Turkey - Irrigation Rehabilitation And Completion Project : Credit 0281 - Credit Agreement - Conformed

* Conformed Copy CREDIT NUMBER 281 TU Development Credit Agreement (Irrigation Rehabilitation and Completion Project) BETWEEN REPUBLIC OF TURKEY AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JANUARY 25, 1972 Confbrmed Copy CREDIT NUMBER 281 TU Development Credit Agreement (Irrigation Rehabilitation and Completion Project) BETWEEN REPUBLIC OF TURKEY AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JANUARY 25, 1972 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated January 25, 1972, between REPUBLIC OF TURKEY (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMI:NT ASSOCIATION (hereinafter called the Association). ARTICLE 1 General Conditions; Definitions Section 1.01. The parties to this Agreenient accept all the proN.isions fl the General Conditions Applicable to Developinent Credit A greeients of the Association, dated Januarv 31, 1969, with the same f'orce and effect as if thev were fully set forth hcrein, subject, however, to the delctlio of Se:tions 501 and 0.02 (1h) thereof and to the renumbering of Section 6.02 (i) uio ö.02 (ih) t hereo (said General Conditions Applicable to )evelopment Credlit Agreeients of the Association, as so medified, being hereinafter called the Genera! Conditions). Section 1.02. Wherever used in this Agreement, unless thlie conhet\t otherwise requires, the several ternis defined in the General Conditions have the respective icanings therein set forth and the followim additional terio have the1 followin mueaningzs: K0 "DSV" ieans /kr/'i I/en State 1 lydraulic Werkst an agen1y of the Borrower under the responsibility of the Ministx of I.nergy and tura! Resources of the Borirower, and inciludes any successor te such agency: (h) "opraksu" means the aigency so named and includes any successor thereto. It is concerned with soil conservation and farn irrigation and is an agency of the Borrower under the responsibility of the Ministry of Village Affairs: (c) "Extension Service" means an agency of the Borrower under the responsibility of the Ministry of Agriculture of' the Borrower, and includes anv successor to such agency: (d) "ABT" means the Agricultural Bank of the Turkish Republic or any successor thereto: (e) "Project Areas" means the following three irrigation areas: 4 (i) Sifijke, on the Mediterranean Coast about 400 kilometers southeast of Ankara near the town of Silifke. The Project Area includes approximately 5,000 net hectares of irrigated land along both banks of the Goksu River served by gravity by canals diverting at the Goksu Regulator and lying above the main interceptor drainage canals, (ii) Koprucar1 on the Mediterranean Coast about 360 kilometers suuthwest of Ankara and about 40 kilometers east of the city of Antalya. The Project Area includes approximately 22,000 net hectures of' irrigable lands that can be served by gravity and pumping from the main canals heading at the existing Koprucay Diversion Dam and (iii) Tokat, on the Anatolia Plateau about 350 kilometers northeast of Ankara and some 100 kilometers from the Black Sea near the tomwn of Tokat. 4 he Project Area consists of three plains - the OmAla, Kazova and Turhal - collectively known as the Tokat plains. The Project Area includes approximately 23,000 net hectares lying along both sides of the Yesilirmak River and consists of those lands that can be served by gravity by canals heading at the existing diversion dams of Tokinakkaya for the Omala Plain and Gomenek for the Kazova and Turhal plains. ARTICLE 11 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 amolIUnt in various currencies equivalent to eighteen million dollars ($18,000,000). 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 Sceikduk shall b mended from time to time, for expenditures made (or, it the Association shall so ugree, to be made) in respect of the reasonable cost t.f youds and serNices required for the Project described in Schedule 2 to this Agrei mnit and to be finmnced under the Development Credit Agreement: provided, however that, except as the Association shall otherwise agree, no withdrawal shall be mad oi account of expenditures in the territories of any country which is n11 a ot lbr of 111hank (other than Switzerland) or for goods produced in, f-r serves supplied from. such territories. 5 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 on the basis of international competition under procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in AugUst 1969, as revised in May 1971, and in accordance with, and subject to, the provisions set forth in Schedule 3 to this Agreement. Section 2.04. Ti,.- Closing Date shall be June 30, 1977 or such other date as shall be 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 I"T) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06 Service charges shall be payable scm i-annually on April I and October I in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Accc .nt in semi-annual installments payable on each . April I and October 1 commencing April 1, 1982 and ending October 1, 202 1, each installment to and including the installment payable on October 1, 1991 to be one-half of one per cent (1/2 of I',) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2') of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project through DSI, Topraksu, the Extension Service and ABT with due diligence and efficiency and in conformity with sound agricultural, engineering, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) If, in the opinion of the Borrower and the Association, it is necessary for DSI to employ consultants to assist in the preparation of plans and specifications for, bidding documents in respect of, or the supervision of the 6 construction of the Proje,-t, the Borrower shall cause DSI to employ qualified and experienced full-time consultants acceptable to the Association upon terms and conditions satisfactory to the Association. (b) For the purpose of assisting Topraksu and the Extension Service in carrying out the Project, the Borrower shall by July 1, 1972 employ a firm of agricultural consultants acceptable to the Association, upon terms and conditions satisfactory to the Association, which said firm will be required to station an engineering consultant and an extension specialist at both Koprucay and Tokat, to assist Topraksu in organizing its work and to assist the Extension Service in organizing and coordinating its operations. Section 3.03. Except as the Association shall otherwise agree, in carrying out the Project, the Borrower shall cause DSI and Topraksu to employ contractors acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.04. (a) The Borrower shall cause DSI, Topraksu and the Extension Service to insure, or to make adequate provision for the insurance of, the goods to be financed out of the proceeds of the Credit against hazards incident to the ac,,uisition, 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 DSI and Topraksu 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 3.05. (a) The Borrower shall cause DSI and Topraksu to furnish to the Association, promptly upon their preparation, the plans, specifications, 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) The Borrower shall or shall cause DSI, Topraksu and the Extension Service to: (i) maintain records adequate 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 Associations' representatives to visit the Project Areas an. examine 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 goods and services financed out of such proceeds. 7 Section 3.06. 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 the construction (and operation) of the facilities included in the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause DSI and Topraksu to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices their operations and financial condition in respect of the Project. (b) The Borrower shall cause DSI and Topraksu to: (i) have their accounts and financial statements in respect of the Project, namely their 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 in English of such provisional financial statements for such year as so audited and (B) the report of such audit by said auditors in English, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning such provisional accounts and financial statements of DSI and Topraksu and the audits thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall (i) cause DSI, under arrangements satisfactory to the Association, to inspect the Almus Dam and its appurtenant structures from time to time, to determine whether there are any deficiencies or potential deficiencies in the condition of such structures or in the quality and adequacy of their maintenance or operation which may endanger their safety and furnish a report in English every five years to the Association, of such scope and in such detail as the Association shall have reasonably requested, the first such report to be furnished by not later than December 31, 1976 and (ii) take any remedial action that is required to correct such deficiencies or potential deficiencies. Section 4.03. Except as the Association shall otherwise agree, the Borrower shall ensure that the flow of water in the Yesilirmak, Goksu and Koprucay rivers shall not be depleted below the minimum that is required for the Project as a result of other development works. I 8 Section 4.04. The Borrower shall cause DSI, Topraksu, the Extension Service and ABT to have such powers, facilities and resources as are necessary for the diligent and efficient carrying out and operation of the Project. Any import, exchange or other licenses required for the importation of goods or the supply of services for the Project shall be issued by the Borrower without delay. Section 4.05. (a) For the purpose of coordinating the work undertaken by DSI, Topraksu, the Extension Service and ABT in respect of the Project, the Borrower shall establish, within three months of the date on which the Development Credit Agreement becomes effective, a separate Coordinating Committee for each of the Project Areas, whose membership, terms of reference and operating procedures are mutually acceptable to the Borrower and the Association. (b) For the purpose of carrying out the Project, the Borrower shall: (i) employ a qualified and experienced full-time local coordinator for extension in each of the Project Areas to coordinate all extension services in the Project Areas and be responsible for the selection and training of extension service foremen, who will be required to follow a program of extension practices mutually acceptable to the Borrower and the Association for a period of not less than ten years from the date on which the Development Credit Agreement becomes effective; and (ii) ensure that sufficient funds are made available to the Extension Service for the operation and maintenance of its vehicles and equipment. Section 4.06. The Borrower shall at all times provide, or cause ABT to provide, appropriate short- and medium-term credit facilities in adequate amounts to farmers in the Project Areas. Section 4.07. The Borrower shall make arrangements, or cause arrangements to be made, for the setting of charges levied on farmers in the Project Areas at levels which will provide revenues at least sufficient to cover all operating and maintenance costs and, in addition, provide for the recovery, on reasonable terms and conditions, of as much as practicable of the moneys invested in the Project (taking into account the relationship of the investment recovery rate to farmers' incentives and capacity to pay), together with reasonable interest thereon. Such arrangements shall be introduced as soon as possible and will be subject to periodic review at intervals not exceeding five years. 9 Section 4.08. The Borrower shall cause the works and facilities included in the Project to be operated and maintained, and to be renewed from time to time as necessary, in accordance with sound agricultural, engineering, economic and financial policies and practices and shall take such action as shall be reasonably required to ensure the economic use of the water made available by such works for agricultural development. Section 4.09. The Borrower shall take all such action as shall be necessary to provide adequate farm-to-market roads within the Project Areas. ARTICLE V Consultation and Information 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, resources and expenditures, in respect of the Project of DSI, Topraksu, the Extension Service, ABT and of any other departments or agencies of the Borrower responsible for the carrying out of any part of the Project, 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, resources and expenditures, in respect of the Project of DSI, Topraksu, the Extension Service, ABT and of any other departments or agencies of the Borrower responsible for carrying out any part of the Project. (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 10 thereof or 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 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. Secticn 6.03. The payment of the principal of, and service charges on, Lhe 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 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. ARTICLE VIII Termination Section 8.01. The date April 26, 1972, is hereby specified for the purposes of Section 10.04 of the General Conditions. 11 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 Boriower: Maliye Bakanligi Hazine Genel Mudurlugu ve Milletlerarasi Iktisadi Isbirligi Teskilati Genel Sekreterligi Ankara, Turkey Cable address: Maliye Hazine Ankara 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. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 12 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. REPUBLIC OF TURKEY By /s / Ahmet Tufan Gul Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. Burke Knapp Vice President 13 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 eligible expenditures so to be financed in each category: Amount of the Credit Allocated (Expressed in % of Expenditures Category Dollar Equivalent) to be Financed I. Irrigation and 9,900,000 46% of total expen- drainage works ditures for Part A of the Project 1I. Equipment, materials 6,100,000 and vehicles for Part B of the Project: (a) Produced within 100% of local ex- the territories penditures of the Borrower (b) Produced outside 100% of foreign the territories expenditures of the Borrower III. Consultants (Part C 400,000 100% of foreign of the Project) expenditures IV. Training (Part D of 100,000 100% of foreign the Project) expenditures V. Unallocated, 1,500,000 TOTAL 18,000,000 14 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; (b) the term "local expenditures" means expenditures in the currency of the Borrower for goods (excluding inland freight) produced in, or services supplied from, the territories of the Borrower; and (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 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; and (b) 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 1 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 15 (c) if the Association shall have reasonably determined that the procurement of any item in any Cateogry 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 under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 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 I 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 percentages then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 16 SCHEDULE 2 Description of the Project The Project is the rehabilitation and completion of irrigation, drainage and on-farm development in the Project Areas. The Project includes: Part A: Irrigation and Drainage (1) Silifke (a) The rehabilitation of existing irrigation and drainage systems and of existing in service roads; (b) The construction of about 52 kilometers of drainage canals: (c) Land-leveling and construction of an on-farm surface drainage system to serve about 3,300 hectares and the installation of tile drains on about 2,400 hectares. (2) Koprucav (a) The construction of a main drainage canal and drainage pump station to serve an area presently irrigated by gravity; (b) The construction of a gravity irrigation distribution system and drainage system to serve about 4,900 hectares- (c) The construction of pumping irrigation systems and drainage systems to serve about 5,800 hectares; (d) The construction of about 8 pumping plants and their corresponding irrigation distribution system and drainage systems on about 2,100 hectares; (e) Land-leveling and construction of an on-farm surface drainage system to serve about 18,000 hectares; (f) Installation of tile drains on about 6,900 hectares; (g) The improvement of existing in service roads and the application of soil amendments on about 800 hectares; 17 (h) The completion of the DSI operating headquarters at Serik. (3) Tokat (a) The rehabilitation of about 160 kilometers of existing irrigation canals and of about 190 kilometers of existing drainage canals; (b) The construction of about 90 kilometers of new irrigation canals and about 110 kilometers of new drainage canals; (c) The construction of about 3 kilometers of levees at Lake Kaz for flood control and drainage; (d) The improvement of about 20 kilometers of channel in the Yesilirrn., river; () Land-leveling and the construction of an on-farm surface drainage system and the improvement of existing in service roads on about 15,000 hectares; (f) The installation of tile drains to serve about 3,900 hectares: (g) The application of soil amendments on about 2,100 hectares. Part B. Equipment, Materials and Vehicles The purchase of equipment, vehicles and materials required for Part A of the Project and vehicles for the Extension Service. Part C. Consultants Consultants' services for Topraksu and the Extension Service and, if necessary, DSI. Part D. Training The training outside of the Republic of Turkey in irrigation, drainage and land-leveling works and in agricultural extension services of personnel of the Borrower in connection with Part A of the Project. The Project is expected to be completed by December 31, 1976. 18 SCHEDULE 3 Procurement 1. With respect to any contract for Part A of the Project estimated to cost the equivalent of $50,000 or more, or to any contract for Part B of the Project estimated to cost the equivalent of $10,000 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 or deletions from the said list as the Association shall reasonablN 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 specilications 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 rAquest. An furthr modification to the hidding 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 Section 2.03 of this Agreement, promptly inform the Borrower and state the reasons for such determination. (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. 19 2. 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, 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 Section 2.03 of this Agreement, promptly inform the Borrower and state the reasons for such determination. 3. For the purpose of evaluating bids for equipment, materials and vehicles for Part B of the Project, bid prices shall be determined and compared in accordance with the following rules: (a) the term "Local Bid" means a bid submitted by a manufacturer established in the territories of the Borrower for goods manufactured or processed to a substantial extent in such territories; any other bid shall be deemed to be a "Foreign Bid"; (b) the bid price under a Local Bid shall be the sum of the following amounts: (i) the ex-factory price of such goods; and (ii) inland freight, insurance and other costs of delivery of such goods to the place of their use or installation: (c) for the purpose of comparing any Foreign Bid with any Local Bid, the bid price under a Foreign Bid shall be the sum of the following amounts: (i) the c.i.f. price of such goods; (ii) the amount of any taxes on the importation of such goods into the territories of the Borrower which generally apply to non-exempt importers, or 15% of the amount specified in (i) above, whichever shall be the lower; and (iii) inland freight, insurance and other costs of delivery of such goods to the place of their use or installation.