India - National Water Management Project : Credit 1770 - Project Agreement - 1 - Conformed

O FF11C IA L CREDIT NUMBER 1770 IN Project Agreement (National Water Management Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF ANDHRA PRADESH STATE OF KARNATAKA STATE OF TAMIL NADU Dated , 1987 CREDIT NUMBER 1770 IN PROJECT AGREEMENT AGREEMENT, dated /!6,/2--' , 1987, among INTERNATIONAL DEVELOPMENT ASSOCIA ON (the Association) and the STATE OF ANDHRA PRADESH (Andhra Pradesh), STATE OF KARNATAKA (Karnataka) and STATE OF TAMIL NADU (Tamil Nadu) each acting by their respective Governors. WHEREAS by the Development Credit Agreement of even date herewith between India (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to ninety three million two hundred thousand Special Drawing Rights (SDR 93,200,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Andhra Pradesh, Karnataka and Tamil Nadu each agree to undertake such obligations toward the Association as are set forth in this Agreement; and WHEREAS Andhra Pradesh, Karnataka and Tamil Nadu, each, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, have agreed to undertake the obligations set forth in this Agreement; NOW TREREFORE 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 Crcdit Agreement, the Preamble to this 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) Andhra Pradesh, Karnataka and Tamil Nadu, each, declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, each shall carry out Parts A (i), A (ii), A (iv), A (v) and A (vi) of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices, and each shall provide, -2 - or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for such Parts of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and Andhra Pradesh, Karnataka and Tamil Nadu shall otherwise agree, Andhra Pradesh, Karnataka and Tamil Nadu shall carry out Parts A (i), A (ii), A (iv), A (v) and A (vi) of the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for Parts A (i), A (ii), A (iv), A (v) and A (vi) of 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. Andhra Pradesh, Karnataka and Tamil Nadu, each, 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 (relat- ing to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respec- tively) in respect of Parts A, (i), A (ii), A (iv), A (v) and A (vi) of the Project. Section 2.05. (a) Andhra Pradesh, Karnataka and Tamil Nadu, each, shall, at the request of the Association, exchange views with the Association with regard to the progress of Parts A (i), A (ii), A (iv), A (v) and A (vi) of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) Andhra Pradesh, Karnataka and Tamil Nadu, each, shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of Parts A (i), A (ii), A (iv), A (v) and A (vi) of the Project, the accomplishment of the purposes of the Credit, or the performance by Andhra Pradesh, Karnataka and Tamil Nadu of their respective obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) Andhra Pradesh, Karnataka and Tamil Nadu each shall: (i) maintain or cause to be maintained records and -3- accounts adequate to reflect, in accordance with sound accounting practices the operations, resources and expenditures in respect of Parts A (i), A (ii), A (iv), A (v) and A (vi) of the Project or the departments or agencies of Andhra Pradesh, Karnataka and Tamil Nadu responsible for the carrying out of its part of Parts A (i), A (ii), A (iv), A (v) and A (vi) of the Project or any part thereof. (b) Andhra Pradesh, Karnataka and Tamil Nadu each shall: (i) have the 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 indepen- dent 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 such year, a certified 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 information concern- ing said records, accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. Section 3.02. For all expenditures with respect to which withdrawals are requested from the Credit Account on the basis of statements of expenditures, Andhra Pradesh, Karnataka and Tamil Nadu each shall: (a) maintain in accordance with Section 3.01 of this Agree- ment records and accounts reflecting such expenditures; (b) 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 docu- ments) evidencing such expenditures; (c) enable the Association's representatives to examine such records; and (d) ensure that such records and accounts are included in the annual audit referred to in Section 3.01 of this Agreement and that the report of such audit contains a separate opinion by the said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal control involved in their preparation, can be relied upon to support the related withdrawals. -4- Section 3.03. Each of the Participating States shall make adequate budgetary allocations for covering the operation and maintenance of each Scheme. 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 Andhra Pradesh, Karnataka and Tamil Nadu 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 20 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 para- graph (a) (ii) of this Section, the Association shall promptly notify Andhra Pradesh, Karnataka and Tamil Nadu of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. ARTICLE 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 -5- designated. 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 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For ANDHRA PRADESH: Secretary to Government of Andhra Pradesh Irrigation and Command Area Development Secretariat Hydrabad, 500022 Andhra Pradesh, India Cable address: Telex: CHIEFSEC 155-6325 APCS-IN Hydrabad, India For KARNATAKA: Secretary II Public Works, CAD and Electricity Department (Irrigation) Government of Karnataka Bangalore 560001 Karnataka, India Cable address: WORKSEC Bangalore, India -6- For TAMIL NADU: Commissioner and Secretary Public Works Department - Government of Tamil Nadu Fort Saint George Madras 600001 Tamil Nadu, India Cable address: CHIEFSEC Madras, 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 Andhra Pradesh, Karnataka and Tamil Nadu may be taken or executed by their respective Secretary in-charge of their Irrigation Department or such other person or persons as Andhra Pradesh, Karnataka and Tamil Nadu shall designate in writing, and Andhra Pradesh, Karnataka and Tamil Nadu, each 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 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 Sou."h Asia ANDHRA PRADESH By Authorized Representative KARNATAKA By Authorized Representative TAMIL NADU By 5 / Authorized Representative -8 - SCHEDULE 1 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: Procurement Procedures 1. All contracts for civil works shall be procured on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association; Drovided, however, that contracts estimated to cost each the equivalent of $40,000 or less and not to exceed in the aggregate the equivalent of $20,000,000, may be procured through piece work or unit price contracts in accordance with procedures satisfactory to the Association; provided, further, that works not to exceed in the aggregate the equivalent of $20,000,000 may be carried out by force account. 2. Contracts for equipment and vehicles shall be procured on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association. Part B: 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 for civil works estimated to cost the equivalent of $80,000 or more and for each contracts for goods estimated to cost the equivalent of $40,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. (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. (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 retained in accordance with Section 4.02 Kb) of this Agreement. -9- 2. 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 Participating States in carrying out Parts A (i), A (ii), A (iv), A (v) and A (vi) of the Project, each of the Participating States shall employ, as and when required, consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Asso- ciation. 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. - 10 - SCHEDULE 2 Implementation Program Andhra Pradesh, Karnataka and Tamil Nadu, each shall: 1. provide, promptly, as needed, the funds, staffing, facili- ties, services and other resources required to carry out through- out the districts under the Project effective agricultural exten- sion services, satisfactory to the Association; 2. take all such actions as shall be necessary to ensure that agricultural extension services for each Scheme are fully operational and adequately staffed by the time each Scheme is completed; 3. select, plan and design and seek approval of each Scheme in accordance with procedures, standards and criteria satisfactory to the Association; 4. establish and, thereafter, maintain or strengthen, as the case may be, the PPM Cells and O&M Cells pursuant to a program and time-table satisfactory to the Association; 5. one year prior to the completion of each Scheme investment, establish and, thereafter, maintain or strengthen, as the case may be, for each Scheme an appropriate committee for purposes of formulating annual and seasonal operational and maintenance plans; 6. (a) under terms of reference satisfactory to the Associa- tion, carry out a detailed interim operation and maintenance review of the Schemes; (b) by December 31, 1991, in consultation with the Associa- tion review the results of the above-mentioned studies; and (c) taking into account such review and the Operation and Maintenance experience gaiend in other irrigation projects else- where in each Participating State, not later than December 31, 1992, in consultation with the Associaton prepare an appropriate Action Plan for improving Operation and Maintenance practices in each of the Participating States, and, promptly thereafter, initiate the implementation of such Action Plan. - 11 - 7. by December 31, 1987, prepare a monitoring and evaluation program for the various activities under Part A of the Project satisfactory to the Association, and implement the said monitor- ing and evaluation program accordingly; 8. without limitation to the generality of Section 9.06 of the General Conditions, until completion of the Project, furnish to the Association annual reports of such scope and in such detail as the Association shall reasonably request covering the progress of the Project, such reports to be submitted through the WMC and furnished to the Association within three months after the end of each reporting period. The first report shall be furnished to the Association by June 30, 1988; 9. by December 31, 1987, prepare and furnish to the Association for its review and comments, detailed schedules for the training programs under Part A (iv) of the Project, and thereafter, taking into account the Association's comments, if any, implement such training programs; 10. without limitation to the provisions of Section 2.01 of this Agreement, by November 30 of each year, commencing on Novem- ber 30, 1987, and thereafter, until the completion of the Pro- ject, prepare and furnish to the Association, for purposes of exchanging views, proposed financial requirements for the forth- coming Borrower's Fiscal Year for carrying out Part A (i), (ii), (iv), (v) and (vi) of the Project; and 11. by December 31, 1987, establish a Dam Safety Panel with membership and terms of reference satisfactory to the Associa- tion, for purposes, inter alia, of inspecting periodically in accordance with sound engineering practices, the dams and related structures serving Schemes under Part A of the Project, in order to determine whether there are any deficiences in the condition of such structures or in the quality and adequacy of maintenance or methods of operation of the same, which may endanger their safety, and shall promptly carry out any repair works which shall be required to ensure the safety of such dams and structures. 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