India - Maharashtra Irrigation Project : Credit 0736 - Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 736 IN Development Credit Agreement (Maharashtra Irrigation Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated October 11, 1977 CREDIT NUMBER 736 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated October 11, 1977, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association.) WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) By an agreement of even date herewith between the Association and the State of Maharashtra, the State of Maharashtra has agreed to undertake certain obligations in respect of the carrying out of the Project; and (C) By an agreement of even date herewith between the Association and Agricultural Refinance and Development Corporation, the Agricultural Refinance and Development Corporation has agreed to undertake certain obligations in respect of the carrying out of the Project. WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Agreements of even date herewith referred to in Recitals (B) and (C) above; and 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 Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Maharashtra" means the State of Maharashtra, a State of India, or any successor thereof; (b) "Maharashtra Project Agreement" means the agreement between the Association and Maharashtra of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Maharashtra Project Agreement and all agreements supplemental to the Maharashtra Project Agreement; (c) "ARDC" means the Agricultural Refinance and Development Corporation, a statutory corporation established and organized under the laws of the Borrower; -3- (d) "ARDC Agreement" means the agreement between the Association and ARDC of even date herewith, as the same may be amended from time to time and such term includes all agreements supplemental to the ARDC Agreement. (e) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARDC pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time; (f) "Financing Banks" means Maharashtra State Cooperative Land Development Bank and Commercial Banks in Maharashtra participating in lending to farmers in the Project Area; and (g) "ProjecL Area" means the combined culturable command areas of the Jayakwadi and Purna Irrigation Schemes in Maharashtra. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to seventy million dollars ($70,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit 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 Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions set forth or referred to in Section 2.02 of the Maharashtra Project Agreement. Section 2.04. The Closing Date shall be March 31, 1983 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. -5- Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each June 1 and December 1 commencing June 1, 1987, and ending December 1, 2026, each installment to and including the installment payable on December 1, 1996, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. -6- ARTICLE III Execution of the Project Section 3.01.(a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause Maharashtra and ARDC to perform in accordance with the provisions of the Maharashtra Project Agreement and the ARDC Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable Maharashtra and ARDC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make available out of the proceeds of the Credit, funds equivalent to $64,500,000 to Maharashtra in accordance with the Borrower's standard arrangements for developmental assistance to the States of India. (c) The Borrower shall relend funds equivalent to $5,500,000 out of the proceeds of the Credit to ARDC under a subsidiary loan agreement to be entered into between the Borrower and ARDC under terms and conditions (including inter alia those set forth in Schedule 3 to this Agreement) which shall have been approved by the Association. 7- (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. -8- ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) Maharashtra shall have failed to perform any of its obligations under the Maharashtra Project Agreement; (b) ARDC shall have failed to perform any of its obligations under the ARDC Agreement or under the Subsidiary Loan Agreement; (c) 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; (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARDC or for the suspension of its operations; and (e) An extraordinary situation shall have arisen which shall make it improbable that (i) Maharashtra will be able to perform its obligations under the Maharashtra Project Agreement, or (ii) ARDC will be able to perform its obligations under the ARDC Agreement or under the Subsidiary Loan Agreement. -9- Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any events specified in paragraphs (a) or (b) of Section 4.01 of this Agreement shall occur and shall c,nt- nt poriod of 60 days after notice thereof shall have been ix.!n Oy L.te Association to the Borrower and Maharashtra or ARDC, as the case may be; and (b) any events specified in paragraphs (c) or (d) of Se,:tion 4.01 of this Agreement shall occur. - 10 - ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution of the Maharashtra Project Agreement on behalf of Maharashtra has been duly authorized or ratified by all necessary governmental action; and (b) the execution of the ARDC Agreement on behalf of ARDC, has been duly authorized or ratified by all necessary corporate and governmental action. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Maharashtra Project Agreement has been duly authorized or ratified by Maharashtra, and is legally binding upon Maharashtra in accordance with its terms; and (b) that the ARDC Agreement has been duly authorized or ratified by ARDC and, is legally binding upon ARDC in accordance with its terms. - 11 - Section 5.03. The date January 11, 1978, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of paragraph (b) of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. - 12 - ARTICLE VI Representatives of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. 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 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. - 13 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement 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 By /s/ N. A. Palkhivala Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Ernest Stern Regional Vice President South Asia - 14- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amount of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works (a) lining of 5,600,000 75% distributaries and minors (b) Others 50,000,000 60% (2) Equipment and 11,400,000 vehicles (a) Directly 100% of foreign imported expenditures (b) Manufactured 100% of local locally expenditures (ex-factory) (c) Locally 70% procured (3) Consultants' 50,000 100% services (4) Unallocated 2,950,000 TOTAL 70,000,000 - 15 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" 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 Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower 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 Credit decreases or increases, the Association 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 Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement; and - 16 - (b) expenditures in respect of Part E of the Project until (i) evidence satisfactory to the Association has been furnished to the Association that the execution and delivcry of the Subsidiary Loan Agreement on behalf of the Borrower and ARDC have been duly authorized or ratified by all nece&nary governmental and corporate action, (ii) the Association has bee furnished with an opinion or opinions satisfactory to the Association of counsel acceptable to the Association showing that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ARDC, and is legally binding upon the Borrower and ARDC, respectively, in accordance with its terms, and (iii) Maharashtra has issued governmental orders to make applicable Special Loans to farmers in thq Project Area in accordance with the Guidelines referred to under Part II of Schedule 3 to this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursemen: percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the - 17 - estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 18 - SCHEDULE 2 Description of the Project The Project is the continuation of irrigation development in the Jayakwadi and Purna Irrigation Schemes areas over a period of four years and consists of the following: Part A: The completion of the Jayakwadi Left Bank Canal (LBC) between km 100-208 and the Jayakwadi Right Bank Canal (RBC) between km 20-132. Part B: The construction of a lined distributary canal system for an irrigation and drainage canal network to serve about 57,000 ha of the Jayakwadi LBC command and about 38,000 ha of the Jayakwadi RBC. Part C: The rehabilitation, upgrading and construction of 385 km of district and village link roads. Part D: The rehabilitation of irrigation distribution works and provision of drainage serving about 30,000 ha of the Purna Irrigation Scheme. Part E: On-farm development in the Jayakwadi Irrigation Scheme comprising land shaping and field channels, covering about 25,000 ha of the Jayakwadi LBC and about 20,000 ha of the Jayakwadi RBC areas. Part F: The construction of 11 market centers. - 19 - Part G: Provision of monitoring facilities in the Jayakwadi Irrigation Scheme to help determine the efficiency of the irrigation system and to evaluate operation and seepage losses; and a system to evaluate economic and social project benefits in the Jayakwadi Irrigation Scheme. Part H: The acquisition and utilization of vehicles and equipment and construction of buildings for Project management and O&M. Part I: The acquisition and utilization of vehicles and equipment and construction of buildings for a strengthened extension service. Part J: The preparation of future irrigation projects in the Project Area. The Project is expected to be completed by December 31, 1981. - 20 - SCHEDULE 3 Principal Lending Terms and Conditions I. Ordinary Land Development Loans 1. Borrower to ARDC (a) For ARDC refinancing up to 9 years: (i) annual interest rate of not less than 6.75%, less 0.25% for prompt payment; and (ii) repayment at the end of 9 years. (b) For ARDC refinancing for more than 9 and up to 15 years: (i) annual interest rate of not less than 7.25%, less 0.25% for prompt payment; and (ii) repayment at the end of 15 years. (c) Borrower to carry exchange risk. 2. ARDC to Financing Banks (a) Annual interest rate of 7.5% minimum. (b) Installment repayments to coincide approximately with collections from ultimate borrowers. (c) Refinancing by purchase of debentures or by loans not exceeding 90% of individual loans. 3. Financing Banks to Ultimate Borrowers (a) Annual Interest rate of 10.5% minimum. - 21 - (b) A once and for all evaluation fee of 0.5% of the cost of project investments may be charged. (c) Repayment periods to be based on the ultimate borrower's repayment capacity, but not to exceed 11 years. (d) Grace periods not exceeding 2 years from the date of disbursement of the loans, may be granted at the discretion of ARDC provided that the repayment period of such loans is not exceeded. II. Special Loans Terms and interest rates for lendings by the Borrower, Maharashtra and ARDC to the Special Loans Account (SLA); for lending from the SLA to the Financing Banks; for lending from the Financing Banks to the Command Area Development Authority (CADA); and for lending from CADA to farmers for on-farm development shall be in accordance with the Guidelines for the Special Loans to Finance On-Farm Development Works in the Command Area Projects issued by ARDC on September 15, 1976. Except as the Association shall otherwise agree, these Guidelines shall not be amended for this Project. - 22 - III. General (a) Security would be as determined by the Financing Banks and ARDC. (b) Technical standards acceptable to ARDC would be observed. (c) Where the land development works are executed by centralized agencies and no cash is paid to the individual farmer to carry out the work, no cash contribution will be necessary. In any other cases the contribution described in the respective loan agreement with ARDC will apply. (d) In respect of lendings by the Financing Banks, the borrower will have to purchase at least one share to become a member.