China - Polytechnic And Television University Project : Credit 1411 - Credit Agreement - Conformed

OFFICAL LOCUNTS REDIT NUMBER 1411 CHA Development Credit Agreement (Polytechnic and Television University Project) between PEOPLE' S REPUBLIC OF CHINA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated C) / 7 1983 CREDIT NUMBER 1411 CHA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated LDr -A / , 1983, between PEOPLE'S REPUBLIC OF CHINA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments 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 Gen- eral Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "MOE" means the Borrower's Ministry of Education; (b) "Project Polytechnics", "CRTVU" and "Project TVUs" mean the institutions listed in Parts I, II.A and II.B, respec- tively, of Schedule 4 to this Agreement, and "Project Institu- tions" means the Project Polytechnics, CRTVU and the Project TVUs, collectively; and (c) "Special Account" means the account to be opened and thereafter maintained pursuant to Section- 2.02 (b) of this Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various cur- rencies equivalent to seventy-nine million six hundred thousand Special Drawing Rights (SDR 79,600,000). -2- Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. (b) For the purposes of the Project, the Borrower shall open and thereafter maintain in dollars a special account in the Bank of China on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agree- ment. Section 2.04. The Closing Date shall be December 31, 1989 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (a) The Bdrrower 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 with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment 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. 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 -3- 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 I 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 each 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 Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project through MOE with due diligence and efficiency and in conformity with appropriate administrative, educational, engineering and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) In order to assist the Borrower in carrying out Part A of the Project, the Borrower shall establish and thereafter main- tain until the Closing Date, a Polytechnic Commission, including representatives from the Project Polytechnics, with functions and responsibilities acceptable to the Association. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ experts whose qualifi- cations, experience and terms and conditions of employment shall be satisfactory to the Association, such experts to be selected in accordance with 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. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be -4- financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (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 furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) shall enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevart records and documents; and (iii) shall furnish to the Association at regular intervals all stich information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of the Pre je , but in any event not later than six months after the ClosL. Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution avd initial operation of the Project, its cost and the betefit -5- derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. The Borrower shall take 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 the construction (and operation) of the facilities included in the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained appropriate accounting practices the opera- tions, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) Without limitation to 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 Credit Account on the basis of statements of expenditure; (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 Credit Account on the basis of statements of expenditure; and (iii) enable the Association's representatives to examine such records. (c) 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) 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 -6- reasonably requested, including without limitation to the fore- going, 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 Credit withdrawn from the Credit Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning said accounts, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause the facilities and equipment provided under the Project to be operated, maintained, reneved and repaired in accordance with sound administrative, financial, engineering and educational policies and practices, and shall provide or cause to be provided, promptly as needed, sufficient funds, services and other resources required for such purposes. Section 4.03. (a) The Borrower shall, until December 31, 1990, or such later date as may be agreed between the Borrower and the Association, monitor and evaluate from time to time the progress made by Project Institutions towards project objectives in light of project indicators and targets agreed between the Borrower and the Association. (b) The Borrower shall cause: (i) the Project Polytechnics to carry out annual surveys and (ii) the Project TVUs to carry, out periodic sample surveys,, of their graduates to determine, inter alia, the relationship between academic specialization and actual employment, commencing with the graduates in 1984 and ending with the graduates in 1990, or such later date as may be agreed between the Borrower and the Association. (c) In order -to assist in carrying out Part C of the Project and the monitoring and evaluation responsibilities under paragraphs (a) and (b) of this Section, the Borrower shall establish, and thereafter maintain until December 31, 1990, in MOE, a unit for the evaluation and planning for polytechnics, and in CRTVU, a unit for the research and evaluation for TVUs, both with competent staff in adequate numbers, and with functions and responsibilities acceptable to the Association. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development -7- Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Borrower's State Council shall have approved this Agreement; and (b) the Special Account has been opened in accordance with the provisions of Section 2.02 (b) of this Agreement. Section 5.02. The date Iff/ , - is hereby specified for the purposes of Section 2.04 of the General Conditions. ARTICLE VI Representatives of theBorrover; Addresses Section 6.01. The Minister of Finance of the Borrower is designa7ted as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Sanlihe Beijing People's Republic of China Cable address: Telex: FINANMIN 22486 MFPRC Beijing For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) -8- 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. PEOPLE'S REPUBLIC OF CHINA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President East Asia and Pacific -9- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Equipment 59,100,000 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 75% of local ex- penditures for other items pro- cured locally (invoiced cost) (2) Specialist 5,500,000 100% services and study tours (3) Overseas 9,600,000 100% fellowships (4) Books and in- 1,900,000 100% of foreign structional expenditures materials (5) Initial deposit in 800,000 Amount due pur- Special Account suant to Section to prefinance 2.02 (b) of this items under Agreement Category (3) above (6) Unallocated 2,700,000 TOTAL 79,600,000 77 - 10 - 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 pblicy of the Association that the proceeds of the Credit 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 Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforemen- tioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures made prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures - in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with - 11 - the procedures set forth or referred to in this Agreement, no expenditure for such item shall be financed out of the proceeds of the Credit, and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Asso- ci3tion's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 12 - SCHEDULE 2 Description of the Project The Project is designed to assist the Borrower in increasing the quantity of, and improving the quality of instruction for, students in its polytechnic and television university systems of post-secondary education. The Project consists of the following Parts: Part A: Polytechnic System Assisting the development of the Borrower's polytechnic system and related policies, such as increased utilization of non-residential facilities, increased student choice in employment and levying of student fees, by means of: 1. Expanding enrollment capacity at the Project Polytechnics through construction and rehabilitation of libraries, laborator- ies and classrooms- 2. Improving the quality of instruction at the Project Polytechnics through: (a) provision of educational equipment (including labora- tory, language laboratory and audiovisual equipment and com- puters), books and teaching materials; and (b) implementation of. a program of curriculum and staff development, including training seminars, fellowships, and local and overseas study tours for teaching staff. 3. Improving the management of resources at the Project Poly- technics through implementation of a staff development program for administrative staff, including the provision of short-term local and overseas training and expert services. I Part B: Television University System 1. Expanding coverage and increasing enrollment for the tele- vision university system through: (a) production by the CRTVU of additional courses in TV broadcasts and in other media; -13- (b) construction, establishment and equipping of nine Ultra High Frequency (UHF) transmission stations at Beijing, Guangzhou, Wuhan, Nanjing, Shenyang, Xian, Shanghai, Chengdu and Tianjin; and (c) establishing a pilot program of study groups in rural areas covered by the Project TVUs and provision and equipping of cLassrooms for use by these study groups. 2. Improving the quality of instruction provided for the tele- vision university system, through: (a) construction and equipping of a production center, a laboratory center and a printing facility, to assist the CRTVU; (b) construction and equipping of about 9 major and 19 minor production centers, and about 85 study centers, each consisting of laboratory, audiovisual and classroom facilities, all to assist the Project TVUs; and (c) improving the professional capabilities of technical and academic staff at the CRTVU and the Project TVUs through provision of local training, overseas fellowships and study tours, and specialist services. 3. Improving the management of resources for the television university system through provision of computer equipment and senior staff training for the CRTVU and Project TVU staff. Part C: Evaluation and Planning Improving and assisting the evaluation of current invest- ments in the polytechnic and television university systems, and planning and preparation of future investments in these and other educational systems, through provision of local training, overseas fellowships and study tours, specialist services and related equipment. The Project is expected to be completed by December 31, 1988. -14- SCHEDULE 3 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 thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notifica- tion to pr.ospective 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. Contracts for goods to be procured on the basis of inter- national competitive bidding shall be grouped to the extent possible so as to permit bulk procurement. 4. 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 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. - 15 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedure described in Part A of this Schedule, goods manufactured in China 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 satis- faction 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 cu.toms duties and other import taxes which a non-exempt importer wouLd have to pay for the importation of the goods offered in - 16 - 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. Contracts for items or groups of items estimated to cost less than the equivalent of $200,000 per contract, up to an aggregate amount not to exceed the equivalent of $6,000,000, may be procured (a) on the basis of evaluation and comparison of quotations obtained from at least three qualified suppliers eligible under the Guidelines or (b) through direct purchase for proprietary items or where required for purposes of standardiza- tion. 2. Books and instructional materials to be financed under Cate- gory 4 of the table set forth in paragraph 1 of Schedule 1 to this Agreement may be procured under contracts negotiated with suppliers. 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 equiva- lent of $200,000 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 -17- sufficient time for its review, a detailed report on the evalua- tion and comparison of the bids received, and suc. other informa- tion as the Association shall reasonably request. The Association shall, if it determines that the intended award would be incon- sistent 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 submission to the Association of the first application for with- drawal of funds from the Credit 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 Associa- tion of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Bor- rower 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. - 18 - SCHEDULE 4 Project Institutions Part I. Polytechnic System Institutions A. Project Polytechnics 1. Hefei Associated College 2. Beijing Short-term College of Economic Management 3. Beijing Short-term College of Electrical Machinery 4. Guangzhou Vocational College 5. Harbin College 6. Luoyang Vocational University 7. Jianghan College, Wuhan 8. Changsha Vocational University 9. Changzhou Professional College 10. Nanjing Jinling Vocational College 11. Shenyang Vocational College 12. Xian Junior College 13. Jinan Vocational College 14. Shanghai Industrial and Commercial Management College 15. Chengdu College 16. Tianjin Professional College 17. Hangzhou Technical College Part II. Television University (TVU) Institutions A. Central Radio and Television University (CRTVU), Beijing B. Project TVUs 1. Anhui Provincial TVU, Hefei 2. Beijing Municipal TVU, Beijing 3. Fujian Provincial TVU, Fuzhou 4. Gansu Provincial TVU, Lanzhou , 5. Guangdong Provincial TVU, Guangzhou 6. Guangxi Zhuang Regional TVU, Nanning 7. Guizhou Provincial TVU, Guiyang 8. Hebei Provincial TVU, Shijiazhuang 9. Heilongjiang Provincial TVU, Harbin 10. Henan Provincial TVU, Zhengzhou 11. Hubei Provincial TVU, Wuhan 12. Hunan Provincial TVU, Changsha 13. Inner Mongolia Regional TVU, Huhhot -19- 14. Jiangsu Provincial TVU, Nanjing 15. Jiangxi Provincial TVU, Nanchang 16. Jilin Provincial TVU, Jilin City 17. Liaoning Provincial TVU, Shenyang 18. Ningxia Hui Regional TVU, Yinchuan 19. Qinghai Provincial TVU, Xining 20. Shaanxi Provincial TVU, Xian 21. Shandong Provincial TVU, Jinan 22. Shanghai Municipal TVU, Shanghai 23. Shanxi Provincial TVU, Taiyuan 24. Sichuan Provincial TVU, Chengdu 25. Tianjin Municipal TVU, Tianjin 26. Xinjiang Regional TVU, Urumqi 27. Yunnan Provincial TVU, Kunming 28. Zhejiang.Provincial TVU, Hangzhou - 20 - SCHEDULE 5 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 Credit 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 Credit allocated from time to time to Category (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 (5) and to be withdrawn from the Credit 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 Association shall, at. the request of the Borrower, withdraw on behalf of the Borrower from the Credit Account and deposit into the Special Account the initial deposit. Thereafter and on the basis of requests by the Borrower furnished to the Association at such intervals as the Association shall specify, the Association shall further so withdraw from the Credit 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 expendi- tures, but only to the extent that the amount of any such ' deposit, together with any amount remaining 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 Association may otherwise agree, each such deposit after the initial deposit shall be withdrawn by the Association from the Credit Account under the respective Category (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. -21- 4. Prior to or at the time of each request by the Borrower for a deposit by the Association into the Special Account after the initial deposit, the Borrower shall furnish to the Association in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. * 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, no further deposit into the Special Account shall be made by the Association (a) when the Association shall have determined at any time that all further withdrawals can be made directly by OL the Borrower from the Credit Account in accordance with the (m., provisions of paragraph (a) of Section 2.02 of this Agreement, or (b) when the total unwithdrawn amount of the Credit allocated to Category (3), minus the unwithdrawn amount of any qualified agreement to reimburse made by the Association and of any special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to items to be financed under Category (3), shall be equal to the equivalent of twice the amount of the initial deposit, whichever shall be sooner. Withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Category (3) shall follow such procedures as the Association shall specify by notice to the Borrower and shall, except as the Association shall otherwise agree, be made only after and to the extent the Association 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 Association 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 paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association and, unless otherwise agreed by the Association, prior to any further deposit into the Special Account by the Association, deposit into the Special Account or, if the Association shall so request, * refund to the Association 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, - 22 - the Borrower shall, promptly upon notice from the Association, and unless otherwise agreed by the Association, refund to the Association such amount then outstanding in the Special Account. 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 198F FOR SECRETARY