Conformed Copy - C2115 - Hyderabad Water Supply and Sanitation Project - Project Agreement 1

Page 1 CONFORMED COPY CREDIT NUMBER 2115 IN LOAN NUMBER 3181 IN Andhra Pradesh Agreement (Hyderabad Water Supply and Sanitation Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and STATE OF ANDHRA PRADESH Dated May 23, 1990 CREDIT NUMBER 2115 IN LOAN NUMBER 3181 IN ANDHRA PRADESH AGREEMENT AGREEMENT, dated May 23, 1990, among INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank), and STATE OF ANDHRA PRADESH, acting by its Governor (Andhra Pradesh). 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 sixty-three million nine hundred thousand Special Drawing Rights (SDR 63,900,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Andhra Pradesh 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 ten million dollars ($10,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Andhra Page 2 Pradesh agree to undertake such obligations toward the Bank as are set forth in this Agreement; (C) the proceeds of the Credit provided for under the Development Credit Agreement and of the Loan provided for under the Loan Agreement will be made available by the Borrower to Andhra Pradesh in accordance with the Borrower's standard arrangements for developmental assistance to the States of India; and WHEREAS Andhra Pradesh, 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, has 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 the General Conditions (as so defined in the Development Credit Agreement and in the Loan Agreement, respectively) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) Andhra Pradesh 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 Part B of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for Part B of the Project. (b) Without any limitation or restriction upon any of its other obligations under this Agreement; (i) Andhra Pradesh shall cause the Board to perform in accordance with the provisions of the Project Agreement all the obligations of the Board therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable the Board to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance; and (ii) except as the Association, the Bank, Andhra Pradesh and the Board shall otherwise agree, the Project shall be carried out substantially in accordance with the Operational Action Plan, as such Plan shall be updated from time to time in agreement with the Association and the Bank. Section 2.02. (a) Andhra Pradesh shall make available to the Board funds required by the Board to carry out Parts A (i), (ii) and (iii) of the Project, including the proceeds of the Credit and the Loan made available by the Borrower to Andhra Pradesh, under a subsidiary loan agreement to be entered into between Andhra Pradesh and the Board, under terms and conditions which shall have been approved by the Association and the Bank, which shall, except as the Association and the Bank may otherwise agree, include interest rate of not less Page 3 than 10-1/4% per annum on the principal amount so relent and withdrawn by the Board and outstanding from time to time, and repayment over a period of twenty-five years, including therein a period of grace of five years. (b) Andhra Pradesh shall make available to the Board, as a grant, funds required by the Board, including the proceeds of the Credit and the Loan to carry out low-cost sanitation, technical assistance, and the training components, under Part A (iv) and (v) of the Project. Section 2.03. 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 the Loan shall be governed by the provisions of the Schedule to this Agreement. Section 2.04. Andhra Pradesh 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 Andhra Pradesh Agreement and Part B of the Project. Section 2.05. Andhra Pradesh shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association and the Bank shall otherwise agree, Andhra Pradesh shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.06. (a) Andhra Pradesh shall, at the request of the Association or the Bank, exchange views with the Association and the Bank with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit and the Loan. (b) Andhra Pradesh 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 the purposes of the Credit and the Loan, or the performance by Andhra Pradesh of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.07. Andhra Pradesh shall: (a) carry out the agreed resettlement and rehabilitation program under Part B of the Project in accordance with a three year timetable satisfactory to the Association and the Bank; (b) monitor all activities in the carrying out of said program through the Collector, District Medak; (c) continue to employ consultants acceptable to the Association and the Bank, to undertake supplementary monitoring of, and evaluation of, the implementation of said program; and (d) promptly revise, as necessary, said program on the basis of monitoring and evaluation reports in consultation with the Association and the Bank. Page 4 Section 2.08. Andhra Pradesh shall: (a) ensure the safety of the Singur Dam by maintaining the DRP until the construction of the Singur Dam, including remedial work, is completed and the Singur Dam is ready for operation and maintenance by the appropriate authorities; and (b) thereafter ensure regular inspection and evaluation of the Singur Dam in accordance with sound engineering practices. Section 2.09. Andhra Pradesh shall operate the Singur Dam in accordance with the operating rules approved by the Association and the Bank. Section 2.10. Andhra Pradesh shall remit to the Board the arrears in payments in respect of the standpost charges due from the Hyderabad Municipal Corporation to the Board, in five equal annual installments, the first installment to be remitted not later than June 30, 1990. ARTICLE III Financial Covenants Section 3.01. (a) Andhra Pradesh shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations, resources and expenditures in respect of Part B of the Project. (b) Andhra Pradesh shall: (i) have its records and accounts relating to Part B of the Project for each financial 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 relating to Part B of the Project 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 or 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 or 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 and the Bank and of Andhra Pradesh thereunder shall terminate on the earlier of the Page 5 following two dates: (i) the date on which the Development Credit Agreement and the Loan Agreement shall have terminated in accordance with their 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 terminate 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 Andhra Pradesh 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 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: Telex: INTBAFRAD 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) For Andhra Pradesh: Secretary to the Government of Page 6 Andhra Pradesh Department of Housing Municipal Administration and Urban Development Secretariat Hyderabad 500022, Andhra Pradesh, India Cable address: MUNURDEV Hyderabad, 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 may be taken or executed by a Secretary to the Government of Andhra Pradesh or such other person or persons as Andhra Pradesh shall designate in writing, and Andhra Pradesh 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 Andhra Pradesh and so long as the Development Credit Agreement shall not have terminated prior to the termination of the Loan Agreement: (a) the obligations of Andhra Pradesh 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, Andhra Pradesh 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/ Attila Karaosmanoglu Regional Vice President Asia STATE OF ANDHRA PRADESH Page 7 By /s/ Anil Kumar Authorized Representative SCHEDULE 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 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. Contract for the Peddapur Water Treatment Plant shall be procured on the basis of turnkey and bidders shall be prequalified as described in paragraph 2.10 of the Guidelines. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.1 hereof, goods manufactured in India 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. Contracts for equipment and materials estimated to cost the equivalent of $200,000 each or less up to an aggregate amount equivalent to $3,000,000, may be procured on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association and the Bank. 2. Small items up to an aggregate amount not to exceed the equivalent of $1,500,000 may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers, in accordance with procedures acceptable to Association. 3. Contracts for civil works may be procured on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association and the Bank, provided, however, that the construction of irrigation bore wells and other small works, up to an aggregate of $4,000,000 equivalent, may be carried out by force account. Part D: Review by the Association of Procurement Decisions 1. Review of prequalification: With respect to the prequalification of bidders 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 and materials estimated to cost the Page 8 equivalent of $1,000,000 and $200,000 or more, respectively, 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 and the Bank pursuant to said paragraph 2 (d) shall be furnished to the Association and the Bank 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 and the Bank pursuant to said paragraph 3 shall be furnished to the Association and the Bank 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 sub-paragraph (b) shall not apply to contracts on account of which the Association or the Bank has authorized withdrawals from the Credit Account or the Loan Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (a) (ii) of the Development Credit Agreement. 3. 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 Board and Andhra Pradesh in the carrying out of Parts A and B of the Project, respectively, Andhra Pradesh and the Board shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association and the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association and the Bank 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.