LOAN AGREEMENT(ENHANCING INFRASTRUCTURE EFFICIENCY AND SUSTAINABILITY PROGRAM) BETWEEN REPUBLIC OF SERBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT("Off. Herald of RS - Treaties", No. 12/2017) |
LOAN NUMBER 8792-YF
LOAN AGREEMENT
AGREEMENT dated as of the Signature Date between REPUBLIC OF SERBIA ("Borrower") and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("Bank"). The Borrower and the Bank hereby agree as follows:
ARTICLE I - GENERAL CONDITIONS; DEFINITIONS
1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form part of this Agreement.
1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement.
ARTICLE II - LOAN
2.01. The Bank agrees to lend to the Borrower the amount of one hundred million Euros (EUR100,000,000), as such amount may be converted from time to time through a Currency Conversion ("Loan"), to assist in financing the program described in Schedule 1 to this Agreement ("Program").
2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section IV of Schedule 2 to this Agreement. All withdrawals from the Loan Account shall be deposited by the Bank into an account specified by the Borrower and acceptable to the Bank.
2.03. The Front-end Fee is one quarter of one percent (0.25%) of the Loan amount.
2.04. The Commitment Charge is one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance.
2.05. The interest rate is the Reference Rate for the Loan Currency plus the Variable Spread; or such rate as may apply following a Conversion; subject to Section 3.02(e) of the General Conditions.
2.06. The Payment Dates are June 1 and December 1 in each year.
2.07. The principal amount of the Loan shall be repaid in accordance with Schedule 3 to this Agreement.
ARTICLE III - PROGRAM
3.01. The Borrower declares its commitment to the objective of the Program. To this end, the Borrower shall: (a) cause Public Enterprise Roads of Serbia, the Project Implementing Entity, to carry out Part 1 of the Program; and (b) through the Public Investment Management Office, to carry out Part 2 of the Program, in accordance with the provisions of Article V of the General Conditions, Schedule 2 to this Agreement, and the Program Agreement (in respect to Part 1 of the Program).
ARTICLE IV - REMEDIES OF THE BANK
4.01. The Additional Event of Suspension consists of the following, namely, a situation has arisen that shall make it improbable that the Program, or a significant part of it, will be carried out, or that the Borrower or Project Implementing Entity will be able to perform their obligations under the Loan Agreement to which they are a party.
4.02. The Additional Event of Acceleration consists of the following, namely, that any event specified in Section 4.01 of this Agreement occurs and is continuing for a period of thirty (30) days after notice of the event has been given by the Bank to the Borrower.
ARTICLE V - EFFECTIVENESS
5.01. The Effectiveness Deadline is the date one hundred and eighty (180) days after the Signature Date.
ARTICLE VI - REPRESENTATIVE; ADDRESSES
6.01. The Borrower’s Representative, who, inter alia, may agree to modification of the provisions of this Agreement on behalf of the Borrower through exchange of letters (unless otherwise determined by the Borrower and the Bank), is its Minister of Finance.
6.02. For purposes of Section 10.01 of the General Conditions:
(a) the Borrower’s address is:
Ministry of Finance
20 Kneza Milosa St.
11000 Belgrade
Republic of Serbia; and
(b) the Borrower’s Electronic Address is:
Facsimile:
(381-11) 3618-961
6.03. For purposes of Section 10.01 of the General Conditions:
(a) the Bank’s address is:
International Bank for Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America; and
(b) the Bank’s Electronic Address is:
Telex: Facsimile:
248423(MCI) or 1-202-477-6391
64145(MCI)
AGREED as of the Signature Date.
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REPUBLIC OF SERBIA |
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By |
Authorized Representative Name: DUSAN VUJOVIC, Ph.D. Title: MINISTER OF FINANCE Date: 02/11/2017 |
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INTERNATIONAL BANK FOR |
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By |
Authorized Representative Name: STEPHEN N. NDEGWA Title: COUNTRY MANAGER Date: NOVEMBER 2, 2017 |
PROGRAM DESCRIPTION
The objective of the Program is to improve the management and sustainability of select public infrastructure by strengthening the Borrower’s capacity and systems, upgrading assets, and increasing expenditure efficiency.
The Program consists of the following activities:
Part 1. Transport
Provision of support to the Borrower: (a) in the maintenance of 8,000 kilometers of the Borrower’s road maintenance program, which covers 14,894 kilometers of category one and category two National Roads managed by the Public Enterprise Roads of Serbia ("PERS"), over the period of 2017 through 2020; and (b) in the introduction and implementation of performance based maintenance contracting in the maintenance of the National Road system, specifically through:
(i) a Service Level Agreement ("SLA");
(ii) the development by PERS of a rolling three-year, performance-based maintenance plan ("Performance-Based Maintenance Plan") that shall be (A) in line with the PERS Long-Term and Medium-Term Business Strategy and Development Plan for 2017-2027, and (B) updated annually as part of the PERS Annual Business Plan; and
(iii) the development by PERS of an asset management plan ("Asset Management Plan") to integrate management, financial, economic, and engineering practices in utilizing PERS’s physical assets, with the objective of providing users with the optimal level of infrastructure service in the most cost-effective manner.
Part 2. Energy
Renovation of 234 buildings officially approved by the Borrower for renovation based on municipal priorities and eligibility criteria established under the Program for Reconstruction and Improvement of State-Owned Public Facilities in Education, Healthcare and Social Protection Sectors.
PROGRAM EXECUTION
Section I. Implementation Arrangements
A. Program Institutions
1. The Borrower shall:
(a) cause PERS to carry out Part 1 of the Program and coordinate all related Program activities including procurement, supervision, monitoring of the progress of the performance based maintenance contract ("PBMC") roll-out and reporting on the achievements of the Disbursement Linked Indicators (as defined in Section IV of Schedule 2), with Ministry of Construction, Transport and Infrastructure ("MCTI") overseeing the regular management and execution of Part 1 of the Program; and
(b) carry out Part 2 of the Program, through the Public Investment Management Office ("PIMO"), which shall oversee the day-to-day management and execution of Part 2 of the Program.
2. The Borrower, through MCTI, shall establish, by no later than thirty (30) days after the Effective Date, and thereafter maintain throughout the implementation of the Program, a PBMC Steering Committee, with a composition and terms of reference acceptable to the Bank, to provide oversight and guidance in the implementation of Part 1 of the Program.
3. The Borrower, through the Ministry of Mining and Energy, shall establish by no later than thirty (30) days after the Effective Date, and thereafter maintain throughout the implementation of the Program, a Steering Committee for Part 2 of the Program for Program oversight and approval and issuance of policies and procedures for Part 2 of the Program, all acceptable to the Bank.
B. Additional Program Implementation Arrangements
1. The Borrower shall carry out the Program Action Plan, or cause the Program Action Plan to be carried out, in accordance with the schedule set out in the said Program Action Plan and in a manner satisfactory to the Bank.
2. Program Operations Manual for Part 2 of the Program
(a) The Borrower shall, through PIMO, in consultation with the Borrower’s relevant ministries, prepare and furnish to the Bank for its review a Program Operations Manual ("POM") for Part 2 of the Program, setting forth, inter alia: (i) the eligibility criteria for and screening of public buildings to be selected for renovation under the Program; (ii) the methodology and procedures for the energy efficiency elaboration, technical design, works procurement, construction supervision, commissioning and monitoring; (iii) the technical and economic standards; (iv) the grievance redress mechanisms; and (v) the procedures for environmental oversight and monitoring, monitoring and evaluation, training and capacity building.
(b) The Borrower, through PIMO, shall carry out Part 2 of the Program in accordance with the POM, acceptable to the Bank, provided, however, that in case of any conflict between the arrangements and procedures set out in the POM and the provisions of this Agreement, the provisions of this Agreement shall prevail, and, except as the Bank shall otherwise agree in writing, the Borrower shall not amend, abrogate or waive any provision of the POM, if such amendment, abrogation or waiver may, in the opinion of the Bank, materially or adversely affect the implementation of the Program.
3. The Borrower, through PIMO, shall enter into a contract with each municipality that is authorized to renovate a public building or public buildings located in the respective municipality and approved for renovation under Part 2 of the Program.
Section II. Excluded Activities
The Borrower shall ensure that the Program excludes any activities which:
A. in the opinion of the Bank, are likely to have significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people; or
B. involve the procurement of: (1) works, estimated to cost USD10,000,000 equivalent or more per contract; (2) goods, estimated to cost USD5,000,000 equivalent or more per contract; (3) non-consulting services, estimated to cost USD5,000,000 equivalent or more per contract; or (4) consulting services, estimated to cost USD5,000,000 equivalent or more per contract.
Section III. Program Monitoring, Reporting and Evaluation
The Borrower, through PERS and PIMO, shall furnish to the Bank each Program Report not later than forty-five (45) days after the end of each calendar semester, covering the calendar semester.
Section IV. Withdrawal of Loan Proceeds
A. General
1. Without limitation upon the provisions of Article II of the General Conditions and in accordance with the Disbursement and Financial Information Letter, the Borrower may withdraw the proceeds of the Loan to: (a) pay the Front-end Fee; and (b) finance the results ("Disbursement Linked Results" or "DLRs") achieved by the Borrower and/or, as relevant, by the Program Implementing Entity, as measured against specific indicators ("Disbursement Linked Indicators" or "DLIs"); all as set forth in the table in paragraph 2 of this Part A.
2. The following table specifies each category of withdrawal of the proceeds of the Loan (including the DLIs as applicable) ("Category"), the DLRs for each Category (as applicable), and the allocation of the amounts of the Loan to each Category:
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Category |
DLR |
Amount of the Loan |
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(1) DLI #1: Completion of maintenance on 1000 kilometers of the National Road Network by PERS |
DLR #1: EUR 15,000,000/1000 for each kilometer of National Road that PERS has satisfactorily completed maintenance in accordance with existing contractual specifications, with a minimum threshold of 100 kilometers of road maintenance satisfactorily completed |
15,000,000 |
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(2) DLI #2: DLI #2.1: Signing of a Service Level Agreement by PERS and MCTI |
DLR #2.1: EUR 5,000,000 for signing of a Service Level Agreement between MCTI and PERS with terms and conditions satisfactory to the Bank |
20,000,000 |
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DLI #2.2: Adoption by PERS of a rolling three-year Performance Based Maintenance Plan |
DLR #2.2: EUR 5,000,000 for adoption by PERS’s Supervisory Board of a rolling three-year Performance Based Maintenance Plan, satisfactory to the Bank |
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DLI #2.3: Completion by PERS of the maintenance of 2.000 kilometers of National Roads using Enhanced Maintenance contractual specifications |
DLI #2.3: EUR 10,000,000/2000 for each kilometer of National Road that PERS has satisfactorily completed maintenance in accordance with Enhanced Maintenance contractual specifications, with a minimum threshold of 100 kilometers of National Road maintenance satisfactorily completed |
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(3) DLI #3: DLI #3.1: Maintenance of 5.000 kilometers of the National Road Network under PBMCs |
DLR #3.1: EUR 20,000,000/5000 for each kilometer of National Network Road maintained pursuant to finalized PBMCs, with a minimum threshold of 100 kilometers of said National Roads maintained pursuant to said PBMCs |
24,850,000 |
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DLI #3.2: Adoption by PERS’s Supervisory Board of an Asset Management Plan |
DLR #3.2: EUR 4,850,000 for adoption by PERS’s Supervisory Board of an Asset Management Plan acceptable to the Bank |
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SUBTOTAL FOR CATEGORIES (1) TO (3) |
59,850,000 |
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(4) DLI #4: Adoption and publication by PIMO management of a Program Operations Manual |
DLR #4: Adoption and publication by PIMO management of a Program Operations Manual satisfactory to the Bank |
3,000,000 |
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(5) DLI #5: Issuance of a Government Decision on the Borrower’s adoption of a medium-term national plan for the renovation of public buildings, and its publication in the Official Gazette |
DLR #5: Issuance of a Government Decision on the Borrower’s adoption of a medium-term national plan for the renovation of public buildings, satisfactory to the Bank, and its publication in the Official Gazette |
4,900,000 |
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(6) DLI #6: Design and operationalization of consolidated monitoring and evaluation system for Part 2 of the Program |
DLR #6: Issuance by an independent auditor, acceptable to the Bank, of a progress report for Part 2 of the Program that includes the data and information collected under the consolidated monitoring and evaluation system, acceptable to the Bank |
2,000,000 |
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(7) DLI #7: Renovation and commissioning of 234 public buildings that (a) have acceptance reports signed and issued, (b) have energy performance certificates issued showing that the building either meets Class C or are two classes higher than the class of the respective pre-renovated building, and (c) have had all renovation invoices paid |
DLR #7.1: EUR 5,000,000 for the first 39 public buildings renovated, (a) for which the acceptance reports have been signed and issued, (b) for which the energy performance certificates have been issued, and (c) which have all renovation invoices paid |
30,000,000 |
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DLR #7.2: EUR 25,000,000/195 for each public building renovated (other than any of the 39 public buildings renovated under DLR #7.1), (a) for which the acceptance reports have been signed and issued, (b) for which the energy performance certificates have been issued, and (c) which have all renovation invoices paid |
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SUBTOTAL FOR CATEGORIES (4) TO (7) |
39,900,000 |
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(8) Front-end Fee to be paid pursuant to Section 2.03 of this Agreement in accordance with Section 2.05 (b) of the General Conditions |
250,000 |
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TOTAL AMOUNT |
100,000,000 |
B. Withdrawal Conditions; Withdrawal Period
1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made:
(a) for purposes of Section 2.03 of the General Conditions, for DLRs achieved prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed EUR8,000,000 may be made for DLRs #4 and #7.1 achieved prior to this date but on or after May 3, 2017;
(b) for DLRs under Categories (1), (2) and (3), until and unless the Borrower has furnished evidence satisfactory to the Bank verifying the respective DLR(s) has/have been achieved; and
(c) for DLRs under Categories (5), (6), and (7), respectively, until and unless the Borrower has furnished evidence satisfactory to the Bank verifying that: (i) the DLR in Category (4) has been achieved in a manner acceptable to the Bank; and (ii) the respective DLR(s) for each Category (5), (6) and (7) has/have been achieved.
2. Notwithstanding the provisions of Part B.1(b) and (c) of this Section, the Borrower may withdraw: (i) an amount not to exceed EUR25,000,000 as an advance; provided, however, that if the DLRs in the opinion of the Bank, are not achieved (or only partially achieved) by the Closing Date, the Borrower shall refund such advance (or portion of such advance as determined by the Bank) to the Bank promptly upon notice thereof by the Bank. Except as otherwise agreed with the Borrower, the Bank shall cancel the amount so refunded. Any further withdrawals requested as an advance under any Category shall be permitted only on such terms and conditions as the Bank shall specify by notice to the Borrower.
3. Notwithstanding the provisions of Part B.1(b) and (c) of this Section, if any of the individual DLRs under Category (1), (2), (3), (4), (5), (6), or (7) has not been achieved, the Bank may, by notice to the Borrower: (a) as applicable, authorize the withdrawal of such lesser amount of the unwithdrawn proceeds of the Loan then allocated to said Category which, in the opinion of the Bank, corresponds to the extent of achievement of said DLR, said lesser amount to be calculated in accordance with the formula set out in Disbursement Linked Result column of the table in Section IV.A.2 of this Schedule; (b) reallocate all or a portion of the proceeds of the Loan then allocated to said DLR to any other DLR; and/or (c) cancel all or a portion of the proceeds of the Loan then allocated to said DLR.
4. The Closing Date is December 31, 2021.
COMMITMENT-LINKED AMORTIZATION REPAYMENT SCHEDULE
The following table sets forth the Principal Payment Dates of the Loan and the percentage of the total principal amount of the Loan payable on each Principal Payment Date ("Installment Share").
Level Principal Repayments
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Principal Payment Date |
Installment Share |
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On each June 1 and December 1 Beginning December 1, 2022 through December 1, 2036 |
3.33% |
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On June 1, 2037 |
3.43% |
Definitions
1. "Anti-corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to the General Conditions, the Bank’s "Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing", dated February 1, 2012, and revised July 10, 2015.
2. "Asset Management Plan" means the plan referred to in Part 1 (iii) of the Program.
3. "Category" means a category set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement.
4. "Decision Establishing Public Enterprise for State Roads Management" means the Borrower’s Decision No.023/8228/2005, dated December 22, 2005, and published in the Official Gazette of the Republic of Serbia No. 115/05, establishing the Project Implementing Entity.
5. "Disbursement Linked Indicator" or "DLI" means in respect of a given Category, the indicator related to said Category as set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement.
6. "Disbursement Linked Result" or "DLR" means in respect of a given Category, the result under said Category as set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement, on the basis of the achievement of which, the amount of the Loan allocated to said result may be withdrawn in accordance with the provisions of said Section IV.
7. "Enhanced Maintenance" means contractual terms that include a clear set of performance standards designed to increase efficiency in maintenance operations and a predictable state of repair to ensure enhanced motorist satisfaction, and that are an enhancement of the existing contractual terms referred to in DLR #1.
8. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for IBRD Financing, Program-for-Results Financing", dated July 14, 2017.
9. "Government" means the Borrower’s executive power with composition as defined in the Law on Government.
10. "Government Decision" means an act of the Government adopted in accordance with the Law on Government.
11 "Law on Government" means the Borrower’s law of the same name published in the Official Gazette of the Republic of Serbia, No. 55/05, 71/05-revision, 101/07, 65/08, 16/11, 68/12-CC, 72/12, 7/14-CC, and 44/14).
12. "Law on Public Enterprises" means the Borrower’s law of the same name published in the Official Gazette of the Republic of Serbia, No. 15/2016.
13. "Law on Public Roads" means the Borrower’s law of the same name published in the Official Gazette of the Republic of Serbia, No. 101/05, 123/07, 101/11, 93/12 i 104/13.
14. "Ministry of Construction, Transport and Infrastructure" or "MCTI" means the Borrower’s ministry of the same name or any legal successor thereto.
15. "Ministry of Mining and Energy" means the Borrower’s ministry of the same name or any legal successor thereto.
16. "National Road" has the meaning ascribed to it under the Law of Public Roads.
17. "National Road Network" means the totality of the National Roads.
18. "Official Gazette" or "Official Gazette of the Republic of Serbia" means the official gazette of the Borrower.
19. "PBMCs" means performance-based maintenance contracts, which replace the contracts and contractual terms referred to in DLR #1 and DLR #2.3; "PBMC" means one such contract.
20. "PBMC Steering Committee" means the steering committee referred to in Section I.A.2 of Schedule 2 to this Agreement, or any legal successor or successors thereto.
21. "Performance-Based Maintenance Plan" means the performance-based maintenance plan referred to in Part 1 (ii) of the Program that addresses the commitments made under the SLA, with the objective of linking infrastructure requirements to usage, minimizing road maintenance costs, and establishing core activities.
22. "PERS Annual Business Plan" means the annual business plan, adopted by PERS’s Supervisory Board on an annual basis, that is harmonized with PERS’s long-term and medium-term plans of business strategy and development and approved by Government Decision, all pursuant to the Law on Public Enterprises.
23. "PERS Long-Term and Medium-Term Business Strategy and Development Plan for 2017-2027" means the long-term and medium-term plan of business strategy and development for 2017-2027, adopted by PERS’s Supervisory Board and approved by Government Decision, all pursuant to the Law on Public Enterprises.
24. "Program Action Plan" means the Borrower’s plan dated September 29, 2017, and referred to in Section I.B.1 of Schedule 2 to this Agreement, as may be amended from time to time with the agreement of the Bank.
25. "Program for Reconstruction and Improvement of State-Owned Public Facilities in Education, Healthcare and Social Protection Sectors" means the Borrower’s program of the same name, established by Government Conclusion 05 No. 351-3817/2016, dated April 8, 2016, and revised by Conclusion 05 No. 351-9644/2016, dated October 11, 2016, and Conclusion 05 No. 351-562/2017-1, dated January 24, 2017.
26. "Program Implementing Entity" means Public Enterprise Roads of Serbia.
27. "Program Operations Manual" or "POM" means the Program Operations Manual for Part 2 of the Program, as such manual is referred to in Sections I.B.2 of Schedule 2 to this Agreement.
28. "Public Enterprise Roads of Serbia" or "PERS" means the public enterprise established as a legal entity by the Borrower pursuant to the Law on Public Roads, or any legal successor or successors thereto.
29. "Public Investment Management Office" or "PIMO" means the Borrower’s agency of the same name, established pursuant to Government Decree 05 No. 110-12429/2015, or any legal successor or successors thereto.
30. "Service Level Agreement" or "SLA" means a multi-annual infrastructure contract between MCTI and PERS that sets forth, inter alia, the Borrower’s fiscal support for the maintenance, rehabilitation and upgrades of National Roads over a specific period, the level of quality that PERS will maintain the infrastructure within its network, and the incentives for better performance.
31. "Signature Date" means the later of the two dates on which the Borrower and the Bank signed this Agreement and such definition applies to all references to "the date of the Loan Agreement" in the General Conditions.
32. "Steering Committee for Part 2 of the Program" means the steering committee referred to in Section I.A.3 of Schedule 2 to this Agreement, or any legal successor or successors thereto.
33. "Supervisory Board" means the governing body of PERS as provided under the Law on Public Enterprises, or its legal successor or successors thereto.