PROJECT AGREEMENT. (Hebei Energy Efficiency Improvement and Emission Reduction Project) between ASIAN DEVELOPMENT BANK. and

Transcription

1 LOAN NUMBER 2835-PRC PROJECT AGREEMENT (Hebei Energy Efficiency Improvement and Emission Reduction Project) between ASIAN DEVELOPMENT BANK and HEBEI PROVINCIAL GOVERNMENT DATED 6 MARCH 2012 PRC 44012

2 PROJECT AGREEMENT PROJECT AGREEMENT dated 6 March 2012 between ASIAN DEVELOPMENT BANK ( ADB ) and HEBEI PROVINCIAL GOVERNMENT ( HPG ). WHEREAS (A) by a Loan Agreement of even date herewith between People s Republic of China ( Borrower) and ADB, ADB has agreed to make to the Borrower a loan of one hundred million Dollars ($100,000,000) on the terms and conditions set forth in the Loan Agreement, but only on the condition that the proceeds of the loan be made available to HPG and that HPG agrees to undertake certain obligations towards ADB as set forth herein; and (B) HPG, in consideration of ADB entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations set forth herein; NOW THEREFORE the parties hereto agree as follows: ARTICLE I Definitions Section Wherever used in this Project Agreement, unless the context otherwise requires, the several terms defined in the Loan Agreement and in the Loan Regulations (as so defined) have the respective meanings therein set forth. ARTICLE II Subloans Section (a) Except as ADB may otherwise agree, the proceeds of each part of the Loan made available by the Borrower to HPG shall be used only for making through HXB a Subloan to a Subborrower in respect of which such part of the Loan was withdrawn from the Loan Account and shall be applied exclusively to the cost of Goods and Works required to carry out the Subproject in respect of which such part of the Loan was withdrawn. (b) Except as ADB may otherwise agree, all Goods and Works shall be procured in accordance with the provisions of Schedule 2 to the Loan Agreement. Section (a) HPG shall cause HFB to establish immediately after the Effective Date, (i) an account at HXB (US Dollar account) for purposes of transfer of the Loan proceeds to the Subborrower s accounts, and (ii) the RMB account. The currency of the US Dollar account shall be the Dollar, and currency to the RMB account shall be CNY.

3 2 HPG shall ensure that the Loan proceeds are transferred from the US Dollar account to the Subborrower s accounts within 5 working days from the receipt of funds by HFB from ADB. Subloans shall be repaid into the REF account, and their interests shall be paid into IDA. (b) Notwithstanding any other provision of this Project Agreement, no withdrawals shall be made from the Loan Account in respect of any Subproject of the First Batch until (i) HFB shall have submitted to ADB a certificate that the Subloan Agreement related to any such Subproject, which shall include the terms and conditions as referred to in Section 3.02(c) of the Loan Agreement and Sections 2.03 and 2.04 of this Project Agreement, shall have been duly executed and delivered on behalf of HXB and the Subborrower and shall have become fully effective and binding upon the parties thereto in accordance with their terms; and (ii) HPG shall have certified to ADB that the ESMS for the Project, as attached to the PAM, shall have been endorsed and adopted by the PMO. (c) The SAW procedure as provided in the PAM shall be used for each withdrawal request in accordance with the Loan Disbursement Handbook, Special Disbursement Guidelines Applicable to the Financial Intermediation Loan and any other arrangements agreed upon between the Borrower and ADB. (d) Without limiting the generality of paragraphs (b) and (c) of this Section, HFB shall, before requesting the first withdrawal for a particular Subloan, submit to ADB (i) an application for approval of such Subloan; (ii) a copy of the Subloan Agreement; (iii) summary sheet using simultaneous application for SAW procedure which lists the individual milestone payment under the Subloan agreement covered in the withdrawal application; (iv) certificate by the PMO that the milestone covered in the withdrawal application has been achieved, and (v) if retroactive financing is claimed in accordance with Section 3.03(f) of the Loan Agreement, the list of payment invoices under each contract package for which such retroactive financing is claimed. Such application shall be in a form satisfactory to ADB and shall contain a description and appraisal of the Subproject, and such other information as ADB shall reasonably request. For any subsequent withdrawal applications, HFB shall submit to ADB (i) summary sheet using simultaneous application for SAW procedure which list the individual milestone payment under the Subloan Agreement covered in the withdrawal application, and (ii) certificate by the PMO that the milestone covered in the withdrawal application has been achieved. (e) Except as ADB may otherwise agree, the first applications and information required by paragraph (d) of this Section shall be submitted to ADB not later than 2 years after the Effective Date. Section (a) HPG shall ensure that each Subloan shall be provided under a Subloan Agreement, in form and substance acceptable to ADB, by which HXB shall obtain rights adequate to protect the interests of the Borrower, HPG, HXB and ADB. The terms and conditions of each Subloan Agreement shall include: (i) commitment charge and interest at the rates acceptable to ADB; (ii) all obligations applicable to the Subborrower as provided in this Project Agreement; and (iii) a milestone based on disbursement schedule acceptable to ADB and in accordance with the PAM. (b) Except as ADB may otherwise agree, the amortization schedule applicable to each Subloan shall not extend beyond 5 years, including a grace period not exceeding 3 years, from the date when such Subloan is authorized for withdrawal from the Loan Account.

4 3 Section Without limiting the generality of the foregoing provisions of Section 2.03(a) of this Project Agreement and in addition to any other provisions which a prudent lender would request, HPG shall ensure that each Subloan Agreement shall include provisions to the effect that: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) the Subborrower shall carry out and operate the Subproject with due diligence and efficiency and in accordance with sound applicable technical, financial, business and development practices, including maintenance of adequate accounts and records; the proceeds of the Loan shall be used only for procurement in member countries of ADB, in accordance with procedures acceptable to ADB, of Goods which are produced in and supplied from, and Works supplied from, such countries; the Goods and Works shall be used exclusively in the carrying out of the Subproject; ADB, HPG and HXB shall each have the right to inspect such Goods and Works, the Subproject and any relevant records and documents, and in accordance with ADB s Anticorruption Policy (1998, as amended to date), ADB shall have the right to audit and examine the records and accounts of the Subborrower and all contractors, suppliers, consultants, and other service providers as they relate to the Subproject; the Subborrower shall ensure that appropriate insurance shall be in place against such risks and in such amounts as shall be consistent with sound business practice, and without any limitation upon the foregoing, such insurance shall cover hazards incident to the acquisition, transportation and delivery of Goods to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods; ADB, HPG and HXB shall each be entitled to obtain all such information as each shall reasonably request relating to the Subloan, the Goods, Works, the Subproject, the Subborrower, and other related matters; Subloans shall be disbursed by HXB, upon receipt of confirmation by PMO through HFB that the relevant milestone has been achieved; and HPG shall be entitled to suspend or terminate further access by the Subborrower to the use of the proceeds of the Loan upon failure by the Subborrower to perform its obligations under the Subloan Agreement. Section HPG, through HFB, shall cause HXB to promptly and effectively exercise its rights in relation to each Subproject in accordance with the Fund Management Regulation and the RMB Accounting Management Agreement, and in such manner as to protect the interests of the Borrower, HPG, HXB, and ADB.

5 4 ARTICLE III Particular Covenants Section (a) HPG shall, and shall cause the PMO and HXB to, carry out the Project with due diligence and efficiency and in conformity with sound applicable technical, financial, business and development practices. (b) In the carrying out of the Project and in the conduct of its business, HPG shall, and shall cause the PMO and HXB to, perform all the obligations set forth in the Loan Agreement, and all obligations set forth in the Schedule to this Project Agreement. Section HPG shall at all times make adequate provision to protect itself against any loss resulting from changes in the rate of exchange between CNY and the currency or currencies in which HPG and HXB s outstanding money obligations will have to be met. Section HPG shall cause HXB not to make a Subloan to any Subborrower unless such Subborrower has at its disposal, or has made appropriate arrangements to obtain as and when required, all local currency funds, including adequate working capital, and other resources which are required by such Subborrower for the carrying out of its Subproject in respect of which the Subloan is to be made. Section HPG shall, and shall cause the PMO, HXB, the Subborrowers and any parties carrying out the Subprojects of the Subsequent Batches to, maintain records and accounts adequate to record the progress of the Project and of each Subproject (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, the operations and financial condition of HPG and HXB. Section (a) ADB and HPG shall cooperate fully to ensure that the purposes of the Loan will be accomplished. (b) HPG shall, and shall cause the PMO and HXB to, promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its obligations under the Loan Agreement, this Project Agreement, the Fund Management Regulation or the RMB Accounting Management Agreement, or the accomplishment of the purposes of the Loan. (c) ADB and HPG shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, HPG, HXB and the Loan. Section (a) HPG shall, and shall cause the PMO and HXB to, furnish to ADB all such reports and information as ADB shall reasonably request concerning (i) the Loan and the expenditure of the proceeds thereof; (ii) the Project; (iii) the Subborrower, parties carrying out the Subprojects of the Subsequent Batches, the Subprojects and the Subloans; (iv) the administration, operations and financial condition of PMO and HXB; and (v) any other matters relating to the purposes of the Loan.

6 5 (b) Without limiting the generality of the foregoing, HPG shall, and shall cause the PMO and HXB to, furnish to ADB periodic reports on the execution of the Project and on their respective operation and management. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the period under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following period. (c) Promptly after the Loan Closing Date, but in any event not later than 6 months after the said closing date or such later date as ADB may agree for this purpose, HPG shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the utilization of the Loan, the execution of the Subprojects of the First Batch and Subprojects of the Subsequent Batches implemented before the Loan Closing Date, their costs, the performance by the relevant agencies of HPG and HXB of their obligations under this Project Agreement and the accomplishment of the purposes of the Loan. Section (a) HPG shall, and shall cause the PMO and HXB to, have their accounts (including US Dollar account and RMB account) and financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB, and shall, promptly after their preparation but in any event not later than 6 months after the close of the fiscal year to which they relate, furnish to ADB (i) certified copies of such audited accounts and financial statements; and (ii) the report of the auditors relating thereto (including the auditors' opinion on the use of Loan proceeds and compliance with the covenants of the Loan Agreement), all in the English language. HPG shall cause HXB to furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. (b) HPG shall, and shall cause HXB to, enable ADB, upon ADB's request, to discuss their respective financial statements and financial affairs from time to time with the respective auditors appointed by HPG pursuant to subsection (a) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of HPG unless HPG shall otherwise agree. Section HPG shall cause the PMO and HXB to enable ADB's representatives to inspect any Subborrower, parties carrying out the Subprojects of the Subsequent Batches, any Subproject, the Goods and Works, and any relevant records and documents. Section (a) HPG shall, promptly as required, cause HXB to take all action within its powers to maintain its corporate existence, to carry on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project or in the conduct of its business. (b) HPG shall cause HXB to at all times conduct its business in accordance with sound applicable technical, financial, and business practices, and under the supervision of competent and experienced management and personnel.

7 6 Section HPG shall cause HXB to ensure that each of its subsidiaries (if any) observe and perform the obligations of HXB under this Project Agreement to the extent to which such obligations may be applicable thereto, as though such obligations were binding upon each of such subsidiaries. Section Except as ADB may otherwise agree, HPG shall, and shall cause HXB to, duly perform all their respective obligations under the Loan Agreement and shall not take, or concur in, any action which would have the effect of assigning, amending, abrogating or waiving any rights or obligations of the parties under the Loan Agreement. ARTICLE IV Effective Date; Termination Section This Project Agreement shall come into force and effect on the date on which the Loan Agreement comes into force and effect. ADB shall promptly notify HPG of such date. Section All the provisions of this Project Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Loan Agreement. ARTICLE V Miscellaneous Section Any notice or request required or permitted to be given or made under this Project Agreement and any agreement between the parties contemplated by this Project Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand, mail or facsimile to the party to which it is required or permitted to be given or made at its address hereinafter specified, or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For ADB Asian Development Bank 6 ADB Avenue Mandaluyong City 1550 Metro Manila Philippines

8 7 For HPG Facsimile Numbers: (632) (632) Hebei Provincial Government Hebei Province Power Demand Side Management and Instruction Center No.19 Huaxi Road, Xinhua District, Shijiazhuang, Hebei People s Republic of China Facsimile Numbers: Section (a) Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Project Agreement by or on behalf of HPG may be taken or executed by its Governor or by such other person or persons as he shall so designate in writing notified to ADB. (b) HPG shall furnish to ADB sufficient evidence of the authority of each person who will act under subsection (a) hereinabove, together with the authenticated specimen signature of each such person. Section No delay in exercising, or omission to exercise, any right, power or remedy accruing to either party under this Project Agreement upon any default shall impair any such right, power or remedy or be construed to be a waiver thereof or an acquiescence in such default; nor shall the action of such party in respect of any default, or any acquiescence in any default, affect or impair any right, power or remedy of such party in respect of any other or subsequent default.

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10 9 SCHEDULE Execution of Project; Environmental, Social and Financial Matters Project Management 1. HPG shall ensure that the PMO is equipped with professionally skilled staff, reasonable office space, equipment, and adequate financial resources, required for implementation of the Project, throughout the Project Implementation Period. Policy Change 2. HPG shall inform ADB, in due course and without delay, of any changes in its energy efficiency regulations. In particular, HPG shall inform ADB of any changes in its policies and regulations to the industrial energy efficiency, including incentive mechanisms for promoting energy efficiency, benchmark standards for energy efficiency for different industries, regulations for phasing out obsolete and inefficient industrial capacity and to provide further incentives to promote the ESCO industry. Environment 3. For the Subprojects of the First Batch, the following provisions shall apply: (a) (b) (c) (d) HPG shall ensure that the preparation, design, construction, implementation, operation and decommissioning of the Subproject and all Project facilities comply with (i) the Borrower s all applicable laws and regulations relating to environment, health and safety; (ii) the Environmental Safeguards; and (iii) all measures and requirements set forth in the Project IEE, EMP, ESMS and any additional measures set forth in the annual Safeguards Monitoring Report. HPG shall make available and cause Subborrowers and the PMO to make available, necessary budgetary and human resources to fully implement the EMP. HPG shall ensure, or cause to be ensured, that all bidding documents and contracts for Works contain provisions that require contractors to (i) comply with the measures relevant to the contractor set forth in the Project IEE, EMP, ESMS, and any additional measures set forth in the annual Safeguards Monitoring Report; (ii) make available a budget for all such environmental measures; and (iii) provide HPG with a written notice of any unanticipated environmental risks or impacts that arise during construction, implementation or operation of the project that were not considered in the Project IEE, EMP and ESMS. HPG shall cause the PMO to do the following:

11 10 Schedule (i) (ii) (iii) submit annual safeguards monitoring reports to ADB and disclose relevant information from such reports to affected persons promptly upon submission; if any unanticipated environmental risks and impacts arise during construction, implementation or operation of the project that were not considered in the Project IEE, EMP and ESMS, promptly inform ADB of the occurrence of such risks or impacts, with detailed description of the event and proposed additional measures; and report any actual or potential breach of compliance with the measures and requirements set forth in the EMP and ESMS promptly after becoming aware of the breach. 4. For Subprojects of the Subsequent Batches, HPG shall ensure and cause the PMO to ensure that Subprojects are selected and approved in accordance with the ESMS and selection criteria as provided in the PAM, and HPG, through the PMO, shall cause the parties to carry out such Subprojects to ensure that: (a) the Subproject is designed, constructed, and operated in accordance with the Borrower s environmental laws and regulations, the Environmental Safeguards and ESMS; (b) the institutional arrangements for effective implementation of environmental safeguards as described in the ESMS are in place before commencement of Works and selection of Subprojects; (c) (d) (e) (f) (g) procedures as specified in the ESMS are fully implemented in a timely manner; mitigation measures included in the Subprojects EMPs are updated at the detailed engineering design stage and incorporated into the bidding documents and Works contracts; any adverse impact on the environment that may arise from Subproject implementation activities is promptly mitigated or minimized and reported to ADB in accordance with the ESMS and EMPs; the ESMS and EMPs are implemented in full to address the environmental aspects during the construction of the subprojects, including actions to be taken for auditing, measuring, and monitoring the environment and safety conditions of the Works, and responding to breaches in environmental or safety requirements; and environmental and safety aspects, and issues are reported on an annual basis to ADB in accordance with the PAM.

12 11 Schedule Social Safeguards 5. HPG shall ensure and cause the PMO to ensure that (a) Subprojects are selected in accordance with the ESMS and selection criteria as provided in the PAM to ensure in particular that (i) no land acquisition is required, and (ii) there are no adverse impacts on ethnic minorities; (b) the Subborrowers and any parties to carry out the Subprojects of the Subsequent Batches design, construct, and operate the Project in accordance with the Borrower s relevant laws and regulations, the Safeguard Policy Statement, and the ESMS; and (c) for Subprojects of the Subsequent Batches, Subproject proposals are screened and social safeguard categorization forms are submitted to ADB for approval to confirm that there are no social safeguard impacts. Gender 6. HPG, through the PMO, shall cause the Subborrowers and any parties to carry out the Subprojects of the Subsequent Batches to ensure that the Subprojects are implemented in accordance with the Borrower s laws and policy commitments as they relate to women s rights and gender equality and ADB s Gender and Development Policy (1998). Health Risks 7. In coordination with the local health bureaus of the Borrower, HPG, through the PMO, shall cause the Subborrowers and any parties to carry out the Subprojects of the Subsequent Batches to ensure that (a) the civil works contractors disseminate information and conduct awareness training on the risks and prevention measures of HIV/AIDS and other communicable diseases to their employees, temporary laborers and family members, and subcontractors during the Project Implementation Period; (b) these requirements are included in the civil works contracts, monitored and reported annually to ADB through HPG; and (c) occupational health and safety issues associated with the facility operation are addressed in accordance with the ESMS. Labor Standards 8. HPG, through the PMO, shall cause the Subborrowers and any parties to carry out the Subprojects of the Subsequent Batches to ensure that the civil works contractors (a) provide timely payment of wages and safe working conditions to all workers; (b) pay equal wages to women and men employees for equivalent labor; (c) do not employ child labor as required by the Borrower s relevant laws and regulations; (d) the contractors involved in the Project implementation maximize the employment of local people, particularly women and ethnic minorities, who meet the job and efficiency requirements for construction and operation and maintenance of the Project facilities; and (e) such workers are provided with adequate on-the-job training and safety training. Grievance Redress Mechanism 9. HPG shall ensure that, within 2 months of the Effective Date, a grievance redress mechanism, acceptable to ADB and in accordance with the PAM, is established and functioning effectively to (a) review and document eligible complaints of Project stakeholders; (b) proactively address grievances; (c) provide the complainants with notice of the chosen mechanism/action; and (d) prepare periodic reports to summarize (i) the number of

13 12 Schedule complaints received and resolved, (ii) chosen actions, and (iii) final outcomes of the grievances and make these reports available to ADB through the procedures alluded in the ESMS. Eligible complaints shall include (a) those related to the Project; (b) any of the service providers; (c) any person responsible for carrying out the Project or Subprojects; (d) complaints on misuse of funds and other irregularities; and (e) grievances due to any safeguards and gender issues. Applicability of the ESMS 10. HPG, through the PMO, shall cause the Subborrowers and any parties to carry out the Subprojects of the Subsequent Batches to ensure that all Subprojects shall be implemented in accordance with the ESMS during the entire Project Implementation Period. Selection of Subproject 11. HPG shall ensure that the PMO select and approve all Subprojects of the Subsequent Batches, in accordance with the detailed procedures and the selection criteria as agreed between ADB and HPG and set forth in the ESMS and the PAM. HPG shall further ensure that any proposals for the Subprojects of the Subsequent Batches to be identified before the Loan Closing Date shall be submitted to ADB for its concurrence. Interest Difference Account 12. Within 3 years of the Effective Date, HPG shall develop guidelines, in a manner and substance acceptable to ADB, for managing IDA. Such guidelines shall include, among others, (a) reward mechanism to provide interest rebates to Subborrowers subject to successful completion of the relevant Subprojects and achieving the stated energy savings; (b) a guarantee fund to act as the first loss reserve for providing credit guarantees to smallscale energy efficiency projects; and (c) institutional and administration mechanism including (i) management structure of IDA and its activities and staffing, (ii) accounting and funds flow, and (iii) reporting. Funding of IDA shall principally come from the retained interest spread between the Subloan interest rate to the Subborrowers and the interest rate of the Loan. HPG shall ensure that no disbursements shall be made from IDA until the guidelines have been in place, and further ensure that IDA shall be established, maintained, replenished and liquidated for supporting the Project in accordance with the terms in the guidelines. Governance and Anticorruption 13. HPG shall cause the Subborrowers and any parties to carry out the Subprojects of the Subsequent Batches to ensure compliance with ADB s Anticorruption Policy (1998, as amended to date). Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the project or subprojects. To ensure this, HPG, through the PMO, shall ensure that all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of consultants, contractors, HXB, Subborrowers, suppliers, and other service providers as they relate to the Project and Subprojects. To promote transparency and strengthen governance, HPG, through the PMO, shall ensure that periodic inspection of contractors is undertaken to ensure that fund withdrawal and settlement procedures are followed. HPG shall ensure that HXB maintains

14 13 Schedule proper internal controls in its operations and shall cause HXB to adopt acceptable computerized accounting and management information system, and prepare financial statements and reports in accordance with national accounting standards. Project Performance and Monitoring 14. HPG, through the PMO, shall cause the Subborrowers and parties to carry out the Subprojects of the Subsequent Batches to ensure that Project outcomes and outputs are monitored and evaluated through a Project performance monitoring system, as agreed to by HPG and ADB in accordance to the PAM.