OFFICIAL
DOCUMENTS
LOAN NUMBER 9045-CN
Project Agreement
(Sichuan Water Supply and Sanitation PPP Project)
between
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
and
SICHUAN PROVINCE
PROJECT AGREEMENT
AGREEMENT between INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT ("Bank") and SICHUAN PROVINCE ("Project Implementing
Entity") ("Project Agreement") in connection with the Loan Agreement ("Loan Agreement")
of the Signature Date between PEOPLE'S REPUBLIC OF CHINA ("Borrower") and the
Bank, concerning Loan No. 9045-CN. The Bank and the Project Implementing Entity hereby
agree as follows:
ARTICLE I - GENERAL CONDITIONS; DEFINITIONS
1.01. The General Conditions (as defined in the Appendix to the Loan Agreement) apply
to and form part of this Agreement.
1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement
have the meanings ascribed to them in the Loan Agreement or the General
Conditions, and the terms used in italics in this Agreement are referring to locations
on the territory of the Borrower or the Project Implementing Entity.
ARTICLE II - PROJECT
2.01. The Project Implementing Entity declares its commitment to the objectives of the
Project. To this end, the Project Implementing Entity shall carry out the Project in
accordance with the provisions of Article V of the General Conditions and the
Schedule to this Agreement, and shall provide, promptly as needed, the funds,
facilities, services and other resources required for the Project.
ARTICLE III - REPRESENTATIVE; ADDRESSES
3.01. The Project Implementing Entity's Representative is its Governor or Vice-Governor.
3.02. For purposes of Section 10.01 of the General Conditions:
(a) the Bank's address is:
International Bank for Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America; and
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(b) the Bank's Electronic Address is:
Facsimile:
1-202-477-6391
3.03. For purposes of Section 10.01 of the General Conditions:
(a) the Project Implementing Entity's address is:
No. 30 Duyuan Street,
Jinjiang District, Chengdu
Sichuan Province
People's Republic of China; and
(b) the Program Implementing Entity's Electronic Address is:
Facsimile:
028 83235668
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AGREED as of the later of the two dates written below.
INTERNATIONAL BA K FOR
RECONSTRUCTIO D DEVELOPMENT
By
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Authorized Representative
Name: / ou S 2-
Title: tre-c-7,rr C11
Date: / ) /
SICHUAN PROVINCE
By
Autnorized Representative
Name: A' 0 (Va_I
Title: Cc,it Sv(a, (A,ce arM Oyd
Date 62'/ >.,
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SCHEDULE
Execution of the Project
Section I. Implementation Arrangements
A. Financing Arrangement
1. For the purposes of carrying out of the Project, the Project Implementing Entity shall
make available the proceeds of the Loan to the Jingyang District, directly or through
the Deyang City, under terms and conditions acceptable to the Bank, including the
following principal terms:
(a) The principal amount shall be made available in Euros or any other Currency
as the Loan may be converted from time to time through a Currency
Conversion of the value of the currency or currencies so withdrawn (such
principal amount determined on the date, or respective dates, of withdrawal
from the Loan Account).
(b) The principal amount so made available (including an amount equal to the
fee paid pursuant to Section 2.03 of the Loan Agreement and any premium
for Interest Rate Caps or Interest Rate Collars paid pursuant Section 4.05(c)
of the General Conditions) shall be recovered over a period of twenty-five
(25) years, inclusive of a grace period of six (6) years.
(c) Interest shall be charged on such principal amount withdrawn and
outstanding from time to time at a rate equal to the rate of interest applicable
from time to time to the Loan pursuant to the provisions of Section 2.05 of
the Loan Agreement.
(d) A Commitment Charge shall be charged equal to one quarter of one percent
(0.25%) per annum on the Unwithdrawn Loan Balance.
2. The Project Implementing Entity shall cause the Jingyang District to:
(a) manage, operate, monitor, transfer and reconcile the proceeds of the Loan
made available to it pursuant to paragraph I above in accordance with
arrangements and procedures acceptable to the Bank;
(b) take all required actions, including provision of timely consents and
approvals as may be necessary, to facilitate the utilization of said Loan
proceeds and the implementation of the Project and, to enable the Project
Implementing Entity to comply with its undertakings under the Project
Agreement; and
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(c) maintain all relevant records and documents related to the Loan and the
Project and provide promptly such documents and records, including all
other information related to the Loan and the Project, as may be requested
by the Project Implementing Entity, the Borrower or the Bank from time to
time.
B. On-lending Agreement
1 . For the purposes of carrying out the Project, the Project Implementing Entity shall
cause the Jingyang District, to on-lend the proceeds of the Loan to the Project
Company, pursuant to an on-lending agreement (the "On-lending Agreement") under
terms and conditions acceptable to the Bank, identical to those described in Section
I.A.1(a) to (d) of this Schedule.
2. The Project Implementing Entity shall cause the Jingyang District to ensure that the
On-lending Agreement includes obligations of the Project Company identical to
those described in Section I.A.2 (a) to (c) of this Schedule.
3. The Project Implementing Entity shall cause the Jingyang District to exercise its
rights under the On-lending Agreement in such manner as to protect the interests of
the Project Implementing Entity and the Bank and to accomplish the purposes of the
Loan.
4. Except as the Bank shall otherwise agree, the Project Implementing Entity shall
cause the Jingyang District to not assign, amend, abrogate or waive the On-lending
Agreement or any of its provisions.
C. Institutional Arrangements.
1. For the purpose of carrying out the Project, the entities listed in (a) and (b) below
have been established by the Jingyang District. The Project Implementing
Entity shall cause the Jingyang District to maintain the entities listed in (a) and
(b) below, with composition, powers, functions, terms of reference, staffing,
facilities and other resources acceptable to the Bank, throughout the implementation
of the Project.
(a) The Project Leading Group:
(i) chaired by the Jingyang District Mayor, with members from key
government institutions including: HUCB, the Water Resources
Bureau, the Finance Bureau, the Development and Reform Bureau,
and the Ecology and Environment Bureau; and
(ii) to be responsible for ensuring leadership of the Project, providing
overall policy, financial, institutional and strategic guidance on
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Project implementation and facilitating coordination among
different implementing agencies within its jurisdiction.
(b) The Project Management Office ("PMO") responsible for:
(i) (A) preparation of a concession with subsidy of the water supply and
sanitation in the Jingyang District on a Design, Build and Operate
model ("Concession"), including (in coordination with local
government's line agencies), feasibility study report design and
approval, appraisal, tendering, selection of sponsor, negotiation and
signing of the contractual arrangement with the special purpose
vehicle established by the selected sponsor ("Project Company") for
the purpose of entering into the Concession as concessionaire; and
thereafter (B) supervision of compliance by the Project Company
with its contractual obligations and performance, monitoring,
evaluation and reporting, and coordination of the implementation of
water supply and sanitation activities and assets whose
responsibility has not be assigned to the Project Company under the
Concession; and
(ii) implementation, coordination, reporting, management and
monitoring and evaluation of the activities under the Project, as well
as the preparation of the consolidated Annual Work Plans and
Budgets and Project Reports.
D. Contractual Arrangements.
1. For the implementation of Part 1 of the Project, the Project Implementing Entity shall
cause the Jingyang District to:
(a) (i) recruit, no later than three (3) months after the Effective Date, and
thereafter maintain throughout the implementation of the Project, an
external environmental and social monitoring consultant team; and
(ii) maintain, throughout the implementation of the Project, (A) a
domestic procurement agency and procurement staff as needed,
each with terms of reference, qualifications and experience
satisfactory to the Bank; and (B) more generally ensure that
sufficient staff as needed for the efficient implementation of the
Project is assigned to the Project, each with terms of reference,
qualifications and experience satisfactory to the Bank;
(b) (i) enter into the Concession with a concessionaire selected on the basis
of terms of reference, qualification and experience satisfactory to
the Bank;
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(ii) require such concessionaire to: (A) carry out its obligations under
the Concession with due diligence and efficiency and in accordance
with sound technical, economic, financial, managerial,
environmental and social standards and practices satisfactory to the
Bank, including in accordance with the provisions of the Anti-
Corruption Guidelines applicable to recipients of loan proceeds
other than the Borrower; the Safeguard Instruments, the
Environmental and Social Commitment Plan ("ESCP") and the
Procurement Regulations; (B) provide, promptly as needed, the
resources required for the purpose including, without limitation, an
amount of equity required from time to time to maintain at all times
throughout the implementation of the Project at least 20% of equity
in the financing of the Concession; (C) (1) maintain a financial
management system and prepare financial statements in accordance
with consistently applied accounting standards acceptable to the
Bank, both in a manner adequate to reflect the operations, resources
and expenditures; and (2) at the Bank's, the Project Implementing
Entity's or the Borrower's request, have such financial statements
audited by independent auditors acceptable to the Bank, in
accordance with consistently applied auditing standards acceptable
to the Bank, and promptly furnish the statements as so audited to the
Project Implementing Entity, the Borrower and the Bank;
(D) maintain policies and procedures adequate to enable it to
monitor and evaluate in accordance with indicators acceptable to the
Bank, the progress of the Project and the achievement of its
objectives; (E) enable the Project Implementing Entity, the
Borrower and the Bank to inspect the Project, its operation and any
relevant records and documents; and (G) prepare and furnish to the
Project Implementing Entity, the Borrower and the Bank all such
information as the Project Implementing Entity, Borrower or the
Bank shall reasonably request relating to the foregoing; and
(iii) exercise its rights under the Concession in such manner as to protect
the interests of the Project Implementing Entity, the Borrower and
the Bank and to accomplish the purposes of the Loan. Except as the
Bank shall otherwise agree, the Project Implementing Entity shall
ensure that the Jingyang District shall not assign, amend, abrogate
or waive the Concession or any of its provisions;
(c) without limitation to the generality of Section 5.03 of the General
Conditions, plan and provision each year in its annual district budget, funds
in an amount sufficient to ensure the viability of Part 1 of the Project, to
provide to the Project Company availability payments in accordance with
the provisions of the PPP Agreement, for the purpose of financing, among
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other things, the financing costs related to the operation of the new utility
established under Part 1 of the Project, debt servicing, return on equity and
operational subsidies; and
(d) no later than December 31, 2021, carry out a water and sewerage sanitation
tariff roadmap study to identify a medium-to long-term pathway for raising
tariffs (and reducing subsidies) so that the tariff be both affordable to
customers and financially sustainable for the Concession and the Jingyang
District's water and sewerage sanitation services.
E. Environmental and Social Standards.
1. The Project Implementing Entity shall, and shall cause the Jingyang District to,
ensure that the Project is carried out in accordance with the Environmental and Social
Standards, in a manner acceptable to the Bank.
2. Without limitation upon paragraph I above, the Project Implementing Entity shall,
and shall cause the Jingyang District to, ensure that the Project is implemented
in accordance with the ESCP, in a manner acceptable to the Bank. To this end, the
Project Implementing Entity shall, and shall cause the Jingyang District to, ensure
that:
(a) the measures and actions specified in the ESCP are implemented with due
diligence and efficiency, and as further specified in the ESCP;
(b) sufficient funds are available to cover the costs of implementing the ESCP;
(c) policies, procedures and qualified staff are maintained to enable it to
implement the ESCP, as further specified in the ESCP; and
(d) the ESCP or any provision thereof, is not amended, revised or waived, except
as the Bank shall otherwise agree in writing and the Project Implementing
Entity has (or has caused Jingyang District to), thereafter, disclosed the
revised ESCP.
In case of any inconsistencies between the ESCP and the provisions of this
Agreement, the provisions of this Agreement shall prevail.
3. The Project Implementing Entity shall, and shall cause the Jingyang District to:
(a) take all measures necessary on its part to collect, compile, and furnish to the
Bank through regular reports, with the frequency specified in the ESCP, and
promptly in a separate report or reports if so requested by the Bank,
information on the status of compliance with the ESCP and the management
tools and Safeguard Instruments and other instruments referred to therein,
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all such reports in form and substance acceptable to the Bank, setting out,
inter alia: (i) the status of implementation of the ESCP; (ii) conditions, if
any, which interfere or threaten to interfere with the implementation of the
ESCP; and (iii) corrective and preventive measures taken or required to be
taken to address such conditions; and
(b) promptly notify the Bank of any incident or accident related to or having an
impact on the Project which has, or is likely to have, a significant adverse
effect on the environment, the affected communities, the public or workers,
in accordance with the ESCP, the instruments referenced therein and the
Environmental and Social Standards.
4. The Project Implementing Entity shall, and shall cause the Jingyang District to,
maintain and publicize the availability of a grievance mechanism, in form and
substance satisfactory to the Bank, to hear and determine fairly and in good faith all
complaints raised in relation to the Project, and take all measures necessary to
implement the determinations made by such mechanism in a manner satisfactory to
the Bank.
F. Annual Work Plans and Budgets and Project Operations Manual
1 . The Project Implementing Entity shall cause the Jingyang District, with inputs from
the Project Company, to: (a) prepare and furnish to the Bank by November 1 in each
year, beginning in 2020, a draft Annual Work Plan and Budget for review and
comment, summarizing the implementation progress of the Project for the said year
and the Project activities to be undertaken in the following calendar year (together
with documentary evidence that the safeguard obligations related to such upcoming
Project activities shall be fully complied with in a timely fashion in accordance with
the Safeguard Instruments), including the proposed annual budget, sources of
financing for the Project and prospective schedule of disbursement; (b) taking into
account the Bank's comments, finalize and furnish to the Bank no later than
December 1 in each year, beginning in 2020, the Annual Work Plan and Budget,
acceptable to the Bank; and (c) thereafter ensure the implementation of the Project
during the following calendar year in accordance with the Annual Work Plan and
Budget agreed with the Bank and in a manner acceptable to the Bank. The Project
Implementing Entity shall not amend, suspend, abrogate, or waive said Annual Work
Plans and Budgets or any provision thereof without the prior written agreement of
the Bank.
2. Throughout the implementation of the Project, the Project Implementing Entity shall,
and shall cause the Jingyang District to, apply the Project Operations Manual in a
timely and efficient manner acceptable to the Bank. The Project Implementing Entity
shall, and shall cause the Jingyang District to, not amend, suspend, or waive said
Project Operations Manual or any provision or schedule thereof, without the prior
written agreement of the Bank. In the event of any inconsistency between the
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provisions of the Project Operations Manual and those of this Agreement or the Loan
Agreement, the provisions of this Agreement and the Loan Agreement shall prevail.
Section II. Project Monitoring, Reportini and Evaluation
A. Project Reports, Mid-term review, completion
1. The Project Implementing Entity shall, and shall cause the Jingyang District to,
monitor and evaluate the progress of the Project and prepare Project Reports in
accordance with the provisions of Section 5.08 (b) of the General Conditions and on
the basis of indicators acceptable to the Bank. Each such Project Report shall cover
the period of one calendar semester (six month-periods), and shall be furnished to
the Bank and Borrower not later than sixty (60) days) after the end of the period
covered by such report.
2. Without limitation to the provisions of the preceding paragraph, the Project
Implementing Entity shall, and shall cause the Jingyang District to, prepare, under
terms of reference acceptable to the Bank, and furnish to the Bank no later than June
30, 2023, or such other date acceptable to the Bank, a consolidated mid-term review
report for the Project, summarizing the results of the monitoring and evaluation
activities carried out from the inception of the Project, and setting out the measures
recommended to ensure the efficient completion of the Project and to further the
objectives thereof.
3. The Project Implementing Entity shall, and shall cause the Jingyang District to (with
inputs from the Project Company), provide to the Borrower not later than five (5)
months after the Closing Date or such other date agreed between the Project
Implementing Entity, Jingyang District and the Borrower, for incorporation in the
report referred to in Section 5.08 (c) of the General Conditions all such information
as the Borrower or the Bank shall reasonably request for the purposes of that Section.