Zambia - Fisheries Development Project : Credit 1529 - Project Agreement - Conformed

. OCU T CREDIT NUMBER 1529-0-ZA Project Agreement (Fisheries Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and ZAMBIA AGRICULTURAL DEVELOPMENT BANK Dated 1985 CREDIT NUMBER 1529-0-ZA PROJECT AGREEMENT AGREEMENT, dated 9, 1985, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and ZAMBIA AGRICULTURAL DEVELOPMENT BANK (herein- after called ZADB). WHEREAS by the Development Credit Agreement of even date herewith between The Republic of Zambia (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equiva- lent to seven million one hundred thousand Special Drawing Rights (SDR 7,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that ZADB agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by a financing agreement to be entered into between the Borrower and ZADB, part of the proceeds of the credit pro- vided for under the Development Credit Agreement will be made available to ZADB on the terms and conditions therein set forth; and WHEREAS ZADB, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed. to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. ZADB declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall carry out Part D of the - 2 - Project described in said Schedule with due diligence and effi- ciency and in conformity with appropriate administrative, finan- cial, engineering and fisheries practices. Section 2.02. In order to assist ZADB in carrying out Part D of the Project, ZADB shall employ a fisheries credit specialist whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such specia- list 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 2.03. Except as the Association shall otherwise agree, goods and civil works required for Part D of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to this Agreement. Section 2.04. (a) ZADB undertakes to insure, or make ade- quate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower for carrying out Part D of the Project 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 ZADB to replace or repair such goods. (b) ZADB shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclusively for the purposes of the Project. Section 2.05. (a) ZADB shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and procurement schedules for Part D of the Project, and any material modifications thereof or addi- tions thereto, in such detail as the Association shall reasonably request. (b) ZADB shall, with respect to Part D of the Project: (i) 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 fi- nanced out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's representatives -3- 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) furnish to the Association at regular intervals all such informa- tion as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditures of such proceeds and the goods and services financed out of such proceeds. (c) 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 ZADB and the Association, ZADB 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 and initial operation of Part D of the Project, its cost and the benefits derived and to be derived from it, the performance by ZADB and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (d) ZADB shall enable the Association's representatives to examine all installations, sites, works, buildings, property and equipment of ZADB and any relevant records and documents. Section 2.06. ZADB shall duly perform all its obligations under the Financing Agreement. Except as the Association shall otherwise agree, ZADB shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Financing Agreement or any provision thereof. Section 2.07. (a) ZADB shall, at the request of the Associa- tion, exchange views with the Association with regard to the pro- gress of Part D of the Project, the performance of its obliga- tions under this Agreement and under the Financing Agreement, and other matters relating to the purposes of the Credit. (b) ZADB shall promptly inform the Association of any con- dition which interferes or threatens to interfere with the pro- gress of the Project, the accomplishment of the purposes of the Credit, or the performance by ZADB of its obligations under this Agreement and under the Financing Agreement. Section 2.08. ZADB shall, with respect to Part D.2 (a) of the Project: (a) prepare and submit annually to the Association for its review and comments a lending program for Sub-loans to artisanal fishermen; (b) carry out such lending program by taking into account, beginning with the second year of Project implementation, the performance of the Sub-loans during the previous year; and (c) open Sub-zonal offices in the areas in which Sub-bor- rowers are located. Section 2.09. ZADB shall, before making a Sub-loan under Part D.2 (c) of the Project, submit to the Association, for its review and comments, the evaluation report to be prepared by ZADB's management loan committee with respect to the proposed Sub-loan. Section 2.10. In carrying out Part D.2 of the Project, ZADB shall make Sub-loans to qualified individual or private companies under terms and conditions satisfactory to the Association, including that ZADB shall: (a) charge the Sub-borrowers: (i) an interest rate not less than the prevailing interest rate charged by commercial banks for lending in the agricultural sector; (ii) a commitment fee of two per cent (2%); and (iii) a processing fee of two per cent (2%) (up to a maximum of 1,000 Kwacha) of the amount of the Sub-loans; (b) require the Sub-borrowers to contribute not less than twenty per cent (20%) of the costs of the goods to be financed under the Sub-loans (except in the case of financing of nets under Part D.2 (a) of the Project); (c) require the Sub-borrowers to repay: (i) Sub-loans for the purchase of nets over a maximum period of one year; (ii) Sub-loans for the purchase of boats and engines over four (4) years; and (iii) Sub-loans under Parts D.2 (b) and (c) of the Project over five (5) years; (d) require the Sub-borrowers to provide adequate liens for securing the Sub-loans; and (e) obtain, by written agreement with the Sub-borrower or by other appropriate legal means, rights adequate to protect the -5- interest of the Borrower, the Association and ZADB, including in the case of any such Sub-loan: (i) the right to require the Sub-borrower to carry out its operations with due diligence and efficiency and to maintain, as appropriate, adequate records; (ii) the right to require that the goods and services to be financed out of the proceeds of the Sub-loan be used exclusively tor the purposes for which the Sub-loan was obtained; (iii) the right of the Association and ZADB to inspect any relevant records or documents maintained; (iv) the right to obtain all such information as the Association or ZADB shall reasonably request relating to the foregoing; and (v) the right of ZADB to suspend or terminate the right of the Sub-borrower to the use of the proceeds of the Sub-loan upon failure by such Sub-borrower to perform its obligations under its agreement with ZADB. Section 2.11. ZADB shall exercise its rights in relation to each Sub-loan in such manner as to protect the interest of the Borrower, the Association and ZADB. Section 2.12. ZADB shall: (a) review annually, in consultation with the Borrower and the Association, the level of interest rates charged by it for lending operations in the agricultural and fishery sector; and (b) adjust such interest rates as shall be necessary to ensure the efficient operation of ZADB's lending program. ARTICLE III Management and Operations of ZADB Section 3.01. ZADB shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, economic, agricultural and fisheries practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. ZADB shall, until the completion of the Project, keep the positions of Director of Administration and Personnel, Director of Finance and Planning, and Director of Operations filled with qualified and experienced staff and shall appoint new staff to these positions in consultation with the Association. - 6 - Section 3.03. ZADB shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. ZADB shall: (a) maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; and (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 withdrawals are requested from the Credit Account on the basis of statements of expenditure, and shall enable the Associa- tion's representatives to examine such records. Section 4.02. ZADB shall: (a) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (b) furnish to the Association 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 Association shall have reasonably requested, including, without limitation to the foregoing, separate opinions by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Credit made available to it and withdrawn from the Credit Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and - 7 - (c) furnish to the Association such other information concerning said accounts, financial statements, records and expenditures, as well as the audit thereof, as the Association shall from time to time reasonably request. Section 4.03. (a) Except as the Association shall otherwise agree, ZADB shall not, until its share capital is fully subscribed, incur any debt if after the incurrence of such debt the ratio of debt to equity shall be greater than 1 to 3. (b) For purposes of this Section: (i) The term "debt" means any indebtedness of ZADB maturing by its terms more than one year after the date on which it is originally incurred. (ii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date, and to the extent, the amount of such debt has become out- standing pursuant to such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent that the guaranteed debt is outstanding. (iii) The term "equity" means the sum of the total unimpaired paid-up capital, retained earnings and reserves of ZADB not allocated to cover specific liabilities. (iv) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Associa- tion. Section 4.04. ZADB shall annually exchange views with the Borrower and the Association on its capital requirements and financing arrangements. -8- ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of ZADB thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date twenty (20) years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in para- graph (a) (ii) of this Section, the Association shall promptly notify ZADB of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: -9- 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) For ZADB: Zambia Agricultural Development Bank P. 0. Box 310847 Society House Cairo Road Lusaka, The Republic of Zambia Cable address: Telex: ZADB ZA 40126 Lusaka Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of ZADB may be taken or executed by its Chief Executive or such other person or persons as ZADB shall designate in writing, and ZADB shall furnish to the Association sufficient evidence of the authority and the authenticated speci- men signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. - 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. INTERNATIONAL DEVELOPMENT ASSOCIATION Byjs/ c6 J Regional Vice President Eastern Af ica ZAMBIA AGRICULTURAL DEVELOPMENT BANK Authorized Representative - 11 - SCHEDULE 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 com- petitive bidding, in addition to the requirements of para- graph 1.2 of the Guidelines, ZADB 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 in question. ZADB shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. Orders for goods shall be bulked together in bidding pack- ages and, wherever possible, each bid package shall be for not less than the equivalent of $50,000. 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,pursuant 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. - 12 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, goods manufactured in Zambia 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 Zambia if the bidder shall have established to the satisfaction of ZADB and the Association that the manufacturing cost of such goods includes a value added in Zambia 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 eval- uated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this fur- ther comparison only, an amount equal to: (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in - 13 - 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 civil works shall be procured on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association. 2. Contracts for goods under Part D.2 (c) of the Project and (i) estimated to cost less than $50,000 equivalent each, may be procured on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association, and (ii) estimated to cost less than $20,000 equivalent each, may be procured on the basis of local shopping after obtaining at least three price quotations. 3. Orders for goods under Part D.2 (a) and (b) of the Project shall be placed through local suppliers approved by ZADB, which shall have adequate sales and after-sales services in Zambia. 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 $50,000 or more: (a) Before bids are invited, ZADB 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 docu- ments 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 prospec- tive bidders. 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 _ 1985. FOR SECRETARY