CONFORMED COPY LOAN NUMBER 1068 TUN Loan Agreement (Irrigation Rehabilitation Project) BETWEEN REPUBLIC OF TUNISIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 31, 1974 CONFORMED COPY LOAN NUMBER 1068 TUN Loan Agreement (Irrigation Rehabilitation Project) BETWEEN REPUBLIC OF TUNISIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 31, 1974 LOAN AGREEMENT AGREEMENT, dated December 31, 1974, between REPUBLIC OF TUNISIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) The Borrower has requested the Bank to assist in the financing of the foreign exchange cost of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) The Project will be carried out by the Office de la Mise en Valeur de la Vallke de la Medjerda et des Primtres Publics Irrigue's, by the Office de Mise en Valeur de Nebhana, and by Banque Nationale de Tunisie with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Office de la Mise en Valeur de la Vallee de la Medjerda et des Perimetres Publics Irrigues, to Office de Mise en Valeur de Nebhana, and to Banque Nationale de Tunisie, respectively, part of the proceeds of the Loan as hereinafter provided; and (C) The Bank is willing to make the Loan available upon the terms and conditions set forth hereinafter and in project agreements of even date herewith between the Bank and Office de la Mise en Valeur de la Vallie de la Medjerda et des P6rimetres Publics Irrigu6s, and Office de Mise en Valeur de Nebhana, respectively; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions): (a) The following sub-paragraph 19 is added to Section 2.01: 4 "19. The terms "OMVVM Project Agreement," and "OMIVAN Project Agreement" shall have the meaning set forth in the Loan Agreement"; and (b) Section 6.06 and 10.03 are amended by inserting the words ", OMVVM Project Agreement, OMIVAN Project Agreement, after the words "Loan Agreement". Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "OMVVM" means "Office de la Mise en Valeur de la Vallie de la Medjerda et des Perimetres Publics Irrigue's" an etablissement public a caract&re industriel et commercial established and operating pursuant to the Borrower's Laws No. 58/63 of June 11, 1958 and No. 58/76 of July 9, 1958, and Decree-Law No. 70/10 of September 28, 1970, including any successor thereto; (b) "OMIVAN" means "Office de Mise en Valeur de Nebhana" an 6tablissement public a caract&re industriel et commercial established and operating pursuant to the Borrower's Law No. 73/28 of May 7, 1973, and Decree No. 73/391 of August 2, 1973, including any successor thereto; (c) "BNT" means "Banque Nationale de Tunisie" a SocietM Anonyme incorporated and operating under the Borrower's Code de Commerce promulgated by Law No. 59/129 of October 5, 1959 and pursuant to its Statuts; (d) "Statuts" means BNT's Article of Incorporation as filed with the R6gistre du Commerce of Tunis, as the same may be amended from time to time; (e) "OMVVM Project Agreement" means the agreement between the Bank and OMVVM of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the OMVVM Project Agreement; (f) "OMIVAN Project Agreement" means the agreement between the Bank and OMIVAN of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the OMIVAN Project Agreement; (g) "BNT Agreement" means the agreement to be entered into between the Borrower and BNT pursuant to Section 3.01(c)(i) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the BNT Agreement; 5 (h) "Dt" means dinars in the currency of the Borrower; (i) "Sub-Loan" means a loan made or proposed to be made to a Project Farmer under Part C of the Project; (j) "Project Farmer" means a beneficiary of a Sub-loan under Part C of the Project; (k) "Project Area Farmer" means a proprietor of irrigable land in the Project area, which has benefited from public investments enabling his land to be irrigated; (1) DEGTH means the Direction Gnrale des Etudes et Grands Travaux a directorate established and operating within the Borrower's Ministry of Agriculture including any successor thereto; (m) "DAFL" means the Direction des Affaires Foncires et de Ldgislation, a directorate established and operating within the Borrower's Ministry of Agriculture in accordance with Article 12 of the Borrower's Decree No. 70-104 of March 28, 1970, as the same may be amended from time to time, including any successor thereto; (n) "CCN" means the "Cooperative Centrale des Legumes et Fruits Nebhana", a cooprative de service, established and operating under the laws of the Borrower, and pursuant to its statuts filed with the Registre du Commerce of Tunis under No. 34858, as the same may be amended from time to time, including any successor thereto; (o) "Investment Contributions" means contributions towards public investments to irrigate land in the Medjerda Valley, and in public irrigated areas, respectively, as those contributions are defined (i) in Section I of the Borrower's Law No. 58/63 of June 11, 1958 (as amended by the Borrower's Law No. 6/60 of July 26, 1960) applicable in the Medjerda Valley portion of the Project, and (ii) in Section 1 of the Borrower's Law No. 63-18 of May 27, 1963 (as amended by the Borrower's Law No. 71-9 of February 16, 1971), including the Decrees taken pursuant thereto, which are applicable in the Nebhana portion of the Project area; (p) "Settler" means an assignee of state land in the Medjerda portion of the Project area pursuant to the provisions of Law No. 70-25 of May 19, 1970 and of Decree No. 70-199 of June 9, 1970; 6 (q) "Contr6leur Financier" means the person referred to in Article 19 of the Borrower's Law No. 58-76 of July 9, 1958 and in Article 11 of the Borrower's Decree No. 73-391 of August 2, 1973. (r) "Attestation" means the certificate referred to in Article 7 of the Borrower's Law No. 74-53 of June 10, 1974 and delivered by the Borrower's Minister of Agriculture to Settlers, or assignees of land pursuant to the Borrower's Law No. 58-63 of June 11, 1958 (as amended by Law No. 6-60 of July 26, 1960) or of Law No. 63-18 of May 27, 1963 (as amended by Law No. 71-9 of February 16, 1971). (s) " SONEDE" means Socidte Nationale d'Exploitation et de Distribution des Eaux, an 6tablissement public a caractre industriel et commercial established and operating pursuant to the Borrower's Law No. 68-22, dated July 2, 1968 (as amended by Law No. 72-37 dated April 27, 1972), including any successor thereto; and (t) "STEG" means Socit6 Tunisienne de L'ElectricitM et du Gaz, an itablissement public a' caractWre industriel et commercial established and operating pursuant to the Borrower's Decree-Law No. 62-8 dated April 3, 1962, including any successor thereto. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twelve million two hundred thousand dollars ($12,200,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods, the carrying out of works or services (other than consultants' services) for the Project and to be financed out of the proceeds of the Loan, shall be awarded in accordance with the provisions of Schedule 4 to this Agreement. 7 Section 2.04. The Closing Date shall be June 30, 1982 or such other date as shall be agreed between the Borrower and the Bank. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight per cent (8%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on February 15 and August 15 in each year. Section 2.08. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. Section 2.09. For the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions, are designated as representatives of the Borrower: (i) BNT with respect of withdrawals to be made under Category IV of the table set out in paragraph I of Schedule 1 to the Loan Agreement; and (ii) The Borrower's Minister of Agriculture with respect of withdrawals to be made under Categories I, II and III of the table set out in paragraph I of Schedule I to the Loan Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project through its departments, agencies and offices and with the assistance of OMVVM and OMIVAN with due diligence and efficiency and in conformity with sound administrative, financial, agricultural, technical, engineering and credit practices, and shall provide or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. 8 (b) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause (i) BNT to perform in accordance with the provisions of the BNT Agreement, (ii) OMVVM to perform in accordance with the provisions of the OMVVM Project Agreement, and (iii) OMIVAN to perform in accordance with the provisions of the OMIVAN Project Agreement all their respective 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 BNT, OMVVM and OMIVAN, respectively, to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall make available: (i) to BNT that portion of the proceeds of the Loan required for the execution of Part C of the Project and provided for under Category IV of the Allocation of the Proceeds of the Loan set forth in paragraph I of Schedule 1 to this Agreement under an agreement to be entered into between the Borrower and BNT under terms and conditions which shall have been approved by the Bank; (ii) to BNT such funds out of its own resources as shall be required for the execution of Part C of the Project, provided, however, that after the effective date of the BNT Agreement, such funds shall be so made available to BNT under the BNT Agreement and under the terms and conditions of the BNT Agreement, which shall have been approved by the Bank; and (iii) to OMVVM and OMIVAN, respectively, by way of a grant, that portion of the proceeds of the Loan required for the execution of Parts A and B of the Project and provided for under Categories I, II and III of the Allocation of the Proceeds of the Loan set forth in Schedule 1 to the Loan Agreement and such other amounts from its own resources as shall be required to carry out Parts A and B of the Project; (c) The Borrower shall exercise its rights under the BNT Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the BNT Agreement or any provision thereof. 9 Section 3.02. The Borrower shall cause DEGTH to construct, operate and maintain in the Nebhana portion of the Project area dams, tubewells, pipelines and other irrigation water delivery devices located outside the public irrigated areas of Nebhana. Section 3.03. The Borrower shall at all times take all such steps as shall be necessary to allocate adequate amounts of water for irrigation in the 2,000 hectares of land referred to under Part B(ix) of the Project. Section 3.04. The Borrower shall carry out an agricultural credit study to be made available to the Bank, together with the Borrower's proposals based thereon no later than December 1, 1975 (or such other date as the Bank may agree). ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. 10 Section 4.02. (a) The Borrower shall cause all works and facilities included in the Project to be adequately maintained and repaired in accordance with sound engineering and agricultural practices and standards and shall cause all dams, canals, pipelines, structures and other works and facilities not included in the Project but necessary to the proper and efficient operation thereof to be operated and adequately maintained and repaired in accordance with such practices and standards; (b) Without limitation or restriction upon the generality of the provision of the foregoing paragraph (a) of this Section, the Borrower shall cause DEGTH: (i) to carry out an inspection by qualified personnel no later than December 31, 1978 (or such other later date as the Bank may agree) and thereafter at intervals of not more than five years, of the Oued Mellegue and Sidi Messaoud dams and their appurtenant structures, to determine whether actual or potential deficiencies exist in the condition of these dams or in the quality and adequacy of their operation and maintenance; (ii) to forward promptly to the Bank copy of the reports related to the inspections referred to in the preceding paragraph (b)(i) of this Section; and (iii) to undertake promptly, as and when needed, any necessary action to operate and adequately maintain and repair the Oued Mellegue and Sidi Messaoud dams, in accordance with sound engineering and agricultural practices and standards. Section 4.03. (a) The Borrower shall take, or cause to be taken, all action as may be necessary in accordance with a timetable acceptable to the Bank to: (i) charge, and to collect from, Project Area Farmers the Investment Contributions; (ii) prepare and deliver to Project Farmers an Attestation; (iii) carry out land consolidations in the Project Area; (iv) implement limitations on the size of land holdings in the Project Area; and (v) implement requirements of Project Area Farmers to irrigate their land. * 11 (b) Before making any changes in the timetable referred to in paragraph (a) of this Section, the Borrower shall submit such changes to the Bank for approval. Section 4.04. (a) Except as the Bank shall otherwise agree, the Borrower shall charge and collect, or cause OMVVM and OMIVAN, respectively, to collect, from Project Area Farmers water charges at levels which will produce a rate of: (i) not less than Dt 0,006 per cubic meter of water delivered to Project Area Farmers located in the Medjerda Valley portion of the Project Area; and (ii) not less than Dt 0,0008 per cubic meter of water delivered to Project Area Farmers located in the Nebhana portion of the Project Area; (b) Without limitation or restriction on the provisior 4 the foregoing paragraph (a) of this Section and unless the Bank shall otherwise agree, the Borrower shall, from time to time, but in any case not less than once in every three years, adjust its water charges so as to provide revenues sufficient to cover the full peration and maintenance cost of the irrigation facilities included in the Project. (c) The Borrower shall promptly inform the Ban' of any adjustments of water charges made in accordance with the provisions of paragraph (b) of this Section. ARTICLE V Reinedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) BNT, OMVVM or OMIVAN shall have failed to perform any of their respective covenants, agreements or obligations under the BNT Agreement, the 01\iVVM Project Agreement or the OMIVAN Project Agreement, respectively; (b) An extraordinary situation shall have arisen which shall make it improbable that BNT, OMVVM or OMIVAN will be able to perform their respective obligations under the BNT Agreement or the OMVVM or OMIVAN Project Agreements, respectively; (c) Law No. 73/28 of May 7, 1973 or Decree No. 73/391 of August 2, 1973 shall have been amended, suspended, abrogated or waived in such a way as materially and adversely to affect the ability of OMIVAN to carry out the covenants, agreements and obligations set forth in the OMIVAN Project Agreement; 12 (d) Laws No. 58/63 of June 11, 1958 and No. 58/76 of July 9, 1958, or Decree Law No. 70/10 of September 28, 1970 shail have been amended, suspended, abrogated, repealed or waived in such a way as materially and adversely to affect the ability of OMVVM to carry out the covenants, agreements and obligations set forth in the OMVVM Project Agreement; and (e) The "Statuts" shall have been amended, suspended, abrogated, repealed or waived in such a way as materially and adversely to affect the ability of BNT to carry out the covenants, agreements and obligations set forth in the BNT Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraphs (c), (d) and (e) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01(c) of the General Conditions: (a) The execution and delivery of the OMVVM Project Agreement on behalf of OMVVM have been duly authorized or ratified by all necessary corporate and administrative action; (b) The execution and delivery of the OMIVAN Project Agreement on behalf of OMIVAN have been duly authorized or ratified by all necessary corporate and administrative action; and (c) OMIVAN shall have employed the senior advisor referred to under Section 3.05 of the OMIVAN Project Agreement. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02(c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: 13 (a) The OMVVM Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of OMVVM, and is legally binding upon OMVVM in accordance with its terms; and (b) The OMIVAN Project Agreement has been duly authorized or ratified by and executed and delivered on behalf of OMIVAN, and is legally binding upon OMIVAN in accordance with its terms. Section 6.03. The date May 1, 1975 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 Ministre du Plan 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: Ministre du Plan Minist6re du Plan I Rue de B6ja Tunis, Tunisia Cable address: MINISTERE DU PLAN 1 Rue de B6ja Tunis For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America 14 Cable address: INTBAFRAD Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF TUNISIA By /s/ Ali Hedda Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s / Munir P. Benjenk Regional Vice President Europe, Middle East and North Africa 15 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Civil works 1,919,000 39% (representing the estimated foreign expendi- ture component) II. Equipment, 3,026,000 100% of foreign vehicles and expenditures or Livestock 77% (representing the estimated foreign expendi- ture component) III. Consultants, 1,043,000 100% of foreign studies and expenditures fellowships IV. Medium- and 2,125,000 38% (representing long-term credit the estimated for fruit tree foreign expendi- orchards, live- ture component) stock stables, farm housing, sprinkler equip- ment, stilling and storage basins, and marketing sup- port facilities and seasonal credit V. Unallocated 4,087,000 TOTAL 12,200,000 16 2. For the purposes of this Schedule the term "foreign expenditures" means expenditures for goods or services supplied from, the territory, and in the currency, of any country other than the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Loan, the Bank may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Categories I and II on account of expenditures incurred after June 1, 1974 in an aggregate amount not exceeding $100,000; and (b) sub-loans under Category IV cf the Allocation of the Proceeds of the Loan set forth in paragraph 1 of this Schedule until the execution and delivery of the BNT Agreement on behalf of the Borrower and BNT, respectively, shall have been duly authorized or ratified by all necessary corporate and administrative action; provided, however, that if the BNT Agreement shall not have been executed and delivered in accordance with the provisions of Section 3.01(c)(i) of this Agreement, by February 1, 1976 the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower cancel the amount of the Loan provided for the carrying out of Part C of the Project and under Category IV of the Allocation of the Proceeds of the Loan set forth in paragraph I of this Schedule. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph I above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category to the extent required to meet the estimated shortfall proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable 17 to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. 18 SCHEDULE 2 Description of the Project The Project is part of the Borrower's Program (i) to close the gap between the low utilization of existing public investments in irrigation and the productive potential of these investments, (ii) to raise incomes of small farmers by intensifying and diversifying the cropping patterns, (iii) to increase the security of land tenure, (iv) to increase the accessibility and volume of agricultural credit to small farmers, (v) to provide needed public services and to improve housing conditions for the lowest income farmers in Medjerda, and (vi) to strengthen agricultural institutions. The Project consists of the following parts: Part A: Activities to be carried out in the irrigable area of the Medjerda Valley (i) rehabilitation of the existing irrigation, drainage, and road networks over a net area of about 20,000 ha; (ii) construction of about 370 farmhouses, installation of facilities to provide about 614 existing farms with electricity and about 678 existing farms with drinking water, rehabilitation and repair of 7 existing rural centers and construction of 2 new centers and construction of housing for 30 extension agents; (iii) establishment of windbreaks for crop protection over about 5,000 ha; (iv) purchase and utilization of equipment and machinery for operation and maintenance of the irrigation, drainage, and road networks over about 20,000 ha; (v) strengthening of OMVVM through provision of specialists, fellowships and vehicles; (vi) on farm development on Settler holdings and on holdings of about 600 Project Area Farmers, including supply of farm machinery; and (vii) purchase of about 900 selected dairy cattle. Part B: Activities to be carried out in the irrigable equipped area at Nebhana (i) assistance in land reform through consolidation and establishment of farm titles for about 3,800 small private farmers 19 with holdings totalling about 5,000 ha and through the provision of supplementary consultant services; (ii) rehabilitation of existing irrigation, drainage, and road networks over about 5,000 ha; (iii) construction of irrigation and drainage works over about 2,000 ha; (iv) establishment of windbreaks over about 1,500 ha; (v) purchase and utilization of equipment and machinery for operation and maintenance of the irrigation, drainage and road network over about 5,000 ha and for additional land development work; (vi) purchase and utilization of field boxes and vehicles and construction of buildings to improve marketing services; (vii) strengthening of OMIVAN through provision of specialists, fellowships and vehicles; (viii) carrying out of a detailed feasibility study and detailed engineering for development of irrigated agriculture over about 3,000 ha not included in the Project; and (ix) on-farm development on about 2,000 ha. Part C. Provision of Credit (i) provision of medium- and long-term credit in the Medjerda portion of the Project area to Settlers and to about 600 Project Farmers for the establishment of fruit orchards over about 850 ha, the construction of housing and stables, and provision of short-term credit to Settlers and to about 600 Project Farmers for crop production inputs; and (ii) provision in the Nebhana portion of the Project area of (a) medium- and long-term credit (A) to Project Farmers for the establishment of fruit orchards over about 300 ha, for sprinkler irrigation equipment for about 400 ha, and for the construction 20 of stilling and storage basins, and (B) to marketing cooperatives for the equipping and construction of marketing support facilities and of (b) short-term credit to such Project Farmers for crop production inputs. The Project is expected to be completed by December 30, 198 1. 21 SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* August 15, 1982 165,000 February 15, 1983 170,000 August 15, 1983 180,000 February 15, 1984 185,000 August 15, 1984 195,000 February 15, 1985 200,000 August 15, 1985 210,000 February 15, 1986 220,000 August 15, 1986 225,000 February 15, 1987 235,000 August 15, 1987 245,000 February 15, 1988 255,000 August 15, 1988 265,000 February 15, 1989 275,000 August 15, 1989 285,000 February 15, 1990 300,000 August 15, 1990 310,000 February 15, 1991 325,000 August 15, 1991 335,000 February 15, 1992 350,000 August 15, 1992 365,000 February 15, 1993 375,000 August 15, 1993 395,000 February 15, 1994 410,000 August 15, 1994 425,000 February 15, 1995 440,000 August 15, 1995 460,000 February 15, 1996 480,000 August 15, 1996 495,000 February 15, 1997 515,000 August 15, 1997 535,000 February 15, 1998 560,000 August 15, 1998 580,000 February 15, 1999 605,000 August 15, 1999 630,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 22 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05(b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 3/4% More than three years but not more than six years before maturity 2-1/4% More than six years but not more than eleven years before maturity 3% More than eleven years but not more than sixteen years before maturity 4-3/4% More than sixteen years but not more than twenty-one years before maturity 6-3/4% More than twenty-one years but not more than twenty- three years before maturity 7-1/2% More than twenty-three years before maturity 8% 23 SCHEDULE 4 Procurement A. General Procedures 1. Except as provided in Part A.2 hereof, contracts shall be let under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. (a) Contracts for civil works (including construction of rural centers) may be advertised locally only, and when competitive bidding procedures shall prove to be impractical, such works may be carried out under force account in accordance with the Borrower's (which term shall, for the purpose of this Schedule, include OMVVM and OMIVAN, as appropriate) regulations applicable to the Borrower's Ministry of Public Works, and in accordance with procurement regulations applicable to OMVVM, OMIVAN, SONEDE and STEG, as appropriate. (b) For specialized hydraulic equipment including repairs thereof and civil works, OMVVM may negotiate purchases of replacement equipment from its usual suppliers, provided, however, that the aggregate amount of such purchases shall not exceed the equivalent of $600,000; and (c) Contracts for livestock may be awarded after receiving at least three quotations from suppliers for each contract to be awarded. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Tunisia may be granted a margin of preference in accordance with, and subject to, the following provisions: 24 (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Tunisia if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Tunisia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Tunisia. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. The lowest evaluated bid of each group shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the lowest evaluated bid from group C shall be selected. C. Review of Procurement Decisions by Bank 1. Review of invitation to bid and of proposed awards and final contracts: With respect to all contracts for (i) all equipment for irrigation (including electromechanical equipment, parts of pumping stations, pipes, taps, turnouts, water 25 meters and sprinklers) and all operation and maintenance equipment (including farm machinery and vehicles) estimated to cost the equivalent of $20,000 or more, and (ii) for civil works (except for works to be carried out under force account as provided in Part A2(a) of this Schedule) estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidd. rs. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and the reasons for the intended award and shall furnish to the Bank, in sufficient time for its review, a detailed report to be prepared by OMVVM and OMIVAN as applicable on the evaluation and comparison of the bids received, together with the recommendation for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms anL conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.