Conformed Copy - C3233 - Fourth Rural Water Supply and Sanitation Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 3233 CHA LOAN NUMBER 4485 CHA Project Agreement (Fourth Rural Water Supply and Sanitation Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and ANHUI PROVINCE FUJIAN PROVINCE GUIZHOU PROVINCE and HAINAN PROVINCE Dated September 17, 1999 CREDIT NUMBER 3233 CHA LOAN NUMBER 4485 CHA PROJECT AGREEMENT AGREEMENT, dated September 17, 1999 among the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and Anhui Province, Fujian Province, Guizhou Province and Hainan Province (the Project Provinces). WHEREAS (A) by the Development Credit Agreement of even date herewith between People's Republic of China (the Borrower) and the Association, the Association has agreed to lend to the Borrower an amount in various currencies equivalent to twenty-two million two hundred thousand Special Drawing Rights (SDR 22,200,000) on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Project Provinces agree to undertake such obligations toward the Association as are set forth in this Agreement; and (B) by the Loan Agreement of even date herewith between the Borrower and the Bank, the Bank has agreed to make available to the Borrower an amount equal to sixteen million dollars ($16,000,000) on the terms and conditions set forth in the Loan Agreement, but only on condition that the Project Provinces agree to undertake such obligations toward the Bank as are set forth in this Agreement; and WHEREAS the Project Provinces, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, and the Bank's entering into the Loan Agreement with the Borrower, have agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE, the parties hereto hereby agree as follows: Page 2 ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Loan Agreement and the General Conditions (as so defined in the Development Credit Agreement and the Loan Agreement, respectively) have the respective meanings therein set forth, and, wherever used in this Agreement (except in Section 5.03), reference to the Association, the Credit or the Credit Account shall also be deemed as reference to the Bank, the Loan and the Loan Account, respectively. ARTICLE II Execution of the Project Section 2.01. (a) Each of the Project Provinces declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, shall carry out its Respective Part of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, sanitation, health, engineering and environmental practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for such Respective Part of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and the Project Provinces shall otherwise agree, each Project Province shall carry out its Respective Part of the Project in accordance with the Implementation Program set forth in Schedule 1 to this Agreement. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works, and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 4 to the Development Credit Agreement. Section 2.03. Each Project Province shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions referred to in Section 1.01 of the Development Credit Agreement and Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions referred to in Section 1.01 of the Loan Agreement (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) in respect of the Project Agreement and its Respective Part of the Project. Section 2.04. (a) Each Project Province shall, at the request of the Association, exchange views with the Association with regard to the progress of its Respective Part of the Project, the performance of its obligations under this Agreement, and other matters relating to the purposes of the Credit. (b) Each Project Province shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of its Respective Part of the Project, the accomplishment of the purposes of the Credit, or the performance by such Province of its obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) Each Project Province shall maintain, or cause to be maintained, records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of its Respective Part of the Project of the departments or agencies of such Project Province responsible for carrying out parts of the Project in its territory. (b) Each Project Province shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with Page 3 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 (6) months after the end of each such year 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 said records and accounts and the audit thereof, as the Association shall from time to time reasonably request. Section 3.02. Each Project Province shall: (a) have the records and accounts for any water plant facility within its territory in which investments in an amount greater than Yuan 5,000,000 equivalent have been made under Part A of the Project, audited at the end of its first full fiscal year of operation in accordance with auditing principles consistently applied by independent auditors acceptable to the Association; (b) furnish to the Association as soon as available, but in any case no later than six (6) months after the end of such year, the report of such audit by said auditors; and (c) furnish to the Association such other information concerning said records and accounts and the audit thereof, as the Association shall from time to time reasonably request. Section 3.03. In respect of each water supply facility under Part A of the Project within its respective territory, each Project Province shall, commencing not later than the second full fiscal year of operations of such facility, ensure that water charges will be established and collected annually at a level sufficient to cover administrative costs, operation and maintenance costs and taxes, plus the greater of (a) interest charges and depreciation, or (b) debt service payments. ARTICLE IV Effective Date; Termination Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which both the Development Credit Agreement and the Loan Agreement become effective. Section 4.02. (a) This Agreement and all obligations of the Association and of the Project Provinces thereunder shall terminate on the earlier of the following two dates: (i) the date on which both the Development Credit Agreement and the Loan Agreement shall terminate; or (ii) a date twenty (20) years after the date of this Agreement. (b) If the Development Credit Agreement or the Loan Agreement terminates before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify the Project Provinces of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions referred to in Section 1.01 of the Development Credit Agreement, or under the General Conditions referred to in Section 1.01 of the Loan Agreement. ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made Page 4 under this 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 addresses 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: Telex: INTBAFRAD 248423 (MCI) or Washington, D.C. 64145 (MCI) For Anhui Province: Anhui Provincial Government 85 Chang Jing Road Hefei 23001 Anhui Province People