Lesotho - Urban Development Project : Credit 1036 - Development Credit Agreement - Conformed

CREDIT NUMBER 1036 LSO Development Credit Agreement (Urban Development Project) between KINGDOM OF LESOTHO and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1980 CREDIT NUMBER 1036 LSO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1980, between KINGDOM OF LESOTHO (hereinafter alled the Borrower) and INTERNA- TIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Associa- tion). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General 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) "MI" means the Borrower's Ministry of the Interior; (b) "MW" means the Borrower's Ministry of Works; (c) "PCU" means the Project Coordination Unit to be estab- lished and maintained pursuant to Section 3.01 (b) hereof within MI until the establishment of MMC pursuant to Section 4.04 hereof, and thereafter within MMC until the completion of the Project; (d) "MMC" means the Maseru Municipal Council to be created pursuant to Section 4.04 of this Agreement; (e) "WSB" means the Water and Sewerage Branch of the Bor- rower's Ministry of Water, Energy and Mining, or any successor thereto, responsible for water supply and sewerage in district headquarters towns in the Borrower's territory; (f) "LEC" means Lesotho Electricity Corporation, a company established and operating pursuant to the laws of the Borrower; -2- (g) "LEHCO-OP" means Lower Income Housing Company (Proprie- tary) Limited, a company established and operating pursuant to the Borrower's laws and its Memorandum and Articles of Association dated August 1, 1975; (h) "BFC" means Building Finance Corporation, a company established and operating pursuant to the laws of the Borrower; (i) "Project Areas" means the part of Khubetsoana area where Part A (1) of the Project for the site and services scheme will be carried out and the area of Thamaes to be declared a "selected development area" pursuant to the provisions of the Land Act where Part A (2) of the Project for upgrading services and densification will be carried out; (j) "Plot" means a demarcated plot to be developed or upgraded under the Project; (k) "Allocable Infrastructure" means that portion of the site preparation and on-site infrastructure allocable to the Plot, including design, supervision and administration costs and financial charges accrued during construction, which is recover- able from beneficiaries and excludes site preparation costs applicable to: (i) community facilities; and (ii) infrastructure costs which are expected to be recovered from utility charges; (1) "Land Act" means the Land Act of 1979 of the Borrower; (m) "Maloti" and "M" mean the currency of the Borrower; and (n) "foreign currency" means any currency other than the currency of the Borrower; it being specified that with respect to Rands which are also legal tender in the territory of the Borrower, expenditures in Rands for goods produced in or services supplied from a country other than the Borrower, shall be deemed to be foreign currency cost. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to six million dollars ($6,000,000). -3- 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, or 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, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be June 30, 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 semiannually on January 15 and July 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each January 15 and July 15 commencing July 15, 1990, and ending January 15, 2030, each installment to and including the install- ment payable on January 15, 2000, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment there- after to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with appro- priate financial, engineering, administrative, planning and -4- supervision practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) For the purposes of paragraph (a) of this Section and the overall coordination of all the activities under the Project, the Borrower shall maintain in existence until the completion of the Project, a Project Coordination Unit (PCU), consisting of a qualified and experienced Project Director, a municipal engineer, an accountant and a sanitation engineer, whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Association, and adequate support staff. (c) Without any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall: (i) not later than December 31, 1980 or such other date as the Borrower and the Association may agree, enter into an agreement with LEC, on terms and conditions which shall have been approved by the Association, providing inter alia for LEC: (A) to upgrade and extend the electrical network to the Project Areas; and (B) to provide out of its own resources adequate funds therefor; (ii) on or prior to April 1, 1981, the Borrower shall make arrangements satisfactory to the Association for the vesting in WSB of responsibility for the operation and maintenance of the water supply works included in Parts A and B of the Project, including the recovery through utility charges of the capital and recurrent costs relating thereto; and (iii) enter into a services agreement with LEHCO-OP on terms and conditions which shall have been approved by the Association, providing inter alia for LEHCO-OP: (A) to mobilize community participation for Part A of the Project through its community service department; -5- (B) to assist the Physical Planning Office of MI in planning the site and services and upgrad- ing layouts for Parts A and B of the Project; (C) under the supervision of the Project Director, to be responsible for the administration of the loan facility under Part C of the Project and, until the completion of the Project, to provide technical assistance (including, inter alios, an architect-planner on a full-time basis and adequate support staff) to Project beneficiaries for the construction of houses, workshops and sanitation units and the pre- paration of house construction manuals; and (D) to monitor, in coordination with Basotho Enterprises Development Corporation, the con- struction and development of workshops; and (iv) enter into a services agreement with BFC, on terms and conditions which shall have been approved by the Association, providing inter alia for BFC: (A) to collect the charges specified in Section 3.08 (b) of this Agreement; and (B) to be paid an appropriate administrative charge for rendering the said services. (d) The Borrower shall exercise its rights under the agree- ments and arrangements referred to in the preceding paragraph (c) in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower, through PCU, shall employ consultants, specialists and technicians whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Association. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards 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 Borrower to replace or repair such goods. -6- (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.04. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain through PCU records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the pro- ceeds of the Credit, and to disclose their use in the Project; (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 through PCU to the Association quarterly consolidated reports and, at regular intervals, all such other information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish through PCU to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. The Borrower shall take all such action as shall be necessary to acquire 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. -7- Section 3.06. The Borrower shall: (a) not later than Decem- ber 31, 1980, or such other date as the Association may agree, declare the area of Thamaes as, a "selected development area" pursuant to the provisions of the Land Act; and (b) prior to undertaking any construction under Parts A (2) and B of the Project for said area, in consultation with the Association, draw up a development and densification scheme therefor. Section 3.07. The Borrower shall cause the community facili- ties included in Part D of the Project to be adequately staffed, operated and maintained by the department or agency of the Bor- rower responsible for each such facility. Section 3.08. In carrying out the Project, the Borrower shall: (a) establish beneficiary selection criteria for the alloca- tion of Plots that are satisfactory to the Association and review with the Association, at least once each year until the completion of the Project, the appropriateness of such criteria; (b) determine and collect through BFC, to the extent that the costs hereinafter referred to are not recovered through utility charges, on terms and conditions satisfactory to the Association: (i) a capital development charge on a per square meter basis for the right to lease a Plot, that is sufficient to recover the full capital cost of Allocable Infrastructure, together with an initial downpayment of not less than 5% of such capital cost, plus interest at the rate of nine per cent (9%) per annum, over a period of 20 years, such capital development charge to be levied in monthly installments; (ii) a monthly charge for loans under Part C of the Project that is sufficient to recover the full amount of each such loan, together with an initial downpayment of not less than 5% of the cost of building materials, plus interest at the rate of nine per cent (9%) per annum, over a period of 20 years; (iii) a monthly service charge, to be paid by each beneficiary, that will be sufficient to recover the full recurrent costs of Plot administration and of operating and maintaining the Allocable Infrastructure; the interest rates referred to in subparagraphs (i) and (ii) above shall be reestab- lished at the 5th, 10th, and 15th anniversaries of the date on which the first payment of such interest falls due at a rate of two percent (2%) per annum below the prime lending rate of BFC at that time, or such other rate as may be agreed between the Bor- rower and the Association; and -8- (c) use a standard agreement on terms and conditions satis- factory to the Association giving the beneficiary the right to lease a Plot in accordance with the provisions of the Land Act, providing inter alia that such beneficiary: (i) will promptly pay the monthly charges that have been determined in accordance with the paragraph (b) of this Section, including any initial downpay- ment which will be payable upon signing of the said agreement; (ii) intends to reside physically on the Plot; (iii) may freely sub-let the Plot or dispose of his interest except that, during the first two years of occupancy, he may exercise the said rights only in favor of a household head satisfying beneficiary selection criteria as established by the Borrower; and (iv) may encumber the Plot by mortgage. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained by the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures in respect of the Project. (b) Without any limitation upon the generality of the fore- going paragraph, the Borrower shall cause PCU: (i) to maintain separate Project accounts adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations in respect of the Project; and (ii) to retain, until one year after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditures, and enable the Association's representatives to inspect such records. (c) The Borrower shall cause PCU to: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by the Borrower's Auditor General or independent auditors acceptable to the Association; (ii) furnish unaudited financial statements to the Association as soon as available, but in any case not later than six months after the end of each such year and furnish to the Association within twelve months after the end of -9- each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including a separate opinion by said auditors, in respect of the expenditures and records referred to in paragraph (b) (ii) of this Section, as to whether the proceeds of the Credit withdrawn from the Credit Account on the basis of expenditures have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning the accounts and financial statements of PCU and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall take out and maintain, or cause to be taken out and maintained, with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice of the Borrower. Section 4.03. (a) The Borrower shall use its best endeavors to appoint local counterparts to the consultants assisting in the carrying out Part E of the Project. (b) Upon completion of the studies referred to in Part E.2 (i) of the Project, the Borrower shall review with the Association the findings and recommendations included therein and after taking into account the Association's comments thereon, if any, shall put said recommendations into effect before or promptly after MMC is created. Section 4.04. Except as the Borrower and the Association shall otherwise agree, the Borrower shall: (a) take all necessary action for the establishment by April 1, 1982 of MMC with such powers and responsibilities as may be appropriate for the due administration of the area of Maseru; and (b) provide MMC with adequate financial resources, staff and facilities for the pur- pose. Section 4.05. The Borrower undertakes that, upon the creation of MMC, it shall cause MMC to observe all covenants in this Agreement relating to PCU, subject to suitable modifications of such covenants as may be required and agreed upon between the Borrower and the Association. - 10 - Section 4.06. The Borrower shall use its best endeavors to cause the ungazetted roads in Maseru and in its peri-urban areas, including the Project Areas, to be adequately maintained and cause all necessary repairs and renewals thereof to be made, all in accordance with appropriate engineering practices. For this purpose, the Borrower shall ensure, during the period of Project implementation, that a satisfactory road maintenance program, including necessary budgetary allocations, is prepared before the beginning of each of its fiscal years and shall consult with the Association, from time to time, as to the appropriateness of said program. Section 4.07. Except as the Borrower and the Association shall otherwise agree, the Borrower shall take all necessary action: (a) for the drawing up of an updated valuation and rating of property to raise revenue for urban services by April 1, 1982; and (b) for the introduction of measures concerning the develop- ment of land with efficiency and economy and due regard to the preservation and improvement of amenities by April 1, 1982. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (h) thereof, namely, that, the Land Act shall have been amended, suspended, abrogated, repealed or waived in such a way as to affect materially and adversely the ability of the Borrower to carry out the covenants, agreements and obligations set forth in 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 (d) thereof, namely that, any event speci- fied in Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: - 11 - (a) The Land Act has come into operation in accordance with Section 1 thereof, and shall be in full force and effect; (b) the municipal engineer, the accountant and the sanita- tion engineer of PCU, referred to in Section 3.01 (b) of this Agreement have been appointed; (c) the execution of the services agreement referred to in Section 3.01 (c) (iii) of this Agreement, on behalf of the Bor- rower and LEHCO-OP, respectively, has been duly authorized or ratified by the parties thereto; and (d) the execution of the services agreement referred to in Section 3.01 (c) (iv) of this Agreement, on behalf of the Borrower and BFC, respectively, has been duly authorized or ratified by the parties thereto. Section 6.02. 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: (a) that the agreement referred to in paragraph (c) of the preceding Section 6.01 has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and LEHCO- OP, respectively, and is legally binding upon the Borrower and LEHCO-OP in accordance with its terms; and (b) that the agreement referred to in paragraph (d) of the preceding Section 6.01 has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and BFC, respectively, and is legally binding upon the Borrower and BFC in accordance with its terms. Section 6.03. The date ) j is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Article IV of this Agreement and the provisions of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty- four years after the date of this Agreement, whichever shall be the earlier. - 12 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister 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: Ministry of Finance P.O. Box 395 Maseru 100 Lesotho Cable address: Telex: FINMIN 367 BB Maseru, Lesotho For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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 - 13 - of Columbia, United States of America, as of the day and year first above written. KINGDOM OF LESOTHO By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Eastern Africa - 14 - 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 amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil and building 1,680,000 85% works (2) Building mate- 1,140,000 85% rials under Part C of the Project (3) Equipment 490,000 100% of foreign expenditures or 85% (4) Technical assis- 1,220,000 100% of foreign tance expenditures or 85% (5) Unallocated 1,470,000 TOTAL 6,000,000 2. For the purposes of this Schedule, the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; provided, how- ever, that if the currency of the Borrower is also that of another country from the territory of which goods or services are sup- plied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures". - 15 - 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shali 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 -upply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. 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, except that with- drawals, in an aggregate amount not exceeding the equivalent of $100,000 may be made in respect of Category (4) on account of payments made for such expenditures before that date but after July 1, 1979. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association 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 ex- penditures 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 expenditures 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 opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 16 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: The provision of: 1. site and services for the development of about 500 Plots, including about 25 for workshops, in the Khubetsoana area of Maseru about 4.5 km from its center; and 2. upgrading of services for about 1,300 existing Plots and about 1,200 Plots (to be created through subdividing the existing Plots), including about 25 for workshops, in the selected development area of Thamaes. Part B: The provision of primary infrastructure to meet the needs of Project beneficiaries in the Project Areas, including construction of roads and storm water drainage and the extension of the water and electricity supply. Part C: The self help construction of houses, small business premises and workshops, sanitation facilities and other improvements by about 1,700 householders, utilizing building materials to be provided to them by the Borrower under loans to be made pursuant to Section 3.08 (b) (ii) of the Development Credit Agreement. Part D: The provision of community facilities in the Project Areas including: 1. the construction, furnishing and equipping of about 28 additional classrooms to existing primary schools in the Project Areas, with an aggregate capacity of about 924 students, each classroom having a capacity of not more than 40 students; - 17 - 2. the construction, furnishing and equipping of two health clinics for maternal and child health with nutrition units and a multipurpose community hall; 3. the provision of road maintenance equipment and of refuse equipment for trash collection for the town of Maseru and the Project Areas; and 4. the construction of a retail market with about 30 stalls in each of the Project Areas. Part E: 1. Strengthening the capabilities and facilities of the PCU and the construction of three houses. 2. Studies: (i) to design the organizational structure and technical, administrative and financial management systems for MMC and to assess MMC training needs; and (ii) for the further devel- opment of the town of Maseru, including the identification of a possible second urban development project. The Project is expected to be completed by June 30, 1984. - 18 - SCHEDULE 3 Procurement A. Competitive Bidding Procedures 1. Except as provided in Part C hereof, goods and civil works shall be procured under contracts awarded on the basis of competi- tive bidding advertised locally and in accordance with procurement procedures acceptable to the Association. 2. Items of civil works and equipment shall be grouped to the extent possible. B. 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 estimated to cost the equivalent of $75,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower 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 sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommenda- tions for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 19 - (c) The terms and conditions of the contract shall not, without 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 withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award 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. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 20% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. C. Procurement Without Contracting Electrical works and construction of roads for Parts A and B of the Project shall be carried out under force account by LEC and the Labor Intensive Construction Unit of the Roads Branch of MW, respectively. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the I 4 day of 198 . FOR SECRETARY