Conformed Copy - C2215 - Agricultural Development Project - Tamil Nadu - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2215 IN LOAN NUMBER 3300 IN (Agricultural Development Project - Tamil Nadu) among INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and STATE OF TAMIL NADU Dated April 17, 1991 CREDIT NUMBER 2215 IN LOAN NUMBER 3300 IN PROJECT AGREEMENT AGREEMENT, dated April 17, 1991, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and STATE OF TAMIL NADU (Tamil Nadu). WHEREAS (A) by the Development Credit Agreement of even date herewith between India and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to sixty four million one hundred thousand Special Drawing Rights (SDR 64,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condi- tion that the State of Tamil Nadu agree to undertake such obligations toward the Association as are set forth in this Agreement; Page 2 (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 twenty million dollars ($20,000- ,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Tamil Nadu agree to undertake such obligations toward the Bank as are set forth in this Agreement; WHEREAS Tamil Nadu, in consideration of the Associa- tion'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, 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) Tamil Nadu 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 through its relevant depart- ments and agencies with due diligence and efficiency and in conformity with appropriate administrative, financial, and agricultural practices, and shall provide, or cause to be provided, promptly as needed, the funds, facili- ties, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Associa- tion and the Bank shall otherwise agree, Tamil Nadu shall carry out the Project in accordance with the Implementa- tion Program set forth in Schedule 2 to this Agreement. Section 2.02. Except as the Association and the Bank shall otherwise agree, procurement of the goods, works and 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 Schedule 1 to this Agree- ment. Section 2.03. Tamil Nadu shall carry out the obliga- tions 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, respec- tively) in respect of the Project Agreement. Section 2.04. (a) Tamil Nadu shall, at the request of the Association and 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 other matters relating to the Page 3 purposes of the Credit and the Loan. (b) Tamil Nadu shall promptly inform the Associa- tion 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 or the Loan, or the performance by Tamil Nadu of its obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) Tamil Nadu shall maintain records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of Tamil Nadu responsible for carrying out the Project or any part thereof. (b) Tamil Nadu shall: (i) have its records and accounts referred to paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consis- tently 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 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, accounts and financial state- ments 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 both 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 Tamil Nadu thereunder shall terminate on the earlier of the following two dates: (i) the date on which both the Development Credit Agreement and the Loan Agreement shall have terminated in accordance with their respective terms; or (ii) the date twenty (20) years after the date of this Agreement. (b) If the Development Credit Agreement or the Loan Agreement or both of the said Agreements terminate in accordance with their respective terms before the date Page 4 specified in paragraph (a) (ii) of this Section, the Association or the Bank or both shall promptly notify Tamil Nadu 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 Condi- tions 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 the State of Tamil Nadu: Chief Secretary Government of Tamil Nadu Fort St. George, Madras, PIN 600009 India Telex: 953 418238 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 Tamil Nadu may be taken or executed by its Chief Secretary or such other person or persons as Tamil Nadu shall designate in writing, and Tamil Nadu shall furnish to the Association Page 5 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 Tamil Nadu and so long as the Development Credit Agreement shall not have terminated prior to the termination of the Loan Agreement: (a) the obligations of Tamil Nadu 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, Tamil Nadu 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 TAMIL NADU By /s/ Anil Kumar 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, equipment 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 Page 6 (the Guidelines). Part B: Preference for Domestic Manufacturers In the procurement of equipment in accordance with the procedures described in Part A hereof, goods manufac- tured 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 and 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Except as provided in Paragraph 2 hereof, contracts for civil works shall be awarded on the basis of competi- tive bidding, advertised locally, in accordance with procedures satisfactory to the Association and the Bank. 2. All watershed and forestry works and civil works related to on-farm development not exceeding the equiva- lent of $2,000,000 may be carried out through force account. 3. Except as provided in Paragraph 4 hereof, equipment estimated to cost less than the equivalent of $200,000 per contract may be, and furniture and vehicles shall be, procured under contracts awarded on the basis of competi- tive bidding, advertised locally, in accordance with procedures satisfactory to the Association and the Bank. 4. Equipment, furniture and vehicles, estimated to cost less than the equivalent of $20,000 per contract, up to an aggregate amount not exceeding $1,000,000 equivalent respectively, may be procured under quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures satisfacto- ry to the Association and the Bank. 5. Livestock, seeds, semen and materials may be procured under quotations solicited from a list of at least three suppliers eligible under the Guidelines, in accordance with procedures satisfactory to the Associa- tion and the Bank, or under direct contracting procedures satisfactory to the Association and the Bank, provided, however, that procurement under such direct contracting procedures does not in the aggregate exceed the equiva- lent of $500,000. Part D: Review by the Association and the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to (i) each contract awarded under Part A above; (ii) each contract for civil works estimat- ed to cost the equivalent of $300,000 or more; and (iii) each contract for vehicles estimated to cost the equiva- lent 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 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 Page 7 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 subparagraph (b) shall not apply to contracts on account of which the Association and the Bank have authorized withdrawals from the Credit and Loan Account on the basis of statements of expenditure. Such contracts shall be retained in accor- dance with Section 4.01 (a) (ii) of the Development Credit 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 Tamil Nadu in carrying out Parts A.1 and E.1(e) of the Project, Tamil Nadu 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. SCHEDULE 2 Implementation Program 1. Tamil Nadu shall, by September 30, 1991, change the status of the current agriculture working group within SPC to that of a standing committee and expand the membership of such committee to include additional technical staff and representatives of farmers and agri- businesses, satisfactory to the Association and the Bank. 2. Tamil Nadu shall, through PPD, DOA, and DAH, as appropriate, develop terms of reference for the studies under clauses (a), (b), (c), and (d) of Part A.2 of the Project and the studies under Parts B.5, C.3 and E.1(f) of the Project, and by September 30, 1991, furnish such terms of reference to the Association and the Bank for review and approval. 3. Tamil Nadu shall: (a) by July 31, 1992 complete and furnish to the Association and the Bank the studies under Parts A.2(a), A.2(b), A.2(c), A.2(d) of the Project acceptable to the Association and the Bank; (b) by September 30, 1992 complete and furnish to the Association and the Bank the study under Part B.5 of the Project acceptable to the Association and the Bank; (c) by June 30, 1992 complete and furnish to the Association and the Bank the study under Part C.3 of the Project acceptable to the Association and the Bank; (d) by December 31, 1991 complete and furnish to the Association and the Bank the study under Part E.1(f) of the Project acceptable to the Association and the Bank; Page 8 4. Tamil Nadu shall, through DOA, develop a detailed training plan for agriculture extension staff with annual implementation plans and an assessment of SLT's training needs, and shall, by September 30, 1991, furnish to the Association and the Bank such plan and assessment satisfactory to the Association and the Bank. 5. Tamil Nadu shall: (a) calculate on an annual basis the production and distribution costs of seeds under methodology acceptable to the Association and the Bank; (b) by March 31, 1993, eliminate Tamil Nadu subsidies on all sales of seeds except the subsidies provided under the Borrower's national programs; (c) by March 31, 1993 eliminate DOA's pesticide trading activities except as may be required to deal with natural calamities including mass pest infestations; and (d) by March 31, 1993, eliminate DOA's direct seed trading activities except as may be required to implement the Borrower's national programs. 6. Tamil Nadu shall: (a) calculate on an annual basis the production and distribution costs of livestock semen under methodology acceptable to the Association and the Bank; and (b) by July 31, 1994, fully recover production and distribution costs of livestock semen. 7. Tamil Nadu shall ensure that incremental staff hired by DOF for the catchment areas selected under Part F.1 of the Project, shall, upon the completion of the Project, be deployed in other catchment areas in Tamil Nadu. 8. Without any limitation or restriction to the provisions of Section 2.01 (a) of this Agreement, Tamil Nadu shall carry out maintenance of the roads to be upgraded and improved under the Project in a manner satisfactory to the Association and the Bank. 9. Not later than March 31, 1992 and not later than March 31 of each subsequent year during the implementa- tion of the Project, Tamil Nadu shall formulate annual plans in respect of the works to be carried out under Parts G.1 and H.1 of the Project during the next Fiscal Year, including adoption of all necessary measures required for implementing such plans, satisfactory to the Association and the Bank. 10. Without limitation to the generality of Section 9.06 of the General Conditions of the Association, Section 9.07 of the General Conditions of the Bank and Section 2.04 of this Agreement, Tamil Nadu shall, by June 30, 1992 and by June 30 of each subsequent year during the implementation of the Project, furnish to the Association and the Bank annual reports on the progress of the Project. 11. In carrying out Part D of the Project, Tamil Nadu shall establish the following cost sharing arrangements with beneficiaries: (a) in respect of privately owned arable and non- arable lands to be treated under the Project, the individual beneficiary landholder shall contribute, depending upon the type of treatment, at least ten to Page 9 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 under the Project, the Panchayats shall contribute not less than ten percent of the cost of labor relating to such treatment; (c) in respect of non-arable State forest land, Tamil Nadu shall enter into written agreements with beneficiaries or their representatives for the purpose of sharing: (i) the responsibility for protecting the forest resources to be developed under the Project; and (ii) the benefits resulting from such development. 12. Tamil Nadu shall in consultation with the Borrower, the Association and the Bank and in accordance with terms of reference and methodology satisfactory to the Associa- tion and the Bank, undertake and complete: (a) by December 31, 1991, a base-line survey of the Project; (b) by September 30, 1994, a mid-term review of the Project; and (c) a final evaluation of the Project within three months after the Closing Date. 13. Tamil Nadu shall, through PCC and the APC, monitor and coordinate the activities of the relevant government departments and agencies under the Project for purposes of ensuring effective interaction among such departments and agencies and prompt and efficient implementation of the Project. 14. For the purpose of carrying out the Project, Tamil Nadu shall employ consultants whose qualifications, experience and terms of reference shall be satisfactory to the Association and the Bank. 15. Tamil Nadu shall, by June 30, 1991, staff DRD with adequate personnel satisfactory to the Association and the Bank.