Philippines - National Fisheries Development Project : Loan 2156 - Loan Agreement - Conformed

LOAN NUMBER 2156 PH Loan Agreement (National Fisheries Development Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1982 LOAN NUMBER 2156 PH LOAN AGREEMENT AGREEMENT, dated 2 , 1982, between REPUBLIC OF THE PHILIPPINE (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) a portion of the Project will be carried out by the Samar Sea - Ticao Pass Fisheries Development Corporation (herein- after referred to as the Corporation' with the Borrower's assist- ance and, as part of such assistance, the Borrower will make available to the Corporation, part of the proceeds of the Loan as hereinafter provided; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set forth hereinafter and in the Project Agreement of even date herewith between the Bank and the Corpora- tion; 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 Loan and Guarantee Agreements of the Bank, dated October 27, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agree- ments of the Bank being hereinafter called the Gereral Condi- tions). 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) "Corporation" means the Samar Sea - Ticao Pass Fisheries Development Corporation, a corporation organized and existing under the Borrower's laws; -2- (b) "Project Agreement" means the agreement between the Bank and the Corporation of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements' supplemental to the Project Agreement; and (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and the Corporation pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrowert on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty-two million four hundred thousand dollars ($29,400,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Sched- ule 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. Section 2.03. Except as the Bank shall otherwise agree: (a) procurement of the goods required for Part B of the Project and to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement; and (b) procurement of the goods and civil works required for Part A of the Project and to be financed out of the proceeds of the Loan, shall be governed by the provisions of Section 2.03 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1989 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. Not later than the Effective Date, the Borrower shall pay to the Bank a fee equivalent to three hundred thirty-one -3- thousand thirty-four dollars ($331,034). The fee shall be payable in such currency or currencies as the Bank shall specify. In the event that the Bank shall not have received full payment of the fee by the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount required for the full payment of the fee in the currency or currencies specified for the purpose. Section 2.06. The Borrower shall pay to the Bank a commit- ment 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 2.07. The Borrower shall pay interest at the rate of eleven and three-fifths per cent (11-3/5%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.08. Interest and other charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.090 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 Part B of the Project with due diligence and efficiency and in conformity with appropriate financial and administrative practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. To that end, the Borrower shall make adequate and timely budgetary provisions for the implementation of Part B of the Project, in line with the financial requirements of Part B of the Project. (b) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause the Corporation to perform in accordance with the provisions of the Project Agreement all the obligations therein set forth, shall take or cause to be taken all action; including the provision of funds, facilities, services and other resources, necessary or appropriate to enable the Corporation to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) In order to assist in carrying out Part A of the Pro- ject, the Borrower shall make available an amount equivalent to twelve million dollars ($12,000,000) of the proceeds of the Loan to the Corporation under a subsidiary loan agreement to be entered into between the Borrower and the Corporation, under terms and conditions which shall have been approved by the Bank, including those set forth in Schedule 5 of this Agreement. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not Pssign, nor amend, abrogate or waive the Subsidiary Loan Agreetment or any provision thereof. Section 3.02. In order to assist in carrying out Part B of the Project, the Borrower shall appoint consultants and training specialists whose selection, qualifications, experience and terms and conditions of appointment shall be satisfactory to the Bank in accordance with principles and procedures described on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods required for Part B of the Project and 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 instal- lation, 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 Bank shall otherwise agree, the Borrower shall cause all goods and services required for Part B of the Project and financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the specifications, reports, -5- training programs, terms of reference of studies, contract docu- ments and work and procurement schedules for Part B of the Pro- ject, and any material modifications thereof or additions thereto, in such detail as the Bank shall reacnably request. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of Part B of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed oit of the proceeds of the Loan, and to disclose their use in Part B of the Project; (ii) enable the Bank's accredited representatives to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning Part B of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Loan, the Bank may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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 Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably 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 Borrower, the Bank and the Corporation of their respective obligations under the Loan Agreement and the Project Agreement, and the accomplishment of the purposes of the Loan, 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 required for carrying out the Project. Section 3.06. The Borrower shall: -6- (a) develop a program satisfactory to the Bank, to monitor and evaluate the Project and by March 31, 1983 begin to implement such program; and (b) by June 30, 1984 review with the Bank the execution of the Project, in order to prepare recommendations, as necessary, for improving Project execution. Section 3.07. The Borrower shall: (a) by September 30, 1982 furnish to the Bank for its review, proposals for organizational changes in the Bureau of Fisheries and Aquatic Resources, the Philippine Fisheries Develop- ment Authority and the Fishery Industry Development Council; (b) by December 31, 1982 begin the procedures for implemen- tation of such organizational changes which are satisfactory to the Bank; and (c) by December 31, 1984 substantially complete the afore- said implementation. Section 3.08. The Borrower shall establish and thereafter maintain with powers, resources, composition and staff satisfac- tory to the Bank, a Project Unit and a secretariat, within the Ministry of Natural Resources responsible for implementation of Part B of the Project. Section 3.09. The Borrower shall: (a) cause the Project Unit to employ a training specialist in accordance with the provisions of Section 3.02 of this Agree- ment; (b) cause the Project Unit to develop, and by December 31, 1982 to implement a training program satisfactory to the Bank for the staff of the Bureau of Fisheries and Aquatic Resources, the Philippine Fisheries Development Authority and the Fishery Indus- try Development Council; and (c) award or cause to be awarded fellowships under the Project to appropriately qualified candidates, in accordance with selection criteria and award procedures satisfactory to the Bank. - 7 - ARTICLE IV Other Covenants Section 4.01. (a) It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. (b) To that end the Borrower: (i) represents that at the date of this Agreement no lien exists on any government assets as security for any external debt except as otherwise disclosed in writing by the Borrower to the Bank; and (ii) undertakes that, except as the Bank shall otherwise agree, if any such lien shall be created, it will ipso facto, equally and ratably, and at no cost to the Bank, secure the payment of the principal of, and interest and other charges on, the Loan and in the creation of any such lien express provision will be made to that effect. The Borrower shall promptly inform the Bank of the creation of any such lien. (c) The foregoing representation and 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. (d) As used in this Section, the term "government assets" means assets of the Borrower or of any agency of the Borrower including the Central Bank of the Philippine,s or any institution performing the functions of a central bank for the Borrower. (e) The Borrower further undertakes that, within the limits of the laws in force in its territories, it will make the fore- going undertaking effective with respect to liens on the assets of its political subdivisions and their agencies, and to the extent that the Borrower is unable within the limits of the laws in force in its territories to make this undertaking effective, the Bor- rower will give to the Bank an equivalent lien satisfactory to the Bank. Section 4.02. (a) The Borrower shall maintain or cause to be maintained separate records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of Part B of Nw -8- the Project, of the departments or agencies of the Borrower responsible for carrying out Part B of the Project or any part thereof, including inventory records and statements on sources and uses of funds. (b) The Borrower shall cause its departments or agencies responsible for carrying out Part B of the Project or any part thereof, to: (i) have their accounts and financial statements in respect of Part B of the Project for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank 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 said auditors, of such scope and in such detail as the Bank shall have reasonably re- quested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request. Section 4.03. The Borrower shall cause the goods, including vehicles and vpssels under Part B of the Project, to be operated and maintained in accordance with sound administrative, financial and engineering policies and practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 4.04. The Borrower shall take all such action as may be necessary, including the provision of equity to the Corpora- tion, to enable the Corporation to comply with the provisions of Section 4.03 of the Project Agreement. 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 Corporation shall have failed to perform any covenant, agreement or obligation of the Corporation under the Project Agreement. -9- (b) An extraordinary situation shall have arisen which shall make it improbable that the Corporation will be able to perform its obligations under the Project Agreement. (c) The Presidential Decree Number 704 of 1975 as ora4nded, the Presidential Decree Number 977 of 1976 as amended, the Letter of Instruction Number 459 of 1976, the Articles of Incorporation of the Corporation or the By-Laws of the Corporation shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the implementation of the Project, the carrying out of the Borrower's obligation under this Agreement, or the ability of the Corporation to carry out the covenants, agreements and obligations set forth in the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of the Corporation or for the suspension of its operations. 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: (a) any event specified in paragraph (a) 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; and (b) any event specified in paragraphs (c) or (d) of Section 5.01 of this Agreement shall occur. 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: (a) the execution and delivery of the Project Agreement on behalf of the Corporation have been duly authorized or ratified by all necessary corporate and governmental action; (b) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and the Corporation; and - 10 - (c) the Project Unit referred to in Section 3.08 of this Agreement shall have been established. Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by the Corporation, and is legally binding upon the Corporation in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and the Corporation and is legally binding upon the Borrower and the Corporation in accordance with its terms. Section 6.03. The date / , is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 1.01. The Minister of Finance 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: Minister of Finance Ministry of Finance Manila Republic of the Philippines Cable address: Telex: MINFIN 7550 CBP-PH Manila 0268 CB-CONF For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 11 - Cable address: Telex: INTBAFRK 440098 (ITT) Washington, D.C. 248423 (RCA) 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. REPUBLIC OF THE PHILIPPINES By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By// Regional Vice President East Asia and Pacific - 12 - 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) Part A of the Project (a) Civil works 6,500,000 50% (b) Equipment, 4,600,000 materials, vehicles and vessels (i) directly 100% of foreign imported expenditures (ii) locally 100% of local manufactured expenditures (ex-factory) (iii) locally 65% procured (c) Consultants' 1,000,000 100% Services Sub-Total 12,100,000 - 13 - Amount of the Loan Allocated % of (Expressed in 4xpenditures Category Dollar Equivalent) to be Financed (2) Part B of the Project (a) Equipment, 5,200,000 materials, vehicles and vessels (i) directly 100% of foreign imported expenditures (ii) locally 100% of local manufactured expendItures (ex-factory) (iii) locally 65% procured (b) Consultants' 1,500,000 100% services and studies (c) Training 1,000,00 100% of foreign expenditures and 60% of local expenditures Sub-Total 7,700,000 (3) Fee 331,034 Amount due (4) Unallocated 2,268,966 TOTAL 22,400,000 - 14- 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 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 decreases 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 expen- ditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient 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 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. 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 - 15 - 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 6the'rwise have been eligible for financing out of the proceeds of the Loan.' - 16 - SCHEDULE 2 Description of, the Project The Project -is part of the Borrower's program to improve the fisheries sector, and consists of'the following Parts: Part A: Area Development Provision of facilities, equipment, materials, vehicles and services including landing places, ice plants, ice and chill storage, carrier boats, marketing and other supporting services at Bulan, San Jacinto, Miaga, Cataingan and Placer in the Masbate/Ticao area, and Catbalogan and Santo Nino in Western Samar. Part B: Institutional Strengthening Strengthening of the Bureau of Fisheries and Aquatic Re- sources, Philippine Fisheries Development Authority and Fishery Industry Development Council through the provision of training, equipment and technical assistance; and studies to assist fisher- ies development. The Project is expected to be completed by December 31, 1988. - 17 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning September 1, 1987 through September 1, 2001 745,000 On March 1, 2002, 795,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 18 - 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 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.75% More than three years but not more than six years before maturity 3.50% More than six years but not more than eleven years before maturity 5.40% More than eleven years but not more than sixteen years before maturity 9.30% More than sixteen years but not more than eighteen years before maturity 10.45% More than eighteen years before maturity 11.60% - 19 - SCHEDULE 4 Procurement under Part B of the Project A. International Competitive Bidding 1. Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance 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 inter- national competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding, in addition. to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to th. date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of inter- national competitive bidding. 3. For bidding purposes scientific equipment, and motor vehicles including motorcycles, shall each be grouped to the extent practicable in such a manner as shall be agreed between the Borrower and the Bank so as to permit bulk procurement. 4. 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 for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. - 20 - 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 the Philippines may be granted a margin of preference in accordance 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 eviluation 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 maiufactured in the Philippines if the bidder shall have estab- lished to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in the Philippines equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes* levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest eva- luated 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 - 21 - have to pay for the importation of the goods offered in such groirl bid; or (ii) 15% of the r.i.f. bid price of such goods if cKid customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it 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 1. Construction of vessel hulls by prequalified shipyards, and procurement of marine engines from prequalified shipyards, shall be carried out in accordance with the Borrower's competitive bidding procedures satisfactory to the Bank. 2. Library, office and communications equipment, and spare parts shall be procured in accordonce with the Borrower's procurement procedures satisfactory to the Bank. D. Review of Procurement Decisions by the Bank 1. Review of prequalification. If prequalification is required, the Borrower shall, before qualification is invited, inform the Bank in detail of the procedure to be followed, and shall intro- duce such modifications in said procedure as the Bank shall reasonably request. The list .of.prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments befire t - applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifi- cations in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $50,000 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. - 22 - 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 if the bids received, and such other information as the Bank shall reasonably request. The Bank shrll, 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 the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. (e) Purchase of the research vessel is to be carried out only after the Bank has reviewed and approved a report on research vessel requirements by a marine engineering consultant appointed in accordance with the provisions of Section 3.02 of this Agree- ment. 3. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such con- tract, together with the analysis of the respective bids, recom- mendations 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. 4. 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 - 23 - 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 Rorrowe.r shall inform the Bank of the proposed modification,.waiver,,extension or change ordar and the reasons therefor. The Bank, 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. -24- SCHEDULE 5 Subsidiary Loan Agreement Principal Terms and Conditions' Amounk-: $12)000,000 equivalent Period 20 years including 5 years of grace Interest rate 11-3/5% per annum Commitment charge to be paid by the Corporation Foreign exchange risk to be borne by the Borrower with the Corporation paying the Borrower a foreign exchange fee INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day ofI , 198 . FOR SECRETARY