Malawi - Fourth Highway Project : Credit 1099 - Credit Agreement - Conformed

CREDIT NUMBER 1099 MAI Development Credit Agreeiment (Fourth Highway Project) between REPUBLIC OF MALAWI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated ;M7n , 1981 CREDIT NUMBER 1099 MAI DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated J-dF"A4Ar X0, 1981, between the REPUBLIC OF MALAWI (hereinafter called the Borrower) and the INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). 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 June 30, 1980, 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 terms have the following meanings: (a) "MOWS" means the Ministry of Works and Supplies of the Borrower; (b) "EPD" means the Economic Planning Division within the Office of the President and Cabinet of the Borrower; (c) "District Council" means the district council, a body corporate established pursuant to the laws of the Borrower, for any of the Borrower's districts included in Part B (i) (c) of the Project; and (d) "First Phase of DRIMP" means the first phase of the Borrower's district roads improvement and maintenance program carried out in the Kasungu, Mulanje, Mzimba and Salima Districts of the Borrower pursuant to the Development Credit Agreement (Second Highway Project), dated December 19, 1974, between the Borrower and the Association, as last amended by exchange of letters dated June 9, 1978 and July 11, 1978 between the Association and the Borrower. -2- 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 twenty-five million nine handred thousand Special Drawing Rights (SDR 25,900,000). 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 The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement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, 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 December 31, 1984 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a 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 February 1 and August 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each February 1 and August 1 commencing August 1, 1991, and ending February 1, 2031, each installment to and including the install- ment payable on February 1, 2001, 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. -3- Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Part B (i) (c) of the Project through the District Councils under the supervision of MOWS, Part E through EPD, and the other Parts through MOWS, all with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, training and planning practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) In order to carry out its obligations under paragraph (a) of this Section and without any limitation or restriction thereon, the Borrower shall in particular: (i) make available, on a grant basis, to each District Council the funds necessary for road maintenance under Part B (i) (c) of the Project to the extent the resources available to such Council from its own revenues are not sufficient to cover the expenditures required for this purpose; and (ii) not later than four months before the beginning of each fiscal year of the Borrower until completion of said Part of the Project, review with the Association the amounts proposed to be made available for this purpose to the District Councils during such fiscal year. Section 3.02. In order to assist the Borrower in the evaluation of bids and the supervision of works for Part A of the Project and in the carrying out of Parts B, C (i) and E of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, including, inter alios, a transport economist to assist in carrying out Part E of the Project to be appointed not later than December 31, 1981. 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. -4- (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 Association, 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 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) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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. Section 3.05. The Borrower shall take all such action as shall be necessary to acquire as and when needed all such land and -5- rights in respect of land as shall be required for carrying out the Project and shall furnish to the Association, at its request, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 3.06. Except as the Association may otherwise agree, the Borrower shall carry out Part A of the Project in accordance with the design standards set forth in Schedule 4 to this Agreement. Section 3.07. The Borrower shall carry out Part B (i) of the Project in accordance with annual work programs agreed upon between the Borrower and the Association. For this purpose, the Borrower shall, not later than four months before the beginning of each fiscal year of the Borrower until completion of said Part of the Project, furnish to the Association for its concurrence the proposed work program for such fiscal year. Section 3.08. The Borrower shall complete the study to be carried out under Part C (i) of the Project by May 31, 1982. Section 3.09. The Borrower shall select candidates whose qualifications and proposed training programs shall be satis- factory to the Association for purposes of training under Part E of the Project; the first such candidate shall be selected by June 1, 1981 and the remaining candidates by December 31, 1981. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records 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 (the Project Accounts). (b) The Borrower shall retain or cause to be retained until one year after the Closing Date, as a separate part of the Project Accounts, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures for the Project on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditure, and shall enable the Asso- ciation's accredited representatives to inspect such records. (c) The Borrower shall: (i) have the Project Accounts for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by its Auditor General or other independent auditors acceptable to the Association; (ii) furnish to the Association as soon as ayailable, but in any case not later than six months after the end of each such year, (A) a certified statement of the Project Accounts for such year as so audited and (B) the report of such audit by the Auditor General or 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 the Auditor General or said auditors in respect of the expenditures and records referred to in paragraph (b) of this Section as to whether the proceeds of the Credit withdrawn from the Credit Account on.1the basis of certifi- cates of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning the Project Accounts and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. (a) The Borrower undertakes to maintain or cause to be maintained adequately its rain and secondary road network, the district roads improved under the First Phase of DRIMP and under the Project, and its road maintenance equipment, and shall cause all necessary repairs and renewals thereof to be made promptly, all in accordance with appropriate engineering, economic and financial practices, and shall provide, promptly as needed, the funds, equipment, workshop facilities, labor and other resources required for the purpose. (b) In order to carry out its obligations under paragraph (a) of this Section and without any limitation or restriction thereon, the Borrower shall, inter alia: (i) promptly upon completion of the study under Part C (i) of the Project, exchange views with the Association on the findings and recommendations of such study; (ii) on the basis of such study and exchange of views, establish a rolling five-year road maintenance program, including the amounts to be allocated annually for its execution, satisfactory to the Borrower and the Association; and -7- (iii) thereafter, not later than four months before the beginning of each fiscal year of the Borrower until five years after completion of the Project, exchange views with the Association on the updating of such program, including its extension to cover an additional year, and the measures taken or to be taken for its execution during such fiscal year. Section 4.03. The Borrower shall take such measures as may be necessary to ensure that the dimensions and axle-loads of vehicles using its highways and roads are consistent with the design standards of such highways and roads. Section 4.04. The Borrower shall maintain a suitable traffic data collection system to assist in the improvement and development of its highway and road network. ARTICLE V Termination Section 5.01. The date a&A021 /160/is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.02. The obliSations of the Borrower under Sections 4.02 (a), 4.03 and 4.04 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 Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance P.O. Box 30049 Capital City Lilongwe 3 Malawi -8- Cable address: Telex: FINANCE FINANCE Lilongwe 4407 MI For the Association: Irternational 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 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 and year first above written. REPUBLIC OF MALAWI By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa -9- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil works 13,160,000 80% under Part A of the Project (2) Civil works under 1,370,000 60% Part B (i) (a) of the Project (3) Civil works under Parts B (i) (b) and D of the Project: (a) under contracts 840,000 70% (b) force account 510,000 70% (4) Civil works under 680,000 75% of incre- Part B (i) (c) mental ex- of the Project penditures during the first mainte- nance year, 50% of such expenditures during the second main- tenance year, and 25% of such expendi- tures during the third maintenance year - 10 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (5) Vehicles, equip- 100% of for- ment and spare eign expendi- parts: tures and 90% of local expenditures (a) for Part B 740,000 (i) of the Project (b) for other Parts 170,000 of the Project (6) Consultants' 85% services: (a) for Part A 840,000 of the Project (b) for Part B 930,000 of the Project (c) for Part C 420,000 of the Project (d) for Part E 190,000 of the Project (7) Training under Part E 50,000 100% of foreign of the Project expenditures (8) Unallocated 6,000,000 TOTAL 25,900,000 - 11 - 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; (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; (c) the term "incremental expenditures" means, in respect of each district of the Borrower included in Part B (i) (c) of the Project, district road maintenance expenditures in such district during any fiscal year of the Borrower over and above the total amount of such expenditures in such district during the Borrower's fiscal year 1980/81; and (d) the term "first maintenance year" means, in respect of each such district, the Borrower's fiscal year during which road maintenance under Part B (i) (c) of the Project starts in such district, and the terms "second maintenance year" and "third maintenance year" mean, for such district, the following two fiscal years of the Borrower, respectively. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disburse- ment 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 expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $350,000 in respect of Category (3) and in an aggregate amount not exceeding the equivalent of $230,000 in respect of Subcategory (6) (b), may be made on account of payments made for such expenditures before that date but after July 1, 1980. - 12 - 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category or Subcategory will be insufficient to finance the agreed percentage of all expenditures in that Category or Subcategory, the Association may, by notice to the Borrower: (i) reallocate to such Category or Subcategory, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category or Subcategory 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 further withdrawals under such Category or Subcategory 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 the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 13 - SCHEDULE 2 Description of the Project The Project is designed to continue the upgrading of the Borrower's main North - South road (Chitipa - Nsanje), to improve the maintenance of the Borrower's road network and the facilities for training of its road sector personnel, and to strengthen the Borrower's institutions in charge of transport sector planning. The Project consists of the following Parts: Part A: Main Road Construction and Improvement (i) Construction of two-lane paved roads between Jenda and Luwawa Turnoff (about 32 km) and Mbowe and Ekwendeni (about 37 km). (ii) Improvement and upgrading of the road between Luwawa Turnoff and Mbowe (about 100 km) to all-weather gravel standard. Part B: District Roads Improvement and Maintenance Program (i) A second phase of the Borrower's district roads improve- ment and maintenance program (DRIMP), to be extended to cover ten additional districts of the Borrower, including: (a) the improvement of a total of about 2,600 km of district roads in said districts; (b) the establishment and equipping of a road maintenance unit in each of said districts, including the construction of depots and of housing for key staff, and staff training; and (c) initial operation of such units to maintain the roads improved under Part B (i) (a) of the Project, and maintenance of the roads improved under the First Phase of DRIMP. (ii) Preparation of a third phase of the Borrower's district roads improvement and maintenance program. - 14 - Part C: General Road Maintenance (i) A comprehensive study of the maintenance needs of all road classes, the capacity of MOWS and the Borrower's district councils to satisfy such needs and the resources available or to be made available for this purpose. (ii) Provision of additional road maintenance equipment to MOWS to be used, in particular, for minor repairs of bituminous pavements. Part D: Training Facilities An initial phase of the relocation of the MOWS training center to Lilongwe, including the construction and equipping of staff housing and classrooms, and dormitories with a capacity for about 25 trainees. Part E: Transport Sector Planning Strengthening of the EPD unit responsible for the planning and coordination of transport sector policies and investments, including training abroad of about 3 staff members for such unit. The Project is expected to be completed by June 30, 1984. - 15 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Parts B and D hereof, civil works 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 nf the Guidelines. 2. For civil works 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 publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the civil works in question. The Borrower shall provide the necessary information to update such notice annually so long as any civil works remain to be procured on the basis of international competitive bidding. 3. Bidders for the civil works included in Part A of the Project shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. B. Other Procurement Procedures 1. Civil works under Part D of the Project and for the construction of depots and staff housing under Part B (i) of the Project may be carried out under contracts procured on the basis of competitive bidding advertised locally, in accordance with local procedures acceptable to the Association. 2. Contracts for the purchase of vehicles, equipment and spare parts for Part B (i) of the Project shall be procured on the basis of negotiated contract extensions from manufacturers supplying - 16 - such vehicles and equipment for the First Phase of DRIMP to ensure standardization, or on the basis of a solicitation of price quotations from at least three suppliers. 3. Contracts for the purchase of vehicles, equipment and spare parts for Parts of the Project other than Parts A and B shall be procured on the basis of a solicitation of price quotations from at least three suppliers. C. Review of Procurement Decisions by the Association 1. Review of prequalification. The Borrower shall, before qualification is invited, inform the Association in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Association for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts, with respect to all contracts estimated to cost the equivalent of $150,000 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 shall furnish to the Associa- tion, 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; in the - 17 - case of contracts for Part A of the Project, such report shall be prepared by the consultants referred to in Section 3.02 of this Agreement and include the recommendations for award of said consultants. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (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 submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 3. 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. 4. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change orders under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 10% 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. - 18 - D. Procurement Without Contracting 1. Civil works referred to in paragraph 1 of Part B of this Schedule may be carried out by force account by MOWS under procedures satisfactory to the Association. 2. Civil works under Parts B (i) (a) and (c) of the Project shall be carried out by force account by MOWS and the District Councils, respectively, under procedures satisfactory to the Association. - 19 - SCHEDULE 4 Design Standards for the Road Works Under Part A of the Project (Section 3.06 of the Development Credit Agreement) A. Design Standards for Paved Roads (Part A(i) of the Project) 1. Design Speed (km/hr) 80 2. Minimum Radius of Curvature (m) 215 3. Maximum Gradient (%) 6.0 4. Pavement Width (m) 6.7 5. Roadway Width (m) 9.7 6. Pavement Type: Subbase: Natural Gravel Base: Natural Gravel or Crushed Stone Surface: Double Bituminous Surface Treatment 7. Pavement Design Method: Accumulated Equivalent Standard Axle Loadings 8. Structures: Width: Equal to Roadway Width + 2 x 0.6 m footpaths Design Loading: According to British Standard 153 B. Design Standards for Improved Gravel Road (Part A (ii) of the Project) 1. Design Speed (km/hr) 50 2. Minimum Radius of Curvature (m) 75 3. Maximum Gradient for Gravel (%) 7.0 (Steeper Slopes to be Provided with Single Bituminous Surface Treatment) 4. Minimum Pavement Width (m) 5.0 5. Minimum Roadway Width (m) 7.0 6. Gravel Surface Thickness (m) 0.15 7. Width of Subsurface Structures: Equal to Roadway Width INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 198L. FOR SECRETARY