China - Technical Cooperation Project : Credit 1412 - Credit Agreement - Conformed

0REDIT NUMBER 1412 CHA Development Credit Agreement (Technical Cooperation Project) between PEOPLE ' S REPUBLIC OF CHINA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated Q , 1983 CREDIT NUMBER 1412 CHA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated (9- - '7 1983, between PEOPLE'S REPUBLIC OF CHINA (hereinafter'called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I Ge)eral 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) "Sub-project" means a particular study or project of technical assistance selected by agreement between the Borrower and the Association pursuant to S-ection 3.01 of this Agreement; (b) "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 (c) "local expenditures" means expenditures in the currency of the Borrower or for goods and services supplied from the territory of the Borrower. 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 nine million four hundred thousand Special Drawing Rights (SDR 9,400,000). -2- Section 2.02. (a) Subject to paragraph (b) below, the amount of the Credit may be withdrawn from the Credit Account in accord- ance with allocations of the proceeds of the Credit agreed between the Borrower and the Association pursuant to Section 3.01 hereof, as such allocations may be amended from time to time by agreement between the Borrower and the Association, for expendi- tures made (or, if the Association shall so agree, to be made) after the date of this Agreement in respect of the reasonable cost of goods and services required for the Project and agreed to be financed out of the proceeds of the Credit. (b) Except as *the Borrower and the Association may other- wise agree, withdrawals from the Credit Account shall be limited to: (i) one hundred per cent of foreign expenditures for (A) services rendered by consultants or consulting firms, and (B) training programs and overseas study tours; and (ii) for equipment and materials required to carry out Sub-projects: (A) one hundred per cent of foreign expenditures; (B) one hundred per cent of local expenditures (ex-factory); and (C) seventy-five per cent of local expenditures for imported items procured locally; provided, however, 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. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods to be financed out of the 0 proceeds of the Credit in accordance with Section 2.02 (b) (ii) of this Agreement shall be governed by the provisions of Schedule 2 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1987 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not -3- withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request: (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in, such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. to Section 2.06. 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 2.07. Commitment charges and service charges shall be payable semiannually on March I and September 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 1 and September 1 commencing March 1, 1994, and ending September 1, 2033, each installment to and including the installment payable on September 1, 2003, to be one-half of one per cent (1/2 of 1%) of such principal amount, and eac h installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.09. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Description and Execution of the Project Section 3.01. (a) The Project for which the Credit is granted consists of the carrying out of high priority Sub- projects selected by agreement between the Borrower and the Asso- ciation which are designed to assist the Borrower: (i) in the preparation of investment projects for which Association or Bank -4- financing has been or is expected to be requested and, in excep- tional cases, of other investment projects; and (ii) in the overall development of its capacity for preparation and implementation of investment projects and administration of technical assistance. (b) Sub-projects shall be selected in accordance with the criteria set forth in Schedule 1 to this Agreement. (c) The purpose and scope of each Sub-project, the method of implementation thereof and the specific allocation thereto of. proceeds of the Credit shall be determined by agreement between the Borrower and the Association. Section 3.02. Except as the Association may otherwise agree, the Borrower shall submit, for each Sub-project, the following to the Association for its approval: (a) a detailed description of the studies and work to be carried out in connection with the proposed Sub-project, includ- ing a time schedule for, the purposes and objectives of, and the benefits expected from such Sub-project; (b) the proposed selection procedures, qualifications, terms of reference and duration of service for any consultants to be engaged for the purposes of the proposed Sub-project; (c) a description of the role of the department or agency or personnel of the Borrower to be responsible for the execution of the proposed Sub-project and counterpart staff, if any, to be supplied by the Borrower; (d) a general description of the arrangements to be made by the executing agencies for the provision of office space, secretarial facilities, transportation and other operational facilities required for the Sub-project to proceed efficiently; (e) estimated foreign and local costs of the proposed Sub-project broken down by major items and showing amounts to be financed by the Borrower and out of the proceeds of the Credit, respectively, and an estimated disbursement schedule; and (f) measures to be taken to comply with paragraphs (b) and (c) of Section 3.05. -5- 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 inci- dent to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the purposes of the Project. Section 3.04. (a) The Borrower shall cause each Sub-project to be carried out with due diligence and efficiency and shall make available, promptly as needed, all funds, facilities, services and other resources required for the purpose. (b) The Borrower shall cause the External Finance Depart- ment of its Ministry of Finance to ensure: (i) the effective coordination among the departments and agencies of the Borrower concerned in the implementation of the Project; and (ii) that, at all times until the Closing Date, a suitably qualified officer of such Department shall be designated to serve as Project Coordi- nator in order to assist in achieving such coordination and shall be assisted by competent staff in adequate numbers. (c) The Borrower shall establish arrangements and procedures, satisfactory to the Borrower and the Association, for supervising and directing the work of any consultants employed for Sub-projects and reviewing the reports and recommendations of such consultants. Section 3.05. (a) For the purpose of carrying out each Sub-project which requires the employment of consultants, the Borrower shall cause its department or agency responsible for the .execution of the Sub-project to enter into a contract with consultants whose selection, qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such consultants to be selected in accordance with the principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. (b) The Borrower shall take or cause to be taken all reasonable measures to facilitate the work of consultants in the -6- performance of their services for the Project and make available to them all information relevant to the Sub-project concerned. (c) The Borrower shall not permit the amendment or waiver of any of the terms and conditions of employment of consultants employed for any Sub-project, or the grant of any material exten- sion of time or any approval of sub-contracts or modifications thereof, or the agreement to substitute personnel of such consultants, without prior agreement between the Borrower and the Association. The Borrower shall promptly inform the Association if it proposes to suspend payments under or terminate any. contract with such consultants. Section 3.06. (a) The Borrower shall cause the consultants employed for the Project promptly to furnish to the Association copies of the documents prepared by them for the Project, including reports and drafts thereof, in such number as the Association shall reasonably request. (b) The Borrower: (i) shall maintain, or cause to be main- tained, records and procedures adequate to record and monitor the progress of the Project and of each Sub-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 representatives to inspect any records and docu- ments relevant to the Projedt, including records and documents which the consultants employed for Sub-projects shall be required to keep for the purposes of the Project; and (iii) shall furnish, or cause to be furnished, to the Association semi-annually all such information as the Association shall reasonably request concerning the Project, the Sub-projects, the costs thereof, and where appropriate, the benefits to be derived therefrom, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award of any contract for goods 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) The Borrower shall, 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, prepare and furnish to -7- 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 3.07. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of each Sub-project, of the departments or agencies of the Borrower responsible for carrying out the Sub-project or any part thereof. (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) to furnish to the Association, as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by such auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) to furnish to the Association such other information concerning the accounts and the audit thereof as the Association shall from time to time reasonably request. Section 3.08. Except as the Borrower and the Association may otherwise agree, the Borrower shall make funds available out of the proceeds of the Credit for Sub-projects on a grant basis, except that whenever an investment is subsequently made in res- pect of a Sub-project under paragraphs 1 (a) or 1 (c) of Schedule .1 to this Agreement, the funds shall be repaid to the Borrower on terms and conditions acceptable to the Association. ARTICLE IV Additional Remedies of the Association Section 4.01. Without in any way rescricting or limiting any other right, power or remedy of the Association under the Devel- opment Credit Agreement, the Associatioa aLy, by notice to the Borrower, terminate in whole or in part the right of the Borrower -8- to make withdrawals from the Credit Account on account of any Sub-project if any of the following events shall have occurred and be continuing: (a) the Borrower shall have failed to perform any covenant, agreement or obligation under this Agreement in respect of such Sub-project; (b) the contract referred to in Section 3.05 (a) hereof for the employment of consultants to assist in the carrying out of such Sub-project shall not have come into force and effect within six months from the date of the Association's approval of such Sub-project pursuant to the provisions of Section 3.02 hereof; and (c) an extraordinary situation shall have arisen which shall make it improbable that such Sub-project can be carried out in accordance with the provisions of this Agreement. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: ' (a) that the Borrower's State Council shall have approved this Agreement; and (b) that the Project Coordinator shall have.been designated in accordance with Section 3.04 (b) (ii) of this Agreement. Section 5.02. The date 17, F2f3 , is hereby specified for the purposes of Sectio. 12.04 of the General Conditions. 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. 9 Section l *e following addresses are specified for the purposes of S1zzz. 21.01 of the General Conditions: For the Ec: i>r: Minif: Finance Sa--.L9 Beif PeaIe's !.epublic of China Cable fress: Telex: swi-=g 22486 MFPRC For the ::-- ion: Ints:21s :al Development Association . 181-, 5:et N.W. Was I--- D.C. 20433 Unizer x-aes of America Cable airess: Telex: :5 2.7AE. 440098 (ITT) jton, D.C. 248423 (RCA) or 64145 (WUI) IN WITNZ.S E5 9?, the parties hereto, acting through their representati-&e -oaounto duly authorized, have caused this Agreement to in their respective names in the District of Columbia, States of America, as of the day and year first above - ?FOPLE'S REPUBLIC OF CHINA 10 .OF2 Authorized Representative :51vRNATIONAL DEVELOPMENT ASSOCIATION (IT Regional Vice President East Asia and Pacific - 10 - SCHEDULE 1 Criteria for Sub-project Eligibility 1. A Sub-project shall be one of the following: (a) a feasibility study or other technical assistance required for preparing: (i) projects for which financ- ing by the Association or the Bank has been or is expected to be requested; and (ii) in exceptional cases, other investment projects; (b) a program to strengthen institutions in China respon- sible for project planning and implementation includ- ing, inter alia, training and overseas study tours; (c) a study to provide information required for the selec- tion of specific projects for implementation; (d) a program for overall development of the administration of technical assistance; or (e) in exceptional cases, consultancy services or other technical assistance required for the implementation of projects of which other components are already being financed by the Association or the Bank. 2. A Sub-project shall be mutually agreed to be of high priority in the Borrower's development efforts. 3. A Sub-project shall have no equally suitable financing available from the United Nations Development -Program or other external financing agencies. - 11 - SCHEDULE 2 Procurement A. International Competitive Bidding 1. Except as .provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the 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 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 theretc, 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 goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international 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-factory price or off-the-shelf price .f 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 geirids 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. B. Preference for Domestic Manufacturers In the procurement of gQods in accordance with the procedure described in Part A of this Schedule, goods manufactured in China - 12 - may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in China if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in China equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, 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 further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C - 13 - which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures Contracts for items estimated to cost less than the equivalent of .$100,000 per contract, up to an aggregate amount not to exceed the equivalent of $500,000, may be procured on the basis of evaluation and comparison of quotations obtained from at least three qualified suppliers eligible under the Guidelines. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report and such other information as the Association shall reasonably request. 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 was invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the -14- submission to the Association of the first application for with- drawal of funds from the Credi, Account in respect of such con- tract. 2. With respect to each contract not governed by the preceding paragraph the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective quotations, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an 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 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 pro- visions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. 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 1983. FOR SECRETARY