CONFORMED COPY
GEF TRUST FUND GRANT NUMBER TF050950
Global Environment Facility
Trust Fund Grant Agreement
(Environmental Protection and Sustainable Development of the
Guarani Aquifer System Project)
between
GENERAL SECRETARIAT OF THE ORGANIZATION
OF AMERICAN STATES
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
acting as an Implementing Agency of the Global Environment Facility
Dated July 23, 2002
GEF TRUST FUND GRANT NUMBER TF050950
GLOBAL ENVIRONMENT FACILITY TRUST FUND GRANT AGREEMENT

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AGREEMENT, dated July 23, 2002, between the GENERAL SECRETARIAT OF THE
ORGANIZATION OF AMERICAN STATES (the Recipient) and INTERNATIONAL BANK
FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) acting as an implementing
agency of the Global Environment Facility (GEF) in respect of grant funds provided to the GEF
Trust Fund by certain members of the Bank as participants of the GEF.
WHEREAS (A) the Bank, pursuant to Resolution No. 91-5 of March 14, 1991 of the
Executive Directors of the Bank, established the GEF to assist in the protection of the global
environment and promote thereby environmentally sound and sustainable economic
development;
(B)
following the restructuring of the GEF, such arrangements continued in place on
the basis set forth in Resolution No. 94-2 of May 24, 1994, of the Executive Directors of the
Bank which, inter alia, established the GEF Trust Fund and appointed the Bank as trustee of the
GEF Trust Fund (Resolution No. 94-2);
(C)
the second replenishment of the GEF Trust Fund was approved on the basis set
forth in Resolution No. 98-2 of July 14, 1998, of the Executive Directors of the Bank (Resolution
No. 98-2);
(D)
the Recipient is a duly established international organization and represents that
it has the necessary legal capacity and powers to enter into this Agreement and perform its
obligations herein set forth;
(E)
the Recipient, having satisfied itself as to the feasibility and priority of the
project described in Schedule 2 to this Agreement (the Project), has requested assistance from
the resources of the GEF Trust Fund for funding the Project, and said request having been
approved in accordance with the provisions of the Instrument for the Establishment of the
Restructured Global Environment Facility approved under Resolution 94-2, and to be funded
from the resources of the GEF Trust Fund; and
(F)
the Argentine Republic (Argentina), the Federative Republic of Brazil (Brazil),
the Republic of Paraguay, and the Oriental Republic of Uruguay (Uruguay) (each of them a
Beneficiary, and the four of them jointly the Beneficiaries), as ultimate beneficiaries of the
Project, have agreed to collaborate on the execution of the Project, as is expected to be detailed
in the Participation Agreements (as defined below); and
WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend a
grant (the GEF Trust Fund Grant) to the Recipient upon the terms and conditions set forth in this
Agreement;
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I

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General Conditions; Definitions
Section 1.01 (a) The following provisions of the General Conditions Applicable to Loan
and Guarantee Agreements for Single Currency Loans of the Bank, dated May 30, 1995 (as
amended through October 6, 1999), with the modifications set forth in paragraph (b) of this
Section (the General Conditions) constitute an integral part of this Agreement:
(i)
Article I;
(ii)
Sections 2.01 (1), (2), (3), (4), (5), (7), (8), (14), (15), (16), (18) and
(21), 2.02 and 2.03;
(iii)
Section 3.01;
(iv)
the first part of Section 4.01 (until the semicolon); Section 4.06;
(v)
Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.06, 5.07 and 5.09;
(vi)
Sections 6.01, 6.02 (c), (e), (f), (g), (h), (i), (l), (m), (n), (o) and (p), 6.03,
6.04 and 6.06;
(vii)
Section 8.01 (b);
(viii)
Sections 9.01 (a), 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09;
(ix)
the second sentence of Section 10.01, and 10.03;
(x)
Article XI; and
(xi)
Sections 12.01, 12.02, 12.03 and 12.04.
(b)
The General Conditions shall be modified as follows:
(i)
a new paragraph shall be added to the end of Section 2.01 to read as
follows: "the term "Special Drawing Rights" and the symbol "SDR"
mean special drawing rights as valued by the International Monetary
Fund in accordance with its Articles of Agreement";
(ii)
the term "Bank", wherever used in the General Conditions, other than in
Sections 5.01 (a) and 6.02 (f) thereof, means the Bank acting as an
implementing agency of the GEF;

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(iii)
the term "Borrower", wherever used in the General Conditions, means
the Recipient, except in Sections 6.02 (f) and 8.01 (b), where the term
"Borrower" shall mean a Beneficiary;
(iv)
the term "Loan Agreement", wherever used in the General Conditions,
means this Agreement;
(v)
the term "Loan", wherever used in the General Conditions, means the
GEF Trust Fund Grant;
(vi)
the term "Loan Account", wherever used in the General Conditions,
means the GEF Trust Fund Grant Account, the account opened by the
Bank on its books in the name of the Recipient to which the amount of
the GEF Trust Fund Grant is credited; and
(vii)
a new paragraph (q) is added to Section 6.02 of the General Conditions,
as follows: "(q) An extraordinary situation shall have arisen in which
any further disbursement under the Grant would exceed the resources
available for disbursement from the GEF."
Section 1.02. Wherever used in this Agreement, unless the context otherwise requires,
the several terms defined in the General Conditions and in the Preamble to this Agreement have
the respective meanings therein set forth and the following additional terms have the following
meanings:
(a)
"GAS" means the Guarani Aquifer System, which is the aquifer underlying
portions of, and shared by, the Beneficiaries;
(b)
"GAS GPS" means the secretariat for the general Project coordination referred
to in Section 3.03 of this Agreement;
(c)
"GEF Trust Fund Grant Account" means the account referred to in Section 1.01
(b) (vi) of this Agreement;
(d)
"Participation Agreement" means any of the agreements entered into between
the Recipient and any of the Beneficiaries pursuant to Section 3.04 of this Agreement;
(e)
"Project Implementation Plan" means the plan for the implementation of the
Project referred to in Section 3.02 of this Agreement; and
(f)
"Special Account" means the account referred to in Section 2.02 (b) of this
Agreement.
ARTICLE II
The GEF Trust Fund Grant

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Section 2.01. The Bank agrees to make available to the Recipient, on the terms and
conditions set forth or referred to in this Agreement, the GEF Trust Fund Grant in an amount in
various currencies equivalent to ten million eight hundred thousand Special Drawing Rights
(SDR10,800,000).
Section 2.02. (a) The amount of the GEF Trust Fund Grant may be withdrawn from the
GEF Trust Fund Grant Account in accordance with the provisions of Schedule 1 to this
Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the
reasonable cost of goods, works and services required for carrying out the Project and to be
financed out of the proceeds of the GEF Trust Fund Grant.
(b)
The Recipient may, for the purposes of the Project, open and maintain in Dollars
a separate general ledger account in a commercial bank satisfactory to the Bank and on terms and
conditions satisfactory to the Bank, including appropriate protection against set off, seizure or
attachment. Deposits into, and payments out of, the Special Account shall be made in
accordance with the provisions of Schedule 4 to this Agreement.
Section 2.03. The Closing Date shall be March 31, 2007 or such later date as the Bank
shall establish. The Bank shall promptly notify the Recipient of such later date.
ARTICLE III
Execution of the Project
Section 3.01. The Recipient declares its commitment to the objectives of the Project as
set forth in Schedule 2 to this Agreement and, to this end, shall carry out the Project (with the
collaboration of the Beneficiaries as set forth in Sections 3.02 and 3.04 of this Agreement) with
due diligence and efficiency and in conformity with appropriate administrative, financial and
procurement practices and with due regard to ecological and environmental factors, and shall
provide, promptly as needed, the funds, facilities, services and other resources required for the
Project. No section of this Agreement shall be construed so as to limit the provisions of this
Section 3.01.
Section 3.02. (a) The Recipient shall carry out the Project (and obtain the Beneficiaries'
collaboration thereafter) in accordance with an implementation plan satisfactory to the Bank,
which shall include, inter alia: (i) detailed institutional implementation arrangements; (ii) the
procedure and criteria to be used by the Recipient in the selection of the projects to benefit from
grants under Part C (b) of the Project; (iii) monitoring and evaluation arrangements; (iv) financial
management and procurement arrangements; and (v) detailed Project costing.
(b)
The Recipient shall not amend the Project Implementation Plan without the
Bank's consent.
(c)
In case of discrepancy between the provisions of the Project Implementation
Plan and those of this Agreement, the provisions set forth in this Agreement shall prevail.
Section 3.03. (a) The Recipient shall carry out the Project through a GAS GPS, with a
secretary general and staff in numbers and with qualifications and responsibilities satisfactory to

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the Bank, and with the assistance of a steering committee (with rotating chairmanship as decided
by the Beneficiaries, starting with a chairman to be appointed by Paraguay in 2002), a
coordination group and national Project execution units, as the composition and functions of said
steering committee, coordination group and national Project execution units shall be described in
the Project Implementation Plan.
(b)
The Recipient shall establish the office of the GAS GPS in the Oriental Republic
of Uruguay, as agreed by the Beneficiaries on March 20, 2002 in their meeting in Buenos Aires,
Republic of Argentina.
Section 3.04. (a) For the purposes of carrying out the Project, the Recipient shall enter
into a participation agreement, satisfactory to the Bank, with each Beneficiary, such agreement to
govern, inter alia, the corresponding Beneficiary's role in the execution of the Project, including
the obligation of each Beneficiary to:
(i)
maintain all goods acquired for the Project (including but not limited to
information system equipment and well monitoring equipment) in good
working condition as determined by the Bank;
(ii)
appoint and thereafter maintain (including the provision of adequate
economic compensation) during Project implementation, a coordinator
with qualifications and responsibilities satisfactory to the Bank, and for
the purposes of, inter alia: (A) providing support to, and coordination of,
all Project activities that correspond to the corresponding Beneficiary;
(B) ensuring the maintenance and dissemination in the Beneficiary of the
information inventoried and generated as a result of the Project;
(iii)
appoint and thereafter maintain during Project implementation
representatives in all Project coordination and implementation units, as
determined in the Project Implementation Plan (including, but not
limited to, a Project steering committee and a Beneficiary execution
unit);
(iv)
select staff and other personnel from its appropriate agencies to
participate in Project activities (including seminars, workshops and other
training activities);
(v)
ensure that provinces, states, municipalities, universities and any other
relevant institutions or agencies, as applicable, are included and involved
in Project execution and activities, including decisions regarding GAS
management;
(vi)
assist the Recipient in the preparation of the reports referred to in
Section 3.07 (a) of this Agreement and provide any other information or
reports relevant to the Project that the Recipient may request;
(vii)
participate, whenever requested by the Recipient or the Bank, in the
reviews referred to in Section 3.07 (b) of this Agreement;
(viii)
in order to use wells for the carrying out of studies under Part A and Part

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E of the Project, get the relevant well owner consent for the carrying out
of said studies;
(ix)
in order for wells to be built after the date of this Agreement to be used
in the Project, ensure that these wells have been built and managed in a
manner satisfactory to the Bank (including environmental and social
aspects);
(x)
with respect to Part E of the Project:
(A)
assign adequate counterpart staff and provide necessary
logistical support for the execution of such Part E of the Project;
(B)
in the case of Argentina and Brazil, enter into agreements
(satisfactory to the Bank) as required by the applicable
constitutions, laws and regulations of said Beneficiaries (and
their relevant states and provinces), with the Province of Entre
Ríos (in the case of Argentina) and the State of Rio Grande do
Sul (in the case of Brazil) and, if applicable, enter into
arrangements (satisfactory to the Bank) with the relevant
Argentine and Brazilian municipalities; and
(C)
maintain well monitoring equipment in satisfactory condition;
(xi)
with respect to Project components which affect indigenous
communities, ensure - through the relevant agency in each Beneficiary
dealing with indigenous issues - that such communities, through
participatory assessments, consultations and dissemination of education
materials participate in the implementation, monitoring and evaluation of
said parts of the Project, all of this as set forth in the indigenous peoples
strategy letter between the Recipient and the Bank of even date
herewith;
(xii)
abide by all applicable Project provisions laid out in this Agreement; and
(xiii)
afford all reasonable opportunity for representatives of the Bank to visit
any part of the Beneficiaries' territory for purposes related to the GEF
Trust Fund Grant.
(b)
The Recipient shall ensure that each Participation Agreement be duly authorized
or ratified by, and executed and delivered by, the relevant Beneficiary and be legally binding
upon such Beneficiary in accordance with the relevant Participation Agreement's terms.
(c)
The Recipient shall exercise its rights and comply with its obligations under each
Participation Agreement in such a manner so as to protect the interests of the Bank to achieve the
purposes of the GEF Trust Fund Grant, and except as the Bank shall otherwise agree, the
Recipient shall not assign, amend, abrogate, waive or fail to enforce any such Participation
Agreement or any provision thereof.

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(d)
The Recipient shall ensure that each of the Participation Agreements is fully
consistent with this Agreement. No provision of any of the Participation Agreements shall in any
way limit the obligations of the Recipient set forth in this Agreement. In case of discrepancy
between the provisions of any Participation Agreement and those of this Agreement, the
provisions set forth in this Agreement shall prevail.
Section 3.05. In order for a university, non-governmental or community organization to
participate in the carrying out of Part C (b) of the Project: (a) the university, non-governmental or
community organization shall have been established and registered with separate legal
personality of its own; (b) the university, non-governmental or community organization's
existence, registration and legal personality shall be maintained throughout the course of its
participation in the Project; and (c) the university, non-governmental or community organization
shall have entered into, and be in compliance with, an agreement with the Recipient whereby, in
exchange for deposits by the Recipient of GEF Trust Fund Grant proceeds in a bank or other
account controlled by the university, non-governmental or community organization (which
deposits shall not exceed amounts required to maintain in such account sums needed to meet
thirty days' worth of projected eligible expenditures for said Part C (b)) said university,
non-governmental or community organization agrees to use such proceeds solely for purposes of
Part C (b) of the Project to allow the Recipient and/or Bank representatives to visit facilities
involved in such Part C (b), to abide by the relevant terms of Schedule 3 to this Agreement and to
allow audits and review of records by, or on behalf of, the Recipient of the use of such proceeds.
Section 3.06. Except as the Bank shall otherwise agree, procurement of the goods and
consultants' services required for the Project and to be financed out of the proceeds of the GEF
Trust Fund Grant shall be governed by the provisions of Schedule 3 to this Agreement.
Section 3.07. Without limitation upon the provisions of Section 9.01 (a) and 9.07 of the
General Conditions, the Recipient shall:
(a)
in the months of March and September of each year during Project
implementation, furnish to the Bank reports on the progress in the implementation of the Project
during the previous six months which shall take into consideration the targets and indicators set
forth in a letter from the Recipient to the Bank of even date herewith, such reports to be of scope
and in such detail as the Bank shall request;
(b)
in the months of March and September of each year during Project
implementation, hold reviews with the Bank such reviews to be based on the reports referred to
in paragraph (a) above and, thereafter, take or cause to be taken all such action which shall have
been agreed upon by the Recipient and the Bank during the reviews referred to in this paragraph,
as necessary for the efficient execution of the Project or the achievement of its objectives, such
action to be taken in the manner and within the timetable agreed upon during such reviews; and
(c)
in the months of March and September of each year during Project
implementation, furnish to the Bank reports on the funds, goods and services provided by the
Beneficiaries to the Project during the previous six months, such reports to be of scope and in
such detail as the Bank shall request.
Section 3.08 For the purposes of Section 9.08 of the General Conditions and without
limitation thereto, the Recipient shall:

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(a)
prepare, on the basis of guidelines acceptable to the Bank, and furnish to the
Bank not later than six months after the Closing Date or such later date as may be agreed for this
purpose between the Recipient and the Bank, a plan designed to ensure the achievement of the
Project objectives after the Closing Date; and
(b)
afford the Bank a reasonable opportunity to exchange views with the Recipient
on said plan.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Recipient shall maintain a financial management system, including
records and accounts, and prepare financial statements in a format acceptable to the Bank,
adequate to reflect the operations, resources and expenditures related to the Project.
(b)
The Recipient shall:
(i)
have the records, accounts and financial statements referred to in
paragraph (a) of this Section, and the records and accounts for the
Special Account, for each fiscal year audited, in accordance with
generally accepted auditing standards and procedures consistently
applied, by independent and qualified auditors;
(ii)
furnish to the Bank as soon as available, but in any case not later than
four months after the end of such year: (A) certified copies of the
financial statements referred to in paragraph (a) of this Section for such
year as so audited; and (B) an opinion on such financial statements,
records and accounts and a report of such audit by said auditors, of such
scope and in such detail as the Bank shall have reasonably requested;
and
(iii)
furnish to the Bank such other information concerning said records and
accounts and the audit thereof as the Bank shall from time to time
reasonably request.
(c)
For all expenditures with respect to which withdrawals from the GEF Trust Fund
Grant Account were made on the basis of statements of expenditure, the Recipient shall:
(i)
maintain or cause to be maintained, in accordance with paragraph (a) of
this Section, records and separate accounts reflecting such expenditures;
(ii)
retain, until at least one year after the Bank has received the audit report
for the fiscal year in which the last withdrawal from the GEF Trust Fund
Grant Account was made, all records (contracts, orders, invoices, bills,
receipts and other documents) evidencing such expenditures;
(iii)
enable the Bank's representatives to examine such records; and

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(iv)
ensure that such records and accounts are included in the annual audit
referred to in paragraph (b) of this Section and that the report of such
audit contains a separate opinion by said auditors as to whether the
statements of expenditure submitted during such fiscal year, together
with the procedures and internal controls involved in their preparation,
can be relied upon to support the related withdrawals.
Section 4.02. (a) Without limitation upon the Recipient's progress reporting obligations
set out in Article III of this Agreement, the Recipient shall prepare and furnish to the Bank a
financial monitoring report, in form and substance acceptable to the Bank, which:
(i)
sets forth sources and uses of funds for the Project, both cumulatively
and for the period covered by said report, showing separately funds
provided under the GEF Trust Fund Grant, and explains variances
between the planned and actual uses of such funds;
(ii)
describes physical progress in Project implementation, both
cumulatively and for the period covered by said report, and explains
variances between actual and planned Project implementation; and
(iii)
sets forth the status of procurement under the Project, as at the end of the
period covered by said report.
(b)
The first FMR shall be furnished to the Bank not later than 45 days after the end
of the first calendar quarter after the Effective Date, and shall cover the period from the
incurrence of the first expenditure under the Project through the end of such first calendar
quarter; thereafter, each FMR shall be furnished to the Bank not later than 45 days after each
subsequent calendar quarter, and shall cover such calendar quarter.
ARTICLE V
Remedies of the Bank
Section 5.01. Pursuant to Section 6.02 (p) of the General Conditions, the following
additional events are specified:
(a)
any of the Beneficiaries shall have failed to perform any of its obligations under
the relevant Participation Agreement; and
(b)
as a result of events which have occurred after the date of this Agreement, an
extraordinary situation shall have arisen which shall make it improbable that a Beneficiary will
be able to perform any of its obligations under the relevant Participation Agreement.
ARTICLE VI
Arbitration

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Section 6.01. Any dispute arising out of or relating to this Agreement which is not settled
by agreement of the parties shall be finally settled by arbitration in accordance with the
UNCITRAL Arbitration Rules in force on the date of this Agreement. The place of arbitration
shall be Washington, D.C. In the event of a conflict between the UNCITRAL Arbitration Rules
and the terms of this Agreement, the terms of this Agreement shall govern.
ARTICLE VII
Effectiveness; Termination
Section 7.01. The following events are specified as conditions to the effectiveness of the
GEF Trust Fund Grant within the meaning of Section 12.01 (c) of the General Conditions:
(a)
that the Project Implementation Plan has been furnished to the Bank;
(b)
that the four Participation Agreements have been duly executed and become
effective;
(c)
that a secretary general for the GAS GPS - satisfactory to the Bank - has been
selected; and
(d)
that the basic infrastructure facilities for the operation of the GAS GPS have
been established in a manner satisfactory to the Bank.
Section 7.02. The date October 21, 2002 is hereby specified for the purposes of Section
12.04 of the General Conditions.
Section 7.03. This Agreement shall continue in effect until the GEF Trust Fund Grant
has been fully disbursed and the parties to this Agreement have fulfilled their obligations
hereunder.
ARTICLE VIII
Representative of the Recipient; Addresses
Section 8.01. The Secretary General (Secretario General) of the Recipient is designated
as representative of the Recipient for the purposes of Section 11.03 of the General Conditions.
Section 8.02 The following addresses are specified for the purposes of Section 11.01 of
the General Conditions:
For the Recipient:
General Secretariat of the Organization of American States
Unit of Sustainable Development and Environment
1889 F Street, N.W.
Washington, D.C. 20006

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United States of America
Cable address:
Telex:
Facsimile:
OAS
64128 202-458-3560
For the Bank:
International Bank for
Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
INTBAFRAD
248423 (MCI)
Washington, D.C.
64145 (MCI)
Facsimile: (202) 477-6391
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized
representatives, have caused this Agreement to be signed in their respective names in the District
of Columbia, United States of America, as of the day and year first above written.
GENERAL SECRETARIAT OF THE ORGANIZATION OF
AMERICAN STATES
By /s/ Richard A. Meganck
Authorized Representative
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
as an implementing agency of the Global Environment Facility
By /s/ David de Ferranti
Regional Vice President

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Latin America and the Caribbean
SCHEDULE 1
Withdrawal of the Proceeds of the GEF Trust Fund Grant
The table below sets forth the Categories of items to be financed out of the proceeds of
the GEF Trust Fund Grant, the allocation of the amounts of the GEF Trust Fund Grant to each
Category and the percentage of expenditures for items so to be financed in each Category:
Amount of the
GEF Trust Fund Grant
% of
Allocated (Expressed in
Expenditures
Category
SDR Equivalent)
to be Financed
(1)
Goods
633,000
100% subject to
paragraph 2 below
(2)
Consultants' Services
7,553,000
100% subject to
paragraph 2 below
(3)
Training and Workshops
1,090,000
100%
(4)
Goods and Services
193,000
100%
financed by grants
under Part C (b) of
the Project
(5)
Recipient's Operating Expenditures
481,000
100% subject to
paragraph 2 below
(6)
GAS GPS Operating Expenditures
429,000
100% subject to
paragraph 2 below
(7)
Unallocated
421,000
________
TOTAL
10,800,000
In case the Recipient loses its tax exempt status with respect to any of the Beneficiaries,
the percentage financed shall be reduced to 85%.
For the purposes of this Schedule:

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"Training and Workshops" means expenditures for the reasonable cost of rent of
facilities, training materials, food, travel expenses, and facilitator fees related to trainings,
seminars and workshops, and transportation costs for study tours and staff exchange
arrangements between officials of the Beneficiaries working in groundwater issues;
"Recipient's Operating Expenditures" means expenditures for the reasonable cost of
travel for the Recipient's staff assigned to the Project, per diems, communications, overhead,
administration of the Project, and remuneration of one professional staff and one administrative
assistant working full-time for the Project; and
"GAS GPS Operating Expenditures" means expenditures for the reasonable cost of
office supplies, utilities, communications, travel and per diem of GAS GPS staff, travel and per
diem for members of the steering committee and the national Project execution units referred to
in Section 3.03 of this Agreement.
The Bank may require withdrawals from the GEF Trust Fund Grant Account to be made
on the basis of statements of expenditure for all expenditures, under such terms and conditions as
the Bank shall specify by notice to the Recipient.
If the Bank shall have determined at any time that any payment made from the GEF
Trust Fund Grant Account was used for any expenditure not consistent with the provisions of this
Agreement, the Recipient shall, promptly upon notice from the Bank, refund to the Bank for
deposit into the GEF Trust Fund Grant Account, an amount equal to the amount so used or the
portion thereof as specified by the Bank.
SCHEDULE 2
Description of the Project
The objective of the Project is to support the Beneficiaries to jointly elaborate and
implement a common institutional and technical framework for the management and preservation
of the GAS.
The Project consists of the following parts, subject to such modifications thereof as the
Recipient and the Bank may agree upon from time to time to achieve such objectives.
Part A: Expansion and Consolidation of the Scientific and Technical Knowledge Base on the
GAS
Carrying out of studies to determine priority transboundary issues and associated
strategic remedial actions for the protection of the GAS, including studies on the geometry,
structure and hydrodynamic behavior of the GAS, an inventory of public and private wells
located within the GAS, a determination of existing levels of pollution, the identification of
recharge and discharge areas, determination of the southern and western boundaries of the GAS,
an appraisal of present and anticipated future uses of the GAS, an assessment of the interactions
between said uses and their cumulative impact on the GAS, and an appraisal of available
technologies for surveying, extracting and use of the GAS' waters.

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Part B: Support for the Beneficiaries' Joint Development and Implementation of the GAS
Management Framework
Support for the development of a framework for the coordinated management by the
Beneficiaries of the GAS including: (a) implementation of a GAS monitoring network involving
all Beneficiaries; (b) development and integration of a GAS information system that facilitates
the management, standardization, dissemination and utilization of data, information and
documents; (c) formulation of a strategic action program that will: (i) support solutions to
pollution, over-exploitation and environmental problems within the GAS; and (ii) prepare a
proposal for a legal GAS management framework; (d) strengthening of Beneficiaries' agencies,
at the federal, state, provincial and municipal levels, involved in GAS management (including the
provision of technical assistance and courses on groundwater management (including technical,
institutional, social, legal and economic aspects of such groundwater management) and study
tours for managers and decision makers to visit relevant water resources management institutions
(including transboundary groundwater management institutions); and (e) carrying out of a
transboundary diagnostic analysis, summarizing the underlying root causes to be addressed in
future GAS management.
Part C: Public and Stakeholder Participation, Education and Communication
(a)
Preparation of a regional communications and public participation plan
regarding GAS issues, including the preparation and implementation of a social communications
manual for the Project.
(b)
Development of strategies and actions for community dissemination of
information and knowledge on the GAS, including the provision of grants of up to $10,000
equivalent each to support the carrying out of said actions by non-governmental organizations,
universities and other community organizations.
(c)
Implementation of communications plans, development and distribution of
informational and educational materials to increase awareness, interest and commitment of civil
society regarding the GAS, including the four areas described in Part E of the Project.
(d)
Carrying out of: (i) a study on Beneficiaries' indigenous peoples' right to
groundwater use and their other natural resources management rights and obligations; and (ii)
consultations with, and provision of training to, indigenous communities located above the GAS
and preparation and distribution among said communities of GAS educational materials in at
least three significant indigenous languages
Part D: Project Monitoring and Evaluation, and Dissemination of Project Results
Development and implementation of a monitoring, evaluation and feedback system for
the Project and dissemination of Project results in the territories of the Beneficiaries and
worldwide.
Part E: Development of Management and Mitigation Measures
Development and implementation of aquifer management and related environmental
mitigation measures in four pilot areas:

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(a)
Concordia (Argentina)/Salto (Uruguay), including the carrying out of: a
technical-hydrogeological assessment, a socio-economic assessment, local institutional capacity
building activities (through training and seminars), the development of local management
measures, such as a local aquifer management plan, and information dissemination activities;
(b)
Rivera (Uruguay)/Santana do Livramento (Brazil), including the carrying out of:
a technical-hydrogeological assessment, a socio-economic assessment, local institutional
capacity building activities (through training and seminars), the development of local
management measures, such as a local aquifer management plan, and information dissemination
activities;
(c)
Caaguazú/Encarnación/Ciudad del Este (Paraguay), including the carrying out of
a technical-hydrogeological assessment identifying possible transboundary management issues,
and a socio-economic assessment with specific focus on indigenous peoples living in the area;
and
(d)
Riberão Preto (Brazil), including the carrying out of: a social assessment,
information dissemination activities, and the provision of technical assistance to state, and
municipal agencies, non-governmental organizations, research institutes and universities related
to local aquifer management planning.
Part F: Assessment of Geothermal Energy Potential of the GAS
Carrying out of a scientific, technical, economic, financial and environmental assessment
on the geothermal potential of the GAS, and evaluation of the technical feasibility of using said
geothermal energy for future energy production activities (including financial, economic and
environmental impact studies).
Part G: Project Coordination and Management
Provision of organizational and administrative support to the Project, including regional
travel for coordination among the Beneficiaries.
* * *
The Project is expected to be completed by December 31, 2006.
SCHEDULE 3
Procurement
Section I.
Procurement of Goods and Works

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Part A: General
Goods and works shall be procured in accordance with the provisions of Section I of the
"Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in
January 1995 and revised in January and August 1996, September 1997 and January 1999 (the
Guidelines) and the following provisions of Section I of this Schedule.
Part B: International Competitive Bidding
Except as otherwise provided in Part C of this Section, goods and works shall be
procured under contracts awarded in accordance with the provisions of Section II of the
Guidelines and paragraph 5 of Appendix 1 thereto.
Part C: Other Procurement Procedures
1.
International or National Shopping
Goods estimated to cost less than $80,000 equivalent per contract, up to an aggregate
amount not to exceed $150,000 equivalent, may be procured under contracts awarded on the
basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and
3.6 of the Guidelines.
2.
Goods and works for Part C (b)
Goods and works required for Part C (b) of the Project, estimated to cost up to $10,000
equivalent per contract and up to an aggregate amount of $240,000 equivalent shall be procured
in accordance with procedures acceptable to the Bank.
Part D: Review by the Bank of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the proposed procurement
plan for the Project shall be furnished to the Bank for its review and approval, in accordance with
the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and
works shall be undertaken in accordance with such procurement plan as shall have been
approved by the Bank, and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for goods procured pursuant to Part B above, the
procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply.

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(b)
With respect to the first contract procured pursuant to Part C. 1 above, the
following procedures shall apply:
(i)
prior to the execution of any contract under shopping procedures, the
Recipient shall provide to the Bank a report on the comparison and
evaluation of quotations received;
(ii)
prior to the execution of any contract procured under shopping
procedures, the Recipient shall provide to the Bank a copy of the
specifications and the draft contract; and
(iii)
the procedures set forth in paragraphs 2 (f), 2 (g) and 3 of Appendix 1 to
the Guidelines shall apply.
3. Post
Review
With respect to each contract not governed by paragraph 2 of this Part, the procedures set
forth in paragraph 4 of Appendix 1 to the Guidelines shall apply.
Section II.
Employment of Consultants
Part A: General
Consultants' services shall be procured in accordance with the provisions of the
Introduction and Section IV of the "Guidelines: Selection and Employment of Consultants by
World Bank Borrowers" published by the Bank in January 1997 and revised in September 1997
and January 1999 (the Consultant Guidelines) and the following provisions of Section II of this
Schedule.
Part B: Quality- and Cost-based Selection
1.
Except as otherwise provided in Part C of this Section, consultants' services shall be
procured under contracts awarded in accordance with the provisions of Section II of the
Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and the
provisions of paragraphs 3.13 through 3.18 thereof applicable to quality- and cost-based selection
of consultants.
2.
The following provisions shall apply to consultants' services to be procured under
contracts awarded in accordance with the provisions of the preceding paragraph. The short list
of consultants for services for provision of technical assistance and training, estimated to cost
less than $200,000 equivalent per contract, may comprise entirely national consultants in
accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

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Part C: Other Procedures for the Selection of Consultants
1.
Selection Based on Consultants' Qualifications
Services estimated to cost less than $100,000 equivalent per contract and up to an
aggregate amount of $1,300,000 equivalent may be procured under contracts awarded in
accordance with the provisions of paragraphs 3.1 and 3.7 of the Consultant Guidelines.
2.
Individual Consultants
Services for tasks that meet the requirements set forth in paragraph 5.1 of the Consultant
Guidelines shall be procured under contracts awarded to individual consultants in accordance
with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.
Services for Part C (b) of the Project
Services required for part C (b) of the Project, such as publicity campaigns or
advertising, estimated to cost up to $10,000 equivalent per contract and up to an aggregate
amount of $240,000 equivalent, shall be procured in accordance with procedures acceptable to
the Bank.
Part D: Review by the Bank of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals, the proposed plan for
the selection of consultants under the Project shall be furnished to the Bank for its review and
approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Consultant
Guidelines. Selection of all consultants' services shall be undertaken in accordance with such
selection plan as shall have been approved by the Bank, and with the provisions of said
paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms selected
pursuant to Part B above, the procedures set forth in paragraphs 1, 2 (other than the third
subparagraph of paragraph 2(a)) and 5 of Appendix 1 to the Consultant Guidelines shall apply.
(b)
With respect to the first contract for the employment of consulting firms selected
pursuant to Part C.1 above, the procedures set forth in paragraphs 1, 2 (other than the second
subparagraph of paragraph 2(a)) and 5 of Appendix 1 to the Consultant Guidelines shall apply.
(c)
With respect to: (i) each contract for the employment of individual consultants to

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work in the GAS GPS; and (ii) each contract for the employment of individual consultants
estimated to cost more than $50,000 equivalent, the qualifications, experience, terms of reference
and terms of employment of the consultants shall be furnished to the Bank for its prior review
and approval. The contract shall be awarded only after the said approval shall have been given.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the procedures set
forth in paragraph 4 of Appendix 1 to the Consultant Guidelines shall apply.
SCHEDULE 4
Special Account
1.
For the purposes of this Schedule:
(a)
the term "eligible Categories" means Categories (1), (2), (3) and (4) set forth in
the table in paragraph 1 of Schedule 1 to this Agreement;
(b)
the term "eligible expenditures" means expenditures in respect of the reasonable
cost of goods and services required for the Project and to be financed out of the proceeds of the
GEF Trust Fund Grant allocated from time to time to the eligible Categories in accordance with
the provisions of Schedule 1 to this Agreement; and
(c)
the term "Authorized Allocation" means the amount of $1,300,000 to be
withdrawn from the GEF Trust Fund Grant Account and deposited into the Special Account
pursuant to paragraph 3 (a) of this Schedule; provided, however, that unless the Bank shall
otherwise agree, the Authorized Allocation shall be limited to the amount of $500,000 until the
aggregate amount of withdrawals from the GEF Trust Fund Grant Account, plus the total amount
of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the
General Conditions shall equal or exceed the equivalent of $800,000.
2.
Payments out of the Special Account shall be made exclusively for eligible expenditures
in accordance with the provisions of this Schedule.
3.
After the Bank has received evidence satisfactory to it that the Special Account has been
duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish
the Special Account shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Recipient shall furnish to the
Bank a request or requests for deposit into the Special Account of an amount or amounts which
do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or
requests, the Bank shall, on behalf of the Recipient, withdraw from the GEF Trust Fund Grant
Account and deposit into the Special Account such amount or amounts as the Recipient shall

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have requested.
(b)
(i)
For replenishment of the Special Account, the Recipient shall furnish to
the Bank requests for deposits into the Special Account at such intervals
as the Bank shall specify.
(ii)
Prior to or at the time of each such request, the Recipient shall furnish to
the Bank the documents and other evidence required pursuant to
para-graph 4 of this Schedule for the payment or payments in respect of
which replenishment is requested. On the basis of each such request, the
Bank shall, on behalf of the Recipient, withdraw from the GEF Trust
Fund Grant Account and deposit into the Special Account such amount
as the Recipient shall have requested and as shall have been shown by
said documents and other evidence to have been paid out of the Special
Account for eligible expenditures. All such deposits shall be withdrawn
by the Bank from the GEF Trust Fund Grant Account under the
respective eligible Categories, and in the respective equivalent amounts,
as shall have been justified by said documents and other evidence.
4.
For each payment made by the Recipient out of the Special Account, the Recipient shall,
at such time as the Bank shall reasonably request, furnish to the Bank such documents and other
evidence showing that such payment was made exclusively for eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be
required to make further deposits into the Special Account:
(a)
if, at any time, the Bank shall have determined that all further withdrawals
should be made by the Recipient directly from the GEF Trust Fund Grant Account in accordance
with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of
this Agreement;
(b)
if the Recipient shall have failed to furnish to the Bank, within the period of time
specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be
furnished to the Bank pursuant to said Section in respect of the audit of the records and accounts
for the Special Account;
(c)
if, at any time, the Bank shall have notified the Recipient of its intention to
suspend in whole or in part the right of the Recipient to make withdrawals from the GEF Trust
Fund Grant Account pursuant to the provisions of Section 6.02 of the General Conditions; or
(d)
once the total unwithdrawn amount of the GEF Trust Fund Grant allocated to the
eligible Categories, minus the total amount of all outstanding special commitments entered into
by the Bank pursuant to Section 5.02 of the General Conditions, shall equal the equivalent of
twice the amount of the Authorized Allocation.

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Thereafter, withdrawal from the GEF Trust Fund Grant Account of the remaining
unwithdrawn amount of the GEF Trust Fund Grant allocated to the eligible Categories shall
follow such procedures as the Bank shall specify by notice to the Recipient. Such further
withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that
all such amounts remaining on deposit in the Special Account as of the date of such notice will
be utilized in making payments for eligible expenditures.
6.
(a)
If the Bank shall have determined at any time that any payment out of the
Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to
paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the
Recipient shall, promptly upon notice from the Bank: (A) provide such additional evidence as the
Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request,
refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so
eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into
the Special Account shall be made until the Recipient has provided such evidence or made such
deposit or refund, as the case may be.
(b)
If the Bank shall have determined at any time that any amount outstanding in the
Special Account will not be required to cover further payments for eligible expenditures, the
Recipient shall, promptly upon notice from the Bank, refund to the Bank such outstanding
amount.
(c)
The Recipient may, upon notice to the Bank, refund to the Bank all or any
portion of the funds on deposit in the Special Account.
(d)
Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this
Schedule shall be credited to the GEF Trust Fund Grant Account for subsequent withdrawal or
for cancellation in accordance with the relevant provisions of this Agreement, including the
General Conditions.

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