India - Karnataka Irrigation Project : Credit 0788 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 788 IN Project Agreement (Karnataka Irrigation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF KARNATAKA Dated May 12, 1978 CREDIT NUMBER 788 IN PROJECT AGREEMENT AGREEMENT, dated May 12, 1978, between INTERNATIONAL DEVELOP- MENT ASSOCIATION (hereinafter called the Association) and STATE OF KARNATAKA, acting by its Governor (hereinafter called Karnataka). WHEREAS by the Development Credit Agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to one hundred twenty-six million dollars ($126,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Karnataka agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS Karnataka, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. Karnataka shall carry out or cause to be carried out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in con- formity with appropriate administrative, financial 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. -2- Section 2.02. 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 of the Schedule to this Agreement. Section 2.03. (a) Karnataka undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or instal- lation, and for such insurance any indemnity shall be payable in a currency freely usable by Karnataka to replace or repair such goods. (b) Except as the Association may otherwise agree, Karnataka shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclusively for the Project. Section 2.04. (a) Karnataka shall. furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) Karnataka: (i) shall maintain or cause to be maintained records and procedures adequate to record and monitor the progress of the Project (including the cost thereof and the benefits to be derived from it), and to identify the goods and services financed out of the proceeds of the Credit made available to it by the Borrower, and to disclose the use thereof in the Project; (ii) shall, enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditures of the proceeds of the Credit so made available to it and the goods and services financed out of such proceeds. (c) Promptly after completion 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 Karnataka and -3- the Association, Karnataka shall 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 the Project, its cost and the benefits derived and to be derived from it, the performance by Karnataka and the Associ- ation of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. Section 2.05. (a) Karnataka shall at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) Karnataka shall promptly inform the Association of any condition which interferes or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by Karnataka of its obligations under this Agreement. ARTICLE III Particular Covenants Section 3.01. Karnataka shall cause its departments and other agencies and authorities responsible for carrying out the Project or any part thereof to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition related to the Project. Section 3.02. Karnataka shall cause its departments and other agencies and authorities responsible for carrying out the Project or any part thereof to: (i) have their accounts and financial statements related to the Project for each fiscal year audited, in accordance with 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 twelve 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 the said accounts and financial statements and the audit thereof as the Association shall from time to time reason- ably request. -4- Section 3.03. In executing the Project, Karnataka shall promptly take necessary measures to minimize the risk of malaria and other water-related diseases in the area covered by the Project. Section 3.04. Karnataka undertakes to complete the Upper Krishna Scheme as early as is technically and financially feasible. Section 3.05. Karnataka undertakes to allocate to the extent possible land suitable for cultivation to the farmers resettled from the Almatti and Narayanpur reservoir areas. Section 3.06. Karnataka shall make water available from its share thereof from river Krishna in sufficient quantities to meet the requirements of the projected cropping pattern in the areas developed under Part A of the Project. Section 3.07. Karnataka undertakes to ensure compulsory land development in the area covered by the Project. Section 3.08. Karnataka shall, in consultation with the Association, strengthen its extension services through improved organization of said services in the area covered by the Project. Section 3.09. Karnataka undertakes to provide adequate funds at all times to operate and maintain in accordance with sound engineering standards the facilities completed under the Project. Section 3.10. Karnataka shall, prior to bringing any area covered by Project under irrigation, prepare a water allocation plan based on cropping pattern for each area commanded by a distributory. Section 3.11. (a) Karnataka shall make ar-.angements for a systematic assessment and collection of Betterment-Levy in the area covered by the Project. (b) Karnataka undertakes to review and, if necessary, increase its water and water-related charges in the area covered by the Project from time to time with the objective of collecting full operational and maintenance cost and, to the extent possible, cost of infrastructure investment, having regard, inter alia, for the incentives and repayment capacity of farmers in the area covered by the Project. - 5 - Section 3.12. Karnataka shall under arrangements satisfactory to the Association cause the dams and spillways constructed under the Project to be periodically inspected in accordance with sound engineering practice in order to determine whether there are any deficiencies in the condition of such structures, or in the quality and adequacy of maintenance of methods of operations of the same, which may endanger their safety. Section 3.13. In respect of the roads to be constructed under Part A (v) of the Project, Karnataka shall, prior to under- taking any construction, prepare and furnish to the Association for its comments, a detailed layout plan for said roads. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of Karnataka thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date twenty years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify Karnataka of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any partial cancellation or suspension under the Development Credit Agreement. - 6 - ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made 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 herein- after specified or at such other address 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: INDEVAS Washington, D.C. For Karnataka: Development Commissioner Government of Karnataka Vidhana Soudha Bangalore 560001, India Cable address: Development Commissioner Bangalore Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Karnataka may be taken or executed by a Secretary to the Government of Karnataka or such other person or persons as Karnataka shall designate in writing, and Karnataka shall furnish to the Association sufficient evidence of the - 7 - authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all col- lectively but one instrument. 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By Is/ W. David Hopper Regional Vice President South Asia STATE OF KARNATAKA By Is/ N.A. Palkhivala Authorized Representative -8- SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods or for civil works shall be procured in accor- dance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding under the Project, Karnataka shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. Karnataka shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. Bidders for the spillway gates for Almatti dam and the works included in Part A (ii) of the Project shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. B. Other Procurement Procedures 1. Contracts for civil works other than those listed in para- graph A.3 above may be let on the basis of competitive bidding advertised locally and in accordance with procedures acceptable to the Association, provided, however, that, (a) contracts for on-farm development and other small works up to an aggregate not exceeding 30% of all civil works under the Project may be let on unit price basis to the local contractors, and (b) works for watering and compacting of embankments; transportation of murrum for stabilization; and manufacture and transportation of pre-cast concrete structures and pre-cast concrete or natural slabs up to -9- an aggregate not exceeding 25% of all civil works under Part A of the Project may be carried out by force account. 2. Contracts for equipment and vehicles, except for backhoes, may be let on the basis of competitive bidding advertised locally and in accordance w,Lth procedures acceptable to the Association. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids of the supply of goods except those to be procured in accordance with local procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to Karnataka of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in India if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in India equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in India. (3) Group C: bids offering any other goods. - 10 - (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if , as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i): the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Evaluation and Comparison of Bids for Civil Works; Preference for Domestic Contractors With respect to any contract for civil works included under Category (2) (b) of the table set forth in Schedule 1 to the Credit Agreement and to be procured in accordance with the pro- cedures described in Part A.1 of this Schedule, a margin of preference of 7-1/2% may be granted to domestic contractors, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying also for such preference shall be asked to provide, as part of the data for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. - 11 - (b) After bids have been received and reviewed, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. E. Review of Procurement Decisions by the Association 1. Karnataka shall, before qualification is invited, inform the Association in detail of the procedure to be followed, and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and, where applicable, of their eligibility for domestic preference under Part D above and of the reasons for the exclusion of any applicant for prequalification and for such eligibility shall be furnished by Karnataka to the Association for its comments before the applicants -.re notified of Karnataka's decision, and Karnataka shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for equipment estimated to cost the equivalent of $500,000 or more or civil works estimated to cost the equivalent of $750,000 or more: (a) Before bids are invited, Karnataka shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, Karnataka shall, before a final decision on the award is made, inform - 12 - the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evalu- ation and comparison of the bids received, and such other infor- mation as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and Karnataka and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 3. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding para- graph, Karnataka shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform Karnataka and the Borrower and state the reasons for such determination.