India - Maharasthtra Water Supply & Sewerage : Credit 0899 - Development Credit Agreement - Conformed

―기 CREDIT NUMBER 899 IN MAHARASHTRA AGREEMENT AGREEMENT, dated June 21, 1979, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and THE STATE OF MAHARASHTRA, acting by its Governor (hereinafter called Maharashtra). 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 forty-eight million dollars ($48,000,000). on the terms and conditions set forth in the Development Credit Agreement, but only on condition, inter alia, that Maharashtra agree to undertake such obligations toward the Association as are hereinafter set -forth; WHEREAS by an agreement of even date between the Association and the Maharashtra Water Supply and Sewerage Board (hereinafter called MWSSB), MWSSB has agreed to undertake certain obligations in respect of the carrying out of the Project; and WHEREAS Maharashtra, 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 ao lollows: 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 Particular Covenants Section 2.01. (a) The Association and Maharashtra shall cooperate fully to assure that the purpose of the Credit will be accomplished. To that end, the Association and Maharashtra shall from time to time, at the request of either party, exchange views 4 -2- through their representatives with regard to the performance of their respective obligations under this Agreement, the performance by MWSSB of its obligations under the Project Agreement, the management, structure, administration, operations, resources and expenditures of MWSSB and other matters relating to the purpose of the Credit. (b) Maharashtra shall take all action which shall be neces- sary on its part to enable MWSSB to perform its obligations under the Project Agreement including the provision of funds, facili- ties, services and other resources required for this purpose and shall not take or permit to be taken any action which would prevent or interfere with the performance of any such obligation of MWSSB. (c) Without any limitation on the generality of paragraph (b) above, Maharashtra shall take all action necessary on its part to ensure: (i) that by September 30, 1979, or such later date as the Association may otherwise agree, MWSSB shall be staffed in accordance with an organizational structure satisfactory to the Association, and (ii) that thereafter no significant alteration in the said organizational structure shall be made without prior consultation with the Association. Section 2.02. Maharashtra shall relend the proceeds of the Credit made available by the Borrower, to MWSSB under appropriate arrangements to be entered into between Maharashtra and MWSSB. Except as the Association shall otherwise agree, such arrangements shall include the following terms: (i) proceeds to be made available for a term of 25 years from the date of the first advance by Maha- rashtra to MWSSB, including a grace period of four years; (ii) interest to be charged at the rate of 6-3/4% per annum, payable semiannually or annually, on amounts withdrawn and outstanding; and (iii) proceeds to be made available promptly as required to enable MWSSB to meet expenditures required for the Project. Section 2.03. Without in any way limiting the generality of paragraph (b) of Section 2.01 hereof, Maharashtra shall, -3- under suitable financing arrangements with MWSSB and the local authorities in the Project Area, ensure the availability of sufficient funds, including loans on the same terms and conditions as those enumerated in Section 2.02 hereof, to enable MWSSB to complete the Project. Section 2.04. Maharashtra shall take all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the carrying out of the Project and, if requested by the Association, shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 2.05. Maharashtra shall reduce industrial waste discharges to acceptable levels in accordance with a program satisfactory to the Association. Section 2.06. Maharashtra shall: (a) cause local authorities in the Project Area to provide grants or loans, on terms satisfactory to the Association, to owners of property who may require financial help to meet (i) the cost of converting the sewerage system thereof to forms suitable for a connection of said property to the public sewer system and (ii) the partial cost of such connection; and (b) take all necessary action by September 30, 1980 to ensure that said owners of property will connect their properties to the public sewer system existing within 50 meters thereof, if necessary availing themselves of the financial arrangements set forth in paragraph (a) above. Section 2.07. For the purpose of enabling MWSSB to meet its commitments in the Project Area, Maharashtra shall cause MIDC to make available to MWSSB sufficient quantities of potable water, estimated at about 100 million liters per day in 1984, and about 150 million liters per day in 1991, at rates to be set after consultation with the Association. Section 2.08. Maharashtra shall ensure that, in accordance with a program satisfactory to the Association: (a) except as the Association may otherwise agree, each of the Six Towns shall establish and maintain a separate account for ** -4- its water supply and sewerage service in accordance with commer- cial accounting practices; and (b) except as the Association may otherwise agree, each village in the Project Area shall establish and maintain a separate account for its water supply service. Section 2.09. Except as the Association may otherwise agree, Maharashtra shall: (a) cause each of the Six Towns to review and, if necessary, adjust, before the commencement of each fiscal year, its respec- tive tariffs for water supply and sewerage services to ensure that: (i) for the fiscal years 1981 through 1983, operating revenues are sufficient to meet operating expenses and debt service requirements, as well as its annual contribution towards the cost of the Project. In case this annual contribution cannot be met from operating revenues, it may be met from other revenues of the Town concerned; and (ii) starting with fiscal year 1984 and thereafter, operating revenues are sufficient to meet the greater of: (A) operating expenses and straight-line depreciation of the fixed assets in operation, as well as an annual rate of return on the average value of the net fixed assets in operationf of at least 3% in fiscal year 1984, 4% in fiscal year 1985, 5% in fiscal year 1986 and 6% thereafter; or (B) operating expenses and debt service requirements; (b) cause each village in the Project Area to review and, if necessary, adjust its respective tariffs for water supply services to ensure that operating revenues are sufficient to meet, for the fiscal year 1984 and for each succeeding fiscal year thereafter, operating expenses and any debt service requirements; and (c). ensure that the local authorities in the Project Area will not subsidize their water supply and sewerage services beyond the cost of supplying water through standpipes calculated at the domestic tariff. (d) For the purposes of this Section, the rate of return shall be calculated in the same manner as the rate of return of MWSSB is calculated pursuant to paragraph (c) of Section 4.04 of the Project Agreement, and the meanings therein assigned to the terms herein employed shall be the same. -5- Section 2.10. Maharashtra shall cause local authorities in the Project Area to: (a) progressively improve their billing and collection procedures for water supply and sewerage services in order to reduce, by March 31, 1981, the level of their respective receiv- ables to a percentage of billings to be agreed with the Associ- ation; (b) pay their bills in respect of bulk supplies of water and other services rendered by MWSSB promptly upon receipt of such services. If any bill shall remain unpaid for more than 90 days, Maharashtra shall ensure the full payment thereof by the local authority concerned, either by deduction of the unpaid amount from grants due to such local authority or by other means available to it; and (c) pay to MWSSB the amount required to service loans or any other instrument providing for the debt still outstanding that MWSSB shall have incurred for the construction of assets in the Project Area pertaining to the water distribution and sewerage system of each local authority, upon transfer of such assets pursuant to Section 4.06 of the Project Agreement. Section 2.11. Maharashtra shall ensure that during Project execution: (a) MWSSB will not utilize surplus revenues resulting from the provision of water supply services in the Project Area for operational and developmental purposes outside said Project Area; and (b) the local authorities in the Project Area will not utilize surplus revenues resulting from the provision of water supply and sewerage services for purposes not related thereto. Section 2.12. Maharashtra shall, before April 1, 1980 review, in consultation with MWSSB and the local authorities, the tariff structure for water supply and sewerage services in the Project Area having regard to, inter alia, the consumer's ability to pay, the economic cost of future expansion of said services and the views of the Association. Section 2.13. Maharashtra shall cause each of the Six Towns to: (i) have its respective accounts and financial statements in - 6 - -6 respect of its water supply and sewerage services (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Association; (ii) furnish to the Association as soon as available, but in any case not later than nine 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 each local authority and the audit thereof as the Association shall from time to time reasonably request. Section 2.14. Maharashtra shall, in respect of the water supply and sewerage services of the loc'l authorities, cause such local authorities to take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate public utility practices. ARTICLE III Effective Date; Termination; Cancellation and Suspension Section 3.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 3.02. (a) This Agreement and all obligations of the Association and of Maharashtra hereunder shall terminate on the earlier of the following two dates: (i) a date 20 years after the date of this Agreement; or (ii) the date on which the Development Credit Agreement shall terminate in accordance with its terms. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (i) of this Section, the Association shall promptly notify Maharashtra of this event. - 7 - -7- Section 3.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. ARTICLE IV Miscellaneous Provisions Section 4.01. 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 specifi-d 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For Maharashtra: The Chief Secretary to the Government of Maharashtra Mantralaya, Bombay India Cable address: RESTIS Bombay -8- Section 4.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Maharashtra may be taken or executed by a Secretary to the Government of Maharashtra or such other person or persons as Maharashtra shall designate in writing, and Maharashtra shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 4.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively 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 /s/ David Hopper Regional Vice President South Asia STATE OF MAHARASHTRA By Is! N. A. Palkhivala Authorized Representative