Page  1
CONFORMED COPY
LOAN NUMBER 3387 CHA
(Ertan Hydroelectric Project)
between
PEOPLE'S REPUBLIC OF CHINA
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
Dated July 11, 1991
LOAN NUMBER 3387 CHA
LOAN AGREEMENT
AGREEMENT, dated July 11, 1991, between PEOPLE'S REPUBLIC OF CHINA (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 Project will be carried out by Ertan Hydroelectric Development 
Corporation (EHDC) with the Borrower's assistance and, as part of such assistance, the 
Borrower will make available to EHDC the proceeds of the Loan as provided in 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 and in the Project Agreement of even date herewith between the Bank and 
EHDC;
NOW THEREFORE the parties hereto hereby agree as follows:
Page  2
ARTICLE I
General Conditions; Definitions
Section 1.01. The "General Conditions Applicable to Loan and Guarantee 
Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 
deleted (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)
"Sichuan" means Sichuan Province, a political sub-division of the 
Borrower or any successor thereto;
(b)
"EHDC" means Ertan Hydroelectric Development Corporation, a state-owned 
enterprise of the Borrower, established and operating pursuant to its Charter and, 
except as the Bank shall otherwise agree, shall include all enterprises and units 
which are under the control of EHDC;
(c)
"Charter" means the Charter of EHDC, issued on March 12, 1989;
 
(d)
"Project Agreement" means the agreement between the Bank and EHDC of even 
date herewith, as the same may be amended from time to time, and such term includes 
all schedules and agreements supplemental to the Project Agreement;
(e)
"Subsidiary Loan Agreements" means the agreements to be entered into 
between the Borrower and Sichuan, and Sichuan and EHDC pursuant to Section 3.01 (b) of 
this Agreement, as the same may be amended from time to time, and such term includes 
all schedules to the Subsidiary Loan Agreements;
(f)
"Special Account" means the account referred to in Section 2.02 (b) of 
this Agreement;
(g)
"SCEPA" means Sichuan Electric Power Administration, a state-owned 
enterprise of the Borrower, established and operating pursuant to its Charter; and
(h)
"Purchase Agreement" means the agreement to be entered into between EHDC 
and SCEPA pursuant to Section 2.06 of the Project Agreement.
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, various currencies that 
shall have an aggregate value equivalent to
the amount of three hundred eighty million dollars ($380,000,000), being the sum of 
withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of 
the date of such withdrawal.
Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account 
in accordance with the provisions of Schedule 1 to this Agreement for expenditures 
made (or, if the Bank shall so
agree, to be made) in respect of the reasonable cost of goods and services required 
for the Project described in Schedule 2 to this Agreement and to be financed out of 
the proceeds of the Loan.
(b)
The Borrower shall, for the purposes of the Project, open and maintain in 
dollars a special deposit account in a bank acceptable to the 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 5 to this 
Agreement.
Section 2.03. The Closing Date shall be December 31, 1996 or such later date as 
the Bank shall establish. The Bank shall promptly notify the Borrower of such later 
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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 the Cost of Qualified Borrowings determined in respect of the preceding 
Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in 
Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the 
principal amount outstanding during the preceding Interest Period, calculated at the 
rate applicable during such Interest Period.
(b)
As soon as practicable after the end of each Semester, the Bank shall 
notify the Borrower of the Cost of Qualified Borrowings determined in respect of such 
Semester.
(c)
For the purposes of this Section:
 
(i)
"Interest Period" means a six-month period ending on the date 
immediately preceding 
each date specified in Section 2.06 of this 
Agreement, beginning with the Interest 
Period in which this Agreement is 
signed.
(ii)
"Cost of Qualified Borrowings" means the cost, as reasonably 
determined by the Bank 
and expressed as a percentage per annum, of 
the outstanding borrowings of the Bank 
drawn down after June 30, 1982, 
excluding such borrowings or portions thereof as 
the Bank has 
allocated to fund: (A) the Bank's investments; and (B) loans which may 
be made by the Bank after July 1, 1989 bearing interest rates determined otherwise 
than as provided in paragraph (a) of this Section.
(iii)
"Semester" means the first six months or the second six months of 
a calendar year.
(d)
On such date as the Bank may specify by no less than six months' notice 
to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to 
read as follows:
"(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 Quarter 
equal to the Cost of Qualified 
Borrowings determined in respect of the 
preceding Quarter, plus one-half of one percent (1/2 of 
1%). On each of the dates 
specified in Section 2.06 of this Agreement, the Borrower shall pay 
interest accrued on the principal amount outstanding during the preceding Interest 
Period, 
calculated at the rates applicable during such Interest Period."
 
"(b)  As soon as practicable after the end of each Quarter, the Bank 
shall notify the 
Borrower of the Cost of Qualified Borrowings determined in 
respect of such Quarter."
"(c) (iii) `Quarter' means a three-month period commencing on January 1, 
April 1, July 1 
or October 1 in a calendar year."
 
Section 2.06. Interest and other charges shall be payable semiannually on March 
1 and September 1 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. EHDC is designated as representative of the Borrower for the 
purposes of taking any action required or permitted to be taken under the provisions 
of Section 2.02 of this Agreement and Article V of the General Conditions.
ARTICLE III
Page  4
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, without any 
limitation or restriction upon any of its other obligations under the Loan Agreement, 
shall cause EHDC to perform in accordance with the provisions of the Project Agreement 
all the obligations of EHDC therein set forth, shall take or cause to be taken all 
action, including the provision of funds, facilities, services and other resources, 
necessary or appropriate to enable EHDC to perform such obligations, and shall not 
take or permit to be taken any action which would prevent or interfere with such 
performance.
(b)
The Borrower shall relend the proceeds of the Loan through Sichuan to 
EHDC under subsidiary loan agreements to be entered into between the Borrower and 
Sichuan, and between Sichuan and EHDC, all under terms and conditions which shall have 
been approved by the Bank.
(c)
The Borrower shall exercise its rights under the Subsidiary Loan 
Agreements, and cause Sichuan to exercise its rights under the Subsidiary Loan 
Agreements, in such manner as to protect the interests of the Borrower and the Bank 
and to accomplish the purposes of the Loan, and, except as the Bank shall otherwise 
agree, the Borrower shall not, and shall not permit Sichuan to, assign, amend, 
abrogate or waive the Subsidiary Loan Agreements or any provision thereof.
Section 3.02. Except as the Bank shall otherwise agree, procurement of the 
goods, works and consultants' services required for the Project and to be financed out 
of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this 
Agreement.
Section 3.03. The Bank and the Borrower hereby agree that the obligations set 
forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions 
(relating to insurance, use of goods and services, plans and schedules, records and 
reports, maintenance and land acquisition, respectively) shall be carried out by EHDC 
pursuant to Section 2.03 of the Project Agreement.
Section 3.04. The Borrower shall take all steps necessary to enable EHDC and 
SCEPA to enter into the Purchase Agreement not later than June 30, 1996, and to 
thereafter implement such Agreement.
Section 3.05. The Borrower shall: (i) furnish or cause to be furnished to the 
Bank not later than June 30, 1993, a plan for completion by SCEPA of the 500-Kv 
transmission network connecting Ertan Hydroelectric Station with the power system in 
Sichuan Province, such plan to include an implementation schedule and a financing 
scheme, and shall (ii) implement such plan not later than June 30, 1998.
Section 3.06. The Borrower shall carry out, or cause to be carried out, the 
resettlement of the people affected by the Project, in accordance with the plan agreed 
with the Bank.
Section 3.07. The Borrower shall provide EHDC with the equity needed, in a 
timely manner, to enable EHDC to achieve the debt-equity ratio referred to in Section 
4.03 of the Project Agreement.
ARTICLE IV
Financial Covenants
Section 4.01. (a) 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 sound 
accounting practices, 
records and accounts reflecting such 
expenditures;
(ii)
ensure that all records (contracts, orders, invoices, bills, 
receipts and other 
documents) evidencing such expenditures are 
Page  5
retained 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; and
(iii)
enable the Bank's representatives to examine such records.
 
(b)
The Borrower shall:
 
(i)
have the records and accounts referred to in paragraph (a) (i) 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, including 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; and
 
(iii)
funish to the Bank any concerning said records and accounts and 
the audit thereof 
as the Bank shall from time to time reasonably 
request.
ARTICLE V
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (k) of the General Conditions, the 
following additional events are specified:
(a)
EHDC shall have failed to perform any of its obligations under the 
Project Agreement.
(b)
As a result of events which have occurred after the date of the Loan 
Agreement, an extraordinary situation shall have arisen which shall make it improbable 
that EHDC will be able to perform its obligations under the Project Agreement.
(c)
The Charter shall have been amended, suspended, abrogated, repealed or 
waived so as to affect materially and adversely the ability of EHDC to perform any of 
its obligations under the Project Agreement.
(d)
The Borrower or any other authority having jurisdiction shall have taken 
any action for the dissolution or disestablishment of EHDC or for the suspension of 
its operations.
Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the 
following additional events are 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 days after notice thereof shall 
have been given by the Bank to the
Borrower;
(b)
the events specified in paragraphs (c) and (d) 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:
Page  6
(a)
the Borrower's State Council has approved the Loan Agreement; and
 
(b)
the Subsidiary Loan Agreements have been executed on behalf of the 
Borrower, Sichuan and EHDC.
Section 6.02. The following are specified as additional matters, within the 
meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion 
or opinions to be furnished to the Bank:
(a)
that the Project Agreement has been duly authorized or ratified by EHDC, 
and is legally binding upon EHDC in accordance with its terms; and
(b)
the Subsidiary Loan Agreements have been duly authorized or ratified by 
the Borrower, Sichuan and EHDC and are legally binding upon the Borrower, Sichuan and 
EHDC in accordance with their
terms. 
Section 6.03. The date ninety (90) days after the date of this Agreement is 
hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VII
Representatives of the Borrower; Addresses
Section 7.01. Except as provided in Section 2.08 of this Agreement, the Minister 
of Finance 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 Borrower:
Ministry of Finance
Sanlihe
Beijing 100820
People's Republic of China
Cable address:
Telex:
 
FINANMIN
22486 MFPRC CN
 
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
197688 (TRT),
Washington, D.C.
248423 (RCA),
 64145 (WUI) or
 82987 (FTCC)
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.
PEOPLE'S REPUBLIC OF CHINA
Page  7
By /s/ Zhu Qizhen
Authorized Representative
INTERNATIONAL BANK FOR
   RECONSTRUCTION AND DEVELOPMENT
By /s/ Marianne Haug
Acting Regional Vice President
Asia
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             Dollar Equivalent)    to be Financed
(1) Civil works              300,000,000        100% of foreign
                                                expenditures
(2) Goods                     30,000,000        100% of foreign
                                                expenditures,
                                                100% of local
                                                expenditures
                                                (ex-factory cost)
(3) Consultants'              12,000,000        100%
    services
    and training
(4) Unallocated               38,000,000
                              __________
         TOTAL               380,000,000
                             ===========
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 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, 
except that withdrawals, in an aggregate amount not exceeding the equivalent of 
$38,000,000, may be made in respect of Categories 1 and 3 on account of payments made 
for expenditures before that date but after September 1, 1990.
Page  8
SCHEDULE 2
Description of the Project
The objectives of the Project are to assist in: (i) alleviating acute power 
shortages in Sichuan through the provision of additional generation capacity, (ii) 
transferring modern technology and introducing efficient dam construction method, 
(iii) enhancing institutional development of EHDC, and (iv) promoting optimal 
operation of the power system, prudent financial management and manpower development.
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:
Provision of preparatory works, including access roads and bridges, water and 
electricity supply, communication links, and various construction plants and site 
facilities.
Part B:
Construction of of a parabolic, double curvature arch dam about 240 meter (m) 
high and about 763 m long, across the Yalong River, together with underground 
powerhouse complex, a log conveyance system, and appurtenant works and structures.
Part C:
Provision and installation of six 550-MW generating units and associated 
electrical equipment, including a 550-kV step-up substation.
Part D:
Resettlement of about 30,000 people affected by the Project.
Part E:
Establishment of a science station for monitoring, studies and environmental 
management.
Part F:
Provision of consultants' services for (i) engineering, procurement, and 
management of construction, and (ii) preparation of future power projects.
Part G:
Carrying out studies on: (i) power pricing in Sichuan, (ii) optimal power plant 
and reservoir operation, (iii) safety of structures; (iv) monitoring of energy 
dissipation facilities; and (v) powerhouse ventilation.
Part H:
Provision of staff training, computers, and application software and 
accessories.
*      *     *
The Project is expected to be completed by September 30, 2000.
SCHEDULE 3
Amortization Schedule
Payment of Principal
Date Payment Due
(expressed in dollars)*
Page  9
On each March 1 and September 1
beginning March 1, 2001
through   March 1, 2011
17,275,000
 
On September 1, 2011
17,225,000
 
_____________________________
*
The figures in this column represent dollar equivalents determined as of the 
respective dates of 
withdrawal. See General Conditions, Sections 3.04 and 4.03.
 
Premiums on Prepayment
Pursuant to Section 3.04 (b) of the General Conditions, the premium payable on 
the principal amount of any maturity of the Loan to be prepaid shall be the percentage 
specified for the applicable
time of prepayment below:
Time of Prepayment
Premium
 
The interest rate (expressed
as a percentage per annum)
applicable to the Loan on the
day of prepayment multiplied
by:
Not more than three years
0.15
before maturity
More than three years but
0.30
not more than six years
before maturity
More than six years but
0.55
not more than 11 years
before maturity
More than 11 years but not
0.80
more than 16 years
before maturity
More than 16 years but not
0.90
more than 18 years
before maturity
More than 18 years
1.00
before maturity
Page  10
SCHEDULE 4
Procurement and Consultants' Services
Section I.
Procurement of Goods and Works
 
Part A:
International Competitive Bidding
 
1.
Except as provided in Part C hereof, goods and works shall be procured under 
contracts awarded in accordance with procedures consistent with those set forth in 
Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" 
published by the Bank in May 1985 (the Guidelines).
2.
Bidders for works included under Part B of the Project shall be prequalified as 
provided in paragraph 2.10 of the Guidelines.
Part B:
Preference for Domestic Manufacturers
 
In the procurement of goods in accordance with the procedures described in Part 
A.1 hereof, goods manufactured in China may be granted a margin of preference in 
accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the 
Guidelines and paragraphs 1 through 4 of Appendix 2 thereto.
Part C:
Other Procurement Procedures
 
Items or groups of items estimated to cost less than the equivalent of $200,000 
per contract, up to an aggregate amount equivalent to $2,000,000, may be procured 
under contracts awarded through limited international bidding procedures on the basis 
of evaluation and comparison of bids obtained from at least three qualified suppliers 
eligible under the Guidelines and in accordance with procedures set forth in Sections 
I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55, 2.56 thereof).
Part D:
Review by the Bank of Procurement Decisions
 
1.
Review of prequalification:
 
With respect to the prequalification of bidders as provided in Part A.2 hereof, 
the procedures set forth in paragraph 1 of Appendix 1 to the Guidelines shall apply.
2.
Review of invitations to bid and of proposed awards and final contracts:
 
(a)
With respect to each contract estimated to cost the equivalent of 
$5,000,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to 
the Guidelines shall apply. Where payments for such contract are to be made out of the 
Special Account, such procedures shall be modified to ensure that the two conformed 
copies of the contract required to be furnished to the Bank pursuant to said paragraph 
2 (d) shall be furnished to the Bank prior to the making of the first payment out of 
the Special Account in respect of such contract.
(b)
With respect to each contract not governed by the preceding paragraph, 
the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall 
apply. Where payments for such contract are to be made out of the Special Account, 
said procedures shall be modified to ensure that the two conformed copies of the 
contract together with the other information required to be furnished to the Bank 
pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to 
be furnished
pursuant to paragraph 4 of Schedule 5 to this Agreement.
3.
The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 
to the Guidelines.
Section II.
Employment of Consultants
 
1.
In order to assist in carrying out work under Part B of the Project, the 
Borrower and EHDC shall: (i) employ a Special Board of Consultants to, among other 
things, review detailed construction design and advise on technical and construction 
Page  11
problems encountered during Project implementation; and (ii) continue to employ 
consultants for the design and supervision of construction.
2.
The Borrower and EHDC shall employ consultants to assist in carrying out Part G 
of the Project.
3.
The qualifications, experience and terms and conditions of employment shall be 
satisfactory to the Bank. Such consultants shall be selected in accordance with 
principles and procedures satisfactory to the Bank on the basis 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.
SCHEDULE 5
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 
$20,000,000 to be withdrawn from the Loan Account and deposited in the Special Account 
pursuant to paragraph 3 (a) of this Schedule.
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 a deposit or deposits which do not exceed the 
aggregate amount of the Authorized Allocation. On the basis of such request or 
requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account 
and deposit in the Special Account such amount or amounts as the Borrower shall have 
requested.
(b)
(i)
For replenishment of the Special Account, theBorrower 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 
Page  12
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; or
(b)
once the total unwithdrawn amount of the Loan allocated to the eligible 
Categories, less the amount of any outstanding special commitment 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; (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.
(d)
Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of 
this Schedule shall be credited to the Loan Account for subsequent withdrawal or for 
cancellation in accordance with the
relevant provisions of this Agreement, including the General Conditions.