LOAN AGREEMENT(SERBIA RAIL INFRASTRUCTURE URGENT RENEWALS) BETWEEN THE REPUBLIC OF SERBIA AND EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT("Off. Herald of RS - Treaties", No. 9/2024) |
(Operation Number 55104)
Dated 8 October 2024
TABLE OF CONTENTS
ARTICLE I - STANDARD TERMS AND CONDITIONS; DEFINITIONS |
1 |
Section 1.01. Incorporation of Standard Terms and Conditions |
1 |
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 |
Section 4.01. Suspension |
6 |
ARTICLE V - EFFECTIVENESS |
6 |
Section 5.01. Conditions Precedent to Effectiveness |
6 |
Section 5.02. Conditions Precedent to the First Drawdown |
6 |
Section 5.03. Legal Opinions |
7 |
Section 5.04. Termination for Failure to Become Effective |
7 |
ARTICLE VI - MISCELLANEOUS |
7 |
Section 6.01. Notices |
7 |
SCHEDULE 1 - DESCRIPTION OF THE PROJECT |
1 |
SCHEDULE 2 - CATEGORIES AND DRAWDOWNS |
1 |
LOAN AGREEMENT
AGREEMENT dated 8 October 2024 between THE 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 intends to implement the Project as described in Schedule 1 which is designed to assist in procuring goods necessary for the rehabilitation of rail tracks across the Serbian rail network on selected sections;
WHEREAS, the Project will be carried out by JSC Serbian Railways Infrastructure, a joint stock company organised in Serbia and fully owned by the Republic of Serbia (the "Project Entity") with technical support from the Ministry of Construction, Transport and Infrastructure (the "MoCTI");
WHEREAS, the Borrower has requested assistance from the Bank in financing part of the Project;
WHEREAS, the Bank is in the process of arranging technical cooperation funds on a grant basis to finance consultancy services required for the Project; and
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 50,000,000, subject to the terms and conditions set forth or referred to in this Agreement and in the project agreement dated on or about the date hereof by and among the Borrower (acting through the MoCTI), the Project Entity and the Bank (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
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 (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 and the Project Agreement 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.
"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.
"Environmental and Social Action Plan" or "ESAP" means the plan of environmental and social mitigation and improvement measures dated July 2024 and agreed between the Bank, the Borrower (represented by MoCTI) and the Project Entity, a copy of which is attached to the Project Agreement as Schedule 1, which may be amended from time to time with the prior written consent of the Bank in accordance with Section 2.04(d) of the Project Agreement.
"Environmental and Social Policy" or "ESP" means the Bank’s Environmental and Social Policy dated 25 April 2019.
"Environmental and Social Verification Process" means a verification process to be undertaken by a specialist through site visits in the rail sections included in the Project as well as other sections specified in the ESAP.
"Fiscal Year" means the Borrower’s fiscal year commencing on 1 January of each year.
"Loan Currency" means EUR.
"MoCTI" means the Ministry of Construction, Transport and Infrastructure of the Republic of Serbia, or any successor entity.
"PIU" means the project implementation unit, including the team of professional and support staff with the necessary administrative powers as well as physical and financial resources necessary to implement the Project.
"Project" means the project for which Loan is made, as described in Schedule 1 (Description of the Project) hereto, as such description may be amended from time to time by agreement between the parties thereto.
"Waste Management Plan" means the Waste Management Plan of the Project Entity developed in line with the ESAP, as may be amended from time to time.
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
(a) 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 50,000,000.
Section 2.02. Other Financial Terms of the Loan
(a) The Minimum Drawdown Amount shall be EUR 1,000,000.
(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 20 April and 20 October of each year.
(e) (1) The Borrower shall repay the Loan in 24 equal (or as nearly equal as possible) semi-annual instalments on 20 April and 20 October of each year, with the first Loan Repayment Date being 20 October 2027 and the last Loan Repayment Date being 20 April 2039.
(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 third anniversary of this Agreement or such later date that the Bank may in its discretion establish in accordance with the Standard Terms and Conditions 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 0.50% 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.
(a) 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 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 (acting through the MoCTI) shall, and shall cause the Project Entity to, unless the Bank otherwise agrees:
(a) Make available the proceeds of the Loan to the Project Entity for the purpose of carrying out the Project;
(b) Cause all goods financed out of the proceeds of the Loan to be used exclusively for the purposes of the Project;
(c) Delegate to the Project Entity the day-to-day management of the Project, including, but not limited to, the consolidated financial and procurement management;
(d) Perform all of its obligations under the Project Agreement;
(e) Cause the Project Entity to perform all of its obligations under the Project Agreement, including without limitation its obligations relating to:
(1) the Project obligations as provided under Section 2.01 of the Project Agreement;
(2) establishment and operation of the PIU as provided for in Section 2.02 of the Project Agreement;
(3) procurement of goods from the Project as provided for in Section 2.03 of the Project Agreement;
(4) environmental and social matters as provided for in Section 2.04 of the Project Agreement;
(5) employment and use of consultants to assist in the implementation of the Project as provided for in Section 2.05 of the Project Agreement;
(6) preparation and submission of reports on matters relating to the Project and to the Project Entity’s operations as provided for in Section 2.06 of the Project Agreement;
(7) 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 Project Entity’s operations as provided for in Section 3.01 of the Project Agreement; and
(8) compliance with all covenants regarding financial and operational aspects of the Project and the Project Entity as provided for in Sections 3.02 and 3.03 of the Project Agreement;
(f) Take or cause to be taken, all additional action necessary to provide adequate funds for the completion of the Project, including, requesting the government contributions if required;
(g) Provide or cause to be provided, when requested, all governmental licenses, approvals or consents required by the Project Entity for the Project, and for carrying out their businesses, including all approvals and licenses necessary to ensure that the Project Entity is granted rights of way and other land use rights necessary for carrying out the Project;
(h) Exempt from VAT and custom duties, all goods, works and services (including consultancy services), procured by the Borrower (acting through the MoCTI) or the Project 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;
(i) Ensure the implementation of the ESAP, and compliance with the Bank’s Environmental and Social Policy by the Project Entity;
(j) Ensure that the Project Entity has adequate resources and suitably qualified personnel during the implementation of the Project as well as after the completion of the Project; and
(k) Ensure that the Project Entity provides evidence to the Bank that construction and rehabilitation waste (including, but not limited to, waste wooden sleepers, contaminated soil, metal tracks), has been adequately disposed of through the hiring of authorised third parties, which shall be confirmed through Environmental and Social Verification Process.
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 rail sector in the territory of the Borrower shall have been amended, suspended, abrogated, repealed or waived in a manner that would have a material adverse effect on the Project or the ability of the Borrower and/or the Project Entity to perform their obligations under this agreement or the Project Agreement;
(b) The Statutes shall have been amended, suspended, abrogated, repealed or waived in a manner that would have a material adverse effect on the Project or the ability of the Borrower and/or the Project Entity to perform their obligations under this Agreement or the Project Agreement; or
(c) Control of the Project Entity shall have been transferred to a party other than the Borrower unless the Bank has given its prior written approval to such transfer.
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) ratification of this Agreement by the Parliament of the Republic of Serbia;
(b) execution of the Project Agreement; and
(c) each of the opinions specified in Section 5.03.(a) and Section 5.03.(b) of this Agreement has been delivered to the Bank in a form and substance satisfactory to the Bank.
Section 5.02. Conditions Precedent to the First Drawdown
The obligation of the Bank to make the first Drawdown of the Loan is subject to the prior fulfilment, in form and substance satisfactory to the Bank, or at the sole discretion of the Bank, the waiver, whether in whole or part and whether subject to conditions or unconditional, of the following conditions precedent:
(a) the PIU has been established by the Project Entity with adequate resources and suitably qualified personnel, in form and substance satisfactory to the Bank, and is operational;
(b) appointment by the Project Entity of an independent engineer to supervise construction works of the Project;
(c) the Project Entity shall have provided evidence, in form and substance acceptable to the Bank, that it has approved the work programme and budget, prioritising the works in line with the agreed scope; and
(d) the Project Entity shall have provided evidence, in form and substance acceptable to the Bank, that the Waste Management Plan has been included in procurement documents for reconstruction and rehabilitation works of the rail network operated by the Project Entity.
(a) For purposes of Section 9.03(a) of the Standard Terms and Conditions, the opinion of counsel shall be given on behalf of the Borrower by the Ministry of Justice, confirming that this Agreement has been duly authorised by 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 of counsel shall be given on behalf of the Project Entity by the head of the legal department of the Project Entity confirming that the Project Agreement has been duly authorised by the Project Entity and constitutes valid and legally binding obligations of the Project Entity enforceable in accordance with its terms.
Section 5.04. 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:
The Republic of Serbia
Kneza Milosa 20
11000 Belgrade
Attention: Minister of Finance
Telephone: +381 11 765 2012
Email: kabinet@mfin.gov.rs
For EBRD:
European Bank for Reconstruction and Development
5 Bank Street
London E14 4BG
United Kingdom
Attention: Banking Services / Operation No. 55104
Telephone: +44 20 7338 6000
Email: bankingservices@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 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) Promptly following the execution of the Agreement, the Borrower, MoCTI, and the Project Entity shall indicate to the Bank 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 in the form of the table below:
Name |
Title |
E-mail address |
Language - English, Russian, French |
|
|
|
|
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 London, England and Belgrade, Republic of Serbia as of the day and year first above written.
THE REPUBLIC OF SERBIA
By: ______________________________
Name: Siniša Mali
Title: First Deputy Prime Minister and Minister of Finance
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT
By: ______________________________
Name: Matteo Colangeli
Title: Director, Regional Head of Western Balkans
DESCRIPTION OF THE PROJECT
1. The purpose of the Project is to assist the Borrower with the modernisation and upgrade of the railway infrastructure on sections spanning approximately 194 km of main and regional rail lines.
2. The Project consists of procurement of goods for the track’s renewal across the network on selected sections split into 6 lots (lots 1 to 5 relate to track-related materials like rail sleepers, ballast, level crossing panels, etc., while lot 6 is for signalling, communications and power related materials).
The Project Entity will cover all costs associated with civil works, design and supervision services as needed.
3. The Project is expected to be completed by 31 September 2027.
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, 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 |
Amount of the Loan (EUR) |
Percentage of expenditures to be |
(1) Goods |
49,500,000 |
100% of the contract value |
(2) Front-end Commission |
500,000 |
100% |
Total Loan: |
50,000,000 |
|