Rwanda - Cinchona Project : Credit 0656 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 656 Rw DEVELOPMENT CREDIT AGREEMENT (Cinchona Project) between REPUBLIC OF RWANDA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated August 20, 1976 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated August 20, 1976, between the REPUBLIC OF RWANDA (hereinafter called the Borrower) and INTERNATIONAL DEVELOP- MENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) 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; (B) The Project will be carried out in part by the Office des Cultures Industrielles du Rwanda with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Office a portion of the proceeds of the Credit as herein- after provided; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- 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 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 Con- ditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise require , the several terms defined in the Gen- eral Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "OCIR" means the Office des Cultures Industrielles du Rwanda (Coffee, Pyrethrum and Cinchona Department) established by law of July 30, 1964 as modified by the decree-law and the Arr8te Presidentiel dated January 20, 1974 and entrusted with the promo- tion of production of such crops by the Borrower; and (b) "Project Area" means the prefectures of Cyangugu, Kibuye and Gikongoro of the Borrower. 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 one million eight hundred thousand dollars ($1,800,000). 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 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 re- quired for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, the goods and works for the Project to be financed out of the proceeds of the Credit, shall be procured. in accordance with the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1982 or such later date as the Borrower and the Association shall agree. 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. - 4 - I 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 December 15, 1986, and ending June 15, 2026, each installment to and including the installment payable on June 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. I -5 ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appropri- ate agricultural, administrative, financial and engineering prac- tices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall charge OCIR with carrying out Parts A and B of the Project and for the purpose shall make available to OCIR the portion of the proceeds of the Credit allocated to Categories (1), (2), (3) and (4), as set forth in Schedule 1 to this Agreement. (c) In order to carry out Parts A and B of the Project, the Borrower shall cause OCIR to employ qualified and experienced supplemental personnel, including two additional agronomists, about three additional extension supervisors (vulgarisateurs), and about twelve extension workers (moniteurs). Section 3.02. (a) The Borrower shall employ not later than December 31, 1976, or such other date as shall be agreed between the Borrower and the Association an agricultural consultant whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association to serve as cinchona development officer for OCIR. -6- (b) In order to assist the Borrower in carrying out Part C of the Project, the Borrower shall employ consultants whose quali- fications and experience shall be satisfactory to the Association, and whose terms and conditions of employment shall be determined from time to time by agreement between the Borrower and the Asso- ciation. 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 inci- dent to the acquisition, transportation and delivery thereof to the place of use or installntion, and for such insurance any in- demnity shall be payable i% 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, Section 3.04. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably re- quest. (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- -7- ect; (ii) shall enable the Association's accredited representa- tives 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 Asso- ciation shall reasonably request concerning the Project. the ex- penditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 3.05. In the carrying out of Part A of the Project, the Borrower shall take such steps as shall be necessary to en- sure that the area planted to cinchona by farmers under the Proj- ect shall not exceed 0.25 ha per farmer. ARTICLE IV Other Covenants Section 4.01. (a) 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. (b) The Borrower shall cause OCIR to maintain records ade- quate to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of OCIR. (c) The Borrower shall cause OCIR 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) fur- nish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certi- fied 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 re- quested; and (iii) furnish to the Association such other informa- tion concerning the accounts and financial statements of OCIR and the audit thereof as the Association shall from time to time rea- sonably request. 9 (d) Pursuant to paragranh (b) of this Section, the Borrower shall cause OCIR to maintain seDarate accounts in respect of its cinchona operations and to undertake a general review of its ac- counting procedures with a view to their improvement. Section 4.02. The Borrower shall cause OCIR 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 appropriate prac- tice. Section 4.03. The Borrower shall periodically review the level of cinchona prices and the levies, duties and taxes on cin- chona and shall make such periodic adjustments to such prices, levies, duties and taxes (including, if necessary, the introduc- tion of additional such levies, duties or taxes) as shall be neces- sary progressively to recover, through such levies, duties and taxes and at a reasonable rate all subsidies to farmers for cin- chona cultivation as well as other capital and recurrent expendi- tures incur-:d by the Borrower and OCIR for the purpose of cin- chona cultivation. The Borrower shall carry out its obligations pursuant to this Section in such a way as to allow for adequate incentives to farmers for cinchona cultivation. Section 4.04. The Borrower shall cause OCIP to be managed at all times according to appropriate administrative, financial and commercial practices under qualified and experienced management supported by adequate staff. - 10 - ARTICLE V Termination Section 5.01. The date November 18, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.02. The obligations of the Borrower under Article IV of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. 9 - 11 - ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of the Borrower responsible for Agriculture is designated as representative of the Borrover for the purposes 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 Borrover: Ministry of Agriculture 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 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 RWANDA By Is/ Tharcisse Gatwa Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Is! Stanley Please Acting Regional Vice President Eastern Africa -13 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be fi- nanced out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of ex- penditures 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: 100,000 90% Housing, office and storage fa- cilities (2) Vehicles, equip- 400,000 100% of foreign ment, tools, chem- expenditures or icals and other 90% agricultural in- puts (3) Operating and 600,000 90% maintenance ex- penses of OCIR re- lated to the Proj- ect including sala- ries of incremental local staff (4) Consultant's ser- 300,000 100% of foreign vices and OCIR's expenditures or staff training 90% under Parts A and B of the Project Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent to be Financed (5) Consultants' ser- 100,000 100% of foreign vices under Part C expenditures or of the Project 90% (6) Unallocated 300,000 TOTAL 1,800,000 - 15 - 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the ter- ritory of any country other than the Borrower. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in res- pect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Bor- rower, increase or decrease the disbursement percentage then ap- plicable to such item as required to be consistent with the afore- mentioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in resrect 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 insuf- ficient to finance the agreed percentage of all expenditures in that Category, the Association may, in agreement with the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then al- located to another Category and which in the oninion of the Asso- - i6 -I ciation 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 comprises a five-year program to increase the production and marketing of cinchona in the Project Area by an increase in smallholder plantings of about 900 ha as well as strengthened extension services, marketing and training. The Proj- ect includes the following specific Parts: Part A: The establishment of nurseries to produce up to 4 million cinchona seedlings annually; the furnishing of such seedlings to farmers in the Project Area together with chemicals, fertilizers and tools; the provision to such farmers of extension services; the establishment of four collecting centers in the Project Area, and operation thereof. Part B: Strengthening of OCIR's management and operations in respect of cinchona development, including training of OCIR staff, and the construction of an office, cinchona storage facilities and staff housing for OCIR. Part C: Technical support services for cinchona development and agricultural development in general, including par- ticularly advisory services for OCIR and the Borrower's Ministry of Agriculture, the carrying out of studies and the preparation of agricultural development projects. * * P The Project is expected to be completed by December 31, 1981. -18 - 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 Guidelines), on the basis of international competitive bidding. 2. Identical or similar items shall be grouped where practicable to form economical packages for the purpose of inviting bids. B. Other Procurement Procedures 1. Vehicles and equipment may be procured (a) on the basis of competitive bidding advertised locally and in neighboring countries, and in accordance with the Borrower's applicable procurement pro- cedures, or (b) on the basis of price quotations to be solicited from not less than three suppliers. To the extent feasible, iden- tical or similar vehicles or equipment items shall be grouped together for purposes of bidding or price quotations so as to per- mit bulk procurement in accordance with appropriate technical and procurement practices. 2. Contracts for goods estimated not to exceed the equivalent of $30,000 may be let in accordance with the applicable procurement procedures of the Borrower. - 19 - 3. Civil works may be carried out (a) on the basis of contracts to be let in accordance with the arnlicable procurement procedures of the Borrower or (b) by the Borrower's Ministry responsible for nublic works by force account. C. Review of Procurement Decisions by the Association 1. Review of invitation to bid and of proposed awards and final contracts. With respect to all contracts for goods 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 re- quire 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, and such other information - 20 - as the Association shall. reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (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 or prequalification invited. (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 bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the con- tract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such deter- mination.