India - Uttar Pradesh Water Supply And Sewerate Project : Credit 0585 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 585 IN Development Credit Agreement (Uttar Pradesh Water Supply and Sewerage Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED SEPTEMBER 25, 1975 CONFORMED COPY CREDIT NUIBER 585 IN Development Credit Agreement (Uttar Pradesh Water Supply and Sewerage Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED SEPTEMBER 25, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated September 25, 1975, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) By an agreement of even date herewith between The State of Uttar Pradesh acting by its Governor (hereinafter called Uttar Pradesh), and the Association, Uttar Pradesh has agreed to undertake certain obligations in respect of the Project (the said agreement being hereinafter called the Uttar Pradesh Agreement); (C) By an agreement of even date herewith between the Association and the Uttar Pradesh Rajya Jal Sambharan Tatha Sewer Vyawastha Nigam (hereinafter called the Jal Nigam), the Jal Nigam has agreed to carry out the Project and to undertake certain other obligations in respect of the Project (the said agreement being hereinafter called the Project Agreement); (D) The Jal Nigam intends to contract from the Life Insurance Corporation of India (hereinafter called LIC) a loan of Rsl80,000,000 (hereinafter called the LIC Loan) to assist in the financing of the Project on terms and conditions set forth or referred to in an agreement (hereinafter called the LIC-Jal Nigam Loan Agreement), including those set forth in Schedule 2 to the Project Agreement, to be entered into between LIC and the Jal Nigam; (E) By an agreement of even date herewith between the Association and LIC, the parties thereto have agreed to coordinate the withdrawals and use of proceeds of such financing (the said agreement being hereinafter called the LIC Agreement); and (F) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter, in the Uttar Pradesh Agreement and in the Project Agreement, NOW TIIEREFORE the parties hereto hereby agree as follows: 4 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 March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions), namely, that in Section 2.01, the following paragraph is substituted to paragraph 5: "5. The term "Borrower" means India, acting by its President". Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Uttar Pradesh" means the State of Uttar Pradesh, a State of India, or any successor thereof. (b) "Uttar Pradesh Agreement" means the agreement of even date herewith between the Association and Uttar Pradesh, as the same may be amended from time to time and such term includes all agreements supplemental to the Uttar Pradesh Agreement. (c) "Project Agreement" means the agreement between the Association and the Jal Nigam of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement. (d) "LIC Agreement" means the Agreement of even date herewith between the Association and LIC, as the same may be amended from time to time. (e) "Ordinance" means the Uttar Pradesh Water Supply and Sewerage (Second) Ordinance, Ordinance No. 10 of 1975, dated May 20, 1975 promulgated by the Governor of Uttar Pradesh. (f) "Act" means the proposed legislation incorporating the provisions substantially in accordance with those set forth in the Ordinance. 5 (g) "Sub-project" means a water supply project, a sewerage project or a water supply and sewerage project carried out or proposed to be carried out under the Project. (h1) "Jul Saunsthan" means a local authority established under Section 18(1) or 19(1) of the Ordinance for the improvement of water supply and sewerage services in any specified area of Uttar Pradesh. (i) "KAVAL" means the towns of Kanpur, Agra, Varanasi, Allahabad and Lucknow, in Uttar Pradesh. (j) "KAVAL Jal Sansthan" means a Jal Sansthan for a KAVAL town and areas contiguous thereto. (k) "local body" has the meaning assigned to it in Section 2(12) of the Ordinance. (1) "Rs" means rupees in the currency of the Borrower. 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 forty million dollars ($40,000,000). Section 2.02. (a) Subject to the provisions of paragraphs (b) and (c) of this Section, the amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may 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 and to be financed out of the proceeds of the Credit. (b) Subject to the provisions of paragraph (c) of this Section, no withdrawals from the Credit Account shall be made in respect of expenditures for a Sub-project unless: i) Uttar Pradesh shall have established a Jal Sansthan with jurisdiction over the area in which such Sub-project is located in accordance with the provisions of the Ordinance; and 6 (ii) the Jal Nigan shall have furnished to LIC and the Association: (A) the agreement referred to in paragraph (i) of Section 2.08 of the Project Agreement: and (B) the technical report referred to in paragraph (ii) of the said Section, for such Sub-project. (c) Notwithstanding the provisions of paragraph (b) of this Section, withdrawals may be made from the Credit Account in respect of foreign expenditures under Category (1) of the table set out in paragraph I of Schedule 1 to this Agreement until June 30, 1976, or such other date as the Borrower and the Association shall agree, in an aggregate amount not exceeding the equivalent of $2,000,000 for Sub-projects in respect of which the provisions of sub-paragraphs (i) or (ii) of paragraph (b) of this Section have not been complied with at the date of such withdrawal, provided that no withdrawal shall be made under this paragraph unless the Jal Nigam shall have furnished to the Association a list of the equipment and materials in respect of which such withdrawal is requested, acceptable to the Association. (d) The Borrower shall, not later than September 30, 1976, or such other date as may be agreed upon between the Borrower and the Association, provide evidence satisfactory to the Association that the equipment and materials referred to in paragraph (c) above are being used for Sub-projects in respect of which the provisions of sub-paragraphs (i) and (ii) of paragraph (b) of this Section have been fully complied with. Section 2.03. Except as the Association shall otherwise agree, the goods, works or 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 set forth or referred to in Section 2.03 of the Project Agreement. Section 2.04. The Closing Date shall be June 30,. 1980 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per 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 March 1 and September I in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March I and September 1 commencing 7 September 1, 1985 and ending March 1, 2025, each installment to and including the installment payable on March 1, 1995 to be one-half of one per cent (1/2 of I') of Sich principal amouinUt, and each installment thereafter to he one and one-half per cet (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. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause Uttar Pradesh and the Jal Nigam to perform in accordance with the provisions of the Uttar Pradesh Agreement and the Project Agreement, respectively, all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable Uttar Pradesh and the Jal Nigam to perform such obligations and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the proceeds of the Credit available to Uttar Pradesh in accordance with the Borrower's standard arrangements for development projects. Section 3.02. When, with respect to any goods to be procured under Section 2.03 of' the Project Agreement, the lowest evaluated bid falls under Group C (as defined in paragraph B(2)(b) of Schedule I to the Project Agreement), the Borrower shall immediately grant permission to import the goods covered by the contract, and no reviews of such permission to import shall be made by the Borrower or by any of' its agencies. and all foreign exchange required therefor shall be promptly made available. When, with respect to any contract, the lowest evaluated bid falls inder Group A or under Group B (as defined in paragraph B(2)(b) of Schedule I to the Project Agreement), the Borrower shall (i) promptly upon receipt of the appropriate applications, issue, or cause to be issued, such import licenses as shall be required to implement the contract, (ii) make available, or cause to be made available, promptly as needed, all foreign exchange which shall be required therefor; and (iii) with respect to locally produced materials which are subject to allocation, make, or cause to be made, allocations of' such materials promptly and in such (Lantities as shall be required f'or such contract. 8 ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) a default shall have occurred in the performance of any obligation of Uttar Pradesh under the Uttar Pradesh Agreement; (b) a default shall have occurred in the performance of any obligation of the Jal Nigam under the Project Agreement; (c) a default shall have occurred in the performance of any obligation of LIC under the LIC Agreement; (d) Uttar Pradesh shall have taken any action for the dissolution or disestablishment of the Jal Nigam; (e) the Ordinance or the Act shall have been amended in such a way as to materially and adversely affect the ability of the Jal Nigam to carry out its obligations under the Project Agreement, or the ability of the Jal Sansthans to carry out their operations. (f) An extraordinary situation shall have arisen which shall make it improbable that the Jal Nigam will be able to perform its obligations under the Project Agreement. (g)(i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Jal Nigam to withdraw the proceeds of the LIC Loan shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the LIC-Jal Nigam Loan Agreement, or (B) the LIC Loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Jal Nigam establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Jal Nigam to perform any 9 of its obligations under such agreement, and (B) adequate funds for the Project aie available to the Jal Nigam from other sources on terms and conditions consistent with the obligations of the Jal Nigam under the LIC-Jal Nigam Loan Agreement. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraphs (a), (b) or (c) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraphs (d), (e) or (g)(i)(B) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01(b) of the General Conditions: (a) the execution and delivery of the Uttar Pradesh Agreement on behalf of Uttar Pradesh have been duly authorized or ratified by all necessary governmental action; (b) the execution and delivery of the Project Agreement on behalf of the Jal Nigam have been duly authorized or ratified by all necessary corporate and governmental action; (c) che execution and delivery of the LIC Agreement on behalf of LIC have been duly authorized or ratified by all necessary corporate and governmental action; (d) the Act has been assented to by the Governor of Uttar Pradesh, or by any other authority having jurisdiction, and has been published in the Official Gaziet te; (e) Uttar Pradesh has made available to the Jal Nigam working capital in an amount of not less than Rsl6,000,000; 10 ( ) Jitfar I'Iudesil1 has ordered the coinstitiihon of thIindclkhand Jli S isItIIaII wit II jIrisdicIiI over the entire areas of tIistiricts Ikiu, I lImiipIIr, .JulIIn, Jhunsi and Ialitpur with effect froil not later than January 1, 197(, and has publishied a notification to this effect in the Uttar Pradesi official gazette, and (g) the execution and delivery of the LIC-Jal Nigam Loan Agreement on behalf of LIC and the Jal Nigam, respectively, have been duly authorized or ratified by all necessary corporate and governmental action and conditions precedent to initial disbursements, if any, have been fulfilled. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Uttar Pradesh Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Uttar Pradesh, and is legally binding upon Uttar Pradesh in accordance with its terms; (b) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Jal Nigam, and is legally binding upon the Jal Nigam in accordance with its terms; (c) that the LIC Agreement has been duly authorized or ratified by, and executed and delivered on behalf of LIC, and is legally binding upon LIC in accordance with its terms; and (d) that the LIC-Jal Nigam Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, LIC and the Jal Nigam, respectively, and is legally binding upon LIC and the Jal Nigam in accordance with its terms. Section 5.03. The date January 26, 1976 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty-five years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary in the Ministry of Finance, Department of Economic Affairs of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. II Section 6.02. ''hc following addresses are specified for the purposes of Section 1 1.01 of lie Geiieral Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affars 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 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 in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ T. N. Kaul Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Mervyn L. Weiner Regional Vice President South Asia 12 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment and ma- 10,600,000 100% of foreign terials procured expenditures by international (C.I.F.) and 60% competitive bid- of local expendi- ding tures (ex-factory) (2) Equipment and ma- 9,700,000 60% of local expendi- terials procured tures (ex-factory) by methods other than international competitive bid- ding (3) Civil works 13,000,000 60% (excluding ex- penditures on land) (4) Consulting ser- 2,200,000 100% of foreign vices and train- expenditures and ing 60% of local ex- penditures (5) Unallocated 4,500,000 TOTAL 40,000,000 13 2. For the purposes of this Schedule: (0) 1he Icri "f6reign expenditures" means ex)Cnditures in the currency of any country other than the Borrower and f'or goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Bol-rower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Category (4) on account of expenditures incurred after June 18, 1975 in an aggregate amount not exceeding the equivalent of $500,000. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph I above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. 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 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 14 or limiting any other right, power or remedy of the Association under the )cvelopmenlt Credit Agreement, by notice to thc Borrower. cancel sich amount ol tie 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 proeceds of the Credit. 15 SCHEDULE 2 Description of the Project The purposes of the Project are to assist in a comprehensive reorganization of the water supply and sewerage sector in Uttar Pradesh, to construct and improve water supply and sewerage services and to introduce a sound public utilities approach to such services in selected areas of said State. The Project consists of the following parts: Part A - Institutions 1. Providing technical assistance, training, specialized equipment and spare parts for the development and strengthening of the Jal Nigam and, except as the Association shall otherwise agree, of the five KAVAL Jal Sansthans and three other Jal Sansthans. Services will be provided to assist in the investigation and design of Sub-projects as necessary, and in technical, rnanagement and financial training, including training in the operation and maintenance of water supply and sewerage systems. 2. Studies of the financial and resource generation capacity of the Jal Nigam and Jal Sansthans including recommendations for water and sewerage tariffs, taxes and charges and conditions for lending by the Jal Nigam to the Jal Sansthans and local bodies for Sub-projects and other capital works in the water supply and sewerage sector. Part B - Sub-Projects 1. Construction of approximately 1,000 systems for improving water supply to the five KAVAL Jal Sansthans and to about 2,000 villages and small towns in the other Jal Sansthans. The water 3roduction in the KAVAL Jal Sansthans will be increased by approximately 5 m /sec, improvements will be made to existing water treatment plants in these towns and some existing equipment will be replaced. Additional wells, pumping stations, service reservoirs, about 800 km of transmission mains and distribution systems will be provided in the areas of the other Jal Sansthans. The water supply to the villages and small towns in the area of jurisdiction of the other Jal Sansthans will also include construction of new wells, intake works, treatment facilities, about 2,200 km of transmission and distribution mains, electrical and mechanical equipment, instrumentation, vehicles and spare parts. 2. in areas under the jurisdiction of the KAVAL Jal Sansthans, improvements will be made to the existing sewerage systems and about 175 km 긔