India - Madras Water Supply And Sanitation Project : Credit 1822 - Project Agreement - Conformed

OFFICIAL CREDIT NUMBER 1822 IN LOAN NUMBER 2846 IN Project Agreement (Madras Water Supply and Sanitation Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and MADRAS METROPOLITAN WATER SUPPLY AND SEWERAGE BOARD Dated , 198 CREDIT NUMBER 1822 IN LOAN NUMBER 2846 IN PROJECT AGREEMENT AGREEMENT, dated 6CAo K, o , 198 , among INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTON AND DEVELOPMENT (the Bank) and MADRAS METROPOLITAN WATER SUPPLY AND SEWERAGE BOARD (hereinafter called MMWSSB). WHEREAS (A) by the Development Credit Agreement of even date herewith between India, acting by its President (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twelve million five hundred thousand Special Drawing Rights (SDR 12,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that MMWSSB 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 Borrower and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to fifty three million dollars ($53,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that MMWSSB agrees to undertake such obligations toward the Bank as are set forth in this Agreement; (C) by an agreement of even date herewith among the Association, the Bank and the State of Tamil Nadu, acting by its Governor, (hereinafter called Tamil Nadu), Tamil Nadu has agreed to assist MMWSSB in carrying out the Project described in Schedule 2 to the Development Credit Agreement; (D) the proceeds of the Credit and the Loan provided for under the Development Credit Agreement and the Loan Agreement respectively will be made available by the Borrower to Tamil Nadu in accordance with the Borrower's standard arrangement for developmental assistance to the States of India; and WHEREAS MMWSSB, in consideration of the Association's entering into the Development Credit Agreement and the Bank's entering into the Loan Agreement, with the Borrower, hns agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: - 2 - ARTICLE I Definitions Section 1.01. Whenever used in this Agreement, unless the context otherwise requires: (a) reference to the Association shall also be deemed as reference to the Bank; (b) reference to the Credit shall also be deemed as reference to the Loan; and (c) the several terms defined in the Development Credit Agreement and in the General Conditions applicable thereto (as so defined), in the Loan Agreement and in the General Conditions applicable thereto (as so defined), and in the Preamble to this Agreement have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) MMWSSB declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, shall carry out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and public utility practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section, MMWSSB shall carry out the Project in accordance with an Operational Action Plan, as such plan may be reviewed on an annual basis, and amended, as necessary, by an agreement between the Association and MMWSSB. 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 and the Loan shall be governed by the provisions of the Schedule to this Agreement. - 3 - Section 2.03. (a) MMWSSB 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 Applicable to Development Credit Agreements of the Association, dated January 1, 1985 (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. (b) MMWSSB shall carry out the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated January 1, 1985 (relating to insurance, use of goods and services, plans and schedules, records and reports, mainte- nance and land acquisition, respectively) in respect of the Project Agreement. Section 2.04. (a) MWSSB shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement, and other matters relating to the purposes of the Credit. (b) MKWSSB 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 MMWSSB of its obligations under this Agreement. ARTICLE III Management and Operations of MMWSSB Section 3.01. MMWSSB shall carry on its operations and conduct its affairs in accordance with sound administrative, financial, engineering and public utility practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. MMWSSB shall at all times operate and main- tain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, financial and public utility practices. Section 3.03. MMWSSB shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.04. MMWSSB shall: (a) consult with the Association prior to making any material modifications in its structure or organization; and (b) ensure that the recruitment of administrative and technical personnel during the period of 1987-1992 will be limited to absolutely essential personnel. ARTICLE IV Financial Covenants Section 4.01. (a) MMWSSB shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition. (b) MMWSSB shall: (i) have its 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 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 Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts and financial statements as well as the audit thereof and said records, as the Association shall from time to time reasonably request. - 5 - Section 4.02. (a) Except as the Association shall other- wise agree, MMWSSB shall, with effect from its financial year commencing April 1, 1988, and for each financial year thereafter, take all necessary measures to ensure that operating revenues are sufficient to meet all of MMWSSB's operating expenses, increases in working capital and debt service, and provide sufficient internally generated funds for capital expenditures indicated in the Operational Action Plan. (b) For the purposes of this Section: (i) the term "capital expenditure" means any expendi- ture incurred in the financial year on fixed or semi-fixed assets for water supply, sewerage, sewage treatment or sewage disposal services of MMWSSB or which may be charged to work-in-progress for such services pending commissioning of fixed or semi-fixed assets, including expenditures on engineering services and interest chargeable to capital assets under construction; (ii) the term "operating revenues" means all revenues from the sale of water and all taxes and charges pertaining to water supply, sewerage and sewage disposal services and other incidental revenues of MMWSSB including net consumers' contributions; (iii) the term "operating expenses" means all costs of operation of MMWSSB, including adequate main- tenance and a reasonable proportion of central administrative charges of MMWSSB but excluding depreciation and other non-cash expenses; and (iv) the term "debt service" means the repayment of loans and other debt obligations as they mature, including payment of interest in respect of such loans and other debt obligations. - 6 - ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association, of the Bank and of MMWSSB thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement and the Loan Agreement shall terminate in accordance with their respective terms; or (ii) the date 25 years after the date of this Agree- ment. (b) If the Development Credit Agreement and the Loan Agreement terminate in accordance with their respective terms before the date specified in paragraph (a) (ii) of this Section, the Association and the Bank shall promptly notify MMWSSB of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancel- lation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. 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: -7- 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 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For MMWSSB: Managing Director Madras Metropolitan Water Supply and Sewerage Board 1, Pumping Station Road Madras 2 600002 India Cable address: Telex: METROWATER 41-8832 MADRAS Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of MMWSSB may be taken or executed by the Managing Director or such other person or persons as he shall designate in writing, and MMWSSB shall furnish to the Association -8- sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively 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 P/ k &A' Regional Vice President Asia INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT BylIg / FcAt~ Regional Vice President Asia MADRAS METROPOLITAN WATER SUPPLY AND SEWERAGE BOARD A iz. Rr n By Authorized Representative -9- SCHEDULE Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part D hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). 2. Bidders for major contracts under the Project shall be prequalified as described in paragraph 2.10 of the Guidelines. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A 1 hereof, goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Preference for Domestic Contractors In the procurement of works in accordance with the proce- dures described in Part A 1 hereof, the Borrower may grant a margin of preference to domestic contractors in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. Part D: Other Procurement Procedures 1. All civil works contracts, except for the water treatment plant and rehabilitation of sewage pumping stations, may be procured on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Contracts for materials and equipment estimated to cosL the equivalent of $100,000 or less each and an aggregate amount not to exceed the equivalent of $4,900,000 may be procured on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. - 10 - Part E: Review by the Association of Procurement Decisions 1. Review of prequalification: With respect to the prequalification of bidders as provided in Part A.2 hereof, the procedures set forth in paragraph 1 of Appendix 1 to the Guidelines shall apply. 2. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to all contracts for civil works estimated to cost the equivalent of $500,000 or more and all contracts for material and equipment estimated to cost the equivalent of $200,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Associa- tion pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, said procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Association pursuant to said paragraph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 3 to the Development Credit Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Asso- ciation has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (a) (ii) of the Develop- ment Credit Agreement. 3. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. - 11 - Section II. Employment of Consultants In order to assist MMWSSB in carrying out the Project, MWSSB shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development and the International Development Association. FOR SECRETARY