India - Maharashtra Rural Water Supply And Environmental Sanitation Program : Credit 2234 - Project Agreement - Conformed

CREDIT NUMBER 2234 IN Project Agreement (Maharashtra Rural Water Supply and Environmental Sanitation Project) between INTERNATIONAL I)EVELOPMENT ASSOCIATION and STATE OF MAHARASHTRA Dated IS ,1991 CREDIT NUMBER 2234 IN PROJECT AGREEMENT AGREEMENT, dated 'JtU.e 5, , 1991, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and STATE OF MAHARASHTRA, acting by its Governor (Maharashtra). WHEREAS 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 seventy- six million four hundred thousand Special Drawing Rights (SDR 76,400,000), on the terms and conditions set forth in the Develop- ment Credit Agreement, but only on condition that Maharashtra agree to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS Maharashtra, 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 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 and the following additional terms have the following meanings: (a) "District Maintenance Fund" means the Fund for Main- tenance and Repairs of Rural Drinking Water Supply Works in respect of each Zilla Parishad; and (b) "Dams" means the existing irrigation dams from which water will be extracted for the purposes of domestic water use under the Project. ARTICLE II Execution of the Project Section 2.01. (a) Maharashtra declares its commitment to the objectives of the Project as set forth in Schedule 2 to the -2- Development Credit Agreement, and, to this end, shall carry out 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 the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and Maharashtra shall otherwise agree, Maharashtra shall carry out 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 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. Maharashtra 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) Maharashtra 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) Maharashtra 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 Maharashtra of its obligations under this Agreement. ARTICLE III Management and Operations of the Board Section 3.01. Maharashtra shall cause the Board to carry on its operations and conduct its affairs in accordance with sound administrative, financial and public utility practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. -3- Section 3.02. Maharashtra shall cause the Board at all times to operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and public utility practices. Section 3.03. Maharashtra shall cause the Board to take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) Maharashtra shall maintain, or cause PPMU to maintain, records and accounts adequate to reflect in accordance with sound accounting practices its operations, resources and expenditures in respect of the Project. (b) Maharashtra shall: (i) have the records and accounts referred to in paragraph (a) above for each financial 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 nine months after the end of each such year, (A) certified copies of its records and accounts relating to 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 shall have reasonably requested; and (iii) furnish to the Assoc ation such other information concerning said records and accounts as well as the audit thereof, as the Association shall from time to time reasonably request. -4- ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of Maharashtra 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 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 Maharashtra of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. 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: -5- For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) For Maharashtra: Secretary to the Government of Maharashtra Department of Rural Development Sachivalya, Bombay, Maharashtra Cable address: Telex: SACHIVALYA 953 1182443 Bombay Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Maharashtra may be taken or executed by any Secretary to the Government of Maharashtra or such other person or persons as Maharashtra shall designate in writing, and Maharashtra shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. -6- 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 ByN P, Ka,,twssm , Regional Vice President Asia STATE OF MAHARASHTRA By/ An Kuwair Authorized Representative -7- SCHEDULE 1 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding 1. 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). 2. Bidders for the construction of water supply schemes shall be prequalified as provided in paragraph 2.10 of the Guidelines. 3. To the extent practicable, contracts for goods shall be grouped into bid packages estimated to cost the equivalent of $200,000 or more. 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: Preference for Domestic Contractors In the procurement of works in accordance with the procedures described in Part A.1 hereof, Maharashtra 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. Testing devices for the public health laboratories to cost the equivalent of $200,000 in an aggregate, may be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids obtained from at least three qualified suppliers eligible under the Guidelines and -8- in accordance with procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55, 2.56 thereof). 2. Contracts for civil works and equipment and materials estimated to cost the equivalent of $5,000,000 and $200,000 each, or less, respectively, may be procured on the basis of competitive bidding, advertised locally, in accordance with procedures satisfac- tory to the Association, provided, however, that the aggregate of such procurement shall not exceed the equivalent of $10,000,000 for civil works and $8,000,000 for equipment and materials. 3. Contracts for small items estimated to cost the equivalent of $50,000 each, or less, up to an aggregate amount equivalent to $3,000,000 may be procured on the basis of comparison of price quotations solicited from a list of at least three suppliers, in accordance with procedures satisfactory to the Association. 4. Works relating to borewells drilling and latrine construction, estimated to cost the equivalent of $12,700,000 in aggregate, may be carried out by force account. Part E: Review by the Association of Procurement Decisions 1. Review of prequalification: With respect to the prequalification of bidders as provided in Part A.2 hereof, 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 equivalent of $5,000,000 and $300,000 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 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 -9- 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 subparagraph (b) shall not apply to contracts on account of which the Association has authorized withdrawals on the basis of statements of expenditure. 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 Maharashtra in carrying out the Project, Maharashtra shall employ consultants whose qualifications, ex- perience and terms and conditions of employment shall be satisfac- tory to the Association. Such consultants shall be selected in accordance with principles and procedures saeisfactory to the Association on the basis of the "Guidelines for the Use of Consul- tants by World Bank Borrowers and by The World: Bank as Executing Agency" published by the Bank in August 1981. - 10 - SCREDULE 2 Implementation Program 1. Maharashtra shall ensure that water supply schemes to be carried out under the Project shall be designed in accordance with criteria satisfactory to the Association. 2. Maharashtra shall furnish to the Association for review by December 31 each year, commencing December 31, 1991, an annual action program for the following year for investments in rural water supply, environmental sanitation, health education, training and technical assistance under the Project, and status of land acquisi- tion required for such investments. 3. (a) In order to assist PPMU in implementation of the Project, Maharashtra shall employ consultants for the following activities: (i) evaluation on a regular basis of construction quality and supervision of water supply schemes and drainage works; (ii) monitoring of health communications; (iii) carrying out of impact evaluations; and (iv) support for organization management. (b) Consultants at (i) above shall be appointed no later than October 1, 1991 and others as and when necessary. 4. Maharashtra shall ensure regular inspection and evaluation of the Dams in accordance with sound engineering practices. 5. Maharashtra shall prepare and furnish to the Association, no later than May 31, 1992, reports on Maharashtra's strategy on environmental sanitation and health education programs to be carried out under the Project, and shall implement such elements of said strategy as shall be agreed upon between Maharashtra and the Association. 6. Maharashtra shall ensure that all the water extraction permits in respect of surface water supply schemes to be constructed under - 11 - the Project are issued by its Department of Irrigation in a timely manner. 7. Maharashtra shall cause the Board to transfer all water supply schemes constructed under the Project to the local Zilla Parishads or the Gram Panchayats, as the case may be, for operation and maintenance of said schemes. 8. Maharashtra shall cause each Gram Panchayat participating in the project to set and collect water tariffs, from private house taps and public standposts, for village water supply schemes and handpumps at levels to cover operation and maintenance costs of such schemes (including bulk water charges related to regional schemes). 9. Maharashtra shall cause each Zilla Parishad participating in the project to transfer sufficient revenues (including all those derived from bulk water charges) each year to the District Main- tenance Fund to ensure coverage of annual operation and maintenance costs for those portions of regional water supply schemes for which it is responsible. 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