India - National Dairy Project : Credit 0824 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 824 IN Project Agreement (National Dairy Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and INDIAN DAIRY CORPORATION Dated June 19, 1978 CREDIT NUMBER 824 IN PROJECT AGREEMENT AGREEMENT, dated June 19, 1978, between INTERNATIONAL DEVEL- OPMENT ASSOCIATION (hereinafter called the Association) and INDIAN DAIRY CORPORATION (hereinafter called IDC). 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 fifty million dollars ($150,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that IDC agree to undertake such obligaiions toward the Association as are hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and IDC, the proceeds of the credit provided for under the Development Credit Agreement will be made available to IDC on the terms and conditions therein set forth; and WHEREAS IDC, 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 Execution of the Project Section 2.01. IDC shall carry out 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, ser- vices and other resources required for the purpose. -2- Section 2.02. In order to assist IDC in carrying out the Project, IDC may employ consultants whose qualifications, experi- ence and terms and conditions of employment shall be satisfactory to the Association. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be governed by the provisions of the Schedule to thl.s Agreement. Section 2.04. (a) IDC 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, transporta- tion and delivery t.reof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by IDC to replace or repair such goods. (b) Except as the Association may otherwise agree, IDC 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 2.05. (a) IDC shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, 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) IDC: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (including its cost and impact), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) shall enable the Association's accredited represent- atives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its annual work programs, budgets, and quarterly progress reports, its cost and impact, the expenditures of such proceeds and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between IDC and the Association, IDC shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and impact, the performance by IDC and the Association of their respective obligations under the Credit Agreement and the accomplishment of the purposes of the Credit. (d) IDC shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of IDC and any relevant records and documents. Section 2.06. IDC shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, IDC 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. IDC shall take all necessary action to promote the establishment of dairy cooperative societies, unions and federations in accordance with the provisions of Part A of the Project. Section 2.08. IDC shall not make sub-loans to dairy coopera- tive unions and federations unless such unions and federations are organized and registered under conttitutions and by-laws which are in conformity with models acceptable to the Association. Section 2.09. IDC shall, in its appraisal of every sub- project to be financed under the Project, (a) apply a set of criteria for the appraisal of sub-projects acceptable to the Association, and (b) include a market analysis of the sub-project. Section 2.10. IDC shall submit the first five sub-projects appraised by it for review by the Association before such sub- projects are approved by IDC. Subsequently, IDC shall submit sub-projects approved by it fur review by the Association. Section 2.11. (a) IDC shall take all necessary action to cause all dairy cooperative societies, unions and federations, as and when they are established, to: (i) have their 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 the relevant Registrar of Cooperative Societies in each State or Union Territory of the Borrower's territory; (ii) furnish to IDC as soon as available, and, except as IDC shall otherwise agree, not later than six months after the end of each such year, (A) certified copies of the financial statements of the said dairy cooperative societies, unions and federations for such year as so audited and (B) the report of such audit of the financial state- ments of the said Unions by said Registrar, of such scope and in such detail as IDC shall have reasonably requested; and (iii) furnish to the Association such information concerning the accounts and financial statements of all dairy cooperative societies, unions and federations and the audit thereof as the Association shall from time to time reasonably request. Section 2.12. IDC shall monitor the progress of each approved sub-project against specific targets acceptable to the Associa- tion. Section 2.13. (a) The Association and IDC shall exchange views, as may be necessary from time to time, with regard to the progress of the Project, the performance of the obliga- tions under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) IDC 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 IDC of its obligations under this Agreement and under the Subsidiary Loan Agree- ment. ARTICLE III Management and Operations of IDC Section 3.01. IDC shall take out and maintain with responsi- ble insurers, or make other provisions satisfactory to the Asso- ciation for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. -5- ARTICLE IV Financial Covenants Section 4.01. IDC shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition. Section 4.02. IDC shall: (i) have its accounts and financial 3tatements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent 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; and (iii) furnish to the Association such other information concerning the said accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. 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. Section 5.02. (a) This Agreement and all obligations of the Association and of IDC 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 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accor- dance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify IDC of this event. Section 5.03. All the provisions of this Agreement shall con- tinue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. 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 des- ignated 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) For IDC: Indian Dairy Corporation 'Darpan', R.C. Dutt Road Baroda - 390005 India Cable address: Telex: INDAIRY 175 239 IDC IN Baroda Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of IDC may be taken or executed by the Managing Director or such other person or persons as he shall designate in writing, and IDC shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. -7- Section 6.03. This Agreement may be executed in several coun- terparts, 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/ W. David Hopper Regional Vice President South Asia INDIAN DAIRY CORPORATION By /s/ J. 3. Baijal Authorized Representative -8- SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, equipment and materials shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, IDC shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. IDC shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding, (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 IDC of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. B. Preference for Domestic Manufacturers In the procurement of equipment and materials in accordance with the procedures described in Part A of this Schedule, goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: -9- 1. 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. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in India Tf the bidder shall have established to the satisfaction of IDC 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. 3. 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. Such lowest evaluated bids 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. 4. If, as a result of the comparison under paragraph 3 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 3 is the lowest evaluated bid shall be selected. - 10 - C. Other Procurement Procedures Contracts for equipment and materials costing less than $100,000 when grouped together may be awarded in accordance with local competitive bidding procedures acceptable to the Associa- tion, except that such contracts may be awarded on the basis of prudent shopping for urgently needed items aggregating not more than $2,000,000. D. Civil Works and Vehicles 1. Contracts for civil works and vehicles shall be awarded in accordance with local competitive bidding procedures acceptable to the Association. E. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to all contracts for equipment, vehicles and civil works estimated to cost the equivalent of $2,000,000 or more, before bids are invited, IDC shall furnish to the Associ- ation, 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. (b) With respect to all contracts for equipment and vehicles estimated to cost the equivalent of $500,000 or more and civil works estimated to cost the equivalent of $750,000 or more, after bids have been received and evaluated, IDC shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it is intended to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform IDC and state the reasons for such determination. - 11 - (c) The terms and conditions of contracts shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of contracts 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 not governed by the preceding paragraph, IDC 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 that the award of the contract was not consistent with the Guideltnes or this Schedule, promptly inform IDC and state the reasons fo7 such determination. 3. Before agreeing to any materiLil modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 10% of the original price, IDC shall inform the Associa- tion of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform IDC and state the reasons for its determination.