China - Red Soils Area Development Project : Credit 1733 - Project Agreement - Conformed

OFFICIAL DOCUMENTSI CREDIT NUMBER 1733 CHA Project Agreement (Red Soils Area Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and JIANGXI PROVINCE and FUJIAN PROVINCE Dated tRC-'ttt , 1986 CREDIT NUMBER 1733 CHA PROJECT AGREEMENT AGREEMENT, dated " Z , 1986, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and JIANGXI PROVINCE and FUJIAN PROVINCE (the Provinces). WHEREAS 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 thirty-four million Special Drawing Rights (SDR 34,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Provinces agree to undertake such obligations toward the Association as are set forth in this Agreement; and WHEREAS the Provinces, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, have agreed to undertake the obligations set forth in this Agree- ment; 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. ARTICLE II Execution of the Project Section 2.01. Each of the Provinces 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 its part of the Project described in said Schedule through the respective PO and Corporation with due diligence and effi- ciency and in conformity with appropriate administrative, finan- cial, engineering and rural development practices, and shall pro- vide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for its respec- tive part of the Project. -2- Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.03. Each of the Provinces 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 services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement and its part of the Project. Section 2.04. Each of the Provinces shall maintain: (i) the Joint Coordinating Committee and its Secretariat established by the Provinces for the purposes of providing interprovincial coor- dination of the activities to be carried out under the Project; and (ii) the Project Coordinating Committee and the PO estab- lished within such Province, all with competent staff in ade- quate numbers, and with functions and responsibilities acceptable to the Association. Section 2.05. Each of the Provinces shall: (i) by November 1 of each year, starting November 1, 1986, prepare and discuss with the Association a plan for provision of chemical fertilizer suffi- cient to meet crop nutrient requirements; and (ii) thereafter implement such a plan. Section 2.06. Each of the Provinces shall prepare and submit to the Association, for th-e Association's review and approval, detailed studies of the technical and financial feasibility of the agroprocessing investments under Part G of the Project, before approval of those investments by such Province. Section 2.07. (a) Each of the Provinces shall, at the request of the Association, exchange views with the Association with regard to the progress of its part of the Project, the per- formance of its obligations under this Agreement and other mat- ters relating to the purposes of the Credit. (b) Each of the Provinces shall promptly inform the Association of any condition which interferes or threatens to -3- interfere with the progress of its part of the Project, the accomplishment of the purposes of the Credit, or the performance by such Province of its obligations under this Agreement. Section 2.08. Each of the Provinces shall cause the respec- tive Corporation to maintain a continuous sample of farm house- holds for monitoring of farm budgets and family incomes, and shall review the findings with the Association. Section 2.09. Each of the Provinces shall cause the respec- tive Corporation to charge interest on Sub-loans at ABC's pre- vailing rates for similar loans for similar purposes; and shall from time to time review such interest charges with the Associaciation in light of the cost of funds to such Corporation and its financial viability, as well as changes in ABC's interest rates. Section 2.10. Each of the Provinces shall cause the respec- tive Corporation to use any net cash accruals by such Corporation due to differences in timing between sub-loan receipts and repay- ments to the respective Province, only for financing agricultural development or agroprocessing activities to be agreed with the Association. ARTICLE III Financial Covenants Section 3.01. (a) Each of the Provinces shall: (i) main- tain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condi- tion in respect of activities related to its part of the Project; and (ii) cause the respective Corporation to maintain records and accounts, including separate Project accounts, adequate to reflect in accordance with sound accounting practices its opera- tions and financial conditions. (b) Each of the Provinces shall: (i) have the accounts referred to in paragraph (a) of this Section including the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; -4- (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors, including each of the Corporations' financial statements, in such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts and the audit thereof and said records as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals are requested from the Credit Account on the basis of statements of expenditure, each of the Provinces shall: (i) maintain, and cause its respective Corporation to maintain, in accordance with paragraph (a) of this Section, separate records and accounts reflecting such expenditures; (ii) retain, until one year after the Association has received the audit report for the fiscal year in which the last wl'hdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives 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 withdrawn in respect of such expenditures have been used for the pirpose for which they were provided. - 5 - 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 the Provinces 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 terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify the Provinces 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 Genaeral 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 sh,ll 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: -6- 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 Jiangxi Province: Bureau of Agriculture, Animal Husbandry and Fisheries Nanchang, Jiangxi Province People's Republic of China Cable address: 2814 Nanchang, Jiangxi For Fujian Province: Bureau of Agriculture Fuzhou, Fujian Province People's Republic of China Cable address: 8056 Fuzhou, Fujian 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 any of either of the Provinces may be taken or executed by the Vice Governor of such Province or such other person or persons as such Vice Governor shall designate in writing, and each of the Provinces shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. -7- 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. 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 By 11 A P _oF e t" L Regional Vice President East Asia and Pacific JIANGXI PROVINCE FUJIAN PROVINCE By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY