LOAN AGREEMENT. between. REPUBLIC OF ECUADOR and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Transcription

1 Public Disclosure Authorized CONFORMED COPY LOAN NUMBER 1231 EC Public Disclosure Authorized LOAN AGREEMENT (Fourth Highways Project) Public Disclosure Authorized between REPUBLIC OF ECUADOR and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized Dated May 24, 1976

2 LOAN AGREEMENT AGREEMENT, dated May 24, 1976, between REPUBLIC OF ECUADOR (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RE- CONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank).

3 -4- ARTICLE II The Loan Section The Bank agrees to lend to the Borrower, on the terms and conditions ina the Loan Agreement set forth or referred to, an amount in various currencies equivalent to ten million five hundred thousand dollars ($10,500,000). Section The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, 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. Section Except as the Bank shall otherwise agree, the goods, works.ad services (other than consultnts' services) for the Project to be financed out of the proceeds of the Loan, shall be procured in this Agreement. accordance with the provisions of Schedule 4 to Section The Closing Date shall be December 31, 1979 or such later date as the Bank may establish upon request of the Borrower. The Bank shall promptly notify the Borrower of such later

4 -5- Section The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section Interest and other charges shall be payable semi-annually on April 15 and October 15 in each year. Section The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement.

5 -6- ARTICLE III Execution of the Project Sectiox (a) The Borrower shall carry out (i) Parts A, B, C, D and E of the Project through MOP, and (ii) Part F of the Project through JUNAPLA, FONAPRE, MOP and MAG, with due diligence and efficiency and in conformity with appropriate engineering, and administrative financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) For the purposes of carrying out Part F of the Project, the Borrower shall maka available to FONAPRE by way of grant, the proceeds of the Loan allocated from time to time to Category (2) (d) of Schedule 1 to this Agreement. Section Except as the Bank shall otherwise agree, the Borrower shall take all necessary measures to ensure that no domestic road construction contractor shall be permitted, as from one year after the date of this Agreement, to take part in any bidding invited by MOP for paved road construction contracts unless such contractor shall have received the technical assistance to be provided under Part D (1) of the Project. Section (a) In order to assist the Borrower in carrying out the Project, the Borrower shall employ engineering, management and agricultural consultants and experts acceptable to the Bank under terms and conditions satisfactory to the Bank.

6 -7- (b) In order to assist MOP in ensuring efficient coordination in respect of the carrying out of the various Parts of the Project, the Borrower shall cause MOP to employ within MOP a Project Coordinator whose qualifications, terms of reference and scope of services shall be satisfactory to the Bank. Section The Borrower shall (a) furnish to the Bank, for review, the program referred to in Part B (2) of the Project, together with a timetable for the implementation thereof; and (b) afford the Bank a reasonable opportunity to comment on such program and timetable. Section (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request.

7 -8- (b) The Borrower shall: (i) maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. Section The Borrower shall take all such action as shall be necessary to acquire as and when reeded all such land and rights in respect of land as shall be required for carrying out the Project. Section All roads included in Part A of the Project shall conform to the highway design standards set forth in Annex A of Schedule 2 to this Agreement, as such standards may be supplemented or amended from time to time by agreement between the Borrower and the Bank.

8 -9- ARTICLE IV Other Covenants Section (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, specific security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property;

9 - 10- and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or gimilar functions, for the Borrower. Section The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with cansistently maintained 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. Section (a) The Borrower shall (i) cause all the paved and gravel surfaced public roads under MOP's jurisdiction to be adequately maintained and cause all necessary repairs thereof to be made, all in accordance with sound engineering practices; and (ii) provide, promptly as needed, the funds, facilities, services and other resources required for the foregoing. (b) The Borrower shall (i) cause all of its highway and road construction and maintenance machinery and equipment required for maintenance of the roads referred to in paragraph (a) above to be

10 adequately maintained and all necessary repairs and renewals thereof to be made, all in accordance with sound engineering practices; and (ii) cause suitable workshops to be established and maintained in suitable places for the foregoing. (c) Without any limitation or restriction upon the generality of the foregoing, the Borrower shall take all necessary action to (i) cause the dimensions, axle-loading and weight limits of the vehicles using the paved public roads under MOP's jurisdiction to be kept within the limits provided by law; and (ii) and consistent enforcement of the Ley.de Caminos. ensure permanent (d) Section 5.09 of the loan agreement dated, September 20, 1957, between the Borrower and the Bank is hereby amended in accordance with the preceding paragraphs of this Section. Section The Borrower shall take all necessary steps to: (a) establish not later than one year after the date of this Agreement or such other date as shall be agreed between the Borrower and the Bank, and maintain and operate thereafter, an adequately staffed agency within MOP to be responsible for the planning and coordination of all land transport within the territories of the Borrower and for the administration and regulation of road transport, with such organization and functions as shall be required for the purpose, including the responsibility for (i) ensuring an appropriate allocation of the public sector resources available for land transportation, on the basis of soundly determined investment priorities and (ii) undertaking the functions related to land transport of the sectoral planning units provided

11 in Article 8 of the Regulations of the Sistema, such functions to include, inter alia: (1) proposing to the Sistema the investment programs and projects to be carried out in the field of land transportation; (2) participating in interministerial working groups on project identification, preparation, appraisal, promotion and implementation; and (3) cooperating with JUNAPLA and with other sectoral planning units in other aspects of the overall coordination of public investment programs; (b) establish, not later than two years after the date of this Agreement or such other date as shall be agreed between the Borrower and the Bank, and thereafter to maintain and operate, an adequately staffed agency of the Borrower to be responsible for the planning and coordination of all modes of transport within the territories of the Borrower with such organization and functions as shall be required for the purpose; and (c) establish not later than one year after the date of this Agreement or such other date as shall be agreed between the Borrower and the Bank, and maintain thereafter an adequately staffed unit within MOP to be responsible for the collection of highway traffic data, and the carrying out and supervision of road planning, programming and preinvestment studies.

12 -13 - ARTICLE V Effective Date; Termination Section The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section (c) of the General Conditions, namely that all necessary acts, consents and approvals to be performed or given by the Borrower, by its political subdivisions or agencies (including Banco Central del Ecuador), or by any agency of any such political subdivision, or otherwise to be performed or given in order to authorize the carrying out of the Project and to enable the Borrower to perform all of the obligations of the Borrower in the Loan Agreement contained together with all necessary powers and rights in connection therewith, have been performed or given. Section The following is specified as an additional matter within the meaning of Section (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely that all acts, consents and approvals referred to in Section 6.01 of this Agreement, together with all necessary powers and rights in connection therewith, have been duly and validly performed or given and that no other such acts, consents or approvals are required in order to authorize the carrying out of the Project and to enable the Borrower to perform all of the obligations of the Borrower in the Loan Agreement contained. Section The date of August 23, 1976, is hereby specified for the purposes of Section of the General Conditions.

13 -14- ARTICLE VI Representative of the Borrower; Addresses Section The Ministro de Obras Pdblicas y Comunicaciones of the Borrower is designated as representative of the Borrower for the purposes of Section of the General Conditions. Section The following addresses are specified for the purposes of Section of the General Conditions: For the Borrower: Ministro de Obras P6blicas y Comunicaciones 6 de Diciembre y Wilson Quito, Ecuador Cable address: MINOBRAS Quito, Ecuador with copies to: and to: Ministro de Finanzas y Credito PSblico 10 de Agosto y Jorge Washington Quito, Ecuador Cable address: MINFINANZAS Quito, Ecuador Presidente de la Junta Nacional de Planificaci6n 10 de Agosto 608 Quito, Ecuador

14 -15- Cable address: JUNAPLA Quito, Ecuador and for the purpose of any notice or request required or permitted to be given or made under Article X of the General Conditions, also: For the Borrower: Procurador General de la Repfiblica Avenida Colombia 248 Oficina 904 Quito, Ecuador For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: INTBAFRAD Washington, D.C.

15 - 16- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, 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. REPUBLIC OF ECUADOR By /s/ Cesar Robalino Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By/s/ E. Lerdau Acting Regional Vice President Latin America and the Caribbean

16 * 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 4,600,000 40% (representing the estimated foreign expenditure component) (2) Consultants' services: (a) Design and supervision of Part A of the Project: 600,000 (i) domes- 50% (representtic con- ing the estimated sultants foreign expenditure component) (ii) foreign 100% of foreign consultants expenditures

17 Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (b) Technical as- 3,400, % of foreign sistance for expenditures Parts B, C and E of the Project (including coordination of the Project) (c) Technical as- 100, % of foreign sistance for expenditures Part D of the Project (d) Technical as- 300,000 75% of foreign sistance for expenditures Part F of the Project (3) Unallocated 1,500,000 TOTAL 10,500,000

18 For the purposes of this Schedule the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan de.- creases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made (a) in respect of expenditures prior to the date of this Agreement except that withdrawals may be made in respect of Category (2) (a) on account of expenditures incurred after December 1, 1975 in an aggregate amount not exceeding the equivalent of $100,000; or (b) on account of expenditures under Category (2) (c) of paragraph 1 of this Schedule until the measures required by Section 3.02 of this Agreement have been taken by the Borrower. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of

19 -20- the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan.

20 -21- SCHEDULE 2 Description of the Project The Project consists of: Part A: Paving and improvement, including realignment where necessary, of the Babahoyo-Balzapamba road (about 49 km). Part B: (1) Review of the operations of the entire Maintenance Department of MOP and specifically its operations in MDP's Primera Divisl6n (which includes the Provinces of Carchi, Imbabura, Pichincha and Esmeraldas), including review of condition of maintenance equipment, technical aspects of maintenance equipment operation and requirements, suitability and training needs of maintenance personnel, and planning, budgeting and controlling of maintenance works. (2) Preparation, on the basis of the findings under Part B (1) and carrying out of a twoyear pilot maintenance program in the said Primera Divisi8n, with a view to extending

21 it to the other Divisiones of MOP. Utilization of sufficient operational equipment for the purpose. Part C: Preparation and carrying out of a program, including staff training, to improve the capabilities of MOP in the fields of: (1) highway planning and preinvestment studies; (2) detailed engineering of highway projects; and (3) application and enforcement of measures for protection of roads and regulation of their use. Part D: (1) Preparation and carrying out of a program designed to improve the capabilities of the Borrower's road construction industry, including a review of the structures and methods of such industry and provision of technical assistance to domestic road construction contractors in the areas of bidding, contracting, cost control, financial planning, personnel management and training, site operations, programming of mobilization,

22 -23 - maintenance, purchases and storage, and equipment management. (2) Provision of technical assistance to assist MOP in (a) preparation and review of prequalification procedures; (b) preparation of bidding documents and evaluation and comparison of bids; (c) the administration and supervision of civil works; and (d) settlement of disputes with respect to civil works contracts. Part E: Provision of technical assistance in respect of the functions of the agencies to be established pursuant to paragraphs (a) and (b) of Section 4.04 of this Agreement particularly in the fields of: (1) transport sector economics; (2) multimodal planning; (3) statistics and information systems; and (4) modal review and evaluation. Part F: Preparation and carrying out of a two-phased program of studies on the area of influence of the proposed trunk road between Puerto Ila and Garrapata, concerning:

23 -24- (1) development of such area's agricultural potential and investments required to realize such agricultural potential; and (2) integrated rural development of such area, including investments in physical infrastructure and social services, this second phase to be carried out only if the investments recommended by the study included in Part F (1) are technically and economically feasible. * e P t The Project is expected to be completed by June 30, 1979.

24 -25- ANNEX A TO SCHEDULE 2 Highway Design Standards Babahoyo-Balzapamba Flat* Flat** Mountainous** Horizontal Vertical Minimum Radius (m) Width - Travelled way (m) Shoulder (m) Maximum Grade (%) *** Minimum Radius - crest (m) sag (i) Sight Distance (m) Design Speed (km/hr) * Class II section (38 km). ** Class III section (11 km). * Limited to a 200 m section.

25 -26- SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars)* April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal.

26 Date Paymezt Lue Payment of Principal (expressed in dollars)* April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 April 15, ,000 October 15, ,000 0 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal.

27 -28- Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1% More than three years but not more than six years before maturity 2-1/4% More than six years but not more than eleven years before maturity 4% More than eleven years but not more than sixteen years before maturity 5-1/2% More than sixteen years but not more than twenty-one years before maturity 7-1/4% More than twenty-one years but not more than twenty-three years before maturity 8% More than twenty-three years before maturity 8-1/2%

28 -29- SCHEDULE 4 Procurement A. General Procedures 1. Works for Part A of the Project shall be procured under contracts to be awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975, (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. (a) Bidders for contracts for civil works under Part A of the Project shall be required to prequalify as described in paragraph 1.3 of Part A of the Guidelines and in acc -I ance with provisions herein and in paragraph B.1 below. A period of at least 45 days shall be allowed for the submission of prequalification documents, such period to begin on the day of delivery of the invitations to the local representatives of member countries of the Bank and Switzerland or, if there are no such local representatives, on the date on which the invitation was sent to the responsible agency of the government of such countries, or on the date of publication of prequalification notices, whichever is later. Copies of such invitation and such notices shall be sent to the Bank at the time of their distribution or publication. (b) For bidding purposes, construction work shall be 0s divided into lots in a manner acceptable to the Bank. The

29 invitation to bid for such work shall, inter alia, specify that (i) bidders may submit bids for one or more lots; (ii) all bids shall be opened and awarded simultaneously; (iii) awards shall be made on the basis of the lowest evaluated bid or combination of bids; and (iv) the Borrower shall have the option of awarding to one contractor a single contract in respect of all lots or separate contracts to different contractors in respect of one or more lots. A period of at least 60 days shall be allowed for the submission of bids. 3. All civil works contracts shall include a price variation formula satisfactory to the Bank, substantially as set forth in Annex A to this Schedule. B. Review of Procurement Decisions by Bank 1. Review of prequalification. The Borrower shall, before prequalification is invited, inform the Bank in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications, of the reasons for the exclusion of any applicant for prequalification, and of the recommendations of the consultants referred to in Section 3.03 (a) of this Agreement shall be furnished by the Borrower to the Bank for its comments before the applicants are notified, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. 2. Review of invitation to bid and of proposed awards and final contracts:

30 -31- With respect to all contracts for civil works under Part A of the Project estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and the reasons for the intended award and shall furnish to the Bank, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.03 (a) of this Agreement, on the evaluation and comparison of the bids received, together with the recommendation for award of the said consultants and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification was invited.

31 (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations and reasons for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.

32 -33 - ANNEX A TO SCHEDULE 4 Price Variation Formula for Civil Works Contracts The price variation formula to be adopted in all conl1-.cts for civil works in accordance with paragraph A.3 of Schedule 4 to this Agreement will be a polynomial of the following form: Ki = p Ai + p2 Bi + p3 Ci + p Di + p5 Ei + p6 Fi Ao Bo Co Do Eo Fo where the following definitions apply: "K" means monthly coefficient of readjustment for each sucn contract; 0 "A" means minimum daily wage of unskilled labor; "B" means price per gallon of diesel oil in Guayaquil including all taxes; "C" means price of a sack (50 kg) of portland cement, including all taxes; "D" means price, including all taxes, of a ton of reinforcing steel bars of 12 mm diameter; "E" means price, including all taxes, of a gallon of cut-back asphalt of MC-0 grade;

33 -34 - "F" means price, including all taxes (FOB), of a bulldozer, type D8 or similar, at the factory; P1 l ip 2, p 3,, I 4,,,, 5", and "p6" mean the percentage of the cost of each item, A through F, of the total estimated cost for any civil works contrace, and two time parameters: o - designating the month in which each civil works contract is signed, and i - designating any month during the contractual period, for which the readjustment coefficient K is being calculated.