India - Second Foodgrain Storage Project : Credit 0747 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 747-IN Project Agreement (Second Foodgrain Storage Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and FOOD CORPORATION OF INDIA Dated January 6, 1978 CREDIT NUMBER 747-IN PROJECT AGREEMENT AGREEMENT, dated January 6, 1978, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and FOOD CORPORATION OF INDIA (hereinafter called the Corporation). 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 one hundred and seven million dollars ($107,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Corporation agrees to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and the Corporation, the proceeds of the Credit provided for under the Development Credit Agreement will be made available to the Corporation on the terms and conditions therein set forth; and WHEREAS the Corporation, in consideration of the Associa- tion'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 Agreemenr, 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 Execution of the Project Section 2.01. The Corporation shall carry out the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropri- ate administrative, financial and engineering practices. -2 - Section 2.02. In order to assist the Corporation in carrying out the Project, the Corporation shall employ by March 31, 1978 or such later date as may be agreed by the Association, consultants whose qualifications, experience and terms and conditions of employment shall be mutually agreed upon among the Borrower, the Corporation and the Association. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for civil works 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 2.04. (a) The Corporation 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 the Borrower against hazards incident to the acquisition, trans- portation and delivery thereof to the place of use or installa- tion, and for such insurance any indemnity shall be payable in a currency freely usable by the Corporation to replace or repair such goods. (b) Except as the Association may otherwise agree, the Corporation shall cause all goods and services financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for the Project. Section 2.05. (a) The Corporation shall furnish to the Association, promptly upon their preparation, the plans, specifi- cations, reports, contract documents and construction and procure- ment schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Corporation: (i) shall 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 pro- ceeds of the Credit relent to it by the Borrower, and to disclosc the use thereof in the Project; (ii) shall, without limitation upon the provisions of paragraph (c) of this Section, enable the Association's representatives to visit the facilities and con- struction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and docu- ments; and (iii) shall furniRh to the Association all such infor- mation 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. -3 - (c) The Corporation shall enable the Association's represen- tatives to examine all plants, installations, sites, works, buildings, property, equipment and any relevant records and documents of the Corporation, related to the Project. Section 2.06. The Corporation shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, the Corporation shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.07. (a) The Corporation shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) The Corporation shall promptly inform the Association of any condition which interferes or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by the Corporation of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.08. (a) By December 31, 1978 or such later date as may be agreed by the Association, the Corporation shall draw up and furnish to the Association for its approval plans for conducting the operations research under Part B of the Project. (b) By June 30, 1978 or such later date as may be agreed by the Association, the Corporation shall draw up and furnish to the Association for its approval detailed plans for conducting the training under Part C of the Project. Section 2.09. The Corporation shall establish a Project Implementation Division for the implementation of the Project, and shall appoint a chief and other qualified staff to ensure the efficient functioning of this Division. Section 2.10. Without limitation to the provisions under Section 2.05 (a) of this Agreement, the Corporation shall prepare and furnish to the Association detailed quarterly progress reports within one month after the end of each calendar quarter. -4 Section 2.11. The Corporation shall carry out continuous monitoring and evaluation of the Project in such form as shall be mutually agreed between the Corporation and the Association by June 30, 1978 or such later date as may be agr d by the Associa- tion. The results of such monitoring and evaluation shall be sent to the Association at least once a year. Section 2.12. The Corporation 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 carrying out the Project. Section 2.13. The Corporation shall ensure that the types and locations of the warehouse complexes and port silos to be con- structed under Part A (i) of the Project shall be determined in accordance with the guidelines set out in Schedule 2 to this Agreement after due consultations among the Borrower, the Associa- tion and the Corporation. ARTICLE III Management and Operations of the Corporation Section 3.01. The Corporation shall at all times manage its affairs, maintain its financial position, plan iLs future expan- sion and carry on its operations, all in accordance with sound business, financial, administrative and engineering practices and under the supervision of experienced and competent management assisted by adequate and competent staff. Section 3.02. (a) The Corporation shall at all times maintain its corporate existence and the right to carry on its operations and to acquire and retain ownership of all lands and maintain and renew all interests in land and other properties, and take all steps necessary to acquire, maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business or in the carrying out of the Project. (b) The Corporation shall at all times operate and maintain its machinery, equipment and other property, and make all neces- sary repairs and renewals thereof, in accordance with sound engineering practices. (c) Except as the Association shall otherwise agree, the Corporation shall not sell, lease, transfer or oLheLwise dispose -5 - of any of its property or assets required for the efficient operation of the Project, except in the normal course of business. Section 3.03. The Corporation shall take out and maintain with responsible insurers, or make other provision 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. (a) The Corporation shall maintain for the Project separate records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. (b) The Corporation shall prepare and furnish to the Asso- ciation its annual budgets for the Project not later than one month prior to the beginning of each financial year. Section 4.02. The Corporation shall: (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 appropriate auditing principles consistently applied, by indcpen,ant auditors acceptable to the Association; (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 the Corporation and the audit thereof as the Association shall from time to ime reasonably re4aest. 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. - 6 - Section 5.02. (a) This Agreement and 11 obligations of the Association and of the Corporation thereurder 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 Agree- ment. (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 the Corporation of this event. Section 5.03. 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 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 the 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 here- inafter 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) -7 - For the Corporation: Food Corporation of India 16-20 Barakhamba Lane New Delhi - 110001 India Cable address: FOOD CORP New Delhi (India) 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 the Corporation may be taken or executed by the Corporation or such other person or persons as the Corporation shall designate in writing. Section 6.03. The Corporation shall Zurnish to the Associa- tion sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of the Corporation, take any action or execute any documents required or permitted to be taken or executed by the Corporation 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 collec- tively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 4n 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/ W. D. Hopper Regional Vice President South Asia FOOD CORPORATION OF INDIA By Is! J. Baijal Authorized Representative -8 - SCHEDULE 1 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods or for civil works shall be procured in accor- dance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines) including the pertinent provisions of the General Introduction thereto, on the basis of international competitive bidding. 2. Bidders for civil works included in Part A of the Project shall be prequalified as described in paragraph 1.3 of Part A of the Guidelines. 3. Contracts for equipment in Parts A and B of this Schedule shall be grouped into packages so as to encourage competition consistent with appropriate technical and procurement practices. B. Other Procurement Procedures 1. Contracts for bag warehouses and rural procurement centers shall be let on th2 basis of competitive bidding advertised locally under procedures satisfactory to the Association. 2. Contracts for civil works under Part A (iii) of the Project shall be awarded to the Indian Railways under procedures satisfac- tory to the Association. 3. Contracts for equipment which cannot be grouped into packages of $100,000 equivalent or more each shall be let on the basis of competitive bidding advertised locally under procedures satisfac- tory to the Association. 4. Contracts for equipment estimated to cost less than $10,000 each may be procured through prudent local shopping on the basis of at least 3 price quotations. 5. Contracts for vehicles shall be procured on the basis of competitive bidding advertised locally under procedures satisfac- tory to the Association. -9 - C. Evalilation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For .he purpose of evaluation and comparison of bids of the supply of goods except those to be procured in accordance with local procedures: (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 ex- cluded; and (iii) the cost to the Corporation 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: (I) Group A: bids offering goods manufactured in India if the bidder shall have established to the satisfaction of the Corporation 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 eval- uated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison a - 10 - 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 lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from Group C which as a result of the comparison under paragraph (c) is the lowest eval- uated bid shall be selected. D. Evaluation and Comparison of Bids for Civil Works; Preference for Domestic Contractors With respect to any contract for civil works included under Category (1) of the table set forth in Schedule 1 to the Development Credit Agreement and to be procured in accordance with the procedures described in Part A.1 of this Schedule, the Corporation may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying also for such preference shall be asked to provide, as part of the data for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. (b) After bids have been received and reviewed by the Corporation, responsive bids will be classified into the following groups: - 11 - (i) bids offered by domestic contractors eligible for preference; and 'ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. The lowest responsive bid shall be selected for the award. E. Review of Procurement Decisions by the Association 1. Review of prequalification. The Corporation shall, before qualification is invited, inform the Association in detail of the procedure to be followed, and shall introduce such modifi- cations in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a state- ment of their qualifications and, where applicable, of their eli- gibility for domestic preference under Part D.1 above and of the reasons for the exclusion of any applicant for prequalification and for such eligibility shall be furnished by the Corporation to the Association for its comments before the applicants are notified of the Corporation's decision, and the Corporation shall make such additions to, deletions from, or modifications in, the said list as the Association shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for goods and civil works estimated to cost the equivalent of $300,000 or more: (a) Before bids are invited, the Corporation shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, to- gether 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. (b) After bids have been received and evaluated, the Corpo- ration shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to - 12 - award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evalua- tion and comparison of the bids received, and such other informa- tion as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsis- tent with the Guidelines or this Schedule, promptly inform the Corporation and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) 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. 3. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding para- graph, the Corporation 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 the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines thaL Lhe award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Corporation and state the reasons for such determination. - 13 - SCHEDULE 2 Type and Location Guidelines for Warehouse Complexes and Port Silos Except as the Association may otherwise agree, the fol- lowing guidelines are to be followed by the Corporation with respect to the types and locations of the warehouse complexes and port silos to be constructed under Part A (i) of the Project: A. Warehouse Complexes 1. (a) local supply and demand situation and existing and projected procurement and/or distribution for each type of grain; (b) type, capacity and location of existing grain storage (the Corporation and others) relative to existing and projected procurement in and near the proposed site; (c) transportation resources serving the locale including road and rail network, and feasibility of a railway siding to the site; and (d) storage and distribution strategies and logistics such as probable moisture content of grain to be procured locally, probable proportion to be procured in bag and bulk, probable length of storage, probable direction and distance of flow to intermediate and consumer storage and issue centers, and transportation resources to be used. 2. Guidelines for site selection and type of warehouse include: (a) sLtage of operations and buffer stocks of wheat in and near procurement towns; (b) need for aeration facilities to dry grain and keep it in good condition; and (c) use of bulk warehouse complexes for storage of wheat or paddy in bulk for 12 to 36 months, or (d) use of bag warehouse complexes where paddy and rice do not need drying and for bag handling and stor- age. - 14 - B. Port Silos 3. Each silo unit to be located adjacent to a dock where ships carrying grain can be received and unloaded. Dock sites and facilities should be capable of receiving and off-loading ships of at least 20,000 ton capacity directly into the silo bulk grain conveying system. Docks are selected where annual receipts of more than 300,000 tons of imported grain would be expected for a silo with 25,000 tons storage capacity and more than 600,000 tons receipts for a silo with 50,000 tons storage capacity. A railway siding should be included in each complcx.