Mali - Second Mali-Sud Rural Development Project : Credit 1415 - Project Agreement - Conformed

P OF F lCREDIT NUMBER 1415 MLI Project Agreement (Second Mali-Sud Rural Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and COMPAGNIE MALIENNE POUR LE DEVELOPPEMENT DES TEXTILES and BANQUE NATIONALE POUR LE DEVELOPPEMENT AGRICOLE and OFFICE POUR LA STABILISATION ET POUR LA REGULARISATION DES PRIX and BANQUE DE DEVELOPPEMENT DU MALI Dated 2 3 , 1984 CREDIT NURBER 1415 MLI PROJECT AGREEMENT AGREEMENT, dated 2.3 , 1984, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association), COMPAGNIE MALIENNE POUR LE DEVELOPPEMENT DES TEXTILES (hereinafter called CMDT), BANQUE NATIONALE POUR LE DEVELOPPEMENT AGRICOLE (hereinafter called BNDA), OFFICE POUR LA STABILISATION ET POUR LA REGULARISATION DES PRIX (hereinafter called OSRP) and BANQUE DE DEVELOPPEMENT DU MALI (hereinafter called BDM). WHEREAS (A) by the Development Credit Agreement of even date herewith between Republic of Mali (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equiva- lent to twenty-four million one hundred thousand Special Drawing Rights (SDR 24,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that CMDT, BNDA, OSRP and BDM agree to undertake such obligations toward the Association as are hereinafter set forth; (B) the Borrower has applied to the International Fund for Agricultural Development (hereinafter called the Fund) for a loan (hereinafter called the Fund Loan) in an amount equivalent to twelve million one hundred thousand Special Drawing Rights (SDR 12,100,000) to assist in financing the Project described in the Development Credit Agreement on the terms and conditions set forth in an agreement (hereinafter called the Fund Loan Agree- ment) between the Borrower and the Fund; (C) the Fund intends to appoint the Association as Cooperating Institution to administer the Fund Loan in accordance with the provisions of the Development Credit Agreement, and the Association is prepared to accept such appointment; (D) by a Subsidiary Loan Agreement to be entered into bet- ween the Borrower and BNDA, an amount equivalent to six million five hundred sixty thousand Special Drawing Rights (SDR 6,560,000) out of the proceeds of the Credit and the Fund Loan provided for under the Development Credit Agreement and the Fund Loan Agreement will be made available to BNDA on the terms and conditions therein set forth; (E) by a Grant Agreement to be entered into between the Borrower and CNDT in accordance with the provisions of the Development Credit Agreement, an amount equivalent to twenty-five -2- million five hundred thirty thousand Special Drawing Rights (SDR 25,530,000) out of the proceeds of the Credit and the Fund Loan provided for under the Development Credit Agreement and the Fund Loan Agreement will be made available to CMDT on the terms and conditions therein set forth; (F) by a Grant Agreement to be entered into between the Borrower and OSRP in accordance with the provisions of the Development Credit Agreement, an amount equivalent to four hundred sixty thousand Special Drawing Rights (SDR 460,000) out of the proceeds of the Credit provided for under the Development Credit Agreement will be made available to OSRP on the terms and conditions therein set forth; and WHEREAS CMDT, BNDA, OSRP and BDM in consideration of the foregoing, have agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) CMDT shall carry out Parts A (1) (a), (b) (ii) and (d), B, C, D, E, F (3), G, H, I, J and K of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices and with the assistance of the Borrower's Ministries. (b) BNDA shall carry out Parts F (1) and (2) of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and banking practices and with the assistance of the Borrower's Ministries. - 3- (c) OSRP shall carry out Parts A (1), (b) (i) and (c) of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative and financial practices and in accordance with the provisions of the Cotton Guarantee Fund Management Agreement referred to in Section 4.02 (b) of the Development Credit Agreement. Section 2.02. (a) In order to assist CNDT, BNDA and OSRP in carrying out the Project, CMDT, BNDA and OSRP shall employ consultants whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association, such consultants to be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. (b) CMDT shall hire and, thereafter, maintain a training specialist in accounting and financial management whose quali- fications and experience and terms and conditions of employment shall be satisfactory to the Association. (c) CNDT shall: (i) not later than March 31, 1984, hire and thereafter maintain until the Project has been completed an agronomist with experience in rice cultivation; and (ii) maintain until the Project has been completed: (A) an agronomist with experience in confectionery groundnuts; (B) a project coordinator; (C) a monitoring and evaluation specialist; (D) a financial manager; (E) an agronomist in experience in maize cultivation; and (F) a specialist in feeder road construction, all of whose qualifications and experience and terms and condi- tions of employment shall be satisfactory to the Association. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule 1 to this Agreement. Section 2.04. (a) CMDT and BNDA undertake to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit or the Fund Loan made available to them by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of -4- use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by CMDT, BNDA and OSRP to replace or repair such goods. (b) CMDT, BNDA and OSRP shall cause all goods and services financed out of the proceeds of the Credic or the Fund Loan made available to them by the Borrower to be used exclusively for the purposes of the Project. Section 2.05. (a) CMDT, BNDA and OSRP shall, as the case may require, furnish to the Association and the Fund, 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 reasonably request. (b) CMDT, BNDA and OSRP shall: (i) maintain records an(! 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 proceeds of the Credit or the Fund Loan, and to disclose their use in the Project; (ii) enable the Association's and the-Fund's 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 or the Fund Loan and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditures of the proceeds of the Credit and the Fund Loan and the goods and services financed out of such proceeds. (c) Upon the award by CMDT, BNDA or OSRP of any contract for goods, works 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 BDM, CMDT, BNDA, OSRP and the Association, BDM, CMDT, BNDA and OSRP shall each prepare and furnish to the Association and the Fund a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the -5- Project, its cost and the benefits derived and to be derived from it, the performance by BDM, CMDT, BNDA, OSRP and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit and the Fund Loan. (e) BDM, CMDT, BNDA and OSRP shall enable the Association's and the Fund's representatives to examine all plants, installa- tions, sites, works, buildings, property and equipment of BDM, CMDT, BNDA and OSRP and any relevant records and documents. Section 2.06. BDM, CMDT, BNDA and OSRP shall duly perform all their obligations under the Grant Agreements and the Subsid-- iary Loan Agreement, respectively, and the Accord Coton. Except as the Association shall otherwise agree, BDM, CMDT, BNDA and OSRP shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Grant Agreements or the Subsidiary Loan Agreement or the Accord Coton, as the case may be, or any provision thereof. Section 2.07. (a) BDM, CMDT, BNDA and OSRP shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of their obligations under this Agreement, the Accord Coton, the Grant Agreements and the Subsidiary Loan Agreement, respectively, and other matters relating to the purposes of the Credit and the Fund Loan. (b) BDM, CMDT, BNDA and OSRP shall promptly inform the Association of any condition wiich interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit or the Fund Loan, or the performance by BDM, CMDT, BNDA and OSRP of their obligations under this Agreement, the Accord Coton, the Grant Agreements and the Sub- sidiary Loan Agreement, as the case may be. Section 2,08. CMDT shall not engage in any activity, in addition to the carrying out of the Project, which shall in- volve in the aggregate expenditures equivalent to more than MF 100,000,000 (one hundred million Mali Francs) per year, in- cluding medium-term credits referred to in Section 3.07 of this Agreement, unless the nature of and financing for such activities has been acceptable to the Association and the Borrower. - 6 - ARTICLE III Management and Operations of BDM, CMDT, BNDA and OSRP Section 3.01. BDM, CMDT, BNDA and OSRP shall carry on their operations and conduct their affairs in accordance with sound administrative, financial, engineering, agricultural and indust- rial practices with qualified and experienced management. Section 3.02. CMDT, BNDA and OSRP shall at all times operate and maintain their plant, machinery, rolling stock and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial, industrial and agricultural practices. Section 3.03. CMDT, BNDA and OSRP shall take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.04. CMDT shall add to the price payable by purchasers of seasonal inputs sold on credit terms a commission which shall be equivalent to not less than 15% of the cash price which the purchasers would have had to pay had the sale or sales been made on strictly cash terms. Section 3.05. CMDT shall pay to AVs in the Project Area: (i) during the cotton marketing season, a fee for services related to the primary marketing of cotton, such fee corresponding to CMDT's budgetary allocation for similar activities undertaken by CMDT; (ii) a commission equal to 3% of the cash price of fertilizers and pesticides sold by the AVs to their individual members on a cash basis; and (iii) a commission equal to 2.5% of all outstand- ing seasonal input advances recovered in full by the AVs for CMDT. Section 3.06. CiDT shall continue to maintain arrangements in its agreements with BNDA, Direction de l'Hydraulique et de l'Energie, Direction Nationale de 1'Elevage and Institut d'Economie Rural for the execution of Parts F, K, C and I of the Project, respectively, and, except as the Association shall otherwise agree, shall not assign, amend, abrogate or waive the said agreements or any provision therof. - 7- Section 3.07. Except as the Borrower and the Association shall otherwise agree, CMDT shall not make, after the date of signature of this Agreement, any medium-term credits to farmers or AVs. Section 3.08. CMDT shall maintain, in a form with functions and staffing satisfactory to the Association, its central monitoring and evaluation unit. The said unit shall be under CMDT's Project Coordinator and shall include in its functions the preparation of the Project completion report required under Section 2.05 (d) of this Agreement in accordance with guidelines satisfactory to the Association. Section 3.09. CMDT shall: (a) not later than March 31, 1984, carry out the studies referred to in: (i) Part A (1) (b) (ii); (ii) Part F (3); and (iii) part D (2) of Schedule 2 to the Development Credit Agreement; and (b) not later than June 30, 1984, review the results of the studies referred to in paragraph (a) of this Section with the Borrower and the Association. Section 3.10. CMDT shall: (a) not later than March 31, 1985, carry out the study referred to in Part A (2) (b) of Schedule 2 to the Development Credit Agreement; and (b) not later than June 30, 1985, review the results of the study referred to in paragraph (a) of this Section with the Borrower and the Association. Section 3.11. CMDT shall: (a) not later than March 31, 1984, carry out the study referred to in Part E (3) of Schedule 2 to the Development Credit Agreement; and (b) not later than June 30, 1984, exchange views on the results of the study with the Borrower and the Association. Section 3.12. Until the review of the study referred to in Section 3.11 of this Agreement has been completed, CMDT shall not purchase or import, except for its own use, any tractors in addition to those already purchased or imported prior to the date of execution of this Agreement. - 8 - Section 3.13. The OSRP shall: (a) not later than Septem- ber 30, 1985, prepare the study referred to in Part A (1) (b) (i) of Schedule 2 to the Development Credit Agreement; (b) not later than December 31, 1985, review with the Borrower and the Association conclusions and recommendations of the study referred to in paragraph (a) of this Section; and (c) not later than March 31, 1986, furnish to the Borrower and the Association a plan of action satisfactory to the Borrower and the Association for the carrying out of the recommendations of the study referred to in paragraph (a) of this Section. ARTICLE IV Financial Covenants Section 4.01. (a) CMDT, BNDA and OSRP shall maintain records and separate accounts adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition, including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account or the Fund Loan Account on the basis of statements of expenditure. (b) CMDT, BNDA and OSRP shall retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account or the Fund Loan Account on the basis of statements of expenditure, and shall enable the Association's and the Fund's representatives to examine such records. Section 4.02. CMDT, BNDA and OSRP shall: (a) have their 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 independent auditors acceptable to the Association; (b) furnish to the Association and the Fund as soon as available, but in any case not later than six months after the end of each such year, (i) certified copies of its financial -9 - statements for such year as so audited, (ii) quarterly progress reports of their operations, and (iii) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including, without limitation to the foregoing, separate opinions by said auditors: (A) on the separate accounts referred to in Section 4.01 (a) of this Agreement; and (B) in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Credit and the Fund Loan made avail- able to it and withdrawn from the Credit Account and the Fund Loan Account, respectively, on the basis of statements of expenditure have been used for the purpose for which they were provided; and (c) furnish to the Association such other information concerning said accounts, financial statements, records and expenditures, as well as the audit thereof, as the Association shall from time to time reasonably request. Section 4.03. In the carrying out of Part F of the Project, BNDA shall, follow lending policies and monitoring and super- vision guidelines satisfactory to the Association, including, inter alia, the lending terms and conditions set forth in Schedule 2 to this Agreement. Section 4.04. Except as the Association shall otherwise agree, BNDA shall not incur any debt, if after the incurrence of such debt the aggregate principal amount of debt of BNDA then incurred and outstanding would be greater than 10 times the equity of BNDA. For the purposes of this Section: (a) The terms "debt" means any indebtedness of BNDA maturing by its terms more than one year after the date on which it is originally incurred. (b) Debt shall be deemed to be incurred: (i) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date of such contract, agreement or instrument; and (ii) under a gua- rantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent that the guaranteed debt is outstanding. (c) The term "equity of BNDA" means the sum of the total unimpaired paid-up capital, retained earnings and reserves of BNDA not allocated to cover specific liabilities. - 10 - (d) Whenever, for the purpose of this Section, it shall be necessary to value in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable on the basis of a rate of exchange satisfactory to the Association. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement or the Fund Loan Agreement becomes effective, whichever shall be earlier. Section 5.02. (a) This Agreement and all obligations of the Association, BDM, CMDT, BNDA and OSRP thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 20 years after the date of this Agreement. (b) If the Developmunt Credit Agreement terminates in accordance with its terms bofore the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BDM, CMDT, BNDA and OSRP of this event. (c) If either the Development Credit Agreement, or the Fund Loan Agreement, terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section and the other Agreement remains in force, all obligations under this Project Agreement of BDM, CMDT, BNDA and OSRP and of the other lender under that other Agreement shall remain in force. (d) If the Association shall notify BDM, CMDT, BNDA and OSRP that its appointment as Cooperating Institution under the Fund Loan Agreement has terminated, all references in this Agreement to the Fund, to the Fund Loan and to the Fund Loan Agreement shall, with respect to the responsibilities of the Association as such Cooperating Institution, be deemed to be deleted. - 11 - Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand against a receipt or by mail, telegram, cable, telex or radiogram, to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: 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) For CMDT: Compagnie Malienne pour le Developpement des Textiles B. P. 487 Bamako, Republic of Mali Cable address: Telex: CIMATEX 972554 Bamako - 12 - For BNDA: BNDA B.P. 2424 Bamako Mali For OSRP: OSRP B.P. 2070 Bamako Mali Telex: ~ 972442 For BDM: BDM B.P. 94 Bamako Mali Telex: 522 or 535 Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement (i) on behalf of CMDT may be taken or executed by its General Manager or such other person, or persons as the Gen- eral Manager shall designate in writing, (ii) on behalf of BNDA may be taken or executed by its General Manager or such other person or persons as the General Manager shall designate in writ- ing, (iii) on behalf of OSRP may be taken by its General Manager or such other person or persons as the General Manager shall designate in writing, and (iv) on behalf of BDM may be taken by its General Manager or such other penson or persons as the General Manager shall designate in writing, and BDM, CMDT, BNDA and OSRP shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. - 13 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Western Africa COMPAGNIE MALIENNE POUR LE DEVELOPPEMENT DES TEXTILES By / Authorized Representative BANQUE NATIONtT E POUR LE DEVELOPPEMENT AGRICOLE By Authorized Representative OFFICE POUR LA STABILISATION ET POUR LA REGULARISATION DES PRIX By / Authorized Representative BANQUE DE DEVELOPPEMENT DU MALI By / Authorized Representative - 14 - SCHEDULE 1 Procurement A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the current edition of 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 international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, CMDT 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 publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. CMDT shall provide the necessary information to update such notice annually so long as any goods or works 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 com- petitive 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; (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; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall 'be included. - 15 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, goods manufactured in Mali may be granted a margin of preference in accordance with, and subject to, the following provisions: 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 Mali if the bidder shall have established to the satisfaction of CMDT and the Association that the manufacturing cost of such goods includes a value added in Mali. 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 nportation of the goods offered in - 16 - 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 coaparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category (1) of the table set forth in Schedule 1 to the Development Credit Agreement and to be procured in accordance with the procedures described in Part A of this Schedule, CMDT may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors applying for such preference shall be asked to provide, as part of the data for qualification, such informa- tion, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. 2. After bids have been received and reviewed by CMDT, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. D. Other Procurement Procedures 1. (i) contracts for civil works, other than for the drilling of wells, estimated to cost less than $500,000 equiva- lent, but in the aggregate not to exceed $6,300,000 equivalent; and - 17 - (ii) contracts for the purchase of vehicles, equipment and furniture, estimated to cost less than $100,000 equiva- lent, but in the aggregate not to exceed $1,800,000 equivalent; may be awarded on the basis of competitive bidding advertised locally, and in accordance with local procedures satisfactory to the Association. 2. Contracts for the purchase of agricultural equipment, rock phosphate and village equipment for Part F (1) of the Project, not to exceed in the aggregate $18,100,000 equivalent, may be procured through negotiated purchases from established and reliable suppliers, provided, however, that quotations from at least three of such suppliers are obtained unless the Association shall otherwise agree. 3. Contracts for the purchase of vehicles, materials and equipment shall be grouped, to the extent practicable, to form bidding packages estimated to cost at least $50,000 equivalent. E. 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 civil works, fertilizers and pesticides estimated to cost the equivalent of $500,000 or more, and to all contracts for vehicles and equipment estimated to cost the equivalent of $150,000 or more: (a) Before bids are invited, CMDT 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, CMDT 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, and such other - 18 - 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 CMDT 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 was 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 withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, CMDT 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 Asso- ciation 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 CMDT 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 .pulated time for performance of such contract, or issuing a hange order under such contract (except in cases of extreme u, 7) which would increase the cost of the contract by more than LI/A of the original price, CMDT 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 pro- visions of this Agreement, shall promptly inform CMDT and state the reasons for its determination. - 19 - SCHEDULE 2 Lending Terms and Conditions BNDA shall, in the Project Area, -follow lending terms and conditions set forth in this Schedule in carrying out Part F (1) and (2) of the Project. A. Purpose BNDA shall make credits to: (i) individual farmers, livestock owners, rural artisans and AVs for agricultural equipment and rock phosphate; (ii) AVs for village equipment and village investments; and (iii) AVs for agricultural equipment, work oxen and rock phosphates for lending to individual farmers. B. Eligibility In order to be eligible to receive a credit, farmers and AVs shall meet lending policies established by BNDA, satisfactory to the Association. C. Terms and Conditions 1. BNDA shall charge an annual interest rate on the amount withdrawn and outstanding under each credit of 10% in the case of credits to individual farmers and of 9% in the case of credits to AVs or any other rates to be determined by the Borrower and the Association, pursuant to Section 4.03 of the Development Credit Agreement. 2. For individual credits for agricultural equipment and work oxen, individual farmers shall be required to provide: (i) at least 5% in cash of the total cost of inputs financed under such credits, in case of farmers who are making initial purchase of such equipment and oxen; and (ii) at least 20% of which at least 5% in cash, in case of other individual farmers. 3. For credits for the purchase of village equipment, AVs shall be required to provide at least 20% of the total cost of items financed under such credits, of which at least 5% in cash. 4. Credits for agricultural equipment shall be repaid in equal installments over a period of up to four years with no grace period. - 20 - 5. Credits for rock phosphate shall be repaid in equal install- ments over a period of up to three years including an adequate grace period which will not exceed one year. 6. Credits for village equipment shall be repaid in equal in- stallments over a period of not less than three years, but not to exceed seven years with no grace period. 7. Notwithstanding paragraph C (1) and (2) and (4) above, credits for the purchase of tractors shall be made on terms and conditions satisfactory to the Association upon review of the study referred to in Section 3.11 (a) of this Agreement. 8. BNDA shall enable the Association's and the Fund's repre- sentatives to examine all goods financed under the credits referred to in paragraph A of this Schedule and any relevant records and documents. 9. BNDA shall have the right to suspend or terminate access by the borrowers to the use of the proceeds of the credits if the borrowers fail to .perform any of their obligations under the respective credit agreements. 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 3 day of J_ t_ 198 . FOR SECRETARY