India - Pochampad Irrigation Project : Credit 0268 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 268 IN Project Agreement (Pochampad Irrigation Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE STATE OF ANDHRA PRADESH DATED AUGUST 23, 1971 CONFORMED COPY CREDIT NUMBER 268 IN Project Agreement (Pochampad Irrigation Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE STATE OF ANDHRA PRADESH DATED AUGUST 23, 1971 AGREEMENT, dated August 23, 1971, between INTER- NATIONAL DEVELOPMENT AssocIATIoN (hereinafter called the Association) and THE STATE of ANDHRA PRADESH (herein- after called Andhra Pradesh). WHEREAS by a development credit agreement of even date herewith between INDIA, acting by its President (here- inafter called the Borrower) and the Association (here- inafter referred to as the Development Credit Agreement), the Association has agreed to make available to the Bor- rower an amount in various currencies equivalent to thirty- nine million dollars ($39,000,000), on the terms and con- ditions set forth in the Development Credit Agreement, but only on condition that Andhra Pradesh agree to under- take such obligations toward the Association as hereinafter set forth; and WHEREAs Andhra Pradesh, in consideration of the Asso- ciation's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions SECTION 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms de- fined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. 4 ARTICLE II Execution of the Project SECTION 2.01. (a) Andhra Pradesh shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in con- formity with sound administrative, agricultural, engineer- ing and financial practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, serv- ices and other resources required for that purpose. (b) Andhra Pradesh shall cause PWD to post necessary staff to the Project in accordance with a schedule which shall be satisfactory to the Association. (c) Andhra Pradesh shall appoint necessary staff to the Project Area to carry out a comprehensive program of agricultural support for the Project referred to in Section 3.02(a) (iv) of this Agreement. (d) Except as the Association shall otherwise agree, Andhra Pradesh, through PWD, shall cause Part A(3) of the Project to be undertaken pursuant to not more than four contracts, to provide for lining 68 km not later than June 30, 1974, and to provide for lining of ar additional 44 km not later than June 30, 1976. SECTION 2.02. Andhra Pradesh shall: (a) consult with the Association with respect to the expe- rience and qualifications required for the post of Project Coordinator; (b) establish a Development Committee by December 31, 1971 with terms of reference acceptable to the Association, under the chairmanship of an officer of Andhra Pradesh of suitably senior rank and consisting of the Secretaries and heads of all departments and agencies associated with the Project with responsibility for the policy direction of the planning and management of the Project; and (c) establish a project working committee by Decem- ber 31, 1971 under the chairmanship of the Project Coordi- nator, (i) with terms of reference acceptable to the Associa- 5 tion, comprising the senior field officers of all departments and agencies associated with the Project, for the purpose of ensuring full liaison between the field representatives of such departments and agencies, and (ii) with responsibility for the implementation and operation of the Project under the direction of the Development Committee. SECTIoN 2.03. For the purpose of encouraging farmers in the Project Area to level their land so as to adapt it to irrigation techniques, Andhra Pradesh shall ensure that (a) appropriate technical staff are posted to the Project Area at all times until completion of the Project, (b) such technical staff will promulgate satisfactory land-levelling standards, (c) adequate equipment is available to farmers in the Project Area to level their land, and (d) adequate funds will be available to assist farmers in the Project Area who require credit for land-levelling. SECTION 2.04. Andhra Pradesh, acting through PWD, shall consult with CWPC before making any design changes, or accepting completed work, on the dam. SECTION 2.05. Andhra Pradesh, through PWD, shall cause Part A(5) of the Project to proceed simultaneously with on-farm development in each area and shall complete Part A(5) of the Project no later than June 1, 1976. SECTION 2.06. Andhra Pradesh shall insure, or make adequate provision for the insurance of, the goods to be financed out of the proceeds of the Credit relent to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by Andhra Pradesh to replace or repair such goods. Andhra Pradesh shall keep the Association informed of such insurance arrangements. SECTION 2.07. In carrying out Part A(1)-(5) of the Project, Andhra Pradesh shall employ suitably qualified contractors under the procedures set out in Schedule 3 to 6 the Development Credit Agreement upon terms and con- ditions satisfactory to the Association. SECTIoN 2.08. Except as the Association shall otherwise agree, Andhra Pradesh shall cause all goods and services financed out of the proceeds of the Credit to be used exclu- sively for the Project until its completion. SECTION 2.09. (a) Andhra Pradesh shall furnish to the Association promptly upon their preparation, the plans, reports, specifications, contract documents and construc- tion and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) Andhra Pradesh shall: (i) maintain records adequate to identify the proceeds of the Credit relent to it by the Borrower and to allocate them specifically to the Project, to record the progress of the Project (including the cost thereof), to show the results achieved by the Proj- ect and to identify the goods and services financed out of the proceeds of the Credit relent to it by the Borrower, and to disclose the use thereof in the Project; (ii) enable the Association's representatives to inspect the Project, the goods financed out of such proceeds and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. ARTICLE III Management and Operations of Project Facilities SECTION 3.01. (a) Andhra Pradesh shall cause all works and facilities included in the Project or necessary to the 7 proper and efficient operation thereof to be operated, main- tained and repaired in accordance with sound engineering practices and standards and shall provide, or cause to be provided, promptly as needed, the funds, facilities, serv- ices and other resources required for that purpose. (b) Without limiting the generality of the preceding paragraph, Andhra Pradesh shall, under arrangements sat- isfactory to the Association, cause the dam constructed under the Project to be periodically inspected, not less fre- quently than once every five years, in accordance with sound engineering practices in order to determine whether there are any deficiencies or potential deficiencies in the condition of such structures and earthworks, or in the quality and adequacy of maintenance or methods of opera- tion of such structures and earthworks which may endanger the safety of such structures and earthworks. SECTION 3.02. (a) Andhra Pradesh shall: (i) conduct a study of crop irrigation requirements and water losses, specifically including water losses in the Project Area due to seepage from canals and percolation in fields and shall utilize the results of such study in the design and operation of distribu- tory canals and drains; (ii) through SGD or PWD, prepare and initiate a groundwater monitoring program in the Project Area by April 30, 1972, and carry out additional studies of field drainage needs according to terms of reference which shall be satisfactory to the Asso- ciation; (iii) for the purpose of ensuring the orderly develop- ment of additional storage, processing and market- ing facilities in the Project Area, carry out a corm- prehensive study, with terms of reference accept- able to the Association, of (a) the optimum size, location and timing of construction of additional storage, processing and marketing facilities, and 8 (b) financial and administrative implications aris- ing out of the construction of such new facilities in the public sector after making reasonable allowance for participation by the private sector; and (iv) within six months after the date of this Agreement, finalize a comprehensive program of agricultural support for the Project which shall be satisfactory to the Association and which shall include pro- posals for strengthening credit societies. (b) Prior to December 31, 1972, Andhra Pradesh shall discuss with the Association the implementation of the rec- ommendations which result from the study referred to in Section 3.02 (a) (iii), above. SECTION 3.03. Andhra Pradesh, through PWD, shall as- sume responsibility for the maintenance of village roads in the Project Area as soon as they have been reconstructed in each sub-division and shall provide adequate funds for proper maintenance of all such roads. SECTION 3.04. Andhra Pradesh shall take out and main- tain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound practice, and keep the Association informed as to such insurance arrangements. ARTICLE IV Financial Covenants SECTION 4.01. Andhra Pradesh shall cause PWD to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices its op- erations and financial condition with respect to the Project. SECTION 4.02. Andhra Pradesh shall cause PWD to: (i) have its accounts and financial statements (statements of income and expenses and related statements) with re- spect to the Project for each fiscal year audited, in accord- 9 ance with sound auditing principles consistently applied, by the Accountant General of Andhra Pradesh; (ii) fur- nish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of such financial statements for such year as so audited and (B) the report of such audit by the Accountant General of Andhra Pradesh, of such scope and in such detail as the Association shall have rea- sonably requested; and (iii) furnish to the Association all such information as the Association shall reasonably re- quest concerning the operations and financial condition with respect to the Project of PWD. SECTION 4.03. Andhra Pradesh shall make arrangements in its annual budgetary allocation for the provision of funds required for the implementation of the Project in accordance with a detailed schedule of construction which shall be acceptable to the Association and shall be sub- mitted to the Association by February 1 in each year. SECTION 4.04. Andhra Pradesh shall allocate an amount equivalent to Rs 20 per hectare of land irrigated or such other amount as agreed with the Association to meet the full cost of operation and maintenance of the facilities which shall be constructed as a part of the Project and shall review such allocation not less frequently than every five years. SECTION 4.05. Except as the Association shall otherwise agree, Andhra Pradesh shall: (a) by December 31, 1972, or as soon thereafter as irri- gation water is allocated to any land, collect the authorized charges payable in respect of such irri- gated land; (b) by December 31, 1974, have completed a study on arrangements for recovery of : (i) the full cost of operation and maintenance of irrigation system, and 10 (ii) as much as practicable of the capital cost of Parts A(1)-(5) and C of the Project attribu- table to the Project Area, having regard, inter alia, for the incentives and repayment capacity of farmers in the Project Area, and shall promptly thereafter consult with the Asso- ciation with respect to the recommendations on such arrangements; and (c) by December 31, 1976, have implemented arrange- ments for recovery of the costs specified in Section 4.05 (b) above. ARTICLE V Consultation, Information and Inspection SECTION 5.01. The Association and Andhra Pradesh shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and Andhra Pradesh shall from time to time, at the request of either party, exchange views through their representa- tives with regard to the performance of their respective obligations under this Agreement, the administration, oper- ations and financial condition of Andhra Pradesh and other matters relating to the purpose of the Credit. SECTION 5.02. The Association and Andhra Pradesh shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accom- plishment of the purposes of the Credit or the performance by either of them of its obligations under this Agreement. SECTION 5.03. Andhra Pradesh shall enable the Associa- tion's representatives to inspect all plants, sites, works, properties and equipment of Andhra Pradesh related to the Project and any relevant records and documents. SECTION 5.04. Andhra Pradesh shall furnish or cause to be furnished to the Association promptly upon their prep- aration the plans, specifications, contract documents and 11 work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. ARTICLE VI Effective Date; Termination; Cancellation and Suspension SECTION 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. SECTION 6.02. (a) This Agreement and all obligations of the Association and of Andhra Pradesh thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agree- ment shall terminate in accordance with its terms; or (ii) a date 25 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in para- graph (a) (ii) of this Section, the Association shall promptly notify Andhra Pradesh of this event and, upon the giving of such notice, this Agreement and all obliga- tions of the parties thereunder shall forthwith terminate. SECTION 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any can- cellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions SECTION 7.01. Any notice or request required or per- mitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agree- ment shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be 12 delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. For Andhra Pradesh: Secretary to the Government of Andhra Pradesh Public Works Department (Projects Wing) Hyderabad 22 India Cable address: SECTION 7.02. Any action required or permitted to be taken, and any documents required or permitted to be exe- cuted, under this Agreement on behalf of Andhra Pradesh may be taken or executed by the Secretary to the Govern- ment of Andhra Pradesh in PWD or such other person or persons as he shall designate in writing. SECTION 7.03. Andhra Pradesh shall furnish to the Asso- ciation sufficient evidence of the authority and the authenti- cated specimen signature of the person or persons who will, 13 on behalf of Andhra Pradesh, take any action or execute any documents required or permitted to be taken or exe- cuted by Andhra Pradesh pursuant to any of the provisions of this Agreement. SECTION 7.04. This Agreement may be executed in sev- eral counterparts, each of which shall be an original, and all. collectively but one instrument. 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 delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. BURKE KNAPP Vice President THE STATE OF ANDHRA PRADESH By /s/ LAKSHMI KANT JHA Authorized Representative