India - Drought Prone Areas Project : Credit 0526 - Project Agreement - 2 - Conformed

CONFORMED COPY CREDIT NUMBER 526 IN Andhra Pradesh Project Agreement (Drought Prone Areas Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE STATE OF ANDHRA PRADESH DATED JANUARY 24, 1975 CONFORMED COPY CREDIT NUMBER 526 IN Andhra Pradesh Project Agreement (Drought Prone Areas Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE STATE OF ANDHRA PRADESH DATED JANUARY 24, 1975 PROJECT AGREEMENT AGREEMENT, dated January 24, 1975, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and THE STATE OF ANDHRA PRADESH, acting by its Governor (hereinafter called Andhra Pradesh). 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 thirty five million dollars ($35,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Andhra Pradesh agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by the Andhra Pradesh Agreement (Andhra Pradesh Agricultural Credit Project) between Andhra Pradesh and the Association dated January 8, 1971, in consideration of the Association entering into the Development Credit Agreement (Andhra Pradesh Agricultural Credit Project) of even date therewith with India, Andhra Pradesh has undertaken certain obligations with respect to the carrying out of minor irrigation works in Andhra Pradesh, and whereas such obligations shall by their terms apply to the works to be carried out in Andhra Pradesh under Part A of the Project; and WHEREAS Andhra Pradesh, 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. Andhra Pradesh shall carry out that portion of the Project described in Schedule 2 to the Development Credit Agreement located in Andhra Pradesh as such portion is further described in the Schedule to this Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and engineering practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 2.02. Andhra Pradesh undertakes to ensure that at all times prior to the Closing Date the position of Project Manager of the DDA in the district of Anantapur shall be filled by a person with qualifications and experience satisfactory to the Association. Section 2.03. (a) Andhra Pradesh shall, not later than two months before the start of each fiscal year, furnish to the AssOciation for its comments, its proposed plan of works to be executed under the DPAP in the district of Anantapur. (b) Andhra Pradesh shall not later than September 30 of each fiscal year furnish to the Association a statement containing information on programs for that fiscal year related to the DPAP and procedures to co-ordinate them. Section 2.04. In carrying out Parts A and B of the Project in the district of Anantapur, Andhra Pradesh shall: (a) conduct semi-detailed groundwater surveys in all areas of the said district in which groundwater development is to be carried out; and (b) before starting construction of the first tank in the said district, furnish to the Association for its comments the master plan for integrated tank construction and command area development in the said district. Section 2.05. In carrying out Part D of the Project, Andhra Pradesh shall: (a) prepare a detailed extension program to assist farmers in the district of Anantapur in improving dry farming; (b) promptly establish a separate group of extension staff under the supervision of the DDA to carry out the extension program referred to in paragraph (a) of this Section; and 5 (c) take all steps as shall be necessary on its part to ensure that farmers in the said district receive fertilizer in such quantities and at such times as are recommended in the said extension program. Section 2.06. In carrying out Part E of the Project: (a) Andhra Pradesh shall furnish to the Association for its comments the final draft of the model by-laws of sheep growers primary cooperative societies; and (b) If in any of the first four years of any such society's operations, that society is unable to generate revenues sufficient to pay the guaranteed amounts to its shareholders as specified in its by-laws, Andhra Pradesh shall provide, or cause to be provided, to the society funds sufficient to enable such guaranteed amounts to be paid. Section 2.07. With regard to Part F of the Project, Andhra Pradesh shall ensure that unions of dairy producer cooperatives shall be established only if such unions are financially viable and shall furnish to the Association for its comments, the final draft by-laws and projected cash flows of any such proposed union. Section 2.08. Except as the Association shall otherwise agree, the goods, works and services (other than consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions of Schedule 3 to the Development Credit Agreement. Section 2.09. (a) Andhra Pradesh undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower 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 by Andhra Pradesh to replace or repair such goods. (b) Except as the Association may otherwise agree, Andhra Pradesh shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclusively for the Project. Section 2.10. (a) Except as the Association shall otherwise agree, Andhra Pradesh shall furnish to the Association promptly upon their preparation, the plans, specifications, reports, 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. 6 (b) Andhra Pradesh: (i) shall maintain in its DPAP Unit and in its DDA in the district of Anantapur records adequate to record the progress of the Project in the said district (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit made available to it by the Borrower, and to disclose the use thereof in the Project; (ii) shall enable the Association's representatives to visit the facilities and construction sites included in the Project, and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) shall 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 made available to it and the goods and services financed out of such proceeds. (c) Andhra Pradesh shall furnish quarterly account summaries to the Borrower's Central DPAP Unit not later than two months after the close of each quarter. Section 2.11. (a) Andhra Pradesh shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project in Andhra Pradesh, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) Andhra Pradesh shall promptly inform the Association of any condition which interferes, or threatens to interfere with, the progress of the Project in Andhra Pradesh, the accomplishment of the purposes of the Credit therein, or the performance by Andhra Pradesh of its obligations under this Agreement. ARTICLE III Other Covenants Section 3.01. Andhra Pradesh shall establish and maintain: (i) an Interdepartmental Coordination Committee for the DPAP under the chairmanship of the Chief Secretary to the Government or Secretary to the Department concerned with the DPAP; and (ii) a District Development Authority in the district of Anantapur with membership, powers and organization satisfactory to the Association. Section 3.02. Andhra Pradesh shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition with respect to the Project. Section 3.03. Andhra Pradesh shall: (i) have its accounts and financial statements for the Project (balance sheets, statements of income and expenses and 7 related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by the Accountant General of Andhra Pradesh; (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 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 the accounts and financial statements of Andhra Pradesh and the audit thereof as the Association shall from time to time reasonably request. Section 3.04. In order to improve the flow of credit to. farmers in the district of Anantapur, Andhra Pradesh shall: (a) take all steps as shall be necessary on its part to promote the establishment of not less than two Farmers' Service Societies in the said district not later than December 31, 1975, or such other date as the Association shall agree; (b) appoint to the Anantapur Credit Coordination Committee: (i) the Project Manager of the DDA for the said district; and (ii) the Sub-divisional Revenue Officers for the said district; and (c) complete not later than December 31, 1975 or such other date as the Association shall agree, a survey of short-term agricultural credit in the said district, on terms of reference prepared in cooperation with the Central DPAP Unit, and shall furnish such survey to the Association upon its completion, for its comments. Section 3.05. Andhra Pradesh shall, not later than December 31, 1975, or such other date as the Association shall agree, initiate a program to update land records in the district of Anantapur. Section 3.06. Andhra Pradesh shall at all times cause the facilities, plant, equipment and machinery required for that portion of the Project located in Andhra Pradesh to be operated, maintained, renewed and repaired in accordance with appropriate engineering and management practices. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. 8 Section 4.02. (a) This Agreement and all obligations of the Association and of Andhra Pradesh 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 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 Andhra Pradesh of this event. Section 4.03. 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 V Miscellaneous Provisions Section 5.01. 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: INDEVAS Washington, D.C. 9 For Andhra Pradesh: Secretary Government of Andhra Pradesh Forest and Rural Development Department Hyderabad 500022 India Cable address: GRAMIKA Hyderabad India Section 5.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of Andhra Pradesh may be taken or executed by Secretary, Forest and Rural Development Department or such other person or persons as Andhra Pradesh shall designate in writing. Section 5.03. Andhra Pradesh shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of Andhra Pradesh, take any action or execute any documents required or permitted to be taken or executed by Andhra Pradesh pursuant to any of the provisions of this Agreement. Section 5.04. 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 representatives thereunto duly authorized, 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 / M. L. Weiner Regional Vice President South Asia THE STATE OF ANDHRA PRADESH By /s / T. N. Kaul Authorized Representative 10 SCHEDULE Description of the Portion of the Project to be Carried Out by Andhra Pradesh in the District of Anantapur 1. Under Part A of the Project: The construction of minor irrigation works including about 375 dugwells and 4 tanks with a total command area of about 570 hectares. 2. Under Part B of the Project: Command area development on the land irrigated by the tanks to be constructed under Part A. 3. Under Part C of the Project: Watershed management consisting of: (i) establishment of about 18,000 hectares of improved pasture on non-arable public lands and village common grazing lands; (ii) the construction of bunds on about 32,000 hectares of private arable lands; (iii) the establishment of about 4,000 hectares of forests on public lands, 500 hectares of village wood lots and 300 kilometers of windbreaks; and (iv) such other works as shall be agreed from time to time between Andhra Pradesh and the Association. 4. Under Part D of the Project: A dry farming development program to extend technology to about 7,500 farmers who cultivate about 30,000 hectares. 5. Under Part E of the Project: Improvement of sheep and wool productio by the establishment of sheepgrowers societies to manage about 5,000 hectares of the improved pasture on village common lands referred to in paragraph 3(i) above, distribution of crossbred rams and the expansion of animal health services. 6. Under Part F of the Project: The development of dairy production through the establishment of producer cooperatives and milk collection systems, the establishment and staffing of two mobile veterinary units and two calf raising centers and the expansion or establishment of one artificial insemination center. 7. Under Part J of the Project: The training of project staff.