India - Kerala Agricultural Development Project : Credit 0680 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 68o IN DEVELOPMENT CREDIT AGREEMENT (Kerala Agricultural Development Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 1, 1977 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 1, 1977, between INDIA acting by its President (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 extending the Credit as hereinafter provided; (B) By an agreement of even date herewith between the Asso- ciation and the State of Kerala, (hereinafter called Kerala), Kerala has agreed to undertake certain obligations in respect of the carrying out part of the Project; (C) By an agreement of even date herewith between the Asso- ciation and the Agricultural Refinance and Development Corporation, (hereinafter called ARDC), ARDC has agreed to undertake certain obligations in respect of the carrying out part of the Project; and (D) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in the agreements referred to in Recitals (B) and (C) above; 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 -f 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) "Kerala" means the State of Kerala, a State of India, or any successor thereof; (b) "ARDC" means Agricultural Refinance and Development Corporation, a statutory corporation established and organized under the laws of the Borrower; (c) "Kerala Project Agreement" means the agreement between the Association and Kerala of even date herewith as the same may be amended from time to time; (d) "ARDC Agreement" means the agreement between the Asso- ciation and ARDC of even date herewith as the same may be amended from time to time; -3- (e) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARDC pursuant to Section 3.01 (d) hereof, as the same may be amended from time to time; (f) "SADU" means the Special Agricultural Development Unit, an administrative unit set up under the Agricultural Production Commissioner, Kerala; (g) "PCK" means the Plantation Corporation of Kerala Ltd., a corporation established and organized under the Companies Act of 1956 of the Borrower; (h) "CRMS" means Cooperative Rubber Marketing Societies, reg- istered under the Kerala Cooperative Societies Act of 1969; (i) "KRMF" means Kerala State Cooperative Rubber Marketing Federation Ltd., registered under the Kerala Cooperative Societies Act of 1969; (j) "IRB" means Indian Rubber Board, a statutory board estab- lished and organized under the Rubber Act of 1947 of the Borrower; (k) "CPCRI" means Central Plantation Crops Research Institute; (1) "KAU" means Kerala Agricultural University, a univer- sity established and organized under the Kerala Agricultural Uni- versity Act, 1971; (m) "KDOA" means Kerala Department of Agriculture; -4- (n) "KSEB" means Kerala State Electricity Board; (0) "PCC" means Project Coordination Committee referred to under Section 3.08 hereof; and (p) "Participating Bank" means any bank listed in the Second Schedule to the Reserve Bank of India Act of 1934 and the Kerala Cooperative Central Land Mortgage Bank including the Primary Land Mortgage Banks. -5- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or re- ferred to, an amount in various currencies equivalent to thirty million dollars ($30,000,000). 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, 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 accordance with the provisions set forth in Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be March 31, 1985 or such later date as the Association shall establish. The Association 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 May 1, and November 1, in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 1, and November 1, commencing May 1, 1987, and ending November 1, 2026, each installment to and including the installment payable on November 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 Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out or cause to be carried out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, agricul- tural and engineering practices and shall provide or cause to be provided, promptly as needed the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall cause Kerala and ARDC to perform in accordance with the provisions of the Kerala Project Agreement and ARDC Agreement, respectively, all the obligations therein set forth with respect to the Project, shall take and cause to be taken all action including the provi- sion of funds, facilities, services and other resources, necessary or appropriate to enable Kerala and ARDC to perform such obliga- tions, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) In order to assist Kerala, IRB and CPCRI in carrying out Parts A through E of the Project, the Borrower shall make available to Kerala, IRB and CPCRI in accordance with the Bor- rower's standard arrangements for development assistance to the States and Agencies of India proceeds of the Credit required by each of them to carry out its respective Parts of the Project. - 8 - (d) The Torrower shall enter into a Subsidiary Loan Agree- ment with ARDC on the terms and conditions (including inter alia those set forth in Schedule 4 to this Agreement), satisfactory to the Association for the purpose of lending to ARDC sums out of the proceeds of the credit sufficient for ARDC to carry out its obligations in respect of Part F of the Project. The Borrower shall exercise its rights under the Subsidiary Loan Agreement, in such manner as to protect the interest of the Borrower and the Association and to accomplish the purpose of the Credit and, except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or vaive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. (a) The Borrower shall cause CPCRI to employ technical consultants, whose qualifications, experience and terms and conditions of employment shall be mutually agreed between the Borrower and the Association, to assist CPCRI in carrying out the agricultural research under Part E of the Project. (b) The Borrower shall cause IRB to employ consultants, whose qualifications, experience and terms and conditions of employment shall be mutually agreed between the Borrower and the Association, to be responsible for planning, designing and supervising the construction and commissioning of the crumb rubber processing factories under Part D of the Project. (c) The Borrower shall cause IRB to employ a crumb rubber processing consultant, whose qualifications, experience and terms and conditions of employment shall be mutually agreed between the Borrower and the Association, to perform advisory services - 9 - needed for the operation of the crumb rubber processing factories to be constructed under Part D of the Project. (d) The Borrower shall arrange with Kerala and IRB for the overseas training of at least five crumb rubber factory managers and about three senior executives of IRB, after consultation with the Association with respect to the training arrangements. Section 3.03. (a) Before the sites and construction schedules of the new crumb rubber processing factories are fixed, the Borrower shall cause IRB to arrange with Kerala, CRMS and KRMF to consult with the Association. (b) After the factories have been constructed, the Borrower shall take all necessary action to assure that they are staffed by personnel deemed by IRB to be qualified and adequate in number. Section 3.04. (a) The Borrower shall cause CPCRI to appoint and maintain qualified and adequate staff in order to carry out Part E of the Project efficiently. (b) The Borrower shall cause IRB to establish a Rubber Pro- cessing Department and to appoint and maintain qualified and adequate staff. The chief executive of the Rubber Processing Department shall be appointed by March 31, 1977 or such later date as may be agreed by the Association. Section 3.05. (a) The Borrower shall cause IRB and CPCRI to: (i) maintain records adequate to record the progress of the Proj- ect (including the cost thereof) and to identify the goods and - 10 . services financed out of the proceeds of the Credit made avail- able to them by the Borrower, and to disclose the use thereof in the Project; (ii) without limitation upon the provisions of para- graph (b) of this Section, enable the Association's representa- tives to visit the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; (iii) furnish to the Asso- ciation all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit so made available to them and the goods and services financed out of such proceeds; and (iv) prepare and furnish to the Association, annual work programs and cost estimates relating to the Project not later than two months prior to the beginning of their respective fiscal years. (b) The Borrower shall cause IRB and CPCRI to enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment and any relevant records and documents relating to the Project. Section 3.06. The Borrower shall cause IRB and CPCRI to: (i) have an annual audit satisfactory to the Association made of their accounts and financial statements relating to the Project (state- ments of income and expenses and related statements) for each fiscal year, in accordance with sound auditing principles consis- tently applied, by independent and qualified auditors; (ii) furnish to the Association as soon as available, but in any case not later than five months after the end of each such year, (A) certified copies of their financial statements for such year as so audited and (B) the report of such audit by said auditors, - 11 - of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. Section 3.07. (a) The Borrower shall cause to be insured the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. (b) Except as the Association -hall 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 3.08. (a) The Borrower shall, for the purpose of overall coordination of the Project, cause Kerala to establish PCC under the chairmanship of the Agricultural Production Commis- sioner of Kerala. The members of PCC shall include representatives of the Borrower, Departments of Agriculture and Cooperation of Kerala, SADU, ARDC, PCK, IRB and CPCRI. (b) PCC shall cause to be prepared and furnished to the Association, ,uarterly progress reports in respect of all Parts of the Project not later than one month after the end of each quarter. - 12 - ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) Kerala shall have failed to perform any of its obliga- tions under the Kerala Project Agreement; (b) ARDC shall have failed to perform any of its obligations under the ARDC Agreement or under the Subsidiary Loan Agreement; (c) an extraordinary situation shall have arisen which shall make it improbable that (i) Kerala will be able to perform its obligations under the Kerala Project Agreement; or (ii) ARDC will be able to perform its obligations under the ARDC Agreement or under the Subsidiary Loan Agreement; (d) ARDC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARDC or by others whereby any of the property of ARDC shall or may be distributed among its creditors; and (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of ARDC or for the suspension of the operations of ARDC. - 13 - Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraphs (a) and (b) of Section 4.01 hereof shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraphs (d) and (e) of Sec- tion 4.01 hereof shall occur. - 1~4 - ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the mean- ing of Section 12.01(b) of the General. Conditions: (a) the execution and delivery of the Kerala Project Agree- ment on behalf of Kerala have been duly authorized or ratified by all necessary governmental action; (b) the execution and delivery of the ARDC Agreement on be- half of ARDC have been duly authorized or ratified by all necessary corporate action; (c) the execution and delivery of the Subsidiary Loan Agree- ment on behalf of the Borrower and ARDC, respectively, have been duly authorized or ratified by all necessary corporate and govern- mental action; and (d) a banking development plan satisfactory to the Association to ensure adequate banking arrangements for Part F (i) and (ii) of the Project has been prepared by ARDC. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: - 15 - (a) that the Kerala Project Agreement has been duly autho- rized or ratified by and executed and delivered on behalf of Kerala and such Agreement is legally binding upon Kerala in accordance with its terms; (b) that the ARDC Agreement has been duly authorized or ratified by, and executed and delivered on behalf of ARDC and is legally binding upon ARDC in accordance with its terms; and (c) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by, and executed and delivered on behalf of, the Borrower and ARDC, and is legally binding upon the Borrower and ARDC in accordance with its terms. Section 5.04. The date July 1, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 16 - ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary to the Government of Indis. in the Ministry of Finance of the Borrower is designated as re- presentative of the Borrower 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 Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: ECOFAIRS New Delhi, India 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. - 17 - 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. INDIA By Is/ Kewal Singh Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Ernest Stern Regional Vice President South Asia - 18 - 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: Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment and materials: 1,000,000 (a) directly imported 100% of foreign exoenditures (b) locally manufac- 100% of local tured expenditures (ex-factory price) (c) locally procured 50% (2) (a) Equipment for new 1,650,000 100% of foreign crumb rubber expenditures or factories 100% of local expenditures (ex- factory price) or 50% (b) Civil works for 350,000 50% new crumb rubber factories - 19 - Credit Allocated % of (Epressed in Expenditures Category Dollar Equivalent) to be Financed (c) Expansion cost of Palai factory: (i) Equipment 80,000 100% of foreign and mate- expenditures or rials 100% of local expenditures (ex-factory price) or 50% (ii) Civil works 20,000 50% (d) marketing facil- 150,000 50% ities (3) Technical assistance and overseas training: (a) rubber process- 375,000 100% ing (b) agricultural 200,000 100% research (4) Loans disbursed 17,300,000 50% to farmers and KSEB (5) Civil works and development costs: (a) cashew devel- 1,000,000 50% opment (b) seed gardens 350,000 50% (6) Other civil works 200,000 50% under Parts A and E of the Project (7) Unallocated 7,325,000 TOTAL 30,000,000 - 20 - 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 supply 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 Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. (a) Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expend- itures prior to the date of this Agreement. (b) In respect of Part D of the Project, under Categories (2) and (3) (a) of this Schedule, no withdrawal shall be made unless the condition under Section 3.02 (b) hereof is fulfilled. - 21 - (c) In respect of Part B of the Project, under Category (5) (a) of this Schedule, no withdrawal shall be made unless the condition under Section 2.08 of the Kerala Project Agreement is fulfilled. (d) In respect of Part C of the Project under Category (5) (b) of this Schedule, no withdrawal shall be made unless the condition under Section 2.09 of the Kerala Project Agreement is fulfilled. 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 Cate- gory, the Association may, by notice to the Borrower: (i) reallo- cate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) if such realloca- tion cannot fully meet the estimated shortfall, reduce the dis- bursement 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 - 22 - limiting any other right, power or remedy of the Association under this Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 23 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: Area development by planting new high-yielding coconut and pepper, rehabilitation and replant- ing of coconut and pepper, provision of minor irrigation facilities, inter-cropping in coconut areas with cocoa, fodder for dairy cattle, and various garden crops and dairy cattle development in Cannanore, Kozhikode, Malappuram, Trivandrum, Idukki and Kottayam districts, to be implemented by SADU through participating farmers. Part B: Rehabilitation of cashew plantation of 2,280 ha, planting of new high yielding cashew in 1,470 ha and establishment of a pilot plant for processing cashew apple, to be undertaken by PCK in Cannanore district. Part C: Establishment of about 450 ha seed gardens for coconut, cashew, cocoa and spices, to be undertaken by SADU. Part D: Construction of about nine crumb rubber processing factories by CRMS or KRMF, expansion of the Palai CRMS crumb rubber factory, with the technical assistance of IRB, and the provision for quality control and marketing facilities. - 24 - Part E: Agricultural research to be undertaken by CPCRI and KAU. Part F: (i) A credit program in consultation with SADU to finance the long-term credit need of participating farmers and KSEB for electric reticulation for irrigation pump- sets under Part A above. (ii) A credit program in consultation with PCK for the cashew development under Part B above. (iii) A credit program for the construction of about nine crumb rubber processing factories by CRMS or KRMF, for the expansion of the Palai CRMS crumb rubber factory and marketing facilities. These credit programs shall be refinanced by ARDC. * * * The Project is expected to be completed by March 31, 1984. - 25 - SCHEDULE 3 Procurement A. International Competitive Bidding 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. B. Other Procurement Procedures 1. Procurement relating to on-farm development for cashew plan- tation and seed gardens under Parts B and C of the Project shall be carried out by force account of PCK and SADU respectively. 2. All other civil works of the Project shall be contracted for by competitive bidding on the basis of local advertising or other local procurement procedures satisfactory to the Association. 3. Equipment for the expansion of Palai crumb rubber processing factory, farm equipment, vehicles, laboratory and office supplies and equipment under Parts A, B, C and E of the Project which cannot be grouped into packages of $100,000 or more shall be procured in accordance with the local procurement procedures satisfactory to the Association. - 26 - 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 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 similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to CRMS or KRMF of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in India may be granted a margin of pref- erence in accordance with, and subject to, the following pro- visions: (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: - 27 - 11-23-76 (1) Group A: bids offering goods manufactured in India if the bidder shall have established to the satis- faction of CRMS or KRMF and the Association that the manufacturing cost of such goods includes a value added in India equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in India. (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 evalu- ated 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 - 28 - 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. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for equipment and civil works, included under Category 2(a) and (b) of the table set forth in Schedule 1 to this Agreement, and all contractss for goods and/or services estimated to cost the equivalent of $200,000 or more: (a) Before bids are invited, the Borrower shall cause to be furnished 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 proce- dures to be followed for the bidding, and shall make such modi- fications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. - 29 - (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 suffi- cient time for its review, a detailed report on the evaluation and comparison of the bids received, 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 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. (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 cause to be furnished to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respec- tive 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 contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 30 - SCHEDULE 4 Principal Lending Terms and Conditions 1. Borrower to ARDC: (a) For ARDC refinancing for up to nine years: (i) annual interest rate of 6.75% minimum, less 0.25% for prompt payment; and (ii) repayment at the end of nine years. (b) For ARDC refinancing for more than nine and up to fifteen years: (i) annual interest rate of 7.25% minimum, less 0.25% for prompt payment; and (ii) repayment at the end of fifteen years; and (c) Borrower to carry exchange risk. 2. ARDC to Participating Bank: (a) Annual interest rate of not less than 7.5% to Participating Bank; (b) Installment repayments to coincide with agreed collection dates from ultimate borrowers; and - 31 - (c) ARDC to refinance Participating Bank by loans not exceeding 90% of individual loans for minor irrigation, and not exceeding 80% of loans for other purposes. 3. Participating Bank to Ultimate Borrowers: (a) For coconut and pepper area development under Part A of the Project: (i) relending is for the rehabilitation of coconut and pepper plantation and coconut new plantings in Cannanore, Kozhikode, Malappuram, Trivandrum, Kottayam and Idukki districts; (ii) a loan ceiling of 95% of the costs of investment; (iii) annual interest rate of not less then 10.5%; and (iv) repayment period not exceeding fifteen years in- cluding a grace period not exceeding seven years from the date of each withdrawal. (b) For electric reticulation for irrigation under Part A of the Project: (i) relending is for KSEB for electric reticulation of irrigation pumpsets; - 32 - (ii) annual interest rate of not less than 10.5%; (iii) repayment period not exceeding seven years from the date of each withdrawal; and (iv) Kerala to guarantee the repayment of principal and interest by KSEB. (c) for cashew development: (i) relending is for PCK to undertake cashew development in Cannanore district under Part B of the Project; (ii) a loan ceiling of 85% of the investment cost of PCK; (iii) annual interest rate of not less than 11%; and (iv) repayment period not exceeding fifteen years from the date of each withdrawal. (d) for crumb rubber processing factories: (i) relending is for CBMS or KRMF as described in Part D of the Project; (ii) a loan ceiling of 85% of the cost; - 33 - (iii) annual interest rate of not less than 11%; and (iv) repayment period not to exceed ten years includ- ing a grace period not exceeding four years from the date of each withdrawal. . General: (a) ARDC and Participating Bank to maintain separate accounts for each of the above financing schemes. (b) Security to be in accordance with arrangements between Participating Bank and ARDC. (c) ARDC to refinance on the basis of feasibility studies. (d) ARDC will provide the Association with the investment feasibility report in respect of the factories under Part D of the Project for review.