China - University Development Project : Credit 1167 - Credit Agreement - 2 - Conformed

CREDIT NUMBER 1167 CHA Development Credit Agreement (University Development Project) between PEOPLE'S REPUBLIC OF CHINA and INTERNATIONAL DEVELOPMENT ASSOCIAT7ION Deted , 1981 CREDIT NUMBER 1167 CHA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated 5y" - , 1981, between PEOPLE'S REPUBLIC OF CHINA (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; and (B) the Borrower has also requested the International Bank for Reconstruction and Development (hereinafter called the Bank) to provide financing assistance towards the financing of the Project in an aggregate principal amount equivalent to one hundred million dollars ($100,000,000) (hereinafter called the Loan) on terms and conditions set forth in an agreement (hereinafter called the Loan Agreement) to be entered into between the Borrower and the Bank; WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: 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 June 30, 1980, 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: -2- (a) "MOE" means the Ministry of Education of the Borrower and any successor thereto; and (b) "Project Universities" means the universities and institutions listed in Schedule 4 to this Agreement. 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 equi- valent to eighty-one million four hundred thousand Special Drawing Rights (SDR 81,400,000). 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, procurement of the goods 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, 1986 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 June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 1 -3- and December 1 commencing December 1, 1991, and ending June 1, 2031, each installment to and including the installment payable on June 1, 2001, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project through MOE with due diligence and efficiency and in conformity with appropriate administrative, educational and financial prac- tices, and shall provide, promptly as needed, the funds, facili- ties, services and other resources required for the purpose. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ or cause to be employed experts whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provisions for the insurance of, 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 insur- ance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, all goods and services financed out of the proceeds of the Credit shall 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, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall rea- sonably request. -4- (b) The Borrower: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds 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 to the Association at regular intervals all such inform- ation 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) Upon the award by the Borrower of any contract for goods or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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 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 this Agreement and the accomplishment of the purposes of the Credit. Section 3.05. 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 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. Section 3.06. The Borrower shall establish, not later than November 30, 1981, and thereafter maintain until the Closing Date, -5- a Review Commission, within MOE, with terms of reference satisfac- tory to the Association, to assist in and to coordinate the development of science and engineering education and research at the Project Universities, and to advise on the installation, operation and maintenance of equipment by the Project Universi- ties. Section 3.07. The Borrower shall establish, not later than November 30, 1981, and thereafter maintain until the Closing Date, an Advisory Panel, within MOE, consisting of experts and with terms of reference satisfactory to the Association, to assist and advise: (i) the Project Universities concerning their respective Parts of the Project; and (ii) the Review Commission in its work. Section 3.08. The Borrower shall select candidates for the fellowships and training provided under the Project in accordance with such procedures and criteria of selection as shall be satis- factory to the Association. Section 3.09. The Borrower shall, for the purposes of the fellowships provided under the Project, establish and carry out foreign language training for selected fellows, in accordance with programs satisfactory to the Association. Section 3.10. The Borrower shall ensure that the equipment to be procured under the Project shall be installed in buildings which are suitable for the purpose, and that such buildings shall be available prior to the delivery of the respective equipment to be installed therein. Section 3.11. So long as any part of the Loan provided for under the Loan Agreement shall remain outstanding, all action taken, including approvals given, by the Bank pursuant to any of the Sections of, and Schedules to, the Loan Agreement, shall be deemed to be taken or given in the name and on behalf of the Bank and the Association; and all information or documentation furnished by the Borrower to the Bank pursuant to the provisions of any such Sections of the Loan Agreement or Schedules thereto, shall be deemed to be furnished to both the Bank and the Associa- tion. -6- ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Section 4.02. The Borrower shall operate and maintain or cause to be operated and maintained, the facilities and equipment included in the Project in accordance with sound administrative, financial, engineering and educational policies and practices, and shall provide or cause to be provided, promptly as needed sufficient funds, services and other resources for such purposes. ARTICLE V Effective Date; Termination Section 5.01. 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: (a) the Borrower's State Council shall have approved the Project and the Development Credit Agreement; and (b) all conditions precedent to the effectiveness of the Loan Agreement, except only the effectiveness of this Agreement, shall have been fulfilled. Section 5.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Borrower's State Council has approved the Project and the Development Credit Agreement. Section 5.03. The date Y 19 is hereby specified for the purposes of Section 12.0 of the General Condi- tions. -7- Section 5.04. The obligations of the Borrower under Section 4.02 of this Agreement shall cease and determine on the date on which this Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. 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 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Sanlihe Beijing People's Republic of China Cable address: Telex: FINANMIN 22486 MFPRC CN Beijing 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 -8- 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. PEOPLE'S REPUBLIC OF CHINA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION Byj Regional Vice President East Asia and Pacific -9- 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 SDR Expenditures Category Equivalent) to be Financed (1) Equipment 63,080,000 100% of foreign and spare expenditures, parts 100% of local expenditures (ex-factory) and 75% of local expenditures for imported goods (2) Specialist 2,030,000 100% services (3) Fellow- 10,170,000 100% of for- ships and eign expen- Training ditures (4) Unallocated 6,120,000 TOTAL 81,400,000 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 - 10 - (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance 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 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 expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $5,000,000 from the Credit and Loan, may be made in respect of payments made for expenditures before that date but after June 23, 1981. 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 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 - 11 - or limiting any other right, power or remedy or of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reason- able opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 12 - SCHEDULE 2 Description of the Project The purpose of the Project is to assist the Borrower in strengthening higher education in the fields of science and engineering. It consists of the following: Part A: A program to increase the number and improve the quality of graduates and to increase the volume and improve the quality of research at the Project Univer- sities through the provision of buildings, furniture and equipment, specialist services, fellowships, training and other related inputs required. Part B: A program to strengthen planning and management capabi- lities of the Project Universities and MOE through provision of equipment, specialist services, fellow- ships, training and other related inputs required. Part C: Preparation of future investments in the education sector. The Project is expected to be completed by June 30, 1985. - 13 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of inter- national competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publica- tion of such notice in order to provide timely notification to prospective biaders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in the People's Republic of China may be granted a margin of prefe- rence in accordance with, and subject to, the following provisions: - 14 - 1. 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. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in the People's Republic of China if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in the People's Republic of China equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest eval- uated 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. 4. If, as a result of the comparison under paragraph 3 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 evaluated 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 3 is the lowest evaluated bid shall be selected. - 15 - C. Other Procurement Procedures Contracts for items costing less than $100,000 equivalent per contract may be procured through direct purchase in accor- dance with procedures satisfactory to the Association, provided all such contracts shall not in the aggregate exceed $20,000,000 equivalent under the Credit and the Loan. 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 costing $100,000. equivalent or more: (a) Before bids are invited, the Borrower shall furnish to the Association for its comments, the text of the invita- tions 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 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 sufficient time for its review, a detailed report 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, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such contract. - 16 - 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 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 15% 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. - 17 - SCHEDULE 4 Project Universities Except as the Borrower and the Association shall otherwise agree, the following shall be Project Unversities participating in the Project: Sichuan University, Chengdu Chongqing University, Chongqing Xian Jiaotong University, Xian Lanzhou University, Lanzhou Zhongshan University, Guangzhou South China Institute of Technology, Guangzhou Wuhan University, Wuhan Huazhong Institute of Technology, Wuhan Fudan University, Shanghai Shanghai Jiaotong University, Shanghai East China Normal University, Shanghai Nanjing University, Nanjing Nanjing Institute of Technology, Nanjing Zhejiang University, Hangzhou University of Science and Technology of China, Hefei Xiamen University, Xiamen Shandong University, Jinan Beijing University, Beijing Qinghua University, Beijing Beijing Medical College, Beijing Beijing Normal University, Beijing Beijing Agricultural University, Beijing Nankai University, Tianjin Tianjin University, Tianjin Dalian Institute of Technology, Dalian Jilin University, Changchun 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 2 . day of 198 L. FOR SECRETARY