Page  1
CONFORMED COPY
LOAN NUMBER 4386-EGT
Loan Agreement
(Third Pumping Stations Rehabilitation Project)
between
ARAB REPUBLIC OF EGYPT
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
Dated November 4, 1998
LOAN NUMBER 4386-EGT
LOAN AGREEMENT
AGREEMENT, dated November 4, 1998, between ARAB REPUBLIC OF EGYPT (the 
Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank).
WHEREAS (A) the Borrower, having satisfied itself as to the feasibility 
and priority of the Project described in Schedule 2 to this Agreement, has 
requested the Bank to assist in the financing of the Project;
(B)
the Borrower intends to contract from Kreditanstalt für 
Wiederaufbau (KfW) a loan (the KfW Loan) in an amount equivalent to about 
$28,600,000 to assist in financing the Project on the terms and conditions set 
forth in an agreement (the KfW Agreement) to be entered into between the 
Borrower and KfW; 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;
Page  2
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, as 
amended through December 2, 1997, (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 have the respective meanings therein set forth 
and the following additional terms have the following meanings:
(a)
"Special Account" means the account referred to in Section 2.02 (b) 
of this Agreement;
(b)
“MED” means the Mechanical and Electrical Department of the 
Borrower’s Ministry of Public Works and Water Resources, the beneficiary and 
executing agency, or any successor thereto; and
(c)
“Project Implementation Plan” means the Borrower’s plan, agreed 
between MED and the Bank, for the implementation of the Project, as the same may 
be amended from time to time as may be agreed between the Borrower and the Bank.
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 
one hundred twenty million dollars ($120,000,000).
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 (a) The amount of the Loan may be withdrawn from the Loan 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 and to be 
financed out of the proceeds of the Loan.
(b) 
The Borrower may through MED, for the purposes of the Project, open 
and maintain in Dollars a special deposit account in its Central Bank on terms 
and conditions satisfactory to the Bank.  Deposits into, and payments out of, 
the Special Account shall be made in accordance with the provisions of Schedule 
6 to this Agreement.
Section 2.03. The Closing Date shall be February 28, 2005 or such later 
date as the Bank shall establish.  The Bank shall promptly notify the Borrower 
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.(a) The Borrower shall pay interest on the principal amount 
of the Loan withdrawn and outstanding from time to time, at a rate for each 
Interest Period equal to LIBOR Base Rate plus LIBOR Total Spread.
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(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)
“LIBOR Base Rate” means, for each Interest Period, the 
London interbank offered rate for six-month deposits in  US 
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)
“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 Loan; as reasonably 
determined by the Bank and expressed as a percentage per 
annum.
(c)
The Bank shall notify the Borrower of LIBOR Base Rate and 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 rates applicable to the Loan 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 May 15th and 
November 15th 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.
Section 2.08. MED is designated as representative of the Borrower for the 
purpose of taking any action required or permitted to be taken under the 
provisions of Section 2.02 (a) of this Agreement and Article V of the General 
Conditions.
Section 2.09. The Borrower represents that it has designated its Ministry 
of Finance for the purposes of handling, on behalf of the Borrower, debt service 
payments with respect to the Loan.
Page  4
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, through MED, with due diligence and efficiency and 
in accordance with the Project Implementation Plan and in conformity with 
appropriate administrative, financial, engineering, environmental, and technical 
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 Borrower and the Bank 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 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
Financial Covenants
Section 4.01. (a) The Borrower shall maintain or cause to be maintained 
records and accounts adequate to reflect in accordance with sound accounting 
practices the operations, resources and expenditures in respect of the Project 
of the departments or agencies of the Borrower responsible for carrying out the 
Project or any part thereof.
(b)
The Borrower shall:
(i)
have the records and accounts referred to in paragraph (a) 
of this Section 
including those for the Special Account 
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, 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 and 
accounts and the audit thereof as the Bank shall 
from time to time reasonably 
request.
Page  5
(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 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;
(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.
ARTICLE V
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (p) of the General Conditions, the 
following additional events are specified:
(a)
The KfW Loan shall have failed to become effective by June 30, 
1999, or such later date as the Bank may agree; provided, however, that the 
provisions of this paragraph shall not apply if the Borrower establishes to the 
satisfaction of the Bank that 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.
(b)
(i)
Subject to subparagraph (ii) of this paragraph:
(A)
the right of the Borrower to withdraw the proceeds of 
any grant or loan 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)
Subparagraph (i) of this paragraph 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.
Section 5.02. Pursuant to Section 7.01 (k) of the General Conditions, the 
following additional event is specified, namely that the event specified in 
Page  6
paragraph (b)(i)(B) of Section 5.01 of this Agreement shall occur, subject to 
the proviso of paragraph (b)(ii) of that Section.
ARTICLE VI
Effective Date; Termination
Section 6.01. The effectiveness of the Loan Agreement shall be determined 
in accordance with Sections 12.01 and 12.02 of the General Conditions.
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
Representatives of the Borrower; Addresses
Section 7.01. Except as provided in Section 2.08 of this agreement, the 
Minister of State for Planning and International Cooperation and the Head of the 
Sector for International and Regional Finance Organizations of the Ministry of 
International Cooperation of the Borrower are severally designated as 
representatives 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 Borrower:
Ministry of International Cooperation
(International and Regional Financing
Organizations Sector)
8 Adly Street
Cairo, Arab Republic of Egypt
Cable address: 
Fax:
Ministry of International
391-5167
  Cooperation
Cairo
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)
IN WITNESS WHEREOF, the parties hereto, acting through their duly 
authorized representatives, have caused this Agreement to be signed in their 
respective names in Cairo, Arab Republic of Egypt, as of the day and year first 
above written.
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ARAB REPUBLIC OF EGYPT
By /s/ Zafer El-Bishry
Authorized Representative
INTERNATIONAL BANK FOR
   RECONSTRUCTION AND DEVELOPMENT
By /s/ Khalid Ikram
Authorized Representative
Middle East and North Africa
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
Loan Allocated
   % of
(Expressed in
Expenditures
Category
   Dollars)
to be Financed
(1)
Goods
109,000,000
100% of 
foreign
expenditures, 
100%
of local 
expenditures
(ex-factory 
costs),
and 85% of 
local
expenditures 
for
other items 
pro-
cured locally
(2)
Training
    300,000
100%
(3)
Consultants' services
    200,000
100%
(4)
Unallocated
 10,500,000
TOTAL
120,000,000
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 Borrower for goods or services supplied 
Page  8
from the territory of any country other than that of the Borrower; and
(b)
the term "local expenditures" means expenditures in the currency of 
the Borrower or for goods or services supplied from the territory of the 
Borrower.
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: (a) goods under 
contracts not exceeding  $1,000,000 equivalent; (b) services of consulting firms 
under contracts not exceeding  $100,000 equivalent; and (c) services of 
individual consultants and training under contract not exceeding  $50,000 
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 reduce losses in agricultural 
productivity and decrease operations and maintenance costs through the further 
rehabilitation of the irrigation and drainage pumping network and the 
strengthening of institutional capability for the proper design, rehabilitation, 
expansion and operation and maintenance of the said network.
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
Carrying out of a program to rehabilitate the irrigation and drainage 
pumping network through the construction of new pumping stations and the 
rehabilitation and repair of existing stations, including the provision therefor 
of electro- mechanical equipment for emergency centers, auxiliary equipment and 
spare parts, trash racks, civil works, including buildings, and intake and 
outlet works.
Part B
Carrying out a program to strengthen central workshops, electrical 
laboratories and mechanical workshops, including the provision therefor of 
equipment for workshops and laboratories and miscellaneous heavy equipment.
Part C
Carrying out of a program to strengthen the operational capability of MED 
through the provision of operation and maintenance equipment, office equipment 
and materials, telemetry equipment, pollution measuring equipment, workshops, 
access road, and the construction, rehabilitation and equipping of other project 
facilities.
Part D
Carrying out a program to strengthen the management capability of MED 
through staff training, workshops and public awareness activities, technical 
assistance, studies, including telemetry studies, updating of pumping stations 
maintenance procedures, preparation of an environmental management plan for the 
operation of pumping and mixing stations, establishment of an environmental unit 
and a monitoring and evaluation unit, upgrading of management information system 
Page  9
and data collection, introduction of operation and maintenance monitoring and 
equipment standardization procedures, development of plans for the 
decentralization of operations and maintenance activities and for the transfer 
of responsibilities for operations and maintenance of the small pumping stations 
to farmers.
* * *
The Project is expected to be completed by August 31, 2004.
SCHEDULE 3
Amortization Schedule
 Payment of Principal
Date Payment Due
(Expressed in Dollars)*
November 15, 2003
2,550,000
May 15, 2004
2,625,000
November 15, 2004
2,705,000
May 15, 2005
2,780,000
November 15, 2005
2,865,000
May 15, 2006
2,945,000
November 15, 2006
3,035,000
May 15, 2007
3,125,000
November 15, 2007
3,215,000
May 15, 2008
3,310,000
November 15, 2008
3,405,000
May 15, 2009
3,505,000
November 15, 2009
3,610,000
May 15, 2010
3,715,000
November 15, 2010
3,820,000
May 15, 2011
3,935,000
November 15, 2011
4,050,000
May 15, 2012
4,170,000
November 15, 2012
4,290,000
May 15, 2013
4,415,000
November 15, 2013
4,545,000
May 15, 2014
4,680,000
November 15, 2014
4,815,000
May 15, 2015
4,955,000
November 15, 2015
5,100,000
May 15, 2016
5,250,000
November 15, 2016
5,405,000
May 15, 2017
5,565,000
November 15, 2017
5,725,000
May 15, 2018
5,890,000
________________________________
*
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.
SCHEDULE 4
Procurement
Section I.
Procurement of Goods 
Part A:
General
Goods shall be procured in accordance with the provisions of Section I of 
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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.
Part B:
International Competitive Bidding
1.
Except as otherwise provided in Part C of this Section, goods 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 to be procured under 
contracts awarded in accordance with the provisions of paragraph 1 of this Part 
B.
(a)
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 Borrower.
(b)
Notification and Advertising
The invitation to prequalify or bid for each contract 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.
International Shopping
Goods estimated to cost less than $1,000,000 equivalent per contract, up 
to an aggregate amount not to exceed $7,000,000 equivalent, 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 less than $100,000 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.
3.
Direct Contracting
Goods which are of a proprietary nature or need to be compatible with 
installed equipment and estimated to cost not more than $20,000,000 equivalent 
in the aggregate may, with the Bank’s prior agreement, be procured in accordance 
with the provisions of paragraph 3.7 of the Guidelines.
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 
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1.
2.
Prior Review 
(a)
With respect to each contract for goods to be procured pursuant to 
the procedures referred to in Part B.1 of this Schedule, the procedures set 
forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply.
(b)
With respect to the first three contracts for goods to be procured 
pursuant to the procedures referred to in Part C.1, 2 and 3 of  this Schedule, 
and with respect to each contract for goods to be procured pursuant to the 
procedures referred to in Part C.3 of this Schedule and estimated to cost the 
equivalent of $1,000,000 or more, the following procedures shall apply:
(i)
prior to the execution of any contract procured under 
shopping procedures the Borrower shall provide to the Bank a 
report on the comparison and evaluation of quotations 
received;
(ii)
prior to the execution of any contract procured under direct 
contracting procedures, the Borrower shall provide to the 
Bank a copy of the specifications and the draft contract; 
and
(iii)
in addition, the procedures set forth in paragraphs 2 (f) 
and 2 (g) and 3 of Appendix 1 to the Guidelines shall apply.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, 
the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall 
apply.
Section II.
Employment of Consultants 
Part A:
General
Consultants’ services shall be procured in accordance with the provisions 
of the Introduction and Section IV of the "Guidelines:  Selection and Employment 
of Consultants by World Bank Borrowers" published by the Bank in January 1997 
and revised in September 1997 (the Consultant Guidelines) and the following 
provisions of Section II of this Schedule.
Part B:
Quality- and Cost-based Selection
Except as otherwise provided in Part C of this Section, consultants’ 
services shall be procured under contracts awarded in accordance with the 
provisions of Section II of the Consultant Guidelines, paragraph 3 of Appendix 1 
thereto, Appendix 2 thereto, and the provisions of paragraphs 3.13 through 3.18 
thereof applicable to quality- and cost-based selection of consultants.
Part C:
Other Procedures for the Selection of Consultants.
1.
Selection Under a Fixed Budget.
Services for less than $100,000 equivalent per contract may be procured 
under contracts awarded in accordance with the provisions of paragraphs 3.1 and 
3.5 of the Consultant Guidelines.
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2.
Least-cost Selection.
Services estimated to cost less than $50,000 equivalent per contract may 
be procured under contracts awarded in accordance with the provisions of 
paragraphs 3.1 and 3.6 of the Consultant Guidelines.
3.
Individual Consultants.
Services for tasks that meet the requirements set forth in paragraph 5.01 
of the Consultant Guidelines shall be procured under contracts awarded to 
individual consultants in accordance with the provisions of paragraphs 5.1 
through 5.3 of the Consultant Guidelines.
Part D:
Review by the Bank of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals, the 
proposed plan for the selection of consultants under the Project shall be 
furnished to the Bank for its review and approval, in accordance with the 
provisions of paragraph 1 of Appendix 1 to the Consultant Guidelines.  Selection 
of all consultants’ services shall be undertaken in accordance with such 
selection plan as shall have been approved by the Bank, and with the provisions 
of said paragraph  1.
2.
Prior Review
(a)
With respect to each contract for  the employment of consulting 
firms  estimated to cost the equivalent of $100,000 or more, the procedures set 
forth in paragraphs 1, 2 (other than the third subparagraph of paragraph 2 (a)) 
and 5 of Appendix 1 to the Consultant Guidelines shall apply.
(b)
With respect to each contract for the employment of individual 
consultants estimated to cost the equivalent of $50,000 or more, the 
qualifications, experience, terms of reference and terms of employment of the 
consultants shall be furnished to the Bank for its prior review and approval. 
The contract shall be awarded only after said approval shall have been given.
3.
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 Consultant 
Guidelines shall apply.
SCHEDULE 5
Implementation Program
1.
The Borrower shall:
(a)
maintain or cause to be maintained arrangements, satisfactory to 
the Bank, for the overall coordination and supervision of Project execution, 
through MED, in accordance with the requirements and other details set forth in 
the Project Implementation Plan; and
(b)
maintain, with staff and other resources and terms of reference 
satisfactory to the Bank: (i) a Special Task Team chaired by MED’s 
Undersecretary of State of the Central Directorate for Projects and with 
Page  13
representatives of the Borrower’s Ministry of Public Works and Water Resources 
and the Borrower’s Egyptian Public Authority for Drainage Projects,  to be 
responsible for resolving potential Project implementation problems and for 
reviewing and approving annual work programs under the Project; and (ii) a full 
time Project Coordination Team, consisting of an engineer and two Finance Staff, 
to be responsible for work program and resolution of day-to-day implementation 
problems under the Project.
2.
The Borrower shall:
(a)
employ consultants with qualifications and terms of reference 
satisfactory to the Bank, to assist in the carrying out of the Project; and
(b)
cause MED to ensure that each of the environment unit and the 
monitoring and evaluation unit referred to under Part D of the Project shall be 
fully staffed and equipped as shall be necessary for its proper functioning.
3.
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to monitor 
and evaluate on an ongoing basis, in accordance with the indicators agreed upon 
between the Borrower and 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 (i) January 31 and July 31 of each year, 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 (ii) by March 31, 2002, a mid-term report integrating the date and 
other information contained in the reports prepared pursuant to subparagraph (b) 
(i) above, on the progress achieved in carrying out the Project during the 
period preceding the date thereof 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 June 30, 2002, or such later date as the 
Bank shall request, the report referred to in subparagraph (b) (ii) 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 the said report and the Bank views on 
the matter.
SCHEDULE 6
Special Account
1.
For the purposes of this Schedule:
(a)
the term "eligible Categories" means Categories (1), (2) and (3) 
set forth in the table in paragraph 1 of Schedule 1 to this Agreement;
(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 accordance with the provisions of Schedule 1 to this 
Agreement; and
(c)
the term "Authorized Allocation" means an amount equivalent to 
$12,000,000 to be withdrawn from the Loan Account and deposited into the Special 
Page  14
Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that 
unless the Bank shall otherwise agree, the Authorized Allocation shall be 
limited to an amount equivalent to $3,000,000 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 $20,000,000.
2.
Payments out of the Special Account 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 the Special 
Account has been duly opened, withdrawals of the Authorized Allocation and 
subsequent withdrawals to replenish the 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 deposit into the Special Account 
of an amount or amounts 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 the Special Account such amount or amounts as the Borrower shall have 
requested.
(b)
(i)
For replenishment of the Special Account, the Borrower shall 
furnish to the Bank requests for deposits into the 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 the 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 the 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 the 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 the 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;
(b)
if the Borrower shall have failed to furnish to the Bank, within 
the period of time specified in Section 4.01 (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 the 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 
Page  15
withdrawals from the Loan Account pursuant to the provisions of Section 6.02 of 
the General Conditions; or
(d)
once the total unwithdrawn amount of the Loan 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 the Project, shall equal the equivalent of twice the 
amount of the Authorized Allocation.  Thereafter, withdrawal from the Loan 
Account of the remaining unwithdrawn amount of the Loan 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 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 the 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 the 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 the 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 the 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 the Special Account.