India - Punjab Irrigation Project : Credit 0889 - Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 889 IN Development Credit Agreement (Punjab Irrigation Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated March 30, 1979 CREDIT NUMBER 889 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated March 30, 1979, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinatter 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 between the Association and the State of Punjab, the State of Punjab has agreed to undertake certain obligations in respect of the carrying out of the Project; (C) by an agreement of even date herewith between the Association and the Agricultural Refinance and Development Cor- poration, the Agricultural Refinance and Development Corporation has agreed to undertake certain obligations in respect of the carrying out of the Project; and (D) 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 Agreements of even date herewith referred to in Recitals (B) and (C) above; 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 Gen- eral 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: -2- (a) "Punjab" means the State of Punjab, a State of India, or any successor thereof; (b) "Project Agreement" means the agreement between the Association and Punjab 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; (c) "ARDC" means the Agricultural Refinance and Development Corporation, a statutory corporation established and organized under the laws of the Borrower; (d) "ARDC Agreement" means the agreement between the Asso- ciation and ARDC of even date herewith, as the same may be amended from time to time and such term includes all agreements supplemen- tal to the ARDC Agreement; (e) "Irrigation Department" means the Department of Irri- gation of Punjab; (f) "PSTC" means the Punjab State Tubewell Corporation Limited, a company established and organized under the laws of Punjab; and (g) "participating banks" means any cooperative bank or commercial bank in Punjab participating in lending under the 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 equiv- alent to one hundred and twenty-nine million dollars ($129,000,000). 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 Associa- tion, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and - 3 - 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 June 30, 1985 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 January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each January 1 and July 1 commencing July 1, 1989, and ending January 1, 2029, each installment to and including the installment payable on January 1, 1999, 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: (i) carry out Part D of the Project or cause it to be carried out; and (ii) enable Punjab and ARDC to perform in accordance with the provisions of the Project Agreement and the ARDC Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provi- sion of funds, facilities, services and other resources, necessary or appropriate to enable Punjab and ARDC to perform such obli- gations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make available out of the proceeds of the Credit funds equivalent to $82,300,000 to Punjab in accor- dance with the Borrower's standard arrangements for developmental assistance to the States of India. (c) The Borrower shall relend out of the proceeds of the Credit funds equivalent to $46,000,000 to ARDC under financ,"il arrangements to be entered into between the Borrower and r-RDC under terms and conditions which shall have been approved by the Association. 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 Project Agreement; (b) ARDC shall have failed to perform any of its obligations under the ARDC Agreement; (c) 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; (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of ARDC or for the suspension of its operations; and (e) an extraordinary situation shall have arisen which shall make it improbable that (i) Punjab will be able to perform its obligations under the Project Agreement, or (ii) ARDC will be able to perform its obligations under the ARDC 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: - 5 - (a) any event specified in paragraphs (a) or (b) 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 Punjab or ARDC; and (b) any event specified in paragraphs (c) or (d) 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 eftectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) ot the General Conditions: (a) the execution of the Project Agreement on behalf of Punjab has been duly authorized or ratified by all necessary governmental action; and (b) the execution of the ARDC Agreement on behalf of ARDC has been duly authorized or ratified by all necessary corporate and governmental action. 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 Project Agreement has been duly authorized or ratified by Punjab, and is legally binding upon Punjab in accordance with its terms; and (b) that the ARDC Agreement has been duly authorized or ratified by ARDC, and is legally binding upon ARDC in accordance with its terms. Section 5.03. The date July 3, 1979, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of Section 4.02 (b) of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. - 6 - ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary of the Department of Economic Affairs 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 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) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this - 7 - 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/ R. L. Misra Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ M. H. Wiehen Acting Regional Vice President South Asia - 8 - 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) Civil works (a) under Part B 46,000,000 55% of ARDC's of the Project refinancing (b) under Parts A 71,000,000 65% and C of the Project (2) Vehicles and 7,400,000 100% of foreign equipment expenditures; or 100% ex- factory cost; or 70% (3) Preparation of 700,000 100% of foreign projects under expenditures Part D of the Project (4) Unallocated 3,900,000 TOTAL 129,000,000 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 or services supplied from the territory of any country other than the Borrower; and -9- (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: (a) expenditures prior to the date of this Agreement; and (b) expenditures under Part B of the Project until the Association has approved (i) the financial arrangements entered into between the Borrower and ARDC pursuant to Section 3.01 (c) of this Agreement, and (ii) the Banking Plan prepared and adopted by ARDC pursuant to Section 2.01 of the ARDC Agreement. 5. 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 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 - 10 - expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in ,ny way restric- ting or limiting any other right, power or remedy of the Associa- tion 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 expen- ditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 11 - SCHEDULE 2 Description of the Project The Project is intended to modernize and improve irrigation systems and to introduce pilot demonstration schemes involving advanced technologies for these purposes in the State of Punjab. The Project consists of the following: Part A: Modernization of canals through (i) lining of about 21,400,000 square meters of canal surface (equivalent to about 4,060 kilometers of distributaries and minor canals) and (ii) improvement of the canal structures, all within a command area of about 1,200,000 hectares. Part B: Modernization of watercourses through lining of a total length of about 15,200 kilometers of watercourse channel on about 2,820 watercourses serving an area of about 620,000 hectares. Part C: Studies and pilot de:'onstration schemes to test advanced technologies for water distribution and on-farm works. Part D: Preparation of irrigation projects by the Borrower I throughout India. The Project is expected to be completed by June 30, 1984.