India - National Dairy Project : Credit 0824 - Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 824 IN Development Credit Agreement (National Dairy Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 19, 1978 CREDIT NUMBER 824 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 19, 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) the Project will be carried out by the Indian Dairy Corporation (hereinafter referred to as IDC) and the National Dairy Development Board (hereinafter referred to as NDDB) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to IDC and NDDB the proceeds of the Credit as hereinafter provided; 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 and in the Project Agreemept of even date herewith between the Association and IDC; 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, 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) "Project Agreement" means the agreement between the Association and IDC of even date herewith, as the same may be -2- amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and IDC pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time; (c) "sub-project" means a project for which a loan is made or proposed to be made to a dairy cooperative union or federation under the Project by IDC out of the equivalent of the proceeds of the Credit made available to IDC by the Borrower under the Subsidiary Loan Agreement; and (d) "sub-loan" means a loan made or proposed to be made to finance a sub-project. 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 one hundred and fifty million dollars ($150,000,000). 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 Associ- ation, 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 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 December 31, 1985 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. -3- 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 May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 1 and November 1 commencing November 1, 1988, and ending May 1, 2028, each installment to and including the installment payable on May 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 IDC to perform in accordance with the provisions of the Project 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 IDC 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 relend part of the proceeds of the Credit equivalent to one hundred and forty-six million dollars ($146,000,000) to IDC under a subsidiary loan agreement to be entered into between the Borrower and IDC under terms and condi- tions satisfactory to the Association which shall include those set forth in Schedule 3 to this Agreement for the purpose of making sub-loans to dairy cooperative unions and federations. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the -4- interests of the Borrower and the Association and to accomplish the purposes 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 cause NDDB to carry out Part F of the Project and shall take or cause to be taken all necessary action, including providing funds, facilities, services, other resources and making part of the proceeds of the Credit equivalent to four million dollars ($4,000,000) available as a grant to NDDB, for the purpose. (b) In order to assist NDDB to carry out Part F of the Project, NDDB may employ consultants whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association. Section 3.03. The Borrower undertakes, or shall cause NDDB, to insure, or to make adequate provision for the insurance of the imported goods to be financed out of the proceeds of the Credit under Part F of the Project 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 by the Borrower or NDDB to replace or repair such goods. Section 3.04. (a) The Borrower shall cause NDDB to furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for Part F of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall cause NDDB: (i) to maintain records and procedures adequate to record and monitor the progress of Part F of the Project (including its cost and impact), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in Part F of the Project; (ii) to enable the Association's accredited representatives to visit the facilities and construction sites included in Part F of the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) to furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning Part F of the Project, its cost and impact, the expenditure of the proceeds of -5- the Credit and the goods and services financed out of such pro- ceeds. (c) The Borrower shall cause NDDB to: (i) have its accounts established for Part F of the Project for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors nominated by the Borrower and 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 NDDB and the audit thereof as the Association shall from time to time reason- ably request. (d) Promptly after completion of Part F 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 Borrower and the Association, the Borrower shall cause NDDB to 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 Part F of the Project, its cost and impact, the performance by NDDB and the Association of their respective functions or obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. The Borrower shall cause IDC and NDDB to review with the Association, at least once each year, the annual work programs of IDC and NDDB in respect of 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) IDC shall have failed to perform any of its obligations under the Project Agreement or the Subsidiary Loan Agreement; -6- (b) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of IDC or NDDB, or for the suspension of operations of IDC or NDDB; and (c) an extraordinary sttuation shall have arisen which shall make it improbable that IDC will be able to perform its obligations under the Project Agreement or the Subsidiary 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 paragraph (a) 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 IDC; and (b) any event specified in paragraph (b) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Subsidiary Loan Agreement has been executed on behalf of the Borrower and IDC. 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 optnion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by IDC, and is legally binding upon IDC in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by the Borrower and IDC and is legally binding upon the Borrower and IDC in accordance with its terms. -7- Section 5.03. The date September 19, 1978 is hereby speci- fied for the purposes of Section 12.04 of the General Con4itiqns. Section 5.04. The obligations of the Borrower under Section 4.02 of this Agreement shall cease and determine on the date op which the Development Credit 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 Secretarys Joint Secretary, Director or Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrpwer 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: Telex: ECOFAIRS 953-313546 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) -8- 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 Is/ J.S. Baijal Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Is/ W. David Hopper 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, materials 60,000,000 and vehicles (a) directly imported 100% of foreign expenditures (b) procured locally 100% of local through interna- expenditures tional competi- (ex-factory tive bidding cost) (c) procured through 60% procedures other than international competitive bidding (2) Establishment costs, 81,000,000 60% including civil works, of dairy cooperative societies, unions and federations other than Category (1) (3) Consultant and tech- 4,000,000 100% nical assistance services (4) Unallocated 5,000,000 TOTAL 150,000,000 - 10 - 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 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 payments made for expen- ditures prior to the date of this Agreement, except that with- drawals, in an aggregate amount not exceeding the equivalent of $1,000,000 may be made on account of payments made for expendi- tures for training and technical assistance before that date but after January 1, 1978. 5. Except as the Association shall otherwise agree, notwith- standing the provisions of paragraph 1 above, withdrawals in respect of: (a) payments for expenditures under Categories (1) and (3) shall be made only against full documentation submitted to the Association; and (b) payments for expenditures under Category (2) may be made against statements of expenditure prepared by IDC. 6. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated - 11 - 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 expendi- tures, 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. 7. 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 Associ- ation's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 12 - SCHEDULE 2 Description of the Project The Project is the first phase of the Borrower's national dairy development program (Operation Flood II) intended to increase the production of milk through the development of supporting facilities and services, and the formation of dairy cooperative societies, unions and federations. The Project consists of the following Parts: A. The establishment of about 20,000 dairy cooperative societies, grouped together into unions and about 25 feder- ations. B. The provision of animal health, artificial insemination and other related extension services to dairy cooperative societies under the Project. C. The construction of dairy processing facilities of unions and federations with a total incremental capacity of about 5 million liters per day. D. The development of packaging, distribution and transport facilities of unions, federations and IDC with incremental marketing capacity of about 4.5 million liters of liquid milk per day. E. The development of storage and long-distance transport facilities to support the establishment of a buffer stock of dairy products, and the development of a national milk marketing network. F. Strengthening and expansion of NDDB's program of training and research with supporting facilities and staff. The Project is expected to be completed by June 30, 1985. - 13 - SCHEDULE 3 Terms for On-lending to IDC 1. Interest rate: 7.5% per annum 2. Amortization period: 20 years Terms for IDC Financial Assistance 1. Amount of sub-loan from 70% of the investment proceeds of Credit: cost of a sub-project 2. Amount of IDC grant: not more than 30% of the investment cost of sub-project 3. Interest rate on sub-loan: 8.5% per annum 4. Amortization on sub-loan: 20 years, inclusive of maximum 5 year grace period on interest and principal, the interest during grace period to be capitalized