Jordan - Northeast Ghor Irrigation And Rural Development Project : Credit 0498 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 498 JO Development Credit Agreement (Northeast Ghor Irrigation and Rural Development Project) BETWEEN THE HASHEMITE KINGDOM OF JORDAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 25, 1974 CONFORMED COPY CREDIT NUMBER 498 JO Development Credit Agreement (Northeast Ghor Irrigation and Rural Development Project) BETWEEN THE HASHEMITE KINGDOM OF JORDAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 25, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 25, 1974, between the HASHEMITE KINGDOM OF JORDAN (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) The Project will be carried out by the Jordan Valley Commission, (hereinafter called JVC) a public entity of the Borrower as established by the Jordan Valley Commission Law of 1973, with the Borrower's assistance and, as part of such assistance, the Borrower will make available to JVC the proceeds of the Credit as hereinafter provided; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and JVC; 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 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: 4 (a) "Project Agreement" means the agreement between the Association and JVC of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (b) "Guidelines for Procurement" means the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972, as revised in October 1972; (c) "ACC" means the Agricultural Credit Corporation of the Borrower established under Law No. 12 of 1963 of the Borrower as such law may be amended from time to time; and (d) "AMO" means the Agricultural Marketing Organization of the Borrower established under Law No. 64 of October 2, 1971 as amended by Law No. 12 of April 1, 1974 as such law may be further amended from time to time. ARTICLE IT 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 seven million, five hundred thousand dollars ($7,500,000). 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 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 described in Schedule 2 to this Agreement 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 territories 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 required for the Project and to be financed out of the proceeds of the Credit shall be procured pursuant to the provisions set forth or referred to in Section 2.04 of the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1979 or such other date as shall be agreed between the Borrower and the Association. 5 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 Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 15 and September 15 commencing September 15, 1984 and ending March 15, 2024, each installment to and including the installment payable on March 15, 1994 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. 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. Section 2.09. The President of JVC is designated as representative of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause JVC 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 JVC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the proceeds of the Credit available to JVC and shall cause JVC to enter into a sub-loan agreement with ACC acceptable to the Association not later than October 31, 1974, for on-lending of funds for carrying out Part D of the Project at an average interest rate of not less than 4-1/4% per annum and to mature in 15 years. Section 3.02. The Borrower shall take, or cause to be taken, all necessary action for the acquisition of all lands, water rights and other rights in respect 6 of land as shall be required for the construction and operation of works under Parts A and B of the Project, prior to the award of construction contracts. Section 3.03. The Borrower shall cause its Health Department to ensure that it is at all times adequately equipped and staffed to take any necessary preventive measures against endemic diseases such as malaria and bilharzia. To that end the Borrower shall cause its Health Department to monitor the area served by the Project for any recurrence of malaria and to promptly take any necessary remedial measures. Section 3.04. The Borrower shall, upon the completion of the Project, provide adequate operational and supervisory staff to its Education and Health Departments to be responsible for the efficient operation of the education and health facilities provided under the Project. Section 3.05. The Borrower shall provide adequate staff, equipment and facilities for extension and research to its Department of Research and Extension. Section 3.06. The Borrower shall: (a) impose and cause its Natural Resources Authority to collect water charges of not less than 6 fils/m3 in the first year of irrigation for the sprinkler-irrigated areas of the Project and not later than the third year for the gravity-irrigated areas of the Project; (b) review said water charges periodically to ensure that (i) all operational and maintenance costs are collected annually from the beneficiaries of the irrigation projects; and (ii) the investment costs with a 5% interest shall be recovered within forty years from the date of the completion of the Project. Section 3.07. The Borrower shall not later than September 30, 1974, or such other date as the Borrower and Association shall agree upon, transfer the operational responsibility of grading and packing stations located at North Shuneh and Wadi Yabis to AMO. Section 3.08. The Borrower shall cause AMO to: (a) levy a fee of not less than 1% of the value of the produce sold in the assembly markets and of not less than 5% of the value of produce handled in the packing and grading stations, commencing with the first year of project operation; and (b) after consulting with the Association, transfer all the packing and grading stations as well as assembly markets under the Project to the Jordan Valley Farmers' Association as soon as said Farmers' Association shall have completed training its staff. 7 Section 3.09. The Borrower shall employ specialists in grading, marketing, and accounting to assist AMO and to train the Farmers' Association in the said marketing operations. Section 3.10. The Borrower shall cause ACC to maintain separate accounts for all its operations relating to the Project. ARTICLE IV Consultation, Information and Inspection Section 4.01. 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 performance by JVC of its obligations under the Project Agreement, the administration, operations and financial condition of JVC and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out 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 4.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial condition of JVC and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. To that end the Borrower shall consult with the Association prior to making any changes in the membership or terms of reference of the Liaison and Advisory Committee established to assist JVC in implementing 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 8 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 or the performance by JVC of its obligations under the Project Agreement. Section 4.03. 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 V Taxes and Restrictions Section 5.01. 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 5.02. 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 5.03. The payment of the principal of, and service charges 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 VI Remedies of the Association Section 6.01. If any event specified in Section 7.01 of the General Conditions or in Section 6.03 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. Section 6.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: 9 (a) JVC shall have failed to carry out any of its obligations under the Project Agreement; and (b) The Jordan Valley Commission Law of 1973 shall have been amended so as to impair the ability of the Borrower or JVC to carry out its obligation under the Development Credit Agreement or the Project Agreement. Section 6.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in Section 6.02 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; and (b) the event specified in Section 6.02(b) of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following 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 execution and delivery of the Project Agreement on behalf of JVC have been duly authorized or ratified by all necessary corporate and governmental action: (b) The enactment of a law establishing the Jordan Valley Farmers' Association and the election of its Executive Board. Section 7.02. The following are specified as additional matters, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely that the Project Agreement has been duly authorized or ratified by, and execute(" and delivered on behalf of, JVC, and constitutes a valid and binding obligation of JVC in accordance with its terms; 10 Section 7.03. The date October 28, 1974 is hereby specified for the purposes of Section 10.04 of the General Conditions. ARTICLE VIII Representative of the Borrower; Addresses Section 8.01. The President of the Jordan Valley Commission of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Jordan Valley Commission P.O. Box 1970 Amman, Jordan Cable address: JOVACO Amman 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. 11 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. THE HASHEMITE KINGDOM OF JORDAN By /s/ Abdullah Salah Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ M.P. Benjenk Regional Vice President Europe, Middle East and North Africa 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 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 %o of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Civil Works 3,600,000 50% of total expenditures II. Equipment and 760,000 Materials (a) imported 100% of foreign expenditures (b) locally 80% of total ex- procured penditures III. Consultants' 470,000 100% of foreign Services expenditures IV. Agricultural 760,000 38% of total Credit expenditures V. Unallocated 1,910,000 TOTAL 7,500,000 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 expenditures and of expenditures for goods produced in, or services supplied from, the territories of the Borrower. 13 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, except that withdrawals may be made in respect of Category III on account of expenditures incurred after March 1, 1974 in an aggregate amount not exceeding the equivalent of $175,000; 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 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 I 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 (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 2.04 of the Project 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. 14 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, 11(b) or IV 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. 15 SCHEDULE 2 Description of the Project The Project is part of the Borrower's program for development of irrigation and rural development and consists of the following components: Part A: Agricultural Development (to be carried out over an area of approximately 7,700 ha) 1. construction of 2 diversion weirs and siltation reservoirs on Wadi Arab and Wadi Jurum; 2. construction of primary and secondary pipelines, and a distribution network to serve a total of 2,760 ha net; 3. construction of about 30 km of farm roads; 4. land leveling of about 3,000 ha; 5. tile drainage of about 520 ha; 6. the rehabilitation works on East Ghor Canal; 7. construction of two assembly markets; and 8. provision of vehicles, equipment and materials. Part B: Rural Development 1. construction of treated water supply systems for about ten villages; 2. construction of three health centers and extension of the existing center at North Shuneh; 3. construction of about 150 schoolrooms; 4. construction of a vocational training center; 5. improvement of about 60 km of roads; 16 6. construction of about ten community development centers; and 7. the provision of vehicles, furniture and equipment. Part C: Consultants' Services for the Project works and specialists for marketing. Part D: Credit The provision of funds for medium- and long-term credit programs by Agricultural Credit Corporation in the Project Area for on-farm development, farm machinery and equipment and for short-term credit for incremental working capital for inputs. The Project is expected to be completed by December 1978.