Conformed Copy - L3177 - Second Agricultural Extension and Applied Research Project - Loan Agreement

Page 1 LOAN NUMBER 3177 TU Loan Agreement (Second Agricultural Extension and Applied Research Project) between REPUBLIC OF TURKEY and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated March 30, 1990 LOAN AGREEMENT AGREEMENT, dated March 30, 1990, between REPUBLIC OF TURKEY (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS 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; 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; 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Area" means the area covered by nineteen of the Borrower's provinces grouped into: (i) the Central Region, comprising Kirsehir, Yozgat, Neveshir, Nigde, Aksaray and Kayseri provinces; (ii) the Central North Region, comprising Amasya, Tokat, Sivas and Erzincan provinces; (iii) the Central Southeastern Region, comprising Malatya, Gaziantep, Kahramanmaras, Adiyaman and Siirt provinces; and (iv) the Mediterranean Region, comprising Antalya, Icel, Adana and Hatay provinces; Page 2 (b) "MAFRA" means the Borrower's Ministry of Agriculture, Forestry and Rural Affairs; (c) "MPWR" means the Borrower's Ministry of Public Works and Resettlement; (d) "GDPI" means MAFRA's General Directorate of Projects and Implementation; (e) "GDRS" means MAFRA's General Directorate of Rural Services; (f) "GDPC" means MAFRA's General Directorate of Protection and Control; (g) "GDOS" means MAFRA's General Directorate of Organization and Support; (h) "EFPD" means GDPI's Externally Financed Projects Department; (i) "PDA" means the Provincial Director of Agriculture; (j) "PAD" means the Provincial Agricultural Directorate; (k) "FTE" means PAD's Farmer Training and Extension Section; (l) "PPS" means PAD's Plant Protection Section; (m) "AHS" means PAD's Animal Health Section; (n) "PSS" means PAD's Projects and Statistics Section; (o) "CD" means the County Agricultural Director; (p) "AES" means the County Agricultural Extension Supervisor; (q) "CCC" means the Central Coordinating Committee referred to in paragraph 2 of Schedule 5 to this Agreement; (r) "RCC" means each or any of the Regional Coordinating Committees to be established pursuant to paragraph 4 of Schedule 5 to this Agreement; (s) "VGT" means a Village Group Technician; (t) "VGTC" means a Village Group Technician Center; (u) "SMS" means a Subject Matter Specialist; (v) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; and (w) "fiscal year" means the period January l through December 31. ARTICLE II The Loan Section 2.0l. 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 sixty-three million dollars ($63,000,000), Page 3 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 l to this Agreement 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. (b) The Borrower shall, for the purposes of the Project, open and 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 6 to this Agreement. Section 2.03. The Closing Date shall be June 30, 1997 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 outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (l/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 Agreement 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 l, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. Page 4 (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 preceding Quarter, plus one-half of one percent (l/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 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 l, April l, July l or October l in a calendar year." Section 2.06. Interest and other charges shall be payable semiannually on June l and December l in each year. Section 2.07. 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 3.0l. (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 the Project through MAFRA with due diligence and efficiency and in conformity with appropriate administrative, financial, economic and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (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 the Project in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. Section 3.02. Except as the Bank 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 Loan shall be governed by the provisions of Schedule 4 to this Agreement. ARTICLE IV Page 5 Financial Covenants Section 4.0l. (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 or agencies 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 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, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (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, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan 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 referred to in paragraph (b) of this Section 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 year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Page 6 (d) Without limitation to the foregoing, the Borrower shall furnish to the Bank, within two months after the end of each semester, a detailed statement in respect of the expenditures referred to in paragraph (a) of this Section for such semester. ARTICLE V Termination Section 5.0l. 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 VI Representative of the Borrower; Addresses Section 6.0l. The Undersecretary of the Treasury and Foreign Trade of the Borrower is designated as representative of the Borrower for the purposes of Section ll.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 Bakanliklar - Ankara Cable address: Telex: MALIYE HAZINE 821-42285 (MLYE-TR) or 821-42689 (ANK-TR) 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 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 TURKEY By /s/ Zalih Seleklar Authorized Representative Page 7 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Hans-Eberhard Koepp Acting Regional Vice President Europe, Middle East and North Africa 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 (l) Civil works 19,500,000 25% (2) Vehicles, 13,600,000 100% of foreign equipment and expenditures, scientific books 100% of local and periodicals expenditures (ex-factory cost) and 80% of local ex- penditures for other items pro- cured locally (3) Consultants' 14,500,000 100% services and overseas training (4) Incremental 9,900,000 66% until operating costs $4.7 million equivalent has been disbursed from this Cate- gory, 50% thereafter and until $8.2 million equi- valent has been disbursed from this Cate- gory, and 33% thereafter (5) Unallocated 5,500,000 TOTAL 63.000.00 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means Page 8 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; (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 "incremental operating costs" means the costs incurred on account of the salaries and allowances of staff recruited, the inputs and materials procured for purposes of field trials and demonstrations carried out, and the operation and maintenance of vehicles procured, under the Project, all calculated in accordance with procedures satisfactory to the Bank. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made: (a) for expenditures prior to the date of this Agreement; and (b) for expenditures under Categories (l) and (2) exceeding an aggregate amount of $1,000,000 equivalent, unless and until the Borrower shall have signed contracts with the consultants required for the Project and to be employed pursuant to Section II (a), (b), (c) and (d) of Schedule 4 to this Agreement. SCHEDULE 2 Description of the Project The objectives of the Project are to assist in achieving sustained increases in agricultural productivity and incomes in the Project Area through support for the widespread adoption by farmers of improved farming practices and, to this end, to: (a) strengthen MAFRA's field extension and research services, so as to facilitate the transmission of improved, appropriate technology from MAFRA to farmers and the flow of feedback from such farmers to MAFRA; (b) introduce in MAFRA's field extension services elements designed to meet the special needs of women engaged in agriculture; and (c) improve animal health services as a complement to successful field extension services carried out by MAFRA. 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 objectives: Part A: Agricultural Extension Strengthening of MAFRA's field extension services: (1) at the village level, through: (a) employment of additional VGTs to work on a full-time basis in providing technical advice to farmers on a broad range of farming activities and to receive feedback from such farmers on newly-introduced technology; (b) employment, on a pilot basis, of a limited number of female VGTs to provide technical advice and training to women in improved methods of agricultural production; (c) construction of VGTCs in selected villages to specifications satisfactory to the Bank; (d) provision for VGTs of vehicles and drivers, office furniture and supplies, demonstration materials and equipment, including audiovisual equipment; and (e) provision of funds to meet operating costs. (2) at the county level, through: (a) appointment of an AES, under the direction of CD, to supervise VGTs, Page 9 to organize VGTs' training, to coordinate information about agricultural extension activities in the county, and to coordinate, with the Director of FTE, CD and other provincial technical personnel, the support to be given by SMSs to such activities; (b) provision for CD of a vehicle and driver, and for AES of housing, a vehicle and driver and office and audio-visual equipment for training VGTs and farmers; and (c) provision of funds to meet operating costs. (3) at the county-group level, through: (a) establishment of teams of SMSs, including expertise in agricultural economics, extension methodology/training and erosion control and reporting to the Director of FTE, inter alia, to train VGTs on a regular basis, to provide technical support to VGTs in the field, to assist AESs in planning agricultural extension activities in the counties, and to liaise with research staff and institutes both within and outside their provinces; (b) construction of VGT training rooms or halls and housing for SMSs; (c) provision of vehicles and drivers, audio-visual equipment and materials and pest surveillance equipment; (d) carrying out by multi-disciplinary teams, consisting of VGTs, AESs, SMSs and researchers from the relevant research institutes, of diagnostic studies of the main farming systems with a view to identifying the appropriate solutions, either tested and available or to be developed through research, to the most pressing productivity problems of such systems; (e) implementation of integrated pest management procedures under the direction of VGTs and SMS teams and (f) provision of funds to meet operating costs. (4) at the provincial level, through: (a) provision of vehicles and drivers and small personal computers for FTEs and for PAD; (b) provision of additional staff for FTEs; (c) aggregation of the county-group diagnostic studies to be carried out under Part A.3 (d) of the Project; (d) establishment, on a pilot basis of mobile animal health units, including provision of vans and drivers, equipment and supplies; (e) provision of scientific books and periodicals for further distribution, as necessary, for the purposes of Part A of the Project; and (f) provision of funds to meet operating costs. (5) at the national level, through: (a) provision of vehicles and drivers and equipment for MAFRA staff involved in the carrying out of the Project; and (b) provision of funds to meet operating costs. Part B: Applied Research 1. Strengthening of seven research institutes serving the Project Area (the Cukurova Agricultural Research Institute, Adana; the Animal Diseases Research Institute, Adana; the Plant Protection Research Institute, Ankara; the Horticultural Research Institute, Erzincan; the Livestock Central Research Institute, Konya; the Fruit Research Institute, Malatya; and the Cotton Research Institute, Nazilli/Aydin) so as to enable them to carry out research planning, to effectively train agricultural extension staff, to participate in diagnostic studies, to undertake on-farm trials for testing new farm technology and to integrate research findings into recommendations for appropriate technology for different categories of farmers, through: (a) construction of additional and/or renovation of existing training facilities; (b) provision of vehicles and drivers, equipment (including audiovisual equipment), scientific books and periodicals, and funds for on-farm research and to meet vehicle and equipment operating and Page 10 maintenance costs; (c) provision of additional technical staff; and (d) establishment in each institute of a Research Extension Liaison Department, including provision of additional staff and funds to meet operating costs for this purpose. 2. Strengthening of an additional seven research institutes serving the Project Area (the Ataturk Central Research Institute for Horticulture, Yalova; the Animal Diseases Research Institute, Etlik/Ankara; the Field Crops Central Research Institute, Ankara; the Southeastern Anatolia Agricultural Research Institute, Diyarbakir; the Plant Protection Research Institute, Adana, the Soil and Water Research Institute, Ankara; and the Rural Services Research Institute, Sanliurfa) so as to enable them, as a backstop for the research institutes covered under Part B.l of the Project, to provide additional training for agricultural extension staff and to make recommendations for appropriate farm technology, through: (a) minor renovation of existing training facilities; and (b) provision of vehicles and drivers, and funds to meet operating costs arising from agricultural extension training activities and vehicle operation and maintenance. Part C: Monitoring and Evaluation 1. Strengthening of GDPI's Monitoring and Evaluation Divisions through provision of vehicles and drivers, computer software, additional staff and funds for financing agricultural case studies and to meet operating costs. 2. Establishment and operation of a management information system, including provision of equipment. Part D: Technical Assistance and Training 1. Carrying out of regular fortnightly or monthly training sessions for VGTs and workshops for SMSs (joined occasionally by VGTs) to be held at least once every two months. 2. Carrying out of an overseas training program acceptable to the Bank for selected staff involved in extension, research and monitoring and evaluation activities under Parts A, B and C of the Project and selected farmers from the Project Area. 3. Carrying out of a supplemental local in-service training program (including orientation sessions) for staff participating in extension, research and monitoring and evaluation activities under Parts A, B and C of the Project and a local training program for selected farmers from the Project Area. 4. Preparation of proposals for future agricultural extension and research programs. The Project is expected to be completed by December 31, 1996. SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* Page 11 On each June 1 and December l beginning December l, l995 through June l, 2007 2,625,000 * The figures in this column represent dollar equivalents 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 Conditions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage 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 0.18 before maturity More than three years but 0.35 not more than six years before maturity More than six years but 0.65 not more than 11 years before maturity More than 11 years but not 0.88 more than 15 years before maturity More than 15 years before 1.00 maturity SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part C hereof, 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 May 1985 (the Guidelines). 2. To the extent practicable, contracts for goods shall be grouped in bid packages estimated to cost the equivalent of $250,000 or more each. Page 12 Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.l hereof, goods manufactured in Turkey 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 l through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Civil works may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. 2. Goods, other than vehicles, estimated to cost less than the equivalent of $50,000 per contract, up to an aggregate amount not to exceed the equivalent of $1,300,000, 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. 3. Books and periodicals may be purchased directly from the publishers or authorized distributors on the basis of negotiated contracts. Part D: Review by the Bank of Procurement Decisions l. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $500,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix l 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 l 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. 2. The figure of 10% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in: (a) designing, conducting and supervising the overall training program for Project staff, including placement and administration of long- and short-term trainees in overseas institutions; (b) designing and carrying out diagnostic studies; (c) implementing a pilot women farmers agricultural extension and research program; (d) strengthening project monitoring and evaluation arrangements; e) carrying out agricultural case studies; Page 13 and (f) preparing future agricultural extension and research programs, the Borrower shall 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 A. Project Implementation and Coordination 1. At the central level, MAFRA shall carry out the Project through GDPI, except for: (a) construction of VGTCs, VGT training facilities and housing for AESs and SMSs under Part A of the Project, which shall be carried out through GDRS and MPWR, acting in collaboration with GDPI; (b) establishment of mobile animal health units under Part A.4 (d) of the Project, which shall be carried out through GDPC; (c) strengthening of veterinary and plant protection and soil and water research institutes under Part B of the Project, which shall be carried out through GDPC and GDRS, respectively; and (d) training of extension staff under Part D of the Project, which shall be coordinated jointly through GDPI and GDOS. GDPI shall also be responsible, through EFPD and its other departments, for coordinating the input of GDPC, GDRS and GDOS and of other departments and agencies of MAFRA to the Project, for procuring vehicles and equipment for the Project, for overseeing the management and implementation of the Project at the provincial level, and for monitoring and evaluating all Project activities. 2. At the central level, MAFRA shall coordinate all Project activities through CCC, which was established under the Agricultural Extension and Applied Research Project (Loan No. 2405-TU) and which shall be retained for this purpose with its existing composition and terms of reference. 3. At the provincial level, MAFRA shall carry out the Project through PADS. Each PDA shall be the Project Manager in his province and shall be assisted by the Technical Sections of his PAD. In particular, FTE shall plan, program and coordinate all extension activities in the province and shall supervise and direct the county-group SMS teams established under the Project; PPS and AHS shall assist extension staff in their respective areas of expertise; and PSS shall assist in monitoring of Project, including extension, activities. The designated research institutes shall regularly train SMSs, coordinate on-farm research trials and provide solutions to farmers' productivity problems as identified through diagnostic studies carried out under the Project and feedback from extension staff. SMSs shall regularly train and provide technical support to VGTs, who shall, in turn, have direct contact with farmers. VGTs shall be supervised by AES at the county-level. 4. At the Provincial level, MAFRA shall coordinate all Project activities through RCCs. For each Region in the Project Area, an RCC shall be established to cover the provinces included in the Project, not later than October 31, 1990. Each RCC shall be chaired by the General Director of GDPI or his deputy and shall include as Page 14 members, from the provinces, the concerned PDAs, the concerned Directors of FTE and PSS and the Directors of the relevant research institutes, and from the center, the concerned Directors from MAFRA. Each RCC shall meet at least once a year to review Project implementation and to discuss technical issues and policy matters with a view, inter alia, to removing constraints, increasing coordination among the Project agencies and approving an implementation program for the concerned provinces for the coming year. B. Supervision of Construction 5. For the purposes of carrying out its responsibility for construction of VGTCs, VGT training facilities and staff housing under Part A of the Project, GDRS shall: (a) not later than October 31, 1990, appoint a full-time architect-engineer to review progress and to regularly visit a representative selection of Project sites throughout the construction season each year so as to ensure quality control; and (b) arrange for visits by its staff to supervise all Project sites at least twice every month from its regional or provincial offices and at least three times during the construction season each year from its headquarters in Ankara and prepare reports on the findings resulting from such visits. C. Project Review 6. The Borrower shall, through GDPI and in consultation with the Bank, carry out: (a) an annual review of the Project, not later than June 30 in each of the years 1991 and 1992; and (b) a mid-term review of the Project, not later than December 31, 1993, all in accordance with terms of reference acceptable to the Bank. GDPI shall, after each such review, make such adjustments in the organization and operation of the Project as may be appropriate in light of the conclusions of the review. D. Progress Reports 7. Pursuant to Section 9.07 of the GeneraI Conditions, GDPI shall, not later than sixty days after the end of each semester, beginning with the semester ending December 31, 1990, furnish to the Bank progress reports on the Project in form and substance satisfactory to the Bank. SCHEDULE 6 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (4) 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 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 $4,000,000 to be withdrawn from the Page 15 Loan Account and deposited into 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 paragraph 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 Borrower, withdraw from the Loan Account 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 out of the Special Account for eligible 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 Conditions and paragraph (a) of Section 2.02 of this Agreement; 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 Page 16 of $8,000,000 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; or (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 cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions.