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

CONFORMED COPY CREDIT NUMBER 848 IN Development Credit Agreement (Punjab Water Supply and Sewerage Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated October 27, 1978 CREDIT NUMBER 848 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated October 27, 1978, 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 (hereinafter called the Punjab Agreement) between the Association and the State of Punjab, acting by its Governor (hereinafter called Punjab), Punjab has agreed to undertake certain obligations in respect of the Project; (C) by an agreement of even date herewith (hereinafter called the Project Agreement) between the Association and the Punjab Water Supply and Sewerage Board (hereinafter called WSSB), WSSB has agreed to carry out the Project and to undertake certain other obligations in respect of the Project; (D) WSSB intends to contract from the Life Insurance Cor- poration of India (hereinafter called LIC) a loan of Rsl30,OO0,OOO (hereinafter called the LIC Loan) to assist in the financing of the Project on terms and conditions, including those set forth in Schedule 2 to the Project Agreement, set forth or referred to in an agreement (hereinafter called the LIC-WSSB Loan Agreement), to be entered into between LIC and WSSB; (E) by an agreement of even date herewith (hereinafter called the LIC Agreement) between the Association and LIC, the parties thereto have agreed to coordinate the withdrawal and use of proceeds of the loan to be provided by LIC; and 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, in the Punjab Agreement and in the Project Agreement of even date herewith; 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 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Punjab" means the State of Punjab, a State of India or any successor thereof; (b) "Punjab Agreement" means the agreement of even date herewith between the Association and Punjab, as the same may be amended from time to time, and such term includes all agreements supplemental to the Punjab Agreement; (c) "Act" means the Punjab Water Supply and Sewerage Act, 1976 of Punjab, as amended; (d) "WSSB" means the Punjab Water Supply and Sewerage Board established by the Act; (e) "LIC" means the Life Insurance Corporation of India, a statutory corporation established by the Life Insurance Cor- poration Act, 1956 of the Borrower; (f) "Project Agreement" means the agreement between the Association and WSSB of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (g) "LIC Agreement" means the agreement of even date here- with between the Association and LIC, as the same may be amended from time to time; (h) "Sub-project" means a water supply project, a sewerage project or a water supply and sewerage projeLt carried out or proposed to be carried out under the Project; (i) "Three Towns" means the towns of Jullundur, Amritsar and Ludhiana in Punjab; (j) "Five Towns" means the towns of Moga, Patiala, Rajpura, Bhatinda and Pathankot in Punjab; (k) "Eight Towns" means the eight towns mentioned in para- graphs (i) and (j) above; (1) "MCs" means the Municipal Corporations and the Municipal Committees of the Eight Towns and "MC" means a Municipal Corpor- ation or a Municipal Committee of said MCs; (m) "Subsidiary Loan Agreements" means agreements between WSSB and the MCs, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreements and all agreements supplemental to the Subsidiary Loan Agreements; and (n) "Rs" means rupees in the currency of the Borrower. 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 equiva- lent to thirty-eight million dollars ($38,000,000). 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, procurement of the goods and civil works to be financed out -4- of the proceeds of the Credit shall be governed by the provisions set forth or referred to in Section 2.03 of the Project Agreement. Section 2.04. The Closing Date shall be March 31, 1983 or such later date as the Association shall establish. The Associa- tion 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 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 semiannually on February 1 and August 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Febru- ary 1 and August 1 commencing February 1, 1989, and ending August 1, 2028, each installment to and including the installment payable on August 1, 1998, 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. 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 Punjab and WSSB to perform in accordance with the provisions of the Punjab Agreement and the Project Agreement, respectively, 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 Punjab and WSSB 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 the proceeds of the Credit available to Punjab in accordance with the Borrower's standard arrangements for development assistance to the States of India. -5- 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) Punjab shall have failed to perform any of its obliga- tions under the Punjab Agreement; (b) WSSB shall have failed to perform any of its obligations under the Project Agreement; (c) LIC shall have failed to perform any of its obligations under the LIC Agreement; (d) Punjab shall have taken any action for the dissolution or disestablishment of WSSB or for the suspension of the operation of WSSB; (e) the Act shall have been amended in such a way as to materially and adversely affect the ability of WSSB to carry out its obligations under the Project Agreement; (f) an extraordinary situation shall have arisen which shall make it improbable that WSSB will be able to perform its obligations under the Project Agreement; and (g) (i) subject to subparagraph (ii) of this paragraph: (A) the right of WSSB to withdraw the proceeds of the LIC Loan shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the LIC-WSSB Loan Agreement, or (B) the LIC Loan shall have become due and payable prior to the agreed maturity thereof. (ii) subparagraph (i) of this paragraph shall not apply if WSSB establishes to the satisfaction of the Association that: -6- (A) such suspension, cancellation, termination - prematuring is not caused by the failure of WSSB to perform any of its obligations under the LIC-WSSB Loan Agreemeht, and (B) adequate funds for the Project are available to WSSB from other sources on terms and conditions consistent with the obligations of WSSB under the LIC-WSSB Loan Agreement. 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), (b) or (c) 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), (e) or (g) (i) (B) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional 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 Punjab Agreement on behalf of Punjab has been duly authorized or ratified by all necessary governmental action; (b) the execution of the Project Agreement on behalf of WSSB has been duly authorized or ratified by all necessary governmental and corporate action; (c) the execution of the LIC Agreement on behalf of LIC has been duly authorized or ratified by all necessary corporate and governmental action; (d) the execution of the LIC-WSSB Loan Agreement on behalf of LIC and WSSB, respectively, has been duly authorized or rati- fied by all necessary corporate and governmental action; and -7- (e) the modifications to the institutional framework of WSSB as agreed between the Association and Punjab have been carried out. 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 Punjab Agreement has been duly authorized or ratified by Punjab, and is legally binding upon Punjab in accordance with its terms; (b) that the Project Agreement has been duly authorized or ratified by WSSB, and is legally binding upon WSSB in accor- dance with its terms; (c) that the LIC Agreement has been duly authorized or ratified by LIC, and is legally binding upon LIC in accordance with its terms; and (d) that the LIC-WSSB Loan Agreement has been duly autho- rized or ratified by LIC and WSSB, respectively, and is legally binding upon LIC and WSSB in accordance with its terms. Section 5.03. The date January 25, 1979 is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Section 4.02 of this Agreement shall cease and determine on the date on which this Agreement shall terminate or on a date 25 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary in the Ministry of Finance, Department of Economic Affairs of the Borrower is desig- nated 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 purpose of Section 11.01 of the General Conditions: -8- 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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/ R. L. Misra Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Robert Picciotto Acting Regional Vice President South Asia -9- 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) Equipment and 23,000,000 materials (a) procured by 100% of foreign international expenditures or competitive 100% of local bidding expenditures (ex-factory) (b) procured by 45% methods other than interna- tional competi- tive bidding (2) Civil works 12,500,000 45% (3) Consultants' 600,000 100% services and training (4) Unallocated 1,900,000 TOTAL 38,000,000 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 - 10 - 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 com- pliance 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 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: (a) payments made for expenditures prior to the date of this Agreement except that withdrawals in an aggregate amount not exceeding the equivalent of $100,000 may be made in respect of Category (3) on account of expenditures made before that date but after February 28, 1978; and (b) payments made for expenditures in a Sub-project in any of the Eight Towns until: (i) the Association has approved such Sub-project; (ii) the Subsidiary Loan Agreement between WSSB and the MC concerned has been executed; (iii) the Association has approved the recommendations of WSSB and the MC concerned on credit terms and conditions for financing water supply and sewerage connection costs including WCs, and the selection criteria for credit eligibility of their customers; and (iv) the Association has approved the detailed imple- mentation program in respect thereof. - 11 - 5. Notwithstanding the allocation of an amount of the Credit or the disbursement 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 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 expen- ditures 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 expendi- tures 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, can- cel 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. - 12 - SCHEDULE 2 Description of the Project The purposes of the Project are to assist in the development of the water supply and sewerage sector in Punjab, to construct and improve water supply and sewerage services in the Eight Towns and to introduce a sound public utilities approach to such services. The Project consists of the following Parts: Part A - Sector Development 1. Provision of technical assistance, training and specialized equipment for the development and strengthening of WSSB and water supply and sewerage departments of MCs. Services will be provided to assist in the preparation of management, organization and staffing proposals and in the establishment of project monitoring, accounting and financial management information systems. 2. Studies of water and sewerage tariffs in the Eight Towns. Part B - Sub-projects 1. Construction and improvement of water supply works in the Eight Towns to serve an additional population of about 800,000 people. These water supply Sub-projects would include the follow- ing major components: about 28 tubewells, 31 service reservoirs, 2 treatment works and 480 kilometers of transmission and distribu- tion mains. 2. Construction and improvement of sewerage and sewage disposal works in the Eight Towns to serve an additional population of about 1,200,000 people. These sewerage Sub-projects would include the following major components: about 120,000 connections and WCs, 600 kilometers of laterals, 140 kilometers of interceptors and outfalls and 2 pumping stations. The Project is expected to be completed by March 31, 1982.