OFFICIAL DOCUMENTS LOAN NUMBER 8865-CN Loan Agreement (Hezhou Urban Water Infrastructure and Environment Improvement Project) between PEOPLE'S REPUBLIC OF CHINA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT LOAN AGREEMENT AGREEMENT dated as of the Signature Date between PEOPLE'S REPUBLIC OF CHINA ("Borrower") and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("Bank"). The Borrower and the Bank hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form 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 the amount of one hundred and fifty million Dollars (USD 150,000,000), as such amount may be converted from time to time through a Currency Conversion ("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 III of Schedule 2 to this Agreement. 2.03. The Front-end Fee is one quarter of one percent (0.25%) of the Loan amount. 2.04. The Commitment Charge is one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance. 2.05. The interest rate is the Reference Rate plus the Variable Spread or such rate as may apply following a Conversion; subject to Section 3.02(e) of the General Conditions. 2.06. The Payment Dates are January 1 and July 1 in each year. 2.07. The principal amount of the Loan shall be repaid in accordance with Schedule 3 to this Agreement. 2.08. (a) If on any given day, the Total Exposure exceeds the Standard Exposure Limit (as said terms are defined in sub-paragraphs (b)(ii) and (b)(iii) of this Section), the Borrower shall pay to the Bank a surcharge at the rate of -2- one half of one percent (0.5%) per annum of the Allocated Excess Exposure Amount (as defined in sub-paragraph (b)(i) of this Section) for each said day ("Exposure Surcharge"). The Exposure Surcharge (if any) shall be payable semi-annually in arrears on each Payment Date. (b) For purposes of this Section the following terms have the meanings set forth below: (i) "Allocated Excess Exposure Amount" means for each day during which the Total Exposure exceeds the Standard Exposure Limit, the product of: (A) the total amount of said excess; and (B) the ratio of all (or, if the Bank so determines, a portion) of the Loan to the aggregate amount of all (or the equivalent portions) of the loans made by the Bank to the Borrower and to other borrowers guaranteed by the Borrower that are also subject to an exposure surcharge, as said excess and ratio are reasonably determined from time to time by the Bank. (ii) "Standard Exposure Limit" means the standard limit on the Bank's financial exposure to the Borrower which, if exceeded, would subject the Loan to the Exposure Surcharge, as determined from time to time by the Bank. (iii) "Total Exposure" means for any given day, the Bank's total financial exposure to the Borrower, as reasonably determined by the Bank. ARTICLE III - PROJECT 3.01. The Borrower declares its commitment to the objectives of the Project. To this end, the Borrower shall cause the Project to be carried out by the Project Implementing Entity in accordance with the provisions of Article V of the General Conditions, Schedule 2 to this Agreement and the Project Agreement. ARTICLE IV - EFFECTIVENESS 4.01. The Effectiveness Deadline is the date ninety (90) days after the Signature Date. ARTICLE V - REPRESENTATIVE; ADDRESSES 5.01. The Borrower's Representative is its Minister of Finance. 5.02. For purposes of Section 10.01 of the General Conditions: (a) the Borrower's address is: -3- Ministry of Finance Sanlihe Xicheng District Beijing 100820 People's Republic of China; and (b) the Borrower's Electronic Address is: Facsimile: (86-10) 6855-2077 5.03. For purposes of Section 10.01 of the General Conditions: (a) the Bank's address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Bank's Electronic Address is: Telex: Facsimile: 248423(MCI) or 1-202-477-6391 64145(MCI) -4- AGREED as of the Signature Date. PEOPLE'S REPUBLIC OF CHINA By Authorized Representative Name: t~ Title: Date: INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Authorized ftresentative Name: Title: __ _ _ _ _ _ _ Date: 701- -5- SCHEDULE 1 Project Description The objectives of the Project are to improve flood risk management and reduce discharge of water pollutants in Hezhou Municipality. The Project consists of the following parts: Part 1: Improving Flood Risk Resilience of the He River (a) Connection of the main channel of the He River and its tributaries - in order to divert, dissipate and store flood water - through such activities as carrying out works to connect Donggan canal with Mawei tributary river and the Lining river with mainstream He River. (b) Removal of river flow obstructions at the three in-stream power stations along the He River through such measures as: (i) carrying out facilities improvement at those power stations; (ii) acquiring and decommissioning Fanglin and Hejiang power stations; (iii) refitting the dam at Huangshi power station; and (iv) optimizing the operational rules of Xiadao power station. (c) Improvement of flood drainage capacity along select parts of the He River through such activities as rehabilitation of the river banks, dredging silt from the riverbed and restoring flood protection zones along the river. Part 2: Improving Urban Drainage and Wastewater Management (a) Connection of Shizigang canal to its upstream lake system to allow diversion of water away from the Hezhou central urban area. (b) Improvement of flood drainage capacity of tributaries of the He River and related canals through such activities as rehabilitation of the banks of - as well as dredging silt on - these waterways, and restoring flood protection zones along these tributaries. (c) Installation of sewage interceptors in Babu district to separate wastewater from storm water, re-routing of the main-line sewer collectors and diversion of sewage to the Hezhou waste water treatment plant. (d) Construction of Jiangnan sewage treatment plant and associated facilities including the pumping station, primary and secondary sewer mains and access roads. -6- (e) Construction of storm water control gates and installation of pump stations at the confluences of the He River and some of its tributaries. (f) Construction of water sightseeing corridor ("green ring") linking parks and green spaces with the city's existing mountain and water system, such construction entailing inter alia embankment building, landscaping, and construction of water-centric park facilities along He River, Dongwu canal, and Donggan canal. (g) Construction of a continuous landscape belt ("green corridor") connecting the Lining River and the Changlong River with rehabilitated lake areas, green landscaped boulevards, and waterfront trails. (h) Development of an ecological and historic corridor along historic Xiyue Old Street comprising, inter alia, waterfront green land, construction of revetment, and integration of the street with the existing road network and bridges. Part 3: Institutional Strengthening, Capacity Building and Project Management (a) Capacity building and technical assistance. Provision of technical assistance to support the improved coordination of water planning and management through: (i) development of an integrated coordination platform for flood risk and urban drainage management; (ii) development of an integrated flood risk and urban drainage masterplan; (iii) development of an integrated flood risk management and urban drainage operations protocol in Hezhou Municipality; (iv) provision of technical assistance as well as Training and Workshops to enhance the capacity of Hezhou Municipality officials and institutions involved in water management in Hezhou Municipality; and (v) carrying out knowledge- sharing and dissemination activities about the Hezhou experience and lessons from integrated water management within China and beyond. (b) Smart system. Planning, designing and installation of a smart internet- based information systems for controlling Hezhou water system comprising, inter alia: (i) flood monitoring and early warning system; (ii) water quality monitoring and early warning system; and (iii) integrated water system control and optimization system. (c) Project management. Supporting the overall capacity of the Project Implementing Entity to coordinate, manage and supervise the implementation of the Project, including: (i) undertaking preliminary and final engineering designs and preparing bidding documents; (ii) -7- construction supervision; (iii) procurement of third party (external) environmental and social safeguards monitoring services; and (iv) hiring of experts to constitute the Dam Safety Panel. -8- SCHEDULE 2 Project Execution Section I. Implementation Arran2ements A. Financing Arrangements 1. For the purposes of carrying out the Project, the Borrower shall make available the proceeds of the Loan to the Project Implementing Entity, under terms and conditions acceptable to the Bank, including the following principal terms: (a) The principal amount shall be made available in Dollars or any other Currency as the Loan may be converted from time to time through a Currency Conversion of the value of the currency or currencies so withdrawn (such principal amount determined on the date, or respective dates, of withdrawal from the Loan Account). (b) The principal amount so made available (including an amount equal to the fee paid pursuant to Section 2.03 of this Agreement and any premium for Interest Rate Caps or Interest Rate Collars paid pursuant to Section 4.05(c) of the General Conditions) shall be recovered over a period of thirty-two (32) years, inclusive of a grace period of seven (7) years. (c) Interest shall be charged on such principal amount withdrawn and outstanding from time to time at a rate equal to the rate of interest applicable from time to time to the Loan pursuant to the provisions of Section 2.05 of this Agreement. (d) A Commitment Charge shall be charged equal to one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance. 2. The Borrower shall cause the Project Implementing Entity to: (a) manage, operate, monitor, transfer and reconcile the proceeds of the Loan made available to it pursuant to paragraph I above in accordance with arrangements and procedures acceptable to the Bank; (b) take all required actions, including provision of timely consents and approvals as may be necessary, to facilitate the utilization of said Loan proceeds and the implementation of the Project and, to enable the Project Implementing Entity to comply with its undertakings under the Project Agreement; and (c) maintain all relevant records and documents related to the Loan and the Project and provide promptly such documents and records, including all other Project related information, as may be requested by the Borrower or the Bank from time to time. -9- B. Safeguards and Dam Safety Measures The Borrower shall take, and shall cause the Project Implementing Entity to take, all measures necessary to comply with, or all measures necessary to enable the Project Implementing Entity to comply with, the provisions of Section I.B and I.C of the Schedule to the Project Agreement. Section H. Project Monitoring Reportin2 and Evaluation The Borrower shall cause the Project Implementing Entity to furnish to the Bank each Project Report not later than sixty (60) days after the end of each calendar semester, covering the calendar semester. Section HI. Withdrawal of Loan Proceeds A. General. Without limitation upon the provisions of Article II of the General Conditions and in accordance with the Disbursement and Financial Information Letter, the Borrower may withdraw the proceeds of the Loan to: (a) finance Eligible Expenditures; (b) pay: (i) the Front-end Fee; and (ii) each Interest Rate Cap or Interest Rate Collar premium; in the amount allocated and, if applicable, up to the percentage set forth against each Category of the following table: -10- Category Amount of the Loan Percentage of Expenditures to Allocated be financed (expressed in USD) (inclusive of Taxes) (1) Goods and works for the 129,464,000 80% Project (2) Consulting services, non- 6,000,000 100% consulting services, Incremental Operating Costs and Training and Workshop for the Project (3) Interest, Commitment 14,161,000 Amount payable pursuant to Charge, and other charges Sections 2.04 and 2.05 of this on the Loan accrued on or Agreement, respectively, in before the last Payment Date accordance with Section 2.07 (c) immediately preceding the of the General Conditions Closing Date (4) Interest Rate Cap or 0 Amount due pursuant to Section Interest Rate Collar 4.05 (c) of the General Conditions premium (5) Front-end Fee 375,000 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions TOTAL AMOUNT 150,000,000 B. Withdrawal Conditions; Withdrawal Period. 1. Notwithstanding the provisions of Part A above, no withdrawal shall be made for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed USD 20,000,000 may be made for payments made prior to this date but on or after April 1, 2018, for Eligible Expenditures under Category (1). 2. The Closing Date is June 30, 2024. -11- SCHEDULE 3 The following table sets forth the Principal Payment Dates of the Loan and the percentage of the total principal amount of the Loan payable on each Principal Payment Date ("Installment Share"). Level Principal Repayments Principal Payment Date Installment Share On each January 1 and July 1 Beginning July 1, 2025 2% through January 1, 2050 -12- APPENDIX Section I. Definitions 1. "Affected Persons" means persons who, on account of the execution of the Project, have experienced or would experience direct economic and social impacts caused by: (a) the involuntary taking of land, resulting in: (i) relocation or loss of shelter; (ii) loss of assets or access to assets; or (iii) loss of income sources or means of livelihood, whether or not such persons must move to another location; or (b) the involuntary restriction of access to legally designated parks and protected areas, resulting in adverse impacts on the livelihood of such persons; and an "Affected Person" means any of such Affected Persons. 2. "Annual Work Plan" means each of the consolidated annual work plans and budgets for the Project to be prepared or updated and, submitted by the Hezhou Project Management Office and approved by the Bank, on an annual basis as provided for in Section I.A.3 of the Schedule to the Project Agreement; and "Annual Work Plans" means, collectively, all such plans. 3. "Anti-Corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to the General Conditions, the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1, 2016. 4. "Bank's Safeguards Policies" means the operational policies and procedures for financing of development projects by the Bank at the date of this Agreement and relating to Environmental Assessment, Natural Habitats, Pest Management, Indigenous Peoples (Ethnic Minorities), Physical Cultural Resources, Involuntary Resettlement, Forests, Safety of Dams, Projects on International Waterways, and Projects in Disputed Areas, as published under http://policies.worldbank.or/ to the extent they are applicable to the Project. 5. "Category" means a category set forth in the table in Section III.A of Schedule 2 to this Agreement. 6. "Dam Safety Panel" means a panel consisting of at least three (3) dam experts to be recruited and retained according to the provision of Section I.C. 1 of the schedule to the Project Agreement. 7. "Environmental and Social Assessment" means the environmental and social assessment, acceptable to the Bank, dated September 2017 disclosed on the Bank's external website (documents & reports) on October 22, 2017. -13- 8. "Environmental Impact Assessment" means the environmental impact assessment report, acceptable to the Bank, dated October 2017 disclosed on the Bank's external website (documents & reports) on October 22, 2017. 9. "Environmental Management Plan" or "EMP" means the environmental and social management plan for the Project, acceptable to the Bank, dated October 1, 2017 and disclosed on the Bank's external website (documents & reports) on October 23, 2017, which sets out the environmental protection measures, including chance finds procedures, in respect of the Project, as well as administrative, monitoring, supervision and training arrangements to ensure the implementation of said plans, as said plan may be revised from time to time with the prior written agreement of the Bank, and such term includes all schedules and annexes supplemental thereto, such as the physical and cultural resources management plan and any additional EMPs as may be required for Project activities. 10. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for IBRD Financing, Investment Project Financing", dated July 14, 2017. 11. "Hezhou Municipal Engineering Administration Bureau" and the acronym "HMEAB" mean the agency of the Hezhou Municipality responsible for public works, or any successor thereto. 12. "Hezhou Municipal Environmental Protection Bureau" and the acronym "HMEPB" mean the agency of the Hezhou Municipality responsible for environmental protection, or any successor thereto. 13. "Hezhou Municipality" means the Project Implementing Entity's municipality of Hezhou, or any successor thereto. 14. "Hezhou Municipal Water Resources Bureau" and the acronym "HMWRB" mean the agency of the Hezhou Municipality responsible for water resources, or any successor thereto. 15. "Incremental Operating Costs" means the reasonable costs incurred for purposes of Project management and implementation based on the Annual Work Plans approved in advance by the Bank, on account of office rental, supplies and consumables, utilities, bank charges, communications, mass media and printing services, interpretation and translation services, vehicle rental, operation, maintenance, and insurance, building and equipment maintenance, local transportation, domestic travel, lodging, and subsistence allowances, and salaries of contractual and temporary staff, but excluding salaries and any salary supplements of members of the Borrower's, the Project Implementing Entity or Hezhou Municipality's civil service. -14- 16. "Project Agreement" means the agreement between the Bank and the Project Implementing Entity of even date herewith, as the same may be amended from time to time; and such term includes all schedules and agreements supplemental to the Project Agreement. 17. "Project Implementation Unit" means any of the units to be established within HMWRB, HIMEAB and HMEPB and referred to in Section I.A.1(c) of the Schedule to the Project Agreement, and any successor thereto and the term "Project Implementation Units" means all such units collectively. 18. "Project Implementing Entity" means the Borrower's Guangxi Zhuang Autonomous Region, or any successor thereto. 19. "Project Leading Group" means the leading group referred to in Section I.A. 1(a) of the Schedule to the Project Agreement, and any successor thereto. 20. "Project Management Office" and the acronym "PMO" mean the office referred to in Section I.A. 1(b) of the Schedule to the Project Agreement, and any successor thereto. 21. "Project Operations Manual" means the Project Implementing Entity's manual dated April 16, 2018 acceptable to the Bank, which incorporates the Procurement Plan, procurement manual, financial management manual, the Project's results framework and performance indicators, technical modules, and other operational arrangements for the Project, as the same may be revised from time to time with the prior written agreement of the Bank. 22. "Procurement Regulations" means, for purposes of paragraph 85 of the Appendix to the General Conditions, the "World Bank Procurement Regulations for IPF Borrowers", dated July 2016, revised November 2017. 23. "Resettlement Action Plan" or "RAP" means the resettlement action plan for the Project, acceptable to the Bank, dated September 2017 and disclosed on the Bank's external website (documents & reports) on October 24, 2017 , setting forth, inter alia: (i) the principles and procedures governing the acquisition of land required for the Project and related facilities; (ii) actions and measures for the payment of compensation to Affected Persons and for their resettlement and rehabilitation; (iii) the criteria and procedures for developing and implementing actions and measures, acceptable to the Bank, for mitigating the adverse social impacts resulting from the implementation of activities in locations that are not directly identified in the RAP; (iv) grievance redress mechanisms; and (v) reporting and monitoring arrangements to ensure compliance with said plan, as the same may be revised from time to time with the prior written agreement of the Bank; and such term includes all attachments and annexes supplemental to said plan, the resettlement plan for linked -15- projects dated October 2017 and disclosed on the Bank's external website (documents & reports) on October 23, 2017 and any additional RAPs as may be required for Project activities pursuant to RPF. 24. "Resettlement Policy Framework" or "RPF" means the resettlement policy framework for the Project, acceptable to the Bank and disclosed on the Bank's external website (documents & reports) on December 17, 2017. 25. "Safeguards Instruments" means, collectively, the Environmental and Social Assessment, Environmental Impact Assessment, Environmental Management Plan, Resettlement Policy Framework and Resettlement Action Plan, as well as any attachments, schedules and annexes supplemental to said instruments. 26. "Signature Date" means the later of the two dates on which the Borrower and the Bank signed this Agreement and such definition applies to all references to "the date of the Loan Agreement" in the General Conditions. 27. "Training and Workshops" means the costs of training activities under the Project, based on the Annual Work Plans approved in advance by the Bank, and attributable to seminars, workshops, and domestic and overseas training, along with travel and subsistence allowances for training participants, services of trainers, rental of training facilities, preparation and reproduction of training materials, and other activities directly related to course preparation and implementation. 28. "Upstream and Downstream Dams" means collectively a set of dams located upstream or downstream of the Hezhou Municipality as listed in the Project Operations Manual.