Djibouti - Urban Development Project : Credit 1518 - Credit Agreement - Conformed

OFFICIAL CREDIT NUMBER 1518 DJI DOCUMENTS Development Credit Agreement (Urban Development Project) between REPUBLIC OF DJIBOUTI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1985 CREDIT NUMBER 1518 DJI DEVELOPMENT CREDIT AGREEMENT AGRE KLE., dated AjA.- 4 \ , 1985, between REPUBLIC OF DJIBOLTI %.hereinafter called the Borrower or Djibouti) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing ot the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower intends to contract from United States Agency for International Development (hereinafter called US-AID) a grant (hereinafter called the US-AID Grant) in an amount of $5,500,000 to assist in financing part of the Project on the terms and conditions set forth in an agreement to be entered into between the Borrower and US-AID; (C) the Borrower also intends to contract from Caisse Centrale de Cooperation Economique (hereinafter called CCCE) a loan (hereinalter called CCCE-Loan) in an amount equivalent to about $1,000,000 to assist in financing part of the Project on the terms and conditions set forth in an agreement to be entered into between the Borrower and CCCE; and 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 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 -2- General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "Project Preparation Advance" means the project prep- aration advance granted by the Association to the Borrower pur- suant to an exchange of letters dated July 1, 1981 and August 7, 1981 between the Borrower and the Association. (b) "Special Account" means the account referred to in Section 2.02 (c) hereof. (c) "Project Account" and "US-AID Account" mean the accounts referred to in Section 3.01 (d) hereof. (d) "MPWUH" means the Borrower's ministry responsible for public works, urban planning and housing. (e) "DD" means the District de Djibouti. (f) "SDD" means the Service des Domaines. (g) "SID" means Sociftf ImmobiliAre de Djibouti. (h) "CDD" means Caisse de D6veloppement de Djibouti. (i) "PMU" means the Project Management Unit referred to in Section 3.01 (b) hereof. (j) "DF" means Djibouti Franc. (k) "Urban Development Fund" means the fund referred to in Section 3.01 (e) hereof. (1) "Borrower - CDD Agreement" means the agreement with CDD referred to in Section 3.01 (c) hereof. (m) "Borrower - SID Agreement" means the agreement with SID referred to in Section 3.01 (c) hereof. (n) "Project Documents" means collectively the documents referred to in paragraphs (1) and (m) above. -3- 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 teferred to, an amount in various cur- rencies equivalent to four million nine hundred thousand Special Drawing Rights (SDR 4,900,000). Section 2.02. (a) 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 Asso- ciation, 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) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the prin- cipal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. (c) The Borrower shall, for the purpose of the Project, open and thereafter maintain in DF a Special Account at the Borrower's Treasury 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 4 to this Agreement. 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 June 30, 1991 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 Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 -4- 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 re- strictions 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 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 June 1 and December 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 1 and December 1 commencing December 1, 1994, and ending June 1, 2034, each installment to and including the installment payable on June 1, 2004, 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 declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end, shall carry out the Project through its MPWUH and SDD, CDD, SID and DD with due diligence and effi- ciency and in conformity with appropriate administrative, finan- cial, engineering and urban development practices and under terms -5- and conditions acceptable to the Association, shall provide, promptly as needed, the funds, facilities (including suitable office space for PMU and SDD), services and other resources (in- cluding funds to SDD to cover an additional percentage of its operating costs satisfactory to the Association) required for the purpose and shall cause SDD, CDD, SID and DD to perform in accor- dance with the provisions of the Project Documents all their respective obligations therein set forth. (b) To ensure the management and coordination of the Pro- ject activities, the Borrower shall establish and, thereafter, maintain, until completion of the Project, an interministerial committee and a Project Management Unit, headed by a qualified and experienced director, such committee and unit to have a com- position and to operate under terms and conditions satisfactory to the Association. (c) In order to define precisely their respective respon- sibilities under the Project and provide for the relending to CDD and SID of proceeds of the Credit, the Borrower shall enter into agreements with CDD and SID under terms and conditions acceptable to the Association. (d) In order to ensure the timely availability of funds for the purposes of the Project, the Borrower shall, in addition to the Special Account, open and, thereafter, maintain at its Treasury until completion of the Project, a Project Account and a US-AID Account where the Borrower's and US-AID's respective con- tributions towards the Project shall be deposited, such accounts to operate under terms and conditions satisfactory to the Asso- ciation. (e) In order to ensure the replicability of the Project activities and to assist the Borrower, CDD, SID, SDD and DD in their infrastructure investments, the Borrower shall establish and thereafter maintain at its Treasury an urban development fund, such fund to operate under terms and conditions satisfac- tory to the Association. (f) (i) The Borrower shall, by March 31, 1985, prepare and submit to the Association for its review and comments a priority plan for the future urban projects to be developed in DD after completion of the'Project, and (ii) the Borrower shall, in carrying out Part F of the Project, take into account the Asso- ciation's comments on such priority plan. (g) The Borrower shall cause SID to reduce and, thereafter, maintain the accounts delinquent for more than three (3) months in its portfolio of leased and lease-purchase properties to less than 20% of said portfolio. Section 3.02. In order to assist the Borrower, through SDD, SID, CDD and DD, in carrying out the Project, the Borrower shall, as and when needed, employ, or cause to be employed, consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such consul- tants 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 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 furnish, or cause to bL furnished, to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and con- struction 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 shall: (i) maintain, or cause to be main- tained, 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 services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) 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) through PMU, fur- nish, or cause to be furnished, to the Association at regular intervals all such information (including quarterly reports to be prepared according to a format acceptable to the Association and -7- using performance indicators acceptable to the Association) as the Association shall reasonably request concerning the Project, the issues arising during its implementation and the ways and means of addressing such issues, the cost of the Project and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the services financed out of such proceeds. (c) Upon the award by the Borrower 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) 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, through PMU, prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execu- tion 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 the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfac- tory 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 exercise its rights under the Project Documents in such manner as to protect the interests of the Borrower and the Association and to accomplish the pur- poses of the Credit, and except as the Association shall other- wise agree, the Borrower shall not assign, amend, abrogate or waive any of the Project Documents or any provision thereof. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records (including separate accounts) adequate to -8- reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies (including SDD and DD) 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, through PMU: (i) have the accounts referred to in paragraphs (a) and (b) of this Section, the Special Account, the Project Account and the US-AID Account 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 eight 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 including, without limitation to the foregoing, 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. (d) The Borrower shall cause each of SID and CDD: (i) to maintain records adequate to reflect in accor- dance with consistently maintained appropriate accounting practices its operations and financial condition including, without limitation to the -9- foregoing, separate accounts reflecting all expen- ditures on account of which withdrawals are re- quested from the Credit Account on the basis of statements of expenditure; (ii) to 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 to enable the Asso- ciation's representatives to examine such records; (iii) to 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; (iv) to furnish to the Association, as soon as avail- able, but in any case not later than eight months after the end of each such year, (1) certified copies of its financial statements for such year as so audited, and (2) 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, a separate opinion by said auditors in respect of the expenditures and records referred to in para- graph (d) (ii) of this Section, 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 (v) to furnish to the Association such other informa- tion concerning said accounts, financial state- ments, records and expenditures, as well as the audit thereof, as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause each of CDD and SID to carry on its operations and conduct its affairs in accordance with sound administrative, financial, and urban development - 10 - practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 4.03. The Borrower shall adequately maintain, or cause to be maintained adequately, the installations and facili- ties constructed, improved, equipped or otherwise assisted under the Project in accordance with appropriate administrative, tech- nical, financial and urban development practices, and provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the Gene- ral Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely, that: (a) Arret^ No. 84.0974/PR/FP, dated July 7, 1984, or Loi No. 68/AN/83/1Are L., dated October 17, 1983, of the Borrower shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely (i) the ability of CDD and SID to perform any of their respective obligations under the Project Documents or (ii) the carrying out of the Project. (b) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of any grant or loan (including the US-AID Grant or the CCCE-Loan) made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing there- for, or (B) any such loan shall have become due and pay- able prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, can- cellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and - 11 - (B) 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 General Conditions, the following additional events are specified pursuant t- paragraph (d) thereof, namely, that any event speci- fied in paragraphs (a) or (b) (i) (B) of Section 5.01 of this Agreement shall occur. 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: (a) The Project Documents have been executed on behalf of all the parties concerned, as provided hereunder. (b) The Special Account, the Project Account and the US-AID Account have been opened, as provided hereunder. (c) The interministerial committee referred to in Section 3.01 (b) hereof, PMU and the Urban Development Fund have been established, as provided hereunder. (d) The Association has beei notified by US-AID that the conditions precedent to the first, disbursement of funds of the US-AID Grant, save for the effectiveness hereof, have been fulfilled. (e) The Association has been notified by CCCE that the conditions precedent to the first disbursement of funds of the CCCE Loan, save for the effectiveness hereof, have been ful- filled. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that: - 12 - (a) The Project Documents have been duly authorized or ratified by the Borrower and all other parties concerned and are legally binding upon the Borrower and all other parties concerned in accordance with their respective terms. (b) The interministerial committee referred to in Section 3.01 (b) hereof, PMU and the Urban Development Fund have been duly established under the laws of Djibouti. Section 6.03. The date o 3 , is hereby specified for the purposes of Section 12.04 of the General Condi- tions. Section 6.04. The obligations of the Borrower under Section 3.06 and Article IV of this Agreement and the provisions of Sec- tion 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty (20) years after the date of this Agreement, which- ever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister of Finance and National Economy 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 and National Economy Republic of Djibouti Telex: 5871 DJ For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 13 - Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF DJIBOUTI By S - - A fr Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By .CN Regional Vice President Eastern and Southern Africa - 14 - 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 Expenditure,s Categg y SDR Equivalent) to be Financed (1) Works (a) Salines- 480,000 100% Ouest (b) Balbala and 1,730,000 100% Old Wards (2) Consultants 380,000 100% (3) Equipment, 140,000 100% of foreign vehicles and expenditures and supplies 95% of local ex- penditures (4) Loans under 670,000 100% Part E of the Project (5) Initial deposit 480,000 Amount due under in Special paragraph 1(c) of Account to Schedule 4 prefinance items under Categories (1) through (4) above (6) Refunding of 480,000 Amount due under Project Prepara- paragraph (b) of tion Advance Section 2.02 hereof (7) Unallocated 540,000 TOTAL 4,900,000 - 15 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the 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, 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 aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; and (b) Cate- gory (1) (a), unless the Borrower shall have caused SID to take the action referred to in Section 3.01 (g) hereof. 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 shortfallo reduce the disbursement percentage then applicable to such expen- ditures 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 - 16 - procedures set forth or referred to in this Agreement, no expen- diture 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 Bor- rower, 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. - 17 - SCREDULE 2 Description of the Project The objectives of the Project are: (i) to improve the living conditions of the urban poor in DD (especially the residents of Balbala and the Old Wards); and (ii) to strengthen the absorptive capacity of the Borrower's agencies involved in the urban sector by providing them with staff training, equipment, and a clearer and more appropriate framework for the management of urban investments, and by introducing more rigor in their cost recovery practices. To that end, the Project consists of the following Parts: Part A: Old Wards Construction or improvement of roads, drainage, water supply and garbage collection in DD (particularly in Wards 3, 5 and 6). Part B: Balbala Construction or improvement of roads, drainage systems, public lighting and garbage collection on the existing new sites and the old center, as well as the construction of a market. Part C: Salines - Ouest Development of about 176 plots, through the construction of about 106 core housing units (the balance to be sold with ser- vices but no housing), paved roads, drainage and sewerage systems and the improvement of public lighting and garbage collection. Part D: Institutional Support Strengthening of SDD, DD, SID, CDD and PMU, through the provision of staff, training and equipment. Part E: Housing Credit Provision of about 100 loans for the purchase of new housing units and about 600 loans for the improvement of existing houses in Balbala and the Old Wards. - 18 - Part F: Future Urban Projects Preparation of detailed designs for future urban projects in DI, The Project is expected to be completed by December 31, 1990. - 19 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and civil works shall be procured under contracts awarded in accordance with pro- cedures 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 and works to be procured on the basis of inter- national 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, a general procurement notice, in such form and detail and containing such information as the Associa- tion shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notifi- cation 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 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 competitive 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 similar 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. - 20 - 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 Djibouti 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 methoas 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 Djibouti if the bidder shall have established to the satisfaction of the Borrower and the Associa- tion that the manufacturing cost of such goods includes a value added in Djibouti 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 212 - 21 - 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 which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category (1) of the table set forth in Schedule 1 to the Development Credit Agreemetnt and to be procured in accordance with the procedures described in Part A of this Schedule, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors applying for such preference shall be asked to provide, as part of the data for qualification, such informa- tion, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly .indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. 2. After bids have been received and reviewed by the Bor- rower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. D. Other Procurement Procedures 1. Contracts for office equipment and supplies whose estimated cost is less than $10,000 equivalent may be awarded after obtaining quotations from at least three local suppliers. - 22 - 2. Contracts for office equipment, whose estimated cost is more than 810,000 equivalent but less than 820,000 equivalent, and contracts for the cleaning of existing drains, land filling, the construction of the Ralbala market and the improvement of the DD garage facilities, may he awarded on the basis of local Tro- cedures acceptable to the Association. E. Review of Procurement Decisions by the Association 1. Review of invitations to hid and of proposed awards and final contracts: With respect to all contracts for goods and civil works estimated to cost the equivalent of 850,000 and q100,000, or more, respectively: (a) Before hids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to hid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the hidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the hidding documents shall require the Association's concurrence before it is issued to the prosnective bidders. (b) After hids 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, by the con- sultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said consultants and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would he 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. - 23 - (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 (except for contracts on account of which withdrawals are allowed from the Credit Account on the basis of statements of expenditures), 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 bids, recommendations for award and such other inf or- mation as the Association shall reasonably request. The Associa- tion 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 10% 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. - 24 - SCHEDULE 4 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 Categories (1) through (4) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Initial Deposit" means an amount in DF equiv- alent 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 Categories (1) through (4), 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. - 25 - 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 Borruwer 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, any request of further deposit into the Special Account may be denied by the Association (a) when the Association shall have determined at any time that all further withdrawals can be made directly by the Borrower from the Credit Account in accor- dance with the provisions of paragraph (a) of Section 2.02 of this Agreement, or (b) unless otherwise agreed by the Associa- tion, when the total unwithdrawn amount of the Credit allocated to Categories (1) through (4), minus the amount of any outstand- ing qualified agreement to reimburse entered into by the Asso- ciation and of any outstanding special commitment made by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Initial Deposit, whichever shall be sooner. Withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Categories (1) through (4) shall follow such procedures as the Association shall specify by notice to the Borrower and shall, except as the Asso- ciation 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 para- graph 2 of this Schedule, or (ii) was not justified by the evi- dence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the 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 - 26 - (b) any amount outstanding in the Special Account will not be required to cover further payments for Eligible Expenditures, 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 198k FOR SECRETARY