India - Bihar Public Tubewell Project : Credit 1737 - Project Agreement - Conformed

OFFICIAL DOCUMENTS CREDIT NUMBER 1737 IN Project Agreenent (Bihar Public Tubewell Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF BIHAR Dated /3 , 1987 CREDIT NUMBER 1737 IN PROJECT AGREEMENT AGREEMENT, dated 1l(vel2tf /3 , 1987, between INTERNATIONAL DEVELOPMENT ASSOCIATa (the Association) and the STATE OF BIHAR, acting by its Governor (Bihar). WHEREAS 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 fifty-nine million five hundred thousand Special Drawing Rights (SDR 59,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Bihar agrees to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS Bihar, in consideration of the Association's enter- ing into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: .mITICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth, and the following additional terms have the following meanings: (a) "Board" means the Bihar State Electricity Board estab- lished by Bihar pursuant to the provisions of the Borrower's Electricity Supply Act, 1948, as amended to the date of this Agreement; (b) "Project Coordinating Unit" means the unit established within the Tubewell Wing and responsible for coordination among the agencies, entities and departments of Bihar participating in the carrying out of the Project or any Part thereof; and (c) "Project Accounting Unit" means the unit established within the Tubewell Wing responsible for carrying out the accounting obligations of Bihar as provided for in Section 3.01 of this Agreement. - 2 - ARTICLE II Execution of the Project Section 2.01. (a) Bihar 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 the Project described in said Schedule with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, managerial and agricultural practices, and shall provide or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation upon the provisions of paragraph (a) of this Section, Bihar shall carry out the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement, as such Schedule may be amended from time to time by agreement between the Association and Bihar. Section 2.02. Except as the Association 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 shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.03. Bihar shall carry out the obligations set for-h in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (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. Section 2.04. (a) Bihar shall, at the request of the Asso- ciation, 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) Bihar 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 Bihar of its obligations under this Agreement. - 3 - ARTICLE III Financial Covenants Section 3.01. (a) Bihar 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 accounting principles and procedures consistently applied, its resources, expenditures and operations related to the Project; and (ii) furnish to the Association copies of their 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 each such year. (b) Bihar 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, including the Special Account, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Association; (ii) furnish to the Association imme- diately following its finalization, the report of such audit by said auditors, of such scope and in such detail as the Associa- tion shall have reasonably requested; and (iii) furnish, or cause co be furnished, to the Association such other information con- cerning said accounts and records, financial statements and the audit thereof as the Association shall from time to time reason- ably request. Section 3.02. For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, Bihar shall: (a) maintain, in accordance with Section 3.01 of this Agreement, separate records and accounts reflect- ing such expenditures; (b) retain, until at least one year after the Asso- ciation has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other docu- ments) evidencing such expenditures; -4- (c) enable the Association's representatives to examine such records; and (d) ensure that such separate accounts are included in the annual audit referred to in Section 3.01 of this Agreement and that the report thereof con- tains, in respect of such separate accounts, a separate opinion by said auditors as to whether the proceeds of the Credit withdrawn in respect of such expenditures were used for the purposes for which they were provided. Section 3.03. Without limiting or restricting Bihar's obli- gations under Section 3.01 of this Agreement, Bihar shall cause the Tubewell Wing to maintain separate records and accounts ade- quate to reflect expenditures on operation and maintenance of the irrigation systems under the Project. Section 3.04. Bihar shall: (a) by December 31, 1987, furnish to the Association, for its review and comments, terms of reference for carrying out a study to establish a water charge system for irrigated areas served by the tubewell irrigation systems under the Project and, thereafter, carry out such study; and (b) by December 31, 1988, furnish to the Association, for its review and comments, the results of the above-mentioned study together with a proposed time-table for implementing its results, and, taking into account the Association's comments, if any, by July 31, 1989, adopt and implement an irrigation water charge system in accordance with the appropriate results of such study and a time-table satisfactory to the Association. Section 3.05. Bihar shall maintain, at all times, its irri- gation water charges for all public tubewell systems at such levels as shall be required to ensure that revenues from such water charges shall cover the average cost of operation and main- tenance, and a reasonable portion of the investment costs, taking into account the payment capacity of farmers. -5 - 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 Bihar 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 twenty years after the date of this Agree- ment. (b) If the Development Credit Agreemeat terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify Bihar of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspensi n 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 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: -6- 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 Bihar: Chief Secretary Government of Bihar Patna Bihar, India Cable address: CHIEFSEC 800001 Bihar, India 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 Bihar may be taken or executed by the Chief Secretary, c: such other person or persons as Bihar shall designate in writing, and Bihar 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 counterparts, each of which shall be an original, and all collectively but one instrument. -7- 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. INTTRNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President South Asia STATE OF BIHAR By Authorized Representative -8- SCHEDULE I Procurement and Consultants' Services I. Procurement of Goods and Works A. International Competitive Bidding Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guidelines). B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, good-- manufactured in India may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. C. Other Procurement Procedures 1. Contracts for civil works not to exceed in the aggregate $19,100,000 equivalent shall be let on the basis of competitive bidding advertised locally in accordance with procedures satis- factory to the Association. 2. Small contracts, estimated to cost in the aggregate the equivalent of $2,900,000 or less, may be procured through piece work or unit price contracts in accordan.e with procedures satis- factory to the Association. 3. Drilling of bore holes for tubewells estimated to cost in the aggregate the equivalent of $3,100,000 or less, and scattered and small works estimated to cost in the aggregate the equivalent of $700,000 or less, may be carried out under force account. 4. Contracts for the following items may be let on the basis of competitive bidding advertised locally in accordance wi.h proce- dures satisfactory to the Association: (i) submersible pump sets and spares not exceeding in the aggregate the equivalent of $3,000,000; (ii) ancillary pump set equipment, not exceeding in the aggregate the equivalent of $1,800,000; (iii) concrete poles -9- and general materials for power lines, not exceeding in the aggregate the equivalent of $13,300,000; (iv) electrical equip- ment, including conductors, distribution transformers and high tension insulators, not exceeding in the aggregate the equivalent of $9,300,000; (v) alfalfa valves, not exceeding in the aggregate the equivalent of $1,000,000; and (vi) light equipment, includ- ing vehicles, not exceeding in the aggregate the equivalent of $3,700,000. 5. Equipment for management improvement under Part D of the Project, not exceeding in the aggregate the equivalent of $800,000, may be let on the basis of competitive bidding adver- tised locally in accordance with procedures satisfactory to the Association. D. Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract: (i) under Part B of the Project estimated to cost the equivalent of $500,000 or more, (ii) for works estimated to cost the equivalent of $500,000 or more, and (iii) for goods estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Associa- tion pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 3 to the Development Credit Agreement. - 10 - (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Records (contracts, orders, invoices, bills, receipts and other documents evidencing such expenditures) shall be retained until one year after the Closing Date. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. II. Employment of Consultants In order to assist Bihar in carrying out Parts D and E of the Project, Bihar shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Con- sultants by World Bank Borrowers and by the World Bank as Exe- cuting Agency" published by the Bank in August 1981. - 11 - SCHEDULE 2 Implementation Program 1. Bihar shall: (a) locate, plan, design and construct the works under Parts A through C of the Project in accordance with standards and criteria satisfactory to the Association; (b) operate and maintain adequately and efficiently the irrigation systems under Part A of the Project, and provide promptly as needed, sufficient funds to carry out such operation and maintenance; (c) by March 1, 1987, prepare and furnish to the Asso- ciation, for its review and comments, drafts of design and oper- ation and maintenance manuals for the tubewell irrigation systems under Part A of the Project, and, thereafter, taking into account the Association's comments, if any, adopt and utilize such manuals, in the carrying out of the activities of the Tubewell Wing; (d) sanction staff positions in the Tubewell Wing in accor- dance with organization and staffing schedules satisfactory to the Association, and thereafter, appoint and deploy the required staff pursuant to such schedules; (e) provide appropriate staffing, facilities, services and other resources required for carrying out agricultural extension services throughout the districts of the Project Area; provided, however, that prior to energizing tubewells under Part A of the Project in a given district, Bihar shall ensure that such agri- cultural extension services are operational therein; and (f) provide to the staff referred to in sub-paragraph (d) of this paragraph necessary training to enable them to implement, operate and maintain efficiently the tubewell irrigation systems under the Project. 2. Bihar shall, maintain within the Tubewell Wing: (a) the Project Coordinating Unit under the direction of a qualified and experienced officer and assigned, at all times, with such powers, functions, funds and staffing as shall be required to enable it to accomplish its purposes; and - 12 - (b) the Project Accounting Unit under the direction of a qualified and experienced officer and assigned, at all times, with such functions and staffing as shall be required to enable it to accomplish its purposes. 3. Bihar shall: (a) by March 31, 1987, prepare and furnish to the Asso- ciation, for its review and comments, draft work plans and sche- dules for monitoring and evaluation activities under the Project, and, thereafter, taking into account the Association's comments, if any, carry out such work plans; and (b) in consultation with the Association, on July 1 of each year, commencing on July 1, .987, review and, if necessary, revise the work plans for monitoring and evaluation. 4. Bihar shall: (a) carry out a management study of the Tubewell Wing in accordance with terms of reference satisfactory to the Asso- ciation; and (b) by December 31, 1987, furnish to the Association, for its review and comments, the results and findings of such manage- ment study and, thereafter, taking into account the Association's comments, if any, carry out the recommendations of such study pursuant to a time-table satisfactory to the Association. 5. Bihar shall make appropriate arrangements to: (a) install and maintain in the Project Area dedicated and independent 11 kilovolt electric feeder lines to energize each of the tubewells under Part A of the Project; (b) not later than two months after completion of each such tubewell irrigation system under Part A of the Project, provide each such tubewell system with electrical power required for the efficient operation thereof; and (c) provide electrical power to the tubewell irrigation systems under the Project with a minimum of about sixteen hours per day at peak demand periods and with a voltage fluctuation not greater than six percent. - 13 - 6. Bihar shall: (a) prepare and furnish to the Association, for its review and comments, terms of reference for carrying out a baseline agro-economic survey of the Project and thereafter, taking into account the Association's comments, if any, carry out such survey; (b) not later than July 31, 1987, furnish to the Association, for its review and comments, the results and con- clusions of such survey; and (c) thereafter, taking into account the Association's comments, if any, carry out the monitoring and evaluation activities recommended under such survey in such detail as the Association may reasonably request. 7. Bihar shall: (a) by December 31, 1989 furnish to the Asso- ciation, for its review and comments, draft terms of reference for undertaking a mid-term review of the Project; (b) taking into account the Association's comments, if any, carry out such mid- term review, and by June 30, 1990, furnish to the Association, for its review and comments, the results of such mid-term review; and (c) thereafter subject to the Association's prior concur- rence, carry out the required adjustments to the Project. 8. Without limitation to the generality of Section 9.06 of the General Conditions, Bihar shall, until the completion of the Project, furnish to the Association semi-annual reports of such scope and in such detail as the Association shall reasonably request covering the progress of the Project during the periods April 1 through September 30 and October 1 through March 31 of each year, such reports to be furnished within two months after the end of each reporting period, the first report to be fur- nished by May 31, 1987. 9. Bihar undertakes to take all such measures as shall be con- sidered necessary to minimize the risk of malaria, filaria and other water related diseases within the Project Area.