CONFORMED COPY

LOAN NUMBER 7842-BA

Federation Project Agreement

(Sarajevo Waste Water Project)

between

INTERNATIONAL BANK FOR RECONSTRUCTION

AND DEVELOPMENT

and

FEDERATION OF BOSNIA AND HERZEGOVINA

Dated June 25, 2010

LOAN NUMBER 7842-BA

PROJECT AGREEMENT
Agreement dated June 25, 2010, entered into between INTERNATIONAL
BANK FOR RECONSTRUCTION AND DEVELOPMENT (Bank) and
FEDERATION OF BOSNIA AND HERZEGOVINA (Project Implementing Entity)
(Project Agreement) in connection with the Loan Agreement (Loan Agreement)
dated March 17, 2010 between Bosnia and Herzegovina (Borrower) and the Bank. The
Bank and the Project Implementing Entity hereby agree as follows:
ARTICLE I - GENERAL CONDITIONS; DEFINITIONS
1.01.

The General Conditions (as defined in the Appendix to the Loan Agreement)
constitute an integral part of this Agreement.

1.02.

Unless the context requires otherwise, the capitalized terms used in this
Agreement have the meanings ascribed to them in the Loan Agreement or the
General Conditions.
ARTICLE II - PROJECT

2.01.

The Project Implementing Entity declares its commitment to the objectives of the
Project. To this end, the Project Implementing Entity shall carry out the Project
in accordance with the provisions of Article V of the General Conditions, and
shall provide promptly as needed, the funds, facilities, services and other
resources required for the Project.

2.02.

Without limitation upon the provisions of Section 2.01 of this Agreement, and
except as the Bank and the Project Implementing Entity shall otherwise agree,
the Project Implementing Entity shall carry out the Project in accordance with the
provisions of the Schedule to this Agreement.
ARTICLE III - REPRESENTATIVE; ADDRESSES

3.01.

The Project Implementing Entitys Representative is the Minister of Finance of

the Federation of Bosnia and Herzegovina.

3.02.

The Banks Address is:

International Bank for Reconstruction and Development
1818 H Street, NW
Washington, DC 20433
United States of America

3.03.

Cable:

Telex:

Facsimile:

INTBAFRAD
Washington, D.C.

248423(MCI) or
64145(MCI)

1-202-477-6391

The Project Implementing Entitys Address is:

Federal Ministry of Finance
Mehmeda Spahe 5
71000 Sarajevo
Bosnia and Herzegovina
Facsimile:
387 33 203 152

AGREED at Sarajevo, Bosnia and Herzegovina, as of the day and year first above
written.

INTERNATIONAL BANK FOR

RECONSTRUCTION AND DEVELOPMENT

By /s/ Marco Mantovanelli

Authorized Representative

FEDERATION OF BOSNIA AND

HERZEGOVINA

By /s/ Borjana Kristo

Authorized Representative

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SCHEDULE
Execution of the Project
Section I.
A.

Implementation Arrangements

Institutional Arrangements

The Project Implementing Entity shall carry out the Project in accordance with the
following institutional and other arrangements:
1.

The Project shall be implemented by the PMT which shall comprise a PMT
manager, a procurement manager and a procurement officer, a financial manager
and other experts as needed for the implementation of the Project. The PMT shall
be responsible for Project management, including procurement, financial
management, disbursements, monitoring and evaluation and reporting
arrangements. The PMT shall also ensure compliance of all Project activities
with the Banks social and environmental safeguards.

2.

The PIT, established within VIK and which shall comprise an engineer assisting
the PMT procurement officer in reviewing technical specifications and certifying
completion of works and a financial officer reporting to the Sarajevo Canton and
the PMT on ViKs financial performance, shall be responsible for day-to-day
management and technical supervision of the Project in coordination with the
PMT. The PIT shall handle procurement, financial and social and environmental
aspects of the Project, which shall subsequently be reviewed and cleared by the
PMT to ensure compliance with Bank guidelines and procedures.

B.

Implementation Covenants and Safeguards

1.

The Project Implementing Entity shall maintain the PIT at all times during
Project implementation with terms of reference and resources satisfactory to the
Bank, and with competent staff in adequate numbers.

2.

The Project Implementing Entity shall, and shall cause the PMT and the PIT to:
(a)

duly perform all obligations under the Operational Manual, the

Environmental Impact Assessment and the Environmental Management
Plan in a timely manner and in accordance with their respective terms,
and apply and implement, as the case may be, the actions, criteria,
policies, procedures and arrangements therein set forth; and

(b)

not amend or waive, or permit to be amended or waived the Operational

Manual, the Environmental Impact Assessment or the Environmental

4
Management Plan or any provisions of any one thereof, except with the
prior written approval of the Bank.
3.

The Project Implementing Entity shall, and shall cause the PMT and the PIT to
ensure that no land acquisition, relocation of population or temporary and/or
permanent restrictions on access to economic resources shall be required under
the Project.

C.

Subsidiary Loan

1.

To facilitate the carrying out and financing of the Project, the Borrower shall
make the proceeds of the Loan available to the Project Implementing Entity
under a subsidiary loan agreement between the Borrower and the Project
Implementing Entity, under the same terms and conditions as the Loan, approved
by the Bank and including the Anti-Corruption Guidelines (Subsidiary Loan
Agreement), for on-lending by the Project Implementing Entity to the Sarajevo
Canton, for the benefit of VIK, on terms and conditions set forth in Part D of this
Section I.

2.

The Project Implementing Entity shall exercise its rights under the Subsidiary
Loan Agreement in such manner as to protect the interests of the Project
Implementing Entity, the Borrower and the Bank and to accomplish the purposes
of the Loan. Except as the Bank shall otherwise agree, the Project Implementing
Entity shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement
or any of its provisions.

D.

Subsidiary Financing

1.

The Project Implementing Entity shall make the proceeds of the Subsidiary Loan
available to the Sarajevo Canton, for the benefit of VIK, for purposes of carrying
out the Project, under a subsidiary financing agreement between the Project
Implementing Entity and the Sarajevo Canton, under the same terms and
conditions as the Subsidiary Loan, approved by the Bank and including the AntiCorruption Guidelines (Subsidiary Financing Agreement).

2.

The Project Implementing Entity shall exercise its rights under the Subsidiary
Financing Agreement in such manner as to protect the interests of the Project
Implementing Entity, the Borrower and the Bank and to accomplish the purposes
of the Loan. Except as the Bank shall otherwise agree, the Project Implementing
Entity shall not assign, amend, abrogate or waive the Subsidiary Financing
Agreement or any of its provisions.

E.

Anti-Corruption

The Project Implementing Entity shall, and shall cause the PMT and the PIT to ensure
that the Project is carried out in accordance with the provisions of the Anti-Corruption
Guidelines.
Section II.

Project Monitoring, Reporting and Evaluation.

A.

Project Reports

1.

The Project Implementing Entity, through the PMT and PIT, shall monitor and
evaluate the progress of the Project and prepare Project Reports for the Project in
accordance with the provisions of Section 5.08 (b) of the General Conditions and
on the basis of indicators agreed with the Bank. Each such Project Report shall
cover the period of one (1) calendar quarter, and shall be furnished to the Bank
not later than forty five (45) days after the end of the period covered by such
report.

2.

The Project Implementing Entity, through the PMT and PIT, shall provide to the
Bank not later than three (3) months after the Closing Date, for incorporation in
the report referred to in Section 5.08 (c) of the General Conditions all such
information as the Borrower or the Bank shall reasonably request for the
purposes of that Section.

B.

Financial Management, Financial Reports and Audits

1.

The Project Implementing Entity, through the PIT, shall maintain a financial
management system and prepare financial statements in accordance with
consistently applied accounting standards acceptable to the Bank, both in a
manner adequate to reflect the operations and financial condition of the Project
Implementing Entity, including the operations, resources and expenditures
related to the Project.

2.

The Project Implementing Entity shall have its financial statements referred to
above audited by independent auditors acceptable to the Bank, in accordance
with consistently applied auditing standards acceptable to the Bank. In addition,
the Project Implementing Entity shall cause VIK to have its financial statements
referred to above audited in accordance with local laws and regulations
acceptable to the Bank. Each audit of these financial statements shall cover the
period of one (1) fiscal year of the Borrower. The audited financial statements for
each period shall be furnished to the Borrower and the Bank not later than six (6)
months after the end of the period.

Section III.

Procurement

All goods, works and services required for the Project and to be financed out of the
proceeds of the Loan shall be procured in accordance with the provisions of Section III of
Schedule 2 to the Loan Agreement.