India - Punjab Water Supply And Sewerage Project : Credit 0848 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 848 IN Project Agreement (Punjab Water Supply and Sewerage Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and PUNJAB WATER SUPPLY AND SEWERAGE BOARD Dated October 27, 1978 CREDIT NUMBER 848 IN PROJECT AGREEMENT AGREEMENT, dated October 27, 1978, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and PUNJAB WATER SUPPLY AND SEWERAGE BOARD (hereinafter called WSSB). WHEREAS by the Development Credit Agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various cur- rencies equivalent to thirty-eight million dollars ($38,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that WSSB agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS WSSB intends to contract from the Life Insurance Corporation of India (hereinafter called LIC) a loan of Rsl30,OOO,OOO (hereinafter called the LIC Loan) to assist in the financing of the Project on terms and conditions, including inter alia those set forth in Schedule 2 to this Agreement, set forth or referred to in an agreement to be entered into between LIC and WSSB (hereinafter called the LIC-WSSB Loan Agreement); and WHEREAS WSSB, in consideration of the Association'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 defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. WSSB shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence -2- and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices. Section 2.02. (a) In order to assist WSSB and the MCs in: (i) the preparation of management, organization and staffing proposals and the development and imple- mentation of project monitoring systems and administrative procedures; (ii) the establishment of accounting and financial management information systems and their imple- mentation; (iii) the development of tariff structures and levels based on appropriate socio-economic research; and (iv) the design of water treatment works; WSSB shall retain under its employment managerial, accounting, financial and engineering consultants whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association. (b) In order to assist WSSB and the MCs in: (i) the identification of training needs and prepara- tion of a training program; and (ii) the preparation of preliminary and detailed engi- neering designs for sewage treatment works; WSSB shall, by February 1, 1979 or such later date as the Associa- tion shall otherwise agree, employ training and engineering con- sultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.04. (a) WSSB undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit relent to it by Punjab against -3- hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insur- ance any indemnity shall be payable in a currency freely usable by WSSB to replace or repair such goods. (b) Except as the Association may otherwise agree, WSSB shall cause all goods and services financed out of the proceeds of the Credit relent to it by Punjab to be used exclusively for the Project. Section 2.05. (a) WSSB shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) WSSB: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost thereof and 'he benefits to be derived from it), and to identify the goods and services financed out of the proceeds of the Credit relent to it by Punjab, and to disclose their use in the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Association's repre- sentatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such informa- tion as the Association shall reasonably request concerning the Project, its costs and, where appropriate, the benefits to be derived from it, the expenditures of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. (c) WSSB shall enable the Association's representatives to examine all plant installations, sites, works, buildings, property and equipment of WSSB and any relevant records and documents. (d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Associa- tion and WSSB, WSSB shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the -4- Project, its cost and the benefits derived and to be derived from it, the performance by the Association and WSSB of their respec- tive obligations under this Agreement and the accomplishment of the purposes of the Credit. Section 2.06. (a) WSSB shall at the request of the Associa- tion, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement, and other matters relating to the purposes of the Credit. (b) WSSB shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by WSSB of its obligations under this Agreement. Section 2.07. WSSB shall relend funds equivalent to the pro- ceeds of the Credit to the MCs on the same terms and conditions as those of the financial arrangements entered into between Punjab and WSSB under Section 2.02 (a) (ii) of the Punjab Agreement. Section 2.08. By February 1, 1979 or such later date as the Association shall otherwise agree, WSSB shall prepare and furnish to the Association for its review the consultants' recommendations on staffing and recruitment proposals for WSSB and the MCs. WSSB shall, based on these and the Association's recommendations, employ adequate and qualified staff to carry out the Project and to assist the MCs in the operation and maintenance of the water supply and sewerage systems to be constructed or improved under the Project. Section 2.09. In order to monitor the progress of the Project and strengthen its financial management, WSSB shall establish project monitoring and financial management information systems within WSSB which shall be functioning by April 1, 1979 or such later date as the Association shall otherwise agree. Section 2.10. By July 1, 1979 or such later date as the Asso- ciation shall otherwise agree, WSSB shall, in conjunction with the MCs and with the assistance of the training consultants, carry out the training program included in Part A.1 of the Project which shall have been reviewed by the Association and Punjab. -5- ARTICLE III Management and Operations of WSSB Section 3.01. WSSB shall at all times manage its affairs, maintain its financial position, plan its future expansion and carry on its operations, all in accordance with sound finan- cial, administrative, engineering and public utility practices and under the supervision of experienced and competent manage- ment assisted by adequate and competent staff. Section 3.02. (a) WSSB shall at all times maintain its existence and the right to carry on its operations and to acquire and retain ownership of all lands and maintain and renew all interests in land and other properties, and take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business or in the carrying out of the Project. (b) WSSB shall at all times operate and maintain its machi- nery, equipment and other property, and make all necessary repairs and renewals thereof, in accordance with sound engineering prac- tices. (c) Except as the Association shall otherwise agree, WSSB shall not sell, lease, transfer or otherwise dispose of any of its property or assets required for the efficient opera- tion of the Project, except in the normal course of business. Section 3.03. WSSB shall take out and maintain with respon- sible insurers, or make other provision satisfactory to the Association, for insurance against such risk and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. WSSB shall maintain records adequate to reflect in accordance with consistently maintained appropri- ate accounting practices its operations and financial condi- tion. -6- Section 4.02. WSSB shall maintain its accounts in accordance with a full public utility commercial accounting system starting on April 1, 1980. Section 4.03. WSSB shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish 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 its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of WSSB and the audit thereof as the Association shall from time to time reason- ably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of WSSB thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement 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 accor- dance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify WSSB of this event. Section 5.03. All the provisions of this Agreement shall con- tinue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. -7- ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or wade under Lthi Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be 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 des- ignated 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For WSSB: Managing Director Punjab Water Supply and Sewerage Board SCO 123-124 Sector 17-C Chandigarh, India Cable address: PUNWATER Chandigarh, India Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of WSSB may be taken or executed by its Managing Director or such other person or persons as WSSB shall -8- designate in writing, and WSSB shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several coun- terparts, 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 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Robert Picciotto Acting Regional Vice President South Asia PUNJAB WATER SUPPLY AND SEWERAGE BOARD By /s/ R. L. Misra Authorized Representative -9- SCHEDULE 1 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the pur- chase of materials and equipment shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding under the Project and in addition to the requirements of paragraph 1.2 of the Guidelines, WSSB shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procure- ment notice, in such form and detail and containing such informa- tion as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the oppor- tunity to bid for the goods and works in question. WSSB shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. Contracts for the purchase of goods or for civil works, including those under Part B of this Schedule, shall be grouped so as to encourage competition and to permit bulk procurement consis- tent with appropriate technical and procurement practices. B. Other Procurement Procedures 1. Contracts for purchase of materials and equipment estimated to cost $100,000 equivalent or less and contracts for purchase of stoneware and concrete pipes shall be let on the basis of competi- tive bidding advertised locally and in accordance with procedures of Punjab satisfactory to the Association. 2. Contracts for civil works shall be executed on the basis of: (i) competitive bidding advertised locally and in accordance with - 10 procedures of Punjab satisfactory to the Association, or (ii) force account, with the prior approval of the Association. 3. Contracts for civil works estimated to cost less than $30,000 equivalent may be executed through force account. 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 except those to be procured in accordance with local procedures: (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 the purchaser of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information 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 satisfaction of WSSB and the Association 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. - 11 - (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 evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (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 offered in each group C bid, for the purpose of this further comparison 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 r3ult of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for materials and equipment to be awarded on the basis of international competitive bidding and all contracts for civil works estimated to cost the equivalent of $500,000 or more: (a) Before bids are invited, WSSB shall furnish to the Association, for its comments, the text of the invitations to hid and the specifications and other bidding documents, toge,her with a description of the advertising procedures to be followed for the bidding, and u1holl make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, WSSB shall, before a final decision on the award is made, inform - 12 - the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report, on the evalua- tion and comparison of the bids received, and such other informa- tion as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsis- tent with the Guidelines or this Schedule, promptly inform WSSB and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Credit and not governed by the preceding paragraph, WSSB shall furnish to the Association, promptly after its execu- tion and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform WSSB and the Borrower and state the reasons for such determination. - 13 - SCHEDULE 2 Principal Terms and Conditions of the LIC-WSSB Loan Agreement 1. The amount of the LIC Loan shall be Rsl30,OO0,OOO. 2. Repayment shall be over 25 years including three years of grace from the date of withdrawal of the first installment of the LIC Loan. 3. Interest shall be paid at the rate of 8.5% per annum and shall be payable half yearly. 4. The proceeds of the LIC Loan shall be used exclusively to finance the local expenditures under Sub-projects approved by LIC and the Association. 5. The goods and services to be financed out of the proceeds of the LIC Loan shall be procured in accordance with the provisions set forth or referred to in this Agreement.