Somalia - Fourth Highway Project : Credit 1324 - Credit Agreement - Conformed

OFFICIAL CREDIT NUMBER 1324 SO YOUMENTS Development Credit Agreement (Fourth Highway Project) between SOMALI DEMOCRATIC REPUBLIC and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated aA.C- , 1983 CREDIT NUMBER 1324 SO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated I Q1Lt % , 1983, between SOMALI DEMOCRATIC REPUBLIC (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; and (B) the Borrower intends to contract from Arab Fund for Economic and Social Development (hereinafter called Arab Fund) a loan (hereinafter called the Arab Fund Loan) in an amount equiva- lent to sixteen million three hundred thousand United States dollars (US$16,300,000) to assist in financing part of the Project on the terms and conditions set forth in an agreement (hereinafter called the Arab Fund Loan Agreement) to be entered into between the Borrower and the Arab Fund. WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to 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 Agreenent, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the term "CED" means the Civil Engineering Department within the Borrower's Ministry of Public Works and Housing. -2- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreemnat set forth or referred to, an amount in various currencies equivalent to twenty-one million four hundred thousand Special Drawing Rights (SDR 21,400,000). Section 2.02. The amount- of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association 8hall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works 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 September 30, 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 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. -3- 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. The commitment charges and service charges shall be payable semiannually on January I and July 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Janu- ary 1 and July 1 commencing July 1, 1993, and ending January 1, 2033, each installment to and including the installmeat payable on Janury 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 Gen- eral Conditions. ARTICLE III Execution of the Project Seccion 3.01. The Borrower shall carry out the Project through CED with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering prac- tices, and shall provide, promptly as needed, the funds, facili- ties, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in the super- vision of the works to be carried out under Part A of the Project and in order to assist the Borrower in carrying out Parts B through D of the Project, the Borrower shall employ consultants and experts, including a road maintenance engineer, a design/ construction engineer, a road maintenance superintendent, two workshop superintendents and an administrative and financial officer, whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association, such consultants and 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. -4- Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (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 construction and procurement schedules for the P-roject, 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 relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report (Project Completion Report), of such -5- scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. The Borrower shall take 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 of Part A of 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. Section 3.06. The Borrower shall: (i) review with the Asso- ciation the findings and recommendations of the road maintenance study to be carried out under Part B of the Project; and- (ii) within six months, upon completion of the road maintenance study, prepare and submit to the Association 2or its approval a plan of action to implement the recommendations of such study. Section 3.07. By October 31, 1983, the Borrower shall appoint a counterpart staff member to each of the road main- tenance engineer, the design/construction engineer, the road maintenance superintendent, the two workshop superintendents and the administrative and financial officer. The qualifications and experience of such counterparts shall be satisfactory to the Association. Section 3.08. The Borrower shall prepare lists of the materials, equipment, spare parts and tools needed to carry out Part D of the Project and submit such lists to the Association for its approval, well before inviting price quotations for such goods. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain through CED separate records and accounts adequate to reflect, in accordance with consistently maintained appropriate accounting practices, the operations, resources and expenditures, in respect of the Project. -6- (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) 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 rea- sonably requested; and (iii) furnish to the Association such other information concerning said accounts, records and expendi- tures and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. Starting in 1983 and until completion of the Project, the Borrower shall, annually, recruit for CED additional newly graduated civil engineers, so that CED shall employ at least ten additional civil engineers by the completion of the Project. Section 4.03. (a) The Borrower shall cause its highway system to be adequately maintained in accordance with sound engineering practices and shall provide funds, facilities, services and other resources required for the purpose. (b) Without limitation upon the foregoing, the Borrower shall make budgetary allocations for road maintenance for 1984 of not less than 20 million Somali Shillings (So.Sh.20,000,000) in 1983 prices. (c) By September 1 of each year up to and including 1987, the Borrower shall review with the Association the budgetary requirements and the proposed budgetary allocation for road maintenance for the next following budget year. Section 4.04. The Borrower shall ensure that all road maintenance staff and equipment of its Ministry of Public Works shall not be diverted to uses other than road maintenance. Section 4.05. The Borrower shall take all measures necessary to ensure at all times that the dimensions and axle loads of the vehicles using its highways and bridges do not exceed limits consistent with the design standards of such highways and bridges. Section 4.06. By June 30, 1984, the Borrower shall submit to the Association for its approval a training program for the CED's -7- highways staff; such training program shall include any arrange- ments planned to be made with local technical institutions. ARTICLE V Remedies of the Association Section 5.01. (a) For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (h) thereof, namely, that subject to para- graph (b) of this Section: (i) The right of the Borrower to withdraw the proceeds of the Arab Fund Loan made to the Borrower for the financing of part of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the Arab Fund Loan Agreement, or (ii) the Arab Fund Loan shall have become due and pay- able prior to the agreed maturity thereof. (b) Paragraph (a) of this Section shall not apply if the Borrower establishes to the satisfaction of the Association that: (i) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (ii) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional event is specified pur- suant to paragraph (d) thereof namely, that the event specified in paragraph (a) (ii) of Section 5.01 of this Agreement shall occur, subject to the proviso of paragraph (b) of that Section. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions namely, that the Arab Fund Loan Agreement has been -8- executed on behalf of the Borrower and the Arab Fund and all conditions (if any) precedent to initial disbursements under the Arab Fund Loan Agreement, other than fulfillment of the condi- tions precedent to the effectiveness of this Agreement, have been satisfied. Section 6.02. The date O"t Cl )9,93 is hereby specified for the purposes of Section 12.04 of the General Condi- tions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Government of the Somali Democratic Republic Mogadishu, Somalia Cable address: MINFIN Mogadishu 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) -9- 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. SOMALI DEMOCRATIC REPUBLIC Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION Regional Vice President Eastern Africa - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil works 13,890,000 50% (2) Consultants' services: (a) for super- 560,000 50% vision of Part A of the Project (b) under Parts B 1,480,000 .90% and C of the Project (3) Materials and equipment under Part D of the Project: 420,000 (a) procured inter- 100% of foreign nationally expenditures (b) procured 90% of local locally expenditures (4) Unallocated 5,050,000 TOTAL 21,400,000 - 11 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; 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 compli- ance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph I 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 Credit or the disbursement. percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expendi- tures 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 the - 12 - procedures set forth or referred to in this Agreement, no expend- itures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 13 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: Strengthening and improvement of the Afgoi-Baidoa Road (216 km) in accordance with the general design standards set out in the Annex to this Schedule. Part B: A study to review the current status of road maintenance of the Borrower and to make recommendations for the improvement of the Borrower's road maintenance planning, organization and opera- tions. Part C: Improvement of CED's highway planning and operations, in- cluding training of CED's highways staff. Part D: The carrying out of urgent road maintenance works. The Project is expected to be completed by June 30, 1986. - 14 - Annex to Schedule 2 General Design Standards for the Afgoi-Baidoa Road Design speed 80-100 km/hr Roadway width 9.5 meters Carriageway width 6.5 meters Shoulder width 1.5 meters (on either side) Minimum horizontal curve 300 meters radius Maximum vertical gradient 6% Minimum vertical curve 20,000 meters (convex) radius 10,000 meters (concave) Road crossfall: (a) Carriageway 3% (b) Shoulders 5% - 15 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Civil works shall be procured under unit ptice 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 works to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notifica- tion to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of interna- tional competitive bidding. 3. Bidders for civil works shall be prequalified as described in paragraph 1.3 of Part 1 of the Guidelines. B. Other Procurement Procedures 1. Goods shall be procured on the basis of responsive quota- tions from at least four reliable suppliers eligible for procure- ment under the Guidelines. 2. Contracts for the purchase of goods will be entered into only after the Association has approved the respective list of goods to be purchased under any of such contracts pursuant to Section 3.08 of this Agreement. - 16 - C. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to the contracts for civil works, before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the bidder or supplier to which it intends to award the contract and shall furnish to the Association, in sufficient time tor its review, a detailed report on the evaluation and comparison of the bids received, 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 invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Credit and 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 con- tract, together with the analysis of the respective quotations, - 17 - 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 literna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of ___ , 198 , . FOR SECRETARY