Ceylon - Lift Irrigation Project : Credit 0121 - Credit Agreement - Conformed

CREDIT NUMBER 121 CE Development Credit Agreement (Lift Irrigation Project) BETWEEN GOVERNMENT OF CEYLON AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 19, 1968 CREDIT NUMBER 121 CE Development Credit Agreement (Lift Irrigation Project) BETWEEN GOVERNMENT OF CEYLON AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 19, 1968 AGREEMENT, dated June 19, 1968, between the Gov- ERNMENT OF CEYLON (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I Credit Regulations SECTION 1.01. The parties to this Agreement accept all the provisions of Development Credit Regulations No. 1 of the Association dated June 1, 1961 as amended Febru- ary 9, 1967 (said Development Credit Regulations No. 1 being hereinafter called the Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Unless the context otherwise requires, the term "Project Area", wherever used in the Development Credit Agreement means: The areas of the Colonisation Schemes of Vavunikulam, Mahakanadarawa, Rajangana and in the Polonnaruwa District and the proposed Youth Settlement Schemes in the Polonnaruwa District as of January 1, 1968. ARTICLE II The Credit SECTION 2.01. The Association agrees to make available to the Borrower, on the terms and conditions in the Devel- opment Credit Agreement set forth or referred to, a devel- opment credit in an amount in various currencies equiva- lent to two million dollars ($2,000,000). SECTION 2.02. The Association shall open a Credit Ac- count in the name of the Borrower and shall credit to such 0 4 Credit Account the amount of the Credit. The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Development Credit Agreement. SECTION 2.03. Except as the Borrower and the Associa- tion shall otherwise agree, the Borrower shall be entitled to withdraw from the Credit Account: (a) such amounts as shall have )een expended for the reasonable foreign currency cost of the goods re- quired to carry out the Project; (b) the equivalent of a percentage or percentages as may be established from time to time by agreement between the Borrower and the Association of such amounts as shall have been expended for the rea- sonable cost of goods required for carrying out the Project and not included in the foregoing sub-section (a); and (c) if the Association shall so agree, suei amounts as shall be required. by the Borrower to meet payments under the foregoing sub-seetion (a); provided, however, that no withdrawals shall be made on account of expenditures made prior to the date of this Agre ment. SECTION 2.04. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (% of L ' ) per anumiti on the principal amount of the Credit withdrawn and outstanding from fime to iime. SECTION 2.05. Service charges shall be payable semi- annually on January 15 and July 15 in each year. SECTION 2.06. The Borrower shall repay the principal amount of the Credit withdrawn from the Credit Account 0 5 in semi-annual installments payable on each January 15 and July 15 commencing July 15, 1978 and ending Jan uary 15, 2018, each installment to and including the installment payable on January 15, 1988 to be one-half of one per cent ( /: of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (11/,%) of such principal amount. SFCTfrox 2.07. The currency of the United Kingdom of Oreat Britain and Northern Ireland is hereby specified for purposes of Section 3.02 of the Regulations. ARTICLE III Use of the Proceeds of the Credit SECTION 3.01. The Borrower shall apply the proceeds of the Credit in accordance with the provisions of the De- velopment Credit Agreement to expenditures on the Project described in the Schedule to this Agreement. The specific allocation of the proceeds of the Credit, and the methods and procedures for procurement of the goods to be financed out of such proceeds, shall be determined by agreement between the Borrower and the Association, subject to modification by further agreement between them. SECTION 3.02. Except as the Borrower and the Associa- tion shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Credit to be uised in the territories of the Borrower exclusively in the carry- ing out of the Project. ARTICLE IV Particular Covenants SECTION 4.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with sound administrative, agricultural, engineering, and 0 6 financial practioes, and shall make available, promptly as needed, all funds, facilities, services and other resources required for the purpose. (b) The Borrower shall, in the carrying out of the Proj- ect, employ qualified and experienced staff. (c) The Borrower shall furnish or cause to be furnished to the Association, promptly upon their preparation, the reports, plans, specifications, contract documents and work schedules for the Project and any material modifications subsequently made therein, in such detail as the Association shall reasonably request. SECTION 4.02. The Borrower shall maintain or cause to be maintained records adequate to identify the goods financed out of the proceeds of the Credit, to disclose the use thereof in the Project and to record the progress of the Project (including the cost thereof) and shall enable the Association's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Credit, the Project, the goods to be financed out of the proceeds of the Credit, and the operations with respect to the Proj- ect of the Ministries of the Borrower responsible for carrying out the Project. SECTION 4.03. (a) The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower and the inter- national balance of payments position of the Borrower. 7 (b) The Borrower and the Association shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Credit and the maintenance of the service thereof. The Borrower shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the main- tenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. SECTION 4.04. The Borrower shall establish and main- tain separate accounts for the Project and shall cause such accounts relating to the Project to be audited at least once a year by an independent auditor acceptable to the Association, and, unless the Association shall otherwise agree, not later than five months after the end of the Bor- rower's fiscal year transmit to the Association certified copies of such accounts and a certified copy of such audi- tor's report. SECTION 4.05. The Borrower shall at all times provide or cause to be provided such production credit to the farmers as shall be necessary for the carrying out of the Project. SECTION 4.06. Except as the Association shall otherwise agree: (a) The Borrower shall, in allocating water available in the Project Area, give priority to the water require- ment of the Project and shall not reduce the amounts of water allocated to the Project below the amounts required therefor. 80 (b) The Irrigation Department of the Borrower shall have sole jurisdiction over the distribution of water allocated to the Project and shall operate and main- tain the irrigation facilities included in the Project. SECTION 4.07. The Borrower shall cause all works, facil- ities and equipment related to the Project to be adequately maintained and from time to time shall cause all necessary renewals and repairs thereof to be made in accordance with sound agricultural and engineering practices. SECTION 4.08. The Borrower shall impose and collect levies on water provided under the Project at rates to be agreed between the Borrower and the Association. SECTION 4.09. Except as the Borrower and the Associa- tion shall otherwise agree, the Borrower undertakes to insure the imported goods to be financed out of the pro- ceeds of the Credit against marine, transit and other haz- ards incident to acquisition, transportation and delivery thereof to the place of use or installation and for such insurance any indemnity shall be payable in a currency freely useable by the Borrower to replace or repair such goods. SECTION 4.10. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of the Borrower or laws in offect in its territories. SECTION 4.11. The Development Credit Agreement shall be free from any taxes that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, delivery or registration thereof. 0 9 ARTICLE V Remedies of the Association SECTION 5.01. (i) If any event specified in paragraph (a) or paragraph (c) of Section 5.02 of the Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (b) of Section 5.02 of the Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have boen given by the Association to the Borrower, then at any sub- sequent time during the continuance thereof, the Associa- tion, at its option, may declare the principal of the Credit then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in the Development Credit Agreement to the contrary notwithstanding. SEcTIoN 5.02. The following is specified as an additional event for the purposes of paragraph (k) of Section 5.02 of the Regulations: On June 30, 1969, the proprietors of lands included in the Project Area shall have failed to approve, pursuant to Sections 35 and 58 of the Irrigation Ordinance (Chap- ter 453) of the Borrower, the rates referred to in Section 4.08 of this Agreement, unless before that date the pro- visions of said Irrigation Ordinance relating to irrigation rates shall have been amended by appropriate legislation to provide for ihe imposition of such rates without such approval. ARTICLE VI Termination; Miscellaneous SECTIoN 6.01. The Closing Date shall be June 30, 1973, or such other date as may from time to time be agreed between the Borrower and the Association. 0 10 SECTION 6.02. If the Development Credit Agreement shall not have come in force and effect by August 20, 1968 the Development Credit Agreement and all the obligations of the parties hereunder shall terminate, unless the Asso- ciation, after consideration of the reasons for the delay, establishes a later date for the purposes of this Section. The Association shall promptly notify the Borrower of such date. SECTIoN 6.03. The following addresses are specified for the purposes of Section 7.01 of the Regulations: For the Borrower: Ministry of Planing and Economic Affairs Central Bank Building, 8th Floor Colombo 1, Ceylon Alternative address for cables: Seeminplan Colombo For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Alternative address for cables: Indevas Washington, D.C. SECTION 6.04. The Permanent Secretary of the Ministry of Planning and Economic Affairs of the Borrower is des- ignated for the purposes of Section 7.03 of the Regulations. 11 IN WITNESS WHEREOF, the parties hereto, acting through their representafives therounto duly authorized, have caused this Development Credit Agreement to be signed in their respective names and delivered in the District of Colunbia, United States of America, as of the day and year first above written. GOVERNMENT OF CEYLON By /s/ OLIVER WEERA INGIE Authorized Representative INTERNATIONAL DEVELOPMENT AssoCIATION By /s/ J. BURKE KNAPP Vice President 0 12 SCHEDULE Description of the Project The purpose of the Project is to increase the production of high value crops, primarily chillies and onions, in the Project Area. The Project includes: 1. The acquisition, installation and use of low lift pumps in the Project Area. 2. The construction of an irrigation system to serve about 6,500 acres in the Project Area. 3. Land leveling of the 6,500 acres and mechanized jun- gle clearing in the youth settlement areas at Polonnaruwa. 4. The construction of about 200 cottages in the youth settlement areas at Polonnaruwa. 5. The provision of technical services to assist in the training of extension workers assigned to the Project. The Project is expected to be completed by June 30, 1972.