Malawi - Second Education Project : Credit 0590 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 590 MAI Development Credit Agreement (Second Education Project) BETWEEN REPUBLIC OF MALAWI AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED NOVEMBER 24, 1975 CONFORMED COPY CREDIT NUMBER 590 MAI Development Credit Agreement (Second Education Project) BETWEEN REPUBLIC OF MALAWI AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED NOVEMBER 24, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated November 24, 1975, between REPUBLIC OF MALAWI (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS 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; and WHEREAS the Association has agreed 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 March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association 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 term "PIU" means the Project Implementation Unit referred to in Section 3.06 of this Agreement. ARTICLE Hl 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 eleven million six hundred thousand dollars ($11,600,000). 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 The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as 4 such Schedule may be amended from time to time by agreement between the Borrower and the Association, 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 out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, the goods, works and services (other than consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be March 31, 1981 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of I %) 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 July 1 and January 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each July I and January 1 commencing January 1, 1986, and ending July 1, 2025, each installment to and including the installment payable on July 1, 1995 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 Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project through its PlU with due diligence and efficiency and in conformity with appropriate administrative, financial, technical and educational practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. 5 Section 3.02. In order to assist the Borrower in the design of buildings and facilities included in Parts A(iii) and A(iv) of the Project, and the preparation of contract documents for, and the supervision of, the construction thereof, the Borrower shall employ architectural and engineering consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 3.03. (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. Section 3.04. (a) The Borrower shall furnish or cause to be furnished to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) 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 visit the facilities and construction sites included in the Project and to examine 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 3.05. The Borrower shall take or cause to be taken 'll such action as shall be necessary to acquire as and when needled all such land and rights in respect of land as shall be required for the construction (and operation) of the facilities included in the Project and shall furnish to the Association, promptly after such acquisition, evidlence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. 6 Section 3.06. (a) For the purpose of carrying out the Project, the Borrower shall establish and maintain within its Ministry of Education a Project Implementation Unit which shall consist, inter alios, of (i) a Project Manager with qualifications, experience and terms and conditions of employment satisfactory to the Association and with duties and responsibilities set forth in the Annex to Schedule 2 to this Agreement, as such Annex may be amended from time to time by agreement between the Borrower and the Association, (ii) a project architect and a procurement officer both with qualifications, experience and terms and conditions of employment satisfactory to the Association, (iii) two architects and a quantity surveyor who shall be appointed, in consultation with the Association within six months after the date of this Agreement (or such other date as may be agreed upon between the Borrower and the Association), and (iv) a project accountant, and, except as the Association shall otherwise agree, shall cause PIU to retain the services of such staff until the completion of the Project. (b) The Borrower shall ensure that PlU be given appropriate powers and functions required to assure the efficient and effective implementation of the Project. (c) Without any limitation or restriction upon the foregoing, the powers and functions of PIU shall include the following: (i) the overall supervision of the Project; (ii) the supervision of the consultants employed under the Project; (iii) the design of buildings and facilities included in Parts A(i) and A(ii) of the Project, and the preparation of contract documents for, and the supervision of, the construction thereof; and (iv) the training of Malawian draftsmen for future employment by PU. Section 3.07. The Borrower shall cause the educational institutions and related facilities included in the Project to be efficiently operated and adequately staffed with qualified teachers. ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained appropriate 7 accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Section 4.02. The Borrower shall continue its review of manpower training to ensure effective manpower utilization, and shall exchange views thereon with the Association. Section 4.03. The Borrower shall furnish to the Association for its review and comments, within one year after the date of this Agreement (or such other date as may be agreed upon between the Borrower and the Association), a plan of operation, including financial arrangements, for building additional primary school facilities following the models built under the Project. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01(b) of the General Conditions, namely, that: (a) PIU has been duly established in accordance with the provisions of Section 3.06 of this Agreement; and (b) a Project Manager, a procurement officer, a project architect and a project accountant have all been duly appointed in accordance with the provisions of Section 3.06(a) of this Agreement. Section 5.02. The date February 24, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: 8 For the Borrower: The Secretary to the Treasury Ministry of Finance P.O. Box 30049 Capital City Lilongwe 3, Malawi Cable address: FINANCE Lilongwe 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 throLIgl their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF MALAWI By /s / D.Y.J. Kalilangwe Autliorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ S. Shahid Husain Regional Vice President Eastern Africa 9 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Categori.y Dollar Equivalent) to be Financed (1) Civil Works 7,100,000 75% (2) Furniture, Equip- 1,600,000 ment and Vehicles (a) Directly 100% of foreign imported expenditures (b) Locally manu- 100% of local factured (ex- expenditures factory cost) (c) Locally pro- 75% of local cured expenditures (3) Architectural and 500,000 75% of local Engineering Serv- expenditures ices (4) Technical Assistance 500,000 100% of foreign expenditures (5) Project Adninistra- 200,000 75% of local tion (including expenditures vehicle operating cost and salaries of local staff) and pre-Investment Studies (6) Unallocated 1,700,000 TOTAL 11,600,000 10 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Categories (4) and (5) of said paragraph I on account of expenditures incurred after July 1, 1975 in an aggregate amount not exceeding the equivalent of $120,000. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph I above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. 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 this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting 11 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. 12 SCHEDULE 2 Description of the Project The Project consists of the following parts: A. The construction, furnishing and equipping of: (i) 22 new prototype primary schools which will serve as models to be replicated by local communities; (ii) 22 new rural education centers; (iii) one new teacher training college including a demonstration school, boarding facilities and staff houses; and (iv) additions to seven secondary schools including boarding facilities and staff houses. B. A program to train Malawian draftsmen for future employment by PIU and a program to prepare future educational projects in Malawi. The Project is expected to be completed by September 30, 1980. 13 ANNEX TO SCHEDULE 2 Duties and Responsibilities of the Project Manager The Project Manager shall be the chief administrative officer of PIU and shall, under the direction of the Permanent Secretary, Ministry of Education, be responsible for directing all aspects of the execution of the Project. More specifically, he shall be responsible, inter alia, for the following: (a) the selection, organization, supervision and direction of all the PIU staff in the performance of their respective duties, and the ensuring of the efficient and effective functioning of PIU; (b) the selection of consultants and specialists, the approval of their terms of reference and the administration of their contracts. (c) the making of necessary arrangements for briefing consultants and specialists; (d) the review and approval, or the arrangement for che review and approval by the appropriate authorities, of all reports, plans, specifications and other materials related to the Project; (e) the making of necessary arrangements for the invitation and evaluation of bids and the awarding of the contracts under the Project; (f) the coordination and integration of all the Project activities among the ministries, authorities and agencies of the Borrower responsible for carrying out the Project or any part thereof, and the necessary coordination and liaison between them and the Association; (g) the organization and administration, in consultation with the appropriate authorities, of any technical assistance or fellowship programs included in the Project; (h) the ensuring of the proper maintenance of the Project accounts and the timely preparation of interim evaluation reports and financial statements; (i) the planning, programming and arranging for the preparation of a Project implementation schedule and the monitoring of the actual performance 14 of works against such schedule to ensure the timely execution of such works and the meeting of the established performance standards; and (j) the preparation of periodic progress reports for the Government and the Association. 15 SCHEDULE 3 Procurement A. General Procedures 1. Except as provided in Part A.3 hereof, goods, works and services shall be procured under contracts to be awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. (a) In order to encourage competitive bidding, contracts under the Project shall be grouped insofar as is practicable. (b) Domestic contractors for civil works costing more than $200,000 equivalent each shall be prequalified as described in Part 2.2 of the Guidelines. 3. Contracts for the following items shall be procured on the basis of competitive bidding advertised locally in accordance with local procedures acceptable to the Association: (a) civil works costing less than $200,000 equivalent each and consisting of small units to be constructed in scattered locations; (b) furniture, equipment, vehicles and other items costing less than $50,000 equivalent each; and (c) locally procured construction materials and in-country transportation services costing less than $50,000 equivalent each. B. Evaluation and Comparison of Bids fbr Goods; Preference fbr Domestic Manufacturers I. For the purpose of evaluation and comparison of bids for the supply of goods: (i) 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 domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) 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 included. 16 2. Goods manufactured in Malawi may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Malawi if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Malawi equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Malawi. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids 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 the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. C. Evaluation and Comparison of Bids fbr Civil Works; Preferences fbr Domestic Contractors With respect to any contract for civil works included under Category (1) of the table set forth in Schedule 1 to the Credit Agreement costing more than 17 $200,000 equivalent, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying also for such preference shall be asked to provide, as part of the information for qualification, to submit together with their bids, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. (b) 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 preftence; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/21/ of the bid amount shall be added to bids received under group (ii) above. D. Review of Pro ctreinent Decisions by the Association 1. Review of prequalification. 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, where applicable, of their eligibility for domestic preference under Part C above and of the reasons for the exclusion of any applicant for prequalification and for such eligioility 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, deletions from, or modifications in, the said list as the Association shall reasonably request. 2. Review of invitation to bid and of proposed awards and final contracts. With respect to contracts for civil works estimated to cost more than the equivalent of $200,000 each and contracts for furniture, equipment and construction materials estimated to cost more than the equivalent of $50,000 each: 18 (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 procedures 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 which it intends to award the contract and the reasons for the intended award 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 recommendation for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, 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 or prequalification invited. (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 such contract. 3. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, 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 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 was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.