Conformed Copy - C2131 - Integrated Watershed Development (Plains) Project - Project Agreement

Page 1 CREDIT NUMBER 2131 IN LOAN NUMBER 3197 IN Project Agreement (Integrated Watershed Development (Plains) Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and STATE OF GUJARAT STATE OF ORISSA and STATE OF RAJASTHAN Dated August 22, 1990 CREDIT NUMBER 2131 IN LOAN NUMBER 3197 IN PROJECT AGREEMENT AGREEMENT, dated August 22, 1990, among INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and STATE OF GUJARAT (Gujarat), STATE OF ORISSA (Orissa), and STATE OF RAJASTHAN (Rajasthan) (collectively "the Project States" and individually "the Project State"). WHEREAS (A) by the Development Credit Agreement of even date herewith between India, acting by its President (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to forty two million six hundred thousand Special Drawing Rights (SDR 42,600,000) on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Project States agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by the Loan Agreement of even date herewith between the Borrower and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to seven million dollars ($7,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Project States agree to undertake such obligations toward the Bank as are set forth in Page 2 this Agreement; and WHEREAS the Project States, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, and the Bank's entering into the Loan Agreement with the Borrower, have 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 requires, the several terms defined in the Development Credit Agreement, the Loan Agreement, the Preamble to this Agreement and in the General Conditions (as so defined in the Development Credit Agreement and the Loan Agreement, respectively) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) The Project States declare their 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 Parts A through E.4 of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices, and shall provide, 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, the Project States shall take all measures necessary to ensure that their respective annual budgets provide for adequate funds for the carrying out of the annual watershed development program and for its maintenance and operations thereafter. (c) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association, the Bank and the Project States shall otherwise agree, the Project States shall carry out Parts A through E.4 of the Project in accordance with the Implementation Program set forth in the Schedule to this Agreement. Section 2.02. Except as the Association and the Bank 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 and of the Loan shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.03. The Project States 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 applicable to the Development Credit Agreement and in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions applicable to the Loan Agreement (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 Part A through E.4 of the Project. Section 2.04. (a) The Project States shall, at the request of the Association and the Bank, exchange views with the Association and the Bank with regard to the progress of Part A through E.4 of the Project, the performance of their obligations under this Agreement, and other matters relating to the purposes of the Credit and of the Loan. (b) The Project States shall promptly inform the Association and the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of Page 3 the purposes of the Credit and the Loan, or the performance by the Project States of their obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) The Project States shall maintain records and accounts adequate to reflect in accordance with sound accounting practices their operations, resources and expenditures in respect of Parts A through E.4 of the Project. (b) Each Project State 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 independent auditors acceptable to the Association and the Bank; (ii) furnish to the Association and the Bank as soon as available, but in any case not later than nine months after the end of each such year, (A) certified copies of its records and accounts referred to in paragraph (a) of this Section 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 and the Bank shall have reasonably requested; and (iii)furnish to the Association and the Bank such other information concerning said records and accounts as well as the audit thereof, as the Association and the Bank shall from time to time reasonably request. 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 and the Loan Agreement become effective. Section 4.02. (a) This Agreement and all obligations of the Association, the Bank and of the Project States thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement or the Loan Agreement of both of said Agreements shall terminate in accordance with their respective terms; or (ii) the date 20 years after the date of this Agreement. (b) If the Development Credit Agreement or the Loan Agreement or both of said Agreements terminates in accordance with their respective terms before the date specified in paragraph (a) (ii) of this Section, the Association and the Bank shall promptly notify the Project States 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 applicable to the Development Credit Agreement or the Loan Agreement. ARTICLE V Page 4 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 197688 (TRT), Washington, D.C. 248423(RCA), 64145 (WUI) or 82987 (FTCC) For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) For Gujarat: Director of Agriculture Krishi Bhavan Paldi Ahamadabad - 380006 Gujarat Cable address: Telex: DIRAGRI 0120 - 3215 AHAMADABAD For Orissa: Director of Soil Conservation Heads of Department Building Bhubaneswar Orissa Cable address: Telex: ORISOIL 675210 - HOME IN BHUBANESWAR For Rajasthan: Director of Agriculture Pant Krishi Bhawan Page 5 Jaipur - 302005 Cable address: Telex: AGRI RAJ 365244 - SECTT IN 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 Project States may be taken or executed by the Director of Agriculture on behalf of Gujarat, by the Director of Soil Conservation on behalf of Orissa, and by the Director of Agriculture on behalf of Rajasthan, or such other person or persons as each Project State shall designate in writing, and each Project State shall furnish to the Association and the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. As long as the Bank has not given notice to the contrary to the Project States and so long as the Development Credit Agreement shall not have terminated prior to the termination of the Loan Agreement: (a) the obligations of the Project States to consult with, and to furnish information, documents, plans, reports, records and statements to, the Bank shall be satisfied to the extent performance in respect of such obligations is rendered to the Association; (b) the obligations of the Bank to consult with, and to furnish information to, the Project States shall be satisfied to the extent such obligations are fulfilled by the Association; and (c) all actions taken (including the giving of approvals or granting of waivers) by the Association pursuant to the Development Credit Agreement shall be deemed to be taken pursuant to both the Development Credit Agreement and the Loan Agreement, and in the name and on behalf of both the Association and the Bank. Section 5.04. 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 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ A. Karaosmanoglu Regional Vice President Asia STATE OF GUJARAT STATE OF ORISSA STATE OF RAJASTHAN By /s/ A. Kumar Authorized Representative SCHEDULE Page 6 Implementation Program 1. Each Project State shall establish and thereafter maintain a State level Policy Steering Committee under the chairmanship of the Chief Secretary or Agriculture Secretary, as the case may be. 2. Each Project State shall establish and thereafter maintain a multi-disciplinary task force at the watershed level: (i) respon- sible for the preparation of operational watershed treatment and management plans, and (ii) with qualified staff in adequate numbers including Project Directors with such powers and functions as may be necessary for the effective management and operation of the respective watershed. 3. In carrying out Part A of the Project, the Project States shall carry out impact evaluation studies on Project benefit and sustainability assessment on different land uses and production systems introduced, including downstream effects (stream flow and groundwater replenishment). 4. In carrying out Parts A.1 (c) and A.2 (c) of the Project, the Project States shall not carry out, without the prior approval of the Association and the Bank, treatment works for natural drainage lines and associated gullies estimated to cost more than twenty-five percent (25%) of the estimated treatment cost of the related watershed. 5. In carrying out Parts A and B of the Project, the Project States shall establish the following cost sharing arrangements with beneficiaries in the Project Area: (a) in respect of privately owned arable and non-arable lands to be treated in the Project Area, the individual beneficiary landholder shall contribute about fifteen percent of the cost of labor and planting materials relating to such treatment in respect of the beneficiary's land; (b) in respect of arable and non-arable community lands, vested in the Panchayats, to be treated in the Project Area, the Panchayats shall contribute about ten percent of the cost of labor relating to such treatment; (c) in respect of non-arable State forest land, the Project States shall enter into written agreements with beneficiaries or their representatives for the purpose of sharing: (i) the respon- sibility for protecting the forest resources to be developed under the Project; and (ii) the benefits resulting from such development. 6. In carrying out Parts A and B of the Project, each Project State shall: (i) coordinate the work of the technical field staff on community mobilization and institution building with that of the participating Non-Governmental Organizations; and (ii) facilitate the exchange among Project States of the experience on consultative planning and beneficiary participation. 7. In carrying out Part C.2 of the Project, the Project States shall, not later than December 31, 1991, enter into agreements with seed suppliers, such agreements to include the following: (i) evaluation of local planting materials and actions required to improve the selection and the processing of seeds; (ii) if required, importation of seeds from the most promising sources and establishment of acceptable reproduction procedures. 8. In carrying out Part D.1 of the Project: (a) each Project State shall establish and thereafter maintain until completion of the Project a Watershed Planning and Coordination Organization (WPCO) with: (i) a planning cell; (ii) a management cell; (iii) a monitoring and reporting cell; and (iv) qualified staff in adequate numbers, including a Project Coordinator with such powers and functions as may be necessary for the effective Page 7 management and operation of the respective WPCO; and (b) such WPCO shall be established: (i) in Gujarat, in GLDC; (ii) in Orissa, in the Department of Soil Conservation; and (iii) in Rajasthan, in the Department of Agriculture. 9. In carrying out Part E.2 of the Project, each Project State shall: (i) develop consultative planning methods and curricula for training field level staff in their use; and (ii) develop models for joint management of non-arable lands, including model agreements for user groups of such lands. 10. The Project States shall participate in the mid-term review of the implementation of the Project referred to in Section 3.05 of the Development Credit Agreement, and shall, promptly thereafter, carry out the agreed recommendations of the review in a manner acceptable to the Association and the Bank.