Philippines - Central Visayas Regional Project : Loan 2360 - Loan Agreement - Conformed

OFFICIAL LOAN NUMBER 2360 PH DCUNIE NTS Loan Agreement (Central Visayas Regional Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1984 LOAN NUMBER 2360 PH LOAN AGREEMENT AGREEMENT, dated ,1984, between REPUBLIC OF PHILIPPINES (herein er called the Borrower) and INTERNATIONAL BANK FOR RECONSTR TION AND DEVELOPMENT (herein- after called the Bank). 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) "Central Visayas" means Region VII of the Republic of the Philippines consisting of the Provinces of Bohol, Cebu, Negros Oriental and Siquijor, and other islands as established and existing under Presidential Decree No. 1; (b) "Regional Projects Office" means the Central Visayas Regional Projects Office as established and existing under Executive Order No. 907 dated September 10, 1983; (c) "Project Preparation Advances" means: (i) the project preparation advance granted by the Bank to the Borrower pursuant to an exchange of letters dated March 24, 1981 and April 24, 1981 between the Borrower and the Bank, as amended; and (ii) the project preparation advance granted by the Bank to the Borrower pursuant to an exchange of letters dated August 5, 1982 and December 30, 1982 between the Borrower and the Bank, as amended: and - 2 - (d) "Special Account" means the account to be opened and thereafter maintained pursuant to Section 2.02 (b) of this Agreement. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agree- ment, an amount in various currencies equivalent to twenty-five million six hundred thousand dollars ($25,600,000). 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 (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between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 Porrower 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower shall, for the purposes of the Project, open and thereafter maintain in dollars a special account in the Central Bank of the Philippines on terms and conditions satisfac- tory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Sched- ule 6 to this Agreement. (c) Promptly after the Effective DaL, , the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amounts required to repay the principal amounts of the Project Preparation Advances withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amounts of the Project Preparation Advances shall thereupon be cancelled. Section 2.03. Except as the Bank shall otherwise agree, procurement 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 June 30, 1990 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. - 3 - Section 2.05. (a) The Borrower shall pay to the Bank a fee equivalent to sixty-three thousand eight hundred forty dollars ($63,840). (b) On or promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount of the said fee in such currency or currencies as the Bank shall determine. 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. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one half percent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of thi6 Section: (i) "Interest Period" means the six-month period commencing on each date specified in Section 2.08 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost" of Qualified Borrowings means the cost, expressed as a percentage per annum, as reasonably determined by the Bank, provided that the amount of $8,520.5 million referred to in (iii) (B) hereunder shall be reckoned at a cost of 10.93% per annum. (iii) "Qualified Borrowings" means: (A) outstanding borrowings of the Bank drawn down after June 30, 1982; and (B) until July 1, 1985, the amount of $8,520.5 million (representing borrowings of the Bank between July 1, 1981 and June 30, 1982) less any part thereof repaid earlier than July 1, 1985. (iv) "Semester" means the first six months or the second six months of a calendar year. Section 2.08. Interest and other charges shall be payable semiannually on February 1 and August 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. The Borrower shall carry out Part B (4) of the Project through its National Economic and Development Authority, and the remainder of the Project through the Regional Projects Office with due diligence and efficiency and in conformity with appropriate administrative, financial and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ or cause to be employed consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank, such consultants to be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guide- lines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 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 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. - 5 - Section 3.04. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, training programs, 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 shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) enable the Bank's representatives to visit the facilities and construc- tion 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 to the Bank at regular intervals all such information as the Bank shall reasonably request con- cerning the Project, its cost and, where appropriate, the bene- fits to be derived from it, the expenditure of the proceeds of the Loan and the goods and services financed out of such pro- ceeds. (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 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 and furnish to the Bank a report, of such scope and in such detail as the Bank 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 Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. Section 3.05. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for carrying out the Project. - 6 - Section 3.06. The Borrower shall cause the action program outlined in Schedule 5 to this Agreement to be completed by the dates set forth therein. Section 3.07. The Borrower shall cause the Regional Projects Office to be maintained, with powers, resources and staff satis- factory to the Bank. 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 for-going 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 aris- ing 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- - 7 - 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. Section 4.02. The Borrower shall, with respect to the Proj- ect, cause the Regional Projects Office to: (a) maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, financial condition, resources and expenditures of the Regional Projects Jifice, the Ministries or Agencies of the Borrower responsible for carrying out the Project or any part thereof, and the Central Visayas Regional Office of such Ministries or Agencies, including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure; (b) 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 with- drawals are requested from the Loan Account on the basis of statements of expenditure, and to enable the Bank's representa- tives to examine such records; (c) have its accounts and financial statements (state- ments of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Bank; (d) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, (i) certified copies of its financial statements for such year as so audited, and (ii) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reason- ably requested, including, without limitation to the foregoing, a separate opinion by said auditors: (A) on the separate accounts referred to in paragraph (a) of this Section; and (B) in respect of the expendit-ures and records referred to in paragraph (b) of this Section, as to whether the proceeds of the Loan made avail- able to it and withdrawn from the Loan Account on the basis of -8- statements of expenditure have been used for the purpose for which they were provided; and (e) furnish to the Bank such other information concern- ing said accounts, financial statements, records and expendi- tures, as well as the audit thereof, as the Bank shall from time to time reasonably request. Section 4.03. The Borrower shall cause the facilities con- structed, and the goods provided under the Project to be operated and maintained in accordance with appropriate administrative, fianancial and agricultural practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. ARTICLE V Effective Date; Termination Section 5.01. 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 Condi- tions: (a) a Project Manager with qualifications and experience satisfactory to the Bank, shall be in place; and (b) the Special Account has seen opened in accordance with the provisions of Section 2.02 (b) of this Agreement. Section 5.02. The date !F, /fey, is hereby speci- fied for the purposes of Section of the General Conditions. ARTICLE VI Representative 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. Se tion 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: -9- For the Borrower: Minister of Finance Ministry of Finance Manila Philippines Cable address: Telex: MINFIN 7550 CBP-PH Manila 40268 CB-CONF 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) - 10 - 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 Regional Vice President East Asia and Pacific - 11 - SCEDULE 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 7,500,000 80% (2) Equipment, 6s500,000 100% of foreign vehicles, inputs, expenditures, materials and 100% of local livestock expenditures (ex-factory cost) and 70% of local expenditures for other items pro- cured locally (3) Consultants' ser- 6,900,000 100% of foreign vices and overseas expenditures and training 80% of local expenditures (4) Initial deposit 2,000,000 Amount due under in Special Account Section 2.02 (b) to prefinance items of this Agreement under Categories (1), (2) and (3) (5) Refunding of 1,100,000 Amount due under Project Prepara- Section 2.02 (c) tion Advances of this Agreement (6) Fee 63,840 Amount due under Section 2.05 of this Agreement (7) Unallocated 1,536,160 TOTAL 25,600,000 - 12 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of 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 have been calculated in com- pliance with the policy of the Bank that the proceeds of the Loan shall not 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; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the dis- bursement percentage then applicable to such Category 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 expenditures 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 insufficient 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 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 continue 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 expenditure for such item shall be financed out of the proceeds - 13 - 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 is part of the Borrower's program to develop the Central Visayas, and consists of the following Parts: Part A: Watershed Management (1) Upland Agriculture (a) introduction of farm systems to control soil erosion, increase soil water retention, improve soil fertility, intensify land use, and increase crop and livestock production; and (b) establishment of nurseries. (2) Social Forestry (a) forest stand improvement; and (b) reforestation. (3) Nearshore Fisheries (a) establishment of artificial reefs; (b) replanting of mangroves; and (c) establishment of coral reef sanctuaries. (4) Infrastructure (a) construction of barangay roads; (b) improvement of existing roads; and (c) grading of trails. Part B: Support Services (1) Institutional Strengthening (a) strengthening of the Central Visayas Regional Office of the Ministry of Agriculture, the Central Visayas Regional Office - 15 - of the Bureau of Forest Development, the Central Visayas Regional Office of the Bureau of Fisheries and Aquatic Resources, the Regional Projects Office, and the Provincial Eagineering Offices; and (b) establishment of management units. (2) Training and Technical Assistance (a) improvement capabilities of staff, farmers and fisher- men; and (b) strengthening of training facilities. (3) Research Research in support of activities related to Part A herein- above. (4) Project Preparation Preparation of Regional projects. The Project is expected to be completed by June 30, 1989. - 16 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each February 1 and August 1 beginning August 1, 1989 through August 1, 2003 855,000 On February 1, 2004 805,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 17 - 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 3.04 (b) of the General Conditions: Time of Prepayment Premium The interest rate (ex- pressed as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment ultiplied by: Not more than three years 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than eleven years before maturity More than eleven years but not 0.80 more than sixteen years before maturity More than sixteen years but not 0.90 more than eighteen years before maturity More than eighteen years 1.00 before maturity - 18 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Construction equipment and vehicles shall be procured under contracts awarded in accordance with procedures 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 construction equipment and vehicles 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 avail- ability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general pro- curement 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 construction equipment and vehicles remain to be procured on the basis of international comdpetitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of construction equipment and vehicles 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 eatry) price for the imported construction equipment and vehicles, or the ex-factory price or off-the-shelf price of other construction equipment and vehicles, offered in such bid; (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 construction equipment and vehicles shall not be taken into account in the evaluation of the bids; and (iii) the cost of inland freight and other expendi- tures incidental to the delivery of the construction equipment and vehicles to the place of their use or installation shall be included. - 19 - B. Preference for Domestic Manufacturers In the procurement of construction equipment and vehicles in accordance with the procedures described in Part A of this Schedule, construction equipment and vehicles manufactured in the Philippines may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of construc- tion equipment and vehicles 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 construction equipment and vehicles manufactured in the Philippines if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufactur- ing cost of such construction equipment and vehicles includes a value added in the Philippines 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 construction equipment and vehicles. 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, pursuant to the bids, of the construction equipment and vehicles. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids - 20 - shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported construction equipment and vehicles 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 construction equipment and vehicles offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such construction equipment and vehicles 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 para- graph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures 1. (a) Except as the Bank may otherwise agree, contracts for civil works, including those for the construction of buildings and barangay roads, and grading of trails, shall be awarded in accordance with the Borrower's competitive bidding procedures satisfactory to the Bank. (b) Works on improvement of roads, watershed rehabilita- tion, reforestation, construction of artificial reefs, and near- shore fisheries may be carried out under force account, provided that works so carried out shall not exceed in the aggregate the equivalent of $500,000. 2. (a) Goods (except for construction equipment and vehicles) may be procured in accordance with the Borrower's procurement procedures satisfactory to the Bank. (b) Contracts for goods (except construction equipment and vehicles) costing less than the equivalent of $10,000 each, may be procured after solicitation of quotations from at least three independent suppliers in accordance with procedures satisfactory to the Bank, provided that such goods so procured shall not exceed in the aggregate the equivalent of $150,000. (c) Livestock shall be procured through local ranchers in accordance with procedures satisfactory to the Bank. D. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: - 21 - With respect to all contracts 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 Borrower 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 comparison 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 was invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion 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 contract, together with the analysis of the respective bids, recommendations 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. - 22 - 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 issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, the Borrower shall inform the 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 Action Program 1. Appointment not later than May 31, 1984, of a full-time financial controller in the Regional Projects Office with quali- fications and experience satisfactory to the Bank. 2. (a) Establishment not later than June 30, 1984, of site management units in each of the sites under Part A (1) of the Project, with powers, resources and staff satisfactory to the Bank. (b) Appointment not later than June 30, 1984, of a full-time manager with qualifications and experience satisfactory to the Bank, for each of the site management units under Part A (1) of the Project. 3. (a) Establishment not later than June 30, 1984, of sub-site management units in each of the sites under Part A (3) of the Project, with powers, resources and staff satisfactory to the Bank. (b) Appointment not later than June 30, 1984, of a full-time deputy manager with qualifications and experience satisfactory to the Bank, for each of the sub-site management units under Part A (3) of the Project. 4. (a) Designate not later than June 30, 1984, the Ayungon - Bindoy site for Part A (2) of the Project. (b) Establishment not later than June 30, 1984, of a site management unit under Part A (2) of the Project, with powers, resources and staff satisfactory to the Bank. (c) Appointment not later than June 30, 1984, of a full- time manager with qualifications and experience satisfactory to the Bank, for the site management unit under Part A (2) of the Project. (d) Designate not later than June 30, 1984, the Central Visayas Regional Office of the Bureau of Forest Development to provide support services under Part A (2) of the Project in accordance with terms of reference satisfactory to the Bank. - 24 - (e) Designate or appoint not later than June 30, 1984, staff with qualifications and in numbers satisfactory to the Bank, for the provision of support services under Part A (2) of the Project. 5. (a) Designate not later than June 30, 1984, the Central Visayas Regional Office of the Ministry of Agriculture to provide support services under Part A (1) of the Project in accordance with terms of reference satisfactory to the Bank. (b) Designate or appoint not later than June 30, 1984, staff with qualifications and in numbers satisfactory to the Bank, for the provision of support services under Part A (1) of the Project. 6. (a) Designate not later than June 30, 1984, the Central Visayas Regional Office of the Bureau of Fisheries and Aquatic Resources to provide support services under Part A (3) of the Project in accordance with terms of reference satisfactory to the Bank. (b) Designate or appoint not later than June 30, 1984, staff with qualifications and in numbers satisfactory to the Bank, for the provision of support services under Part A (3) of the Project. 7. (a) Designate not later than June 30, 1984, the Provincial Engineers Office in Bohol, Cebu, Negros Oriental and Siquijor to implement Part A (4) of the Project, under terms of reference satisfactory to the Bank. (b) Designate or appoint not later than June 30, 1984, staff with qualifications and in numbers satisfactory to the Bank, for the implementation of Part A (4) of the Project. - 25 - SCHEDULE 6 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Loan as set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures 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 allocated from time to time to Categories (1), (2) and (3) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "initial deposit" means an amount in dollars equivalent to the amount allocated to Category (4) and to be withdrawn from the Loan Account and deposited in the Special Account pursuant to the first sentence of paragraph 3 to this Schedule. 2. Payments out of the Special Account shall be made exclu- sively for eligible expenditures in accordance with the provi- sions of this Schedule. 3. The Bank shall, at the request of the Borrower, withdraw on behalf of the Borrower from the Loan Account and deposit into the Special Account the initial deposit. Thereafter and on the basis of requests by the Borrower furnished to the Bank at such inter- vals as the Bank shall specify, the Bank shall further so with- draw from the Loan Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for eligible expenditures, but only to the extent that the amount of any such deposit, together with any amount remain- ing on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of the initial deposit. Except as the Bank may otherwise agree, each such deposit after the initial deposit shall be withdrawn by the Bank from the Loan Account under the respective Categories (1), (2) and (3), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. - 26 - 4. Prior to or at the time of each request by the Borrower for a deposit by the Bank into the Special Account after the initial deposit, the Borrower shall furnish to the Bank in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Bank shall reasonably re- quest, showing that such payment was made for eligible expendi- tures. 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, no further deposit into the Special Account shall be made by the Bank (a) when the Bank shall have determined at any time that all further withdrawals can be made directly by the Borrower from the Loan Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement, or (b) unless otherwise agreed by the Bank, when the total unwithdrawn amount of the Loan allocated to Categories (1), (2) and (3) for the Project, minus the amount of any qualified agreement to reimburse made by the Bank and of any special commitment entered into by the Bank pur- suant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the initial deposit, whichever shall be sooner. Withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to Categories (1), (2) and (3) of the Project shall follow such procedures as the Bank shall specify by notice to the Borrower and shall, except as the Bank shall otherwise agree, be made only after and to the extent the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. If the Bank shall have determined at any time that: (a) any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to para- graph 2 of this Schedule, or (ii) was not justified by the evi- dence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Bank and, unless otherwise agreed by the Bank, prior to any further deposit into the Special Account by the Bank, deposit into the Special Account or, if the Bank shall so request, refund to the Bank an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or (b) any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, - 27 - the Borrower shall, promptly upon notice from the Bank, and unless otherwise agreed by the Bank, refund to the Bank such amount then outstanding in the Special Account. 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 aTxed the Seal of the Bank thereunto this day of 6 198 -. FOR SECRETARY