CONFORMED COPY CREDIT NUMBER 151 KO Development Credit Agreement (Education Project) BETWEEN REPUBLIC OF KOREA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 4, 1969 CONFORMED COPY CREDIT NUMBER 151 KO Development Credit Agreement (Education Project) BETWEEN REPUBLIC OF KOREA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 4, 1969 gUnppmut Tubit Arawigt AGREEMENT, dated June 4, 1969, between REPUBLIC OF KOREA (hereinafter called the Borrower) and INTER- NATIONAL DEVELOPMENT AssoCIATION (hereinafter called the Association). ARTICLE I General Conditions; Definitions SECTION 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to De- velopment Credit Agreements of the Association dated January 31, 1969, with the same force and effect as if they were fully set forth herein (said General Conditions Appli- cable to Development Credit Agreements of the Association being hereinafter called the General Conditions). SECTION 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth. ARTICLE II The Credit SECTION 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to fourteen million eight hundred thousand dollars ($14,800,000). SECTIOi 2.02. (a) The Association shall open a Credit Account on its books in the name of the Borrower and shall credit to such Account the amount of the Credit. (b) The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, this Develop- ment Credit Agreement and in accordance with the alloca- tion of the proceeds of the Credit set forth in Schedule 1 to this Agreement, as such allocation shall be modified from time to time pursuant to the provisions of such Schedule or by further agreement between the Borrower and the Association. SECTION 2.03. The Borrower shall be entitled to with- draw from the Credit Account in respect of the reasonable cost of goods or services required for the Project and to be financed under tlhis Development Credit Agreement: (i) such amounts as shall have been paid (or, if the Association shall so agree, shall be required to meet payments to be made) for goods or services included in Categories I, III and IV of the allocation of the proceeds of the Credit set forth in Schedule 1 to this Agreement; and (ii) the equivalent of thirty-five percent (35%) of such amounts as shall have been paid (or, if the Asso- ciation shall so agree, shall be required to meet payments to be made) for goods or services included in Category II of the allocation of the proceeds of the Credit set forth in Schedule 1 to this Agree- ment, provided, however, that if there shall be an increase in an estimate of such payments for goods or services included in such Category, the Asso- ciation may by notice to the Borrower adjust the above percentage as required in order that with- drawals of the amount of the Credit then allocated to such Category and not withdrawn may continue pro rata with the payments remaining to be made for goods or services included in such Category. 5 SECTION 2.04. No withdrawals from the Credit Account shall be made: (i) under Categories III and IV of the allocation of the proceeds of the Credit set forth in Schedule 1 to this Agreement on account of payments in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; or (ii) on account of payments for taxes imposed by the Borrower or any of its political sub-divisions on, or in connection with the importation or supply of, goods or services included in Category I of said allocation of the proceeds of the Credit. 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. SECTION 2.06. Service charges shall be payable semi- annually on June 15 and December 15 in each year. SECTION 2.07. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account in semi-annual installments payable on each June 15 and December 15 commencing June 15, 1979 and ending Decem- ber 15, 2018, each installment to and including the install- ment payable on December 15, 1988 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1%) of such principal amount. 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. 6 ARTICLE III Use of Proceeds of the Credit SECTION 3.01. The Borrower shall apply the proceeds of the Credit in accordance with the provisions of this Devel- opment Credit Agreement to expenditures ou the Project, described in Schedule 2 to this Agreement. SECTION 3.02. Except as the Association shall otherwise agree, (i) the goods and services (other t1.an consulting services) to be financed out of the proceeds of the Credit shall be procured on the basis of international competitive bidding in accordance with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in February 1968, and in accordance with such other procedures supplementary thereto as are set forth in Schedule 4 to this Agreement or as shall be agreed be- tween the Borrower and the Association, and (ii) contracts for the procurement of such goods and services shall be subject to the prior approval of the Association. SECTION 3.03. Except as the Association may otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclu- sively in carrying out the Project. ARTICLE IV Particular Covenants SECTION 4.01. (a) The Borrower shall carry out the Project with due diligence and efficiency, in conformity with sound technical, financial and administrative standards and with due regard to economy, and shall at all times make or cause to be made available, promptly as needed, all funds and other resources required for carrying out the Project and for the effective utilization, staffing, equip- 7 ping, operation and maintenance of the educational insti- tutions included in the Project. (b) The Borrower shall cause the educational institutions included in the Project to be so operated as to promote the educational objectives of the Borrower and to be pro- vided with qualified teachers and administrators in adequate numbers. (c) The Borrower shall cause the buildings, furniture and equipment of the educational institutions included in the Project to be adequately maintained and shall cause all necessary repairs and renewals thereof to be made. The Borrower shall establish appropriate administrative and financial procedures for the purposes of such maintenance. (d) For the purpose of carrying out the Project, the Borrower shall establish in the Borrower's Ministry of Education a special unit headed by a Project Director, acceptable to the Association, who shall be responsible for the proper execution and supervision of the Project. The Borrower shall appoint as members of such unit (i) a full- time assistant to the Project Director, acceptable to the Association, (ii) an experienced architect, acceptable to the Association, (iii) an accountant and (iv) such support- ing technical, accoLnting and secretarial staff as may be necessary for the purposes of such unit. (e) Except as the Association shall otherwise agree, the Borrower shall cause Parts A, B and C of the Project to be carried out by contractors acceptable to the Borrower and the Association employed under contracts satisfactory to the Borrower and the Association. (f) Except as the Association shall otherwise agree, the Borrower shall furnish or cause to be furnished to the Association for its approval promptly upon their prepara- 8 tion the plans, specifications, contracts and work schedules for the construction included in the Project and the master lists of instructional equipment and furniture included therein, and any subsequent material modifications thereof, in such detail as the Association shall reasonably request. SECTION 4.02. (a) In the carrying out of the Project, the Borrower shall employ qualified and experienced architec- tural consultants, acceptable to the Borrower and the Asso- ciation, upon terms and conditions satisfactory to the Bor- rower and the Association, for the following purposes: (i) establishing space, construction and costing stand- ards to be applied to all schools included in the Project, and supervising the implemcntation of such standards; (ii) advising the Borrower on the professional compe- tence of the architectural units of the Borrower's Provincial Boards of Education with respect to the responsibilities assigned to such units in the carry- ing out of the Project; and (iii) assisting the Borrower in the selection of Korean architectural firms for the purposes of the Project. (b) The Borrower shall cause the said architectural units or qualified Korean architectural firms to (i) design the schools included in the Project on the basis of the standards referred to in paragraph (a) (i) of this Section, (ii) pre- pare appropriate drawings and documents for the purposes of school construction, and (iii) supervise the construction of schools included in the Project. SECTION 4.03. (a) The Borrower shall take appropriate steps to develop agricultural, commercial and technical sub- jects in its teacher training institutions, secondary and post-secondary schools. 9 (b) Without limiting the generality of the foregoing paragraph (a), the Borrower shall (i) employ an adequate number of qualified specialists, acceptable to the Asso- ciation, for such periods as shall be agreed between the Borrower and the Association to assist the Borrower in preparing sound education planning, establishing adequate facilities for training teachers in the above mentioned sub- jects and in developing agricultural, commercial and tech- nical education in the Borrower's secondary and post- secondary schools, (ii) provide ten fellowships for the purpose of training Koreans overseas as specialists in the said subjects, and (iii) take appropriate measures to ensure that the Koreans so trained as specialists join the public service of the Borrower for at least four years upon the completion of their training overseas. (c) The Borrower shall promptly take all requisite steps for the acquisition and retention by the Borrower of all such lands, interests in land and properties and all rights, powers and privileges as may be necessary or proper for the construction and operation of the educational institu- tions included in the Project to ensure that such lands are available immediately as needed for the purposes of said construction. SECTION 4.04. (a) For the purpose of strengthening the staff and organization of the Borrower's Ministry of Edu- cation, the Borrower undertakes that it will: (i) appoint additional staff to the Planning and Man- agement Office of the said Ministry for the purpose of developing agricultural, technical, marine and fishery education; and (ii) appoint specialists in agricultural, commercial, in- dustrial marine and fishery subjects to the Direc- torate of School Supervisors of the said Ministry. 10 (b) The Borrower undertakes that it will take all action reasonably required on its part to ensure that the schools included in the Project are at all times adequately provided with electricity, water and such other utilities as may be required for the proper functioning of such schools. SECTION 4.05. The Borrower shall (i) maintain or cause to be maintained such records as sball be adequate to iden- tify the goods and services finaneou out of the proceeds of the Credit, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect in accordance with consisLently main- tained sound accounting practices the operations and finan- cial condition, in respect of the Project, of the ministries or departments of the Borrower responsible for the con- struction, operation and maintenance of the Project or any part thereof; (ii) enable the Association's representatives to inspect the Project, the operation thereof, the goods and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Credit, the Project, the goods and services financed out of the proceeds of the Credit, the operation of the educational system of the Borrower, the programs for educational development in its territories and the oper- ation and financial condition, in respect of the Project, of the ministries or departments of the Borrower responsible for the construction, administration, operation and main- tenance of the Project or any part thereof. SECTION 4.06. (a) The Borrower and the Association shall cooperate fully with each other to assure that the purposes of the Credit will be accomplished. To that end, each of them shall furnish to the other all such information as either shall reaseaably request with regard to the gen- 11 eral status of the Credit. On the part of the Borrower, such information shall include information with respect to fian- cial and economic conditions in the territories of the Bor- rower and the international balance of payments position of the Borrower. (b) The Borrower and the Association shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Credit and the maintenance of the service thereof. The Borrower shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the main- tenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. SECTION 4.07. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of the Borrower or laws in effect in its territories. SECTION 4.08. This Agreement shall be free from any taxes that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, delivery or registration thereof. SECTION 4.09. The Borrower undertakes to insure the imported goods to be financed out of the proceeds of the Credit against marine, transit and other hazards incident to acquisition, transportation and delivery thereof to the place of use or installation and for such insurance any in- demnity shall be payable in a currency freely usable hv the Borrower to replace or repair such goods. 12 ARTICLE V Remedies of the Association SECTION 5.01. If any event specified in Section 7.01 of the General Conditions shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the prin- cipal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal, together with such charges, shall become due and payable immediately, anything in this Development Credit Agreement to the contrary notwithstanding. ARTICLE VI Effective Date; Termination SECTION 6.01. The following event is specified as an addi- tional condition to the effectiveness of this Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions, namely: that the architectural consultants referred to in Section 4.02(a) of this Develop- ment Credit Agreement shall have been employed. SECTION 6.02. The date of September 30, 1969, is hereby specified for the purposes of Section 10.04 of the General Conditions. SECTION 6.03. The obligations of the Borrower under Sections 4.01(b) and (c), 4.03(a), 4.04 and 4.05 of this Agreement shall terminate on the date on which this Devel- opment Credit Agreement shall terminate or on a date twenty years after the date of this Development Credit Agreement, whichever shall be the earlier. 13 ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1974 or such other date as shall be agreed between the Borrower and the Association. SECTION 7.02. The Minister, Economic Planning Board, of the Borrower is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. SECTION 7.03. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: Minister, Economic Planning Board Republic of Korea Seoul Korea Alternative address for cables: EPB Seoul For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Alternative address for cables: Indevas Washington, D.C. 14 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF KOREA By /s/ DONG JO KIM Authorized Representative INTERNATIONAL DEVELOPMENT AssoCIATIoN By /s/ J. BURKE KNAPP Vice President 15 SCHEDULE 1 Allocation of Proceeds of the Credit Amount expressed Category in Dollar Equivalent I. Furniture and equipment 8,490,000 II. Civil works 4,330,000 III. Professional fees and administration 250,000 IV. Technical assistance and fellowships 460,000 V. Unallocated 1,270,000 TOTAL 14,800,000 Reallocation Upon Change in Cost Estimates 1. If the estimate of the cost of the items included in any of the Categories I to IV shall decrease, the amount of the Credit then allocated to, and no longer required for, such Category will be reallocated by the Association to Category V. 2. If the estimate of the cost of the items included in any of the Categories I to IV shall increase, an amount equal to the portion, if any, of such increase to be financed out of the proceeds of the Credit (or, in the case of Category II, an amount equal to 35 % of such increase) will be allocated by the Association, at the request of the Bor- rower, to such Category from Category V, subject, how- ever, to the requirements for contingencies, as determined by the Association, in respect of the cost of the items in the other Categories. 16 SCHEDULE 2 Description of the Project The Project consists of the following: A. Construction and equipment of : (i) replacements for 3 technical high schools and ex- pansion of 6 others; (ii) extensions to 2 comprehensive high schools; (iii) extensions to 5 agricultural-technical high schools; (iv) extensions to 4 commercial high schools; and (v) extensions to 7 agricultural high schools. B. Construction and equipment of : (i) extensions to 4 higher technical schools; and (ii) extensions to one higher agricultural school. C. Construction and equipment of an extension to the De- partment of Agricultural Education at the Seoul Na- tional University. D. Provision of science equipment for the science teacher training departments at the three national universities of Seoul, Kyungbuk and Kongju. E. Consulting Services for the works included in Parts A, B and 0 above. F. The provision of 26 man-years of technical assistance and 20 man-years of overseas fellowships to promote the development of agricultural and technical education and to assist educational planning. The specific educational institutions to be included in the Project, the specific locations thereof, enrollment levels thereat and the approximate areas of construction shall be those shown in Schedule 3 to this Agreement, subject to modification by further agreement between the Borrower and the Association. The Project is expected to be completed by June 30, 1974. 17 SCHEDULE 3 List of Educational Institutions A. High Schools. Replacements for 3 and extensions to 24 secondary high schools including 700 student boarding places. Approx. Total Student Axea to be Final Total Boarding constructed Name of School Enrollment Places (sq. meters) Technical High Schools Seoul P-k 960 - 2270 Pusan (rebuilding) 1680 - 11178 Anyang 1080 - 2376 Taiback 960 - 4800 Choongnarn 1080 - 4114 Mokpo (rebuilding) 1080 - 7974 Ulsan (rebuilding) 1080 - 7974 Chinju 960 - 4647 Soonchon 1080 - 4736 Comprehensive High Schools Youngju 1080 - 4274 Kunsan 3000 - 2883 Agricultural-Technical High Schools Sosa 840 - 2743 Kangneung 840 - 3415 Janghang 600 - 2544 Nonsan 840 - 4487 Kimhae 1560 - 7650 Agricultural High Schools Yoju 480 100 2941 Boeun 600 100 3312 Jeongeup 960 100 5765 Bosung 480 100 4116 Kimchon 600 100 3148 Kongju 720 100 4060 Suwon 600 100 3167 Continued 18 Approx. Total Student Area to be Final Total Boarding constructed Name of Institutiou Enrollment Places (sq. meters) Commercial High Schools Kyunggi 1200 - 2573 Kyu-ngnam 1440 - 4446 Inchon 1200 - 2231 Taegu 1440 - 2353 B. Higher Schools. Extensions to 5 higher schools. Higher Technical Schools Kyunggi 1400 - 2158 Pusan 1600 - 2188 Chungju 800 - 2715 Taejon 900 - 1054 Higher Agricultural School Chinju 1000 - 5433 C. University Teacher Training Departments. Extensions to one Department including 100 student boarding places and equipment for 3 others. Seoul, Agricultural Teacher Training Department 320 100 580 Seoul, Department of Science Education and Home Economics Kyungbuk, Department of Equipment only Science Education Kongju, Department of Science Education 19 SCHEDULE 4 Procurement Pursuant to Section 3.02 of the Development Credit Agreement, international competitive bidding will be used to carry out the Project, and the procedures set forth in the Guidelines for Procurement under World Bank Loans and IDA Credits, dated February 1968, shall be applied by the Borrower together with the following supplementary pro- visions: 1. Contracts for Civil Works (a) The several civil works included in the Project shall be grouped to form one or more economical bid Packages, whenever practicable. (b) Prior to inviting bids the Borrower shall: (i) Submit to the Association for approval lists containing the types and groups of works proposed to be let and the estimated costs thereof, together with a description of the method to be used for obtaining bids in re- spect to each one; (ii) Upon obtaining such approval, the Borrower shall submit for the approval of the Associa- tion the draft bidding documents, the draft contracts, the list of firms that the Borrower proposes to invite to bid, if any, and the proposed international advertising coverage. (c) After bids have been received and evaluated, the Borrower shall send to the Association a summary thereof, the analysis of the bids and a brief justifica- tion of the Borrower's decision on the award; provided, however, that in the case of any contract, or a group of contracts covered by a single award, involving an 20 amount of US$100,000 equivalent or more, the Bor- rower shall obtain the Association's approval before making the award. (d) As soon as a contract has been awarded, the Bor- rower shall send a certified copy thereof to Association promptly after execution of such contract and prior to the submission to the Association of the first appli- cation for withdrawal in respect of such contract. (e) The Borrower shall request the Association's ap- proval for any proposed change in a contract involving a price increase of 5 per cent, or more than US$10,000 equivalent, whichever is less. 2. Contracts for Equipment and Furniture (a) Lists for all items of equipment and furniture required for the Project shall be prepared, showing the specifications and estimated unit and total price of each item. Items will be grouped so as to permit bulk procurement as shall be consistent with sound technical and procurement practices. (b) Prior to inviting bids the Borrower shall: (i) Submit to the Association for its approval the lists mentioned in paragraph 2 (a) above, together with a description of the method to be used for obtaining bids in respect of each one; (ii) Submit for the Association's approval the proposed standard bid, tender and contract documents. (c) In the case of a contract involving an amount of US$25,000 equivalent or less, the Borrower shall send to the Association, after the bids have been evaluated and awarded (provided the bid amount was within original estimates) a summary and analysis thereof, 21 and a brief justification of the decision on the awarding of the contract. (d) Foreign bids will be compared on a C.I.F. port of entry, Korean landed price basis exclusive of customs duties and similar taxes incident to importation of the goods. (e) Where bids are submitted by Korean suppliers of goods substantially manufactured or processed in the territories of the Borrower, the following rules shall be observed for the purposes of comparing any such bid to any competing bid of a foreign bidder: (i) All customs duties and similar taxes incident to importation shall first be deducted from the total of such foreign bid; (ii) The portion of such foreign bid representing the C.I.F. port of entry, Korean landed price of the goods shall then be increased by 15o 0 thereof or the existing level of such duties and taxes, whichever is lower and the result- ing figure shall be deemed to be the delivered price of the imported goods; (iii) If the ex-factory price of the goods offered by the competing Korean supplier is equal to or lower than the delivered price of the imported goods arrived at under sub-para- graph (ii) hereof, and other terms and con- ditions are satisfactory, the contract shall be awarded to the Korean supplier. (f) As soon as a contract has been awarded, the Bor- rower shall send a certified copy thereof to the Asso- ciation, promptly after the execution of such contract and prior to the submission to the Association of the first application for withdrawal in respect of such contract.