Sri Lanka - Tea Rehabilitation - Diversification Project : Credit 1240 - Credit Agreement - Conformed

CREDIT NUMBER 1240 CE Development Credit Agreement (Tea Rehabilitation and Diversification Project) between DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA and INTERNATIONAL DEVELOPMENT ASSOCIATIOh Dated * 1982 CREDIT NUMBER 1240 CE DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated 2 , 1982, between DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) Part A of the Project will be carried out by the Sri Lanka State Plantations Corporation (hereinafter called SPC) and the Janatha Estates Development Board (hereinafter called JEDB) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to SPC and JEDB part of the proceeds of the Credit as hereinafter provided; 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 and in the Project Agreement of even date herewith between the Association and SPC and JEDB; 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 Agree- ments 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 Gen- eral Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: -2- (a) "Project Agreement" means the agreement between the Association and SPC and JEDB 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 supple- mental to the Project Agreement; (b) "Part A Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and SPC and JEDB 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 Part A Subsidiary Loan Agreement; and "Part B Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and the Bank of Ceylon pursuant to Section 3,01 (d) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Part B Subsidiary Loan Agreement; (c) "High Country Project Area" means the area mainly in the Nuwara Eliya administrative district of the Borrower where parts of the Project are to be carried out, and which includes regional boards of JEDB at the date of this Agreement designated as JEDB-I and JEDB-II; (d) "Mid Country Project Area" means the area mainly in the randy and Matale administrative districts of the Borrower where parts of the Project are to be carried out, and which includes regional boards of SPC and JEDB at the date of this Agreement designated as SPC-I, JEDB-II and JEDB-IV; (e) "Low Country Project Area" means the area mainly in the Galle and Matara administrative districts of the Borrower where parts of the Project are to be carried out, and which includes the regional board of SPC at the date of this Agreement desig- nated as SPC-IV; (f) "Minor Export Crops" mean pepper, cardamom and cloves; and (g) "sub-borrowers" mean private estate owners and small- holders. -3- 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 set forth or referred to, an amount in various currencies equivalent to seventeen million eight hundred thousand Special Drawing Rights (SDR 17,800,000). 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 pf the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods andIcivil works required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agree- ment. Section 2.04. The Closing Date shall be September 30, 1986 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to -4- time be designated or selected pursuant to the provisions of that Section. Section 2.06. 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 2.07. Service and commitment charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 1 and September 1 commencing September 1, 1992, and ending March 1, 2032, each installment to and including the installment payable on March 1, 2002, 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. i Section 2.09. 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. (a) The Borrower shall carry out or cause to be carried out Parts B and C of the Project, and cause SPC and JEDB to carry out Part A of the Project with due diligence and efficiency and in conformity with appropriate administrative, agricultural, financial and engineering practices, and shall pro- vide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause SPC and JEDB to perform in accordance with the provisions of the Project Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable SPC and JEDB to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. -5- (c) The Borrower shall relend up to the equivalent of seventeen million five hundred thousand dollars ($17,500,000) out of the proceeds of the Credit to SPC and JEDB under a subsidiary loan agreement to be entered into between the Borrower and SPC and JEDB, in accordance with terms and conditions outlined in Schedule 4 to this Agreement, as such Schedule may be amended from time to time. (d) The Borrower shall relend up to the equivalent of one million dollars ($1,000,000) out of the proceeds of the Credit to the Bank of Ceylon under a subsidiary loan agreement to be entered into between the Borrower and the Bank of Ceylon for on-lending to sub-borrowers under the Project, in accordance with terms and conditions which shall have been approved by the Association, including the terms and conditions outlined in Schedule 4 to this Agreement, as such Schedule may be amended from time to time. (e) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the pur- poses of the Credit, and except as the Association shall other- wise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. In order to assist in carrying out the Pro- ject, the Borrower shall employ or cause to be employed, consul- tants whose selection, qualifications, experience and terms and conditions of employment shall be satisfactory to the Association in accordance with the principles and procedures described in 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 to be financed out of the proceeds of the Cred.it against hazards inci- dent 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) The Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the purposes of the Project. -6- Section 3.04. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, training programs, contract documents and work and pro- curement schedules for Parts B and C of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall: (i) maintain records and proce- dures adequate to record and monitor the progress of Parts B and C of the Project (including its cost and the benefits 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) enable the Association's representatives to visit the facilities, construction sites and planting areas included in Parts B and C of the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular inter- vals all such information as the Association shall reasonably request concerning Parts B and C of the Project, its costand, where appropriate, the benefits to be derived from it, the ex- penditure of the proceeds of the Credit and the goods and ser- vices 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 Credit, the Association 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 Parts B and C 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 pre- pare 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 Parts B and C of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower 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 appoint and maintain in that position a Project Director responsible for the implementa- tion of Parts B and C of the Project, whose qualifications and experience are satisfactory to the Association. -7- ARTICLE IV Other Covenants Section 4.01. The Borrower shall cause the Bank of Ceylon, the National Institute of Plantation Management and the Tea Smallholders Developme-t Authority: (a) to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition, including, without limitation to the foregoing, separate accounts for the Project. (b) to have their accounts and financial statements for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Association; (c) (i) to furnish to the Association and said auditors, as soon as available, but in any case not later than four months after the end of each such year, copies of their financial state- ments for such year, and (ii) to furnish to the Association eight months after the end of each such year, the report of such audit by said auditors and the audited financial statements, of such scope and in such detail as the Association shall have reasonably requested, including, without limitation to the foregoing, a separate opinion by said auditors on the sep,.rate accounts refer- red to in paragraph (a) of this Section; and (d) to furnish to the Association such other information concerning said accounts, financial statements, records and expenditures, as well as the audit thereof, as the Association shall from time to time reasonably request. Section 4 .02. The Borrower shall take all measures neces- sary to ensure that tea producers realize returns satisfactory to the Association. To that end, the Borrower shall review with the Association, projected and actual tea profit levels by May 31, 1983 and by each May 31 thereafter, and agree with the Association on a plan of action to ensure reasonable financial returns to tea pro- ducers. -8- Section 4.03. The Borrower shall take all such action as may be necessary on its part to enable SPC and JEDB to comply with the provisions of Section 4.03 of the Project Agreement. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the Gen- eral Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) SPC or JEDB shall have failed to perform any of its obligations under the Project Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that SPC or JEDB will be able to perform its obligations under the Project Agreement. (c) The laws or regulations establishing SPC or JEDB shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of SPC or JEDB to perform any of its obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of SPC or JEDB or for the suspension of its operations. Section 5.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (d) 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 Association to the Borrower; (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 Development Credit -9- Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of SPC and JEDB have been duly authorized or ratified by all necessary governmental and corporate action; (b) the Part A Subsidiary Loan Agreement has been executed on behalf of the Borrower and SPC and JEDB; (c) the Part B Subsidiary Loan Agreement has been executed on behalf of the Borrower and the Bank of Ceylon; (d) the management consultants for SPC and JEDB have been appointed in accordance with the provisions of Section 3.02 of this Agreement; and (e) the land and rights in respect of land required for carrying out Part A of the Project have been transferred to SPC and JEDB. Section 6.02. The following are specified as additional mat- ters, within the meaning of Section 12.02 (b) of the General Con- ditions, to be included in the opinion or opinions to be fur- nished to the Association: (a) that the Project Agrcement has been duly authorized or ratified by SPC and JEDB, and is legally binding upon SPC and JEDB in accordance with its terms; (b) that the Part A Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and SPC and JEDB, and is legally binding upon the Borrower and SPC and JEDB in accordance with its terms; and (c) that the Part B Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and the Bank of Ceylon and is legally binding upon the Borrower and the Bank of Ceylon in accordance with its terms. Section 6.03. The date t Ais /is hereby specified for the purposes of Section 12.04 of the General Con- ditions. - 10 - Section 6.04. The obligations of the Borrower under Section 4.02 of this Agrement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Secretary, Ministry of Finance and Planning 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: Ministry of Finance and Planning Colombo Democratic Socialist Republic of Sri Lanka Cable address: Telex: SECMINFIN 21232 Colombo FORAID 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 hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District - 11 - of Columbia, United States of America, as of the day and year first above written. DEMOCRATIC SOCIALIST REPUBLIC OF SRI IANKA By li Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Re inal Vice President South Asia - 12 - 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 2,400,000 85% and materials (2) Equipment and 12,300,000 100% of foreign vehicles expenditures for directly imported items, 100% of local expenditures (ex-factory) for locally manu- factured items, and 85% for other loc- ally procured items (3) Consultants' services 1,300,000 100% and training (4) Unallocated 1,800,000 TOTAL 17,800,000 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 - 13 - (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 compli- ance 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 ex- penditures prior to the date of this Agreement- except that with- drawals, in an aggregate amount not exceeding the equivalent of SDR 450,000 may be made on account of payments made for such expenditures before that date but after January 1, 1982. 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 Cate- gory may continue until all expenditures thereunder shall have been made. 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 ex- penditures for such item shall be financed out of the proceeds of - 14 - the Credit and the Association may, without in any way restrict- ing or limiting any other right, power or remedy of the Associa- tion under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 15 - SCHEDULE 2 Description of the Project The Project is part of the Borrower's program to improve tea production by the rehabilitation of fields and facilities in the High Country Project Area and the Low Country Project Area, and to diversify poor tea lands mainly in the Mid Cou'ntry Project Area into minor export crops and fuelwood, and cotsists of the following Parts: Part A: SPC and JEDB 1. Field Works a. Tea replanting and infilling on about 5,700 hec- tares; b. Renovation of soil conservation works on about -5,300 hectares; and c. Diversification into Minor Export Crops and fuel- wood on about 8,200 hectares. 2. Processing and Storage a. Expansion and rehabilitation of tea factories; and b. Provision of processing facilities mainly for Minor Export Crops. 3. Staff.and Equipment a. Provision of field and nursery equipment; b. Provision of vehicles for green leaf tea trans- port; and c. Provision of staff, office equipment and vehicles. 4. Housing and Health a. Construction and rehabilitation of housing and water supply facilities; and b. Provision of health services. - 16 - 5. Organization and Management Improvement in organization and management of SPC and JEDB. Part B: Private Sector 1. Field Works Tea replanting. 2. Processing and Storage Expansion and rehabilitation of tea factories. Part C: Borrower 1. Staff Training Provision of training in the National Institute of Plantation Management. 2. Program Preparation Preparation of a medium-term tree-crop investment pro- gram. 3. Extension Provision of extension services to tea smallholders in the Low Country Project Area through the Tea Small- holders Development Authority. Part C.2 of the Project is expected to be completed by September 30, 1983, and the remainder of the Project is expected to be completed by September 30, 1985. - 17 - SCHEDULE 3 Procurement A. International Competitive Bidding 11 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 current edition of 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 to be procured on the basis of international com- petitive 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 thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notifica- tion to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary in- formation to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive 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; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and simi- lar taxes levied in connection with the sale or delivery, pur- suant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. - 18 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the pro- cedures described in Part A of this Schedule, goods manufactured in Sri Lanka 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 sholl 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 Sri Lanka if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Sri Lanka 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 evalu- ated 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 - 19 - 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 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 low- est evaluated bid shall be selected. C. Other Procurement Procedures 1. Equipment, except those under Parts A.2 and B.2 of the Proj- ect, trucks, tractors and trailers may be procured in accordance with the Borrower's competitive bidding procedures satisfactory to the Association. 2. Except as provided in Part C.3 hereunder, contracts for works shall be awarded in accordance with the Borrower's competi- tive bidding procedurrs satisfactory to the Association. 3. Housing renovation may be carried out by estate labor under force account.- 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 estimated to cost the equiva- lent 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 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 be-fore 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 evaluation and comparison of the bids received, and such other - 20 - 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 or prequalification was 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 with- drawal of funds from the Credit Account in respect of such con- tract. 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 infor- mation as the Association shall reasonably request. The Associa- tion 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. 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 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 pro- visions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. - 21 - SCHEDULE 4 Principal Terms and Conditions for Re-Lending A. Borrower to SPC and JEDB 1. Loan amount $17,500,000 equivalent 2. Initial interest rate : 16% per annum 3. Amortization period 15 years, including 5 years of grace 4. Foreign exchange risk to be borne by the Borrower B. Borrower to Bank of Ceylon 1. Loan amount $1,000,000 equivalent 2. Initial interest rate 13% per annum 3. Amortization period 15 years, including 5 years of grace 4. Foreign exchange risk to be borne by the Borrower C. Bank of Ceylon to sub-borrower 1. Loan amount $1,000,000 equivalent 2. Initial interest rate 16% per annum 3. Amortization period 15 years, including 5 years of grace D. Other Terms and Conditions The Borrower shall on the date of the Development Credit Agreement and on each January 1 thereafter, notify the Associa- tion of the prevailing rate, and unless the Association shall otherwise agree, shall adjust the interest rates referred to in this Schedule by one percentage point for each percentage point change between the prevailing rate on such January 1 and the pre- vailing rate on the date hereof. For purposes of this Schedule "prevailing rate" means the interest rate of the Central Bank's medium- and long-term refinancing scheme. 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 day of \M, Ai, 1 98 1X. FOR SECRETARY