Rwanda - Agricultural Development Project : Credit 0439 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 439 RW Development Credit Agreement (Agricultural Development Project) BETWEEN REPUBLIC OF RWANDA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED NOVEMBER 29, 1973 CONFORMED COPY CREDIT NUMBER 439 RW Development Credit Agreement (Agricultural Development Project) BETWEEN REPUBLIC OF RWANDA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED NOVEMBER 29, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated November 29, 1973, between the REPUBLIC OF RWANDA (hereinafter called the 'orrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the deletion of Sections 5.01 and 6.02 (h) thereof and to the renumbering of Section 6.02 (i) into 6.02 (h) thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth: (a) "BNR" means the Banque Nationale du Rwanda established by a law of the Borrower dated April 24, 1964. (b) "Project Area" means an area of about 45,000 ha which occupies the northwestern part of the Prefecture of Byumba and is bound on the west by Uganda, on the east by the National Park's Hunting Reserve, and on the south by the Ngarama-Kararna road. (c) " OVAPAM" means the Office pour la valorisation pastorale et agricole dut Mutara, a public agency to be established by the Borrower for purposes of carrying out the agricultural development of the Project Area. (d) "AU" means an animal unit, i.e. one or more animals (including fractions thereof) equivalent to a weaned bovine in terms of feed intake. (e) "RwF" means francs in the currency of the Borrower. (f) "Subsidiary Loan Agreement" means the agreement referred to in Section 3.03(a) of this Agreement. A7 ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to three million eight hundred thousand dollars ($3,800,000). Section 2.02. 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 shall be amended from time to time, 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 under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories; and provided further that no withdrawal shall be made on account of expenditures under Part D (ii) of the Project until the Borrower shall have made arrangements satisfactory to the Association for the aerial photographic survey of the tse-tse fly belt in the territories of the Borrower. Section 2.03. Except as stated in Schedule 3 to this Agreement or as the Association shall otherwise agree, the goods and services (other than services of consultants) required for the Project and to be financed out of the proceeds of the Credit, shall be procured on the basis of international competition under procedures consistent with the Guidelines for Procurement under 'orld Bank Loans and IDA Credits, published by the Bank in April 1972, as revised in October 1972, and in accordance with, and subject to, the provisions set forth in said Schedule 3. Section 2.04. The Closing Date shall be December 31, 1979 or such other date as shall be agreed between the Borrower and the Association. 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. Service charges shall be payable semi-annually on April 1 and October I in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payable on each 5 April 1 and October 1 commencing April 1, 1984 and ending October 1, 2023, each installment to and including the installment payable on October 1, 1993 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. 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. The Borrower shall cause OVAPAM to carry out the Project with due diligence and efficiency, in conformity with sound financial, administrative and agricultural practices and according to the policies described in Schedule 4 to this Agreement, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) The Borrower shall establish and maintain OVAPAM, with such organization, powers and authority as shall be satisfactory to the Association. (b) Except as the Association shall otherwise agree, OVAPAM shall be managed by a board of directors constituted by one representative of each of the following institutions: the Ministry responsible for Agriculture and Livestock, the Ministry responsible for Finance, the Ministry responsible for Commerce, the Ministry responsible for Social Affairs, the Ministry responsible for Planning, the BNR, by one representative of the beneficiaries under Part A of the Project; by one representative of the beneficiaries under Part B of the Project; and by the Project Director, who shall participate in the discussions of said board without vote and serve as its secretary. The representative of the Ministry responsible for Agriculture and Livestock shall be chairman of the board of directors. Section 3.03. (a) The Borrower shall relend free of interest the equivalent of $2,700,000 out of the proceeds of the Credit to OVAPAM under a Subsidiary Loan Agreement to be entered into between the Borrower and OVAPAM under terms and conditions which shall have been agreed by the Borrower and the Association. Such terms shall include a term of 35 years including 5 years of grace. (b) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. 6 (c) The Borrower shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable OVAPAM to perform all of its obligations under the Subsidiary Loan Agreement and shall not take or permit to be taken any action which might interfere with such performance. Section 3.04. Without limitation or restriction upon the provisions of Section 3.01 of this Agreement and except as the Association shall otherwise agree, the Borrower shall: (a) employ, and second to OVAPAM free of charge to OVAPAM, (i) qualified and experienced experts acceptable to the Association, on terms and conditions satisfactory to the Association, to serve as OVAPAM's senior executive (hereinafter called Project Director), Ranching Manager, Marketing Officer, Chief Development Officer, Paysannat Sub-manager, Chief Accountant, and Chief Mechanic; provided that said personnel, except for the Project Director and the Chief Development Officer, shall be employed within three months after the Effective Date; and (ii) qualified personnel acceptable to the Project Director as required to carry out efficiently OVAPAM's operations, who shall include counterparts to any expatriate experts seconded to OVAPAM; (b) to the extent that the experts referred to in paragraph (a)(i) hereof are expatriates, consult with the Association within the fourth year after the date of this Agreement regarding the availability of local qualified experts to take over the responsibilities of such expatriate experts and, in case there are no such local experts available, regarding appropriate arrangements to continue to employ qualified expatriate experts; (c) second from time to time teams of surveyors from its Ministry responsible for Agriculture and Livestock to OVAPAM, in such number and with such qualifications as the Project Director shall reasonably request, to assist OVAPAM in the planning and layout of the settlement schemes and group ranches under Parts A and B of the Project; and (d) cause the veterinary services from said Ministry to arrange regular visits by a qualified veterinarian to the Project Area to assist in organizing and to supervise the carrying out of routine veterinary practices, and to provide qualified veterinarians for any specific campaign OVAPAM shall organize from time to time to insure animal health and fertility. Section 3.05. Without limitation or restriction upon the provisions of Section 3.01 of this Agreement, the Borrower shall cause OVAPAM to be provided with such overdrafts as shall be necessary for OVAPAM to meet temporary seasonal 7 requirements of additional working capital to carry out its undertakings efficiently, on terms similar to those available to other agencies of the Borrower. Section 3.06. The Borrower shall approve OVAPAM's budget for next fiscal year not less than three months before the end of each of OVAPAM's fiscal years. Section 3.07. The Borrower shall establish a committee chaired by the Prefect of Byumba or his representative and constituted also by the appropriate Burgomaster, the Project Director or his designee, the sub-manager of OVAPAM's Paysannat Division, the Ranching Manager of OVAPAM or his representative, a Paysannat Division agronomist, and an agronomist and a veterinary of the Prefecture of Byumba, to select beneficiaries under Parts A and B of the Project according to the criteria set forth in paragraph 2 of Schedule 4 to this Agreement and such other supplementary criteria as the Borrower and the Association shall agree from time to time; provided that the sub-manager of OVAPAM's Paysannat Division shall participate only in the selection of beneficiaries under said Part A and that the Ranching Manager or his representative shall participate only in the selection of beneficiaries under said Part B. Section 3.08. The Borrower shall cause OVAPAM to enter into contracts with the beneficiaries under Parts A and B of the Project, under terms and conditions satisfactory to the Association, specifying their rights and obligations regarding the cultivation plots they will receive, and, with respect to the beneficiaries under Part B of the Project, regarding also their grazing rights on group ranches. Section 3.09. The Borrower shall cause: (a) the beneficiaries under Part B of the Project who will receive grazing rights on the same group ranch to enter into partnership contracts on terms and conditions satisfactory to the Association for purposes of managing jointly their cattle on said group ranch; and (b) OVAPAM to enter into contracts with said partnerships, under terms and conditions satisfactory to the Association, regarding livestock and pasture management. Section 3.10. (a) Unless the Association shall otherwise agree, the Borrower shall cause OVAPAM to charge and collect (i) from each beneficiary under Parts A and B of the Project, an annual fee of RwF 1,200; provided that during the first two years after the respective settlement such fee will be of RwF 200 and that the proceeds thereof will be credited to the beneficiary's account in OVAPAM 8 as a reserve against payment of subsequent fees; (ii) from each beneficiary under Part B of the Project, an annual fee of RwF 450 per AU, beginning three years after the respective settlement, and (iii) from each beneficiary under the Project, an annual veterinary fee of RwF 265 per head of cattle. (b) The Borrower shall cause the Project Director to report promptly to OVAPAM's board of directors any default in the payment of the fees referred to in paragraph (a) hereof, to ensure the prompt exercise of all administrative and judicial remedies appropriate to collect said fees, and to report periodically to said board about the progress of said actions. Section 3.11. (a) Without limitation or restriction upon the provisions of Section 3.01 hereof, the Borrower shall promptly provide OVAPAM with such funds as are needed to meet the expenditures necessary to carry out efficiently OVAPAM's purposes, whenever the funds available to OVAPAM will be insufficient to meet such expenditures because of a case of force majeure, non-collection of the fees referred to in Section 3.10 (a) hereof, or any other cause. (b) Without limitation or restriction upon the provisions of paragraph (a) hereof, the Borrower shall cause OVAPAM to request promptly, through its board of directors, the provision of such funds. Section 3.12. The Borrower shall, within two years after the Effective Date, assign three tracts of land of about 20 ha each to OVAPAM, at locations chosen in consultation with the Project Director, for purposes of constructing three cattle-holding grounds. Section 3.13. The Borrower shall cause OVAPAM: (a) to enter into contracts with the Institut des Sciences Agronomiques du Rwanda on terms and conditions satisfactory to the Association, for the provision to OVAPAM of technical services for carrying out Part D of the Project; and (b) to employ a biologist consultant acceptable to the Association on terms and conditions satisfactory to the Association, to assist OVAPAM in carrying Part D (ii) of the Project. Section 3.14. (a) The Borrower shall cause OVAPAM to insure, or to make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by OVAPAM to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. 9 Section 3.15. (a) The Borrower shall cause to be furnished to the Association, promptly upon their preparation, the plans, specifications, reports, including training schedules for local staff who will replace expatriate experts, contract documents and work and procurement schedules, for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall or shall cause OVAPAM to: (i) maintain records adequate to recc7d the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project; (ii) enable the Association's representatives to inspect the Project, the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 3.16. The Borrower shall provide educational and medical facilities and services in the Project Area in line with national standards. Section 3.17. (a) The Borrower shall cause the Project to be carried out according to the operating policies set forth in Schedule 4 to this Agreement, as amended from time to time by agreement between the Borrower and the Association. (b) The Borrower and the Association shall consult each other from time to time on the establishment of associations of beneficiaries under Part A of the Project. Section 3.18. Infrastructure works under Parts A, B and C of the Project shall be carried out by OVAPAM, piincipally by labor-intensive techniques and giving due preference to the employment of the beneficiaries under Parts A and B of the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained 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. 10 (b) Without limitation or restriction upon the provisions of the preceding paragraph (a), the Borrower shall cause OVAPAM to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of OVAPAM. (c) The Borrower shall, with respect to its accounts referred to in paragraph (a) hereof: (i) have said accounts for each fiscal year audited, in accordance with sound auditing principles consistently applied, by the respective commissaires aux comptes designated by the Borrower according to its normal practices; (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 copies of said accounts for such year as so audited and (B) 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 accounts and the audit thereof as the Association shall from time to time reasonably request. (d) The Borrower shall cause OVAPAM with respect to all its accounts to: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited in accordance with sound 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 copies of its financial statements for such year as so audited and (B) 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 accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause OVAPAM to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound practice. ARTICLE V Consultation, Information and Inspection Section 5.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: 11 (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the administration, operations, resources and expenditures of OVAPAM and, in respect of the Project, of the other departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrowel, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its administrative subdivisions and of any agency of the Borrower or of any such administrative subdivision. Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the operations, resources and expenditures of OVAPAM and, in respect of the Project, of the other departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof. the performance by either of them of its obligation: under the Development Credit kgreement or the performance by OVAPAM of its obligations under the Subsidiary Loan Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to inspect all installations, sites, works, buildings, property and equipment of OVAPAM and any relevant records and documents and to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions Section 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 6.02. The Development Credit Agreement and the Subsidiary Loan Agreement shall be free from any taxes on or in connection with the execution, 12 delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 6.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association Section 7.01. If any event specified in Section 7.01 of the General Conditions shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. ARTICLE VIII Effective Date; Termination Section 8.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01 (b) of the General Conditions: (a) A presidential decree and the necessary executory decrees shall have been issued, defining the Project Area and establishing OVAPAM and the selection committee referred to in Section 3.07 of this Agreement. (b) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and OVAPAM, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. (c) The Borrower shall have deposited in OVAPAM's account with BNR the equivalent of $100,000 on account of its contribution. (d) OVAPAM shall have employed the Project Director and the Chief Development Officer referred to in Section 3.04. 13 Section 8.02. The following is specified as an additional matter, within the meaning of Section 10.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and OVAPAM, respectively, and constitutes a valid and binding obligation of the Borrower and OVAPAM in accordance with its terms. Section 8.03. the date March 4. 1974 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.04. The obligations of the Borrower under Sections 3.02 (b), 3.04 (a), 3.05, 3.06, 3.15 (b) and 3.16 and under Article IV of this Agreement shall cease and terminate on the date on which the Development Credit Agreement shall terminate or on a date thirty years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. The Minister of the Borrower responsible for Agriculture and Livestock is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Minister of Agriculture and Livestock P.O. Box 621 Kigali, Rwanda Cable address: MINAGRI Kigali For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America 14 Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the city of Kigali, Republic of Rwanda, as of the day and year first above written. REPUBLIC OF RWANDA By /s / Aloys Nsekalige For the President of the Republic INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / S. Shahid Husain Director, Country Programs Department Eastern Africa Regional Office 15 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 amounts of the Credit to each category and the percentage of eligible expenditures so to be financed in each category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Infrastructure, Equip- ment, Materials, and Related Facilities (a) Part A of the 510,000 Project }e 100% of foreign (b) Part B of the 700,000 ) expenditures and Project ) 95% of local ex- ) penditures (c) Part C of the 43,000 ) Project ) II. Headquarters Facili- 372,000 100% of foreign ties: Buildings, fur- expenditures and niture, water and 95% of local ex- electricity supply, penditures vehicles, machinery, tools, and related items III. Staff (a) Expatriate 832,000 100% of foreign expenditures (b) Local 340,000 90% of total ex- penditures IV. OVAPAM's Operating ex- 300,000 90% of total ex- penses other than penses regular Staff V. Tse-tse Fly Eradi- cation (a) Eradication from 170,000 100% of foreign Project Area expenditures and 95% of local ex- penditures 16 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (b) Studies (i) local staff, 55,000 100% of foreign equipment, expenditures and materials and 95% of local ex- transportation penditures (ii) Biologist 28,000 100% of foreign consultant expenditures VI. Unallocated 450,000 TOTAL 3,800,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; and (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; and (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 17 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above: (a) if the estimate of the expenditures under any Category or sub-category shall decrease, the amount of the Credit then allocated to such Category or sub-category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category or sub-category shall increase, the percentage set forth in the third column of the table in paragraph 1 above in respect of such expenditures shall be applied to the amount of such increase, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category or sub-category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and (c) if the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under Categories III (b) or IV shall increase and no proceeds of the Credit are available for reallocation to such Categories, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Categories may continue until all expenditures thereunder shall have been made. 18 SCHEDULE 2 Description of the Project The Project is the development of Mutara lands, west of the Kagera National Park, for crop and livestock production, by settling some 5,700 families on about 45,000 ha, one-fourth of which would be developed for small farms tinder intensive crop production, and the balance as group ranches for cattlemen who are prepared to manage their cattle collectively. The Project consists of: Part A: The establishment of a cropping settlement scheme of about 4,300 lots of about 2 to 2.5 ha each, for the production of food crops with groundnuts or coffee as the main cash crop, on about 12,000 ha located in the southernmost and ecologically most suitable lands of the Project Area. Investments under Part A will include, inter alia, plot layout; the construction of about 400 km of dirt roads, anti-erosion works, cattle dips, bridges, water supply, and housing for field staff; and the provision of housing material for beneficiaries, and vehicles and machinery. Part B: The establishment of about 120 group ranches on about 3 1,000 ha. Beneficiaries under Part B will receive cropping plots of about 1.3 ha each, which will carry inseparable grazing rights on group grazing lands where they will raise their cattle jointly with that of about 12 other beneficiaries. Investments under Part B will include, inter alia: group ranch layout; construction of about 150 km of dirt roads; water supply; construction and repair of cattle dips and related facilities; construction of 3 veterinary centers, and housing for staff; and the provision of housing material for beneficiaries, and vehicles and implements. Part C. The establishment and operation of a bull breeding ranch on about 480 ha, based on local and imported improved breeding cattle. Part D: (i) The eradication of the tse-tse fly from the Project Area; and (ii) The carrying out of a feasibility study to eradicate the tse-tse fly from Rwanda. 19 Part E: The establishment and operation of Project related headquarters facilities. Investment under Part E will include, inter alia: construction of housing for staff, office buildings, workshops and stores; and the provision of vehicles, machinery, equipment and tools. It is expected that the Project will be completed by June 30, 1979. 20 SCHEDULE 3 Procurement 1. With respect to any contract for goods and services estimated to cost the equivalent of $20,000 or more: (a) Before bids are invited, the Borrower shall cause OVAPAM to furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedure as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall cause OVAPAM, before a final decision on the award is made, to inform the Association of the name of the bidder to whom it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and OVAPAM and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. 2. Contracts for goods and services estimated to cost $2,000 or more but less than $20,000, shall be tendered among local suppliers, and the Borrower shall cause OVAPAM to furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract, two conformed copies of such contract, together with such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract is not consistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and OVAPAM and state the reasons for such determination. 21 3. Goods and services for less than $2,000 equivalent may be procured from local sources without advertising for bids, on the authorization of the Project Director. 4. Sahiwal bulls for Part C of the Project may be procured on a negotiated contract basis. 22 SCHEDULE 4 Operating Policies 1. OVAPAM (a) Powers and Functions: OVAPAM shall, among other things: construct, maintain and cause to be maintained the infrastructure works; participate in the selection of Project beneficiaries; prescribe timetables for land clearing and regulations for soil conservation, land cultivation, cattle production and animal health; enter into contracts with Project beneficiaries and the partnerships organized by the beneficiaries under Part B of the Project, and supervise the fulfillment of their obligations thereunder; impose and collect settlement, grazing and veterinary fees; impose destocking by group ranches when necessary; order sale of cattle that have attained such age or weight as OVAPAM shall specify from time to time; maintain records to compare projected with actual Project progress; maintain detailed records for sample cultivation plots and group ranches, covering inter alia production yields and the quantity and value of production sold; terminate rights of beneficiaries pursuant to the respective contracts; provide technical and marketing services. (b) Administrative Structure: OVAPAM shall have the following four divisions: (i) General Services, in charge of initial development work, administrative matters, and the carrying out of tse-tse fly eradication; (ii) Paysannat, in charge of carrying out Part A of the Project; (iii) Ranching, in charge of carrying out Parts B and C of the Project; and (iv) Marketing. The area under Part A of the Project shall be divided into three sections, each under an agronomist and 4 field assistants. A veterinary assistant shall be assigned to provide veterinary services under Part A of the Project. The area under Part B shall be divided into three veterinary sectors, each under a veterinary technician and two veterinary assistants, to provide veterinary 23 cover, day-to-day extension advice, and to keep records of livestock numbers, performance and health. 2 Selection of Beneficiaries Selection shall be carried out by the committee referred to in Section 3.07 of this Agreement, taking into account the following: landlessness, physical fitness, and good repute. Farmers and graziers presently occupying the Project Area shall receive priority in the selection of beneficiaries under Parts A and B of the Project, respectively. Beneficiaries undei Part A of the Project shall be required to have enough seeds, in the opinion of the Project Director, to carry out production through the first cropping season following their settlement. There shall be no barriers to spontaneous grouping under Part B of the Project and voluntary grouping shall be encouraged; provided, however, that OVAPAM shall be entitled to modify the constitution of the groups to ensure appropriate resources use. 3. Cultivation Plots Cultivation plots under Part A of the Project shall be laid down along 5 m wide dirt roads which shall follow the contour of the area. A gravity fed piped water supply system from reservoirs filled by gravity from springs shall be constructed wherever it is technically and economically feasible, or alternative water supply systems shall be installed, so that no plot is farther than about 1.5 km from water. Cultivation plots under Part B of the Project shall be laid down taking due account of the suitability of the land for agricultural use. Beneficiaries under Parts A and B shall receive seedlings; an initial issue of selected seeds furnished by the Service des Semences Selectione'es of the Ministry responsible for Agriculture and Livestock, for further multiplication; a hoe and a machete; and timber to build a house. They shall clear the land according to a timetable prescribed by OVAPAM; plant boundary hedges and take such measures for erosion control and follow such cropping practices as OVAPAM shall prescribe; and shall market their produce through OVAPAM. Beneficiaries under Part A of the Project shall be allowed to maintain not more than 2 head of cattle in their lots, provided they are kept in stables. With regard to said cattle, they shall have the same obligations as beneficiaries under Part B of the Project have with respect to theirs regarding animal health. 24 4. Grazing Plots Beneficiaries under Part B of the Project shall retain individual ownership of their cattle but all the cattle within a group ranch shall be managed as one herd by the partnership the members of each group shall organize, under the technical assistance and supervision of OVAPAM. Each beneficiary shall have a minimum of 6 AU grazing rights on the group grazing lands, even if at the outset he owns less than 6 AU. No beneficiary shall have more than 45% of the grazing rights on the respective group ranch, provided, however, that he may temporarily enjoy the grazing rights of other members of the group until such members build up their herd so as to be able to fully enjoy their grazing rights. Voting rights shall be proportional to the grazing rights each beneficiary has. Each partnership under Part B of the Project shall receive fencing material, kraal building material, one improved bull, and one ox-cart and trek gear. With regard to the group grazing lands, each such partnership shall be obligated to erect a fence around the group ranch, to plant rows of Euphorbia between outlined paddocks, market its product through OVAPAM, and to follow sound livestock and pasture management practices including those prescribed by OVAPAM. Such practices shall include: (a) maintaining fencing and internal demarcations; (b) carrying out rotational grazing; (c) removing from pastures undesirable weeds, grasses and unnecessary timber and scrub; (d) controlling grass fires; (e) maintaining appropriate stocking rates; (f) branding all stock; (g) using, and controlling the use of, of improved bulls; (h) culling non-productive breeding stock; (i) castrating all male calves not suitable for breeding; (j) selling of slaughter stock without unnecessary delays; 25 (k) reporting and treating livestock diseases; (1) dipping all livestock once weekly; (m) inoculating cattle at least against anthrax, blackwater, and contagious abortion; and (n) maintaining the cattle under a suitable drug regime against internal parasites. 5. Bull Breeding Ranch The ranch shall breed crossbred Sahiwal bulls from Ankole cows and sell them at cost to the group ranching partnerships organized under Part B of the Project.