CREDIT NUMBER 1652 PAK
Development Credit Agreement(Karachi Special Development Project)
between
ISLAMIC REPUBLIC OF PAKISTAN
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated t : 1986
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CREDIT NUMBER 1652 PAK
DEVELOPRENT CREDIT AGREEMENT
AGREEMENT, dated 'WA ! ( , 1986,
between ISLAMIC REPUBLIC OF PAKISTA4N, acting by its President
(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 Project will be carried out by the Borrower's
Province of Sind (Sind), the Karachi Metropolitan Corporation
(KMC), the Karachi Water and Sewerage Board (KWSB), the Karachi
Transport Corporation (KTC), and the Karachi Development Autho-
rity (KDA), all with the Borrower's assistance and, as part of
such assistance, the Borrower will make available to Sind, for
its use and for the use of KMC, KWSB, KTC and KDA for purposes of
implementing the Project, the proceeds of the Credit as provided
in this Agreement; and
(C) the Borrower intends to obtain from the Asian
Development Bank (ADB) additional funds (the ADB Funding) to
assist in the financing of Parts A.3, D.1(a), E and F (ii) and
related portions of Part G of the Project, in an aggregate
principal amount equivalent to $51,000,000 and on such terms
and conditions as are set forth in the agreement to be entered
into between the Borrower and ADB (the ADB Funding Agreement);
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 and in the
Project Agreement of even date herewith between the Association
and Sind, KMC, KWSB, KTC and KDA;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTIGLE I
General Conditions; Definitions
Section 1.01. The General Conditions Applicable to Develop-
ment Credit Agreements of the Association, dated January 1,
1985, with the modification set forth below (the General
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Conditions) constitute an integral part of this Agreement: the
last sentence of Section 3.02 is deleted.
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) "KMC" means the Karachi Metropolitan Corporation, being
the elected local government serving the metropolitan area of
Karachi;
(b) "KWSB" means the Karachi Water and Sewerage Board, a
subsidiary of KMC;
(c) "KTC" means the Karachi Transport Corporation, a public
enterprise wholly owned by Sind and providing mass transit in
Karachi;
(d) "KDA" means the Karachi Development Authority, a body
established under President's Order No. 5 of 1957;
(e) "Implementing Agencies" mean collectively KMC, KWSB,
KTC and KDA, and "Implementing Agency" means each and any of KMC,
KWSB, KTC or KDA;
(f) "Project Agreement" means the agreement between the
Association and Sind, KMC. KWSB, KTC and KDA of even date here-
with, as the same may be amended from time to time; such term
includes all schedules and agreements supplemental to the Project
Agreement;
(g) "KMC Subsidiary Loan Agreement" means the agreement to
be entered into between Sind and KMC pursuant to Section 3.01
(c) (ii) of this Agreement, as the same may be amended from time
to time; such term includes all schedules and agreements supple-
mental to the KMC Subsidiary Loan Agreement;
(h) "KWSB Subsidiary Loan Agreement" means the agreement to
be entered into between Sind and KMC (to which KWSB shall be a
party) pursuant to Section 3.01 (c)(iii) of this Agreement, as
the same may be amended from time to time; such term includes all
schedules and agreements supplemental to the KWSB Subsidiary Loan
Agreement;
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(i) "KTC Subsidiary Loan Agreement" means the agreement to
be entered into between Sind and KTC pursuant to Section 3.01
(c) (iv) of this Agreement, as the same may be amended from time
to time; such term includes all schedules and agreements supple-
mental to the KTC Subsidiary Loan Agreement;
(j) "Subsidiary Loan Agreements" mean collectively the
subsidiary loan agreements referred to in paragraphs (g), (h) and
(i) of this Section, and "Subsidiary Loan Agreement" means each
and any such agreement;
(k) "PMU" means the Project Monitoring Unit, to be esta-
blished as part of Sind's Planning and Development Department for
purposes of monitoring and coordinating the Project, pursuant to
paragraph 2 of Schedule 2 to the Project Agreement;
(1) "katchi abadi" means a squatter settlement;
(m) "Special Accounts" mean the accounts referred to in
Section 2.02 (b) of this Agreement and Section 2.01 (c) of the
Project Agreement, and "Special Account" means any one of those
accounts;
(n) "KMC/KWSB Special Account" means the Special Account
which KMC and KWSB shall jointly open and maintain pursuant to
Section 2.02 (b) of this Agreement and Section 2.01 (c) of the
Project Agreement;
(o) "KDA Special Account" means the Special Account which
KDA shall open and maintain pursuant to Section 2.02 (b) of this
Agreement and Section 2.01 (c) of the Project Agreement;
(p) "Rs" and "rupees" mean the currency of the Borrower;and
(q) "FY" or "Fiscal Year" means the Borrower's fiscal year
covering the period July 1 through June 30.
ARTICLE II
The Credit
Section 2.01. The Association agrees to lend to the Bor-
rower, on the terms and conditions set forth or referred to in
the Development Credit Agreement, an amount in various currencies
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equivalent to sixty-five million four hundred thousand Special
Drawing Rights (SDR 65,400,000).
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, as such Schedule may be amended
from time to time by agreement between the Borrower and the Asso-
ciation, for expenditures made (or, if the Association shall so
agree, to be made) in respect of the reasonable cost of goods and
services required for the Project and to be financed out of the
proceeds of the Credit.
(b) The Borrower shall, for the purposes of the parts of
the Project for which they are respectively responsible, cause
KMC/KWSB and KDA to open and maintain in Dollars special accounts
in the National Bank of Pakistan on terms and conditions satis-
factory to the Association. Deposits into, and payments out
of, the Special Accounts shall be made in accordance with the
provisions of Schedule 3 to this Agreement.
Section 2.03. The Closing Date shall be September 30, 1992
or such later date as the Association shall establish. The Asso-
ciation shall promptly notify the Borrower of such later date.
Section 2.04. (a) The Borrower shall pay to the Association
a commitment charge at the rate of one-half of one per cent (1/2
of 1%) per annum on the principal amount of the Credit not with-
drawn from time to time. The commitment charge shall accrue from
a date sixty days after the date of the Development Credit Agree-
ment to the respective dates on which amounts shall be withdrawn
by the Borrower from the Credit Account or shall be cancelled.
(b) The commitment charge shall be paid: (i) at such
places as the Association shall reasonably request; (ii) without
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 per cent (3/4
of 1%) per annum on the principal amount of the Credit withdrawn
and outstanding from time to time.
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Section 2.06. Commitment charges and service charges shallbe payable semi-annually on May 15 and November 15 in each year.
Section 2.07. The Borrower shall repay the principal amountof the Credit in semi-annual installments payable on each May 15and November 15 commencing May 15, 1996, and ending November 15,2035. Each installment to, and including the installment payableon, November 15, 2005, shall be one-half of one per cent (1/2 of1%) of such principal amount, and each installment thereaftershall be one and one-half per cent (1-1/2%) of such principalamount.
Section 2.08. The currency of the United States of Americais hereby specified for the purposes of Section 4.02 of theGeneral Conditions.
Section 2.09. The Additional Chief Secretary, Planning andDevelopment Department of Sind, the Mayor of Karachi, the Manag-ing Director of KWSB, the Managing Director of KTC, and theDirector General of KDA, are designated as the respresentativesof the Borrower for purposes of taking any action required orpermitted to be taken under the provisions of Sections 2.02 (a)and (b) of this Agreement and Article V of the General Conditionsin respect of the parts of the Project for which they are respec-tively responsible.
ARTICLE III
Execution of the Project
kction 3.01. (a) The Borrower declares its commitment tothe objectives of the Project as set forth in Schedule 2 to thisAgreement, and, to this end, without any limitation or restric-tion upon any of its other obligations under the DevelopmentCredit Agreement, shall cause Sind and the Implementing Agenciesto perform in accordance with the provisions of the ProjectAgreement all of their respective obligations therein set forth,shall take and cause to be taken all action, including theprovision of funds, facilities, services and other resources,necessary or appropriate to enable Sind and the ImplementingAgencies to perform such obligations, and shall not take orpermit to be taken any action which would prevent or interferewith such performance.
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(b) Without limitation upon the provisions of paragraph (a)of this Section, the Borrower shall and shall cause Sind and theImplementing Agencies to carry out the Project in accordancewith:
(i) the Implementation Program set forth in Schedule 2to the Project Agreement, as such Schedule may beamended from time to time by agreement among theBorrower, Sind, the Implementing Agencies and theAssociation; and
(ii) an Operational Action Plan acceptable to theAssociation, as such Operational Action Plan maybe reviewed on an annual basis, and amended, asnecessary, by agreement among the Borrower, Sind,the Implementing Agencies and the Association.
(c) The Borrower shall make the proceeds of the Creditavailable to Sind, under terms and conditions which shall bemutually satisfactory to the Borrower and the Association, to beutilized by Sind as follows:
(i) in an amount equivalent to about SDR 2,000,000 forthe purposes of Part F (i) of the Project and forestablishing the PMU;
(ii) in an amount equivalent to about SDR 10,400,000for on-lending to KMC, for the purposes of PartsD.1(b) and D.2 and relaLed portions of Part G ofthe Project, under a subsidiary loan agreement tobe entered into between Sind and KMC, under termsand conditions which shall have been approvedby the Association and which shall include aninterest rate of at least 7% per annum and arepayment period of 25 years including a graceperiod of 6 years;
&iii) in an amount equivalent to about SDR 860,000 formaking available to KMC, for the purposes ofParts D.3 and F (iii) and related portions ofPart G of the Project, on a grant basis;
(iv) in an amount equivalent to about SDR 19,450,000for on-lending to KWSB through KMC, for thepurposes of Parts A.1 and A.2 and related portions
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of Part G of the Project, under a subsidiary loan
agreement to be entered into between Sind and KMC
(with KWSE as party as necessary), under terms and
conditions which shall have been approved by the
Association and which shall include an interest
rate of at least 11% per annum and a repayment
period of 25 years including a grace period of
6 years;
(v) in an amount equivalent to about SDR 685,000 for
making available to KWSB through KMC, for the
purposes of Part A.4 and related portions of
Part G of the Project, on a grant basis;
(vi) in an amount equivalent to about SDR 1,180,000
for on-lending to KTC, for the purposes of
Part C.1 (a) and related portions of Part G of the
Project, under a subsidiary loan agreement to be
entered into between Sind and KTC, under terms and
conditions which shall have been approved by the
Association and which shall include an interest
rate of at least 11% per annum and a repayment
period of 25 years including a grace period of
6 years;
(vii) in an amount equivalent to about SDR 2,335,000for making available to KTC, for the purposes of
Part C.1 (b) and related portions of Part G of che
Project, on a grant basis; and
(viii) in an amount equivalent to about SDR 28,460,000
for making available to KDA, for the purposes of
Parts B, C.2, C.3 and C.4 and related portions of
Part G of the Project, on a grant basis.
(d) The Borrower shall, and shall cause Sind and the
relevant Implementing Agencies to, exercise their rights under
the Subsidiary Loan Agreements in such 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 ensure that Sind and the
relevant Implementing Agencies shall not assign, amend, abrogate
or waive the Subsidiary Loan Agreements or any provisions
thereof.
Section 3.02. Except as the Association shall otherwise
agree, procurement of the goods, works and consultants' services
required for the Project and to be financed out of the proceeds
of the Credit, shall be governed by the provisions of Schedule 1
to the Project Agreement.
Section 3.03. The Borrower and the Association hereby agree
that 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, respec-
tively) shall be carried out by Sind and the Impl,menting
Agencies pursuant to Section 2.03 of the Project Agreement.
ARTICLE IV
Remedies of the Association
Section 4.01. Pursuant to Section 6.02 (h) of the General
Conditions, the following additional events are specified:
(a) Sind or any of the Implementing Agencies shall have
failed to perform any of their respective obligations under the
Project Agreement.
(b) As a result of events which have occurred after the
date of the Development Credit Agreement, an extraordinary situa-
tion shall have arisen which shall make it improbable that Sind
or any of the Implementing Agencies will be able to perform their
respective obligations under the Project Agreement.
(c) The Borrower, or any other authority having jurisdic-
tion, shall have taken any action for the dissolution or dis-
establishment of any of the Implementing Agencies, or for the
suspension of their operations.
(d) The Sind Local Government Ordinance of 1979, Sind Local
Government (Amendment) Ordinance of 1983 or President's Order
No. 5 of 1957 shall have been amended, suspended, abrogated,
repealed or waived in such a way as to materially or adversely
affect the ability of any of the Implementing Agencies to carry
out their obligations under the Project Agreement.
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(e) (i) Subject to subparagraph (ii) of this paragraph:
(A) the right of the Borrower to withdraw the
proceeds of any grant or loan (including the
ADB Funding) made to thc Borrower for the
financing cf the Project shall have been
suspended, cancelled or terminated in whole
or in part, pursuant to the terms of the
agreement providing therefor; or
(B) any such loan (including the ADB Funding)
shall have become due and payable prior to
the agreed maturity thereof.
(ii) Subparagraph (i) of this paragraph shall not apply
if the Borrower establishes to the satisfaction of
the Association that: (A) such suspension, can-
cellation, termination or prematuring is noc
caused by the failure of the Borrower to perform
,ny of its obligations under such agreement; and
(B) 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 4.02. Pursuant to Section 7.01 (d) of the General
Conditions, the following additional events are specified:
(a) the event specified in paragraph (a) of Section 4.01 of
this Agreement shall occur and shall continue for a period of
sixty days after notice thereof shall have been given by the
Association to the Borrower;
(b) any event specified in paragraph (c) or paragraph (d)
of Section 4.01 of this Agreement shall occur; and
(c) the event specified in paragraph (e) (i) (B) of Sec-
tion 4.01 of this Agreement shall occur, subject to the proviso
of subparagraph (ii) of that paragraph.
ARTICLE V
Effective Date; Termination
Section 5.01. The following events are specified as addi-
tional conditions to the effectiveness of the Development Credit
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Agreement within the meaning of Section 12.01 (b) of the General
Conditions:
(a) the Executive Committee of the National Economic
Council shall have approved the PC-1 document with respect to the
Project;
(b) all conditions precedent to the effectiveness of the
ADB Funding Agreement, except the effectiveness of this Agree-
ment, shall have been fulfilled; and
(c) the Subsidiary Loan Agreements shall have been signed.
Section 5.02. The following are specified as additional
matters, within the meaning of Section 12.02 (b) of the General
Conditions, to be included in the opinion or opinions to be
furnished to the Association:
(a) the Project Agreement has been duly authorized or
ratified by Sind and each of the Implementing Agencies, and is
legally binding upon Sind and each of the Implementing Agencies,respectively, in accordance with its terms; and
(b) each Subsidiary Loan Agreement has been duly authorized
or ratified by the parties thereto and is legally binding upon
such parties in accordance with its terms.
Section 5.03. The date one hundred twenty (120) days after
the date of this Agreement is hereby specified for the purposes
of Section 12.04 of the General Conditions.
Section 5.04. The obligations of the Borrower under the
provisions of paragraph (b) of Section 4.02 of this Agreement
shall cease and determine on the date on which the Development
Credit Agreement shall terminate or on the date twenty (20) years
after the date of this Agreement, whichever shall be the earlier.
ARTICLE VI
Representatives of the Borrower; Addresses
Section 6.01. Except as provided in Section 2.09 of this
Agreement, the Secretary General or the Secretary, or any
Additional Secretary, Joint Secretary, Deputy Secretary or
Section Officer, Economic Affairs Division of the Borrower is
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designated as representative of the Borrower for the purposes of
Section 11.03 of the General Conditions.
Section 6.02. The following addresses are specified for the
purposes of Section 11.01 of the General Conditions:
For the Borrower:
The Secretary General to the
Government of Pakistan
Economic Affairs DivisionIslamabad,Pakistan
Cable address: Telex:
ECONOMIC ED DIV-05-634
Islamabad
For the Association:
International Development Association
1818 H Street, N.W.Washington, D.C. 20433
United States of America
Cable address: Telex:
INDEVAS 440098 (ITT)
Washington, D.C. 248423 (RCA) or
64145 (WUI)
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IN WITNESS WHEREOF, the parties hereto, acting through their
duly authorized representatives, have caused this Agreement to be
signed in their respective names in the District of Columbia,
United States of America, as of the day and year first above
written.
ISLAMIC REPUBLIC OF PAKISTAN
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
ByR Regional Vice President
South Asia
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SCHEDULE i
Withdrawal of the Proceeds of the Credit
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
(1) Civil works 78%
(a) under Part C.1 (a) 1,030,000
of the Project
(b) under Parts A.1, 48,430,000
A.2, B, C.2,C.3, D.1(b)and D.2 of the
Project
(2) Equipment and 100% of foreign
materials expenditures,100% of local
(a) for Part C.1 (a) 250,000 expenditures
of the Project (ex-factory
cost) and 50%
(b) for Parts A.1, 3,310,000 of local expen-
A.2, B, C.2, C.3, ditures for
D.1(b) and D.2 items pro-
of the Project cured locally
(3) Consultants' 100%
services and
training
(a) for Parts C.1 (b) 4,310,000
and F (i) ofthe Project
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Amount of theCredit Allocated % of
(Expressed in Expanditures
Category SDR Equivalent) to be Financed
(b) for Parts A.4, 4,000,000
B.3, C.2, C.4,D.3, F (iii)and G.1 (e) ofthe Project
(4) Unallocated 4,070,000
TOTAL 65,400,000
2. For the purposes of this Schedule:
(a) the term "foreign expenditures" means expenditures in
the currency of any country other than that of the Borrower for
goods or services supplied from the territory of any country
other than that of the Borrower; and
(b) the term "local expenditures" neans expenditures in the
currency of the Borrower or for goods or services supplied from
the territory of the Borrower.
3. Notwithstanding the provisions of paragraph I above, no
withdrawals shall be made in respect of:
(a) payments made for expenditures prior to the date of
this Agreement, except that withdrawals, in an aggregate amount
not exceeding the equivalent of SDR 1,310,000, may be made on
account of payments made for expenditures before that date but
after November 30, 1985; and
(b) payments made for expenditures under Categories (1) (a)
and (2) (a), unless and until the Borrower shall have furnished
to the Association evidence satisfactory to the Association
that KTC has achieved the performance targets set forth in
Section 4.05 of the Project Agreement.
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SCHEDULE 2
Description of the Project
The objectives of the Project are to: (a) improve theprovision of basic urban services in Karachi; (b) strengthen theinstitutional and financial capacity of local agencies to deliversuch services; (c) demonstrate the feasibility of new methods ofproviding such services to the urban poor; (d) develop proposalsfor and improve metropolitan management, resource mobilizationand cost recovery; and (e) develop proposals for future projects.
The Project consists of the following parts, subject to suchmodifications thereof as the Borrower and the Association mayagree upon from time to time to achieve such objectives:
Part A: Water Supply and Sewerage
1. Rehabilitation of the Kinjhar-Gujjo (K-G) Canal, includingthe execution of earthworks and provision of concrete lining topermit a water flow of up to 1200 cusecs.
2. Provision of two (2) alternate, standby syphon pipes,parallel to existing syphon pipes Nos. 19 and 20, including thenecessary transition chambers to link old and new syphon pipes.
3. Rehabilitation and expansion of the two existing sewagetreatment plants, including repair of the trunk sewerage feedernetworks and renovation and re-activation of disused powergeneration units.
4. Carrying out of a study to update the 1974 sewerage masterplan.
Part B: Flood Control and Drainage
1. Construction of flood control works along the Malir River.
2. Repair and improvement of the four (4) main outfalls of thestormwater drainage system in the Old City of Karachi, includingthe construction of stormwater channels and tidal gates.
3. Carrying out of a study to update and expand the currentdrainage master plan.
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Part C: Transportation
1. Improvement of bus services through the provision of (a)depot upgrading including the improvement of, and provisionof equipment for, hardstands, buildings and utilities, and(b) technical asssistance and training.
2. Provision of traffic de-congestion and safety improvementfacilities, including the training of traffic police and trafficengineering staff and implementation of a road safety educationprogram.
3. Construction of (a) a bridge over the Malir River, (b) acity-center by-pass road along the Malir River flood controlbund, and (c) a railway overpass at Qaidabad.
4. Carrying out of a study of public transport needs andoptions, including longer term mass transit development andgovernment/private sector inv-lvement.
Part D: Katchi Abadi Upgrading and Regularization
1. Upgrading of about 3,400 acres of land in (a) the Orangiand Baldia katchi abadis and (b) about 16 other katchi abadis,through the provision to occupants of basic urban infrastruc-ture and services and security of tenure in the form of 99-yearleases.
2. Carrying out of a pilot guided land development project onabout 100 acres of land to test the feasibility of a lower-costapproach to land development.
3. Carrying out of a study of land market operation and policies governing the development and sale of land.
Part E: Solid Waste Management
Expansion of solid waste management operations, through theprovision of vehicles for solid waste collection, street sweepingand land-fill site operations, construction of new, and upgradingof existing, workshops, and development of new sanitary land-filldisposal sites.
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Part F: Metropolitan Financial and Management Studies
Carrying out of (i) a Metropolitan Management and Budgeting
Study, (ii) a Metropolitan Resource Generation Study, and (iii) a
KMC Financial Management Assistance Program.
Part G: Technical Assistance and Training
1. Provision of consultants' services to:
(a) carry out the studies referred to in Parts A.4, B.3,C.4, D.3 and F of the Project, (b) assist with the implementation
of Parts C.1 and C.2 of the Project, (c) assist with the design
and implementation of solid waste management reorganization
envisaged under Part E of the Project, (d) assist with the staff
training referred to in Part G.2 of the Project, and (e) under-
take other Project-related studies and training.
2. Provision of (a) on-the-job training under Parts A, B, C, D,E and F (iii) of the Project, and (b) training as recommended by
the Metropolitan Financial and Management Studies referred to in
Parts F (i) and F (ii) of the Project.
The Project is expected to be completed by March 31, 1992.
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SCHEDULE 3
Special Accounts
1. For the purposes of this Schedule:
(a) the term "eligible Categories" means Categories 1 (b),2 (b) and 3 (b) set forth in the table in paragraph 1 of Sched-ule 1 to this Agreement;
(b) the term "eligible expenditures" means expenditures inrespect of the reasonable cost of goods and services required forthe Project and to be financed out of the proceeds of the Creditallocated from time to time to the eligible Categories in accor-dance with the provisions of Schedule 1 to this Agreement; and
(c) the term "Authorized Allocation" means, in respectof KMC/KWSB, an amount equivalent to SDR 2,000,000 to be with-drawn from the Credit Account and deposited in the KMC/KWSBSpecial Account, and, in respect of KDA, an amount equivalentto SDR 2,000,000 to be withdrawn from the Credit Account anddeposited in KDA's Special Account, all pursuant to para-graph 3 (a) of this Schedule.
2. Except as the Association shall otherwise agree, paymentsout of the Special Accounts shall be made exclusively foreligible expenditures in accordance with the provisions of thisSchedule.
3. After the Association has received evidence satisfactory toit that a Special Account has been duly opened, withdrawals ofthe relevant Authorized Allocation and subsequent withdrawals toreplenish such Special Account may be made as follows:
(a) On the basis of a request or requests by KMC/KWSB orKDA, as the case may be, for a deposit or deposits which add upto the aggregate amount of the relevant Authorized Allocation,the Association shall, on behalf of KMC/KWSB or KDA, as the casemay be, withdraw from the Credit Account and deposit in therelevant Special Account such amount or amounts as KMC/KWSB orKDA, as the case may be, shall have requested.
(b) KMC/KWSB and KDA shall furnish to the Associationrequests for replenishment of the Special Accounts at suchintervals as the Association shall specify. On the basis of such
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requests, the Association shall withdraw from the Credit Accountand deposit into the Special Accounts such amounts as shall berequired to replenish the Special Accounts with amounts notexceeding the amount of payments made out of the Special Accountsfor eligible expenditures. All such deposits shall be withdrawnby the Association from the Credit Account under the respectiveeligible Categories, and in the respective equivalent amounts, asshall have been justified by the evidence supporting the requestfor such deposit furnished pursuant to paragraph 4 of thisSchedule.
4. For each payment made by KMC/KWSB or KDA, as the case maybe, out of the relevant Special Account for which KMC/KWSB orKDA, as the case may be, requests replenishment pursuant toparagraph 3 (b) of this Schedule, KMC/KWSB or KDA, as the casemay be, shall furnish to the Association, prior to or at thetime of such request, such documents and other evidence as theAssociation shall reasonably request, showing that such paymentwas made for eligible expenditures.
5. (a) Notwithstanding the provisions of paragraph 3 of thisSchedule, no further deposit into a Special Account shall be madeby the Association when either of the following situations firstarises:
(i) the Association shall have determined that allfurther withdrawals should be made directly byKMC/KWSB or KDA, as the case may be, from theCredit Account in accordance with the provisionsof paragraph (a) of Section 2.02 of this Agree-ment; or
(ii) the total unwithdrawn amount of the Credit allo-cated to the relevant eligible Categories to whichsuch Special Account appertains, minus the amountof any outstanding special commitment entered intoby the Association pursuant to Section 5.02 ofthe General Conditions with respect to the relatedparts of the Project, shall be equal to the equi-valent of twice the amount of the relevant Autho-rized Allocation.
(b) Thereafter, withdrawal from the Credit Account of theremaining unwithdrawn amount of the Credit allocated to therelevant eligible Categories for expenditures to which such
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Special Account appertains shall follow such procedures as the
Association shall specify by notice to KMC/KWSB or KDA, as the
case may be. 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 the relevant
Special Account as of the date of such notice have been or will
be utilized in making payments for eligible expenditures.
6. (a) If the Association shall have determined at any time
that any payment out of a Special Account (i) was made for any
expenditure or in any amount not eligible pursuant to paragraph 2
of this Schedule, or (ii) was not justified by the evidence
furnished pursuant to paragraph 4 of this Schldule, KMC/KWSB or
KDA, as the case may be, shall, promptly upon notice from the
Association deposit into such Special Account (or, if the Asso-
ciation shall so request, refund to the Association) an amount
equal to the amount of such payment or the portion thereof not so
eligible or justified. No further deposit by the Association into
such Special Account shall be made until KMC/KWSB or KDA, as the
case may be, has made such deposit or refund.
(b) If the Association shall have determined at any time
that any amount outstanding in a Special Account will not be
required to cover further payments for eligible expenditures,
KMC/KWSB or KDA, as the case may be, shall, promptly upon notice
from the Association, refund to the Association such outstanding
amount for crediting to the Credit Account.
INTERNATIONAL DEVELOPMENT ASSOCIATION
CERTIFICATE
I hereby certify that the foregoing is a true
copy of the original in the archives of the Interna-
tional Development Association.
In witness whereof I have signed this Certifi-
cate and affixed the Seal of the Association
thereunto the day of
198 .
FOR SECRETARY
