5.
PROJECT IMPLEMENTATION
The Borrower shall implement the Project in accordance with the Agreement.
The Borrower designates Ministry for Public Investment as the PIE. The Borrower shall ensure that the PIE appoints a PIU appropriately staffed and equipped, to the satisfaction of the CEB, throughout the Project implementation period.
In any event, the Borrower remains solely liable to comply with its obligations under the Agreement.
Failure to comply with the undertakings set forth under this Clause 5 would constitute, irrespective of any other applicable provision of the Loan Regulations, an event in the terms of Article 3.3 (h) of the Loan Regulations and may give rise to (i) the relevant Sub-project expenditure declared ineligible for Allocation under the Project; and/or (ii) the early reimbursement, suspension or cancellation of the Loan, in whole or in part, under the terms of Articles 3.3 (Early reimbursement of disbursed loans), 3.5 (Suspension by the Bank of undisbursed loans) and 3.6 (Cancellation by the Bank of undisbursed loans) of the Loan Regulations.
5.1
Duty of Care
The Borrower, through the PIE, shall apply all care and diligence, and shall exercise all typically used means (including, but not limited to, legal, financial, managerial and technical) required for the proper implementation of the Project.
5.2
Allocation Period
The Borrower shall allocate each Tranche to the Project within twelve (12) months after the relevant Disbursement Date (hereinafter, the “Allocation Period”), unless otherwise agreed in writing between the Borrower and the CEB. If a Tranche disbursed by the CEB is not allocated to the Project or is only partially allocated to it within the Allocation Period, the Borrower shall proceed with prepayment of the unallocated amounts on the next Interest Payment Date in the terms provided under Sub-clause 4.7 unless otherwise agreed between the Borrower and the CEB.
5.3
Project Costs
The Tranches disbursed under the Initial Loan, the Addendum No. 1 Loan and the Loan shall not exceed sixty-six point four per cent (66.4%) of the total eligible costs of the Project specified under Appendix 1 hereto. If the Tranches disbursed under the Initial Loan, the Addendum No. 1 Loan and the Loan exceed the above 66.4% (by reduction of the total eligible costs or otherwise), the Borrower shall proceed with prepayment of the surplus on the next Interest Payment Date in the terms provided under Sub-clause 4.7.
Should the total eligible costs of the Project increase or be revised for whatever reason, the Borrower shall ensure that the additional financial resources for the completion of the Project are available without recourse to the CEB. The plans to finance the increased costs shall be communicated to the CEB without delay.
5.4
Project Specific Undertakings
The Borrower shall ensure that:
(i) the Borrower through the PIE shall inform the CEB as soon as possible
about any significant (above 10%) revision of the Project costs as set forth in Appendix 5 table 1;
(ii) the Borrower through the PIE shall inform the CEB in case subsidies are
needed to ensure the long-term viability of the investment, e.g., to cover operations and maintenance costs; the Borrower through the PIE shall ensure the availability of funds for such purposes;
(iii) all the land, real property rights and permits required for the
implementation of the Project are timely available;
(iv) all assets and plants under the Project are permanently insured,
maintained and operated in accordance with international best practices; and
(v) any other requirement specified in Appendix 1 (“Specific Conditions”)
hereto is complied with.
5.5
Procurement
Procurement of supplies, works and services to be financed under the Project shall comply with the Procurement Guidelines.
The Borrower shall conduct all procurement procedures under the Project in accordance with the public procurement laws of the Republic of Serbia. In particular, the Borrower shall ensure that any party having an interest in obtaining a particular contract to be financed under the Project shall have access to the review procedures and remedies provided for under the laws of the Republic of Serbia.
To be eligible for financing under the Loan, procurement of works, services and goods carried out in accordance with the above shall comply with the stated Procurement Guidelines. In particular, the Procurement Plan (as defined in the CEB Procurement Guidelines) (and any update thereof) indicating the procurement methods for each contract shall be submitted to the CEB for approval. Upon receipt,
the CEB will inform the Borrower of the scope of review that the CEB carries out for each contract.
5.6
Environmental and Social Safeguards
| The Borrower, through the PIE, shall implement the Project in conformity with the |
| requirements set forth in the Environmental and Social Safeguards Policy. In |
| particular, should any Sub-project require an Environmental Impact Assessment |
| (EIA) or an Environmental and Social Impact Assessment (ESIA) in accordance with |
| the Environmental and Social Safeguards Policy, the Borrower, through the PIE, shall |
| notify the CEB and ensure that the EIA/ESIA is undertaken in accordance with the |
| requirements of the Environmental and Social Safeguards Policy. The Borrower, |
| through the PIE, shall ensure that the relevant EIA/ESIA documentation is made |
| available for the CEB’s review upon request. |
5.7
Human Rights
The Borrower, through the PIE, shall ensure that the implementation of the Project does not give rise to a violation of (i) the European Convention on Human Rights; or (ii) the European Social Charter.
5.8
Integrity
The Borrower, directly or through the PIE, undertakes that:
(a) it will institute and thereafter comply with internal policies, procedures and
controls, in line with applicable legislation and international best practices, for the purpose of preventing the Borrower to become, in connection with the implementation of the Project or otherwise, an instrument for money laundering or terrorism financing;
(b) it will not make any Loan proceeds available to or for the benefit of, directly or
indirectly, any Sanctioned Person;
(c) it will not commit, and no person, with its consent or prior knowledge, will
commit, in connection with the implementation of the Project or any Sub- project a Corrupt Practice, a Fraudulent Practice, a Coercive Practice, a Collusive Practice or an Obstructive Practice (hereinafter, together with money laundering, terrorism financing and making available any Loan proceeds to Sanctioned Persons referred to as the “Prohibited Practices”).
For the purposes of this Agreement:
(i) A “Corrupt Practice” means any act of offering, giving, receiving, or
soliciting, directly or indirectly, anything of value to influence improperly the actions of another party.
(ii) A “Fraudulent Practice” means any act or omission, including a
misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit, or to avoid an obligation.
(iii) A “Coercive Practice” means any act of impairing or harming, or
threatening to impair or harm, directly or indirectly, any party or the property of any party to influence improperly the actions of a party.
(iv) A “Collusive Practice” means any arrangement between two or more
parties designed to achieve an improper purpose, including influencing improperly the actions of another party.
(v) An “Obstructive Practice” means, in relation to an investigation into a
Coercive, Collusive, Corrupt or Fraudulent Practice, (a) any act of deliberately destroying, falsifying, altering or concealing of evidence material to the investigation; (b) any act of threatening, harassing or intimidating any party to prevent it from disclosing its knowledge of matters relevant to the investigation or from pursuing the investigation; and/or (c) any act intending to materially impede the exercise of the contractual rights of audit or access to information.
The Borrower directly or through the PIE undertakes to inform CEB if it should become aware of any fact or information suggestive of the commission of any such Prohibited Practice. For this purpose, the knowledge of any member of the PIE and the PIU shall be deemed the knowledge of the Borrower.
The Borrower, directly or through the PIE, undertakes:
(i) to take timely such action as the CEB may reasonably request to
investigate and/or terminate any alleged or actual Prohibited Practice;
(ii) to facilitate any investigation that the CEB may conduct concerning any
alleged or actual Prohibited Practice; and
(iii) to inform the CEB of the measures taken to seek damages from the
persons responsible for any loss resulting from any such Prohibited Practice.
The Head of the PIE shall appoint the Head of the PIU, who shall be responsible for contacts with the CEB for the purposes of this Sub-clause.
5.9
Visibility
The Borrower shall inform the Final Beneficiaries that the Project/ Sub-project is partly financed by the CEB through appropriate means of communication such as dedicated notices in relevant websites, social media, press releases, brochures or the exhibit of billboards/plates on relevant Project / Sub-project sites/facilities. In any case, information to the Final Beneficiaries shall display in an appropriate way the CEB’s name and logo.