China - Pishihang-Chaohu Area Development Project : Credit 1606 - Project Agreement - 2 - Conformed

CREDIT NUMBER 1606 CHA OFFIC. LOAN NUMBER 2579 CHA Anhui Project Agreement (Pishihang-Chaohu Area Development Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and ANHUI PROVINCE Dated 1985 CREDIT NUMBER 1606 CHA LOAN NUMBER 2579 CHA ANHUI PROJECT AGREEMENT AGREEMENT, dated &XC-tz.L. , 1985, among INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and ANHUI PROVINCE,(Anhui). WHEREAS: (A) by the Development Credit Agreement of even date herewith between People's Republic of China (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to seventy-five million seven hundred thousand Special Drawing Rights (SDR 75,700,000), on the terms and conditions set forth in the/ Development Credit Agreement, but only on condition that Anhui agrees to undertake such obligations toward the Association as are set forth in this Agreement; (B) by the Loan Agreement of even date herewith between the B6rrower and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to seventeen million dollars ($17,000,000), on the terms and condi- tions set forth in the Loan Agreement, but only on condition that Anhui agrees to undertake such obligations toward the Bank as are hereinafter set forth; and WHEREAS Anhui, in consideration of the Association's enter- ing into the Development Credit Agreement with the Borrower, and the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth, and the term "Bank's General Conditions" means the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 1, 1985. -2- ARTICLE II Execution of the Project Section 2.01. Anhui declares its commitment to the objective of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, shall carry out Parts A through D of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineer- ing and rural development practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, ser- vices and other resources required for Parts A through D of the Project. Section 2.02. (a) Anhui shall onlend the equivalent of SDR 2,930,000 out of the proceeds of the Credit to ABC under a subsidiary loan agreement to be entered into between Anhui and ABC under terms and conditions which shall have been approved by the Association. (b) Anhui shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of Anhui and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, Anhui shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision relating to the parties to the Subsidiary Loan Agreement, the interest rate and the repayment and grace periods. Section 2.03. In order to assist in coordinating and carrying out Parts A through D of the Project, Anhui shall: (i) maintain a Steering Committee, with staff, functions and responsibilities acceptable to the Association and the Bank; (ii) maintain a Project Management Office with staff, functions and responsibilities acceptable to the Association and the Bank; and (iii) cause each of the prefectures and counties partici- pating in the Project to maintain a Steering Committee and a Project Management Office, with staff, functions and respon- sibilities acceptable to the Association and the Bank. Section 2.04. Except as the Association and the Bank shall otherwise agree, procurement of the goods and works and employment of consultants required for Parts A through D of the -3- Project, to be financed out of the proceeds of the Credit and the Loan, shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.05. (a) Anhui shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and ser- vices, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Anhui Project Agreement and Parts A through D of the Project. (b) Anhui shall carry out the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the Bank's General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Anhui Project Agreement and Parts A through D of the Project. Section 2.06. Anhui shall, at the request of the Association or the Bank, exchange views with the Association and the Bank with regard to the progress of Parts A through D of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit and the Loan. Section 2.07. Anhui shall promptly inform the Association and the Bank of any condition which interferes or threatens to interfere with the progress of Parts A through D of the Project, the accomplishment of the purposes of the Credit and the Loan, or the performance by Anhui of its obligations under this Agreement. Section 2.08. Anhui shall: (a) by November 1 of each year, starting November 1, 1985, prepare and discuss with the Associa- tion and the Bank, a plan for provision of phosphate and potassium fertilizer for the Project; and (ii) thereafter implement such a plan. Section 2.09. Anhui shall: (a) employ, in accordance with terms of reference acceptable to the Association and the Bank, consultants to assist in carrying out studies on irrigation and flood control systems operations under Part D of the Project; and (b) not later than December 31, 1989, submit to the Asso- ciation and the Bank, for their review and comments, the pre- liminary reports on such studies. -4- ARTICLE III Financial Covenants Section 3.01. (a) Anhui shall maintain records and accounts adequate to reflect, in accordance with sound accounting prac- tices, its operations and financial condition in respect of activities related to Parts A through D of the Project. (b) Anhui shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) and the Anhui Special Account, for each fiscal year audited, in accor- dance with appropriate auditing principles consis- tently applied, by independent auditors acceptable to the Association and the Bank; (ii) furnish to the Association and the Bank as soon as available, but in any case not later than six months after the end of each such year: (A) certified copies of its 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 Associa- tion and the Bank shall have reasonably requested; and (iii) furnish to the Association and the Bank such other information concerning said accounts and financial statements as well as the audit thereof and said records, as the Association and the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals are requested from the Credit Account or the Loan Account on the basis of statements of expenditure, Anhui shall: (i) maintain, in accordance with parag'aph (a) of this Section, separate records and accounts reflecting such expenditures; -5- (ii) retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's and the Bank's repre- sentatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report thereof contains, in respect of such separate accounts, a separate opinion by said auditors as to whether the pro- ceeds of the Credit and the Loan withdrawn in respect of such expenditures have been used for the purpose for which they were provided. 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 and the Loan Agreement become effective. Section 4.02. (a) This Agreement and all obligations of the Association, the Bank and Anhui 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) the date twenty years after the date of this Agreement. (b) If the Development Credit Agreement or the Loan Agree- ment or both of said Agreements terminate in accordance with their terms before the date specified in paragraph (a) (ii) of this Section, the Association, or the Bank or both, as the case may be, shall promptly notify Anhui 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 tinder the Development Credit Agreement or the Loan Agreement. - 6 - 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: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 U.S.A. Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 7 For Anhui: Anhui Provincial Water Resources Bureau Hefei, Anhui People's Republic of China 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 Anhui may be taken or executed by the Senior Vice Governor of Anhui Province or such other person or persons as such Senior Vice Governor shall designate in writing, and such. Senior Vice Governor shall furnish to the Association and the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. As long as the Bank has not given notice to the contrary to Anhui and so long as the Development Credit Agreement shall not have terminated prior to the termination of the Loan Agreement: (a) the obligations of Anhui to consult with, and to furnish information, documents, plans, reports, records and statements to, the Bank shall be satisfied to the extent that Anhui's performance in respect of such obligations is rendered to the Association; (b) the obligations of the Bank to consult with, and to furnish information to Anhui shall be satisfied to the extent such obligations are fulfilled by the Association; and (c) all actions taken (including the giving of approvals or the granting of waivers) by the Association pursuant to the Development Credit Agreement shall be deemed to be taken pursuant to both the Development Credit Agreement and the Loan Agreement and in the name and on behalf of both the Association and the Bank. Section 5.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. -8- IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Acting Regional Vice President East Asia and Pacific ANHUI PROVINCE By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day of 6 198 - FOR SECRETARY INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archi,es of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and aixed the Scal of the Association thereunto the day of 19F SC T FOR SECRETARY