Sri Lanka - Water Supply And Sanitation Rehabiliation Project : Credit 1700 - Project Agreement - Conformed

OFFICL DOCUM CREDIT NUMBER 1700 CE Project Agreement (Water Supply and Sanitation Rehabilitation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and NATIONAL WATER SUPPLY AND DRAINAGE BOARD Dated , 1986 CREDIT NUMBER 1700 CE PROJ CT AGREEMENT AGREEMENT, dated 02 , 1986, between INTERNATIONAL DEVELOPME OCIATION (the Association) and NATIONAL WATER SUPPLY DRAINAGE BOARD (hereinafter called WDB). WHEREAS (A) by the Development Credit Agreement of even date herewith between Democratic Socialist Republic of Sri Lanka (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to thirty-two million one hundred thousand Special Drawing Rights (SDR 32,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that WDB agree to undertake such obligations toward the Associa- tion as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and WDB, part of the proceeds of the credit provided for under the Development Credit Agreement will be made available to WDB on the terms and coditions set forth in said Subsidiary Loan Agreement; and WHEREAS WDB, in consideration of the Association's entering 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: ARTICLE I Definitions Section 1.01. Unless the context 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) WDB declares its commitment to the objec- tives of the Project as set forth in Schedule 2 to the Develop- ment Credit Agreement, and, to this end, shall carry out Parts A through E of the Project with due diligence and efficiency and in -2- conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be pro- vided, 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, WDB shall carry out Parts A through E of the Project in accordance with an Operational Action Plan satisfac- tory to the Association. To that end, WDB shall: (i) prepare and furnish to the Association annual updates of said Plan; (ii) carry out the programs under said Plan with such changes thereof as the Association and WDB shall have agreed upon; and (iii) keep the Association informed of the progress of the implementaion of said Plan. Section 2.02. Except as the Association shall otheruise 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 the Schedule to this Agreement. Section 2.03. WDB shall carry out the obligations set forth 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 and its part of the Project. Section 2.04. WDB shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, WDB 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) WDB shall, at the request of the Associa- tion, exchange views with the Association with regard to the progress of its part 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. (b) WDB shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of its part of the Project, the accomplishment of the purposes of the Credit, or the performance by WDB of its -3- obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of WDB Section 3.01. WDB shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, engineering and public utilities practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. WDB shall at all times operate and maintain 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 utilities practices. Section 3.03. WDB shall take out and maintain with respon- sible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) WDB shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) WDB shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) and the Special Account 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 -4- 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 shall have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts and financial statements as well as the audit thereof and said records, as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, WDB shall: (i) maintain, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Associa- tion 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 documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, 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 4.02. Except as the Association shall otherwise agree, WDB shall, from time to time, take all such measures (including, without limitation, adjustments of the structure or levels of its tariffs) as shall be required to produce sufficient rev-Iues to cover (i) operating expenses and working capital requirements, commencing with fiscal year 1987, and (ii) all of such requirements together with debt service or depreciation, whichever is higher, commencing with fiscal year 1989. -5- 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 WDB 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) the date 25 years after the date of this Agree- ment. (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 WDB 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, C.able, 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For WDB: National Water Supply and Drainage Board P.O. Box 14 Mount Lavinia Sri Lanka Cable address: Telex: WATERBOARD 21482 NWSDB CE RATMALANA 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 WDB may be taken or executed by its Chairman or such other person or persons as such Chairman shall designate in writing, and WDB 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 counterparts, each of which shall be an original, and all collectively but one instrument. -7- 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 By / Regional Vice President South Asia NATIONAL WATER SUPPLY AND DRAINAGE BOARD By /e I Authorized Representative -8- SCHEDULE Procurement and Comiultants' Services Section I. Procurement of Goods and Works Part A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and works 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 May 1985 (the Guidelines). 2. Bidders for the installation of transmission pipelines, cement mortar lining of existing mains, and treatment facility rehabilitation shall be prequalified as described in paragraph 2.10 of the Guidelines. Part B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A 1 hereof, goods manufactured in Sri Lanka 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. Part C. Preference for Domestic Contractors In the procurement of works in accordance with the proce- dures described in Part A 1 hereof, WB may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part D. Other Procurement Procedures 1. Civil works contracts for: (i) laying distribution mains and sewers; (ii) construction of small pump stations; and (iii) minor improvements of water services and sanitation facilities up to an aggregate amount of $5,800,000 equivalent may be awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Road reinstatement may be carried out through force account. -9- 3. Contracts for electrical and lifting equipment and pumping plant estimated to cost less than $100,000 equivalent, up to an aggregate amount of $1,500,000 equivalEnt, may be let following local competitive bidding procedurf.is satisfactory to the Association. Part E. Review by the Association of Procurement Decisions 1. Review of prequalification: With respect to the prequalification of bidders as provided in Part A.2 hereof, the procedures set forth in paragraph I of Appendix 1 to the Guidelines shall apply. 2. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for goods and works 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 Association 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. (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. Such contracts shall be re- tained in accordance with Section 4.01 (c) (ii) of this Agree- ment. - 10 - 3. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower or WDB, as the case may be, in carrying out the Project, the Borrower or WDB, as the case may be, shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory 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 Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY