Afghanistan - Second Education Project : Credit 0674 - Credit Agreement - Conformed

7- 2 COMFORMED COPY CREDIT NUMBER 674 AF DEVELOPMENT CREDIT AGREEMENT (Second Education Project) between REPUBLIC OF AFGHANISTAN and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated January 7, 1977 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated January 7, 1977, between the REPUBLIC OF AFGHANISTAN (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association),, WHEREAS the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; and 2 - ARiXCLE 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 March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Advance" means the amount provided by the Association to the Borrower for the preparation of the Project under an agree- ment constituted by an exchange of letters between the Borrower and the Association dated May 19, 1976, and May 28, 1976; and (b) "PIU" means the Project Implementation Unit to be established pursuant to Section 3.08 (a) of this Agreement. -3 - 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 equiva- lent to six million dollars ($6,000,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Sched- ule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. (b) On the date the Development Credit Agreement shall enter into force and effect, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself out of the proceeds of the Credit allocated to Category (5) set forth in Schedule 1 to this Agreement, an amount equivalent to the prin- cipal amount withdrawn by the Borrower out of the Advance and ser- vice charges thereon outstanding on such date. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for civil works to be fi- nanced out of the proceeds of the Credit, shall be procured in ac- cordance with the provisions of Schedule 3 to this Agreement. 40 Section 2.04. The Closing Date shall be April 30, 1982, or such later date as the Association shall establish. The Associ- ation shall promptly notify the Borrower of such later date. 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 June 15 and December 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 15 and December 15, commencing June 15, 1987, and ending December 15, 2026, each installment to and including the installment payable on December 15, 1996, 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. * - 5- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, educational and engineering Oractices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in the carrying out of the Project the Borrower shall employ educational, archi- tectural and engineering experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Association. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards in- cident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any in- demnity shall be payable in a currency freely usable by the Bor- rower 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. -6- Section 3.04. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement sched- ules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reason- ably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the pro- ceeds of the Credit, and to disclose the use thereof in the Proj- ect; (ii) shall enable the Association's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association 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 3.05. The Borrower shall take, or cause to be taken, all such action as shall be necessary to acquire, as and when needed, all such land and rights in respect of land as shall be required for carrying out the Project and shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 3.06. The Borrower shall, within eighteen months from the date of this Agreement, or such other date as shall be agreed * -7- between the Borrower and the Association, carry out, on a continu- ing basis, a tracer study to follow the progress and job placement of students graduating from the secondary agricultural schools. The said study shall, inter alia, include an evaluation of students' work attitudes, backgrounds and achievements while in school. The results of the study shall be furnished to the Association annually in respect of each of the first five graduating classes. Section 3.07. The Borrower shall, not later than eighteen months from the date of this Agreement, or such other date as shall be agreed between the Borrower and the Association, furnish to the Association, the Borrower's proposed designs for: (i) a national teacher training complex; (ii) five teacher training institutes; and (iii) a national educational materials and services center, such designs to, inter alia, include the master plan, preliminary drawings, equipment lists and detailed cost estimates. Section 3.08. (a) The Borrower shall establish, and there- after maintain, within the Department of Construction of the Ministry of Education of the Borrower, a Project Implementation Unit to be responsible for the execution, supervision and coordi- nation of the Project, with powers, responsibilities, organization and resources, as shall be satisfactory to the Borrower and the Association and including those set forth in Schedule 4 to this Agreement. In the carrying out of its functions the PIU shall be fully assisted by the Department of Vocational Education in the Ministry of Education of the Borrower. -8- 0 (b) The Borrower shall cause the PIU to be adequately staffed at all times. Without limitation or restriction upon the general- ity of the foregoing, the Borrower shall appoint and maintain, on a full-time basis, a director to the PIU and an architect to assist the said director, .each with suitable experience and qualifications, and shall furnish to the Association the names, experience and qualifications of the persons appointed. 9- ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of the de- partments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Section 4.02. The Borrower shall cause the effective utili- zation, operation, maintenance and repair of the educational facil- ities included in the Project and of the equipment thereof and shall provide, promptly as needed, the funds, facilities, services (including teaching staff) and other resources required for the purpose. -10 0 ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) that the PIU has been established in accordance with Section 3.08 (a) of this Agreement; (b) that the director and the architect referred to in Sec- tion 3.08 (b) of this Agreement have been appointed and have taken up their respective posts; and (c) that the Borrower has commenced the training of agricul- tural teacher trainers under Part III of the Project in accordance with a program satisfactory to the Borrower and the Association. Section 5.02. The date April 7, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.03. The obligations of the Borrower under Sections 4.01 and 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. S -11 - ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of Planning of the Borrower is designated as representative of the Borrower for the purpoJes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Planning Kabul Republic of Afghanistan Cable address: MINPLAN Kabul, Afghanistan For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. -12 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 AFGHANISTAN By /s/ M.E. Abdullah Malikyar Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Munir P. Benjenk Regional Vice President Europe, Middle East and North Africa 0 -13- 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 amount of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 1,920,000 32% (2) Furniture and 2,830,000 100% of foreign equipment expenditures or, if manufac- tured locally, 100% of local expenditures representing ex-factory price, or if imported but procured locally, 80% (3) Project Implemen- 200,000 85% tation Unit (4) Services for 90,000 100% of foreign pre-investment expenditures, or designs 20% (5) Repayment of 200,000 100% Advance Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Technical assis- 30,000 85% tance (other than for pre- investment designs) includ- ing training (7) Unallocated 420,OOO TOTAL 6,ooo,ooo -15 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. (a) In the event the Borrower shall obtain the financing for Part III of the Project from another external source, the Association shall transfer the proceeds of the Credit allocated to Category 6 to Category 7 and shall increase the percentage set forth with respect to Category 1 in the last column of the table set forth in paragraph 1 of this Schedule. (b) The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Crediz shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or ser- vices, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. - 16- 4. Subject to Section 2.02 (b) of this Agreement, but notwith- standing 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. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allo- cated to another Category and which in the opinion of the Associ- ation are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expendi- tures 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, can- cel 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. -17 - SCHEDULE 2 Description of the Project The Project is the first phase of the development and improve- ment of agricultural education in Afghanistan and consists of the following parts: Part I: The construction and equipping of: (i) four new Agricultural Secondary Schools, as detailed in Paragraph I of Exhibit A to this Schedule; and (ii) additions to three Agricultural Secondary Schools, as detailed in Paragraph II of Exhibit A to this Schedule. Part II: The preparation of the pre-investment designs for one National Teacher Training Complex, one National Materials Production and Services Center and five Teacher Training Institutes, as detailed in Paragraph III of Exhibit A to this Schedule. Part III: (a) The training of agricultural teacher trainers in numbers adequate to meet the needs of the institutions in- cluded in Part I of the Project. (b) The preparation of teaching materials and the development of curricula required for said institutions. - 18 - 0 (c) Agricultural education and training through fellow- ships abroad for about 60 man-months. The Project is expected to be completed by September 30, 1981. -19 - EXHIBIT A Paragraph I Accomodation Estimated Student Places Student Staff Total Gros Type of Institution Grades (New) Boarding Housing Area in m 4 new Agricultural Secondary Schools 9 - 12 3,360 2,280 30 44,700 Paragraph II 3 Agricultural Secondary Schools 9 - 12 2,130 980 16 34,650 Paragraph III 1 National Teacher Training Complex 13 - 17 820 650 5 5 Teacher Training Institutes 13 - 14 2,400 1,740 4o 1 National Materials Production and Ser- vices Center - 20'- SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the pur- chase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guide- lines), on the basis of international competitive bidding. 2. Contracts for Furniture and Equipment. With respect to con- tracts for furniture and equipment: (a) Before inviting bids, the Borrower shall send to the Association for its comments the lists prepared by specialists of all items of furniture and equipment required for each educa- tional institution included in the Project showing the specifica- tions and the estimated unit and total price of each category of items. Items will be indexed, coded and numbered for identifica- tion with the Project school or institution in question and the spaces for which they are required. The said lists shall include items estimated to cost more than $10,000 equivalent. (b) The items to be purchased for each educational institu- tion shall be grouped in lots so as to permit bulk procurement as shall be consistent with appropriate technical and procurement practices. Insofar as practicable, each lot of such items shall be -21- for not less than $50,000 equivalent. All other items which cannot be so grouped (hereinafter called Miscellaneous Items) shall be grouped separately for purposes of procurement. B. Other Procurement Procedures 1. Contracts for civil works under the Project will be awarded on the basis of competitive bidding advertised locally and in ac- cordance with local bidding procedures satisfactory to the Borrower and the Association. 2. (i) Miscellaneous Items; (ii) spare parts or other items ancillary and compatible to those procured in accordance with Part A.1 hereof; and (iii) specialized equipment not susceptible of inter- national competitive bidding, shall be procured in accordance with Borrower's procurement procedures, after inviting quotations from three suppliers provided that the total cost of such procurement shall not exceed $1,500,000 in the aggregate for all educational institutions included in the Project. In the event the estimated cost of such procurement shall be in excess of $1,500,000 the Borrower shall consult with the Association on the procurement procedures to be followed by the Borrower. The Borrower shall consult with the Association prior to modifying the existing procurement procedures of the Borrower. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with 22- local procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and sim- ilar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expen- ditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Afghanistan may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- lowed in the evaluation and omparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Afghanistan if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Afghanistan equal to at least 20% of the ex-factory bid price of such goods. S -23 - (2) Group B: all other bids offering goods manufactured in Afghanistan. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest eval- uated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this fur- ther comparison only, an amount equal to: (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. - 24- D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to civil works contracts estimated to cost the ec,uivalent of $100,000 or more and all contracts for furniture and equipment estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably re- quest. 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 Bor- rower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in suf- ficient time for its review, a detailed report, on the evaluation and comparison of the bids received, together with the recommen- dations for award, and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the provisions of this Agreement, promptly inform the Borrower and state the reasons for such determination. 1 -25 - (c) The terms and conditions of the contract shall not, with- out 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 with- drawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Credit and not governed by the preceding paragraph, the Borrower shall 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 such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award, wherever applicable, and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the provisions of this Agreement, promptly inform the Borrower and state the reasons for such determination. 0 - 26 - 0 SCHEDULE 4 The Project Implementation Unit 1. The PIU to be established within the Ministry of Education of the Borrower in accordance with Section 3.08 shall be respon- sible for the carrying out and the supervision of the Project. In the carrying out of its functions the PIU shall be fully assisted by the Department of Vocational Education of the Ministry of Education of the Borrower. It shall be provided with adequate premises, equipment, supporting staff, means of communications and transport facilities. 2. In addition to the staff referred to in Section 3.08 (b) of this Agreement, the PIU will include one architect and one civil/ structural engineer included under experts' services referred to in Section 3.02 of this Agreement. 3. The PIU will be responsible, inter alia, for the following: (a) the coordination of the Project with ministries and government services; (b) the selection, briefing, coordination and supervision of architectural experts provided for in Section 3.02 of this Agreement and contractors responsible for carrying out the civil works under the Project; (c) the acceptance of the civil works design of the education institutions included in the Project; 27 - (d) the preparation of detailed lists of the furniture and equipment required for Part II of the Project; (e) the procurement of civil works, furniture and equipment including the preparation of bidding documents, the analysis of bids and the making of recommendations regarding the award of con- tracts; (f) the regular inspection of all construction work; (g) the keeping of records, including financial records, of the execution of the Project, and the preparation of quarterly progress reports to the Association; and (h) the selection, arrangement and supervision of the fellow- ships under Part III of the Project.