Page  1
CONFORMED COPY
LOAN NUMBER 4175 TUN
Loan Agreement
(Greater Tunis Sewerage and Re-use Project)
between
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
and
OFFICE NATIONAL DE L’ASSAINISSEMENT
Dated December 19, 1997 
LOAN NUMBER 4175 TUN 
LOAN AGREEMENT
AGREEMENT, dated December 19, 1997, between the INTERNATIONAL BANK FOR 
RECONSTRUCTION AND DEVELOPMENT (the Bank) and the OFFICE NATIONAL DE L’ASSAINISSEMENT 
(the Borrower).
WHEREAS (A) the Republic of Tunisia (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 assist in the financing of the 
Project;
(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 and to undertake such other obligations as set 
forth in the Guarantee Agreement;
(C)
Part B of the Project will be carried out by the Guarantor with the 
Bank’s assistance and, as part of such assistance, the Bank has agreed to make 
available a loan to the Guarantor in an amount equal to fifty-seven million French 
Francs (FRF57,000,000) to assist in financing part of the cost of Part B of the 
Project on the terms and conditions set forth in a loan agreement of even date 
herewith (the Republic of Tunisia Loan Agreement, as further defined in Section 1.02 
(h) of this Agreement); and
WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to 
extend the Loan to the Borrower upon the terms and conditions set forth in this 
Agreement;
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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, with the 
modification set forth below (the General Conditions) constitute an integral part of 
this Agreement:
Section 6.03 is modified to read:
“Section 6.03.  Cancellation by the Bank.  If (a) the right of the 
Borrower to make withdrawals from the Loan Account shall have been 
suspended 
with respect to any amount of the Loan for a continuous period 
of thirty days, or 
(b) at any time, the Bank determines, after 
consultation with the Borrower, 
that an amount of the Loan will not be 
required to finance the Project’s costs to be 
financed out of the 
proceeds of the Loan, or (c) at any time, the Bank 
determines, with 
respect to any contract to be financed out of the proceeds of the 
Loan,  that corrupt or fraudulent practices were engaged in by representatives 
of the 
Borrower or of a beneficiary of the Loan during the procurement 
or the execution of 
such contract, without the Borrower having taken 
timely and appropriate action 
satisfactory to the Bank to remedy the 
situation, and establishes the amount of 
expenditures in respect of such 
contract which would otherwise have been eligible for 
financing out of 
the proceeds of the Loan, or (d) at any time, the Bank determines 
that 
the procurement of any contract to be financed out of the proceeds of 
the 
Loan is inconsistent with the procedures set forth or referred to in 
the Loan 
Agreement and establishes the amount of expenditures in respect 
of such contract 
which would otherwise have been eligible for financing 
out of the proceeds of the 
Loan, or (e) after the Closing Date, an 
amount of the Loan shall remain 
unwithdrawn from the Loan Account, or 
(f) the Bank shall have received notice from 
the Guarantor pursuant to  Section 6.07 with respect to an amount of the Loan, the Bank 
may, by 
notice to the Borrower and the Guarantor, terminate the right of the 
Borrower to make withdrawals with respect to such amount.  Upon the 
giving of 
such notice, such amount of the Loan shall be cancelled.”
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)
“Category” means a category of items to be financed out of the proceeds 
of the Loan, as set forth in the table in paragraph 1 to this Agreement; and the term 
“Categories” means more than one Category collectively;
(b)
“Basic Legislation” means the Guarantor’s Law No. 74-73 dated  August 3, 
1974, as amended and completed by the Guarantor’s Law No. 93-41 dated April 19, 1993, 
and its implementation Decree No. 95-1139 dated June 28, 1995, pursuant to which the 
Borrower has been established and is operating as an industrial and commercial public 
institution (établissement public à caractère industriel et commercial);
(c)
“Performance Indicators” means the agreed performance indicators set 
forth in a letter of even date herewith to be utilized by the Borrower to measure the 
progress in the carrying out of Part A of the Project and the degree to which the 
objectives thereof are being achieved;
(d)
“Fiscal Year” means the twelve (12) month period corresponding to any of 
the Guarantor’s fiscal years, which period commences on January 1 and ends on December 
31 in each calendar year;
(e)
“French Franc” and “FRF” means each the lawful currency of the Republic 
of France;
(f)
“Performance Contract” means the agreement (contrat-programme) between 
the Guarantor and the Borrower setting forth reciprocal undertakings designed to 
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enable the Guarantor and the Borrower to achieve certain financial, investment and 
operational targets during Fiscal Years 1997 through 2001; and
(g)
“Republic of Tunisia Loan Agreement” means the loan agreement of even 
date herewith between the Republic of Tunisia and the Bank for the Project (Loan No. 
4174 TUN).
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, an amount equal to two 
hundred eighty-three million French Francs (FRF283,000,000).
Section 2.02. 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, works and services required for Part A of the Project and to be financed out of 
the proceeds of the Loan.
Section 2.03. The Closing Date shall be December 31, 2004, or such later date as 
the 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-fourths 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. The Borrower shall pay interest on the principal amount of the 
Loan withdrawn and outstanding from time to time in accordance with the provisions of 
Schedule 3 to this Agreement.
Section 2.06. Interest and other charges shall be payable in arrears on February 
15 and August 15 in each year.
Section 2.07. The Borrower shall repay the principal amount of the Loan in 
accordance with the provisions set forth in Schedule 3 to this Agreement.
ARTICLE III
Execution of the Part A of the Project;
Management and Operations of the Borrower
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 
Part A of the Project with due diligence and efficiency and in conformity with 
appropriate administrative, economic, engineering, environmental, financial, technical 
and waste water practices, and shall provide, promptly as needed, the funds, 
facilities, services and other resources required for Part A of 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 Part A of 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 Part A of 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 Bank and the Borrower, a plan for the 
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future operation of Part A of the Project; and
(b)
afford the Bank a reasonable opportunity to exchange views with the 
Borrower on said plan.
Section 3.04. The Borrower shall, at all times: (i) carry out the Performance 
Contract with due diligence and efficiency and take all action necessary to achieve 
the targets and objectives therein set forth; and (ii) duly perform its obligations 
under the Performance Contract and, except as the Guarantor, the Borrower and the Bank 
may otherwise agree, not take or concur in any action which would have the effect of 
amending, abrogating, assigning or waiving said Performance Contract or any provision 
thereof.
Section 3.05. The Borrower shall carry on its operations and conduct its affairs 
in accordance with sound administrative, economic, engineering, environmental, 
financial, public utility, technical and waste water practices under the supervision 
of qualified and experienced management assisted by competent staff in adequate 
numbers.
Section 3.06. The Borrower shall at all times operate and maintain its plant, 
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, environmental, financial, sewerage, technical and water practices.
Section 3.07. The Borrower shall take out and maintain with responsible insurers 
insurance against such risks and in such amounts as shall be consistent with 
appropriate practice.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain records and accounts adequate to 
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) 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 seven (7) 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 or cause to be maintained, in accordance with 
paragraph (a) of this Section, records and accounts 
reflecting such expenditures;
(ii)
retain, until at least one (1) year after the Bank has 
received the audit report for the Fiscal Year in which the 
last 
withdrawal from the Loan Account was made, all records 
(contracts, 
orders, invoices, bills, receipts and other 
documents) evidencing such 
expenditures;
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(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 4.02. (a)  Except as the Bank may 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 one point three 
(1.3) 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 the purposes of this Section:
(i)
The term “debt” means any indebtedness of the Borrower 
maturing by its terms more than one (1) 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 (12) 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.
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(vii)
Whenever for the purposes of this Section it shall be 
necessary to value, in terms of the currency of the 
Guarantor, 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.
Section 4.03. (a) Except as the Bank shall otherwise agree, the Borrower shall 
generate, for each of its Fiscal Years after its Fiscal Year ending on December 31, 
1997, funds from internal sources equivalent to not less than thirty percent (30%) of 
the annual average of the Borrower’s capital expenditures incurred, or expected to be 
incurred, for that year and the two (2) next following Fiscal Years.
(b)
Before November 30 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) in respect of such 
year and the two (2) next following Fiscal Years and shall furnish to the Bank a copy 
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) 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 sewerage tariffs) in 
order to meet such requirements.
(d)
For the purposes of this Section:
(i)
The term “funds from internal sources” means the difference 
between:
(A)
the sum of revenues from all sources related to 
operations, consumer deposits and consumer 
contributions in aid of construction, net 
non-operating 
income and any reduction in working 
capital other than cash; 
and
(B)
the sum of all expenses related to operations, 
including administration, adequate maintenance and 
taxes and payments in lieu of taxes (excluding 
provision for 
depreciation and other non-cash 
operating charges), debt 
service requirements, all 
cash dividends and other cash 
distributions of 
surplus, increase in working capital other 
than cash 
and other cash outflows other than capital 
expenditures.
(ii)
The term “net non-operating income” means the difference 
between:
(A)
revenue 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.
(iii)
The term “working capital other than cash” means the 
difference between current assets excluding cash and 
current liabilities at the end of each Fiscal Year.
(iv)
The term “current assets excluding cash” means all assets 
other than cash which could in the ordinary course of 
business be converted into cash within twelve (12) months, 
including 
accounts receivable, marketable securities, 
inventories and pre-paid 
expenses properly chargeable to 
operating expenses within the next 
Fiscal Year.
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(v)
The term “current liabilities” means all liabilities which 
will become due and payable or could under circumstances 
then 
existing be called for payment within twelve (12) 
months, including 
accounts payable, customer advances, debt 
service requirements, 
taxes and payments in lieu of taxes, 
and dividends.
(vi)
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.
(vii)
The term “capital expenditures” means all expenditures on 
account of fixed assets, including interest charged to 
construction, related to operations.
(viii) Whenever for the purposes of this Section it shall be 
necessary to value, in terms of the currency of the 
Guarantor, 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.
Section 4.04. The Borrower agrees, within the limits of its prerogatives to set 
levels of its sewerage tariffs, to take all necessary measures to achieve full 
recovery of its operation and maintenance costs and make a reasonable contribution to 
its investment costs, including, without limitation, increases for each of its Fiscal 
Years after its Fiscal Year ending on December 31, 1997, to the overall level of 
existing sewer tariffs, of eight percent (8%), or such other percentage necessary to 
achieve such requirement.
Section 4.05. The provisions of Sections 4.04 and 4.05 of the Project Agreement 
between the Bank and the Borrower dated September 21, 1994 (Loan No. 3782 TUN - Water 
Supply and Sewerage Project) are hereby amended to read as set forth, respectively, in 
Sections 4.03 and 4.04 of this Agreement.
Section 4.06. The Borrower agrees, within the limits of its prerogatives to set 
levels of its sewerage tariffs, to restructure, not later than December 31, 2002, the 
existing progressive tariff rate structure to limit, in accordance with guidelines 
satisfactory to the Bank, the benefits of cross subsidy to those domestic consumers in 
the first tranches.
Section 4.07. The Borrower shall take all adequate action necessary to ensure 
that a comprehensive and separate cost-accounting system to monitor and evaluate the 
cost of its operations, including the cost of storm-water drainage, industry or 
tourism, shall be implemented and operational not later than December 31, 2000.
ARTICLE V
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (l) of the General Conditions, the 
following additional events are specified:
(a)
The Guarantor shall have failed to perform any of its obligations under 
the Republic of Tunisia Loan Agreement.
(b)
The Basic Legislation 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.
Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the 
following additional events specified:
(a)
The event specified in paragraph (a) of Section 5.01 of this Agreement 
shall occur and shall continue for a period of sixty (60) days after notice thereof 
shall have been given by the Bank to the Borrower.
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(b)
The event specified in paragraph (b) of Section 5.01 of this Agreement 
shall occur.
ARTICLE VI
Effective Date; Termination
Section 6.01. The following events are specified as additional conditions to the 
effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the 
General Conditions:
(a)
The Performance Contract has been executed on behalf of the Borrower; and
(b)
All conditions precedent to the effectiveness of the Republic of Tunisia 
Loan Agreement have been fulfilled, other than those related to the effectiveness of 
this Agreement.
Section 6.02. The date one hundred twenty (120) days after the date of this 
Agreement is hereby specified for the purposes of Section 12.04 of the General 
Conditions.
ARTICLE VII
Representative of the Borrower; Addresses
Section 7.01. The President General Director of the Borrower is designated as 
representative of the Borrower for the purposes of Section 11.03 of the General 
Conditions.
Section 7.02. 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
Cable address:
Telex:
INTBAFRAD
248423 (MCI) or
Washington, D.C.
 64145 (MCI)
For the Borrower:
Office National de l’Assainissement
32, rue Hédi Nouira
1001 Tunis
Republic of Tunisia
Cable address: 
Telex:
ONAS Tunis
15080
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 District of Columbia, United States of America, as of the day and year first above 
written.
INTERNATIONAL BANK FOR
  RECONSTRUCTION AND DEVELOPMENT
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By /s/ Gianni Brizzi 
Acting Regional Vice President 
Middle East and North Africa
OFFICE NATIONAL DE L’ASSAINISSEMENT
By /s/ Noureddine Majdoub
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            % of
Loan Allocated
Expenditures
Category
in French Francs
to be Financed
(1)
Works
136,000,000
100% of foreign
expenditures and
60% of local
expenditures
(2)
Goods, including
102,000,000
100% of foreign
equipment and
expenditures,
its installation
100% of local
expenditures,
(ex-factory cost)
and 80% of local
expenditures for
other items procured
locally
(3)
Consultants'
 17,000,000
100%
Services and
Training
(4)
Unallocated
 28,000,000
 __________
TOTAL
283,000,000
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, works 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, works 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.
4.
The Bank may require withdrawals from the Loan Account to be made on the basis 
of statements of expenditure for expenditures for: (i) goods, under contracts costing 
Page  10
less than $500,000 equivalent each; (ii) works, under contracts costing less than 
$3,000,000 equivalent each; (iii) services of consulting firms, under contracts 
costing less than $100,000 equivalent each; and (iv) services of individual 
consultants, under contracts costing less than $50,000 equivalent each, all 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 assist the Guarantor and the Borrower in: 
(i) improving service levels of urban sewerage; (ii) promoting efficient re-use of 
effluent from sewage treatment plants for agricultural purposes; (iii) reducing urban 
and coastal pollution; (iv) improving the Borrower’s cost recovery and financial 
capacity, with the long-term objective of achieving the Borrower’s financial autonomy; 
(v) introducing appropriate new sewage treatment technology; and (vi) developing 
private sector participation in the sewerage sector.
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 to achieve such 
objectives:
Part A:
Urban Sewerage
Carrying out of the Greater Tunis sewerage program, comprising the execution of 
works, the provision of equipment, and the carrying out of studies and research work 
required to implement the following:
1.
expansion and rehabilitation of the Tunis South (Meliane) waste water treatment 
plant in the southern basin of Tunis to increase its capacity to about 675,000 
population (approximately 70,000 cubic meters per day);
2.
restructuring of the Tunis West sewage collection system, including the 
construction of approximately fifty-two (52) kilometers of primary sewers, in order to 
divert part of the sewage to the plant envisioned to be constructed separately under a 
concession scheme associating the private sector thereto;
3.
strengthening of the Tunis South sewage collection system and connection of the 
villages of Mornag and Radès to the Tunis South (Meliane) waste water treatment plant, 
entailing the construction of a collection system of about forty-eight (48) kilometers 
of main sewer;
4.
extension of the Tunis North sewage collection system by about thirty-three (33) 
kilometers, construction of a liaison conduit of about four (4) kilometers between the 
waste water treatment plants of Tunis North and Choutrana, and rehabilitation of the 
waste water treatment plant of Tunis North;
5.
extension, rehabilitation, and resizing of the sewage collection networks of 
Tunis Central and North to prevent salty groundwater intrusion, including the 
construction of about forty-five (45) kilometers of sewers; and
6.
strengthening of all secondary sewer systems, requiring the construction of 
about two hundred thirty (230) kilometers of sewers.
Part B:
Re-use of Treated Sewage for Agriculture
Carrying out of a program to promote the reuse of treated sewage for 
agriculture, and comprising:
1.
construction of a storage basin in the El Attar Valley to store treated waste 
water to be used for irrigation;
2.
construction of a pumping station, balancing reservoirs, access roads, 
windbreaks, and water supply and irrigation systems for purposes of equipping an area 
of about one thousand (1,000) ha in the El Attar Valley; and
3.
carrying out of a pilot project for groundwater recharge with purified sewage 
Page  11
treated with an appropriate tertiary method.
* * *
The Project is expected to be completed by June 30, 2004.
SCHEDULE 3
Interest and Principal Repayment Provisions
A.
General Definitions
For purposes of this Schedule, the following terms have the following meanings:
(a)
“Disbursed Amount” means, in respect of each Interest Period, the 
aggregate principal amount of the Loan withdrawn from the Loan Account in such 
Interest Period.
(b)
“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.
(c)
“Interest Payment Date” means any date specified in Section 2.06 of this 
Agreement.
(d)
“Rate Fixing Date” means, for each Disbursed Amount, the first day of the 
Interest Period next following the Interest Period in which such Disbursed Amount is 
withdrawn.
B.
Interest
1.
The principal amount of the Loan shall be divided into Disbursed Amounts.  
Interest shall accrue on each Disbursed Amount outstanding from time to time at a rate 
based on a floating rate index prior to its Rate Fixing Date and at a fixed rate from 
its Rate Fixing Date, as described in paragraph 2 of this Part B.
2.
(a)
From the date of withdrawal of each amount of each Disbursed Amount 
withdrawn and outstanding, to but not including the Rate Fixing Date for such 
Disbursed Amount, interest on each such amount shall accrue, at a rate equal to the 
applicable:
(i)
PIBOR Base Rate; plus
(ii)
PIBOR Total Spread.
(b)
From the Rate Fixing Date for each Disbursed Amount until final repayment 
thereof, interest on such Disbursed Amount shall accrue, at a rate equal to the 
applicable:
(i)
Fixed Base Rate; plus
(ii)
Fixed Total Spread.
3.
For purposes of paragraph 2 of this Part B, the following terms have the 
following meanings:
(a)
“PIBOR Base Rate” means, for the Interest Period in which a Disbursed 
Amount is withdrawn, the Paris interbank offered rate for six-month deposits in French 
Francs for value the first day of such Interest Period (or, in the case of the initial 
Interest Period, for value the day occurring on the Interest Payment Date preceding 
the first day of such Interest Period), as reasonably determined by the Bank and 
expressed as a percentage per annum.
(b)
“PIBOR Total Spread” means, for the Interest Period in which each 
Disbursed Amount is withdrawn:
Page  12
(i)
one-half of one percent (1/2 of 1%);
(ii)
minus (or plus) the weighted average margin, for such 
Interest Period, below (or above) the Paris 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 
such Disbursed Amount for such Interest 
Period;
as reasonably determined by the Bank and expressed as a percentage per annum.
(c)
“Fixed Base Rate” means, for each Disbursed Amount, the equivalent of the 
Paris interbank offered rate for six-month deposits in French Francs for value on the 
Rate Fixing Date for such Disbursed Amount, expressed as a single fixed interest rate 
based on the fixed interest rates corresponding to the repayment installments of such 
Disbursed Amount, as reasonably determined by the Bank and expressed as a percentage 
per annum.
(d)
“Fixed Total Spread” means, for each Disbursed Amount:
(i)
one-half of one percent (1/2 of 1%);
(ii)
minus (or plus) the cost margin, applicable on the Rate 
Fixing Date for such Disbursed Amount, below (or above) the 
Paris interbank offered rates, or other reference rates, 
for six-month 
deposits, in respect of the Bank's 
outstanding borrowings or 
portions thereof allocated to 
fund single currency loans or portions 
thereof made by it 
that include such Disbursed Amount; plus
(iii)
the Bank's risk spread applicable on the Rate Fixing Date 
for such Disbursed Amount;
as reasonably determined by the Bank and expressed as a percentage per annum.
4.
The Bank shall notify the Guarantor and the Borrower of the PIBOR Base Rate, the 
PIBOR Total Spread, the Fixed Base Rate and the Fixed Total Spread applicable to each 
Disbursed Amount, promptly upon the determination thereof.
5.
Whenever, in light of changes in market practice affecting the determination of 
the interest rates referred to in this Schedule, 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 this Schedule, the 
Bank may modify the basis for determining the interest 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 new 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.
C.
Repayment
1.
Subject to the provisions of paragraph 2 of this Part C, the Borrower shall 
repay each Disbursed Amount of the Loan in semiannual installments payable on each 
February 15 and August 15, the first such installment to be payable on the seventh 
(7th) Interest Payment Date following the Rate Fixing Date for such Disbursed Amount 
and the last such installment to be payable on the eighteenth (18th) Interest Payment 
Date following the Rate Fixing Date for such Disbursed Amount. Each installment shall 
be one-twelfth (1/12) of such Disbursed Amount.
2.
Notwithstanding the provisions of paragraph 1 of this Part C, if any installment 
of principal of each Disbursed Amount would, pursuant to the provisions of said 
paragraph 1, be payable after February 15, 2013, the Borrower shall also pay on said 
date the aggregate amount of all such installments.
3.
After each Disbursed Amount shall have been withdrawn, the Bank shall promptly 
notify the Borrower and the Guarantor of the amortization schedule for such Disbursed 
Amount.
Page  13
SCHEDULE 4
Procurement and Consultants' Services
Section I.
Procurement of Good and Works
Part A:
General
Goods and works under Part A of the Project 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 (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 under 
Part A of the Project 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 under Part A of the 
Project to be procured under contracts awarded in accordance with the provisions of 
paragraph 1 of this Part B.
(a)
Prequalification
Bidders for the extension and rehabilitation of the Tunis South (Meliane) waste 
water treatment plant under Part A.1 of the Project shall be prequalified in 
accordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines.
(b)
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.
(c)
Notification and Advertising
The invitation to prequalify or bid for each contract under Part A of the 
Project estimated to cost $10,000,000 equivalent or more shall be advertised in 
accordance with the procedures applicable to large contracts under paragraph 2.8 of 
the Guidelines.
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
(i) Equipment under Part A of the Project estimated to cost less than $500,000 
equivalent per contract, up to an aggregate amount not to exceed $7,000,000 
equivalent; (ii) pipe supplies under Part A of the Project estimated to cost less than 
$1,000,000 equivalent per contract, up to an aggregate amount not to exceed 
$20,000,000 equivalent; (iii) works and pipe laying under Part A of the Project 
estimated to cost less than $3,000,000 equivalent per contract, up to an aggregate 
amount not to exceed $50,000,000 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 under Part A of the Project estimated to cost less than $250,000 
equivalent per contract, up to an aggregate amount not to exceed $2,000,000 
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.
Part D:
Review by the Bank of Procurement Decisions
1.
Prior Review
Page  14
With respect to each contract for: (i) goods estimated to cost the equivalent of 
$500,000 or more; and (ii) works estimated to cost the equivalent of $3,000,000 or 
more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines 
shall apply.
2.
Post Review
With respect to each contract not governed by paragraph 1 of this Part, the 
procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply.
Section II.
Employment of Consultants
1.
Consultants' services under Part A of the Project 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 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: (i) contracts for the employment of consulting firms 
estimated to cost less than $100,000 equivalent each; or (ii) contracts for the 
employment of individuals estimated to cost less than $50,000 equivalent each.  
However, said exceptions to prior Bank review shall not apply to: (i) the terms of 
reference for such contracts; (ii) single-source selection of consulting firms; (iii) 
assignments of a critical nature, as reasonably determined by the Bank; (iv) 
amendments to contracts for the employment of consulting firms raising the contract 
value to $100,000 equivalent or above; or (v) amendments to contracts for the 
employment of individual consultants raising the contract value to $50,000 equivalent 
or above.
SCHEDULE 5
Implementation Program
Section I:
Project Monitoring, Reporting and Evaluation
1.
(a)
Without limitation upon the provisions of Section 9.07 of the General 
Conditions, the Borrower shall, commencing on March 31, 1999 and not later than 
September 30 and March 31 in each Fiscal Year and until Project completion, prepare 
and furnish to the Bank a report, of such scope and in such detail as the Bank and the 
Borrower shall reasonably establish, describing, in accordance with parameters 
acceptable to the Bank, the progress achieved in the implementation of Part A of the 
Project during the preceding six-month period.
(b)
For the purposes of the preparation of the report due March 31 in each 
Fiscal Year, the parameters to be utilized by the Borrower pursuant to the provisions 
of the preceding paragraph (a) shall include the Performance Indicators evaluated on a 
yearly basis.
Section II:
Mid-Term Review
2. 
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with the Performance Indicators, the 
carrying out of Part A 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 30, 2001, 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 Part A of the Project during 
the period preceding the date of said report and setting out the measures recommended 
Page  15
to ensure the efficient carrying out of Part A 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, 2001, 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 management and 
completion of Part A of the Project and the achievement of the objectives thereof and 
of the Performance Indicators, based on the conclusions and recommendations of the 
said report and the Bank views on the matter.