Sierra Leone - Integrated Agricultural Development Project : Credit 0323 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 323 SL Development Credit Agreement (Integrated Agricultural Development Project) BETWEEN SIERRA LEONE AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 30, 1972 CONFORMED COPY CREDIT NUMBER 323 SL Development Credit Agreement (Integrated Agricultural Development Project) BETWEEN SIERRA LEONE AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 30, 1972 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 30., 1972, between SIERRA LEONE (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). 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 January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the deletion of Sections 5.01 and 6.02 (h) thereof and to the renumbering of Section 6.02 (i) into 6.02 (h) thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, 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) "Project Unit" means the organizational unit within the Ministry of Agriculture and Natural Resources of the Borrower referred to in Section 3.04 of this Agreement; (b) "Project Manager" means the head of the Project Unit; (c) "SLPMB" means the Sierra Leone Produce Marketing Board of the Borrower established in 1949; (d) "Rice Co-poration" means the Rice Corporation of the Borrower established in 1965; (e) "ADA" means the Agricultural Development Authority referred to in Section 3.05 of this Agreement, and any successor or successors thereto; and (f) "Leone" and the letters "Le" mean Leone in the currency of the Borrower. 4 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 four million three hundred thousand dollars (4,300,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule shall be amended from time to time, for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 under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the teritories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. Section 2.03. Except as the Association shall otherwise agree, the goods and services (other than services of consultants) required for the Project and to be financed out of the proceeds of the Credit shall be procured in accordance with the provisions set forth or referred to in Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be March 31, 1976 or such other date as shall he agreed between the Borrower and the Association. 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 CrediL withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on March I and September I in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payable on each March 1 and September I commencing September 1, 1982 and ending March 1, 2022, each installment to and including the installment payable on March 1, 1992 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. 5 Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland 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 the Project with due diligence and efficiency and in conformity with sound administrative, financial, agricultural and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Except as the Borrower and the Association shall otherwise agree, the Borrower shall without restriction or limitation upon the provisions of paragraph (a) hereof: (i) make arrangements to borrow from the Bank of Sierra Leone an amount of Le 180,000 and from SLPMB an amount of Le 120,000, to finance part of the expenditures for the palm oil mill included in Part [1 of the Project, such loans to be converted into equity held by the Bank of Sierra Leone and SLPMB in these respective amounts, as soon as said palm oil mill shall have been transferred to ADA as specified in Section 3.05 (c) (iv) of this Agreement; (ii) provide during the period from January 1, 1976 to December 31, 1978, as and when needed to fully develop the areas planted under Parts I (1) and (2) of the Project, an aggregate amount of Le 300,000; and (iii) establish a fund (hereinafter called the Project Fund) to be used exclusively to make payments for the cost of goods and services required for the Project. The Borrower shall on the first day of each calendar month deposit in the Project Fund such amounts as shall be required to maintain the Project Fund at a level sufficient to meet, together with the proceeds of the Credit, payments expected to be made for Project expenditures during the subsequent two months in accordance with monthly cost estimates prepared by the Project Manager with the approval of the Permanent Secretary of the Ministry of Agriculture and 6 Natural Resources of the Borrower. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with sound accounting practices the operations and financial condition of the Project Fund. Section 3.02. Except as the Borrower and the Association shall otherwise agree, the Borrower shall lend the funds required for financing Part 1 (1) of the Project to the smallholders participating in the Project in accordance with the Policies and Procedures for Sub-loans set forth in Schedule 4 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association. Section 3.03. (a) In carrying out the Project, the Borrower shall employ qualified and experienced consultants acceptable to the Association upon terms and conditions satisfactory to the Association as follows: (i) in carrying out Part 11 of the Project, the Borrower shall employ engineering consultants to assist in the preparation of bidding documents for, and in the supervision of the construction of, the oil palm mill included in the Project; and (ii) the Borrower shall employ agricultural consultants to carry out the studies included in Part IV of the Project. (b) In carrying out Pait II of the Project, the Borrower shall employ contractors acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.04. Except as the Borrower and the Association shall otherwise agree, the Borrower shall, in carrying out the Project, establish and maintain within its Ministry of Agriculture and Natural Resources, a project unit, with such responsibilities, powers and staff as are specified in Schedule 5 to this Agreement. Section 3.05. Except as the Borrower and the Association shall otherwise agree, the Borrower shall, in carrying out Part V of the Project: (a) take or cause to be taken all necessary steps as shall be required to establish on a date not later than March 31, 1974 or one month prior to the expected commissioning of the oil mill inder Part II of the Project, whichever shall be the earlier, an Agricultural Development Authority, with such objectives, powers and organization under such legal instruments as shall be acceptable to the Association: 7 (b) to assist the Borrower in preparing the establishment of ADA and its assumption of responsibilities, employ not later than June 30, 1973, an official, designated to become the Managing Director of ADA as soon as it shall be established, whose experience and qualifications for such position shall be satisfactory to the Association; (c) make arrangements satisfactory to the Association: (i) to ensure that ADA, once established, will have such powers, management, staff, resources, capital structure and financial policies as are necessary to carry out its responsibilities with due diligence and efficiency and in conformity with sound administrative, financial, agricultural and engineering practices: (ii) to ensure that ADA, once established, will adopt a Policy Statement, which will not be changed without the approval of the Association; (iii) - ensure that ADA, once established, shall employ a Managing Director and Deputy Managing Director, whose experience and qualifications for their respective positions shall be satisfactory to the Association; (iv) to transfer to ADA, once established, the properties and facilities relating to the oil palm plantation and to the palm oil mill included in the Project, as soon as they are completed, and relating to the credit program under Part I (1) of the Project as soon as disbursements under Category I of Schedule I to this Agreement shall have been completed, together with all assets and liabilities relating thereto, other than the Borrower's obligation under this Agreement to make payments of principal or service charges to the Association; and (v) to ensure that ADA, once established, will not assume any responsibilities other than those related to the properties and facilities specified under sub-paragraph (iv) above without the prior consent of the Association, and (d) not request or permit ADA to declare or pay to the Borrower any dividends or to make any other distribution on the part of ADA's capital held by the Borrower. 8 Section 3.06. (a) The Borrower shall insure, or make adequate provision for tie 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. Section 3.07. (a) The Borrower shall furnish, or cause to be furnished, to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules, for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) lhe Borrower shall, or shall cause ADA to: (i) maintain records adequatc to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project; (ii) enable the Association's representatives to inspect the Project, the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the tds i crb:e findnced out of such proceeds. Section 3.08. The Borrower shall, or shall cause ADA to, take all such action as shall he necessary to acquire as and when needed all such land and rights in respect of h d as shall be required for carrying out the Project. ARTICLE IV Other Covenants S'cction 4.01. (a) The Borrower shall maintain, or shall cause to be maintained, records adequate to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the Project Unit the oil palm estate included under Part 1 (2) of the Project, the palm oil mill included under Part II of the Project and of ADA. 9 (b) The Borrower shall: (i) have the accounts and financial statements of the Project Unit, the oil palm estate included under Part I (2) of the Project, and the palm oil mill included under Part II of the Project and of ADA (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound 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 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 Association shall have reasonably requested; and (iii) furnish to ihe Association such other information concerning the accounts and financial statements of the Project Unit, the oil palm estate included under Part 1 (2) of the Project, and the palm oil mill included under Part II of the Project and of ADA, and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. (a) The Borrower shall cause ADA to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound practice. (b) The Borrower shall cause ADA at all times to operate, maintain, renew and repair its facilities, plant, equipment and machinery in accordance with sound engineering and management practices. Section 4.03. Except as the Borrower and the Association shall otherwise agree, the Borrower shall: (a) prepare and implement a plan for upgrading rice research at the rice station of its Ministry of Agriculture and Natural Resources in Rokupr, (b) no later than December 31, 1973, submit to the Association for comments the study included in Part IV (4) of the Project; and (c) take or cause SLPMB to take all such action as shall be required to appoint ADA the licensed buying agent of the SLPMB. Section 4.04. (a) Until the Closing Date and except as otherwise recommended by the study included in Part IV (3) of the Project the Borrower shall not, without prior consultation with the Association (i) initiate any new palm oil development in addition to that included in the Project, nor (ii) expand beyond present commitments the existing Gambia oil palm plantations. 10 (b) The Borrower shall or shall cause SLPMB to prepare and submit to the Association plans satisfactory to the Association: (i) for the phased closure of uneconomic palm oil mills operated by SLPMB; and (ii) for the marketing of palm oil produced as a result of the Project, including a draft agreement to be entered into by SLPMB and ADA, once established, setting out millgate pricing arrangements and a guarantee that SLPMB will purchase all palm oil produced as a result of the Project. ARTICLE V Consultation, Information and Inspection Section 5.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the administration, operations and financial condition, resources and expenditures of the Project Unit, of ADA and, in respect of the Project, of other departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the operations and financial condition, resources and expenditures of the Project Unit, of ADA and, in respect of the Project, of other departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. 11 (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions Section 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 6.02. The Development Credit Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 6.03. The payment of the principal of, and service clarges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association Section 7.01. If any event specified in Section 7.01 of the General Conditions or in Section 7.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. 12 Section 7.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) After the establishment of ADA, the Borrowe. or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ADA or for the suspension of its operations without the prior agreement of the Association. (b) After establishment of ADA, any material change in the structure, organization, powers or responsibilities of ADA shall have been made so as to adversely affect ADA's ability to carry out its functions. Section 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in Section 7.02 (b) of this Agreement shall occur and shall continue for a period of thirty days after notice thereof shall have been given by the Association to the Borrower. (b) any event specified in Section 7.02 (a) of this Agreement shall occur. ARTICLE VIII Effective Date; Termination Section 8.01. The tbllowing events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01 (b) of the General Conditions: (a) The Borrower has established the Project Unit. (b) The Project Manager and the Financial Controller have been appointed in accordance with the provisions of Schedule 5 to this Agreement and have taken up their duties. (c) The Borrower has made arrangements satisfactory to the Association for the appointment of the Deputy Project Manager, Credit Manager, Land Planning Officer and Plantation Manager in accordance with the provisions of Schedule 5 to this Agreement. (d) The Borrower has prepared and submitted to the Association the forms of loan agreements spelified in Schedule 4 to this Agreement. 13 Section 8.02. The date of September 29, 1972 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.03. The obligations of the Borrower under sections 4.01 (b) and 4.02 of this Agreement and the provisions of paragraphs (a) and (b) of Section 7.02 of this Agreement and those of paragraph (a) of Section 7.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: The Financial Secretary The Ministry of Finance Freetown, Sierra Leone Cable address: Minfin Freetown For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. 14 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. SIERRA LEONE By /s / Jacob A. C. Davies Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Mohamed Shoaib Vice President 15 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 amounts of the Credit to each category and the percentage of eligible expenditures so to be financed in each category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Credits to small- 850,000 80% of total ex- holders and field penditures development for the oil palm plantation under Part I of the Project II. Palm oil mill and 1,650,000 100% of foreign rice mills, vehicles, expenditures machinery, equipment, fuel and spare parts III. Planning, construc- 200,000 80% of total ex- tion and furnishing penditures of buildings IV. Services of local 350,000 80% of total ex- staff penditures V. Recruiting and 600,000 80% of total ex- services of expat- penditures riate staff and consultants, and services of local staff of ADA VI. Unallocated 650,000 TOTAL 4,300,000 16 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; and (b) the term "total expenditures" means the aggregate of foreign and of expenditures for goods produced in, or services supplied from, the territories of the Borrower. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; (b) expenditures for planting of oil palms or construction of the palm oil mill until the plans specified in Section 4.04 (b) of this Agreement shall have been submitted to the Association; and (c) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, the percentage set forth in the third column of the table in paragraph 1 above in respect of such expenditures shall be applied to the amount of such increase, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and 17 (c) 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 Section 2.03 of 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 tinder 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. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under Category 1, ITT, IV or V shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 18 SCHEDULE 2 Description of the Project The Project, which extends over the three-year investment period from 1973 to 1975, is the first phase of an agricultural development program designed to raise the incomes and living standards of about 2,500 near-subsistence smallholders in the Eastern and Southern Provinces of the Borrower. The Project consists of the following parts: Part I: Planting Program (1) Provision of credit to smallholders, for labor, pesticides, fertilizers and planting materials required to: (a) clear and bring into rice production about 6,000 acres of inland swamp; (b) plant about 750 acres of cocoa; and (c) plant about 1830 acres of oil palms. (2) Planting of about 510 acres of oil palms to complete a 2,000 acre nucleus oil palm plantation. This planting program shall be phased approximately as shown in the Annex to this Schedule 2, as such Annex may be modified from time to time by agreement ctween the Borrower and the Association. Part II: Construction of one palm oil mill and about 20 small rice mills. Part III. Training of Project farmers in efficient rice, cocoa and oil palm production techniques. Part IV: Carrying out of the following studies: (1) A study for the preparation of an agricultural development project in the Northern Province of the Borrower; 19 (2) A feasibility study and an investment plan for a forestry project in the Tama forest reserve of the Borrower; (3) A detailed market study of the Borrower's domestic palm oil requirements, including recommendations for future palm oil development; and (4) A study covering (a) the improving of milling of domestic rice in the territories of the Borrower, including the disposal of uneconomic rice mills operated by the Rice Corporation, (b) a mechanism for importing rice into such territories, and (c) the marketing of domestic and imported rice in such territories. Part V. Establishment of an Agricultural Development Authority to be charged with the promotion of agricultural development in the territories of the Borrower. The Project is expected to be completed by December 31, 1975. 20 ANNEX TO SCHEDULE 2 Project Year 1 3 Total (Acres) Swamp rice 1,000 2,000 3,000 6,000 Cocoa - 250 500 750 Oil palm: (a) Nucleus estate 510 - - 510 (b) Smallholders 200 800 830 1,830 21 SCHEDULE 3 Procurement 1. (a) The goods and services (other than consultants' services) required for construction and equipment of the palm oil mill and the rice mills, vehicles, spraying machines and fertilizer shall be procured on the basis of international competition and procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972. (b) Other goods and services (other than consultants' services) shall be procured on the basis of local competitive procedures acceptable to the Association. 2. With respect to any contract estimated to cost the equivalent of $5,000 or more: (a) If bidders are required to prequalify, the Borrower shall, before qualification is invited, inform the Association in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Association 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 Association for its comments before the applicants are notified and the Borrower shall make such additions to or deletions from the said list as the Association shall reasonably request. (b) 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 procedure 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. (c) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the bidder to whom 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, together with the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in this Schedule, promptly inform the Borrower and state the reasons for such determination. 22 (d) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (e) 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 in respect of any such contract. 3. With respect to any other contract, 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 any such contract, two conformed copies of such contract, together with the analysis of bids (including a copy of the record of the public opening of the bids and a bid examination report), 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 is not consistent with the procedures set forth or referred to in this Schedule, promptly inform the Borrower and state the reasons for such determination. 23 SCHEDULE 4 Policies and Procedures for Sub-loans 1. In making the Sub-loans referred to in Section 3.02 of this Agreement, the Borrower shall follow the policies and procedures outlined below, as such policies and procedures may be amended from time to time by agreement between the Borrower and the Association. The Borrower shall make arrangements to ensure that ADA, pursuant to Section 3.05 (c) (iv) of this Agreement, will assume the Borrower's role and follow the same policies and procedures in respect to this lending program. I. Eligibility 2. Sub-loans shall be made to such farmers selected by the Project Unit who: (a) are not in default in respect to any debts owed to the Borrower or any cooperative society; (b) have sufficient suitable land for the activity for which the Sub-loan is requested; and (c) have adequate rights to use the land for at least the period required to ensure payment of principal and interest on the Sub-loan. 3. Sub-loans shall be made to eligible farmers for original planting (Development Sub-loan) as follows: (a) up to Le 148/acre for a maximum of 2 acres of cocoa to cover the cost of planting and maintenance to first harvest, including planting material, chemicals, equipment and hired labor; (b) up to Le 49/acre for a maximum of 3 acres of swamp rice to cover the cost of swamp clearance and land preparation for three years, and materials, equipment and hired labor required for planting and harvesting during the first year; and (c) up to Le 105/acre for a maximum of 10 acres of oil palm to cover the cost of planting and maintenance to first harvest, including planting material, chemicals, equipment and hired labor. 4. Sub-loans shall be made to eligible farmers for seasonal inputs (Seasonal Sub-loan) as follows: 24 (a) up to Le 25/acre for a maximum of 2 acres of cocoa beginning in year 5 after planting to cover cost of hired labor and chemicals; (b) up to Le 11/acre for a maximum of 3 acres of swamp rice beginning in year 2 after planting to cover the cost of fertilizer, seed rice, transport, tools and hired labor; and (c) up to Le 9/acre for a maximum of 10 acres of oil palm to cover the cost of hired labor. 5. No farmer shall receive a Sub-loan for more than one crop. II. Terms of Loans 6. Development Sub-loans shall be repayable in installments as follows: (a) for cocoa in eight annual installments. The first installment shall fall due not later than June 30 in the year in which the first crop shall be harvested, after disbursement of these loans shall have begun; (b) for rice in five annual installments. The first installment shall fall due not later than March 3 1 in the year after the year in which the first crop shall be harvested, after disbursement of these loans shall have begun. (c) for oil palm in nine annual installments. The first installment shall fall due not later than June 30 in the year after the year in which the first crop shall be harvested after disbursement of these loans shall have begun. 7. Seasonal Sub-loans shall fall due not later than 12 months after their disbursement. III. Interest 8. The Development Sub-loans shall bear an interest at a rate of 8% per annum on the outstanding balance, or such rate as the Borrower and the Association shall have otherwise agreed. 9. Seasonal Sub-loans shall bear interest at a rate of I0% per annum, or such rate as the Borrower and the Association shall have otherwise agreed. 25 IV. Disbursement 10. Sub-loans shall generally be disbursed in kind. Whenever it shall be necessary to disburse a portion of any Sub-loan in cash, the Borrower shall ensure that this cash is exclusively used for the procurement of goods or services for which it is lent by reimbursing borrowers for work completed or goods purchased. V. Payment of Principal and Interest 11. In order to collect payments of principal and interest from the farmers when due under the Sub-loans, the Borrower shall make arrangements satisfactory to the Bank for the necessary deductions from the farmers' produce. VI. Other Terms and Conditions of Sub-loans 12. Farmers receiving Sub-loans for rice shall mill their produce at the mills included in Part II of the Project, farmers receiving Sub-loans for cocoa shall market their produce through licensed buying agents acceptable to the Borrower, and farmers receiving Sub-loans for palm oil shall market their produce through the mill included in Part II of the Project. In the event a farmer ceased to channel produce in this manner, his Sub-loan or Sub-loans would become payable immediately. 13. In the event of persistent repayment default, the Borrower shall operate the farm until the payments under the Sub-loan have been recovered in full. 14. Rice farmers who form a group for the purpose of swamp development shall be collectively responsible for repayment of the total credit extended to members of the group. 15. Farmers shall be offered agricultural training courses. VII. Forms of Loan Agreements 16. Sub-loans shall be extended under agreements substantially . the form of Forms of Loan Agreements prepared by the Borrower which shall be satisfactory to the Association. The Borrower shall not assign, amend, abrogate or waive any such agreement or any provision thereof without the prior consent of the Association. 26 SCHEDULE 5 The Project Unit I. The Project Unit shall consist of the following full-time staff: (1) Project Manager, who shall have the overall responsibility for the direction and coordination of the Project Unit's work, and who shall report directly to the Permanent Secretary of the Ministry of Agriculture and Natural Resources; (2) Deputy Project Manager; (3) Financial Controller; (4) Credit Manager; (5) Land Planning Officer; (6) Mill Engineer; and (7) Plantation Manager. The qualifications and experience of these officials for their respective positions, as well as their terms of reference, shall be acceptable to the Association. II. The Borrower shall make available to the Project Unit, from the staff of its Ministry of Agriculture and Natural Resources, qualified staff, as and when requested by the Project Manager, including: (1) a Cocoa/Rice Officer; (2) three other Agricultural Officers; (3) fifteen Agricultural Instructors; and (4) administrative and secretarial staff as may be required for carrying out the Project Unit's responsibilities. III. The Project Unit shall be responsible, and have the necessary powers, for carrying out the Project. The Project Unit shall have its head office at Kenema; field management of cocoa and rice planting included in the Project shall be effected through three main field offices, the location of such offices to be determined by the Borrower in consultation with the Project Manager.