Page 1 CONFORMED COPY CREDIT NUMBER 3556 UNI Development Credit Agreement (HIV/AIDS Program Development Project) between FEDERAL REPUBLIC OF NIGERIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated August 23, 2001 CREDIT NUMBER 3556 UNI DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated August 23, 2001, between FEDERAL REPUBLIC OF NIGERIA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) the Executive Directors of the Association approved on September 12, 2000 the Multi-Country HIV/AIDS Program for the Africa Region estimated in the amount of SDR 378.4 million over the next three years; (C) this Project is part of the Multi-Country HIV/AIDS Program for the Africa Region; (D) the Association has received from the Borrower the following policy document, namely the HIV/AIDS Emergency Action Plan dated February, 2001 containing details of the design and content of the Borrower’s national response to the HIV/AIDS epidemic for the three year period (2001 to 2004) that was jointly prepared by development partner agencies under the leadership of the National Action Committee on HIV/AIDS ("NACA") (the said document being hereinafter sometimes referred to as the "HEAP" or the "Plan") and declaring the Borrower’s commitment to the execution of the Plan; (E) the Project will be carried out at State and local levels by Participating States (as hereinafter defined), and Parts A and B of the Project will be carried out by Line Ministries (as hereinafter defined) at Federal and State Page 2 levels; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985 (as amended through October 6, 1999), with the modifications set forth below (the General Conditions), constitute an integral part of this Agreement: (a) A new paragraph (12) is added to Section 2.01 to read as set forth below, and the existing paragraphs (12) through (14) of said Section are accordingly renumbered as paragraphs (13) through (15): "12. ‘Participating Country’ means any country that the Association determines meets the requirements set forth in Section 11 of Resolution No. 194 of the Board of Governors of the Association, adopted on April 8, 1999; and ‘Participating Countries’ means, collectively, all such countries."; and (b) the second sentence of Section 5.01 is modified to read: "Except as the Borrower and the Association shall otherwise agree, no withdrawals shall be made: (a) on account of expenditures in the territories of any country which is not a Participating Country or for goods produced in, or services supplied from, such territories; or (b) for the purpose of any payment to persons or entities, or for any import of goods, if such payment or import, to the knowledge of the Association, is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." 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) "AIDS" means the Acquired Immune Deficiency Syndrome; (b) "CBOs" means Community-Based Organizations and civil society organizations established and operating under the laws of the Borrower; (c) "Coordinating Bodies" means NACA, SACAs, and LACAs (as hereinafter defined); (d) "Eligible Categories" means, in respect of the National Special Account, Categories 1 (a), 2 (a), 3 (a), 4 (a) and 5 (a) set forth in the table in Part A.1 of Schedule 1 to this Agreement; in respect of the Akwa-Ibom Special Account, Categories 1 (b), 2 (b), 3 (b), 4 (b) and 5 (b) set forth in said table; in respect of the Benue Special Account, Categories 1 (c), 2 (c), 3 (c), 4 (c) and 5 (c) set forth in said table; in respect of the Ebonyi Special Account, Categories 1 (d), 2 (d), 3 (d), 4 (d) and 5 (d) set forth in said table; in respect of the Kaduna Special Account, Categories 1 (e), 2 (e), 3 (e), 4 (e), and 5 (e) set forth in said table; in respect of the Lagos Special Account, Categories 1 (f), 2 (f), 3 (f), 4 (f), and 5 (f) set forth in said table; in respect of the Taraba Special Account, Categories 1 (g), 2 (g), 3 (g), 4 (g), and 5 (g) set forth in said table; in respect of the Adamawa Special Account, Categories 1 (h), 2 (h), 3 (h), 4 (h), and 5 (h); in respect of the Cross River Special Account, Categories 1 (i), 2 (i), 3 (i), 4 (i), and 5 (i) ; in respect of the Imo Special Account, Categories 1 (j), 2 (j), 3 (j), 4 (j), and 5 (j); in respect of the Kano Special Account, Categories 1 (k), 2 (k), 3 (k), 4 (k), and 5 (k) ; in respect of the Plateau Special Account, Categories 1 (l), 2 (l), 3 (l), 4 (l), and 5 (l); in respect of the Nasarawa Special Account, Categories 1 (m), 2 (m), 3 (m), 4 (m), and 5 (m) ; in respect of the Anambra Special Account, Categories 1 (n), 2 (n), 3 (n), 4 (n), and 5 (n) ; in respect of the Borno Special Account, Categories 1 (o), 2 (o), 3 (o), 4 (o), and 5 (o) ; in respect of the Edo Special Account, Categories 1 (p), 2 (p), 3 (p), 4 (p), and 5 (p) ; in respect of the Federal Page 3 Capital Territory Special Account, Categories 1 (q), 2 (q), 3 (q), 4 (q), and 5 (q); in respect of the Oyo Special Account, Categories 1 (r), 2 (r), 3 (r), 4 (r), and 5 (r); and in respect of the Niger Special Account, Categories 1 (s), 2 (s), 3 (s), 4 (s), and 5 (s). (e) "Eligible Expenditures" means, in respect of a Special Account, the expenditures for works, goods and services referred to in Section 2.02 (a) of this Agreement and to be financed out of the proceeds of the Credit allocated from time to time to said Special Account’s respective Eligible Categories; (f) "Financial Procedures Manual" means the manual to be adopted pursuant to Section 6.01 (c) of this Agreement, containing accounting, financial reporting and auditing procedures for maintaining proper financial controls in the implementation of the Plan and Project; (g) "Grant Agreement" means the agreement referred to in paragraph 4 (c) of Schedule 4 to this Agreement; (h) "Grant" means a grant made or proposed to be made to an Implementor (as hereinafter defined) to finance a Subproject under Part C of the Project; (i) "HIV" means the Human Immuno-Deficiency Virus; (j) "HIV/AIDS Grants Manual" means the manual to be adopted pursuant to Section 6.01(c) of this Agreement, setting forth the procedures, guidelines, processes, timetables and criteria (including procedures, guidelines, eligibility and other criteria) for Grants, and the conduct and monitoring of Subprojects, as such manual may be amended from time to time with the prior agreement of the Association; (k) "IAPSO" means the Inter-Agency Procurement Services of the United Nations; (l) "IEC materials" means information, education and communication materials; (m) "Implementor" means a CBO, a private sector entity, including a religious body, an NGO (as hereinafter defined) or a research institution which has met the eligibility criteria set out in the HIV/AIDS Grants Manual and which, as a result, has received or is entitled to receive, a Grant for the carrying out of a Subproject (as hereinafter defined); (n) "LACA" means a Local Action Committee on AIDS to catalyze, facilitate and coordinate a multi-sectoral response to the HIV/AIDS epidemic at LGA levels; (o) "LGA" means a Local Government Administration or Area established and operating pursuant to the Borrower’s Constitution dated May 29, 1999, as may be amended from time to time; (p) "Line Ministries" means up to ten Ministries of the Borrower that have prepared action plans in accordance with paragraph 2 (a) (ii) of Schedule 4 to this Agreement, including the Borrower’s Ministries of Health, Education, and Defense; (q) "NACA" means the National Action Committee on AIDS, created by letter of the President and Commander-in-Chief dated January 11, 2000; (r) "Naira" means the currency of the Borrower; (s) "NGO" means a non-governmental organization not-for-profit entity established and operating under the laws of the Borrower; (t) "NPT" means the National Program Team to be established pursuant to Section 6.01 (d) of this Agreement; (u) "Participating State" means any of the Borrower's States which have entered into a Subsidiary Agreement with the Borrower in accordance with the provisions set forth in Schedule 5 to this Agreement; (v) "Project Account" means the account referred to in Section 3.03 (a) of this Agreement; (w) "Project Implementation Manual" or "PIM" means the manual to be adopted pursuant to Section 6.01 (b) of this Agreement for implementation of the Project, Page 4 giving details of procurement and disbursement arrangements, performance indicators, terms of reference of staff and other administrative, financial and organizational arrangements; (x) "Project Management Report" means each report prepared in accordance with Section 4.02 of this Agreement; (y) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to the letter agreement signed on behalf of the Association on November 11, 2000 and on behalf of the Borrower on December 27, 2000; (z) "SACA" means a State Action Committee on AIDS in the Governor’s Office of the State concerned, to catalyze, facilitate and coordinate the response against the HIV/AIDS epidemic at State levels; (aa) "Special Accounts" means the accounts referred to in Part B of Schedule 1 to this Agreement; (bb) "SPT" means a State Program Team to coordinate implementation of the Plan at State levels; (cc) "Subproject" means a subproject to be carried out by an Implementor under Part C of the Project and which satisfies the eligibility criteria set out in paragraph 4 of Schedule 4 to this Agreement and in more detail in the provisions of the HIV/AIDS Grants Manual; (dd) "Subsidiary Agreements" means the agreements to be entered into between the Borrower and each of the Participating States pursuant to Section 3.01 (c) and Schedule 5 of this Agreement, as the same may be amended from time to time, and such term includes all schedules to each of the Subsidiary Agreements; (ee) "UNFPA" means the United Nations Fund for Population Activities; (ff) "UNICEF" means the United Nations Children’s Emergency Fund; and (gg) "WHO" means the World Health Organization. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to seventy-one million Special Drawing Rights (SDR 71,000,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for: (i) expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of works, goods and services required for the Project and to be financed out of the proceeds of the Credit; and (ii) amounts paid (or, if the Association shall so agree, amounts to be paid) by a Participating State under Part C of the Project to meet the reasonable cost of works, goods and services required for a Subproject in respect of which the withdrawal from the Credit Account is requested. (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be canceled. Section 2.03. The Closing Date shall be June 30, 2006 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be Page 5 set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or canceled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date and at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next date in that year specified in Section 2.06 of this Agreement. (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on June 15 and December 15 in each year. Section 2.07. (a) Subject to paragraphs (b), (c) and (d) below, the Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 15 and December 15 commencing December 15, 2011 and ending June 15, 2036. Each installment to and including the installment payable on June 15, 2021 shall be one and one-fourth percent (1-1/4%) of such principal amount, and each installment thereafter shall be two and one-half percent (2-1/2%) of such principal amount. (b) Whenever: (i) the Borrower's per capita gross national product (GNP), as determined by the Association, shall have exceeded for three consecutive years the level established annually by the Association for determining eligibility to access the Association's resources; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the repayment of installments under paragraph (a) above by: (A) requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid; and (B) requiring the Borrower to commence repayment of the principal amount of the Credit as of the first semiannual payment date referred to in paragraph (a) above falling six months or more after the date on which the Association notifies the Borrower that the events set out in this paragraph (b) have occurred, provided, however, that there shall be a grace period of a minimum of five years on such repayment of principal. (c) If so requested by the Borrower, the Association may revise the modification referred to in paragraph (b) above to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (d) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Page 6 Project as set forth in Schedule 2 to this Agreement and, to this end, shall: (i) carry out the Project at national levels through NACA and Line Ministries; and (ii) cause the Participating States to carry out the Project at State and local levels through the respective SACAs and Line Ministries; all with due diligence and efficiency and in conformity with appropriate administrative, financial and health 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 Association shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement. (c) The Borrower shall onlend a portion of the proceeds of the Credit allocated from time to time to Categories (1), (2), (3), (4) and (5) to the Participating States under Subsidiary Agreements to be entered into between the Borrower and Participating States, on the same terms as this Credit, and which shall include the terms and conditions set forth in Schedule 5 to this Agreement. (d) The Borrower shall exercise its rights under each Subsidiary Agreement in such a manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive any of the Subsidiary Agreements or any provision thereof. Section 3.02. Except as the Association shall otherwise agree, procurement of the works, goods and consultants’ services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. Without limitation to its obligations under Section 3.01 of this Agreement, the Borrower shall, and shall cause each of the Participating States to: (a) open and maintain accounts in Naira in a commercial bank acceptable to the Association on terms and conditions satisfactory to the Association (the "Project Accounts"); (b) promptly thereafter, make an initial deposit equivalent to $400,000 into NACA's Project Account, and cause each Participating State to make an initial deposit equivalent to $100,000 into said Participating State's Project Account, to finance the Borrower’s and Participating State's contribution to the costs of the Project; (c) thereafter deposit into each such Project Account, on a quarterly basis, the amount required to replenish said Project Account up to the Borrower's and Participating State’s contribution to the costs of the Project; and (d) use the funds in said Project Account exclusively to finance expenditures under the Project and not otherwise financed out of the proceeds of the Credit. Section 3.04. For the purposes of Section 9.07 of the General Conditions and without limitation thereto, the Borrower shall cause NACA to: (a) prepare, on the basis of guidelines acceptable to the Association, and furnish to the Association not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, a plan for the future operation of the Project; and (b) afford the Association a reasonable opportunity to exchange views with the Borrower on said plan. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained a financial management system, including records and accounts, and prepare financial statements in a format acceptable to the Association, 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 Page 7 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 Federal Special Account and Special Accounts for Participating States for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six 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 Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of Project Management Reports or 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 Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association’s representatives to examine such records; and (iv) ensure that such 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 Project Management Reports or 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. Section 4.02. (a) Without limitation upon the provisions of Section 4.01 of this Agreement, the Borrower shall carry out a time-bound action plan acceptable to the Association for the strengthening of the financial management system referred to in paragraph (a) of said Section 4.01 in order to enable the Borrower, not later than December 31, 2002, or such later date as the Association shall agree, to prepare quarterly Project management reports, acceptable to the Association, each of which: (i) (A) sets forth actual sources and applications of funds for the Project, both cumulatively and for the period covered by said report, and projected sources and applications of funds for the Project for the six-month period following the period covered by said report, and (B) shows separately expenditures financed out of the proceeds of the Credit during the period covered by said report and expenditures proposed to be financed out of the proceeds of the Credit during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and (B) explains variances between the actual and previously forecast implementation targets; and (iii) sets forth the status of procurement under the Project and expenditures under contracts financed out of the proceeds of the Credit, as at the end of the period covered by said report. (b) Upon the completion of the action plan referred to in paragraph (a) of Page 8 this Section, the Borrower shall prepare, in accordance with guidelines acceptable to the Association, and furnish to the Association not later than 45 days after the end of each calendar quarter a Project Management Report for such period. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (l) of the General Conditions, the following additional event is specified, namely, that a situation has arisen which shall make it improbable that the Plan, or a significant part thereof, will be carried out. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) Subsidiary Agreements have been executed between the Borrower and at least three Participating States; (b) the Borrower has caused NACA to adopt the Project Implementation Manual in form and substance satisfactory to the Association, including a procurement plan for the first year of the Project; (c) the Borrower has caused NACA to adopt the HIV/AIDS Grants Manual and the Financial Procedures Manual, in form and substance satisfactory to the Association; (d) the NPT has been established, with a Project manager, accountant, internal auditor, and procurement officer, with qualifications and experience, and employed on terms and conditions (including terms of reference) satisfactory to the Association; (e) SPTs have been established in each of the Participating States that have met the condition set forth in paragraph (a) above, each staffed with a Project manager, accountant, an internal auditor, and a procurement officer, with qualifications and experience and employed on terms and conditions (including terms of reference) satisfactory to the Association; (f) NACA and each of the Participating States referred to in paragraph (a) of this Section have appointed in accordance with the provisions of Section II of Schedule 3 to this Agreement: (i) an independent auditor; and (ii) consultants to assist the NPT and SPTs to develop the requisite capacities in financial management and procurement required for Project implementation; (g) NACA and the three Participating States referred to in paragraph (a) of this Section have established financial management systems acceptable to the Association and have adopted action plans to enhance the effectiveness of such financial management systems; and (h) NACA and the three Participating States referred to in paragraph (a) of this Section have opened their respective Project Account, by depositing therein the initial deposit referred to in Section 3.03 (b) of this Agreement. Section 6.02. 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 Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower responsible for finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Page 9 Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Honorable Minister Federal Ministry of Finance Ahmadu Bello Way Abuja, Nigeria Cable address: FEDMINFIN Abuja For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: Facsimile: INDEVAS 248423 (MCI) or (202) 477-6391 Washington, D.C. 64145 (MCI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in Abuja, Nigeria as of the day and year first above written. FEDERAL REPUBLIC OF NIGERIA By /s/ Adamu Ciroma Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Peter Lutz Woicke Acting Regional Vice President Africa SCHEDULE 1 Withdrawal of the Proceeds of the Credit A. General 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed Page 10 (1) Civil works: 100% of foreign ex- (a) Federal 150,000 penditures and (b) Akwa-Ibom 170,000 85% of local ex- (c) Benue 170,000 penditures (d) Ebonyi 170,000 (e) Kaduna 170,000 (f) Lagos 170,000 (g) Taraba 170,000 (h) Adamawa 130,000 (i) Cross River 130,000 (j) Imo 130,000 (k) Kano 130,000 (l) Plateau 130,000 (m) Nasarawa 130,000 (n) Anambra 100,000 (o) Borno 100,000 (p) Edo 100,000 (q) Federal Capital 100,000 Territory (r) Oyo 100,000 (s) Niger 100,000 (2) Goods: 100% of foreign (a) Federal 1,100,000 expenditures and (b) Akwa-Ibom 630,000 90% of local (c) Benue 630,000 expenditures (d) Ebonyi 630,000 (e) Kaduna 630,000 (f) Lagos 630,000 (g) Taraba 630,000 (h) Adamawa 550,000 (i) Cross River 550,000 (j) Imo 550,000 (k) Kano 550,000 (l) Plateau 550,000 (m) Nasarawa 550,000 (n) Anambra 460,000 (o) Borno 460,000 (p) Edo 460,000 (q) Federal Capital 460,000 Territory (r) Oyo 460,000 (s) Niger 460,000 (3) Grants for 100% of amounts Subprojects: disbursed (a) Federal 8,000,000 (b) Akwa-Ibom 1,070,000 (c) Benue 1,070,000 (d) Ebonyi 1,070,000 (e) Kaduna 1,070,000 (f) Lagos 1,070,000 (g) Taraba 1,070,000 (h) Adamawa 850,000 (i) Cross River 850,000 (j) Imo 850,000 (k) Kano 850,000 (l) Plateau 850,000 (m) Nasarawa 850,000 (n) Anambra 650,000 (o) Borno 650,000 (p) Edo 650,000 (q) Federal Capital 650,000 Territory (r) Oyo 650,000 (s) Niger 650,000 (4) Consultants’ 100% services, training, study tours and audits Page 11 (a) Federal 3,250,000 (b) Akwa-Ibom 1,110,000 (c) Benue 1,110,000 (d) Ebonyi 1,110,000 (e) Kaduna 1,110,000 (f) Lagos 1,110,000 (g) Taraba 1,110,000 (h) Adamawa 910,000 (i) Cross River 910,000 (j) Imo 910,000 (k) Kano 910,000 (l) Plateau 910,000 (m) Nasarawa 910,000 (n) Anambra 670,000 (o) Borno 670,000 (q) Edo 670,000 (p) Federal Capital 670,000 Territory (r) Oyo 670,000 (s) Niger 670,000 (5) Incremental Operating 80% Costs (a) Federal 2,230,000 (b) Akwa-Ibom 370,000 (c) Benue 370,000 (d) Ebonyi 370,000 (e) Kaduna 370,000 (f) Lagos 370,000 (g) Taraba 370,000 (h) Adamawa 300,000 (i) Cross River 300,000 (j) Imo 300,000 (k) Kano 300,000 (l) Plateau 300,000 (m) Nasarawa 300,000 (n) Anambra 230,000 (o) Borno 230,000 (q) Edo 230,000 (p) Federal Capital 230,000 Territory (r) Oyo 230,000 (s) Niger 230,000 (6) Refunding of 470,000 Amount due pursuant Project Preparation to Section 2.02 (b) of Advance this Agreement (7) Unallocated 6,600,000 TOTAL 71,000,000 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 works, 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 incremental operating costs arising under the Project on account of maintenance of vehicles, fuel, equipment, office supplies, utilities, consumables, travel per diem and allowances, travel and accommodation, office rental and Project support staff recruited to work in the NPT and respective SPTs, excluding salaries of civil servants. 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 Agreement; (b) payments under Categories (1) (b) through (s); (2) (b) through (s); (3) (b) through (s); (4) (b) through (s); and (5) (b) through (s), with respect to any Participating State, until a Subsidiary Agreement between the Borrower and such Page 12 Participating State is binding and has become effective; and (c) payments under Category (3) unless the Subproject in question has been approved by the NACA or the appropriate SACA in accordance with the procedures, guidelines, eligible criteria, and other provisions set out or referred to paragraph 4 of Schedule 4 to this Agreement and in the HIV/AIDS Grant Manual. 4. The Association may require withdrawals from the Credit Account to be made on the basis of statements of expenditure for expenditures for: (a) works and goods under contracts not exceeding $100,000 equivalent; (b) services of consulting firms under contracts not exceeding $100,000 equivalent; (c) services of individual consultants under contracts not exceeding $50,000 equivalent; (d) training and study tours; and (e) Incremental Operating Costs; all under such terms and conditions as the Association shall specify by notice to the Borrower. B. Special Accounts 1. The Borrower shall open and maintain in dollars nineteen separate special deposit accounts (the Federal Special Account, and a Special Account for each Participating State) in commercial banks, on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure and attachment. 2. After the Association has received evidence satisfactory to it that the Special Accounts have been opened, withdrawals from the Credit Account of amounts to be deposited into said Special Accounts shall be made as follows: (a) until the Association shall have received: (i) the first Project Management Report referred to in Section 4.02 (b) of this Agreement; and (ii) a request from the Borrower for withdrawal on the basis of Project Management Reports, withdrawals shall be made in accordance with the provisions of Annex A to this Schedule 1; and (b) upon receipt by the Association of a Project Management Report pursuant to Section 4.02 (b) of this Agreement, accompanied by a request from the Borrower for withdrawal on the basis of Project Management Reports, all further withdrawals shall be made in accordance with the provisions of Annex B to this Schedule 1. 3. Payments out of each Special Account shall be made exclusively for Eligible Expenditures. For each payment made by the Borrower out of a Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for Eligible Expenditures. 4. Notwithstanding the provisions of Part B.2 of this Schedule, the Association shall not be required to make further deposits into any Special Account: (a) if the Association determines at any time that any Project Management Report does not adequately provide the information required pursuant to Section 4.02 of this Agreement; (b) if the Association determines at any time that all further withdrawals should be made by the Borrower directly from the Credit Account; or (c) if the Borrower shall have failed to furnish to the Association within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Association pursuant to said Section in respect of the audit of: (A) the records and accounts for any Special Account; or (B) the records and accounts reflecting expenditures with respect to which withdrawals were made on the basis of Project Management Reports. 5. The Association shall not be required to make further deposits into any Special Account in accordance with the provisions of Part B.2 of this Schedule if, at any time, the Association shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Credit Account pursuant to Section 6.02 of the General Conditions. Upon such notification, the Association shall determine, in its sole discretion, whether further deposits into the Special Accounts may be made and what procedures should be followed for making such deposits, and shall notify the Borrower of its determination. 6. (a) If the Association determines at any time that any payment out of any Special Account was made for an expenditure which is not an Eligible Expenditure, or was not justified by the evidence furnished to the Association, the Borrower shall, Page 13 promptly upon notice from the Association, provide such additional evidence as the Association may request, or deposit into said Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment. Unless the Association shall otherwise agree, no further deposit by the Association into any 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 Association determines at any time that any amount outstanding in any Special Account will not be required to cover payments for Eligible Expenditures during the six-month period following such determination, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in a Special Account. (d) Refunds to the Association made pursuant to sub-paragraph (a), (b) or (c) of this paragraph 6 shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the provisions of the Development Credit Agreement. Annex A to SCHEDULE 1 Operation of Special Accounts When Withdrawals Are Not Made On the Basis of Project Management Reports 1. For the purposes of this Annex: (a) the term "Authorized Allocation" means: (i) in respect of the Federal Special Account, an amount equivalent to $1,200,000 to be withdrawn from the Credit Account and deposited into said Special Account pursuant to paragraph 2 of this Annex; provided, however, that, unless the Association shall otherwise agree, said Authorized Allocation shall be limited to an amount equivalent to $600,000, until the aggregate amount of withdrawals from the Credit Account of amounts allocated to said Special Account’s Eligible Categories, plus the total amount of all outstanding special commitments entered into by the Association pursuant to Section 5.02 of the General Conditions in respect of amounts allocated to said Categories, shall equal or exceed the equivalent of SDR 3,000,000. (ii) in respect of a Participating State Special Account, an amount equivalent to $400,000 to be withdrawn from the Credit Account and deposited into said Special Account pursuant to paragraph 2 of this Annex; provided, however, that, unless the Association shall otherwise agree, said Authorized Allocation shall be limited to an amount equivalent to $200,000, until the aggregate amount of withdrawals from the Credit Account of amounts allocated to said Special Account’s Eligible Categories, plus the total amount of all outstanding special commitments entered into by the Association pursuant to Section 5.02 of the General Conditions in respect of amounts allocated to said Categories, shall equal or exceed the equivalent of SDR 1,000,000. 2. Withdrawals of a Special Account’s Authorized Allocation and subsequent withdrawals to replenish said Special Account shall be made as follows: (a) For withdrawals of said Special Account’s Authorized Allocation, the Borrower shall furnish to the Association a request or requests for deposit into said Special Account of an amount or amounts which in the aggregate do not exceed said Authorized Allocation. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into said Special Account such amount as the Borrower shall have requested. (b) For replenishment of said Special Account, the Borrower shall furnish to the Association requests for deposit into said Special Account at such intervals as the Association shall specify. Prior to or at the time of each such request, the Page 14 Borrower shall furnish to the Association the documents and other evidence required pursuant to Part B.3 of Schedule 1 to this Agreement for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into said 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 said Special Account for Eligible Expenditures. Each such deposit into said Special Account shall be withdrawn by the Association from the Credit Account under one or more of said Special Account’s Eligible Categories. 3. The Association shall not be required to make further deposits into a Special Account, once the total unwithdrawn amount of the Credit allocated to said Special Account’s Eligible Categories minus the total amount of all outstanding special commitments entered into by the Association pursuant to Section 5.02 of the General Conditions in respect of expenditures to be financed out of the proceeds of the Credit allocated to said Categories, shall equal the equivalent of twice the amount of said Special Account’s Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to said Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in said Special Account as of the date of such notice will be utilized in making payments for Eligible Expenditures. Annex B to SCHEDULE 1 Operation of Special Account When Withdrawals Are Made On the Basis of Project Management Reports 1. Except as the Association may otherwise specify by notice to the Borrower, all withdrawals from the Credit Account shall be deposited by the Association into the Special Account in accordance with the provisions of Schedule 1 to this Agreement. Each such deposit into the Special Account shall be withdrawn by the Association from the Credit Account under one or more of the Special Account’s Eligible Categories. 2. Each application for withdrawal from the Credit Account for deposit into the Special Account shall be supported by a Project Management Report. 3. Upon receipt of each application for withdrawal of an amount of the Credit, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account an amount equal to the lesser of: (a) the amount so requested; and (b) the amount which the Association has determined, based on the Project Management Report accompanying said application, is required to be deposited in order to finance Eligible Expenditures during the six-month period following the date of such report; provided, however, that the amount so deposited, when added to the amount indicated by said Project Management Report to be remaining in the Special Account, shall not exceed the equivalent of $4,000,000. SCHEDULE 2 Description of the Project The objectives of the Project are to: (i) assist the Borrower in financing a portion of the Plan; (ii) reduce the spread of the HIV/AIDS epidemic; (iii) mitigate the socio-economic and health impact of HIV/AIDS; and (iv) increase access to care and support for people infected by HIV and for people affected by the HIV/AIDS epidemic, through the expansion of HIV/AIDS services at the Federal, State, and local levels with participation of public and private sector entities, NGOs and CBOs. The Project consists of the following Parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Capacity Development 1. Strengthening the institutional, financial and technical capacity of the Borrower’s agencies, organizations, and public sector entities participating in HIV/AIDS epidemic control activities and efforts, including strengthening or Page 15 establishment of Coordinating Bodies to: (a) prepare and implement plans under the Plan; (b) coordinate Project activities; and (c) monitor the progress of the Plan and Project, all through the provision of technical advisory services and training. 2. Development of a system to collect, organize and disseminate information on HIV/AIDS prevention and care, research, and best practices in other countries. Part B: Public Sector Strengthening the capacity of the Line Ministries at Federal and State levels to prepare and implement action plans prepared in accordance with paragraph 2 (a) (ii) of Schedule 4 to this Agreement, including but not limited to: 1. Provision of assistance to the Borrower's Ministries of Health to: develop and extend an integrated tuberculosis management system; expand treatment services for sexually transmitted infections; improve blood safety; disseminate clinical protocols to manage HIV infection, sexually transmitted and opportunistic infections; improve safe handling of laboratory and medical materials and waste; distribute essential supplies; initiate a program for prevention of mother to child transmission; strengthen the HIV/AIDS serosurveillance system; improve availability of condoms; carry out a program to improve the knowledge base of HIV/AIDS, using IEC materials; and provide HIV-related counseling on HIV/AIDS prevention, diagnosis, clinical management and social support; and provide civil service personnel with HIV and STI-related prevention, care and mitigation services. 2. Provision of assistance to the Borrower's Ministries of Education to: introduce an HIV/AIDS curriculum; ensure access to school by children and teachers living with HIV/AIDS; expand HIV/AIDS-related counseling and testing to schools, colleges and institutions of higher education; develop policies for education of orphans; and provide HIV-related counseling to the Ministry workforces. 3. Provision of assistance to the Ministry of Defense to: train health care providers, care givers, social workers and counselors on HIV/AIDS prevention, diagnosis, clinical management and social support; and provide military personnel with HIV and STI-related prevention, care and mitigation services. 4. Provision of assistance to other Line Ministries to carry out action plans that are prepared in accordance with paragraph 2 (a) (ii) of Schedule 4 to this Agreement. Part C: HIV/AIDS Grants 1. Provision of Grants to Implementors at State and local levels for the benefit of communities in Participating States and to Implementors at Federal levels for use in the implementation, management and maintenance of Subprojects for HIV/AIDS related activities. 2. Assisting Implementors to prepare Subprojects for a multisector response to the HIV/AIDS epidemic. * * * The Project is expected to be completed by December 31, 2005. SCHEDULE 3 Procurement and Consultants’ Services Section I. Procurement of Goods and Works Part A: General 1. Goods and works shall be procured in accordance with: (a) the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 and revised in January and August 1996, September 1997 and January 1999 (the Guidelines); and (b) the provisions of the following Parts of this Section I. 2. In paragraphs 1.6 and 1.8 of the Guidelines, the references to "Bank member countries" and "member country" shall be deemed to be references, respectively, to "Participating Countries" and "Participating Country". Page 16 Part B: International Competitive Bidding 1. Except as otherwise provided in Part C of this Section, goods and works shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix 1 thereto. 2. The following provisions shall apply to goods and works to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B. (a) Grouping of contracts To the extent practicable, contracts for goods and works shall be grouped in bid packages estimated to cost $150,000 equivalent or more each. (b) Preference for domestically manufactured goods The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Borrower. Part C: Other Procurement Procedures 1. Procurement for Emergency Purposes The following items if: (i) listed on a procurement plan for the Project satisfactory to the Association and determined by the Borrower and the Association as emergency requirements for purposes of the Project; and (ii) procured by NPT or an SPT under contracts awarded within a period not later than 12 months after the Effective Date, may in the case of: (A) computers and accessories, office and power equipment for NACA and SACAs (up to an aggregate amount not to exceed $200,000 equivalent) be procured either under contracts awarded on the basis of international shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines, or from IAPSO in accordance with the provisions of paragraph 3.9 of the Guidelines; and (B) vehicles (up to an aggregate amount not to exceed $500,000 equivalent) be procured: (A) from IAPSO in accordance with the provisions of paragraph 3.9 of the Guidelines; and/or (B) under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 2. National Competitive Bidding Except as otherwise provided in paragraph 1 of this Part, works and goods estimated to cost less than $150,000 equivalent per contract, up to an aggregate amount not to exceed $2,000,000 equivalent, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. 3. International and National Shopping Subject to the provisions of paragraph 1 of this Part, goods estimated to cost less than $30,000 equivalent per contract, up to an aggregate amount not to exceed $8,800,000 equivalent, may be procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 4. Procurement from UN Agencies Goods estimated to cost less than $50,000 equivalent per contract, up to an aggregate amount not to exceed $5,000,000 equivalent, may be procured from IAPSO, UNFPA, UNICEF, and WHO, all in accordance with the provisions of paragraph 3.9 of the Guidelines. 5. Force Account Works costing $5,000 equivalent or less per contract, up to an aggregate amount not to exceed $1,000,000 equivalent, may, with the Association's prior agreement, be carried out by force account in accordance with the provisions of paragraph 3.8 of the Guidelines. Page 17 6. Direct Contracting HIV/AIDS testing reagents, up to an aggregate amount not to exceed $200,000 equivalent, may, with the Association's prior agreement, be procured in accordance with the provisions of paragraph 3.7 of the Guidelines. 7. Community Participation Works, goods and services required for Part C of the Project shall be procured in accordance with procedures acceptable to the Association. 8. Procurement of Small Works Works estimated to cost less than $10,000 equivalent per contract, up to an aggregate amount not to exceed $3,700,000 equivalent, may be procured under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from three (3) qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description of the works, including basic specifications, the required completion date, a basic form of agreement acceptable to the Association, and relevant drawings, where applicable. The award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to complete the contract successfully. Part D: Review by the Association of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitation to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Association for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Association, and with the provisions of said paragraph 1. 2. Prior Review (a) The procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply to the following: (i) each contract for goods procured by direct contracting; (ii) each contract for goods and works estimated to cost the equivalent of $100,000 or more; (iii) the first contract for works to be procured by each Line Ministry; and (iv) the first contract for goods to be procured under national competitive bidding procedures by each Line Ministry, the first contract for goods and works to be procured under national competitive bidding procedures by NPT, and the first two contracts for goods and works to be procured under national competitive bidding procedures by each SPT. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II. Employment of Consultants Part A: General 1. Consultants’ services shall be procured in accordance with (a) the provisions of the Introduction and Section IV of the "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" published by the Association in January 1997 and revised in September 1997 and January 1999, subject to the modifications thereto set forth in paragraph 2 of this Part A (the Consultant Guidelines), and (b) the provisions of the following Parts of this Section II. Page 18 2. In paragraph 1.10 of the Consultant Guidelines, the references to "Bank member countries" and "member country" shall be deemed to be references, respectively, to "Participating Countries" and "Participating Country". Part B: Quality- and Cost-Based Selection 1. Except as otherwise provided in Part C of this Section, consultants’ services shall be procured under contracts awarded in accordance with the provisions of Section II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to quality- and cost-based selection of consultants. 2. The following provisions shall apply to consultants’ services to be procured under contracts awarded in accordance with the provisions of the preceding paragraph. The short-list of consultants for services estimated to cost less than $150,000 equivalent per contract, may comprise entirely national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Part C: Other Procedures for the Selection of Consultants 1. Least-cost Selection Services for: (i) financial audits; and (ii) other repetitive tasks, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.1 and 3.6 of the Consultant Guidelines. 2. Individual Consultants Services for tasks that meet the requirements set forth in paragraph 5.1 of the Consultant Guidelines may be procured under contracts awarded to individual consultants in accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines. 3. Selection Based on Consultants’ Qualifications Services estimated to cost less than $100,000 equivalent per contract may be procured under contracts awarded in accordance with the provisions of paragraphs 3.1 and 3.7 of the Consultant Guidelines. 4. Single Source Selection Services for tasks that meet the requirements set forth in paragraph 3.8 of the Consultant Guidelines may, with the Association's prior agreement, be procured in accordance with the provisions of paragraphs 3.8 through 3.11 of the Consultant Guidelines. Part D: Review by the Association of the Selection of Consultants 1. Selection Planning Prior to the issuance to consultants of any requests for proposals, the proposed plan for the selection of consultants under the Project shall be furnished to the Association for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Consultant Guidelines. Selection of all consultants’ services shall be undertaken in accordance with such selection plan as shall have been approved by the Association, and with the provisions of said paragraph 1. 2. Prior Review (a) With respect to each contract for the employment of consulting firms estimated to cost the equivalent of $100,000 or more, and each contract for assignments of a critical nature, as reasonably determined by the Association, the procedures set forth in paragraphs 1, 2 (other than the third subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the Consultant Guidelines shall apply. (b) With respect to each contract for the employment of individual consultants estimated to cost the equivalent of $50,000 or more, the qualifications, experience, terms of reference and terms of employment of the consultants shall be furnished to the Association for its prior review and approval. The contract shall be awarded only after the said approval shall have been given. (c) With respect to each contract awarded by single source selection, the Page 19 qualifications, experience, terms of reference and terms of employment of the consultants shall be furnished to the Association for its prior review and approval. The contract shall be awarded only after the said approval shall have been given. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Consultant Guidelines shall apply. SCHEDULE 4 Implementation Program 1. The Borrower shall cause NACA to carry out the Project in accordance with the Project Implementation Manual, the HIV/AIDS Grants Manual, and the Financial Procedures Manual and, except as the Association shall otherwise agree, shall not amend or waive any provision of the PIM, the HIV/AIDS Grants Manual or the Financial Procedures Manual if, in the opinion of the Association, such amendment or waiver may materially and adversely affect the carrying out of the Project or the achievement of the objectives thereof. 2. (a) The Borrower, through: (i) NACA, shall maintain the NPT in a form and with functions, staffing and resources satisfactory to the Association, including a Project Accountant and Internal Auditor; (ii) Line Ministries shall submit to NACA annual action plans under the Plan by September 1 in each year for approval in accordance with the Project Implementation Manual; and (iii) NACA at the national level and the respective SACAs at the State level shall submit annual action plans under the Plan by November 1 in each year under the Plan for approval by the Association and NACA, respectively, in accordance with the Project Implementation Manual. (b) The Borrower shall cause each Participating State to maintain a multi-sectoral SACA and the respective SPT in a form and with functions, staffing and resources satisfactory to the Association, including a Project accountant and internal auditor. (c) The NPT shall assist in the strengthening of the capacity of the SPTs for technical, impact assessment, financial audits, participatory community appraisal techniques, and monitoring and evaluation of Project activities. (d) At least one-third of the membership of each SACA shall be drawn from civil society, including at least one person from an organization representing people living with HIV/AIDS. 3. The NPT shall, by September 1 in each year: (i) report to the NACA on the discharge of its functions under the Project; and (ii) furnish to NACA for its approval, consolidated annual work programs, related annual budget proposals, various progress reports and other documents relating to functioning of the NPT. 4. (a) With respect to Part C of the Project, proposed Implementors shall have: (i) developed a specific action plan; (ii) acquired a legal personality; and (iii) opened a bank account into which part of the proceeds of the Credit would be channeled. (b) Subprojects shall consist of eligible specific activities to fight against HIV/AIDS as part of the action plan referred to in (a) above and set forth in detail in the HIV/AIDS Grants Manual. Said activities shall include, but not be limited to: IEC activities, awareness and prevention campaigns, promotion of behavior change, other support to orphans and AIDS patients, condom distribution, and community-based care activities. (c) NACA and the SACAs shall make proceeds of the HIV/AIDS Grants available to an Implementor for implementation of a Subproject on a grant basis, under an Page 20 agreement, satisfactory to the Association, to be entered into between NACA or a SACA and the Implementor (the Grant Agreement). Subprojects shall be approved in accordance with the procedures, guidelines, eligible criteria and other provisions set forth in detail in the HIV/AIDS Grants Manual and outlined hereunder, which shall include the requirement for a counterpart contribution from Implementors. (d) The Grant Agreement shall provide for rights adequate to protect the interests of the Association, the Borrower, NACA, and respective SACAs, including to the extent that it shall be appropriate, the right to require the Implementor to: (i) carry out the Subproject in accordance with annual action plans approved by the respective Coordinating Body with due diligence and efficiency and in accordance with sound administrative, financial, health, technical and managerial standards; (ii) maintain adequate records for the Subproject concerned; (iii) procure all goods, works and services required for a Subproject in accordance with the provisions of Schedule 3 to this Agreement; (iv) use the goods, works and services so procured exclusively in the carrying out of the Subproject; (v) permit NPT or the SPT to inspect, by itself or jointly with representatives of the Association, if the Association shall so request, any goods, works, plants and construction included in the Subproject, the operation thereof, and any relevant records and documents; and (vi) specify the contribution to be made by an Implementor carrying out a Subproject to the total costs of the Subproject. 5. The Borrower shall cause NACA to prepare and furnish to the Association: (a) by September 30, 2002, an effective HIV/AIDS information system, including a robust surveillance system at the Federal level and by December 31, 2002 a master plan for the development of a comprehensive information system including the Participating States, with targets and schedules for project inputs, process, output and outcome indicators. (b) by September 30, 2002, detailed instruments for monitoring and evaluation, including data collection forms, reporting formats and analytical methodologies for use by Federal, Participating States, LGAs and Communities. (c) by December 31, 2002, a comprehensive review to evaluate data concerning key performance indicators and related socio-cultural and behavioral aspects of the HIV/AIDS epidemic, including institutional capacities to cope with the epidemic. 6. (a) The Borrower shall cause NACA no later than October 30 each year: (i) to undertake, with the participation of the Association and other development partner agencies, an in-depth review of the carrying out of the Project; and (ii) to take all necessary action to ensure the participation in the said annual review of representatives of the Participating States, LGAs, NGOs and CBOs. The annual review shall assess the following: (A) the overall progress made in the implementation of the Project; (B) the results of the monitoring and evaluation activities; and (C) the replicability of Project activities on a wider scale. (b) The Borrower shall, cause NACA, three months before such review, to prepare and furnish to the Association reports including a technical audit and Implementor assessment, in scope and detail satisfactory to the Association, needed to undertake the review, including preparation of a program of action to deal with deficiencies in Project implementation identified prior to such review. (c) The Borrower through NACA shall, based on such review, promptly prepare an action plan, satisfactory to the Association, for the further implementation of the Project, and shall thereafter implement such action plan. 7. The Borrower shall cause NACA to: (a) maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to the Association, the carrying out of the Project and the achievement of the objectives Page 21 thereof; (b) prepare, under terms of reference satisfactory to the Association, and furnish to the Association, on or about January 31 of each year, a report integrating the results of the monitoring and evaluation activities performed pursuant to paragraph (a) of this Section, on the progress achieved in the carrying out of the Project during the period preceding the date of said report and setting out the measures recommended to ensure the efficient carrying out of the Project and the achievement of the objectives thereof during the period following such date; and (c) review with the Association, by February 28, 2004, or such later date as the Association shall request, the report referred to in paragraph (b) of this Section, and, thereafter, take all measures required to ensure the efficient completion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Association’s views on the matter. Schedule 5 Terms and Conditions of Subsidiary Agreements With Participating States Required Pursuant to Section 3.01 (c) of this Agreement 1. The terms and conditions of each Subsidiary Agreement shall include the following obligations of each Participating State to: (a) carry out the Project with due diligence and efficiency, in conformity with appropriate administrative, financial and health practices and in accordance with the Project Implementation Manual, the HIV/AIDS Grants Manual, the Financial Procedures Manual, and the Implementation Program in Schedule 4 of this Agreement; and provide, or cause to be provided, promptly as needed, the facilities, services and other resources required for the Project; (b) comply with the procedures for procurement of goods, works and consultant services set forth in Section 3.02 of this Agreement; (c) comply with record keeping, auditing and report requirements set forth in Section 4.01 of this Agreement with respect to the Project, including the annual auditing of its records and accounts in respect of the Project (operations, resources and expenditures in respect of the Project); (d) carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project; (e) at the request of the Borrower or the Association, exchange views with the Borrower and the Association with regard to the progress of the Project and the performance of its obligations under the Subsidiary Agreement; (f) promptly inform the Borrower and the Association of any condition which interferes or threatens to interfere with the progress of the Project, or the performance by said Participating State of its obligations under the Subsidiary Agreement; and (g) except as the Borrower and the Association shall otherwise agree, neither take nor concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Agreement or any provision thereof. 2. The Subsidiary Agreements shall include a provision stipulating that in case of conflict between a Subsidiary Agreement and this Agreement, the latter shall apply. 3. A Subsidiary Agreement shall not become effective until evidence satisfactory to the Association shall have been furnished to the Association establishing that: (i) a Subsidiary Agreement has been executed on behalf of the Borrower and said Participating State; (ii) a SACA has been established in said Participating State; (iii) an SPT has been established in said Participating State with a duly qualified and experienced Project manager, accountant, an Page 22 internal auditor, and a procurement officer, with qualifications and experience and employed on terms and conditions (including terms of reference) satisfactory to the Association; (iv) said Participating State has adopted the HIV/AIDS Grants Manual and the Financial Procedures Manual; (v) said Participating State has appointed, in accordance with the provisions of Section II of Schedule 3 to this Agreement, an independent auditor; (vi) said Participating State has appointed in accordance with the provisions of Section II of Schedule 3 to this Agreement a consultant to assist the SPT to develop the requisite capacities in financial management and procurement; (vii) said Participating State has established a financial management system acceptable to the Association and has adopted an action plan to enhance the effectiveness of such financial management system; and (viii) said Participating State has opened a Project Account and deposited therein $100,000.