Ghana - Road Rehabilitation And Maintenance Project : Credit 1601 - Credit Agreement - Conformed

OFFICIALTREDIT NUMBER 1601 GH iDOCUMENTS Development Credit Agreement (Road Rehabilitation and Maintenance Project) between REPUBLIC OF? GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1985 CREDIT NUMBER 1601 GH DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated )A.- , 1985, between REPUBLIC OF GHANA (th&orrower and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) Part A of the Project will be carried out by the Ghana Highway Authority with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Ghana Highway Authority part of the proceeds of the Credit as provided in this Agreement; (C) Part C of the Project will be carried out by the Bank for Housing and Construction with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Bank for Housing and Construction part of the proceeds of the Credit as provided in this Agreement; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreements of even date herewith between the Association and, respectively, the Ghana Highway Authority and the Bank for Housing and Construction; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The General Conditions Applicable to Develop- ment Credit Agreements of the Association, dated January 1, 1985, with the modifications set forth in Schedule 5 to this Agreement (the General Conditions), constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions have the respec- tive meanings therein set forth and the following additional terms have the following meanings: -2- (a) "GHA Project Agreement" means the agreement between the Association and the Ghana Highway Authority of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the GHA Project Agreement; (b) "BHC Project Agreement" means the agreement between the Association and the Bank for Housing and Construction of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the BHC Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into. between the Borrower and BHC pursuant to Sec- tion 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (d) "GRA" means Ghana Highway Authority, a body corporate with perpetual succession and common seal, established and opera- ting under Ghana Highway Authority Decree, 1974 (N.R.C.D. 298) of the Borrower, as amended to the date of this Agreement; (e) "BHC" means Bank for Housing and Construction, estab- lished pursuant to the Bank for Housing and Construction Decree, 1972 (N.R.C.D. 135) of the Borrower, as amended to the date of this Agreement; (f) "Investment Project" means: (i) road rehabilitation and maintenance works to be carried out by contractors under Parts A.2 and B.2 of the Project; (ii) aggregates to be produced by quarry operators for said road rehabilitation and maintenance works; or (iii) the acquisition by Plant Pool of equipment and materials to be made available to contractors and quarry opera- tors through sale or hire, all, except as the Association may otherwise agree, for the purposes of carrying out Parts A.2 and B.2 of the Project; and "free-limit Investment Project" means an Investment Project requiring procurement of equipment, spare parts, supplies and consumables under Category 3 (a) of the table in paragraph 1 6f Schedule 1 in an amount less than $50,000 equivalent which, together with amounts previously financed for the same Investment Project and not repaid, shall not exceed in the aggregate the equivalent of $100,000 and which, when added to all other free-limit Investment Projects to be financed out of the proceeds of the Credit, shall not exceed in the aggregate the equivalent of $1,500,000; (g) "Investment Enterprise" means an enterprise to which BHC proposes to make or has made a loan for an Investment Project; (h) "Cedis" means the currency of the Borrower; (i) "foreign currency" means any currency other than the currency of the Borrower; (j) "Subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by BHC or by any one or more of its subsidiaries; (k) "Plant Pool" means Plant Pool, Ltd., a Subsidiary of BHC; (1) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (m) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated July 31, 1981 and August 17, 1981 between the Borrower and the Association; (n) "Decree" means the Bank for Housing and Construction Decree, 1972 (N.R.C.D. 135) of the Borrower, as amended to the date of this Agreement; (o) "By-laws" means the by-laws of BHC, approved by its Board of Directors on November 29, 1973, as amended to the date of this Agreement; (p) "PMU" means the project management unit to be established by the Borrower pursuant to Section 3.04 (a) of this Agreement; (q) "MRH" means the Borrower's Ministry of Roads and Highways; and (r) "DFR" means the Department of Feeder Roads of MRH. -4- ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to forty million four hundred thousand Special Drawing Rights (SDR 40,400,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to-time by agreement between the Borrower and the Asso- ciation, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods, works and services required for the Project and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in U.S. dollars a special account in a coimner- cial bank on terms and conditions satisfactory to the Associa- tion. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. (c) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be June 30, 1990 or such later date as the Association shall establish. The Asso- ciation 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. -5- (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. Commitment charges and service charges shall be payable semiannually on May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 1 and November 1 commencing November 1, 1995, and ending May 1, 2035. Each installment to and including the installment payable on May 1, 2005 shall be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower 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 Part B of the Project through MRH and DFR, and shall coordinate all Parts of the Project through PMU, all with due diligence and efficiency and in conformity with appropriate administrative, financial, and engineering practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without any limitation upon any of its other obliga- tions under this Agreement, the Borrower shall cause GRA and BHC to perform in accordance with the provisions of, respectively, the GHA Project Agreement and the BHC Project Agreement, all the obligations of GHA and BHC therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appro- priate to enable GHA and BHC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall relend the proceeds of the Credit withdrawn under Sub-category 3 (a) of the table in paragraph 1 of Schedule 1 to this Agreement to BHC under a subsidiary loan agreement to be entered into between the Borrower and BHC, under terms and conditions which shall have been approved by the Asso- ciation and which shall include, inter alia, (i) interest at 12% p.a. or such other rate as may be agreed upon between the Borrower, BHC and the Association, (ii) repayment over 12 years, including 3 years of grace, (iii) on-lending by BHC at 20% p.a. with repayment over maximum 12 years, or on such other terms as may be agreed upon between the Borrower, BHC and the Association, and (iv) the Investment Enterprises to assume the foreign ex- change risk until repayment to BHC and the Borrower to assume the foreign exchange risk thereafter. (d) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the pur- poses of the Credit, and except as the Association shall other- wise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. (e) The Borrower shall make the proceeds of the Credit withdrawn under Category (1) and Sub-categories 3 (b), (c) and (d) of the table in paragraph 1 of Schedule 1 to this Agreement available to GHA and BHC, respectively, on a grant basis. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this AgtNeement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to -7- insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of Part A of the Project shall be carried out by GHA pursuant to Section 2.03 of the GHA Project Agreement and in respect of Part C of the Project by BHC pursuant to Section 2.05 of the BHC Project Agreement. Section 3.04. For the purposes of ensuring overall coordina- tion and administration of the Project, including coordination and facilitation of all procurement under the Project, provision of technical assistance to MRH, GRA, DFR, road contractors and quarry operators, operation of the Special Account, and prepara- tion of quarterly consolidated progress reports, the Borrower shall establi3h an autonomous project management unit, adminis- tered by MRH, in accordance with terms of reference acceptable to the Association. Section 3.05. As from January 1, 1988, the Borrower, through MRH or any agencies under MRH's overall supervision, shall, other than for force account operations, contract for all new road rehabilitation and periodic maintenance works on the basis of local competitive bidding procedures acceptable to the Association. Section 3.06. (a) The Borrower shall cause PMU, not later than one month before the start of each calendar quarter, to prepare and submit to the Association for its approval in respect of that quarter a work program for GHA and DFR, together with an estimate of expenditures. (b) Without limitation upon the generality of the provisions of Section 3.01 of this Agreement, the Borrower shall, not later than one month before the start of each calendar quarter, furnish to GHA and DFR an amount in Cedis which, together with the Cedi resources then available to each of these agencies, will enable it to meet its estimated expenditures on its Part of the Project during such quarter. Section 3.07. The Borrower shall cause MRH and DFR to carry out Part B.2 of the Project in accordance with the Borrower's Report entitled "Road Rehabilitation and Maintenance Programme: Pilot Feeder Roads Project" dated March 1985, as such Report may be amended in agreement with the Association. -8- Section 3.08. The Borrower shall take out and maintain with responsible insurers insurance on DFR's warehoused spare parts against such risks and in such amounts as shall be consistent with appropriate practice, including reinsurance abroad so as to ensure that any indemnity shall be payable in a freely usable currency. Section 3.09. Without limitation upon the generality of Section 3.01 of this Agreement, the Borrower shall ensure that fuel financed out of the proceeds of the Credit shall be avail- able in sufficient quantities to carry out the works required under the Project and the Borrower shall, to this end, make such special purchase and distribution arrangements as may be neces- sary during times of general fuel shortage. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained separate accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures of PMU in respect of the Project and of MRH and DFR in respect of Part B of the Project. (b) The Borrower shall cause to be provided to PMU summary accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of GHA, BHC and of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (c) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section, including the Special Account, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than four months after the end of each such year, a certified copy of the report of such audit by the said auditors, of such 9- scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the said accounts and the audit thereof and said records as the Association shall from time to time reasonably request. (d) For all expenditures with respect to which withdrawals are requested from the Credit Account on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (c) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by the said auditors as to whether the proceeds of the Credit withdrawn in respect of such e,tpenditures have been used for the purpose for which they were provided. Section 4.02. The Borrower shall reorganize MRH and its agencies in accordance with a plan of action acceptable to the Association. Section 4.03. The Borrower shall take all necessary measures: (i) to adjust unit rates under existing road mainte- nance or rehabilitation contracts by December 31, 1985 to reflect devaluations and price increases since January 1, 1983; and (ii) to provide, as from January 1, 1986, for automatic adjustment of contractors' unit rates for road works reflecting changes in exchange rates or prices in accordance with a formula acceptable to the Association. - 10 - Section 4.04. The Borrower shall cooperate with BHC to ensure that BHC: (i) will adopt an action program acceptable to the Association by September 30, 1985 for strengthening its financial condition and operational and financial management capabilities, and (ii) will be able to carry out such action program with due diligence and efficiency. Section 4.05. The Borrower shall: (i) review annually with the Association during the 1985-1990 period the Borrower's annual investment program for the transport sector for the three years subsequent to the year of the review, beginning with the 1986-88 period, including detailed physical work programs and projects in all transport modes; and (ii) monitor jointly with the Association -the execution of said investment programs at six-monthly intervals, Section 4.06. For the purpose of mobilizing resources for road maintenance requirements, the Borrower shall: (i) establish a tax on diesel and gasoline fuel at a level satisfactory to the Association; (ii) establish on terms and conditions satisfactory to the Association, a separate fund into which all proceeds of said tax will be deposited and which will only be drawn down for the purposes of defraying road maintenance expenses; and (iii) carry out and complete before December 31, 1985, a study on the structure and adequacy of road user charges with the objective of attaining coverage of not less than 50% of the cost of annual periodic road maintenance requirements as from January 1, 1991. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) GHA shall have failed to perform any of its obligations under the GRA Project Agreement or BHC shall have failed to per- form any of its obligations under the BHC Project Agreement or the Subsidary Loan Agreement. (b) As a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that GHA or BHC will be able to perform its obligations under, respectively, the GHA Project Agreement or the BHC Project Agreement. - 11 - (c) The Ghana Highway Authority Decree, 1974, as amended, or the Decree or By-laws of BHC shall have been amended, sus- pended, abrogated, repealed or waived so as to affect materially and adversely the operations or financial condition of GHA or BHC or the ability of GHA or BHC to perform any of its obligations under, respectively, the GHA Project Agreement or the BHC Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of GHA, BHC or Plant Pool or for the suspension of the operations of any one of them. (e) BHC shall be unable to pay its debts as they mature or any action or proceeding shall have been undertaken whereby any of the property of BHC shall or may be distributed among its creditors. (f) Any part of the principal amount of any loan to BHC having an original maturity of one year or more shall, in accor- dance with its terms, have become due and payable in advance of maturity or any security for any such loan shall have become enforceable. (g) A Subsidiary or any other entity shall have been created or acquired or taken over by BHC, if such creation, acquisition or taking over would adversely affect the conduct of BHC's business, its financial situation, the efficiency of its management and personnel or the carrying out of Part C of the Project. Section 5.02. For the purposes of Section 7.01 (d) of the General Conditions, the following additional events are speci- fied: (a) the events specified in paragraph (a) or (g) of Sec- tion 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and (b) the events specified in paragraphs (c), (d), (e) or (f) of Section 5.01 of this Agreement shall occur. - 12 - 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: (a) the road user tax and the separate fund referred to in Section 4.06 of this Agreement have been established in accor- dance with the provisions of that Section; and (b) the consultants for PMU referred to in Section II of Schedule 3 of this Agreement have been employed in accordance with the provisions of said Section. Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely that the GHA Project Agreement has been duly authorized or ratified by GHA and is legally binding upon GHA in accordance with its terms. Section 6.03. The date 120 days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Sections 4.03 and 4.05 of this Agreement and the provisions of paragraphs (d), (e), (f) and (g) of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on the date 12 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Provisional National Defence Council Secretary for Finance and Economic Planning 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: - 13 - For the Borrower: The Provisional National Defence Council Secretary Ministry of Finance and Economic Planning P. 0. Box M 40 Accra, Ghana Cable address: ECONOMICOM For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 GHANA By U Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION Regional Vice President Western Africa - 14 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) For Part A of the Project (GHA): (a) Equipment and 6,050,000 materials (i) directly 100% of foreign imported expenditures (ii) locally 70% procured (b) Civil works (1) by force 2,220,000 16% account (ii) by contract (A) bridge 5,040,000 100% of foreign rehabi- expenditures and litation 50% of local ex- penditures (B) other 5,040,000 16% (c) Consultants' 4,840,000 100% services, train- ing, and studies - 15 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (d) Reinsurance 100,000 100% of foreign of warehoused expenditures spare parts (2) For Part B of the Project (MRH, DFR): (a) Equipment and 1,310,000 materials (i) directly 100% of foreign imported expenditures (ii) locally 70% procured (b) Civil works (i) by force 310,000 60% account (ii) by contract 2,020,000 60% (c) Consultants' 1,920,000 100% services, training and studies (d) Reinsurance of 100,000 100% of foreign warehoused expenditures spare parts (3) For Part C of the Project (BHC): (a) Equipment and 5,240,000 materials (i) directly 100% of foreign imported expenditures (ii) locally 70% procured - 16 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (b) Office equipment 510,000 and vehicles (i) directly 100% of foreign imported expenditures (ii) locally 70% procured (c) Consultants' 510,000 100% services and training (d) Reinsurance of 100,000 100% of foreign warehoused expenditures spare parts (4) Refunding of Pro- 1,020,000 Amount due pur- ject Preparation suant to Section Advance 2.02 (c) of this Agreement (5) Unallocated 4,070,000 TOTAL 40,400,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any couiltry other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (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; and (c) the term "equipment" includes vehicles and the term "materials" includes spare parts, fuel, and other consumable inputs. - 17 - 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 500,000, may be made in respect of Sub-category 1 (c) on account of payments made for expenditures before that date but after September 1, 1984; (b) Category (3) unless: (i) the Association has received evidence satisfactory to it that the Subsidiary Loan Agreement has been duly executed on behalf of the Borrower and BHC; and (ii) the Association has received an opinion or opinions satisfactory to it, stating that the BHC Project Agreement and the Subsidiary Loan Agree- ment have been duly authorized or ratified by BHC and, with respect to the Subsidiary Loan Agree- ment, the Borrower, and are legally binding upon BHC and, with, respect to the Subsidiary Loan Agreement, the Borrower, in accordance with their terms; and (c) Sub-category 3 (a) unless: (i) the conditions specified in sub-paragraph (b) immediately above have been satisfied; and (ii) (A) the Investment Project has been approved by the Association and any expenditures there- for, if such expenditures have already been incurred, have been made less than ninety days prior to the date on which the Associa- tion shall have received the application and information required by Section 2.02 (b) of the BHC Project Agreement, or (B) the Investment Project is a free-limit Investment Project for which the Association has authorized withdrawals from the Credit Account and any expenditures therefor, if such expenditures have already been incurred, - 18 - have been made less than ninety days prior to the date on which the Association shall have received the request and information required by Section 2.02 (c) of the BHC Project Agreement. - 19 - SCHEDULE 2 Description of the Project The objective of the Project is to remove key road transport obstructions to export/import trade and to movement of domestic farm inputs and outputs. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: GHA 1. Strengthening of GHA and of road contractors and quarry operators through training, technical assistance, studies and through an incentive program for GHA employees. 2. Execution of a three-year tranche of the Borrower's road rehabilitation and maintenance program. 3. Rehabilitation or reconstruction of about 15 major bridges in critical disrepair and establishment and initial operation of a bridge maintenance unit. 4. Rehabilitation of about 105 km of the Accra-Kumasi highway. Part B: MRH and DFR 1. Strengthening of MRH and DFR through training and techni-- cal assistance and through an incentive program for MRH and DFR employees. 2. Execution of a pilot feeder road program consisting of the rehabilitation of approximately 240 km of feeder roads in the Sefwi-Wiawso district * and spot improvements and maintenance in the Western, Ashanti and Brong Ahafo regions. Part C: BHC 1. Financing of the acquisition of equipment, materials and spare parts by contractors, quarry operators and Plant Pool. - 20 - 2. Improvement of BHC's organization, operations and financial management. The Project is expected to be completed by December 31, 1989. - 21 - SCHEDULE 3 Procurement Section I. Procurement of Goods and Works Part A. International Competitive Bidding 1. Except as provided in Part D hereof, works for Part A.3 of the Project and goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guidelines). 2. (a) Contracts will be grouped to the maximum extent practicable to allow bulk procurement. (b) Goods shall be exempted from pre-shipment price inspection by a third-party inspection firm. (c) Bidders for works for Part A.3 of the Project shall be pre-qualified. Part B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A.1 hereof, goods manufactured in Ghana may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C. Preference for Domestic Contractors In the procurement of works in accordance with the proce- dures described in Part A.1 hereof, the Borrower may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part D. Other Procurement Procedures 1. As from January 1, 1988, new contracts for works to be carried out under Parts A.2 and B.2 of the Project shall be procured on the basis of local competitive biddiLig in accordance - 22 - with procedures acceptable to the Association. Prior to that date, such works may be procured on the basis of direct contracting. 2. Contracts for goods estimated to cost less than $50,000 equivalent may be procured on the basis of local competitive bidding in accordance with procedures acceptable to the Association, provided that the aggregate amount of such contracts shall not exceed $1,000,000 equivalent. 3. Equipment and spare parts of a proprietary nature or subject to standardization may be procured on the basis of price quotations from at least three suppliers, with at least two of them located -outside of Ghana. 4. Works under Part A.2 of the Project that can properly be carried out by GHA's mobile maintenance units, works for spot improvements and maintenance under Part B.2 of the Project, and construction and renovation of buildings may be carried out by force account. Part E. Review by the Association of Procurement Decisions 1. Review of prequalification: With respect to the prequalification of bidders as provided in Part A.2 (c) hereof, the procedures set forth in paragraph 1 of Appendix 1 to the Guidelines shall apply. 2. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for goods or works estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 - 23 - of Appendix 1 to the Guidelines shall apply. Where payments for such cont'act are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 (the Special Account Schedule) to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of thia Agree- ment. 3. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist GRA to carry out Part A of the Project, MRH and DFR to carry out Part B of the Project, BHC to carry out Part C of the Project, and PMU to carry out its obligations under Section 3.04 (a) of this Agreement, GHA, BHC and the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall 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. -24- SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in paragraph 1 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 Credit allocated from time to time to Categories (1), (2) and (3) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount of US$2,000,000 which is to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except if the Association shall otherwise agree, payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to the Association that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdra- wals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible - 25 - expenditures. Each such deposit shall be withdrawn by the Association from the Credit Account under the respective Cate- gories (1), (2) or (3), 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. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made directly by the Borrower from the Credit Account in accordance with the provisions of paragraph (a) of Section 2.02 of this Agreement; or (ii) when the total unwithdrawn amount of the Credit allocated to Categories (1), (2) and (3), minus the amount of any outstanding qualified agreement to reimburse made by the Association and of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the GaeIral Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Cate- gories (1), (2) and (3) shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association 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 payments for eligible expenditures. - 26 - 6. (a) If the Association shall have determined at any time that any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE 1 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 day of , 198 . FOR SECRETARY