India - National Seed Project : Loan 1273 - Loan Agreement - Conformed

LOAN NUMBER /2 IN LOAN AGREEMENT (National Seed Project) between INDIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1976 LOAN AGREEMENT AGREEMENT, dated , 1976, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) The Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agree- ment by making the Loan as hereinafter provided; (B) By four separate agreements of even date herewith the first between the Bank and the State of Andhra Pradesh, the second between the Bank and the State of Haryana, the third between the Bank and the Governor of the State of Maharashtra, and the fourth between the Bank and the State of Punjab, the States of Andhra Pradesh, Haryana, Maharashtra and Punjab have each agreed to under- take certain obligations in respect of the carrying out of the Project; (C) By an agreement of even date herewith between the Bank and Agricultural Refinance and Development Corporation (hereinafter called ARDC), ARDC has undertaken certain obligations in respect of the carrying out of the Project; and (D) The Bank is willing to make the Loan to the Borrower on the terms and conditions set forth hereinafter and in the agree- ments referred to in Recitals (B) and (C) above; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein. Section 1.02. Wherever used in this Agreement, unless the con- text otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Andhra Pradesh" means the State of Andhra Pradesh, a State of India, or any successor thereof; (b) "Haryana" means the State of Haryana, a State of India, or any successor thereof; (c) "Maharashtra" means the State of Maharashtra, a State of India, or any successor thereof; (d) "Punjab" means the State of Punjab, a State of India, or any successor thereof; (e) "the States" means Andhra Pradesh, Haryana, Maharashtra and Punjab; -3- (f) "ARDC" means Agricultural Refinance and Development Cor- poration, a statutory corporation established and organized under the laws of the Borrower; (g) "Andhra Pradesh Project Agreement, "Haryana Project Agreement", "Maharashtra Project Agreement" and "Punjab Project Agreement" means the respective agreements between the Bank and each of the States of even date herewith referred to in Recital (B) of this Agreement, as each such agreement may be amended from time to time; (h) "the State Project Agreements" means the Andhra Pradesh Project Agreement, Haryana Project Agreement, Maharashtra Project Agreement and Punjab Project Agreement and "the respective State Project Agreement" means in relation to any one of the States, any such agreement to which that State is a party; (i) "ARDC Agreement" means the agreement between the Bank and ARDC referred to in Recital (C) of this Agreement, as the same may be amended from time to time; (j) "SSC" means in relation to: (i) Andhra Pradesh, the Andhra Pradesh State Seeds Development Corporation Limited; (ii) Haryana, the Haryana Seeds Development Corporation Limited; (iii) Maharashtra, the Maharashtra State Seeds Corporation Limited; and (iv) Punjab, the Punjab State Seeds Corporation Limited; (k) "NSC" means the National Seed Corporation Limited, a statutory corporation established and organized under the laws of the Borrower; (1) "ICAR" means Indian Council of Agricultural Research; (m) "Agricultural Universities" means (A) the Andhra Pradesh Agricultural University; (B) the Haryana Agricultural University at Hissar; (C) the Agricultural Universities of Maharashtra located at Akola, Rahuri and Parbhani; and (D) the Punjab Agricultural Univer- sity at Ludhiana; (n) "Participating Bank" means any bank listed in the Second Schedule to the Reserve Bank of India Act, 1934; (o) "SFCI" means State Farms Corporation of India; (p) "truthfully labelled seeds" means any seeds labelled under Section 7 (c) of the Seeds Act, 1966 (No. 54 of 1966); (q) "breeder seed" means seed of high genetic purity pro- duced by a plant breeder; (r) "foundation seed" means progeny of breeder seed or first generation foundation seed produced under statutory quality con- trol standards; (s) "certified seed" means progeny of foundation seed pro- duced to statutory quality control standards; (t) "Subsidi&ry Loan Agreement" means the agreement to be entered into between the Borrower and ARDC pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time; -5- (u) "PMMC" means the Project Management and Monitoring Com- mittee mentioned in Section 4.02 of this Agreement; (v) "CSCB" means the Central Seed Certification Board estab- lished under the Borrower's Seeds (Amendment) Act, 1972 (No. 55 of 1972); (w) "CWC" means the Central Warehousing Corporation, a statu- tory corporation established and organized under the laws of the Borrower; and (x) "SSCA" means the Seed Certification Agency of each of the States. -6- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty-five mil- lion dollars ($25,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expendi- tures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Proj- ect and to be financed out of the proceeds of the Loan. Section 2.03. (a) Except as the Bank shall otherwise agree, the goods and works for the Project to be financed out of the pro- ceeds of the Loan, shall be procured in accordance with the pro- visions set forth in Schedule 4 to this Agreement. (b) Where a contract is awarded for the supply for the Proj- ect of goods manufactured outside India, the Borrower shall imme- diately grant permission to import the goods covered by the con- tract, and no reviews of such permission to import shall be made by the Borrower or by any of its agencies, and all foreign exchange required therefor shall be promptly made available. Section 2.04. The Closing Date shall be June 30, 1981, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdravn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and one-half per cent (8-1/2%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semi-annually on June 15 and December 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. -8- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out or cause to be carried out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, agricul- tural and engineering practices and shall provide, or cause to be provided, promptly as needed the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall take and cause ull its agencies to take all action (including the provision of funds, facilities, services and other resources) which shall be necessary or appropriate on their part to enable the States, with respect to the State Project Agreements, and ARDC, with respect to the ARDC Agreement, to perform all of their obligations under the said Agreements and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) In order to assist Andhra Pradesh, Haryana, Maharashtra and Punjab in carrying out the Project, the Borrower shall make available to each of the States in accordance with the Borrower's standard arrangements for developmental assistance to the States of India proceeds of the Loan required by each of the said States to carry out the Project. -9- (a) The Borrower shall enter into a Subsidiary Loan Agreement with ARDC on terms and conditions (including, inter alia, those set forth in Schedule 5 to this Agreement) satisfactory to the Bank for the purpose of lending to ARDC part of the proceeds of the Loan equivalent to eighteen million one hundred fifty thousand dollars ($18,150,000) or such amounts as the Bank may from time to time agree. The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purpose of the Loan and, except as the Bank may otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agree- ment or any provision thereof. Section 3.02. The Borrower shall employ, or cause to be em- ployed, the consultants mentioned in Part I (2) of the Project whose qualifications, experience and terms and conditions of em- ployment (including terms of reference) shall be satisfactory to the Bank. Section 3.03. (a) The Borrower shall insure, or cause to be insured, or make, or cause to be made, adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, trans- portation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. (b) Except as the Bank may otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. - 10 - Section 3.04. The principal lending terms and conditions re- lating to the Project shall be as set out in Schedule 5 to this Agreement, said schedule being subject to amendment by agreement between the Borrower, ARDC and the Bank. 0 - 11 - ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of for- eign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative sub- divisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; - 12 - and (ii) any lien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrover, of any political or administrative subdi- vision thereof and of any entity owned or controlled by, or oper- ating for the account or benefit of, the Borrover or any such sub- division, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section h.02. The Borrover shall establish a Project Manage- ment and Monitoring Committee to monitor and coordinate the carry- ing out of the Project. The membership and powers of the Committee shall be satisfactory to the Bank. Section 4.03. The Borrover shall establish a Central Seed Certification Board with powers and membership satisfactory to the Bank. Section 4.04. The Borrover shall cause ICAR to: (i) coordinate breeder seed production under the Project; (ii) determine the par- ticular investment needs of each institution participating in such production; and (iii) assign a senior ICAR official to carry out the above tasks. Section 4.05. The Bororver shall cause NSC to enter into an agreement with each SSC satisfactory to the Bank. The said agree- ment shall, inter alia, set out the respective responsibilities - 13 - of NSC and the SSC in the carrying out of the Project. The Bor- rower shall not permit NSC to assign, amend, abrogate or vaive any such agreement without prior consultation with the Bank. Section 4.06. The Borrower shall with respect to supplies of foundation seed, access to seed quality control services, access to variety trials, seed movement and such other matters as may be agreed between the Borrower and the Bank extend the same treatment to all persons involved in the seed industry. Section 4.07. The Borrower shall cause NSC to conduct with the assistance of marketing consultants biennial surveys of seed demand in India. Section 4.08. The Borrower shall permit NSC to appoint such dealers in seed as NSC may in the interest of efficiency consider necessary. Section 4.09. The Borrower shall review iith the Bank on a regular basis the level of the charges for NSC's services and shall * cause such charges to be adjusted as and when necessary to enable NSC to cover its operating costs. Section 4.10. The Borrower shall with respect to the Project accounts of NSC, ICAR, CSCB, SFCI and CWC cause NSC, ICAR, CSCB, SFCI and CWC to maintain, records adequate to reflect in accordance with consistently maintained appropriate accounting practices their respective operations and financial conditions. Section 4.11. The Borrower shall: (i) have the accounts and financial statements for the Project of NSC for each fiscal year audited, in accordance with appropriate auditing principles con- sistently applied, by independent auditors acceptable to the Bank; (ii) cause NSC to furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of NSC's financial statements for such year as so audited, and (B) the report of such audit by said audi- tors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) cause NSC to furnish to the Bank such other information concerning the said accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request. - 15 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (k) thereof: (a) any of the States shall have failed to perform any of its obligations under the respective State Project Agreement; (b) ARDC shall have failed to perform any of its obligations under the ARDC Agreement or under the Subsidiary Loan Agreement; (c) an extraordinary situation shall have arisen which shall make it improbable that (i) any of the States will be able to per- form its obligations under the respective State Project Agreement; or (ii) ARDC will be able to perform its obligations under the ARDC Agreement or under the Subsidiary Loan Agreement; (d) ARDC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARDC or by others whereby any of the property of ARDC shall or may be distributed among its creditors; and (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARDC, NSC or any of the SSC's or for the suspension of the operations of ARDC, NSC or any of the SSC's. - 16 - Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) any event specified in paragraph (a) or (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; and (b) any event specified in paragraph (d) or (e) of Section 5.01 of this Agreement shall occur. - 17 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the completion of arrangements satisfactory to the Bank for the transfer to the SSC's of suitable processing plants of NSC; (b) the execution and delivery of the State Project Agree- ments on behalf of each of the States have been duly authorized or ratified by all necessary governmental action; (c) the execution and delivery of the ARDC Agreement on behalf of ARDC have been duly authorized or ratified by all necessary cor- porate action; (d) the execution and delivery of the Subsidiary Loan Agree- ment on behalf of the Borrower and ARDC, respectively, have been duly authorized or ratified by all necessary corporate and govern- mental action; (e) the completion to the satisfaction of the Bank of lending arrangements between ARDC and the Participating Banks for loans to the SSC's; and (f) the purchase for cash by the States and by NSC of equity shares of the respective SSC's in an amunt of not less than five hundred thousand rupees (Rs500,000). - 18 - Section 6.02. The following are specified as additional mat- ters, within the meaning of Section 12.02 (c) of the General Con- ditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the State Project Agreements have been duly autho- rized or ratified by, and executed and delivered on behalf of, each of the States, and each such Agreement is legally binding upon Andhra Pradesh, Haryana, Maharashtra or Punjab (as the case may be) in accordance with its terms; (b) that the ARDC Agreement has been duly authorized or rati- fied by, and executed and delivered on behalf of, ARDC, and is legally binding upon ARDC in accordance with its terms; and (c) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by, and executed and delivered on behalf of, the Borrover and ARDC, and is legally binding upon the Borrower and ARDC in accordance with its terms. Section 6.03. The date a iLd 1 / , is hereby specified fbr the purposes of Section 12.04 of the General Conditions. - 19 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary to the Government of India in the Ministry of Finance of the Borrower is designated as repre- sentative of the Borrower 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 Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: ECOFAIRS New Delhi, India For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. - 20 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INDIA /J By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President South Asia -21- SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expen- ditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment, machi- 100% of foreign nery and vehicles: expenditures for directly imported (a) SSC 5,600,000 items and 100% of the ex-factory (b) NSC 325,000 price of items manufactured (c) Farm develop- 1,250,000 locally ment (d) Agricultural 1,830,000 Universities (e) Seed quality 315,000 control (f) Bulk and tran- 140,000 sit storage (2) Civil works includ- 60% ing engineering: (a) SSC 3,310,000 (b) NSC 75,000 - 22 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (c) Farm develop- 1,110,000 ment (d) Canal remodel- 1,16o,oo ling (e) Agricultural 700,000 Universities (f) Seed quality 90,000 control (g) Bulk storage 1,465,000 and transit sheds (3) ARDC refinancing 2,360,000 70% of amounts of private sector disbursed by processing facili- ARDC ties (4) Technical Assistance 270,000 100% and Overseas Training (5) Unallocated 5,000,000 TOTAL 25,000,000 - 23 - 2. For the purposes of this Schedule the term "foreign expen- ditures" means expenditures in the currency of any country other than the Borrower and for goods, or services supplied from the territory of any country other than the Borrover. 3. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrover on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notvithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of: (a) expenditures prior to the date of this Agreement except that withdrawals may be made in respect of Categories (1), (2) and (4) on account of expenditures incurred after November 1, 1975, in an aggregate amount not exceeding the equivalent of $500,000; (b) expenditures under Categories (1) (c) and (2) (c) relat- ing to any farm until the Bank or such other institution as the Bank may determine has been furnished with farm plans satisfactory to the Bank or that institution (as the case may be) in respect of that farm; - 214 - (c) expenditures under Categories (1) (a) and (2) (a) until the Bank has approved the design of each cotton plant and of the 5,000 ton and 10,000 ton cereal plant modules to be financed thereunder; (d) expenditures made by Andhra Pradesh or Punjab (as the case may be) until Andhra Pradesh or Punjab has transferred to its respective Agricultural University land which satisfies the Bank as suitable for seed production; (e) expenditures under Category (3) until the technical aspects of proposals relating to the processing facility to be financed thereunder have been approved by NSC; and (f) expenditures under any Category for a State until that State has established its SSC with articles of association satis- factory to the Bank and has caused its SSC to sign the agreement with NSC mentioned in Section 4.05 of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Cate- gory, to the extent required to,meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the - 25 - estimated shortfall, reduce the disbursement percentage then appli- cable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procure- ment of any item in any Category is inconsistent with the proce- dures set forth or refk .red to in this Agreement, no expenditures Q for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under this Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expen- ditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 26 - SCHEDULE 2 Description of the Project The Project which is designed to assist the Borrower's National Seed Program consists of the following Parts: Part A: Improvement of facilities for breeder and foundation seed production. Part B: (1) Development for foundation and certified seed pro- duction of farms of the Agricultural Universities, SFCI and Haryana Land Reclamation and Development Corporation. (2) Remodelling of parts of the Bhakra Canal Irrigation System serving the Haryana farms included in Part B (1) above. Part C: Establishment and equipping of State Seed Corporations in each of the States. Part D: (1) Expansion of seed storage capacity including con- struction of transit stores and bulk holding depots. (2) Establishment of a reserve stock scheme for founda- tion and certified seed of major cereals. - 27 - Part E: Expansion of seed quality control facilities including the establishment in each of the States of independent seed certification agencies and the establishment and/ or improvement of seed testing laboratories in Andhra Pradesh, Haryana and Punjab. Part F: Expansion of the National Seed Corporation's vegetable seed operations. Part G: Development of seed technology research programs in the Agricultural Universities in the States. Part H: Expansion of private sector capacity for seed production, research, marketing, sale and related activities. Part I: (1) Overseas training including an advanced pro- gram in seed technology for qualified candidates from the Agricultural Universities; processing engineers from NSC and the SSC's and senior staff from quality control agencies. (2) Provision of technical assistance for the Project consisting of 28 man-months of consultancy services for seed technology research, processing plant de- sign, quality control administration, marketing, marketing training and demand analysis. The Project is expected to be completed by December 31, 1980. - 28 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* June 15, 1981 425,000 December 15, 1981 445,000 June 15, 1982 465,000 December 15, 1982 485,000 June 15, 1983 505,000 December 15, 1983 525,000 June 15, 1984 550,000 December 15, 1984 570,000 June 15, 1985 595,000 December 15, 1985 620,000 June 15, 1986 650,000 December 15, 1986 675,000 June 15, 1987 705,000 December 15, 1987 735,000 June 15, 1988 765,000 December 15, 1988 800,000 June 15, 1989 830,000 December 15, 1989 865,000 June 15, 1990 905,000 December 15, 1990 945,000 June 15, 1991 985,000 December 15, 1991 1,025,000 June 15, 1992 1,070,000 December 15, 1992 1,115,000 June 15, 1993 1,160,000 December 15, 1993 1,210,000 June 15, 1994 1,260,000 December 15, 1994 1,315,000 June 15, 1995 1,370,000 December 15, 1995 1,430,000 To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 29 - Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1-1/4% More than three years but not more than six years before maturity 2-1/2% More than six years but not more than eleven years before maturity 4-1/2% More than eleven years but not more than sixteen years before maturity 6-3/4% More than sixteen years but not more than eighteen years before maturity 7-1/2% More than eighteen years before maturity 8-1/2% - 30 - SCEDULE 4 Procurement A. International CoMpetitive Biddig Contracts for equipment and machinery estimated to cost the equivalent of $50,000 or more shall be awarded in accordance with procedures consistent with those set forth in Part A of the "Guide- lines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guide- lines), on the basis of international competitive bidding. B. Other Procurement Procedures (1) Except as provided in Part B (4) below contracts for equipment and machinery estimated to cost the equivalent of less than $50,000 (other than motorcycles) and contracts for equipment and machinery that cannot be grouped into packages of $50,000 or more, shall be awarded after competitive bidding based on local advertising in accordance with procedures satisfactory to the Bank. (2) Except as provided in Part B (3) below, all civil works shall be procured under contracts to be awarded after competitive bidding based on local advertising in accordance with procedures satisfactory to the Bank. - 31 - (3) Remodelling of Bakhra Canal Irrigation System under Part B (2) of the Project may, as the Borrower shall determine, be executed by force account. (4) Items for the private sector and motorcycles shall be procured according to customer choice. Minor equipment up to an aggregate amount of $1,000,000 may, in exceptional cases, be pro- cured through prudent shopping. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to Andhra Pradesh of inland freight ard other expenditures incidental to the delivery of goods to te place of their use or installation shall be included. 2. Goods manufactured in India which under Part A of this Sched- ule are to be procured under contracts awarded on the basis of international competitive bidding may be granted a margin of preference in accordance with, and subject to, the following pro- visions: - 32 - (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in India if the bidder shall have established to the satis- faction of the Borrower and the Bank that the manufacturing cost of such goods includes a value added in India equal to at least 20% of the ex- factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in India. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest eval- uated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this compari- son, a bid from group A or group B is the lowest, it shall be selected for the award. - 33 - (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods of- fered in each group C bid, for the purpose of this further com- parison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Review of Procurement Decisions by the Bank 1. With respect to all contracts estimated to cost the equiva- lent of $200,000 or more: (a) Before bids are invited, the Borrower and the State con- cerned shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising proce- dures to be followed for the bidding, and shall make such modifi- cations in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding docu- ments shall require the Bank's concurrence before it is issued to the prospective bidders. -34 - (b) After bids have been received and evaluated, the Bor- rover and the State concerned shall, before a final decision on the ward is made, inform the Bank of the name of the bidder to vhich it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report, on the evaluation and comparison of the bids received, together with the reasons for the intended award, and such other information as the Bank shall reasonably request. The Bank shall, if it deter- mines that the intended award would be inconsistent with the Guide- lines or this Schedule, promptly inform the Borrower and the State concerned and state the reasons for such determination. (c) The terms and conditions of the contract shall not, with- out the Bank's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to all other contracts estimated to cost the equivalent of less than $200,000, the Borrower and the State con- cerned shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, - 35 - if it determines that the eward of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and the State concerned and state the reasons for such determination. - 36 - SCHEDULE 5 Principal Lending Terms and Conditions 1. Borrower to ARDC Loans to be repaid in not more than 15 years. Annual interest rate to be at least 6-1/2% net of any prompt payment discounts. 2. ARDC to Participating Banks Repayments to concide with payments by ultimate borrowers. Annual interest rate to be at least 8%. 3. Participating Banks to Borrowers (a) Loans to finance up to 70% of project investments by NSC, SSC, Central Warehousing Corporation, State Warehousing Corporations and SFCI and private sector processors and up to 75% of project investments by the Agricultural Universities. (b) Repayment, including grace period, to be between 5 and 15 years. Annual interest to be at least 11%. Grace period to be given as necessary. - 37 - 4. Other Lending Conditions (a) Banks to SFCI and Haryana Land Reclamation and Development Corporation Detailed farm planning proposals, including soil, topo- graphical and ground water survey, farm mechanization and land development plans, cash flow statements to be provided; minimum financial rate of return to be 20% with suitable cash flow. A State Government guarantee for repayment of principal and interest would be provided if the banks so desire. (b) Participating Banks to SSCS and NSC Detailed investment proposal, supported by technical review and plant design by NSC, to be submitted, including cash flows and financial position. (c) Participating Banks to Central Warehousing and State Warehousing Corporations and NSC Investment proposals to be made by the institutions them- selves. State Warehousing Corporations proposals will require technical approval of the Central Warehousing Corporation. Central Warehousing Corporation will have to enter into a lease back contract with NSC and NSC agreement to the tech- nical specifications would be required. Central Warehousing Corporation must also provide overall storage capacity availability and use statement to justify expansion and choice of location and size. -38 - (d) Participating Banks to private processors Loan proposals for processing plant must be prepared with technical review of plant design by NSC. Any research farm development proposals must provide details required under 4 (a) above. 5. All Sub-borrowers Proposals to the Participating Banks should include detailed implementation schedules. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this /o day of ,1974. FOR SECRETARY