Colombia - Integrated Nutrition Improvement Project : Loan 1487 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1487 CO Loan Agreement (Integrated Nutrition Improvement Project) between REPUBLIC OF COLOMBIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated November 10, 1977 LOAN NUMBER 1487 CO LOAN AGREEMENT AGREEMENT, dated November 10, 1977, between REPUBLIC OF COLOMBIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modification thereof (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions): Section 11.03 is amended to read as follows: Section 11.03. Action on Behalf of the Borrower or Guarantor. Any action required or permitted to be taken, and any documents required or permitted to be executed, pursuant to the Loan Agreement or the Guarantee Agreement, on behalf of the Borrower or the Guarantor, may be taken or executed by the representative of the Borrower or the Guarantor designated in the Loan Agreement or the Guarantee Agreement for the purposes of this Section or any person thereunto authorized in writing by him. Any modification or amplification of the provisions of the Loan Agreement or the Guarantee Agreement may be agreed to on behalf of the Borrower or the Guarantor by written instrument executed on behalf of the Borrower or the Guarantor by the representative so designated or any person thereunto authorized in writing by him; provided that such modification or amplification is reasonable in the circumstances and will not substantially increase the obligations of the Borrower under the Loan Agreement or of the Guarantor under the Guarantee Agreement. Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: -2- (a) "PAN" means the Plan Nacional de Alimentaci6n y Nutrici6n of the Borrower for the years 1977 through 1985; (b) "DNP" means Departamento Nacional de Planeaci6n of the Borrower; (c) "Ministerio Salud" means the Ministerio de Salud PGblica of the Borrower; (d) "Project Entities" means collectively the entities listed in Part 2 of the Annex to Schedule 2 to this Agreement, as such Annex may be amended by agreement between the Borrower and the Bank; (e) "Project Area" means the area within the administrative limits of the Distrito Especial of bogotA and the area covered by the departamentos of Caldas, Risaralda, Tolima, Valle, Atldntico, Bolivar and Magdalena; (f) "Community Health Posts" means the health posts, in- cluding the services provided therefrom, set up by the Borrower in rural and urban areas within the primary health care level of the Borrower's National Health System; (g) "PAN Group" means the Administraci6n of PAN estab- lished within DNP; and (h) "pesos" and "Col.$" mean the currency of the Borrower. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty-five million dollars ($25,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank 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 out of the proceeds of the Loan. -3- Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods, for civil works or for services to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1982 or such later date as the Bank shall otherwise establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight per cent (8%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other .charges shall be payable semi-annually on May 1 and November 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project through DNP, with the participation of Ministerio Salud and the Project Entities, with due diligence and efficiency and in confor- mty with appropriate nutritional, agricultural, administrative, economic, engineering and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose (the funds to be provided by the Borrower, in addition to the proceeds of the Loan, being on the date hereof estimated to aggregate the equivalent of not less than thirty-nine million dollars ($39,000,000). Ministerio Salud and the Project Entities shall participate in the carrying out of the Project to the extent indicated in the Annex to Schedule 2 to this Agreement, as such Annex may be amended by agreement between the Borrower and the Bank. -4- (b) The Borrower shall enter into agreements, satisfactory to the Bank, with each of the Project Entities for: (i) defining in detail the responsibilities, functions and administrative procedures of the Borrower and each of such Project Entities, respectively, in respect of the carrying out of the Project, and (ii) making available to each of such Project Entities such portions of the proceeds of the Loan and such other contributions of the Borrower as shall be necessary to cover the expenses of each of such Project Entities in respect of the Project. (c) The Borrower shall cause DNP and Ministerio Salud to enter into an agreement, satisfactory to the Bank, for defining in detail the responsibilities (including financial responsibili- ties), functions and administrative procedures of DNP and Minis- terio Salud, respectively, in respect of the carrying out of the Project. (d) The Borrower shall exercise its rights under each of the agreements referred to in paragraph (b) above in such manner as to protect the interests of the Borrower and the Bank and to accom- plish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, nor amend, abro- gate or waive such agreements or any provision thereof. (e) The Borrower shall cause DNP and Ministerio Salud to exercise their rights under the agreement referred to in paragraph (c) above in such manner as to protect the interests of the Bank, DNP and Ministerio Salud and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall cause DNP and Ministerio Salud not to assign, amend, abro- gate or waive such agreement or any provision thereof. Section 3.02. The Borrower shall take and shall cause its agencies and entities to take all action which shall be necessary on their part to enable the Project Entities to carry out the activities required from them, and shall not take or permit to be taken any action which might interfere with the carrying out of such activities. Section 3.03. (a) In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ, or cause to be employed, consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. -5- (b) By January 1, 1978, the Borrower shall employ, or cause to be employed, the seven full-time consultants required for the carrying out of Part A (iii) of the Project with respect to the health administrations in each of the departamentos in the Project Area. Section 3.04. (a) The Borrower undertakes to insure, or cause to be insured, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for 6uch insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.05. (a) The Borrower shall furnish, or cause to be furnished, to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifica- tions thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain, or cause to be main- tained, records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable, or cause to be enabled, the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish, or cause to be furnished, to the Bank, all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. Section 3.06. The Borrower shall take, or cause to be taken, all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction and operation of the facilities included in the Project. -6- Section 3.07. For the carrying out of Part A (ii) of the Project, the Borrower shall prepare, by January 1, 1978, and carry out thereafter a training program, satisfactory to the Bank, for the primary health care level of the Borrower's National Health System. Section 3.08. Under Part F of the Project, the Borrower shall: (i) by September 30, 1978, carry out an evaluation of the primary health care level of the Borrower's National Health System, under terms of reference acceptable to the Bank; (ii) on the basis of the conclusions of the evaluation in (i) hereof, in agreement with the Bank, revise the program and implementation schedule for the carrying out of Part A of the Project; and (iii) carry out the program referred to in (ii) hereof. Section 3.09. Under Part F of the Project, the Borrower shall: (i) by January 1, 1978, initiate the special evaluation of the nutrition delivery systems in the departamento of Bolivar or such other departamento as the Bank shall agree, included in Part F (b) (ii) of the Project, under terms of reference acceptable to the Bank; and (ii) on the basis of the conclusions of the evalua- tion in (i) hereof, modify, in consultation with the Bank, the national nutrition program of the Borrower. Section 3.10. For the carrying out of Part G of the Project, the Borrower shall employ in DNP, until December 31, 1985, in the PAN Group, the following staff: (i) one director of the PAN Group, and two chiefs for the financing and programming unit and the evaluation unit of the PAN Group, respectively, all of whom shall have appropriate qualifications, experience and job descriptions, as defined by the Borrower in its letter to the Bank of even date herewith; (ii) such qualified and experienced technical staff, whose job descriptions shall be furnished to the B,nk, as shall be required for the carrying out of n/AN, including the Project; and (iii) such qualified and experienced supporting staff as shall be required for the efficient operation of the PAN Group. -7- Section 3.11. The Borrower shall: (i) by March 1, 1978, establish the Project management fund included in Part G (b) of the Project; and (ii) through December 31, 1980, deposit in such fund an amount aggregating the equivalent of $300,000. ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of thc Bank, in making loans to, or with the guarantee of, its member. iot to seek, in normal circumstances, special security from the member con- cerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distri- bution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allo- cation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any o.f its political or administrative subdivisions, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other assets, satisfactory to the Bank, of the Borrower or of any entity owned or controlled by, or operating for the account or benefit of, the Borrower, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Bor- rower. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. -8- (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall take all action, including the granting of all necessary authorizations, import licenses, foreign exchange permits and all other approvals required under the laws of the Borrower, to ensure the timely procurement of the goods and services required for the Project. Section 4.03. The Borrower shall establish and maintain records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project. Section 4.04. The Borrower shall include in the agreements to be entered into pursuant to paragraph (b) of Section 3.01 of this Agreement such provisions as shall be necessary to ensure that each Projec.: Entity shall: (a) establish and maintain separate accounts on its records to be used exclusively for the Project and to register in such accounts all its receipts and payments for or in connection with the Project, in accordance with sound accounting principles and procedures consistently applied; and (b) (i) have the accounts referred to in paragraph (a) above and related statements for each fiscal year audited, in accordance with sound auditing prin- ciples consistently applied, by independent audi- tors acceptable to the Bank; (ii) furnish to the Borrower and the Bank, as soon as available, but in any case not later than four months after the end of such entity's fiscal year, (A) certified copies of such accounts and related statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and -9- (iii) furnish to the Bank such other information con- cerning such accounts and related statements of such entity and the audit thereof as the Bank shall from time to time reasonably request. Section 4.05. Without limitation or restriction upon the provisions of paragraph (a) of Section 3.01 of this Agreement, the Borrower shall take and cause to be taken all action, including the provision of funds and resources, to ensure that the facili- ties constructed under the Project are adequately operated, maintained, renewed and repaired. Section 4.06. Except as the Bank shall otherwise agree, the Borrower shall put into effect and maintain, or cause to be put into effect and maintained: (a) with respect to the works completed under Part A of the Project, a system of contributions by the communities benefited by such works consisting of an average of .ten per cent (10%) of all investment costs; (b) with respect to the works completed under Part B (a) of the Project, a system of charges for the recovery from the users of such works of all operating and maintenance costs, including depreciation, and for the contribution by such users of an average initial amount of not less than ten per cent (10%) of all invest- ment costs followed by a further contribution by the users within each community of a percentage ranging between ten per cent (10%) and forty per cent (40%) of the investment costs of the works completed for each such community, determined in accordance with the cost recovery provisions established in Paragraph (e) of Part 3, Chapter III (C) of the Manual de Procedimientos en Promoci6n Comunitaria para el Programa Nacional de Saneamiento Bdsico Rural of Instituto Nacional de Salud of January, 1975; (c) with respect to the works completed under Part B (b) of the Project, a system of charges for the recovery from the bene- ficiaries of such works of not less than an average of fifty per cent (50%) of all investment costs; and (d) with respect to health services provided under Part A of the Project, a system of charges for the recovery, on the average, from the beneficiaries of such services of at least the cost of drugs and medicines provided at Community Health Posts. - 10 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) The Borrower, DNP, Ministerio Salud or any of the Project Entities shall have failed to perform any of its respec- tive obligations under any agreement entered into pursuant to paragraphs (b) and (c) of Section 3.01 of this Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that the Borrower, DNP, Ministerio Salud or any of the Project Entities will be able to perform any of its respec- tive obligations under any agreement entered into pursuant to paragraphs (b) and (c) of Section 3.01 o', this Agreement. (c) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of DNP, Ministerio Salud or any of the Project Entities or for the suspension of their operations related to the execution of the Project. (d) The Borrower or any other authority having jurisdiction shall have divested DNP, Ministerio Salud or any of the Project Entities of any of the functions or powers vested in any of them as of the date of this Agreement so as to affect adversely the efficient carrying out of the Project. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely, any of the events specified in paragraphs (a) and (c) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower. ARTICLE VI Effective Date; Termination Section 6.01. The following events -are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: - 11 - (a) the execution and delivery of the agreements referred to in paragraph (b) of Section 3.01 of this Agreement on behalf of the Borrower and Instituto Nacional de Salud and Instituto Colombiano de Bienestar Familiar, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. (b) the execution and delivery of the agreement referred to in paragraph (c) of Section 3.01 of this Agreement on behalf of DNP and Ministerio Salud, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. Section 6.02. The date March 9, 1978, is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministro de Hacienda y Cr6dito Pfiblico of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministerio de Hacienda y Cr&dio Pfiblico Palacio de los Ministerios Plaza San Agustin Bogotf, Colombia Cable address: MINHACIENDA Bogoti For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 12 - Cable address: INTBAFRAD 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 in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF COLOMBIA By /s/ Virgilio Barco Vargas Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Enrique Lerdau Acting Regional Vice President Latin America and the Caribbean - 13 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works for 9,000,000 55% Parts A and B of the Project (2) (a) Equipment, 6,600,000 materials and sup- plies (ex- cluding food), and vehicles for Parts A, B, C, D E and G (a) of the Project (i) directly 100% of foreign imported expenditures (ii) imported 50% and pro- cured lo- cally (iii) locally 50% of the ex- manufac- factory costs tured (b) Water pipes 1,700,000 and pumps for Part B of the Proj- ect -14- Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (i) directly 100% of foreign imported expenditures (ii) imported 50% and pro- cured lo- cally (iii) locally 75% of the ex- manufac- factory costs tured (3) Technical 700,000 100% Assistance (Consultant services; fellowships under Parts C and E of the Project) (4) Training (Parts A, C and D 1,200,000 100% of the Project) (5) (a) PAN Group (Part 2,150,000 55% G (a) of the Project) Salaries and other opera- tional expenses, office furniture and equipment for monitoring and evaluation (b) Project Manage- 150,000 55% ment Fund (Part G (b) of the Project) - 15 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Costs of produc- 1,700,000 55% ing and trans- mitting mass media communica- tions (Part C (a) (i) of the Project) (7) Unallocated 1,800,000 TOTAL 25,000,000 2. For the purposes of this Schedule, the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan de- creases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $300,000 may be made in respect of Categories (2), (4), (5) (a) and (6) on account of payments made for expenditures before that date but after February 1, 1977 included in Parts C, D and F of the Project; and - 16 - (b) expenditures of any Project Entity (other than Instituto Nacional de Salud and Instituto Colombiano de Bienestar Familiar) until evidence satisfactory to the Bank has been furnished to the Bank that the agreement between the Borrower and such Project Entity, provided for in paragraph (b) of Section 3.01 of this Agreement, has been duly executed and delivered. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in para- graph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insuffi- cient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such realloca- tion cannot fully meet the estimated shortfall, reduce the dis- bursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 17 - SCHEDULE 2 Description of the Project The Project is part of PAN and consists of the following Parts to be carried out in the Project Area: Part A: Health Services Strengthening of the primary health care system as a mechan- ism for integrated delivery of nutrition/health services including nutrition education, family welfare services, coupons for subsi- dized food supplements, potable water supplies and latrines. To this end, this Part of the Project shall include: (i) construc- tion, equipping, staffing and operation of about 56 new Community Health Posts, and renovation, equipping, staffing and operation of about 225 existing Community Health Posts; (ii) training of staff for the Community Health Posts referred to in (i) above; and (iii) strengthening of the organization and management of Ministerio Salud and the Seccionales de Salud of the Borrower. Part B: Water Supply and Sanitation (a) Installation or expansion of about 215 gravity systems, including a chlorination plant for one of them, and about 134 pumping systems, generally from deep wells; and (b) Installation of about 112,000 household latrines. Part C: Nutrition Education (a) Production, dissemination and evaluation of (i) mass media communications, and (ii) interpersonal communications, both designed to improve family food consumption and feeding practices within existing income limitations; and (b) Training of personnel, including fellowships, for the carrying out of the activities referred to in paragraph (a) above, in accordance with programs satisfactory to the Bank. Part D: Family Gardens (a) Carrying out a program to increase production and consumption of home-grown vegetables and legumes by approxi- mately 20,000 families; and - 18 - (b) Training of personnel responsible for the carrying out of the program referred to in paragraph (a) above, in accordance with programs satisfactory to the Bank. Part E: Applied Food Technology and Quality Control (a) Carrying out of a program, which will include about 26 sub-projects and fellowships, of product research and develop- ment, technology demonstration and extension, and feasibility studies, designed to improve the use by low-income families of available food and stimulate production of new varieties of low-cost enriched foods; and (b) (i) Establishment, equipping, staffing and operation of a central food quality control laboratory and food analysis system; and (ii) Carrying out of about 6 studies regarding food quality analysis and improvement, development of minimum-cost diets using processed foods in differ- ent regions and economic effects on producers and consumers of food standards legislation. Part F: Monitoring and Evaluation (a) Establishment and operation of a monitoring system: (i) to determine the physical progress of the Project; (ii) to ascer- tain the impact of the Project on the nutritional status, the morbidity and mortality of the general population in the Project Area; (iii) to enable an ongoing evaluation of the cost-effective- ness of the Project by local, departmental and national level managements; and (iv) to permit the continuous re-appraisal and calibration of PAN design, based on the above; and (b) Carrying out of: (i) an intensive evaluation of the primary health care level of the Borrower's National Health System; (ii) a special evaluation of the nutritional delivery systems in the departamento of Bolivar or such other departa- mento as the Bank shall agree; and (iii) studies of (1) management effectiveness of the nutrition delivery system, utilizing the Community Health Posts in comparison to direct commercial distri- bution, (2) intra-family distribution of foods in families assisted by the food distribution program, the extent of diversion to non-target groups and the impact on nutritional status and (3) effect of the Project on macro-economic variables, including - 19 - income, productivity and employment of adult workers in the Project Area. Part G: Coordination and Administration (a) Operation of the PAN Group to coordinate, evaluate and refine PAN, including the Project, and to prepare plans for subsequent implementation. (b) Establishment and operation of a Project management fund in DNP for the financing of innovative activities consistent with the purpose of the Project, the list and scope of such activities to be agreed upon between the Borrower and the Bank from time to time. The Project will be carried out with the participation of the entities listed in the Annex to this Schedule. The Project is expected to be completed by December 31, 1981. - 20 - ANNEX TO SCHEDULE 2 Participation in the Project 1. Ministerio Salud Parts A, B (b), E (b) (i) and F (b) (i) 2. Project Entities: Instituto Colombiano de Parts C and D Bienestar Familiar Instituto Nacional de Salud Parts B (a), and E (b) (i) and (ii) Instituto de Investigaciones Part E (a) and (b) (ii) Tecnol6gicas Fondo Nacional de Proyectos de Parts C and E (a) and (b) Desarrollo (ii) - 21 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each May 1 and November 1 beginning May 1, 1982 through May 1, 1994 960,000 On November 1, 1994 1,000,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for p.rposes of withdrawal. - 22 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.40% More than three years but not more than six years before maturity 2.80% More than six years but not more than eleven years before maturity 5.20% More than eleven years but not more than fifteen years before maturity 7.05% More than fifteen years before maturity 8.00% - 23 - SCHEDULE 4 Procurement A. General Procedures 1. Except as provided in paragraphs 2 and 3 below, contracts for the purchase of goods or for civil works shall be procured in accordance with the Borrower's competitive bidding procedures. 2. Contracts for the purchase of (i) water pumps and piping; and (ii) audio-visual nutrition education equipment, vehicles and other items, estimated to cost the equivalent of more than $100,000, shall be procured in accordance with procedures consis- tent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines) including the pertinent provisions of the General Introduction thereto, on the basis of international competitive bidding. 3. Notwithstanding the provisions in paragraph 1 above, civil works may be carried out by force account or through self-help labor. 4. For bidding purposes, contracts referred to in paragraphs 1 and 2 above shall be grouped, to the extent practicable, in such manner as to permit bulk procurement. 5. Contracts for services shall be procured at a reasonable price, account being taken also of their quality and the com- petence of the parties rendering them. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with local procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) 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 included. - 24 - 2. Goods manufactured in Colombia may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Colombia if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Colombia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Colombia. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it - 25 - shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. C. Review of Procurement Decisions by the Bank 1. With respect to all contracts referred to in paragraph 2 of Part A of this Schedule estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, 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 procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract referred to in paragraph 2 of Part A of this Schedule to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to delivery to the Bank of the first application for withdrawal of - 26 - funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.