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World Bank Document CONFORMED COPY Public Disclosure Authorized CREDIT NUMBER 376 YAR (Amendment) Public Disclosure Authorized AGREEMENT AMENDING DEVELOPMENT CREDIT AGREEMENT (Tihama Development Project) between YEMEN ARAB REPUBLIC and INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized Dated April 9, 1976 Public Disclosure Authorized AGREEMENT AMENDING DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 9, 1976, between YEMEN ARAB REPUBLIC (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) By a Development Credit Agreement (Tihama Develop- ment Project) dated May 7, 1973, between the Borrower and the Asso- ciation (hereinafter called the 1973 Agreement), the Association made a development credit to the Borrower in an amount in various currencies equivalent to ten million nine hundred thousand dollars ($10,900,000) on the terms and conditions set forth in the 1973 Agreement; (B) Supplemental financing is now necessary to cover the es- timated increases in the cost of carrying out the Project described in Schedule 2 to the 1973 Agreement; (C) By Agreement dated January 17, 1976, the Kuwait Fund for Arab Economic Development (hereinafter called the Kuwait Fund) has agreed to make a loan (hereinafter called the Second Kuwait Fund Loan) to the Borrower in an amount of two million eight hundred thousand Kuwaiti Dinars (KD2,800,000) to assist in financing part of the Project on the terms and conditions therein set forth; and (D) The Association has agreed to amend the 1973 Agreement by adding the equivalent of ten million three hundred thousand -2- dollars ($10,300,000) to the amount of the said credit, upon the terms and conditions hereinafter set forth; NOW THEREFORE, it is hereby agreed as follows: 0 - 3 - ARTICLE I Section 1.01. Except as amended and added to hereunder, all the provisions of the 1973 Agreement shall remain in full force and effect, and shall be applicable to this Agreement as if fully set forth herein. Section 1.02. Section 2.01 of the 1973 Agreement is hereby amended to read as follows: "The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agree- ment set forth or referred to, an amount in various cur- rencies equivalent to twenty-one million two hundred thousand dollars ($21,200,000)." Section 1.03. Section 3.02(c) of the 1973 Agreement is here- by amended to read as follows: "The Borrower shall lend to its Central Bank, promptly upon the establishment of ACF, for the purpose of carrying out Part E of the Project, an amount equivalent to one mil- lion three hundred and fifty thousand dollars ($1,350,000) out of the Borrower's funds, and the amount allocated under Category IV of Schedule 1 to this Agreement under a sub- sidiary loan agreement to be entered into between the Bor- rower and the Central Bank upon terms and conditions (in- cluding those set forth in Schedule 4 to this Agreement) which shall have been approved by the Association." 14- Section 1.04. The table set forth in paragraph 1 of Schedule 1 to the 1973 Agreement is hereby amended to read as follows: "Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Civil Works (a) foreign con- 11,330,000 100% of foreign tractors expenditures (b) local contracts 1,120,000 42% of total ex- for Wadi Zabid penditures (rep- camp and access resenting the roads and for estimated for- Wadi Mawr camp, eign expenditure access road and component) crossing II. Equipment and 2,370,000 Materials (a) imported 100% of foreign expenditures (b) locally 80% of total ex- procured penditures (rep- resenting the estimated for- eign expenditure component) III. Consultant Serv- 3,980,000 100% of foreign ices and Train- expenditures ing of Personnel * -5 - "Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed IV. Agricultural Credit (a) credits 210,000 75% of total ex- amounting penditures (rep- to up to resenting the $280,000 in estimated for- aggregate eign expenditure component) (b) credits ex- 690,000 25% of total ex- ceeding penditures (rep- $280,000 in resenting one- aggregate third of the estimated foreign expenditure component) V. Unallocated 1,500,000 TOTAL 21,200,000" -6 0 Section 1.05. (a) Section 2.04 of the 1973 Agreement is here- by amended to read as follows: "The Closing Date shall be June 30, 1979 or such other date as shall be agreed between the Borrower and the Association." (b) The last sentence of Schedule 2 of the 1973 Agreement is hereby amended to read as follows: "The Project is expected to be completed by December 31, 1978." Section 1.06. Paragraph (i) of Part A of Schedule 2 to the 1973 Agreement is hereby amended to read as follows: "the construntion of 5 diversion weirs with gate- controlled intakes, sluiceways and associated river training works." Section 1.07. The following new Sections are added to Article III of the 1973 Agreement: "Section 3.12. (a) In order to perform on-farm demon- stration work and to assist farmers in preparing farm development plans, the Borrower shall establish within the Authority an on-farm development unit with such technical staff, equipment and facilities as may be necessary for the efficient carrying out of its functions. -7- (b) In order to assist the Borrower in carrying out the on-farm development component included in Part E of the Project and in establishing and operating the on-farm development unit referred to in Section 3.12 (a) of this Agreement, the Borrower shall employ, or cause to be em- ployed, an on-farm development expert acceptable to the Association upon terms and conditions satisfactory to the Association. Section 3.13. In order to assist the Borrower in carry- ing out Part C of the Project and to ensure close coordina- tion of the Borrower's agricultural research and extension programs in the Tihama coastal zone the Borrower shall es- tablish a committee with representatives of the Authority, the Borrower's Central Planning Organization and Ministry of Agriculture. Section 1.08. The following new Sections are added to Article IV of the 1973 Agreement: "Section 4.12. With regard to the provisions referred to in Section 4.10 hereinabove, the Borrower shall: (a) ap- ply a table of minimum charges as set forth in Schedule 5 to this Agreement, to recover the investment, operation and maintenance costs of Part A of the Project; and (b) cause the Authority to collect such charges. Section 4.13. For the purpose of determining the annual charges for the recovery of the investment, operation and maintenance costs referred to in Section 4.12 of this Agree- ment, the Borrower shall: (i) complete before December 31, -8- 1976, a study acceptable to the Association, to determine the basis and methods for a more equitable sharing of costs and benefits among the farmers in the Project Areas; and (ii) complete before December 31, 1977, a survey acceptable to the Association to determine land ownership and title in the Project Areas. Section 4.14. In order to ensure (i) full recovery of the operation and maintenance costs of Part A of the Project; and (ii) recovery of the investment costs of Part A of the Project in real terms, without interest, over a period of fifty years, bearing in mind incentives for farmers and their ability to pay, the Borrower shall conduct, jointly with the Association, periodic reviews for the purpose of adjusting the charges levied for said costs at intervals of not more than five years. Section 4.15. The Borrower shall take such measures and provide such incentives as may be necessary to recruit and appoint more of its nationals to the professional staff of the Authority." Section 1.09. (a) Subsections (b) and (c) of Section 7.02 of the 1973 Agreement are hereby amended to read as follows: "(b) subject to subsection (d) of this Section, the right of the Borrower to withdraw the proceeds of (i) the loan provided by the Kuwait Fund for Arab Economic Develop- ment under the agreement referred to in Section 8.01 (a) 9 of this Agreement or (ii) the proceeds of the Second Kuwait Fund Loan, shall have been suspended in whole or in part; and (c) subject to subsection (d) of this Section, the outstanding principal of (i) the loan provided by the Kuwait Fund for Arab Economic Development under the agree- ment referred to in Section 8.01 (a) of this Agreement or (ii) of the Second Kuwait Fund Loan, shall have been de- clared, or shall have become, due in advance of the agreed maturity thereof." (b) The following new subsection is added to Section 7.02 of the 1973 Agreement: "(d) Subsections (b) and (c) of this Section shall not apply if the Borrower establishes to the satisfaction of the Association that: (i) such suspension, cancellation, termina- tion or prematuring is not caused by the failure of the Bor- rower to perform any of its obligations under such Agreement, and (ii) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement." Section 1.10. The following new Schedule is added to the 1973 Agreement: - 10 - "SCHEDULE 5 Charges for Recovery of Investment, Operation and Maintenance Costs of Parts A and B of the Project 1. The operation and maintenance cost shall be recovered annual- ly and uniformly from all beneficiaries, irrespective of size of land holding, with beneficiaries paying a share equal to the share of production received by said beneficiaries.
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