Philippines - Rural Water Supply And Sanitation Project : Loan 2206 - Loan Agreement - Conformed

LOAN NUMBER 2206 PH Loan Agreement (Rural Water Supply and Sanitation Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1982 LOAN NUMBER 2206 PH LOAN AGREEMENT AGREEMENT, dated c2J , 1982, between REPUBLIC OF THE PHILIPPINES (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein- after 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 extending the Loan as hereinafter provided; (B) Part A of the Project will be carried out by Rural Waterworks Development Corporation with the Borrower's assistance and, as part of such assistance, the Borrower will make available to Rural Waterworks Development Corporation part of the proceeds of the loan; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to extend the loan to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Bank and Rural Waterworks Develop- ment Corporation; 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 October 27, 1980, with the same force and effect as if they were fully set forth 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 have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Corporation" means the Rural Waterworks Development Corporation established pursuant to the Borrower's Executive Order No. 577 dated January 12, 1980; -2- (b) "Level I System" means a system of water service from a single source suitable to supply on average to some 15 to 50 households; (c) "Level II System" means a system of water service designed to supply on average to some 100 to 150 households with one faucet per 4 to 6 households; (d) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and the Corporation pursuant to Section 3.01 (b) of this Agreement; and (e) "peso" means the currency unit of the Borrower. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrcwer, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to thirty-five million five hundred thousand dollars ($35,500,000). Section 2.02. 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 expendi- tures made (or, if the Bank shall so agree, to be made) in res- pect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, pro- curement of the goods and civil works required for the Project and 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 December 31, 1987 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. Not later than the Effective Date, the Bor- rower shall pay to the Bank a fee equivalent to five hundred twenty-four thousand six hundred thirty-one dollars ($524,631). The fee shall be payable in such currency or currencies as the Bank shall specify. In the event that the Bank shall not have -3- received full payment of the fee by the Effective Date, the Bank shall, on behalf of the Borrower, withdraw the amount allocated to Category (5) of the table set forth in paragraph 1 of Schedule 1 to this Agreement, and pay to itself the amount required for the full payment of the fee in the currency or currencies speci- fied for the purpose. Section 2.06. The Borrower shall pay to the Bank a commit- ment 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 2.07. The Borrower shall pay interest at the rate of eleven and three-fifths per cent (11-3/5%) per annum on the principal amount of the Loan withdrawn and outstanding from time co time. Section 2.08. Interest and other charges shall be payable semiannually on June 1 and December 1 in each year. Section 2.09. 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 III Execution of the Project Section 3.01. (a) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause the Corporation to perform in accordance with the provisions of the P-iject Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable the Corporation to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make funds equivalent to $5,000,000 out of the proceeds of the Loan available to the Corporation under a subsid.iary loan agreement to be entered into between the Borrower and the Corporation under terms and conditions which shall have been approved by the Bank. (c) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Sub- sidiary Loan Agreement or any provision thereof. Section 3.02. The Borrower shall carry out or cause to be carried out Parts B and C of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices under arrangements satisfactory to the Bank, and shall provide, prompt- ly as needed, the funds, facilities, services and other resources required for the p- -pose. Section 3.03. In order to assist in carrying out the Pro- ject, the Borrower shall employ consultants whose selection, qua- lifications, experience and terms and conditions of employment shall be satisfactory to the Bank in accordance with the princi- ples and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Exe- cuting Agency" published by the Bank in August 1981. Section 3.04. (a) The Botrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indem- nity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the purposes of the Project. Section 3.05. (a) The Borrower shall furnish or cause to be furnished to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construc- tion and procurement schedules for Parts B and C of the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower shall: (i) maintain or cause to be main- tained records and procedures adequate to record and monitor the progress of Parts B and C of the Project (including the cost and - 5 - the benefits to be derived from them), to identify the goods and services financed out of the proceeds of the Loan, and to dis- close their use in the Project; (ii) enable the Bank's represent- atives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan-/and any relevant records and documents; and (iii) furnish or cause to be furnished to the Bank at regular intervals all such information as the Bank shall reasonably request con- cerning Parts B and C of the Project, the cost and, where appro- priate, the benefits to be derived from them, the expenditure of the proceeds of the Loan 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 Loan, the Bank 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 Parts B and C 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 Bank, the Borrower shall prepare or cause to be prepared and furnished to the Bank reports through the Corporation, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of Parts B and C of the Project, the cost and the benefits to be derived from them, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. Section 3.06. The Borrower shall, by March 31, 1983 complete staffing of: (a) the Project Implementation and Review Committee, re- sponsible for monitoring performance and overall coordination in implementation of the Project; (b) the Project Management Office in its Ministry of Public Works and Highways, responsible for source development in respect of Levels I and II Systems; and (c) the Project Management Office in its Ministry of Health, responsible for implementation of the sanitation compo- nents of the Project. -6- 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 concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution 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 allocation, 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 or as security for the payment of debt incurred for the purpose of financing the purchase 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 sub- division thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Bor- rower. - 7 - (d) The Borrower further undertakes that, within the limits of the laws in force in its territories, it will make the f ore- going undertaking effective with respect to liens on public assets, and to the extent that the Borrower is unable within the limits of the laws in force in its territories to make this undertaking effective, the Borrower will give to the Bank an equivalent lien satisfactory to the Bank. Section 4.02. (a) The Borrower shall maintain or cause to be maintained separate accounts and records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of the Ministries or agencies of the Borrower responsible for carrying out Parts B and C of the Project. (b) Without limitation on the foregoing, the Borrower shall: (i) maintain or cause to be maintained separate accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditures; (ii) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditures; and (iii) enable the Bank's repre- sentatives to examine such records. (c) The Borrower shall: (i) have the separate accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles con- sistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Bank 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 paragraph (b) of this Section as to whether the proceeds of the Loan withdrawn from the Loan Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Bank such other information concerning said separate accounts, records and expenditures and the audit thereof as the Bank shall from time to time reasonably request. -8- Section 4.03. In order to ensure continued efficient opera- tion of the rural water supply systems constructed under the Pro- ject, the Borrower shall make satisfactory arrangements in its regional level workshops to carry out major maintenance of said systems, and shall ensure the provision of adequate staff and funds for such purposes. Section 4.04. The Borrower shall, for the purpose of in- creasing efficiency in the development of rural water supply sector, (i) review by April 30, 1983 the roles of various govern- ment Ministries and agencies dealing with said sector; and (ii) implement by December 31, 1983 such recommendations arising from said review as shall be agreed upon between the Borrower and 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 Corporation shall have failed to perform any cove- nant, agreement or obligation of the Corporation under the Pro- ject Agreement; and (b) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of the Corporation or for the suspension of the operations of the Corporation. 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) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower and the Corporation; and (b) the event specified in parao,raph (b) of Section 5.01 of this Agreement shall occur. -9- 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 ,,,di- tions: (a) the execution and delivery of the Project Agreement on behalf of the Corporation have been duly authorized or ratified by all necessary corporate and governmental action; and (b) the Subsidiary Loan Agreement has been executed on behalf of the Borrower and the Corporation. 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 fur- nished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by the Corporation, and is legally binding upon the Cor- poration in accordance with its terms; and (b) that the Subsi- diary Loan Agreement has been duly authorized or ratified by the Borrower and the Corporation and is legally binding upon the Borrower and the Corporation in accordance with its terms. Section 6.03. The date2 is hereby specified for the purposes of Section 12.04 of th, General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: - 10 - For the Borrower: Minister of Finance Ministry of Finance Manila, Philippines Cable address: MINFIN Manila For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. 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 THE PHILIPPINES By / Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By 1- Aifl Regional Vice President East Asia and Pacific - 11 - SCHEDULE I 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 % and rates of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment and 16,450,000 materials (a) directly 100% of foreign imported expenditures (b) locally 100% of local manufactured expenditures (ex-factory) (c) locally 65% procured (2) Civil works in pesos equi- valent to: (a) wells 1,000,000 $100.00 per well (b) toilet units 6,000,000 $8.00 per com- pleted unit (c) workshops 110,000 $9,000.00 per completed main- tenance workshop (d) stabilization 200,000 $17,000.00 per ponds completed pond (e) Level II 3,300,000 $750.00 per com- Systems pleted design and $7,500 per com- pleted System - 12 - Amount of the Loan Allocated % and rates of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (3) Consultants' 4,350,000 100% services (4) Training 450,000 (a) foreign 100% of foreign expenditures (b) local 30% of local expenditures (5) Fee 524,631 Amount due (6) Unallocated 3,115,369 TOTAL 35,500,000 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 (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages and rates have been calculated in compliance 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 derreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage or rate then applicable to such item as required to be consistent with the aforementioned policy of the Bank. - 13 - 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments r 'e for expen- ditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages and rates set forth in the table in paragraph 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 or rate of all expendi- tures 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 reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may conti- nue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- ditures 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 eli- gible for financing out of the proceeds of the Loan. -14 - SCHEDULE 2 Description of the Project The Project is designed to assist the Borrower in imple- menting a program of improving public health in rural areas through provision of safe water supply and excretion disposal systems. The Project consists of the following: Part A: (i) Coordination of rural water supply and sanitation activities under the Project. (ii) Installation of about 400 Level II Systems, including provision of vehicles, equipment and materials. Part B: (i) Construction of about 9,700 Level I Systems comprising about 4,500 shallow wells and about 2,300 deep wells, and the rehabilitation of about 2,900 existing wells, and source development for about 400 Level II Systems, including provision of vehicles, equipment and materials. (ii) Construction and equipping of about 12 rural water supply systems' maintenance workshops. (iii) Carrying out of research in testing of handpumps, well screens and other equipment required for water supply systems. (iv) Procurement of and training in the use of micro-computer equipment. (v) Training in the design, construction, management, operation and maintenance of water supply and sanitation systems. (vi) Construction of about 750,000 toilet units. (vii) Provision of chemicals for the disinfection of wells; and provision of vehicles, equipment and materials for supervision of construction under Part B (vi) and for health education. (viii) Construction and performance monitoring of 12 waste stabilization ponds. - 15 - Part C: Preparation of solid waste management, flood control and drainage projects. The Project is expected to be completed by June 30, 1987. - 16 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each June 1 and December 1 beginning June 1, 1988 through June 1, 2002 1,185,000 On December 1, 2002 1,135,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 17 - Premiuns 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 3.04 (b) of the General Conditions: Time of Prepayment Premium Not more than three years 1.75% before maturity More than three years but not 3.50% more than six years before maturity More than six years but not 6.40% more than eleven years before maturity More than eleven years but not 9.30% more than sixteen years before maturity More than sixteen years but not 10.45% more than eighteen years before maturity More than eighteen years 11.60% before maturity - 18 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, goods and civil works shall be procured under contracts awarded in accordance with pro- cedures consistent with those set forth in the current edition of 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 and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraphs 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 publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international com- petitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive 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-facbory price or off-the-shelf price of other goods, offered in such bid; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and simi- lar taxes levied in connection with the sale or delivery, pur- suant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. - 19 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, goods manufactured in the Philippines may be granted a margin of preference in accor- dance 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: (1) Group A: bids offering goods manufactured in the Philippines if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes F value added in the Philippines equal to at least zO 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 conection with the sale or delivery, pursuant to the bids, of the goods. Such lowest evalu- ated 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 fur- ther comparison only, an amount equal to: (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in - 20 - 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. C. Other Procurement Procedures 1. Specialized computer equipment and related services up to an equivalent of $20,000 in aggregate may be procured after obtain- ing quotations from at least three independent suppliers or manu- facturers, in accordance with procurement procedures satisfactory to the Bank. 2. Civil works may be carried out through local contracts or force account or voluntary labor. D. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to contracts for equipment, each estimated to cost the equivalent of $100,000 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 docu- ments 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. (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 com- parison 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. - 21 - (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 was 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 extension of the stipulated time for performance of such contract, or issu- ing 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 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. 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 02's, day of L, 198 Z. FORSECRETARY