Madagascar - Fourth Highway Project : Credit 0641 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 64a MAG DEVELOPMENT CREDIT AGREEMENT (Fourth Highway Project) between DEMOCRATIC REPUBLIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 23, 1976 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 23, 1976, between DEMOCRATIC REPUBLIC OF MADAGASCAR (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT 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 making the Credit as hereinafter provided; and (B) The Borrower intends to contract from the Arab Bank for Economic Development in Africa (hereinafter called BADEA) a loan (hereinafter called the BADEA Loan) in an amount equivalent to $5,000,000 to assist in the financing of the civil works to be carried out by force account under Part B of the Project, on the terms and conditions set forth in an agreement (hereinafter called the BADEA Loan Agreement) to be entered into between the Borrower and BADEA; 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 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following ad- ditional terms have the following meanings: (a) "MTP" means Ministere des Travaux Publics, the Ministry of Public Works of the Borrower; (b) "DTN" means Direction des Travaux Neufs, the New Works Department of MTP; (c) "DIM" means Direction de 1'Infrastructure et de Main- tenance, the Infrastructure Department of MTP; (d) "SCP" means Service Central de Programmation, the Central Programming Service of NTP; -3- (e) "RN1" means the National Road No. 1, a section of which is to be reconstructed under Part A of the Project; and (if) "FMG" means the currency of the Borrower. 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 twenty-two million dollars ($22,000,000). 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 required 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, works and services (other than consultants' services) for the Project shall be procured in accordance with the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1980 or such later date as the Association shall establish. The Asso- ciation 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. -5- Section 2.06. Service charges shall be payable semi-annually on April 1 and October 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 1 and October 1 commencing October 1, 1986, and ending April 1, 2026, each installment to and including the installment payable on April 1, 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 Gen- eral Conditions. -6- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out Parts A and B of the Project through DTN, Part C of the Project through SCP and Part D of the Project through DIM with due diligence and effici- ency and in conformity with appropriate engineering, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) For the reconstruction of the section of RN1 referred to in Part A of the Project and the construction of bridges under Parts A and B of the Project, the Borrower shall employ contractors acceptable to the Association, upon terms and conditions satisfactory to the Association. (b) The Borrower shall make adequate arrangements satisfac- tory to the Association for the carrying out.by force account of civil works mnder Part B of the Project, excluding bridges. Section 3.03. In order to assist DTN in carrying out Part B of the Project, the Borrower shall employ engineering consultants whose qualifications, experience and terms and conditions of em- ployment shall be satisfactory to the Association. Section 3.04. In order to assist MTP in carrying out Parts C and D of the Project, the Borrower shall: (a) not later than De- cember 31, 1976 or such other date as shall be agreed with the -7- Association, employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association; (b) submit to the Association, for review, promptly upon completion, the studies referred to in Part Cl and Dl of the Project; and (c) consult with the Association regarding the decisions that it proposes to take in the light of the consul- tants' recommendations and the means of their implementation. Section 3.05. (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 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. Section 3.06. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or addi- tions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) -8- 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 3.07. The Borrower shall take 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. -9- ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with con- sistently maintained appropriate accounting practices the opera- tions, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carry- ing out the Project or any part thereof. Section 4.02. The Borrower shall (a) take all measures rea- sonably required to ensure that the dimensions and axle-loads of vehicles using its national highway network shall not exceed limits consistent with the design standards for such roads and (b) not later than December 31, 1976 or such other date as shall be agreed between the Association and the Borrower, exchange views with the Association with respect to its proposed program for the implementation of the said measures. Section 4.03. Not later than December 31, 1976 or such other date as shall be agreed between the Association and the Borrower, the Borrower shall, in consultation with the Association, prepare a work program and an implementation schedule to reorganize DI's maintenance equipment renting system and improve DI's spare parts supply system. Section 4.04. The Borrower shall cause its national road net- work to be adequately maintained and shall cause all necessary 10 repairs thereof to be made promptly, all in accordance with sound engineering practices, and shall make arrangements, satisfactory to the Association, to provide, promptly as needed, the funds, facilities, services and other resources required for such main- tenance and repairs. - 11 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof, subject to paragraph (c) of this Section: (a) the right of the Borrower to withdraw the proceeds of the BADEA Loan made to the Borrower for the financing of the Proj- ect shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the BADEA Loan Agreement, or (b) the BADEA Loan shall have become due and payable prior to the agreed maturity thereof. (c) paragraphs (a) and (b) of this Section shall not apply if the Borrower establishes to the satisfaction of the Bank that: (i) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement, and (ii) 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. Section 5.02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following event is specified pursuant to paragraph (h) thereof, namely that the event specified in para- graph (b) of Section 5.01 of this Agreement shall occur. - 12- ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the BADEA Loan Agreement has been duly signed and conditions precedent to initial disbursements, if any, under the said BADEA Loan Agreement, except for the effectiveness of this Agreement, have been fulfilled. Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be fur- nished to the Bank, namely, that the execution and delivery of the BADEA Loan Agreement have been duly authorized or ratified by all necessary corporate and governmental action, and that the said BADEA Loan Agreement is legally binding upon the borrower and BADEA respectively, in accordance with its terms. Section 6.03. The date September 21, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. -13- ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministre des Finances et du Plan 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: Ministere des Finances et du Plan Tananarive Madagascar Cable address: MINFINPLAN Tananarive 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. - 14- 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. DEMOCRATIC REPUBLIC OF MADAGASCAR By /s/ C. Randrianasolo Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ S. Please Acting Regional Vice President Eastern Africa -15 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 under 9,400,000 70% Part A of the Proj- ect and construc- tion of bridges under Part B of the Project (2) Engineering and 1,200,000 100% of foreign supervision of expenditures or construction 80% of local expenditures (3) Study under Part C.1 80,00 100% of foreign of the Project expenditures or 90% of local expenditures (4) Training under Part 1,700,000 100% of foreign C.2 of the Project expenditures or 90% of local expenditures (5) Study under Part 90,000 100% of foreign D.1 of the Project expenditures or 90% of local expenditures - 16 - Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Spare parts and 3,600,000 100% of foreign equipment under expenditures or Part D.2 of the 90% of local Project expenditures (7) Weigh-bridges 500,000 100% of foreign portable scales and expenditures or vehicles under Part 90% of local D.3 of the Project expenditures (8) Unallocated 5,30,000 TOTAL 22,000,000 (1)7 - 17 - 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. 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 surply thereof; to that end, if the amount of any such taxes levied on or in re- spect 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 appli- cable to such item as required to be consistent with the aforemen- tioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of 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 - 18 - of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Cate- gory, the Association may, by notice to the Borrower, reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to an- other Category and which in the opinion of the Association are not needed to meet other expenditures. 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, cancel such amount of the Credit as, in the Association's reasonable opin- ion, represents the amount of such expenditures which would other- wise have been eligible for financing out of the proceeds of the Credit. -19- SCHEDULE 2 Description of the Project The Project consists of the following Parts: A. Reconstruction of the 67 km two-lane paved Section of RNl between Arivonimano and Analavory. B. Construction to gravel standards of the 370 km secondary feeder road between Tsiroanomandidy and Maintirano. C. 1. A study of MTP's training needs to improve road maintenance. 2. Implementation of the study's recommendations. D. 1. A study of DIM's equipment conditions and of its requirements for spare parts and equipment renewal. 2. Procurement of spare parts and equipment identi- fied under Part D.1 above. 3. Procurement and installation of weigh-bridges and port- able scales and procurement of vehicles for the enforcement of the Borrower's axle-load regulations. The Project is expected to be completed by June 30, 1980. - 20 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for civil works equipment and vehicles shall be let in accordance with procedures consistent with those set forth in 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. Contractors shall be required to prequalify as described in paragraph 1.3 of Part A of the Guidelines, and at least 30 days shall be allowed for submission of prequalification documents. 3. Civil works shall be carried out under three separate unit price contracts as shown below: Contract No. 1: Roads under Part A of the Project; Contract No. 2: Bridges under Part A of the Project; and Contract No. 3: Bridges under Part B of the Project. (1)1 - 21 - B. Other Procurement Procedures 1. Civil works for the Tsiroanomandidy-Maintirano road, except those for the bridges of said road, shall be carried out by force account. 2. Spare parts under Part D.2 of the Project may be procured through local shopping. C. Evaluation and Comparison of Bids for Civil Works, Preferences for Domestic Contractors With respect to any contract for civil works, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A.2 of this Schedule and applicants for qualifications ap- plying also for such preference shall be asked to provide, as part of the infcrmation for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be fol- lowed in the evaluation and comparison of bids to give effect to such preference. - 22 - (b) After bids have been received and reviewed by the Bor- rower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. D. Review of Procurement Decisions by the Association 1. Review of prequalification. The Borrower shall, before quali- fication is invited, inform the Association in detail of the pro- cedure to be followed and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and, where applicable, of their eligibility for domestic preference under Part C above and of 'the reasons for the exclusion of any applicant for prequalification and for such eli- gibility shall be furnished by the Borrower to the Association for its comments before the applicants are notified, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request. 2. Review of invitation to bid and of proposed awards and final contracts. -23- With respect to any contract for civil works, equipse.it or vehicles subject to international competitive bidding: (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 document or procedure as the Association shall reasonably request. Any further modification of the bidding documents shall require the Association's concurrence before it is issued to the prospec- tive bidders. (b) The firms invited to bid shall be allowed at least 60 days for the submission of their proposals. The bidding documents with respect to civil works shall be accompanied by a bid bond or bank guarantee amounting to not less than 2% of the estimated con- tract value. (c) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, 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, by the consultants referred to in Sections 3.03 and 3.04 of this Agreement, on the evaluation and comparison of the bids received, together with the recommenda- tions for award of the said consultant, and 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 the Guidelines, promptly inform the Borrower and state the reasons for such determination. (d) With respect fo civil works, the succefful bidder shall, at the Borrower's option, furnish either a performance bond or a bank guarantee in an amount of not less than 10% of the contract price, which bond or guarantee shall remain in effect until one year after completion of the works provided for in the contract. In addition, the contract shall provide for retention of not less than 10% of the cost of works on each monthly invoice. These reten- tions may cease to be made when the cumulative amount retained reaches about 5% of the total contract price. One-half of the re- tention monies shall be released when all the work has been sub- stantially completed, and the other half fourteen days after the termination of the contractor's responsibility in respect of de- fects. The period during which the contractor will remain respon- sible in respect of defects in the works (fair wear and tear ex- cepted) will extend for one year after provisional acceptance of the works. (e) The terms and conditions of the contract shall not, with- out the Association's concurrence, materially differ from those on which bids were asked. (f) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the delivery to the' Association of the first application for with- drawal of funds from the Credit Account in respect of any such contract. 3. With respect to any contract for spare parts under D.2 of the Project, the Borrower shall furnish to the Bank, promptly after its 25 - execution and prior to the submission to the Bank of the first ap- plicat ion for withdrawal of funds from the Credit Account in re- spect of such contract, two conformed copies of such contract and such other information as the Association shall reasonably request.