Second Additional Loan for the Integrated Mass Transit Systems Project

CONFORMED COPY

LOAN NUMBER 7739-CO

Loan Agreement

(Second Additional Loan for the Integrated Mass Transit Systems Project)

between

REPUBLIC OF COLOMBIA

and

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

Dated September 24, 2009

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LOAN AGREEMENT

Agreement dated September 24, 2009, between REPUBLIC OF COLOMBIA (“Borrower”) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (“Bank”).

WHEREAS the Borrower has requested that the Bank support the continuation of the Borrower’s execution of its National Urban Transport Program (as defined in the Appendix to this Agreement), through the provision of a second additional loan provided for in Article II of this Agreement to assist in the financing of the expansion of the activities related to the Original Project (as defined in the Appendix to this Agreement and amended in Schedule 1 to this Agreement).

The Borrower and the Bank agree as follows:

ARTICLE I — GENERAL CONDITIONS; DEFINITIONS

1.01.  The General Conditions (as defined in the Appendix to this 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 General Conditions or in the Appendix to this Agreement.

ARTICLE II — LOAN

2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, the amount of three hundred million Dollars ($300,000,000) as such amount may be converted from time to time through a Currency Conversion in accordance with the provisions of Section 2.07 of this Agreement (“Loan”), to assist in financing the project described in Schedule 1 to this Agreement (“Project”).

2.02.  The Borrower may withdraw the proceeds of the Loan in accordance with Section IV of Schedule 2 to this Agreement.

2.03.  The Front-end Fee payable by the Borrower shall be equal to one quarter of one percent (0.25%) of the Loan amount. The Borrower shall pay the Front-end Fee not later than 60 days after the Effective Date.

2.04.  The interest payable by the Borrower for each Interest Period shall be at a rate equal to LIBOR for the Loan Currency plus the Fixed Spread; provided, that upon a Conversion of all or any portion of the principal amount of the Loan, the interest payable by the Borrower during the Conversion Period on such amount shall be determined in accordance with the relevant provisions of Article IV of the General Conditions. Notwithstanding the foregoing, if any amount of the Withdrawn Loan Balance remains unpaid when due and such non-payment continues for a period of thirty days, then the interest payable by the Borrower shall instead be calculated as provided in Section 3.02 (d) of the General Conditions.

2.05.  The Payment Dates are February 15 and August 15 in each year.

2.06.  The principal amount of the Loan shall be repaid in accordance with the provisions of Schedule 3 to this Agreement.

2.07. (a) The Borrower may at any time request any of the following Conversions of the terms of the Loan in order to facilitate prudent debt management: (i) a change of the Loan Currency of all or any portion of the principal amount of the Loan withdrawn to an Approved Currency; (ii) a change of the interest rate basis applicable to all or any portion of the principal amount of the Loan withdrawn and outstanding from a Variable Rate to a Fixed Rate, or vice versa; and (iii) the setting of limits on the Variable Rate applicable to all or any portion of the principal amount of the Loan withdrawn and outstanding by the establishment of an Interest Rate Cap or Interest Rate Collar on the Variable Rate.

(b) Any conversion requested pursuant to paragraph (a) of this Section that is accepted by the Bank shall be considered a “Conversion”, as defined in the General Conditions, and shall be effected in accordance with the provisions of Article IV of the General Conditions and of the Conversion Guidelines.

ARTICLE III — PROJECT

3.01.  The Borrower declares its continued commitment to the objectives of the Project. To this end, without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower: (a) shall carry out Part A of the Project through MOT; and (b) shall, through MOT (in close coordination with MHCP for the purposes of processing Transfers) cause the Participating Cities, the City of Bogotá and the Implementing Entities to carry out Part B of the Project, all in accordance with the provisions of the respective Subsidiary Agreements and Article V of the General Conditions.

3.02.  Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Borrower and the Bank shall otherwise agree, the Borrower, (through MOT), shall ensure that the Project is carried out in accordance with the provisions of Schedule 2 to this Agreement.

ARTICLE IV — REMEDIES OF THE BANK

4.01. The Additional Events of Suspension consist of the following:

(a) Any of the Subsidiary Agreements shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of the Borrower (through MHCP or MOT), the corresponding Participating City, the City of Bogotá or Implementing Entity to perform any of their respective obligations under the Project.

(b) An extraordinary situation shall have arisen which shall make it improbable that the Borrower (through MHCP or MOT), the corresponding Participating City, the City of Bogotá or Implementing Entity will be able to carry out any of their respective obligations under any of the Subsidiary Agreements.

(c) Any of the Participating Cities, the City of Bogotá or any of the Implementing Entities shall have failed to perform any of its respective obligations under their corresponding Subsidiary Agreement, in connection with the Project.

(d) The IMTS Legislation has been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of the Borrower (through MHCP or MOT), the Participating Cities, the City of Bogotá or Implementing Entities to perform any of their respective obligations under any of the Subsidiary Agreements.

ARTICLE V — EFFECTIVENESS; TERMINATION

5.01. The Additional Conditions of Effectiveness consist of the following:

(a)  The updated Subsidiary Agreements have been executed on behalf of the Borrower (through MHCP and MOT), the corresponding Participating Cities, and Implementing Entities, as set forth in Section I.B.1 of Schedule 2 to this Agreement.

(b)  The updated Operational Manual has been issued by the Borrower (through MOT), as set forth in Section I.A.2 of Schedule 2 to this Agreement and approved by the Bank.

(c)  The updated Resettlement Policy Framework has been adopted by the Borrower (through MOT), as set forth in Section I.D.1(b) of Schedule 2 to this Agreement.

(d)  The updated Resettlement Action Plans Type B and C (reflecting the provisions of the updated Resettlement Policy Framework) have been adopted by the respective Implementing Entities as set forth in Section I.D.2.(a) of Schedule 2 to this Agreement.

5.02. The Additional Legal Matter consists of the following, namely, that the updated Subsidiary Agreements have been duly authorized or ratified by the Borrower (through MHCP and MOT), the Participating Cities, the City of Bogotá and the Implementing Entities and are legally binding upon the Borrower, the Participating Cities, the City of Bogotá and the Implementing Entities in accordance with their respective terms (as reflected in legal opinions to the Bank from counsel representing the Borrower, the corresponding Participating City, the City of Bogotá and Implementing Entity under each Subsidiary Agreement).

5.03. Without prejudice to the provisions of the General Conditions, the Effectiveness Deadline is the date ninety (90) days after the date of this Loan Agreement, but in no case later than the eighteen (18) months after the Bank’s approval of the Loan which expire on February 4, 2011.

ARTICLE VI — REPRESENTATIVE; ADDRESSES

6.01. The Borrower’s Representative is the Minister of Finance and Public Credit of the Borrower.

6.02. The Borrower’s Address is:

Ministry of Finance and Public Credit

Palacio de los Ministerios

Plaza San Agustín

Carrera 7A, N˚ 6-45, Piso 3

Bogotá, D.C.

Colombia

Facsimile: (571) 350-9344

6.03. The Bank’s Address is:

International Bank for Reconstruction and Development

1818 H Street, N.W.

Washington, D.C. 20433

United States of America

Cable address: Telex: Facsimile:

INTBAFRAD 248423(MCI) or 1-202-477-6391

Washington, D.C. 64145(MCI)

AGREED at Bogotá, Republic of Colombia, as of the day and year first above written.

REPUBLIC OF COLOMBIA

By /s/ Oscar Iván Zuluaga Escobar

Authorized Representative

MINISTRY OF TRANSPORT

By /s/ Andrés Uriel Gallego Henao

Authorized Representative

INTERNATIONAL BANK FOR

RECONSTRUCTION AND DEVELOPMENT

By /s/ Gloria Grandolini

Authorized Representative

SCHEDULE 1

Project Description

The objectives of the Project are: (a) to develop high quality and sustainable BRTS in Participating Cities to improve mobility along strategic mass transit corridors; (b) to improve accessibility to public transportation for the poor; and (c) to build greater institutional capacity in the Borrower’s public transportation institutions in order to formulate integrated urban transport policies and to improve urban transport planning and traffic management.

The Project consists of the following parts included in the Original Loan Agreement, which are hereby amended to read as set forth below:

Part A: Implementing Capacity Building

1.  Strengthening of institutional capacity, at the national level, through the provision of technical assistance in support of the Borrower’s efforts to formulate national urban transport programs and strategies pursuant to the National Urban Transport Program, through, inter alia:

(a)  the definition of a national urban transport institutional map;

(b)  the formulation of a transport sector policy;

(c)  the definition of operational, regulatory, institutional, environmental, social and road safety strategies within the urban transport and urban development context;

(d)  the identification of appropriate mass transit solutions to improve transport in the Borrower’s territory and to improve traffic management; and

(e)  the development of policy guidance in a series of strategic areas, including inter alia: development of performance and monitoring mechanisms, regulatory and institutional frameworks related to the National Urban Transport Program, and the design and implementation of communication strategies.

2.  Improvement of the institutional capacity of the Participating Cities and Implementing Entities to ensure adequate implementation of BRTS, through, inter alia: (a) the provision of equipment and training; (b) the setup and maintenance of an operational structure able to program, monitor and administer public transportation services; (c) the implementation of twinning arrangements between Implementing Entities; and (d) the strengthening of the institutional capabilities of the Participating Cities and Implementing Entities, through the provision of technical assistance in inter alia: environmental and social matters, bus operation and fare collection concessions, tariff-setting and tariff integration with other entities (if applicable) and communication strategies.

3.  Strengthening of the operational capacity of Participating Cities with respect to the implementation of urban development and transport strategies.

4.  Provision of support to the PCU to conduct overall Project coordination, evaluation, supervision and implementation, including, inter alia:

(a)  the strengthening of the capacity of the PCU to comply with its responsibilities under this Agreement as set forth in the Operational Manual, including through the hiring of specialized staff, comprising, inter alia, urban transport engineers, economists, and legal, financial, social and environmental specialists;

(b)  the carrying out of Project audits;

(c)  the carrying out of Project studies, including, inter alia, performance reviews and impact evaluations; and

(d)  the design and implementation of a program to monitor and evaluate the carrying out of the Project.

Part B: BRTS Development

1.  The expansion of the physical scope and geographical and social coverage of the National Urban Transport Program in the Participating Cities, other than Bogotá, through the carrying out of, inter alia, the following activities:

(a)  construction of segregated busways;

(b)  construction of terminals and transfer centers;

(c)  construction of mixed-traffic lanes adjacent to busways corridors;

(d)  construction of sidewalks;

(e)  rehabilitation of feeder routes;

(f)  construction of pedestrian ways along busways corridors;

(g)  construction or adaptation of complementary transport corridors to the segregated busways;

(h)  carrying out required interventions or upgrading of public service networks adjacent to the construction areas;

(i)  carrying out supervision of construction works referred to in this paragraph; and

(j)  construction of bus stations.

2.  The continued provision of financing for the construction and operation of the NQS Line of the Bogotá Transmilenio, S.A.

3. (a) The provision of financing for the acquisition of land required for the carrying out of Part B.1 of the Project.

(b) The provision of financing for the resettlement and the provision of compensation to Affected Persons pursuant to the provisions of the RAPs (as set forth in Section III of the Appendix to this Agreement), in connection with the carrying out of Part B.1 of the Project.

4. Design and implementation of EMPs for the carrying out of Parts B.1 and B.2 of the Project.

SCHEDULE 2

Project Execution

Section I. Implementation Arrangements

A.  General Implementation Framework

1.  Institutional Arrangements

(a)  The Borrower declares its commitment to the objectives of the Project, as described in Schedule 1 to this Agreement, and to this end shall carry out the Project, through MOT and MHCP (as set forth in Section 3.01 of this Agreement), and shall cause the Participating Cities, the City of Bogotá and Implementing Entities to carry out their respective Parts of the Project, all with due diligence and efficiency and in conformity with appropriate administrative, engineering, environmental, financial, managerial, social, technical, and urban practices satisfactory to the Bank and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project, under the terms and conditions set forth in the provisions of this Schedule.

(b)  The Borrower, through MOT shall: (i) operate and maintain (under the purview of MOT’s Deputy Minister), at all times during Project implementation, a Project coordination unit (the PCU) with a structure, functions and responsibilities acceptable to the Bank, including, inter alia, the responsibility of the PCU to assist the Borrower in the coordination, monitoring and supervision of the Project; (ii) ensure that the PCU is, during Project implementation, headed by a Project coordinator and staffed with a core team consisting of an environmental specialist; a resettlement specialist; and a procurement specialist; and other professional and administrative staff, all hired with terms of reference (detailed in the Operational Manual), in accordance with Section III of this Schedule, in numbers and with qualifications and experience acceptable to the Bank.