrading 2 existing dump sites to sanitary landfills, 
including access roads, weighbridges, surface water diversion drains, leachate 
treatment facilities; operators facilities and small workshop; provision of new solid 
waste collection vehicles and bins, and track mounted bucket/dozer. 
5.
Resettlement and rehabilitation of the Affected Persons.
PART B:
1.
Strengthening the institutional capacity of the Cam Pha Urban Environmental 
Company to upgrade its operations and facilitate its commercialization, with the 
provision of consultants’ services, by:
(a)
(i) developing programs to promote community awareness of the health and 
environmental benefits arising from improved sanitation facilities and better solid 
waste collection; (ii) installing integrated commercial utility financial and cost 
accounting and financial management monitoring and reporting systems to facilitate 
effective management of assets and financial resources; (iii) formulating a corporate 
strategy, establishing institutional accountabilities in order to aid financial and 
operational decision making; (iv) improving operation and maintenance practices,  
including the establishment  \0cof a program for regular desludging of septic tanks; (v) 
facilitating private sector participation in the provision of septage and solid waste 
collection and other services and preparing an appropriate regulatory framework for 
contracted services; (vi) improving human resource development and training; and (vii) 
improving environmental monitoring; and
(b) 
improving construction management and supervision.
2.
Strengthening the institutional capacity of the Danang Urban Environmental 
Company to  upgrade its operations and facilitate its commercialization, with the 
provision of consultants’ services, by:
(a)
(i) developing programs to promote community awareness of the health and 
environmental benefits arising from improved sanitation facilities and better solid 
waste collection; (ii) installing integrated commercial utility financial and cost 
accounting and financial management monitoring and reporting systems to facilitate 
effective management of assets and financial resources; (iii) formulating a corporate 
strategy, establishing institutional accountabilities in order to aid financial and 
Page  15
operational decision making; (iv) improving operation and maintenance practices, 
including the establishment of a program for regular desludging of septic tanks; (v) 
facilitating private sector participation in the provision of septage and solid waste 
collection and other services and preparing an appropriate regulatory framework for 
contracted services; (vi) improving human resource development and training; and (vii) 
improving environmental monitoring; and
(b)
improving construction management and supervision.
3.
Strengthening the institutional capacity of the Haiphong Sewerage and Drainage 
Company to upgrade its operations and facilitate its commercialization, with the 
provision of consultants’ services, by:
(a)
(i) developing programs to promote community awareness of the health and 
environmental benefits arising from improved sanitation facilities and better solid 
waste collection; (ii) installing integrated commercial utility financial and cost 
accounting and financial management monitoring and reporting systems to facilitate 
effective management of assets and financial resources; (iii) formulating a corporate 
strategy, establishing institutional accountabilities in order to aid financial and 
operational decision making; (iv) improving operation and maintenance practices, 
including the establishment of a program for regular desludging of septic tanks; (v) 
facilitating private sector participation in the provision of septage and solid waste 
collection and other services and preparing an appropriate regulatory framework for 
contracted services; (vi) improving human resource development and training; and (vii) 
improving environmental monitoring; and
(b) 
improving construction management and supervision.
4.
Strengthening the institutional capacity of the Ha Long Urban Environmental 
Company to upgrade its operations and facilitate its commercialization, with the 
provision of consultants’ services, by:
(a)
(i) developing programs to promote community awareness of the health and 
environmental benefits arising from improved sanitation facilities and better solid 
waste collection; (ii) installing integrated commercial utility financial and cost 
accounting and financial management monitoring and reporting systems to facilitate 
effective management of assets and financial resources; (iii) formulating a corporate 
strategy, establishing institutional accountabilities in order to aid financial and 
operational decision making; (iv) improving operation and maintenance practices, 
including the establishment of a program for regular desludging of septic tanks; (v) 
facilitating private sector participation in the provision of septage and solid waste 
collection and other services and preparing an appropriate regulatory framework for 
contracted services; (vi) improving human resource development and training; and (vii) 
improving environmental monitoring; and
(b) 
improving construction management and supervision.
PART C:   
Financing of Sanitation Sub-projects through the provision of Sanitation 
Sub-loans to improve sanitary conditions at the household level and reduce the 
pollution load discharged to drains. 
* * * 
The Project is expected to be completed by December 31, 2004.
SCHEDULE 3 
Special Accounts
1.
For the purposes of this Schedule:
(a)
the term “eligible Categories” means: (i) with respect to the Quang Ninh 
Special Account, Categories 1(a), 1(d), 2(a) and 2(d); (ii) with respect to the 
Haiphong Special Account, Categories 1(c) and 2(c); (iii) with respect to the Danang  
Parts A and B Special Account, Categories 1(b), 2(b) and 3; and (iv) with respect to 
Page  16
the Danang Part C Special Account, Categories 4 and 5; all as set forth in the table 
in paragraph 1 of Schedule 1 to this Agreement;
(b)
the term “eligible expenditures” means expenditures in respect of the 
reasonable cost of goods and services required for the Project and to be financed out 
of the proceeds of the Credit allocated from time to time to the eligible Categories 
in accordance with the provisions of Schedule 1 to this Agreement; and
(c)
the term “Authorized Allocation” means an amount equivalent to: (i) 
$150,000 in respect of the Danang Parts A and B  Special Account; (ii) $150,000 in 
respect of the Haiphong Special Account; (iii) $150,000 in respect of the Quang Ninh 
Special Account, and (iv) $150,000 in respect of the Danang Part C Special Account;  
to be withdrawn from the Credit Account and deposited into the Special Accounts 
pursuant to paragraph 3(a) of this Schedule.
2.
Payments out of the respective Special Account shall be made exclusively for 
eligible expenditures in accordance with the provisions of this Schedule.
3.
After the Association has received evidence satisfactory to it that the 
respective Special Account has been duly opened, withdrawals of the Authorized 
Allocation and subsequent withdrawals to replenish the respective Special Account 
shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Borrower shall furnish 
to the Association a request or requests for deposit into the respective Special 
Account of an amount or amounts which do not exceed the aggregate amount of the 
Authorized Allocation. On the basis of such request or requests, the Association 
shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into 
the respective Special Account such amount or amounts as the Borrower shall have 
requested.
(b)
(i)
For replenishment of the respective Special Account, the Borrower 
shall 
furnish to the Association requests for deposits into the 
respective Special 
Account at such intervals as the Association shall 
specify.
(ii)
Prior to or at the time of each such request, the Borrower shall 
furnish to 
the Association the documents and other evidence required 
pursuant to 
paragraph 4 of this Schedule for the payment or 
payments in respect of which 
replenishment is requested. On the basis 
of each such request, the Association 
shall, on behalf of the Borrower, 
withdraw from the Credit Account and deposit 
into the respective 
Special Account such amount as the Borrower shall have 
requested and as shall have been shown by said documents and other evidence to 
have been paid out of the respective Special Account for eligible 
expenditures. All such deposits shall be withdrawn by the Association 
from the 
Credit Account under the respective eligible Categories, and 
in the respective 
equivalent amounts, as shall have been justified by 
said documents and other 
evidence. 
4.
For each payment made by the Borrower out of the respective Special Account, the 
Borrower shall, at such time as the Association shall reasonably request, furnish to 
the Association such documents and other evidence showing that such payment was made 
exclusively for eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the Association 
shall not be required to make further deposits into any Special Account:
(a)
if, at any time, the Association shall have determined that all further 
withdrawals should be made by the Borrower directly from the Credit Account in 
accordance with the provisions of Article V of the General Conditions and paragraph 
(a) of Section 2.02 of this Agreement;
(b)
if the Borrower shall have failed to furnish to the Association, 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 Association pursuant to said Section in 
respect of the audit of the records and accounts for the Special Accounts;
Page  17
(c)
if, at any time, the Association shall have notified the Borrower of its 
intention to suspend in whole or in part the right of the Borrower to make withdrawals 
from the Credit Account pursuant to the provisions of Section 6.02 of the General 
Conditions; or
(d)
once the total unwithdrawn amount of the Credit allocated to the eligible 
Categories for the respective Special Account, minus the total amount of all 
outstanding special commitments entered into by the Association pursuant to Section 
5.02 of the General Conditions with respect to the Project, shall equal the equivalent 
of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the 
Credit Account of the remaining unwithdrawn amount of the Credit allocated to the 
eligible Categories shall follow such procedures as the Association shall specify by 
notice to the Borrower. Such further withdrawals shall be made only after and to the 
extent that the Association shall have been satisfied that all such amounts remaining 
on deposit in the respective Special Account as of the date of such notice will be 
utilized in making payments for eligible expenditures.
6.
(a)
If the Association shall have determined at any time that any payment out 
of any Special Account: (i) was made for an expenditure or in an amount not eligible 
pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence 
furnished to the Association, the Borrower shall, promptly upon notice from the 
Association: (A) provide such additional evidence as the Association may request; or 
(B) deposit into the respective Special Account (or, if the Association shall so 
request, refund to the Association) an amount equal to the amount of such payment or 
the portion thereof not so eligible or justified. Unless the Association shall 
otherwise agree, no further deposit by the Association 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 Association shall have determined at any time that any amount 
outstanding in any Special Account will not be required to cover further payments for 
eligible expenditures, the Borrower shall, promptly upon notice from the Association, 
refund to the Association such outstanding amount.
(c)
The Borrower may, upon notice to the Association, refund to the 
Association all or any portion of the funds on deposit in the Special Accounts.
(d)
Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) 
of this Schedule shall be credited to the Credit Account for subsequent withdrawal or 
for cancellation in accordance with the relevant provisions of this Agreement, 
including the General Conditions.