Nepal - Babai Irrigation Engineering Project : Credit 1093 - Credit Agreement - Conformed

OPFICIAI, CREDIT NUMBER 1093 NEP DOCUMENTS Development Credit Agreement (Babai Irrigation Engineering Project) between KINGDOM OF NEPAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1981 CREDIT NUMBER 1093 NEP DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated (-N e 2 , 1981 between KINGDOM OF NEPAL (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS the Borrower has requested the Association to assist in the financing of the cost of the project described in Schedule 2 to this Agreement (hereinafter called the Project); and WHEREAS the Association is willing, on the basis inter alia of the foregoing, to make a development credit to the Borrower on the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: 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 June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). 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: (a) "DIHM" means the Borrower's Department of Irrigation, Hydrology and Meteorology; and (b) "Project Area" means an area of about 20,000 ha in the Borrower's Bardia District of the Bheri zone. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement -2- set forth or referred to, an amount in various currencies equiva- lent to two million eight hundred thousand Special Drawing Rights (SDR 2,800,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement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 to be financed out of the proceeds of the Credit, shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1983 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 June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 1 and December 1 commencing June 1, 1991, and ending December 1, 2030, each installment to and including the installment payable on December 1, 2000, 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. -3- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project through DIHM with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering prac- tices, and shall provide, promptly as needed, the funds, facili- ties, services and other resources required for the purpose. (b) Without any limitation or restriction upon its obliga- tion under paragraph (a), the Borrower shall cause: (i) DIHM to provide suitably qualified and experienced staff to work with the consultants referred to in Section 3.03 (a) of this Agreement; (ii) its Roads Department to assign a suitably qualified and experienced engineer to DIHM, to be responsible for the design of an approximately 30 kilometer section of the Borrower's East West Highway. Section 3.02. The Borrower shall appoint a Project Manager whose qualifications and experience shall be satisfactory to the Association, who shall be responsible for the implementation of the Project. Section 3.03. (a) For the purpose of carrying out the Pro- ject, the Borrower shall employ qualified and experienced consul- tants satisfactory to the Association, under contracts, including terms of reference, satisfactory to the Association. (b) The Borrower shall cooperate fully with such consultants in the performance of their services for the Project and make available to them all information relevant to the Project. (c) The Borrower shall cause such consultants promptly to furnish to the Association copies of the documents prepared by them for the Project, including reports and drafts thereof, plans, designs, specifications, work schedules and estimates of costs, in such number as the Association shall reasonably request. (d) With respect to the evaluation and implementation of the recommendations and other conclusions contained in the documents referred to in the preceding paragraph: (i) during the carrying out of the Project, the Bor- rower and the Association shall from time to time -4- exchange views on said recommendations and conclu- sions, and (ii) upon completion of the Project, the Borrower shall consult with the Association on the recommendations and conclusions relating thereto. 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 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, all goods and services financed out of the proceeds of the Credit shall be used exclusively for the Project until its completion. 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 agencies of the Borrower responsible for carrying out the Project or any part thereof, including without limitation to the foregoing, separate accounts reflecting all expenditures under Categories 1 (b) and (3) of the table in paragraph 1 of Schedule 1 to this Agreement on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditure. (b) The Borrower shall retain, or cause to be retained, until one year after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditure and shall enable the Association's accredited representatives to examine such records. (c) The Borrower shall: (i) cause the records and accounts referred to in paragraph (a) of this Section for each fiscal year -5- to be audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than nine months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested including, without limitation to the foregoing, an opinion by said auditors in respect of the records and accounts referred to in paragraph (a) of this Section as to whether the proceeds of the Credit withdrawn from the Credit Account have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning said separate accounts, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. S etion 4.02. In order to ensure the coordination of the plans for the road and irrigation system and the settlement plans in respect of approximately 2,400 ha of lowlands in the Khumber Area, the Borrower shall: (a) by not later than June 30, 1981, decide and notify the Association, whether the said lowlands shall be developed as part of the settlement scheme for the Borrower's Khumber Cotton Project or as part of a settlement scheme for paddy cultivators, and shall notify the Association of any institutional arrangements made or to be made for forest clearing and settlement in the Khumber area; and (b) cause, as applicable, the staff of the Khumber Cotton Project, the staff of the DIHM, and the consultants employed pursuant to Section 3.03 (a) of this Agreement to coordinate the preparation of such plans. ARTICLE V Termination Section 5.01. The date :w- ->- , 1981 is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Secretary, Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance His Majesty's Government of Nepal Kathmandu Nepal Cable address: Telex: ARTHA 249 NEP Kathmandu, Nepal 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 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties thereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District - 7 - of Columbia, United States of Americi, as of the day and year first above written. KINGDOM OF NEPAL By $" Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By : /ii< Byy Regional Vice President South Asia - 8 - 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 SDR Equivalent) to be Financed (1) Civil works 240,000 (a) by contract 95% (b) by force account 100% (2) Equipment and 470,000 vehicles: (a) directly imported 100% of foreign expenditures (b) locally manu- 100% of local factured expenditures (ex-factory) (c) locally procured 75% (3) Salaries and Operating 120,000 100% Expenses related to the Project (4) Consultants' services 1,760,000 100% (5) Unallocated 210,000 TOTAL 2,800,000 -9- 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 the currency of the Borrower or 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 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 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. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement, except that with- drawals, in an aggregate amount not exceeding the equivalent of $300,000 may be made in respect of Category (1) on account of payments made for such expenditures before that date but after January 1, 1980. 5. 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 allocated to another Category and which in the opinion of the Association are not needed to meet other 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. - 10 - 6. 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 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 the Development Credit 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. - 11 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: Preparation of final engineering design, cost estimates and tender documents for the facilities to be constructed or installed in the Project Area and for the approximately 30 kilometer Section of the East West Highway. Part B: Review of prequalification of contractors and issue and evaluation of bids. Part C: Carrying out of topographical surveys along alignments of irrigation and drainage channels, project roads and the East West Highway as well as site surveys for major structures, including a bridge over the Man River. Part D: Carrying out of aerial photography and preparation of ground control and topographical maps. Part E: Carrying out of geological investigations, particularly at the weir site, surveys for the location of construction materials, infiltration tests, hydrological surveys, laboratory tests and, if necessary, a hydraulic model test for the headworks and desilting facilities. Part F: Carrying out a semi-detailed soil survey and classification of soils for irrigation. Part G: Carrying out of a detailed socio-economic benchmark survey. - 12 - Part H: Provision of engineering equipment and vehicles to DIHM and construction of camps and quarters for use by consultants and DIHM staff. The Project is expected to be completed by June 30, 1983. - 13 - Schedule 3 Procurement A. International Shopping Procedures Contracts for the procurement of equipment and vehicles shall be awarded through international shopping procedures which shall be satisfactory to the Association. B. Other Procurement Procedures Contracts for the construction of civil works may be procured on the basis of locally advertised competitive bidding in accor- dance with applicable procurement procedures of the Borrower which shall be satisfactory to the Association or may be carried out by the Borrower through force account. C. 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 estimated to cost the equiva- lent of $500,000 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 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, and such other informa- tion as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsis- tent with this Schedule, promptly inform the Borrower and state the reasons for such determination. - 14 - (c) The terms and conditions of the contract shall not, without the Association'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 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 or the Fund Loan Account in respect of such contract. 2. With respect to each contract not governed by the preceding 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 respective 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 contract was not consistent with this Schedule, promptly inform the Borrower and state the reasons for such determination. 3. Before agreeing to any material modification or 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 15% 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. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the J26 day of 198 . FOR SECRETARY