India - Hyderabad Water Supply And Sanitation Project : Loan 3181 - Project Agreement - Conformed

CREDIT NUMBER 2115 IN LOAN NUMBER 3181 IN Project Agreement (Hyderabad Water Supply and Sanitation Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and HYDERABAD METROPOLITAN WATER SUPPLY AND SEWERAGE BOARD Dated 04 3 , 1990 CREDIT NUMBER 2115 IN LOAN NUMBER 3181 IN PROJECT AGREEMENT AGREEMENT, dated ',hJ a3 , 1990, among INTERNATIONAL DEVELOPMENT AUSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank), and HYDERABAD METROPOLITAN WATER SUPPLY AND SL4ERAGE BOARD (the Board). WHEREAS (A) by the Development Credit Agreement of even date herewith between India, acting by its President (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to sixty- three million nine hundred thousand Special Drawing Rights (SDR 63,900,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Board agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by the Loan Agreement of even date herewith between the Borrower and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to ten million dollars ($10,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Andhra Pradesh agree to undertake such obligations toward the Bank as are set forth in this Agreement; (C) the proceeds of the Credit provided for under the Development Credit Agreement and of the Loan provided for under the Loan Agreement will be made available by the Borrower to the State of Andhra Pradesh (Andhra Pradesh) in accordance with the Borrower's standard arrangements for developmental assistance to the States of India; (D) by a subsidiary loan agreement to be entered into between Andhra Pradesh and the Board, part of the proceeds of the Credit provided for under the Development Credit Agreement and part of the proceeds of the Loan provided for under the Loan Agreement will be made available to the Board on the terms and conditions set forth in said Subsidiary Loan Agreement; and HEREAS the Board, in consideration of the Association's entering into the Development Credit Agreement with the Borrower IEM -2- and the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the i-bligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined in the Development Credit Agreement and in the Loan Agreement, respectively) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) The Board declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, shall carry out Part A of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association, the Bank, Andhra Pradesh and the Board shall otherwise agree, the Project shall be carried out substantially in accordance with the Operational Action Plan, as such Plan shall be updated from time to time in agreement with the Association and the Bank. Section 2.02. Except as the Association and the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit and the Loan shall be governed by the provisions of the Schedule to the Andhra Pradesh Agreement. Section 2.03. The Board shall carry out or cause to be carried out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions applicable to the Development Credit Agreement and in Sections 9.04, 9.05, 9.06, -3- 9.07, 9.08 and 9.09 of the General Conditions applicable to the Loan Agreement (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement and Part A of the Project. Section 2.04. The Board shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association and the Bank shall otherwise agree, the Board shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) The Board shall, at the request of the Association or the Bank, exchange views with the Association and the Bank with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit and the Loan. (b) The Board shall promptly inform the Association and the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit and the Loan, or the performance by the Board of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of the Board Section 3.01. The Board shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and public utility practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. The Board shall at all times operate and main- tain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and public utility practices. Section 3.03. The Board shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association and the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. -4- Section 3.04. The Board shall, until completion of the Project, maintain a Project Cell staffed and organized in a manner satisfactory to the Association and the Bank. Section 3.05. The Board shall, by May 31, 1990, establish and staff, and thereafter maintain, an organization under its Director of Finance for budgeting, accounting and financial analysis, in a. manner satisfactory to the Association and the Bank. ARTICLE IV Financial Covenants Section 4.01. (a) The Board shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) The Board shall: (i) have its records, accounts and financial statements (balarme sheets, statements of income and expenses and related statements) for each financial year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association and the Bank; (ii) furnish to the Association and the Bank 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 and the Bank shall have reasonably requested; and (iii) furnish to the Association and the Bank such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Association and the Bank shall from time to time reasonably request. Section 4.02. (a) Except as the Association and the Bank shall otherwise agree, the Board shall, with effect from its financial year commencing April 1, 1990 take all such measures (including, without limitation, adjustments of the structure of levels of its tariffs) as shall be required to produce gross -5- revenues from all sources equivalent to not less than the total operating expenses of the Board plus debt-service requirements in excess of provision for depreciation. (b) For the purposes of this Section: (i) The term "gross revenues from all sources" means the sum of revenues from all sources related to the Board's operations, net non-operating income and any reductions in non-cash working capital; (ii) The term "total operating expenses" means the sum of all expenses related to the Board's operations, including maintenance and administration (excluding depreciation and other non-cash operating charges) interest and other charges on debt (excluding interest financed .under a loan contract), repayment of loans (including sinking fund payments, if any), all taxes or payments in lieu of taxes, and any other cash outflows other than capital expenditures related to the Board's operations; (iii) The term "debt-service requirement" means the aggregate amount of amortization (including sinking fund payments, if any) of, and interest and other charges on, debt; (iv) The term "debt" means any indebtedness of the Board maturing by its terms more than one year after the date on which it is originally incurred; (v) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date of such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into, but only to the extent that the guaranteed debt shall be outstanding; and (vi) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, -6- obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Association and the Bank. Section 4.03. The Board shall, not later than September 30, 1990, establish and, thereafter, levy a sewerage service charge as a surcharge of not less than twenty percent on charges for water service, to be payable by all water consumers who are served by a private water connection and whose property abuts a street at a point along its length at which a public sanitary sewer is provided. 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 and the Loan Agreement become effective. Section 5.02. (a) This Agreement and all obligations of the Association and the Bank and of the Board thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement and the Loan Agreement shall have terminated in accordance with their terms; or (ii) the date 20 years after the date of this Agreement. (b) If the Development Credit Agreement or the Loan Agreement or both of said Agreements terminate in accordance with their respective terms before the date specified in paragraph (a) (ii) of this Section, the Association and the Bank shall promptly notify the Board 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 applicable to the Development Credit Agreement or the Loan Agreement. -7- 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 desig- nated 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 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) For the Bank: International Bank for Reconstructon and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) -8- For the Board: Hyderabad Metropolitan Water Supply and Sewerage Board Hyderabad, Andhra Pradesh India Telex: 953 425-6325 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 the Board may be taken or executed by its Managing Director or such other person or persons as the Board shall designate in writing, and the Board shall furnish to the Association and the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. As long as the Bank has not given notice to the contrary to the Board and so long as the Development Credit Agreement shall not have terminated prior to the termination of the Loan Agreement: (a) the obligations of the Board to consult with, and to furnish information, documents, plans, reports, records and statements to, the Bank shall be satisfied to the extent performance in respect of such obligations is rendered to the Association; (b) the obligations of the Bank to consult with, and to furnish information to, the Board shall be satisfied to the extent such obligations are fulfilled by the Association; and (c) all actions taken (including the giving of approvals or granting of waivers) by the AssoCiation pursuant to the Development Credit Agreement shall be deemed to be taken pursuant to both the Development Credit Agreement and the Loan Agreement, and in the name and on behalf of both the Association and the Bank. Scwr>aion 6.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. -9- IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Regio 1 Vice President Asia HYDERABAD METROPOLITAN WATER SUPPLY AND SEWERAGE BOARD ByAuhie Rer Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development and the International Development Association. FOR SECRETA9Y