India - Chambal Command Area Development Project : Credit 0562 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 562 IN Development Credit Agreement (Chambal Command Area Development Project - Madhya Pradesh) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 20, 1975 CONFORMED COPY CREDIT NUMBER 562 IN Development Credit Agreement (Chambal Command Area Development Project - Mauhya Pradesh) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 20, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 20, 1975, 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 Madhya Pradesh acting by its Governor (hereinafter called Madhya Pradesh), Madhya Pradesh has agreed to undertake certain obligations in respect of the carrying out of the Project; (C) By an agreement of even date herewith between the Association and Agricultural Refinance Corporation (hereinafter called ARC), ARC has undertaken certain obligations in respect of the carrying out of the Project; and (D) The Association has agreed on the basis inter alia of the foregoing to extend the Credit to the Borrower upon terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: 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, 197 1, with the same force and effect as if they were fully set forth herein. 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) "Madhya Pradesh" means the State of Madhya Pradesh, a State of India, or any successor thereof; 4 (b) "ARC" means Agricultural Refinance Corporation, a statutory corporation established and organized under the laws of the Borrower; (c) "Project Agreement" means the agreement between the Association and Madhya Pradesh acting by its Governor of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (d) "ARC Agreement" means the agreement of even date herewith between the Association and ARC, and all Schedules thereto, as the same may be amended from time to time; (e) "LDB" means Madhya Pradesh State Cooperative Land Development Bank, Limited, a cooperative society established and organized under the laws of Madhya Pradesh; (f) "Participating Bank" means LDB or any commercial banks making loans which are, or are proposed to be, refinanced by ARC under the Project; (g) "Category" means a category of the allocation of the proceeds of the Credit set forth in Schedule 1 to this Agreement; (h) "CAA" means Command Area Authority, established in the Government of Madhya Pradesh; (i) "Project Area" means the command area of the Chambal Irrigation Project in Madhya Pradesh; (j) "Rs" means rupees in the currency of the Borrower; and (k) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARC pursuant to Section 3.01(c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement. ARTICLE H 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 twenty-four million dollars ($24,000,000). 5 Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time, 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. (b) The Association may, on behalf of the Borrower, withdraw from the Credit Account and pay to itself an amount of the Credit not exceeding the equivalent of $300,000 in respect of any costs to the Association deriving from the employment of the land development specialist under Section 3.02 of this Agreement. Section 2.03. (a) Except as the Association shall otherwise agree, the goods, works and services (other than consultants' services) for the Project 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 2.03 of the Project Agreement. (b) Where a contract is concluded for the supply for the Project of goods manufactured outside India, the Borrower shall immediately grant permission to import the goods covered by the contract, 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. (c) Where a contract is concluded for the supply for the Project of goods manufactured in India, the Borrower shall: (i) promptly upon receipt of the appropriate applications, issue, or cause to be issued, such import licenses as shall be required to carry out the contract: (ii) make available, or cause to be made available, promptly as needed, all foreign exchange which shall be required therefor; and (iii) with respect to locally produced materials which are subject to allocation, make, or cause to be made, allocations of such materials promptly and in such quantities as shall be required for such contract, Section 2.04. The Closing Date shall be December 31, 1979 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. 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 I%) 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 March I and September 1 in each year. 6 Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 1 and September 1 commencing September 1, 1985 and ending March 1, 2025, each installment to and including the installment payable on March 1, 1995 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 and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Parts F(l) and H of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, agricultural 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 the Development Credit Agreement, the Borrower shall cause Madhya Pradesh and ARC to perform in accordance with the provisions of the Project Agreement, the ARC Agreement and the Subsidiary Loan 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 Madhya Pradesh and ARC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall enter into a Subsidiary Loan Agreement with ARC on terms and conditions (including inter alia those set forth in Schedule 3 to this Agreement) satisfactory to the Association for the purpose of lending to ARC an amount equivalent to 85% of such amount as shall be required by ARC to refinance not less than 75% of loans made by Participating Banks to farmers in the Project Area for land development. 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 purpose 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. (d) In order to assist Madhya Pradesh in carrying out Parts A through E, F(2) and G of the Project, the Borrower shall make available to Madhya Pradesh the proceeds of the Credit under Categories (I )(a), (2) through (4) and (6). 7 (e) The Borrower shall cause Madhya Pradesh to make arrangements in its annual development plan 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. Section 3.02. In order to assist in carrying out Part B(1) of the Project and such other works as the Borrower and the Association shall determine, the Borrower shall cause to be employed a land development specialist. The qualifications, experience and period of employment of the said specialist shall be satisfactory to the Borrower and the Association. Section 3.03. Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. 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) Madhya Pradesh shall have failed to perform any of its obligations under the Project Agreement. (b) ARC shall have failed to perform any of its obligations under the ARC Agreement or under the Subsidiary Loan Agreement. (c) An extraordinary situation shall have arisen which shall make it improbable that (i) Madhya Pradesh will be able to perform its obligations under the Project Agreement, or (ii) ARC will be able to perform its obligations under the ARC Agreement or under the Subsidiary Loan Agreement. (d) ARC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARC or by others whereby any of the property of ARC shall or may be distributed among its creditors. (e) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARC or for the suspension of the operations of ARC. 8 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 event specified in paragraphs (a) and (b) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraphs (d) and (e) of Section 4.01 of this Agreement shall occur. 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 and delivery of the Project Agreement on behalf of Madhya Pradesh have been duly authorized or ratified by all necessary governmental action; (b) the execution and delivery of the ARC Agreement on behalf of ARC hve been duly authorized or ratified by all necessary corporate action; and (c) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and ARC, respectively, have 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 Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Madhya Pradesh, and is legally binding upon Madhya Pradesh in accordance with its terms. (b) That the ARC Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ARC, and is legally binding upon ARC in accordance with its terms. 9 (c) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ARC, and is legally binding upon the Borrower and ARC in accordance with its terms. Section 5.03. The Date September 19, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. 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 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. 10 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 / G. V. Ramakrishna Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ M. L. Weiner Regional Vice President South Asia 11 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 amounts 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) infrastruc- 14,400,000 60% ture (irriga- tion and drain- age, roads and ravine erosion control) (b) on farm 1,900,000 68% development full package (2) Equipment and 3,500,000 Vehicles (a) directly 100% of foreign imported expenditures (b) locally 100% of local manu- expenditures factured (ex-factory) (c) imported 70% items pro- cured locally 12 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (3) Fertilizer 500,000 100% of foreign expenditures (4) Technical assis- 400,000 100% of foreign tance under Part expenditures A(7) of the Proj- ect (5) Technical assis- 800,000 100% of foreign tance under Part H expenditures and of the Project and 75% of local land development expenditures specialist (6) Unallocated 2,500,000 TOTAL 24,000,000 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; and (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 Association 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 13 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 I above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph I 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 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) with respect to Category (1), 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. 14 SCHEDULE 2 Description of the Project The Project is the first stage of a program to improve and complete the existing irrigation facilities, construct drainage works, provide on-farm development, improve the road system and provide agricultural supporting services (extension and research) throughout the Project Area. The Project consists of: A. Irrigation and Drainage Works (1) Right Main Canal Bank Strengthening and Lining Strengthening of the embankments, and the lining of 11 km of canal bed and inside side slopes to reduce piping damage. (2) Canal Capacity Works The enlargement of some 300 km of distributary canals and the increasing of the carrying capacity of some 100 km of watercourses which serve the 12,000 ha On-Farm Development Full Package Area and selected other areas. (3) Canal Control Structures Installation of 3,000 gated and enlarged pipe outlets to chaks, 44 canal regulators, 11 escape structures and 100 small tail clusters. (4) Aquatic Weed Control Installation of 22 draw-off structures and the contstruction of embankments for two tanks in the RMC and Bhind canals. (5) Main Drainage The improvement of about 200 km of natural drainage courses, and construction of about 560 km of interceptor drains. (6) Operating Facilities Installation of a 300 km telemetering/telecommunication system, surfacing of 220 km of canal roads, construction of about 54 access bridges and provision of housing and buildings for the operating staff. 15 (7) Preparation of further phases of the Chambal Command Area Development Project and of other such projects in the Madhya Pradesh. B. On-Farm Development (1) On-Farm Development (Full Package) on about 12,000 ha of undulating land, consisting of land levelling, construction of water courses, drains and access roads. (2) Drainage Improvement Works on about 20,000 ha of flat land. C. Roads Construction of about 206 km of roads linking villages and markets. D. Ravine Erosion Control A pilot project to identify the "least cost method" ravine erosion control, covering about 50 km of ravine perimeter. E. Mechanical Equipment The provision of mechanical equipment needed for Parts A, B and C of the Project. F. Project Administration during Implementation and Technical Assistance (1) The provision of a land development specialist. (2) The training of CAA in on-farm development and extension work. G. Fertilizer The provision of about 2,000 nutrient tons of fertilizer and its distribution over a two year period to farmers benefiting from Part B (1) of the Project. H. Technical assistance to the Borrower for the preparation of command area development projects throughout India. The Project is expected to be completed by December 31, 1978. 16 SCHEDULE 3 Principal Terms of Subsidiary Loan Agreement For ARC refinancing up to 9 years: (a) Annual interest rate to be not less than 6-3/4%, less 1/4% for prompt repayment; (b) Repayment to be made at the end of nine years. II. For ARC refinancing from 9 to 15 years: (a) Annual interest rate to be not less than 7-1/4%, less 1/4% for prompt repayment; (b) Repayment to be made at the end of 15 years. III. General The exchange risk to be on the account of the Borrower.