India - Orissa Irrigation II Project : Credit 1397 - Project Agreement - Conformed

CREDIT NUMBER 1397 IN Project Agreement (Orissa Irrigation II Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF ORISSA Dated , 1983 CREDIT NUMBER 1397 IN PROJECT AGREEMENT AGREEMENT, dated - , 1983, between INTERNATIONAL DEVELOPMENT AS OCIATION (hereinafter called the Association) and the STATE OF ORISSA (hereinafter called Orissa), acting by its Governor. WHEREAS (A) by the Development Credit Agreement of even date herewith between India (hereinafter called the Borrower), acting by its President, and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to ninety-seven million one hundred thousand Special Drawing Rights (SDR 97,100,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Orissa agree to undertake such obligations toward the Asso- ciation as are hereinafter set forth; and WHEREAS Orissa, 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 THEREFORF 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, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the.Project Section 2.01. Orissa shall carry out the Project, described in Schedule 2 to the Development Credit Agreement, with due dili- gence and efficiency and in conformity with appropriate admini- strative, financial, engineering and agricultural 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. Without limitation to the provisions of Section 2.01 of this Agreement, Orissa shall ensure that: (a) the planning, design, construction, operation and maintenance of MIPs under Part A of the Project shall be carried out in accordance with estabiished technical and economic criteria; (b) the planning, design, construction, operation and maintenance of the watercourses, field channels and drainage channels under Part C of the Project shall be carried out in accordance with established technical and economic criteria; and (c) MIPs under Part A (i) of the Project shall be monitored and MIPs under Part A (ii) of the Project shall be appraised and monitored, pursuant to the provisions of Schedule 4 to the Development Credit Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and 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) Orissa undertakes to ensure, 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, 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 by Orissa to replace or repair such goods. (b) Except as the Association shall otherwise agree, Orissa 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 purposes of the Project. Section 2.05. (a) Orissa 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) Orissa shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project - 3 - (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) enable the Association's 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) furnish to the Association 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 expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award by Orissa of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a desc:iption thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (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 Orissa and the Association, Orissa shall prepare and furnish to the Associa- tion a report, of such scope and in such detail as the Associa- tion 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 Orissa and the Associa- tion of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. Section 2.06. (a) Orissa shall, at the request of the Asso- ciation, exihange views with the Association with regard to the progress of the Project, the performance of its obligations tinder this Agreement and other matters relating to the purposes of the Credit; and (b) Orissa 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 Orissa of its obligations under this Agreement. Section 2.07. For purposes of assisting in the coordination, policy-level guidance and monitoring of the various activities under the Project, Orissa shall, not later than August 31, 1983, establish and, thereafter, maintain, a State Coordination and Monitoring Committee chaired by the Development Commissioner of -4- Orissa, such Committee shall include as members representatives of Orissa's Irrigation, Agriculture and Cooperation and Revenue departments, and of any other agency or department of Orissa related to the carrying out of the Project, as shall be neces- sary. Section 2.08. Orissa shall: (a) not later than March 31, 1984, prepare and furnish to the Association, a model management plan for MIPs under Part A of the Project; and (b) not later than six months prior to commencing operation of the irrigation water distribution system within each MIP under the Project, taking into account the Association's comments, if any, apply to such MIPs, a detailed management plan based on the model referred to in paragraph (a) of this Section, provided, however, that in the MIPs under the Project in which, at the date of this Agreement, irrigation water is being provided, such detailed management plan shall be established and applied not later than September 30, 1984. Section 2.09. Pursuant to the provisions of Section 2.08 of this Agreement, Orissa shall: (a) maintain in each MIP under the Project, a suitably qualified Assistant Engineer' with such responsibilities and functions as shall be required for the efficient management of each MIP under the Project; and (b) establish and, thereafter, maintain, in each MIP under the Project, a Water Management Committee with such powers and responsibilities as shall be required for the efficient operation of such MIPs; such Committee to include as members, inter alia, the Assistant Engineer in charge of the respective MIP, repre- sentatives of Orissa's concerned departments and farmers' repre- sentatives, including the Chairman of the local elected body (Panchayat Samiti). Section 2.10. The provisions of Section 2.09 (b) of this Agreement supersede the provisions of Section 2.02 (d) of the Prior Project Agreement. Section 2.11. Orissa shall, not later than March 31, 1984, establish and, thereafter, apply a management information and - 5 - monitoring system for Project construction and operation of the MIPs under the Project. Section 2.12. Orissa shall carry out detailed surveys of the cultivable command areas within each MIP, adequate for land acquisition and for alignment of canals and watercourses, such detailed surveys shall be conducted not later than six months prior to the carrying out of construction works in MIPs under the Project. Section 2.13. Orissa shall, six months prior to the compl- etion in each MIP of works under Part A of the Project, take all action as shall be necessary to strengthen its agricultural extension and supply support for carrying out the Project, including provision of adequate supply of production inputs, agricultural credit and market facilities. Section 2.14. Orissa shall: (a) not later than September 30, 1983, establish and, thereafter, maintain, the Water and Land Management Institute; (b) not later than March 31, 1984, establish and, there- after, maintain, for assisting its Irrigation and Power Depart- ment, a Research and Development Cell with such responsibilities, functions and staffing as shall be required for carrying out Parts D and E of the Project; (c) not later than June 30, 1984, establish and, there- after, maintain a technical-level Research and Development Technical Advisory Committee with such functions, responsibi- lities and membership as shall be required for advising, guiding and monitoring the Research and Development Cell provided for in paragraph (b) of this Section, such Committee to be chaired by the Secretary of Orissa's Irrigation and Power Department and shall include respresentatives of its Department of Agriculture and Cooperation as well as representatives of the engineering and agricultural universities and other agencies and departments of Orissa carrying out research and development and training activities related to the Project; and (d) not later than September 30, 1984, prepare and furnish to the Association for its review and comments, work plans and schedules for carrying out Parts D and E of the Project, and thereafter, taking into account the Association's comments, if any, carry out such work plans. -6- Section 2.15. Orissa shall take all action as shall be necessary to ensure quality control in respect of the design, construction and maintenance of MIPs under the Project. Section 2.16. (a) Orissa shall: (i) maintain its existing panel of experts to review the plans and design of the dams and related structures under the Project and their adequacy; and (ii) cause said panel to conduct periodic reviews during design and construction to examine whether any new grounds for making changes in the design of such dams and related structures have become apparent; and (b) without limiting the generality of Section 2.01 of this Agreement, Orissa shall, under arrangements which have been agreed between the Associ:tion and Orissa, cause the dams and the related structures constructed under the Project to be periodically inspected in accordance with sound engineering practice in order to determine whether there are any deficien- cies in the condition of such structures, or in the quality and adequacy of maintenance or methods of operations of the same, which may endanger their safety. Section 2.17. Orissa undertakes that: (a) regular irrigation water shall be delivered to any Chak within MIPs under the Project only after an appropriate rotational water allocation piocedure has been established and applied within such Chak, provided, however, that in those Chaks within MIPs under the Project where irrigation water has been delivered prior to the date of this Agreement, but that the irrigation distribution system under Part A of the Project has not been completed to the date of this Agreement, Orissa shall comply with the provision of this paragraph by October 31, 1984; and (b) not later than sixty days after completion of works under Part C (i) of the Project, establish and, thereafter, apply appropriate rotation water supply procedures, provided, however, that in those Chaks where such works have been completed under the Prior Project Agreement, Orissa shall comply with the provisions of this paragraph by October 31, 1984. Section 2.18. Orissa shall take or cause to be taken all such action as shall be necessary to acquire all such land and rights in respect of land as shall be required for carrying out -7- the Project and 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 pur- poses related to the Project. Section 2.19. Orissa shall at all times cause the buildings provided under the Project to be efficiently maintained, as well as the vehicles, facilities and equipment provided under the Project to be efficiently operated and maintained, and all neces- sary repairs and renewals thereof to be made, all in accordance with scund engineering and financial practices. Section 2.20. Orissa undertakes to take all measures as may be considered necessary to minimize the risk of malaria and other water-related diseases within the Project area. ARTICLE III Financial Covenants Section 3.01. (a) Orissa shall cause its departments and other agencies and authorities responsible for carrying out the project or any part thereof to: (i) maintain separate records and accounts adequate to reflect, in accordance with sound accounting principles and procedures consistently applied, its resources, expenditures and operations related to the Project; and (ii) furnish to the Association copies of their accounts and financial statements related to the Project for each fiscal year, certified as to their accuracy and authenticity by an independent auditor acceptable to the Association, as soon as available but in any case not later than nine months after the end of each such .year. Section 3.02. Orissa shall cause its department and other agencies and authorities responsible for carrying out the Project or any part thereof to: (i) have their accounts and financial sf:atement related to the Project for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association immediately following its finali- zation, 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 or cause to be furnished, to the Association such other information concerning said accounts and records, financial statements and the audit thereof as the Association shall from time to time reasonably request. -8- Section 3.03. Orissa shall: (a) not later than March 31, 1984, undertake a study on the appropriate irrigation water charge system with the objective of recovering full operation and maintenance costs and a reasonable portion of the capital costs and measures to improve the collec- tion of such charges; (b) not later than December 31, 1985, prepare and furnish such study to the Association and, thereafter, taking into account the Association's comments, if any, and also having regard, inter alia, to the incentives and repayment capacity of farmers, implement the recommendations of such study; and (c) in the interim, the water charges shall be reviewed in light of the Eighth Finance Commission recommendations. Section 3.04. Until the recommendations of the study referred to in Section 3.03 of the Agreement are implemented, Orissa shall make annual budgetary allocations adequate to meet operation and maintenance expenditure requirements for MIPs under the Project. 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. This Agreement and all obligations of the Association and of Orissa thereunder shall terminate on the date on which the Development Credit Agreement shall terminate in accordance with its terms, and the Association shall promptly notify Orissa thereof. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion 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 -9- 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 Orissa: Agricultural Production Commissioners Government of Orissa Bhubaneswar, Orissa India Cable Address: AGRISEC Bhubaneswar, India 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 Orissa may be taken or executed by the Secretary of the Government of Orissa or such other person or persons as Orissa shall designate in writing, and Orissa 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. - 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 5/ Regional Vice President South Asia STATE OF ORISSA By Authorized Representative - 11 - SCHEDULE Procurement A. International Competitive Bidding 1. Except as provided in Parts C and E hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Association 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 to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, Orissa 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 in question. Orissa shall provide the necessary information to update such notice annually so long as any goods 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; (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; and (iii) the cost of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. - 12 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, goods manufactured in 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 would 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 Orissa 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 - 13 - 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. C. Other Procurement Procedures (a) Contracts for civil works shall be let on the basis of competitive bidding advertised locally, in accordance with local procedures satisfactory to the Association, provided, however, that in the case of contracts awarded under Work-Order proce- dures, each contract shall not exceed the equivalent of $25,000 and in the aggregate not to exceed 10% of the total cost of civil works to be financed under the Project; and (b) Contracts for purchase of light equipment and vehicles estimated to cost less than $100,000 each, may be procured on the basis of competitive bidding advertised locally, in accordance with local procedures satisfactory to the Association. D. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works estimated to cost the equivalent of $500,000 or more, and for goods to be procured pursuant to paragraph A of this Schedule: (a) Before bids are invited, Orissa 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 docu- ments 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 prospec- tive bidders. (b) After bids have been received and evaluated, Orissa 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- - 14 - 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 incon- sistent with the Guidelines or this Schedule, promptly inform Orissa 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 was 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. 2. With respect to each contract not governed by the preceding paragraph (except for contracts on account of which withdrawals are allowed from the Credit Account on the basis of statements of expenditures), Orissa shall furnish to the Association, promptly after its execution and prior to the submission to the Associa- tion 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 Orissa 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, Orissa shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines thatthe proposal would be inconsistent with the provisions of this Agreement, shall promptly inform Orissa and state the reasons for its determination. E. Procurement Without Contracting Civil works may be carried out through force account, provided, however, that such works shall not exceed 20% of the total cost of civil works to be financed under the Project. 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 198 . FOR SECRETARY