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CONFORMED COPY
(Coastal Embankments Rehabilitation Project)
between
PEOPLE'S REPUBLIC OF BANGLADESH
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
as Administrator of Grant Funds
provided by JAPAN
Dated July 23, 1992
JAPANESE GRANT AGREEMENT
AGREEMENT, dated July 23, 1992, between PEOPLE'S REPUBLIC OF BANGLADESH (the 
Recipient) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) acting as 
Administrator (the Administrator) of grant funds provided by JAPAN (Japan).
WHEREAS (A) pursuant to a letter agreement dated July 30, 1990 between Japan and 
International Bank for Reconstruction and Development (the Bank) and the Association, 
Japan has requested the Bank and the Association, and the Bank and the Association 
have agreed, to administer grant funds to be made available by Japan for the financing 
of certain programs and projects supported by the Bank and the Association, as the 
case may be, in accordance with the provisions of such letter agreement;
WHEREAS (B) the Recipient, having satisfied itself as to the feasibility and 
priority of the Project described in Schedule 2 to this Agreement, has requested Japan 
to assist in the financing of the Project out of said grant funds; 
WHEREAS (C) the Recipient is also requesting the Association to provide 
additional assistance of a total amount of about SDR 15,515,000 towards the financing 
of the rehabilitation of coastal embankments damaged by the cyclone that hit the 
Recipient's territory on April 29, 1991 (the Cyclone), under the Develop-ment Credit 
Agreements between the Association and the Recipient respectively dated May 18, 1984 
for the Bangladesh Water Development Board Small Schemes Project (Credit No: 1467-BD); 
June 15, 1987 for the Fourth Flood Control and Drainage Project (Credit No: 1784-BD); 
and July 7, 1989 for the Third Flood Rehabili-tation (Emergency) Project (Credit No: 
2048-BD);
WHEREAS (D) the Recipient is also requesting Saudi Arabia to provide additional 
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assistance of about $13,300,000 equivalent towards the financing of rehabilitation of 
the coastal embankments referred to in paragraph (C) above;
WHEREAS (E) the Recipient is also requesting the European Economic Community to 
provide additional assistance of about $3,000,000 equivalent towards the financing of 
the rehabilitation of the coastal embankments referred to in paragraph (c) above; and
WHEREAS (F) Japan has agreed to make available to the Recipient a grant out of 
said grant funds (the Grant) to assist the Recipient in carrying out the Project on 
the terms and conditions hereinafter set forth;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. (a) The following provisions of the General Conditions Applicable 
to Development Credit Agreements of the Association, dated January 1, 1985, with the 
modifications set forth in paragraph (b) of this Section (the General Conditions) 
constitute an integral part of this Agreement:
(i)
Article I;
     (ii)
Sections 2.01 (1), (2), (3), (4), (5), (6), (7), (8), (9), (12) 
and (13), 2.02 and 2.03;
    (iii)   Section 3.01;
     (iv)
Sections 4.01 and 4.05;
(v)
Article V;
     (vi)
Sections 6.01, 6.02 (a), (b), (c), (d), (e), (g) and (h), 6.03, 
6.04 and 6.06;
    (vii)
Section 8.01 (b);
   (viii)
Sections 9.01, 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08;
     (ix)
Article X; and
(x)
Article XI.
(b)
The General Conditions shall be modified as follows:
(i)
the term "Association", wherever used in the General Conditions, 
other than in Section 6.02 (e) thereof, means the International 
Development Association acting as Administrator of the Grant 
pursuant to the letter agreement between Japan and the Bank and 
the Association referred to in Recital (A) of this Agreement, 
except that in Section 6.02 the term Association shall also 
include the Association acting in its own capaci-ty; 
     (ii)
the term "Borrower", wherever used in the General Conditions, 
means the Recipient;
    (iii)
the term "Development Credit Agreement", wherever used in the 
General Conditions, means this Agree-ment;
     (iv)
the term "Credit", wherever used in the General Conditions, means 
the Grant;
(v)
the term "Credit Account", wherever used in the General 
Conditions, means the Grant Account, an account opened by the 
Administrator on its books in the name of the Recipient to which 
the amount of the Grant is credited; and
     (vi)
Section 4.01 shall be modified to read:
"Withdrawals from the Grant Account shall be made in yen; 
provided, however, that if the expenditures to be financed out of 
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the proceeds of the Grant have been paid or are payable in another 
currency, the Administrator shall, at the request of the 
Recipient, purchase such currency with the proceeds of such 
withdrawal."
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 respec-tive 
meanings therein set forth, and the following additional terms have the following 
meanings: 
(a)
"Special Account" means the account referred to in Section 2.02(b) of 
this Agreement; and
(b)
"Yen" means the currency of Japan.
ARTICLE II
The Grant
Section 2.01. The Administrator agrees to make available to the Recipient, on 
the terms and conditions set forth or referred to in this Agreement, a grant in an 
amount of two billion seven hundred million yen (¥2,700,000,000).
Section 2.02. (a) The amount of the Grant may be withdrawn from the Grant 
Account in accordance with the provisions of Schedule 1 to this Agreement for 
expenditures made (or, if the Administrator shall so agree, to be made) in respect of 
the reasonable cost of civil works required for the Project described in Schedule 2 to 
this Agreement and to be financed out of the Grant.
(b)
The Recipient shall, for the purposes of the Project, open and maintain 
in dollars a special deposit account in a bank acceptable to the Administrator, on 
terms and conditions satisfac-tory to the Administrator, including appropriate 
protection against set-off, seizure or attachment. Deposits into, and payments out of, 
the Special Account shall be made in accordance with the provisions of Schedule 4 to 
this Agreement.
Section 2.03. The Closing Date shall be December 31, 1994 or such later date as 
the Administrator shall establish. The Administrator shall promptly notify the 
Recipient of such later date.
ARTICLE III
Execution of the Project
Section 3.01. The Recipient declares its commitment to the objectives of the 
Project as set forth in Schedule 2 to this Agreement, and, to this end, without any 
limitation or restriction upon any of its other obligations under this Agreement, 
shall carry out the Project with due diligence and efficiency and in conformity with 
appropriate administrative, financial, and engineering practices, and shall provide, 
promptly as needed, the funds, facilities, services and other resources required for 
the Project.
Section 3.02. Except as the Administrator shall otherwise agree, procurement of 
the goods, works and services required for the Project and to be financed out of the 
proceeds of the Grant shall be governed by the provisions of Schedule 3 to this 
Agreement.
Section 3.03. Notwithstanding any other provision of this Agreement, the 
Borrower shall cause Bangladesh Water Development Board (BWDB) to carry out the 
Project in accordance with administrative arrangements and procedures satisfactory to 
the Association.
Section 3.04. The Borrower shall, prior to entering into any contract for civil 
works under the Project: (i) cause BWDB to engage consultants to assist BWDB in 
construction supervision under the Project, on terms and conditions satisfactory to 
the Association; and (ii) ensure that its Ministry of Land has given its approval for 
the Deputy Commissioner of the District where such civil works are to be carried out, 
to acquire land needed for the purposes of such civil works.
ARTICLE IV
Financial Covenants
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Section 4.01. (a) The Recipient shall maintain and cause to be maintained 
records and accounts adequate to reflect in accordance with sound accounting practices 
the operations, resources and expenditures in respect of the Project of the 
departments or agencies of the Recipient responsible for carrying out the Project or 
any part thereof.
(b)
The Recipient shall:
(i)
have the records and accounts referred to in paragraph (a) of this 
Section including those for the Special Account for each fiscal 
year audited, in accordance with appropriate auditing principles 
consistently applied, by independent auditors acceptable to the 
Administrator;
     (ii)
furnish to the Administrator, as soon as available, but in any 
case not later than six months after the end of each such year, a 
certified copy of the report of such audit by said auditors, of 
such scope and in such detail as the Administrator shall have 
reasonably requested; and
    (iii)
furnish to the Administrator such other information concerning 
such records, accounts and the audit thereof as the Administrator 
shall from time to time reasonably request.
(c)
For all expenditures with respect to which withdrawals from the Grant 
Account were made on the basis of statements of expenditures, the Recipient shall:
(i)
maintain or cause to be maintained in accordance with sound 
accounting practices, records and accounts reflecting such 
expenditures;
     (ii)
retain, until at least one year after the Administrator has 
received the audit report for the fiscal year in which the last 
withdrawal from the Grant Account was made, all records 
(contracts, orders, invoices, bills, receipts and other documents) 
evidencing such expenditures;
    (iii)
enable the Ad-ministrator's representatives to examine such 
records; and
     (iv)
ensure that such records and accounts are included in the annual 
audit referred to in paragraph (b) of this Section and that the 
report of such auditors contains a separate opinion by said 
auditors as to whether the statements of expenditure submitted 
during such fiscal year, together with the procedures and internal 
controls involved in their preparation, can be relied upon to 
support the related withdrawals.
ARTICLE V
Remedies of the Administrator
Section 5.01. Pursuant to Section 6.02(h) of the General Conditions, the 
following additional event is specified:
(a)
Subject to paragraph (b) of this paragraph, the right of the Recipient to 
withdraw the proceeds of any grant, credit or loan for the Project shall have been 
suspended, cancelled or terminated in whole or in part, pursuant to the terms of the 
agreement providing such grant, credit or loan.
(b)
Subparagraph (a) of this paragraph shall not apply if the Recipient 
establishes to the satisfaction of the Administrator that: (i) such suspension, 
cancellation or termination is not caused by the failure of the Recipient to perform 
any of its obligations under such agreement; and (ii) adequate funds for the Project 
are available to the Recipient from other sources consistent with the obligations of 
the Recipient under this Agreement.
ARTICLE VI
Effectiveness
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Section 6.01. (a) This Agreement shall become effective upon its execution by 
the parties hereto.
(b)
This Agreement shall continue in effect until the Grant has been fully 
disbursed and the parties to this Agreement have fulfilled their obligations 
hereunder.
ARTICLE VII
Representation
Section 7.01. The Secretary or any Additional Secretary, Joint Secretary, Deputy 
Secretary or Assistant Secretary of the Economic Relations Division of the Ministry of 
Finance of the Recipient is designated as representative of the Recipient for the 
purposes of Section 11.03 of the General Conditions.
Section 7.02. The following addresses are specified for the purposes of Section 
11.01 of the General Conditions:
For the Recipient:
Economic Relations Division
Ministry of Finance
Government of the People's 
Republic of Bangladesh
Dhaka, Bangladesh
Cable address:
Telex:
BAHIRSAMPAD 
642226 SETU BJ
                  Dhaka                   672796 SETU BJ
For the Administrator:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
INDEVAS
197688 (TRT),
Washington, D.C.
248423 (RCA),
 64145 (WUI) or
 82987 (FTCC)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names as 
of the day and year first above written.
PEOPLE'S REPUBLIC OF BANGLADESH
By /s/ Ayub Quadri 
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
as Administrator of the Grant
By /s/ D. Joseph Wood
Regional Vice President
South Asia
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SCHEDULE 1
Withdrawal of the Grant
1.
The table below sets forth the Categories of items to be financed out of the 
Grant, the allocation of the amounts of the Grant to each Category and the percentage 
of expenditures for items so to be financed in each Category:
Amount of the
Grant Allocated
   % of
(Expressed in Expenditures
Category
Yen)     
to be Financed
Civil Works   
 2,700,000,000
95% 
TOTAL
 2,700,000,000
2.
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be 
made in respect of payments made for expendi-tures prior to the date of this 
Agreement.
SCHEDULE 2
Description of the Project
The main objective of the Project is to carry out urgently needed rehabilitation 
and reconstruction of coastal embankments damaged as a result of the cyclone that hit 
the Recipient's territory on April 29, 1991 (the Cyclone).
The Project consists of the following parts, subject to such modifications 
thereof as the Recipient and the Administrator may agree from time to time to achieve 
such objective.
Part A:
Rehabilitation of coastal embankments of Polder 62 in Chittagong District 
(hereinafter referred to as "Polder 62") damaged during the Cyclone;
Part B:
Construction of new embankments in Polder 62 in areas hit by the Cyclone, 
where protection of embankments in existing locations is technically and economically 
not feasible;
Part C:
Rehabilitation and improvement of existing drainage outlets and other 
structures and construction of structures needed in retired embankments in Polder 62 
hit by the Cyclone;
Part D:
Provision of necessary erosion protection works for Polder 62; and
Part E:
Afforestation in the fore-bay areas of the embankments referred to in 
Parts A and B above, so as to guard against wave action and reduce surge pressure on 
the embankments.
*  *  *  *
The Project is expected to be completed by June 30, 1994.
SCHEDULE 3
Procurement and Consultants' Services
Part A:
International Competitive Bidding
Except as provided in Part C hereof, works shall be procured under contracts 
awarded in accordance with procedures consistent with those set forth in Sections I 
and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published 
by the International Bank for Reconstruction and Development in May 1985 (the 
Guidelines).
Part B:
Preference for Domestic Contractors
In the procurement of works in accordance with the procedures described in Part 
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A hereof, the Recipient may grant a margin of preference to domestic contractors in 
accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the 
Guidelines and paragraph 5 of Appendix 2 thereto.
Part C:
Other Procurement Procedures
Works for afforestation of foreshore areas in front of coastal embankments under 
Part E of the Project, up to an aggregate amount not exceeding Yen 30,000,000 
equivalent, may be carried out through force account.
Part D:
Review by the Administrator of Procurement Decisions
1.
Review of invitations to bid and of proposed awards and final contracts:
(a)
With respect to each contract awarded under Part A of this Schedule, the 
procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall 
apply. Where payments for such contract are to be made out of the Special Account, 
such procedures shall be modified to ensure that the two conformed copies of the 
con-tract required to be furnished to the Administrator pursuant to said paragraph 2 
(d) shall be furnished to the Administrator prior to the making of the first payment 
out of the Special Account in respect of such contract.
(b)
With respect to each contract not governed by the pre-ceding paragraph, 
the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall 
apply. Where payments for such contract are to be made out of the Special Account, 
such procedures shall be modified to ensure that the two conformed copies of the 
contract together with the other information required to be furnished to the 
Administrator pursuant to said paragraph 3 shall be furnished to the Administrator as 
part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to the 
Grant Agreement. 
(c)
The provisions of the preceding subparagraph (b) shall not apply to 
contracts on account of which the Adminis-trator has authorized withdrawals from the 
Grant Account on the basis of statements of expenditure. Such contracts shall be 
retained in accordance with Section 4.01 (c) (ii) of this Grant Agreement.
2.
The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 
to the Guidelines.
SCHEDULE 4
Special Account
1.
For the purposes of this Schedule:
(a)
the term "eligible Category" means the Category set forth in the table in 
paragraph 1 of Schedule 1 to this Agreement;
(b)
the term "eligible expenditures" means expenditures in respect of the 
reasonable cost of goods and services required for the Project and to be financed out 
of the amount of the Grant allocated from time to time to the eligible Category in 
accordance with the provisions of Schedule 1 to this Agreement; and
(c)
the term "Authorized Allocation" means an amount equivalent to $2,000,000 
to be withdrawn from the Grant Account and deposited into the Special Account pursuant 
to paragraph 3 (a) of this Schedule.
2.
Payments out of the Special Account shall be made exclusively for eligible 
expenditures in accordance with the provisions of this Schedule.
3.
After the Administrator has received evidence satisfactory to it that the 
Special Account has been duly opened, withdrawals of the Authorized Allocation and 
subsequent withdrawals to replenish the Special Account shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Recipient shall furnish 
to the Administrator a request or requests for a deposit or deposits which do not 
exceed the aggregate amount of the Authorized Allocation. On the basis of such request 
or requests, the Administrator shall, on behalf of the Recipient, withdraw from the 
Grant Account and deposit in the Special Account such amount or amounts as the 
Recipient shall have requested.
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(b)
(i)
For replenishment of the Special Account, the Recipient shall 
furnish to the Administrator requests for deposits into the 
Special Account at such intervals as the Administrator shall 
specify.
     (ii)
Prior to or at the time of each such request, the Recipient shall 
furnish to the Administrator the documents and other evidence 
required pursuant to paragraph 4 of this Schedule for the payment 
or payments in respect of which replenishment is requested. On the 
basis of each such request, the Administrator shall, on behalf of 
the Recipient, withdraw from the Grant Account and deposit into 
the Special Account such amount as the Recipient shall have 
requested and as shall have been shown by said documents and other 
evidence to have been paid out of the Special Account for eligible 
expenditures.
All such deposits shall be withdrawn by the Administrator from the Grant Account under 
the respective eligible Category, and in the respective equivalent amounts, as shall 
have been justified by said documents and other evidence.
4.
For each payment made by the Recipient out of the Special Account, the Recipient 
shall, at such time as the Administrator shall reasonably request, furnish to the 
Administrator such documents and other evidence showing that such payment was made 
exclusively for eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the 
Administrator shall not be required to make further deposits into the Special Account:
(a)
if, at any time, the Administrator shall have determined that all further 
withdrawals should be made by the Recipient directly from the Grant Account in 
accordance with the provisions of Article V of the General Conditions and paragraph 
(a) of Section 2.02 of this Agreement; or
(b)
once the total unwithdrawn amount of the Grant allocated to the eligible 
Category, less the amount of any outstanding special commitment entered into by the 
Administrator pursuant to Section 5.02 of the General Conditions with respect to the 
Project, shall equal the equivalent of twice the amount of the Authorized Allocation. 
Thereafter, withdrawal from the Grant Account of the remaining unwithdrawn amount of 
the Grant allocated to the eligible Category for the Project shall follow such 
procedures as the Administrator shall specify by notice to the Recipient. Such further 
withdrawals shall be made only after and to the extent that the Administrator shall 
have been satisfied that all such amounts remaining on deposit in the Special Account 
as of the date of such notice will be utilized in making payments for eligible 
expendi-tures.
6.
(a)
If the Administrator shall have determined at any time that any payment 
out of the Special Account: (i) was made for an expenditure or in an amount not 
eligible pursuant to paragraph 2 of this Schedule; (ii) was not justified by the 
evidence furnished to the Administrator, the Recipient shall, promptly upon notice 
from the Administrator: (A) provide such additional evidence as the Administrator may 
request; or (B) deposit into the Special Account (or, if the Administrator shall so 
request, refund to the Administrator) an amount equal to the amount of such payment or 
the portion thereof not so eligible or justified. Unless the Administrator shall 
otherwise agree, no further deposit by the Administrator into the Special Account 
shall be made until the Recipient has provided such evidence or made such deposit or 
refund, as the case may be.
(b)
If the Administrator shall have determined at any time that any amount 
outstanding in the Special Account will not be required to cover further payments for 
eligible expenditures, the Recipient shall, promptly upon notice from the 
Administrator, refund to the Administrator such outstanding amount.
(c)
The Recipient may, upon notice to the Administrator, refund to the 
Administrator all or any portion of the funds on deposit in the Special Account.
(d)
Refunds to the Administrator made pursuant to paragraphs 6 (a), (b) and 
(c) of this Schedule shall be credited to the Grant Account for subsequent withdrawal 
or for cancellation in accordance with the relevant provisions of this Agreement, 
including the General Conditions.
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