LOAN AGREEMENT(SERBIA RAILWAY SECTOR MODERNIZATION PROJECT USING THE MULTIPHASE PROGRAMMATIC APPROACH) BETWEEN REPUBLIC OF SERBIA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT("Off. Herald of RS - Treaties", No. 13/2021) |
LOAN NUMBER 9221-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
2.01. The Bank agrees to lend to the Borrower the amount of fifty-one million Euros (€51,000,000), as such amount may be converted from time to time through a Currency Conversion ("Loan"), to assist in financing the project described in Schedule 1 to this Agreement ("Project").
2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section III of Schedule 2 to this Agreement.
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 plus the Fixed 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 15 and December 15 in each year.
2.07. The principal amount of the Loan shall be repaid in accordance with Schedule 3 to this Agreement.
Article III
3.01. The Borrower declares its commitment to the objectives of the Project and the MPA Program. To this end, the Borrower, through MCTI, with the assistance of IZS, RD, Serbia Cargo and Serbia Voz, shall carry out the Project in accordance with the provisions of Article V of the General Conditions and Schedule 2 to this Agreement.
Article IV
4.01. The Additional Event of Suspension consists namely of the following that as a result of events which have occurred after the date of the Loan Agreement, an extraordinary situation has arisen which makes it improbable that the MPA Program can be carried out.
Article V
5.01. The Additional Condition of Effectiveness consists of the following, namely, that the Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Borrower to make withdrawals under it (other than the effectiveness of this Agreement) have been fulfilled.
5.02. The Effectiveness Deadline is the date one hundred and eighty (180) days after the Signature Date.
Article VI
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 |
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20 Kneza Milosa St. |
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11000 Belgrade |
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Republic of Serbia; and |
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(b) the Borrower’s Electronic Address is: |
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Facsimile: |
E-mail: |
(381-11) 3618-961 |
kabinet@mfin.gov.rs |
6.03. For purposes of Section 10.01 of the General Conditions: (a) the Bank’s address is:
International Bank for Reconstruction and Development |
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1818 H Street, N.W. |
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Washington, D.C. 20433 |
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United States of America; and |
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(b) the Bank’s Electronic Address is: |
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Telex: |
Facsimile: |
E-mail: |
AGREED and signed in English as of the Signature Date.
REPUBLIC OF SERBIA
By
____________________________________
Authorized Representative
Name: Siniša Mali
Title: Minister of Finance
Date: May 10, 2021
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
By
____________________________________
Authorized Representative
Name: Linda Van Gelder
Title: Regional director
Date: May 10, 2021
PROJECT DESCRIPTION
The objective of the Project is to enhance the efficiency and safety of existing railway assets and improve governance and institutional capacity of the railway sector.
The Project constitutes a phase of the MPA Program and consists of the following parts:
Component 1: Infrastructure Investments and Asset Management
1.1 Reliable and Safe Railway Infrastructure
Provision of support to IZS for the carrying out of a program of track renewal and safety interventions to restore service performance, including, inter alia: (a) the renewal of critically important lines and tunnels in Belgrade city center; (b) the construction of the second stage of the main railway station in Belgrade city center; (c) the improvement of railway level crossings; (d) the installation of four measurement stations to monitor rolling stock, provide data to predict and prevent future failures, and help to identify maintenance needs proactively; and (e) the supervision of all civil works.
1.2 Technical Documentation
Provision of support for the preparatory technical work to ensure the readiness of the infrastructure investment pipeline for subsequent phases of the MPA Program, including, inter alia, the carrying out of feasibility studies, preliminary designs, detailed designs, spatial plans, environmental management plans, environmental impact assessments and resettlement plans, if applicable.
1.3 Asset Management
(a) adoption of a specialized railway infrastructure asset management system encompassing the functionalities of the life-cycle-cost analysis, cost-benefit, failure mode effects and criticality analysis and reliability, availability, maintainability and safety as IZS’s standard tool for planning and decision making for financing activities; (b) provision of technical assistance to develop railway infrastructure implementation plans aiming at rationalizing the scheduling of railway improvements to minimize delays and uncertainties for cargo and passenger operations during the carrying out of civil works; and (c) acquisition of machinery to carry out critical repairs of track infrastructure and to refurbish existing passenger trains.
Component 2: Institutional Strengthening and Project Management
2.1 Sectoral Governance
Provision of technical assistance and financing of investments to strengthen the governance of the IZS, RD, Serbia Cargo and Serbia Voz, and improve their efficiency and results, including, inter alia: (a) the provision of support to IZS, Serbia Cargo and Serbia Voz to adopt commercially oriented, independent management and modernize their internal structures and systems through wider adoption of ICT technologies and introduction of business support systems, asset management systems, financial reporting systems, and document management systems; (b) the carrying out of training and provision of technical support to enhance RD’s capacity as a railway market and safety regulator; and (c) the provision of assistance to complete proper contractual arrangements in the railway sector by developing and implementing a Statement of Requirements.
2.2 Human Capital
Provision of technical assistance and carrying out of capacity building activities to establish mechanisms and frameworks for long term development of human resources and knowledge sharing in the railways sector, including, inter alia: (a) the development and implementation of robust human resources systems, strategies, and knowledge curricula with corresponding gender action plans in IZS, Serbia Cargo and Serbia Voz; (b) the design of educational, training and retraining programs in cooperation with vocational schools and universities; and (c) the establishment of a railway PhD program for women, through the financing of scholarships.
2.3 Project Management and Citizen Engagement
Provision of Project management support, including, inter alia: (a) the financing of staff and technical support for the PIU and Project Implementation Teams; (b) the carrying out of Training and knowledge exchange; (c) the carrying out of communication and citizen engagement activities; (d) the carrying out of Project audits; and (e) the acquisition of office equipment and financing of Operating Costs.
Component 3: Railway Modernization Enablers
3.1 Intelligent Railway and Safety Management Systems
Carrying out of structured planning of intelligent railway systems, introduction of safety management systems in the Borrower’s railway sector and development of the regulations for the General Data Protection Law and cybersecurity rule book, including, inter alia: (a) the provision of technical assistance to help IZS, RD, Serbia Cargo and Serbia Voz to implement the European Railway Traffic Management System and develop an implementation plan for the intelligent railway systems; and (b) the implementation of the safety management systems approach.
3.2 Integrated Territorial Development
Provision of better connectivity to, and synchronization with, other transport modes and improvement of accessibility of the train terminals, through: (a) the financing of a comprehensive study on how railway services could attract more users through better integration with the existing and future urban landscape; (b) the identification and prioritization of short to long term investments to be implemented in the next phases of the MPA Program and the carrying out of pilots to finance integration investments identified in the study mentioned in (a) herein, including the strengthening of non-motorized transport through the financing of bicycle parking facilities and safe non-motorized transport access to the station.
3.3 Modal Shift
Provision of support to shift traffic toward the railways as a greener and more affordable transport mode, through: (a) the financing of a study to identify opportunities for increasing railway market share, including, inter alia, the potential for attracting additional traffic, social implications, and impact on environmental footprint; and (b) the carrying out of an analysis of the ownership alternatives for Serbia Cargo and the establishment of a roadmap for implementation of the selected approaches.
PROJECT EXECUTION
Section I. Implementation Arrangements
A. Institutional Arrangements.
1. Without limitation to the provisions of Article V of the General Conditions and except as the Bank shall otherwise agree, the Borrower shall maintain throughout Project implementation, with composition, resources, terms of reference, and functions acceptable to the Bank:
(a) a Project implementation unit within MCTI (PIU), to be responsible for: (i) the overall coordination of all Project implementation activities; (ii) ensuring that the requirements, criteria, policies, procedures, and organizational arrangements set forth in the Project Operations Manual are applied in carrying out the Project; (iii) preparation of all Project implementation documents, including Project supervision reports; and (iv) monitoring and evaluation of the Project; and
(b) a Central Fiduciary Unit (CFU), within MoF, to be responsible for the procurement and financial management of the Project, as detailed in the Project Operations Manual (POM).
2. Not later than one month after the Effective Date, the Borrower, through MCTI, shall cause RD, IZS, Serbia Cargo, and Serbia Voz to each establish a Project implementation team (PIT) with composition, resources, terms of reference, and functions acceptable to the Bank and further detailed in the POM.
B. Implementation Agreements.
1. To facilitate the carrying out of the Project, not later than one month after the Effective Date, the Borrower, through MCTI shall enter into an agreement with RD, under terms and conditions approved by the Bank ("RD Agreement"), including, inter alia, RD’s obligation to support the implementation of the Project in accordance to the provisions of this Agreement, the Project Operations Manual, the Anti-Corruption Guidelines, and the ESCP.
2. To facilitate the carrying out of the Project, not later than one month after the Effective Date, the Borrower, through MCTI shall enter into an agreement with IZS, under terms and conditions approved by the Bank ("IZS Agreement"), including, inter alia, IZS’s obligation to support the implementation of the Project in accordance to the provisions of this Agreement, the Project Operations Manual, the Anti-Corruption Guidelines, and the ESCP.
3. To facilitate the carrying out of the Project, not later than one month after the Effective Date, the Borrower, through MCTI shall enter into an agreement with Serbia Cargo, under terms and conditions approved by the Bank ("Serbia Cargo Agreement"), including, inter alia, Serbia Cargo’s obligation to support the implementation of the Project in accordance to the provisions of this Agreement, the Project Operations Manual, the Anti-Corruption Guidelines, and the ESCP.
4. To facilitate the carrying out of the Project, not later than one month after the Effective Date, the Borrower, through MCTI shall enter into an agreement with Serbia Voz, under terms and conditions approved by the Bank ("Serbia Voz Agreement"), including, inter alia, Serbia Voz’s obligation to support the implementation of the Project in accordance to the provisions of this Agreement, the Project Operations Manual, the Anti-Corruption Guidelines, and the ESCP.
5. The Borrower, through MCTI, shall exercise its rights under the RD Agreement, IZS Agreement, Serbia Cargo Agreement and Serbia Voz Agreement, in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan. Except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the RD Agreement, IZS Agreement, Serbia Cargo Agreement and Serbia Voz Agreement or any of their provisions.
C. Project Operations Manual.
1. The Borrower, through MCTI, shall implement the Project in accordance with a POM, in form and substance satisfactory to the Bank, that sets out the operational and administrative procedures and requirements for Project implementation, including, inter alia: (a) the role and responsibilities of RD, IZS, Serbia Cargo, and Serbia Voz under the Project; (b) the composition, functions and terms of reference of the PIT; (c) the indicators to be used in the monitoring and evaluation of the Project; (d) the procedures for Project monitoring, supervision and evaluation, including the format and content of the Project Reports; (e) the eligibility criteria and procedures for the election of the investments to be financed under the pilots referred to in Part 2.3(b) of the Project; and (f) the Project’s procurement and financial management procedures.
2. The POM may not be assigned, amended, abrogated or waived, or permitted to be assigned, amended, abrogated or waived, or any provision thereof, in a manner which, in the opinion of the Bank, may materially and adversely affect the implementation of the Project. The POM may only be amended in consultation with, and after approval of, the Bank. In case of any conflict between the terms of the POM and those of this Agreement, the terms of this Agreement shall prevail.
D. Environmental and Social Standards.
1. The Borrower shall ensure that the Project is carried out in accordance with the Environmental and Social Standards, in a manner acceptable to the Bank.
2. Without limitation upon paragraph 1 above, the Borrower shall ensure that the Project is implemented in accordance with the Environmental and Social Commitment Plan ("ESCP"), in a manner acceptable to the Bank. To this end, the Borrower shall ensure that:
(a) the measures and actions specified in the ESCP are implemented with due diligence and efficiency, and provided in the ESCP;
(b) sufficient funds are available to cover the costs of implementing the ESCP;
(c) policies and procedures are maintained, and qualified and experienced staff in adequate numbers are retained to implement the ESCP, as provided in the ESCP; and
(d) the ESCP, or any provision thereof, is not amended, repealed, suspended or waived, except as the Bank shall otherwise agree in writing, as specified in the ESCP, and ensure that the revised ESCP is disclosed promptly thereafter.
3. In case of any inconsistencies between the ESCP and the provisions of this Agreement, the provisions of this Agreement shall prevail.
4. The Borrower shall ensure that:
(a) all measures necessary are taken to collect, compile, and furnish to the Bank through regular reports, with the frequency specified in the ESCP, and promptly in a separate report or reports, if so requested by the Bank, information on the status of compliance with the ESCP and the environmental and social instruments referred to therein, all such reports in form and substance acceptable to the Bank, setting out, inter alia: (i) the status of implementation of the ESCP; (ii) conditions, if any, which interfere or threaten to interfere with the implementation of the ESCP; and (iii) corrective and preventive measures taken or required to be taken to address such conditions; and
(b) the Bank is promptly notified of any incident or accident related to or having an impact on the Project which has, or is likely to have, a significant adverse effect on the environment, the affected communities, the public or workers in accordance with the ESCP, the environmental and social instruments referenced therein and the Environmental and Social Standards.
5. The Borrower shall establish, publicize, maintain and operate an accessible grievance mechanism, to receive and facilitate resolution of concerns and grievances of Project-affected people, and take all measures necessary and appropriate to resolve, or facilitate the resolution of, such concerns and grievances, in a manner acceptable to the Bank.
6. The Borrower shall ensure that all bidding documents and contracts for civil works under the Project include the obligation of contractors, subcontractors and supervising entities to: (a) comply with the relevant aspects of ESCP and the environmental and social instruments referred to therein; and (b) adopt and enforce codes of conduct that should be provided to and signed by all workers, detailing measures to address environmental, social, health and safety risks, and the risks of sexual exploitation and abuse, sexual harassment and violence against children, all as applicable to such civil works commissioned or carried out pursuant to said contracts.
Section II. Project Monitoring, Reporting and Evaluation
The Borrower, through MCTI, shall furnish to the Bank each Project Report not later than one month after the end of each calendar semester, covering the calendar semester.
Section III. Withdrawal of Loan Proceeds
A. General.
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) finance Eligible Expenditures; and (b) pay the Front-end Fee; in the amount allocated and, if applicable, up to the percentage set forth against each Category of the following table:
Category |
Amount of the Loan |
Percentage of Expenditures |
(1) Goods, works, non-consulting services, consulting services, Training and Operating Costs for the Project |
50,872,500 |
50% of Project Expenditures |
(2) Front-end Fee |
127,500 |
Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions |
TOTAL AMOUNT |
51,000,000 |
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For the purpose of this table:
(a) the custom duties and value added tax for the importation and supply of works, goods and non-consulting services, within the Borrower’s territory and for the purpose of the implementation of the Project, shall not be financed out of Loan proceeds. The Borrower confirms that the importation and supply of works, goods and non-consulting services, within the Borrower’s territory and for the purpose of the implementation of the Project, shall be exempted from customs duties and value added tax; and
(b) the term "Project Expenditures" means the Eligible Expenditures to be jointly financed by the Loan and by the Co-financing to cover the total cost of Project activities, which is estimated to be the equivalent of EUR 102,000,000.
B. Withdrawal Conditions; Withdrawal Period.
1. Notwithstanding the provisions of Part A above, no withdrawal shall be made for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed €1,000,000 may be made for payments made prior to this date but on or after January 1, 2021, for Eligible Expenditures.
2. The Closing Date is December 31, 2026.
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
Principal Payment Date |
Installment Share |
On each June 15 and December 15 |
5.56% |
On December 15, 2032 |
5.48% |
APPENDIX
Definitions
1. "Anti-Corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to the General Conditions, the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1, 2016.
2. "Category" means a category set forth in the table in Section III.A of Schedule 2 to this Agreement.
3. "CFU" means Central Fiduciary Unit, the unit referred to in Section I.A.1(b) of Schedule 2 to this Agreement.
4. "Co-financier" means the Agence Française de Développement (AFD).
5. "Co-financing" means, for purposes of paragraph 16 of the Appendix to the General Conditions, an amount of EUR 51,000,000 to be provided by the Co-financier to assist in financing the Project.
6. "Co-financing Agreement" means the agreement to be entered into between the Borrower and the Co-financier providing for the Co-financing.
7. "Environmental and Social Commitment Plan" or "ESCP" means the environmental and social commitment plan for the Project, dated January 21, 2021, as the same may be amended from time to time in accordance with the provisions thereof, which sets out the material measures and actions that the Borrower shall carry out or cause to be carried out to address the potential environmental and social risks and impacts of the Project, including the timeframes of the actions and measures, institutional, staffing, training, monitoring and reporting arrangements, and any environmental and social instruments to be prepared thereunder.
8. "Environmental and Social Standards" or "ESSs" means, collectively: (i) "Environmental and Social Standard 1: Assessment and Management of Environmental and Social Risks and Impacts"; (ii) "Environmental and Social Standard 2: Labor and Working Conditions"; (iii) "Environmental and Social Standard 3: Resource Efficiency and Pollution Prevention and Management"; (iv) "Environmental and Social Standard 4: Community Health and Safety"; (v) "Environmental and Social Standard 5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement"; (vi) "Environmental and Social Standard 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources"; (vii) "Environmental and Social Standard 7: Indigenous Peoples/Sub-Saharan Historically Underserved Traditional Local Communities"; (viii) "Environmental and Social Standard 8: Cultural Heritage"; (ix) "Environmental and Social Standard 9: Financial Intermediaries"; and (x) "Environmental and Social Standard 10: Stakeholder Engagement and Information Disclosure"; effective on October 1, 2018, as published by the Bank.
9. "European Railway Traffic Management System" means a single European signaling and speed control system that ensures interoperability of the national railway systems, including a reduction of the purchasing and maintenance costs of the signaling systems as well as increasing the speed of trains, the capacity of infrastructure and the level of safety in rail transport.
10. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for IBRD Financing, Investment Project Financing", dated December 14, 2018 (revised on August 1, 2020, and on December 21, 2020).
11. "Infrastructure of Serbian Railways" or "IZS" means Joint Stock Company for Public Railway Infrastructure Management, established pursuant to the Decision 05 No. 023-7359/2015, dated July 2, 2015, on Founding of Joint Stock Company for Public Railway Infrastructure Management, duly published in the Borrower’s Official Gazette No.60/15 and 73/15, dated July 8, 2015 and August 21, 2015.
12. "Law on Protection of Personal Data" means the Borrower’s law duly published in the Borrower’s Official Gazette No. 87/2018, dated November 13, 2018.
13. "MCTI" means the Borrower’s Ministry of Construction, Transport, and Infrastructure, or any successor thereto.
14. "MoF" means the Borrower’s Ministry of Finance, or its successor thereto.
15. "MPA Program" means the multiphase programmatic approach program designed to improve the efficiency and safety of the Borrower’s rail network and enhance the environmental sustainability of the Borrower’s transport system.
16. "Operating Costs" means reasonable incremental expenses incurred on account of implementation of the Project, including, inter alia, office supplies and other consumable goods, office rent, internet and communications costs, support for information systems, translation costs, bank charges, utilities, travel, transportation, per diem, accommodation costs (lodging), CFU salaries and other reasonable expenditures directly associated with the implementation of the Project, on the basis of annual budgets acceptable to the Bank, excluding salaries of the civil service employees.
17. "PIU" means Project Implementation Unit, the unit referred to in Section I.A.1 (a) of Schedule 2 to this Agreement.
18. "Procurement Regulations" means, for purposes of paragraph 85 of the Appendix to the General Conditions, the "World Bank Procurement Regulations for IPF Borrowers", dated July 2016, revised November 2017, August 2018 and November 2020.
19. "Project Implementing Team" means the team to be established within RD, IZS, Serbia Cargo, and Serbia Voz, respectively, referred to in Section I.A.2 of Schedule 2 to this Agreement.
20. "Project Operations Manual" or "POM" means the manual referred in Section I.C of Schedule 2 to this Agreement.
21. "Railway Directorate" or "RD" means the Borrower’s rail market regulator and National Safety Authority, established pursuant to: (i) the Borrower’s Law on Railways, duly published in the Borrower’s Official Gazette No. 41/2018, dated May 31, 2018; (ii) the Borrower’s Law on Safety of Railway Traffic, duly published in the Borrower’s Official Gazette No. 41/2018, dated May 31, 2018; and (iii) the Borrower’s Law on Interoperability of Railway System, duly published in the Borrower’s Official Gazette No. 41/2018, dated May 31,2018.
22. "Serbia Cargo" means Joint Stock Company for Railway Transport of Goods "Serbia Cargo" Belgrade-Savski Venac, established pursuant to the Decision 05 No. 023-7357/2015, dated July 2, 2015, on Founding of Joint Stock Company for Railway Transport of Goods, duly published in the Borrower’s Official Gazette No. 60/15, dated July 8, 2015.
23. "Serbia Voz" means Joint Stock Company for Passenger Railway Transport "Srbija Voz", established pursuant to Government Decision 05 No. 023-7361/2015 dated July 2, 2015 on Founding of Joint Stock Company for Passenger Railway Transport, duly published in the Borrower’s Official Gazette No. 60/15, dated July 8, 2015.
24. "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.
25. "Statement of Requirements" means the Borrower’s document which shall set out the indicators to be achieved by railway activities during a particular control period for the Railway Directorate and for the Borrower’s rail industry, including an initial statement of funds available to support these activities.
26. "Training" means the reasonable costs, as shall have been approved by the Bank, for training and workshops conducted under the Project, including tuition, travel and subsistence costs for training and workshop participants, costs associated with securing the services of trainers and workshop speakers, rental of training and workshop facilities, preparation and reproduction of training and workshop materials, study tours and other costs directly related to training course and workshop preparation and implementation (but excluding goods and consultants’ services).