Lesotho - Second Highway Project : Credit 0619 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 619 LSO DEVELOPMENT CREDIT AGREEMENT (Second Highway Project) between KINGDOM OF LESOTHO and INTERNATIONAL DEVELOPMENT ASSOCIATION Da2ed March 10, 1976 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated March 10, 1976, between the KINGDOM OF LESOTHO (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 intends to enter into an agreement with the Ministry of Overseas Development of the United Kingdom (hereinafter called ODM) for a grant (hereinafter called the ODM Grant) to as- sist in financing Parts A, B, C and D of the Project on the terms and conditions set forth in an agreement (hereinafter called the ODM Grant Agreement) to be entered into between the Borrower and ODM; and 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: -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 Gen- eral Conditions and in the Recitals to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "MW Planning Unit" means the Planning Unit of the Bor- rower's Ministry of Works; (b) "CMW & PP" means the Central Mechanical Workshop and Plant Pool of the Borrower; and (c) "LCU" means the Labor Intensive Construction Unit to be established by the Borrower in accordance with the provisions of Section 3.07(a) 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 five million five hundred thousand dollars ($5,500,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule 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 December 31, 1980, or such later date as the Association shall establish. The Asso- ciation 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 -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 1 and October 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 1 and October 1 commencing April 1, 1986, and ending October 1, 2025, each installment to and including the installment payable on Octo- ber 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 States of America is hereby specified for the purposes of Section 4.02 of the Gen- eral Conditions. -5- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project through its Ministry of Works with due diligence and efficiency and in con- formity with appropriate administrative, financial and engineering practices; and under the supervision of experienced and competent personnel, and shall provide, promptly as needed, the facilities, services and other resources required for the purpose, including whatever funds are needed in addition to those made available to the Borrower by the Association and under Recital B of this Agree- ment. Section 3.02. In order to assist the Borrower in the prepara- tion of plans and specifications for carrying out Parts A, B and C of the Project, the preparation of bidding documents, the pre- qualification of contractors, the evaluation of bids and the super- vision of the road reconstruction and improvement specified in Parts A and B of the Project, the Borrower shall employ engineering consultants whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association and to ODM. Section 3.03. (a) The Borrower undertakes to insure, or make adequaLe provision for the insurance of, the imported goods to be financed wholly or partially 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. -6- (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed wholly or partially out of the proceeds of the Credit to be used exclusively for the Project until its completion. Section 3.04. (a) The Borrower shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Proj- ect, 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 wholly or partially 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 all such action as shall be necessary to acquire as and when needed all such rights in respect of land as shall be required for carrying out the Project and shall furnish to the Association, promptly af- ter such acquisition, evidence satisfactory to the Association that such rights in respect of land are available for purposes related to the Project. -7- Section 3.06. Except as the Association may otherwise agree, the design standards for the roads specified in Parts A and B of the Project shall be those set forth in Schedule 4 to this Agree- ment. Section 3.07. The Borrower shall: (a) establish by September 30, 1976, or such other date as may be agreed with the Association, and maintain in existence for an initial period of three years, a LCU and a LCU Coordinating Committee whose organization, ex-officio membership, financial and operating procedures, powers and responsibilities, shall be mutually acceptable to the Borrower and the Association; and 0 (b) review, prior to the expiration of the aforesaid period of three years and in consultation with the Association, the achievements of the LCU. -8- ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained appropriate accounting practices the operations, allocated funds 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. (a) The Borrower shall use its best efforts to cause its equipment for road maintenance to be reasonably maintained and repaired and to ensure that there are adequately equipped work- shop facilities suitably located for this purpose. (b) The Borrower shall continue to cause the roads specified in Parts A and B of the Project and the link road from St. Michaels to Masianokeng to be reasonably maintained and repaired in accord- ance with sound engineering and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for this purpose. Section 4.03. The Borrower shall take all such reasonable action as shall be necessary to ensure that the dimensions and axle loads of vehicles using its gazetted road system are consistent with the structural and geometric design standards of such roads. Section 4.04. The Borrower shall, by July 1, 1976, or such other date as the Association may agree, employ a suitably quali- fied Mosotho economist in its Hq Planning Unit. -9- Section 4.05. The Borrower shall (i) discuss with ODM, the organization and procedures of its CMW&PP and furnish to the Association, by December 31, 1976, or such other date as the Association may agree, a plan of action for the ensuing four years to make the CMW&PP more responsive to user requirements; and (ii) implement such plan of action after it has been mutually agreed upon by the Borrower, ODM and the Association. -10- ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (h) thereof, namely, that: (i) Subject to subparagraph (ii) of this paragraph: The right of the Borrower to withdraw the proceeds of the ODM Grant made to the Borrower to assist in the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the 0DM Grant Agreement. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancella- tion, or termination is not caused by the failure of the Borrower to perform any of its obligations under such agreement, and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (d) thereof, namely, that, any event specified in sub-paragraph (i) of Section 5.01 of this Agreement shall occur. S -11 - ARTICLE VI Effective Date; Termination Section 6.01. 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) the execution and! delivery of the ODM Grant Agree- ment have been duly authorized or ratified by all necessary govern- mental action, and all conditions precedent to the effectiveness of such agreement or the right to make withdrawals thereunder, except only the effectiveness of this Agreement, shall have been fulfilled; and (b) the Borrower has employed the engineering con- sultants specified in Section 3.02 of this Agreement. Section 6.02. The following are specified as additional mat- ters, within the meaning of Section 12.02(b) of the General Condi- tions, to be included in the opinion or opinions to be furnished to the Association, namely, that the ODM Grant Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the parties thereto and is legally binding upon such parties in accordance with their respective terms. Section 6.03. The date May 28, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. 0 - 12 - Section 6.04. The obligations of the Borrower under Sections 4.02 and 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 years after the date of this Agreement, whichever shall be the earlier. 0 mm0 -13- ARTICLE VII Representative of the Borrower; Addresses Section 7.01. 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 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Minister of Finance P.O. Box 395 Maseru, Lesotho Cable address: FINMIN Maseru 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. -14 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. KINGDOM OF LESOTHO By Is/ T. J. Mashologu Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ S. Please Acting Regional Vice President Eastern Africa -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 the amounts of the Credit to each Category and the percentage of expen- ditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Road reconstruc- 3,365,000 86% of total tion and improve- expenditures ment (Parts A and B of the Project) (2) Consultants serv- 13,000 100% of foreign ices for Parts A expenditures and B of the Project (3) Consultants servi- 372,000 100% of total ces for Part E of expenditures the Project (4) Unallocated 1,750,000 TOTAL 5,500,000 -16 0 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; provided, however, that if the currency of the Bor- rower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (b) the term "total expenditures" means the aggregate of foreign expenditures and of expenditures for goods produced in 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, in- crease 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 1 above, no with- drawals shall be made in respect of expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Category (2) on account of expenditures incurred after October 1, 1975, in an aggregate amount not exceeding the equivalent of $13,000. -17 - 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 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 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. -18 0 SCHEDULE 2 Description of the Project The Project consists of: Part A. The improvement to gravel 3 standard and partial bitumini- zation of about 95 kilometers of the road between St. Michaels and Mantsonyane. Part B. The reconstruction (including partial realignment) to gravel 4 standard of about 52 kilometers of the earth track between Mantsonyane and Thaba Tseka. Part C. The provision of maintenance facilities on the road between St. Michaels and Thaba Tseka which will include (i) housing, a mechanical workshop and two depots; and (ii) radio communication equipment, workshop equipment and road maintenance equipment. Part D. Technical assistance to the Ministry of Works. Part E. The establishment and operation of the LCU on a basis mutually satisfactory to the Borrower and the Association. The Project is expected to be completed by December 31, 1979. - 19 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, goods, works and services to be financed out of the proceeds of the Credit shall be procured under contracts to be awarded in accordance with procedures consis- tent with those set forth in Part A of the "Guidelines for Procure- ment 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. (a) Bidders for works shall be required to prequalify and 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 procedures 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 fur- nished by the Borrower to the Association for its comments before the applicants are notified and the Borrower shall make such addi- tions to or deletions from the said list as the Association shall reasonably request. (b) Before bids for goods, works or services 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 - 20 0 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. (c) After bids have been received and evaluated, the Borrower shall, before a final decision on the award i 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 com- parison 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 the Guidelines, promptly inform the Borrower and state the reasons for such determination. (d) The terms and conditions of the contract shall not, with- out the Association's concurrence, materially differ from those on which bids were asked. (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 any such contract. B. Other Procurement Procedures Contracts for goods, works and services estimated to cost less than the equivalent of $300,000 shall be awarded in accordance - 21 - with the Borrower's normal procurement procedures, but 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 contracts, two conformed copies of such contracts, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably request. Should no bids be received for works estimated to cost less than the equivalent of $300,000, the Borrower may construct such works by force account and submit a claim to the Association, together with such other information as the Association shall reasonably request, for the reimbursement of the actual cost of such works. C. Evaluation and Comparison of Bids for Goods 1. 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. Maseru 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. 2. Goods manufactured in the Kingdom of Lesotho may be granted a margin of preference in accordance with, and subject to, the following provisions: - 22 - (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the informa- tion required to establish the eligibility of a bid for such pref- erence 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 the Kingdom of Lesotho if the bidder shall have estab- lished to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in the Kingdom of Lesotho equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in the Kingdom of Lesotho. (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 eval- uated 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. -23 - (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 com- parison 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. - 24- SCHEDULE 4 Design Standards for Project Roads Design speed Width (m) Recommended Maximum (kph) Car- Grossfall (%) Gradient (%) Curvature Desir- Min- Forma- riage Pave- Shoul- Desir- Abso- Desir- Max- Terrain able imum tion way ment der able lute able imum Gravel 3* Rolling 60 50 6.00 3.50 3 5 5 8 4 30' 80 15' Hilly 50 35 6.00 3.50 3 5 8 12 60 30' 160 15' Mountain 30 25 5.00 3.50 3 5 10 14 18 0 0' 330 o' Gravel 4 Rolling 50 40 4.00 3.20 - - 6 9 60 20' 140 20' Hilly 40 25 4.00 3.20 - - 9 13 80 50' 230 5' Mountain 20 15 4.00 3.20 - - 12 16 230 5' 380 55' * Stretches of the St. Michaels-Mantsonyane road with gradients in excess of 10% (totalling approximately 25 kilometers) will be bituminized.