Turkey - Second Highway Project : Loan 2439 - Loan Agreement - Conformed

OFFJCIAL UMENTS LOAN NUMBER 2439 TU Loan Agreement (Second Highway Project) between REPUBLIC OF TURKEY and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated ,1984 LOAN NKBER 2439 TU LOAN AGREEMNT AGREEMENT, dated -'0- I , 1984, between REPUBLIC OF TURKEY (hereinafter called the Borrower) and INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Gua- rantee Agreements of the Bank, dated October 27, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agree- ments of the Bank being hereinafter called the General Condi- tions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "KGM" means the General Directorate of Highways within the Borrower's Ministry of Public Works and Resettlement; (b) "Project Team" means the Project Control and Coordina- tion Team of KGM referred to in Section 3.05 of the Loan Agree- ment (Highway Rehabilitation Project) dated May 13, 1982 between the Borrower and the Bank, as the said Project Team shall be maintained pursuant to Section 3.02 of this Agreement; and (c) "Special Account" means the account to be opened and thereafter maintained pursuant to Section 2.02 (b) of this Agree- ment. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in this Agree- ment, an amount in various currencies equivalent to one hundred eighty-six million four hundred thousand dollars ($186,400,000). -2- Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Sched- ule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan and in respect of the fee specified in Section 2.05 of this Agreement. (b) The Borrower shall, for the purposes of the Project, open and thereafter maintain in dollars a special account in its Central Bank on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 5 to this Agreement. Section 2.03. Except as the Bank shall otherwise agree, pro- curement of the goods and civil works required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1991 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Bank a fee equivalent to four hundred sixty-four thousand eight hundred thirty-eight dollars ($464,838). (b) On or promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount of the said fee in such currency or currencies as the Bank shall determine. Section 2.06. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%;) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.07. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one p!r.ent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. - 3- (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six-month period commencing on each date specified in Section 2.08 of this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost" of Qualified Borrowings means the cost, expressed as a percentage per annum, as reasonably determined by the Bank, provided that the amount of $8,520.5 million referred to in (iii) (B) hereunder shall be reckoned at a cost of 10.93% per annum. (iii) "Qualified Borrowings" means (A) outstanding borrowings of the Bank drawn down after June 30, 1982; and (B) until July 1, 1985, the amount of $8,520.5 million (representing borrowings of the Bank between July 1, 1981 and June 30, 1982) less any part thereof repaid earlier than July 1, 1985. (iv) "Semester" means the first six months or the second six months of a calendar year. Section 2.08. Interest and other charges shall be payable semiannually on February 1 and August 1 in each year. Section 2.09. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project through KGM with due diligence and efficiency and in conformity with appropriate financial, administrative and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. -4- Section 3.02. In order to facilitate proper coordination and management of the execution of the Project, the Borrower shall maintain the Project Team with such organization, facilities, staff and other resources and under such terms of reference as shall be satisfactory to the Bank. Section 3.03. In order to assist the Borrower in the carry- ing out of Part C (1) of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Bank, such con- sultants to be selected in accordance with principles and proce- dures satisfactory to the Bank 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. Section 3.04. The Borrower shall: (a) review with the Bank, not later than October 31 of each year beginning with 1985, the Borrower's (i) indicative plans for the carrying out of its program to upgrade and maintain its highway network through 1988, (ii) evaluations of the investments to be undertaken under the Project, prepared in accordance with criteria and on the basis of a methodology satisfactory to the Bank, and (iii) detailtd plans for the carrying out of the works, training, studies, procurement of equipment and employment of consultants under the Project during the year following such review, together with the specifics of the budgetary allocations relating thereto; and (b) without limitation on the generality of paragraph (a) of this Section, ensure that bids for the works to be finariced out of the proceeds of the Loan under Part A of the Project shall be invited only after the Bank shall have approved such works and the specific highway sections to be constructed or rehabilitated through such works on the basis of feasibility studies, including technical and economic evaluations, which shall have been carried out by the Borrower in accordance with criteria and a methodology satisfactory to the Bank. Section 3.05. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indem- -5- nity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the purposes of the Project. Section 3.06. (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, training programs, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (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 Loan, and to disclose their use in the Project; (ii) shall enable the Bank'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 Loan and any relevant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reason- ably request concerning the Project, its cost and, where appro- priate, the benefits to be derived from it, the expenditure of the proceeds of the Loan 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 Loan, the Bank may publish a description thereof, the name and nation- ality of the party to whom the contract was awarded and the con- to tract 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 Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall rea- sonably 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 Bank of their respec- tive obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. -6- Section 3.05. The Borrower shall take or cause to be taken all nuch 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 carrying out the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are avail- able for purposes related to the Project. ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property or as security for the payment of debt incurred for the purpose of financing the purchase of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative sub- - 7 - division thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Bor- rower. Section 4.02. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Proj- ect, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, including, without limitation, separate records and accounts reflecting all expenditures on account of which withdrawals are requested from the Loan Account on the basis of statements of expenditure. (b) The Borrower shall: (i) 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 Loan account on the basis of statements of expenditure and (ii) enable the Bank's representatives to examine such records. (c) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than nine months after the end of each such year, a certi- fied copy of the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably re- quested, including without limitation to the foregoing, a separate opinion by said auditors in respect of the expenditures and records referred to in paragraph (b) of this Section as to whether the proceeds of the Loan withdrawn from the Loan Account on the basis of statement of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Bank such other information concerning said accounts, records and expenditures and the audit thereof as the Bank shall from time to time reasonably request. Section 4.03. The Borrower shall at all times cause: (a) its highway network to be maintained and all necessary repairs thereof to be made, all in accordance with appropriate and routine maintenance practices; and -8- (b) the equipment to be procured under Part C of the Project to be maintained and all necessary repairs and renewals thereof to be made, all in accordance with appropriate engineer- ing practices. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an additional condition to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Condi- tions, namely, the Special Account has been opened in accordance with the provisions of Section 2.02 (b) of this Agreement. Section 5.02. The date .9 - . 14-, 114t , is hereby specified for the purposes of Section 12.04 of the General Condi- tions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Undersecretary of the Treasury and Foreign Trade 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: Basbakanlik Hazine Ve Dis Ticaret Mustesarligi Mithapasor Caddesi No. 18 Yenisehir-Ankara Turkey Cable address: Telex: MALIYE 821-42285 (MLYE-TR) or HAZINE 821-42689 (ANK-TR) Ankara For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF TURKEY By/S Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By IS1C Lo--v G & u4'ev- Regional Vice President Europe, Middle East and North Africa - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 0 (a) Pavement works 45,000,000 60% (b) Other works 6,500,000 45% (2) Equipment and 105,700,000 100% of foreign spare parts expenditures, 100% of local expenditures (ex- factory cost) and 40% of local ex- penditures for other items pro- cured locally (3) Consultants' 2,000,000 100% services (4) Fellowships 500,000 100% (5) Initial deposit 9,000,000 Amount to be in Special withdrawn pur- Account to suant to Section prefinance 2.02 (b) of this items under Agreement Categories (1) through (4) above - 11 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) -to be Financed (6) Fee 464,838 Amount specified in Section 2.05 of this Agreement (7) Unallocated 17,235,162 TOTAL 186,400,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (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 Bank that the proceeds of the Loan shall not 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; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the dis- bursement percentage then applicable to such Category as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for ex- penditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to - 12 - finance the agreed percentage of all expenditures in that Cate- gory, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disburse- ment 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 Bank shall have reasonably determined that the pro- curement of any item in any Category 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 Loan, and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 13 - sCeDULE 2 Description of the Project The objectives of the Project are to assist the Borrower in carrying out its programs for 1985/88 to upgrade and maintain its highway network, improve highway safety and control, and develop institutional capabilities in highway planning and management, all in accordance with its National Transport Master Plan for 1983/93. The Project consists of the following Parts: Part A: Carrying out a program to construct and rehabilitate priority highway sections of the State and Provincial road systems, with particular emphasis on those sec- tions which serve the export and transit trade, includ- ing road widening, base and pavement layers, asphaltic overlays and construction of new alignments and bridges. Part B: Carrying out a program to upgrade highway mechanical services, including the provision of equipment and spare parts to be utilized in highway construction, maintenance and general services. Part C: (1) Development and application of suitable policies and procedures for pavement research and manage- ment, highway construction and maintenance, design and construction of new alignments, bridges and motorways, highway safety and equipment and spare parts inventory control and management. (2) Carrying out a training program, including the provision of fellowships, for KGM's technical staff in highway planning and management. The Project is expected to be completed by December 31, 1990. - 14- SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each February 1 and August 1 beginning February 1, 1989 through February 1, 2001 7,170,000 On August 1, 2001 7,150,000 0 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General Conditions, Section 3.04. - 15 - Premium on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.04 (b) of the General Conditions: Time of Prepayment Premium The interest rate (ex- pressed as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment multiplied by: Not more than three years .18 before maturity More than three years but not .35 more than six years before maturity More than six years but not .65 more than eleven years before maturity More than eleven years but .88 not more than fifteen years before maturity More than fifteen years 1.00 before maturity - 16 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part C 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 bid- ding 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 tha requirements of paragraphs 1.2 of the Guidelines, the Borrower shall prepare and forward to the Bank 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 Bank shall reasonably request; the Bank will arrange for the publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower 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. Bidders for the works included in Part A of the Project shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. 4. 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 ixpenditures incidental to the delivery of the - 17 - goods to the place of their use or installation shall be included. 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 the Republic of Turkey 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 the Republic of Turkey if the bidder shall have estab- lished to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in the Republic of Turkey 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 - 18 - 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. C. Other Procurement Procedures 1. Contracts for: (a) earthworks, small bridges and ancillary works estimated to cost the equivalent of $3,000,000 or less each and in the aggregate not exceeding the equivalent of $18,000,000, and (b) pavement works estimated to cost the equivalent of $3,000,000 or less each and in the aggregate not exceeding the equivalent of $9,000,000, may be procured on the basis of com- petitive bidding, advertised locally, in accordance with proce- dures satisfactory to the Bank. 2. Contracts for goods estimated to cost the equivalent of $3,000,000 or less each and in the aggregate not exceeding the equivalent of $34,000,000, may be procured on the basis of com- petitive bidding, advertised locally, in accordance with proce- dures satisfactory to the Bank. 3. Contracts for goods estimated to cost the equivalent of $20,000 or less each and in the aggregate not exceeding the equivalent of $800,000, may be procured on the basis of nego- tiated contracts with local suppliers of such goods, in accord- ance with procedures satisfactory to the Bank. D. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower shall, before qualification is invited, inform the Bank in detail of the procedures to be followed, and shall introduce such modifications in said procedures as the Associa- tion shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification shall be furnished by the Borrower to the Bank for its comments - 19 - before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Association shall reason- ably request. 2. Review of invitations to bid and of proposed awards and final contracts. With respect to all contracts for civil works estimated to cost the equivalent of $5,000,000 or more each, and for goods estimated to cost the equivalent of $750,000 or more each: (a) Before bids are invited, the Borrower shall furnish to the Bank, 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 docu- ments or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank'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 Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and compari- son of the bids received, and such other information as the Bank shall reasonably request. The Bank 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 Bank'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 Bank promptly after its execution and prior to the sub- mis3ion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, or, where payments for such contract are to be made out of the Spe- cial Account, prior to the making of the first payment out of the said Account in respect of such contract. - 20 - 3. With respect to each contract not governed by the preceding paragraph (other than contracts on account of which withdrawals are allowed from the Loan Account on the basis of statements of expenditure), the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, or, where payments for such contract are made out of the Special Account, as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 5 to this Agreement, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank 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. 4. 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 Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, 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. - 21 - SCHEDULE 5 Special Account 1. For the purposes of this Annex: (a) the term "Category" means a category of items to be financed out of the proceeds of the Loan as set forth in the table in paragraph I of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan allocated from time to time to Categories (1) through (4) in accordance with the provisions of Schedule I to this Agreement; and (c) the term "initial deposit" means an amount in dollars equivalent to the amount allocated to Category (5) and to be withdrawn from the Loan Account and deposited in the Special Account pursuant to the first sentence of paragraph 3 to this Schedule. 2. Payments out of the Special Account shall be made exclu- sively for eligible expenditures in accordance with the provi- sions of this Schedule. 3. The Bank shall, on or promptly after the Effective Date, withdraw on behalf of the Borrower from the Loan Account and deposit into the Special Account the initial deposit. Thereafter and on the basis of requests by the Borrower furnished to the Bank at such intervals as the Bank shall specify, the Bank shall further so withdraw from the Loan Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for eligible expenditures, but only to the extent that the amount of any such deposit, together with any amount remaining on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of the initial deposit. Except as the Bank may otherwise agree, each such deposit after the initial deposit shall be withdrawn by the Bank from the Loan Account under the respective Categories (1) through (4), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. - 22 - 4. Prior to or at the time of each request by the Borrower for a deposit by the Bank into the Special Account after the initial deposit, the Borrower shall furnish to the Bank in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Bank shall reasonably re- quest, showing that such payment was made for eligible expendi- tures. 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, no further deposit into the Special Account shall be made by the Bank (a) when the Bank shall have determined at any time that all further withdrawals can be made directly by the Borrower from the Loan Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement, or (b) when the total unwithdrawn amount of the Loan allocated to Categories (1) through (4) for the Project, minus the amount of any qualified agreement to reimburse made by the Bank and oi any special com- mitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the initial deposit, which- ever shall be sooner. Withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to Categories (1) through (4) for the Project shall follow such procedures as the Bank shall specify by notice to the Borrower and shall, except as the Bank shall otherwise agree, be made only after and to the extent the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making pay- ments for eligible expenditures. 6. If the Bank shall have determined at any time that: (a) any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to para- graph 2 of this Schedule, or (ii) was not justified by the evi- dence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Bank and, unless otherwise agreed by the Bank, prior to any further deposit into the Special Account by the Bank, deposit into the Special Account or, if the Bank shall so request, refund to the Bank an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or (b) any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, - 23 - the Borrower shall, promptly upon notice from the Bank, and un- less otherwise agreed by the Bank, refund to the Bank such amount then outstanding in the Special Account. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank ^hereunto this day of , 198 . FOR SECRETARY