Sri Lanka - AGR Extension & Adaptive Research : Credit 0931 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 931 CE Development Credit .Ageement (Agricultural Extension and Adaptive Research Project) between DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated July 24, 1979 11 CREDIT NUMBER 931 CE DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 24, 1979, between DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I General Conditions; Definitions Section 1.01. The perties 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 following additional term has the following meaning, viz., "Department of Agriculture" means the Department of Agricul- ture in the Borrower's Ministry of Agricultural Development and Research. 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 fifteen million five hundred thousand dollars ($15,500,000). 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 The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement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 Associ- ation, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services requited for the Project and to be financed out of the proceeds of the Credit. Ni- -2- Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1985 or such later date as the Association shall establish. The Associa- tion 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 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 semiannually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 15 and September 15 commencing September 15, 1989, and ending March 15, 2029, each installment to and including the installment payable on March 15, 1999, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appro- priate agricultural, engineering, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ, by January 31, 1980 or such other date as the Association may agree, consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Ki -3- 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 to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use 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 at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. . mmmmalemaIme -4- 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 land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfac- tory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 3.06. The Borrower shall: (a) vest responsibility for carrying out all extension services under the Project in the Department of Agriculture; and (b) appoint by July 1, 1979, and maintain thereafter, the Director of the Department of Agriculture as the Project Director with such terms of reference as shall be satisfactory to the Association. Section 3.07. The Borrower shall establish and maintain a Project Coordination Committee with membership and terms of reference satisfactory to)the Association. Section 3.08. The Borrower, in order to carry out Part A of the Project, shall cause: (a) district level officers in the Borrower's Ministry of Rural Industrial Development and the Borrower's Ministry of Coconut Industry to serve as subject matter officers on animal husbandry and coconut cultivation, and to train village level and range level extension officers in the Department of Agriculture on subject matters of animal husbandry and coconut cultivation; and (b) the said village level and range level extension offic- ers, in turn, to instruct farmers on subject matters of animal husbandry and coconut cultivation. Section 3.09. The Borrower shall employ additional staff required for extension services, adaptive research, training, economic analysis, monitoring and evaluation and civil works under the Project in accordance with a progr, m mutually agreed between the Borrower and the Association. Section 3.10. The Borrower shall ensure that staff who are assigned to extension services on the Project (a) are retained 1..4 4 51 in their assignments for the duration of the Project except for reasons of unsatisfactory performance of prescribed duties under their training and visit schedules or with the express approval of the Department of Agriculture; and (b) attend to all prescribed training and visit duties on a full time basis, and carry out their training and visit schedules without undue interruption. Section 3.11. The Borrower shall cause the financial manage- ment system of the Department of Agriculture to be revised by December 31, 1979 in a manner satisfactory to the Association, so as to permit expeditious authorization of expenditures under the Project. Section 3.12. The Borrower shall cause the Department of Agriculture to prepare and adopt a plan, satisfactory to the Association, to carry out Part C (iii) of the Project, by Decem- ber 31, 1979, and thereafter, carry out the plan. Section 3.13. The Borrower shall ensure that the supply of building materials is adequate *to carry out the works under the Project in accordance with a timetable mutually agreed with the Association. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and separate accounts adequate to reflect in accordance with consistently maintained appropriate 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, including, without limitation to the foregoing, all expenditures described in Category 4 of the table in paragraph 1 of Schedule 1 to this Agreement on account of which withdrawals are requested from the Credit Account on the basis of certificates of expendi- ture. (b) The Borrower shall retain, or cause to be retained, until one year after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditure and shall enable the Association's accredited representatives to examine such records. -6- (c) The Borrower shall: (i) have or cause to have the separate accounts referred to in Section 4.01 (a) above for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Association; (ii) have or cause to have the said sep-arate accounts consolidated by the Project Director; (iii) furnish or cause to be furnished 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 the said separate accounts for such year as so audited; (B) the report of -such audit by such auditors, of such scope and in such detail as the Association shall have reasonably requested, including, without limitation to the foregoing, a separate opinion by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) above as to whether the proceeds of the Credit withdrawn from the Credit Account on the basis of certificates of expendi- ture have been used for the purpose for which they were provided, and (C) the consolidated accounts prepared by the.Project Director under Section 4.01 (c) (ii) above; and (iv) furnish or cause to be furnished to the Association such other information concerning said separate accounts, consolidated accounts, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause to be taken out and maintained with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 4.03. The Borrower agrees, after the completion of the Project, to make available adequate funds so as to enable the Department of Agriculture to continue: (a) the operation, with due diligence and efficiency, of extension services, adaptive research training, economic studies and other activities introduced or established under the Project; (b) the proper operation and maintenance of all ProJect equipment, vehicles, buildings and facilities; and (c) -the employment of the staff engaged under the Project to carry out the above mentioned activities and operation and maintenance. -7- 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 (b) of the General Conditions, namely, that the Borrower shall have established the Project Coordination Committee in accordance with Section 3.07 of this Agreement. Section 5.02. The date October 24, 1979 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 years after, the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. The Secretary, Ministry of Finance and Planning 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: Ministry of Finance and Planning Colombo Democratic Socialist Republic of Sri Lanka Cable address: Telex: SECMINFIN 1232 Colombo FORAID ik -8- For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereuntod -ly authorized, have caused this Agreement to be signed.jin their respective names in the District of Columbia, United States of America, as of the day and year first above written. DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA By /s/ W. S. Karunaratne Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. David Hopper Regional Vice President South Asia -9- SCHEE 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, fhe 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) Construction and 4,400,000 65% materials (2) Equipment, supplies, 4,300,000 100% of foreign vehicles and spares expenditures; 100% of local expenditures ex-factory; and 65% of other local expendi- tures (3) Technical Assistance 1,700,000 100% and overseas training (4) Salaries and allowances 3,400,000 65% under Section 3.09 (5) Unallocated 1,700,000 TOTAL 15,500,000 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 - 10 - (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 com- pliance 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 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement, except that with- drawals in an aggregate amount not exceeding the equivalent of $200,000 may be made on account of payments made for expendi- tures before that date but after March 15, 1979. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 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 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 estimat,ed shortfall, reduce the disbursement percentage then applicable to such expen- ditures 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 or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to r1 T2 2- C- - 11 - the Borrower, cancel such amount of the Credit as, in the Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. vå 'rD 71,11 - 12 - SCHEDULE 2 Description of the Project The Project is intended to assist the Borrower to strengthen its (i)'extension services by establishing the training and visit system on a unified basis in the Borrower's entire territory, and (ii) adaptive research. The Project consists of the following Parts: Part A: Extension Services Strengthening of extension services by establishing, for the Borrower's entire territory, a unified training and visit extension system for (i) all crops (excluding tea and rubber), and (ii) animal husbandry (excluding veterinarian services and supply of improved animal breeds). Part B: Adaptive Research Strengthening of adaptive research by establishing an adap- tive research network consisting of inter alia about 24 adaptive research centers supervised by about 8 mobile teams, and by conducting field trials in farmers' fields. Part C: Department of Agriculture Strengthening, improvement and expansion of the Department of Agriculture's (i) agricultural training institutions, (ii) Economic Unit, and (iii) Civil Engineering Unit. Part D: Civil Works Construction of training facilities, offices, laboratories, workshops and quarters for additional staff required under the Project. Part E: Vehicles and Equipment Provision of vehicles, including spares, for additional staff required under the Project, and equipment, including spares, for farms (for adaptive research and training), training facilities, offices, laboratories and workshops used under the Project. -13- Part F: Operation and Maintenance Program of operation and maintenance for works, buildings, vehicles and equipment under the Project. Part G: Overseas Training Provision of a scheme for overseas training of staff from the Department of Agriculture, Department of Animal Production and Health and Coconut Cultivation Board. The Project shall be carried out with the assistance of about 140 man-months of consultant services. The Project is expected. to be completed by December 31, 1984. - 14 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, goods shall be procured under contracts 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 March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding, (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. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in the Democratic Socialist Republic of Sri Lanka may be granted a margin - 15 - of preference in accordance with, and subject to, the following provisions: 1. 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. 2. After evaluation, responsive bids will be classified in one of the following three groups: (a) Group A: bids offering goods manufactured in the Democratic Socialist Republic of Sri Lanka 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 the Democratic Socialist Republic of Sri Lanka equal to at least 20% of the ex-factory bid price of such goods. (b) Group B: all other domestic bids. (c) Group C: bids offering any other goods. 3. 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. 4. If, as a result of the comparison under paragraph 3 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 evaluated 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 evaluated 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, - 16 - it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures 1. (a) Bicycles and motorcycles which are to be sold to Project staff; (b) small off-the-shelf items which cannot be bulked into packages suitable for procurement under Part A of this Schedule and each contract costing less than $10,000 equivalent; (c) items which are urgently needed and (d) items requiring standardization, may be procured through local procedures satisfactory to the Association, provided all such procurement under sub-paragraphs (a), (b), (c) and (d) shall not in the aggregate exceed $1,200,000 equivalent. 2. Contracts for construction shall be awarded on the basis of local competitive bidding in accordance with procedures satisfac- tory to the Association. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for goods and civil works estimated to cost the equivalent of $100,000 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 Bor- rower 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 shall furnish to the Associ- ation, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Association shall reasonably request. The - 17 - 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 submi ,.on to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract 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 the respective 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. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination.