Conformed Copy - L3196 - Cement Industry Restructuring Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3196 IN (Cement Industry Restructuring Project) between INDIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 13, 1990 LOAN NUMBER 3196 IN LOAN AGREEMENT AGREEMENT, dated June 13, 1990, between INDIA, acting by its President (the Borrower), and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). 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 Bank to assist in the financing of the Project; (B) the Borrower intends to obtain from Danish International Development Agency (DANIDA) a grant (the DANIDA Grant) in an amount equivalent to $5,800,000 to assist in financing Parts B and C of the Project on the terms and conditions set forth in an agreement (the DANIDA Financing Agreement) to be entered into between the Borrower and DANIDA; (C) Part A of the Project will be carried out by the Participating Companies (PCs as herein defined) with the Borrower's assistance provided through the Industrial Page 2 Credit and Investment Corporation of India Limited (ICICI as herein defined) and the Industrial Development Bank of India (IDBI as herein defined) to whom the Borrower will make available a part of the proceeds of the Loan as provided in this Agreement; (D) Parts B and C of the Project will be carried out by the Office of the Development Commissioner for Cement Industry (DCCI as herein defined), with the Borrower's assistance and, as part of such assistance, the Borrower will make available to DCCI a part of the proceeds of the Loan as provided in this Agreement; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith among the Bank and ICICI and IDBI; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 deleted (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 respective meanings therein set forth and the following additional terms have the following meanings: (a) "DCCI" means the Office of the Development Commissioner for Cement Industry of the Borrower and includes any successor thereto; (b) "ICICI" means the Industrial Credit and Investment Corporation of India Limited, a company established and existing under the laws of India; (c) "ICICI Subsidiary Loan" means the portion of the proceeds of the Loan onlent by the Borrower to ICICI pursuant to Section 3.01 (c) of this Agreement; (d) "IDBI" means the Industrial Development Bank of India, a corporation established under the Industrial Development Bank of India Act, 1964 of the Borrower, as amended to the date of this Agreement; (e) "IDBI Subsidiary Loan" means the portion of the proceeds of the Loan onlent by the Borrower to IDBI pursuant to Section 3.01 (c) of this Agreement; (f) "PC" or "PCs" mean(s) the participating company or participating companies to which ICICI and IDBI propose to make Sub-loans for the purposes of carrying out Sub-projects under Part A of the Project and in- clude(s) such other company or companies acceptable to the Bank; (g) "Project Agreement" means the agreement between the Bank and ICICI and IDBI 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 Project Agreement; (h) "RTCs" means the regional training centers Page 3 referred to in Paragraph 2 of Schedule 5 to this Agree- ment; (i) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (j) "Steering Committee" means the Steering Committee established pursuant to Paragraph 3 (a) of Schedule 5 to this Agreement; (k) "Sub-loan" means the portion of the proceeds of the ICICI Subsidiary Loan and the IDBI Subsidiary Loan relent by ICICI and IDBI respectively to a PC pursuant to Section 3.01 (d) of this Agreement for carrying out a Sub-project; (l) "Sub-project" means a specific cement industry project to be carried out by a PC under Part A of the Project utilizing the proceeds of a Sub-loan; and (m) "Subsidiary Loan Agreements" mean the agree- ments entered into between the Borrower and ICICI and the Borrower and IDBI in respect of the ICICI Subsidiary Loan and the IDBI Subsidiary Loan, made available to ICICI and IDBI respectively pursuant to Section 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 Agreements. 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 the Loan Agreement, various currencies that shall have an aggregate value equivalent to the amount of three hundred million dollars ($300,000,000), being the sum of withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expendi- tures 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. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special deposit account in the Reserve Bank of India 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 6 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1996 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstand- ing from time to time, at a rate for each Interest Period Page 4 equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agree- ment is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates determined otherwise than as pro- vided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the pre- ceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Inter- est Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter." "(c) (iii) `Quarter' means a three-month period commencing on January 1, April 1, July 1 or October 1 in a calendar year." Section 2.06. Interest and other charges shall be payable semiannually on January 15 and July 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization Page 5 schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commit- ment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end: (i) shall, through DCCI, carry out Parts B and C of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and industrial practices and shall pro- vide, promptly as needed, the funds, facilities, services and other resources required for such parts of the Project; and (ii) without limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause ICICI and IDBI to perform all their respective obligations set forth in the Project Agreement, shall take or cause to be taken all actions, including the provision of funds, facilities, services and other resources, necessary or appro- priate to enable ICICI and IDBI to per- form such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) Without limitation upon the provisions of paragraph (a) of this Section, and except as the Borrower and the Bank shall otherwise agree, the Borrower shall carry out and cause the Project to be carried out in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. (c) The Borrower shall (i) through Subsidiary Loan Agreements, in form and substance satisfactory to the Bank, onlend a portion of the proceeds of the Loan to ICICI and IDBI to enable them to assist the PCs to carry out Part A of the Project, and (ii) through a budgetary allocation, pass on a portion of the proceeds of the Loan to DCCI to enable it to carry out Parts B and C of the Project. (d) The Borrower shall cause ICICI and IDBI to relend a portion of the proceeds of the ICICI Subsidiary Loan and the IDBI Subsidiary Loan respectively to the PCs, in accordance with the procedures and on the terms and conditions set forth or referred to in Part A of the Schedule to the Project Agreement, to enable them to carry out Sub-projects selected in accordance with the selection criteria laid down in Part B of the Schedule to the Project Agreement. (e) The Borrower shall exercise its rights under the Subsidiary Loan Agreements in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and, except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreements or any provision thereof. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods and services required for the Project and to be financed out of the proceeds of the Page 6 Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 3.03. The Bank and the Borrower hereby agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to 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 ICICI and IDBI or caused to be carried out by the PCs pursuant to Section 2.03 of the Project Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments, agencies or institutions of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accor- dance with appropriate auditing princi- ples consistently applied, by indepen- dent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as avail- able, but in any case not later than six months after the end of each such year, the report of such audit by said audi- tors, of such scope and in such detail as the Bank shall have reasonably re- quested; and (c) For all expenditures with respect to which withdrawals from the Loan Account were made 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, records and accounts reflecting such expenditures; (ii) retain or cause to be retained, until at least one year after the Bank has re- ceived the audit report for the fiscal year in which the last withdrawal from the Loan Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit re- ferred to in paragraph (b) of this Sec- tion and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal Page 7 year, together with the procedures and internal controls involved in their preparation, can be relied upon to sup- port the related withdrawals. ARTICLE V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional events are specified: (a) ICICI or IDBI shall have failed to perform any of their respective obligations under the Project Agreement. (b) As a result of events which have occurred after the date of the Loan Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that ICICI or IDBI will be able to perform their respec- tive obligations under the Project Agreement. (c) The Memorandum and Articles of Association of ICICI dated January 5, 1955 and the Industrial Develop- ment Bank of India Act, 1964 (both as amended to the date of this Agreement) shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of ICICI or IDBI to perform any of their respective obligations under the Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolu- tion or disestablishment of ICICI or IDBI or for the suspension of their respective operations. (e) Any of the Memoranda of Understanding referred to in paragraph 2 of Schedule 5 to this Agreement shall have been amended or repealed so as to affect materially and adversely the implementation of Part B of the Project. Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 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 Bank to the Borrower; (b) any event specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur; and (c) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to with- draw the proceeds of any loan or grant made to the Borrower for the financing of the Project shall have been suspended, cancelled or termi- nated in whole or in part, pursuant to the terms thereof, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to Page 8 the satisfaction of the Bank that: (A) such suspension, cancellation, termina- tion or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consis- tent with the obligations of the Borrow- er under this Agreement. ARTICLE VI Effective Date; Termination Section 6.01. 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 Conditions, namely, that the Subsidiary Loan Agreements have been executed on behalf of the Borrower and ICICI and the Borrower and IDBI pursuant to Section 3.01 (c) of this Agreement. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by ICICI and IDBI, and is legally binding upon ICICI and IDBI in accordance with its terms; and (b) that the Subsidiary Loan Agreements have been duly authorized or ratified by the Borrower, ICICI and IDBI and are legally binding upon the Borrower and ICICI and Borrower and IDBI in accordance with their respective term. Section 6.03. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. Except as provided in Section 2.08 of this Agreement, the Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary or Under Secretary in the Ministry of Finance, Department of Economic Affairs 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 Condi- tions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Telex: ECOFAIRS 953-3166175 New Delhi Page 9 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 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) 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. INDIA By /s/ Anil Kumar Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ A. Karaosmanoglu Regional Vice President Asia 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 (Expressed in % of Dollar Expenditures Category Equivalent) to be Financed (1) Sub-loans under Part A of the Project: (a) Equipment 297,000,000 100% of foreign and spares expenditures, 100% of local expenditures (ex-factory cost) and 80% of local expendi- tures for other items procured locally Page 10 (b) Consultants' 1,000,000 100% services and training Amount of the Loan Allocated (Expressed in % of Dollar Expenditures Category Equivalent) to be Financed (2) Part B of the Project (a) Equipment 1,400,000 100% of foreign and educa- expenditures, tional 100% of local materials expenditures (ex-factory cost) and 80% of local expen- ditures for other items procured locally (b) Consultants' 200,000 100% services and training (3) Consultants' 400,000 100% services under Part C of the Project ___________ TOTAL 300,000,000 =========== 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expendi- tures 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 expendi- tures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agree- ment; and (b) Category (2) of the table set forth in Paragraph 1 above, unless (i) the Steering Committee has been established, and (ii) the DANIDA Financing Agree- ment, referred to in paragraph B of the Preamble to this Agreement, is effective. SCHEDULE 2 Description of the Project The objectives of the Project are to support the Borrower's policy to assist the cement industry modern- ization and restructuring in India. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such Page 11 objectives: Part A: Industry Modernization and Restructuring 1. (a) Undertaking specific cement industry projects relating to (i) the addition of capacity through the establishment of new plants or expansion of existing plants in cement deficit market regions with a view to reducing the regional demand and supply imbalance and enhancing the efficiency of production and distribution of cement, and (ii) modernization and restructuring of selected cement companies throughout India; and (b) provision of training and consultants' services related thereto. 2. Establishment and development of a bulk cement transportation system including the provision of loading and unloading facilities and special bulk cement wagons with a view to improving the efficiency of cement distribution and the productivity of construction industry. Part B: Human Resources Development Establishment of Regional Training Centers and provision of training and consultants' services for the purpose of assisting the cement industry to meet its demand for skilled manpower. Part C: Technical Assistance Undertaking studies and technical assistance programs relating to the Project including the following: (1) study of the general environmental status and pollution control measures for the cement industry, (2) feasibility study for bulk cement transport by coastal shipping, (3) study for mini-cement development strategy, (4) feasibility study for setting up coal washery for the cement industry, (5) feasibility study for use of lignite in the cement industry, and (6) technical assistance for the establishment of the pilot bulk cement transport system. * * * The Project is expected to be completed by December 31, 1995. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* January 15, 1996 5,460,000 July 15, 1996 5,675,000 January 15, 1997 5,895,000 July 15, 1997 6,120,000 January 15, 1998 6,360,000 July 15, 1998 6,605,000 January 15, 1999 6,860,000 July 15, 1999 7,125,000 January 15, 2000 7,405,000 July 15, 2000 7,690,000 January 15, 2001 7,990,000 July 15, 2001 8,300,000 January 15, 2002 8,620,000 July 15, 2002 8,955,000 January 15, 2003 9,300,000 Page 12 July 15, 2003 9,660,000 January 15, 2004 10,035,000 July 15, 2004 10,425,000 January 15, 2005 10,825,000 July 15, 2005 11,245,000 January 15, 2006 11,685,000 July 15, 2006 12,135,000 January 15, 2007 12,605,000 July 15, 2007 13,095,000 January 15, 2008 13,600,000 July 15, 2008 14,130,000 January 15, 2009 14,675,000 July 15, 2009 15,245,000 January 15, 2010 15,835,000 July 15, 2010 16,445,000 _____________________________ * The figures in this column represent dollar equiva- lents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Condi- tions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percent- age specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) applicable to the Loan on the day of prepayment multiplied by: Not more than three years 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than 11 years before maturity More than 11 years but not 0.80 more than 16 years before maturity More than 16 years but not 0.90 more than 18 years before maturity More than 18 years before 1.00 maturity SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part C hereof, goods for Parts A and B of the Project shall be procured under contracts Page 13 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 May 1985 (the Guidelines). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in India 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: Other Procurement Procedures 1. Items or groups of items for goods for Part A of the Project estimated to cost less than the equivalent of $8,000,000 per contract, up to an aggregate amount equivalent to $30,000,000, may be procured in accordance with standard commercial procedures acceptable to the Bank. 2. Items or groups of items for goods for Part B of the Project estimated to cost less than the equivalent of $200,000 per contract, up to an aggregate amount not to exceed the equivalent of $1,400,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Bank. Part D: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for goods for Part A of the Project estimated to cost the equivalent of $8,000,000 or more and goods for Part B of the Project estimated to cost the equivalent of $200,000 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 Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank 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 preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, said 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 Bank pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 6 to this Agreement. (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which the Bank has authorized withdrawals on the basis of state- ments of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Page 14 Section II. Employment of Consultants In order to assist DCCI and the PCs to carry out Parts B and C and Part A of the Project respectively, the Borrower shall employ and cause ICICI and IDBI to cause the PCs to employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures 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. SCHEDULE 5 Implementation Program 1. The Borrower shall include the following main terms and conditions in the Subsidiary Loan Agreements: (a) ICICI Subsidiary Loan Amount = $149,000,000 equivalent. IDBI Subsidiary Loan Amount = $149,000,000 equivalent. (b) Onlending rate = 12% per annum. (c) Amortization: repayment over 20 years including a grace period of 5 years. (d) Foreign exchange risk to be borne by the Borrower. (e) Main relending terms and conditions of Sub- loans as provided in Part A of the Schedule to the Project Agreement. (f) Sub-projects to be selected on the basis of approved criteria as provided in Part B of the Schedule to the Project Agreement. (g) Audit and accounts provisions corresponding to the Loan Agreement. 2. For the purpose of carrying out Part B of the Project, the Borrower shall, through DCCI, enter into Memoranda of Understanding with cement companies selected by the Borrower in agreement with the Bank. The Memoranda of Understanding shall, inter alia, (a) provide for (i) the establishment of Regional Training Centers with the objective of providing training for the purpose of assisting the cement industry to meet its demand for skilled manpower, and (ii) the passing on of a portion of the proceeds of the Loan to the RTCs as a grant for the said purpose, and (b) prescribe operating guidelines, for the operation of RTCs, satisfactory to the Bank. 3. The Borrower shall (a) establish a Steering Commit- tee under the Chairmanship of the Development Commission- er for Cement Industry, comprising a representative each of the Ministry of Industry of the Borrower, Directorate General of Employment and Training of the Borrower, IDBI, DANIDA, cement companies referred to in Paragraph 2 hereof, and the Cement Manufacturers' Association for the purpose of implementation of Part B of the Project, and (b) by December 31, 1990, appoint a Program Coordinator, with qualifications and experience acceptable to the Bank, for the purpose of providing technical support and assistance to DCCI in the coordination of activities under Part B of the Project. The Steering Committee and the Program Coordinator shall be given such functions and Page 15 powers as agreed to between the Borrower and the Bank. 4. The Borrower shall undertake and complete various studies under Part C of the Project in accordance with terms of reference and schedules agreed to between the Borrower and the Bank. The Borrower shall promptly furnish a copy of each completed study to the Bank for its review and discussion with the Borrower and shall follow-up the recommendations, if any, pursuant thereto. SCHEDULE 6 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories 1, 2 and 3 set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expendi- tures 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 the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $16,000,000 to be withdrawn from the Loan Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to para- graph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Bor- rower, withdraw from the Loan Ac- count and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid Page 16 out of the Special Account for eli- gible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Condi- tions and paragraph (a) of Section 2.02 of this Agree- ment; or (b) once the total unwithdrawn amount of the Loan allocated to the eligible Categories, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) 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. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank 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 Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for Page 17 cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.