India - Gujarat Fisheries Project : Credit 0695 - Credit Agreement - Conformed

-7 7 3 CONFORMED COPY CREDIT NUMBER 695-IN DEVELOPMENT CREDIT AGREEMENT (Gujarat Fisheries Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 22, 1977 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 22, 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) the Borrower has also requested the Bank to provide additional assistance towards the financing of the Project and by an agreement of even date herewith between the Borrower and the Bank (hereinafter called the Loan Agreement) the Bank is agreeing to provide such assistance in an aggregate principal amount equivalent to fourteen million dollars ($14,000,000) (hereinafter called the Loan); (C) the Borrower and the Association intend, to the extent practicable, that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures on the Project before disbursements of the proceeds of the Loan provided for in the Loan Agreement are made; -2- (D) by an agreement of even date herewith between the Association, the Bank and the State of Gujarat, acting by its Governor (heieinafter called Gujarat), Gujarat has agreed to undertake certain obligations in respect of the carrying out of the Project; (E) by an agreement of even date herewith between the Association, the Bank and the Agricultural Refinance and Development Corporation (hereinafter called ARDC), ARDC has agreed to undertake certain obligations in respect of the carrying out of the Project; and (F) the Association is willing, on the basis inter alia of the foregoing, to make the Credit available upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -3- 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 Agreements 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 respective meanings therein set forth and the following additional terms have the following meanings: (a) "Loan Agreement" means the agreement of even date herewith between the Borrower and the Bank for the purpose of the Project, as such agreement may be amended from time to time; and such term includes the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, as made applicable to such agreement, all agreements supplemental to the Loan Agreement and all schedules to the Loan Agreement; (b) "Gujarat" means the State of Gujarat, a State of India, or any successor thereof; -4- (c) "ARDC" means Agricultural Refinance and Development Corporation, a statutory corporation established and organized under the laws of the Borrower; (d) "Gujarat Project Agreement" means the agreement between the Association, the Bank and Gujarat of even date herewith, as the same may be amended from time to time; (e) "ARDC Agreement" means the agreement between the Association, the Bank and ARDC of even date herewith, as the same may be amended from time to time; (f) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARDC pursuant to Section 3.01 (d) hereof, as the same may be amended from time to time; (g) "CCC" means Central Coordinating Committee, a committee to be established by the Borrower within its Ministry of Agriculture and Irrigation under Section 3.02 (a) hereof, and comprising of the Joint Secretary for Fisheries of the Ministry of Agriculture and Irrigation (Chairman), the Deputy Commissioner for Fisheries Planning (Secretary), the Managing Director of ARDC or his representative, representatives of the Ministry of Finance and the Ministry of Shipping and Transport, and such other persons as may be necessary; -5- (h) "GFCCA" means Gujarat Fisheries Central Cooperative Association Limited, an association registered under the Bombay State Cooperatives Act, 1925; (i) "PSC" means Project Supervision Committee, a committee to be established by Gujarat under Section 2.08 (d) of the Gujarat Project Agreement, and comprising of the Secretary of Gujarat's Department of Agriculture, Cooperatives, Forest and Fisheries (Chairman), the Secretary of the Department of Finance or his representative, the Secretary of the Public Works Department or his representative, the Commissioner of Fisheries, the Director of Ports, the Regional Director of ARDC and the Chairman of GFCCA, and such other persons as may be necessary; (j) "GPD" means Gujarat Ports Directorate or any successor thereof; (k) "FTD" means Fisheries Terminal Division, a Division of the Office of Commissioner of Fisheries of Gujarat; (1) "FPCS" means Fishermen's Primary Cooperative Societies or any successor thereof; (m) "DACFF" means the Department of Agriculture, Cooperatives, Forest and Fisheries of Gujarat; and (n) "Participating Bank" means any bank listed in the Second Schedule to the Reserve Bank of India Act of 1934. - 6 - ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to four million dollars ($4,000,000). 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 in the Schedule to the Gujarat Project Agreement. Section 2.04. The Closing Date shall be June 30, 1983 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. -7- 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 March 1 and September 1 in each year. 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, 1987, and ending March 1, 2027, each installment to and including the installment payable on March 1, 1997, 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. -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, fishery 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 cause Gujarat and ARDC to perform in accordance with the provisions of the Gujarat Project Agreement and the ARDC Agreement all the obligations therein set forth with respect to the Project, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate Lo enable Gujarat 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. -9- (c) In order to assist Gujarat and the Indian Institute of Management, Ahmadabad or such other institution mutually agreed between the Borrower and the Association to carry out Parts A through C of the Project, the Borrower shall make available to Gujarat in accordance with the Borrower's standard arrangements for development assistance to the States and Agencies of India the proceeds of the Credit required by them to carry out their Parts of the Project. (d) The Borrower shall enter into a Subsidiary Loan Agreement with ARDC 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 ARDC sums out of the proceeds of the Credit sufficient for ARDC to carry out its obligations in respect of Part D of the Project. 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. Section 3.02. (a) The Borrower shall establish CCC within its Ministry of Agriculture and Irrigation in order to provide policy guidance. - 10 - (b) By December 31, 1977 or such later date as may be agreed by the Association, the Borrower shall begin the two test fishing operations under Part C (1) (a) of the Project and they shall be completed by June 30, 1979 or such later date as may be agreed by the Association. The terms of reference shall be prepared by the consultant employed under Section 3.03 (a) hereof. Copies of all quarterly progress reports and the final report of these test fishing operations shall ue furnished to the Association promptly upon their preparation. (c) By December 31, 1977 or such later date as may be agreed by the Association, the Borrower shall cause the Indian Institute of Management, Ahmadabad or such other institution mutually agreed between the Borrower and the Association to begin the fish marketing study under Part C (1) (b) of the Project which shall be completed by March 31, 1979 or such later date as may be agreed by the Association. The Borrower shall cause its Ministry of Agriculture and Irrigation to prepare terms of reference for this study satisfactory to the Association. Section 3.03. (a) In order to assist the Borrower to prepare terms of reference and to carry out the test fishing operations under Section 3.02 (b) hereof, the Borrower shall employ fisheries resources management consultants under Part C (3) of the Project whose qualifications, experience and terms and - 11 - conditions of employment shall be mutually agreed between the Borrower and the Association. (b) By September 30, 1977 or such later date as may be agreed by the Association, the Borrower shall institute a mandatory fishing vessel registration scheme also applicable to Gujarat in order to improve the control of fish resource exploitation. Section 3.04. (a) The Borrower shall insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation 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 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. Section 3.05. The Borrower shall cause the Indian Institute of Management, Ahmadabad or such institution agreed between the Borrower and the Association under Sections 3.01 (c) and 3.02 (c) hereof to tuaintain separate accounts for the Project and records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. - 12 - Section 3.06. The Borrower shall cause the Indian Institute of Management, Ahmadabad or such institution under Section 3.05 hereof to: (i) have an annual audit satisfactory to the Association made of its accounts relating to the Project for each fiscal year, in accordance with sound auditing principles consistently applied, by independent and qualified auditors; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of its accounts 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 its accounts and the audit thereof as the Association shall from time to time reasonably request. - 13 - 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) Gujarat shall have failed to perform any of its obligations under the Gujarat 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) Gujarat will be able to perform its obligations under the Gujarat 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 or for the suspension of the operations of ARDC. - 14- 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 hereof 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 hereof shall occur. - 15 - ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution and delivery of the Gujarat Project Agreement on behalf of Gujarat have been duly authorized or ratified by all necessary governmental action; (b) the execution and delivery of the ARDC Agreement on behalf of ARDC have been duly authorized or ratified by all necessary corporate action; (c) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and ARDC, respectively, have been duly authorized or ratified by all necessary corporate and governmental action; (d) PSC has been established by Gujarat under Section 2.08 (d) of the Gujarat Project Agreement; and (e) CCC has been established by the Borrower under Section 3.02 (a) hereof. 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: - 16 - (a) tlat the Gujarat Project Agreement has been duly authorized or ratified by and executed and delivered on behalf of Gujarat and such Agreement is legally binding upon Gujarat in accordance with its terms; (b) that the ARDC Agreement has been duly authorized or ratified 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 authorized or ratified by, and executed and delivered on behalf of, the Borrower and ARDC, and is legally binding upon the Borrower and ARDC in accordance with its terms. Section 5.03. The date July 22, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 17 - ARTICLE VI Representatives 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 Fihance Department of Economic Affairs New Delhi, India Cable address: ECOFAIRS New Delhi, India 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) and 64145 (WUI) - 18 - 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/ J.S. Baijal Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Ernest Stern Regional Vice President South Asia - 19 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit and of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and of the Loan, the allocation of amounts of such proceeds to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit and of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Dredging equipment 1,400,000 100% of foreign and spare parts expenditures or 100% of local expenditures (ex-factory price) (2) Civil works, mate- 7,900,000 50% rials and equipment under Parts A (1) and A (3) of the Project (3) Consultants services 600,000 100% (4) Cost of marketing 3,400,000 90% of local study and test fish- expenditures ing operations (5) Loans by ARDC as des- 4,700,000 55% cribed under Schedule 3 to this Agreement TOTAL 18,000,000 - 20 - 2. For the purpose 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 and the Bank that no proceeds of the Credit and of the Loan 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 and of the Loan decreases or increases, the Association or 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 Association and the Bank. 4. (a) Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments for expenditures prior to the date of this Agreement. - 21 - (b) In respect of Part B (2) of the Project, under Category (5) of this Schedule, no withdrawal shall be made unless the subsidies to fishermen for the purchase of mechanized trawlers are withdrawn. (c) In respect of Part D of the Project, under Category (5) of this Schedule, no withdrawal shall be made unless the condition under Section 2.08 of the ARDC Agreement is fulfilled. 5. Notwithstanding the allocation of an amount of the Credit and of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Association and the Bank have or, after full withdrawal of the entire amount of the Credit, the Bank has, reasonably estimated that the amount of the Credit and of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association and the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit and of the Loan which are then allocated to another Category and which in the opinion of the Association and the Bank 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. - 22 - 6. If the Association and the Bank 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 of the Loan and the Association and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Association and the Bank under this Agreement and the Loan Agreement, by notice to the Borrower, cancel such amount of the Credit and of the Loan as, in the Association's and the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit and of the Loan. - 23 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: (1) Improvement of harbors, shore services and facilities at Mangrol and Veraval by the construction and extension of breakwaters and the dredging to form a tidal basin; development of a land area for shore facilities; and construction of additional berthing jetties, wharves, maneuvering areas, a multi-berth slipway, offices, marketing and utilities support facilities, to be implemented by GPD. Adequate water and electricity shall be supplied by Gujarat for the efficient operation of these services and facilities. (2) Management of the fishing terminals at Mangrol and Veraval including the auction halls by FTD. (3) Construction by Gujarat of approach roads and water supply facilities for about eight villages between Mangrol and Veraval. Part B: (1) GFCCA, cooperatives and private entrepreneurs shall carry out the construction and operation of ice and freezing plant, fishmeal plant and cold storage at - 24 - Mangrol, Veraval and in other villages in the sub-project area and procurement of trucks; (2) Supply of about 270 trawlers of 9 to 15 meters equipped with fishing gear for sale for cash or on hire purchase to private fishermen by GFCCA; (3) Procurement and supply of about 350 canoes with outboard motors and fishing gear and about 1,050 outboard motors for fishing canoes by GFCCA; and (4) Procurement and operation of two fish net manufacturing machines by GFCCA. Part C: (1) (a) Carrying out test fishing operations off the coast of Gujarat and the State of Andhra Pradesh by the Borrower; (b) Carrying out an All-India fish marketing study covering fresh and dried fish by the Indian Institute of Management, Ahmadabad or such institution agreed between the Borrower, the Association and the Bank under Section 3.01 (c) and 3.02 (c) of this Agreement; (2) Carrying out production, fishermen's households and credit recipients surveys by the Department of Fisheries of Gujarat; and - 25 - (3) Provision of technical assistance in fisheries resources management to the Borrower and technical assistance in harbor engineering, underwater rock excavation and fisheries resources and terminal operation to Gujarat. Part D: A credit program to finance the civil works, materials and equipment under Part B above, to be implemented by ARDC and the Participating Bank. The Project is expected to be completed by December 31, 1982. - 26 - SCHEDULE 3 Principal Lending Terms and Conditions 1. Borrower to ARDC: For ARDC refinancing for up to 9 years: (a) annual interest rate of 6.75% minimum, less 0.25% for prompt payment; (b) repayment at the end of 9 years; and (c) Borrower to carry exchange risk. 24 ARDC to Participating Bank: (a) Annual interest rate of not less than 8% to the Participating Bank; (b) Installment repayments to coincide with agreed collection dates from ultimate borrowers; and (c) ARDC to refinance the Participating Bank by loans not exceeding 80% of individual loans. 3. Participating Bank to Ultimate Borrowers: (a) to GFCCA, cooperatives and private entrepreneurs under Part B (1) of the Project: (i) relending is for the construction of ice, freezing and fish processing plant, ice and fish storage, provision of trucks and two fish net manufacturing machines; - 27 - (ii) a loan ceiling of 80% of the cost of equipment and civil works; (iii) annual interest rate of not less than 11%; (iv) repayment period not exceeding 9 years from the date of each withdrawal; and (v) ultimate borrowers to have capital and staff considered adequate by ARDC to operate the facilities. (b) To cooperatives and fishermen: (i) relending is for the purchase of mechanized trawlers under Part B (2) of the Project; (ii) annual interest rate of not less than 11%; (iii) repayment period not exceeding 9 years from the date of each withdrawal; (iv) a loan ceiling of 85% of the purchasing cost; and (v) existing trawler owners are not eligible for this financing. (c) To cooperatives and fishermen: (i) relending is for the procurement of 9 meter canoes with outboard motors and fishing gear and for outboard motors only for existing canoes, under Part B (3) of the Project; - 28 - (ii) a loan ceiling of 92.5% of the cost (90% for provision of outboard motors only); (iii) annual interest rate of not less than 11%; and (iv) repayment period not exceeding 5 years (3 years for provision of outboard motors only) from the date of each withdrawal. 4. General: (a) ARDC and the Participating Bank to maintain separate accounts for each of the above financing schemes and GFCCA and FPCS shall maintain accounts satisfactory to ARDC; (b) Security and insurance to be in accordance with arrangements between the Participating Bank and ARDC; (c) ARDC to refinance the Participating Bank only after determining that the completion of agreed items of development is critical to Project implementation; (d) ARDC to advise the Association prior to inviting bids for the acquisition of equipment and contracts for civil works where such bids are subject to international competitive bidding under the Schedule to the Gujarat Project Agreement; - 29 - (e) all applications for refinancing having total investment costs in excess of $500,000 equivalent, together with appraisal reports and all other relevant data, to be forwarded to the Association and the Bank for final approval; (f) loans may be re-scheduled, if necessary and in agreement with ARDC, in the event of natural calamities resulting in widespread fish famine or closure of fishing operations for more than 100 days between the months of April and October in any calendar year; (g) all fish landings from trawlers registered at Mangrol and Veraval shall be sold through their auction halls, and shall be weighed and records maintained of catch and prices of each class and variety of fish; (h) repayments from ultimate borrowers under paragraphs 3 (a) and (b) above shall be made from fish sale proceeds on regular weekly basis or when repayments are made according to established practices of the Participating Bank and/or ARDC; and (i) where vessels are purchased under hire purchase agreements through GFCCA or FPCS, such institutions shall be permitted to retain an interest margin not exceeding 0.5% to meet hire purchase costs.