Conformed Copy - C2339 - Education Development in Poor Provinces Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2339 CHA (Education Development in Poor Provinces Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and GUIZHOU PROVINCE HUBEI PROVINCE HUNAN PROVINCE SHAANXI PROVINCE SHANXI PROVINCE and YUNNAN PROVINCE Dated April 10, 1992 CREDIT NUMBER 2339 CHA PROJECT AGREEMENT AGREEMENT, dated April 10, 1992, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and the PROVINCES OF GUIZHOU, HUBEI, HUNAN, SHAANXI, SHANXI, and YUNNAN of the PEOPLE'S REPUBLIC OF CHINA (the Project Provinces). WHEREAS by the Development Credit Agreement of even date herewith between the People's Republic of China (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to ninety-three million two hundred thousand Special Drawing Rights (SDR 93,200,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Project Provinces agree to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS the Project Provinces, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, have agreed to undertake the obligations set forth in this Agreement; Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) Each Project Province declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out the Project within its territory with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and education practices and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for carrying out the Project within its territory. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and the Project Provinces shall otherwise agree, each Project Province shall carry out the Project in its territory in accordance with the Implementation Program set forth in Schedule 2 to this Agreement. Section 2.02. The Project Provinces shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement and the Project. Section 2.03. (a) The Project Provinces shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) The Project Provinces shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by the Project Provinces of their respective obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) The Project Provinces shall maintain, or cause to be maintained, records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Project Provinces responsible for carrying out the Project. (b) The Project Provinces shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year 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 eight months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association Page 3 shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Project Provinces shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of the Project Provinces thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify the Project Provinces of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: Page 4 International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) For Guizhou Province: Guizhou Province Zhong Hua Bei Lu Guiyang Guizhou Province People's Republic of China Telex: 66002 GZFAO CN For Hubei Province: Hubei Province Shui Guo Hu, Wuchang District Wuhan Hubei Province People's Republic of China Telex: 40202 HRFAO CN For Hunan Province: Hunan Province Wu Yi Zhong Lu Changsha 410011 Hunan Province People's Republic of China Telex: 98122 HPFAO CN For Shaanxi Province: Shaanxi Province Xin Cheng District Xi'an Shaanxi Province People's Republic of China Telex: 70025 SOFAO CN For Shanxi Province: Shanxi Province Fu Dong Jie Taiyun Shanxi Province Page 5 People's Republic of China Telex: 28014 SPFAO CN For Yunnan Province: Yunnan Province Wu Hua Shan Kunming Yunnan Province People's Republic of China Telex: 64075 FAOYN CN Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of each Project Province, or by each Project Province on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by the Governor or Vice-Governor of such Project Province, or such other person or persons as the Governor or Vice-Governor shall designate in writing, and each Project Province shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Gautam S. Kaji Regional Vice President East Asia and Pacific GUIZHOU PROVINCE HUBEI PROVINCE HUNAN PROVINCE SHAANXI PROVINCE SHANXI PROVINCE and YUNNAN PROVINCE By /s/ Zhu Qizhen Authorized Representative SCHEDULE 1 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding Page 6 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 Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). 2. To the extent practicable, contracts for equipment shall be grouped into bid packages estimated to cost the equivalent of $100,000 or more. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.1 hereof, goods manufactured in China may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. The following items may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association: (A) civil works; (B) furniture for primary and lower secondary schools; (C) books; and (D) teaching equipment and materials estimated to cost the equivalent of $200,000 or less per contract, up to an aggregate amount not to exceed the equivalent of $31,500,000. 2. Equipment and materials estimated to cost the equivalent of $20,000 or less per contract, up to an aggregate amount not to exceed the equivalent of $8,400,000 total for the Project and $1,400,000 total per Project Province, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. 3. Minor civil works estimated to cost the equivalent of $40,000 or less per contract, up to an aggregate amount not to exceed the equivalent of $24,000,000 total for the Project and $4,000,000 total per Project Province, may be carried out by force account. 4. Contracts for furniture for remote, rural schools may be awarded after direct negotiations with suppliers, up to an aggregate amount not to exceed $1,800,000 total for the Project and $300,000 total per Project Province in accordance with procedures acceptable to the Association. Part D: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for: (a) technical assistance, studies and research; (b) the first civil works contract in each Project Province; and (c) goods estimated to cost the equivalent of $200,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. When payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. When payments for such contract are to be made out of the Special Account, such Page 7 procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to the Development Credit Agreement. (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which withdrawals from the Credit Account are to be made on the basis of statements of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II: Employment of Consultants In order to assist the Project Provinces in carrying out the Project, Provinces shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association 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. SCHEDULE 2 Implementation Program 1. Each Project Province will carry out its Primary Education Action Plan and its Lower Secondary Education Action Plan in accordance with the terms of each such Education Plan, including providing reports based on the progress indicators included in such Plan to the Borrower and made available to the Association on a semiannual basis. 2. Each Project Province shall: (a) by December 31 of each year during Project implementation, furnish to the Association for its review and comment, a plan based on criteria acceptable to the Association, for school construction and rehabilitation to take place in each county to be financed out of the proceeds of the Credit during the next calendar year; and (b) ensure that all school construction and rehabilitation financed under the Project is in accordance with a plan acceptable to the Association. 3. Each Province shall: (a) by December 31, 1992, provide to the Association a school maintenance plan acceptable to the Association; and (b) carry out the plan in accordance with its terms. 4. Each Project Province shall carry out or cause to be carried out maintenance of equipment provided to lower secondary schools on at least an annual basis, including provision of any spare parts required for maintenance. 5. Each Project Province shall, by December 31, 1992, provide to the Association a plan to improve the structure of pre-service teacher training, including carrying out teacher supply and demand projections and detailing actions required to adjust the supply of teachers to projected demand. 6. Each Project Province shall participate in a midterm review of the progress of carrying out the Project in its territory by no later than June 30, 1995. 7. Each Project Province shall enter into arrangements, satisfactory to the Association, with: (a) a key national research institution or university, acceptable to the Association, with the assistance of an international education institution when Page 8 appropriate, for purposes of monitoring and evaluating reform under the higher education pilot projects under Part B of the Project; and (b) a Chinese institution with qualifications acceptable to the Association, for purposes of developing software and providing training for the management information system under Parts C.1 and C.2 of the Project. 8. Each Project Province shall make the proceeds of the Credit available to counties for purposes of carrying out the Project on the same terms and conditions as the Project Province has received the proceeds of the Credit, except that (a) the Project Province shall bear all foreign exchange risks, and (b) the Project Province may make the proceeds of the Credit available on more concessional terms than it has received, when appropriate, taking into consideration the poverty level of the county concerned.