Nepal - Rural Development Project : Credit 0617 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 617 NEP DEVELOPMENT CREDIT AGREEMENT (Rural Development Project) between KINGDOM OF NEPAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 30, 1976 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 30, 1976, between KINGDOM OF NEPAL (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 Gen- eral Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "ADBN" means the Agricultural Development Bank, estab- lished under the Agricultural Development Bank Act, 1967, as amended, of the Borrower, and any successor or successors thereto; (b) "PCC" means the project coordinating committee established pursuant to the provisions of Section 3.04 of this Agreement, as the same mqy be amended from time to time; (c) "Project Area" means Nuwakot and Rasuwa Districts of the Bagmati Zone, excluding the area designated by the Borrower to be developed as Langtang National Park; -3- (d) "MFAI" means the Borrower's Ministry of Food, Agriculture and Irrigation; (e) "DDC" means the Dairy Development Corporation, established under the Corporation Act, 1964, of the Borrower, and any succes- sor or successors thereto; (f) "Sub-loan" means a loan made or proposed to be made by ADPN to a guided cooperative or to a farmer in the Project Area; (g) "Project Coordinator" means the person appointed by the Borrower pursuant to the provisions of Section 3.03 of this Agree- ment; and (h) "AIC" means the Agricultural Inputs Corporation, estab- lished under the Corporation Act, 1964, of the Borrower, and any successor or successors thereto. -4- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to eight million dollars ($8,000,000). Section 2.02. 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, as such Schedule may be amended from time to time by agreement between the Borrower and the Association. Section 2.04. The Closing Date shall be December 31, 1981 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. -5- 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 June 15 and December 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 15 and December 15 commencing June 15, 1986, and ending December 15, 2025, each installment to and including the installment payable on December 15, 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 General Conditions. Section 2.09. The Project Coordinator shall be designated as representative of the Borrower for purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article 5 of the General Conditions. -6- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out, or cause to be carried out, the Project with due diligence and efficiency and in conformity with appropriate administrative, agricultural, engi- neering. financial, forestry and public health practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation to the foregoing paragraph (a), the Borrower shall cause the DDC, ADBN and AIC to carry out Parts A(2)(a), B(1) and B(3), respectively, of the Project and shall provide the proceeds of the Credit withdrawn in respect of such Parts to DDC, ADBN and AIC, respectively. (c) The Borrower shall lend proceeds of the Credit withdrawn in respect of Part B(1) of the Project to ADBN and shall ensure that such proceeds are relent in accordance with Schedule 4 hereto, as such Schedule may be amended from time to time by agreement between the Borrower and the Association. (d) Without limitation to the foregoing paragraph (a), the Borrower shall employ promptly as required to implement the Project additional staff in such capacities and numbers as shall be agreed between the Borrower and the Association. -7- Section 3.02. (a) Except as the Borrower and the Association shall otherwise agree, the Borrower shall employ the following consultants and technical experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association: (i) an assistant to the Project Coordinator to assist District staff in the Project Area in planning, budgeting and Project implementation and in establishing systems for Project disbursement, accounting and monitoring (estimated 3 years); (ii) an irrigation engineer to train District staff in the Project Area in the identification, pre- paration and implementation of the construction of improved irrigation systems and in training farmers in the operation and maintenance thereof (estimated 3 years), (iii) consultants to assist the Borrower in the formu- lation of procedures for evaluating the socio- economic impact of the Project on farmers in the Project Area and in analyzing the data collected thereunder (estimated 30 man-months); and (iv) consultants to assist the Borrower's Planning Commission in the identification and preparation of other rural development projects (estimated 12 man-months). -8- (b) Before employing the consultants referred to in paragraph (a)(iv) of this Section, the Borrower shall consult with the Asso- ciation on the terms of reference for any proposed study of other rural development projeccs. Section 3.03. The Borrower shall employ a suitably qualified and experienced person within its Ministry of Panchayats to serve full-time as Project Coordinator under terms of reference mutually agreed between the Borrower and the Association. Before any appoint- ment is made to the position of Project Coordinator, the Borrower shall inform the Association of the names, qualifications and ex- perience of the persons being considered for appointment to such position and afford the Association a reasonable opportunity to exchange views with the Borrower on the qualifications and expe- rience of such persons. Section 3.04. Except as the Borrower and the Association shall otherwise agree, in order to coordinate the activities under the Project, the Borrower shall maintain the project coordinating com- mittee (PCC) with its headquarters at Kathmandu. The Borrower shall establish terms of reference for PCC in consultation with the Association. The PCC shall include the Secretary of the Ministry of Panchayats as Chairman, the Project Coordinator as Secretary, and representatives from the Ministry of Finance, Ministry of Works and Transport, MFAI, Ministry of Forest, Ministry of Industries, Ministry of Land Reform, Ministry of Health, the chief district officers of Nuwakot and Rasuwa Districts, ADBN, AIC and, DDC. Section 3.05. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be -9- 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, all goods and services financed out of the proceeds of the Credit shall be used exclusively for the Project until its completion. Section 3.06. (a) The Borrower shall furnish to the Associa- tion, 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, and cause ADBN, AIC and DDC to maintain, records adequate to record the progress of their respective parts of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit related thereto, and to disclose the use thereof in the Project; (ii) shall enable, and cause ADBN, AIC and DDC to permit, the Association's accredited representatives to visit the facilities and construction sites included in their respective parts of the Project and to examine the goods financed out of the proceeds of the Credit related thereto and any relevant records and documents; and (iii) shall furnish, and cause ADBN, AIC and DDC to furnish, to the Association all such information as the Association shall reasonably request concerning their respective - 10 - parts of the Project, the expenditure of the proceeds of the Credit related thereto and the goods and services financed out of such proceeds. Section 3.07. The Borrower shall take or cause to be taken all such action as shall be necessary to purchase or otherwise acquire as and when needed all such land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Association, when so requested, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 3.08. The Borrower shall ensure that, under arrange- ments satisfactory to the Association, agricultural inputs, credit and extension services shall be provided to farmers in the Project Area in a timely manner. Section 3.09. The Borrower shall cause to be prepared and furnished to the Association each year the annual development plans for Nuwakot and Rasuwa Districts and shall ensure that the annual allocations in the development budget for these two Districts are in conformity with the requirements of the Project. Section 3.10. Except as the Association shall otherwise agree, the Borrower shall carry out, or cause to be carried out, the studies described in Parts F(6) and F(7) of the Project not later than one year after the Effective Date, or such other date as shall be agreed between the Borrower and the Association. - 11 - Section 3.11. The Borrower shall cause the extension and training centers included in Parts A(1)(a) and A(3)(b) of the Project and the health posts included in Part D(1) of the Project to be staffed by an adequate number of qualified persons and shall provide such health posts with adequate quantities of medicines, drugs and other supplies. Section 3.12. Except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out a cadastral survey of, and complete classification of land in, the Project Area not later than three years after the Effective Date, or such other date as shall be agreed between the Borrower and the Association. Section 3.13. The Borrower shall establish and maintain a program for monitoring and evaluating the socio-economic impact of the Project on farmers in those parts of the Project Area which are agreed between the Borrower and the Association. The areas to be covered, the agency or agencies to be involved and the pro- cedures to be followed in carrying out such program shall be agreed between the Borrower and the Association not later than six months after the date of this Agreement, or such other date as shall be agreed between the Borrower and the Association. For this purpose, the Borrower shall submit its proposals to the Association not later than three months after the date of this Agreement, or such other date as shall be agreed between the Borrower and the Association. Section 3.14. The Borrower shall levy and collect water charges for the Batar Plain Irrigation Scheme (Part A(4)(d) of the Project) at levels to be determined in consultation with the Association. -12 0 The Borrower shall submit proposals as to the amount and method of collection of such charges to the Association not later than one year after the Effective Date, or such other date as shall be agreed between the Borrower and the Association. Section 3.15. The Borrower shall, in consultation with the Association and not later than six months after the Effective Date, or such other date as agreed between the Borrower and the Associa- tion, cause MFAI to develop (a) crop production practices and priorities for agricultural research in the Project Area; and (b) training programs for farmers in the Project Area. Section 3.16. The Borrower shall, in consultation with the Association and not later than six months after the Effective Date, or such other date as shall be agreed between the Borrower and the Association, cause its Ministry of Industries to carry out a study on the variety, design, production and quality of cottage industries in the Project Area. - 13 - ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain and cause ADBN, AIC and DDC to maintain,records adequate to reflect in accordance with consistently maintained appropriate accounting practices (i) the operations, resources and expenditures, in respect of the Proj- ect, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof and (ii) ADBN's, AIC's and DDC's operations and financial condition with respect to its activities under the Project. (b) The Borrower shall: (i) have its accounts relating to the Project for each fiscal year audited, in accordance with appro- priate auditing principles consistently applied, by the Auditor General of the Kingdom of Nepal; (ii) except as the Association shall otherwise agree, furnish to the Association as soon as avail- able, but in any case not later than twelve months after the end of each such year, (A) certified copies of its accounts for such year as so audited and (B) the report of such audit by said auditor, of such scope and in such detail as the Association shall have reasonably requested; (iii) furnish to the Association such other information concerning its accounts relating to the Project and the audit thereof as the Association shall from time to time rea- sonably request. (c) The Borrower shall cause ADBN, AIC and DDC to: (i) have their accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year - 14 - audited, in accordance with appropriate auditing principles consis- tently applied, by independent auditors acceptable to the Associa- tion; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of their 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 ADBN, AIC and DDC and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause all roads, tracks, trails and bridges in the Project Area and all works and buildings constructed under the Project to be maintained or repaired in ac- cordance with appropriate engineering standards and shall cause to be provided, as and when required, the funds, facilities and services for this purpose. - 15 - ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 of the General Conditions, namely that the Borrower has made arrangements satis- factory to the Association for the employment of consultants and technical experts in accordance with the provisions of Section 3.02 of this Agreement. Section 5.02. The date July 30, 1976, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.03. The obligations of the Borrower under Sections 3.08, 3.11 and 3.13 and Article IV of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date fifteen years after the date of this Agreement, whichever shall be the earlier. - 16- ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Secretary, Additional Secretary or Joint Secretary of the Ministry 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: For the Borrower: Secretary to His Majesty's Government Ministry of Finance Kathmandu Nepal Cable address: ARTHA Kathmandu 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. - 17 - 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 NEPAL By /s/ P. B. Khatri Authorized Representative INTERNATIONAL DEVELOPMENT AS SOCIATION By Is/ R. Picciotto Acting Regional Vice President South Asia - 18 0 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be fi- nanced 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 Category Dollar Equivalent) to be Financed (1) Civil works (a) Batar Plain 130,000 63% irrigation scheme (b) Construction 2,4409000 63% and maintenance of all buildings (other than Panchayat assembly halls and regional training centers), minor irrigation works, roads, trails, suspension bridges, village water supplies and erosion control (other than reafforestation) (c) Construction of 60,000 63% Panchayat assembly halls and the regional train- ing centers - 19 - Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (2) Equipment, piping, medical supplies, livestock and vehicles (a) Directly 2,100,000 100% of -foreign imported expenditures (b) Other 70,000 63% (3) Planting, reaf- forestation, re- generation and pro- tection of forests (a) By Department 220,000 63% of Forestry (b) By Department 50,000 63% for Soil and Water Conser- vation (4) Studies and train- 180,000 63% ing (5) Project administra- 380,000 63% tion and staffing (6) ADBN Sub-loans and 570,000 63% of amounts loans made by De- disbursed partment of Cottage and Village Indus- tries (7) Technical 100,000 100% assistance (8) Unallocated 1,700,000 TOTAL 8,000,000 - 20 - 2. For the purposes of this Schedule the term "foreign expendi- tures" 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. 3. (a) No proceeds of the Credit shall be withdrawn under Cate- gory (3)(a) until the study referred to in Section 3.10 and Part F(6) of the Project has been completed. (b) No proceeds of the Credit shall be withdrawn under Category (1)(a) until (i) water users' associations have been formed in the Batar Plain on the basis of the studies referred to in Section 3.10 and Part F(7) ofi the Project; (ii) final designs for such works satisfactory to the Association have been completed; and (iii) the Borrower has established, to the satisfaction of the Association, the amount of, and procedures for levying, water charges. 4. 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 re- spect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Bor- rower, increase or decrease the disbursement percentage then ap- plicable to such item as required to be consistent with the afore- mentioned policy of the Association. -21 - 5. 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 under Cate- gory (4) on account of expenditures incurred after December 1, 1975 for the study described in Part F(6) of the Project in an aggregate amount not exceeding $20,000 equivalent. 6. 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) 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 fur- ther withdrawals under such Category may continue until all expen- ditures thereunder shall have been made. 7. 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, - 22 - cancel such amount of the Credit as, in the Association's reason- able opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the pro- ceeds of the Credit. - 23 - SCHEDULE Description of the Project The Project is part of the Borrower's program over a five-year period to provide for intensive development of the Project Area by improving infrastructure and social services and by increasing the agricultural and livestock production of the approximately 29,000 families living therein. It consists of the following Parts: Part A: Agriculture, livestock and irrigation (1) Agricultural extension and animal health services (a) Construction and equipping of about five ad- ministrative sub-centers in Nuwakot District and about three administrative sub-centers in Rasuwa District. (b) Purchase and utilization of equipment for production of radio programs and of about 500 radios for distribution to farmers in the Project Area. (c) Construction of a livestock market at Trisuli Bazaar. (d) Introduction of improved varieties of crops and stock by establishing a seed and live- stock exchange program. - 24 - (e) Establishment of an annual program for the innoculation and dosing of buffaloes, cattle, sheep and goats. (2) Dairying and forestry (a) Construction, equipping and operation by DDC of a cheese and butter factory at Trisuli Bazaar of about 1,000 liters' capacity per day. (b) Planting of about 2,500 hectares of fodder and fuel trees, regeneration of about 1,000 hec- tares of fodder trees and increased protection of about 5,000 hectares of forest by means of fencing and controlled exploitation. (c) Reafforestation and regeneration of over- exploited forest areas primarily for purposes of erosion control. (3) Agricultural research and training (a) Purchase and utilization of equipment and materials for, and construction of stores and sheds at, the research stations of MFAI's Crop Research Division at Kakani, Dhunche and Trisuli Bazaar. - 25 - (b) Construction of training centers at the Kakani, Dhunche and Trisuli Bazaar Research Stations, construction of a regional training center at Trisuli Bazaar and carrying out training pro- grams for farmers and officials at such centers. (4) Irrigation (a) Development of about 600 hectares of small gravity-fed irrigation schemes. (b) Improvement of hill terrace irrigatior on about 650 hectares suitable for maize-based crop rotations and about 200 hectares suitable for rice-based crop rotations. (c) Development of a 110 hectare pilot low-lift pump scheme in Nuwakot District. (d) Development of a high-lift irrigation scheme to serve about 240 hectares on the Batar Plain in Nuwakot District. (e) Establishment of a district irrigation office with workshop and storage facilities in Nuwakot District. Part B: Agricultural credit and marketing facilities (1) Provision of credit by ADBN to farmers in the Project Area, directly and through cooperative - 26 - societies, for the purchase and utilization of such inputs as seed, fertilizer, agricultural chemicals, veterinary medicines and livestock and provision of managerial staff to cooperative societies in con- nection therewith. (2) Establishment, supervision and auditing of about 25 cooperative societies in the Project Area by the Cooperatives Department in the Borrower's Ministry of Land Reform in order to ensure the speedy and efficient implementation of Part B(1) of the Project. (3) Construction and staffing by AIC of about 16 ware- houses in the Project Area and supply of inputs to farmers through them. Part C: Infrastructure (1) Establishment, not later than two years after the Effective Date, or such other date as shall be agreed between the Borrower and the Association, of a Divisional Office of the Borrower's Department for Soil and Water Conservation at Trisuli Bazaar and carrying out of soil erosion control programs in the Project Area including, inter alia: (a) road, track and trail maintenance; (b) check-dam and embankment construction; and (c) stabilization of abut 500 hectares of endangered slopes. -27 - (2) Construction of about 50 kilometers of dry-weather tracks. (3) Improvement of about 100 kilometers of major trails and about 75 kilometers of minor trails. (4) Construction of about 12 small suspension footbridges. Part D: Health services, village water supplies and cottage industries (1) Health services (a) Construction of about 8 health posts in Nuwakot District and about 7 health posts in Rasuwa District. (b) Provision of staff, drugs, medicine and supplies for the health posts constructed under Part D(1)(a) of the Project. (2) Village water supplies (a) Provision of about 70 village water supply systems in Nuwakot District and about 30 village water supply systems in Rasuwa District. (b) Training of village technical staff and maintenance workers. - 29 - Part F: Studies and training (1) Training District staff in the identification, preparation and implementation of the construction of improved irrigation system and training farmers in the operation and maintenance thereof. (2) Carrying out a study of the variety, design, pro- duction and quality of cottage industries in the Project Area. (3) Carrying out a study to determine practices to improve crop production and to determine priorities for agricultural research in the Project Area. (4) Developing agricultural training programs for farmers in the Project Area. (5) Evaluation of the socio-economic impact of the Project on farmers in the Project Area. (6) Carrying out a study to determine the boundaries of forest areas in the Project Area and to set priori- ties for the development of such areas, indicating the specific areas to be covered in implementing Parts A(2)(b) and A(2)(c) of the Project. - 30 - (7) Carrying out a complete cadastral survey of the Batar Plain and a comprehensive socio-economic survey of the farmers living on the Batar Plain. The Project is expected to be completed by June 30, 1980. - 31 - SCHEDULE 3 Procurement A. General Procedures 1. Except as provided in Part A.3 hereof, equipment, piping and vehicles shall be procured under contracts to be awarded in ac- cordance 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. Contracts for equipment, piping and vehicles shall be bulked to the extent possible so as to encourage international competition. 3. (a) Contracts for equipment, piping or vehicles estimated to cost the equivalent of $50,000 or less may be awarded on the basis of competitive bidding advertised locally and pursuant to the Borrower's usual procurement procedures. (b) Contracts for the construction of the regional training center and district assembly halls for the District Panchayats shall be awarded on the basis of competitive bidding advertised locally and pursuant to the Borrower's usual procurement procedures. - 32- B. Procurement Without Contracting The construction of roads, tracks, bridges, buildings and irrigation works and the items to be used for erosion control under the Project shall be carried out by the Borrower under force account. C. Review of Procurement Decisions by the Association 1. Review of invitation to bid and of proposed awards and final contracts. With respect to all contracts for equipment, piping and vehicles 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) 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 - 33 - detailed report on the evaluation and comparison of the bids re- ceived, together with the recommendation for award and such other information as the Association shall reasonably request. The Asso- ciation 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 fu:nished 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. 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. - 34 - SCHEDULE 4 (Section 3.01(c)) Lending Terms in Respect of Agricultural Credit The following chart indicates the basic lending and relending terms for proceeds of the Credit withdrawn to implement Part B(1) of the Project. Lender Borrower Type of Loan Interest Rate Borrower ADBN Funds for short-term 7% loans (one planting season) Borrower ADBN Funds for medium-term 5% loans (livestock, up to 3 years) ADBN Coopera- Funds for short-term 11% tive loans society ADBN Coopera- Funds for medium-term 8% tive loans society ADBN or Farmer Short-term 15% cooperative society ADBN or Farmer Medium-term 12% cooperative society