India - Second Madras Urban Development : Credit 1082 - Project Agreement - Conformed

OFVIC IA CREDIT NUMBER 1082-IN DOCUMIENTS Project Agreement (Second Madras Urban Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF TAMIL NADU Dated I 198l CREDIT NUMBER 1082-IN PROJECT AGREEMENT AGREEMENT, dated * ) , 1981, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and the STATE OF TAMIL NADU, acting by its Governor (hereinafter called Tamil Nadu). 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 thirty-two million six hundred thousand Special Drawing Rights (SDR 32,600,000), on the terms and condi- tions set forth in the Development Credit Agreement, but only on condition that Tamil Nadu agrees to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS Tamil Nadu, 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 and the following additional terms have the following meanings: (a) "TNHB" means the Tamil Nadu Housing Board; (b) "TNSCB" means the Tamil Nadu Slum Clearance Board; (c) "MMA" means the Madras Metropolitan Area as notified under the Tamil Nadu Town and Country Planning Act, 1971; (d) "Rs" means rupees in the currency of the Borrower; (e) "Executing Agencies" means PTC, the Corporation, TNHB, TNSCB, SIDCO, MMDA and the Departments of Public Works, Health, Education, Social Welfare, and Highways and Rural Works of Tamil -2- Nadu and shall include such other Agencies and Departments of Tamil Nadu as may be agreed upon between the Association and Tamil Nadu; (f) "Sites and Services Revolving Fund" means the Fund established pursuant to Section 2.07 (iii) of the First Project Agreement and to be maintained for the purposes of this Agreement; and (g) "Slum Improvement Revolving Fund" means the Fund established pursuant to Section 2.08 (iii) of the First Project Agreement and to be maintained for the purposes of this Agreement. ARTICLE II Execution of the Project Section 2.01. (a) Tamil Nadu shall carry out, or cause to be carried 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, services and other resources required for the purpose. (b) Tamil Nadu shall make available to the Executing Agencies funds equivalent to the proceeds of the Credit made available by the Borrower to Tamil Nadu on terms and conditions satisfactory to the Association. Section 2.02. In order to assist Tamil Nadu in carrying out Part E of the Project, Tamil Nadu shall employ, or cause to be employed, consultants whose qualifications, experience 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 this Agreement. Section 2.04. (a) Tamil Nadu shall cause the Executing Agencies 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 them by Tamil Nadu against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. (b) Except as the Association may otherwise agree, Tamil Nadu 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) Tamil Nadu shall furnish, or cause to be furnished, to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and con- struction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) Tamil Nadu: (i) shall maintain, or cause to be maintained, records and procedures adequate 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. (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 Tamil Nadu and the Association, Tamil Nadu 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 the benefits derived and to be derived from it, the performance by Tamil Nadu and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (d) Tamil Nadu shall enable the Association's representatives to examine all plants, installations, sites, -4- works, buildings, property and equipment related to the Project and any relevant records and documents. Section 2.06. (a) Tamil Nadu 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 other matters relating to the purposes of the Credit. (b) Tamil Nadu 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 Tamil Nadu of its obligations under this Agreement. Section 2.07. Tamil Nadu undertakes that the investments under Part D (ii) of the Project shall be undertaken only after the Association and Tamil Nadu have agreed on the actions to be taken and equipment to be procured. ARTICLE III Other Covenants Section 3.01. Tamil Nadu shall cause TNHB, TNSCB, PTC, SIDCO and the Corporation to take out and maintain with responsible insurers, or make other provisions satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.02. Tamil Nadu shall, commencing April 1, 1982, cause TNHB to: (i) limit its annual investment in housing other than for the economically weaker sections, to not more than 55% of its total investment in housing and plot development in MMA; and (ii) construct housing for the economically weaker sections under its MMA program in accordance with physical standards mutually acceptable to the Association and Tamil Nadu. Section 3.03. Tamil Nadu shall cause TNSCB to limit its annual expenditure on its slum clearance-cum-tenement program during the period April 1, 1981 to March 31, 1986 to not more than Rs 37,500,000. Such expenditure shall be limited to units required for households in areas which cannot be improved in situ, such as the right-of-way of the essential transport cor,idors, along the water courses regularly subjected to flooding, and in other areas mutually agreed between the Association and Tamil Nadu. -5- Section 3.04. Tamil Nadu shall ensure that in respect of the sites and services to be developed under Part A of the Project, (i) the settler selection criteria, including income levels, (ii) the terms and conditions of sale for plots and housing sites, (iii) the terms and conditions of sale for small industry sites and sheds, and (iv) the terms and conditions of loans extended by SIDCO for small industry sites, sheds and machinery, shall all be satisfactory to the Association. Section 3.05. Tamil Nadu undertakes, in respect of Part B of the Project, (i) to recover the costs of land, infrastructure, and services in improved slums under lease-cum-sale agreements which allow for the passage of freehold title to residents promptly after the payment by such residents of the full amount due for the plots purchased by them, and (ii) that the charges to slum households for land and improvement and the terms and conditions of lease-cum-sale agreements with households in slums improved under the Project shall be satisfactory to the Association. Section 3.06. Tamil Nadu undertakes (i) to cause the revenues received from beneficiaries under lease-cum-sale agreements entered into pursuant to Part A of the Project to be deposited in the Sites and Services Revolving Fund, and (ii) to cause the revenues received from beneficiaries under lease-cum-sale agreements entered into pursuant to Part B of the Project to be deposited in the Slum Improvement Revolving Fund. Section 3.07. Tamil Nadu shall cause: (i) PTC and the Corporation to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition; (ii) the other Executing Agencies to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition related to the Project or any part thereof; and (iii) MMDA to maintain an overall Project account adequate to reflect the operations of all Executing Agencies in respect of the Project. Section 3.08. Tamil Nadu shall cause: (i) PTC and the Corporation to have their 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 independent auditors icceptable to the Association; (ii) TNHB, TNSCB and SIDCO to have their accounts and financial statements -6- (balance sheets, statements of income and expenses and related statements) in respect of the Project for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors, acceptable to the Association; (iii) to be furnished to the Association as soon as available, but in any case not later than ten months after the end of each such year, (A) certified copies of the 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 (iv) to be furnished to the Association such other information concerning the accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. Section 3.09. (a) Except as the Association may otherwise agree, Tamil Nadu shall cause PTC to take all such action as is necessary to: (i) maintain a ratio of current assets to current liabilities (hereinafter referred to as the current ratio) of at least 1.5:1; (ii) ensure that PTC's operating costs (which shall include depreciation but exclude interest and other charges on debt, corporate taxes and subvention) do not exceed 95% of its operating revenues; and (iii) ensure that PTC does not incur any long-term debt unless the net revenue of PTC for the fiscal year preceding the date of such incurrence or for a later twelve-month period ended prior to the date of such incurrence, whichever net revenue is the greater, shall be not less than 1.5 times the maximum debt service requirements for any succeeding fiscal year on all long-term debt of PTC including the proposed long-term debt. (b) For the purposes of this Section: (i) the term "long term debt" means all debt incurred, including debt assumed or guaranteed by PTC, except debt incurred in the ordinary course of business and maturing by its terms on demand or less than one year after its incurrence; (ii) the term "incur" with reference to any debt includes any modification of the terms of payment of such debt. Debt shall be deemed to be incurred (a) under a contract or loan agreement, on the date the contract or loan agreement providing for such debt is entered and (b) under a guarantee agreement, on the date the agreement providing for such guarantee shall have been entered into; -7- (iii) the term "net revenue" means gross revenue from transport operations, less all operating expenses, including adequate maintenance, taxes other than corporate taxes or payments in lieu of taxes, if any, and administrative expenses, but before provision for depreciation and interest and other charges on debt; and (iv) the term "debt service requirements" means the aggregate amount of principal repayments (including sinking funds payments, if any), interest and other ciflarges on long-term debt. Section 3.10. Tamil Nadu shall cause the Corporation to: (1) increase its revenues (excluding revenues from surcharge on sales tax and grants from the Borrower and Tamil Nadu) by at least 8% annually; (ii) ensure that, until March 31, 1986, its debt service payments in any fiscal year shall not exceed 20% of its revenues; and (iii) furnish, by December 31, 1981, for review by the Association, the Corporation's proposals for achieving improvements in the collection of property taxes within its jurisdiction. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of Tamil Nadu 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. -8- (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 Tamil Nadu of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE V Miscellaneous Provisions Section 5.01. 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 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: INDEVAS Washington, D.C. For Tamil Nadu: Chief Secretary to the Government of Tamil Nadu Fort St. George Madras 600009 India Cable address: CHIEFSEC Fort St. George Madras -9- Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Tamil Nadu may be taken or executed by a Secretary to the Government of Tamil Nadu or such other person or persons as Tamil Nadu shall designate in writing, and Tamil Nadu shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representat!'ves 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 Regional Vice President South Asia STATE OF TAMIL NADU By Authorized Representative - 10 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Parts C and E 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 international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, Tamil Nadu 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 publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. Tamil Nadu 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 the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; and (ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. 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 - 11 - 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 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 if the bidder shall have established to the satisfaction of India 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 domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. 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 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 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. - 12 - C. Other Procurement Procedures 1. Contracts for small items estimated to cost the equivalent of $50,000 or less may be awarded after obtaining price quotations from at least three suppliers. 2. Contracts for civil works, materials for bus bodies, maintenance equipment procured under Part D (ii) of the Project, and hand carts and refuse bins for solid waste may be awarded on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Association. D. 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 for (i) civil works estimated to cost the equivalent of $500,000 or more; and (ii) equipment and materials estimated to cost the equivalent of $200,000 or more: (a) Before bids are invited, Tamil Nadu shall furnish 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, Tamil Nadu 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 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 Tamil Nadu 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. - 13 - (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. 2. With respect to each contract not governed by the preceding paragraph, Tamil Nadu 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 Tamil Nadu and state the reasons for such determination. 3. 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, Tamil Nadu 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 Tamil Nadu and state the reasons for its determination. E. Procurement Without Contracting Bus bodies may be built by PTC in its own workshops through force account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of * , 1981. FOR SECRETARY