Conformed Copy - C2796 - Natural Resources Management Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2796 NIR Development Credit Agreement (Natural Resources Management Project) between REPUBLIC OF NIGER and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 5, 1996 CREDIT NUMBER 2796 NIR DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 5, 1996, between REPUBLIC OF NIGER (the "Borrower") and INTERNATIONAL 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) the Borrower has requested from the Kingdom of Norway ("Norway") a grant (the "Norwegian Grant") in an amount equivalent to three million seven hundred thousand dollars ($3,700,000) to assist in financing the Project on the terms and conditions set forth in an agreement (the "Norwegian Grant Agreement") to be entered into between the Borrower and Norway; (C) the Borrower has requested from the Kingdom of Denmark (Denmark) a grant (the "Danish Grant") in an amount equivalent to five million dollars ($5,000,000) to assist in financing the Project on the terms and conditions set forth in an agreement (the "Danish Grant Agreement") to be entered into between the Borrower and Denmark; and (D) 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; Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the modifications thereto set forth below (the "General Conditions") constitute an integral part of this Agreement: (a) The last sentence of Section 3.02 is deleted. (b) The second sentence of Section 5.01 is modified to read: "Except as the Association and the Borrower shall otherwise agree, no withdrawals shall be made: (i) on account of expenditures in the territories of any country which is not a member of the Bank or for goods produced in, or services supplied from, such territories; or (ii) for the purpose of any payment to persons or entities, or for any import of goods, if such payment or import, to the knowledge of the Bank, is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." 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) "CBNRM Plan" means a community based natural resource management plan, a comprehensive plan to be designed and implemented by a Community (as hereinafter defined) for the sustainable development of its natural resources and for the carrying out of socio-economic investments; (b) "CFAF" means the currency of the Borrower; (c) "CNRM" means any council for natural resource management to be established pursuant to paragraph 6 of Schedule 4 to this Agreement; (d) "Community" means a group of persons sharing, on agreed terms, the land on which they live either permanently or seasonally and the natural resources thereof, and carrying out agricultural and/or livestock production or other natural resource management activities; (e) "District" means any of the Borrower's arrondissements established by the Borrower's law No. 94-028 of October 21, 1994; (f) "District Technical Committee" means any of the Borrower's technical committees established by the Borrower at the District level; (g) "Implementation Manual" means the manual referred to in paragraph 1 of Schedule 4 to this Agreement; (h) "Initial Deposit" means the deposit referred to in Section 3.03 (b) of this Agreement; (i) "MAL" means the Borrower's Ministry of Agriculture and Livestock; (j) "MWE" means the Borrower's Ministry of Water and Environment; Page 3 (k) "NRM" means Natural Resource Management as defined in the "Guidelines for a Rural Development Policy in Niger", enacted by the Borrower's Ordonnance No. 92-030 of July 8, 1992; (l) "NRMDT" means any of the district teams to be established pursuant to paragraph 5 of Schedule 4 to this Agreement; (m) "NRMDC" means each of the district committees to be established pursuant to paragraph 7 of Schedule 4 to this Agreement; (n) "NRMSC" means the steering committee referred to in paragraph 2 of Schedule 4 to this Agreement; (o) "NRMU" means Natural Resource Management Unit, the inter-ministerial unit established by the Borrower's Arrete No. 42 MAG/EL/MH/E of April 17, 1992; (p) "ONVPE" means Organisation nigerienne de volontaires pour la preservation de l'environnement, a non-governmental organization established under the laws of the Borrower; (q) "Project Account" means the account referred to in Section 3.03(a) of this Agreement; (r) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to the letters dated February 3, 1988 and August 14, 1995; (s) "RDSC" means Rural Development Sub-Committee, the Borrower's inter-ministerial committee established by the Borrower's Arrete No. 033 of April 17, 1992; (t) "Selected Districts" means the territory, within the boundaries existing at the date of this Agreement, of the Borrower's districts of Boboye, Dogondoutchi, Goure, Say and Tessaoua; (u) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; and (v) "UTA" means the Technical Support Unit established within MWE by the Borrower's Arrete No. 64 MH/E/DAAF of September 3, 1992. 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 this Agreement, an amount in various currencies equivalent to eighteen million Special Drawing Rights (SDR 18,000,000). 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 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower may, for the purposes of the Project, open and maintain in CFAF a special deposit account (the "Special Account") in a commercial bank acceptable to the Association, on terms and conditions acceptable to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions Page 4 of Schedule 5 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 principal 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 canceled. Section 2.03. The Closing Date shall be March 31, 2002 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the "Accrual Date") to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or canceled; and (ii) at the rate set as of the June 30 immediately preceding the Accrual Date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next payment date in that year specified in Section 2.06 of this Agreement. (c) 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 2.05. 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 May 1 and November 1 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 1 and November 1 commencing May 1, 2006 and ending November 1, 2035. Each installment to and including the installment payable on November 1, 2015 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever: (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 Dollars for five consecutive years; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such Page 5 installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. Section 2.08. The currency of the French Republic is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and to this end, shall carry out the Project through MAL and under the overall responsibility of NRMU with due diligence and efficiency and in conformity with appropriate financial, administrative, management and environmental 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 Association shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 4 to this 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. Section 3.03. For the purpose of Annex 1 to this Agreement, the Borrower shall: (a) open and maintain, until the completion of the Project, an account (the "Project Account") in a commercial bank acceptable to the Association; (b) deposit into the Project Account an initial amount equivalent to $400,000 (the "Initial Deposit"); (c) thereafter, at annual intervals following the Initial Deposit, replenish the Project Account by an amount equivalent to $175,000 or any other amount required for further implementation of the Project, as agreed between the Borrower and the Association; and (d) ensure that the amounts deposited into the Project Account are utilized exclusively for the Borrower's counterpart expenditures under the Project. Section 3.04. (a) The Borrower shall maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with indicators acceptable to the Association, the carrying out of the Project and the achievement of the objectives thereof. (b) The Borrower shall ensure that NRMU, NRMSC, the District authorities and Community representatives shall, from time to time and in any case not later than December 31 each year, meet with the Association to review the progress achieved in carrying out the Project. Any institution participating in the financing of the Project shall also be invited to participate in such meetings. Page 6 (c) Once a year prior to any such meeting as specified in paragraph (b) of this Section, and in any case not later than October 31 of each year, the Borrower shall submit to the Association for its review and comments an annual work program, inclusive of an indicative list of the investments to be financed under Part A of the Project during the following calendar year. (d) Promptly after any meeting as specified in paragraph (b) of this Section, the Borrower shall make such revisions to such annual work program and to the list of investments under Part A of the Project as may be appropriate, having due regard to the comments emanating from such meeting. (e) Except as the Association shall otherwise agree, the Borrower shall thereafter carry out Part A of the Project in the year in question on the basis of such work program, as so revised. Section 3.05. (a) The Borrower shall conduct, not later than March 31, 1999, jointly with the Association, and based on performance indicators acceptable to the Association, a mid- term Project implementation review: (i) to monitor progress in the carrying out of the Project; (ii) to monitor performance of the Borrower's national, District and Community level implementation authorities; (iii) to monitor the effectiveness of the criteria set forth in the Implementation Manual in relation to Part A of the Project; and (iv) to exchange information among staff responsible for Project implementation, to devise solutions to current issues and to ensure the continuation of the Project. (b) Not later than six weeks prior to the review under paragraph (a) of this Section, the Borrower shall furnish to the Association for its review and comments a report in such detail as the Association shall reasonably request, including: (i) an evaluation of progress achieved in Project implementation; and (ii) a draft action program for the future operation of the Project. (c) Promptly after completion of the review under paragraph (a) of this Section, the Borrower shall carry out the recommendations arising out of the said review as agreed by the Borrower and the Association, or such other actions as shall be necessary as a result of the review referred to above, to ensure the efficient completion of the Project and the achievement of the objectives thereof. Section 3.06. For the purpose of Section 9.08 of the General Conditions and without limitation thereto, the Borrower shall: (a) prepare, on the basis of guidelines acceptable to the Association, and furnish to the Association not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, a plan for the future operation of the Project; and (b) afford the Association a reasonable opportunity to exchange views with the Borrower on said plan. 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 of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Page 7 (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 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 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 said records, accounts and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit 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 Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the Special Account was made, 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 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 Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional event is specified: (i) subject to sub-paragraph (ii) of this paragraph, the right of the Borrower to withdraw the proceeds of any grant made to the Borrower for the financing of the Project shall have been suspended, canceled or terminated in whole or in part, pursuant to the terms thereof; and (ii) sub-paragraph (i) of this paragraph shall not Page 8 apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation or termination is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. 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 (b) of the General Conditions: (a) the Borrower has adopted an Implementation Manual acceptable to the Association; (b) the Borrower has established a Project accounting and financial management system acceptable to the Association; (c) the Borrower has appointed an auditing firm acceptable to the Association for the purposes of Section 4.01(b) of this Agreement; (d) the Borrower has opened the Project Account and deposited the Initial Deposit; (e) the Borrower has opened in regard to each of the Selected Districts a project sub-account in a commercial bank acceptable to the Association under terms and conditions acceptable to the Association; (f) UTA has been staffed in a manner acceptable to the Association and has prepared a work program acceptable to the Association; (g) the Borrower has employed or appointed, as the case may be, at least six of the experts referred to in paragraph 4 (i) of Schedule 4 to this Agreement, and the experts referred to in paragraphs 4 (ii) and (iii) of the same Schedule, all in accordance with the provisions of Section II of Schedule 3 to this Agreement; and (h) all the conditions precedent to the initial disbursement of the Norwegian Grant Agreement and of the Danish Grant Agreement respectively, except for the effectiveness of this Agreement, have been fulfilled. Section 6.02. The date one hundred twenty (120) 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 Minister responsible for 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: Ministry of Finance and Planning Page 9 P.O. Box 389 Niamey Niger Telex: 5463 NI For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) 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 NIGER By /s/ Almoustapha Soumaila Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Jean-Louis Sarbib Regional Vice President Africa 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 Grant Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Civil Works 7,180,000 100% of foreign expenditures and 95% of local expenditures (2) Goods (including 2,690,000 100% of foreign vehicles, equipment expenditures and cartographic 95% of local materials) expenditures Page 10 (3) Consultants' 1,550,000 100% Services, Studies and Training (4) Incremental 3,830,000 95% Operating Costs (5) Refunding of 1,010,000 Amount due Project pursuant to Preparation Section 2.02 (c) Advance of this Agreement (6) Unallocated 1,740,000 __________ TOTAL 18,000,000 ========== 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; provided, however, that if the currency of the Borrower is also that of another country from the territory of which the goods and services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; and (c) the term "incremental operating costs" means expenditures for office consumable (including telephone, facsimile and other communication expenses), staff travel and associated subsistence allowances, salary for incremental contractual and temporary staff, office rental, office supplies and maintenance, and fuel for vehicles. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 4. The Association may require withdrawals from the Credit Account to be made on the basis of statements of expenditure for goods and works under contracts not exceeding $100 000 equivalent, for services of consulting firms under contracts not exceeding $75,000 and for services of individual consultants not exceeding $30,000, under such terms and conditions as the Association shall specify by notice to the Borrower. SCHEDULE 2 Description of the Project The objectives of the Project are: (i) to assist selected rural Communities in different agro-ecological zones in designing and implementing CBNRM Plans for their lands and provide them with the necessary know-how, information, technical and financial resources, within a proper institutional and legal framework; and (ii) to assist the Borrower in building up a national capacity to promote, assist and coordinate the diverse NRM initiatives within the framework of a long-term national program, as well as in designing a comprehensive set of national NRM policies and strategies. Page 11 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: CBNRM Plans 1. Provision of assistance (including the acquisition of equipment and vehicles) to about 280 Communities in Selected Districts for the design and implementation of CBNRM Plans. 2. Provision of assistance (including the acquisition of equipment and vehicles) to about 100 additional Communities already benefiting from an assistance to NRM projects, to carry out additional investments, training and studies, and to receive specialized services. Part B: CBNRM Assistance 1. Carrying out of a natural resource assessment at the national level and establishing a national natural resource information network as a baseline to support the activities of Part A of the Project. 2. Carrying out of CBNRM-related research and studies and provision of short and medium-term technical assistance. 3. Carrying out a program for human resources development and public awareness building through CBNRM sensitization and training of Community members, development partners, and the Borrower's personnel. 4. Production of aerial photographs, photo-mosaics and land- use maps for the Selected Districts and of detailed maps of the Communities under Part A of the Project. Part C: National NRM Policy Assistance 1. Carrying out studies and reports, assisting in drafting policy documents and in supplying and disseminating NRM-related information. 2. Provisions of assistance to the RDSC secretariat in organizing meetings and field trips and in preparing and distributing reports. 3. Establishing and operating a Land Tenure Commission in three Selected Districts. * * * The Project is expected to be completed by September 30, 2001. SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: General Goods and works shall be procured in accordance with the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the "Guidelines") and the following provisions of this Section, as applicable. Part B: International Competitive Bidding 1. Except as otherwise provided in Part C of this Section, goods and works shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines Page 12 and paragraph 5 of Appendix 1 thereto. 2. The following provisions shall apply to goods to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B. (a) Grouping of contracts To the extent practicable, contracts for goods shall be grouped in bid packages estimated to cost $100,000 equivalent or more each. (b) Preference for domestically manufactured goods The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Borrower. Part C: Other Procurement Procedures 1. Limited International Bidding Goods required under Part B.4 of the Project, estimated to cost up to an aggregate amount not to exceed $500,000, may be procured under contracts awarded in accordance with the provisions of paragraph 3.2 of the Guidelines. 2. National Competitive Bidding Goods estimated to cost less than $100,000 equivalent per contract, up to an aggregate amount not to exceed $1,400,000 equivalent, and works offered locally estimated to cost less than $100,000 equivalent per contract, up to an aggregate amount not to exceed $3,600,000, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. 3. National Shopping Goods estimated to cost less than $30,000 equivalent per contract, up to an aggregate amount not to exceed $800,000 equivalent, may be procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 4. Community Participation Works required for Part A of the Project estimated to cost less than $30,000 equivalent per contract, up to an aggregate amount not to exceed $8,400,000 equivalent, shall be procured through community participation, in accordance with procedures acceptable to the Association. Part D: Review by the Bank of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitations to pre-qualify for bidding or to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Bank, and with the provisions of said paragraph 1. 2. Prior Review With respect to each contract for goods and works estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. Page 13 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II: Employment of Consultants 1. Consultants' services shall be procured under contracts awarded in accordance with the provisions 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 (the "Consultant Guidelines"). For complex, time-based assignments, such contracts shall be based on the standard form of contract for consultants' services issued by the Bank, with such modifications thereto as shall have been agreed by the Association. Where no relevant standard contract documents have been issued by the Bank, other standard forms acceptable to the Association shall be used. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Bank review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts, shall not apply to (a) contracts for the employment of consulting firms estimated to cost less than $75,000 equivalent each, or (b) contracts for the employment of individual consultants estimated to cost less than $30,000 equivalent each. However, said exceptions to prior review by the Association shall not apply to (i) the terms of reference for such contracts, (ii) single-source selection of consulting firms, (iii) assignments of a critical nature, as reasonably determined by the Bank, (iv) amendments to contracts for the employment of consulting firms raising the contract value to $75,000 equivalent or above, or (v) amendments to contracts for the employment of individual consultants raising the contract value to $30,000 equivalent or above. SCHEDULE 4 Implementation Program 1. The Borrower shall carry out the Project in conformity with an Implementation Manual which shall contain, inter alia, detailed procedures and schedules for each of the Project components, a Project monitoring and retrospective evaluation system and, among other things, with specific regard to Part A of the Project, types of eligible investments and activities, guidelines concerning Community contributions and alternative sources of funding, budgeting procedures, procurement arrangements and standard bidding documents. All amendments to the Implementation Manual shall be subject to the Association's prior consent. 2. NRMSC shall have the purpose of reviewing and approving annual work plans for the Project. The NRMSC shall be composed of selected members of RDSC and of representatives of the Communities. The NRMSC shall be chaired by the Secretary General of MAL and shall meet at least twice a year. The NRMSC shall be maintained, until the completion of the Project, with composition and terms of reference acceptable to the Association. 3. NRMU shall operate under the supervision of the Secretary General of MAL and, inter alia, shall be responsible for the overall coordination and management of the Project. NRMU shall, inter alia: (i) assist and supervise the Project staff; (ii) carry out the Project monitoring and evaluation; (iii) gather and disseminate NRM related information; and (iv) advise decision-makers on NRM policies and strategies. Page 14 4. The Borrower shall, for the purposes of the Project, employ or appoint in NRMU: (i) eleven technical experts selected, inter alia, in the following areas: agronomy, forestry, water resource, livestock and range land management, social-anthropology, gender issues, agro-economy, land tenure, decentralization, land use planning, monitoring and evaluation, training and NRM information system; (ii) one expert in finance; and (iii) one expert in procurement. The Borrower shall ensure that the above-mentioned NRMU staff shall not, be transferred, removed or replaced for at least three years after the date of their employment, without prior approval of the Association. 5. For the purpose of providing assistance in natural resource management to the Communities and of assisting them prepare and implement CBNRM Plans, the Borrower shall establish a NRMDT acceptable to the Association in each of the Selected Districts, comprising a team leader, a monitoring and evaluation specialist, an accountant and two community support teams. 6. For the purpose of ensuring Community involvement in the design and implementation of CBNRM Plans, the Borrower shall cause the Communities participating in Part A.1 of the Project to establish a CNRM acceptable to the Association. 7. For the purpose of reviewing and approving CBNRM Plans and of monitoring their implementation, the Borrower shall establish a NRMDC acceptable to the Association in each of the Selected Districts, which shall consist of representatives of the District Technical Committees and the Communities. 8. The Borrower shall, following criteria acceptable to the Association, in each Community of Part A.1 of the Project, provide a CBNRM Plan, including the details of the investments to be financed under Part A.1 of the Project: (a) designed by the CNRM and NRMDT; (b) approved by the NRMDC; (c) endorsed by the Borrower's authority at the District level; and (d) signed by the Community and the NRMDT. 9. As part of the Borrower's obligations under Section 3.01 (a) of this Agreement, the Borrower's extension agents shall participate in the selection of Communities under Part A.1 of the Project and shall assist such Communities in the design and implementation of CBNRM Plans. Regular contacts among such extension agents, NRMDTs, CNRMs and the Communities participating in Part A.1 of the Project shall be ensured by liaison agents financed under the Project. The number and location of liaison agents as well as the criteria for their selection shall be acceptable to the Association. 10. (a) For the purposes of Part A.1 of the Project, the Borrower shall maintain for each of the Selected Districts a project sub-account in a commercial bank acceptable to the Association under terms and conditions acceptable to the Association. Out of the proceeds of the Project Account, the Borrower shall deposit into each of such project sub-accounts an amount equivalent to $50,000. Replenishments of the project sub-accounts for eligible expenditures to be financed under Part A.1 of the Project shall be made from the Special Account and the Project Account. (b) No initial replenishment shall be made out of proceeds of the Special Account into the project sub-account in the district of Boboye unless: (i) the Boboye NRMDC has been established and has become operational, with terms of reference and composition acceptable to the Association; (ii) an agreement between NRMU and ONVPE, acceptable to the Association, has been made including the terms and conditions under which ONVPE will operate; and (iii) ONVPE staff for the district of Boboye has been appointed and is acceptable to the Association. Page 15 (c) No initial replenishment shall be made out of the proceeds of the Special Account into any of the project sub- accounts in the districts of Dogondoutchi, Goure, Say and Tessaoua unless: (i) the related NRMDC has been established and has become operational, with terms of reference and composition acceptable to the Association; and (ii) the staff of the NRMDT and the liaison agents have been appointed, with terms of reference and qualifications acceptable to the Association. 11. The Communities shall carry out the implementation of the CBNRM Plans as part of their contribution to Project implementation and for those activities that cannot be executed by the Communities such implementation shall be contracted out. After receiving prior agreement of the CNRM, the head of each NRMDT shall be responsible for executing the contracts and approving the payments thereof. 12. The records and accounts for the Project Account and for the project sub-accounts referred to in paragraph 10 of this Schedule for each fiscal year shall be audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association. SCHEDULE 5 Special Account 1. For the purposes of this Schedule: (a) the term "Eligible Categories" means Categories (1) through (4) 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 proceedsof the Credit allocated from time to time to the Eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $1,600,000 to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that the Authorized Allocation shall be limited to an amount equivalent to $800,000 until the aggregate amount of withdrawals from the Credit Account plus the total amount of all outstanding special commitments entered into by the Association pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of SDR 6,000,000. 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 Association has received evidence acceptable 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 Association 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 Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Page 16 Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association 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 Association shall, on behalf of the Borrower, withdraw from the Credit 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 Association from the Credit 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 Association shall reasonably request, furnish to the Association 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 Association shall not be required to make further deposits into the Special Account: (a) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; (b) if the Borrower shall have failed to furnish to the Association, within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Association pursuant to said Section in respect of the audit of the records and accounts for the Special Account; (c) if, at any time, the Association shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Credit Account pursuant to the provisions of Section 6.02 of the General Conditions; or (d) once the total unwithdrawn amount of the Credit allocated to the Eligible Categories, less the amount of any outstanding special commitment entered into by the Association 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 Credit Account of the remaining unwithdrawn amount of the Credit allocated to the Eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. 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 such notice 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 Page 17 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 Association, the Borrower shall, promptly upon notice from the Association (A) provide such additional evidence as the Association may request; or (B) 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 the Association shall otherwise agree, no further deposit by the Association 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 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. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraph 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.