FRAMEWORK LOAN AGREEMENT LD 1764 (2012)BETWEEN COUNCIL OF EUROPE DEVELOPMENT BANK AND REPUBLIC OF SERBIA("Off. Herald of RS - Treaties", No. 18/2015) |
LD 1764 (2012)
The COUNCIL OF EUROPE DEVELOPMENT BANK, International Organisation, Paris (hereinafter, the CEB), on the one hand,
and
The REPUBLIC OF SERBIA (hereinafter, the Borrower), on the other hand,
- Having regard to the loan application submitted by the Republic of Serbia dated 4 January 2012 (hereinafter, the Loan Application),
- Having regard to the Third Protocol to the General Agreement on Privileges and Immunities of the Council of Europe,
- Having regard to the CEB’s Loan Regulations adopted by the CEB Administrative Council’s Resolution 1495 (2006) and subsequently amended by the CEB Administrative Council’s Resolution 1530 (2010) (hereinafter, the Loan Regulations).
- Having regard to the CEB’s Overall policy framework for loan and project financing (hereinafter, the Loan Policy) adopted by the CEB Administrative Council’s Resolution 1495 (2006) and subsequently amended by the CEB Administrative Council’s Resolutions 1522 (2009) and 1530 (2010),
- Having regard to the CEB’s Environmental Policy adopted by the CEB Administrative Council’s Resolution 1530 (2010) (hereinafter, the Environmental Policy),
- Having regard to the CEB’s Procurement Guidelines adopted by the CEB’s Administrative Council in September 2011 (hereinafter, the Procurement Guidelines),
HAVE AGREED UPON THE FOLLOWING:
Definitions
"Allocation" means the commitment of a Tranche by the Borrower to the eligible component parts of the Project (identified by means of a standard table appended to this Agreement) even if such Tranche has not yet been paid out for the Project.
"Business Day" means a day on which the TARGET 2 System (Trans-European Automated Real-time Gross Settlement Express Transfer System) is operating.
"Closing Date" means the date from which, upon notification by the CEB to the Borrower, no further disbursements can be requested by the Borrower.
‘‘Environmental Law’’ means EU law and the national laws and regulations of the Republic of Serbia, as well as applicable international treaties, of which a principal objective is the preservation, protection or improvement of the environment.
"EURIBOR" (Euro Interbank Offered Rate) is the rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank. It is sponsored by the European Banking Federation, computed by Reuters and published every working day in Brussels at 11 a.m. on Reuters page EURIBOR01.
"Final Beneficiaries" are the individuals that benefit from the social effects of the Project.
"Modified Following Business Day Convention" means a convention whereby if a specified date would fall on a day which is not a Business Day, such date would be the first following day that is a Business Day unless that day falls in the next calendar month, in which case that date would be the first preceding day that is a Business Day.
"Project Implementing Body" (hereinafter called the PIB) means the Ministry of Justice of the Republic of Serbia (or any successor thereto), which, by delegation of the Borrower, oversees the implementation of the Project.
"Project Implementation Unit" (hereinafter called the PIU) means the dedicated co-ordinating structure, which, by delegation of the PIB, is in charge of the day-to-day implementation, management and follow-up of the activities included under the Project.
"Projected State of Progress of Works" means the ratio of eligible expenditures, for all the component parts of the Project, to total eligible cost of the Project, where eligible expenditures include already-incurred expenditures as well as those that are expected to be incurred for a determined period of time not exceeding one year from the date of the latest monitoring report (as defined in Article 4.2.2. below).
"State of Progress of Works" means the ratio of already-incurred eligible expenditures, on all the component parts of the Project, to total eligible cost of the Project.
"Tranche" means an amount disbursed or to be disbursed from the loan.
Article 1.
The Loan is granted under the general conditions of the Loan Regulations and under the special conditions established by this framework loan agreement (hereinafter the Agreement), its Appendices and its side letters (hereinafter the Side Letters).
Article 2.
The CEB grants to the Borrower, who accepts, a Loan (hereinafter, the Loan) for the financing of the Project ref. LD 1764 (2012), approved by CEB’s Administrative Council on 27 January 2012, consisting in the partial financing of the construction and equipment of a new prison facility located in Pančevo (Serbia) (hereinafter, the Project).
The Loan is granted by the CEB in consideration of the commitment that the Borrower is making to apply it solely to financing the Project, as described in Appendix 1, and to carry out such Project under the conditions which are detailed in this Agreement and its Appendices.
Any change to the way the Loan is applied that has not received the CEB’s approval may lead to the suspension, cancellation or early reimbursement of the Loan, under the terms of Articles 3.3., 3.5. and 3.6. of the Loan Regulations.
Article 3.
3.1. Financial conditions
The amount of the Loan granted is:
EUR 18 000 000
Eighteen million euros
It shall be disbursed in Tranches.
For each Tranche, the amount, the interest rate, the disbursement date, the repayment period and each party’s accounts for payments shall be determined jointly by the Borrower and the CEB. The repayment period shall not be greater than twenty (20) years, including up to five (5) years of grace.
A Side Letter which specifies these conditions shall be drawn up at the time of disbursement substantially in the form set out in Appendix 2.
3.2. Disbursement
The CEB shall disburse the Loan in a minimum of two (2) Tranches. The amount of each Tranche shall be determined according to the State of Progress of Works and/or Projected State of Progress of Works.
The signature of the Side Letter for the first Tranche must occur within twelve (12) months following the entry into force of the present Agreement as defined under Article 3.3.
The first Tranche shall not exceed 50% of the approved Loan amount.
Each subsequent Tranche can be disbursed only after the Borrower confirms in writing to the CEB, subject to compliance with article 4.2.2. below, that 90% of the previous Tranche has been Allocated.
3.3. Conditions for disbursement
The signature of the Side Letter for the first Tranche will be subject to the CEB having previously received, in form and substance satisfactory to it, of the following evidence or documentation:
1. Evidence in English satisfactory to CEB that the execution of this Agreement by the Borrower has been duly authorised and that the person(s) signing this Agreement is/are duly authorised to do so with the specimen signature of such person(s); and
2. Legal opinion in English issued by the Ministry of Justice, in form and substance satisfactory to CEB, covering the issues of capacity, power and authority of the Borrower and confirming that the Agreement is valid, binding and enforceable in accordance with its terms.
3. Evidence that the Feasibility Report prepared for the Project has been officially approved by the Borrower;
4. Evidence that a PIU has been set up by the PIB in accordance with Article 4.1.2. of the Agreement;
5. A Procurement Plan in accordance with Article 4.1.3. of the Agreement;
In addition, the signature of the Side Letters for all Tranches, including the first Tranche, shall be subject to the CEB having previously received the following:
1. Evidence in English satisfactory to CEB that the execution of the relevant Side Letters by the Borrower has been duly authorised;
2. Evidence that the person(s) signing the relevant Side Letter is/are duly authorised to do so with the specimen signature of such person(s).
3.4. Closing Date
The Closing Date is set at 30 September 2019.
If deemed necessary, the Parties may agree to an extension of the Closing Date by means of an exchange of letters.
3.5. Payment details
All the amounts due by the Borrower under this Agreement are payable in the currency of each Tranche to the account number communicated by the CEB to the Borrower at the time of disbursement.
The Borrower or the bank instructed by the Borrower, as the case may be, shall send a written payment notice to the CEB at least five (5) Business Days before payment of any amounts due under this Agreement.
Any payment under this Agreement shall be made on a Business Day subject to the Modified Following Business Day Convention.
Article 4.
Monitoring the Loan and the Project
4.1. Use of the Loan
4.1.1. Period
Unless otherwise agreed to in writing between the Parties (by means of an exchange of letters), the Borrower shall allocate the Tranches within twelve (12) months after each disbursement. The proceeds of the Loan cannot be used for the financing of taxes, customs and other duties.
The amount not allocated to the Project within such period shall be repaid to the CEB within thirty (30) days upon expiration of the aforementioned 12-month period.
The Borrower undertakes to bear the cost resulting from this repayment. This cost shall include that which the CEB will have to bear due to the reinvestment of the same amount on the date of repayment for the residual life of the original Loan, as well as any other related cost. The reinvestment rate shall be determined by the CEB on the basis of market conditions on the repayment date and for the period in question. The cost shall therefore be calculated taking into account the difference between the original rate and the reinvestment rate.
Furthermore, if a Tranche disbursed by the CEB is not allocated to the Project or is only partially allocated to it within the period mentioned in the first paragraph above, this would constitute an event as listed in Article 3.3. (h) of Chapter 3 of the Loan Regulations and may give rise to the suspension, cancellation or early reimbursement of the Loan under the terms of Articles 3.3., 3.5. and 3.6. of the Loan Regulations.
4.1.2. Implementation of the Project
The Borrower designates the Ministry of Justice as the PIB. The PIB will establish and maintain within its structure a Project Implementation Unit (PIU). The Borrower undertakes (i) to provide the necessary complementary financial resources needed for the functioning of the PIU within the budget line of the PIB (as described in Appendix 1); and (ii) to take all necessary actions for the PIU to be appropriately staffed and equipped.
The PIU will keep a separate account for all the activities carried out under the Project which may be audited by CEB.
Notwithstanding the above, the Borrower shall remain responsible to ensure compliance with the obligations set forth under the Agreement and liable for any infringement thereof.
4.1.2.1. Duty of care
The Borrower shall apply all care and diligence, and shall exercise all typically used means, in particular legal, financial, technical, social and managerial, which are required for the proper implementation of the Project.
4.1.2.2. Increased or revised cost of the Project
Should the costs of the Project, as described in Appendix 1 attached hereto, increase or be revised for whatever reason, the Borrower shall ensure that the additional financial resources for the completion of the Project are available.
In any case, financing by the CEB shall not exceed 60% of the total cost of the Project, excluding interest and financial charges, such as defined in Appendix 1.
4.1.2.3. CEB visibility
The Borrower shall (i) indicate in all its promotional material related to the Project that the latter is partly financed by the CEB (displaying in an appropriate way CEB’s logo) and (ii) consult with CEB regarding the official press releases about the Project.
4.1.2.4. Project undertakings
The Borrower undertakes that:
- The implementation of the Project will comply with the eligibility criteria/eligible costs set out in the Loan Policy;
- The implementation of the Project will comply with the Environmental Policy. In particular, the PIB, on behalf of the Borrower, shall ensure that:
(i) All environmental impact assessments (EIA), consents and planning permissions, as and when necessary for the realisation of the Project, are timely obtained from competent authorities and all recommendations/conditions attached to each such EIA, consent or permission are fulfilled;
(ii) The conceptual design of the Project sets targets on indicators in terms of energy consumption as well as monitoring instruments to compare energy performance of new and existing buildings and facilities.
- All rights of way or use related to land and real estate property will be timely obtained and remain in force;
- All works and property forming part of the Project are permanently insured in accordance with standard industry practice;
- Maintenance (direct or indirect), repair, overhaul and renewal of all equipment and real estate property forming part of the Project will be carried out as required to keep it in good working order; in this respect, the Borrower shall inform CEB in due course of all the arrangements made to this end.
- The implementation of the Project will not lead to a violation of the European Convention on Human Rights and of the European Social Charter; and
- The implementation of the Project will comply with the relevant rules on fraud, corruption and money laundering, as further detailed below under Article 4.1.4.
Failure to comply with the above undertakings would constitute an event as indicated in Article 3.3. (h) of Chapter 3 of the Loan Regulations and, following a notification from CEB, may give rise to the suspension, cancellation or early reimbursement of the Loan under the terms of Article 3.3., 3.5. and 3.6. of the Loan Regulations.
4.1.3. Procurement
Procurement of supplies, works and services to be financed under the Project shall comply with the Procurement Guidelines. In particular, the thresholds above which the Borrower shall be required to obtain supplies, works and services through international procurement procedures are the ones set out in the relevant EU Procurement Directives, as published from time to time in the Official Journal of the European Union (OJEU). The Procurement Plan (and any update thereof) indicating the procurement methods for each contract shall be submitted to the CEB for approval. Upon receipt, the CEB will inform the Borrower of the scope of review that CEB will carry out for each contract.
Should the Borrower fail to comply with the undertakings arising out of the Procurement Guidelines, the CEB (i) may declare the relevant contract expenditure as ineligible for Allocation under the Project; and/or (ii) may proceed with the suspension, cancellation or demand of early reimbursement of the Loan under the terms of Articles 3.3., 3.5. and 3.6. of the Loan Regulations.
4.1.4. Integrity Commitment
The Borrower warrants that it has not committed, and no person to its present knowledge has committed, and undertakes that it will not commit, and no person, with its consent or prior knowledge, will commit, in connection with the procurement process under the Project or the execution of any contract under the Project, as described in Appendix 1, a corrupt, fraudulent, coercive or collusive practice.
For the purposes of this Agreement:
- "A corrupt practice is the offering, giving, receiving, or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party";
- "A fraudulent practice is any act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit, or to avoid an obligation";
- "A coercive practice is impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party";
- "A collusive practice is an arrangement between two or more parties designed to achieve an improper purpose, including influencing improperly the actions of another party".
In this respect, the knowledge of any member of the PIB or PIU shall be deemed the knowledge of the Borrower. The Borrower undertakes to inform CEB if it should become aware of any fact or information suggestive of the commission of any such practice.
The Borrower shall also ensure that the PIU will institute, maintain and comply with internal procedures and controls in compliance with applicable national laws and best practices, for the purpose of ensuring that no transaction is entered into (i) with the aim of money laundering or (ii) with the aim of financing terrorism, particularly for the benefit of any of the individuals or institutions named on the lists of sanctioned persons promulgated by the United Nations Security Council or its committees pursuant to Security Council Resolutions 1267 (1999), 1373 (2001) (available at http:/www.un.org/terrorism), as updated from time to time, and/or by the Council of the EU pursuant to its Common Positions 2001/931/CSFP and 2002/402/CSFP and their related or successor resolutions and/or implementing acts in connection with terrorism financing matters.
Failure to comply with the above warranties and undertakings would constitute a breach of Article 3.3. (g) and/or Article 3.3. (h) of Chapter 3 of the Loan Regulations and may give rise to the suspension, cancellation or early reimbursement of the Loan under the terms of Articles 3.3., 3.5. and 3.6. of the Loan Regulations.
The PIB, on behalf of the Borrower, undertakes:
(a) To take such action as CEB shall reasonably request to investigate and/or terminate any alleged or suspected act or failure to comply with the undertakings described in Article 4.1.4.;
(b) To facilitate any investigation that CEB may make concerning any such act or failure to comply with the undertakings described in Article 4.1.4.; and
(c) To inform CEB of the measures taken to seek damages from the persons responsible for any loss resulting from any such act or failure to comply with the undertakings described in Article 4.1.4.
The Head of the PIB shall be responsible for contacts with CEB for the purposes of Article 4.1.4.
4.2. Information requirements
4.2.1. Information concerning the Project
The PIU, on behalf of the Borrower, shall keep accounting records concerning the Project, which shall be in conformity with international standards, showing, at any point, the Project’s state of progress, and which shall record all operations made and identify the assets and services financed with the help of the Loan.
The PIU, on behalf of the Borrower, undertakes to respond within a reasonable period to any request for information from the CEB and to provide it with any documentation that the CEB should consider necessary and may reasonably request, for the proper implementation of the Agreement, particularly as concerns the monitoring of the Project and the use of the Loan.
The PIU, on behalf of the Borrower, shall inform the CEB immediately of any legislative or regulatory change in the economic sector relevant to the Project, and, in a general sense, of any event which may have a material adverse impact on the execution of its obligations under the Agreement. Any event that may have a material adverse impact on the execution of the Borrower’s obligations under the Agreement would constitute an event as listed in Article 3.3 (h) of Chapter 3 of the Loan Regulations and may give rise to the suspension, cancellation or early reimbursement of the Loan under the terms of Articles 3.3., 3.5. and 3.6. of the Loan Regulations.
4.2.2. Monitoring reports
Every six (6) months, from the beginning of Project implementation until completion of the entire Project, the PIU, on behalf of the Borrower, shall send to the CEB a monitoring report as of mid-year and year-end. The PIU shall also send a monitoring report prior to any disbursement request with the exception of the first Tranche. These reports must be deemed satisfactory by the CEB before any disbursements may be made.
Monitoring reports shall address:
- The state of Allocation of the disbursed Loan Tranches;
- The progress of the Project’s financing and procurement plans;
- The progress of the Project itself, in terms of physical advancement and expenditures incurred;
- Project management details; and
- Project performance indicators (as specified in Appendix 4).
Appendix 3 provides the template specifying the minimum information required by the CEB for monitoring reports. Alternative formats containing the same information may also be used.
4.2.3. Project completion report
Upon physical completion of the entire Project, the PIU, on behalf of the Borrower, shall present a final report containing an appraisal of the Project’s economic, financial, social and environmental effects. This report must be deemed satisfactory by the CEB.
4.2.4. Monitoring missions
The PIU, on behalf of the Borrower, undertakes to favourably receive any monitoring missions carried out by employees of the CEB or outside consultants hired by the CEB, and to provide all the necessary co-operation, including by facilitating visits to the relevant Project sites. In particular, the CEB may have an on-site audit of the Project’s accounting carried out by one or more consultants of its choice, at the Borrower’s expense, in the case of default by the Borrower in respect of any of its obligations under the Loan.
Article 5.
Discharge of the Borrower’s obligations
After payment of the full amount of the principal of the Loan and all interest and other expenses resulting therefrom, in particular those amounts under Articles 6. and 7. below, the Borrower shall be fully released from its obligations towards the CEB, with the exception of those set out in Articles 4.2.1. and 4.2.4. above for the purposes of a possible ex-post evaluation of the Project.
Article 6.
For disbursements in EURO, and notwithstanding any other recourse available to the CEB under the Agreement and the Loan Regulations or otherwise, if the Borrower does not pay all interest or any other amount payable under the Agreement, at the latest on the due date specified, the Borrower must pay additional interest on the amount due and not fully paid, at the one-month EURIBOR rate as of the due date at 11 a.m. (local time in Brussels), plus 2.5% per annum, as of the due date of this amount until the date of actual payment.
The applicable one-month EURIBOR rate shall be updated every 30 days.
Article 7.
All duties and taxes of all kinds, due and paid, and all expenses resulting either from the conclusion, execution, liquidation, cancellation or suspension of this Agreement, in all or in part, or from the guarantee or the Loan, together with all judicial or extra-judicial acts having this Loan as their origin, shall be borne by the Borrower.
However, the provisions of Article 4.7. of Chapter 4 of the Loan Regulations shall apply regarding the costs of the arbitration procedure mentioned in said Chapter 4.
Article 8.
Pari passu and negative pledge
The Borrower declares that no other commitment has been made or will be made in the future which might give a third party a preferential rank, a preferential right of payment, a collateral or guarantee of any nature whatsoever which might confer enhanced rights upon third parties (hereinafter, a Security).
If such a Security were nevertheless granted to a third party, the Borrower agrees to form or supply an identical Security in favour of the CEB or, where it is hindered in doing so, an equivalent Security, and to stipulate the formation of such a Security in favour of the CEB.
Failure to comply with these provisions would represent an event as laid down in Article 3.3. (h) of Chapter 3 of the Loan Regulations and may give rise to the suspension, cancellation or early reimbursement of the Loan under the terms of Articles 3.3., 3.5. and 3.6. of the Loan Regulations.
Article 9.
Representations and warranties
The Borrower represents and warrants:
- that its competent bodies have authorised it to enter into the Agreement and have given the signatory(ies) the authorisation therefor, in accordance with the laws, decrees, regulations, articles of association and other texts applicable to it;
- that the drawing up and execution of the Agreement does not contravene the laws, decrees, regulations, articles of association, and other texts applicable to it and that all the permits, licences, and authorisations necessary therefor have been obtained and shall remain valid for the entire Loan period.
Any change in relation to the above representations and warranties must, for the entire Loan period, be notified to the CEB immediately, and any supporting documents provided.
Article 10.
The Borrower may not raise any fact relating, within the scope of the use of the Loan, to its relations with third parties in order to avoid fulfilling, either totally or partially, the obligations resulting from the Agreement.
The CEB may not be involved in disputes which might arise between the Borrower and third parties and the costs, whatever their nature, incurred by the CEB due to any claims, and in particular all legal or court costs, shall be at the expense of the Borrower.
Article 11.
Interpretation of the Agreement
The Borrower states that it has received a copy of the Loan Regulations, and has taken note thereof. Where there is a contradiction between any provision whatsoever of the Loan Regulations and any provision whatsoever of the Agreement, the provision of the Agreement shall prevail.
The headings of the paragraphs, sections, and chapters of the Agreement shall not be used for its interpretation
In no case shall it be presumed that the CEB has tacitly waived any right granted to it by the Agreement.
Article 12.
The Agreement, its Appendices and the Side Letters relating thereto shall be governed by the rules of the CEB as specified in the provisions of Article 1, paragraph 3, of the Third Protocol (dated 6 March 1959) to the General Agreement on Privileges and Immunities of the Council of Europe (dated 2 September 1949) and, secondarily, if necessary, by French law.
Disputes between the parties to the Agreement shall be subject to arbitration under the conditions laid down in Chapter 4 of the Loan Regulations.
Article 13.
Execution of an arbitration award
The Parties agree not to take advantage of any privilege, immunity or legislation before any jurisdictional or other authority, whether domestic or international, in order to object to the enforcement of an award handed down under the conditions laid down in Chapter 4 of the Loan Regulations.
Article 14.
Any notice or other communication to be given or made under this Agreement to CEB or the Borrower shall be in writing and shall be deemed to have been duly given or made when it is delivered by hand, airmail or facsimile by one party to the other at such party’s address specified below.
|
For the Borrower: |
Ministry of Finance of the Republic of Serbia 20, Kneza Miloša Street - 11000 Belgrade, Serbia Attention: Minister of Finance and/or State Secretary Fax: (+381 11) 361 89 61 [or] (+381 11) 364 26 32 |
|
For the CEB: |
Council of Europe Development Bank 55, avenue Kléber - 75116 Paris, France Attention: Directorate General for Loans and Social Development Fax: (+33 1) 47 55 37 52 |
All communications to be given or made shall be in English or French or, if in another language, shall be accompanied by an English or French certified translation thereof, when so required by the CEB.
Article 15.
The Agreement shall enter into force upon ratification by the Parliament of the Republic of Serbia and upon written confirmation to that effect received by CEB from the Borrower.
Article 16.
The Agreement is drawn up in two (2) originals, each of which is equally valid.
One original is kept by each of the Parties.
|
Belgrade, on 25 June 2015 |
|
……………………………………….. |
|
Paris, on 15 June 2015 |
|
……………………………………….. |
|
APPENDIX 1 |
PROJECT DESCRIPTION |
|
APPENDIX 2 |
SIDE LETTER (TEMPLATES): |
|
- Appendix 2a: Side Letter for a fixed rate loan in Euro |
|
|
- Appendix 2b: Side Letter for a floating rate loan in Euro |
|
|
APPENDIX 3 |
MONITORING REPORTS (TEMPLATES): |
|
- Narrative Monitoring Report |
|
|
- Table 1: Costs/Financing sources |
|
|
- Table 2: Annual Procurement Plan |
|
|
- Table 3: List of Awarded contracts |
|
|
- Table 4: Loan utilisation |
|
|
- Table 5: Financial Sources |
|
|
- Table 6: Activity schedule |
|
|
APPENDIX 4 |
PROJECT PERFORMANCE INDICATORS |
SIDE LETTER FOR A FLOATING RATE LOAN IN EURO
(Templates)
PROJECT PERFORMANCE INDICATORS
