Tunisia - Southern Irrigation Project : Loan 1796 - Loan Agreement - Conformed

OFFICIALI LOAN NUMBER 1796 TUN DOCUMENTS Loan Agreement (Southern Irrigation Project) between REPUBLIC OF TUNISIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1980 LOAN NUMBER 1796 TUN LOAN AGREEMENT AGREEMENT, dated F4 , 1980, between REPUBLIC OF TUNISIA (hereinafter calledthe Borrower) and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) Parts A and D of the Project will be carried out by the Borrower, respectively through GR and DRES (as these terms are hereinafter defined); (C) Parts B and C of the Project will be carried out by OMVD and by OMVG, respectively, with the Borrower's assistance and, as part of such assistance, the Borrower w>ll make available to OMVD and OMVG, respectively, a portion of the proceeds of the Loan as hereinafter provided; (D) by an exchange of letters dated January 10, 1978 and January 27, 1978 between the Borrower and the Bank, the Bank granted to the Borrower a project preparation advance (hereinafter called the Advance) in various currencies equivalent to one hundred and eighty thousand dollars ($180,000) to assist in financing the preparation of the Project; and (E) the Bank is prepared to refund the Advance out of the proceeds of the Loan provided for herein; WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth -2- herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Area" means the area of about 5,000 ha com- prising the Regions of Djerid, Nefzaoua and Gabas; (b) "GR" means the Genie Rural Department within the Borrower's Ministry of Agriculture; (c) "DRES" means the Direction des Ressources en Eau et en Sol within the Borrower's Ministry of Agriculture; (d) "OMVD" means the Office de Mise en Valeur du Djerid, an 6tablissement public A caractAre industriel et commercial responsible for agricultural development in the Djerid region, and to be established by the Borrower pursuant to Section 6.01 (a) of this Agreement, or any successor thereto; (e) "OMVG" means the Office de Mise de Valeur de GabAs, an 6tablissement public A caractAre industriel et commercial responsible for agricultural development in the Gabgs and Nefzaoua regions, and to be established by the Borrower pursuant to Section 6.01 (b) of this Agreement, or any successor thereto; (f) "Simulation Models" means the mathematical models used to simulate the process of acquifer development to determine their evolution as a result of various programs of their exploitation; and (g) "Dinars" and "DT" mean the currency of the Borrower. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty-five million dollars ($25,000,000). -3- Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan 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 Bank, for expenditures made (or, if the Bank 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 Loan. (b) As of the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount required to repay the principal amount of the Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Advance shall be cancelled as of the same date. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1986 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to.the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of seven and ninety-five hundredths per cent (7.95%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE Ill Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts A and D of the Project through GR and DRES, respectively, and shall cause OMVD and OMVG to carry out Parts B and C, respectively, of the Project, under arrangements acceptable to the Bank, all with due diligence and efficiency and in conformity with appropriate administrative, financial, agricultural and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Promptly after the completion of Part A of the Project, the Borrower shall ensure that the responsibility for the opera- tion and maintenance of the new plantations established under Part A of the Project is transferred to OMVD and OMVG, respectively. (c) Without limitation or restriction upon the generality of Section 3.01 (a) of this Agreement, the Borrower shall allocate to GR, DRES, OMVD and OMVG, respectively: (i) budgetary funds in such amounts as shall be required to meet, inter alia, the local expenditures for Parts A, D, B and C, respectively, of the Pro- ject, and (ii) such proceeds of the Loan as shall have been withdrawn by the Borrower for the purposes of Parts A, D, B and C, respectively, of the Project. (d) The Borrower shall, through its Ministry of Agriculture, ensure the coordination of the work of OMVD, OMVG and of its agencies and departments participating in the execution of the Project. Section 3.02. In order to assist (i) GR in the preparation of bidding documents and the evaluation of bids and the supervi- sion of construction works under the Project, and (ii) DRES in the carrying out of the studies under Part D of the Project, the Borrower shall employ consultants whose qualifications, experi- ence and terms and conditions of employment shall be satisfactory to the Borrower and the Bank. Section 3.03. Without limitation or restriction upon any of its obligations under this Agreement, the Borrower shall cause Parts B and C of the Project to be carried out by OMVD and OMVG, respectively, under terms and conditions satisfactory to the Bank; for this purpose, not later than December 31, 1980, or such later date as may be agreed upon between the Borrower and the Bank, the Borrower shall enter into arrangements providing for, inter alia, the obligations of OMVD and OMVG, respectively: (i) to establish, manage and maintain the new plan- tations and carry out the extension services -5- under the direction and supervision of qualified staff satisfactory to the Bank; (ii) to periodically determine the price of alfalfa hay produced taking into account prevailing market prices in the Project Area; (iii) to procure the goods provided under Parts B.3 and C.3, respectively, of the Project in accordance with the provisions set forth in Schedule 4 to this Agreement; and (iv) to undertake any other obligations as the Borrower and the Bank shall agree. Section 3.04. (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 Loan again, hazards incident to the acquisition, transportation and delive y 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 Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.05. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of Parts A and D of the Project (including its cost and, where appropriate, the benefits to be derived from it), to identify the goods and ser- vices financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in Part A of the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information. as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, -6- the benefits to be derived from it, the expenditure of the pro- ceeds of the Loan 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 at such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably 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 Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. Section 3.06. The Borrower shall closely monitor the varia- tions in water salinity and the depletion of exisiing and future wells throughout the Project Area and, for this purpose, the Borrower shall: (a) not later than April 1, 1981, forward to the Bank for its review and comment a report summarizing the data recorded on the evolution of aquifers taking into account water levels, water use and water quality of existing and future wells; (b) not later than October 1, 1983: (i) develop a new Simulation Model for the Djerid Region similar to the Simulation Model developed for the Nefzaoua Region; and (ii) carry out simulations of the evolution of the Djerid and Nefzaoua aquifers, and forward to the Bank for its review and comment the results thereof; (c) not less than every five years after the date specified in paragraph (b), carry out simulations and promptly thereafter forward to the Bank, for its review and comment, a copy of the results thereof establishing detailed projections of the evolution of the Djerid and Nefzaoua aquifers; and (d) take all such remedial action as may be agreed upon between the Borrower and the Bank to limit salinity and ensure availability of potable water through such measures as may be appropriate, including as the case may be, through water desalin- ization or conveyance of fresh water from less saline wells. -7- ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member con- cerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distri- bution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the alloca- tion, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivisi,on, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with -8- consistently maintained sound accounting practices the operations, resources and expenditures, in respect of Parts A and D of the Project, of the departments or agencies of the Borrower respon- sible for carrying out the Project or any part thereof. Section 4.03. The Borrower shall cause all works and facili- ties included in the Project to be adequately maintained and repaired in accordance with sound engineering and agricultural practices and standards and shall cause all canals, pipelines, structures and other works and facilities not included in the Project but necessary to the proper and efficient operation thereof to be operated and adequately maintained and repaired in accordance with such practices and standards. Section 4.04. The Borrower shall: (i) carry out a study, based on the criteria set forth in Schedule 5 of this Agreement, for the establishment of a cost recovery system for irrigation in the Project Area; (ii) on the basis of the results of such study and not later than June 30, 1981, submit to the Bank for its review and comment a plan to progressively increase water charges to be paid by farmers; and (iii) thereafter implement such plan on the basis of such recommendations as shall have been agreed upon between the Borrower and the Bank, and periodically review the adequacy of the level of water charges in consultation with the Bank. ARTICLE V Remedies of the Bank Section 5.01, For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) the Borrower, OMVD or OMVG shall have failed to perform any of their respective obligations under this Agreement or under the arrangements entered into pursuant to Section 3.03 of this Agreement; and (b) an action shall have been taken for the abrogation or amendment of any of the terms of the Borrower's Act establishing OMVD or the Borrower's Act establishing OMVG which would, in the opinion of the Bank, adversely affect the execution of the Project or the ability of the Borrower, OMVD or OMVG to perform their -9- respective obligations under this Agreement or under the arrange- ments entered into pursuant to Section 3.03 of this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any of the events specified in paragraph (a) of Section 5.01 of this Agreement shall o-cur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any of the events specified in paragraph (b) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) OMVD shall have been duly and legally established as an 'tablissement public ' caract're industriel et commercial with all such powers as are necessary to carry out Part B of the Project in accordance with the terms and conditions set forth in this Agreement; and (b) OMVG shall have been duly and legally established as an 'tablissement public ' caract're industriel et commercial with all such powers as are necessary to carry out Part C of the Project in accordance with the terms and conditions set forth in this Agreement. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that OMVD has been duly and legally established as an etablissement public a caractere industriel et commercial in compliance with all applicable laws and regulations prevailing in the Republic of Tunisia, and has been duly empowered to carry out Part B of the Project in accordance with the provisions set forth,in this Agreement; and - 10 - (b) that OMVG has been duly and legally established as an 6tablissement public A caractere industriel et commercial in compliance with all applicable laws and regulations prevailing in the Republic of Tunisia, and has been duly empowered to carry out Part C of the Project in accordance with the provision set forth in this Agreement. Section 6.03. The date 4 O is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministre D6l6gu6 aupras du Premier Ministre Charg6 du Plan 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: Minist6re du Plan 1 rue de Beja Tunis, Tunisia Cable address: Telex: MINISTERE DU PLAN MIPLAN Tunis 12117 TN For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 11 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day atnd year first above written. REPUBLIC OF TUNISIA By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Europe, Mi9dle East and North Africa - 12 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 8,800,000 40% (2) Vehicles and agri- 12,600,000 100% of foreign cultural and irri- expenditures gation equipment and 55% of local expendi- tures (3) Consultants' ser- 420,000 100% of foreign *vices and studies expenditures (4) Refunding of Project 180,000 100% Preparation Advance (5) Unallocated 3,000,000 TOTAL 25,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower or for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. - 13 - 3. The disbursement percentages have been calculated in com- pliance with the policy of the Bank that no proceeds of the Loan 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 Loan decreases or increases, the Bank 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 Bank. 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. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in para- graph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insuf- ficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallo- cation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank 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 Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 14 - SCHEDULE 2 Description of the Project The Project, which is included in the Borrower's Master Plan for Water Resources Development in Southern Tunisia, consists of the following Parts: Part A: Civil Works 1. Hydraulic and civil works for the rehabilitation of 7 oases on about 3,000 ha and for the establishment of 9 new date palm plantations and date palm-forage peri- meters on about 2,100 ha in the Djerid, Nefzaoua and Gabas Regions, including: (i) deep-well boring; (ii) installation of pump sets and of well equipment; (iii) installation of power connections; (iv) land-levelling; (v) construction of irrigation and drainage infrastruc- tures; (vi) installation of wind breakers and anti-sand barriers; (vii) construction of feeder roads and access roads; (viii) construction of office buildings, storage facili- ties, and repair shops for vehicles and agricul- tural equipment; and (ix) construction of a date processing plant in the Djerid Region. 2. Acquisition of vehicles and acquisition and installation of equipment, including pump sets, well equipment, abestos and cement pipes. 3. Establishment and maintenance of an experimental plot of about 15 ha in the Nefzaoua Region to undertake research on: - 15 - (i) drip irrigation for date palms; (ii) sprinkler irrigation for forage plantations; and (iii) various drainage systems. Part B: Agricultural Development in the Djerid Region 1. Planting, operating and maintaining 4 date palm planta- tions of a total of about 1,300 ha, including about 280 ha of forage plantation. 2. Provision of agricultural extension services to farmers to improve date, vegetable and forage production. 3. Acquisition of vehicles and trucks and acquisition and installation of agricultural equipment and machinery. 4. Operation of a date processing plant. Part C: Agricultural Development in the Gabas and Nefzaoua Regions 1. Planting, operating and maintaining 5 date palm plantations of a total of about 800 ha in the Nefzaoua Region, including about 300 ha of forage plantation for the production of alfalfa. 2. Provision of agricultural extension services to farmers to improve the date, vegetable and forage production. 3. Acquisition of vehicles and trucks and acquisition and installation of agricultural equipment and machinery. Part D: Studies of the Evolution of Aquifers 1. Construction of a detailed Simulation Model for the aquifer in the Djerid Region. - 16 - 2. Carrying out of simulations on the basis of the Simula- tion Models developed for the Djerid and Nefzaoua aquifers. The Project is expected to be completed by December 31, 1985. - 17 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 15 and September 15 beginning September 15, 1986 through September 15, 1996 1,135,000 On March 15, 1997 1,165,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 18 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.40% More than three years but not more than six years before maturity 2.80% More than six years but not more than eleven years before maturity 5.15% More than eleven years but not more than fifteen years before maturity 7.00% More than fifteen years before maturity 7.95% - 19 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereunder, 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 Bank 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 Bank shall reasonably request; the Bank will arrange for the publication 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 inter- national 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 the imported goods, or the ex-factory price or off-the-shelf price of other goods offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. 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 Republic of Tunisia may be granted a margin of preference in accordance with, and subject to, the following provisions: - 20 - 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: (1) Group A: bids offering goods manufactured in the Republic of Tunisia if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Republic of Tunisia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pur*uant to the bids, of the goods. Such lowest eval- uated 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 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 3 is the lowest evaluated bid shall be selected. - 21 - C. Other Procurement Procedures Notwithstanding the provisions of Part A of this Schedule: 1. Contracts for civil works required under the Project shall be awarded on the basis of local competitive bidding procedures acceptable to the Bank, except that civil works required for the installation of the power connections under Part A.1 (iii) of the Project, estimated to cost the equivalent of $400,000, shall be carried out on the basis of a negotiated contract between the Borrower and the Soci6t6 Tunisienne d'Electricitf et du Gaz under terms and conditions satisfactory to the Borrower and the Bank. 2. Contracts for vehicles and agricultural equipment required under Parts A, B and C of the Project, which do not exceed the equivalent of $250,000 each and which do not exceed in the aggregate the equivalent of $1,700,000, may be awarded on the basis of local competitive bidding procedures acceptable to the Bank. 3. Contracts for pump sets, well equipment, and asbestos and cement pipes required under Part A.2 of the Project, which do not exceed the equivalent of $250,000 each and which do not exceed in the aggregate the equivalent of $750,000, may be awarded in accor- dance with local competitive bidding procedures acceptable to the Bank. D. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $250,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, 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 Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it, is issued to the prospective bidders. - 22 - (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and compari- son of the bids received, and such other information as the Bank shall reasonably request. The Bank 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 Bank'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 Bank promptly after its execution and prior to the sub- mission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such con- tract, together with the analysis of the respective bids, recom- mendations for award and such other information as the Bank shall reasonably request. The Bank 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 30% of the original price, the Borrower shall inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, 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. - 23 - SCHEDULE 5 Criteria for Formulating a Cost Recovery System Determination of the level of water charges to be recovered from farmers shall take into account, the provisions of the Bor- rower's Code des Eaux as well as, inter alia, the following factors: 1. the costs (in real terms) incurred by the Borrower for constructing, operating and maintaining the irriga- tion system in the Project Area; 2. the impact of the level and structure of water charges on the farmers' incentives to utilize available water resources; 3. the farmers' relative income in relation to the national per capita income; 4. the scope for possible differentiation in the water charges as applied to farmers with different income levels and farm sizes; and 5. the appropriate phasing of increases in water charges in relation to increased agricultural production under the Project. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this -day of eZ& , 198 LL. S XSCRETA FOR SECRETARY