India - Rajasthan Canal Command Area Development Project : Credit 0502 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 502 IN Project Agreement (Rajasthan Canal Command Area Development Project) BETWEEN THE STATE OF RAJASTHAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 31, 1974 CONFORMED COPY CREDIT NUMBER 502 IN Project Agreement (Rajasthan Canal Command Area Development Project) BETWEEN THE STATE OF RAJASTHAN AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 31, 1974 PROJECT AGREEMENT AGREEMENT, dated July 31, 1974, between THE STATE OF RAJASTHAN acting by its Governor (hereinafter called Rajasthan) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) by a development credit agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Association (hereinafter referred to as the Development Credit Agreement), the Association has agreed to make available to the Borrower an amount in various currencies equivalent to eighty-three million dollars ($83,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition inter alia that Rajasthan agrees to undertake such obligations toward the Association as hereinafter set forth; (B) By an agreement of even date herewith between the Association, and the Agricultural Refinance Corporation, Agricultural Refinance Corporation has agreed to undertake certain obligations in respect of the carrying out of the Project; and WHEREAS Rajasthan, 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. ARTICLE II Particular Covenants Section 2.01. (a) Rajasthan shall carry out the Project and shall cause RLDC to take all steps as shall be necessary on its part to carry out Part A thereof 4 with due diligence and efficiency and in conformity with sound administrative, financial, engineering and agricultural practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon the provisions of paragraph (a) of this Section, Rajasthan shall furnish to the Association, not later than February 1 in each year, a detailed Project implementation schedule for the next fiscal year, acceptable to the Association. Section 2.02. Rajasthan shall enable the Association's representatives to inspect the Project and any ielevant records and documents; and shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request, concerning the Project, the services and the operations and financial condition with respect to the Project of the agency or agencies responsible for the carrying out of the Project or any part thereof. Section 2.03. Rajasthan and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, Rajasthan and the Association 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 Project, and other matters relating to the purpose of the Credit. Section 2.04. Rajasthan 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, or the performance by either of them of its obligations under this Agreement. Section 2.05. Rajasthan shall take all action which shall be necessary on its part to enable ARC to perform its obligations under the ARC Agreement and shall not take or permit any of its agencies to take any action which would prevent or interfere with the performance of any such obligations of ARC or of Participating Banks associated therewith. Section 2.06. (a) Rajasthan shall, and shall cause RLDC 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 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. 5 (b) Except as the Association may otherwise agree, Rajasthan shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 2.07. Except as the Association shall otherwise agree, contracts for the purchase of goods, the carrying out of works or services (other than consultants' services) for the Project and to be financed out of the proceeds of the Credit shall be awarded in accordance with the provisions of Schedule 1 to this Agreement. Section 2.08. (a) Rajasthan shall maintain and repair, or cause to be maintained and repaired, all roads, canals, water supplies, facilities, equipment and materials included in the Project, in accordance with sound engineering and agricultural practices, and shall furnish promptly as needed, the funds, facilities, equipment, labor and other resources required for the purpose. (b) Rajastan shall furnish to the Association not later than February 15 in each year, estimates of the costs of operation and maintenance of the Project works referred to in paragraph (a) of this Section for the next fiscal year, in such detail as the Association shall reasonably request, for the Association's comments. Section 2.09. Except as the Association shall otherwise agree, Rajasthan shall: (a) not later than June 30, 1976, levy and collect irrigation charges from farmers in the Project Area in amounts sufficient to cover the annual cost of operating and maintaining the irrigation system in the said area; (b) establish a committee not later than December 31, 1977, and cause such committee to recommend, not later than December 31, 1978, arrangements for the recovery of Project costs to the extent practicable, over a period of not more than 50 years, which shall take into account, inter alia, the repayment capacity of, and reasonable incentives to, farmers in the Project Area; Rajasthan shall, promptly after receiving the said committee's recommendations, furnish such recommendations to the Association; Rajasthan shall, after consideration of the recommendations of the said committee, make arrangements for the recovery of such costs; and (c) adjust the charges referred to in paragraph (a) of this Section periodically to ensure that total yearly receipts from such charges equal the projected yearly operating and maintenance costs of the said irrigation system. Section 2.10. Rajasthan shall (i) maintain in CAA consolidated records adequate to record the progress of the Project (including the cost thereof) and 6 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) 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) 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. Section 2.11. Rajasthan shall designate: (i) a Circle to design and construct the afforestation works under Part C of the Project; (ii) a Circle to design and construct the roads under Part D of the Project; and (iii) a Circle to design and construct the water supply works under Part E of the Project. ARTICLE III Management and Operations of RLDC Section 3.01. Rajasthan shall cause RLDC to: (i) at all times manage its affairs, maintain its financial position, and carry on its operations, all in accordance with sound business and financial practices and under the supervision of experienced and competent management assisted by experienced and competent staff in adequate number; and (ii) take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of their business or in the carrying out of the Project. Section 3.02. Rajasthan shall cause RLDC to 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 appropriate practice. ARTICLE IV Financial Covenants Section 4.01. Rajasthan shall cause RLDC to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition. Section 4.02. Rajasthan shall cause RLDC to: (i) have an annual audit satisfactory to the Association made of its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for 7 each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent and qualified auditors; (ii) furnish to the Association as soon as available, and, except as the Association shall otherwise agree, not later than four 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 RLDC, and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. Rajasthan shall in its CAA maintain records adequate to reflect in accordance with consistently maintained sound accounting practices, the operations and financial condition of CAA. Section 4.04. Rajasthan shall: (i) have the accounts and financial statements of CAA (statements of income and related statements) 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 four 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 the Accountant General of Rajasthan, 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 CAA, as the Association shall reasonably reque A. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. If the Development Credit Agreement shall terminate pursuant to Section 12.04 of the General Conditions, the Association shall promptly notify Rajasthan of this event and, upon the giving of such notice, this Agreement and all obligations of the parties hereunder shall forthwith terminate. Section 5.02. This Agreement shall terminate and all obligations of Rajasthan and the Association hereunder shall cease and determine on the date on which the Project Agreement terminates in accordance with its terms. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any partial cancellation or suspe nsion under the Development Credit Agreement. 8 ARTICLE VI Miscellaneous Provisions Section 6.01. 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 Rajasthan: Secretary to the Government of Rajasthan Command Area Development and Water Utilization Department Jaipur, Rajasthan India Cable address: CHIEFSEC Jaipur 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. Section 6.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of Rajasthan may be taken or executed by the Secretary to the Government of Rajasthan or such other person or persons as Rajasthan shall designate in writing. 9 Section 6.03. Rajasthan 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 Rajasthan, take any action or execute any documents required or permitted to be taken or executed by Rajasthan pursuant to any of' the provisions of this Agreement. Section 6.04. 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 and delivered in the District of Columbia, United States of America, as of the day and year first above written. THE STATE OF RAJASTHAN By /s/ T. N. Kaul Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / Mervyn L. Weiner Regional Vice President South Asia 10 SCHEDULE 1 Procurement A. General Procedures 1. Contracts for equipment and vehicles estimated to cost the equivalent of $100,000 or more shall be let under procedures consistent with those set forth in 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 the Guidelines), on the basis of international competitive bidding. 2. Contracts for equipment and vehicles estimated to cost less than the equivalent of $100,000 shall be let on the basis of the ordinary procedures of Rajasthan. 3. Identical or similar goods shall be grouped together, whenever practicable, for the purpose of procurement. 4. Civil works shall be carried out either under contracts let under the procedures of Rajasthan or through force.account, provided, however, that the cost of civil works to be carried out through force account shall not exceed in the aggregate 30% of all civil works carried out under the Project. 5. Contracts for fertilizer shall be let under the following procedures: (a) the Borrower shall invite not less than three price quotations from suppliers in member countries of the Bank and Switzerland; (b) the contract shall be awarded to the bidder whose bid is the lowest evaluated bid; and (c) the Borrower shall furnish to the Association, together with any application for withdrawal of funds from the Credit Account in respect of any such contract: (i) the details of the bids sought; (ii) the names of the firms invited to submit bids; (iii) the summary of the bids submitted and, in the event the lowest bid is not accepted, the analysis thereof and the reasons for choosing the successful bidder; (iv) two conformed copies of the contract; and (v) a statement from the Borrower that fertilizer in the quantity and of the types financed out of the proceeds of the Credit shall be made available to farmers in the Project Area as set forth in Part I of the Project. 11 B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) 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 domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in India if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in India equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in India. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. The lowest evaluated bid of each group shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the 13 (e) Two conformed copies of the contract shall be furnished 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 such contract. 2. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, the Borrower 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 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 was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination.