Conformed Copy - L3204 - Small Coconut Farms Development Project - Loan Agreement

Page 1 LOAN NUMBER 3204 PH Loan Agreement (Small Coconut Farms Development Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 4, 1990 LOAN NUMBER 3204 PH LOAN AGREEMENT AGREEMENT, dated June 4, 1990, between REPUBLIC OF THE PHILIPPINES (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). 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 Bank to assist in the financing of the Project; (B) the Borrower has contracted from the Overseas Development Administration, an agency of the Government of the United Kingdom (ODA) a grant (the ODA Grant) in an amount equivalent to 1.3 million dollars to assist in financing Part B of the Project on terms and conditions set forth in the ODA Grant Agreement entered into between the Borrower and the ODA; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of Page 2 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) "PCA" means the Philippine Coconut Authority of the Borrower established under Presidential Decree No. 232 in June 1973 or any successor thereto; (b) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; and (c) "Memorandum of Agreement" means the agreement entered into between PCA and the Department of Agriculture of the Borrower for the purpose of assisting PCA in carrying out its obligations under the Project, and dated March 13, 1990, and the Supplemental Agreement thereto dated April 4, 1990. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agreement, various currencies that shall have an aggregate value equivalent to the amount of one hundred twenty one million eight hundred thousand dollars ($121,800,000), being the sum of withdrawals of the proceeds of the Loan with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the pro- ceeds of the Loan. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special deposit account in a bank on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 6 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1996 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during such Interest Period. Page 3 (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July l, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the preceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter." "(c) (iii) 'Quarter' means a three-month period commencing on January l, April l, July l or October 1 in a calendar year." Section 2.06. Interest and other charges shall be payable semiannually on January 15 and July 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth Page 4 in Schedule 2 to this Agreement, and, to this end, shall carry out the Project through PCA with due diligence and efficiency and in conformity with appropriate administrative, financial and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Bank shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. Section 3.02. (a) In order to enable PCA to carry out its obligations under the Project, the Borrower shall take all necessary action to make available to PCA a sufficient number of competent extensionists in accordance with the memorandum of Agreement. (b) Without limitation upon the generality of paragraph (a) of this Section, the Borrower shall: (i) select Municipal Coconut Development Officers for PCA with qualifications, experience and training as agreed with the Bank; and (ii) make arrangements for external recruitment of Municipal Coconut Development Officers in the event that insufficient numbers of suitable extension staff are made available to PCA in accordance with the Memorandum of Agreement. Section 3.03. The Borrower shall: (a) by June 30, 1993 furnish to the Bank, for its review and comment, a financing plan for the long-term coconut development program, and the associated activities and staffing of PCA; (b) within six months of having received the Bank's comments, finalize said financing plan; and (c) as soon as the necessary approvals have been obtained but not later than January 1, 1995, implement the said financing plan. Section 3.04. Except as the Bank 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 Loan shall be governed by the provisions of Schedule 4 to this Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain 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 the Project and of PCA. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than nine months after the end of each such year, the report of such audit by said auditors, of such scope and in such Page 5 detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made 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, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Other Covenants Section 5.01. The Borrower shall cause PCA: (a) to take out and maintain with responsible insurers, or to make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice; (b) to carry on its operations and conduct its affairs in accordance with sound administrative, financial and agricultural practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers; and (c) at all times to operate and to maintain its plants, machinery, equipment and other property, and from time to time, promptly as needed, to make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and agricultural practices. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (c) of the General Conditions: Page 6 (a) the formalization of a new organizational structure satisfactory to the Bank for PCA; (b) the establishment within PCA of a Central Project Operations Unit; and (c) arrangement has been made for the establishment of at least one seed garden in manners satisfactory to the Bank. Section 6.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Secretary 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: Secretary of Finance Department of Finance Manila Republic of the Philippines Cable address: Telex: SECFIN 40268 CB-CONF Manila For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 248423 (RCA) Washington, D.C. 64145 (WUI) 197688 (TRT) or 82987 (FTCC) 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. REPUBLIC OF THE PHILIPPINES By /s/ Emmanuel Pelaez Authorized Representative Page 7 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Gautam Kaji Acting Regional Vice President Asia SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Works 3,400,000 90% (2) Vehicles and 4,600,000 100% of foreign spare parts expenditures, 100% of local expenditures (ex-factory cost) and 80% of local expenditures for other items pro- cured locally (3) Equipment and 3,200,000 100% of foreign spare parts expenditures, 100% of local expenditures (ex- factory cost) and 85% of local ex- penditures for other items pro- cured locally (4) Consultants' 5,300,000 100% services, training, studies and extension (5) Research 300,000 100% (6) Copra driers 4,400,000 90% (7) Farm inputs 80,900,000 90% (8) Incremental operating cost (a) 2,000,000 60% (b) 2,100,000 45% (c) 1,700,000 30% (d) 1,800,000 25% (9) Unallocated 12,100,000 Page 8 TOTAL 121,800,000 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; (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; and (c) the term "incremental operating costs" means expenditures for incremental staff salaries and benefits, travel allowances, office expenses and vehicle maintenance and operation. 3. 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; (b) payments in respect of Category (6) of this Schedule for Copra driers until a satisfactory plan, for the implementation of a pilot scheme to introduce improved drying practices in major oil mill catchments, has been received by the Bank; (c) expenditures under Category (8) (b) until $2,000,000 under Category (8) (a) is fully disbursed; (d) expenditures under Category (8) (c) until $2,100,000 under Category (8) (b) is fully disbursed; and (e) expenditures under Category (8) (d) until $1,700,000 under Category (8) (c) is fully disbursed. SCHEDULE 2 Description of the Project The objectives of the Project are: (a) to launch a program of coconut development and productivity improvement; (b) to increase the incomes of small-scale coconut farmers by improving coconut yields and copra quality; and (c) to boost earnings by supply of higher quality copra for processing and the export market. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Coconut Farm Development (1) Establishment of seed gardens and nurseries to produce high yielding hybrid coconut seedlings sufficient, when full production is achieved, to sustain a replanting program of about 50,000 ha/year. (2) Replanting of over-aged palms with high-yielding hybrid coconut seedlings on about 16,400 ha, and replanting of palms damaged by typhoons and other natural disasters with selected tall seedlings on about 8,600 ha. (3) Provision of inputs and technical assistance to support annual intercropping during the Project's Page 9 first three years of replanting. (4) Provision of inputs to rehabilitate middle-aged palms on 348,000 ha, and to support the development of young palms planted on about 50,000 ha under previous PCA development schemes. Part B: Copra Quality Improvement (1) Equipping of an existing laboratory in Manila for aflatoxin assey, and establishment of a second regional copra quality control laboratory in Cebu. (2) Support for a pilot effort to introduce hot-air copra driers to smallholders in 2-3 major mill catchment areas. (3) Provision of technical assistance and training. Part C: Institutional Strengthening of PCA (1) Expansion of central, regional and provincial PCA office staff; replacement vehicles; office, communications and other minor equipment; construction and equipping of three new regional offices and renovation of three existing regional offices; support for incremental operating expenditures; technical assistance, training and research studies. (2) Completion of facilities for PCA's Coconut Extension Training Center; training of staff trainers and extension workers; and supporting materials for training and extension activities. (3) Upgrading of PCA's coconut research program through agronomic consultancy services, vehicles equipment and materials for PCA's Research and Development Branch and three regional research centers and support for contract research on coconut processing and end uses. * * * The Project is expected to be completed by June 30, 1995. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* January 15, 1996 2,215,000.00 July 15, 1996 2,305,000.00 January 15, 1997 2,395,000.00 July 15, 1997 2,485,000.00 January 15, 1998 2,580,000.00 July 15, 1998 2,680,000.00 January 15, 1999 2,785,000.00 July 15, 1999 2,895,000.00 January 15, 2000 3,005,000.00 July 15, 2000 3,120,000.00 January 15, 2001 3,245,000.00 July 15, 2001 3,370,000.00 January 15, 2002 3,500,000.00 July 15, 2002 3,635,000.00 January 15, 2003 3,775,000.00 July 15, 2003 3,920,000.00 January 15, 2004 4,075,000.00 July 15, 2004 4,230,000.00 Page 10 January 15, 2005 4,395,000.00 July 15, 2005 4,565,000.00 January 15, 2006 4,745,000.00 July 15, 2006 4,925,000.00 January 15, 2007 5,120,000.00 July 15, 2007 5,315,000.00 January 15, 2008 5,520,000.00 July 15, 2008 5,735,000.00 January 15, 2009 5,960,000.00 July 15, 2009 6,190,000.00 January 15, 2010 6,430,000.00 July 15, 2010 6,685,000.00 ____________________________ * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Conditions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (ex- pressed as a percentage per annum) applicable to the Loan on the day of prepayment multiplied by: Not more than three years 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than 11 years before maturity More than 11 years but 0.80 not more than 16 years before maturity More than 16 years but 0.90 not more than 18 years before maturity More than 18 years before 1.00 maturity SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part C 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 May 1985 (the Guidelines). Page 11 2. To the extent practicable, contracts for goods shall be grouped in bid packages estimated to cost at least the equivalent of $200,000 or more each. 3. To the extent practicable, contracts for works shall be grouped in bid packages estimated to cost the equivalent of $1,000,000 or more each. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.l hereof, goods manufactured in the Republic of the Philippines may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Packages for equipment, vehicles and spare parts may be procured under contracts awarded on the basis of local competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank provided that said contracts shall not exceed $200,000 per contract and up to an amount of $1,300,000 in the aggregate. 2. Packages for civil works not exceeding $1,000,000 per contract may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. 3. Items or groups of items estimated to cost less than the equivalent of $50,000 per contract, up to an aggregate amount not to exceed the equivalent of $15,800,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Bank. Part D: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for goods and works estimated to cost at least the equivalent of $200,000 and $1,000,000, respectively, the procedures set forth in paragraphs 2 and 4 of Appendix l 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 required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank 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 preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix l to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, said 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 Bank pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 6 to this Agreement. Page 12 (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which the Bank has authorized withdrawals on the basis of statements of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank 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. SCHEDULE 5 Implementation Program The Borrower shall cause PCA to: 1. Not later than March 31, 1991, furnish evidence to the Bank that it had obtained the use of a suitable seed garden site for a period of at least 20 years. 2. Enter into contracts for hybrid seed production with agricultural enterprises with adequate financial, technical and managerial resources as agreed with the Bank. 3. Annually furnish for Bank's approval the nursery development plan of PCA for the following year, with specific reference to the need for any field nurseries and the circumstances justifying their use. 4. Include in its annual capital budget adequate funds to finance Project's activities, including the non-incremental costs, and that such funds will be released for use in a timely manner. 5. Timely fill the posts of the heads of PCA's Central Project Operations Unit and Operation and Planning Department of the Field Operation Branch with incumbents with training and experience as agreed with the Bank. 6. Ensure that farmers participating in the Project will be selected in accordance with criteria agreed with the Bank. 7. Ensure that benefits under the Project will be limited to either replanting 1 ha or rehabilitation of 3 ha or nutrient support of 4 ha per small holder. 8. Not later than June 30 of each year, furnish, to the Bank for its review and comment, the proposed annual Project's area coverage targets and related plans and budget for the succeeding year. 9. Not later than September 30, 1990, commence the implementation of a new organizational structure agreed with the Bank. SCHEDULE 6 Special Account 1. For the purposes of this Schedule: Page 13 (a) the term "eligible Categories" means the Categories 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 Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule l to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $5,000,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 3 (a) of 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. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make Page 14 further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Loan allocated to the eligible Categories less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank 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 Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.