Afghanistan - Third Highway Project : Credit 0927 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 927 AF Development Credit Agreement (Third Highway Project) between DEMOCRATIC REPUBLIC OF AFGHANISTAN and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 25, 1979 r- CREDIT NUMBER 927 AF DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 25, 1979, between DEMOCRATIC REPUBLIC OF AFGHANISTAN (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requestéd the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinaf ter provided; and' (B) the Borrower has also requested the Association, as Administrator' of the Special Action Account. established with funds contributed by the Member States of the European Economic Commu- nity, to provide additional assistance towards the financing of the Project from the resources 'of the 'Special Action Account and by an agreement of even date herewith between the Borrower and the Association as Administrator of the Special Action Accouht established with funds contributed by the Member States of the European Economi,c Community (hereinafter called the Special Action Credit A;reement), the said Administrator is agreeing to provide such assistance in an aggregate principal amount equivalent to about four million four hundred thousand dollars ($4,400,OO) (hereinafter called the Speciai Action Credit); and WHEREAS the Association has agreed, on the, basis inter alia of the foregoing,- to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLEI General Cönditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Devélopment Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the -Association being hereinafter called the General Conditions). 91: 'CC? Section 1.02. Wherever used in this Agreement, unless the context'otherwise requiresi 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) "Special Action Credit Agreement" means the agreement of even date herewith between the Borrower and the Association, as Administrator of the Special Action Account established with funds contributed by the Member States of- the European Economic Commu- nity, for the purpose of the Project, as such agreement may be amended from otime to time; and such term includes the General Conditions Applicable to Development Credit Agreements of the International Development Association, dated March 15, 1974, as made applicable to such agreement, all agreements supplemental to the Special Action Credit Agreement and all schedules thereto; (b) "RCMD" means the Road Construction and Maintenance Department of the Borrower; and (c) "Afghani" and "Af" mean the currency of the Borrower. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the tems and conditions. in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to seventeen million six hundred thousand dollars ($17,600,000). Section 2.02.o The amount of the Credit may be withdrawn from the Credit 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-Association, 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 and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works shall be governed by the provisions of Schedule 3 to this Agreement. 00 -3- Section 2.04. The Closing Date. shall be June 30, 1984 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 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 semiannually on May 1 and November -1 in each year. Section02.07. The Borrower °shall repay the principal amount of the Credit in semiannual installments payable on each May 1 and November 1 commencing November 1, i989, and ending May 1, 2029, each installme1nt to and including the installment payable on May 1, 1999, to be one-half of one per cent, (1/2 of 1%),.of such principal amount, and each installment thereaf ter 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® Borroide(ýr shall carry out the Project through¢its RCMD with due diligence and efficiency and in confor- mity with appropriate administrative financial and engineering practices, and shall provide, promptly as needed, the funds, facilities,, services and other resources required' for the purpose. Section 3.02. Irn order to assist the Berrower in the carrying out åf the ProjectC and in training RCMD staff, the Borrower shall emply a firm of consultants, with qualifications, experience and terms and conditions of employment satisfactory to the Borrower and the Association. Section 3.03. (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 the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Ass,icia- tion, promptly upon their preparation, the plans, specificatIons, reports, contract documents and construction and procurement schedules for the Project., and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the bpnefits to be derived from it), to identify the, goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) shall enable the Association'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 Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrow4 and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. 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 -5- required for carrying out the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfac- tory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 3.06. The Borrower shall, from time to time upon the Association's request, review with the Association, the progress of the Borrower's program for the training of highway maintenance personnel, and, shall carry out all such measures as may be neccessary for the effective implementation of the said program. Section 3.07. The Borrower shall, prior to commencing any works, furnish to the Association technical and economic justifi- cation, satisfactory to the Association', for each overlay section of the roads included under Part A of the Project, of which the total traffic density, the traffic composition, the present pavement condition and the thickness of the required overlay shall be similar. The pavement thickness designs and technical standards for the execution of pavement works shall be satisfactory to the Association. ARTICLE IV Other Covenants Section 4.01. The Borrower shall: (a) take all measures reasonably necessary to ensure at all times that the dimensions and axle loads of the vehicles using its highways do not exceed limits consistent with the design standards of such highways; (b) not later than December 31, 1979 or such other date as shall be agreed with the Association, adopt and put into full force and effect regulations, acceptable to the Association, for the purposes set forth in paragraph (a) of this Section; and (c) thereafter, take all measures necessary to ensure that the limits imposed by such regulations on such dimensions and axle-loads in accordance with such design standards are duly observed. Section 4.02. The Borrower shall cause its highway system to be adequately maintained in accordance with sound engineering practices, and shall provide promptly as needed, the funds, equip- ment, facilities, staff, services and other resources required for . . . . . . . the purpose, and in particular, shall ensure that adequate amounts for road maintenance are included in its budget each year. ARTICLE V Financial Covenants Section 5.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with con- sistently maintained appropriate accounting practices the opera- tions, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Section 5.02. Without limitation upon the generality of Section 5.01 of this Agreement, the Borrower shall ensure that, with respect to asphaltic concrete on account of which withdrawals are requested from the Credit Account and until one year after the Closing Date, all records evidencing (i) the quantities of such asphaltic concrete produced and laid for the road strengthening program under Part A of the Project, and (ii) the quality of said asphaltic concrete on the basis of laboratory tests, are retained and shall make such records available to the Association's accre- dited representatives upon their request for inspection. ARTICLE VI Remedies of the Association Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely, that, subject to paragraph (c) of this Section: (a) the right of the Borrower to withdraw the proceeds of the Special Action Credit made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the Special Action Credit Agreement; (b) the Special Action Credit shall have become due and payable prior to the agreed maturity thereof; and (c) paragraphs (a) and (b) of this Section shall not apply if: (i) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its p4I , i; 03 Ml_J; 77 obligations under such agreement, and (ii) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (d) thereof, namely that the event specified in paragraph (b) of Section 6.01 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveress of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) all conditions precedent to the effectiveness of the. Special Action Credit Agreement, except for the effectiveness of this Agreement, have been fulfilled; and (b) the contract between the Borrower and the firm of con- sultants referred to in Section 3.02 of this Agreement has become effective in accordance with its terms. Section 7.02. The date December 27, 1979 is hereby speci- fied for the purposes of Section .12.04 of the General Conditions. Section 7.C. The obligations of the Borrower under Article IV of this Agreement and the provisions of Section 6.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date fifteen years after the date of this Agreement, whichever shall be the earlier. ARTICLE VIII Representatives of the Borrower; Addresses Section 8.01. The Minister of Public Works of the Borrower is designated as representative of the Borrower 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. 8 For the Borrower: Ministry of Public Works. P.O. Box 577 Kabul Afghanistan Cable address: Telex: MINWORKS 41 RCMD AF Kabul, Afghanistan For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCÀ) or 64145 (WUI) 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. DEMOCRATIC REPUBLIC OF AFGHANISTAN By /s/ A. G. Farahi vi Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ M. 'P. Benjenk Regional Vice President Europe, Middle East and North Africa ___9 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 the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: (? Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Pavement 7,000,000 100% of eligible strengthening amounts on ac- under Part A count of dsphal- of the Project tic concrete as shall be agreed between the Bor- rower and the Association (2) Equipment for as- 3,500,000 100% of foreign phalt mixing and expetditures and laying unit 100% of local expenditures, ex-factory (3) Asphalt required 12000100q 100% of foreign for surface dress- expenditures ing under Part A of the Project (4) Equipment for Roads 1,200,000 100%of foreign Maintenance and Im- expenditures and provement Program 100%'of local under Part B of the expenditures e Project factory (5) Spare parts for 22800,000 100% of.foreign existing expenditures ment 1, 20S00M00Iofreg .expenditures_and 100 ofloa exenitre, o - 10 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Finanted (6) Technical Assis- 700,000 100% of foreign tance expenditures (7) Unallocated 1,400,000 TOTAL. 17,600,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" 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; and (b) the term "local expenditures" means expenditures in thé currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territry of, the Borrower on goods or services, or on the importation, manufacture, procurement or suppl)'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 Credit decreases or increases, the Association 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 Association. 4. Amounts eligible for financing under Category ,(1) of the table set forth in paragraph 1 of this Schedule shall be the equivalent of $17.5, per metriC ton of asphaltic conciete laid or such other unit amount as may be agreed (between the Borrower and the Association. 5. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (i) payments made for - 11 - expenditures prior to the date of this Agreement; and (ii) amounts to be financed under Category (1) of this Agreement unless the Association shall have received, with respect to each withdrawal on account thereof, a statement in a form satisfactory, to the Association, from consultants responsible for quantity and quality control of the pavement strengthening program under Part A of the Project, which shall certify (A) the quantities of asphaltic concrete laid in carrying out pavement works under Part A of the Project, in terms of tonnage of such asphaltic concrete, (B) the quality of such asphaltic concrete and its 'application in accor- dance with the requirements of Section 3.07 of this Agreement. 6. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allo- cated to-another CAtegory and which in the opinion of the Associa- tion are not needed to meet ot41_i expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 7. If the Association shall have reasonably determined that the procurement pf any item in any Category is inconsistent with the procedures $et forth or referred to in this Agreement , no expenditures for such item shall be financed out of the pro- ceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's easonable opinion, represents the amount of such expenditures which wou.l4 otherwise have been eligible for financ- ing out of the proceed uf the Credit. A. -12 SCHEDULE 2 Description of the Project The Project consists of the following Parts: (A) a three-year time slice of the pavement strengthening program of the Borrower for the Kabul-Kandahar, Kabul- Torkham and Kandahar-Spin Boldak roads comprising asphaltic concrete paving of about 450 km of road sections: and surface dressing of about 160 km of road sections, all such sections to be selected in agreement with thé Association; (B) the carrying out of a three-year time slice of the maintenance and improvement programoof the Borrower for the part of RCMD's road network not referred to in Part A above; and (C) the improvement of RCMD's planning and operational capabilities. * * * The Pro ject is expected to be completed by December 31, 1983. 13- SCHEDULE 3 Procurement A. Itternational Competitive Bidding 1. Except as provided in Parts C and E hereof, goods and civil works ,for the-Project shall be procured under contracts awarded in acdfordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. ;For goods and works to be procured on the basis of inter- nati,nal. competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating the,'keto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shl reasonably request; the Association will arrange for the pullication of such notice in order to provide timely notification toi prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or wrks remain to be procured on the basis of international compe- titive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding, (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price f6r 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. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in * 14 71 -14- Afghanistan may be granted a margin of preference in accordanice with, and subject to, the following provisions: 1. 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. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Afghanistan if the bidder shall have established to the satisfaction of the Borrower and the Associa- tion that the manufacturing cost of such goods includes a value added in Afghanistan equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Afghanistan. (3) Group C: bids offering any other goods. 3. 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. 4. If, as a result of the comparison under paragraph 3 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 evaluated 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 thee group A bid in such further comparison is the lowest, it ato impt t WH I14I 0 '-15 - shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures Spare parts for existing equipment may be procured either from the supplier or manufacturer thereof or, wherever practi- cable, by international shopping. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for asphaltic bitumen and equipment estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid rand 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 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) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Association of the name of the bidder to ,which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evalua- tion and comparison of the bids received, together with the recommendations for award and such other information as the Association shall reasonably request. The Association 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 Association's concurrence, materially, differ from those on which bids were asked. -16- (d) Two cofiformed copies of the contract shall be furnished to the Association promptly after its execution. Such contract relating to equipment shall be furnished prior to the submission to the Association ;of the first application for withdrawal of funds from the Credit Account in respect of such contract. 3. With respect to 'each contract not governed by the preced- ing paragraph, the Borrower shall furnish 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 such contract, two conformed copies of such contract, together with the analysis of the respec- tive bids, recommendations for award and such other information as the Association shall reasonably request. The, Association sihall, if it determines that the award of the contract was not consistent with the duidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 4. Before agreeing to any material modification c waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 10% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. E. Procurement Without Contracting The Borrower may carry out the mixing of the asphaltic concrete and the paving of roads therewith under the Project through RCMD.