Philippines - Aurora-Penaranda Irrigation Project : Credit 0472 - Credit Agreement - Conformed

CONFORMED COP CREDIT NUMBER 472 PH Development Credit Agreement (Aurora-Penaranda Irrigation Project) BETWEEN REPUBLIC OF THE PHILIPPINES AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 14, 1974 CONFORMED COPY CREDIT NUMBER 472 PH Development Credit Agreement (Aurora-Penaranda Irrigation Project) BETWEEN REPUBLIC OF THE PHILIPPINES AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 14, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated May 14, 1974, between REPUBLIC OF THE PHILIPPINES (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 Borrower has also requested the Bank to provide additional assistance towards the financing of the Project and by an agreement of even date herewith between the Borrower and the Bank (hereinafter called the Loan Agreement) the Bank is agreeing to provide such assistance in an aggregate principal amount equivalent to nine million five hundred thousand dollars ($9,500,000) (hereinafter called the Loan); (C) The Borrower and the Association intend, to the extent practicable, that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures on the Project before disbursements of the proceeds of the Loan provided for in the Loan Agreement are made; WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; 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). 4 0 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) "Agricultural Development Coordinating Council" means the council established by agreement among NIA and other agencies of the Borrower, dated September 15, 1972, for the purpose of coordinating agricultural supporting services in the area served by the Upper Pampanga River Project; (b) "Central Luzon Irrigation Development Study" means the study described in Part B of Schedule 2 hereto; (c) "Guidelines" means the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972 and revised in October 1972; (d) "Loan" means the loan provided for in the Loan Agreement; (e) "Loan Agreement" means the agreement of even date herewith between the Borrower and the Bank for the purpose of the Project, as such agreement may be amended from time to time; and such term includes the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 31, 1969, as made applicable to such agreement, all agreements supplemental to the Loan Agreement and all schedules to the Loan Agreement; (f) "NIA" means the National Irrigation Administration, an agency established by Republic Act No. 3601 of the Borrower; (g) "PENRIS" means the Penaranda River Irrigation System, an existing irrigation system of about 16,700 hectares in the northern portion of the Project Area; (h) "pesos" and the sign -i means pesos in the currency of the Republic of the Philippines; (i) "Project Area" means an area of about 25,300 hectares in the Provinces of Nueva Ecija, Bulacan and Pampanga bounded on the north by the Penaranda River, on the east by PENRIS lateral C canal (as proposed to be extended to the Maasim River), on the south by the Maasim River, and on the west by the Candaba Swamp and the Pampanga River; 5 (j) "Special Fund" means the fund established pursuant to Section 3.0 1(b); and (k) "Upper Pampanga River Project" means the project described in Schedule 3 to the Loan Agreement between the Borrower and the Bank, dated August 18, 1969 (loan number 637 PH). 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 nine million five hundred thousand dollars ($9,500,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the 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 (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 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 June 30, 1979 or such other date as shall be agreed between the Borrower and the kssociation. 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 April 15 and October 15 in each year. 6 Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 15 and October 15 commencing October 15, 1984, and ending April 15, 2024, each installment to and including the installment payable on April 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. ARTICLE III Execution of the Project Section 3.0 1. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with sound financial, administrative, engineering and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation to its obligations under paragraph (a) of this Section, the Borrower undertakes to establish and maintain, under arrangements satisfactory to the Bank, a Special Fund from which NIA may draw without restriction to meet expenditures in respect of the Project. The Borrower shall adjust and replenish the amount in the Special Fund at monthly intervals to a level at least equivalent to the estimated amount of payments to be made for goods and services required for the Project, less the estimated amount of payments to be made directly by the Association or the Bank to suppliers, consultants or contractors for such goods and services, during the next three months' period. (c) The Borrower shall take all such action as may be required to ensure that: (i) NIA shall carry out the construction and implementation of the Project, operate and administer all facilities therein and determine the priorities in the use of waters allocated to the Project within the Project Area, provided that the Borrower may transfer functions outside the normal scope of NIA's activities with respect to the Project to other appropriate agencies of the Borrower; and (ii) all other agencies of the Borrower whose assistance is necessary for executing the Project shall take such action as shall be required to assist NIA in executing the Project and shall not take any action which would interfere with such execution. (d) For the purpose of coordinating agricultural supporting services in the Project Area and in the area served by the Upper Pampanga River Project, the Borrower shall reconstitute the Agricultural Development Coordinating Council to 7 enable it to serve both such areas and shall cause it to ensure such coordination and the implementation of the plan referred to in Section 3.03(b). Section 3.02. In order to assist the Borrower in: (a) increasing the portion of Project civil works done under contract; (b) completing investigations and designs for the dams and canals in Part A(i) of the Project; (c) preparing or reviewing tender documents, supervising construction and certifying payment documents for all Project civil works; and (d) implementing the Central Luzon Irrigation Development Study; the Borrower shall cause NIA to employ engineering consultants acceptable to the Association upon terms and conditions satisfactory to the Association within three months of the date of this Agreement. Section 3.03. Except as the Association shall otherwise agree, the Borrower shall: (a) ensure that adequate agricultural supporting services are made available to farmers in the Project Area including, without limitation, increasing the agricultural extension staff assigned to the Project Area to not less than about 100 extension workers (of which not less than about 50 will be farm management technicians) by 1980 and maintaining such staff at not less than that level thereafter. (b)(i) cause the Agricultural Development Coordinating Council to submit to the Association not later than one year after the date of this Agreement a plan for providing adequate supporting agricultural services in the Project Area, (ii) exchange views with the Association in respect thereof, and (iii) implement such a plan promptly thereafter. Section 3.04. (a) The Borrower shall grant all water rights required to enable NIA to carry out and operate the Project and shall take such action as is required to ensure that no private rights are granted which could adversely affect the water supply for the Project. (b) 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 carrying out the Project. 8 Section 3.05. In carrying out Part A of the Project, the Borrower shall employ, or cause NIA to employ, contractors 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 such goods. (b) Except 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 until its completion. Section 3.07. (a) Except as the Association shall otherwise agree, construction shall not commence on any portion of Part A(i) of the Project until the Association has received final plans satisfactory to the Association in respect of such portion. (b) The Borrower shall furnish, or cause NIA to furnish, to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (c) The Borrower shall, or shall cause NIA: (i) to 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) to 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) to 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. 9 ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause NIA to maintain separate records adequate to reflect in accordance with consistently maintained sound accounting practices its operations in respect of the Project. (b) The Borrower shall cause NIA to: (i) have accounts and financial statements in respect of the Project (statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of NIA and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. (a) The Borrower shall cause the works and facilities included in the Project to be operated and maintained in accordance with sound agricultural, engineering and financial policies and practices, and shall make available sufficient funds to NIA for such purposes. (b) Without limitation to its obligations under paragraph (a) of this Section, the Borrower undertakes to do, or, to the extent required, to cause NIA to do, the following: (i) to make adequate budgetary provision to operate and maintain the Project; (ii) to treat the Project and the Upper Pampanga River Project as a single economic and administrative unit for all purposes relating to setting and collecting irrigation fees; and (iii) except as the Association shall otherwise agree, to take all necessary action to ensure that charges for the use of irrigation water are levied and collected from the users of the Project and that such charges will provide NIA with revenues sufficient to cover all operating and maintenance costs of the Project, and, in addition, to provide for the recovery, within a period not 10 less than 25 nor more than 50 years, on reasonable terms and conditions satisfactory to the Association, of the monies invested in the Project, without impairing the users' incentives and capacity to pay. 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 hereto: (a) exchange views through their representatives with regard to (i) the performance of their respective obligations under the Development Credit Agreement and the Loan Agreement, (ii) the administration, operations, financial condition, resources and expenditures of NIA and, in respect of the Project, of other departments or agencies of the Borrower responsible for carrying out any part of the Project, and (iii) 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 administration, operations, and financial condition, resources and expenditures of NIA and, in respect of the Project, of 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 thereof or the performance by either of them of its obligations under the Development Credit Agreement or the Loan Agreement. 11 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. 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 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. Section 7.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified: A default shall occur in the performance of any obligation on the part of the Borrower under the Loan Agreement, and such default shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower. 12 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) that the Borrower shall have established the Special Fund and shall have deposited therein not less than three million pesos (P 3,000,000); and (b) that all conditions to the effectiveness of the Loan Agreement have been fulfilled. Section 8.02. The date August 15, 1974 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.03. The obligations of the Borrower under Sections 3.01(c), 3.0 1(d), 3.03(a), 3.04(a), 4.01 and 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty-five years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. The Secretary of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Secretary of Finance Department of Finance Manila, Philippines Cable address: SECFINANCE Manila 13 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 THE PHILIPPINES By /s / Eduardo Z. Romualdez Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ M. L. Weiner Acting Regional Vice President Asia 14 SCHEDULE 1 Withdrawal of the Proceeds of the Credit and of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and of the Loan, the allocation of amounts of such proceeds to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit and of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Civil works (a) mobilization 3,500,000 100% of foreign and construc- expenditures tion equipment for civil works contractors (up to 50% of the value of each contract) (b) other civil 7,200,000 27% of total works expenditures II. Equipment 2,300,000 a. directly 100% of foreign imported expenditures equipment b. imported 65% of total equipment expenditures procured locally III. Consulting services 1,500,000 100% of foreign and overseas training expenditures or 600 of total expenditures IV. Interest and other 2,000,000 100% of total charges on the Loan expenditures accrued on or before April 14, 1979 V. Unallocated 2,500,000 TOTAL 19,000,000 15 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, or for goods 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. (a) Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (i) 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 $50,000; and (ii) 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 or of the Loan will be withdrawn on account of payments for such taxes. (b) In addition, except as the Borrower, the Association and the Bank shall otherwise agree, and until all amounts of the Credit shall have been withdrawn or committed, no withdrawals shall be made from the Loan Account (as such term is defined in the Loan Agreement) other than under Category IV except under commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions referred to in Section 1.01 of the Loan Agreement. 4. Notwithstanding the allocation of an amount of the proceeds of the Credit and of the Loan 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 proceeds of the Credit and of the Loan then allocated to such Category and no longer required therefor will be reallocated by the Association 16 and by the Bank or, after full withdrawal of all amounts of the Credit, by the Bank, by increasing correspondingly the unallocated amount of the proceeds of the Credit and of the Loan; (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 and by the Bank or, after full withdrawal of all amounts of the Credit, by the Bank, at the request of the Borrower, to such Category from the unallocated amount of the proceeds of the Credit and of the Loan, subject, however, to the requirements for contingencies, as determined by the Association and by the Bank or, after full withdrawal of all amounts of the Credit, by the Bank, in respect of any other expenditures; and (c) if the Association and the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit or, after full withdrawal of all amounts of the Credit, of the proceeds of the Loan and the Association and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Association and the Bank under the Development Credit Agreement and the Loan Agreement, by notice to the Borrower, cancel such amount of the Credit or of the Loan or both as in the Association's and the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit or, after full withdrawal of all amounts of the Credit, of the proceeds of the Loan. 5. Notwithstanding the percentages set forth in the third column of the table set out in paragraph I above, if the estimate of total expenditures tinder Category I(b), 11(b) or III shall increase and no proceeds of the Credit and of the Loan are available for reallocation to such Category, the Association and the Bank or, after full withdrawal of all amounts of the Credit, the Bank, may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under any such Category may continue until all expenditures thereunder shall have been made. 17 SCHEDULE 2 Description of the Project The purposes of the Project are to provide irrigation and drainage facilities allowing year round cultivation in the Project Area through more effective control of water and a transbasin diversion to bring in supplemental water for the dry season, and to complete a study for future water and land development. It will comprise the following Parts: Part A: Expansion of Irrigation and Drainage Facilities (i) Construction of two earth and rockfill diversion dams on the Canili and Diayo rivers in the Aurora basin and of diversion channels to divert the water from these rivers into the Pantabangan Reservoir of the Pampanga River; (ii) raising and improvement of the Pampanga-Bongabon diversion dam; (iii) enlarging and extending the main canal and the lateral G-2 canal of the Pampanga-Bongabon River Irrigation System to provide a canal connection between the Pampanga-Bongabon dam and the Penaranda diversion dam; (iv) rehabilitation and upgrading of the PENRIS including repair of existing canals and structures and provision of additional control structures and turnouts; (v) construction of a new irrigation and drainage system to serve an area of about 8,600 hectares south of the PENRIS in the Project Area, including enlarging the lateral C canal of the PENRIS and constructing diversion structures on local rivers, control structures and turnouts; (vi) improvement of existing drainage channels and construction of cross-drainage and diversion structures in the Project Area to collect local flows; (vii) upgrading of existing and construction of additional roads in the Project Area including roads for operation and maintenance along main canals; and 18 (viii) construction of small buildings for use by water management technologists approximately in the ratio of one for each 500 hectares of irrigated land in the Project Area. Part B: Central Luzon Irrigation Development Study (i) Execution of a study culminating in a report to be submitted to the Borrower including an inventory of land and water resources of the Central Luzon basin, a review of the status of their development, identification of specific potential irrigation projects, and an irrigation plan for the basin setting out a sequence for integrated water development through such projects; and (ii) conducting a training program for technical personnel of NIA in comprehensive land and water resource development planning including on-the-job training, academic courses and overseas training. Part C. Procurement of Vehicles and Equipment in Connection with Parts A and B of the Project. The Project is expected to be completed by June 30, 1978. * 19 SCHEDULE 3 Procurement A. Contracts Governed by Guidelines 1. With respect to any contract for civil works estimated to cost the equivalent of $100,000 or more or equipment estimated to cost the equivalent of $50,000 or more: (a) If bidders are required to prequalify, the Borrower shall, before qualification is invited, inform the Association in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification, shall be furnished by the Borrower to the Association for its comments before the applicants are notified and the Borrower shall make such additions to or deletions from the said list as the Association shall reasonably request. (b) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedure as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (c) Promptly after bids have been opened, the Borrower shall furnish to the Association a report of the names of each bidder and the amounts of each bid. (d) 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, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said consultants, and 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. 20 (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 delivery 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 civil works or equipment, the Borrower shall furnish to the Association, promptly after its execution and prior to the delivery 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. B. Procurement Exempt from International Competitive Bidding I. Any contract for the procurement of imported equipment, materials and supplies not exceeding the equivalent of $10,000 may be let on a competitive basis consistent with the Borrower's normal procurement practices without international competitive bidding, provided that the aggregate expenditure for items procured under this paragraph B.1 shall not exceed the equivalent of $100,000. 2. Contracts for civil works included in Part A(ii) through (viii) inclusive of the Project shall be let under procedures consistent with the Guidelines but shall be exempt from the requirement of international competitive bidding. 3. Civil works included in Part A(ii) through (viii) inclusive of the Project may be carried out by NIA on force account, provided that, except with the prior consent of the Association and the Bank, the aggregate cost thereof shall not exceed the equivalent of $2.2 million. C. Supplemental Rules on Bid Evaluation and Comparison For the purpose of evaluation and comparison of bids for the supply of goods for the Project, the following supplemental rules shall apply: 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 21 supplied goods, shall be excluded. 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. 2. The Borrower may grant a margin of preference to goods manufactured in the Republic of the Philippines 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 the Philippines, if the bidder shall have established to the satisfaction of the Borrower, the Association and the Bank that the manufacturing cost of such goods includes a value added in the Republic of the Philippines equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: bids offering goods manufactured in the Philippines 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 to determine 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) If, as a result of the comparison under paragraph (b) above, the lowest bid is a bid from Group C, all Group C bids shall be further compared with the lowest bid from Group A, as determined under paragraph (b) above, after adding to the c.i.f. bid price of goods to be imported offered in each Group C bid, for the purpose of this further comparison only, an amount equal to 15% of the c.i.f. bid price of such goods. If the Group A bid in such further comparison is the lowest, it shall be selected for purposes of award; if not, the lowest bid from Group C, as determined under paragraph (b) above, shall be selected for purposes of award. 22 3. The bidding documents shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the methods and stages that will be followed in the evaluation and comparison of bids to give effect to such preference.