Madagascar - Irrigation Rehabilitation Project : Credit 1589 - Credit Agreement - Conformed

I CREDIT NUMBER 1589 MAG DCUMEMh~ Development Credit Agreement (Irrigation Rehabilitation Project) between DEMOCRATIC REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSO:IATION Dated 1 / ,1985 CREDIT NUMBER 1589 HAG DEVELOPMENT CREDIT Af1REEMENT AGREEMENT, dated J < - , 1985, between DEMOCRATIC REPUBLIC OF MADAGASCAR (the Borrower) and INTER- NATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) part of the Project will be carried out by the Societ6 pour l'Am6nagement et la Mise en Valeur de la Vall6e du Bas- Mangoky (SAMANGOKY) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to SAMANGOKY part of the proceeds of the Credit as provided in this Agreement; (C) by agreement dated February 14, 1985, the Caisse Centrale de Coopgration Economique (CCCE) has agreed to make available as a loan to the Borrower an aggregate principal amount of twenty four million French francs (FF 24,000,000) to assist in financing part of the Project; (D) the Borrower intends to contract from CCCE an addi- tional loan in an amount of about FF 36,000,000 to assist in financing part of the Project; (E) the Borrower intends to contract from European Develop- ment Fund (EDF) a grant in an amount of 5.3 million ECU to parti- cipate in financing the Project; 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 set forth in this Agreement and in the Project Agreement of even date herewith between the Association and SAMANGOKY; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The General Conditions Applicable to Develop- ment Credit Agreements of the Association, dated January 1, 1985, -2- (t,he General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires. the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "SAMANGOKY" means the Socifti pour l'Amenagement et la Mise en Valeur de la Vallee du Bas-Mangoky, the Lower Mangoky Valley Development Corporation, established as a corporation on June 2, 1961 and transformed into a mixed company pursuant to Decree No. 62-526 dated October 17, 1962 and Decree No. 67-007 dated June 28, 1967, as amended, to the date of this Agreement; (b) "Project Agreement" means the agreement between the Association and SAMANGOKY of even date herewith, as the same may be amended from time to time, and such, term includes all .ched- ules and agreements supplemental to the Project Agreement; (c) "Subsidiary Agreement" means the agreement to be entered into between the Borrower and SAMANGOKY pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time; (d) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (e) "MPARA" means the Borrower's Ministry of Agricultural Production and Agrarian Reform; (f) "MPARA Annual Work Program" means any annual work program prepared by the Borrower pursuant to the provisions of paragraph 4 of Schedule 4 to this Agreement; (g) "SAMANGOKY Annual Work Program" means any annual work program prepared by SAMANGOKY pursuant to the provisions of Section 2.06 of the Project Agreement; and (h) "Coordinating Committee" means the Comite de Coordination du Projet de Rehabilitation des Petits P6rimetres Irrigugs as established within MPARA, inter alia, for the purposes of the Project. -3- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to twelve million six hundred thousand Special Drawing Rights (SDR 12,600,000). 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) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special account in a bank accept- able to the Association 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 Sched- ule 4 to this Agreement. (c) 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. Section 2.03. The Closing Date shall be June 30, 1991 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.04. (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. -4- (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 2.05. 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 2.06. Commitment charges and service charges shall be payable semiannually on February 1 and August 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Febru- ary 1 and August 1 commencing August 1, 1995, and ending Febru- ary 1, 2035. Each installment to and including the installment payable on February 1, 2005 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment there- after shall be one and one-half per cent (1-1/2%) of such princi- pal amount. Section 2.08. 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: (i) shall carry out Parts A and B of the Project through MPARA with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for Parts A and B of the Project; and (ii) without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause SAMANGOKY to perform in accordance with the provisions of the -5- Project Agreement all the obligations of SAMANGOKY therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable SAMANGOKY to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) Without limitation upon the provisions of paragraph (a) of this Section, the Borrower shall carry out Part B of the Project in accordance with the Implementation Program set forth in Schedule 5 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association. (c) The Borrower shall make the proceeds of the Credit allocated for the carrying out of Part C of the Project available to SAMANGOKY on a grant basis under a subsidiary agreement to be entered into between the Borrower and SAMANGOKY, under terms and conditions which shall have been approved by the Association. (d) The Borrower shall exercise its rights under the Subsidiary Agreement 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 the Subsidiary Agreement or any provision thereof. (e) Without any limitation or restriction upon the provisions of paragraph (a) of this Section, the Borrower shall, during each year of execution of the Project, make adequate provisions in its annual budget for the funds to be provided as the Borrower's contribution: (i) to MPARA on the basis of the MPARA Annual Work Program for any such year to be prepared pursuant to paragraph 4 of Schedule 4 to this Agreement; and (ii) to SAMANGOKY on the basis of the SAMANGOKY Annual Work Program for any such year to be prepared pursuant to Section 2.06 of the Project Agreement. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. -6- Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to in- surance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of Part C of the Project shall be carried out by SAMANGOKY pursuant to Section 2.03 of the Project Agreement. Section 3.04. (a) The Borrower shall employ, at all times during execution of the Project, a Project Coordinator with adequate responsibilities, experience and qualifications. (b) The Borrower shall consult with the Association before making any employment for the position of Project Coordinator. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain through the Directorate of Finance and Personnel of MPARA or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of Parts A and B of the Project of the departments or agencies of the Borrower responsible for carrying out Parts A and B of the Project or any part thereof. (b) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section including the Special 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 six months after the end of each such year, a certified copy of the report of such audit by the said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the said accounts and the audit thereof -7- and said records as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals are requested from the Credit Account on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by the said auditors as to whether the proceeds of the Credit withdrawn in respect of such expenditures have been used for the purpose for which they were provided. Section 4.02. (a) By October 31 of each year during execu- tion of the Project, the Borrower shall submit to the Association for approval its annual maintenance contract to be concluded with SAMANGOKY for the following year. (b) The Borrower shall transfer to SAMANGOKY all funds as stipulated in the maintenance contracts referred to in paragraph (a) of this Section. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: -8- (a) SAMANGOKY shall have failed to perform any of its obligations under the Project Agreement. (b) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it improbable that SAMANGOKY will be able to perform its obligations under the Project Agreement. (c) The Borrower's Decrees referred to in Section 1.02(a) of this Agreement shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of SAMANGOKY to perform any of its obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of SAMANGOKY or for the suspension of its operations. Section 5.02. For the purposes of Section 7.01 (d) of the General Conditions, the following additional events are speci- fied: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and (b) the events specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Subsidiary Agreement has been executed on behalf of the Borrower and SAMANGOKY in accordance with the provisions of Section 3.01(c) of this Agreement; and -9- (b) the Borrower has amended its Ordonnance 81.026, dated December 22, 1981 and the Decree 82.353, dated August 13, 1982, in order to authorize the creation of legal entities (structures d'op6ration) in the context of its Ordonnance 76-044, dated December 27, 1976; such legal entities to involve all water users of a given irrigation scheme and to have adequate authorities to operate and manage any such irrigation systems, to assess the user charge to be collected for maintenance and operation, and to decide on the use of such funds. Section 6.02. The following is specified as an additional matter, 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 the Project Agreement has been duly authorized or ratified by SAMANGOKY, and is legally binding upon SAMANGOKY in accordance with its terms. Section 6.03. The date 90 days after the date of this Agree- ment is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Ministre aupres de la Presidence chargg des Finances et de l'Economie 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: Ministre aupres de la Presidence charge des Finances et de l'Economie Antananarivo 101 Madagascar Cable address: Telex: MINFIN 22336 Antananarivo - 10 - 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 duly authorized representatives, 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. DEMOCRATIC REPUBLIC OF MADAGASCAR By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCI TION By Att;lvq Regional Vice President Ea tern and Southern Africa - 11 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. Thei table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil works under 4,200,000 65% Parts A and B of the Project (2) Consultants' 2,000,000 100% services under Part A of the Project (3) Vehicles, equip- 500,000 100% of foreign ment and office expenditures and furniture for 90% of local Parts A and B expenditures of the Project (4) Travel cost and 500,000 90% training under Parts A and B of the Project (5) Civil works under 1,500,000 65% Part C of the Project (6) Consultants' serv- 200,000 100% ices and training under Part C of the Project - 12 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (7) Vehicles, equip- 700,000 100% of foreign ment and office expenditures and furniture for 90% of local Part C of the expenditures Project (8) Special Account 850,000 Amounts to be deposited pur- suant to para- graph 3 (a) of Schedule 4 to this Agreement (9) Refunding of Project 840,000 Amount due under Preparation Advance Section 2.02 (c) of this Agreement (10) Unallocated 1,310,000 TOTAL 12,600,000 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; 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. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made: (i) for expenditures prior to the date of this Agreement; (ii) for expen- ditures under Categories (5), (6) and (7) of the table in para- graph 1 above unless (A) the Borrower and the Association have approved a five-year financial rehabilitation program for - 13 - SAMANGOKY and the Borrower has made a cash contribution to SAMANGOKY to restore its working capital to a level acceptable to the Association, and (B) such expenditures have been approved by the Association in the context of the SAMANGOKY Annual Work Program for any such year or a previous year pursuant to the provisions of Section 2.06 of the Project Agreement; and (iii) for expenditures under Categories (1) through (4), unless such expenditures have been approved by the Association in the context of the MPARA Annual Work Program for any such year or a previous year pursuant to the provisions of paragraph 4 of Schedule 4 of this Agreement. - 14 - SCHEDULE 2 Description of the Project The objectives of the Project are to develop a systematic approach to rehabilitate medium irrigation schemes, to develop new institutions for self-administration and self-finance of irrigation schemes by irrigation users and to rehabilitate irrigation schemes in Mangoky in order to increase outputs pro- duced by SAMANGOKY. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Management Support for MPARA 1. Provision of technical assistance to four Directorates and the Coordinating Committee within MPARA to strengthen their capability to coordinate and monitor execution of Part B of the Project and to assist in the establishment of water management committees and irrigation user associations. 2. Construction of additional offices for MPARA. Part B: Rehabilitation of Medium Irrigation Schemes Rehabilitation of about 16 medium irrigation schemes in accordance with procedures set forth in Schedule 5 to this Agreement. Part C: Rehabilitation of the Mangoky Irrigation Scheme 1. Cleaning of the desilting basin, the headwork and the access canal; 2. Resealing of the concrete section, joints, including about 100 km of raised canals; 3. Rehabilitation of about 45 km of services roads; 4. Repair of the river-intake gate and of irrigation gates; 5. Improvement of the outlets of the main drains; - 15 - 6. Acquisition of equipment needed for maintenance of irri- gation schemes; and 7. Provision of technical assistance to introduce cost- accounting. The Project is expected to be completed by December 31, 1990. - 16 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A. International Competitive Bidding Except as provided in Parts C and D hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guidelines). Part B. Preference for Domestic Contractors In the procurement of works in accordance with the proce- dures described in Part A hereof, the Borrower may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part C. Local Competitive Bidding Goods for Part C of the Project estimated to cost the equivalent of $100,000 or less may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. Part D. Other Bidding Procedures Office equipment furniture and civil works estimated to cost the equivalent of $100,000 or less may be procured under con- tracts awarded on the basis of evaluation and comparison of bid invited from a list of at least three local suppliers in accord- ance with procedures acceptable to the Association. Part E. Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. - 17 - Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 (the Special Account Schedule) to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agree- ment and Section 4.01 (c) (ii) of the Project Agreement. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out Parts A and B of the Project, the Borrower shall employ consultants, includ- ing a senior adviser to the project coordinator, an agricultural economist, a training/extension specialist, a senior advisor, a rural institutions advisor, two senior irrigation engineers and a project education specialist whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall 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. - 18 - 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 I 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 (7) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount in dollars equivalent to the amount allocated to Category (8) which is to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of 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. After the Association has received evidence satisfactory to the Association that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent with- drawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible - 19 - expenditures. Except as the Association may otherwise agree, each such deposit shall be withdrawn by the Association from the Credit Account under the respective Categories (1) through (7), 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. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined 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 (ii) unless otherwise agreed by the Association, when the total unwithdrawn amount of the Credit allocated to Categories (1) through (7) for the Project, minus the amount of any outstanding qualified agreement to reimburse made by the Association and of any outstanding special commit- ment 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 Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Catego- ries (1) through (7) for the Project shall follow such procedures as the Association shall specify by notice to the Borrower. Except as the Association shall otherwise agree, such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of - 20 - such notice have been or will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that 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 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. Unless otherwise agreed by the Association, no further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that 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, refund to the Association such outstanding amount. - 21 - SCHEDULE 5 Implementation Schedule for Part B of the Project 1. Selection of Medium Irrigation Schemes for Rehabilitation The Borrower shall carry out an inventory for all medium irrigation schemes by December 31, 1987. Medium irrigation schemes shall be selected for rehabilitation under the Project on the basis of such inventories and by taking into consideration the following criteria: (a) motivation of the operators of the respective irriga- tion schemes; (b) appropriateness of rehabilitation of the respective irrigation scheme in the framework of the regional rehabilitation strategy; (c) cost of transportation and condition of existing road network; (d) existence of supporting infrastructure (e.g. extension services, availability of agricultural credit); and (e) the estimated economic rate of return of the investment for the rehabilitation of the respective irrigation scheme to exceed 14%. The Borrower shall submit to the Association for review and approval, upon its approval by the Coordinating Committee, an evaluation of each irrigation system, whose rehabilitation is proposed to be financed under the Credit with a detailed report on the criteria set forth above. 2. Preinvestment Studies Upon selection of an irrigation scheme to be rehabilitated under the Project, the Borrower shall carry out a base-line survey to determine the agricultural, economic and sociological characteristics and land ownership of any such irrigation scheme. The Borrower shall transmit to the Association for approval the terms of reference of the baseline surveys for irrigation systems whose rehabilitation is proposed to be financed under the Credit. - 22 - On the basis of the findings of the baseline survey, the Borrower shall prepare the preliminary engineering, a five-year scheme agricultural development plan and a feasibility study including possible alternatives for rehabilitation and a sensitivity analysis. The Borrower shall transmit to the Association for review all documents referred to above relatitg to irrigation schemes, whose rehabilitation is proposed to be financed under the Credit, together with the recommendations of the Coordinat- ing Committee to be taken into account for the preparation of detailed studies. The Association shall give its comments within three months after receipt of any such documents. 3. Detailed Studies and Rehabilitation Works The Borrower shall prepare, taking into consideration any comments made by the Coordinating Committee and the Association, the final engineering design, a revision of the cost estimates, the bidding documents and a provisional manual for scheme opera- tion and maintenance. Before initiation of the procurement pro- cedure, the Borrower shall submit: (i) to the Coordinating Committee for review all the documents referred to above; and (ii) all documents relating to irrigation schemes, whose rehabi- litation is proposed to be financed under the Credit to the Association for review and approval. In case that the revised cost estimates exceed the initial cost estimates by more than 15% for any given irrigation scheme and the Borrower decide to rehabilitate such scheme, the Borrower shall redo the feasibility study and shall demonstrate that the economic rate of return of any such irrigation scheme exceeds 14%. The Borrower shall start rehabilitation works on any medium irrigation scheme proposed to be financed under the Credit only after the respective legal entity referred to in Section 6.01 (b) of this Agreement for any such scheme has approved the rehabili- tation plan and committed itself to cover full cost of operation and maintenance thereof upon completion of the works, to make an advance payment equal to the estimated financial cost of one year of maintenance and to deposit such funds into a bank account before completion of the rehabilitation works. Upon completion of the rehabilitation works, the Borrower shall prepare a manual for scheme operation and maintenance. The Borrower shall also carry out the five-year agricultural develop- ment plans referred to in paragraph (3) above. - 23 - 4. MPARA Annual Work Program By September 30 of each year of execution of the Project, the Borrower shall prepare and submit to the Association for approval an annual work program (MYIPARA Annual Work Program) which shall include all items set forth below and such other information as the Association shall reasonably request: (a) works to be carried out under Part B of the Project; (b) activities to be carried out under paragraphs 2 and 3 of this Schedule; (c) incremental and extraordinary expenditures of MPARA for the execution of such program; (d) all items to be financed under the Credit during any such year; and (e) the legal instrument establishing the legal entities involving all water users of any irrigation scheme proposed to be rehabilitated under the Credit, such legal entities to have adequate authorities in conforming with the provisions of Section 6.01 (b) of this Agreement. 5. Special Report By December 31, 1988, the Borrower shall prepare and submit to the Association a report summarizing the achievements made under Part B of the Project, evaluating the performance of the departments and agencies of the Borrower involved and making recommendations for improvements to be made for the further execution of the Project. The Borrower shall discuss the recommendations of such report with the Association, and shall take into consideration any comments made by the Association regarding the execution of the Project. 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 198 FOR SECRETARY