India - Uttar Pradesh Urban Development Project : Credit 1780 - Credit Agreement - Conformed

OFFICIAL CREDIT NURBER 1780 IN Development Credit Agreement (Uttar Pradesh Urban Development Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated - e, 1987 CREDIT NUMBER 1780 IN LOAN NUMBER 2797 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated ^ 6tA I , 1987, between INDIA, acting by its President (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (B) the Borrower has also requested the International Bank for Reconstruction and Development (the Bank) to provide addi- tional assistance towards the financing of the Project and by an agreement of even date herewith between the Borrower and the Dank (the Loan Agreement), the Bank is agreeing to provide such assistance in an aggregate principal amount equivalent to twenty million dollars ($20,000,000) (the Loan); (C) the Borrower and the Association intend, to the extent practicable, that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures in respect of the Project before disbursements of the proceeds of the Loan provided for in the Loan Agreement are made; (D) Part A of the Project will be carried out by the State of Uttar Pradesh with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the State of Uttar Pradesh part of the proceeds of the Credit as provided in this Agreement; (E) Part B of the Project will be carried out by the Borrower; and (F) WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith between the Association and the State of Uttar Pradesh; NOW THEREFORE the parties hereto hereby agree as follows: - 2 - ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Uttar Pradesh" means the State of Uttar Pradesh, acting by its Governor, a State of India and any successor thereto; (b) "Project Agreement" means the Agreement between the Association, the Bank and Uttar Pradesh of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (c) "Authority" means the Central Ganga Authority of the Boriower established pursuant to the Resolution of the Ministry of Environment and Forests of the Borrower dated February 16, 1985; (d) "GPD" means the Ganga Project Directorate in the Ministry of Environment and Forests of the Borrower established pursuant to the Order of the said Ministry dated June 7, 1985; (e) "Project Towns" means: (i) the towns of Agra, Allahabad, Bareilly, Gorakhpur, Kanpur, Lucknow and Varanasi; (ii) Aligarh, Moradabad and Saharanpur; (iii) Ghaziabad and Shaktinagar; (iv) if applicable, any or all of the following towns: Dehradun, Jhansi and Nainital; and (v) such other towns, not exceeding eighteen in number, for which a United Nations Development Programme study for low-cost sanitation has been completed and which are selected by Uttar Pradesh in consultation with the Association; -3" (f) "U.P. Implementing Agencies" means collectively, in respect of Part A of the Project: Nagar Mahapatika of each town included in Clause (e) (i) of this Section, Nagar Palika of each town included in Clause (e) (ii) of this Section, the City Board of Ghaziabad and Special Area Development Authority of Shaktinagar, the Development Authority of each of the towns included in Clauses (e) (i) and (e) (ii) of this Section with the exception of Saharanpur, the appropriate agency specified by Uttar Pradesh, in consultation with the Association for each of the towns to be included as Project Towns pursuant to Clauses (e) (iv) and (e) (v) of this Section and U.P. Jal Nigam or Jal Sansthan, as appropriate; (g) "Ganga Implementing Agencies" means collectively, in respect of Part B of the Project: U.P. Jal Nigam for Project activities in Uttar Pradesh; Bihar State Water and Sewage Board for Project activities in the State of Bihar and Calcutta Metropolitan Development Authority and the State Public Health and Engineering Directorate for Project activities in the State of West Bengal and such other agency or agencies designated by the States concerned under intimation to the Association; (h) "Implementing Agency" means each and any of the agencies specified in paragraphs (f) and (g) of this Section; (i) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; and (j) "Loan Agreement" means the agreement of even date herewith between the Borrower and the Bank for the Project, as such agreement may be amended from time to time; and such term includes the "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, as applied to such agreement, and all schedules and agreements supplemental to the Loan Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to one hundred six million three hundred thousand Special Drawing Rights (SDR 106,300,000). 4- Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Association shall so agree, to be made) in respect of the rea- sonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in Dollars a special account in the Reserve Bank of India on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. The Closing Date shall be March 31, 1996 or such later date as the Association shall establish. The Asso- ciation shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Develcpment Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible curcency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Commitment charges and service charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal. amount of the Credit in semiannual installments payable on each March 15 and September 15 commencing September 15, 1997, and ending March 15, 2037. Each installment to and including the installment payable on March 15, 2007, shall be one-half of one percent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half percent (1-1/2%) of such principal amount. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTIGLE III Execution of the Project Section 3.01. The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out Part B of the Project through the GPD with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for Part B of the Project. Section 3.02. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause Uttar Pradesh to perform in accordance with the provisions of the Project Agreement all the obligations of Uttar Pradesh therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appro- priate to enable Uttar Pradesh to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall: (i) make an amount equivalent to SDR 81,300,000 out of the proceeds of the Credit available to Uttar Pradesh in accordance with the Borrower's standard procedures for development assistance to the States of India; and (ii) make an amount equivalent to SDR 25,000,000 available to GPD and the Ganga Implementing Agencies for Part B of the Project by way of grant in accordance with the Borrower's standard procedures. -6- Section 3.03. 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 4 to the Development Credit Agreement. Section 3.04. Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause the GPD and the Ganga Implementing Agencies to carry out Part B of the Project in accordance with an operational action plan, as such plan may be reviewed on an annual basis, and amended, as necessary, by agreement between the Borrower and the Association. Section 3.05. The Borrower and the Association hereby agree that 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, respec- tively) in respect of Part A of the Project, shall be carried out by Uttar Pradesh pursuant to Section 2.03 of the Project Agreement and, in respect of Part B of the Project, by the appropriate Implementation Agency. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall cause the Ganga Imple- menting Agencies to maintain separate records and accounts ade- quate to reflect, in accordance with sound accounting practices, their operations, resources and expenditures in respect of Part B of the Project. (b) The Borrower shall cause the Ganga Implementing Agen- cies to have their records and accounts referred to in paragraph (a) of this Section 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 certi- fied copy of 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 - 7 - information concerning said records and accounts, and the audit thereof and said records, as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall have the Special Account for each fiscal year audited in accordance with appropriate auditing principles consistently applied by independent auditors acceptable to the Association and furnish to the Association, as soon as available, but in any case not later than six months after the end of each year the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested. Section 4.03. For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall cause the Ganga Implementing Agencies to: (i) maintain in accordance with Section 4.01 (a) of this Agreement records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association 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 records and accounts are included in the annual audit referred to in Section 4.01 (b) of this Agreement and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditures furnished during such fiscal year together with the procedures and internal controls involved in their preparation, can be relied upon to support such withdrawals. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) Uttar Pradesh shall have failed to perform any of its obligations under the Project Agreement; (b) as a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situation shall have arisen which shall make it impossible that Uttar Pradesh will be able to perform its obligations under the Project Agreement; and (c) the Borrower, or any other authority having juris- diction, shall have taken any action for the dissolution or disestablishment of the GPD, or the Implementing Agency, or for the suspension of their operations, or shall have taken any other action which will materially or adversely affect the ability of the GDP or an Implementing Agency to carry out its respective functions in respect of the Project. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower and Uttar Pradesh; and (b) the event specified in paragraph (c) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following is specified as an additional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that all conditions precedent to the effec- tiveness of the Loan Agreement have been fulfilled, except for the effectiveness of this Agreement. - 9 - Section 6.02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely, that the Project Agreement has been duly authorized or ratified by Uttar Pradesh, and is legally binding upon Uttar Pradesh in accordance with its terms. Section 6.03. The date 90 days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary or Under Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Department of Economic Affairs Ministry of Finance New Delhi, India Cable address: Telex: ECOFAIRS 953-313546 New Delhi 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) - 10 - 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. INDIA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By41 1Lt.W Regional Vice President Asia - 11 - SCREDULE 1 Withdrawal of the Proceeds of the Credit and the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of Amount of the Credit the Loan Allocated Allocated (P-xpressed (Expressed % of Expen- in SDR in Dollars ditures to Category Equivalent) Equivalent) be Financed (1) Equipment and mate- rials: (a) procured 7,500,000 1,500,000 100% of for- through eign expen- I.C.B. ditures, 100% of local ex- penditures (ex-factory cost) (b) procured 4,500,000 1,000,000 65% through other pro- cedures (2) Civil works: (a) procured 35,000,000 6,500,000 85% through I.C.B. (b) procured 49,000,000 9,000,000 65% through other pro- cedures - 12 - Amount of Amount of the Credit the Loan Allocated Allocated (Expressed (Expressed % of Expen- in SDR in Dollars ditures to Category Equivalent) Equivalent) be Financed (3), Home construc- 60,0O00 100,000 85% tion and improve- ment loans (4) Sector Manage- 6,500,000 1,000,000 100% ment, Technical Assistance, training and studies (5) Unallocated 3,200,000 900,000 TOTAL 106,300,000 20,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 12,300,000, may be made in respect of Category (4) on account of payments made for expenditures before that date but after November 1, 1985, and in respect of all other Categories on account of payments before the date of this Agreement but after August 1, 1986. - 13 - SCHEDULE 2 Description of the Project The objectives of the Project are: (a) to support the improvements in urban sector management and institutional strengthening initiated by the Government of Uttar Pradesh and to reduce the serious deficits in urban shelter, infrastructure and services in the State; and (b) to assist the Central Ganga Authority in its efforts to reduce pollution levels in the Ganga River. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Uttar Pradesh The carrying out of a program to further improve urban sector management, and to provide critical infrastructure in shelter, water supply, sewerage, drainage, low cost sanitation, solid waste management, maintenance management and traffic engineering and management in the Project Towns. Part B: Central Ganga Authority The carrying out of a program of technical assistance and training, improvement and pricrity rehabilitation works and river quality monitoring in the States of Bihar, Uttar Pradesh and West Bengal. The Project is expected to be completed by March 31, 1995. - 14 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories set forth in the table in paragraph I of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to SDR 4,600,000 to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the - 15- amount of payments made out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Asso- ciation from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the -sociation when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article v of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit allo- cated to the eligible Categories, minus the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. - 16 - 6. (a) If the Association shall have determined at any time that any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. No further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account. - 17 - SCHEDULE 4 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part C 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. (a) The design, construction and commission of: (i) water treatment plants at Lucknow and Agra, (ii) augmentation of water supplies at Varanasi, and (iii) Sewage treatment plants at Allahabad, Haridwar and Kanpur, shall be procured on a turnkey basis. (b) Wherever it is technically feasible and appropriate, pollution control works shall be procured on a turnkey basis. (c) Bidders for works specified in paragraphs (a) and (b) above shall be prequalified as described in paragraph 2.10 of the Guidelines. (d) To the extent practicable, contracts for equipment and materials shall be grouped in bid packages estimated to cost the equivalent of $100,000 or more each. Part B: Preference for Domestic Manufacturers/Contractors In the procurement of goods and civil works in accordance with the procedures described in Part A 1 hereof, goods manu- factured in India and domestic contractors 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 Appendix 2 thereto. In the case of turnkey contracts the preference shall be applied through mutually agreed procedures. Part C: Other Procurcment Procedures 1. Civil works not included in the turnkey contracts and contracts estimated to cost less than $5,000,000 each may be - 18 - procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Contracts for equipment and materials estimated to cost less than $100,000 each but more than $20,000, may be let on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association. 3. Items or groups of items estimated to cost less than the equivalent of $20,000 per contract, up to an aggregate amount not to exceed the equivalent of $1,200,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. Part D: Review by the Association of Procurement Decisions 1. Review of prequalification: With respect to the prequalification of bidders as provided in Part A.2 (c) hereof, the procedures set forth in paragraph 1 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 civil works and equipment estimated to cost the equivalent of $500,000 or more, and $200,000 or more, respectively, and the turnkey contracts, 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 - 19 - 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 4.03 of the Development Credit Agreement and Section 3.02 of the Project Agreement, as applicable. 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 Uttar Pradesh in the carrying out of Part A of the Project and the Borrower to carry out Part B of the Project, Uttar Pradesh and the Borrower 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. Section III: Procurement Agencies Procurements to be made pursuant to this Schedule in respect of Part A of the Project shall be made by the appropriate U.P. Implementing Agency, and in respect of Part B of the Project by the appropriate Ganga Implementing Agency. 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