India - Kanpur Urban Development Project : Credit 1185 - Project Agreement - Conformed

0 7 \CREDIT NUMBER 1185 IN Project Agreement (Kanpur Urban Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF UTTAR PRADESH Dated 1982 CREDIT NUMBER 1185 IN PROJECT AGREEMENT AGREEMENT, dated , 1982, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and STATE OF UTTAR PRADESH (hereinafter called Uttar Pradesh). 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 twenty two million two hundred thousand Special Drawing Rights (SDR 22,200,000) on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Uttar Pradesh agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS Uttar Pradesh, in consideration of the Associa- tion'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 and the term "Executing Agencies" means the Authority, the Jal Sansthan and the Nagar Mahapalika, and the Directorate of In- dustries and the Department of Housing of Uttar Pradesh. ARTICLE II Execution of the Project Section 2.01. (a) Uttar Pradesh 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 conformity with appropriate administrative, financial and -2- engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Uttar Pradesh shall make available to the Executing Agencies funds equivalent to the proceeds of the Credit made available by the Borrower to Uttar Pradesh on terms and conditions satisfactory to the Association. Section 2.02. In order to assist the Executing Agencies in (i) administration of civil works contracts, and (ii) carrying out Part C of the Project, Uttar Pradesh shall cause to be employed consultants whose qualifications, experience and terms and condi- tions of employment shall be satisfactory to the Association. 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 of the Schedule to this Agreement. Section 2.04. (a) Uttar Pradesh undertakes to cause the Executing Agencies to insure, or make adequate provision for the insurance of, the importeu goods to be financed out of the pro- ceeds of the Credit made available to them by Uttar Pradesh 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 to replace or repair such goods. (b) Except as the Association may otherwise agree, Uttar Pradesh 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 2.05. (a) Uttar Pradesh shall furnish, or cause to be furnished, to the Association, 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) Uttar Pradesh shall: (i) maintain, or cause to be maintained, records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services -3- financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) shall enable the Association's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals 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 such proceeds and the goods and services financed out of such proceeds. (c) Upon the award by Uttar Pradesh of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) 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 Uttar Pradesh and the Association, Uttar Pradesh 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 Uttar Pradesh and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (e) Uttar Pradesh shall enable the Association's repre- sentatives to examine all plants, installationq, sites, works, buildings, property, equipment, records and documents relevant to the performance of Uttar Pradesh's obligations under this Agreement. Section 2.06. (a) Uttar Pradesh 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) Uttar Pradesh 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 Uttar Pradesh of its obligations under this Agreement. -4- Section 2.07. Uttar Pradesh shall ensure that the annual work program for off-site water supply, sewerage and drainage to be carried out by the Nagar Mahapalika and the Jal Sansthan under Part B (i) of the Project shall be agreed upon between Uttar Pradesh and the Association by April 1 of each year. ARTICLE III Particular Covenants Section 3.01. Uttar Pradesh shall cause the Authority, the Jal Sansthan and the Nagar Mahapalika to: (i) take out and main- tain with responsible insurers, or make other provisions satis- factory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice; (ii) at all times to manage their affairs, maintain their finan- cial position, plan their future expansion and carry on their operations, all in accordance with sound business, financial, administrative and engineering practices and under the supervision of experienced and competent management assisted by adequate and competent staff; and (iii) at all times operate and maintain their plant, machinery, equipment and other property, and make all necessary repairs and renewals thereof, in accordance with sound engineering practices. Section 3.02. Uttar Pradesh shall cause the Authority, the Jal Sansthan and the Nagar Mahapalika to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition. Section 3.03. Uttar Pradesh shall cause the Authority, the Jal Sansthan and the Nagar Mahapalika to: (i) have their accounts and financial statements (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 acceptable 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 their 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 said accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. -5- Section 3.04. Uttar Pradesh shall ensure that in respect of the sites and services to be developed by the Authority under Part A (i) of the Project, (i) the beneficiary selection criteria, (ii) the terms and conditions of lease and mortgage, and (iii) the terms and conditions of shelter construction and small business loans to the beneficiaries, shall all be satisfactory to the Association. Section 3.05. Uttar Pradesh shall ensure that, (i) the terms and conditions of lease and mortgage, and of improvement loans, to the beneficiaries of slum upgrading under Part A (ii) of the Project, and (ii) the terms and conditions of the sewer connection loans under Part B (i) of the Project shall all be satisfactory to the Association. Section 3.06. Uttar Pradesh shall cause to be taken all such action as may be necessary to introduce accounting systems in respect of the Authority, the Jal Sansthan and the Nagar Maha- palika satisfactory to the Association and to ensure that said accounting systems shall be fully operational in respect of the Jal Sansthan by April 1, 1982 and in respect of the Authority and the Nagar Mahapalika by April 1, 1983. Section 3.07. Uttar Pradesh shall cause the Jal Sansthan to: (i) implement, by April 1, 1982, a water wastage and leakage detection program, including production metering and area-wise bulk metering; (ii) on the basis of the findings of such program, develop, by September 30, 1982, an action program to reduce water wastage and leakage to a level acceptable to the Association; and (iii) thereafter implement said action program in accordance with a time schedule satisfactory to the Association. Section 3.08. (a) Uttar Pradesh shall cause the Jal Sansthan to: (i) initiate an accelerated connection program, to achieve not less than 80,500 total water connections by March 31, 1985; (ii) introduce quarterly water meter reading and semi-annual billing with effect from the fiscal year commencing April 1, 1981 and quarterly billing with effect from the fiscal year commencing April 1, 1982; (iii) develop its water meter repair and replace- ment capability, through the provision of adequate staff and spare parts, to ensure that not less than 75% and 90% of installed meters are fully functional in each quarter with effect from the quarters beginning January 1 and October 1, 1983, respectively; (iv) introduce an effective collection program, including proce- dures for disconnection of defaulting consumers, to achieve cash -6- collections of not less than 60%, 65%, 70%, 75% and 80% of the current year's receivables during fiscal years 1981/82, 1982/83, 1983/84, 1984/85 and 1985/86 respectively; and (v) generate sufficient revenues, through operational improvements and, if necessary, tariff revisions, to cover not less than (A) 75% of the operation and maintenance costs and debt service requirements for its water supply operations for the fiscal year beginning April 1, 1982, (B) 100% of the operation and maintenance costs and debt service requirements for its water supply operations for the fiscal year beginning April 1, 1983, and (C) 100% of the operation and maintenance costs and debt service requirements for its water supply and sewerage operations for each year commencing with the fiscal year beginning April 1, 1984. (b) For the purposes of this Section: (i) the term "debt" means any debt maturing by its terms more than twelve months after the date on which it is originally incurred; and (ii) the term "debt service requirements" means the aggregate amount of amortization, interest and other charges in respect of debt. Section 3.09. Uttar Pradesh shall cause the Nagar Mahapalika to, (i) establish, by April 1, 1982, a Traffic Management and Engineering Cell with adequate staff, and (ii) implement such low cost traffic management schemes under Part B (iv) of the Project as shall be agreed upon between Uttar Pradesh and the Association. Section 3.10. Uttar Pradesh undertakes to ensure that, not later than April 1, 1983, the Nagar Mahapalika shall make such organizational and operational changes in its solid waste manage- ment service as shall be agreed upon between the Association and Uttar Pradesh based on the recommendations of the study being conducted by the consultants on the organization and management of the Nagar Mahapalika. Section 3.11. Uttar Pradesh undertakes that only such invest- ments under Part B (iii) of the Project shall be undertaken as shall be agreed upon between the Association and Uttar Pradesh based on the recommendations arising from the study now being carried out of the maintenance functions of the Nagar Mahapalika and the Jal Sansthan. -7- Section 3.12. Uttar Pradesh shall cause the Nagar Mahapalika to implement, not later than April 1, 1983, such measures to increase the revenues of the Nagar Mahapalika as shall be agreed upon between Uttar Pradesh and the Association on the basis of recommendations arising from the resource mobilization study presently being carried out by Uttar Pradesh. 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 Uttar Pradesh 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 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accor- dance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify Uttar Pradesh of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. 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 -8- permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have des- ignated 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 Uttar Pradesh: Secretary to the Government of Uttar Pradesh Department of Housing Lucknow, U.P. India Cable address: HOUSINGUP Lucknow 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 Uttar Pradesh may be taken or executed by a Secretary to the Government of Uttar Pradesh or such other person or persons as Uttar Pradesh shall designate in writing, and Uttar Pradesh shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. -9- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 (w ' , Regional Vice President South Asia STATE OF UTTAR PRADESH BAyz RAeay peentaatv Authorized Representative - 10 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Credits" dated March 1977 (hereinafter called the Guidelines), on the basis of inter- national competitive bidding as described in Part A of the Guide- lines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, Uttar Pradesh 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. Uttar Pradesh 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 compe- titive bidding. 3. To the extent practicable, goods shall be grouped in bid packages estimated to cost the equivalent of $50,000 or more each. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost of - 11 - inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. 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. 2. 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 domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. 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. 4. If, as a result of the comparison under paragraph 3 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 evaluated bid price of the imported - 12 - 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 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures 1. Contracts for equipment and materials estimated to cost the equivalent of $50,000 or less each and in the aggregate not exceeding the equivalent of $200,000 may be let after obtaining quotations from at least three suppliers. 2. Contracts for equipment which must be compatible with other equipment in use, or for which local availability of spares and maintenance facilities is essential, may be let on the basis of competitive bidding advertised locally in accordance with proce- dures acceptable to the Association, provided, that the list of such equipment shall have been approved by the Association. 3. Contracts for civil works shall be let on the basis of com- petitive bidding advertised locally in accordance with procedures satisfactory to the Association. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for (i) civil works estimated to cost the equivalent of $500,000 or more, and (ii) equipment and materials to cost the equivalent of $200,000 or more: (a) Before bids are invited, Uttar Pradesh shall furnish or cause to be furnished 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 - 13 - 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, Uttar Pradesh shall, before a final decision on the award is made, inform 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 evaluation and comparison of the bids received, and such other information 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 Uttar Pradesh 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. 2. With respect to each contract not governed by the preceding paragraph, Uttar Pradesh shall furnish or cause to be furnished to the Association, promptly after its execution and prior to the submission to the Association of the first application for with- drawal 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 Uttar Pradesh and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, Uttar Pradesh shall inform the Association of the proposed modification, waiver, extension or -14 - change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform Uttar Pradesh and state the reasons for its determination. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 198 . FOR-sEcRTTA-RY