Page  1
CONFORMED COPY
LOAN NUMBER 
7083
 - BR
Project Agreement
(Fortaleza Metropolitan Transport Project)
among
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
and
COMPANHIA BRASILEIRA DE 
TRENS URBANOS - CBTU
and
COMPANHIA CEARENSE DE 
TRANSPORTES METROPOLITANOS - METROFOR
Dated August 1, 2002
Page  2
LOAN NUMBER 
7083
 - BR
PROJECT AGREEMENT
AGREEMENT, dated August 1, 2002, among the INTERNATIONAL BANK FOR 
RECONSTRUCTION AND DEVELOPMENT (the Bank), COMPANHIA BRASILEIRA DE 
TRENS URBANOS – CBTU (CBTU) and COMPANHIA CEARENSE DE TRANSPORTES 
METROPOLITANOS – METROFOR (METROFOR).
WHEREAS by the Loan Agreement of even date herewith between the Federative 
Republic of Brazil (the Borrower) and the Bank, the Bank has agreed to make available to the 
Borrower an amount equal to ninety-eight million six hundred thousand Euro (EUR98,600,000), 
on the terms and conditions set forth in the Loan Agreement, but only on condition that CBTU 
and METROFOR agree to undertake such obligations toward the Bank as are set forth in this 
Agreement; and
WHEREAS CBTU and METROFOR, in consideration of the Bank's entering into the 
Loan Agreement with the Borrower, have agreed to undertake the obligations set forth in this 
Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
Definitions
Section 1.01.
Unless the context otherwise requires, the several terms defined in the 
Loan Agreement and the General Conditions (as so defined) have the respective meanings 
therein set forth.
ARTICLE II
Execution of the Project
Section 2.01.
CBTU and METROFOR declare their commitment to the objectives of 
the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end: (a)  METROFOR 
and CBTU shall carry out the Project with due diligence and efficiency and in conformity with 
appropriate administrative, financial, environmental, engineering and public transportation 
practices; and (b) CBTU shall provide or cause to be provided, promptly as needed, the funds, 
facilities, services and other resources required for the Project, including the proceeds of the 
Loan and the counterpart funds required on the part of the Borrower for the Project.
Section 2.02.
Except as the Bank shall otherwise agree, procurement of the goods, 
works and consultants' services required for the Project and to be financed out of the proceeds of 
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the Loan, shall be carried out by METROFOR, with the assistance of CBTU, in accordance with 
the provisions of Schedule 1 to this Agreement.
Section 2.03.
METROFOR shall carry out the obligations set forth in Sections 9.04, 
9.05, 9.06, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and 
services, plans and schedules, maintenance and land acquisition, respectively) and CBTU shall 
carry out the obligations set forth in Section 9.07 thereof (relating to records and reports), all in 
respect of the Project.
Section 2.04.
(a)  CBTU and METROFOR shall, at the request of the Bank, 
exchange views with the Bank with regard to the progress of the Project, the performance of their 
respective obligations under this Agreement and other matters relating to the purposes of the 
Loan.
(b)
CBTU and METROFOR shall promptly inform the Bank of any condition which 
interferes or threatens to interfere with the progress of the Project, the accomplishment of the 
purposes of the Loan, or the performance by CBTU or METROFOR of their respective 
obligations under this Agreement.
Section 2.05.
(a)  CBTU shall maintain, until completion of the Project, the existing 
unit in CBTU, established pursuant to the Resolution of CBTU’s Director President No. 
0235-2001, dated July 26, 2001, with staff, responsibilities and functions satisfactory to the 
Bank, to be responsible, within CBTU, for the coordination of the execution of the Project.
(b)
METROFOR shall maintain, until completion of the Project, a unit in 
METROFOR (the PCU) with staff, responsibilities and functions satisfactory to the Bank, to be 
responsible, within METROFOR, for the coordination of the execution of the Project. The PCU 
shall be assisted by consultants to be selected pursuant to the provisions of Section II of Schedule 
1
to this Agreement, including a specialist in relocation of population to monitor the carrying out 
of the Resettlement Plan until its completion, an environmental engineer, a procurement 
specialist, and a management information systems specialist to assist CBTU in the overall 
financial management and supervision of the Project.
Section 2.06.
METROFOR shall: 
(a)
carry out the Resettlement Plan in accordance with the terms thereof;
(b)
not initiate any work on any section of the rail system under Part A.1 of the 
Project until the relocation of families and commercial activities under such section has been 
concluded in accordance with the Resettlement Plan;
(c)
not initiate any work under Part A.1 of the Project which may prevent access to 
homes or job sites of the population living in, or in an area adjacent to, the right-of-way of the 
rail system under Part A.1 of the Project, until METROFOR has implemented measures to 
mitigate such lack of access, in accordance with a plan satisfactory to the Bank (including, if 
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required, relocation of the affected population);
(d)
carry out Part A.1 of the Project in accordance with the provisions of the manual 
of environmental procedures, issued by METROFOR on March 21, 2000;
(e)
provide to CBTU all information regarding the carrying out of the Project that 
may be required by CBTU for the operation of the management information system referred to in 
Section 2.07 (a) of this Agreement;
(f)
for purposes of complying with paragraph (e) above, establish, not later than 180 
days after the date of this Agreement, and thereafter maintain until the completion of the Project, 
a
management information system similar to the system referred to in Section 2.07 (a) of this 
Agreement; and
(g)
not later than twelve months after the Effective Date, submit to the Bank the 
Transport Integration Study, after taking into account any comments that the Bank may have on 
the draft of such study.
Section 2.07.
(a)  CBTU shall, with the assistance of METROFOR, maintain, during 
the execution of the Project, a management information system for purposes of tracking the 
physical progress of the Project, in order to enable CBTU to carry out the overall financial 
management and supervision of the Project and produce the reports referred to in paragraph (b) 
below and the information referred to in Section 3.03 (b) and (c) of this Agreement to be 
included in the Project Management Reports.
(b)
Without limitation to the provisions of Section 2.04 of this Agreement, CBTU 
shall, until the completion of the Project, prepare, with the assistance of METROFOR, and 
furnish to the Bank, not later than February 28 and August 31 of each year, a report of such 
scope and in such detail as the Bank shall reasonably request on the progress of the Project and 
the achievement of its objectives (as measured against the performance indicators set forth in 
Schedule 2 to this Agreement), the compliance of obligations of CBTU and METROFOR under 
this Agreement and the availability of funds as required to meet their obligations set forth in this 
Agreement, each such report to cover the calendar semester period immediately preceding the 
issuance of such report.
Section 2.08.
Without limitation to the provisions of Section 2.04 of this Agreement, 
CBTU and METROFOR shall:
(a)
in the month of November of each year during the execution of the Project, 
review with the Bank, the Borrower and the State the progress in the execution of the Project and 
in the achievement of its objectives, and the performance of the respective obligations of the 
Borrower, CBTU, METROFOR and the State under the Loan Agreement, the Project Agreement 
and the State Agreement, as the case may be; and
(b)
in the twenty-fourth month after the Effective Date, conduct a comprehensive 
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mid-term review with the Bank, the Borrower and the State of the matters referred to in (a) 
above, and thereafter take all such action which shall have been agreed upon with the Bank, 
during such review, as necessary for the efficient execution of the Project or the achievement of 
its objectives, such action to be taken in the manner and within the timetable agreed upon during 
such review.
Section 2.09.
METROFOR shall manage and operate the STU-FOR/METROFOR 
System in accordance with appropriate administrative, financial, environmental, safety and 
public transportation practices.
Section 2.10.
METROFOR and CBTU shall:
(a)
at the request of the Bank, exchange views with the Bank with regard to the 
progress of the carrying out of the rehabilitation and modernization works currently under way 
for the South Line; and
(b)
promptly inform the Bank of any condition which interferes or threatens to 
interfere with the carrying out of such works.
Section 2.11.
METROFOR shall:
(a)
prepare and furnish to the Bank not later than six months after the Closing Date 
or such later date as may be agreed for this purpose between the Bank and METROFOR, a plan, 
of such scope and in such detail as the Bank shall reasonably request, for the future operation of 
the Project; and
(b)
afford the Bank a reasonable opportunity to exchange views with METROFOR 
on said plan.
ARTICLE III
Financial Covenants
Section 3.01.
(a)  CBTU shall maintain a financial management system, including 
records and accounts, and prepare financial statements in a format acceptable to the Bank, 
adequate to reflect the operations, resources and expenditures related to the Project.
(b)
CBTU shall:
(i)
have the records, accounts and financial statements referred to in 
paragraph (a) of this Section for each fiscal year audited, in accordance 
with auditing standards acceptable to the Bank, consistently applied, by 
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independent auditors acceptable to the Bank;
(ii)
furnish to the Bank as soon as available, but in any case not later than six 
months after the end of each such year:  (A) certified copies of the 
financial statements referred to in paragraph (a) of this Section for such 
year as so audited; and (B) an opinion on such statements, records and 
accounts and report of such audit, by said auditors, of such scope and in 
such detail as the Bank shall have reasonably requested; and
(iii)
furnish to the Bank such other information concerning such records, 
accounts and financial statements, and the audit thereof, and concerning 
said auditors, as the Bank may from time to time reasonably request. 
Section 3.02.
Without limitation upon the provisions of Section 3.01 of this 
Agreement, CBTU shall, not later than nine months after the date of this Agreement or such later 
date as the Bank shall agree, complete the carrying out of a time-bound action plan acceptable to 
the Bank for the strengthening of its financial management system referred to in paragraph (a) of 
said Section 3.01 in order to enable CBTU to produce the information referred to in Section 3.03 
(a) of this Agreement to be included in the Project Management Reports.
Section 3.03.
Upon completion of the action plan referred to in Section 3.02 of this 
Agreement, CBTU shall prepare, in accordance with guidelines acceptable to the Bank, and 
furnish to the Bank not later than 45 days after the end of each calendar quarter a project 
management report, acceptable to the Bank, each of which shall:
(a)
(i)  set forth actual sources and applications of funds for the Project, both 
cumulatively and for the period covered by said report, and projected sources and applications of 
funds for the Project for the six-month period following the period covered by said report; and 
(ii) shows separately expenditures financed out of the proceeds of the Loan during the period 
covered by said report and expenditures proposed to be financed out of the proceeds of the Loan 
during the six-month period following the period covered by said report;
(b)
(i) describe physical progress in Project implementation, both cumulatively and 
for the period covered by said report; and (ii) explain variances between the actual and 
previously forecast implementation targets; and
(c)
set forth the status of procurement under the Project and expenditures under 
contracts financed out of the proceeds of the Loan, as at the end of the period covered by said 
report.
Section 3.04.
(a)  METROFOR shall maintain records and accounts adequate to reflect 
in accordance with sound accounting practices the operations and financial condition of 
METROFOR and to register separately the operations, resources and expenditures related to the 
Project.
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(b)
METROFOR shall:
(i)
have its records, accounts and financial statements (balance sheets, 
statements of income and expenses and related statements) for each 
fiscal year audited, in accordance with appropriate auditing principles 
consistently applied, by independent auditors acceptable to the Bank;
(ii)
furnish to the Bank as soon as available, but in any case not later than six 
months after the end of each such year:  (A) certified copies of said 
financial statements reflecting the records and accounts referred to in 
paragraph (a) of this Section for such year as so audited; and (B) an 
opinion on such statements, records and accounts and 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 such records, 
accounts and financial statements and the audit thereof as the Bank shall 
from time to time reasonably request.
ARTICLE IV
Effectiveness; Termination; Cancellation and Suspension
Section 4.01.
This Agreement shall come into force and effect on the date upon 
which the Loan Agreement becomes effective.
Section 4.02.
This Agreement and all obligations of the Bank, CBTU and 
METROFOR hereunder shall terminate on the date on which the Loan Agreement shall terminate 
in accordance with its terms, and the Bank shall promptly notify CBTU and METROFOR 
thereof.
Section 4.03.
All the provisions of this Agreement shall continue in full force and 
effect notwithstanding any cancellation or suspension under the General Conditions.
ARTICLE V
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Miscellaneous Provisions
Section 5.01.
Any notice or request required or permitted to be given or made under 
this Agreement and any agreement between the parties contemplated by this Agreement shall be 
in writing.  Such notice or request shall be deemed to have been duly given or made when it shall 
be delivered by hand or by mail, telex or facsimile to the party to which it is required or 
permitted to be given or made at such party's address hereinafter specified or at such other 
address as such party shall have designated by notice to the party giving such notice or making 
such request.  Deliveries made by facsimile transmission shall also be confirmed by mail.  The 
addresses so specified are:
For the Bank:
International Bank for
  Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INTBAFRAD
248423 (MCI) or
(202) 477-6391
Washington, D.C.
 64145 (MCI)
For CBTU:
Companhia Brasileira de Trens Urbanos - CBTU
Estrada Velha da Tijuca 77
20.531-080 Rio de Janeiro, RJ
Brazil
Facsimile:
(55-21) 2208-1780
For METROFOR:
Companhia Cearense de
  Transportes Metropolitanos - METROFOR
Rua 24 de Maio, 60 - Centro
60020-001 Fortaleza, Ceará
Brazil
Facsimile:
(55-85) 4557016
With copies to
Ministério do Planejamento, Orçamento e Gestão
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Secretaria de Assuntos Internacionais
Esplanada dos Ministérios, Bloco "K" - 5 andar
70.040-906 Brasília, D.F.
Brazil
Facsimile:
(55-61) 2254022
Ministério dos Transportes
Subsecretaria de Planejamento e Orçamento
Esplanada dos Ministérios, Bloco "R" - 4 andar
70.044-900 Brasília, D.F.
Brazil
Facsimile:
(55-61) 3117979
Section 5.02.
Any action required or permitted to be taken, and any document required 
or permitted to be executed, under this Agreement may be taken or executed: (a) on behalf of 
CBTU, by its Director-President or such other person or persons as he or she shall designate in 
writing; and (b) on behalf of METROFOR, by its Director-President or such other person or 
persons as he or she shall designate in writing.  CBTU and METROFOR shall furnish to the 
Bank sufficient evidence of the authority and the authenticated specimen signature of each such 
person.
Section 5.03.
This Agreement may be executed in several counterparts, each of 
which shall be an original, and all collectively but one instrument.
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in city of 
Fortaleza, State of Ceará, Brazil, as of the day and year first above written.
INTERNATIONAL BANK FOR     
  RECONSTRUCTION AND DEVELOPMENT
By /s/ Jorge M. Rebelo
Authorized Representative
COMPANHIA BRASILEIRA DE 
  TRENS URBANOS - CBTU
By /s/ Luiz Otávio Mota Valadares
By /s/ Arrenaldo Bonavita Teixeira
Authorized Representatives
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COMPANHIA CEARENSE DE 
  TRANSPORTES METROPOLITANOS - METROFOR
By /s/ Luiz Eduardo Barbosa de Moraes
By /s/ Maiza Rodrigues Ponte Parente
Authorized Representatives
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SCHEDULE 1
Procurement
Section I
.
Procurement of Goods and Works
Part A
: General
Goods and works under Part A.1 of the Project shall be procured, in accordance with the 
provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" 
published by the Bank in January 1995 and revised in January and August 1996, September 1997 
and January 1999 (the Guidelines) and the following provisions of this Section, as applicable.
Part B
: International Competitive Bidding
1.
Goods and works under Part A.1 of the Project shall be procured under a turnkey 
contract awarded in accordance with the provisions of Section II of the Guidelines and paragraph 
5 of Appendix 1 thereto. 
2.
The following provisions shall apply to the procurement of goods and works under Part 
A.1 of the Project:
(a)
Prequalification
Bidders shall be prequalified in accordance with the provisions of paragraphs 2.9 and 
2.10 of the Guidelines.
(b)
Notification and Advertising
The invitation to prequalify shall be advertised in accordance with the procedures 
applicable to large contracts under paragraph 2.8 of the Guidelines not later than 6 months after 
the Effective Date.
(c)
Preference for domestically manufactured goods
The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto 
shall apply to goods manufactured in the territory of the Borrower.  For purposes of the 
Guidelines, the term custom duties and other import taxes includes the Borrower's Freight 
Surcharge for the Renewal of the Merchant Marine (
Adicional ao Frete para a Renovação da 
Marinha Mercante
), established by Decree Law 1.142 of December 30, 1970, as amended to 
December 31, 1987, or any other tax, levy or charge that, in the reasonable opinion of the Bank, 
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may substitute it, in whole or in part, after January 1, 1988.  
Part C
: Prior Review by the Bank of Procurement Decisions
The procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall 
apply to the procurement of goods and works under Part A.1 of the Project.
Section II
.
Employment of Consultants
Part A
: General
Consultants’ services shall be procured in accordance with the provisions of the 
Introduction and Section IV of the “Guidelines:  Selection and Employment of Consultants by 
World Bank Borrowers” published by the Bank in January 1997 and revised in September 1997 
and January 1999 (the Consultant Guidelines) and the following provisions of Section II of this 
Schedule.
Part B
: Quality- and Cost-based Selection
Except as otherwise provided in Part C of this Section, consultants’ services shall be 
procured under contracts awarded in accordance with the provisions of Section II of the 
Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and the 
provisions of paragraphs 3.13 through 3.18 thereof applicable to quality- and cost-based selection 
of consultants.
Part C
: Individual Consultants
Services for tasks that meet the requirements set forth in paragraph 5.1 of the Consultant 
Guidelines shall be procured under contracts awarded to individual consultants in accordance 
with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.
Part D
: Review by the Bank of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals, the proposed plan for 
the selection of consultants under the Project shall be furnished to the Bank for its review and 
approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Consultant 
Guidelines.  Selection of all consultants’ services shall be undertaken in accordance with such 
selection plan as shall have been approved by the Bank, and with the provisions of said 
paragraph 1.
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2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms estimated 
to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 1, 2 (other than 
the third subparagraph of paragraph 2(a)) and 5 of Appendix 1 to the Consultant Guidelines shall 
apply.
(b)
With respect to each contract for the employment of individual consultants, the 
qualifications, experience, terms of reference and terms of employment of the consultants shall 
be furnished to the Bank for its prior review and approval.  The contract shall be awarded only 
after the said approval shall have been given.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the procedures set 
forth in paragraph 4 of Appendix 1 to the Consultant Guidelines shall apply, provided, however, 
that the terms of reference for the respective assignments shall be subject to the Bank’s prior 
review and approval.
SCHEDULE 2
Performance Indicators
By End of the Calendar Year
2000
(base)
2001
2002
2003
2004
2005
Project Development Objectives
Percentage of rail stations integrated 
with bus lines (integration-related 
objective)
0
0
0
0
50
50
Rail share of urban transport 
motorized trips (%) 
(congestion-related objective)
2
10
Generalized cost of travel (travel 
time plus fare plus reliability) 
between Caucaia and João 
Felipe in minutes (accessibility 
of low-income user related 
objective)
93
65
Project Outputs
Physical Implementation
%
of
permanent way works 
completed (Part A.1 of the Project)
0
0
33
66
100
%
of other civil works completed 
0
0
33
66
100
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(Part A.1 of the Project)
%
of rolling stock delivered and 
systems completed (Part A.1 of 
the Project)
0
0
0
33 
80
100
Institutional Development
Private sector participation process
Modeling 
completed
Bidding 
procedures 
initiated
Integrated urban transport, land use 
and air quality strategy (Part B.1 of 
the Project)
Draft 
report 
completed
Final 
report 
discussed 
in a 
participato
ry manner