India - Karnataka Tank Irrigation Project : Credit 1116 - Project Agreement - Conformed

DOCUMTSj CREDIT NUMBER 1116 IN Project Agreement (Ka-nataka Tank Irrigation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF KARNATAKA Dated , 1981 CREDIT NUMBER 1116 IN PROJECT AGREEMENT AGREEMENT, dated Xlack Ldb , 1981, between INTERNATIONAL DEVELOPMENT 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 forty-three million five hundred thousand Special Drawing Rights (SDR 43,500,000), on the terms and condi- tions 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, and the term "Employment Affirmation Scheme" means a scheme estab- lished by Karnataka to assure employment opportunities for labor in rural areas. 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, agricultural 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 installation, 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 2.05. (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 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 financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) 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) 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) 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 the Association and Karnataka, Karnataka shall prepare and furnishd to -3- 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 the Associa- tion and Karnataka of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. Section 2.07. (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 undertakes that (a) the TIPs be planned, designed, approved, implemented and operated according to criteria agreed between the Association and Karnataka; and (b) individual TIPs be processed in accordance with the procedures agreed between the Association and Karnataka. Section 3.02. Karnataka shall not later than by March 31, 1983, complete, according to terms of reference agreed between the Association and Karnataka, a study with the purpose: (a) to investigate whether the formation of water users' organizations would contribute to an increase of the farmers' participation in the operation of the TIPs; (b) to recommend means for establishing viable and effective participation of beneficiaries in operation and maintenance of the TIPs; and (c) to recommend a system of water charges in accordance with objectives agreed with the Association. Section 3.03. With the objective of ensuring recovery of annual operational and maintenance costs and, to the extent possible, cost of infrastructure investments, having consideration to incentives for, and payment capacity of, farmers, Karnataka shall (a) considering the recommendations of the study specified in Section 3.02 above, by March 31, 1984, review the method of charging for irrigation water supply as well as the level of water and water related charges in tank irrigation projects in Karna- taka, and (b) as soon as feasible thereafter, introduce and enforce an appropriate system and level of such charges after paying due consideration to the Assocation's comments, if any, on the above mentioned review and the study. Section 3.04. Karnataka shall maintain the following organi- zational arrangements in its Department of Irrigation during the execution of the Project: (a) two Project Formulation Cells and two Quality Control Divisions in the Minor Irrigation Wing with adequate staff; (b) the Minor Irrigation Committee for appraisal and super- vision of TIPs; and (c) the Special Appraisal and Supervision Circle, consisting of two Appraisal Divisions, a Technical Monitoring and Evaluation Division and an Operational Monitoring and Evaluation Division, with adequate staff. Section 3.05. Karnataka shall promptly furnish to the Association a Project Summary for each TIP approved by the Minor Irrigation Committee as well as the minutes of each meeting of said Committee. Section .3.06. Karnataka shall each year by March 31 furnish to the Association an annual Implementation Program and an annual Performance Summary of the TIPs, prepared in a manner satisfactory to the Association. Section 3.07. Karnataka shall cause establishment of separate Tank Irrigation Committees for at least three selected TIPs before their construction, in accordance with terms of reference and with a composition to be agreed with the Association. Section 3.08. (a) Karnataka shall: (i) maintain its panel of experts with qualifications, experience and terms of reference acceptable to the Association and Karnataka to review the plans and designs of all dams, including their related structures constructed under the Project, whose proposed height of the -5- embankment above streambed exceeds 10 m, or whose proposed gross storage behind embankment exceeds 2.5Mm3 at full reservoir level, or whose proposed location of the embankment is such that significant destruction could occur in case of failure; and (ii) cause said panel to conduct periodic reviews during the design and construction to examine whether any new grounds for making changes in the design of the such dams have become apparent. (b) Without limiting the generality of Section 3.01 above, Karnataka shall under arrangements satisfactory to the Association and Karnataka cause the dams mentioned in Section 3.08 (a) above 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 ade- quacy of maintenance or methods of operations of the same, which may endanger their safety. ARTICLE IV Financial Covenants Section 4.01. Karnataka shall cause its departments and other agencies and authorities responsible for carrying out the Project or any part thereof to: (i) maintain separate records and accounts adequate to reflect, in accordance with sound account- ing principles and procedures consistently applied, its resources, expenditures and operations related to the Project; (ii) furnish to the Association copies of their accounts and financial state- ments related to the Project for each fiscal year, certified as to their accuracy and authenticity by an independent auditor accept- able to the Association, as soon as available but in any case not later than nine months after the end of such year. Section 4.02. 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 immediately following its finali- zation, the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; (iii) furnish, or cause to be furnished, to the - 6 - Association such other information concerning said accounts and records, financial statements and the audit thereof as the Asso- ciation shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (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 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 Karnataka of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. 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 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: -7- 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 Karnataka: Development Commissioner Government of Karnataka Vidhana Soudha Bangalore 560001, India Cable address: Development Commissioner Bangalore Section 6.02. 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 authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. 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 - 8 - Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION *&2A Regional Vice President South Asia STATE OF KARNATAKA Byie v Authorized Representative - 9 - SCHEDULE Procurement A. 1. Except as provided in paragraph 2 below contracts for civil works and equipment shall be awarded on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association. 2. Civil works: (a) works for which safety or quality considerations so require may be carried out by force account pro- vided, however, that the aggregate of such works shall not exceed 20% of all civil works; and (b) works suitable to be carried out under the Employ- ment Affirmation Scheme may be executed under such scheme provided that the aggregate of such works shall not exceed 10% of all civil works of the Project. B. 1. With respect to all contracts estimated to cost more than the equivalent of $200,000: (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 they are issued to the prospective bidders. (b) After bids have been received and evaluated, Karnata'a 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 - 10 - Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with this Schedule, promptly inform 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. (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 to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, Karnataka shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first applica- tion 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 inform- ation as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with this Schedule, promptly inform Karnataka and state the reasons for such 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 SECRETARY