India - Himachal Pradesh Apple Processing And Marketing : Credit 0456 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 456 IN Project Agreement (Himachal Pradesh Apple Processing and Marketing Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND AGRICULTURAL REFINANCE CORPORATION AND HIMACHAL PRADESH AGRO-INDUSTRIES CORPORATION PRIVATE LIMITED DATED JANUARY 22, 1974 CONFORMED COPY CREDIT NUMBER 456 IN Project Agreement (Himachal Pradesh Apple Processing and Marketing Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND AGRICULTURAL REFINANCE CORPORATION AND 'HIMACHAL PRADESH AGRO-INDUSTRIES CORPORATION PRIVATE LIMITED DATED JANUARY 22, 1974 PROJECT AGREEMENT AGREEMENT, dated January 22, 1974, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and AGRICULTURAL REFINANCE CORPORATION (hereinafter called ARC) and HIMACHAL PRADESH AGRO-INDUSTRIES CORPORATION PRIVATE LIMITED (hereinafter called AIC). 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 thirteen million dollars ($13,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition inter alia that ARC and AIC agree to undertake such obligations toward the Association as hereinafter set forth: WHEREAS by an agreement of even date herewith between the Association and the State of Himachal Pradesh acting by its Governor, the said State has agreed to undertake certain obligations in respect of the carrying out of the Project. WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and ARC, part of the proceeds of the credit provided for Under the Development Credit Agreement will be made available to ARC on the terms and conditions therein set forth; and WHEREAS ARC and AIC, ini consideration of the Association's entering into the Development Credit Agreement with the Borrower, have 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 and the term "Rs" means rupees in the currency of the Borrower. 4 ARTICLE II Execution of the Project Section 2.01. ARC shall, and AIC shall cause HPMC to, carry out Parts A, B and D of the Project described in Schedule 2 to the Development Credit 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. (a) ARC shall enter into the Subsidiary Loan Agreement with the Borrower under terms and conditions which shall have been approved by the Association, including those set forth in Schedule 3 to the Development Credit Agreement. (b) ARC and PCB shall enter into the Refinance Agreement under terms and conditions which shall have been approved by the Association, including those set forth in Schedule I hereto. (c) ARC shall duly perform all its obligations under the Subsidiary Loan Agreement and under the Refinance Agreement. Except as the Association shall otherwise agree, ARC shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving said Agreements or any provision thereof. (d) ARC shall: (i) require the Participating Commercial Banks to maintain separate accounts for Project lending; and (ii) ensure that the annual audited accounts of such Banks are submitted to the Association within four months of the end of their fiscal year together with a statement of Project lending for such Banks, certified by ARC. Section 2.03. (a) In order to assist HPMC in conducting site investigations, preparing alternative plans, designs and tender documents, evaluating bids, supervising construction and equipment installation and making test runs for the cold storage units and the juice concentrate plant included in Parts A and B of the Project, AIC shall cause HPMC to employ qualified and experienced engineering consultants acceptable to the Association upon terms and conditions satisfactory to the Association. (b) In order to assist HPMC in training the personnel and undertaking initial operations of the said juice concentrate plant, AIC shall cause HPMC to 5 employ a food technologist and a food processing microbiologist with qualifications and experience acceptable to the Association upon terms and conditions satisfactory to the Association. (c) In order to assist HPMC in the selection of sites and the preparation of plans, designs and tender documents, the evaluation of bids and the supervision of construction for the packing houses, collection stations and transshipment center included in Part A of the Project and the cableways included in Part D of the Project, AIC shall cause HPMC to request from Himachal Pradesh, and utilize, the services of engineers, architects and other specialists as shall be required for the proper execution of such works. 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 competitive bidding 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 2 to this Agreement. Section 2.05. (a) AIC shall cause HPMC 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 HPMC 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 HPMC to replace or repair such goods. (b) Except as the Association may otherwise agree, AIC shall cause all goods and services financed out of the proceeds of the Credit relent to HPMC by the Borrower to be used exclusively for the Project. Section 2.06. (a) AIC shall cause HPMC to 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) ARC shall, and AIC shall cause HPMC to: (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 the Borrower, and to disclose the use thereof in the Project; (ii) without limitation upon the provisions of Section 5.03 of this Agreement, enable the 6 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. ARTICLE III Management and Operations of ARC and HPMC Section 3.01. ARC shall, and AIC shall cause HPMC to: (a) at all times manage their affairs, maintain their financial position, plan their future expansion and carry on their operations, all in accordance with sound business and financial practi,es and under the supervision of experienced and competent management assisted by experienced and competent staff in adequate number; and (b) 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. AIC shall cause HPMC 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. ARC shall, and AIC shall cause HPMC to, maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition. Section 4.02. ARC shall, and AIC shall cause HPMC to: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (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) 7 furnish to the Association such other information concerning the accounts and financial statements of ARC and HPMC and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Consultation, Information and Inspection Section 5.01. The Association, ARC and AIC shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Association, ARC and AIC shall from time to time, at the request of any 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 ARC and HPMC and other matters relating to the purpose of the Credit. Section 5.02. The Association, ARC and AIC 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 the Borrower and ARC of their respective obligations under the Subsidiary Loan Agreement. Section 5.03. ARC shall, and AIC shall cause HPMC to, enable the Association's representatives to inspect all their records and documents relevant to the Project. ARTICLE VI Effective Date; Termination; Cancellation and Suspension Section 6.01. This Agreeii-ent 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 ARC and AIC 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. 8 (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 ARC and AIC of this event. Section 6.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any 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 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. For ARC: Managing Director Agricultural Refinance Corporation Shri Niketan F Block Shiv Sagar Estate Dr. Annie Besant Road Worli, Bombay, 18 W.B. India 9 Cable address: AGROFINANS Bombay For AIC: Managing Director Himachal Pradesh Agro-Industries Corporation (Private) Limited Summer Seat Simla India Cable address: HIMAGRO Simla 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: (i) ARC may be taken or executed by its Managing Director or such other person or persons as ARC shall designate in writing; (ii) AIC may be taken or executed by its Managing Director or such other person or persons as AIC shall designate in writing. Section 7.03. ARC and AIC 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 ARC and HPMC, take any action or execute any documents required or permitted to be taken or executed by ARC and HPMC, respectively, 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. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 10 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/ I.P.M. Cargill Regional Vice President Asia AGRICULTURAL REFINANCE CORPORATION By //s/ G. V. Ramakrishna Authorized Representative HIMACHAL PRADESH AGRO-INDUSTRIES CORPORATION PRIVATE LIMITED By /s/ G. V. Ramakrishna Aithorized Representatve 9 11 SCHEDULE I Principal terms and conditions of relending A. Refinancing Agreement from ARC to PCB (a) Term: up to 15 years for any single loan, including two to three years grace period; (b) Interest rate: 7%; (c) Security: such security as shall be prescribed by ARC. B. Relending from PCB to IPMC (a) Term: up to 15 years for any single loan, including two to three years grace period; (b) Interest rate: 9-1/2%; (c) Security: such security as shall be prescribed by PCB. C. As a condition of participating in project financing, PCB shall provide the required seasonal working capital to HPMC. 12 SCHEDULE 2 Procurement A. General For the purposes of this Schedule, the term "Procuring Entity" means Himachal Pradesh or HPMC, as the case may be, and the provisions of this Schedule shall apply to Himachal Pradesh and HPMC to the extent that Himachal Pradesh and HPMC shall procure goods and services to be financed out of the proceeds of the Credit. B. Contracts Governed by Guidelines 1. With respect to any contract for aerial cableways, machinery, equipment or material estimated to cost the equivalent of $50,000 or more: (a) If bidders are required to prequalify, the Procuring Entity shall, 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 the Procuring Entity to the Association for its comments before the applicants are notified and the Procuring Entity shall make such additions to or deletions from the said list as the Association shall reasonably request. (b) Except as the Procuring Entity and the Association shall otherwise agree, such standard conditions of contract shall be used in inviting bids as shall be agreed upon between the Procuring Entity and the Association. (c) Before bids are invited, the Procuring Entity 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, the Procuring Entity 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 13 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 the Procuring Entity and state the reasons for such determination. (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 civil works, machinery, equipment or material, the Procuring Entity 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 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 the Procuring Entity and state the reasons for such determination. 3. Identical or similar items of machinery, equipment or material shall, to the extent possible, be consolidated in a single invitation for the purposes of bidding by each participant. 4. Minor equipment items which cannot be grouped in packages of $50,000 or more shall be procured through local competitive bidding. 5. Civil works for Parts A and B of the Project shall be carried out through contracts awarded on the basis of local competitive bidding under procedures satisfactory to the Association. 6. Civil works for Part C of the Project shall be carried out by contractors or through force account. 14 C. 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 goods included in Categories II and III of the table set forth in paragraph I of Schedule I to the Development Credit Agreement, the Procuring Entity may grant a margin of preference to goods manufactured in India in accordance with, and subject to, the following provisions: (a) After evaluation, responsive bids will be classified in one of the following 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: bids offering goods manufactured in India, other than bids classified in group A. (3) Group C: bids offering any other goods. (b) All evaluated bids in each group shall be first compared among themselves, excluding aniy customs duties and other import taxes in goods to be imported and any sales or similar taxes on goods to be supplied locally, to determine the lowest evaluated bid of each group. The lowest evaluated bids 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 purposes of award. (c) If, as a result of the comparison under paragraph (b) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest bid from group A, as determined under paragraph (b) above, after adding to the c.i.f. bid price of goods to be imported offered in each group C bid, for 15 the purpose of this further comparison only, an amount equal to the smaller of (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of goods offered in such group C bid, or (ii) 15% of the c.i.f. bid price of such goods. If the group A bid in such further comparison is the lowest, it shall be selected for purposes of award; if not, the lowest bid from group C, as determined under paragraph (b) above, shall be selected for purposes of award. 3. The bidding documents shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the methods and stages that will be followed in the evaluation and comparison of bids to give effect to such preference.