India - Subernarekha Irrigation Project : Credit 1289 - Project Agreement - Conformed

FK CREDIT NUMBER 1289 IN Project Agreement (Subernarekha Irrigation Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF BIHAR and STATE OF ORISSA Dated r&,1982 CREDIT NUMBER 1289 IN PROJECT AGREEMENT AGREEMENT, dated '4 4 , 1982, among INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the STATE OF BIHAR, acting by its Governor (hereinafter called Bihar) and the STATE OF ORISSA, acting by its Governor (hereinafter called Orissa). 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 sixteen million three hundred thousand Special Drawing Rights (SDR 116,300,000), on the terms and conditions set forth in the Development Credit Agree- ment, but only on condition that Bihar and Orissa agree to under- take such obligations toward the Association as are hereinafter set forth; and WHEREAS Bihar and Orissa, in consideration of the Associa- tion's entering into the Development Credit Agreement with the Borrower, have 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. (a) Bihar shall carry out in its territory Parts A, B, C, D and E of the Project described in Schedule 2 to the Development Credit Agreement; and Orissa shall carry out in its territory Parts A (ii), C and E of the Project; all with due diligence and efficiency and in conformity with appro- priate administrative, financial, engineering and agricultural -2- practices; and Bihar and Orissa shall provide or cause to be provided, promptly as needed, the funds, facilities, services or other resources required for the purpose. (b) Bihar and Orissa shall within the framework of the Tripartite Agreement maintain the institutional arrangements for the execution and operation of the facilities included under Part A of the Project. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and 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) Bihar and Orissa each 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 it to replace or repair such goods. (b) Bihar and Orissa shall each cause all goods and services financed out of the proceeds of the Credit made avail- able to it by the Borrower to be used exclusively for the pur- poses of the Project. Section 2.04 (a) Bihar and Orissa shall each furnish to the Association, promptly upon their preparation, the plans, specifi- cations, reports, contract documents and construction and pro- curement schedules for the Parts of the Project for which it is responsible, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) Bihar and Orissa shall each: (i) maintain records and procedures adequate to record and monitor the progress of the Parts of the Project for which it is responsible (including their cost and the benefits to be derived from them), to identify the goods and services financed out of the proceeds of the Credit made available to it, and to disclose their use in the Project; (ii) enable the Association's representatives to visit the facilities and construction sites included in the Project and to -3- examine the goods financed out of the proceeds of the Credit made available to it and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such infor- mation 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 Bihar or Orissa 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 wh-m the contract was awarded and the contract price. (d) Promptly after completio:- 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 Bihar and the Association, Bihar shall prepare and furnish to the Associa- tion a report, of such scope and in such detail as the Associa- tion 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 Bihar and Orissa and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (e) Orissa shall assist Bihar in the preparation of the report referred to in paragraph (d) of this Section. Section 2.05. (a) Bihar and Orissa shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of their respective obligations under this Agr;-ement, and other matters relating to the purposes of the Credit. (b) Bihar and Orissa shall each promptly inform the Asso- ciation of any condition which interferes or threatens to inter- fere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance of their respective obligations under this Agreement. Section 2.06. Bihar shall by December 31, 1982 establish, and thereafter maintain, in its Irrigation Department a Subernarekha Research Cell and a Subernarekha Project Unit, including a Planning and Monitoring Cell and a Minor Distribution -4- Systems Planning and Design Cell, whose staffing structure and responsibilities shall be agreed with the Association. Section 2.07. Bihar and Orissa shall each: (i) by Decem- ber 31, 1982 prepare and furnish to the Association for its review and comments a detailed plan for the establishment of the training facilities referred to in Part C (ii) of the Project; and (ii) by September 30, 1983 establish such facilities in accordance with the said plan as agreed with the Association. Section 2.08. Bihar and Orissa shall each: (i) by Decem- ber 31, 1982, prepare and furnish to the Association for its review and comments the terms of reference for an irrigation system operation and maintenance study; (ii) by December 31, 1983 carry out said study as agreed with the Association; and (iii) utilize the recommendations of the study in formulating the operation and maintenance estimates and procedures for subsequent implementation of the Project. Section 2.09. Bihar shall complete by December 31, 1983 an irrigation system improvement study and by December 31, 1984 a socio-economic base-line survey in the Project Area in Bihar under terms of reference agreed with the Association. Section 2.10. Bihar shall: (i) by December 31, 1983 estab- lish, and thereafter maintain, a pollution control and monitoring program for the Project Area in Bihar, which will be carried out in a manner agreed with the Association; and (ii) introduce mandatory requirements for authorization by its State Water Pollution Control and Prevention Board for supply of water to industries from the facilities included under the Project in Bihar. Section 2.11. (a) Bihar shall: (i) by December 31, 1982 con- stitute and thereafter maintain, a panel of experts with qualifi- cations, experience and terms of reference acceptable to the Association and Bihar, to review the adequacy of the plans and design of the dams included in the Project and their associated structures; and (ii) cause said panel to conduct periodic reviews during design and construction of such dams to examine whether there is any need for making changes in the design of such dams. (b) Bihar shall under arrangements satisfactory to the Association and Bihar cause the dams and the related structures constructed under the Project to be periodically inspected in -5- 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. To this end, Bihar shall propose to the Association appropriate arrangements for the Association's review not later than one year before the expected completion of such structures. Section 2.12. Orissa shall by December 31, 1984 prepare an irrigation and drainage master plan for the Project Area in Orissa under terms of reference agreed with the Association. ARTICLE III Particular Covenants Section 3.01. Bihar shall: (i) by December 31, 1982 prepare and furnish to the Association a plan for the development in Bihar of the roads required for the purposes of the Project during the Project implementation period; (ii) execute such a plan in coordination with the progress of the irrigation development works under the Project; and (iii) by December 31, 1984 prepare a comprehensive road development plan for the entire part of the Project area located in Bihar. Section 3.02. Bihar shall: (i) by December 31, 1983 commence an on-going evaluation of its rehabilitation activities under terms of reference agreed with the Association; and (ii) not less than two years before causing submergence of any land located in the SIS in Bihar, formulate a rehabilitation plan, including an implementation schedule, agreed with the Association. Section 3.03. Bihar and Orissa shall each at all times cause the facilities included in the Project and the equipment and machinery required for their operation, to be operated, main- tained, renewed and repaired in accordance with appropriate engineering and management practices, and shall provide, promptly as needed, the funds required for this purpose. Section 3.04. Bihar shall by April 1, 1984 implement a Training and Visit agricultural extension system for farmers in the Project Area located in Bihar. Section 3.05. Orissa shall not less than two years before causing submergence of any land in the SIS in Orissa: (i) -6- constitute a Rehabilitation Committee; and (ii) formulate a rehabilitation plar, including an implementation schedule, agreed with the Association. Section 3.06. Bihar and Orissa undertake to continue, after the completion of the Project, the development of the SIS and complete said development as soon as it is technically and finan- cially feasible to do so. ARTICLE IV Financial Covenants Section 4.01. Bihar and Orissa shall each cause their respective departments and other agencies and authorities responsible for carrying out the Project or any part thereof to: (i) maintain separate records adequate to reflect, in accordance with sound accounting principles and procedures consistently applied, its resources, expenditures and operation related to the Project; and (ii) furnish to the Association copies of its accounts and financial statements related to the Project for each fiscal year, certified as to their accuracy and authenticity by an independent auditor acceptable 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. Bihar and Orissa shall each cause their res- pective departments and other agencies and authorities responsi- ble 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 finalization 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 or cause to be furnished, to the Association such other information concerning said accounts and records, financial statements and the audit thereof as the Association shall from time to time reasonably request. -7- 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 Bihar and Orissa 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 accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify Bihar and Orissa of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion 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 designated by notice to the party giving such notice or making such request. The addresses so specified are: - 8- 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 Bihar: Commissioner and Secretary to the Government of Bihar, Irrigation Department Patna 800001 India Cable address: CHIEFSEC Patna, India For Orissa: Commissioner and Secretary to the Government of Orissa Irrigation and Power Department Bhubaneswar, Orissa 765001 Cable address: CHIEFSEC Bhubaneswar, India 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 Bihar or Orissa may be taken or executed by a Secretary to the Government of Bihar or Orissa, respec- tively, or such other person or persons as the Government of Bihar or Orissa, respectively, shall designate in writing, and Bihar and Orissa shall furnish to the Association sufficient - 9 - evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several countjrparts, each of which shall be an original, and all collectively shall form 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 Regional Vice President South Asia STATE OF BIHAR By Authorized Representative STATE OF ORISSA By Authorized Representative - 10 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and civil works shall be procured under contracts awarded in accordance with pro- cedures consistent with those set forth in the current edition of 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, in addition to the requirements of paragraph 1.2 of the Guidelines, Bihar and Orissa, as the case shall require, 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 con- taining 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. Bihar or Orissa, as the case may be, 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 inter- national competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive 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 simi- lar 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 inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. - 11 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures 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 satis- faction of Bihar or Orissa, as the case may be, 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 eval- uated 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 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 - 12 - 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. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category (1) of the table set forth in Schedule 1 to the Development Credit Agreement and to be procured in accordance with the procedures described in Part A of this Schedule, Bihar and Orissa may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors applying for such preference shall be asked to provide, as part of the data for qualification, such informa- tion, including details of ownership, as shall be required to determine whether, according to the classification 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. 2. After bids have been received and reviewed by Bihar or Orissa, as the case may be, 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. D. Other Procurement Procedures 1. Civil works estimated to cost the equivalent of $5,000,000 or less per contract may be procured on the basis of competitive - 13 - bidding advertised locally, in accordance with procedures satis- factory to the Association, provided, however, that: (i) where such competitive bidding is not possible such civil works may be carried out through piecework contracts; and (ii) when required by safety and quality considerations or when quantities cannot be estimated in advance with sufficient precision, such civil works may be carried out on force account subject to the condition, however, that the aggregate cost of civil works carried out through piecework contracts and on force account shall not exceed fifteen percent of the total cost of the civil works. 2. Contracts for light equipment and vehicles may be awarded on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association. E. 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 civil works estimated to cost the equivalent of $500,000 or more or for goods estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Association shall be furnished, for its comments, with 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 such modifications shall be made 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, but before a final decision on the award is made, the Association shall be informed of the name of the bidder to which it is intended to award the contract and shall be furnished, in sufficient time for its review, with a detailed report on the evaluation and compari- son of the bids received, and such other information as the Asso- ciation shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform Bihar or Orissa, as the case may require, and state the reasons for such determina- tion. - 14 - (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 with- drawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract not governed by the preceding paragraph, the Association shall be furnished, 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, with 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 Bihar or Orissa, as the case may require, 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 extension 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, Bihar or Orissa, as the case may be, shall inform the Association of the proposed modifica- tion, waiver, extension or change order and the reasons there- for. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform Bihar or Orissa, as the case may require, 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 a;xd affixed the Seal of the Association thereunto the day of J , 198 2 FOR SECRETARY