Mali - Integrated Rural Development Project : Credit 0491 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 491 MLI Development Credit Agreement (Integrated Rural Development Project) BETWEEN REPUBLIC OF MALI AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 1, 1974 CONFORMED COPY CREDIT NUMBER 491 MLI Development Credit Agreement (Integrated Rural Development Project) BETWEEN REPUBLIC OF MALI AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 1, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 1, 1974, between REPUBLIC OF MALI (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) "OA" means the Borrower's "Operation Arachide" an Op&ration de Developpement Rural established and operating within the Borrower's Ministry of Production pursuant to the Ordonnance No. 22/CMLN of March 24, 1972, Decree No. I 16-PG-RM of September 16, 1972, and Decree No. 33/PG-RM of March 25, 1972, including any successor thereto; (b) "SCAER" means "Societe de Crddit Agricole et d'Equipement Rural" a Socidtd d'Etat established and operating under the laws of the Borrower pursuant to Ordonance No. 16/CMLN of May 10, 1971 and Decree No. 62/PG of May 28, 1971, including any successor thereto; (c) "OSRP" means Office de Surveillance et de Rdgulation des Prix, an Etablissement Public established and operating Linder the laws of the Borrower pursuant to Law No. 68-42 DL-RM of June 20, 1968, including any successor thereto; (d) "MF" means Mali Francs in the currency of the Borrower; 4 (e) "Reciprocal Service Agreement" means the agreement to be entered into between OA and SCAER as provided for under Section 3.02 of this Agreement; (f) The term "Bareme Arachide" means the schedule of estimated costs per ton to be incurred from the groundnut producer level up to the delivery of such products CIF Europe for the various transactions and operations in respect to groundnut products (including producer price, collecting costs, sale, purchase, treatment, handling, bagging, shipment, payment of taxes and levies and other miscellaneous costs with respect to such products) as this schedule is determined annually by the Groundnut Legislation; (g) The term "Groundnut Legislation" means the Borrower's decree issued each year by the Borrower for purposes of regulating the marketing and prices of groundnut products for each such year; (h) The term "Producer Price" means the price to be paid, in respect of groundnut products, to the groundnut producer, as this price is determined annually by the Groundnut Legislation; and (i) The term "Special Account" means the account referred to under Section 3.03 of this Agreement. 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 eight million dollars ($8,000,000). Section 2,02. (a) 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 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. (b) Without limitation on the provisions of paragraph (a) of this Section the Association shall, promptly after the Effective Date, withdraw from the Credit 5 Account and deposit in the Special Account an initial amount in the currency of the Borrower not exceeding $200,000 equivalent and shall thereafter, at the request of the Borrower, further withdraw from the Credit Account and deposit in the Special Account such amounts as shall be required to reimburse the Borrower for payments made out of the Special Account for expenditures for the Project eligible for financing under the Development Credit Agreement but only to the extent that the amount of any such deposit, together with any amount on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of $200,000. (c) Notwithstanding the foregoing no further deposit shall be made to the Special Account and no other withdrawal shall be made from the Credit Account when the total amount theretofore withdrawn from the Credit Account pursuant to paragraphs (a) and (b) of this Section, together with the amount of any special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions shall have reached in the aggregate the equivalent of $7,800,000. (d) The Borrower shall be entitled to withdraw from the Credit Account pursuant to the provisions of paragraph (a) of this Section the unwithdrawn amount of the Credit in excess of $7,800,000, if and only to the extent that the Association shall have been satisfied that all payments were made by the Borrower out of the Special Account for expenditures eligible for withdrawal from the Credit Account. (e) If the Association shall have determined that payments have been made by the Borrower out of the Special Account for expenditures not eligible for withdrawal from the Credit Account, the Borrower shall, upon notice from the Association, deposit in the Special Account an amount equal to the amount of such payments. Section 2.03. Except as the Association shall otherwise agree, the goods and services (other than services of consultants and groundnut seeds to be produced by OA) 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 April 1972, as revised in October 1972, and in accordance with, and subject to, the provisions set forth in Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be September 30, 1978 or such other date as shall be agreed between the Borrower and the Association. 6 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 January I and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each January I and July 1 commencing July 1, 1984 and ending January 1, 2024, each installment to and including the installment payable on January 1, 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 French Republic 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 with the assistance of OA, SCAER and of the Borrower's departments specified in the description thereof in Schedule 2 to this Agreement, with due diligence and efficiency and in conformity with appropriate sound administrative, agricultural, engineering and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. The Borrower shall cause OA and SCAER, to enter into a reciprocal service agreement under terms and conditions satisfactory to the Association for purposes of defining the responsibilities of OA and SCAER in the purchase and distribution of farm inputs and equipment, tht. provision of credit and the management of stocks. Section 3.03. The Borrower shall, for purposes of execution of the Project, open a special account on terms and conditions satisfactory to the Association in a bank in the territory of the Borrower acceptable to the Association. Section 3.04. No later than six (6) months from the date of this Agreement, (or such other date as the Association may agree) the Borrower shall: (i) cause OSRP to assume under arrangements satisfactory to the Association all OA's obligations incurred by OA towards SCAER 7 in respect of any transaction related to the purchase, resale and distribution of seed products; (ii) entrust OA with exclusive responsibility in the Project area for procurement of, supply and distribution of, and extension of Credit for, groundnut seed products; and (iii) cause OA to establish a revolving fund for purposes of financing OA's credit extension operations for groundnut seed products. Section 3.05. In order to assist the Borrower in carrying out Parts A, C and D of the Project, the Borrower shall employ consultants acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.06. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the 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 ;uch goods. (b) Exrept as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.07. (a) The Borrower shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents, work 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: (i) shall 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) shall enable the Association's accredited representatives to examine the Project, the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall 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. Section 3.08. 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 8 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 maintain or cause to be maintained, records, including separate accounts, adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower, including OA, OSRP and SCAER, responsible for carrying out the Project or any part thereof. (b) Without limitation or restriction upon the provisions of the foregoing paragraph the Borrower shall cause OSRP to maintain separate accounts, adequate to reflect in accordance with consistently maintained sound accounting practices, its operations, resources and expenditures in respect of its groundnut operations. (c) The Borrower shall cause: (i) OA to have its accounts and financial statements (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) OSRP to have its accounts (including the accounts referred to under the foregoing paragraph (b)) and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by the Borrower's audit services; (iii) OA and OSRP to 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 their respective 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 (iv) furnish to the Association such other information concerning their respective accounts and financial statements of OA and OSRP and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause OA 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 appropriate practice. 9 Section 4.03. (a) The Borrower shall afford the Association a reasonable opportunity to exchange views with the Borrower on any new policies or measures which may affect prices, rebates or any other subsidy on farm inputs and equipment, including seeds. (b) For the purpose of encouraging cash sales of farm inputs and equipment, including seeds, in the Project area, the Borrower shall, no later than six (6) months from the date of this Agreement, (or such other date as the Association may agree) take all action as may be necessary to ensure that in the Project area discounts are granted to purchasers of any such inputs, including seeds, sold for cash, in an amount to be determined with due regard to the service charges applicable to the purchase on credit of any such products. Section 4.04. (a) The Borrower shall afford the Association a reasonable opportunity to exchange views with the Borrower: (i) each year on its proposed Groundnut Legislation, and (ii) on its proposed new Producer Price, before enacting any changes with respect to the Producer Price. (b) The Borrower shall take all measures necessary: (i) to enable OSRP to accumulate in the price stabilization fund maintained within OSRP, reserves sufficient to enable OSRP to stabilize prices paid, in respect of groundnut products, to producers of such products; and (ii) to cause OSRP to submit annually to the Association for approval a proposed schedule of estimated payments to be made for that year in respect of groundnut products, to and from such price stabilization fund. Section 4.05 The Borrower shall take, or cause to be taken, all action as may be necessary: (i) to appoint, no later than six months from the date of this Agreement (or such other date as the Association may agree), to OA's Board of Directors, the manager of OSRP; and (ii) to invite, as and when needed, for the purpose of ensuring coordination of the execution of the Project, representatives of the Borrower's departments responsible for carrying out any Part of the Project, to attend the meetings of OA's Board of Directors; Section 4.06. The Borrower shall take all action necessary to cause: (i) OA to employ and maintain a manager, a manager of technical operations and chief accountant, all with qualifications and experience and under terms and conditions 10 satisfactory to the Association; and (ii) its Direction Nationale des Travaux Publics within its Ministry of Public Works to second, to OA a road inspector and not less than four trained road gang leaders, all experienced and qualified. Section 4.07. (a) The Borrower shall take all action as may be necessary to fix, no later than November 30, 1974 (or such other date as the Association may agree) the producer price applicable, in the Project area, on millet and sorghum products at not less than MF25 per kilogram. (b) Without limitation or restriction upon the provisions of paragraph (a) of this Section, the Borrower shall: (i) no later than August 15, 1974 (or such other date as the Association may agree) carry out the study referred to under Part D(b) of the Project; (ii) no later than April 30, 1975 (or such other date as the Association may agree) exchange views with the Association on the recommendations of such study; and (iii) no later than May 31, 1975 (or such other date as the Association may agree) establish on the basis of said recommendations a plan of action to be satisfactory to the Association, and thereafter implement such plan of action. 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 OA, OSRP and SCAER, respectively, 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 11 (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 administration, operations and financial condition, resources and expenditures of OA, OSRP, SCAER, respectively, and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out Lny 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 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 thcreo', 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 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 effec in its territories. 12 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. Section 7.02-. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified, namely, that the Borrower's (i) Ordonnance No. 22/CMLN of March 24, 1972, (ii) Ordonance No. 16 CMLN of May 10, 1971, (iii) Decree No. 116-PG-RM of September 16, 1972, (iv) Decree No. 33/PG-RM of March 25, 1972, (v) Decree No. 62-PG of May 28, 1971, or (vi) Law No. 68-42/DL-RM of June 20, 1968 shall have been amended, suspended, abrogated, repealed or waived in such a way as materially and adversely to affect the ability of OA, SCAER or OSRP, respectively, to assist the Borrower in carrying out the covenants, agreements and obligations set forth in this Agreement. Section 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified, namely, that any event specified in Section 7.02 of this Agreement shall occur. ARTICLE VIII Effective Date; Termination Section 8.01. 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) OA and SCAER have executed and delivered the Reciprocal Service Agreement and such agreement has been duly authorized and ratified by all necessary corporate and governmental action (including without limitation, authorization and approval by the Borrower's Minister of Finance and Minister of Production); and (b) The Borrower has opened the Special Account. 13 Section 8.02. The following is specified as an additional matter, 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 Reciprocal Service Agreement has been duly authorized and approved by the Borrower's Minister of Finance and Minister of Production and has been duly authorized or ratified by, and executed and delivered on behalf of, OA and SCAER, and constitutes a valid and binding obligation of OA and SCAER in accordance with its terms. Section 8.03. The date September 30, 1974 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.04. The obligations of the Borrower under Article 4 of this agreement and the provisions of Section 7.02 of this Agreement and those 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 7 years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 9.0 1. The Minister responsible for 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: Ministry of Finance Bamako, Koulouba Republic of Mali Cable address: MINIFINANCES Bamako 14 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 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 MALI By /s/ H.E. Seydou Traor6 Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / E. Peter Wright Director, Country Programs Department Western Africa Regional Office 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. Vehicles and 795,000 100% of foreign graders required expenditures or for the purposes 66% of total of the Project expenditures II. Incremental cost 208,000 18% of total of groundnut im- expenditures proved seeds III. Construction of 1,352,600 80% of total buildings and expenditures Project facili- ties IV. Expatriate staff, 1,721,000 85% of total salaries and expenditures consultants' services V. Consultants' 90,000 100% of foreign services under expenditures Part D(b) of the Project and account- ing services VI. Incremental 807,000 75% of total local staff expenditures salaries VII. Incremental 1,637,400 80% of total operating costs expenditures of Project VIII. Unallocated 1,389,000 TOTAL 8,000,000 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; (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; (c) the term "incremental cost of groundnut improved seeds" means for any kind of groundnut improved seeds such amount as the Association shall reasonably determine to be needed by OA from time to time to finance purchases of that kind of groundnut improved seeds in quantities sufficient to meet Project demands, over and above the amounts already available to OA for that purpose; (d) the term "incremental local staff salaries" means such amount as the Association shall reasonably determine to be needed by the Borrower to meet expenditures made (or, if the Association shall so agree, to be made) for local staff salaries required to meet Project demands, over and above the amounts already available to the Borrower for that purpose; and (e) the term "incremental operating costs of the Project" means such amount as the Association shall reasonably determine to be needed by the Borrower to meet operating expenditures made (or, if the Association shall so agree, to be made) for the Project, over and above the amounts already available to the Borrower for that purpose. 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) 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; and (c) any expenditures in respect of any Category of the table set forth in paragraph 1 of this Schedule, unless the Borrower's request for authorization 17 to make withdrawals from the Credit Account shall be supported by contract, shipping and other appropriate documents satisfactory to the Association, provided that, in case of withdrawals to be made from the Credit Account under Categories II, VI and VII of the table set forth in paragraph I of this Schedule, requests for authorizations to make withdrawals from the Credit Account, on account of expenditures in respect of any such Category shall be supported by statements certified by OA that such amounts to be withdrawn from the Credit Account have been paid (or, if the Association shall so agree, shall be required to meet payments to be made) in connection with eligible expenditures under said Category. 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 2.03 of the Development Credit 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 Categories I, II, III, IV or VI 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 is the second phase (March 1973 - March 1978) of the Borrower's "Operation Arachide" and under this second phase, OA's activities will be: (i) intensified in the area it covers at present in the administrative units of Kouliboro, Bamamba, Bamako, Kolokami, Nara, Kita, Kayes, Bafoulabd, Kenieba; (ii) extended to new areas in the Administrative units of Segou, Niono, Macina, San Tominian and the eastern part of Kenieba; and (iii) diversified to promote in addition to groundnuts, all principal farming activities, especially the production of basic cereals, and livestock. The Project consists of the following parts: Part A: Staffing, equipping and operating OA for the administration of agricultural extension, credit and marketing services in the project area; construction and furnishing of housing, office, storage, garage and workshop facilities; and provision of technical assistance for Project management. Part B: Rural Track Improvement Program Improvement and spot repair of about 1500 km of track located in the Western and Central Sectors of the Project Area to be carried out by OA's Services des Travaux Routiers. Part C: Functional Literacy Program Studv and evaluation of past and ongoing functional literacy programs and establishing, constructing, staffing and equipping of about 500 functional literacy program centers during an initial 3 year stage and of about 200 additional functional literacy programs, the establishment of which is to be contingent upon the results of the study mentioned above, all to be carried out in consultation with OA by the Directorate of Functional Literacy within the Borrower's Ministry of Education. 19 Part D: Research Program and evaluation (a) Carrying out by the Directorate of Agricultural Research of the Institut d'Economie Rurale within the Borrower's Ministry of Production of a research program consisting of: (i) applied studies on diversification of agricultural production in the Project area by the introduction of crops such as cotton, maize, cowpeas and fodder crops; (ii) continuation of work on improved groundnut varieties and pesticides and fertilizers to be applied to groundnut farming; and (iii) carrying out of soil surveys; (b) study on marketing of, and on producer prices applicable to, millet and sorghum products. (c) Carrying out by an autonomous evaluation unit attached to, and in coordination with, the Institut d'Economie Rurale within the Borrower's Ministry of Production, of an evaluation of the effects of the Project on the population in the Project area and on the economy of the Borrower. Part E: Improvements of Medical Facilities Progran! Provision of additional staff, vehicles, equipment, medicines and construction and equipping of dispensaries in the Project Area to improve, under the supervision of OA and the Directorate of Medical Services within the Borrower's Ministry of Public Health, the activities and quality of existing health services in the remotest parts of the Project Area. Part F: Improvement of Veterinary Services Program Strengthening of existing veterinary services through p;ovision of additional staff, dips, vehicles, equipment, veterinary medicine, and carrying out of veterinary programs to be established jointly by OA and the Services de l'Elevage et de la Sante Animale within the Borrower's Ministry of Production. The Project is expected to be completed by March 31, 1978. 20 SCHEDULE 3 Procurement A. Contracts Governed by Guidelines 1. With respect to any contract for vehicles and graders, estimated to cost the equivalent of US$50,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or 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. (b) 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. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. 2. With respect to any other contract for vehicles and graders, 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, 21 if it determines that the award of the contract is not consistent with the procedures set forth in Section 2.03 of this Agreement, promptly inform the Borrower and state the reasons for such determination. B. Supplemental Rules on Bid Evaluation and Comparison for goods included in Category I of the table set out in paragraph 1 of Schedule 1 to the Development Credit Agreement 1. For the purpose of evaluation and comparison of bids, customs duties and other import taxes on imported goods, and sales and similar taxes on locally supplied goods, shall be excluded, except to the extent hereinafter provided. Bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for locally manufactured goods. The cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be taken into account in the evaluation of bids in accordance with paragraph 4.7 of the Guidelines for Procurement. 2. For goods included in Category I of the table set forth in paragraph 1 of Schedule 1 to the Development Credit Agreement, the Borrower may grant a margin of preference to goods manufactured in Mali in accordance with, and subject to, the following provisions: (a) After evaluation, responsive bids will be classified in one of the following groups: (1) Group A: bids offering goods manufactured in Mali if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Mali equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: bids offering goods manufactured in Mali, other than bids classified in Group A. (3) Group C: bids offering any other goods. (b) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes in goods to be imported and any sales or similar taxes on goods to be supplied locally, to determine 22 the lowest evaluated bid of each group. The lowest evaluated bids of each group shall then be compared with each other and if, as a result of this comparison, a bid from Group A or Group B is the lowest, it shall be selected for purposes of award. C. Preferences for Domestic Civil Works Contractors 1. With respect to any co. tract for civil works included under Category III of the table set forth in Schedule I to the Development Credit Agreement, the Borrower may grant a margin of preference to domestic contractors, as determined by the Borrower, in accordance with, and subject to, the following provisions: (a) Contractors shall be 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. Applicants applying for preference shall be asked to provide such information, including details of ownership, as the Borrower shall require to determine whether according to the Borrower's established classification a particular firm or group of firms qualifies for a domestic preference. A list of prequalified bidders identifying those eligible for preference, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification or eligibility for preference, shall be furnished by the Borrower to the Association for its comments and the Borrower shall make such additions to or deletions from the said list as the Association shall reasonably request before the applicants are invited to bid. (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. The bidding documents shall clearly indicate any preference which will be granted and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. 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 reviewed by the Borrower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. 23 For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. (d) After bids have been 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. (e) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (f) 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.