Nepal - Technical Assistance II Project : Credit 1379 - Credit Agreement - Conformed

DIT NUMBER 1379 NEP Development Credit Agreement (Technical Assistance II Project) between KINGDOM OF NEPAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1983 CREDIT NUMBER 1379 NEP DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated &.V I , 1983, between KINGDOM OF NEPAL (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). 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 have the respective meanings therein set forth and the term "Sub-project" means a particular study or project of technical assistance to be financed out of the proceeds of the Credit. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various curren- cies equivalent to five million six hundred thousand Special Drawing Rights (SDR 5,600,000). Section 2.02. (a) Subject to paragraph (b) below the amount of the Credit may be withdrawn from the Credit Account in accord- ance with allocations of the proceeds of the Credit agreed between the Borrower and the Association pursuant to Section 3.01 of this Agreement, as such allocations 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) after the date of this Agreement in respect of the rea- sonable cost of goods and services required for the Project and agreed to be financed out of the proceeds of the Credit. -2- (b) Except as the Borrower and the Association may other- wise agree, withdrawals from the Credit Account shall be limited to: (i) services rendered by consultants or consulting firms, either contracted directly or as sub-con- tractors, one hundred per cent of expenditures; (ii) training programs, one hundred per cent of expen- ditures; (iii) equipment and materials required to carry out the Sub-projects and procured directly by the depart- ments or agencies of the Borrower responsible for carrying out the Sub-projects, one hundred per cent of "foreign expenditures", one hundred per cent of "local expenditures" ex-factory cost, and 75% of "local expenditures" for other items pro- cured locally; and (iv) one hundred per cent of foreign expenditures for overseas travel of the "Borrower's personnel" working on the Sub-projects with the consultants referred to in subparagraph (i) above, provided, however, that such overseas travel is made in con- nection with the services of such consultants. For the purposes of this sub-paragraph, "Borrower's personnel" means persons employed by the depart- ments or agencies of the Borrower responsible for carrying out the Sub-projects; provided, however, 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 ser- vices, or on the importation, manufacture, pro- curement or supply thereof. For the purposes of this Section: (A) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods and services supplied from the territory of any country other than that of the Borrower; and -3- (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. Section 2.03. The Closing Date shall be December 31, 1987 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. 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 and commitment charges shall be pay- able semiannually on March 1 and September 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 1 and September 1 commencing September 1, 1993, and ending March 1, 2033, each installment to and including the installment payable on March 1, 2003, 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. -4- ARTICLE III Description of the Project; Use of Proceeds of the Credit Section 3.01. (a) The Project for which the Credit is granted consists of the carrying out of Sub-projects selected by agreement between the Borrower and the Association, and which shall be aimed to assist the Borrower in: (i) identifying high priority Projects; (ii) the execution of Projects and other development activites; and (iii) strengthening of its institu- tions in order to develop its own capacity to undertake its development programs. (b) Sub-projects shall be selected in accordance with the criteria set forth in the Schedule to this Agreement. (c) The specific purpose and scope of each Sub-project, the method of execution thereof and the specific allocation thereto of the proceeds of the Credit shall be determined, in each case, by agreement between the Borrower and the Association. Section 3.02. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceed 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 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, the Borrower shall, cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.03. (a) Subject to the provisions of paragraph (b) of this Section, the equipment and materials to be financed under Section 2.02 (b) (ii) of this Agreement shall be procured on the basis of international competitive bidding under procedures con- mistent with those set forth in the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Cre- dits published by the Bank in March 1977" (hereinafter called the Guidelines). (b) Contracts for equipment and materials estimated to cost each less than $50,000 equivalent may be let through local pro- curement procedures satisfactory to the Association, provided - 5- that the aggregate for such contracts shall not exceed $500,000 equivalent. (c) 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 documents relating thereto, a general procure- ment notice, in such form and detail and containing such informa- tion as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to pro- vide timely notification to prospective bidders of the opportuni- ty 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. (d) In the procurement of goods in accordance with the pro- cedures described in paragraph (a) of this Section, goods manu- factured in Nepal may be granted a margin of preference in accordance with, and subject to, the following provisions: (i) 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. (ii) After evaluation, responsive bids will be classi- fied in one of the following three groups: (1) Group A: bids offering goods manufactured in Nepal 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 Nepal 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. (iii) In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall - 6 - 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 evaluated bids shaall 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. (iv) If, as a result of the comparison under paragraph (iii) 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: (1) the amount of customs duties and other import taxes which a non-exempt importer wouid have to pay for the importation of the goods offered in such group C bid; or (2) 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 (iii) is the lowest evaluated bid shall be selected. (e) For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of inter- national 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; (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. (f) Review of invitations to bid and of proposed awards and final contracts: -7- With respect to all contracts for equipment and materials estimated to cost the equivalent of $100,000 or more: (i) Before bids are invited, the Borrower shall fur- nish to the Association, for its comments, the text of the invitations to bid and the specifica- tions 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. (ii) 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 re- ceived, and such other iniOrmation as the Associa- tion shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the provisions of this Agreement, promptly inform the Borrower and state the reasons for such determination. (iii) 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. (iv) Two conformed copies of the contract shall be fur- nished to the Association promptly after its exe- cution and prior to the submission to the Associa- tion of the first application for withdrawal of funds from the Credit Account in reapect of such contract. (g) With respect to each contract not governed by-para- graph (f) of this Section, the Borrower shall furnish to the Association, promptly after its execution and prior to the sub- mission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such con- tract, two conformed copies of such contract, together with the -8- analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably re- quest. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or with the provisions of this Agreement, promptly inform the Borrower and state the reasons for such determination. (h) Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion 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 10% 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 pro- visions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. Section 3.04. If the Association shall have reasonably determined that the procurement of any item under a Sub-project is inconsistent with the procedures set forth or referred to in this Agreement, no expenditure for such item shall be financed out of the proceeds of the Credit, and the Association may, with- out in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Bcrrower, 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. ARTICLE IV Execution of the Project Section 4.01. (a) The Borrower shall carry out the Project, and cause its ministries and agencies responsible for carrying out each Sub-project to carry out the respective Sub-project, all with due diligence and efficiency and in conformity with appro- priate administrative, financial and economic practices, and shall provide, promptly, as needed, the funds, facilities, ser- vices and other resources required for the purpose. (b) The Borrower shall vest in its Ministry of Finance the responsibility for: (i) ensuring effective coordination among the ministries and agencies of the Borrower concerned in the execu- tion of the Project, and (ii) monitoring the execution of the Project. -9 - (c) For purposes of the overall coordination and monitoring of the Project, the Borrower shall: (i) establish the position of Project Coordinator within its Ministry of Finance; and (ii) appoint and, thereafter maintain in service an officer whose qua- lifications, experience and terms of reference shall be satis- factory to the Association. (d) For each Sub-project the Borrower shall establish arrangements and procedures, satisfactory to the Association, for supervising and directing the work of any consultant employed therefor, and for reviewing the reports and recommendations of such consultant. Section 4.02. (a) For the purpose of carrying out each Sub-project which requires the employment of consultants, the Borrower shall enter into a contract, pursuant to the -tandard consultants contract provided for in Section 4.06 of this Agree- ment, with consultants whose qualifications, experience, terms of reference, and terms and conditions of employment shall be satis- factory 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 Con- sultants by World Bank Borrowers and by the World Bank as Exe- cuting Agency" published by the Bank in August 1981. (b) The Borrower shall not amend or waive any of the terms and conditions of the contract entered into by the Borrower with a consultant for purposes of any Sub-project, or suspend payments under any such contract, or terminate any such contract, or grant any material extension of time of any such contract, or grant any material extension of time or any approval of sub-contracts or modifications thereof, or agree to substitution of personnel of such consultants, or sub-contractors, without the prior approval of the Association. (c) The Borrower shall take all reasonable measures to facilitate the work of consultants in the performance of their services for the Project and make available to them all informa- tion relevant to the Sub-project involved. Section 4.03. For each Sub-project, except as the Associa- tion may otherwise agree, the Borrower shall submit the following to the Association for its approval: (a) a detailed description of the studies and work to be carried out in connection with the proposed Sub-project, includ- ing a time schedule for, the purposes and objectives of, and the benefits expected from such Sub-project; - 10 - (b) the selection procedures, qualifications, terms of reference and duration of service for any consultants to be engaged in carrying out the proposed Sub-project; (c) description of the role of the department or agency or personnel of the Borrower to be responsible for the execution of the proposed Sub-project; (d) description of amenities to be supplied by the Bor- rower, including office space, supplies, domestic transpoftation, secretarial services, counterpart staff, and other operational facilities required for the Sub-projects to proceed efficiently and to permit the Borrower's staff to develop their expertise; and (e) estimated foreign and local costs of the proposed Sub- project broken down by major items and showing amounts to be financed out of the proceeds of the Credit, and amounts to be financed by the Borrower from other sources, respectively, and an estimated disbursement schedule. Section 4.04. (a) The Borrower shall furnish to the Associa- tion, as soon as available, copies of the documents prepared by the consultants employed pursuant to Section 4.02 (a) of this Agreement, including reports and drafts thereof, in such number as the Association shall reasonably request. (b) The Borrower and the Association shall from time to time exchange views with respect to the evaluation and possible implementation of the recommendations and other conclusions con- tained in the documents referred to in paragraph (a) of this Sec- tion. (c) The Borrower shall: (i) maintain, or cause to be main- tained records and procedures adequate to record and monitor the progress of the Project and of each Sub-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, and to disclose their use in the Project; (ii) enable the Asso- ciation's representatives to inspect any records and documents relevant to the Project, including records and documents which the consultants employed by the Borrower shall be required to keep for the purposes of the Project; and (iii) furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Credit and the Project. - 11 - (d) The Borrower shall, 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, 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 ini- tial 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 Devel- opment Credit Agreement and the accomplishment of the purposes of the Credit. . (e) Without limitation to the provisions of this Section, the Borrower shall, through its Ministry of Finance, furnish to the Association quarterly reports of such scope and in such detail as the Association shall reasonably request, on the pro- gress of each Sub-project, including the costs and benefits derived and to be derived from them, and the performance of the Borrower, its respective ministries and agencies and the Associa- tion of their respective obligations under this Agreement, and the performance of the Borrower, its respective ministries and agencies and the consultants of their respective obligations under the agreements entered into pursuant to Section 4.02 (a) of this Agreement. For such purposes, the Borrower shall cause its ministries and agencies responsible for carrying out Sub- projects, to furnish to the Borrower's Ministry of Finance all such information as shall be required for preparing such quar- terly reports. Section 4.05. (a) The Borrower shall maintain or cause to be maintained records and separate accounts adequate to reflect in accordance with consistently maintained sound accounting prac- tices the operations, resources and expenditures, in respect of each Sub-project, of the department or agency of the Borrower responsible for carrying out each Sub-project. (b) The Borrower shall cause its departments or agencies responsible for carrying out each Sub-project: (i) to have their accounts and, if applicable, their financial statements (balance sheets, statements of income and expenses and related state- ments), in respect of the Project for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) to furnish to the Association, as soon as available, but in any case not later than six months after the end of each such year, (A) the report of such audit by such auditors, of such scope and in such detail as the Association shall have reasonably - 12 - requested, and, if applicable, (B) certified copies of the finan- cial statements for such year as so audited; and (iii) to furnish to the Association such other information concerning the accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. Section 4.06. The Borrower shall, not later than March 31, 1984, prepare and furnish to the Association for its review and comments, a draft standard contract for the employment by the Borrower of individual consultants and consulting firms, and, thereafter, taking into account the Association's comments, if any, utilize such standard contract in the hiring of consultants' services. Section 4.07. The Borrower shall, not later than Decem- ber 31, 1983, prepare and furnish to the Association for its review and comments, a program to strengthen the local consul- tancy industry of Nepal, including a survey of existing firms, development of guidelines for selection and use of local consul- tants, establishment of a consultants' registry, training, semi- nars and conferences, and, thereafter, carry out such program taking into account the Association's comments, if any. ARTICLE V Additional Remedies of the Association Section 5.01. Without in any way restricting or limiting any other right, power or remedy of the Association under the Devel- opment Credit Agreement, the Association may, by notice to the Borrower, terminate in whole or in part the right of the Borrower to make withdrawals from the Credit Account on account of any Sub-project if any of the following events shall have occurred and be continuing: (a) the Borrower shall have failed to perform any covenant, agreement or obligation under this Agreement in respect of such Sub-project; (b) the contract referred to in Section 4.02 (a) of this Agreement for the employment of consultants to assist in the carrying out of such Sub-project, shall not have come into force and effect within six months from the date of the Association's approval of such Sub-project pursuant to the provisions of Sec- tion 4.03 of this Agreement; and - 13 - (c) an extraordinary situation shall have arisen which shall make it improbable that such Sub-project can be carried out in accordance with the provisions of this Agreement. 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, namely, that the position of Project Coordinator referred to in Section 4.01 (c) of this Agreement has been established and that the Project Coordinator referred to in Sec- tion 4.01 (c) of this Agreement has been duly appointed and has taken up his duties in a manner satisfactory to the Association. Section 6.02. The date e-'1y 2'ii 1983, is hereby specified for the purposes of Section 12.04 of the General Condi- tions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Secretary, Ministry 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 His Majesty's Government Kathmandu, Nepal Cable address: Telex: ARTHA 2499 NEP Kathmandu, Nepal For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 14 - Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS ,HEREOF, 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. KINGDOM OF NEPAL By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President South Asia - 15 - SCHEDULE Criteria for Sub-project Eligibility 1. A Sub-project shall be of high priority in the Borrower's development efforts and shall be one of the following: (a) a feasibility study or other investigation required for preparing projects suitable for financing by the Asso- ciation or other external financing agencies (with priority given to studies of projects believed likely to be suitable for consideration for financing by the Association); (b) technical assistance or staff training program designed to strengthen institutions in Nepal responsible for project planning and implementation, including super- vision thereof; or (c) a study to provide information required for the selec- tion of specific projects for implementation, or for improvement of overall economic planning. 2. A Sub-project should have no equally suitable financing available from the United Nations Development Program or other external financing agencies. 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 L Z day of 198 . FOR SECRETARY