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CONFORMED COPY
LOAN NUMBER 7064-LE
Project Agreement
(Community Development  Project)
between
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
and
COUNCIL FOR DEVELOPMENT AND RECONSTRUCTION
Dated September 10, 2001 
LOAN NUMBER 7064-LE
PROJECT AGREEMENT
AGREEMENT, dated September 10, 2001, between INTERNATIONAL BANK FOR 
RECONSTRUCTION AND DEVELOPMENT (the Bank) and COUNCIL FOR DEVELOPMENT AND 
RECONSTRUCTION (CDR).
WHEREAS (A) by the Loan Agreement of even date herewith between the Lebanese 
Republic (the Borrower) and the Bank, the Bank has agreed to make available to the 
Borrower an amount equivalent to twenty million United States dollars (US$20,000,000), 
on the terms and conditions set forth in the Loan Agreement, but only on condition 
that CDR agrees to undertake such obligations toward the Bank as are set forth in this 
Agreement;
(B)
by a Subsidiary Agreement to be entered into between the Borrower and 
CDR, the proceeds of the Loan provided for under the Loan Agreement will be made 
available to CDR as a grant on the terms and conditions set forth in said Subsidiary 
Agreement; and
WHEREAS CDR, in consideration of the Bank’s entering into the Loan Agreement 
with the Borrower, has agreed to undertake the obligations set forth in this 
Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
Definitions 
Section 1.01. Unless the context otherwise requires, the several terms defined 
in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as 
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so defined) have the respective meanings therein set forth.
ARTICLE II
Execution of the Project
Section 2.01. (a) CDR declares its commitment to the objective of the Project as 
set forth in Schedule 2 to the Loan Agreement, and, to this end, shall carry out the 
Project with due diligence and efficiency and in conformity with appropriate 
administrative, financial, engineering and environmental practices, and shall provide, 
or cause to be provided, promptly as needed, the funds, facilities, services and other 
resources required for the Project.
(b)
Without limitation upon the provisions of paragraph (a) of this Section 
and except as the Bank and CDR shall otherwise agree, CDR shall carry out the Project 
in accordance with the Implementation Program set forth in Schedule 2 to this 
Agreement, and the provisions of the PIP and the Operations Manual, including the 
environmental guidelines.
Section 2.02. Except as the Bank shall otherwise agree, procurement of the 
goods, works and consultants’ services required for the Project and to be financed out 
of the proceeds of the Loan shall be governed by the provisions of Schedule 1 to this 
Agreement.
Section 2.03. (a) CDR shall carry out the obligations set forth in Sections 
9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to 
insurance, use of goods and services, plans and schedules, records and reports, 
maintenance and land acquisition, respectively) in respect of the Project Agreement.
(b)
For the purposes of Section 9.07 of the General Conditions and without 
limitation thereto, CDR shall:
(i)
prepare, on the basis of guidelines acceptable to the Bank, and 
furnish to the Bank not later than six (6) months after the 
Closing Date or such later date as may be agreed for this purpose 
between the Bank and CDR, a plan for the future operation of the 
Project; and
(ii)
afford the Bank a reasonable opportunity to exchange views with 
CDR on said plan.
Section 2.04. CDR shall duly perform all its obligations under the Subsidiary 
Agreement. Except as the Bank shall otherwise agree, CDR shall not take or concur in 
any action which would have the effect of amending, abrogating, assigning or waiving 
the Subsidiary Agreement or any provision thereof.
Section 2.05. (a) CDR shall, at the request of the Bank, exchange views with the 
Bank with regard to the progress of the Project, the performance of its obligations 
under this Agreement and under the Subsidiary Agreement, and other matters relating to 
the purposes of the Loan.
(b)
CDR shall promptly inform the Bank of any condition which interferes or 
threatens to interfere with the progress of the Project, the accomplishment of the 
purposes of the Loan, or the performance by CDR of its obligations under this 
Agreement and under the Subsidiary Agreement.
Section 2.06. CDR shall ensure that the sites referred to under Part A of the 
Project are acquired in accordance with the provisions of Schedule 2 to this Agreement 
and pursuant to a timetable acceptable to the Bank.
ARTICLE III
Management and Operations of CDR
Section 3.01. CDR shall carry out its operations and conduct its affairs in 
accordance with sound administrative, financial, engineering and environmental 
practices under the supervision of qualified and experienced management assisted by 
competent staff in adequate numbers.
Section 3.02. CDR shall take out and maintain with responsible insurers 
insurance against such risks and in such amounts as shall be consistent with 
appropriate practice.
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ARTICLE IV
Financial Covenants
Section 4.01. (a) CDR shall at all times maintain a financial management system, 
including records and accounts, and prepare financial statements, all in accordance 
with accounting standards acceptable to the Bank, consistently applied, adequate to 
reflect its operations and financial condition and to register separately the 
operations, resources and expenditures related to the Project.
(b)
CDR shall:
(i)
have the records, accounts and financial statements (balance 
sheets, statements of income and expenses and related statements) 
related to the Project for each fiscal year audited, in accordance 
with auditing standards acceptable to the Bank, consistently 
applied, by independent auditors acceptable to the Bank; 
(ii)
furnish to the Bank as soon as available, but in any case not 
later than six months after the end of each such year, (A) 
certified copies of the financial statements referred to in 
paragraph (a) of this Section, for such year as so audited, and 
(B) an opinion on such statements and report of such audit, by 
said auditors,  of such scope and in such detail as the Bank shall 
have reasonably requested; and
(iii)
furnish to the Bank such other information concerning such 
records, accounts and financial statements, and the audit thereof, 
and concerning said auditors, as the Bank may from time to time 
reasonably request.
Section 4.02. (a) Without limitation upon the provisions of Section 4.01 of this 
Agreement, CDR shall carry out a time-bound action plan acceptable to the Bank for the 
strengthening of the financial management system referred to in paragraph (a) of said 
Section 4.01 in order to enable CDR, not later than November 15, 2002, or such later 
date as the Bank shall agree, to prepare quarterly Project Management Reports, 
acceptable to the Bank, each of which:
(i)
(A) sets forth actual sources and applications of funds for the 
Project, both cumulatively and for the period covered by said 
report, and projected sources and applications of funds for the 
Project for the six-month period following the period covered by 
said report, and (B) shows separately expenditures financed out of 
the proceeds of the Loan during the period covered by said report 
and expenditures proposed to be financed out of the proceeds of 
the Loan during the six-month period following the period covered 
by said report;
(ii)
(A) describes physical progress in Project implementation, both 
cumulatively and for the period covered by said report, and (B) 
explains variances between the actual and previously forecast 
implementation targets; and
(iii)
sets forth the status of procurement under the Project and 
expenditures under contracts financed out of the proceeds of the 
Loan, as at the end of the period covered by said report.
(b)
Upon the completion of the action plan referred to in paragraph (a) of 
this Section, the Borrower shall prepare, in accordance with guidelines acceptable to 
the Bank, and furnish to the Bank not later than 45 days after the end of each 
calendar quarter a Project Management Report for such period.
ARTICLE V
Effective Date; Termination;
Cancellation and Suspension
Section 5.01. This Agreement shall come into force and effect on the date upon 
which the Loan Agreement becomes effective.
Section 5.02. This Agreement and all obligations of the Bank and of CDR 
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thereunder shall terminate on the date on which the Loan Agreement shall terminate in 
accordance with its terms, and the Bank shall promptly notify CDR thereof.
Section 5.03. All the provisions of this Agreement shall continue in full force 
and effect notwithstanding any cancellation or suspension under the General 
Conditions.
ARTICLE VI
Miscellaneous Provisions
Section 6.01. Any notice or request required or permitted to be given or made 
under this Agreement and any agreement between the parties contemplated by this 
Agreement shall be in writing. Such notice or request shall be deemed to have been 
duly given or made when it shall be delivered by hand or by mail, telegram, cable, 
telex, facsimile or radiogram to the party to which it is required or permitted to be 
given or made at such party’s address hereinafter specified or at such other address 
as such party shall have designated by notice to the party giving such notice or 
making such request. The addresses so specified are:
For the Bank:
International Bank for
  Reconstruction and Development
1818 H Street, NW
Washington, DC 20433
United States of America
Cable address:
Telex:
Facsimile:
INTBAFRAD
248423 (MCI) or
(202) 477-6391
Washington, D.C.
 64145 (MCI)
For CDR:
P.O. Box 116-5351
Beirut
Lebanese Republic
Facsimile:
961 1 981 252
961 1 981 253
Section 6.02. Any action required or permitted to be taken, and any document 
required or permitted to be executed, under this Agreement on behalf of CDR, or by CDR 
on behalf of the Borrower under the Loan Agreement, may be taken or executed by the 
President of CDR  or such other person or persons as the President of CDR shall 
designate in writing, and CDR shall furnish to the Bank sufficient evidence of the 
authority and the authenticated specimen signature of each such person.
Section 6.03. This Agreement may be executed in several counterparts, each of 
which shall be an original, and all collectively but one instrument.
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
Beirut, Lebanese Republic, as of the day and year first above written.
INTERNATIONAL BANK FOR
  RECONSTRUCTION AND DEVELOPMENT
By /s/ Joseph Saba
Acting Regional Vice President
Middle East and North Africa Region
COUNCIL FOR DEVELOPMENT AND
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  RECONSTRUCTION
By /s/ Mahmoud Osman
Authorized Representative
SCHEDULE 1
Procurement and Consultants’ Services
Section I.
Procurement of Goods and Works
Part A:
General
Goods and works shall be procured in accordance with the provisions of Section I 
of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the 
Bank in January 1995 and revised in January and August 1996, September 1997 and 
January 1999 (the Guidelines) and the following provisions of Section I of this 
Schedule.
Part B:
International Competitive Bidding
Except as otherwise provided in Part C of this Section, goods and works shall be 
procured under contracts awarded in accordance with the provisions of Section II of 
the Guidelines and paragraph 5 of Appendix 1 thereto.
Part C:
Other Procurement Procedures 
1.
National Competitive Bidding
Works estimated to cost less than US$500,000 equivalent per contract, up to an 
aggregate amount not to exceed $4,000,000 equivalent, and goods estimated to cost less 
than US$300,000 equivalent per contract, up to an aggregate amount not to exceed 
US$1,000,000 equivalent, may be procured under contracts awarded in accordance with 
the provisions of paragraphs 3.3 and 3.4 of the Guidelines.
2.
National Shopping
Goods estimated to cost less than US$25,000 equivalent per contract, up to an 
aggregate amount not to exceed US$250,000 equivalent, may be procured under contracts 
awarded on the basis of national shopping procedures in accordance with the provisions 
of paragraphs 3.5 and 3.6 of the Guidelines.
3.
Direct Contracting
Works which should be procured as an extension of an existing contract, and 
goods which must be purchased from the original supplier to be compatible with 
existing equipment or are of a proprietary nature and costing US$200,000 equivalent or 
less in the aggregate, may, with the Bank’s prior agreement, be procured in accordance 
with the provisions of paragraph 3.7 of the Guidelines.
4.
Procurement of Goods and Small Works with Community Participation
Goods under Part A of the Project estimated to cost less than US$50,000 
equivalent per contract, up to an aggregate amount not to exceed US$2,000,000 
equivalent and small works under Part A of the Project estimated to cost less than 
US$100,000 equivalent per contract, up to an aggregate amount not to exceed 
US$6,000,000 equivalent, shall be procured in accordance with procedures acceptable to 
the Bank, including simplified bidding and contract documents with basic description 
and specifications of the required goods and small works, posting of Invitations to 
Bid in a public place within the community, transparent procedures for accepting 
sealed bids, public bid opening, bid evaluation, and contract award to the bidder with 
the lowest price who can provide the requisite skills, equipment and other resources 
to complete the contract satisfactorily. Such contracts for goods and small works 
awarded on this basis shall be for fixed prices or lump sums.
Part D:
Review by the Bank of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the proposed 
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procurement plan for the Project shall be furnished to the Bank for its review and 
approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the 
Guidelines. Procurement of all goods and works shall be undertaken in accordance with 
such procurement plan as shall have been approved by the Bank, and with the provisions 
of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for works estimated to cost the equivalent 
of US$100,000 or more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to 
the Guidelines shall apply.
(b)
With respect to each contract for goods estimated to cost the equivalent 
of US$50,000 or more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to 
the Guidelines shall apply.
(c)
With respect to the first contract for works and the first contract for 
goods under each Subproject Agreement to be procured in accordance with the procedures 
referred to in paragraph 4 of Part C above, the procedures set forth in paragraphs 2 
and 3 of Appendix 1 to the Guidelines shall apply.
(d)
With respect to the first contract for goods under each Subproject 
Agreement to be procured in accordance with the procedures referred to in paragraph 2 
of Part C above, the following procedures shall apply:
(i)
prior to the selection of any supplier under shopping procedures, 
the CDR shall provide to the Bank a report on the comparison and 
evaluation of quotations received; and
(ii)
the procedures set forth in paragraphs 2(f), 2(g) and 3 of 
Appendix 1 to the Guidelines shall apply.
(e)
With respect to each contract for goods and each contract for works to be 
procured in accordance with the procedures referred to in paragraph 3 of Part C above, 
the following procedures shall apply:
(i)
prior to the execution of any contract procured under direct 
contracting procedures, CDR shall provide to the Bank a copy of 
the specifications and the draft contract; and
(ii)
the procedures set forth in paragraphs 2(f), 2(g) and 3 of 
Appendix 1 to the Guidelines shall apply.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the 
procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply.
Section II.
Employment of Consultants
Part A:
General
Consultants’ services shall be procured in accordance with the provisions of the 
Introduction and Section IV of the "Guidelines:  Selection and Employment of 
Consultants by World Bank Borrowers" published by the Bank in January 1997 and revised 
in September 1997 and January 1999 (the Consultant Guidelines) and the following 
provisions of Section II of this Schedule.
Part B:
Quality- and Cost-based Selection
1.
Except as otherwise provided in Part C of this Section, consultants’ services 
shall be procured under contracts awarded in accordance with the provisions of Section 
II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 
thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to 
quality- and cost-based selection of consultants.
2.
The following provisions shall apply to consultants’ services to be procured 
under contracts awarded in accordance with the provisions of the preceding paragraph.  
The short list of consultants for services estimated to cost less than US$100,000 
equivalent per contract, may comprise entirely national consultants in accordance with 
the provisions of paragraph 2.7 of the Consultant Guidelines.
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Part C:
Other Procedures for the Selection of Consultants
1.
Least-cost Selection
Services for training, thematic studies, impact assessments and social surveys 
under the Project estimated to cost less than US$200,000 equivalent per contract may 
be procured under contracts awarded in accordance with the provisions of paragraphs 
3.1 and 3.6 of the Consultant Guidelines.
2.
Selection Based on Consultants’ Qualifications
Services under Parts B and C of the Project estimated to cost less than 
US$100,000 equivalent per contract may be procured under contracts awarded in 
accordance with the provisions of paragraphs 3.1 and 3.7 of the Consultant Guidelines.
3.
Single Source Selection
(a)
Services provided by consultant firms under the Project which are 
estimated to cost less than US$100,000 equivalent per contract, may, with the Bank’s 
prior agreement, be procured in accordance with the provisions of paragraphs 3.8 
through 3.11 of the Consultant Guidelines.
(b)
Services provided by individual consultants under the Project which are 
estimated to cost less than US$50,000 equivalent per contract, may, with the Bank's 
prior agreement, be procured in accordance with the provisions of paragraphs 3.8 
through 3.11 of the Consultant Guidelines.
4.
Individual Consultants
Services for tasks that meet the requirements set forth in paragraph 5.1 of the 
Consultant Guidelines shall be procured under contracts awarded to individual 
consultants in accordance with the provisions of paragraphs 5.1 through 5.3 of the 
Consultant Guidelines.
Part D:
Review by the Bank of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals, the proposed 
plan for the selection of consultants under the Project shall be furnished to the Bank 
for its review and approval, in accordance with the provisions of paragraph 1 of 
Appendix 1 to the Consultant Guidelines.  Selection of all consultants’ services shall 
be undertaken in accordance with such selection plan as shall have been approved by 
the Bank, and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms 
estimated to cost the equivalent of US$200,000 or more, the procedures set forth in 
paragraphs 1, 2 (other than the third subparagraph of paragraph 2(a)) and 5 of 
Appendix 1 to the Consultant Guidelines shall apply.
(b)
With respect to each contract for the employment of consulting firms 
estimated to cost the equivalent of US$100,000 or more, but less than the equivalent 
of US$200,000, the procedures set forth in paragraphs 1, 2 (other than the second 
subparagraph of paragraph 2(a)) and 5 of Appendix 1 to the Consultant  Guidelines 
shall apply.
(c)
With respect to each contract for the employment of individual 
consultants estimated to cost the equivalent of US$50,000 or more, the qualifications, 
experience, terms of reference and terms of employment of the consultants shall be 
furnished to the Bank for its prior review and approval.  The contract shall be 
awarded only after the said approval shall have been given.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the 
procedures set forth in paragraph 4 of Appendix 1 to the Consultant Guidelines shall 
apply.
SCHEDULE 2
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Implementation Program
A.
Project Implementation and Coordination
1.
CDR shall carry out the Project in accordance with the Project Implementation 
Plan and the Operations Manual and, except as CDR and the Bank shall otherwise agree, 
CDR shall not amend or waive any provision of the Project Implementation Plan or the 
Operations Manual if, in the opinion of the Bank, such amendment or waiver may 
materially and adversely affect the carrying out of the Project or the achievement of 
the objective thereof.
2.
CDR shall appoint a full time Project Coordinator, with qualifications and 
experience and on the basis of terms of reference acceptable to the Bank. The Project 
Coordinator shall be in charge of coordinating and facilitating the functions of the 
PMT within CDR and shall report directly to the president of CDR pursuant to the laws 
and regulations of the Borrower.
3.
Day-to-day management of all Project activities shall be carried out by the PMT 
which shall, at all times during Project implementation, be maintained, within CDR 
under the supervision of the Project Coordinator, with professional staffing in 
adequate number, whose qualifications and experience shall be acceptable to the Bank. 
The PMT shall comprise a project manager, a financial management specialist, an 
accountant, a procurement officer, a monitoring and evaluation specialist and an 
environmental specialist as well as supervision and support staff.
4.
CDR shall require the PMT to ensure that any proposed Subproject complies with 
the provisions of the Operations Manual particularly with regard to CDR’s obligation 
to seek the Bank’s pre-approval in accordance with the provisions of Schedule 1 to 
this Agreement.
5.
The PIs shall, in accordance with the provisions of this Agreement and the 
Operations Manual, be responsible for: (a) conducting social assessments of the 
beneficiary communities in coordination with the concerned stakeholders; (b) designing 
demand-driven priority needs programs for the proposed Subprojects, based on such 
assessments; (c) carrying out the implementation of the Subproject programs approved 
by CDR; (d) supervising, monitoring and evaluating the implementation of the eligible 
Subprojects including the environment requirements set forth in the environmental 
guidelines; and (e) furnishing CDR through the PMT with progress and financial reports 
integrating the results of the monitoring and evaluation activities.
B.
Mid-Term Review
CDR shall:
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with indicators satisfactory to the Bank, 
the carrying out of the Project and the achievement of the objectives thereof;
(b)
prepare, under terms of reference satisfactory to the Bank, and furnish 
to the Bank, on or about December 31, 2003, a report integrating the results of the 
monitoring and evaluation activities performed pursuant to paragraph (a) of this 
Section, on the progress achieved in the carrying out of the Project during the period 
preceding the date of said report and setting out the measures recommended to ensure 
the efficient carrying out of the Project and the achievement of the objectives 
thereof during the period following such date; and
(c)
review with the Bank, by January 31, 2004, or such later date as the Bank 
shall request, the report referred to in paragraph (b) of this Section, and, 
thereafter, take all measures required to ensure the efficient completion of the 
Project and the achievement of the objective thereof, based on the conclusions and 
recommendations of the said report and the Bank’s views on the matter.
C.
Eligibility Criteria for Subprojects
No Subproject shall be eligible for financing out of the proceeds of the Loan 
unless CDR is satisfied that the Subproject meets the eligibility criteria specified 
below and in the Operations Manual, which shall include, inter alia, the following: 
(a)
the Subproject shall be initiated by the PIs on a demand-driven basis;
(b)
the Subproject shall be financially and technically viable and shall meet 
the criteria specified in the Operations Manual; and
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(c)
the Subproject shall comply with the standards set forth in the 
applicable laws of the Borrower relating to health, safety and environmental 
protection and in a manner acceptable to the Bank. 
D.
Terms and Conditions of Subproject Grants made for approved Subprojects
Subprojects shall be carried out pursuant to Subproject Agreements, to be 
concluded between CDR and the PIs under terms and conditions set forth in the 
Operations Manual and satisfactory to the Bank which, inter alia, shall include the 
following:
(a)
financing on a grant basis;
(b)
the obligation to carry out the Subproject in accordance with criteria 
set forth in the Operations Manual, with due diligence and efficiency and in 
accordance with sound environmental, engineering, technical, financial, and managerial 
standards and to maintain adequate records to reflect, in accordance with sound 
accounting practices, the operations, resources and expenditures in respect of the 
Subproject;
(c)
the right of CDR to inspect by itself, or jointly with the Bank, if the 
Bank shall so request, the equipment, sites, services and training, included in the 
Subproject, the operations thereof and any relevant records and documents;
(d)
the right of CDR to obtain from the PI all information as, CDR, the 
Borrower or the Bank shall reasonably request regarding the administration, operation 
and financial conditions of the Subproject; and
(e)
the right of CDR to suspend or terminate the right of the PI to use the 
proceeds of the Subproject Grant for the Subproject upon the failure by the PI to 
perform any of its obligations under its Subproject Agreement, such failure to be 
determined by external audits carried out in accordance with the procedures set forth 
in the Operations Manual.