Conformed Copy - C2862 - Coal Sector Environmental and Social Mitigation Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2862 IN Project Agreement (Coal Sector Environmental and Social Mitigation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and COAL INDIA LTD. Dated June 5, 1996 CREDIT NUMBER 2862 IN PROJECT AGREEMENT AGREEMENT, dated June 5, 1996, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and COAL INDIA LTD. (Coal India). WHEREAS by the Development Credit Agreement of even date herewith between INDIA (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to forty three million three hundred thousand Special Drawing Rights (SDR 43,300,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Coal India agree to undertake such obligations toward the Association as are set forth in this Agreement; WHEREAS Coal India, 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 and Page 2 in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) Coal India 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 environmental practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Coal India shall carry out the Environmental Action Plans, Rehabilitation Action Plans and Indigenous Peoples' Development Plans for each Project Mine, in accordance with the provisions of such Plans, and to that end shall promptly inform the Borrower and the Association of any material deviations in respect of the implementation thereof. (c) Without limitation upon the provisions of paragraphs (a) and (b) of this Section and except as the Association and Coal India shall otherwise agree, Coal India 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. (a) Coal India 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. (b) For the purposes of Section 9.07 of the General Conditions and without limitation thereto, Coal India shall: (i) prepare, on the basis of guidelines acceptable to the Association, and furnish to the Association not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, a plan designed to ensure the sustain- ability of the Project; and (ii) afford the Association a reasonable opportunity to exchange views on said plan. Section 2.04. (a) Coal India 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) Coal India shall promptly inform the Association Page 3 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 Coal India of its obligations under this Agreement. ARTICLE III Management and Operations of Coal India Section 3.01. Coal India shall carry on its operations and conduct its affairs in accordance with sound administrative, financial and environmental practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. Coal India shall at all times 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 environ- mental practices. Section 3.03. Coal India shall 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) Coal India shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition, and the operations with respect to the Project of each subsidiary company which assists in carrying out the Project and each Project Mine. (b) Coal India shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) 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 nine 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 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 Association such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Association shall from time to time reasonably request. ARTICLE V Effective Date; Termination; Cancellation and Suspension Page 4 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 Coal India 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 para- graph (a) (ii) of this Section, the Association shall promptly notify Coal India 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: 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 Coal India: Coal India Ltd. Coal Bhawan 10 Netaji Subhas Road Calcutta 700001 Cable address: Telex: COAL INDIA 021 7180 (CIL-IN) Calcutta, India 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 Coal India, may be taken or executed by the Chairman and Managing Director or such other person or persons as the Chairman and Managing Director shall designate in writing, and Coal India shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature Page 5 of each such person. Section 6.03. 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/ Heinz Vergin Acting Regional Vice President South Asia COAL INDIA LTD. 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 and revised in January 1996 (the Guidelines) and the following provisions of this Section, 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 to be procured under contracts awarded in accordance with the provisions of paragraph 1 of this Part B. (a) Preference for domestically manufactured goods 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. (b) The invitation to bid for each contract estimated to cost $10,000,000 equivalent or more shall be advertised in accordance with procedures applicable to large contracts under paragraph 2.8 of the Guidelines. Part C: Other Procurement Procedures 1. National Competitive Bidding Goods estimated to cost less than $200,000 equivalent per contract, up to an aggregate amount not to exceed Page 6 $4,000,000 equivalent and all civil works estimated to cost less than $3,500,000 equivalent per contract, up to an aggregate amount not to exceed $45,000,000 may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. 2. National Shopping Goods estimated to cost less than $15,000 equivalent per contract, up to an aggregate amount not to exceed $2,000,000 equivalent, may be procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 3. Procurement of Small Works Works estimated to cost less than $15,000 equivalent per contract, up to an aggregate amount not to exceed $2,000,000 equivalent, may be procured under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from three (3) qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description of the works, including basic specifications, the required completion date, a basic form of agreement acceptable to the Association, and relevant drawings, where applicable. The award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to complete the contract successfully. 4. Community Participation Goods and works required for Parts B and C of the Project set forth in Schedule 2 to the Development Credit Agreement may be procured in accordance with procedures acceptable to the Association. Part D: Review by the Association 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 Association 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 Association, and with the provisions of said paragraph 1. 2. Prior Review With respect to (i) each contract for goods estimated to cost the equivalent of $200,000 or more, (ii) each contract for civil works estimated to cost the equivalent of $500,000 or more, and (iii) the first ten contracts for civil works each estimated to cost the equivalent of $200,000 or more but less than $500,000, 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 Page 7 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 as shall have been agreed by the Association. Where no relevant standard contract documents have been issued by the Bank, other standard forms acceptable to the Association shall be used. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Association 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 individuals estimated to cost less than $50,000 equivalent each. However, said exceptions to prior Association 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 Association, (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. Coal India shall: (a) maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to the Association, the carrying out of the Project and the achievement of the objectives thereof; (b) prepare, under terms of reference satisfactory to the Association, and furnish to the Association, by September 30, 1998, a report integrating the results of the monitoring and evaluation activities performed pursuant to sub-paragraph (a) above, on the progress achieved in the carrying out of the Project during the period preceding the date of said report and setting out the measures recommended to ensure the efficient carrying out of the Project and the achievement of the objectives thereof during the period following such date; and (c) review with the Association, by December 31, 1998, or such later date as the Association shall request, the report referred to in sub-paragraph (b) above, and, thereafter, take all measures required to ensure the efficient completion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Association's views on the matter. 2. Coal India shall: (a) establish a team of experts, whose terms of reference and qualifications and experience shall be satisfactory to the Association, to review its mine emergency plans for each Project Mine; (b) submit such mine emergency plans to such team by December 31, 1996; and (c) modify any mine emergency plan, if necessary, in line with recommendations made by the team. 3. Coal India shall: (a) carry out, or cause to be carried out, safety engineering studies for reclamation of overburden dumps at each Project Mine; (b) by August 15, 1996 appoint a panel of experts, whose terms of reference and qualifications and experience shall be satisfactory to the Association, to review and approve the recommendations of such studies with respect to each Project Mine; and (c) implement the recommendations, as approved by the panel, in a timely manner. 4. Coal India shall by October 31, 1996, appoint a panel of social and environmental experts, whose terms of reference qualifications and experience shall be satisfactory to the Association, to monitor the compliance with the Plans referred to in Section 2.01 (b) of the Project Agreement. Page 8 5. Coal India shall employ, or cause to be employed, by August 31, 1996, a team of experienced consultants, whose terms of reference, qualifications and experience shall be satisfactory to the Association, to assist in the periodic reviews and assessment of the implementation of the Environmental Action Plans, the Resettlement Action Plans and the Indigenous Peoples' Develop- ment Plans. 6. Coal India shall by December 31, 1996: (a) post at each Project Mine a full-time resettlement and rehabilitation officer, whose terms of references and qualifications and experience shall be satisfactory to the Association, to assist in the implementa- tion of the Indigenous Peoples' Development Plans and Resettlement Actions Plans for the Project Mines; and (b) provide appropriate training satisfactory to the Association in participatory community development to such officers. 7. Coal India shall submit by June 30, 1997, an action program, satisfactory to the Association, that will raise the incomes of those persons identified by the study undertaken under Part C of the Project above the poverty line established by the Borrower, and, thereafter, implement such program in accordance with the provisions thereof. 8. Coal India shall by June 30, 1997, review with the Association, and thereafter implement over an eighteen month period a program, satisfactory to the Association, to strengthen its environmental management capacity. 9. Coal India shall invite by September 30, 1996, proposals from certified NGOs or specialized local organizations, and by December 31, 1996, appoint NGOs or specialized local organizations for assisting Coal India in the implementation of Resettlement Action Plans and the Indigenous Peoples' Development Plans. 10. Coal India shall, by December 31, 1997, furnish to the Association for comment a report containing the lessons learned from the implementation of the Rehabilitation Action Plans and the Indigenous Peoples' Development Plans at each Project Mine. 11. Coal India shall throughout the implementation of the Project seek the approval from appropriate authorities to extend environmental clearance for each Project Mine prior to the expiry of the period for which such approval is granted so as to enable it to continue with its mining operations. Toward that end, Coal India shall take all such actions as may be required or necessary in order to obtain such approval and furnish to the Association copies of such approval. 12. Coal India shall, during the implementation of the Project, provide to the Association quarterly reports on the progress of the Project within 60 days after the end of each quarter beginning with the quarter ending September 30, 1996.