Conformed Copy - C2763 - Bombay Sewage Disposal Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2763 IN LOAN NUMBER 3923 IN Project Agreement (Bombay Sewage Disposal Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and MUNICIPAL CORPORATION OF GREATER BOMBAY Dated December 28, 1995 CREDIT NUMBER 2763 IN LOAN NUMBER 3923 IN PROJECT AGREEMENT AGREEMENT, dated December 28, 1995, among INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank), and MUNICIPAL CORPORATION OF GREATER BOMBAY (the Corporation). 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 fifteen million nine hundred thousand Special Drawing Rights (SDR 15,900,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Corporation 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 one hundred sixty-seven million dollars Page 2 ($167,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Corporation 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 the State of Maharashtra (Maharashtra) in accordance with the Borrower's standard arrangements for developmental assistance to the States of India; (D) by a subsidiary loan agreement to be entered into between Maharashtra and the Corporation, the proceeds of the Credit provided for under the Development Credit Agreement and the proceeds of the Loan provided for under the Loan Agreement will be made available to the Corporation on the terms and conditions set forth in said Subsidiary Loan Agreement; and WHEREAS the Corporation, 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) The Corporation 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 with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and water supply and sewerage public utility 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, the Bank, Maharashtra and the Corporation shall otherwise agree, the Corporation 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 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 Schedule 1 to this Agreement. Section 2.03. The Corporation shall carry out or cause to be carried 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, Page 3 maintenance and land acquisition, respectively) in respect of the Project Agreement. Section 2.04. The Corporation shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association and the Bank shall otherwise agree, the Corporation 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 2.05. (a) The Corporation 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) The Corporation 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 the Corporation of its obligations under this Agreement and under the Subsidiary Loan Agreement. ARTICLE III Management and Operations of the Corporation Section 3.01. The Corporation shall cause WSSD to carry on its operations and conduct its affairs in accordance with sound administrative, financial and water supply and sewerage public utility practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. The Corporation shall cause WSSD 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. The Corporation shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association and the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Financial Covenants Section 4.01. (a) The Corporation shall cause WSSD to maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) The Corporation shall cause WSSD to: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) 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 six months after the end of each such year: (A) certified copies of its financial statements for such year as so audited, and (B) the report Page 4 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 statements as well as the audit thereof, as the Association and the Bank shall from time to time reasonably request. Section 4.02. Except as the Association and the Bank shall otherwise agree: (a) The Corporation shall, from time to time take, or cause to be taken, all such measures (including, without limitation, adjustments of the structure or levels of its water supply and sewerage tariffs or other charges) as shall be required to produce, for each of its financial years, on funds from internal sources equivalent to not less than 35% of the annual average of the Corporation's capital expenditures relating to WSSD incurred, or expected to be incurred, during that year and the next following financial year. (b) Before December 31 in each of its financial years, the Corporation shall, on the basis of forecasts prepared by the Corporation and satisfactory to the Association and the Bank, review the adequacy of its water supply and sewerage tariffs to meet the requirement set forth in the preceding paragraph (a) in respect of such year and the next following financial year and shall furnish to the Association and the Bank a copy of such review upon its completion. (c) For the purposes of this Section: (i) The term "funds from internal sources" means the difference between: (1) The sum of gross revenues from all sources related to water supply and sewerage operations and cash consumer contributions in aid of construction, net non-operating income and any reduction in non-cash working capital; and (2) The sum of all expenses of water supply and sewerage operations, including maintenance and administration (excluding depreciation and other non-cash operating charges), interest and other charges on debt (excluding interest financed under a loan contract), repayment of loans (including sinking fund payments, if any) all taxes or payments in lieu of taxes, all cash dividends and other cash distributions of surplus, increase in net working capital other than cash, and any other cash outflows other than cash expenditures related to water supply and sewerage operations. (ii) The term "capital expenditures" means all expenditures incurred on account of fixed or capital assets, including interest charged to construction, related to water supply and sewerage operations. Section 4.03. The Corporation shall ensure that WSSD shall maintain a separate account adequate to cover the planned costs of its asset replacement, including rehabilitation of its assets. Page 5 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 and the Loan Agreement become effective. Section 5.02. (a) This Agreement and all obligations of the Association and the Bank and of the Corporation thereunder shall terminate on the earlier of the 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 25 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 the Corporation 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 applicable to the Development Credit Agreement or the Loan Agreement. 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: 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: Page 6 INTBAFRAD 197688 (TRT), Washington, D.C. 248423 (RCA), 64145 (WUI) or 82987 (FTCC) For the Corporation: Municipal Corporation of Greater Bombay Mahapalika Marg Bombay 400001, India Telex: 953-85973 WSSD-IN 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 the Corporation may be taken or executed by the Municipal Commissioner or such other person or persons as the Corporation shall designate in writing, and the Corporation shall furnish to the Association and the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. As long as the Bank has not given notice to the contrary to the Corporation 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 Corporation 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 Corporation 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 6.04. 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/ Heinz Vergin Acting Regional Vice President South Asia MUNICIPAL CORPORATION OF GREATER BOMBAY Page 7 By /s/ N. Valluri Authorized Representative SCHEDULE 1 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: General Goods and works shall be procured in accordance with the provisions of Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 (the Guidelines) and the following provisions of this Section I, as applicable. Part B: International Competitive Bidding 1. Except as otherwise provided in Part C of this Section, goods and works shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix 1 thereto. 2. The following provisions shall apply to goods and works to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B. (a) Prequalification Bidders for the works included in Part A (i) through (iii) of the Project shall be prequalified in accordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines. (b) Preference for Domestically Manufactured Goods and Domestic Contractors The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto shall apply to goods manufactured in the territory of the Borrower and works to be carried out by domestic contractors. (c) Dispute Review Board Each contract for works estimated to cost $50,000,000 equivalent or more shall include the provisions for a dispute review board set forth in the standard bidding documents for works referred to in paragraph 2.12 of the Guidelines. Part C: National Competitive Bidding Contracts for works listed in Part A (v) through (viii) of the Project may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. Part D: Review by the Bank of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitations to prequalify for bidding or to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approved by the Bank, and with the provisions of said paragraph 1. Page 8 2. Prior Review With respect to each contract estimated to cost the equivalent of $1,000,000 or more, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II. Employment of Consultants 1. Consultants' services shall be procured under contracts awarded in accordance with the provisions 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 (the Consultant Guidelines). For complex, time-based assignments, such contracts shall be based on the standard form of contract for consultants' services issued by the Bank, with such modifications thereto as shall have been agreed by the Bank. Where no relevant standard contract documents have been issued by the Bank, other standard forms acceptable to the Bank shall be used. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Bank review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts, shall not apply to (a) contracts for the employment of consulting firms estimated to cost less than $100,000 equivalent each or (b) contracts for the employment of individual consultants estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Bank review shall not apply to (a) the terms of reference for such contracts, (b) single-source selection of consulting firms, (c) assignments of a critical nature, as reasonably determined by the Bank, (d) amendments to contracts for the employment of consulting firms raising the contract value to $100,000 equivalent or above, or (e) amendments to contracts for the employment of individual consultants raising the contract value to $50,000 equivalent or above. SCHEDULE 2 Implementation Program 1. The Corporation shall implement the remedial works to be carried out under Part A (vii) of the Project in accordance with the Remedial Works Program dated May 2, 1995 agreed upon among the Association, the Bank and the Corporation. 2. The Corporation shall implement the Environmental Monitoring and Mitigation Plan dated June 2, 1995, agreed upon among the Association, the Bank and the Corporation. 3. For the purpose of carrying out of the Project, the Corporation shall by August 31, 1995, establish and thereafter maintain a Project Management Unit in WSSD with an organization and staffing satisfactory to the Association and the Bank. 4. (a) In carrying out the slum sanitation schemes under Part A (vi) of the Project, the Corporation shall apply, or cause to be applied in a manner satisfactory to the Association and the Bank, the Policy Guidelines for Implementation of Slum Sanitation Schemes dated June 1995, agreed upon among the Association, the Bank and the Corporation. (b) With respect to each slum sanitation scheme, the Corporation shall furnish to the Association and the Bank, a certification that the Policy Guidelines referred to in sub- Page 9 paragraph (a) above have been complied with in respect of such scheme.