Conformed Copy - C2256 - Irrigated Agriculture Intensification Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 2256 CHA LOAN NUMBER 3337 CHA (Irrigated Agriculture Intensification Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and ANHUI PROVINCE JIANGSU PROVINCE and SHANDONG PROVINCE Dated June 20, 1991 CREDIT NUMBER 2256 CHA LOAN NUMBER 3337 CHA PROJECT AGREEMENT AGREEMENT, dated June 20, 1991, among INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and ANHUI PROVINCE, JIANGSU PROVINCE and SHANDONG PROVINCE (the Project Provinces). 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 one hundred thirty-nine million Special Drawing Rights (SDR 139,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Project Provinces agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by the Loan Agreement of even date herewith between People's Republic of China (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to one hundred forty-seven million Page 2 one hundred thousand dollars ($147,100,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Project Provinces agree to undertake such obligations toward the Bank as are set forth in this Agreement; WHEREAS the Project Provinces, in consideration of the Association's entering 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 Loan 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. (a) Each of the Project Provinces 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 its respective parts of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agronomic 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 and except as the Association, the Bank and the Project Provinces shall otherwise agree, each of the Project Provinces shall carry out its respective parts of the Project in accordance with the Implementation Program set forth in Schedule 2 to this Agreement. Section 2.02. Except as the Association and the Bank 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 proceeds of the Loan shall be governed by the provisions of Schedule 1 to this Agreement. Section 2.03. Each Project Province 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 the Development Credit Agreement and in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions applicable to the Loan Agreement (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of its respective parts of the Project and the Project Agreement. Section 2.04. (a) Each Project Province shall, at the request of the Association and the Bank, exchange views with the Association and the Bank with regard to the progress of its respective parts of the Project, the performance of its obligations under this Agreement and other matters relating to the purposes of the Credit and the Loan. (b) Each Project Province shall promptly inform the Association and the Bank of any condition which interferes or threatens to interfere with the progress of its respective parts of the Project, the accomplishment of the purposes of the Credit and the Loan, or the performance by such Project Province of its obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) Each Project Province shall maintain or cause to be maintained Page 3 records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Project Provinces responsible for carrying out the Project or any part thereof. (b) Each of the Project Provinces shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently 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, the report of such audit by said auditors, of such scope and in such detail as the Association and the Bank shall have reasonably requested; and (iii) furnish to the Association and the Bank such other information concerning said records and accounts and the audit thereof as the Association and the Bank shall from time to time reasonably request. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which both the Development Credit Agreement and the Loan Agreement become effective. Section 4.02. (a) This Agreement and all obligations of the Association and the Bank and of the Project Provinces thereunder shall terminate on the earlier of the following two dates: (i) the date on which both the Development Credit Agreement and the Loan Agreement shall terminate in accordance with their terms; or (ii) the date 20 years after the date of this Agreement. (b) If the Development Credit Agreement or the Loan Agreement or both of said Agreements terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association and the Bank shall promptly notify the Project Provinces of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions applicable to the Development Credit Agreement or the Loan Agreement. 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 Page 4 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) 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 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) For Anhui: Anhui Provincial People's Government 85 Changjiang Road Hefei 230001 Anhui Province People's Republic of China Cable address: Telex: 0067 Hefei 90020 AHJW CN Facsimile: 255470 For Jiangsu: Jiangsu Provincial People's Government 68 West Beijing Road Nanjing 210000 Jiangsu Province People's Republic of China Telex: 342250 FBOJP CN Facsimile: 025-302229 For Shandong: Shandong Provincial People's Government 158 Jingsi Road Jinan 250001 Shandong Province People's Republic of China Facsimile: Page 5 0531-612498 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 Project Province may be taken or executed by its Governor or Vice Governor or such other person or persons as its Governor or Vice Governor shall designate in writing, and the Project Province 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. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. Section 5.04. As long as the Bank has not given notice to the contrary to the Project Provinces and so long as the Development Credit Agreement shall not have terminated prior to the termination of the Loan Agreement: (a) the obligations of the Project Provinces to consult with, and to furnish information, documents, plans, reports, records and statements to, the Bank shall be satisfied to the extent 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, the Project Provinces shall be satisfied to the extent such obligations are fulfilled by the Association; and (c) all actions taken (including the giving of approvals or 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. 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 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ A. Karaosmanoglu Regional Vice President Asia ANHUI PROVINCE JIANGSU PROVINCE SHANDONG PROVINCE By /s/ Zhu Qizhen Authorized Representative SCHEDULE 1 Procurement and Consultants' Services Section I: Procurement of Goods and Works Part A: International Competitive Bidding Page 6 1. Except as provided in Part C hereof, goods 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. To the extent practicable, contracts for equipment, materials and supplies shall be grouped into bid packages estimated to cost the equivalent of $200,000 or more. 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 China 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: Other Procurement Procedures 1. Items or groups of items for computers and engineering, laboratory and other specialized equipment may be procured under contracts awarded through limited international bidding procedures on the basis of evaluation and comparison of bids obtained from at least three qualified suppliers eligible under the Guidelines and in accordance with procedures set forth in Sections I and II of the Guidelines (excluding paragraphs 2.8, 2.9, 2.55, 2.56 thereof). 2. Works for construction of buildings, pumping stations, major canal and drainage structures and bridges and mechanized excavation of major canals, drains and river channels as well as cement and items or groups of items of equipment, estimated to cost the equivalent of $200,000 or less per contract, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association and the Bank. 3. Items or groups of items of equipment, instruments, tools and miscellaneous goods estimated to cost the equivalent of $50,000 or less per contract, up to an aggregate amount equivalent to $8,000,000, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association and the Bank. 4. Works on the laterals and sub-laterals, rural roads, afforestation and other on-farm works and land development may be carried out by force account in accordance with procedures acceptable to the Association and the Bank up to an aggregate amount equivalent to $161,000,000. 5. Planting materials may be purchased directly from local production teams and specialized households in accordance with procedures acceptable to the Association and the Bank. Part D: Review by the Association and the Bank of Procurement Decisions 1. (a) With respect to each contract 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 a Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association and the Bank pursuant to said paragraph 2 (d) shall be furnished to the Association and the Bank prior to the making of the first payment out of such Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding 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 a Special Account, such 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 and the Bank pursuant to said paragraph 3 shall be furnished to the Association and the Bank as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 3 to Page 7 the Development Credit Agreement. (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which the Association and the Bank have authorized withdrawals on the basis of statements of expenditure. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II: Employment of Consultants In order to assist the Project Provinces in carrying out Part C of the Project, the Project Provinces shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association and the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association and the Bank 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. SCHEDULE 2 Implementation Program A. Irrigation and Drainage 1. Anhui and Shandong shall each cause its respective Water Resource Bureaus to monitor groundwater resources in its Project Area each year and prepare and furnish an analysis thereof to the Association and the Bank by June 30 of the following year. Anhui and Shandong shall each ensure that no new tubewells shall be drilled in its Project Area, other than those under Part A (2) of the Project, unless such tubewells shall be justified on the basis of such an analysis. 2. Each Project Province shall, by December 31, 1991, prepare and furnish to the Association and the Bank for comment a draft plan of operation and maintenance for each major irrigation scheme included under Part A (1) of the Project, and shall thereafter issue such plans, taking into account the comments of the Association and the Bank. Such plans shall be issued for a period of three years of trial operation, and shall thereafter be reviewed, revised as necessary, and re-issued by December 31, 1995, based on the results of trial operation. 3. Each Project Province shall ensure that water charges are collected for completed surface irrigation schemes under Part A of the Project at a level sufficient to cover full annual operation and maintenance costs, with the rates to be revised periodically as necessary to reach such level. B. Agricultural Intensification 1. Each Project Province shall cause each CATEC in its Project Area to prepare and furnish to its provincial PMO by December 31 of each year a detailed extension program showing proposed activities and physical targets for the next year. 2. Each Project Province shall cause the PMOs in its Project Area to: (a) sell to farmers through CATECs the fertilizer and other inputs provided under Part B (1) of the Project at its actual import cost plus distributors' margin; and (b) operate a revolving fund using the proceeds of such sales to be used to finance future purchases of such fertilizer and other inputs. 3. Each Project Province shall prepare and furnish to the Association and the Bank by December 1 of each year an annual fertilizer plan showing the quantities of chemical fertilizer required and the plan for procuring them in the next year. Page 8 4. Each Project Province shall ensure that: (a) pesticides to be provided under Part B (1) of the Project shall be approved by the Association and the Bank; and (b) the storage, handling, distribution and use of such pesticides shall be consistent with guidelines satisfactory to the Association and the Bank, and where applicable, the guidelines of the Borrower's Ministry of Agriculture. 5. Each Project Province: (a) shall review and analyze by the end of each year for its Project Area: (i) contract and negotiated procurement crop targets for grain and oil crops; (ii) market and negotiated prices for grain and oil crops: (iii) cotton price and production incentives; and (iv) sales prices of imported agricultural inputs; (b) shall furnish to the Association and the Bank the results of such reviews and analyses and recommendations by March 31 of the following year; and (c) shall also furnish such results and recommendations for cotton price and production incentives to the State Price Bureau by March 31 of each year. C. Environmental Protection 1. Each Project Province shall ensure that all Project activities shall conform to environmental standards and guidelines, including the environmental regulations and guidelines issued by the National Environmental Protection Agency and by the Environmental Protection Bureau of the respective Project Provinces, which shall be acceptable to the Association and the Bank. 2. Each Project Province shall maintain an environmental unit under the provincial PMO, with functions and responsibilities acceptable to the Association and the Bank, staffed by competent staff in adequate numbers. 3. Each Project Province shall: (a) furnish to the Association and the Bank by December 31, 1991, an environment management program for such Project Province, prepared by its environmental unit; (b) cause its environmental unit to prepare a review of progress in each year under such environment management program; and (c) cause its Provincial PMO to furnish to the Association and the Bank, by March 31 of the following year, such annual review, along with the findings and recommendations. 4. Jiangsu shall, under arrangements satisfactory to the Association and the Bank, cause the existing dams and reservoirs within its Project Area to be maintained and inspected periodically in accordance with sound engineering practice. D. Project Management 1. Each Project Province shall maintain or cause to be maintained: (a) a project leading group at each of the provincial, prefectural and county levels in its Project Area, with composition and responsibilities acceptable to the Association and the Bank; and (b) a project management office at each of the provincial, prefectural and county levels in its Project Area, with functions and responsibilities acceptable to the Association and the Bank, staffed by competent staff in adequate numbers. 2. Each Project Province shall cause its provincial PMO to prepare and furnish to the Association and the Bank by December 31 of each year a detailed annual budget and Page 9 work program for Project implementation for the following year. 3. Each Project Province shall carry out its respective portion of the training provided under Part C of the Project in accordance with a program agreed with the Association and the Bank. 4. (a) Each Project Province shall cause its provincial PMO to evaluate any proposals made by county PMOs to finance activities under the Project which have not been previously appraised by the Association and the Bank, and shall approve only such proposals as are consistent with representative models agreed with the Association and the Bank. (b) Each Project Province shall inform the Association and the Bank of such proposals promptly after approval, including the economic rate of return of each such proposal as approved.