Philippines - Second Rural Development - Land Settlement Project : Loan 1421 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1421 PH Loan Agreement (Second Rural Development-Land Settlement-Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 10, 1977 LOAN AGREEMENT AGREEMENT, dated June 10, 1977, between THE REPUBLIC OF THE PHILIPPINES (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). -2- ARTICLE 1 General Conditions; Definitions Se,Llan 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank 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) "DAR" means the Borrower's Department of Agrarian Reform; (b) "CPMU" means the Central Project Management Unit established by DAR; (c) "IPCC" means the Inter-Agency Project Coordinating Committee established by the Borrower, or any successor thereto; (d) "LOI" means the Letter of Instruction which the Borruwer intends to issue to certain of its departments and agencies for the implementation of parts of the Project under the direction of DAR; - 3 - (e) "Special Account" means the fund to be maintained in DAR pursuant to Section 3.01 (d) of this Agreement; (f) "Project Area" means the following three settlements established by the Borrower; (i) Agusan del Sur, a settlement about 16,500 ha in extent situated in the Province of Agusan del Sur on the Island of Mindanao; (ii) Bukidnon, a settlement about 36,000 ha in extent situated in the Province of Bukidnon on the Island of Mindanao; and (iii) Capiz, a settlement about 25,000 ha in extent situated in the Province of Capiz on the Island of Panay. (g) "Subsidiary Loan Agreement" means the subsidiary loan agreement to be entered into between the Borrower and the Central Bank of the Philippines pursuant to Section 3.01 (b) of this Agreement. -4- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to fifteen million dollars ($15,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan 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 Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1982 or such later date as the Bank shall otherwise establish. The Bank shall promptly notify the Borrower of such later date. -5- Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and two-tenths per cent (8.20%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on February 1 and August 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -6- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project through DAR and with the assistance of the IPCC and the departments and agencies of the Borrower specified in the LOI, with due diligence and efficiency and in conformity with appropriate financial, administrative, engineering and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for this purpose. (b) Without any limitation or restriction to its obligations under paragraph (a) of this Section, the Borrower shall relend to the Central Bank of the Philippines the proceeds of the Loan allocated to credit in Category 5 of the table in paragraph 1 of Schedule 1 to this Agreement in a subsidiary loan agreement to be entered into between the Borrower and the said Central Bank under terms and conditions which shall have been approved by the Bank and which shall include, inter alia, a term of twenty years including four and one-half years of grace and interest at the rate of 8.20% per annum. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the - 7 - purpose of the Loan and, except as the Borrower and the Bank shall agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. (d) Without limitation or restriction to its obligations under paragraph (a) of this Section, the Borrower shall establish and maintain until the completion of the Project and under arrangements satisfactory to the Bank, a Special Account from which DAR may draw without restriction to meet expenditures in respect of the Project. The Borrower shall adjust and replenish the amount in the Special Account at monthly intervals to a level at least equivalent to the estimated amount of payments to be made for goods, services and civil works required for the Project, less the estimated amount of payments to be made directly by the Bank to suppliers or contractors for such goods, services and civil works during the next two months. Section 3.02. Except as the Bank may otherwise agree, the Borrower shall, until at least the completion of the Project, (i) maintain in existence the CPMU with its present organization, powers and responsibilities; and (ii) employ or maintain in employment, as the case may be, the following suitably qualified and experienced staff: (A) in CPMU, a Project manager, a financial controller and a chief planning economist, and (B) in each of the settlements included in the Project, a settlement area manager. -8- The Borrower shall afford the Bank a reasonable opportunity to comment on the qualifications and experience of the candidates before making an appointment to any of the said positions. Section 3.03. Until the completion of the Project, the Borrower shall cause DAR to furnish to the Bank within thirty days of the end of each quarter, commencing with the quarter ending September 30, 1977, a report, in a form acceptable to the Bank, on the progress being made in carrying out the Project. Section 3.04. In order to assist DAR in carrying out Part A of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Except as the Bank shall otherwise agree, and subject to the provisions of Section 6.01 (c) of this Agreement, the Borrower shall employ such consultants with respect to Parts A (i) through A (iii) not later than May 31, 1978, and with respect to Part A (iv), not later than November 30, 1977. 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 Loan 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 the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, all goods and services financed out of the proceeds of the Loan shall be used exclusively for the Project until its completion. Section 3.06. (a) The Borrower shall furnish to the Bank: (i) its annual work plans and budgets for the carrying out of the Project, in sufficient time for these to be reviewed by the Bank prior to their final approval as part of the Borrower's budget; and (ii) promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain consolidated records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank'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 Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. - 10 - Section 3.07. 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 the construction (and operation) of the facilities included in the Project. Section 3.08. (a) The Borrower shall, in carrying out Parts B (i), (ii) of the Project, ensure that the final engineering designs of works to be undertaken under such Parts of the Project, and the arrangements for implementing such works for operating and maintaining them and, in the case of irrigation works, arrangements for cost recovery, are all agreed to by the Bank before starting construction on such works. (b) In carrying out Part B (iv) of the Project, the Borrower shall obtain the Bank's approval of the detailed designs of the erosion control works to be undertaken under such Part B (iv) and the specifications of the equipment to be procured by the Borrower for this purpose before purchasing such equipment. Section 3.09. The Borrower shall not later than December 31, 1977, or such other date as the Bank shall agree: (i) take all such action as shall be necessary to implement revised procedures and guidelines, that are mutually satisfactory to the Borrower and the Bank, for land allocation and associated survey work by DAR in the Project Area; and (ii) establish Land Committees in the Project Area. - 11 - Section 3.10. The Borrower shall cause DAR, with the assistance of agricultural engineering, evaluation and other consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank (i) to prepare by December 31, 1980, a ten year settlement areas action program; and (ii) to complete by December 31, 1979, feasibility studies for accelerating the development of existing settlement areas and for establishing new settlement areas and furnish by the said date such studies to the Bank for its comments. Section 3.11. The Borrower shall establish in DAR, and staff and maintain, a monitoring and evaluation system which will, inter alia, monitor and evaluate the progress of the Project. Section 3.12. The Borrower shall, whenever this is necessary, make satisfactory arrangements to assist in relocating any residents in the Project Area who are required to move as a result of the carrying out of the Project. - 12 - ARTICLE IV Other Covenants Section 4.01. (a) It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. (b) To that end the Borrower: (i) represents that at the date of this Agreement no lien exists or any governmental assets as security for any external debt except as otherwise disclosed in writing by the Borrower to the Bank; and (ii) undertakes that, except as the Bank shall otherwise agree, if any such lien shall be created, it will ipso facto equally and ratably, and at no cost to the Bank, secure the payment of the principal of, and interest and other charges on, the Loan and in the creation of any such lien express provision will be made to that effect. The Borrower shall promptly inform the Bank of the creation of any such lien. (c) The foregoing representation and undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. - 13 - (d) As used in this Section, the term "governmental assets" means assets of the Borrower or of any agency of the Borrower including the Central Bank of the Philippines or any institution performing the functions of a central bank for the Borrower. (e) The Borrower further undertakes that, within the limits of the laws in force in its territories, it will make the foregoing undertaking effective with respect to liens on the assets of its political subdivisions and their agencies, and to the extent that the Borrower is unable within the limits of the laws in force in its territories to make this undertaking effective, the Borrower will give to the Bank an equivalent lien satisfactory to the Bank. Section 4.02. The Borrower shall cause DAR (i) to maintain separate accounts and financial statements adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations in respect of the Project; and (ii) to ensure that similar separate accounts are maintained by the departments and agencies of the Borrower specified in the LOI. Section 4.03. The Borrower shall cause DAR to take out and maintain with responsible insurers, or to make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. - 14 - Section 4.04. The Borrower shall use its best efforts to ensure that a rural bank is established and fully operational in Capiz not later than June 30, 1979. Section 4.05. (a) The Borrower shall cause the works and facilities included in Part B of the Project to be operated and maintained in accordance with sound agricultural, engineering and financial policies and practices, and shall make available, or cause to be made available, sufficient funds for such purposes. (b) Without limitation on its obligations under paragraph (a) of this Section, the Borrower undertakes to: (i) cause an Irrigator Service Association to be established among the beneficiaries of each irrigation work included in the Project Area not later than the beginning of operations of such work; (ii) cause each such Association to operate and maintain such irrigation work, and to levy and collect from its members such dues, and to obtain from its members such labor, as shall be required for the purpose; and - 15 - (iii) levy and collect from such beneficiaries such charges as shall be sufficient to provide for the recovery within a reasonable period, on reasonable terms and conditions satisfactory to the Bank, a portion of the monies invested in the said irrigation works, without impairing the users incentives and capacity to pay. (c) The Borrower shall consult with the Bank annually, on the adequacy of such operation and maintenance and of such dues and charges. Section 4.06. The Borrower shall review the policies and procedures governing DAR's Fund for Direct Assistance to settlers in the Project Area and consult with the Bank on the results of such review not later than June 30, 1978, or such other date as the Bank shall agree, with a view to making such direct assistance consistent with the credit policies of rural banks and cooperative rural banks operating in the Project Area. The Borrower shall thereafter monitor the operation of the said Fund in the Project Area and furnish to the Bank for its comments the results of such review not later than December 31 in each of the years 1979 through 1981. - 16 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (k) thereof, namely, that the Letter of Instruction shall have been amended, suspended, abrogated, repealed or waived in such a manner as to materially and adversely affect the implementation of the Project or the carrying out of the Borrower's obligations under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (h) thereof, namely that any event specified in Section 5.01 of this Agreement shall occur. - 17 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the LOI has been issued and has become effective; (b) that the Special Account has been established; (c) that the consultant required to provide management support to the CPMU has been employed pursuant to Section 3.04 of this Agreement; and (d) that a settlement area manager has been employed for each of the settlement areas included in the Project Area. Section 6.02. The date September 12, 1977, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. - 18 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Secretary of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secretary of Finance Department of Finance Manila, Philippines Cable address: SECFINANCE Manila For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 19 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF THE PHILIPPINES By /s/ Eduardo Z. Romualdez Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ S. Shahid Husain Regional Vice President East Asia and Pacific - 20 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment, vehicles 2,200,000 and spare parts: (a) directly im- 100% of foreign ported expenditures (b) locally manu- 100% of local factured expenditures (ex-factory) (c) locally 65% procured (2) Civil works (a) buildings 900,000 45% (b) other civil 5,700,000 45% works (3) Consultants' ser- 700,000 100% of foreign vices and Overseas expenditures or Training 65% (4) Salaries of Project 1,900,000 45% Personnel and other operating expenses - 21 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (5) Term credit 900,000 60% of amounts disbursed by Central Bank (6) Unallocated 2,700,000 TOTAL 15,000,000 - 22 - 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 compliance with the policy of the Bank that no proceeds of the Loan 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 respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank 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 Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) payments made under Category (5) in paragraph (i) of this Schedule unless - 23 - evidence satisfactory to the Bank shall have been furnished to the Bank that: (i) the Subsidiary Loan Agreement has been duly executed on behalf of the Borrower and the Central Bank of the Philippines; and (ii) that the rural banks to which the proceeds of the Loan are to be made available by the Central Bank meet the Central Bank eligibility criteria. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank 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. -24 - 6. If the Bank 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 expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 25 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: Program support to improve the design and implementation of the Borrower's countrywide settlement program, which will include: (i) Planning and technical studies; (ii) The provision of management support, staff training and communication and transportation facilities to the CPMU and of staff training to DAR; (iii) Provision of training for the staff of the agricultural service centers; and (iv) Evaluation and monitoring studies in the Project Area. Part B: The provision of infrastructure development, agricultural and other services including transportation facilities in the Project Area which will include: (i) Road construction and improvement; (ii) Irrigation and drainage; (iii) Forestry development; (iv) Other land development; ('r) Health facilities, including family planning and nutrition, and water supply; (vi) Service buildings and facilities; - 26 - (vii) Construction of an Agricultural Service Center in each of the three settlements included in the Project Area to provide agricultural extension, farmer training, adaptive research and other services; (viii) The provision of marketing, cooperative development and credit services to settlers. The Project is expected to be completed by July 31, 1982. - 27 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each February 1 and August 1 beginning August 1, 1982 through February 1, 1997 485,000 On August 1, 1997 450,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 28 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.25% More than three years but not more than six years before maturity 2.45% More than six years but not more than eleven years before maturity 4.50% More than eleven years but not more than sixteen years before maturity 6.55% More than sixteen years but not more than eighteen years before maturity 7.40% More than eighteen years before maturity 8.20% - 29 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase 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, as described in Part A of the Guidelines. B. Other Procurement Procedures 1. Notwithstanding the provisions set forth or referred to in Part A. 1 of this Schedule: (i) civil works may be carried out either (A) by the Borrower under force account, or (B) by contracts awarded under the Borrower's procedures or competitive bidding, provided that the aggregate cost of civil works carried out by force account shall not, without the prior consent of the Bank, exceed 40% of the total cost of all civil works in the Project; - 30 - (ii) items of equipment, materials and vehicles estimated to cost the equivalent of not more than $20,000 may be awarded on a competitive basis under the Borrower's normal procurement procedures without international competitive bidding; (iii) any item of such equipment estimated to cost the equivalent of not more than $10,000 may be purchased at a reasonable price in accordance with the Borrower's usual procedures, provided, that the aggregate expenditure for such items shall not exceed the equivalent of $300,000; and (iv) equipment and materials bought by beneficiaries under the credit component of the Project may be purchased through normal commercial channels. 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: (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 similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight - 31 - and other expenditures incidental to the delivery of goods to the place of their use of installation shall be included. 2. Goods manufactured in the Republic of the Philippines 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 information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison 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 the Republic of the Philippines if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in the Republic of the Philippines equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: All other bids offering goods manufactured in the Republic of the Philippines. (3) Group C: bids offering any other goods. - 32 - (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 evaluated 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 further comparison only, an amount equal to (i) the amount of customs 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. - 33 - D. Review of Procurement Decisions by the Bank 1. With respect to all contracts for civil works estimated to cost the equivalent of $250,000 or more and all contracts for equipment and vehicles estimated to cost the equivalent of $125,000 or more: (a) Review of prequalification. If bidders are required to prequalify, the Borrower shall, before qualification is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. (b) Review of invitations to bid and of proposed awards and final contracts: (i) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description -34- of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (ii) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank 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. (iii) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. - 35 - (iv) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.