Conformed Copy - C1997 - Shaanxi Agricultural Development Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 1997 CHA (Shaanxi Agricultural Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and SHAANXI PROVINCE Dated September 14, 1989 CREDIT NUMBER 1997 CHA PROJECT AGREEMENT AGREEMENT, dated September 14, 1989, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and SHAANXI PROVINCE (the Province). WHEREAS 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-eight million eight hundred thousand Special Drawing Rights (SDR 78,800,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Province agree to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS the Province, 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 Page 2 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. ARTICLE II Execution of the Project Section 2.01. (a) The Province 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 rural development 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 and the Province shall otherwise agree, the Province 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, the Province shall: (i) on-lend part of the proceeds of the Credit made available to it to prefectural, county and township enterprises under terms and conditions acceptable to the Association, including that applicable interest rates will be no less than ABC's prevailing interest rates for similar loans for similar purposes; and (ii) make or cause to be made adequate and timely budgetary provisions for the implementation of the Project. 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. The Province 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) The Province 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) The Province 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 the Province of its obligations under this Agreement. Section 2.05. In order to assist in coordinating and carrying out the Project, the Province shall maintain the Project Management Office with staffing, functions and responsibilities acceptable to the Association to be headed by its Director from the Provincial Planning Commission assisted by its Leading Deputy Project Director from the Provincial Water Conservancy Bureau, who shall be responsible for the day-to-day management of the Project activities. Section 2.06. The Province shall prepare and furnish to the Association for its review by December 15 of each year, a detailed work and financing plan for the implementation of the Project during the following year. ARTICLE III Financial Covenants Page 3 Section 3.01. (a) The Province shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) The Province 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; (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, the Province 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 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. (a) The Province shall ensure that water charges be set and adjusted as necessary to cover no later than January 1, 1997: (i) full operation and maintenance costs; and (ii) a portion of capital cost at a level to be agreed from time to time between the Association and the Province, in respect of all irrigation and water supply schemes assisted under the Project. (b) The Province shall furnish to the Association, no later than December 31, 1991, a plan of action to comply with the obligation specified in paragraph (a) above. 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 the Province 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 Page 4 (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 Province 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 the Province: Shaanxi Provincial People's Government Xincheng, Xian, Shaanxi Province 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 Province, may be taken or executed by its Governor 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 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/ Attila Karaosmanoglu Regional Vice President Page 5 Asia SHAANXI PROVINCE By /s/ Zhao Xixin 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 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). 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: Other Procurement Procedures 1. Cement estimated to cost less than the equivalent of $500,000 per contract and other construction material estimated to cost less than the equivalent of $200,000 per contract, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures acceptable to the Association. 2. Earth works for pond, canal and drainage construction and on-farm works for irrigation shall be carried out by force account procedures satisfactory to the Association. 3. Office, design and specialized equipments estimated to cost less than the equivalent of $50,000 per contract and breeding stock, up to an aggregate amount not to exceed the equivalent of $1,000,000, 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. 4. Contracts for civil works for structures and building construction shall be awarded in accordance with local competitive bidding procedures acceptable to the Association. Part 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 for goods estimated to cost the equivalent of $200,000 or more and for works estimated to cost the equivalent of $3,000,000 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. Page 6 (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 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 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) of this 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 Province in carrying out the Project, the Province 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. (a) The Province shall ensure that the Project activities will comply with environmental control standards acceptable to the Association. (b) The Province shall establish by December 1, 1993 and thereafter maintain a system to monitor effluents from agroprocessing facilities constructed under the Project. (c) The Province shall continuously monitor water quality in the canals and pipes for water supplies under Parts A and B of the Project and furnish to the Association, by December 1, 1993, a report of water quality assessment in form and content satisfactory to the Association. 2. The Province shall: (a) ensure that adequate chemical and other fertilizer nutrients will be made available to farmers assisted under the Project; and (b) to this end, furnish to the Association by December 1 of each year, an annual program for the provision of such nutrients. 3. The Province shall by December 1, 1991: (a) ensure that poultry development program under Part D of the Project will be completed; and (b) consult with the Association regarding phases II and III of said development program.