Page  1
CONFORMED COPY
LOAN NUMBERS 4032-0 POL
4032-1 POL
Loan Agreement
(Bielsko-Biala Water and Wastewater Project)
between
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
and
MUNICIPAL COMPANY “AQUA” S.A. OF BIELSKO\1eBIALA
Dated September 20, 1996
LOAN NUMBERS 4032-0 POL 
4032-1 POL
LOAN AGREEMENT
AGREEMENT, dated September 20, 1996, between INTERNATIONAL BANK FOR 
RECONSTRUCTION AND DEVELOPMENT (the Bank) and MUNICIPAL COMPANY “AQUA” S.A. OF 
BIELSKO\1eBIALA (the Borrower ).
WHEREAS: (A) Republic of Poland (the Guarantor) and the Borrower, having been 
satisfied as to the feasibility and priority of the Project described in Schedule 2 to 
this Agreement, have requested the Bank to provide assistance in the financing of the 
Project through provision of the Loan;
(B)
by an agreement (the Guarantee Agreement) of even date herewith between 
the Guarantor and the Bank, the Guarantor has agreed to guarantee the obligations of 
the Borrower in respect of the Loan;
(C) 
the National Fund for Environmental Protection and Water Management 
(NFEP) intends to make a Loan  to the Borrower pursuant to an agreement (the NFEP Loan 
Agreement) in an amount equivalent to seven million dollars ($7,000,000) to assist in 
financing the Project on the terms and conditions set forth therein; and
WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to 
Page  2
extend the Loan to the Borrower upon the terms and conditions set forth in this 
Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Loan and Guarantee 
Agreements for Single Currency Loans” of the Bank, dated May 30, 1995 (the General 
Conditions) constitute an integral part of this Agreement.
Section 1.02. Unless the context otherwise requires, the several terms defined 
in the General Conditions and in the Preamble to this Agreement have the respective 
meanings therein set forth and the following additional terms have the following 
meanings:
(a)
“Statutes” means the corporate statutes of the Borrower dated March 12, 
1990, as amended to the date of this Agreement;
(b)
“Performance Agreement” means the agreement dated January 30, 1995, 
between the Borrower and the Municipality of Bielsko-Biala, as amended to the date of 
this Agreement;
(c)
“Deutsche Mark” and “DEM” each means the lawful currency of the Federal 
Republic of Germany;
(d)
“USD Loan Tranche” means the amount of the Loan in Dollars provided for 
in Section 2.01 of this Agreement;
(e)
“DEM Loan Tranche” means the amount of the Loan in Deutsche Marks 
provided for in Section 2.01 of this Agreement;
(f)
“Loan Tranche” means any of the USD Loan Tranche or the DEM Loan Tranche; 
and
(g)
“Special Account” means any of the accounts referred to in Section 2.02 
(b) of this Agreement, and “USD Special Account” and “DEM Special Account” mean the 
Special Accounts to be maintained in Dollars and Deutsche Marks, respectively.
ARTICLE II
The Loan
Section 2.01. The Bank agrees to lend to the Borrower, on the terms and 
conditions set forth or referred to in the Loan Agreement, the following amounts:
(a)
an amount equal to twelve million dollars ($12,000,000); and
(b)
an amount equal to thirteen million two hundred thousand Deutsche Marks 
(DEM 13,200,000).
Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account 
in accordance with the provisions of Schedule 1 to this Agreement for expenditures 
made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of 
goods and services required for the Project described in Schedule 2 to this Agreement 
and to be financed out of the proceeds of the Loan.
(b) 
The Borrower may, for the purposes of the Project, open and maintain in 
the currency of each Loan Tranche a special deposit account, each in a commercial bank 
acceptable to the Bank, on terms and conditions satisfactory to the Bank, including 
appropriate protection against set-off, seizure or attachment. Deposits into, and 
payments out of, the Special Accounts shall be made in accordance with the provisions 
of Schedule 6 to this Agreement.
Section 2.03. The Closing Date shall be June 30, 2003 or such later date as the 
Page  3
Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of 
such later date.
Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate 
of three\1efourths of one percent (3/4 of 1%) per annum on the principal amount of the 
Loan not withdrawn from time to time.
Section 2.05. (a) The Borrower shall pay interest on the principal amount of: 
(i) the USD Loan Tranche withdrawn and outstanding from time to time, at a rate for 
each Interest Period equal to USD LIBOR Base Rate, plus USD LIBOR Total Spread; and 
(ii) the DEM Loan Tranche withdrawn and outstanding from time to time, at a rate for 
each Interest Period equal to DEM LIBOR Base Rate plus DEM LIBOR Total Spread.
(b)
For the purposes of this Section:
(i)
“Interest Period” means the initial period from and including the 
date of this 
Agreement to, but excluding, the first Interest Payment Date 
occurring 
thereafter, and after the initial period, each period 
from and including an 
Interest Payment Date to, but excluding the 
next following Interest Payment 
Date.
(ii)
“Interest Payment Date” means any date specified in Section 2.06 
of this 
Agreement.
(iii)
“USD LIBOR Base Rate” means for each Interest Period the London 
interbank 
offered rate for six-month deposits in Dollars for 
value the first day of such 
Interest Period (or, in the case of the 
initial Interest Period, for value the 
Interest Payment Date occurring 
on or next preceding the first day of such 
Interest Period), as 
reasonably determined by the Bank and expressed as a 
percentage 
per annum.
(iv)
“USD LIBOR Total Spread” means, for each Interest Period: (A) one 
half of one 
percent (1/2 of 1%); (B) minus (or plus) the weighted 
average margin, for such 
Interest Period, below (or above) the London 
interbank offered rates, or other 
reference rates, for six-month 
deposits, in respect of the Bank’s outstanding 
borrowings or 
portions thereof allocated by the Bank to fund single currency 
loans 
or portions thereof made by it that include the USD Loan Tranche; as 
reasonably determined by the Bank and expressed as a percentage per annum.
(v)
“DEM LIBOR Base Rate” means for each Interest period the London 
interbank 
offered rate for six-month deposits in Deutsche Marks 
for value the first day 
of such Interest Period (or, in the case of 
the initial Interest Period, for 
value the Interest Payment Date 
occurring on or next preceding the first day 
of such Interest Period), 
as reasonably determined by the Bank and expressed 
as a percentage per 
annum.
(vi)
“DEM LIBOR Total Spread” means, for each Interest Period: (A) one 
half of one 
percent (1/2 of 1%); (B) minus (or plus) the weighted 
average margin, for such 
Interest Period, below (or above) the London 
interbank offered rates, or other 
reference rates, for six-month 
deposits, in respect of the Bank’s outstanding 
borrowings or 
portions thereof allocated by the Bank to fund single currency 
loans 
or portions thereof made by it that include the DEM Loan Tranche; as 
reasonably determined by the Bank and expressed as a percentage per annum.
(c)
The Bank shall notify the Borrower and Guarantor of USD LIBOR Base Rate, 
USD LIBOR Total Spread, DEM LIBOR Base Rate and DEM LIBOR Total Spread for each 
Interest Period, promptly upon the determination thereof.
(d)
Whenever, in light of changes in market practice affecting the 
determination of the interest rates referred to in this Section 2.05, the Bank 
determines that it is in the interest of its borrowers as a whole and of the Bank to 
apply a basis for determining the interest rates applicable to the Loan other than as 
provided in said Section, the Bank may modify the basis for determining the interest 
Page  4
rates applicable to amounts of the Loan not yet withdrawn upon not less than six (6) 
months’ notice to the Borrower of the new basis. The basis shall become effective on 
the expiry of the notice period unless the Borrower notifies the Bank during said 
period of its objection thereto, in which case said modification shall not apply to 
the Loan. 
Section 2.06. Interest and other charges shall be payable semiannually on April 
15 and October 15 in each year.
Section 2.07. The Borrower shall repay the principal amount of the Loan in 
accordance with the amortization schedule set forth in Schedule 3 to this Agreement.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the objectives of the 
Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry 
out the Project with due diligence and efficiency and in conformity with appropriate 
administrative, financial, public utility and environmental practices, and shall 
provide, 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 the Borrower shall otherwise agree, the Borrower shall 
carry out the Project in accordance with the Implementation Program set forth in 
Schedule 5 to this Agreement.
Section 3.02. 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 4 to this 
Agreement.
Section 3.03. For the purposes of Section 9.08 of the General Conditions and 
without limitation thereto, the Borrower shall:
(a)
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 Borrower and the Bank, a plan for the 
future operation of the Project; and 
(b) 
afford the Bank a reasonable opportunity to exchange views with the 
Borrower on said plan.
ARTICLE IV
Management and Operations of the Borrower
Section 4.01. The Borrower shall carry on its operations and conduct its affairs 
in accordance with sound administrative, financial, engineering and public utility 
practices under the supervision of qualified and experienced management assisted by 
competent staff in adequate numbers.
Section 4.02. The Borrower shall at all times operate and maintain its plants, 
machinery, equipment and other property, and from time to time, promptly as needed, 
make all necessary repairs and renewals thereof, all in accordance with sound 
engineering, financial and public utility practices.
Section 4.03. The Borrower shall take out and maintain with responsible 
insurers, or make other provision satisfactory to the Bank for, insurance against such 
risks and in such amounts as shall be consistent with appropriate practice.
ARTICLE V
Financial Covenants
Section 5.01. (a) The Borrower shall maintain records and accounts adequate to 
Page  5
reflect in accordance with sound accounting practices its operations and financial 
condition.
(b) 
The Borrower shall:
(i)
have its records, accounts and financial statements (balance 
sheets, 
statements of income and expenses and related 
statements) and the records and 
accounts for the Special Accounts for 
each fiscal year, audited, in accordance 
with appropriate auditing 
principles 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 its financial 
statements for such year as so audited; and 
(B) the 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 said 
records, accounts 
and financial statements as well as the audit thereof 
as the Bank shall from 
time to time reasonably request.
(c) 
For all expenditures with respect to which withdrawals from the Loan 
Account were made on the basis of statements of expenditure, the Borrower shall:
(i)
maintain, in accordance with paragraph (a) of this Section, 
records and 
accounts reflecting such expenditures;
(ii)
retain, until at least one year after the Bank has received the 
audit report 
for the fiscal year in which the last withdrawal from the 
Loan Account or 
payment out of the Special Accounts was made, 
all records (contracts, orders, 
invoices, bills, receipts and other 
documents) evidencing such expenditures;
(iii)
enable the Bank's representatives to examine such records; and
(iv)
ensure that such records and accounts are included in the annual 
audit 
referred to in paragraph (b) of this Section and that the 
report of such audit 
contains a separate opinion by said auditors 
as to whether the statements of 
expenditure submitted during such fiscal 
year, together with the procedures 
and internal controls involved in 
their preparation, can be relied upon to 
support the related 
withdrawals.
Section 5.02. (a) Except as the Bank shall otherwise agree, the Borrower shall 
maintain, for each of its fiscal years after its fiscal year ending on December 31, 
1995, a ratio of total operating expenses to total operating revenues not higher than 
0.65.
(b)
Before December 31, in each of its fiscal years, the Borrower shall, on 
the basis of forecasts prepared by the Borrower and satisfactory to the Bank, review 
whether it would meet the requirements set forth in paragraph (a) above in respect of 
such year and the next following fiscal year, and shall furnish to the Bank the 
results of such review upon its completion.
(c)
If any such review shows that the Borrower would not meet the 
requirements set forth in paragraph (a) above for the Borrower's fiscal years covered 
by such review, the Borrower shall promptly take all necessary measures (including, 
without limitation, adjustments of the structure or levels of its rates) in order to 
meet such requirements.
(d)
For the purposes of this Section:
(i)
The term "total operating expenses" means all expenses related to 
operations, 
including administration and adequate maintenance, but 
excluding depreciation 
and other non-cash operating charges and taxes 
and interest and other charges 
on debt.
Page  6
(ii)
The term "total operating revenues" means revenues from all 
sources related to 
operations.
Section 5.03. (a)  Except as the Bank shall otherwise agree, the Borrower shall 
not incur any debt unless a reasonable forecast of the revenues and expenditures of 
the Borrower shows that the estimated net revenues of the Borrower for each fiscal 
year during the term of the debt to be incurred shall be at least 1.5 times the 
estimated debt service requirements of the Borrower in such year on all debt of the 
Borrower including the debt to be incurred.
(b)
For purposes of this Section:
(i)
The term "debt" means any indebtedness of the Borrower maturing by 
its terms 
more than one year after the date on which it is originally 
incurred.
(ii)
Debt shall be deemed to be incurred: (A) under a loan contract or 
agreement or 
other instrument providing for such debt or for the 
modification of its terms 
of payment on the date of such contract, 
agreement or instrument; and (B) 
under a guarantee agreement, on 
the date the agreement providing for such 
guarantee has been 
entered into.
(iii)
The term "net revenues" means the difference between: (A) the sum 
of revenues 
from all sources related to operations and net non-operating 
income; and (B) 
the sum of all expenses related to operations 
including administration, 
adequate maintenance, taxes and payments 
in lieu of taxes, but excluding 
provision for depreciation, other 
non-cash operating charges and interest and 
other charges on debt.
 (iv)
The term “net non-operating income” means the difference between: 
(A) revenues 
from all sources other than those 
related to 
operations; and 
(B) expenses, 
including taxes and payments in 
lieu of taxes, incurred in the generation of 
revenues in (A) above.
(v)
The term “debt service requirements” means the aggregate amount of 
repayments 
(including sinking fund payments, if any) of, and interest 
and other charges 
on, debt.
(vi)
The term “reasonable forecast” means a forecast prepared by the 
Borrower not 
earlier than twelve months prior to the incurrence of the 
debt in question, 
which both the Bank and the Borrower accept as 
reasonable and as to which the 
Bank has notified the Borrower of its 
acceptability, provided that no event 
has occurred since such 
notification which has, or may reasonably be expected 
in the future 
to have, a material adverse effect on the financial condition or 
future 
operating results of the Borrower.
(vii)
Whenever for the purposes of this Section it shall be necessary to 
value, in 
terms of the currency of the Guaran\1ftor, debt payable in 
another currency, 
such valuation shall be made on the basis of 
the prevailing lawful rate of 
exchange at which such other 
currency is, at the time of such valuation, 
obtainable for the 
purposes of servicing such debt, or, in the absence of such 
rate, 
on the basis of a rate of exchange acceptable to the Bank.
ARTICLE VI
Remedies of the Bank
Section 6.01. Pursuant to Section 6.02 (l) of the General Conditions, the 
following additional events are specified: 
 (a) 
 the Statutes shall have been amended, suspended, abrogated, repealed or 
waived so as to affect materially and adversely the ability of the Borrower to perform 
any of its obligations under this Agreement. 
Page  7
(b)
(i)
Subject to paragraph (ii) of  this Section:
(A)
the right of the Borrower to withdraw the proceeds of any loan or 
grant made 
to the Borrower for the financing of the Project shall have 
been suspended, 
canceled or terminated in whole or in part, pursuant 
to the terms of the 
agreement providing therefor; or
(B)
any such loan shall have become due and payable prior to the 
agreed maturity 
thereof.
(ii)
Paragraph (b) (i) of this Section shall not apply if the Borrower
establishes to the satisfaction of the Bank that: 
(A) 
such suspension, cancellation, termination or prematuring is not 
caused 
by the failure of the Borrower to perform any of its 
obligations under such 
agreement; and
 (B) 
adequate funds for the Project are available to the Borrower from 
other 
sources on terms and conditions consistent with the 
obligations of the 
Borrower under this Agreement.  
(c)
Any authority having jurisdiction over the Borrower shall have taken any 
action for the dissolution or disestablishment of the Borrower or the suspension of 
its operations.
Section 6.02  Pursuant to Section 7.01 (h) of the General Conditions, the 
following additional events are specified, namely that:
(a)
the event specified in Section 6.01 (b) (i) of this Agreement shall 
occur, subject to the proviso of Section 6.01 (b) (ii) of this Agreement; and
(b)
any event specified in paragraphs (a) or (c) of Section 6.01 of this 
Agreement shall occur.
ARTICLE VII
Effective Date; Termination
Section 7.01. The following event is specified as an additional condition to the 
effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the 
General Conditions, namely that all conditions precedent to the effectiveness of the 
NFEP Loan  Agreement have been fulfilled, other than those related to the 
effectiveness of this Agreement.
Section 7.02. The date ninety (90) days after the date of this Agreement is 
hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VIII
Representative of the Borrower; Addresses
Section 8.01. The General Manager of the Borrower is designated as 
representative of the Borrower for the purposes of Section 11.03 of the General 
Conditions.
Section 8.02. The following addresses are specified for the purposes of Section 
11.01 of the General Conditions:
For the Bank:
International Bank for
 Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Page  8
Cable address:
Telex:
INTBAFRAD
248423 (RCA)
Washington, D.C.
 82987 (FTCC)
 64145 (WUI) or
197688 (TRT)
For the Borrower:
Municipal Company “AQUA” S.A.
of Bielsko-Biala
ul. 7 Maja 23
43-300 Bielsko-Biala
Republic of Poland
Telex:
035531
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
the city of Warsaw, Republic of Poland, as of the day and year first above written.
INTERNATIONAL BANK FOR
  RECONSTRUCTION AND DEVELOPMENT
By /s/ Paul Knotter
Authorized Representative 
MUNICIPAL COMPANY “AQUA” S.A. OF 
   BIELSKO\1eBIALA
By /s/ Bogdan Traczyk
Authorized Representative
SCHEDULE 1
Withdrawal of the Proceeds of the Loan
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 so to be financed in each Category:
Amount of the
Amount of the
   % of
Loan Allocated
Loan Allocated
Expenditures
(Expressed in
(Expressed in
   to be
Category
   Dollars)
Deutsche Marks)
  Financed
(1)
Goods
  4,200,000
  4,400,000
100% of foreign
expenditures,
100% of local
expenditures
(ex-factory cost) 
and 85% of  
local 
expenditures
for other items 
procured locally
(2)
Works under
  2,800,000
  3,200,000
70%
Page  9
Parts A.2, A.3 and
B.3 of the Project
(3)
Works under Part  
  1,100,000
  1,200,000
30%
B.2 of the Project
(4)
Consultants’ Services    400,000
    600,000
90%
and training under
Part C of the Project
(5)
Engineering Services   1,800,000
  2,000,000
90%
under Part D of the
       Project
(6)  Unallocated
   1,700,000
  1,800,000
   _________
  _________
TOTAL
  12,000,000
13, 200,000
2. 
For the purposes of this Schedule:
(a) 
the term "foreign expenditures" means expenditures in the currency of any 
country other than that of the Guarantor for goods or services supplied from the 
territory of any country other than that of the Guarantor; and
(b)
the term "local expenditures" means expenditures in the currency of the 
Guarantor or for goods or services supplied from the territory of the Guarantor.
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be 
made in respect of payments made for expenditures prior to the date of this Agreement, 
except that withdrawals, in an aggregate amount not to exceed $1,000,000 equivalent 
may be made in respect of Categories (2) and (5) on account of payments made for 
expenditures before that date but after August 1, 1995.
4.
The Bank may require withdrawals from the Loan Account to be made on the basis 
of statements of expenditure for expenditures for goods under contracts not exceeding 
$300,000 equivalent and works under contracts not exceeding $500,000 equivalent, under 
such terms and conditions as the Bank shall specify by notice to the Borrower.
SCHEDULE 2
Description of the Project
The objectives of the Project are to: (a) improve the safety, reliability and 
quality of water supply services of Bielsko-Biala; (b) improve the efficiency of water 
production, transmission and distribution systems; (c) improve the safety, reliability 
and efficiency of the sewer system; (d) reduce pollution of local surface water from 
combined sewer overflows; (e) reduce pollutant emissions into the Biala river; and (f) 
enhance the Borrower’s institutional capabilities.
The Project consists of the following parts, subject to such modifications 
thereof as the Borrower and the Bank may agree upon from time to time to achieve such 
objectives:
Part A:
Water Supply
Upgrading of  water treatment plants and the water transmission and distribution 
network consisting of: (1) expansion/improvement of service to Zloty Lany area; (2) 
upgrading of existing Wapienica, Szczyrk and Sola water treatment plants; and (3) 
carrying out a program for rehabilitating and improving the efficiency of  the 
transmission-pumping-storage-distribution system, including programs of leak detection 
and repair and water main rehabilitation/replacement.
Part B: 
Wastewater
Upgrading and expansion of the wastewater system consisting of: (1) expansion of 
Wapienica and Industrial wastewater collectors; (2) expansion of Komorowice 
Page  10
(additional capacity of 60,000 m3/day of primary and secondary biological treatment) 
and Wapienica  (to a capacity of 8,000 m3/day primary and secondary biological 
treatment) wastewater treatment plants; and (3) carrying out a program for 
rehabilitating and improving the efficiency of the sewer system, including programs 
for sewer rehabilitation/replacement, infiltration/inflow reduction, pumping station 
refurbishment and energy savings and combined sewer overflow reduction.
Part C: 
Technical Assistance and Training
Strengthening the institutional capabilities of the Borrower through technical 
assistance and training consisting of carrying out a program to improve the 
organizational structure, cost accounting system, management information and control 
systems, tariff setting and management, demand management, commercial operations, 
personnel management, business planning and asset management.
Part D:
Engineering Design and Construction Supervision
(1)
Identification, design and implementation of cost effective programs for water 
and sewer system rehabilitation and operations improvements financed under Parts A (3) 
and B (3) of the Project; and (2) preparation of studies, final designs, tender 
documents, tendering and supervision of construction under Parts A and B of the 
Project.
* * *
The Project is expected to be completed by December 31, 2002.
SCHEDULE 3
Amortization Schedule
Payment of
Payment of Principal
Principal 
     (Expressed 
Date Payment Due
(Expressed in Dollars)* 
in Deutsche Marks)** 
October 15, 2001
500,000.000
550,000.000 
April 15, 2002
500,000.000
550,000.000 
October 15, 2002
500,000.000
550,000.000 
April 15, 2003
500,000.000
550,000.000 
October 15, 2003
500,000.000
550,000.000 
April 15, 2004
500,000.000
550,000.000 
October 15, 2004
500,000.000
550,000.000 
April 15, 2005
500,000.000
550,000.000 
October 15, 2005
500,000.000
550,000.000 
April 15, 2006
500,000.000
550,000.000 
October 15, 2006
500,000.000
550,000.000 
April 15, 2007
500,000.000
550,000.000 
October 15, 2007
500,000.000
550,000.000
 
April 15, 2008
500,000.000
550,000.000 
October 15, 2008
500,000.000
550,000.000 
April 15, 2009
500,000.000
550,000.000 
October 15, 2009
500,000.000
550,000.000 
April 15, 2010
500,000.000
550,000.000
 
October 15, 2010
500,000.000
550,000.000 
April 15, 2011
500,000.000
550,000.000 
October 15, 2011
500,000.000
550,000.000 
April 15, 2012
500,000.000
550,000.000 
October 15, 2012
500,000.000
550,000.000 
April 15, 2013
500,000.000
550,000.000
TOTALS
    12,000,000.000
    13,200,000.000
_____________________
*
The figures in this column represent the amount in Dollars to be repaid, except 
as provided 
in Section 4.04 (d) of the General Conditions. 
Page  11
**
The figures in this column represent the amount in Deutsche Marks to be repaid, 
except as 
provided in Section 4.04 (d) of the General Conditions.
SCHEDULE 4
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 (the Guidelines) and the following provisions of this Section, as 
applicable.
Part B: 
International Competitive Bidding
1. 
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.
2.
The following provisions shall apply to goods and works to be procured under 
contracts awarded in accordance with the provisions of paragraph 1 of this Part B:
(a)
Prequalification
Bidders for the Komorowice plant supply and installation contract shall be 
prequalified in accordance with the provisions of paragraphs 2.9 and 2.10 of the 
Guidelines.
(b)
Grouping of  contracts
To the extent practicable, contracts for equipment of  water and wastewater 
treatment plants, pipes and accessories, pumps and electrical equipment, water meters 
and computer equipment shall be grouped in bid packages.
(c) 
Preference for domestically  manufactured goods
The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 
thereto shall apply to goods manufactured in the territory of the Guarantor.
Part C : 
Other Procurement Procedures
1. International 
Shopping
Goods  estimated to cost $300,000 equivalent or less per contract and $1,000,000 
equivalent or less in the aggregate, may be procured under contracts awarded on the 
basis of international shopping procedures in accordance with the provisions of 
paragraphs 3.5 and 3.6 of the Guidelines. 
2.
National  Shopping
Goods estimated to cost $50,000 equivalent or less per contract and $1,000,000 
equivalent or less in the aggregate,  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. 
National Competitive  Bidding
Works estimated to cost $1,000,000 equivalent or less per contract may be 
procured under contracts awarded  in accordance with the provisions of paragraphs 3.3 
and 3.4 of the Guidelines. 
4.
Procurement of Small Works
Works estimated to cost $200,000 equivalent or less per contract, and not to 
Page  12
exceed $2,000,000 in the aggregate, shall be procured under lump sum, fixed price 
contracts awarded on the basis of quotations obtained from three qualified domestic 
contractors in response to a written invitation.  The invitation shall include a 
detailed description of the works, including basic specifications, the required 
completion date, a basic form of agreement acceptable to the Bank, and relevant 
drawings, where applicable.  The award shall be made to the contractor who offers the 
lowest price quotation for the required work, and who has the experience and resources 
to successfully complete the contract.
Part D: 
Review by the Bank of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to prequalify for bidding or to bid for 
contracts, the proposed 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
With respect to: (a) each contract  for goods estimated to cost the equivalent 
of $300,000 or more; (b) the first two contracts for works estimated to cost the 
equivalent of $300,000 or more; and (c) each contract for works estimated to cost the 
equivalent of $500,000 or more, the procedures set forth in paragraphs 2 and 3 of 
Appendix 1 of the Guidelines shall apply.
Section II. Employment of Consultants
1.
Consultants’ services shall be procured under contracts awarded in accordance 
with the provisions of the “Guidelines for the Use of Consultants by World Bank 
Borrowers and by the World Bank as Executing Agency” published by the Bank in August 
1981 (the Consultant Guidelines).   For complex, time-based assignments, such 
contracts shall be based on the standard form of contract for consultants’ services 
issued by the Bank, with such modifications thereto as shall have been agreed by the 
Bank.  Where no relevant standard contract documents have been issued by the Bank, 
other standard forms acceptable to the Bank shall be used.
2.
Notwithstanding the provisions of paragraph 1 of this Section, the provisions of 
the Consultant Guidelines requiring prior Bank review or approval of budgets, short 
lists, selection procedures, letters of invitation, proposals, evaluation reports and 
contracts shall not apply to: (a) contracts for the employment of consulting firms 
estimated to cost less than $100,000 equivalent each; or (b) contracts for the 
employment of individual consultants estimated to cost less than $50,000 equivalent 
each. However, said exceptions to prior Bank review shall not apply to: (a) the terms 
of reference for such contracts; (b) single-source selection of consulting firms; (c) 
assignments of a critical nature, as reasonably determined by the Bank; (d) amendments 
to contracts for the employment of consulting firms raising the contract value to 
$100,000 equivalent or above; or (e) amendments to contracts for the employment of 
individual consultants raising the contract value to $50,000 equivalent or above.
SCHEDULE 5
Implementation Program
1.
The Borrower shall: 
(a)
establish and thereafter maintain until completion of the Project the 
Project Implementation Unit (PIU) headed by a full-time Project Implementation Manager 
with qualifications, experience and terms of reference satisfactory to the Bank,  with 
overall responsibility for all aspects of  Project implementation, who shall report 
directly to the General Manager of the Borrower; 
(b)
by February 28, 1997, employ in accordance with Schedule 4, Section II of 
this Agreement, consultants with qualifications, experience and terms of reference 
satisfactory to the Bank  to assist in the institutional reorganization and 
Page  13
strengthening of the Borrower under Part C of the Project; 
(c) 
by January 31, 1997, employ in accordance with Schedule 4, Section II of 
this Agreement, consultants with qualifications, experience and terms of reference 
satisfactory to the Bank to assist in the carrying out of programs for water and sewer 
network rehabilitation and efficiency improvements under Part D (1) of the Project; 
and 
(d) 
except as otherwise agreed with the Bank, by January 31, 1997, employ in 
accordance with Schedule 4, Section II of this Agreement, consultants with 
qualifications, experience and terms of reference satisfactory to the Bank to assist 
in the preparation of studies, final designs, tender documents, tendering and 
supervision of construction under Part D (2) of the Project.
2.
The Borrower shall comply with the provisions of the Performance Agreement, 
including, without limitation, those pertaining to the productivity targets and tariff 
adjustments.  Except as the Borrower and the Bank shall otherwise agree, the Borrower 
shall not assign, amend, abrogate or waive the Performance Agreement or any provision 
thereof. 
3.
The Borrower: (a) shall, by June 30 of  each calendar year, beginning on June 
30, 1996, furnish to the Bank for its approval a plan which includes the description, 
justification and estimated costs of and procurement arrangements for the investments 
for systems rehabilitation and operations improvement to be undertaken by the Borrower 
during the next calendar year; and (b) shall not undertake any new investments 
estimated to cost more than $5,000,000 equivalent without the prior concurrence of the 
Bank.
4. 
 Notwithstanding the provisions of Section 9.07 of the General Conditions, the 
Borrower shall  by  March 31 and  September 30 of each calendar year, furnish to the 
Bank for review and comment a report on the progress made in Project implementation 
during the preceding semester. 
5.
The Borrower 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 September 31, 1998, 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 December 31, 1998, 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 objectives thereof, based on the conclusions and 
recommendations of said report and the Bank’s views on the matter.
SCHEDULE 6
Special Accounts
1.
For the purposes of this Schedule:
(a)  
the term "eligible Categories" means the following Categories, set forth 
in the table in paragraph 1 of Schedule 1 to this Agreement: for the USD Special 
Account,  (1), (2), (3), (4), and (5); and for the DEM Special Account, (1), (2), (3), 
(4), and (5);
(b) 
the term "eligible expenditures" means expenditures in respect of the 
reasonable cost of goods and services required for the Project and to be financed out 
of the proceeds of the Loan allocated from time to time to the eligible Categories in 
Page  14
accordance with the provisions of Schedule 1 to this Agreement; and
(c) 
the term "Authorized Allocation" means an amount to be withdrawn from the 
Loan Account and deposited in the Special Accounts pursuant to paragraph 3 (a) of this 
Schedule, equal to $1,000,000 for the USD Special Account and DEM 1,500,000 for the 
DEM Special Account, provided, however, that unless the Bank shall otherwise agree, 
the Authorized Allocation shall be limited to an amount equal to $500,000 for the USD 
Special Account and DEM 800,000 for the DEM Special Account until the aggregate amount 
of withdrawals from the Loan Account plus the total amount of all outstanding special 
commitments entered into by the Bank pursuant to Section 5.02 of the General 
Conditions shall be equal to or exceed the equivalent of  $5,000,000.
2. 
Payments out of the Special Accounts shall be made exclusively for eligible 
expenditures in accordance with the provisions of this Schedule.
3.
 After the Bank has received evidence satisfactory to it that a Special Account 
has been duly opened, withdrawals of the Authorized Allocation and subsequent 
withdrawals to replenish such Special Account shall be made as follows:
(a) 
For withdrawals of the Authorized Allocation, the Borrower shall furnish 
to the Bank a request or requests for a deposit or deposits which do not exceed the 
aggregate amount of the Authorized Allocation. On the basis of such request or 
requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account 
and deposit into such Special Account such amount or amounts as the Borrower shall 
have requested.
(b)
(i)
For replenishment of such Special Account, the Borrower shall 
furnish to the 
Bank requests for deposits into such Special Account 
at such intervals as the 
Bank shall specify.
 
(ii)
Prior to or at the time of each such request, the Borrower shall 
furnish to 
the Bank the documents and other evidence required pursuant 
to paragraph 4 of 
this Schedule for the payment or payments in respect 
of which replenishment is 
requested.  On the basis of each such request, 
the Bank shall, on behalf of 
the Borrower,  withdraw from the Loan 
Account and deposit into such Special 
Account such amount as the 
Borrower shall have requested and as shall have 
been shown by 
said documents and other evidence to have been paid out of such 
Special Account for eligible expenditures.
All such deposits shall be withdrawn by the Bank from the Loan Account under the 
respective eligible Categories, and in the respective equivalent amounts, as shall 
have been justified by said documents and other evidence.
4.
 For each payment made by the Borrower out of any Special Account, the Borrower 
shall, at such time as the Bank shall reasonably request, furnish to the Bank such 
documents and other evidence showing that such payment was made exclusively for 
eligible expenditures.
5. 
Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall 
not be required to make further deposits into a Special Account:
(a) 
if, at any time, the Bank shall have determined that all further 
withdrawals should be made by the Borrower directly from the Loan Account in 
accordance with the provisions of Article V of the General Conditions and paragraph 
(a) of Section 2.02 of this Agreement; or
(b) 
if the Borrower shall have failed to furnish to the Bank, within the 
period of time specified in Section 5.01 (b) (ii) of this Agreement, any of the audit 
reports required to be furnished to the Bank pursuant to said Section in respect of 
the audit of the records and accounts for such Special Account;
(c) 
if, at any time, the Bank shall have notified the Borrower of its 
intention to suspend in whole or in part the right of the Borrower to make withdrawals 
from the Loan Account pursuant to the provisions of Section 6.02 of the General 
Conditions; or
Page  15
(d) 
once the total unwithdrawn amount of the Loan Tranche allocated to the 
eligible Categories, minus the total amount of all outstanding special commitments 
entered into by the Bank pursuant to Section 5.02 of the General Conditions with 
respect to such Loan Tranche, shall equal the equivalent of twice the amount of the 
corresponding Authorized Allocation.
Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of 
the respective Loan Tranche allocated to the eligible Categories shall follow such 
procedures as the Bank shall specify by notice to the Borrower.  Such further 
withdrawals shall be made only after and to the extent that the Bank shall have been 
satisfied that all such amounts remaining on deposit in the respective Special Account 
as of the date of such notice will be utilized in making payments for eligible 
expenditures.
6.
 (a) 
If the Bank shall have determined at any time that any payment out of any 
Special Account: (i) was made for an expenditure or in an amount not eligible pursuant 
to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished 
to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such 
additional evidence as the Bank may request; or (B) deposit into such Special Account 
(or, if the Bank shall so request, refund to the Bank) an amount equal to the amount 
of such payment or the portion thereof not so eligible or justified.  Unless the Bank 
shall otherwise agree, no further deposit by the Bank into such Special Account shall 
be made until the Borrower has provided such evidence or made such deposit or refund, 
as the case may be.
(b) 
If the Bank shall have determined at any time that any amount outstanding 
in any Special Account will not be required to cover further payments for eligible 
expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the 
Bank such outstanding amount.
(c)
The Borrower may, upon notice to the Bank, refund to the Bank all or any 
portion of the funds on deposit in any Special Account.
(d)
 Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of 
this Schedule shall be credited to the Loan Account for subsequent withdrawal or for 
cancellation in accordance with the relevant provisions of this Agreement, including 
the General Conditions.