India - Twelfth Railway Project : Credit 0448 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 448 IN Development Credit Agreement (Twelfth Railway Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED DECEMBER 21, 1973 CONFORMED COPY CREDIT NUMBER 448 IN Development Credit Agreement (Twelfth Railway Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED DECEMBER 21, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated December 21, 1973, between INDIA, acting by its President (hereinafter called the Borrower) and IN7RNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the International Bank for Reconstruction and Development has previously financed the foreign exchange cost of six projects forming a part of the program for rehabilitation, modernization, expansion and increase in capacity of the railways owned and operated by the Borrower, and has entered into loan agreements with the Borrower dated August 18, 1949 No. 171N: July 12, 1957 Nos. 1671N, 1681N, 1691N and 170IN; September 16, 1958 No. 2071N; July 15, 1959 No. 2331N; July 29, 1960 No. 2621IN and October 13, 1961 No. 2981N providing for such projects; (B) the Association has previously assisted in financing the foreign exchange cost of five projects forming part of the programs for rehabilitation, modernization, expansion and increase in capacity of the railways owned and operated by the Borrower, and has entered into development credit agreements with the Borrower dated March 22, 1963 No. 361N: October 26, 1964 No. 671N; June 29, 1966 No. 881N; September 24, 1969 No. 1621N and January 24, 1972 No. 280IN providing for such projects; (C) the Borrower has requested the Association to assist in financing a twelfth railway project; and (D) the Association is willing to make a development credit available for such twelfth railway project on the terms and conditions hereinafter provided; 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 following modifications thereof 4 (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) paragraph 5 of Section 2.01 is amended to read as follows: "5. The term 'Borrower' means India, acting by its President." (b) Section 5.01 is deleted; and (c) Section 6.02(h) is deleted and Section 6.02(i) becomes 6.02(h). Section 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) "Railways" means the railways owned and operated by the Borrower and includes all railway property, equipment and materials of the Borrower; (b) "Rupees" means the currency of the Borrower; and (c) "Corporate Plan" means the corporate plan referred to in Section 4.03(a) of the Development Credit Agreement dated January 24, 1972 (No. 280 IN). ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to eighty million dollars ($80,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, 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. 5 Section 2.03. Except as the Association shall otherwise agree, the goods and services (other than services of consultants) required for the Project and to be financed out of the proceeds of the Credit, 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 April 1972, as revised in October 1972, and in accordance with, and subject to, the provisions set forth in Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be September 30, 1975 or such other date as shall be agreed between the Borrower and the Association. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one -,-r cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on February I and August 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each February I and August 1 commencing February 1, 1984, and ending August 1, 2023, each installment to and including the installment payable on August 1, 1993 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 (1-1/2%) of such principal amount. Section 2.08. 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. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out the Project and conduct the operations of the Railways, with due diligence and efficiency and in conformity with sound engineering, financial and administrative practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation 6 and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.03. (a) The Borrower shall furnish to the Association, promptly upon their preparation, the plans, specifications, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain or cause to be maintained records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the oroceeds of the Credit, and to disclose the use thereof in the Project; (ii) shall enable the Association's accredited representatives to examine the Project, the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Section 4.02. (a) Except as the Association shall otherwise agree, the Borrower shall maintain passenger fares and freight rates, and shall take all other action as may be necessary or appropriate, so as to provide to the Railways net revenue sufficient to enable the Railways to meet for each fiscal year out of internally generated resources, all operating expenses and dividend payments on capital-at-charge. (b) For the purpose of this Section: (i) the term "net revenue" means the revenue accruing from the operation of the Railways excluding any net revenues or losses 7 which may result from the operation of mass rapid transit systems in the principal cities of India. Such revenues or losses from mass rapid transit systems, if included in the Railways' budget, will be separately shown therein and in the financial accounts of the Railways; (ii) the term "operating expenses" means all direct costs of operation of the Railways, including adequate maintenance expenses and adequate appropriation for the Depreciation Reserve Fund and the Pension Fund of the Railways; and (iii) the term "capital-at-charge" means the capital provided by the Borrower to the Railways and appearing in the Railways accounts as interest-bearing permanent capital. (c) The adequate appropriation for the Depreciation Reserve Fund of the Railways mentioned in subparagraph (ii) of paragraph (b) of this Section shall be not less than Rupees 1.150 million, 1.200 million and 1.250 million for the fiscal years 1973/74 to 1975/76 respectively. Section 4.03. The Borrower shall prepare and keep uo to date a Corporate Plan covering all aspects of the Railways' business which shall include, inter alia, provision for the matters specified in Schedule 4 to the Development Credit Agreement dated January 24, 1972 (No. 280 IN) and shall take into account any plans of the Borrower in other modes of transportation. ARTICLE V Consultation, Information and Inspection Section 5.0 1. 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 the performance of their respective obligations under the Development Credit Agreement, the administration, operations, financial condition, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, and other matters relating to the purposes of the Credit; and (b) 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 8 information shall include information 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 Borrower or of any such political subdivision. Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Associatioi all such information as the Association shall reasonably request concerning the administration, operations, financial condition, resources and expenditures in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof or the performance by either of thim of its obligations under the Development Credit Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to inspect all plants, installations, sites, works, buildings, property and equipment of the Railways and any relevant records and documents, and 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 execution, 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 restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association Section 7.01. If any event specified in Section 7.01 of the General Conditions shall occur and shall continue for the period, if any, therein set forth, then at 9 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 together 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. ARTICLE VIII Termination Section 8.01. The date March 21, 1974 is hereby specified for the purposes of Section 10.04 of the General Conditions. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. Any Secretary, Additional Secretary, Joint Secretary or Director/Deputy Secretary to the Government of India in the Ministry of Finance of the Borrower is designated as representative 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: 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 10 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 / G. V. Ramakrishna Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ I.P.M. Cargill Regional Vice President Asia 11 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the categories of imported items to be financed out of the proceeds of the Credit and the allocation of amounts of the Credit to each category: Amount of the Credit Allocated (Expressed in Category Dollar Equivalent) 1. Components and materials 49,500,000 required for the manufacture of electric locomotives, diesel locomotives, electric multiple units. coaches and wagons II. Equipment and materials 1,500,000 for line capacity works, electrical works, etc. Ill. Rails 2,500,000 IV. Equipment for signalling 2,000,000 and telecommunication schemes V. Equipment and materials 2,000,000 for electrification schemes VI. Plant and machinery 2,000,000 VII. Other railway equipment 4,500,000 and material; technical services approved by the Association Amount of the Credit Allocated (Expressed in Category Dollar Equivalent) ViII. Equipment for standard- 16,000,000 ization, consisting of: (a) Diesel locomotive components including rectifiers and control equipment, crank shafts, cylinder head casting, turbo-chargers, compres- sors, fuel booster pumps, pistons (b) Electric locomotive com- ponents, including air- blast circuit breakers, tap-changers, traction motor components, switch- gear, transformers, rec- tifiers, gears, pinions, brake equipment and com- pressors (c) Electric multiple unit components, mainly traction and brake equipment TOTAL 80,000,000 2. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; (b) expenditures prior to the date of this Agreement; and 13 (c) 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. 3. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph 1 above, if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association, at the request of the Borrower, to any other Category, except Category VIII, to the extent required by an increase in the estimate of the expenditures under such other Category. 4. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 14 SCHEDULE 2 Description of the Project The Project is the investment scheduled to be made by the Railways for the period from January 1, 1974 to March 31, 1975, estimated at approximately $654 million equivalent. The Project includes the acquisition of rolling stock, other railway materials and equipment and technical services, which will enable the putting into service during the Project period of about 370 locomotives, about 300 electric multiple units, construction of about 1,650 coaches to meet the steady growth of passenger traffic and about 27,000 wagons (in terms of four-wheelers), as well as the provision of track renewals and bridge works, line capacity works and signalling electrification, new lines, workshops, machinery, plant and staff and passenger amenities. The Project is expected to be completed by March 31, 1975. 15 SCHEDULE 3 Procurement 1. With respect to any contract for equipment or materials with a foreign currency component estimated to cost the equivalent of $1,000,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures 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 modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the 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 detailed report on the evaluation and comparison of the bids received, together with the reasons for the intended award except that prior approval of the Association shall not be required in respect of any contract for such items as shall have been agreed upon between the Borrower and the Association, if the award for such agreed items has been made to the lowest evaluated bidder. In the latter case, the Borrower shall furnish to the Association, promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it detennines that the intended or actual award, as the case may be, is inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (d) Two confonned copies of the contract shall be furnished to the Association promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. 2. (a) Subject to the provisions of sub-paragraph (b) below, with respect to any other contract for equipment or materials, the Borrower shall furnish to the 16 Association, promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract, two conformed copies of such contract, and upon request by the Association, the analysis of bids, recommendations for award and any other material relevent thereto. The Association shall, if it determines that the award of the contract is not consistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and state the reasons for such determination. (b) With respect to any contract for equipment or materials with a foreign currency component estimated to cost the equivalent of $50,000 or less, the Borrower shall use procurement arrangements in accordance with its usual business practices. 3. Notwithstanding the provisions included in the foregoing paragraphs of this Schedule, with respect to any contract for equipment or materials to be financed under Category VIII of the table set out in paragraph 1 of Schedule I to this Agreement, the Borrower may place contracts through negotiation provided that: (a) the terms and conditions of negotiated contracts conform to the Borrower's standard form of contract; and (b) the Association's prior approval of such standard form of contract (and any modification thereof) shall have been obtained.