India - Third Calcutta Urban Development Project : Credit 1369 - West Bengal Agreement - Conformed

OFFICIAL DOCUMENTS CREDIT NUMBER 1369 IN West Bengal Agreement (Third Calcutta Urban Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF WEST BENGAL Dated , 1983 CREDIT NUMBER 1369 IN WEST BENGAL AGREEMENT AGREEMENT, dated , 1983, between INTERNATIONAL DEVELOPMENT ASOCIATION (hereinafter called the Association) and STATE OF WEST BENGAL, acting by its Governor (hereinafter called West Bengal). WHEREAS by the Development Credit Agreement of even date herewith between INDIA, acting by its President (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to one hundred thirty-six million three hundred thousand Special Drawing Rights (SDR 136,300,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that West Bengal agree to under- take such obligations toward the Association as are hereinafter set forth; WHEREAS by an agreement of even date between the Association and the Calcutta Metropolitan Development Authority, the Calcutta Metropolitan Development Authority has agreed to undertake cer- tain obligations in respect of the carrying out of the Project described in Schedule 2 to the Development Credit Agreement; and WHEREAS West Bengal, in consideration of the Association's entering into the Development Credit Agreement with the Borrower and Project Agreement with the Calcutta Metropolitan Development Authority, 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 term "FAM" means the Fund Assigned to the Municipalities, with its revenue and capital accounts, established by West Bengal to administer the Revised Grant Structure for the purpose of devolving revenue grants and capital grants to the Municipalities from FAM's revenue and capital accounts, respectively, based on agreed performance targets to be set annually by West Bengal. -2- ARTICLE II Execution of the Project Section 2.01. Without any limitation or restriction upon any of its other obligations under this Agreement, West Bengal shall cause the Authority to perform in accordance with the provisions of the Project Agreement all the obligations of the Authority therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable the Authority to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. Section 2.02. For the purpose of carrying out the Project, West Bengal shall make available the proceeds of the Credit made available to it by the Borrower, to the Authority on standard terms and conditions of West Bengal applicable to transfer of funds for development projects which shall, except as the Association may otherwise agree, include, inter alia, that the Authority shall pay interest on the principal amount so made available and withdrawn and outstanding from time to time at a rate of not less than 7% per annum, and repay the principal amount over a period of 15 years, including therein a period of grace of five years. Section 2.03. West Bengal shall exercise its rights under the Act in such manner as to protect the interests of West Bengal and the Association, and to accomplish the purposes of the Credit. Section 2.04. 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 set forth or referred to in Section 2.03 of the Project Agreement. Section 2.05. West Bengal undertakes to ensure that, except as the Association may otherwise agree, the Corporation shall perform all the obligations set forth in the Schedule to this Agreement. Section 2.0. (a) West Bengal shall, at the request of the Association, exchange views with the Associaticn with regard to - 3 - the progress of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit. (b) West Bengal 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 West Bengal of its obligations under this Agreement. ARTICLE III Particular Covenants Section 3.01. West Bengal shall cause its departments and other agencies and authorities responsible for carrying out any part of the Project to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial condition related to the Project. Section 3.02. West Bengal shall cause the Municipalities, CMWSA, the Calcutta Improvement Trust and the Howrah Improvement Trust to: (i) 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 acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than nine months after the end of each such year, (A) certified copies of the 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 information concerning their accounts and financial state- ments and the audit thereof as the Association shall from time to time reasonably request. Section 3.03. West Bengal shall by September 30, 1983, employ accounting firms acceptable to the Association to assist the Municipalities (except the Corporation) in maintaining accounts and in preparation of final accounts for audit. Section 3.04. West Bengal shall, by December 31, 1983, complete its review of the current property tax assessment base of the Municipalities, and shall cause to be carried out a general revaluation of properties by its Central Valuation Board in respect of such Municipalities whose tax base after said review is found to be inadequate. Section 3.05. West Bengal shall cause CMWSA to introduce such charges for supply of water as shall be agreed upon between the Association and West Bengal and to ensure that such rates shall be revised periodically to enable CMWSA to achieve coverage of all expenditures for operation, maintenance and debt service requirements by its financial year 1985/86. Section 3.06. West Bengal shall ensure prompt payment of any bulk water supply bills remaining outstanding from the Municipa- lities to CMWSA for more than 30 days. Section 3.07. West Bengal shall, by September 30, 1983 and March 31, 1984, deposit amounts equivalent to Rs. 50,000,000 and Rs. 40,000,000, respectively, in the Area Development Account referred to in paragraph 10 of Schedule 2 to the Project Agreement. Section 3.08. Except as the Association may otherwise agree, West Bengal shall cause CMWSA to: (a) take administrative, operational and financial mea- sures (including adjustments of the structure or levels of its water tariffs) as shall be required to recover not less than the following percentages of its revenue income to its revenue expen- ditures obtained through its water supply operations: 75% in fiscal year 1983/84 and 95% in fiscal year 1984/85; and achieve full cost recovery for its water supply operations by fiscal year 1985/86; (b) prepare, before January 1 of each year, forecasts of its water supply operations on a basis satisfactory to the Association, review measures taken or proposed to be taken, including the adequacy of its tariffs, to meet the requirements set forth in paragraph (a) of this Section for the next following fiscal year, and forward to the Association a copy of such review on completion; and (c) for the purpose of paragraph (a) of this Section, the term "revenue income" means the sum of gross revenues from sources related to CMWSA's water operations, including consumer - 5 - deposits, and the term "revenue expenditures" means the sum of all expenses of CMWSA's water supply operations including maintenance, administration, replacement fund and interest on debt. Section 3.09. West Bengal shall: (i) update annually the performance targets, maximum revenue deficits, annual revenue grant and capital grant requirements for each of the Municipali- ties, for the purpose of making suitable provisions in the following year; and (ii) make arrangements for appropriate provisions to FAM based on rolling yearly estimates. 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 West Bengal 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. (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 West Bengal of this event. 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 the parties contemplated by this Agreement shall be in writing. - 6 - 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 West Bengal: The Secretary to the Government of West Bengal Metropolitan Development Department 18 Rabindra Sarani Calcutta 700001, India Cable address: CHIEFSEC Calcutta 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 West Bengal may be taken or executed by a Scretary to the Government of West Bengal or such other person or persons as West Bengal shall designate in writing, and West Bengal 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. -7- 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 /A Regional Vice President South Asia STATE OF WEST BENGAL eBy Authorized Representative -8- SCHEDULE Obligations of the Corporation 1. To reduce its reliance on revenue subventions from West Bengal from about 24% of its revenue expenditures in fiscal year 1982/83 to about 10% by fiscal year 1987/88 and the annual level of said subventions for the intervening years to be such as shall be agreed upon between the Association and West Bengal. 2. To take all necessary steps within its power to achieve cash collection of not less than 85% of the current demand of its consolidated property taxes by fiscal year 1987/88, and the collection percentages for the intervening years to be such as shall be agreed upon between the Association and West Bengal. 3. To take all necessary steps within its power to achieve cash collections of its arrears demand of property tax of at least 50% annually. 4. By fiscal year 1987/88, to recover all expenditures for operation, maintenance, purchase of bulk water and charges equivalent to depreciation. 5. (a) To take all administrative, operational and financial measures (including, adjustments of the structure or levels of the Corporation's water tariffs) as shall be required to achieve full cost recovery for its water supply operations by fiscal year 1987/88, and the targets for cost recovery during the intervening years to be such as shall be agreed upon between the Asso- ciation and West Bengal. (b) To prepare, before March 1 of each year, forecasts of its water supply operations on a basis satisfactory to the Association, review the adequacy of its tariffs to meet the requirements set forth in the preceding paragraph (a) for the next following fiscal year and forward to the Association a copy of such review on completion. (c) For the purpose of paragraph (a) above the term "reve- nue income" means the sum of gross revenue from sources related to the Corporation's water operations, includ- ing consumer deposits, and share of consolidated -9- property tax, and "revenue expenditures" means the sum of all expenses of the Corporation's water supply operations including maintenance, administration, and charges equivalent to depreciation. 6. To introduce by November 1, 1983, a graduated water rate based on ferrule size in consultation with the Association for unmetered domestic consumers, and to review and revise said rate annually in order to meet the requirements of paragraph 4-of this Schedule. 7. To revise the rates for metered non-domestic water users as such rates shall be agreed upon between the Association and West Bengal. 8. To introduce annual licensing of all new private tubewells. 9. To adhere to a timetable and targets for metering and con- sumer survey programs acceptable to the Association. 10. To install, by September 30, 1983, and thereafter maintain a meter reading, billing and customer service department within the Corporation. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true L 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 19 8 3. FOR SECRETARY