India - Rajasthan Water Supply And Sewerage Project : Credit 1046 - Project Agreement - Conformed

늬 CREDIT NUMBER 1046 IN PROJECT AGREEMENT AGREEMENT, dated , 1980, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and THE STATE OF RAJASTHAN, acting by its Governor (hereinafter called Rajasthan). 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 eighty million dollars ($80,000,000), on the terms and ccnditions set forth in the Development Credit Agreement, but only on condition, inter alia, that Rajasthan agree to undertake such obligations toward the Association as are hereinafter set forth; and WHEREAS Rajasthan, 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. Rajasthan shall carry out the Project through RWSSB and PHED with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices, and shall provide, or cause to be p-.Lovided, promptly as needed, the funds, facilities, services and other resources required for the purpose. -2- Section 2.02. In order to assist Rajasthan: (i) in the carrying out of Parts A, B and C of the Project; and (ii) in the carrying out of the studies included in Part D of the Project; Rajasthan shall, in accordance with a timetable agreed from time to time between Rajasthan and the Association, employ 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. Rajasthan shall ensure that: (a) RWSSB shall at all times have a full complement of its members; and (b) PHED shall be adequately staffed by July 1, 1981, in accordance with an organizational structure satisfactory to Rajasthan and the Association, and that thereafter any significant alteration in the said organizational structure shall be made only after consultation with the Association. Section 2.05. Rajasthan 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 the carrying out of the Project and, if requested by the Association, shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 2.06. (a) Rajasthan 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, trans- portation and delivery thereof to the place of use or installa- tion, and for such insurance any indemnity shall be payable in a -3- currency freely usable by Rajasthan to replace or repair such goods. (b) Except as the Association may otherwise agree, Rajasthan 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 2.07. (a) Rajasthan shall through RWSSB 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) Rajasthan: (i) shall through RWSSB maintain 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) Without in any way limiting the generality of paragraph (b) above, Rajasthan shall through RWSSB establish not later than January 1, 1981, monitoring and reporting systems for the Project. (d) 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 Rajasthan and the Association, Rajasthan shall through RWSSB prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execu- tion and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by Rajasthan and the Association of their respective obligations under this Agreement and the accomplishment of the purposes of the Credit. -4- Section 2.08. (a) Rajasthan shall through RWSSB, 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) Rajasthan shall through RWSSB 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 Rajasthan of its obligations under this Agreement. Section 2.09. Rajasthan shall through RWSSB at all times manage, operate and maintain its water supply and sewerage plants, machinery, equipment and property, and promptly make all neces- sary repairs -and renewals thereof, all in accordance with sound engineering and public utility practices. Section 2.10. For the purposes of carrying out Part A of the Project, Rajasthan shall through RWSSB prepare and furnish to the Association for its review, not later than March 1 of each year, the proposed implementation program for the forthcoming fiscal year. Section 2.11. Rajasthan shall through RWSSB, with the assistance of the consultant' referred to in Section 2.02 hereof, prepare and furnish to the Association for its comments, a health education program to achieve health benefits envisaged under the Project. Section 2.12. Rajasthan shall (i) through RWSSB prepare a training program satisfactory to Rajasthan and the Association, (ii) establish, not later than April 1, 1981, a training unit to carry out said training program, and (iii) thereafter carry out the training of PHED's staff in accordance with such program. Section 2.13. Rajasthan shall, not later than April 1, 1981, prepare and thereafter implement through RWSSB a program satisfactory to Rajasthan and the Association for financing the costs of sewer connections, basic plumbing and installation thereof for lower income groups. Section 2.14. For the purposes of Part A of the Project, Rajasthan shall: - 5 - (a) except as the Association shall otherwise agree, ensure that each local authority will contribute the equivalent of 2.5% of the construction costs of its scheme; (b) introduce water charges sufficient to cover operation and maintenance costs from April 1, 1981 and thereafter; and (c) authorize the local authorities to collect standpost water charges, and in the event of a shortfall in the collection of such charges, it shall, not later than 120 days after billing, make funds available to PHED to cover such shortfall. Section 2.15. Rajasthan shall, not later than April 1, 1981 carry out, or cause to be carried out, a study in respect of its urban areas, and after consultation with the Association, imple- ment the findings of such study, on the following: (i) the intro- duction of a block tariff structure and related tariff levels for water supply; (ii) the introduction of a sewerage charge as a percentage of the water charge to apply to all premises with a water connection and within a prescribed distance from a sewer main; and (iii) the extent to which the tariff rates should be uniform or differ to suit particular local costs and conditions. Section 2.16. For purposes of carrying out Part C of the Project, Rajasthan shall, not later than April 1, 1981: (a) ensure that the local authorities will transfer to Rajasthan the responsibility for the operation of sewerage and sewage disposal works and all assets pertaining thereto; and (b) introduce sewerage charges satisfactory to Rajasthan and the Association. Section 2.17. Rajasthan shall ensure that, (i) commencing in January 1, 1981 and thereafter, local authorities in its urban areas make timely payments to PHED for water supplied through standposts, and (ii) in the event any such payments remain outstanding for more than 120 days after billing, Rajasthan shall pay such arrears on behalf of the local authority. Section 2.18. Rajasthan shall ensure supply to RWSSB of an adequate water allocation from the Jodhpur water supply canal system (Hemawas-Jawai) for the purpose of enabling RWSSB to meet its commitments in Jodhpur. -6- Section 2.19. Rajasthan lindertakes that: (a) until April 1, 1986, it shall not, without prior agree- .uent with the Association, transfer to any local authority the responsibility for the operation of its urban water supply and sewerage systems and any assets pertaining thereto; and (b) thereafter, it shall effect such transfer only under arrangements designed to ensure sound financial and operational practices. ARTICLE III Financial Covenants Section 3.01. Rajasthan shall maintain or cause to be main- tained separate records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures, in respect of the Project, of its departments and agencies responsible for carrying out the Project or any part thereof. Section 3.02. (a) Rajasthan shall cause RWSSB and PHED to establish not later than April 1, 1981 and maintain thereafter a supplementary commercial accounting system. (b) Rajasthan shall cause RWSSB and PHED to, beginning with fiscal year 1981: (i) have their supplementary commercial accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with 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 nine months after the end of each such year, (A) certified copies of 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 said accounts and financial statements and the audit thereof as the Association shall from time to time reason- ably request. Section 3.03. (a) Except as the Association may otherwise agree, Rajasthan shall, before the commencement of each fiscal year, review and adjust, if necessary, its tariffs for urban water - 7 - supply services to ensure that operating revenues are sufficient to: (i) commencing with f±scal year 1981, meet RWSSB's operating expenses and the greater of depreciation or debt service require- ments; and (ii) produce an annual rate of return on the average value of RWSSB's net fixed assets in operation of at least 2% in fiscal year 1982, 3% in fiscal year 1983, 5% in fiscal year 1984 and 8% in fiscal year 1985 and thereafter; (b) For the purposes of this Section: (i) the annual rate of return shall be calculated by using, as the denominator, the value of the net fixed assets in operation of RWSSB at the beginning and at the end of the fiscal year in question, and dividing the total by two and, as the numerator, an amount equal to the net revenues of RWSSB for that year; (ii) the term "value of the net fixed assets in opera- tion of RWSSB" means the gross value of the fixed assets in operation less accumulated depreciation; (iii) the term "net revenues" means the difference between the (A) operating revenues and (B) operat- ing expenses together with depreciation; (iv) the term "operating revenues means all revenues from the sale of water; (v) the term "operating expenses means all costs of operation of RWSSB including adequate maintenance and administrative costs but excluding deprecia- tion; and (vi) the term "debt" means all debt incurred by Rajasthan on account of RWSSB, including the funds to be made available to RWSSB for purposes of Parts B and C of the Project as if under a loan repayable over a period of 25 years including a grace period of 5 years, and bearing interest at the rate of 6.5% per annum on the principal amount withdrawn and outstanding; and (vii) the term "debt service requirements" means the aggregate amount of amortization, interest and other charges on such debt. -8- Section 3.04. Rajasthan shall through RWSSB and PHED take all necessary steps to progressively increa3e its level of revenue collection so as to ensure that, commencing with fiscal year 1982 and all times thereafter, its accounts receivable shall not exceed an amount equivalent to: (i) with respect to the urban areas, the billings rendered in 3 consecutive months in such fiscal year; and (ii) with respect to the rural areas, the billings rendered in 4 consecutive months in such fiscal year. 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 Rajasthan hereunder shall terminate on the earlier of the following two dates: (i) a date 20 years after the date of this Agreement; or (ii) the date on which the Development Credit Agreement shall terminate in accordance with its terms. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (i) of this Section, the Association shall promptly notify Rajasthan 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 Development Credit Agreement. 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 -9- or made when it shall be delivered by hand or by mail, telegram, cable, teley or radiogram to the party to which it is required or permitted to be given or made at such party's address herein- after 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) For Rajasthan: Secretary to the Government of Rajasthan (PHED) Sachivalaya Jaipur, Rajasthan India Cable address: CHIEFSEC Jaipur Section 5.0'. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Rajasthan may be taken or executed by the Secretary, Public Health Engineering Department or such other person or persons as Rajasthan shall designate in writing, and Rajasthan 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 collec- tively but one instrument. - 10 - 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 Regional Vice President South Asia STATE OF RAJASTHAN By Authorized Representative - 11 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and civil works for the Jodhpur raw water main 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, Rajasthan shall prepare and for- ward 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 there- to, 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. Rajasthan shall provide the necessary informa- tion to update such notice annually so long as any goods or works remain to Ie 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 - 12 - India 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 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 othe' 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 - 13 - not, the bid from group C which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selUzcted. C. Preference for Domestic Contractors With respect to the evaluation of bids for any contract for civil works included under Category (2) of Schedule 1 to the Development Credit Agreement and to be procured in accordance with the procedures described in Part A of this Schedule, Rajasthan 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 information, including details of ownership, as shall be required to determine whether, according to the classification established by Rajasthan 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. 2. After bids have been received and reviewed by RWSSC, respon- sive bids will be classified into the following groups: (i) bid 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. Contracts for civil works other than those for the Jodphur raw water main may be let on the basis of local competitive bidding procedures satisfactory to the Association, provided, however, that civil works estimated to cost less than $30,000 equivalent may be carried out by force account. 2. All contracts for concrete and stoneware pipes, and contracts for other equipment and materials estimated to cost the equivalent of $150,000 or less each may be let on the basis of local competi- tive bidding procedures satisfactory to the Association. - 14 - 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 for equipment and materials estimated to cost the equivalent of $150,000 or more, and all contracts for civil works estimated to cost the equivalent of $500,000 or more: (a) Before bids are invited, Rajasthan 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, Rajasthan 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 Rajasthan 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. (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, Rajasthan 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 - 15 - 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 Rajasthan 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 exten- sion 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, Rajasthan 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 Rajasthan and state the reasons for its determination. 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 A day of 1980 FOR SECRETARY