India - Punjab Irrigation Project : Credit 0889 - Project Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 889 IN Project Agreement (Punjab Irrigation Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF PUNJAB Dated March 30, 1979 CREDIT NUMBER 889 IN PROJECT AGREEMENT AGREEMENT, dated March 30,1979, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the STATE OF PUBJAB, acting by its Governor (hereinafter called Punjab). 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 twenty-nine million dollars ($129,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Punjab agree to undertake such obligations toward the Associa- tion as are hereinafter set forth; and WHEREAS Punjab, in consideration of the Association's enter- ing 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. Punjab shall carry out Parts A, B and C of the Project described in Schedule 2 to the Development Credit Agree- ment 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. - 2 - Section 2.02. Punjab shall provide funds sufficient to execute the Project substantially in accordance within an imple- mentation schedule agreed with 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 this Agreement. Section 2.04. (a) Punjab 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 che Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or instal- lation, and for such insurance any indemnity shall be payable in a currency freely usable by Punjab to replace or repair such goods. (b) Except as the Association may otherwise agree, Punjab shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclu- sively for the Project. Section 2.05. (a) Punjab 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) Punjab: (i) shall maintain records and procedures ade- quate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), 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 representatives 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 cost and, where appropriate, the benefits to be derived from it, the expenditures of such proceeds and the goods and services financed out of such proceeds. - 3 - (c) Promptly after completion of the Project, but in any event not laler than six months after the Closing Date or such later date as may be agreed for this purpose between Punjab and the Association, Punjab 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 ini- tial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by Punjab and the Association of their respective obligations under the Credit Agreement and the accomplishment of the purposes of the Credit. Section 2.06. (a) Punjab shall at the request of the Associa- tion, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) Punjab 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 Punjab of its obligations under this Agreement. ARTICLE III Particular Covenants Section 3.01. Punjab shall: (i) establish by July 31, 1979 and maintain thereafter, a Project Coordinating Unit with such functions as shall be mutually agreed between the Association and Punjab; and (ii) appoint by July 31, 1979 and maintain thereafter a Project coordinator whose qualifications, experi- ence and terms of reference shall be mutually agreed between the Association and Punjab, to head the said Unit. Section 3.02. Punjab shall establish or cause to be estab- lished by January 31, 1980 and maintained thereafter, a monitoring and evaluation unit with functions mutually agreed between the Association and Punjab, in PSTC and in each of the following administrations within the Irrigation Department: (i) Canal Administration; and (ii) Water Resources Administration. Section 3.03. Punjab shall cause PSTC, by August 31, 1979 or such later date as may be mutually agreed between the Association and Punjab, to: (i) establish a Management Information Unit with such functions as shall be mutually agreed between the Associa- tion and Punjab; (ii) appoint and maintain a financial advisor whose qualifications, experience and terms of reference shall be mutually agreed between the Association and Punjab, to head the said Unit; and (iii) furnish a financial management plan to the Association for its review and comments. Section 3.04. Punjab shall establish, by July 31, 1979, a wing in the Irrigation Department, with responsibilities, satis- factory to the Association, for works under Part C of the Project. Section 3.05. Punjab shall cause PSTC to: (a) prepare and furnish, by December 31, 1979, a design manual suitable for use under Part B of the Project, to the Association for its review and comments; and (b) monitor and evaluate the existing procedures and speci- fications for plastering of watercourse lining and furnish a report on the adequacy of the said procedures and specifications together with any recommendations thereon, by December 31, 1979, to the Association for review. Section 3.06. Punjab shall make adequate arrangements for the efficient operation and preventive maintenance of all the irri- gation works under the Project. Section 3.07. Punjab agrees to guarantee debt repayments by PSTC for institutional credit to be refinanced by ARDC under the Project. Section 3.08. Punjab agrees that each of the studies and pilot demonstration schemes under Part C of the Project shall be mutually agreed between the Association and Punjab before each of such studies or schemes is carried out. Section 3.09. (a) Punjab agrees to complEte and make avail- able to the Association for its comments not later than August 31, 1981, a statewide review of alternative methods of collecting water and water-related charges in modernized irrigation projects, with special emphasis on volumetric water pricing. -5- (b) The said review shall, inter alia, have regard to: (i) farmers' capPr,ity to pay; (ii) farmers' incentives for adopting procedures of modern irrigated agriculture; (iii) the effects of the alternative collecting methods on Punjab's revenues; and (iv) comparable systems of water and water-related charges in other States of India. ARTICLE IV Financial Covenants Section 4.01. Punjab shall cause each of its various depart- ments or agencies responsible for carrying out any part of the Project, to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition in respect of the Project or any part thereof. Section 4.02. Punjab shall cause each of its various depart- ments or agencies responsible for carrying out any part of the Project to: (i) have the accounts and financial statements for such part of the Project as the department or agency may be responsible, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by inde- pendent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than nine months after the end of each such year, (A) certified copies of the said 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 infor- mation 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 Agreament 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 all obligations of the Association and of Punjab 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 Agree- ment. (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 Punjab 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 Agreemant 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 D-:velopment 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 Punjab: Chief Secretary to the Government of Punjab Chandigarh, India Cable address: CHIEFSEC Punjab CHANDIGARH, India 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 Punjab may be taken or executed by its Chief Secretary or such other person or persons as Punjab shall designate in writing, and Punjab shall furnish to the Association sufficient evidence of the authority and the authenticated speci- men signature of each such person. 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 Is/ M. H. Wiehen Acting Regional Vice President South Asia STATE OF PUNJAB By /s/ R. L. Misra Authorized Representative - 8 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and civil works 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 and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, Punjab 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 and works in question. Punjab shall provide the necessary information to update such notice annually so long as any goods or works 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 the Borrower 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 goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in India - 9 - may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation 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 if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacLuring 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 eval- uated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this compari- son, 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 evaluated 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 evaluated 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 - 10 - which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Preference for Domestic Contractors With respect to the evaluation of bids for 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 of this Schedule, Punjab may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: 1. Contractors applying for such preference shall be asked to provide, as part of the data for qualification, such informa- tion, including details of ownership, as shall be required to determine whether, according to the classification established by Punjab and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding docu- ments 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. 2. After bids have been received and reviewed by Punjab, responsive bids will be classified into the following groups: (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. D. Other Procurement Procedures 1. Civil works on distributary and small canals to be modern- ized under Part A of the Project may be carried out by contracts awarded on the basis of local competitive bidding in accordance with procedures satisfactory to the Association. 2. Civil works on modernization of watercourses and small canals under Part B of the Project may be carried out by small unit price contracts awarded on the basis of local competitive - 11 - bidding in accordance with procedures satisfactory to the Asso- ciation. 3. Civil works under the Project may be carried out through force account, provided that such works shall not in the aggregate exceed 10% of the total cost of all civil works under the Project. 4. Groups of contracts for vehicles, equipment and spares, each costing less than $100,000 equivalent, may be procured locally on the basis of local competitive bidding in accordance with pro- cedures satisfactory to the Association, provided that such contracts shall not in the aggregate exceed $4,000,000 equivalent, and, further provided that such contracts shall not include backhoes, crawler tractors, transporter units for heavy equipment and initial spares for these items. E. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $500,000 or more: (a) Before bids are invited, Punjab shall urnish 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. (b) After bids have been received and evaluated, Punjab shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to 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 Punjab and state the reasons for such determination. - 12 - (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 with- drawal of funds from the Credit Account in respect of such con- tract. 3. With respect to each contract not governed by the preceding paragraph, Punjab 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 Guidelines or this Schedule, promptly inform Punjab and state the reasons for such determination. 4. Before agreeing to any material 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 15% of the original price, Punjab shall inform the Association 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 Punjab and state the reasons for its determination.