OIFFICKA i r tT DIT NUMBER 1500 CHA * Development Credit Agreement (Second Agricultural Education Project) between PEOPLE'S REPUBLIC OF CHINA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1984 CREDIT NUMBER 1500 CHA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated I , 1984, between PEOPLE'S REPUBLIC OF CHINA (hereinafter called the Borrower) and INTERNATION-%L DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower has also requested the International Bank for Reconstruction and Development (the Bank) to provide addi- tional assistance towards the financing of the Project and by an agreement of even date herewith between the Borrower and the Bank (hereinafter called the Loan Agreement) the Bank is agreeing to provide such assistance in an aggregate principal amount equiva- lent to forty-five million three hundred thousand dollars ($45,300,000) (hereinafter called the Loan); (C) the Borrower and the Association intend, to the extent practicable, that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures on the Project before disbursements of the proceeds of the Loan provided for in the Loan Agreement are made; 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 hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the -2- General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "MAAF" means the Borrower's Ministry of Agriculture, Animal Husbandry and Fisheries; (b) "Project Agricultural Colleges (Group A)," "Project Agricultural Colleges (Group B)", "Project Training and Extension Support Centers," and "Project Technical Schools" mean the insti- tutions listed in Parts A, B, C and D, respectively, of the Annex to Schedule 2 to this Agreement; "Project Agricultural Colleges" means Project Agricultural Colleges (Group A) and Project Agri- cultural Colleges (Group B); and "Project Institutions" means all of the institutions listed in said Annex, collectively; (c) "Special Account" means the account to be opened and thereafter maintained pursuant to Section 2.02 (b) of this Agree- ment; (d) "Agricultural Education and Research Project" means the Project described in Schedule 2 to the Development Credit Agree- ment between the Borrower and the Association, dated November 16, 1982, entered into for the Agricultural Education and Research Project (Credit No. 1297-CHA), as such Schedule may be amended from time to time; and (e) "Loan Agreement" means the agreement of even date herewith between the Borrower and the Bank for the purpose of the Project, as such agreement may be amended from time to time; and such 'term includes the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated October 27, 1980, as made applicable to such agreement, all agreements supplemental to the Loan Agreement and all Schedules to the Loan Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various cur- rencies equivalent to twenty-two million Special Drawing Rights (SDR 22,000,000). -3- 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 Association, for expenditures made (or, if the Association shall so agree, to be made) 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. (b) For the purposes of the Project, the Borrower shall open and thereafter maintain in dollars a special account in the Bank of China on terms ai,d conditions satisfactory to the Asso- ciation. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and 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 Agree- ment. Section 2.04. The Closing Date shall be June 30, 1991 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without re- strictions 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 2.06. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 -4- of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.07. Commitment charges and service charges shall be payable semiannually on February 15 and August 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each February 15 and August 15 commencing August 15, 1994, and ending February 15, 2034, each installment to and including the install- ment payable on February 15, 2004, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment there- after to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.09. 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 the Project through MAAF with due diligence and efficiency and in conformity with appropriate administrative, educational, engineering, agricul- tural, and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) In order to coordinate and assist in carrying out the Project, the Borrower shall continue to maintain: (i) the Project Office established in accordance with Section 3.01 (b) (i) of the Development Credit Agreement for the Agricultural Education and Re- search Project, with functions and responsibili- ties acceptable to the Association, and with qualified and experienced staff; and (ii) the Review Committee established for purposes of the Project, including representatives from the -5- Project Institutions, to be assiszed by an Inter- national Advisory Panel, to be appointed by December 31, 1984 or such later date as may be agreed between the Borrower and the Association, by said Project Office, comprised of experts in various disciplines to provide advice on technical matters to the Review Commitee, both with func- tions and responsibilities acceptable to the Asso- ciation. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ experts and special- ists whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such experts and specialists to 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. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) The Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the purposes of the Project. Section 3.04. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or addi- tions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the -6- goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction (and operation) of the facilities included in the Project and shall furnish to the Association, upon request, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes . related to the Project. Section 3.06. The Borrower shall: (a) cause the Project Office referred to in Section 3.01 (b)(i) of this Agreement to select candidates for fellowships under the Project in accordance with selection criteria satisfactory to the Association; and (b) provide language training, as needed, for candidates so selected at the foreign language training facilities established under the Agricultural Education and Research Project. -7- ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained appropriate accounting practices the opera- tions, resources and expenditures, in respect of the Project, of the departments or agenries of the Borrower responsible for carrying out the Project or any part thereof. (b) Without limitation to the foregoing, the Borrower shall: (i) maintain or cause to be maintained separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; (ii) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; and (iii) enable the Association's representatives to examine such records. (c) The Borrower shall: (i) have the accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent audiuors ac94ptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by such auditors, of such scope and in such detail as the Association shall have rea- sonably requested, including without limitation to the foregoing, a separate opinion by said auditors in respect of the expendi- tures and records referred to in paragraph (b) of this Section as to whether the proceeds of the Credit withdrawn from the Credit Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning said accounts, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall cause the facilities and equipment provided under the Project to be operated, maintained, renewed and repaired in accordance with sound administrative, financial, engineering and educational policies and practices, and shall provide or cause to be provided, promptly as needed, sufficient funds, services and other resources required for such purposes. Section 4.03. (a) The Borrower shall, until December 31, 1992, or such later date as may be agreed between the Borrower and the Associationr annually monitor and evaluate the progress made by Project Institutions towards project objectives in light of project indicators agreed between the Borrower and the Associ- ation. (b) The Borrower shall cause the Project Agricultural Col- leges and Project Technical Schools to carry out annual surveys of their graduates to determine, inter alia, the relationship between academic preparation and actual employment, commencing with the graduates in 1984 and ending with the graduates in 1992, or such later dates as may be agreed between the Borrower and the Association. ARTICLE V Effective Date; Termination Section 5.01. 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 Borrower's State Council shall have approved this Agreement; (b) the Special Account has been opened in accordance with the provisions of Section 2.02 (b) of this Agreement; and (c) all conditions precedent to the effectiveness of the Loan Agreement, excepting only the effectiveness of this Agree- ment, shall have been fulfilled. Section 5.02. The date 0 ; -- , is hereby specified for the purposes of Section 12.04 of the General Condi- tions. ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. -9- Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Sanlihe Beijing People's Republic of China Cable address: Telex: FINANMIN 22486 MFPRG Beijing 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 representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. PEOPLE'S REPUBLIC OF CHINA *I ByOl Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President East Asia and Pacific - 10 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit and of the Loan 1. The table below sets forth the Categories of items to be financed out of the procee%s of the Credit and of the Loan, the allocation of the amounts of the Credit and of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount Amount of the of the Credit Loan Allocated Allocated (Expressed (Expressed % of in SDR in Dollar Expenditures Category Equivalent) Equivalent) to be Financed (1) Equipment 14,980,000 30,600,000 100% of for- eign expendi- tures, 100% of local expendi- tures (ex- factory cost) and 75% of lo- cal expendi- tures for other items procured locally (in- voiced cost) (2) Civil works 480,000 500,000 20% for Part A.2(c) of the Project (3) Specialist 1,670,000 3,700,000 100% services (4) Overseas 3,000,000 6,200,000 100% fellow- ships (5) Books and 370,000 1,000,000 100% of for- instructional eign expendi- materials tures - 11 - Amount Amount of the of the Credit Loan Allocated Allocated (Expressed (Expressed % of in SDR in Dollar Expenditures Category Equivalent) Equivalent) to be Financed (6) Initial 1,500,000 Amoint due pur- deposit suant to Sec- in Special tion 2.02 (b) Account of this Agree- to pre- ment finance items under Cate- gories (1), (3), (4) and (5) above (7) Fee 112,968 Amount due under Section 2.05 of the Loan Agree- ment (8) Unallocated 3,187;032 TOTAL 22,000,000 45,300,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association and the Bank that the - 12 - proceeds of the Credit or the Loan shall not be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Association or the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforementioned policy of the Association and the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures made prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Association or the Bank has reasonably estimated that the amount of the Credit or the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association or the Bank may, by notice to the Borrower: (a) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit or the Loan which are then allocated to another Category and which in the opinion of the Association or the Bank are not needed to meet other expenditures; and (b) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association or the Bank shall have reasonably deter- mined that the procurement of any item in any Category is incon- sistent with the procedures set forth or referred to in this Agreement, no expenditure for such item shall be financed out of the proceeds of the Credit or the Loan, and the Association or the Bank may, without in any way restricting or limiting any other right, power or remedy of the Association under the Devel- opment Credit Agreement or the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Credit or the Loan as, in the Association's or the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 13 - SCHEDULE 2 Description of the Project The objectives of the Project are to expand the number and improve the technical skills of professional and middle-level personnel in the agricultural sector through assistance to agricultural colleges, technical schools and other educational facilities, broadening the role of agricultural colleges as community and regional resources and developing training for agricultural technicians. The Project consists of the following Parts: A. Agricultural Colleges 1. Increasing enrollment, improving the quality of instruction, and improving management at the Project Agricultural Colleges (Group A) through a program of: (a) construction, renovation and equipping of new educa- tional facilities, including laboratories and classrooms, and provision of instructional materials; and (b) providing: (i) local training, overseas fellowships and specialist services to assist teaching staff in improving their professional qualifications; and (ii) short-term local and over- seas fellowships, and specialist services, to assist administra- tive staff in improving their management capability. 2. Introducing new specializations and postgraduate programs, expanding the research and extension support activities and establishing and operating modern library and food science facilities at the Project Agricultural Colleges (Group B), through a program of: (a) construction, renovation and equipping of libraries and laboratories, and provision of research materials; (b) providing overseas fellowships, and specialist ser- vices, to assist library staff and staff teaching in new areas in upgrading professional skills; and (c) establishing a model library at Beijing Agricultural University and a model food science institute at Central China - 14 - Agricultural College, including construction and equipping of the facilities necessary therefor, and providing local and overseas fellowships, and specialist services, to train library and food science staff. B. Training Extension and Support Centers Expano?ing the training capacity and improving the curriculum at the Pru"ect Training Extension and Support Centers, through a program of: 1. construction, renovation and equipping of training facili- ties, including libraries, classrooms, and laboratories; and 2. providing local and overseas fellowships, and specialist services to assist extension center staff in upgrading profes- sional skills. C. Agricultural Technical Schools Increasing enrollment, improving the quality of instruction, and improving management at the Project Technical Schools, through a program of: 1. construction, renovation and equipping of educational facilities; and 2. providing local and overseas fellowships, and specialist services, to assist teaching staff in upgrading their profes- sional skills, and overseas visits, and specialist services, to assist administrative staff in planning the development of agricultural technical schools. D. Educational Support Facilities 1. Expanding the number and frequency, and improving the quality, of broadcast educational programs in agriculture by providing audio production equipment, local and overseas staff training and specialist services to MAAF's Central Agricultural Broadcast School. 2, Increasing the production capacity of MAAF's Agricultural Film Studio by constructing and equipping a video studio, and providing local and overseas fellowships, and specialist serv- ices, to train staff in video studio engineering and production. - 15 - 3. Increasing the supply of agricultural education teaching materials by constructing, and equipping the printing plant at MAAF's Publishing House and providing specialist services to improve color printing quality. E. Evaluation and Planning Improving and assisting through provision of overseas fel- lowships, specialist services and equipment: (1) the evaluation of current investments in agricultural education, including those included in the Project; and (2) the planning and preparation of future investments in agricultural education, in particular, in- creased investments similar to those under Parts B and C of the Project. The Project is expected to be completed by December 31, 1989. - 16 - Annex to Schedule 2 Project Institutions A. Project Agricultural Colleges (Group A) 1. Beijing Agricultural Mechanization College, Beijing 2. Dalian Fisheries College, Dalian, Liaoning 3. Shihezi Agricultural College, Shihezi, Xinjiang 4. Nanjing Forestry College, Nanjing, Jiangsu 5. Northeast Forestry College, Harbin, Heilongjiang 6. Wuhan Hydraulic and Electrical Engineering College, Wuhan, Hubei 7. Chengdu Meteorology College, Chengdu, Sichuan 8. Guangxi Agricultural College, Nanning, Guangxi 9. Inner Mongolia Agriculture and Animal Husbandry College, Hohhot, Inner Mongolia 10. Northeast Agricultural College, Harbin, Heilongjiang 11. Shandong Agricultural College, Taian, Shandong 12. Zhejiang Agricultural University, Hangzhou, Zhejiang B. Project Agricultural Colleges (Group B) 1. Nanjing Agricultural College, Nanjing, Jiangsu 2. Central China Agricultural College, Wuhan, Hubei 3. South China Agricultural College, Guangzhou, Guangdong 4. Northwestern Agricultural College, Xian, Shaanxi 5. Southwestern Agricultural College, Chongqing, Sichuan 6. Shenyang Agricultural College, Shenyang, Liaoning - 17 - 7. Beijing Forestry College, Beijing 8. East China Technical University of Water Resources, Nanjing, Jiangsu 9. Shanghai Aquatic Products College, Shanghai 10. Nanjing Meteorological College, Nanjing, Jiangsu 11. Beijing Agricultural University, Beijing C. Project Training and Extension Support Centers Training and extension support centers established at: 1. Anhui Agricultural College, Hefei, Anhui 2. Henan Agricultural College, Zhengzhou, Henan 3. Hunan Agricultural College, Changsha, Hunan 4. Jiangsu Agricultural University, Yangchou, Jiangsu 5. Jiangxi Agricultural University, Nanchang, Jiangxi 6. Jilin Agricultural University, Changchun, Jilin 7. Central China Agricultural College, Wuhan, Hubei 8. Northeast Agricultural College, Harbin, Heilongjiang D. Project Technical Schools 1. Beijing Agricultural Technical School, Beijing 2. Changji Agricultural Technical School, Changji, Xinjiang 3. Changsha Agricultural Technical School, Changsha, Hunan 4. Heilongjiang Animal Husbandry School, Shuang Cheng, Heilongjiang 5. Hongxinglong Technical School, Jixian, Heilongjiang - 18 - 6. Guangxi Agricultural Mechanization School, Wuming, Guangxi 7. Shandong Aquatic School, Yantai, Shandong 8. Suzhou Agricultural Technical School, Suzhou, Jiangsu 9. Wenjiang Agricultural Technical School, Wenjiang, Sichuan 10. Yellow River Water Conservancy Technical School, Kaifeng, Henan 11. Lanzhou Meteorology Technical School, Lanzhou, Gansu 12. Nanjing Forestry Technical School, Nanjing, Jiangsu E. Project Institutions for Part D of the Project 1. Central Agricultural Broadcast School, Beijing 2. Central Agricultural Film Studio, Beijing 3. Agricultural Printing Plant, Beijing - 19 - SCHEDULE 3 Procurement 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 the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notifica- tion to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. Contracts for goods to be procured on the basis of inter- national competitive bidding shall be grouped to the extent possible so as to permit bulk procurement. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and simi- lar taxes levied in connection with the sale or delivery, pur- suant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. - 20 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedure described in Part A of this Schedule, goods manufactured in China may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in China if the bidder shall have established to the satis- faction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in China equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid.of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. Such lowest evalu- ated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in - 21 - such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures 1. Items or groups of items estimated to cost less than the equivalent of $200,000 per contract, up to an aggregate amount not to exceed the equivalent of $6,000,000, may be procured under contracts awarded on the basis of evaluation and comparison of bids invited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. 2. Civil works contracts for Part A.2(c) of the Project shall be awarded in accordance with procedures and on terms and condi- tions satisfactory to the Association. 3. Books and instructional materials to be financed under Cate- gory (5) of the table set forth in paragraph 1 of Schedule 1 to this Agreement may be procured under contracts negotiated with suppliers. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $200,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform - 22 - the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evalua- tion and comparison of the bids received, and such other informa- tion as the Association shall reasonably request. The Association shall, if it determines that the intended award would be incon- sistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification was invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such con- tract. 2. With respect to each contract not governed by the preceding paragraph the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Associa- tion of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Bor- rower and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the pro- visions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. - 23 - 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 or the Loan as set forth in the table in paragraph 1 of Schedule 1 to this Agree- ment; (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 or the Loan allocated from time to time to Categories (1), (3), (4) and (5) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "initial deposit" means an amount in dollars equivalent to the amount allocated to Category (6) and to be withdrawn from the Credit Account and deposited in the Special Account pursuant to the first sentence of paragraph 3 to this Schedule. 2. Payments out of the Special Account shall be made exclu- sively for eligible expenditures in accordance with the provi- sions of this Schedule. 3. The Association shall, at the request of the Borrower, withdraw on behalf of the Borrower from the Credit Account and deposit into the Special Account the initial deposit. Thereafter and on the basis of requests by the Borrower furnished to the Association or the Bank at such intervals as the Association or the Bank shall specify, the Association or the Bank shall further so withdraw from the Credit Account or the Loan Account and depo- sit into the Special Account such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for eligible expenditures, but only to the extent that the amount of any such deposit, together with any amount remaining on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of the initial deposit. Except as the Association or the Bank may otherwise agree, each such deposit after the initial deposit shall be withdrawn by the Association from the Credit Account or the Bank from the Loan Account under the respective Categories -24- (1), (3), (4) and (5) 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. Prior to or at the time of each request by the Borrower for a deposit into the Special Account after the initial deposit, the Borrower shall furnish to the Association or the Bank in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Association or the Bank shall reasonably request, showing that such payment was made for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, no further deposit into the Special Account shall be made 'by the Association or the Bank: (a) when the Association or the Bank shall have determined at any time that all further withdrawals can 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 from the Loan Account in accordance with the provisions of Section 2.02 of the Loan Agreement; or (b) unless otherwise agreed by the Association or the Bank when the total unwithdrawn amount of the Credit and the Loan allocated to Categories (1), (3), (4) and (5), minus the unwithdrawn amount of any qualified agreement to reimburse made by the Association or the Bank and of any special commitment entered into by the Asso- ciation or the Bank pursuant to Section 5.02 of the General Conditions or the -General Conditions applicable to the Loan Agreement with respect to items to be financed under Categories (1), (3), (4) and (5), shall be equal to the equivalent of twice the amount of the initial deposit, whichever shall be sooner. Withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Categories (1), (3), (4) and (5) and withdrawal from the Loan Account of the remaining un- withdrawn amount of the Loan allocated to Categories (1), (3), (4) and (5) shall follow such procedures as the Association or the Bank shall specify by notice to the Borrower and shall, except as the Association or the Bank shall otherwise agree, be made only after and to the extent the Association or the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expendi- tures. 6. If the Association or the Bank shall have determined at any time that: - 25 - (a) 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 or the Bank and, unless otherwis- agreed by the Association or the Bank, prior to any further deposit into the Special Account by the Association or the Bank, ueposit into the Special Account or, if the Association or the Bark shall so request, refund to the Asso- ciation or the Bank an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or (b) any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association or the Bank, and unless otherwise agreed by the Association or the Bank, refund to the Association or the Bank such amount then outstanding in the Special Account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 1981 . FOR SECRETARY