3 (d) “Concessionaire” means the party entering into the Concession Agreement with SLPA; (e) “Consulting Guidelines" means ADB’s Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers (2006, as amended from time to time); (f) “EIA” means the Environmental Impact Assessment as approved by the CCD on 12 December 2005 and as referred to in paragraph 13 of Schedule 5 to this Loan Agreement; (g) “EMP” means the Environmental Management Plan as approved by the CCD on 12 December 2005 and as referred to in paragraph 13 of Schedule 5 to this Loan Agreement; (h) “Goods” means equipment and materials to be financed out of the proceeds of the Loan; including related services such as transportation, insurance, installation, commissioning, and initial maintenance, but excluding consulting services; (i) “HIV/AIDS” means Human Immunodeficiency Virus/ Acquired Immune Deficiency Syndrome; (j) “MPA” means the Ministry of Ports and Aviation of the Borrower; (k) “MOFP” means the Ministry of Finance and Planning of the Borrower; (l) "Project Executing Agency" for the purposes of, and within the meaning of, the Loan Regulations, means MPA, or any legal successor thereto acceptable to ADB, which is responsible for the carrying out of the Project; (m) “Project facilities” means the facilities, equipment, and materials provided under this Project; (n) “Procurement Guidelines” means ADB’s Procurement Guidelines (2006, as amended from time to time); (o) “Project Implementing Agency” means SLPA; (p) “Procurement Plan” means the procurement plan for the Project dated 18 January 2007 and agreed between the Borrower and ADB, as updated from time to time in accordance with Procurement Guidelines, Consulting Guidelines, and other arrangements agreed with ADB; (q) “RRP” means the Report and Recommendation of the President to the Board of Directors of ADB for the Project; (r) “Rupees” or “SLRs” means the currency of the Borrower; 4 (s) “SEIA” means the Summary Environmental Impact Assessment as approved by the CCD on 12 December 2005 and as referred to in paragraph 13 of Schedule 5 to this Loan Agreement; (t) “SLPA” means the Borrower’s Sri Lanka Ports Authority established under the SLPA Act No. 51 of 1979, as amended, and any legal successor thereto; (u) "Subsidiary Loan Agreement" means the agreement between the Borrower and SLPA referred to in Section 3.01 of this Loan Agreement; and (v) “Works” means construction or civil works to be financed out of the proceeds of the Loan, including services such as drilling or mapping, and project related services that are provided as part of a single responsibility or turnkey contract, but excluding consulting services. ARTICLE II The Loan Section 2.01. (a) ADB agrees to lend to the Borrower from ADB's ordinary capital resources an amount of three hundred million ($ 300,000,000) Dollars, as such amount may be converted from time to time through a Currency Conversion in accordance with the provisions of Section 2.06 of this Loan Agreement. (b) The Loan has a term of 25 years, including a grace period of 5 years, as defined in paragraph (c) of this Section. (c) The term “grace period” as used in this paragraph (b) of this Section means the period prior to payment of the first principal amount of the Loan on the Principal Payment Date in accordance with the amortization schedule set forth in Schedule 2 to this Loan Agreement. Section 2.02. The Borrower shall pay to ADB interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate for each Interest Period equal to the sum of LIBOR and 0.60% as provided by Section 3.02 of the Loan Regulations. Section 2.03. The Borrower shall pay a commitment charge of 0.35 % per annum. Such charge shall accrue on the full amount of the Loan (less amounts withdrawn from time to time), commencing sixty (60) days after the date of this Loan Agreement. Section 2.04. Interest and other charges on the Loan shall be payable semiannually on 15 February and 15 August in each year. Section 2.05. The Borrower shall repay the principal amount of the Loan withdrawn from the Loan Account in accordance with the provisions of Schedule 2 to this Loan Agreement. 5 Section 2.06. (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, whether withdrawn and outstanding or unwithdrawn, 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 Floating Rate to a Fixed Rate, or vice versa; and (iii) the setting of limits on the Floating 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 said Floating Rate. (b) Any conversion requested pursuant to paragraph (a) of this Section that is accepted by ADB shall be considered a "Conversion", as defined in Section 2.01(6) of the Loan Regulations, and shall be effected in accordance with the provisions of Article V of the Loan Regulations and the Conversion Guidelines. ARTICLE III Use of Proceeds of the Loan Section 3.01. (a) The Borrower shall relend the proceeds of the Loan to SLPA under a Subsidiary Loan Agreement under the same terms and conditions as the Loan. (b) The Borrower shall cause SLPA to apply the proceeds of the Loan to the financing of expenditures on the Project in accordance with the provisions of this Loan Agreement and the Project Agreement. Section 3.02. The Goods, Works and consulting services to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan among different categories of such Goods, Works and consulting services and other items of expenditure shall be in accordance with the provisions of Schedule 3 to this Loan Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and ADB. Section 3.03. Except as ADB may otherwise agree, all Goods, Works and consulting services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to this Loan Agreement. ADB may refuse to finance a contract where Goods, Works or consulting services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB. 6 Section 3.04. Except as ADB may otherwise agree, the Borrower shall cause all Goods, Works and consulting services financed out of the proceeds of the Loan to be used exclusively in the carrying out of the Project. Section 3.05. The closing date for withdrawals from the Loan Account for the purposes of Section 9.02 of the Loan Regulations shall be 30 April 2011 or such other date as may from time to time be agreed between the Borrower and ADB. ARTICLE IV Particular Covenants Section 4.01. (a) The Borrower shall cause SLPA to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and ports management practices. (b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement. Section 4.02. The Borrower shall make available to SLPA, promptly as needed, the funds, facilities, services and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project. Section 4.03. In the carrying out of the Project, the Borrower shall cause competent consultants and contractors, acceptable to ADB, to be employed to an extent and upon terms and conditions satisfactory to the Borrower and ADB. (b) The Borrower shall cause the Project to be carried out in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. The Borrower shall cause SLPA to furnish to ADB, promptly after their preparations, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. Section 4.04. The Borrower shall cause SLPA to (i) maintain separate account for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms and reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. 7 (b) The Borrower shall enable ADB, upon ADB’s request, to discuss the Borrower’s financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Borrower pursuant to Section 4.05 (a) hereabove, 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 the Borrower unless the Borrower shall otherwise agree. Section 4.05. The Borrower shall enable ADB’s representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, and any relevant records and documents. Section 4.06. The Borrower shall cause SLPA to ensure that the Project facilities are operated, maintained and repaired in accordance with sound administrative, financial, engineering, environmental, ports management and maintenance and operational practices. Section 4.07. The Borrower shall take all action which shall be necessary on its part to enable SLPA to perform its obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. Section 4.08. (a) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such a manner as to protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan. (b) No rights or obligations under the Subsidiary Loan Agreement shall be assigned, amended, abrogated or waived without the prior concurrence of ADB. ARTICLE V Suspension; Cancellation; Acceleration of Maturity Section 5.01. The following are specified as additional events for suspension of the right of the Borrower to make withdrawals from the Loan Account for the purposes of Section 9.01(l) of the Loan Regulations: (a) The SLPA Act or any provision thereof shall have been repealed, suspended or amended in a manner which in the reasonable opinion of ADB will or may adversely affect the carrying out or the operation of the Project. (b) SLPA shall have failed to perform any of its obligations under the Subsidiary Loan Agreement. Section 5.02. The following is specified as an additional event for acceleration of maturity for the purposes of Section 9.07(a)(iv) of the Loan Regulations: any of the events specified in Section 5.01 of this Loan Agreement shall have occurred. 8 ARTICLE VI Effectiveness Section 6.01. The following are specified as additional conditions to the effectiveness of this Loan Agreement for the purposes of Section 10.01(f) of the Loan Regulations: (a) the Borrower shall have issued an invitation for the negotiation of the Concession Agreement to the selected private operator(s), following an open competitive bidding procedure in accordance with the Borrower’s laws and procedures; and (b) the Subsidiary Loan Agreement, in form and substance satisfactory to ADB, shall have been duly executed and delivered on behalf of SLPA and shall have become fully effective and binding upon SLPA in accordance with its terms, subject only to the effectiveness of this Loan Agreement. Section 6.02. The following is specified as an additional matter, for the purposes of Section 10.02 (d) of the Loan Regulations, to be included in the opinion or opinions to be furnished to ADB: that the SLPA Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of the parties thereto and is legally binding upon the parties thereto in accordance with its terms, subject only to the effectiveness of this Loan Agreement. Section 6.03. A date ninety (90) days after the date of this Loan Agreement is specified for the effectiveness of the Loan Agreement for the purposes of Section 10.04 of the Loan Regulations. ARTICLE VII Delegation of Authority Section 7.01. The Borrower hereby designates SLPA agent for the purposes of taking any action or entering into any agreement required or permitted under Sections 3.02, 3.03 and 3.05 of this Loan Agreement and under Sections 6.01, 6.02, 6.03 and 6.04 of the Loan Regulations. Section 7. 02. Any action taken or any agreement entered into by SLPA pursuant to the authority conferred under Section 7.01 of this Loan Agreement shall be fully binding on the Borrower and shall have the same force and effect as if taken by the Borrower. Section 7.03. The authority conferred on SLPA under Section 7.01 of this Loan Agreement may be revoked or modified by agreement between the Borrower and ADB. 9 ARTICLE VIII Miscellaneous Section 8.01. Each of the Secretary, MOFP; the Deputy Secretary to the Treasury, MOFP; and the Director General, Department of External Resources, MOFP of Sri Lanka is designated as representative of the Borrower for the purposes of Section 12.02 of the Loan Regulations. Section 8.02. The following addresses are specified for the purposes of Section 12.01 of the Loan Regulations: For the Borrower The Secretary Ministry of Finance and Planning The Secretariat Colombo 1 Sri Lanka Copy: Deputy Secretary to the Treasury Director General, External Resources Department Cable Address: SECMINFIN COLOMBO Telex Number: 21232 FORAID COLOMBO 21409 FINMIN COLOMBO Facsimile Number: (94 11) 244-9823 (94 11) 244-7633. For ADB Asian Development Bank P.0. Box 789 0980 Manila, Philippines Cable Address: ASIANBANK MANILA 11 SCHEDULE 1 Description of the Project 1. The principal objective of the Project is to promote economic growth by improving the Borrower’s competitiveness through expansion of the Colombo Port using a public-private partnership to maintain its status as a regional transshipment hub port. 2. The Project shall comprise: (i) dredging an approach channel and inner harbor west of the existing harbor; (ii) constructing a breakwater to the west of the existing harbor, including a basin area and a smaller secondary breakwater; (iii) relocating the existing submarine oil pipeline near the entrance to the new terminals ; (iv) establishing a new marine operations center; (v) providing navigational aid; and (vi) constructing shore utilities including electrical plant, water main and storage tanks and a sewage treatment plant. 3. The Project is expected to be completed by 31 October 2010. 12 SCHEDULE 2 Amortization Schedule (Colombo Port Expansion Project) 1. 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). If the proceeds of the Loan shall have been fully withdrawn as of the first Principal Payment Date, the principal amount of the Loan repayable by the Borrower on each Principal Payment Date shall be determined by ADB by multiplying: (a) the total principal amount of the Loan withdrawn and outstanding as of the first Principal Payment Date; by (b) the Installment Share for each Principal Payment Date, such repayment amount to be adjusted, as necessary, to deduct any amounts referred to in paragraph 4 of this Schedule, to which a Currency Conversion applies. Payment Due Date Payment of Principal (Expressed in percentage) 15-Aug-2012 0.83 15-Feb-2013 0.87 15-Aug-2013 0.91 15-Feb-2014 0.96 15-Aug-2014 1.01 15-Feb-2015 1.06 15-Aug-2015 1.11 15-Feb-2016 1.16 15-Aug-2016 1.22 15-Feb-2017 1.28 15-Aug-2017 1.35 15-Feb-2018 1.42 15-Aug-2018 1.49 15-Feb-2019 1.56 15-Aug-2019 1.64 15-Feb-2020 1.72 15-Aug-2020 1.81 15-Feb-2021 1.90 15-Aug-2021 1.99 15-Feb-2022 2.09 15-Aug-2022 2.20 15-Feb-2023 2.31 15-Aug-2023 2.42 15-Feb-2024 2.54 15-Aug-2024 2.67 15-Feb-2025 2.80 15-Aug-2025 2.94 15-Feb-2026 3.09 15-Aug-2026 3.25 15-Feb-2027 3.41 13 15-Aug-2027 3.58 15-Feb-2028 3.76 15-Aug-2028 3.94 15-Feb-2029 4.14 15-Aug-2029 4.35 15-Feb-2030 4.57 15-Aug-2030 4.79 15-Feb-2031 5.03 15-Aug-2031 5.29 15-Feb-2032 5.54 TOTAL 100.00 2. If the proceeds of the Loan shall not have been fully withdrawn as of the first Principal Payment Date, the principal amount of the Loan repayable by the Borrower on each Principal Payment Date shall be determined as follows: (a) To the extent that any proceeds of the Loan shall have been withdrawn as of the first Principal Payment Date, the Borrower shall repay the amount withdrawn and outstanding as of such date in accordance with paragraph 1 of this Schedule. (b) Any withdrawal made after the first Principal Payment Date shall be repaid on each Principal Payment Date falling after the date of such withdrawal in amounts determined by ADB by multiplying the amount of each such withdrawal by a fraction, the numerator of which shall be the original Installment Share specified in the table in paragraph 1 of this Schedule for said Principal Payment Date (the Original Installment Share) and the denominator of which shall be the sum of all remaining Original Installment Shares for Principal Payment Dates falling on or after such date, such repayment amounts to be adjusted, as necessary, to deduct any amounts referred to in paragraph 4 of this Schedule, to which a Currency Conversion applies. 3. Withdrawals made within two calendar months prior to any Principal Payment Date shall, for the purposes solely of calculating the principal amounts payable on any Principal Payment Date, be treated as withdrawn and outstanding on the second Principal Payment Date following the date of withdrawal and shall be repayable on each Principal Payment Date commencing with the second Principal Payment Date following the date of withdrawal. 4. Notwithstanding the provisions of paragraphs 1 and 2 of this Schedule, upon a Currency Conversion of all or any portion of the withdrawn principal amount of the Loan to an Approved Currency, the amount so converted in said Approved Currency that shall be repayable on any Principal Payment Date occurring during the Conversion Period, shall be determined by ADB by multiplying such amount in its currency of denomination immediately prior to said Conversion by either: (i) the exchange rate that reflects the amounts of principal in said Approved Currency payable by ADB under the Currency Hedge Transaction relating to said Conversion; or (ii) if ADB so determines in accordance with the Conversion Guidelines, the exchange rate component of the Screen Rate. 5. If the principal amount of the Loan withdrawn and outstanding from time to time shall be denominated in more than one Loan Currency, the provisions of this Schedule 14 shall apply separately to the amount denominated in each Loan Currency, so as to produce a separate amortization schedule for each such amount. 15 SCHEDULE 3 Allocation and Withdrawal of Loan Proceeds General 1. The table attached to this Schedule sets forth the Categories of Goods, Works, services and other items to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan to each such Category (hereinafter called the Table). (Reference to "Category" or "Categories" in this Schedule is to a Category or Categories of the Table.) Percentages of ADB Financing 2. Except as ADB may otherwise agree, the items of the Categories listed in the Table shall be financed out of the proceeds of the Loan on the basis of the percentages set forth in the Table. Reallocation 3. Notwithstanding the allocation of Loan proceeds and the withdrawal percentages set forth in the Table, (a) if the amount of the Loan allocated to any Category appears to be insufficient to finance all agreed expenditures in that Category, ADB may, by notice to the Borrower, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amounts of the Loan which have been allocated to another Category but, in the opinion of ADB, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made; and (b) if the amount of the Loan then allocated to any Category appears to exceed all agreed expenditures in that Category, ADB may, by notice to the Borrower, reallocate such excess amount to any other Category. Disbursement Procedures 4. Except as ADB may otherwise agree, payments for all Goods, Works and consulting services to be financed out of the Loan proceeds shall be disbursed in accordance with ADB’s “Loan Disbursement Handbook” dated January 2001 (ADB’s Loan Disbursement Handbook) as amended from time to time and ADB’s direct payment procedure shall be used for disbursement of payments. 16 Attachment to Schedule 3 TABLE ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Colombo Port Expansion Project) CATEGORY ADB FINANCING Amount Allocated Percentage and Number Item $ Basis for Withdrawal Category from the Loan Account 1 Works 260,300,000 81.7 percent of total expenditure* 2 Equipment 2,000,000 100 percent of total expenditure* 3 Consulting Services 12,700,000 100 percent of total expenditure* 4 Unallocated 25,000,000 Total 300,000,000 * Exclusive of taxes and duties. 17 SCHEDULE 4 Provisions on Procurement and Consulting Services A. General 1. All Goods and Works, and consulting services, to be financed out of the proceeds of the Loan shall be subject to and governed by the Procurement Guidelines, and the Consulting Guidelines, respectively. 2. All terms used and not otherwise defined in this Loan Agreement have the meanings provided in the Procurement Guidelines and/or the Consulting Guidelines, as applicable. B. Procurement for Goods and Works 3. Except as ADB may otherwise agree, Goods and Works shall only be procured on the basis of the methods of procurement set forth below: International Competitive Bidding The methods of procurement are subject to, among other things, the detailed arrangements and threshold values set forth in the Procurement Plan. The Borrower may only modify the methods of procurement or threshold values with the prior agreement of ADB, and modifications must be set out in updates to the Procurement Plan. C. Selection of Consulting Services 4. The Borrower shall apply the following methods for selecting and engaging the specified consulting services, in accordance with, among other things, the procedures set forth in the Procurement Plan: Single Source Selection for consulting services D. Industrial or Intellectual Property Rights 5. (a) The Borrower shall ensure that all Goods and Works procured (including without limitation all computer hardware, software and systems, whether separately procured or incorporated within other goods and services procured) do not violate or infringe any industrial property or intellectual property right or claim of any third party. (b) The Borrower shall ensure that all contracts for the procurement of Goods and Works contain appropriate representations, warranties and, if appropriate, indemnities from the contractor or supplier with respect to the matters referred to in subparagraph (a) of this paragraph. 6. The Borrower shall ensure that all ADB-financed contracts with consultants contain appropriate representations, warranties and, if appropriate, indemnities from the 18 Schedule 4 consultants to ensure that the consulting services provided do not violate or infringe any industrial property or intellectual property right or claim of any third party. 19 SCHEDULE 5 Execution of Project and Operation of Project Facilities; Financial Matters Project Executing Agency and Implementation Agency 1. MPA shall be the Project Executing Agency, responsible for overall Project coordination. 2. SLPA shall be the Project Implementing Agency, responsible for timely and effective implementation of the Project. Project Implementation Unit 3. Within one month of the Effective Date, MPA shall (i) establish the PIU and (ii) select key staff for its operation including staff for the environmental monitoring as specified in the EIA. PIU staff shall be selected in accordance with the Borrower’s relevant procedures. The PIU shall be responsible for the day-to-day implementation of the Project and shall be headed by a full time Project Director. The Project Director will be supported by qualified staff having expertise in contract management, environmental monitoring, planning and accounting. The PIU shall (i) plan and schedule Project activities; (ii) supervise and monitor the work program of the Project and Project performance; (iii) administer procurement activities; (iv) be responsible for the bookkeeping and the maintenance of the Project accounts; (v) prepare liquidation reports; (vi) prepare and submit to ADB various reports, including quarterly and annual Project monitoring and progress report; and (vii) coordinate field activities. Project Steering Committee 4. Within one month of the Effective Date, a Project Steering Committee shall be established to oversee and coordinate issues related to Project implementation. The Project Steering Committee, chaired by Secretary, MPA shall comprise representatives from concerned government agencies, including MOFP, External Resources Department and National Planning Department and shall meet whenever necessary but not less than once every six months, to provide policy guidance on the direction of the Project. SLPA shall report to the Project Steering Committee on the Project implementation on a regular basis. Project Director 5. Within one month of the Effective Date, the Borrower shall ensure that the Project Director is appointed in accordance with the Borrower’s relevant procedures. The Project Director shall report to the Chairman, SLPA. The Project Director shall have the overall responsibility for the timely and satisfactory implementation of the Project. 20 Schedule 5 Advisory Committee 6. Within three months of the Effective Date, the Borrower shall establish the Advisory Committee chaired by the Secretary, MPA and including as a member, the person holding the post of Director General of the Public Utilities Commission. Counterpart Funds 7. The Borrower shall ensure that adequate counterpart funds are made available to the Project when and in the amounts required to enable Project agencies to discharge their responsibilities under the Project and that counterpart funds shall be increased if needed to cover any shortfall of fund for the completion of the Project. Concessionaire 8. The Borrower shall ensure that Concessionaires for at least the first two new terminals under the Project shall be chosen through an open competitive bidding process. Concession Agreement 9. The Borrower shall ensure that SLPA’s equity share in the terminal concession companies shall not exceed 15% of the entire issued capital of such concession company. This limit shall not apply in the case of a corporate entity registered by the SLPA and / or the Borrower under the Companies Act No. 17 of 1982 of Sri Lanka, as amended, for the purposes of carrying out the container terminal operations. 10. The Borrower shall cause SLPA to ensure that the Concession Agreements with all Concessionaires operating under the Project include the provision that the Concessionaire shall follow the EMP, the National Environmental Act (NEA) No. 47 of 1980 as amended, ADB’s Environment Policy (2002), ADB’s policy on Involuntary Resettlement (1995) and ADB’s Policy on Indigenous People (1998) in constructing the terminals under such Concession Agreements. This provision shall be strictly monitored during project implementation. Resettlement 11. The Borrower shall ensure that the Project design and implementation are carried out in a manner so as to avoid any land acquisition or involuntary resettlement. The Borrower shall cause SLPA to ensure that in case of change in Project scope or any unanticipated resettlement impacts (due to quarrying of rocks, widening of access roads or any other activity) during Project implementation, land acquisition and resettlement activities shall be implemented in accordance with all applicable laws and regulations of the Borrower to the extent not inconsistent with ADB’s policies and procedures and in accordance with ADB’s policy on Involuntary Resettlement (1995) and Policy on Indigenous Peoples (1998). In case of unanticipated resettlements impacts during Project implementation, the Borrower shall cause SLPA to submit a satisfactory Resettlement Plan to ADB for review prior to the award of Works contracts. Before any affected person is dispossessed or displaced from its assets, the Borrower shall cause SLPA to ensure that they are consulted and compensated 21 Schedule 5 at replacement values such that their living standards are not adversely affected, in accordance with the Resettlement Plan. Environment 12. The Borrower shall cause SLPA to ensure that the Project and all Project facilities are developed, conducted, implemented, and maintained in accordance with the Borrower’s National Environmental Act (NEA) No. 47 of 1980, as amended, and ADB’s Environment Policy (2002). In case of any discrepancies between the Borrower’s laws, regulations, and/or procedures, and ADB’s requirements, ADB’s Environment Policy (2002) shall prevail. 13. The Borrower shall cause SLPA to apply the environmental mitigation measures included in the EIA and the SEIA report for the implementation of the Project, as necessary. The Borrower shall cause SLPA to monitor, review, and if necessary, update the EMP prior to any Works to ensure that all negative environmental impacts related to Works are mitigated properly. In case of unanticipated negative environmental impacts, the Borrower shall cause SLPA (i) to report such impacts to CCD and ADB; and (ii) to provide remedial mitigation measures to affected people in consultation with CCD and EMC. 14. The Borrower shall cause SLPA to conduct regular environmental monitoring. The monitoring report should be submitted to ADB, EMC and other relevant agencies such as CCD, and Council for Environmental Affairs CEA every 6 months. 15. The Borrower shall cause SLPA to provide the contractors and Concessionaires with the EIA and the SEIA including the EMP and ensure that contractors and Concessionaires implement the required mitigation measures as described in the EMP in a satisfactory manner. In addition, the Borrower shall cause the SLPA to ensure that the contractors and Concessionaires report on the implementation of the EMP on a regular basis, along with any deviation from the EIA report. Works 16. Prior to the commencement of the Works, the Borrower shall cause SLPA to ensure that updated environmental approval is obtained from CCD. Social Development and Gender 17. The Borrower shall cause SLPA to ensure that all Works contractors comply with all applicable labor laws, do not employ child labor for construction and maintenance activities, provide appropriate facilities for women in construction campsites, encourage employment of the poor, particularly women, and do not differentiate wages between men and women for work of equal value. The Borrower shall cause SLPA to ensure that Works contracts include a requirement on the part of the contractors to conduct an information and education campaign on communicable diseases, including but not limited to sexually transmitted diseases and HIV/AIDS for construction workers as a part of the health and safety program at campsites during the construction period. The Works contracts shall 22 Schedule 5 include specific clauses on these undertakings, and compliance shall be strictly monitored by SLPA during project implementation. Good Governance 18. Consistent with the Borrower’s and ADB’s commitment to good governance, accountability and transparency, the Borrower shall cause SLPA to ensure that the Project funds are utilized effectively and efficiently to implement the Project and to achieve the Project objectives. The Borrower shall cause SLPA to (i) disclose the bid awards on SLPA’s website; (ii) undertake necessary measures to create and sustain a corruption-free environment; (iii) ensure that the Borrower’s Anticorruption Law and ADB’s policy on Anticorruption (1998, as amended to date), are strictly enforced and are being complied with during Project implementation, and that relevant provisions of ADB’s policy on Anticorruption, are included in all bidding documents for the Project; (iv) facilitate ADB’s exercise of its right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project; (v) conduct periodic inspections on the Project contractor’s activities related to fund withdrawals and settlements; and (vi) ensure that contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit an examine the records and accounts of SLPA and all contractors, suppliers, consultants and other service providers as they related to the Project. The Borrower shall cooperate with any audit and investigation and extend necessary assistance, including access to all relevant books and records, as well as engagement of independent auditors and experts that may be needed for satisfactory completion of such audits and investigations. Project Review 19. In order to ensure effective Project implementation, ADB and SLPA shall jointly undertake annual reviews of the Project to assess progress, identify constraints and agree on strategies for resolving constraints. Within two years of the Effective Date, SLPA and ADB shall undertake a comprehensive mid-term review (MTR) of the Project which shall (i) review the scope, design, and implementation arrangements of the Project; (ii) identify changes needed since the time of the Project appraisal; (iii) assess implementation performance against Project performance indicators; (iv) review and establish compliance with legal covenants; and (v) identify problems and constraints. The results of the MTR shall be discussed by SLPA and ADB and if required, appropriate corrective measures shall be formulated to ensure successful Project implementation and achievement of the Project objectives. Without limiting the generality of Section 7.04 (d) of the Loan Regulations, within three months of physical completion of the Project, the PIU shall submit to ADB a Project completion report providing detailed evaluation of the progress implementation, costs, consultant’s performance, social and economic impact and other details as requested by ADB. Project impacts will be evaluated upon the completion of the Project according to a schedule and terms of reference to be agreed upon by the SLPA and ADB. Project Performance Monitoring System (PPMS) 20. Within six months of the Effective Date, the Borrower, through SLPA, shall develop a PPMS, including baseline performance monitoring and systematic Project 23 Schedule 5 performance monitoring. The Borrower shall cause SLPA to carry out surveys (i) at the start of Project implementation to establish baseline data, (ii) at Project mid-term review, and (iii) at the time of Project completion; and (iv) not later than six months after Project completion, to evaluate the Project benefits. Data to be compiled for the purpose of Project performance and evaluation shall be in format developed in consultation with ADB. Key indicators shall be proposed by SLPA and developed in consultation with ADB.
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