Liberia - Fifth Highway Project : Credit 1449 - Credit Agreement - Conformed

OFFICIAL CREDIT NUMBER 1449 LBR DOCUMENTS Development Credit Agreement (Fifth Highway Project) between REPUBLIC OF LIBERIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 3 ,1984 CREDIT WJMBER 1449 LZR DEVELOPMENT CREDIT AREEMENT AGREEMENT, dated A 4 fA R , 1984, between REPUBLIC OF LIBERIA (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Associatio and the United States Agency for International Development (herein- after called USAID) to assist in financing the Project described in Schedule 2 to this Agreement; (B) USAID has agreed to assist in the financing of Parts C (iii) and E (2) of the Project by making available a grant (here- inafter called the USAID Grant) in the principal amount equiva- lent to three million one hundred thousand dollars ($3,100,000); and (C) the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower on 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 Gen- eral Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "MPW" means the Ministry of Public Works of the Bor- rower. (b) "Project Account" means the Project Account referred to in Section 3.01 (b) of this Agreement. - 2 - (c) "Special Account" means the account to be opened and thereafter maintained pursuant to Section 2.02 (c) of this Agree- ment. (d) "Project Preparation Advance" means the pro.ect prepar- ation advance granted by the Association to the Borrower pursuant to an exchange of letters dated April 19, 1983 and May 9, 1983 between the Borrower and the Association. 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 rcferred to, an amount in various curren- cies equivalent to ten million nine hundred thousand Special Drawing Rights (SDR 10,900,000). 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 Ac- count and pay to itself the amount required to repay the princi- pal amount of the Project Preparation Advance withdrawn and out- standing 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 purposes of the Project, open and thereafter maintain in the currency of the Borrower a special account in the National Bank of Liberia 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 of this Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the -3- Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agree- ment. Section 2.04. The Closing Date shall be December 31, 1987 or such later date at 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 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 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 February 15 and August 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Febru- ary 15 and August 15 commencing August 15, 1994, and ending Feb- ruary 15, 2034, each installment to and including the installment payable on February 15, 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. -4- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project set forth in Schedule 2 to this Agreement and, to this end, shall carry out the Project through MPW with due diligence and efficiency and in conformity with ap- propriate engineering, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) To ensure the availability of funds for the Project, the Borrower: (i) shall open at a commercial bank and thereafter maintain a bank account (hereinafter called the Project Account) to be used exclusively for payments for goods and services re- quired for the Project; (ii) shall pay into the Project Account (A) an initial deposit of $400,000 equivalent; and (B) by Decem- ber 1, 1984 an additional amount of $200,000 equivalent; and (iii) shall replenish such Account on a quarterly basis or more frequently where necessary to ensure that such Account shows by the end of the first month of each quarter a positive balance of at least $400,000 equivalent in 1984 and $600,000 equivalent thereafter. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ consultants, experts and specialists whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Associa- tion, such consultants, experts, and specialists 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 Worle Bi *k 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 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, and (except as the -5- Association shall otherwise agree) all operable and repairable units of MPW's Operations Bureau's road maintenance equipment fleet, 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 Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii),shall enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any 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, of such scope and in such detail as the Association shall reasonably request, on the execution and ini- tial 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 Devel- opment Credit Agreement and the accomplishment of the purposes of the Credit. -6- 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: (i) shall introduce by July 1, 1984 and thereafter maintain and operate in its Ministry of Pub- lic Works, an improved accounting system for road maintenance satisfactory to the Association; (ii) shall as from fiscal year 1985 introduce in its recurrent budget a road maintenance budget prepared on functional lines and in form and content satisfactory to the Association; and (iii) shall include in its maintenance budget the following minimum amounts for materials, fuel, spare parts and other supplies for road maintenance during the follow- ing fiscal years: (A) 1984, (2nd half), $1,400,000; (B) 1985, $2,800,000; (C) 1986, $3,100,000; and (D) 1987 (1st half), $1,600,000. Section 3.07. The Borrower: (i) shall in the execution of Part C of the Project limit upgrading earthworks to no more than 10% of the total regravelling volume to be carried out; and (ii) shall, starting from December 1, 1984, review with the Associa- tion at least once every six months physical progress of work carried out by the regravelling brigades of MPW's work force under the Project; provided that the Borrower shall, in the event that the assessed output of work be less than that required under the work program referred to in Section 3.11 of this Agreement, take, in agreement with the Association, all necessary measures (including possible increases in the amount of work to be carried out by contractors) to achieve the output required. Section 3.08. The Borrower shall take such steps as shall be necessary to ensure that the dimensions and axle loads of ve- hicles using its roads shall be consistent with the structural and geometric design standards of such roads. Section 3.09. The Borrower shall no later than December 1, 1985: (1) fully install the remaining three weighbridges procured by MPW in 1976; and (ii) provide in its budgets funds sufficient to cover all operating and maintenance costs of the weighbridges. -7- Section 3.10. The Borrower: (i) shall cause all roads included in the Project and all MPW's road maintenance equipment to be maintained adequately; (ii) shall cause all necessary repairs and renewals thereof to be made promptly, all in accordance with appropriate techniques and economic practices; and (iii) shall provide promptly as needed, the funds, facili- ties, equipment, services and other resources required for this purpose, Section 3.11. During execution of the Project and for five years thereafter, the Borrower shall no later than May 15 of each year furnish to the Association for its review and comments, the budget and work program which it proposes for routine and periodic road maintenance during the fiscal year next following. Section 3.12. The Borrower shall not undertake any activi- ties likely to affect adversely the administrative and manpower resources available for the Project or likely to impair the efficient carrying out of the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and separate accounts adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) Without limitation to the foregoing, the Borrower shall: (i) maintain or cause to be maintained separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; (ii) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; and (iii) enable the Association's representatives to examine such records. (c) The Borrower shall: (i) have the accounts referred to in paragraphs (a) and (b) of this Section, the Project Account and the Special Account for each fiscal year audited, in - 8.- 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 four 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 fore- going, a separate opinion by said auditors in respect of the expenditures and records referred to in paragraph (b) of this Section as to whether (A) 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 (B) whether the unit rates adopted with respect to maintenance operations under the Project for purposes of withdrawal of proceeds of the Credit on the basis of statements of expenditure are adequate; 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. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) subject to paragraph (b) of this Section, the right of the Borrower to withdraw the proceeds of the USAID Grant for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the USAID Grant; (b) paragraph (a) of this Section shall not apply if the Borrower establishes to the satisfaction of the Association that: (i) such suspension, cancellation or termination is not caused by the failure of the Borrower to perform any of its obligations under the terms of the USAID Grant, 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- -9- suant to paragraph (d) thereof, namely, that the event specified in paragraph (a) 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: (a) the opening of the Project Account and the Special Ac- count; (b) the payment into the Project Account of an initial de- posit of $400,000 equivalent; and (c) the making by the Borrower of arrangements satisfactory to the Association for obtaining the USAID Grant. Section 6.02. The date Z - 1 Lt O, (ff1L 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: Minister of Finance Ministry of Finance Monrovia Liberia - 10 - Cable address: Telex: MINFIN 4221 Monrovia 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) 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 LIBERIA By/S/ ?* 0le, Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By / Regional Vice President Western Africa - 11 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Equipment, 2,090,000 100% of foreign tools, spare expenditures and parts for 90% of local ex- equipment over- penditures haul and equipment over- haul by con- tractors under Part D of the Project (2) Periodic main- 3,590,000 80% of cost of tenance under materials used in Part C (i) and work carried out by C (ii) of the MPW's work force Project (ex- cluding royalties for laterite) (3) Consultant and 2,060,000 100% of foreign audit services expenditures under Parts E (1) and F of the Project (4) Materials for 1,560,000 routine main- tenance under Part B of the Project (a) expenditures made 30% before 1985 -12 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (b) expenditures made 24% in 1985 (c) expenditures made 15% after 1985 (5) Initial deposit 570,000 Amount due under in Special Section 2.02 (c) Account of this Agreement (6) Refunding of 340,000 Amount due under Project Prepara- Section 2.02 (b) tion Advance of this Agreement (7) Unallocated 690,000 TOTAL 10,900,000 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; provided, however, that if the currency of the Borrower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; 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, manufacture, procurement or - 13 - 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, in- crease or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforemen- tioned policy of )he Association. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of expenditures made prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditure for such item shall be financed out of the proceeds of the Credit, and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Asso- ciation's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 14 - SCHEDULE 2 Description of the Project The objectives of the Project are to strengthen MPW's abil- ity to carry out efficiently the Borrower's road maintenance pro- gram and to ensure the adequate maintenance of the Borrower's public roads system. The Project consists of the following Parts: A. Strengthening of MPW's Management Development and carrying out of a medium-term program to improve MPW's managerial and financial accountability including: (i) coordination of the activities of MPW's bureaus and improve- ment of its management information systems; (ii) improvement of MPW's capability to carry out assignments within Ithe established budgets; and (iii) installation of a modern cost accounting system for work monitoring and planning. B. Road Maintenance: (1) The carrying out of a three-year road maintenance pro- gram, including the routine maintenance by MPW's work force of about 2,450 miles of the all-weather-road network and about 2,275 miles of the dry-weather-road network. (2) Establishment and organization of specialized light mechanized units and labor gangs to carry out maintenance tasks set out in MPW's annual routine maintenance programs. C. Periodic Maintenance of Gravel Roads Rehabilitation of about 450 miles of gravel roads (listed in the Annex hereto, said Annex being-subject to modification by agreement between the Borrower and the Association) involving: (i) the deployment by MPW's Operations Bureau of three brigades (one in each region) and, if necessary, contractors to regravel about 350 miles of gravel roads; (ii) establishment of a specialized drainage unit to carry out drainage improvements of roads to be rehabilitated; and (iii) regraveling under contract of about 100 miles of roads. D. Workshops and Equipment: (1) Additions to the road maintenance equipment fleet of MPW including: (i) the provision for MPW's Operations Bureau of - 15 - additional water tanks, lube trucks and other items needed to provide balanced equipment for the Bureau's maintenance brigades; and (ii) repair and overhaul of MPW's Operations Bureau's equip- ment. (2) Basic rehabilitation of MPW's workshop facilities in- cluding: (i) provision to MPW's workshops of reliable water, electricity, compressed air and fuel-dispensing services, work- shop equipment, hand tools and radio equipment; and (ii) re- placement of ancillary equipment and hand tools. E. Technical Assistance: (1) Provision of consultant services to assist MPW in: (i) the execution of the Project; and (ii) the carrying out of a road maintenance study to prepare a future road maintenance program. (2) A program of overseas training and fellowships. F. Audit Services The carrying out of annual external audits of the Project. The Project is expected to be completed by December 31, 1986. - 16 - ANNEX TO SCHEDULE 2 List of Gravel Roads (Part C of the Project) Road Sections Length (miles) 1. Bomi hills - Lofa Bridge 13.7 2. Lof a Bridge - Mano River 35.0 3. Gba - Bo 42.7 4. Madina - Robertsport 27.5 5. Bambli - Greenville 71.0 6. Harper - Karlokeh 32.0 7. Zwedru - Cestos River 54.0 8. St. Paul River - Mendikoma 113.0 9. Ganta - Cestos River 61.1 TOTAL 450.0 - 17 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Parts C and E 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 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 in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. Equipment, spare parts, tools and materials required for Parts B, C and D of the Project shall be bulked, where possible, to permit the use of international competitive bidding. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and simi- lar taxes levied in connection with the sale or delivery, pur- suant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. - 18 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedure described in Part A of this Schedule, goods manufactured in Li- beria 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 Liberia if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Liberia 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 fur- ther comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer - 19 - 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. Other Procurement Procedures 1. (a) Contracts for goods which cannot be grouped into lots costing more than $60,000 equivalent, and contracts for fuel may be awarded under local competitive bidding procedures satisfac- tory to the Association; provided, however, that the aggregate cost of items (other than fuel) so procured shall not exceed $1,500,000 equivalent. (b) Minor items not exceeding $10,000 equivalent in value per purchase that are urgently needed may be procured by local shopping, provided that the aggregate cost of goods and items (other than fuel) so procured shall not exceed $500,000 equiva- lent. 2. Equipment repair and overhaul by authorized dealers shall be carried out, and proprietary spare parts available exclusively from the original manufacturer of equipment required under the Project shall be purchased, under directly negotiated contracts satisfactory to the Association. 3. Contracts for periodic maintenance under Part C of the Project shall be awarded on the basis of local competitive bid- ding procedures satisfactory to the Association. D. Review of Procurement Decisions by the Association: 1. Review of prequalification. The Borrower shall, before qual- ification is invited, inform the Association in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Association for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request. - 20 - 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for goods estimated to cost the equivalent of $60,000 or more and all contracts for works (irrespective of cost): (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids Iave 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 suf- ficient time for 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 incon- sistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and c3nditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification was invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the delivery to the Association of the first application for with- drawal of funds from the Credit Account in respect of such con- tract. 3. 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 delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed - 21 - copies of such contract, together with the analysis of the respective bids, recommendations for award and such other infor- mation as the Association shall reasonably request. The Associa- tion shall, if it determines that thk award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. 4. 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. E. Procurement Without Contracting Routine maintenance and rehabilitation of about 350 miles of gravel roads included in Part C (i) of the Project shall be carried out by MPW's workforce. - 22 - SCHEDULE 4 Special Account 1. For the purpose 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 proviLions of Schedule 1 to this Agreement; and (c) the term "initial deposit" means an amount in the currency of the Borrower equivalent to the amount allocated to Category (5) and to be withdrawn from the Credit Account and deposited in the Special Account pursuant to the first sentence of paragraph 3 to this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions 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 expenditures, 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 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. - 23 - 4. Prior to or at the time of each request by the Borrower for a deposit by the Association into the Special Account after the initial deposit, the Borrower shall furnish to the Association in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Association shall reasonably request, showing that such payment was, made for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association: (a) when the Association shall have determined at any time that all further withdrawals can be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement, or (b) unless otherwise agreed by the Association, when the total unwithdrawn amount of the Credit, less the amount of any qualified agreement to reimburse made by the Association and of any special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to 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 shall follow such procedures as the Association shall specify by notice to the Borrower and shall, except as the Association shall otherwise agree, be made only after and to the extent the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. If the Association shall have determined at any time that: (a) any payment out of the Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association and unless otherwise agreed by the Association, prior to any further deposit into the Special Account by the Association, deposit into the Special Account or, if the Association shall so request, refund to the Association an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or (b) any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, - 24 - 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 0 day of 198 FOR SECRETARY