India - Gujarat Irrigation Project : Credit 0808 - Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 808 IN Development Credit Agreement (Gujarat Irrigation Project) t-ween INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated July 17, 1978 CREDIT NO. 808 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 17, 1978, 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) the Project will be carried out by the State of Gujarat, acting by its Governor with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the State of Gujarat the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and the State of Gujarat; NOW THEREFORE the parties hereto hereby agree as follows: 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 (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Gujarat" means the State of Gujarat, a State of India or any successor thereof; -2- (b) "Project Agreement" means the agreement between the Association and Gujarat 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; and (c) "MIP" means a medium irrigation project comprising a cultivable command area of between 2,000 and 30,000 hectares. 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 equiva- lent to eighty-five million dollars ($85,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, 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. 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 set forth or referred to in Section 2.03 of the Project Agreementa Section 2.04. The Closing Date shall be June 30, 1984 or such later date as the Association shall establish. The Associa- tion 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 semiannually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each January 1 -3- and July 1 commencing July 1, 1988, and ending January 1, 2028, each installment to and including the installment payable on January 1, 1998, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (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 Agree- ment, the Borrower shall enable Gujarat to perform in accordance with the provisions of the Project Agreement 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 Gujarat 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 Gujarat in accordance with the Borrower's standard arrangements for developmental assistance to the States of India. Section 3.02. The Borrower shall ensure that the procedures for approval and monitoring of MIPs as set forth in Schedule 3 to this Agreement are adhered to. 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) An extraordinary situation shall have arisen which shall make it improbable that Gujarat would be able to perform its obli- gations under the Project Agreement; and (b) Gujarat shall have failed to perform any of its obliga- tions under the Project Agreement. -4- Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (d) thereof; namely that the event specified in paragraph (b) 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 Gujarat. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the execution and delivery of the Project Agreement on behalf of Gujarat has been duly authorized or rati- fied by all necessary governmental action. Section 5.02. The following is specified as an additional matter, 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, namely, that the Project Agreement has been duly authorized or ratified by Gujarat, and is legally binding upon Gujarat in accordance with its terms. Section 5.03. The date October 16, 1978, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Zconomic Affairs New Delhi, India -5- 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 Agree- ment 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/ N.A. Palkhivala Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. David Hopper Regional Vice President South Asia -6- 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) Civil works: (a) new MIPs 67,000,000 60% (b) existing MIPs 16,000,000 60% (2) Equipment and vehicles: 300,000 (a) directly 100% of foreign imported expenditures (b) locally 100% of local procured expenditures (ex-factory) or 70% (3) Technical services 200,000 100% (4) Unallocated 1,500,000 TOTAL 85,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance 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 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 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) re- allocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allo- cated to another Category and which in the opinion of the Associa- tion 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 expendi- tures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reason- able opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. -8- SCHEDULE 2 Description of the Project The Project crasists of the following: Part A: Completion of on-going and execution of new MIPs in Gujarat. Part B: Modernization of existing MIPs in Gujarat. Part C: Establishment of automatic discharge measuring stations, and acquisition of vehicles for their operation. Part D: Preparation of evaluation studies and monitoring of the Project. The Project is expected to be completed by June 30, 1983. -9- SCHEDULE 3 Procedures for Appraisal and Progress Monitoring of Medium Irrigation Projects (MIPs) A. The Central Water Commission under the Ministry of Agri- culture and Irrigation of the Borrower shall maintain an Appraisal Committee which shall be responsible for appraisal and monitoring of the progress of individual MIPs. Except as the Association shall otherwise agree, the procedures for appraisal and monitoring shall be as follows: 1. Preparation. Gujarat shall be responsible for the preparation of each HIP. The Appraisal Committee shall monitor the progress of the preparation of MIPs through field visits and review of reports, plans, specifications, contract documents, construc- tion and procurement schedules. 2. Appraisal. Gujarat shall submit each HIP to the Appraisal Committee for appraisal. The committee or its representatives shall (a) visit the MIP area, (b) review reports, plans, designs and specifications to ensure that the HIP has been designed in accordance with (i) established technical criteria, and (ii) sound engineering practices with special emphasis given to the safety of the dam structure and to the drainage plan, (c) review and, if required, adjust cost estimates and schedules of expenditures to properly reflect the likely cost of the MIP, (d) review the cropping pattern to ensure that it is realistic and suitable for the HIP area, (e) review arrangements for resettlement of families affected by the MIP iii accordance with Gujarat's policies, and (f) review the adequacy of extension, credit, input supply, transport and marketing facilities available to farmers in the HIP area. The review of the design of the dam structure with regard to safety referred to in paragraph (b) above would be made by the Central Water Commission with emphasis on hydrology, geology and structural engineering. - 10 - 3. Approval. Any MIP that meets the established criteria, is designed in accordance with sound engineering practices, costs less than Rs. seventy million excluding expected price increases, has a benefit cost ratio of not less than 1.0 as calculated in accordance with the established economic criteria, and has a cropping pattern that is realistic and suitable for the MIP area, may be approved by the Appraisal Committee for financ- ing from the proceeds of the Credit. Any other MIP shall be submitted to the Association for approval. 4. Implementation. The Appraisal Committee or its representatives shall visit the site of each MIP under construction, and review relevant records, plans, specifications and procurement schedules in order to (a) ensure that the MIP is constructed in accordance with the established technical criteria and sound engineering practices, (b) monitor the progress of the construction, and (c) assist Gujarat in solving any technical problems that might arise. 5. Operation and Maintenance. The Appraisal Committee shall review for each MIP, for a period not exceeding two years after completion of each MIP, records maintained by Gujarat on (a) the area irrigated in each irrigation season, (b) monthly inflow and water release data, (c) costs of and organization for operation and maintenance of the MIP, in order to ensure that the MIP is operated and maintained in accordance with sound economic and engineering standards. B. Gujarat shall make available to the Appraisal Committee or its representatives plans, specifications, reports, contract documents, construction and procurement schedules and other records in respect of MIPs to be financed under the Project, as the Appraisal Committee might reasonably request. C. The Appraisal Committee shall prepare reports on the conclu- sions of its appraisal and monitoring, of such timing, scope and detail, as have been agreed between the Borrower and the Association.