Conformed Copy - C2616 - Loess Plateau Watershed Rehabilitation Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2616 CHA Project Agreement (Loess Plateau Watershed Rehabilitation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and GANSU PROVINCE, SHAANXI PROVINCE, SHANXI PROVINCE and NEI MONGOL AUTONOMOUS REGION Dated June 28, 1994 CREDIT NUMBER 2616 CHA PROJECT AGREEMENT AGREEMENT, dated June 28, 1994, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and GANSU PROVINCE (Gansu), SHAANXI PROVINCE (Shaanxi), SHANXI PROVINCE (Shanxi) and NEI MONGOL AUTONOMOUS REGION (Nei Mongol)(the Project Provinces). 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 one hundred six million three hundred thousand Special Drawing Rights (SDR 106,300,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Project Provinces agree to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS the Project Provinces, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, have agreed to undertake the obligations set forth in this Agreement; Page 2 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 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) Each of the Project Provinces 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 its respective part of the Project with due diligence and efficiency and in conformity with appropriate administrative, agricultural, engineering, environmental and financial practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required therefor. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and the Project Province concerned shall otherwise agree, each Project Province shall carry out its respective part of 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 Parts A and B(1) of 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. Each of the Project Provinces 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 its respective part of the Project. Section 2.04. (a) Each of the Project Provinces shall, at the request of the Association, exchange views with the Association with regard to the progress of its respective part of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) Each of the Project Provinces shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of its respective part of the Project, the accomplishment of the purposes of the Credit, or the performance of its respective obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) Each of the Project Provinces shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of its respective part of the Project and of its departments or agencies responsible for carrying out its respective part of the Project or any part thereof. (b) Each of the Project Provinces 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. (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, the report of Page 3 such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association 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 becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of the Project Provinces 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 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 Project Provinces 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 248423 (RCA), Washington, D.C. 82987 (FTCC), 64145 (WUI) or 197688 (TRT) For Gansu: Gao Lan Lu 76# Lanzhou 730030 Gansu People's Republic of China Telex: Page 4 22466 MWREP CN For Shaanxi: Xi Yi Lu 151# Xi'an 710004 Shaanxi People's Republic of China Cable Address: Xi'an 2556 For Shanxi: Xin Jian Lu 26# Taiyuan 030002 Shanxi People's Republic of China Cable Address: Taiyuan 8693 For Nei Mongol: Hu Lun Nan Lu 6# Hohhot 010020 Nei Mongol People's Republic of China Cable Address: Hohhot 4223 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 a Project Province may be taken or executed by the Vice-Governor of said Project Province responsible for agriculture or such other person or persons as said Vice-Governor shall designate in writing, and said Project Province 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/ Gautam S. Kaji Regional Vice President East Asia and Pacific GANSU PROVINCE SHAANXI PROVINCE SHANXI PROVINCE Page 5 NEI MONGOL AUTONOMOUS REGION By /s/ Li Daoyu Authorized Representative SCHEDULE 1 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 1992 (the Guidelines). (a) For fixed-price contracts, the invitation to bid referred to in paragraph 2.13 of the Guidelines shall provide that, when contract award is delayed beyond the original bid validity period, the successful bidder's bid price will be increased for each week of delay by two predisclosed correction factors acceptable to the Association, one to be applied to all foreign currency components and the other to the local currency component of the bid price. Such an increase shall not be taken into account in the bid evaluation. (b) In the procurement of goods in accordance with this Part A, each Project Province shall use the relevant standard bidding documents issued by the Bank, with such modifications thereto as the Association shall have agreed to be necessary for the purposes of the Project. Where no relevant standard bidding documents have been issued by the Bank, each Project Province shall use bidding documents based on other internationally recognized standard forms agreed with the Association. 2. Bidders for fertilizer 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 $250,000 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 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. Equipment and materials for training centers, seedling nurseries, and laboratories, estimated to cost the equivalent of $250,000 or less per contract, up to an aggregate amount equivalent to $2,000,000, may be procured under contracts awarded: (a) 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 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); or (b) on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. 2. Civil works for key dam structures, estimated to cost the equivalent of $250,000 or more per contract, and civil works for training centers and other facilities under Part B of the Project, regardless of the cost thereof, shall be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. Other works shall be carried out by force account or under contracts awarded after direct negotiations, in accordance with procedures acceptable to the Association. Page 6 Part D: 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 (i) each contract for goods estimated to cost the equivalent of $250,000 or more and (ii) each contract for civil works estimated to cost the equivalent of $500,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contracts 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 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 withdrawals from the Credit Account are to be made 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 the Project Provinces in carrying out Part B(1) of the Project, each Project 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. For complex, time-based assignments, each Project Province shall employ such consultants under contracts using the standard form of contract for consultants' services issued by the Bank, with such modifications as shall have been agreed by the Association. Where no relevant standard contract documents have been issued by the Bank, each Project Province shall use other standard forms agreed with the Association. SCHEDULE 2 Implementation Program Part A: Land Development and Infrastructure 1. Each Project Province shall, under arrangements satisfactory to the Association: (a) grant or cause to be granted to each household unit which participates under its respective Part of the Project, the exclusive right to use the land upon which Project activities are to be undertaken by such household for a term of not less than 30 years for land to be used for orchards, terraces and warping land, and for not less than 50 years for other land to be used under the Project; and (b) execute written contracts in relation to such land-use, keep copies of the contracts in the relevant village or town-ship registry and make the register available for inspection. 2. Each Project Province shall: Page 7 (a) cause all dams and related structures constructed under its respective part of the Project to be maintained and inspected periodically in accordance with sound engineering practice, under arrangements satisfactory to the Association; (b) ensure that the designs and construction of each dam constructed or improved under the Project exceeding 10 meters in height or 2,500,000 cubic meters in storage volume is independently reviewed under arrangements satisfactory to the Association; and (c) increase the height of any such dams only in accordance with standards and arrangements set by the Borrower and satisfactory to the Association. Part B: Environmental Management 1. (a) Each Project Province shall ensure that all activities under its respective part of the Project shall conform to environmental standards and guidelines satisfactory to the Association, including the environmental regulations and guidelines issued by the National Environmental Protection Agency and its Provincial Environmental Protection Bureau. (b) To that end, each Project Province shall implement the part of the Environmental Monitoring and Management Plan applicable to its respective part of the Project in a manner satisfactory to the Association. 2. Each Project Province shall ensure that: (a) all pesticides used under its respective part of the Project shall have been approved by the Association; and (b) the storage, handling, distribution and use of such pesticides shall be consistent with guidelines satisfactory to the Association. Part C: Financial Management Each Project Province shall ensure that: (a) charges are collected from the water users for the irrigation systems completed under its respective part of the Project at levels sufficient to cover full annual operation and maintenance costs by not later than the sixth year after their completion; (b) the rates of charges shall be revised periodically as necessary to gradually reach such level; and (c) furnish through its respective PMO, to the Association by February 28 in each year, commencing February 28, 1995, for review by the Association, a list of the proposed water charges for such irrigation schemes for the following year. Part D: Project Management 1. Each Project Province shall maintain or cause to be maintained: (a) a project leading group at each of the provincial, prefectural and county levels included in its respective part of the Project, with composition and responsibilities acceptable to the Association, to formulate Project-related policies, coordinate among relevant agencies and provide overall guidance on implementation of its respective part of the Project; (b) a project management office, with functions and responsibilities acceptable to the Association, staffed by competent staff in adequate numbers, to organize, coordinate and implement Project activities at the provincial level; and (c) technical panels with membership, functions and responsibilities acceptable to the Association to manage and coordinate its respective Institutional Development Component. 2. Each Project Province shall ensure that its respective Institutional Development Component shall be carried out in accordance with programs agreed with the Association. To that end, each Project Province shall: (a) prepare, through its respective PMO, and furnish to the CPMO, for forwarding to the Association by November 30 in each year, a proposed program of activities to be carried out under its respective Institutional Development Component during the following calendar year; and Page 8 (b) thereafter promptly carry out such program during said following calendar year, as shall have been approved by the Association. 3. Without limitation to the provisions of Section 9.06 of the General Conditions, each Project Province shall: (a) prepare, through its respective PMO, and furnish to the CPMO for forwarding to the Association, by November 30 of each year, a work plan and annual budget for implementation of its respective part of the Project during the following year; (b) prepare and furnish to the Association by March 31 and September 30 of each year during implementation of its respective part of the Project, a report on the progress made in carrying out its respective part of the Project; and (c) by September 30, 1997, carry out a mid-term review with the Association and the Borrower of the progress of and prospects for implementation of its respective part of the Project.