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REGISTERED No. D. (D.N.) -72

The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 9J NEW DELHI, THURSDAY, JANUARY 7, 1982/PAUSA 17, 1903

Separate paging is given to this Part in order that it maybefiledasaseparate

compilation

1185 GI/81—1

(19)

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27 1.185 GI/81—2

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MINISTRY OF COMMERCE

PUBLIC NOTICE NO. 3ITC(PN)182

New Delhi, the 7th January, 1982

31

and indicated in the body of the Import licence (s) as per para 2 of the Public Notice No. 78-ITC(PN)|74 dt. 6-6-74, issued by the CCI&E, which also enjoins that the Customs authorities and the authorised dealers in foreign exchange will make debits to the value of the licence(s) at the ex- change rate specified on the import licence (s). The licence will bear the superscription "Japanese Yen Credit No. 1D-P. 13". The first and 2nd suffix to the licence code will bo "S|JC". This will also be repeated in the letter from the CCI&E forwarding the import licence to APSEB a copy of wihch should be endorsed to the Ministry of Finance, Department of Economic Affairs (Japan Section).

I(iii). Import Licence(s) can be issued only in favour of

APSEB on C.I.F. basis.

I(iv). Depending on the convenience of APSEB nioie than one I|L may be issued under this credit, but the total value must not exceed Y 7,070 million (CIF) as specified at (1) above.

(I)(v) The extension of the validity of the I1L may on application by APSEB, be granted upto 31-12-85. Request for further extension, If any, should be referred to the Department of Economic Affairs (Japan Section).

I(vi). Imports to be financed under the Credit are rei- tricted to the list of goods and services _ attached to the I]L duly attested by the Licensing Authorities.

IMPORT TRADE CONTROL

Subject:—Licensing conditions in respect of import of goods and services under the OECF Loan agreement of Yen 7.0 Billion for Nagarjuna- sagar Hydro Electric Power Station Expansion Project-Stage-U.

F. No. IPC/23(23V81.—The terms and condition* governing the issuance of Import licences in respect of import of goods and services under the OECF Loan agree- ment of Yen. 7.0 Billion for the implementation of Nagar- junasagar Hydro Electric Power Station Project—Stage-II as given in Appendix to thli Public Notice are notified for information.

\MANI NARAYANSWAMI, Chief Controller of

Imports & Export*

APPENDIX TO MINISTRY OF COMMERCE PUBLIC NOTICE NO. 3-ITC(PN)|82 DATED THE 7TH JANUARY, 1982

LICENSING CONDITIONS IN RESPECT OF IMPORTS OF GOODS AND SERVICES UNDER THE YEN CRE- DIT OF YEN SEVEN BILLION FOR THE IMPLEMEN- TATION OF THE NAGARJUNASAGAR HYDRO ELECTRIC POWER STATION EXPANSION PROJECT (STAGE-II) OF THE ANDHRA PRADESH STATE ELECTRICITY BOARD (APSEB).

Section-I:—General conditions :

I(i).—-The Yen credit of Y 7 Billion extended by the

Overseas Economic Co-operation Fund of Japan (OECF) for financing the Import requirements of the Nagarjuna- sagar Hydro Electric Power Station Expansion Project (Stage-II) of the Andhra Pradesh State Electricity Board (APSEB) is untied in favour of developing countries. Accordingly the goods and services to be procured under this credit can be Imported from Japan and all countries enumerated in the list at Annexure-I which will be eligible "ource countries under the credit.

1(11).—Import Licencc(s) under the Credit can be issued only for such items and for such value as have been speci- fically cleared by the DGTD[OG Committee. The value of import licence(s) issued under this credit should not exceed Y 7,070 million (CIF).

The nipee value of the IjL shall be determined with ref. to the exchange rate notified by the Department of Revenue (Customs) and prevailing on the date of Issue of the I|L I(vii). No remittance of foreign exchange will be per- mitted against the I|L. Any payment toward* Indian Agent's commission should be made in Indian rupees to the agents in India. Such payments, however, will form part of th" licence value and will, therefore be charged to the licence.

I(viii). Firm order must be placed on C & F basis on the Overseas supplier located In the countries mentioned In Annexure-I and sent to the Department of Economic Affairs (Japan section) within 4 months from the date of issue of the I|L. Insurance charges will be payable in India in Indian rupees. "Firm orders" means purchase orders placed by the Indian Licencee on the Overseas supplier duly signed by the letter or purchase contract duly signed by both the Indian Importer and the Overseas supplier. Orders on Indian Agents of Overseas suppliers and|or order con- firmation of such Indian Agents are not acceptable.

I(ix). This condition of the placement of contracts within 4 months period will be treated as not having been com- plied with unless complete contract documents reach the Ministry of Finances Department of Economic Affairs (Japan section) within four months from the date of Issue of the I|L. If firm orders as explained in para I(viii) above cannot be placed within four months for valid reasons, th© licencee should submit the I]L to the concerned licensing authorities giving reasons whv ordering could not be com- pleted within four months. Such requests for extension in the ordering period will be considered on merit by th" licensing authorities who may grant extension upto a further maximum period of 4 months. If, however, extension 1" sought beyond 8 months from the date of issue of the T(L such proposals will Invariably be referred by the licensing authorities to the Department of Economic Affairs (Japan section). Ministry of Finance, North block. New Delhi who will consider such extension on the merits of each cane and communicate their decision to the licensing authorities for communication to the Hcencee. Only on production by the .licencee of a letter from the licensing authorities sanctioning such extension will be authorised dealers and departmental authorities permit the facility of letter of authority for the establishment of letter of credit, acceptance of deposits of the rupee eonivalent, etc. in respect of supply contracts entered into under the I|L.

Ifx). All payments must be completed within 4 months'

from the expiry of the I|L. Individual payments must be arranged upon shipment of goods. The contract should provide for payment on cash hasii i.e. on presentation of shipping documents. No credit facility of eny kind will be permitted to be availed of by *he Indian Importer from the Overseas supplier. The contract should provide for the period of delivery of good"t as follows •.

" months after the receipt of Letter of credit but to be completed latest by the end of ".

lu fixing the terminal date for shipment it should be noted

that this date should not be beyond 31-12-85.

Scction-11: Special points to be kept in view while nego-

tiating a supply contract.

JI(O. The C & F value of the contract should be ex- pressed in Yen (fraction of Yen should be omitted) and should exclude Indian Agent's commission, if any, which should be paid in Indian rupees.

In no circumstunces the contract value should be ex- pressed in Indian rupees or in any other currency. The purchase order and the supplier's order confirmation should be in English only.

II(li). The main guidelines for procurement of goods and services under the OECF Yen Credit (Project Aid) arc given in AnneJcurerll. However, normally the procurement of goods and services should be made through Formal Open International Tendering and the following points should be borne in mind :

(a) Invitations to bid shall have to .be advertised in atieast one newspaper of general circulation in India.

(b) Bid bonds or bidding guarantees are a usual re- quirement but they should not be set so high as to discourage suitable bidders.

(c) Bid bonds or guarantee? should be released to un- successful bidders as soon as possible after the bids have been opened.

JI (iii) In cases where Formal Open International Ten- dering is not considered appropriate the Fund will accept the following alternative procedures :

(a) Where the importer has convincing reasons or main- taining a reasonable standardisation of hi^ equipment.

(b) Where the. number of qualified suppliers la limited.

(c) Where the amount involved in the procurement is BO small that foreign firms clearly would not be Interested or that tho advantages of formal open international tendering would be outweighed by the administrative burden involved.

(d) Where, in addition to the cases fa), ( b W c) above, the Fund deems It inappropriate to follow the formal open international tendering procedures or the Fund deems such procedure inapplicable, e.g., in case of emergency procurement.

In the above mentioned cases the following, procurement procedure' may be applied: in such a manner a" to. cpmply with the formal open international tendering procedures to the fullest possible extent as appropriate.

(1) Formtil Selective International Tendering,

(ii) Informal International Competitive Procurement.

(Hi) Direct purchases from a single supplier.

However, prior approval 'at top Fund shall, be obtained if it is proposed to adopt procurement procedures other than Formal Open International Tendering for goods and services to.be financed out of the proceeds of the Loan, submitting- to the Fund an .application for approval of procurement methodfs) signed by a duly authorised person together; with its reasoning.

Prior to inviting bids for the procurement of gopds and services, the importer shall submit to the Fund for its approval copies of all notices and instructions to bidders, fho bid form, the proposed contract, specifications nnd drawings and all other documents relevant to the bidding.

The-appHcaticmldocuments should be sent In triplicate to the Department of Economic Affairs (Japan section) for obtaining the approval of the Fund:

II (iv) The payment to the Overseas supplier should txf arranged through an irrevocable L|C tp be opened by. the Credit of India, Tokyo in their favour under the OECF Yen Credit (Proje;t Aid) No, ID-P. 13 for 1980-81 the detail! of which are given in Section VI below.

II (v) Only one contract should be entered into against the I|L. In exceptional cases, more than one contract may be permitted to be entered into, for which prior approval of tho Department of Economic Affairs (lapan section), Ministry of Finance, should be obtained soon after the date of isauo of the Import Licence.

II (vi) Elcgibillty of supplier : Suppliers shall be nationals of tho eligible source countries or juridical persons incorporated and registered in the eligible source countries and controlled by -nationals of the eligible source countries.

II (vii) Declaration in contract: The following statements cf eligibility by the supplier shall be. added to each contract.

"I the undersigned, hereby certify that the goods to be supplied are produced in (eligible source country).

I, the undersigned, further certify that to the best of my information and belief, the portion imported from the non- eligible source countries is less than 30% in accordance with the following formula :

Imported CIF perice+Import duty

X100

Supplier's FOB price

ant)

"I, the undersigned, hereby certify , th*t-r—(Name of company) has been.incorporated and registered in- — (Name of eligible source country), and is controlled by nationals of the eligible source countries."

II (viiih Permissible imports from non-eligible source

countries:

Financing of goods which contain material originating from a non-eligible source country or countries may be made, provided.that the imported portion is less .than 3 0% on an itetn-by-item basis in accordance with the following for- mula :

Imported CIF price + Import duty _ 1 , X10O

Suppliers FOB price

Section-Ill : Conditions to be incorporaled in the supply

contracts

bodied in the supply contract :

III (i) The following provisions should be specifically em- . .

(a) The contract ;s arranged in accordance with the loan agreement between the Govt. of India nnd the Over- seas Economic Co-operation Fund of Japan (OECF) dated the 15th October 1981 concerning the Yen Credit TSFo. ID-P. 13 (Project Aid) for Nagarjuna- sagar Hydro Electric Project Expansion Scheme (Stage-TI) of APSEB and will be subject to the ap- proval of Govt. of India nnd the OECF.

(b) Payments to. the -mippller shall be made through, an irrevocable L|C. to be issued by the Bank of India, Tokyo, under the Loan Agreement No. ID-P. 13 dt 15-10-81 between the Govt. of India and the OECF. Japan.

ft) The Overseas suppliers agree to furnish such infor- mation and documents as may be required under the Yen Credit arrangtment* by the Govt. Of Indi* on the one hand and the OECF on the other.

fd) Certificate (triplicate), in . the form* indicated in-

H(vtO. , ,

HI (il) In caae the supplier is located in Japan, the supply

contract should contain a clause that the Japanese supplier - aRrces to make shmpinq arrangements in consultation with the Embassy of India, Tokyo. and that for tWs purpose he would keep.the Embassy of India, Tokyo, Informed of the delivery schedule of the goods involved and not'fy the Em-, bassy of India arieast "ix weeks in advance of the shipping

required so that suitable arrangements could bo made. In exceptional cases, wheie the Indian Importer require it, thi" pcrioa of notice may be reduced. The Japanese supplier should also agree to send a cable advice to the importer alter taori shipment giving the necessary details and a copy thereof should be sen: to the Embassy of India, Tokyo,

Section-IV : Contract approval by OECF :

IV (i) Within the stipulated period for placement of firm orders the licence should forward 4 copies of the eontiact duly signed by both APSEB and Overseas suppliers supported by order confirmation in writing by the Overseas supplier or their photo copirs complete in all respects, together vsitli two photo copies of the relevant valid I /L to Japan Section, Department of Economic Affairs, Ministry of Finance, Noith Block, New Delhi.

TV (ii) The above procedure will also apply to all contract amendments causing essential modifications to the contcnli of contracts or in ils price.

IV (iii) The Ministry of Finance (DEA) Japan Section will arrange to send one copy of the contract documents lo the OECF fov their approval for financing under Yen ^ ndit No. ID-P. 13 (Project Aid) for Nngarjunasagar Hydro Electric Power Station Expansion Project (Stage-TI).

Section-V : Papyment to the Oversea? suppliers—Letter of Credit procedure :

V (i) On receipt of the intimation of the contract approval from the OECF by the Ministry of Finance, Department of Fconomic Affairs, Japan section. APSEB and the CAA &A will be informed of the same. Whereafter the APSEB should approach the Controller of Aid Accounts A Audit, (hereinafter referred to as CAA&A) Department of Economic Affairs, Ministry of Finance, UCO Bank Building Parliament Street, New Delhi with a request in the form attached as Arinexure-IIJ fjor issue of a Letter of Authorisation. The CAA&A will issuo a letter of authorisation as in the form attached an Anncxure-IV addressed to the Tokyo Branch of the Bank of India for opening an irrevocable L/C as in the form attached as Annexurc-V (for physical imports) or An- nexure-VI (for services) in favour of the Overseas supplier concerned. Copien of the letter of authorisation will be en- dorsed to the OECF, the Embassy of India, Tokyo, the Impor- ter's Bank in India, and Japan section, Department of Econo- mic Affairs, Ministry of Finance.

V (ii) On receipt of the letter of authority, the Bank of India, Tokvo. will establish an Irrevocable L/C as per An- nexwre-V (applicable to physical imports) or VI (applicable to services) in favour of the Overseas suppliers concerned and will also forward a copy of the same to the OECF, Embassy of India, Tokyo, the Importer's Bank in India and the CAA&A.

The above procedure of opening.of letters of credit on the basis of the letter* of authority from CAA&A would ipso facto apply to all such amendments to letter of authorisation/ letter of credit as may become necessary due to contract amend- ment or otherwise.

V (iii) The overseas supplier shall, after effecting shipment of goods present through his hankers the documents specified in the L/C to the Bank of Tndia, Tokyo. If the documents are found to be in order, the Bank of India, Tokyo will release the amount st>ecined in the document⁰ to thi* Overseas sup- plier through his bankers and will thereafter obtain reimburse- ment of the said amount from the OECF.

V (iv) Banking charges payable to the 13.ink of Tndia, Tokyo for opening th© L/C for negotiations thereunder aDd charges, if any, of overseas supplier's banker and interest charges payable to the Bank of India, Tokyo, fov the period counting from the date of payment of the cost of imports by them to the overseas supplier to the date of reimbursement by the OECF shall be settled by the concerned importer's Bank in India by remittances to the Bank of India, Tokyo through normal banking channel without affecting the Govt, of India's account.

Scction-VI : Responsibility for rupee deposit :

VI (i) The Bank of India. Tokyo will forward the nerotl- able shipping documents to the accredited bunkers of importei

3.

as indicated in the Appendix to the relevant Letter of "Autho- rity and the bankeis will in turn en&ure that trie rupee depo- sits ate invaiiably made at RBI, New Delhi or SBI, Tis Hazari, Delhi before releasing xin shipping documents. Inte- rest cnarges on the rupee-equivalents of the Yen payments calculated (# y per cent per annum for the first 30 days find @ 15 per ceut per annum for the period in excess thereof reckoned from the date of payment by the Hunk of lhtlSa, 'Iokyu iO the Overseas supplier to the date of actual rupee deposit, htivc also to be deposited along with the principal • paymont, in terrrs of Public Notice No. 46-ITC(PN)/76 dt. 16-6-76, it should be noted that interest is chargeuble for both the days i.e. the day op. which payment is made to the overseas supplier and also the day on which rupee deposit is made in Cipvt. account vide Public Notice No. 74- 1TC

The exchange rate to be adopted for computing the rupee equivalent of the Yen payments made to the ovenwas suppliers will be the- composite rate of exchange applicable to the date of payment which will be worked out in accordance with the method prescribed in Public Notices No. tO9-ITC(PN)/74 dt. 3-8-74 and No. 8-lTC(PN)/76 dt. 17-1-76 or as may be notified by Govt. from time to time through Public Notices of the CCI&E or through Exchange Control circulais of the RBI. '1 he Head of account to which the above rupee dsposits should be crcdite'd is "K-deposits and advances—843—Civil deposits Deposits for purchase etc. abroad—Purchase under credits/ Loan agreements" Ixjans from the Govt. of Japan—7 Billion Yen Credit No. ID-P. 13 for Nagarjunasngar Hydro Electric Power Station Expansion Project (Stagc-Il).

VI (ii) The amount referred to above should be deposited in cash to the credit of the Govt. either in the RBI, New Delhi or SBI, Tis Hazkri, Delhi as contemplated in Public Noti-cs "No. 184-rrC(PN>/68 dt. 30-8-68, No. 233-ITC(PN)/ 68 dt. 24-10-68, No. 132-ITC(PN)/71 dt. 5-10-71, No, 74-ITC(PN)/74 dt. 31-5-74 and No. 103-ITC(PN)/76 dt. 12-10-76.

VI (Jii) The concerned Bank in India shall also furnish such additional deposit in the same manner stipulated above as may be requested by the Go\t. of India, Ministry of Finance, Department of Economic Affairs on account of service charces within 7 days, after such a demand Is irade by Ministry of Finance (Department of Economic Affairs). While filling in th© various columns in the challan it should be ensured by the importers /truer bankers that the information prescribed in r>ara 2 of Public Notice No. 132- rrC(PN)/71 dt. 5-10-71 is invariably indicated in the column "full particulars of remittances anj authority (if any)" of the Challan. The following particulars should invariably be fur- nished in the treasury challans.

(a) Ministry of Finance Letter of Authority No. and date,

(b) Amount at Yen currency in respect of which deposits arc to be made together with rate of conversion adopted.

(c) Date of payment to the overseas supplier.

Thereafter the Treasury challans evidencing the rape* de- posit should be sent by Rcgd. post to tho CAA&A indicating lei. K> the letter of authorisation issued by him and h",i enclosing copies of the invoice and shipping documents.

NOTE : Importer's Bank in Ir-dia should ensure that thel rupee deposits are invariably made within 10 d^vs of the receipt of the advice of payments and negnti- abfe shipping documents from the Bank of India, Tokyo and that the CAAAA, Ministry of Finance (DEA) New Delhi is kept informed of the fact Im- mediately thereafter.

VI (iv) The concerned Bank in India should also endorse the amount 'of runce deposits on fhe evchanso control rnnv of the licencee and send the requisite 'S' form to the RBT, Bombay.

Section-VIIT : Miscellaneous provisions :

VTTI (i) Reports on the utilisation of tho Import Licence :

The Importer should send a monthly report, after the L /C has been opened regarding shipments anJ payments made there against and about the balance left, to the • CAAAA.

Economic Affairs, Ministry of Finance, UCO Bank

A, Parliament Street, New Delhi.

Pwandft St. Helena and dep (2) Sao Tomo and Principe

, Senegal

. HI (ii) Notifying suppliers of Special conditions : The vencee should apprise the supplier of any special provisions in the I/L which may affect the suppliers in carrying out the transaction.

VIII (iii) Disputes : It should be understood that the Govt. of India will not undertake any responsibility for disputes, if any, that may arise between the Jicenceo and the suppliers. The conditions to bo fulfilled by (he supplier before payment by the Bank of India, Tokyo must be clearly spelt out by the importer in Annexure-IIl under 'Terms of payment". Provisions dealing with settlement of disputes should be in- cluded in the conditions of contract.

vm (lv) Future instructions : The licencee shall promop- tly comply with any directions, instructions or orders issued by the Govt. of India from time to time regarding any and all matter* arising from or pertaining to the I /L and for meeting all obligation* under the Yen credit agreement (Project Aid) No. ID-P. 13 with the OECF Japan.

VIII (v) Breach or violation : Any breach or violation of the conditions set forth in the. above c l a ws will ^suit In appropriate action under th© Imports and Exports (Control) Act.

VITI(vi) List of Annexures :—

Seychelles Sierra Leone Somalia Sudan Swaziland Terro. Afars and Issas Togo Uganda Un. R"p. of Tanzania Upper Volte Zaire Republic Zambia

(1) Formerly the territory of Spanish Guinea, Including the

Islands of Fernando PO.

(2) Including the following islands : As ceniion, Trijtan

da Inaccossibles, Nightingale, Gough.

(3) Main islands , Aruba, Bonaire, Curacao, Saha, St,

Euatacit St. Martin (Southern part).

m. AMERICA, North and Central

Annexure-I List of eligible source countries. Annexure-II Broad guidelines for procurement. Annexure-ni Request for issue of letter of authority. Anncxure-IV Form of Letter of Authority. AnnexurerV Form of L/C (applicable to physical Imports) Annexure-VI Form of L /C (applicable to services),

ANNEXURB—I

List of Eligible Source Countries

A. Developing Countries and Territories

(al) Non-OPEC Developing Countries

I. AFRICA, North of Sahara

Egypt Morocco Tunisia

n. AFRICA. South of Shahara

Bahamas Barbados Belize Bermuda Costa Rica Cuba Dominican Republlo El Salvador Guadeloupe Guatemala Haiti Honduras Jamaica Martinique Mexico Netherlands in Tille* Nicaragua Panama St. Pierre &. Miquelon

Trinidad and Tobago

West Indies (Br.)'n.f.e.

(") Associated States (1)

(b) Dependence (2)

(1) Main Islands : Antlgue. Dominica, Grenada, St. Kitts (St. Caristophe), Nevis-AnguiUa, St. Lucia and St. Vincent

(2) Main islands : Montserrat, Cayman, Turks and Caicos,

and British Virgin Islands.

IV. AMERICA, South

Angola Botswana Burundi Cameroon Cape Verde Islands Central African Rep, Chad Comoro Islands Congo, People's Republic of Dahemay Equatorial Guinea (1) Ethiopia Gambia Ghana Guinea Ivory Coast Kenya Lesotho Liberia Malagasy Republic Malawi Mali Mauritania, Mauritius Mozambique Niger Portuguese Guinea Reunion Pnodesia

Argentina Bolivia Brazil Chile Colombia Falkland Islands French Guiana Guyana Paraguay Peru Surinam Uruguay

V, ASIA, Middle Easl

Bahrain Israel Jordan Lebanon Oman Syrian Arab Republic United Arab Emirates (3) Yemen Arab Republic Yemen, People's O.R, (4)

VI. ASIA, South

Afghanistan Bangladesh Bhutan Burma India Maldivts Nepal Pakistan Sri Lanka

VIT. ASIA, Far East

Brunei Hong Kong Khmer Republic Korea, Republic of Laos Macao Malaysia Philippines Singapore Taiwan Thailand Timor Viet-Nam, Rep. of Vier-Nam Dom. Rep.

VIII. OCEANIA

Coek Islands

Gilbert & Ellicc U. French Polynesia (5) Nauru New Calendonia New Hebrices (Br. and Fr.) Niue Pacific Islands (US) (6) Papua New Guinea Solomon glands (Br.) Tonga Wallis and Futuna Western Samoa

XI. EUROPE Cyprus Gibraltar Greece Malta Spain Turkey Yugoslavia

(3) Ajraan, Dubai, Ftyairah Ras al Khaimah, Sharjah

and Ummat Quaiwain.

(4) Including Aden and various sultanates and emirates.

(5) Comprising the Society Islands (including Tahiti), The Austral Wands, the Tuamotu-Gambier Group and the Marquesas Islands.

(6) Trust Territory of the Pacific Islands : Caroline Tslsnds, Marshall Islands, and Marine Islands (Except Guam).

I [85 Gl/Rl—3

35

(a2"; Mem ber or Association Countries of OPEC

Algeria

Bolivia

Libyan Arab Republic

Gabon

Nigeria

Ecuador

Venezuela

Iran

Iraq

Kuwait

Qatar

Saudi Arabia

Abu Dhabi

Indonesia

ANNEXURE-Jl

Main guidelines for procurement of goods and service* under the Project Loan as formulated by OECF

I. Advertising

For all contracts subject to Formal Open International Tendering, invitations to bid shall be advertised in at least one newspaper of general circulatkm in India.

II. Biddins Documents and Contract

11-J. Bid Bonds or Guarantees—Bid bonds or biddlnjt Kiiarantees are a usual requirement but they should not be set "o high as to discourage suitable bidders. Bid bonds or guarantees should be released to unsuccessful bidder as soon as possible after the bid have been crooned.

II-2. Conditions of Contract.—The conditions of contract should clearly define the rights and¹ obligations of the im- porter and the contractor or supplier, and the powers and authority of the engineer if one, if employed by the im- porter, in the administration of the contract and any vari- ations thereunder. In addition to th© customary general conditions of contract, some of which are referred to in these Guidelines, special conditions appropriate to the nature and location of the proiect should be included.

II-3, Type and Size of Contract.—Contracts can be let on the basis of unit prices for work performed or items ron- plied or of a lump sum price, or a combination of both for different portions of the contract, according to the nature of the goods or services to b" provided aud the biddlnR docu- ments should clearly state the type of contract selected.

Contracts based principally on the reimbursement of actual costs are not acceptable by the Fund except in exceptional circumstances.

Single contracts for engineering, equipment and construc- tion to be provided by the same party (Turnkey Contracts") are acceptable if they offer technical and economic advan- tages for "the borrower country.

II-4. Eligible Suppliers,—Exporters or suppliers whose goods and service? are to be financed out of the proceeds of the Loan (hereinafter referred to as "the eligible sup- plier") shall be,, nationals of the eligible source countries satisfying the following conditions.

(1) a rc-ajority of subscribed shares shall be held bv

nationals of the eligible source countries.

2) a majority of full-time directors shall be nationals

of the eligible source countries and

;) such juridical 'persons' shall be registered in the

eligible source countries.

.. Contract Price.—(a) The contract price should be J In Japanese Yen provided, however, that the portion the contract price which the contractor will spend in the oorrower'v country should be stated In the borrower's cur- rency.

(b) Price Adjustment Clauses.—Bidding documents should contain a clear statement whether firm prices arc required or escalation of the bid piices is acceptable.

A provision should be made for adjustment in the con- tract prices in the event changes occur in the prices of the major coot constituents of the contract, such as labour and important materials.

The specific formula tor price ad]iwtments should be

clearly defined in the bidding documents.

A ceiling on price adjustment should be included in con- tracts for the supply of goods, but it is noi usual to include such a ceiling in contract* for civil works.

No price adjustments should normally be provided for

goods to be delivered within one. year,

The Guidelines do not attempt to identify the various

methods by which contract prices may be adjusted.

(c) Insurance.—The bidding documents should state pre- cisely the types of insurance to be provided by the success- ful bidder.

, 111-2. The contract duly signed by both parties or purchase

order by the Indian importer placed on the overseas sup- plier supported by order confirmation in writing by the overseas supplier, or their photo copies are nlso acceptable to the Fund.

II1-3. The following statement of eligibility by the sup-

.ylier¹ shall be added to each contract.

V. liquidated Damage :

Liquidated damage clauses should be included in bidding documents when delays in completion or delivery will result in extra cost, loss of revenues or loss of other benefits to the borrower. Provision may also be made for a bonus to be paid to contractors for completion of civil works) contract* at or ahead of times specified in the contract when such earlier completion would be of benefit to the borrower,

VI. Force Majeure :

The expenditure of the Contract included in the bidding documents should contain clauses, when appropriate, stipulat- ing that a failure on the part of the parties to pet form their obligations under the Contract shall not be considered a default under the Contract if such iailure in tho result of an oven of force Majeure (to be defined in the conditions of the Contract).

VII. Settlement of Disputes ;

Provision dealing with the settlement of disputes should be included in the ^conditions of the. Contract. It is desir- able that the provisions whould be based on "Rules of Con- ciliation and Arbitration" which have been prepared by the International Chamber of Commerce or on such other ar- rangements as may mutually acceptable to the Indian Im- porter and the overseas supplier.

VIII. Language Interpretation :

Bidding documents should be prepared in English. If other language should be used in the bidding documents, English should be added to such documents and it is requir- ed to specify which is governing.

IX. Bid Opening, Evaluation and Award of Contract :

IX-1. Time Interval between Invitation and submission of Bids.—The time allowed for preparation of bids will de- pend to a large extent upon the magnitude and complexity of the contract. Generally not less than 30 days should be allowed for international bidding. The time allowed, how- ever, should be governed by the circumstances relating to each contract,

capability and financial resoiwcea effectively to carry out the contract concerned. If the bidder does not meet thai test, his bid should be rejected.

1X-7. Evaluation and Comparison of Bids.—Bid evalua- tion must be consistent with Ihe terms and conditions set forth in the bidding documents. In addition to the bid price, adjusted to correct arithmetical errors, other factors such as the time ot completion of construction or the effi- ciency and compatibility of the equipment, the availability of service and spare parts, and the reliability of construc- tion methods) proposed should be taken into consideration. To the extent practicable these factors Should be expressed in monetary terrrs accordinn to criteria specified in the bidding documents. The amount of escalation for price ad- justments, if any, included in ihc bids should not be taken into consideration,

The currency or currencies in which the price offered in each bid would be paid by the borrower if that bid were accepted should be valued in terms of a single currency selected by the borrower for comparison of all bids and stated in the bidding documents. The rates of exchupHe to be used in such. valuation should be the selling rates pub- lished by an official source, tind applicable to similar trans- actions on the day bids arc opened unless there should be a chanse in the value of currencies before the awnrd i

IX-H. Rejection of Bids.—Bidding documents i.siuilly pro- vide that borrowers may reject all bids. However, all bids should not be rejected and new bids invited on the same specifications solely for the purpose of obtaining lower prices in the new bids, except in cases where the. lowest evaluated bid exceeds the costs estimates hy a substantial amount. Rejection of all bids tray also be juuiified when (a} bids are not responsive to the intent of the bidding documents, or (b) there is a lack, of competition. If all bids are re- jected, the borrower should review the cause or causes justi- fying the rejection and either consider revision of the speci- fication or modification in the project (or amounts of work on items called for in the original invitation to bids), or both. In special circumstances after consultation with the Fund, the borrower may negotiate with one or two of Ihe lowest bidders to try to obtain a satisfactory contract.