Conformed Copy - C1885 - Northern Irrigation Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 1885 CHA (Northern Irrigation Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and NEI MONGGOL AUTONOMOUS REGION and NINGXIA HUI AUTONOMOUS REGION Dated August 11, 1988 CREDIT NUMBER 1885 CHA PROJECT AGREEMENT AGREEMENT, dated August 11, 1988 between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and NEI MONGGOL AUTONOMOUS REGION and NINGXIA HUI AUTONOMOUS REGION (the Regions). WHEREAS (A) by the Development Credit Agreement of even date herewith between People's Republic of China (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to seventy-two million seven hundred thousand Special Drawing Rights (SDR 72,700,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that each of the Regions agree to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS each of the Regions, 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; Page 2 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 and in the General Conditions (as so defined) have the respective meanings therein set forth, and "FY" means the fiscal year of the Regions starting January 1 and ending December 31. ARTICLE II Execution of the Project Section 2.01. (a) Each of the Regions 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 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 shall otherwise agree, each of the Regions shall carry out the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement. (c) Without limitation upon the provisions of paragraph (a) of this Section, each of the Regions shall make adequate and timely budgeting provisions for the implementation of that part of the Project for which such Region is financially responsible. 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. Each of the Regions 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. Section 2.04. (a) Each of the Regions shall, at the request of the Association, 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) Each of the Regions 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 such Region of its obligations under this Agreement. Section 2.05. In order to assist in coordinating and carrying out the Project, each of the Regions shall, at regional, prefecture (league) and county levels: (i) maintain Project Coordinating Committees, with membership, functions and responsibilities acceptable to the Association; and (ii) maintain Project Management Offices with staff, functions and responsibilities acceptable to the Association. Section 2.06. Each of the Regions shall prepare and furnish to the Association for its review by November 1 of each year, a detailed work and financing plan for the implementation of the Project during the following year. ARTICLE III Page 3 Financial and Other Covenants Section 3.01. (a) Each of the Regions shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition in respect of activities related to its part of the Project. (b) Each of the Regions shall: (i) have the accounts referred to in paragraph (a) of this Section including 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 six months after the end of each 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 concerning said records, accounts and the audit thereof, 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, each of the Regions shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit 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 paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 3.02. Each of the Regions shall ensure that water charges be set and adjusted as necessary to cover at least the full operation and maintenance costs not later than: (a) FY 1997 in respect of all irrigation schemes under Part A of the Project; and (b) (i) FY 1996 in respect of the gravity supply scheme, and (ii) FY 2002 in respect of the lift irrigation shemes, under Part B of the Project. 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. Page 4 Section 4.02. (a) This Agreement and all obligations of the Association and of the Regions 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 twenty years after the date of this Agreement. (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 the Regions of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation 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 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 Nei Monggol: Nei Monggol Autonomous Region People's Government No. 1 Xing Hua Avenue Huhehaote, Nei-Monggol Autonomous Region People's Republic of China For Ningxia: Ningxia Hui Autonomous Region People's Government No. 217, West Jiefang Street Yinchuan, Ningxia Hui Autonomous Region People's Republic of China 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 the Regions may be taken or executed by the respective chaiman or such other person or persons as he shall designate in writing, and he 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 Page 5 which shall be an original, and all collectively but one instrument. 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 /s/ Russell J. Cheetham Acting Regional Vice President Asia NEI MONGGOL AUTONOMOUS REGION By /s/ Han Xu Authorized Representative NINGXIA HUI AUTONOMOUS REGION By Han Xu Authorized Representative SCHEDULE 1 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding 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). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in China 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 procedures described in Part A hereof, the Borrower 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. Equipment, instruments and materials, estimated to cost the equivalent of not more than US$200,000 per contract, and aggregating not more than US$1,500,000 under Part A and US$1,000,000 Page 6 under Part B, may be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids invited from a list of at least three qualified suppliers eligible under the Guidelines and in accordance with the procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55 and 2.56 thereof). 2. Items or groups of items estimated to cost less than the equivalent of $50,000 per contract, up to an aggregate amount not to exceed the equivalent of $500,000, 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. 3. On-farm works and land development may be carried out by force account procedures satisfactory to the Association. 4. Except for the trunk drain and the pumping station under Part A of the Project, contracts for civil works for earthworks and structures and building construction estimated to cost more than $200,000 equivalent shall be awarded in accordance with local competitive bidding procedures acceptable to the Association. Part E: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to all contracts for goods and works estimated to cost the equivalent of $200,000 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 preceding 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 Schedules 3 and 4 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 Association has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 3.01 (c) (ii) of the Project Agreement. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II: Employment of Consultants In order to assist the Regions in carrying out the Project, each of the Regions 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. SCHEDULE 2 Implementation Program 1. Each of the Regions shall carry out training of Project staff and farmers under the Project in accordance with a program agreed with the Association. 2. Ningxia shall implement the resettlement under Part B of the Project in accordance with the plan agreed with the Association. Page 7 3. (a) Each of the Regions shall ensure that the Project activities will comply with the Borrower's environmental control standards acceptable to the Association. (b) Nei Monggol shall continously monitor water quality in the trunk drain and the main drains as well as Wuliangsuhai lake and furnish to the Association annual reports of water quality assessment in form an d content satisfactory to the Association. 4. Each of the Regions shall: (a) ensure that adequate chemical and other fertilizer nutrients will be made available to farmers in the Project Area; and (b) to this end, furnish to the Association by November 1 of each year, an annual program for the provision of such nutrients. 5. Ningxia shall: (a) establish a working group, assisted by suitably qualified consultants, to study the agricultural development of the Yinbei area, with terms of reference for study satisfactory to the Association; and (b) by June 30, 1991, furnish to the Association a report on said study. 6. Each of the Regions shall furnish to the Association for its review and approval, guidelines for local competitive bidding, procedures and sample documents, by June 30, 1988 and in any case prior to bid invitation. 7. Nei Monggol shall, for the purposes of efficient management of unified irrigation and drainage work, maintain the Hetao Irrigation Area Management General Bureau in accordance with the Borrower's national guidelines for management of large irrigation areas. For the purpose of such management, Nei Monggol shall prepare a draft operation and maintenance manual and furnish to the Association for its review and approval, by June 30, 1990.