India - Bombay Water Supply And Sewerage : Credit 0390 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 390 IN Project Agreement (Bombay Water Supply and Sewerage Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND MUNICIPAL CORPORATION OF GREATER BOMBAY DATED JUNE 8, 1973 CONFORMED COPY CREDIT NUMBER 390 IN Project Agreement (Bombay Water Supply and Sewerage Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND MUNICIPAL CORPORATION OF GREATER BOMBAY DATED JUNE 8, 1973 PROJECT AGREEMENT AGREEMENT, dated June 8, 1973, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and MUNICIPAL CORPORATION OF GREATER BOMBAY (hereinafter called BMC). WHEREAS by the Development Credit Agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to fifty-five million United States dollars ($55,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BMC agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS the Borrower has agreed to make available to Maharashtra the proceeds of the credit provided for under the Development Credit Agreement; WHEREAS by an agreement of even date herewith between Maharashtra and the Association, Maharashtra has agreed to assist BMC in the carrying out of the - Project described in Schedule 2 to the Development Credit Agreement; WHEREAS under subsidiary loan arrangements between t ie State of Maharashtra and BMC, the proceeds of the credit provided for under the Development Credit Agreement will be relent to BMC; and WHEREAS BMC, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. 4 ARTICLE II Execution of the Project Section 2.01. BMC shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with sound administrative, financial and public utility practices. Section 2.02. (a) To assist BMC in carrying out the Project, BMC shall employ competent and experienced consultants acceptable to, and upon terms and conditions satisfactory to, the Association. (b) In carrying out Parts A and B of the Project, BMC shall employ suitably qualified and experienced contractors. Section 2.03. If BMC, Maharashtra and the Borrower decide to proceed with further development programs including sewage treatment and disposal facilities, BMC shall employ consultants acceptable to and upon terms and conditions satisfactory to the Association for: (a) site and marine investigation, detailed design and preparation of bidding documents, and (b) review of the proposed methods - of treatment and disposal and of the economic and financial justification of the selected system. Section 2.04. 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 (hereinafter called Guidelines), and in accordance with, and subject to, the provisions set forth in Schedule I to this Agreement. Section 2.05. (a) BMC undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit relent to it by Maharashtra against hazards incident to the 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 usable to replace or repair such goods. (b) Except as the Association may otherwise agree, BMC shall cause all goods and services financed out of the proceeds of the Credit relent to it by Maharashtra to be used exclusively for the Project. 5 Section 2.06. (a) BMC shall furnish to the Association promptly upon their preparation, the plans, specifications, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) BMC shall: (i) maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit relent to it by Maharashtra, and to disclose the use thereof in the Project; (ii) without limitation upon the provisions of Section 5.03 of this Agreement, enable the Association's representatives to examine the Project, the goods financed out of such proceeds and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit so relent to it and the goods and services financed out of such proceeds. Section 2.07. BMC shall take all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction and operation of the facilities included in the Project. Section 2.08. BMC shall duly perform all its obligations under the Subsidiary Loan Arrangements. Except as the Association shall otherwise agree, BMC shall not take or concur in any action which would have the effect of amending, abrogating, or waiving the Subsidiary Loan Arrangements or any terms thereof. ARTICLE III Management and Operations of WSSD Section 3.01. Except as the Association shall otherwise agree, BMC shall maintain the existence of WSSD and shall employ competent and qualified staff in adequate numbers for efficient operation of WSSD. Section 3.02. BMC shall not make any material modification in the structure, organization, responsibilities and technical and financial operations of WSSD (including changes in the posts of the equivalent of deputy chief engineer level and above) without prior consultation with the Association. Section 3.03. BMC shall cause WSSD to operate its business and conduct its affairs in accordance with sound administrative, financial and public utility practices under the supervision of qualified and experienced management and shall operate, maintain, renew and repair its plants, equipment and property, including the Project, in accordance with sound engineering and public utility practices. 6 Section 3.04. BMC shall, in respect of WSSD, take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with sound public utility practices. Section 3.05. BMC shall not, without prior approval of the Association, sell, lease, transfer or dispose of any of the properties or assets of WSSD except in the ordinary course of business. Section 3.06. BMC shall take all practicable measures to ensure that the execution and operation of the Project are carried out with due regard to ecological and environmental factors. ARTICLE IV Financial Covenants Section 4.01. BMC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. (a) BMC shall: (i) have the accounts and financial statements (balance sheets, statements of income and expenses and related statements) of WSSD for each fiscal year audited, in accordance with sound auditing principles consistently applied; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of the financial statements of WSSD for such year as so audited and (B) the report of such audit, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of WSSD and the audit thereof as the Association shall from time to time reasonably request. (b) BMC shall: (i) furnish to the Association, not later than December 3 1, 1973, financial statements prepared on a commercial accounting basis, with an accompanying balance sheet as of March 31, 1973 and the auditor's report for the financial year 1972-73, in respect of its water supply and sewerage services; and (ii) transfer all balances shown in the above mentioned balance sheet to WSSD, with such balances to form the opening balances of the Water Supply and Sewerage Fund and the Consolidated Loan Fund of the WSSD at April 1, 1973. Section 4.03. (a) Except as the Association shall otherwise agree, BMC shall (i) maintain in effect for its financial year commencing April 1, 1973, the water taxes and water charges approved by its Standing Committee by Resolution 7 No. 2354 dated November 29, 1972 and by Resolution No. 198 dated April 27, 1973, respectively; and (ii) for its financial year commencing April 1, 1974 and for each year thereafter, set and maintain tariffs for water supply, sewerage and sewage disposal services to provide operating revenues which, after meeting (A) all operating expenses, provision for depreciation and interest chargeable to operations; and (B) repayments on long-term indebtedness to the extent that such repayments exceed the provision for depreciation, will provide, together with any internal funds of WSSD available for investment, including unutilized depreciation provisions, for financial years commencing April 1, 1974 and April 1, 1975 at least 33% of capital expenditures and for financial years commencing thereafter at least 40% of capital expenditures; this latter percentage to be subject to a mutually agreed revision between the Association and BMC (aa) after March 31, 1981, or (bb) if BMC is authorized by the Borrower and Maharashtra to incur capital expenditures on an additional sewage treatment and disposal investment program as referred to in Section 2.03 of this Agreement. (b) For the purposes of the above, the percentages of capital expenditures required to be covered shall be deemed to be satisfied: (i) for BMC's financial years commencing April 1, 1974 and April 1, 1975, if BMC covers at least 33% of the aggregate of its capital expenditures for such two years, and BMC covers in any one of such years, at least 25% of its capital expenditures; and (ii) for BMC's financial years commencing April 1, 1976 and thereafter, if BMC covers in any two consecutive financial years, at least 40% of the aggregate of its capital expenditures for such two years, and BMC covers in any one of such years, at least 33% of its capital expenditures. (c) For the purpose of this Section: (i) the term "operating revenues" means all revenues from the sale of water and all taxes and charges pertaining to water supply, sewerage and sewage disposal services and other incidental revenues of WSSD including net consumers' contributions; (ii) the term "operating expenses" means all costs of operation of WSSD, including adequate maintenance; and a reasonable proportion of central administrative charges of BMC; 8 (iii) the term "depreciation" means depreciation based on appropriate asset valuations and depreciation methods mutually agreed between BMC and the Association; (iv) the term "long-term indebtedness" means the amount of any loans for the account of WSSD from any source having a repayment period in excess of one year; (v) the term "capital expenditure" means any expenditure incurred in the financial year on fixed or semi-fixed assets for water supply, sewerage, sewage treatment or sewage disposal services of WSSD or which may be charged to work-in-progress for such services pending commissioning of fixed or semi-fixed assets, including expenditures on engineering services and interest chargeable to capital assets under construction; and (vi) the term "internal funds of WSSD available for investment" means net accretions from consumers' and contractors' deposits, provident and pension fund contributions of WSSD and its employees, insurance and similar reserve funds of WSSD, but excluding any loans from any source to (A) WSSD or (B) its reserve funds. Section 4.04. BMC shall make available to the Association, in such detail as the Association shall reasonably request, the annual investment programs of WSSD during the period 1974 through 1981, together with the comments of Maharashtra thereon. Section 4.05. BMC shall give an opportunity to the Association to review and comment upon any contracts to be concluded by BMC after the date of this Agreement for the purchase of existing and new supplies of bulk water. ARTICLE V Consultation, Information and Inspection Section 5.01. The Association and BMC shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association and BMC shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the administration, operations and financial condition of BMC and other matters relating to the purpose of the Credit. I 9 Section 5.02. The Association and BMC 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 performance by either of them of its obligations under this Agreement or the performance by Maharashtra and BMC of their respective obligations under the Subsidiary Loan Arrangements. Section 5.03. BMC shall enable the Association's representatives to examine all plants, sites, works, properties and equipment of WSSD and any relevant records and documents. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 6.02. (a) This Agreement and all obligations of the Association and of BMC 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) a date twenty-five years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a)(ii) of this Section, the Association shall promptly notify BMC of this event. Section 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any partial cancellation or suspension under the Development Credit Agreement. ARTICLE VII Miscellaneous Provisions Section 7.01. Any notice or request required or permitted to be given or made tinder 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, 10 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: INDEVAS Washington, D.C. For BMC: Municipal Commissioner for Greater Bombay Mahapalika Marg Fort, Bombay-i India Cable address: BOWASEP Bombay Section 7.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of BMC may be taken or executed by the Municipal Commissioner for Greater Bombay or such other person or persons as he shall designate in writing. Section 7.03. BMC shall furnish to the Association sutficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of BMC, take any action or execute any documents required or permitted to be taken or executed by BMC pursuant to any of the provisions of this Agreement. Section 7.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. 11 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 delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ 1.P.M. Cargill Regional Vice President Asia MUNICIPAL CORPORATION OF GREATER BOMBAY By /s/ E. Gonsalves Authorized Representative 12 SCHEDULE 1 Procurement A. Contracts Governed by Guidelines 1. With respect to any contract for machinery, equipment or material (other than for instrumentation or large water meters) estimated to cost the equivalent of $100,000 or more, and with respect to any contract for instrumentation or large water meters estimated to cost the equivalent of $50,000 or more: (a) If bidders are required to prequalify, BMC shall (which, for the purposes of this Schedule, includes any canalizing agency appointed by the Borrower), before qualification is invited, inform the Association in detail of the procedure to be followed and shall introduce such modifications in said procedure 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 BMC to the Association for its comments before the applicants are notified and BMC shall make such additions to or deletions from the said list as the Association shall reasonably request. (b) Except if BMC and the Association shall otherwise agree, such standard conditions of contract shall be used in inviting bids as shall be agreed upon between BMC and the Association. (c) Before bids are invited, BMC 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 procedures 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. (d) After bids have been received and evaluated, BMC 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. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.04 of this Agreement, promptly inform BMC and state the reasons for such determination. 13 (e) The terms and conditions of the contract shall not, without the Association's prior concurrence, materially differ from those on which bids were asked. (f) Two conformed 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. With respect to any other contract for machinery, equipment or material, or any contract for vehicles, BMC 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 fim 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 determines that the award of the contract is not consistent with the procedures set forth or referred to in Section 2.04 of this Agreement, promptly inform BMC and state the reasons for such determination. 3. Identical or similar items of machinery, vehicles, equipment or material shall, to the extent possible, be consolidated in a single invitation for the purposes of bidding by each participant. 4. BMC may procure equipment, vehicles and materials required under Category II of Table I of Schedule 1 to the Development Credit Agreement without the process of international competitive bidding, provided that the terms and conditions of the purchases so made shall be satisfactory to the Association. B. Supplemental Rules on Bid Evaluation and Comparison 1. For the purpose of evaluation and comparison of bids, customs duties and other import taxes on imported goods, and sales and similar taxes on locally produced goods, shall be excluded, except to the extent hereinafter provided, and bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for locally produced goods. The cost to the Borrower of inland freight, insurance and other expenditures incidental to the delivery of goods to the place of their use or installation shall be taken into account in the evaluation of bids in accordance with paragraph 4.7 of the Guidelines. 2. For the purpose of evaluating bids for goods and associated services included in Categories I and III of the table set out in paragraph 1 of Schedule I to the 14 Development Credit Agreement, bid prices shall be determined and compared in accordance with the following rules: (a) The term "Domestic 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 territories; any other bid shall be deemed to be a "Foreign Bid"; (b) The bid price under a Domestic 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 installation. (c) For the purpose of comparing any Foreign Bid with any Domestic Bid the bid price under a Foreign Bid shall be the sum of the following amounts: (i) the c.i.f. price of such goods; (ii) an amount (hereinafter called "Domestic Preference Margin") equal to the smaller of (A) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the goods offered in the bid, or (B) 15% of the c.i.f. bid price of such goods; and (iii) handling costs, inland freight, insurance and other cosf; of delivery of such goods to the place of their use or installa,ion. 3. The bidding documents shall clearly indicate any preference which will be granted to Domestic Bids, the information required to establish the eligibility of a bid for such pre' ence and the methods that will be followed in the evaluation and comparison oi oids to give effect to such preference.