India - Second Power Transmission Project : Credit 0242 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 242 IN Development Credit Agreement (Second Power Transmission Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 3, 1971 CONFORMED COPY CREDIT NUMBER 242 IN Development Credit Agreement (Second Power Transmission Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 3, 1971 AGREEMENT, dated May 3, 1971, between INDIA, act- ing by its President (hereinafter cal'ed the Borrower) and INTERNATIONAL DEVELOPMENT A SOOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Associa- tion to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; and WHEREAS (B) The Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Bor- rower upon the terms and conditions hereinafter set forth; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions SECTION 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the follow- ing modifications thereof (said General Conditions Appli- cable to Development Credit Agreements of the Associa- tion, as so modified, being hereinafter called the General Conditions) : (a) Section 5.01 is deleted; (b) Section 6.02 (h) is deleted and Section 6.02 (i) be- comes 6.02 (h); (c) paragraph 5 of Section 2.01 is amended to read as follows: 4 "5. The term 'Borrower' means India, acting by its President." SEOTIoN 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) The term "State" shall mean any one of the follow- ing nine States of India: Andhra Pradesh, Bihar, Gujarat, Haryana, Maharashtra, Punjab, Rajasthan, Uttar Pradesh, West Bengal; and the term "States" shall mean (except where otherwise indicated) all of such nine States. (b) The term "Board" shall mean any one of the State Electricity Boards established pursuant to the Electricity (Supply) Act, 1948, of India, in one of the States, and the term "Boards" shall mean (except where otherwise indi- cated) all of such nine Boards. (c) The term "Agency" shall mean the Bhakra Manage- ment Board. ARTICLE II The Credit SECTIO,T 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to seventy-five million dollars ($75,000,000). Whenever this Development Credit Agree- ment comes into force and effect in respect of a part of the Credit in accordance with Sections 8.02 and 8.03 of this Agreement, the Association shall credit to the Credit Ac- count such part of the Credit. SECTION 2.02. The amount of the Credit may be with- drawn from the Credit Account in accordance with the pro- visions of Schedule 1 to this Agreement, as such Schedule 5 shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in re- spect of the reasonable cost of goods and services required for the Project and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, (a) no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories, and (b) no withdrawal shall be made with respect to contracts for the purchase of goods and services which are awarded more than eight- een months after the signing of this Agreement. SECTION 2.03. The Closing Date shall be September 30, 1975 or such other date as shall be agreed between the Borrower and the Association. SECTION 2.04. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. SECTION 2.05. Service charges shall be payable semi- annually on February 15 and August 15 in each year. SECTION 2.06. The Borrower shall repay the principal nount of the Credit in semi-annual installments payable on each February 15 and August 15 commencing August 15, 1981 and ending February 15, 2021, each installment to and including the installment payable on February 15, 1991, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one- half per cent (11/%) of such principal amount. SECTIoN 2.07. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. 6 ARTICLE III Execution of the Project SECTION 3.01. (a) The Borrower shall at all times make available, or cause to be made available, to the Boards and the Agency, promptly as needed, all sums, including the proceeds of the Credit, which shall be required for the carrying out of the Project, all such sums to be made avail- able on terms and conditions satisfactory to the Borrower and the Association. (b) The Borrower shall take or cause to be taken all action which shall be necessary on its part to enable the Boards and the Agency to carry out the Project and shall not take, or permit any agency of the Borrower to take, any action that would prevent or interfere with the prompt carrying out of the Project by the Boards and the Agency. (c) The Borrower shall exercise its rights in relation to each Board and the Agency in such manner as to protect the interests of the Borrower and the Association and in particular to cause each Board and the Agency to carry out its respective obligations under the undertakings re- ferred to in Sections 8.01 and 8.02 of this Agreement. (d) The amount of foreign exchange to be made avail- able out of the proceeds of the Credit to each one of the Boards and Agency shall be as stated in Schedule 4 to this Agreement, subject to modification by further agreement between the Borrower and the Association. SECTION 3.02. Except as the Association shall otherwise agree, the goods and services required for the Project shall be procured on the basis of international competition under procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits published by the Bank in August 1969, and in accordance with, and sub- ject to, the provisions set forth in Schedule 3 to this Agree- ment. When, with respect to any contract, the lowest evalu- ated bid is a Foreign Bid (as defined in paragraph 3(a) of 7 Schedule 3 to this Agreement), the Borrower shall imme- diately grant permission to import the goods covered by the contract, and no reviews of such permission to import shall be made by the Borrower or by any of its agencies, including the Directorate General of Technical Develop- ment. When, with respect to any contract, the lowest evalu- ated bid is a Local Bid (as defined in paragraph 3(a) of Schedule 3 to this Agreement), the Borrower shall (i) promptly upon receipt of the appropriate applications, issue, or cause to be issued, such import licenses as shall be required to carry out the Project; (ii) make available, or cause to be made available, promptly as needed, all for- eign e:,rchange which shall be required to carry out the Project; and (iii) with respect to locally produced mate- rials which are subject to allocation, make, or cause to be made, allocations of such materials promptly and in such quantities as shall be required to carry out the Project. SECTIoN 3.03. The Borrower shall cause each one of the Boards and the Agency: (i) to carry out its part of the Project under the gen- eral supervision of the Borrower with due diligence and efficiency and in conformity with sound engi- neering, financial and public utility practices; (ii) to obtain the goods to be acquired out of the pro- ceeds of the Credit free and clear of all encum- brances, and to use such goods exclusively in the carrying out of the Project; (iii) to furnish to the Association through the Borrower promptly upon their approval by the Borrower the plans, specifications, economic justification and con- struction schedule for its part of the Project and any material modifications subsequently made therein, in such detail as the Association shall from time to time request; (iv) in such cases as the Association, in consultation with the Borrower, may deem necessary, to employ 0 suitably qualified and competent consultants to assist such Board or Agency in carrying out its undertakings with respect to (a) the construction of the Project and (b) financial and accounting practices; (v) to maintain records adequate to identify the goods and services acquired out of the proceeds of the Credit, to disclose the use thereof in the Project, to record the progress of its part of the Project (in- cluding the cost thereof) and to reflect in accord- ance with consistently maintained sound public util- ity accounting practices the operations and financial condition of such Board or Agency; (vi) to allow the Association's representatives to inspect the Project, the goods financed out of the proceeds of the Credit and the sites, works and construction included in the Project, the operation thereof and any relevant records and documents; (vii) to insure with responsible insurers, or make ade- quate provision for the insurance of, all imported goods acquired out of the proceeds of the Credit; such insurance shall cover such marine, transit and other risks incident to the acquisition, transporta- tion and delivery thereof to the place of use or installation; shall be for such amounts as shall be consistent with sound business practices; and for such insurance any indemnity shall be payable in a currency freely usable by the insured party to replace or repair such goods; (viii) in addition, to insure against such risks and in such amounts as shall be consistent with sound business and public utility practices or to make other ade- quate arrangements to cover promptly any damage or losses resulting from such risks; (ix) to inform the Borrower and the Association promptly of any condition which interferes with, 9 or threatens to interfere with, the accomplishment of the purposes of the Credit or the carrying out of the Project, or which shall increase or threaten to increase materially the estimated cost of the Project; (x) to give all such information as the Borrower and the Association shall reasonably request relating to the foregoing and to the financial condition, the operation and administration of such Board or Agency; (xi) to furnish to the Association all such information as the Association shall reasonably request concern- ing the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds; (xii) to (a) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) audited, as required by the provisions of the Electricity (Supply) Act, 1948, of India; (b) furnish to the Association as soon as available, but, in any case not later than six months after the end of each such year, (i) certified copies of its financial statements for such year as so audited and (ii) the report of such audit; and (c) furnish to the Association such other information concerning the foregoing accounts and financial statements as the Association shall from time to time reasonably request; and (xiii) to perform its obligations in accordance with the undertakings provided under Section 7.03 of Loan Agreement No. 416 IN, dated June 11, 1965. ARTICLE IV Other Covenants SECTION 4.01. The Borrower agrees that, for the fiscal year ending March 31, 1970 and for each fiscal year there- 10 after, it shall produce financial data in respect of each Board, separating the information relating to rural elec- trification from information relating to that Board's other supply functions. Pro forma income statements, statements of sources and application of funds, rate bases, and details of indebtedness, would be prepared both for rural electri- fication and for the Board excluding that aspect. Such financial data for the fiscal year ending March 31, 1970 shall be submitted by November 30, 1971, and for each fiscal year thereafter by November 30 following the end of the fiscal year or other mutually agreed dates. SECTION 4.02. The Borrower agrees to consult with the State Governments and the Boards with respect to the dis- position of (a) unpaid interest on loans from State Gov- ernments to certain Boards and (b) those portions of such loans which were raised by other Boards to meet the unpaid interest on previous loans from State Governments. The Borrower shall keep the Association informed as to the results of such consultations and shall, in any event, submit a progress report not later than December 31, 1971 and thereafter at six month intervals. ARTICLE V Consultation, Information and Inspection SECTION 5.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to matters relating to the purposes of the Credit and the maintenance of the service thereof. (b) furnish to the other all such information as it shall reasonably request with regard to matters relating to the purposes of, and the general status of, the Credit. On the part of the Borrower, such information shall include infor- 0 11 mation with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Bor- rower or of any such political subdivision. SECTION 5.02. The Borrower and the Association shall promptly inform each other of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development Credit Agreement or the performance by the Boards and the Agency of its obli- gations under the undertakings referred to in Sections 8.02 and 8.03 of this Agreement. SECTION 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Associa- tion to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions SECTION 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. SECTION 6.02. The Development Credit Agreement shall be free from any taxes on or in connection with the execu- tion, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. SECTION 6.03. The payment of the principal of, and service charges on, the Credit shall be free from all restric- tions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. 12 ARTIOLE VII Remedies of the Association SECTION 7.01. If any event specified in Section 7.01 of the General Conditions or in Section 7.03 of this Agree- ment shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its -option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately to- gether with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. SECTION 7.02. For the purposes of Section 6.02 of the General Conditions, the following additional event is specified: (a) a default shall have occurred, on the part of any one or more of the Boards or the Agency, in the performance of any undertaking referred to in Sec- tion 8.02 or 8.03 of this Agreement. (b) a default shall have occurred in the performance of any obligation of the Borrower relating to any of the Boards (as defined in Section 1.02(b) of this Agreement) under Loan Agreement No. 416 IN, dated June 11, 1965, or in the performance by any one or more of these Boards of any undertaking re- ferred to in Section 7.03 of Loan Agreement No. 416 IN. SECTIoN 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional event is spec- ified: any event specified in Section 7.02 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower. 13 ARTICLE VIII Effective Date; Termination SECTION 8.01. The following event is specified as an addi- tional condition to the effectiveness of this Agreement within the meaning of Section 10.01(b) of the General Con- ditions, namely, that one of the undertakings referred to in Section 8.02 of this Agreement shall have been received and accepted by the Association. SECTION 8.02. Except as the Borrower and the Associa- tion shall otherwise agree, this Development Credit Agree- ment shall come into force and effect in respect of the part of the Credit to be made available to any one of the Boards, as specified in Schedule 4 hereof, when: (a) the condition specified in Section 10.03 of the General Conditions shall have occurred; (b) the Borrower shall have obtained from such Board and submitted to the Association an undertaking, in a form to be agreed upon between the Borrower and the Association and endorsed by the State in which such Board is established, to perform all acts re- ferred to in Section 3.03 of this Agreement; and (c) the Association dispatches to the Borrower notice of its acceptance of such undertaking. SECTION 8.03. Except as the Borrower and the Associa- tion shall otherwise agree, this Development Credit Agree- ment shall come into force and effect in respect of the part of the Credit to be made available to the Agency, as speci- fied in Schedule 4 hereof, when: (a) the condition specified in Section 10.03 of the General Conditions shall have occurred; (b) the Borrower shall have obtained from the Agency and submitted to the Association an undertaking, in a form to be agreed upon between the Borrower and 14 the Association, to perform all acts referred to in Section 3.03 of this Agreement; and (c) the Association dispatches to the Borrower notice of its acceptance of such undertaking. SECTION 8.04. (a) The date August 2, 1971, is hereby specified for the purposes of Section 10.04 of the General Conditions. (b) If this Development Credit Agreement shall have come into force and effect in accordance with Section 10.03 of the General Conditions, but if by the date specified in Section 8.04(a) of this Agreement, there shall be a portion of the Credit in respect of which this Development Credit Agreement shall not have come into force and effect, then all obligations of the parties hereunder with respect to such portion of the Credit shall terminate and such portion of the Credit shall be deemed to be cancelled pursuant to Article VI of the General Conditions, unless the Associa- tion, after consideration of the reasons for the delay, es- tablishes a later date for purposes of this paragraph. The Association shall promptly notify the Borrower of such later date. SECTION 8.05. The obligations of the Borrower under Section 4.01 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 25 years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses SECTION 9.01. Any Secretary, Special Secretary or Joint Secretary to the Government of India in the Ministry of Finance or a Director of the Department of Economic Affairs in the Ministry of Finance is designated as repre- sentative of the Borrower for the purposes of Section 9.03 of the General Conditions. SECTION 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: 15 For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Ecofairs New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ L. K. JHA Authorized Representative INTERNATIONAL DEVELOPMENT AssoCIATION By /s/ J. BURKE KNAPP Vice President 16 SCHEDULE I Withdrawal of the Proceeds of the Credit 1. The table below sets forth the categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each category and the percentage of eligible expenditures so to be financed in each category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Conductors & Groundwire 20,000,000 100o of total expenditures II. Towers 10,000,000 100o " " III. Transmission Line Insulators 2,500,000 1000 " IV. Substation Equipment, including Transformers, Switchgear, Capacitors, Control and Relay Panels, Control and Power Cables 22,500,000 100% " " V. Communication and Load Dispatch Equipment 15,000,000 100c VI. Miscellaneous Equipment 1,000,000 100o " " VII. Unallocated 4,000,000 TOTAL 75,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expendi- tures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; and (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 17 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of : (a) expenditures prior to the date of this Agreement; (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount repre- sented by the percentage set forth in the third column of the table in paragraph 1 above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no pro- ceeds of the Credit will be withdrawn on account of pay- ments for such taxes; (c) payment for the local erection of the goods referred to in paragraph 1 above except insofar as foreign currency expenditures are incurred; and (d) expenditures for freight and insurance within the territories of the Borrower. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above: (a) if the estimate of the expenditures under any Cate- gory shall decrease, the amount of the Credit then allo- cated to such Category and no longer required therefor will be reallocated by the Association by increasing cor- respondingly the unallocated amount of the Credit; and (b) if the estimate of the expenditures under any Cate- gory shall increase, the percentage set forth in the third column of the table in paragraph 1 above in respect of such expenditures shall be applied to the amount of such in- crease, and a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Cate- gory from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as deter- mined by the Association, in respect of any other expendi- tures. 18 SCHEDULE 2 Description of the Project The Project consists of the supply and construction of about 4500 circuit km -of transmission lines operating at voltages between 66 kV and 220 kV and about 110 sub- stations with an aggregate capacity of about 3500 MVA to be constructed by the Boards, and by the Agency on behalf of the Boards of Haryana, Punjab and Rajasthan. The Project is expected to be completed by March 31, 1975. 19 SCHEDULE 3 Procurement 1. With respect to any contract for machinery, equipment or materials (hereinafter referred to as goods) estimated to cost the equivalent of $50,000 or more: (a) If bidders are required to prequalify, the Borrower shall, before qualification is invited, inform the Associa- tion in detail of the basis for qualification and of the pro- cedure to be followed and shall introduce such modifica- tions as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification, shall be furnished by the Borrower to the Association for its comments before the applicants are notified and the Borrower shall make such additions or deletions from the said list as the Associa- tion shall reasonably request. (b) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invita- tions to bid and the specifications and other bidding docu- ments, together with a description of the advertising pro- cedures to be followed for the bidding, and shall make such modifications in the said documents or procedure as the Association shall reasonably request. Any further modi- fication to the bidding documents shall require the Associa- tion's concurrence before it is issued to the prospective bidders. (c) After bids have been received and evaluated, the Borrower shall, before any notification of an award is made, inform the Association of the name of the bidder to whom it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a de- tailed report on the evaluation and comparison of the bids received, together with the reasons for the intended award. The Association shall promptly inform the Borrower 20 whether it has any objection to the intended award on the ground that it would be inconsistent with the Guidelines for Procurement under World Bank Loans and IDA Credits referred to in Section 3.02 of this Agreement or with the Development Credit Agreement, and shall state the reasons for any objections it may have. (d) If the contract shall be awarded over the Associa- tion's reasonable objection, or if its terms and conditions shall, without the Association's concurrence, materially differ from those on which bids were asked, no expendi- ture thereunder shall be financed out of the proceeds of the Credit. (e) Two certified copies of the contract shall be fur- nished to the Association promptly after it execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Ae- count in respect to any such contract. 2. With respect to any other contract for goods, the Bor- rower shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract, two certified copies of such contract, a summary of bids or quotations received, the analysis thereof and the recommendations thereon, and any other related material which the Asso- ciation shall request. The Association shall promptly in- form the Borrower if it finds that the award of the contract is not consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits referred to in Section 3.02 of this Agreement or with the Development Credit Agreement and, in such event, no expenditure under such contract shall be financed out of the proceeds of the Credit. 10 21 3. For the purpose of evaluating bids for goods and asso- ciated services included in the Categories of the table set out in paragraph 1 of Schedule 1 to this Agreement, bid prices shall be determined and compared in accordance with the following rules: (a) The term "Local Bid" means a bid submitted by a manufacturer established in the territories of the Borrower for goods manufactured or processed to a substantial extent (as reasonably determined by the Association) in such ter- ritories; any other bid shall be deemed to be a "Foreign Bid ". (b) The bid price under a Local Bid shall be the sum of the following amounts: (i) the ex-factory price of such goods, and (ii) inland freight, insurance and other costs of delivery of such goods to the place of their use or installa- * tion. (c) For the purpose of comparing any Foreign Bid with any Local Bid, the bid price under a Foreign Bid shall be the sum of the following amounts: (i) the c.i.f. landed price of such goods; (ii) the amount of any taxes on the importation of such goods into the territories of the Borrower which generally apply to non-exempt importers, or 157 of the amount specified in (i) above, whichever shall be the lower; and (iii) inland freight, insurance and other costs of delivery of such goods to the place of their use or installa- tion. 22 SCHEDULE 4 Allocation of the Proceeds of the Credit to the Boards and Agency Boards Millions of US $ Andhra Pradesh 9.85 Bihar 7.40 Gujarat 0.40 Haryana 3.55 Maharashtra 6.70 Punjab 7.20 Rajasthan 3.60 Uttar Pradesh 16.40 West Bengal 9.00 64.10 Bhakra Management Board 10.90 TOTAL 75.00