Somali - Northwest Region Agricultural Development Project : Credit 0635 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 635 SO DEVELOPMENT CREDIT AGREEMENT (North-West Region Agricultural Development Project) between SOMALI DEMOCRATIC REPUBLIC and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated J-U:y 7, 1976 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 7, 1976, between SOMALI DEMOCRATIC REPUBLIC (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). -2- 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 Agree- ments 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 following additional terms have the following meanings: (a) "PIU" means the Project Implementation Unit to be es- tablished pursuant to Section 3.02 (a) of this Agreement; and (b) "Management Team" means the team of experts referred to in.Section 3.02 (b) of this Agreement. -3- 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 equiva- lent to ten million dollars ($10,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time, for expenditures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 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 June 30, 1983 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 ser- vice 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. -4- Section 2.06. Service charges shall be payable semi-annually on June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 1 and December 1 commencing December 1, 1986, and ending June 1, 2026, each installment to and including the installment payable on June 1, 1996 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. -5- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) For the purpose of carrying out the Proj- ect, the Borrower shall establish and maintain a Project Implemen- tation Unit ('IU) attached to its Ministry of Agriculture. (b) The PIU shall consist of a Project Manager and a team of euperts, collectively called the Management Team, provided by the consultants referred to in Section 3.03 of this Agreement and comprising of a Land Use Planning Engineer (Team Leader and Deputy Project Manager), a Soil Conservation Officer, Chief Mechanic, an Extension Training Officer and a Horticultural Extension Officer, and such other support staff as shall be necessary. (c) The Borrower shall maintain an adequate level of support- ing staff attached to the PIU during the implementation of the Project. (d) The PIU shall be supervised by a ministerial committee consisting of the Secretaries of State for Finance and Agriculture of the Borrower, and the President of the Somali Development Bank. -6- Section 3.03. For the purposes listed below, the Borrower shall employ consultants acceptable to the Association, upon terms and conditions satisfactory to the Association: (i) the preparation of feasibility studies for fur- ther development of soil and water resources in the North-West and Bay Regions; (ii) the development of small irrigated farms; (iii) the development of a training program; (iv) the establishment of quantum and criteria for recovery of costs of land bunding; and (v) the formation of the Management Team. Section 3.04. For the purpose of development of the small irrigated farms under the Project, the Borrower shall cause the Chairman, Regional Council (North-West Region) to invite applica- tions for settlement of said farms. Allocations for settlements shall be made in accordance with criteria to be agreed between the Borrower and the Association by a committee consisting of the Chairman, Regional Council (North-West Region), the Project Manager and the Horticultural Extension Officer. Section 3.05. (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 inci- dent to the acquisition, transportation and delivery thereof to 0 -7- 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 3.06. (a) The Borrower shall furnish to the Associ- ation, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or addi- tions thereto, in such detail as the Association shall reason- ably request. 0 (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 pro- ceeds of the Credit, and to disclose the use thereof in the Project; (ii) shall enable the Association's accredited repre- sentatives to visit the facilities and construction sites in- cluded in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and docu- ments; and (iii) shall furnish to the Association all such in- formation 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. S1 0 ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with con- sistently maintained appropriate accounting practices the opera- tions, 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 cause its Ministry of Agri- culture to: (i) maintain separate accounts in respect of expendi- tures under the Project; (ii) have said accounts for each fiscal year audited, in accordance with sound auditing principles con- sistently applied, by independent auditors acceptable to the Association; (iii) furnish to the Association as soon as avail- able, but in any case not later than six months after the end of each such year, (A) certified copies of 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 Associa- tion such other information concerning the said accounts and the audit thereof as the Association shall from time to time reason- ably request. Section 4.03. The Borrower shall, after completion of the Project, operate and maintain the water points, gully erosion pilot area, the Geed-Deeble Horticultural Station and the Aburin Farm, and shall continue seed multiplication program at the Geed- Deeble Horticultural Station and the Aburin Farm. -9- Section 4.04. The Borrower shall, within one year from the date of this Agreement, or such other date as the Association shall agree, appoint suitably qualified candidates to the positions of a horticulturist at the Geed-Deeble Horticultural Station and a farm manager at the Aburin Farm. Section 4.05. In order to facilitate implementation of the Project, the Borrower shall make available to the PIU topographical maps to be prepared from the aerial photographs of its North-West Region taken on behalf of the Borrower in 1973. Section 4.06. The Borrower shall take all necessary action to safeguard existing use of surface and underground waters and to ensure that agricultural credit will be available to individual land users under the Project for the development of water resources on their holdings. Section 4.07. (a) The Borrower shall cause PIU and the consul- tants to undertake a study of the method and criteria to be adopted in the recovery of the bunding costs from the farmers participating in the Project on the basis of experience gained in the initial period of the project implementation. (b) The Borrower shall, by August 31, 1980, or such other date as the Association may agree, submit for review by the Asso- ciation detailed proposals on the quantum and method of such re- covery, and shall recover such costs from the farmers in such amounts and in accordance with such procedures as shall be agreed upon between the Borrower and the Association. -10- 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:. (a) a suitably qualified Project Manager for PIU has been appointed in consultation with the Association; and (b) the consultants referred to in Section 3.03 of this Agreement have been appointed. Section 5.02. The date October 5, 1976, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.03. The obligations of the Borrower under Section 4.03 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, which- ever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Secretary of State for 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: For the Borrower: The Secretary of State for Finance Government of the Somali Democratic O Republic Mogadiscio Somali Democratic Republic Cable address: MINFIN Mogadiscio 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. -12 0 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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. SOMALI DEMOCRATIC REPUBLIC By /a/ Abdullahi Ahmed Addou Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Stanley Please Acting Regional Vice President Eastern Africa -13- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the ,amounts of the Credit to each Category and the percentage of expen- ditures for itefas so to be financed in each Category: Amunt of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Vehicles, tractors, equipment and materials:, 3,610,000 (a) directly im- 100% of foreign ported expenditures (b) imported equip- 70% ment procured locally (2) Operating costs for bunding and water points includ- ing extension and training 3,477,500 45% (3) Salaries of 100% of foreign Management Team 786,000 expenditures (4) Feasibility studies and technical 100% of foreign assistance 1,600,000 expenditures (5) Unallocated 526,500 TOTAL 10,000,000 - 14- 2. For the purposes of this Schedule the term "foreign expenditures" means expenditures for goods or services supplied from, the terri- tory, and in the currency, of any country other than the Borrower, 3. The disbursement percentages have been calculated in compli- ance 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 any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Credit, the Association may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 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 Cate- gory, the Association may, by notice to the Borrower: (i) reallo- cate 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 -15- fully meet the estimated shortfall, reduce the disbursement percen- tage 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 expendi- tures 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 awount 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. -16 0 SCHEDULE 2 Description of the Project The Project is part of the Borrower's six year program of redevelopment through soil and water conservation and other meas- ures designed to increase agricultural production, to assist the current trend to settled agriculture and to establish a technical basis for future development in its North-West and Bay Regions. The Project consists of: A. The construction of field bunds on about 25,000 hectares, restoration of existing field bunds on about 2,000 hectares and establishment of experimental gully erosion control works. B. The development of about 50 small irrigated farms. C. The improvement of crop trials and training facilities at the Aburin dry-land demonstration and experimental farm. D. The extension of the Geed-Deeble Horticultural Station to improve fruit crop trials, nursery production and sorghum seed multiplication. E00 The rehabilitation and expansion of extension services to dry-land farmers. F. The construction of about 100 water points for human con- sumption and about 50 for livestock. - 17 - G. Utilization of consultants' services to provide technical assistance, training and preparation of two feasibility studies. The Project is expected to be completed by December 31, 1982. -18- SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Parts B and C hereof, goods, works and services shall be procured under contracts to be awarded in accor- dance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. Identical or similar items of equipment shall, to the extent possible, be consolidated in a single invitation for the purpose of bidding by each participant. B. Other Procurement Procedures 1. Contracts for the construction of buildings and concrete water tanks, dug wells and installation of irrigation equipment in small irrigated farms may be awarded on the basis of competitive bidding advertised locally in accordance with procedures acceptable to the Association. 2. Pumps and irrigation equipment for small-scale irrigation farms may be procured by the farmers locally from existing commer- cial channels. - 19 - 3. Single units of tractors and cultivation equipment, and office equipment may he procured locally by following usual procurement procedures of the Borrower. C. Procurement Without Contracting Construction of field bunds and water points and the extension of the Geed-Deeble Horticultural Station may be done through force account. D. Review of Procurement Decisions by Association 1. With respect to all contracts for vehicles, tractors and equipment estimated to cost the equivalent of $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 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) Promptly after the bids have been received, the Borrower shall inform the Association of the names of the bidders and the respective amounts of the bids. -20- (c) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and the reasons for the intended award and shall fur- nish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids re- ceived, and such other information as the Association shall reason- ably 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. (d) 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. (e) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds 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. - 21 - 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 deter- mination.