Thailand - Chao Phya Irrigation Improvement Project : Credit 0379 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 379 TH Development Credit Agreement (Chao Phya Irrigation Improvement Project) BETWEEN KINGDOM OF THAILAND AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 9, 1973 CONFORMED COPY CREDIT NUMBER 379 TH Development Credit Agreement (Chao Phya Irrigation Improvement Project) BETWEEN KINGDOM OF THAILAND AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 9, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated May 9, 1973, between KINGDOM OF THAILAND (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the deletion of Sections 5.01 and 6.02(h) thereof and to the renumbering of Section 6.02(i) into 6.02(h) thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions). Se 'on L.u2. Whenever used in this Agreement, uniess the context otherwise requires, the several terms defined in liC General Conditions have their respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Organization" means the centralized project org'nization to be established pursuant to paragraph (a) of Section 3.06 of this Agretment. (b) "Project Area" means an area of approximately 17,000 ha located in the Borrower's districts of Sanburi and Bangrachan in the Boromdhart and Chanasutr irrigation projects (in the Northern Chao Phya Plain). (c) "Guidelines for Procurement" means the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, as revised in October 1972. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies eq' -alent to five million five hundred thousand dollars ($5,500,000). 4 Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed under this Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services (other than services of consultants) required for the Project and to be financed out of the proceeds of the Credit, shall be procured on the basis of international competition under procedures co,istent with the Guidelines for Procurenient in accordance with, and subiL- to, the provisions set forth in Schedule 3 to this Agreement. Section 2.04. Ti-. Closing Date shall be June 30, 1978 or such other date as shall be agr xi between the Borrower and the Association. 6ection 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each January I and July I commencing July 1, 1983, and ending January 1, 2023, each instalrnent to and including the installment payable on January 1, 1993 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate agricultural, engineering, 5 economic and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in the preparation of final designs and the implementation of the Project works and in the carrying out of Part D of the Project, the Borrower shall, within three months of the date of this Agreement (or such other time limit as the Borrower and the Association shall agree), employ engineering and agricultural consultants acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.03. In carrying out Part B of the Project and for the construction of buildings under Part C of the Project, the Borrower shall employ contractors acceptable to the A .-ciation upon terms and conditions satisfactory to the Association; provided, however, that the Borrower may, except as the Borrower and the Association shall otherwise agree, carry out up to three-fourths of the works under Part B of the Project under force account. Section 3.04. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to 'he place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, all goods and services finan. d out of the proceeds of the Credit shall be used exclusively for the Project until its completion. Section 3.05. (a) The Borrol,. shall fur'ish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material mcdifications thereof or additions thereto, in such detail as the Association shall re,,sonably request. (b) The Borrower: (i) shall mairtain iecords adequate to record the progress of the Project (including the coi thereof) and to identify the goods and services financed out of the proceeds of The Credit, and te disclose the use thereof in the Project; (ii) shall enable the Association's accredited representatives to examine the Project, the goods financ..d out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. 6 Section 3.06. The Borrower shall: (a) establish a centralized project organization acceptable to the Association to be responsible for the execution and operation of the Project; (b) continue to employ, during the implementation of the Project, a project manager, with experience and qualifications acceptable to the Association, to be responsible for the planning and implementation of the Project in the field; and (c) ensure that all such staff as may be seconded to the Project Organization shall work exclusively under the administrative responsibility of the Project Organization. Section 3.07. The Borrower shall cause its Bank for Agriculture and Agricultural Cooperatives (i) to increase its trained branch office staff in Sanburi and Bangrachan, (ii) to ensure that such staff shall cooperate closely with the Project Organization and (iii) to make available such funds, both short-term and long-term, as shall be needed to adequately meet the credit requirements of the farmers served by the Project. Section 3.08. In accordance with its policy of recovering all operational and maintenance costs and a reasonable pioportion oF investment costs from the beneficiaries of irrigation projects, the Borrower shall: (a) promptly carry out a cost recovery study and on the basis of such study, prepare within two years of the date of this Agreement (or such other time limit as the Borrower and the Association shall agree), appropriate levels of charges and collection procedures; (b) review the proposals of such study with the Association; and (c) impose and commence to collect such charges, in the Project Area, within two years after completion of the Project (or such other time hmit as the Borrower and the Association shall agree). Section 3.09. Within one year of the date of this Agreement (or such other time limit as the Borrower and the Association shall agree), the Borrower shall take all the necessary legal measures to facilitate the procedures for boundary realignment and issuance of land titles in the Project Area. Section 3.10. Within six months of the date of this Agreement (or such other time limit as the Borrower and the Association shall agree), the Borrower 7 shall prepare a detailed plan for providing extension services in the Project Area and for the training of extension workers, and review such plan with the Association. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures. in respect of the Project, of the departments or ay -' of the Borrower responsible for carrying out the Project or any part tc (b) The Borrower shall . ase all Project accounts (including those of Project management services and operation and maintenance costs) to be consolidated under the Project Organization; (ii) have such accounts and financial statements related thereto for each l'iscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (iii) furnish to the Association for its review as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of such financial statements for such year as so audited and (B) the report of such audit by such auditors, of such scope and in such detail, as the Association shall have reasonably requested; and (iv) furnish t. the Association such other information concerning such accounts and financial statements and the audit thereof as the Association shall from time to time reasonably i'quest. Section 4.02. The Borrower shall operate and maintain the Chao Phya diversion dam, Boromdhart and Chanasutr headworks and main canals as well as the irrigation and dainage networks, roads, on-farm works, and all other facilities constructed under the PAoject in accordance w th standards acceptable to the Association and shall provide promptly as needed such funds for that purpose. ARTICLE V Consultation, Information and Inspection Section 5.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall f-om time to time, at the request of either party: 8 (a) exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the administration, operations of the departments or agencies of the Borrower responsible for cark,ying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of th., Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof or the performance by either of them of its obligations under this Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions Section 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 6.02. This Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 6.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of 9 any nature imposed inder the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association Section 7.01. If any event specified in Section 7.01 of the General Conditions shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in this Agreement notwithstanding. ARTICLE VIII Effective Date; Termination Section 8.01. The following event is specified as an additional condition to the effectiveness of this Agreement within the meaning of Section 10.01(b) of the General Conditions, namely, that the Borrower shall have taken all appropriate measures to establish the Project Organization. Section 8.02. The following is specified as an additional matter, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Project Organization has been duly and validly established under the laws of the Borrower. Section 8.03. The date August 9, 1973 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.04. The obligations of the Borrower inder Article IV and Sections 3.08, 5.01(a) and 5.02(a) of this Agreement shall cease and determine on the date on which this Agreement shall terminate or on a date thirty years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. 10 Section 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Minister of Finance Ministry of Finance Bangkok 2, Thailand Cable address: MINANCE Bangkok For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. KINGDOM OF THAILAND By /s/ Anand Panyarachun Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / I.P.M. Cargill Regional Vice President Asia 11 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Civil Works 1,800,000 35% of total expenditures II. Consulting Services 1,000,000 100% of foreign expenditures I. Vehicles and Equip- 1,800,000 ment (a) Directly 100% of foreign Imported expenditures (b) Manufactured 100% of local Locally expenditures ex-factory (c) Imported but 65% of total Procured Locally expenditures IV. Unallocated 900,000 TOTAL 5,500,000 12 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; and (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; and (b) payments for taxes imposed directly under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph 1 above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, the percentage set forth in the third column of the table in paragraph 1 above in respect of such expenditures shall be applied to the amount of such increase, and a corresponding amour.c will be allocated by the Association, at the request of the Borroo;er, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and 13 (c) if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under this Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under Category I shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 14 SCHEDULE 2 Description of the Project The Project is part of the Borrower's program for improving irrigation facilities and supporting services to farmers in the Project Area. The Project consists of the following parts: A. Rehabilitation of irrigation canals, drains and roads serving the Project Area. B. On-farm development works involving the surveying, planning and carrying out of (i) the construction of irrigation and drainage ditches, farm roads, land levelling, and realignment of farm boundaries on 10,000 ha; (ii) the repair or construction of farm irrigation and drainage ditches and minor works related thereto on 7,000 ha; and (iii) the issuance of land titles. C. Provision of necessary supporting agricultural services to farmers, including extension, research, seed multiplication, credit and a fisheries' development scheme and the construction of residence and office buildings. D. A feasibility study for a second stage project in the Northern Chao Phya Plain and a study to propose cost recovery levels and collection procedures. The Project is expected to be completed by June 1977. 15 SCHEDULE 3 Procurement A. Contracts governed by Guidelines for Procurement 1. With respect to any contract for vehicles and equipment estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedure as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) Soon after the bids have been received, the Borrower shpll inform the Association of the names of all the bidders and the respective amount of the bids. (c) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the. bidder to whom it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said consultants, and the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and state the reasons for such determination. (d) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (e) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. 2. With respect to any other contract for vehicles and equipment, the Borrower shall furnish to the Association promptly after its execution and prior to the 16 submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contr-ct is not consistent with the procedures set forth or referred to in Section 2.03 of * is Agreement, promptly inform the Borrower and state the reasons for suer. eermination. 3. For the purpose of evaluation and comparison of bids customs duties and other import taxes on imported goods, and sales and similar taxes on locally produced goods, shall be excluded, except to the extent hereinafter ptovided, and bidders shall be required to state in their bid the c.i.f. (Port of Bangkok) price for imported goods, or the ex-factory price for locally produced goods. The cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be taken into account in the evaluation of bids in accordance with paragraph 4.7 of the Guidelines for Procurement. 4. For purposes of the provisions hereinafter set forth, the following terms shall have the following meanings: (a) Preferred Domestic Bid means a bid offering goods manufactured in the Borrower's territories if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in the Borrower's territories of not less than 20% of the ex-factory bid price. (b) Non-preferred Domestic Bid means any other bid offering goods manufactured in the Borrower's territories. (c) Foreign Bid means any bid other than those specified in (a) or (b) above. 5. A margin of preference may be granted by the Borrower to Preferred Domestic Bids. Such preference shall be granted by adding to each Foreign Bid, for the purpose only of comparison with Preferred Domestic Bids, an amount (hereinafter called "Domestic Preference Margin") equal to the smaller of (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the goods offered in the bid, or (ii) 15% of the c.i.f. bid price of such goods. 17 6. If Preferred Domestic Bids are received, the comparison among all evaluated bids for each contract shall be made in the stages and with the preferences indicated below: Stage Bids to be Compared Preference I. All Preferred Domestic Bids and None Non-preferred Domestic Bids. II. (a) Lowest evaluated bid under Stage I, Add Domestic if Preferred Domestic Bid, with Preference all Foreign Bids; Margin to Foreign Bids or (b) Lowest evaluated bid under Stage 1, None if Non-preferred Domestic Bid, with all Foreign Bids. III. If lowest evaluated bid under Stage None II is not the lowest evaluated bid under Stage 1, all Foreign Bids only. 7. The Bidding documents shall clearly indicate any preference which will be granted to Preferred Domestic Bids and the information required to establish the eligibility of a bid for such preference and the methods and stages that will be followed in the evaluation and comparison of bids to give effect to such preference. 8. Notwithstanding the provisions referred to in Section 2.03 of this Agreement or included in the foregoing sub-paragraphs of this Schedule, the Association may accept (i) that off-shelf items costing less than $5,000 equivalent each may be procured in accordance with the Borrower's usual procurement procedures, provided, however, that the aggregate cost of such items does not exceed $50,000 equivalent; and (ii) that, pursuant to the provisions of paragraph 1.2 of the Guidelines for Procurement, the construction works under Parts B and C of the Project may be subject to contracting procedures acceptable to the Association. 18 B. Works not governed by Guidelines for Procurement Notwithstanding the provisions referred to in Section 2.03 of this Agreement or included in paragraph A of this Schedule, the Association may accept that the Borrower may carry out the works under Part A of the Project and up to three-fourths of the works under Part B of the Project under force account, unless the Borrower and the Association shall otherwise agree.