LOAN AGREEMENT. between. and

Transcription

1 CONFORMED LOAN NUMBER 1373 IND LOAN AGREEMENT (Nutrition Development Project) between REPUBLIC OF INDONESIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Dated March 14, 1977

2 LOAN AGREEMENT AGREEMENT, dated March 14, 1977, between REPUBLIC OF INDONESIA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECON- STRUCTION AND DEVELOPMENT (hereinefter called the Bank).

3 - 2 - ARTICLE I General Conditions; Definitions Section The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "MOH" neans the Borrower's Ministry of Health, and includes any successor in function thereto; (b) "MOE" means the Borrower's Ministry of Education and Culture, and includes any successor in function thereto; (c) "MOA" means the Borrower's Ministry of Agriculture, and includes any successor in function thereto; (d) "MTC" means the Borrower's Ministry of Manpower, Transmigration and Cooperatives, and includes any successor in function thereto;

4 - 3 - (e) "MHA" means the Borrower's Ministry of Home Affairs, and includes any successor in function thereto; (f) "MOI" means the Borrower's Ministry of Industry, and includes any successor in function thereto; (g) "BAPPENAS" means the Borrower's national development planning agency; (h) "CRDN" means Pusat Penelitian dan Pengembangan Gizi, the Borrower's Center for Research and Development in Nutrition, established and existing within MOH in accordance with Decree No. 114/MEN.KEs./XII/75 of the Borrower's Minister of Health; (i) "FTDC" means Pusat Pengembangan Teknologi Pangan, the Borrower's Food Technology Development Center at Bogor, to be established as a part of the Borrower's Agricultural University of Bogor within MOE; (j) "AETE" means the Borrower's Agricultural Education, Training and Extension Agency established and operating within MOA pursuant to Presidential Decrees Nos. 44 and 45 of 1974 of the Borrower and in accordance with Chapter IX of Decree No. 190/Kpts/Org/5/1975 of the Minister of Agriculture of the Borrower; (k) "DGFCA" means the Directorate General of Food Crops Agriculture of the MOA; (1) "FNU" means the Food. and Nutrition Unit established within MOA in accordance with the Decree of the Borrower's Minister of Agriculture No. 100/Kpts/OP/3/1975;

5 14 (m) "NIIHOH" means Lembaga Nasional Hygiene Perusahaan dan Kesehatan KerdJa, the Borrower's National Institute for Industrial Hygiene and Occupational Health, established and existing under the General Directorate of Occupational Health within MTC, in accordance with Decree No. 153 of 1969 dated August 27, 1969 of the Borrower's Minister of Manpower; (n) "Academy" means Akademi Gizi, the Borrower's Academy of Nutrition at Jakarta, established and existing within MOH in accordance with Decree No. 1190/Um/Pend. dated June 14, 1957 of the Borrower's Minister of Health, as amended by Decree No. 105/Pend dated December 27, 1966 of the Borrower's Minister of Health; (o) "NIPP" means a Nutrition Intervention Pilot Project, comprising a package of coordinated activities intended to bring about a direct improvement in the nutritional status of vulnerable target groups; (p) "Research Coordinating Committee" means the Committee established pursuant to Section 3.07 of this Agreement; (q) "Project Director" means the person who is designated to be responsible for overall coordination of the implementation of the Project; (r) "Project Co-Director" means any of the persons appointed as Co-Director in accordance with the provisions of paragraph 4 of Schedule 5 to this Agreement;

6 -5- (s) "Project Manager" means the person appointed within MOH to direct and coordinate the implementation of the Project, subject to the overall supervision of the Project Director; (t) "NIPP Coordinator" means the person appointed in MOH to administer, at the national level, Parts B.1 and B.2 of the Project; (u) "Kabupaten" means an administrative subdivision of a Province of the Borrower; and (v) "Governing Decrees" means any of: (i) Presidential Instruction No. 14 of 1974, dated September 13, 1974, establishing a Ministerial Committee responsible for coordinating and implementing nutrition programs on a national scale; (ii) Decree of the Borrower's Minister of State for People's Welfare No. 03/KEP/M/KESRA/II/1975, dated February 12, 1975, establishing a Technical Commission to provide technical support to the Ministerial Committee; and (iii) Decree of the Borrower's Minister of Health No. 092/S.J./II/1977, dated February 10, 1977, providing for the establishment of key positions for the implementation of the Project.

7 -6- ARTICLE II The Loan Section The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to thirteen million dollars ($13,000,000). Section The amount of the Loan may be withdrawn from the Loan 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 Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works required for the Project and to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section The Closing Date shall be March 31, 1982 or such later date as the Bank shel establish. The Bank shall promptly notify the Borrower of such later date.

8 -7- Section The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn rnd outstanding from time to time. Section Interest and other charges shall be payable semi-annually on June 15 and December 15 in each year. Section The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement.

9 -8- ARTICLE III Execution of the Project Section (a) The Borrower shall carry out or cause to be carried out the Project described in Schedule 2 to this Agreement with due diligence and efficiency and in conformity with appropriate nutritional, agricultural, administrative, economic, engineering and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Except as the Borrower and the Bank shall otherwise mutually agree, the organization and management for the Project shall be as set forth in Schedule 5 to this Agreement. Section In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ consultants whose qualifications and experience and terms and conditions of employment shall be satisfactory to the Bank. Section The Borrower shall afford the Bank a reasonable opportunity to comment on the qualifications and experience of any person proposed to be appointed to the positions of Project Director, Project Co-Director, Project Manager and NIPP Coordinator, prior to the time any such appointment is made.

10 - 9 - Section (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 Loan 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) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section (a) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds.

11 (c) Without limitation or restriction upon the provisions of subsections (a) and (b) of this Section 3.05, except as the Borrower and the Bank shall otherwise mutually agree, the Project Director shall be required to prepare and furnish to the Bank semi-annual reports, in form and substance satisfactory to the Bank, regarding the progress of the Project, including inter alia civil works, procurement, recruitment and training of key personnel. (d) The accounts of all agencies of the Borrower participating in the implementation of the Project or any part thereof, relating to the Project, which are to be kept pursuant to the provisions of Section 4.02 of this Agreement, shall be audited each fiscal year in accordance with appropriate auditing principles consistently applied by independent auditors acceptable to the Bank, and as soon as available, but in any case not later than six months after the end of each such year, the Bank shall be furnished with certified copies of such accounts for such year as so audited and the report of such audit by such auditors of such scope and in such detail as the Bank shall have reasonably requested. Both separate and consolidated accounts, as referred to in Section 4.02(b) of this Agreement, shall be so furnished. Section 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 Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to the Project.

12 Section Except as the Borrower and the Bank shall otherwise mutually agree, the Borrower shall, (i) by August 1, 1977, establish and thereafter maintain, on terms and conditions satisfactory to the Bank, a Research Coordinating Committee (Panitia Koordinasi Penelitian), to facilitate coordination of the nutrition related research programs being carried out by various institutes of the Borrower, and (ii) submit to the Bank annual progress reports on such programs in form and substance satisfactory to the Bank. Section Except as the Borrower and the Bank shall otherwise mutually agree, the Borrower shall, with respect to the NIPP program to be carried out under Part B.1 of the Project, (i) submit to the Bank not later than August 1, 1977, the plans of operations for the first two Kabupatens to be served by the NIPP program for approval, prior to commencing implementation of such plans; (ii) carry out a review of the NIPP program at the end of the second year of the NIPP program, with a view to determining any necessary changes in program direction and content; and (iii) select new Kabupatens to be served by the NIPP program in accordance with criteria established in consultation with the Bank, it being further agreed that the third and fourth Kabupatens shall be selected not later than October 1, 1977 and the remaining three Kabupatens not later than August 1, Section The Borrower shall in consultation with the Bank carry out a review of the home/village garden component of the NIPP program at the end of the third year of the NIPP program with a view to determining whether this component should be orepared for more general replication.

13 Section Except as the Borrower and the Bank shall otherwise mutually agree, the Borrower shall provide or cause to be provided through DGFCA, as and when required, no less than 10 additional extension staff for the home/village garden component of the NIPP program (Part B.2 of the Project).

14 ARTICLE IV Other Covenants Section (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circurustances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property;

15 and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) Without limitation or restriction upon the provisions of subsection (a) of this Section 4.02, the Borrower shall, (i) require that all of its agencies participating in the implementation of any part of the Project, maintain separate accounts in respect thereof; and (ii) establish and maintain within MOH, a project accounting unit responsible, inter alia, for consolidating the accounts maintained under (i) above.

16 ARTICLE V Remedies of the Bank Section For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of CRDN or FTDC or the FNU or for the suspension of all or part of the operations of CRDN or FTDC or the FNU and alternative arrangements satisfactory to the Bank for the carrying out of their respective research and work programs under the Project have not been made; and (b) The Governing Decrees or any provision thereof shall have been repealed, amended, suspended, varied or waived, so as to affect: (i) the carrying out of the Project; or (ii) the performance by the Borrower of any of its other obligations under this Agreement. Section For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) the event specified in paragraph (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of 30 days after notice thereof shall have been given by the Bank to the Borrower; and

17 (b) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur.

18 ARTICLE VI Termination Section The date June 15, 1977, is hereby specified for the purposes of Section of the General Conditions.

19 ARTICLE VII Representative of the Borrower; Addresses Section The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section of the General Conditions. Section The following addresses are specified for the purposes of Section of the General Conditions: For the Borrower: Ministry of Finance Post Office Box 21 Jakarta, Indonesia Cable address: Telex: For the Bank: MINISTRY FINANCE DITJMON Jakarta International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: Telex: INTBAFRAD (ITT) Washington, D.C (RCA) or (wui)

20 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. REPUBLIC OF INDONESIA By /s/ Zahar Arifin Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ S. Shahid Husain Regional Vice President East Asia and Pacific

21 SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 6,ooo,o0 80% (2) Vehicles and equipment 3,000,000 (a) directly imported 100% of foreign expenditures (b) imported equipment 65% procured locally (c) locally manufactured 95% equipment procured following international competitive bidding (d) locally assembled 40% vehicles procured following prudent shopping (3) Consultants' services 3,000, % and fellowships, and salaries of local experts for staff of Project Director (4) Unallocated 1,000,000 TOTAL 13,000,000

22 For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall 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; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $50,000 may be made in respect of Category (3) on account of payments made for such expenditures before that date but after October 1, 1975.

23 Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) 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 Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in 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 Loan.

24 SCHEDULE 2 Description of the Project The main purposes of the Project are (i) to strengthen and expand the existing nucleus of personnel and institutions in Indonesia to enhance the Borrower's capacity for formulation and execution of nutrition programs, operational research, manpower training and monitoring and evaluation in nutrition; (ii) to develop nationally replicable and cost effective measures to improve the nutritional status of malnourished target groups, through field level action programs and their evaluation; and (iii) to assist in the formulation and the implementation of a more comprehensive food and nutrition program on a national scale. The Project consists of the following Parts: Part A: Support for Institutions (1) Strengthening of CRDN through provision of additional staff, training, technical assistance, equipment and expansion of physical facilities; (2) Strengthening of FTDC through provision of staff, training, technical assistance, equipment and physical facilities; and (3) Strengthening of planning, coordination and evaluation of nutrition activities through provision of technical assistance to MOH, MOE, and MDA.

25 -2)4 - Part B: Direct Nutrition Action Programs (1) A Nutrition Intervention Pilot Project (NIPP) which integrates nutritional, educational, agricultural and health activities and selective food supplementation to vulnerable target groups in each of seven Kabupatens, reaching in the aggregate about 180 villages; (2) A program to increase the production of nutritious vegetables and fruits in home/village gardens through provision of improved seeds, development of model garden packages and intensification of extension efforts in villages selected for the NIPP program; (3) A program to improve on-farm and village-level storage, including establishment in villages selected for the NIPP program which lack storage facilities, of smallscale storage units with an aggregate storage capacity of about 300 tons; and (4) An iron supplementation program to tackle nutritional anemia in a selected number of plantations with a view to developing a national program to cover all government and privately owned plantations. Part C: Education and Training (1) Testing the efficiency of alternative nutrition communication methods to bring about desirable changes in nutrition behavior;

26 (2) Upgrading and expanding the training of nutritionists in the Academy by provision of equipment, staff, training, technical assistance, and necessary physical facilities; and (3) Improving the training of agricultural extentionists by upgrading teachers and trainers and by introducing nutrition in the curriculum of the basic training centers and the secondary agricultural schools of AETE. Part D: Preparation of a National Food and Nutrition Program Preparation of a national food and nutrition program which takes into account inter alia: (i) the results of the evaluation of the various nutrition actions taken under the preceding Parts of the Project and their cost effectiveness and replicability; (ii) manpower availability; and (iii) the managerial skills and institutions developed as a result of the Project. * * * The Project is expected to be completed by March 31, 1981.

27 SCHEDULE 3 Amortization Schedule Date Payment Due Payment of Principal (expressed in dollars)* On each June 15 and December 15 beginning December 15, 1981 through June 15, ,ooo On December 15, ,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal.

28 Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) General Conditions: of the Time of Prepayment Premium Not more than three years before maturity 1.25% More than three years but not more than six years before maturity 2.55% More than six years but not more than eleven years before maturity 4.65% More than eleven years but not more than sixteen years before maturity 6.80% More than sixteen years but not more than eighteen years before maturity 7.65% More than eighteen years before maturity 8.50%

29 SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods or for civil works shall be procured in accordance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines) including the pertinent provisions of the General Introduction thereto, on the basis of international competitive bidding. 2. Bidders for civil works estimated to cost the equivalent of $1,000,000 or more, and for which a domestic preference is intended to be granted in accordance with Part D of this Schedule, shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. B. Other Procurement Procedures 1. Civil works contracts estimated to cost less than the equivalent of $1,000,000 may be awarded on the basis of competitive bidding following local advertising, without restriction on foreign bidders, and in accordance with the Borrower's normal procurement procedures.

30 Contracts for the supply of equipment and furniture, estimated to cost less than the equivalent of $50,000, may be awarded on the basis of competitive bidding following local advertising, and in accordance with the Borrower's normal procurement procedures. 3. Up to 10 vehicles may be purchased locally after prudent shopping including wherever possible the solicitation of at least three price quotations. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with local procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Indonesia may be granted a margin of preference in provisions: accordance with, and subject to, the following (a) 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.

31 (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Indonesia if the bidder shall have established to the satisfaction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in Indonesia equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Indonesia. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated 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. (d) If, as a result of the comparison under paragraph (c) 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 c.i.f. 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

32 would have to pay for the importation of the goods offered in 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 (c) is the lowest evaluated bid shall be selected. D. Evaluation and Comparison of Bids for Civil Works; Preference for Domestic Contractors With respect to any contract for civil works included under Category 1 of th: table set forth in Schedule 1 to the Loan Agreement and to be procured in accordance with the procedures described in Part A1 of this Schedule, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying also for such preference shall be asked to provide, as part of the data for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Bank, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference.

33 (b) After bids have been received and reviewed by the Borrower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. E. Review of Procurement Decisions by the Bank 1. Review of prequalification. The Borrower shall, before qualification is invited, inform the Bank in detail of the procedure to be followed, and shall introduce such modifications in said pro-.edure as the Bank shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and, where applicable, of their eligibility for domestic preference under Part D.1 above and of the reasons for the exclusion of any applicant for prequalification and for such eligibility shall be furnished by the Borrower to the Bank for its comments before the applicants are notified of the Borrower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Bank shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts:

34 With respect to all contracts for civil works estimated to cost the equivalent of $500,000 or more and all contracts for the supply of goods estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, 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 Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent 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 Bank's concurrence, materially differ from those on which bids were asked or prequalification invited.

35 - 3)4 - (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan 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 Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.

36 SCHEDULE 5 Organization and Management 1. Participating Ministries The respective components of the Project will be implemented within the existing organizational structure of Government, as follows: Project Ccmponent Part A (1) Part A (2) Ministry/Agency Primarily Responsible for Implementation MOH/CRDN MOE/FTDC Part A (3) MOH, MOE and MOA Part B (1) MOH and MHA Part B (2) Part B (3) MOA MOE/FTDC and MOA Part B (4) MTC, MOA and MOH Part C (1) Part C (2) Part C (3) MOH MOH MOA/AETE Part D MOH, MOA and BAPPENAS

37 Project Director (a) Overall management and coordination of the implementation of the Project shall be the responsibility of a Project Director. The first Project Director shall be the Director General of Community Health, MOH. The Project Director shall be assisted by at least the following full-time staff, all with appropriate qualifications and experience: (i) a senior administrator, who shall be designated as the Project Manager; (ii) a deputy Project Manager; (iii) a finance officer; and (iv) a procurement officer. The Project Director shall be further assisted, under terms of reference mutually acceptable to the Borrover and the Bank, by a management advisor (for about two years, on a full-time basis), a procurement advisor, and planning consultants. (b) The Project Director shall be responsible (inter alia) for: (i) monitoring the progress of the Project; (ii) ensuring interministerial and agency coordination in the implementation of the respective components of the Project; (iii) ensuring adequate budgetary provisions for the Project in the budget requests of the respective ministries and agencies of the Borrover responsible for the implementation of the respective components of the Project; (iv) coordinating the flow of funds to the respective agencies; and (v) submitting withdrawal requests to the Bank under Section 2.02 of Schedule 1 to the Loan Agreement, in respect of all components of the Project.

38 Monitoring and Evaluation To assist the Project Director in the monitoring and evaluation of the Project, the Borrower shall establish and maintain a separate monitoring and evaluation unit, reporting directly to the Project Director, which unit shall be staffed, on a fulltime basis, by at least two qualified and experienced professionals. 4. Co-Directors To ensure coordination among the several ministries of the Borrower participating in the implementation of the Project, the Borrower shall appoint three Co-Directors, respectively from MOE, MOA and MHA, who shall work in close cooperation with the Project Director in identifying and solving problems of interministerial coordination. 5. CRDN and FTDC CRDN and FTDC will continue to be administered by their respective Directors, assisted by financial and procurement staff. Both institutes will cooperate closely and coordinate their work as required with ARD, DGFCA and AETE. 6. Nutrition Research For the purpose of coordinating the nutrition-related research programs being carried out by the various institutes of the Borrower, the Borrower shall establish and maintain a Research Coordinating Committee in accordance with the provisions

39 of Section 3.07 of the Loan Agreement, which Committee will be chaired in rotation by the Directors of FTDC and CRDN, and which Committee will include as members inter alia representatives from BAPPENAS, MOA (including, without limitation, DGFCA, AETE, ARD, and the Agricultural University of Bogor), MH, and MOI. T. NIPP The NIPP component (Parts B.1 and B.2 of the Project) will be administered: (i) at the national le, l, by a Coordinator (the NIPP Coordinator) within MOH reporting directly to the Project Director, assisted by at least one fulltime nutrition program officer (NPO) and three fulltime assistant NPOs, all with appropriate qualifications and experience; (ii) at the Provincial level, through the respective Provincial Badan Perbaikan Gizi Daerah (BPGD) (Nutrition Improvement Coordinating Committee), under the administrative responsibility of the respective Provincial Governors; and (iii) at the Kabupaten level, through the respective Kabupaten BPGDs, under the administrative responsibility of the respective Bupatis (Chief Executive Officer of the Kabupaten).

40 Anemia Prevention and Control The anemia prevention and control component (Part BA of the Project) will be administered in the field by NIIHOH through its respective regional institutes (RILHOHs) under the NTW, in close collaboration with MOA (Directorate General of Plantations) and MDH (NIPP Coordinator). 9. Training and Nutrition Education The training and nutrition education components (Part C of the Project) will be coordinated by the Chairman of the Center for Manpower Education and Training in MOH. 10. National Food and Nutrition Program The preparation of a national food and nutrition program (Part D of the Project) will be the responsibility of the Project Director, assisted by the staff of the monitoring and evaluation unit, in close collaboration with CRDN, FTDC, the planning bureaus of MOH and MDA, the FNU, and BAPPENAS.