LOAN AGREEMENT(SERBIAN CLIMATE RESILIENCE AND IRRIGATION PROGRAMME -PHASE I AND II) BETWEEN REPUBLIC OF SERBIA AND EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT("Off. Herald of RS - Treaties", No. 6/2023) |
(Operation Number 50848 and 53169)
Dated 22 September 2023
TABLE OF CONTENTS
ARTICLE I - STANDARD TERMS AND CONDITIONS; DEFINITIONS |
2 |
|
Section 1.01. |
Incorporation of Standard Terms and Conditions |
2 |
Section 1.02. |
Definitions |
2 |
Section 1.03. |
Interpretation |
3 |
ARTICLE II - PRINCIPAL TERMS OF THE LOAN |
3 |
|
Section 2.01. |
Amount and Currency |
3 |
Section 2.02. |
Other Financial Terms of the Loan |
3 |
Section 2.03. |
Drawdowns |
4 |
ARTICLE III - EXECUTION OF THE PROJECT |
4 |
|
Section 3.01. |
Other Affirmative Project Covenants |
4 |
ARTICLE IV - SUSPENSION; ACCELERATION; CANCELLATION |
6 |
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Section 4.01. |
Suspension |
6 |
Section 4.02. |
Acceleration of Maturity |
6 |
ARTICLE V - EFFECTIVENESS |
6 |
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Section 5.01. |
Conditions Precedent to Effectiveness |
6 |
Section 5.02. |
Legal Opinions |
7 |
Section 5.03. |
Termination for Failure to Become Effective |
7 |
ARTICLE VI - MISCELLANEOUS |
7 |
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Section 6.01. |
Notices |
7 |
SCHEDULE 1 - DESCRIPTION OF THE PROJECT |
1 |
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SCHEDULE 2 - CATEGORIES AND DRAWDOWNS |
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LOAN AGREEMENT
AGREEMENT dated 22 September 2023 between REPUBLIC OF SERBIA (the "Borrower") and EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank").
PREAMBLE
WHEREAS, the Bank has been established to provide financing for specific projects to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in certain countries committed to and applying the principles of multiparty democracy, pluralism and market economics;
WHEREAS, the Borrower is implementing climate resilience and irrigation project in the Republic of Serbia (the "Project");
WHEREAS, the Project is being carried out in two phases by the Public Water Management Company Srbijavode in relation to construction of new irrigational infrastructure in the municipalities of Svilajnac and Negotin (the "Scrip 1 Phase") and in relation to the construction of new irrigational infrastructure in the local self-governments of Ruma and Sremska Mitrovica (the "Scrip 2 Phase") by the Public Water Management Company Vode Vojvodine (Svilajnac, Negotin, Ruma and Sremska Mitrovica are referred to as the "Municipalities" and each of the Public Water Management Company Srbijavode and the Public Water Management Company Vode Vojvodine as the "Executing Entity") with financial assistance from the Borrower, support of the Municipalities and with participation of the Ministry of Agriculture, Forestry and Water management-Republic Water Directorate of the Republic of Serbia;
WHEREAS, for the purposes of financing the Project, the Bank has agreed to make available to the Borrower loans under the loan agreement entered into between the Bank and the Borrower dated 20 December 2019 and the loan agreement dated 15 December 2021 (the "Existing Loan Agreements"). The Bank also entered into the project agreement with the Borrower, Public Water Management Company Srbijavode, Municipality of Negotin and the Municipality of Svilajnac dated 18 June 2020 ("Scrip 1 Project Agreement") and the project agreement with the Borrower, Public Water Management Company Vojvodine, the Municipality of Ruma and the Municipality of Sremska Mitrovica dated 24 December 2021 ("Scrip 2 Project Agreement") (together the "Project Agreements");
WHEREAS, the Borrower has now requested further assistance from the Bank in financing of the Project as described in Schedule 1 by providing finance for the additional items and amounts listed in Schedule 2 to this Agreement and the Project shall now be understood to include the items referred to in Schedule 1 of this Agreement in addition to the description of each of the phases of the Project as contained in each of the Existing Loan Agreements;
WHEREAS, the parties agreed to amend the Project Agreements on or about the date hereof as required by this Agreement which agreements following such amendments shall be referred to as the "Project Agreements";
WHEREAS, the Bank has agreed on the basis of, inter alia, the foregoing to make a loan to the Borrower in the amount of EUR 18,000,000 (eighteen million Euro), subject to the terms and conditions set forth or referred to in this Agreement and the Project Agreements as such agreements will be amended on or about the date hereof (each of such agreements referred to as the "Project Agreement" as defined in the Standard Terms and Conditions).
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
STANDARD TERMS AND CONDITIONS; DEFINITIONS
Section 1.01. Incorporation of Standard Terms and Conditions
(a) All of the provisions of the Bank’s Standard Terms and Conditions dated 5 November 2021 are hereby incorporated into and made applicable to this Agreement with the same force and effect as if they were fully set forth herein.
(b) Each of the Executing Entities and the Municipalities are specified as a Project Entity for the purposes of the Standard Terms and Conditions.
Wherever used in this Agreement (including the Preamble and Schedules), unless stated otherwise or the context otherwise requires, the terms defined in the Preamble have the respective meanings given to them therein, the terms defined in the Standard Terms and Conditions have the respective meanings given to them therein and the following terms have the following meanings:
"Borrower’s Authorised Representative" |
means the Minister of Finance of the Borrower or any other person duly authorised by the Borrower’s Government as may be notified in writing by the Borrower to the Bank from time to time. |
"ClientNet" |
means the Bank’s online portal for the transmission of documents and information between the Bank and its clients, and any replacement website as the Bank may from time to time notify the Borrower. |
"Enforcement Policy and Procedures" |
means the Bank’s Enforcement Policy and Procedures dated 4 October 2017. |
"Irrigation Strategy" |
means the irrigation and drainage program in the Republic of Serbia for a period until 2032 (including the action plan for its implementation) to be prepared and adopted by the Borrower pursuant to Section 3.01(g) below. |
"PIU" |
means the Project Implementation Unit with adequate resources and staffed with suitably qualified personnel in a manner satisfactory to the Bank |
"Loan Currency" |
means Euro. |
In this Agreement, a reference to a specified Article, Section or Schedule shall, except where stated otherwise in this Agreement, be construed as a reference to that specified Article or Section of, or Schedule to, this Agreement.
ARTICLE II
Section 2.01. Amount and Currency
The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, the amount of EUR 18,000,000 (eighteen million Euro).
Section 2.02. Other Financial Terms of the Loan
(a) The Minimum Drawdown Amount shall be EUR 150,000.
(b) The Minimum Prepayment Amount shall be EUR 1,000,000.
(c) The Minimum Cancellation Amount shall be EUR 1,000,000.
(d) The Interest Payment Dates shall be 25 October and 25 April of each year.
(e) (1) The Borrower shall repay the Loan in 24 equal (or as nearly equal as possible) semi-annual instalments on 25 October and 25 April of each year, with the first Loan Repayment Date being 25 April 2027 and the last Loan Repayment Date being 25 April 2038.
(2) Notwithstanding the foregoing, in the event that (i) the Borrower does not draw down the entire Loan amount prior to the first Loan Repayment Date specified in this Section 2.02.(e), and (ii) the Bank extends the Last Availability Date specified in Section 2.02.(f) below to a date which falls after such first Loan Repayment Date, then the amount of each drawdown made on or after the first Loan Repayment Date shall be allocated for repayment in equal amounts to the several Loan Repayment Dates which fall after the date of such drawdown (with the Bank adjusting the amounts so allocated as necessary so as to achieve whole numbers in each case). The Bank shall, from time to time, notify the Borrower of such allocations.
(f) The Last Availability Date shall be 31 December 2026, or such later date that the Bank may in its discretion establish and notify to the Borrower. If the Available Amount, or any part thereof, is subject to a Fixed Interest Rate, and the Bank postpones the Last Availability Date, the Borrower shall promptly pay to the Bank such amount of Unwinding Costs as shall, from time to time, be notified by the Bank in writing to the Borrower.
(g) The rate of the Commitment Charge shall be 0.5% per annum.
(h) The Loan is subject to a Variable Interest Rate. Notwithstanding the foregoing, the Borrower may, as an alternative to paying interest at a Variable Interest Rate on all or any portion of the Loan then outstanding, elect to pay interest at a Fixed Interest Rate on such portion of the Loan in accordance with Section 3.04(c) of the Standard Terms and Conditions.
The Available Amount may be drawn down from time to time in accordance with the provisions of Schedule 2 to finance (1) expenditures made (or, if the Bank so agrees, to be made) in respect of the reasonable cost of goods, works and services required for the Project and (2) the Front-end Commission.
ARTICLE III
Section 3.01. Other Affirmative Project Covenants
In addition to the general undertakings set forth in Articles IV and V of the Standard Terms and Conditions, the Borrower shall, unless the Bank otherwise agrees:
(a) Make available to the relevant Executing Entity the proceeds of the Loan;
(b) Cause all goods, works and services financed out of the proceeds of the Loan for the Project to be used exclusively for the purposes of the Project, in compliance with the provisions of this Agreement, including but not limited to Schedule 2 hereof, and each of the Project Agreements and for civilian purposes;
(c) Delegate to the relevant Executing Entity the day-to-day management of the Project, including, but not limited to, the consolidated financial and procurement management;
(d) Perform, as the Beneficiary (as such term is defined in the relevant Project Agreement), and cause the Executing Entities and Municipalities to perform all of their obligations under the relevant Project Agreement;
(e) Provide or cause to be provided, when requested, all governmental licenses, approvals or consents required by each of the Executing Entity for the financing and carrying out of the Project, and carrying on of its business, including all approvals and licenses necessary to ensure that the each of the Executing Entities is granted rights of way and other land use rights necessary for carrying out the Project;
(f) Take all actions necessary to provide adequate funds for the completion of the Project, including the government contributions if required;
(g) Not later than 30 June 2024 adopt the Irrigation Strategy;
(h) Ensure, through the Beneficiary, satisfactory implementation of the Environmental and Social Action Plan ("ESAP") and compliance with the EBRD Environmental and Social Policy relating to the project preparation activities by the each of the Executing Entities in relation to both Scrip 1 and the Scrip 2 Phases of the Project;
(i) Update the Scrip 1 Project Agreement to include the preparation of relevant studies, not limited to environmental and geological studies for Pambukovica Dam project, in the scope of the Project and include the obligation of the Executing Entity to engage and manage the consultants involved in the preparation of such studies and amend the Project Agreements to include the amended Procurement Plan (as defined in the relevant Project Agreement) for each of Scrip 1 Phase and the Scrip 2 Phase of the Project;
(j) Cause each Municipality and Executing Entity to perform all of its obligations under the relevant Project Agreement, including without limitation its obligations relating to:
(1) operation of a PIU as provided for in Section 2.02 of the relevant Project Agreement;
(2) procurement of goods, works and services as well as consultancy services from the Project as provided for in Section 2.03 of the relevant Project Agreement;
(3) environmental and social matters as provided for in Section 2.04 of the relevant Project Agreement;
(4) employment and use of consultants to assist in the implementation of the Project as provided for in Section 2.05 of the relevant Project Agreement;
(5) preparation and submission of reports on matters relating to the Project and to teach of the Executing Entities operations as provided for in Section 2.06 of the relevant Project Agreement;
(6) maintenance of procedures, records and accounts, preparation, auditing and submission to the Bank of financial statements and furnishing to the Bank any other relevant information relating to the Project or the Executing Entity’s operations as provided for in Section 2.06 of the relevant Project Agreement; and
(7) compliance with all covenants regarding the Executing’s Entity conduct of business and operations as provided for in Section 3.01 of the relevant Project Agreement; and
(k) Exempt from VAT and customs duties all goods, works and services (including consultancy services), procured by the Executing Entity for the Project and financed from the proceeds of the Loan or any technical cooperation funds made available by the Bank, or provide for their reimbursement
ARTICLE IV
SUSPENSION; ACCELERATION; CANCELLATION
The following are specified for purposes of Section 7.01(a)(xvii) of the Standard Terms and Conditions:
(a) The legislative and regulatory framework applicable to the irrigation and construction sector in the territory of the Borrower shall have been amended, suspended, abrogated, repealed or waived in a manner other than as approved by the Bank in writing;
(b) Control of any of the Executing Entity shall have been transferred to a party other than the Borrower;
(c) Any of the Beneficiary, the Executing Entities or the Municipalities shall have failed to perform any of their obligations under the Project Agreement to which they are party.
Section 4.02. Acceleration of Maturity
The following are specified for purposes of Section 7.06(f) of the Standard Terms and Conditions: any of the events specified under Section 4.01 shall have occurred and continued without remedy for thirty (30 days) after the notice thereof has been given by the Bank to the Borrower.
ARTICLE V
Section 5.01. Conditions Precedent to Effectiveness
The following are specified for purposes of Section 9.02(c) of the Standard Terms and Conditions as additional conditions to the effectiveness of this Agreement and the Project Agreement:
(a) The ratification of this Agreement by the Parliament of the Republic of Serbia; and
(b) Each amendment to the Project Agreement, in form and substance satisfactory to the Bank (including so as to address the requirements in paragraph (i) of Section 3.01, has been executed and delivered and all conditions precedent to its effectiveness have been fulfilled.
(a) For purposes of Section 9.03(a) of the Standard Terms and Conditions, the opinion or opinions of counsel shall be given on behalf of the Borrower by the Ministry of Justice and the following are specified as additional matters to be included in the opinion or opinions to be furnished to the Bank:
(1) this Loan Agreement and each amendment to the Project Agreement has been duly authorised or ratified by, and delivered on behalf of, the Borrower and constitutes a valid and legally binding obligation of the Borrower, enforceable in accordance with its terms.
(b) For purposes of Section 9.03(c) of the Standard Terms and Conditions, the opinion or opinions of counsel shall be given on behalf of each of the Executing Entities and each of the Municipalities by the head of the legal departments of each of the Executing Entity and each of the Municipalities and the following are specified as additional matters to be included in the opinion or opinions to be furnished to the Bank:
(1) each of the amendments to the Project Agreement have been duly authorised by, and executed and delivered on behalf of, each of the Executing Entity and each of the Municipality and constitutes a valid and legally binding obligation of each of the Executing Entity and each of the Municipalities, enforceable in accordance with their terms.
Section 5.03. Termination for Failure to Become Effective
The date 180 days after the date of this Agreement is specified for purposes of Section 9.04 of the Standard Terms and Conditions.
ARTICLE VI
(a) The following addresses are specified for purposes of Section 10.01 of the Standard Terms and Conditions, except that any notice shall be deemed to be delivered if by hand, mail, or in pdf or similar format by electronic mail:
For the Borrower: |
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Ministry of Finance of the Republic of Serbia |
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Kneza Miloša 20 |
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11000 Belgrade |
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Serbia |
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Attention: |
Minister of Finance |
Email: |
kabinet@mfin.gov.rs |
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For EBRD: |
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European Bank for Reconstruction and Development |
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5 Bank Street |
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London E14 4BG |
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United Kingdom |
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Attention: |
Operation Administration Department / Operation No. 50848 and 53169 |
Telephone: |
+44 20 7338 6000 |
Email: |
oad@ebrd.com |
(b) The Bank may invite the Borrower to register to use ClientNet or another form of electronic communication and, if the Borrower and the Bank agree to use ClientNet or such other form of electronic communication, any notice, application or other communication from the Borrower to the Bank or from the Bank to the Borrower (other than any notice, application or other communication that is required by this Agreement or any other Financing Agreement to be in an original, certified or hard copy), may, subject to the terms and conditions of ClientNet or such other form of electronic communication, be given or made by posting such notice, application or other communication on ClientNet or sent in accordance with the terms agreed concerning such other form of electronic communication.
(c) Any notice, application or other communication delivered by hand, airmail or facsimile transmission or via ClientNet or another agreed form of electronic communication will only be effective when actually received (or made available) in readable form, provided that any notice, application or other communication that is received (or made available) after 5:00 p.m. in the place in which the party to whom the relevant notice, application or communication is sent has its address for the purpose of this Agreement shall be deemed only to become effective on the following day.
(d) The following are the names, titles and email addresses of the persons designated as the initial contacts of the Borrower for purposes of any invitation the Bank may send to the Borrower regarding ClientNet:
Name |
Title |
E-mail address |
Language - English, Russian, French |
Public Debt |
|
kabinet@javnidug.gov.rs |
English |
Nataša Nikolić |
Representatives of the Ministry of Agriculture, Forestry and Water Management |
natasa.nikolic@minpolj.gov.rs |
English |
Nikola Jovanović |
Representative of the Public Water Company "Srbijavode" |
nikola.jovanovic@srbijavode.rs |
English |
Milica Djakovic |
Representatives of the Public Water Company "Vode Vojvodine" |
mdjakovic@vodevojvodine.rs |
English |
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorised representatives, have caused this Agreement to be signed in six copies and delivered at Belgrade, the Republic of Serbia as of the day and year first above written.
REPUBLIC OF SERBIA |
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By: |
______________________________ |
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Name: SINIŠA MALI |
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Title: DEPUTY PRIME MINISTER AND MINISTER OF FINANCE |
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EUROPEAN BANK |
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FOR RECONSTRUCTION AND DEVELOPMENT |
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By: |
______________________________ |
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Name: MATTEO COLANGELI |
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Title: Director |
DESCRIPTION OF THE PROJECT
1. The purpose of the Project is to assist the Borrower in construction and rehabilitation of primary irrigation infrastructure in the municipalities of Negotin (Eastern Serbia) and Svilajnac (Central Serbia) and in construction of primary irrigation infrastructure in the municipalities of Ruma and Sremska Mitrovica and to provide support in Project implementation, procurement, in preparation of the biodiversity study and studies for the needs of Pambukovica dam construction and supervisions of works.
2. The Project consists of the following Parts, subject to such modifications thereof as the Bank and the Borrower may agree upon from time to time:
(i) Civil works: construction of primary irrigation infrastructure in the municipalities of Negotin and Svilajnac;
The Svilajnac component is located in the municipality of Svilajnac, c. 90 km southeast from Belgrade. The proposed irrigation system will provide 1.916 million m3/year (irrigation period: approximately April to October) for an irrigated area of 1,042 ha, which is split in two parts:
- Part A with an area of 330 ha will be supplied by groundwater from shallow boreholes; Part A sub-components include construction of boreholes, distribution pipeline and power supply; and,
- Part B with water to be abstracted directly from the river; Part B sub-components will consist in inflatable rubber weirs, pumping stations, distribution pipelines.
The Negotin component is located approximately 175 km east-southeast from Belgrade in the eastern part of Serbia at the borders with Bulgaria and Romania downstream of the hydroelectric dam Djerdap on the Danube River. The Project foresees construction of a new pumping station on Danube River in the impoundment area of Djerdap 2 and transfer of the water to 870 ha of new irrigation fields. Negotin sub-components consist in intake on the Djerdap lake, rising main from pumping station to balancing reservoir, balancing reservoir and distribution pipelines.
(ii) Civil works: construction of primary irrigation infrastructure in the municipalities of Ruma and Sremska Mitrovica
The Project includes of the construction of a pumping station on the Jaračka Jarčina channel and a transit pipeline from the pumping station to the existing reservoirs Borkovac and Pavlovac. With the construction of the pressure pipeline in question, which is about 22 km long, raw water is transported to artificial lakes that will serve as reservoirs and which will enable the irrigation of about 3,500 ha (2230 ha related to the Pavlovci reservoir and 1270 ha related to the Borkovac reservoir) of orchards and vineyards.
(iii) Support in preparation and implementation of the Biodiversity Study for the needs of Pambukovica dam project.
(iv) Studies for Pambukovica Dam Project. The Pambukovica Dam project, currently under preparation, will provide flooding protection for the whole area as well as will enable future irrigation schemes. Preparation for the Pambukovica dam entails environmental, technical and climate studies (incl. but not limited to comprehensive ESIA, geotechnical studies, design reviews, dam risk assessment, etc.).
3. The Project is expected to be completed by 31 December 2026.
CATEGORIES AND DRAWDOWNS
1. The table below sets forth the categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each category, and the percentage of expenditures for items to be financed in each category.
2. Notwithstanding the provisions of paragraph 1 above, no drawdown shall be made until the Loan becomes effective.
3. The Bank shall be entitled to draw down on behalf of the Borrower and pay to itself, as and when due, the Front-end Commission.
Category |
in EUR |
% of Expenditures to be financed |
Scrip Loan 1 (1) Civil Works to include new infrastructure in the municipalities of Negotin, and Svilajnac |
7,700,000 |
100% |
(2) Studies for Pambukovica Dam |
2,000,000 |
100% |
(3) Contingencies for project implementation, supervision of works and procurement |
200,000 |
100% |
(4) Front-end Commission |
100,000 |
100% |
Total Scrip Loan 1 |
10,000,000 |
|
Scrip Loan 2 |
|
|
(5) Civil Works to include new infrastructure in the municipalities of Ruma and Sremska Mitrovica |
7,530,000 |
100% |
(6) Support in supervision of works, project implementation and procurement (including contingencies in this regards) |
390,000 |
100% |
(7) Front-end Commission |
80,000 |
100% |
Total Scrip Loan 2 |
8,000,000 |
|
Total Loan extension: |
18,000,000 |
100% |