India - Madhya Pradesh Medium Irrigation Project : Credit 1108 - Credit Agreement - Conformed

CREDIT NUMBER /A9 t IN Development Credit Agreement (Madhya Pradesh Medium Irrigation Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 1981 CREDIT NUMBER /f IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated .16 , 1981, 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) by an Agreement of even date herewith between the Association and the State of Madhya Pradesh (hereinafter called Madhya Pradesh), Madhya Pradesh has agreed to undertake certain obligations in respect of the carrying out of the Project; 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 Madhya Pradesh; 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 June 30, 1980, 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and Madhya Pradesh of even date herewith, as the same may be amended from time to time, and such term includes all -2- schedules to the Project Agreement and all agreements supplemental to the Project Agreement; and (b) MIP (Medium Irrigation Project) means an irrigation project of medium size, comprising a cultivable command area of between 2,000 to 15,000 hectares, included or to be included in the Project. 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 one hundred twelve million six hundred thousand Special Drawing Rights (SDR 112,600,000). 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 Associa- tion, 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 2.04 of the Project Agreement. Section 2.04. The Closing Date shall be March 31, 1987 or such later date as the Association shall establish. The Association 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 May 15 and November 15 in each year. -3- Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing May 15, 1991, and ending November 15, 2030, each installment to and including the istallment payable on November 15, 2000, 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 States of America 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 Agreement, the Borrower shall cause Madhya Pradesh 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 Madhya Pradesh 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 available the proceeds of the Credit to Madhya Pradesh in accordance with the Borrower's stan- dard arrangements for developmental assistance to the States of India. Section 3.02. The Borrower shall ensure that all MIPs shall be appraised, approved, carried out and monitored subject to and in accordance with the provisions of Schedule 3 to this Agreement. 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) Madhya Pradesh shall have failed to perform any of its obligations under the Project Agreement; and (b) an extraordinary situation shall have arisen which shall make it improbable that Madhya Pradesh will be able to perform its obligations under the Project Agreement. 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 (a) 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 Madhya Pradesh. 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 of the Project Agreement on behalf of Madhya Pradesh has been duly authorized or ratified 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 Madhya Pradesh, and is legally binding upon Madhya Pradesh in accordance with its terms. Section 5.03. The date %I, 1981, is hereby specified for the purposes of Sect ion 12.04 of the General Condi- tions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary or Under Secretary of the -5- 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 Economic Affairs New Delhi India Cable address: Telex: ECOFAIRS New Delhi 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) 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 - 6 - of Columbia, United States of America, as of the day and year first above written. INDIA By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President 11 South Asia -7- 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 SDR Equivalent) to be Financed (1) Civil Works 100,970,000 70% (2) Equipment and 5,810,000 100% of for- Vehicles eign expendi- tures, 100% of local expenditures ex-factory and 70% of other expenditures (3) Technical Assistance 980,000 100% (4) Unallocated 4,840,000 TOTAL 112,600,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any coui ry other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. -8- 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 para- graph I 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) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expendi- tures, 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 expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restric- ting or limiting any other right, power or remedy of the Associa- tion under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. -9- SCHEDULE 2 Description of the Project The Project is designed to assist the Borrower in carrying out the irrigation development in Madhya Pradesh over a five-year period. The Project consists of the following Parts: Part A: Construction of about 30 MIPs; Part B: Provision of equipment to improve the hydrological data base for the planning of future major and medium irrigation projects; Part t: Preparation of evaluation studies and monitoring of the Project; Part D: Establishment of a water management component to experi- ment with selective improvements in the infrastructure and management of the following existing MIPs: Satak, Saroda, Ajnal and Chillar; Part E: Establishment of training programs for operational and management staff of the Irrigation and Agricultural Departments of Madhya Pradesh; Part F: Provision of technical services to assist Madhya Pradesh in the planning and design of the distribution system of the MIPs; and Part G: Establishment of four demonstration farms of about 10 hectares each for irrigated agriculture. The Project is expected to be completed by March 31, 1986. - 10 - SCHEDULE 3 Procedures for Appraisal and Progress Monitoring of Medium Irrigation Projects (MIPs) A. The Central Water Commission under the Ministry of Agricul- ture 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 Madhya Pradesh shall be responsible for the preparation of each MIP. The Appraisal Committee shall monitor the progress of the preparation of MIPs through field visits and review of reports, plans, specifications, contract documents, construction and procurement schedules. 2. Appraisal Madhya Pradesh shall submit each MIP to the Appraisal Committee for appraisal. The committee or its representa- tives shall (a) visit the MIP area, (b) review reports, plans, designs and specifications to ensure that the MIP 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 structures 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 of the proposed MIP to ensure that it is realistic and suitable for that MIP area, (e) review arrangements for resettlement of families affected by the MIP in accordance with Madhya Pradesh's policies, and (f) review the adequacy of extension, credit, input supply, transport and marketing facilities available to farmers in the MIP area. The review of the design of the dam structures with regard to safety referred to in paragraph (b) above would be made by the Central Water Commission. 3. Approval Any MIP that meets the criteria established for the MIPs among the Borrower, the Association and Madhya Pradesh, is - 11 - designed in accordance with sound engineering practices, costs less than Rs. hundred million excluding expected price increases and has a cropping pattern )hat is realistic and suitable for the MIP area, may be approved by the Appraisal Committee for financing 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: (a) to ensure that the MIP is constructed in accordance with the established technical criteria and sound engineering practices, (b) to monitor the progress of the construction, and (c) to assist Madhya Pradesh in solving any technical problems that might arise. 5. Operation and Maintenance A. The Appraisal Committee shall review for each MIP, for a period not exceeding two years after completion of each MIP, records maintained by Madhya Pradesh on (a) the area irrigated in each irrigation season, (b) monthly inflow and water release data, and (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. Madhya Pradesh 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 reason- ably request. C. The Appraisal Committee shall prepare reports on the conclusions of its appraisal and monitoring, of such scope and detail, and at such times as have been agreed between the Borrower and the Association. 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 198F R. FOR SECRETARY