Conformed Copy - L4354 - Irrigated Agriculture Intensification II Project - Project Agreement

Page 1 CONFORMED COPY LOAN NUMBER 4354 CHA Project Agreement (Irrigated Agriculture Intensification II Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and ANHUI PROVINCE HEBEI PROVINCE HENAN PROVINCE JIANGSU PROVINCE and SHANDONG PROVINCE Dated July 31 , 1998 LOAN NUMBER 4354 CHA PROJECT AGREEMENT AGREEMENT, dated July 31, 1998, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and ANHUI PROVINCE, HEBEI PROVINCE, HENAN PROVINCE, JIANGSU PROVINCE and SHANDONG PROVINCE (collectively, the Project Provinces, and individually, a Project Province). WHEREAS by the Loan Agreement of even date herewith between People's Republic of China (the Borrower) and the Bank, the Bank has agreed to lend to the Borrower an amount equal to three hundred million Dollars ($300,000,000), 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; and WHEREAS the Project Provinces, in consideration of the Bank's entering into the Loan Agreement with the Borrower, have 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 Loan Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. Page 2 ARTICLE II Execution of the Project; Section 2.01. (a) Each Project Province declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, shall carry out its Respective Part of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, and environmental practices, and in accordance with programmatic guidelines acceptable to the Bank, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation upon the provisions of Section 2.01(a) of this Agreement, and except as the Bank and the concerned Project Province shall otherwise agree, each Project Province shall carry out its Respective Part of the Project in accordance with the Implementation Program set forth in the Schedule to this Agreement. Section 2.02. (a) Except as 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 Loan shall be governed by the provisions of Schedule 4 to the Loan Agreement. (b) Without limitation upon the foregoing, all pesticides and other farm chemicals required for the Project shall be selected exclusively from a list of chemicals approved by the Bank and shall be used, handled and stored in accordance with guidelines acceptable to the Bank. Section 2.03. (a) Each Project Province 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 (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) in respect of its Respective Part of the Project. (b) For the purposes of Section 9.08 of the General Conditions and without limitation thereto, each Project Province shall: (i) prepare, on the basis of guidelines acceptable to the Bank, a plan for the future operation of its Respective Part of the Project, and furnish the same to the Borrower, for consolidation pursuant to Section 3.04 of the Loan Agreement, not later than three months after the Closing Date or such later date as may be agreed for this purpose between the Bank and said Project Province; and (ii) afford the Bank a reasonable opportunity to exchange views with said Project Province on said plan. Section 2.04. (a) Each Project Province shall, at the request of the Bank, exchange views with the Bank with regard to the progress of its Respective Part of the Project, the performance of its obligations under this Agreement, and other matters relating to the purposes of the Loan. (b) Each Project Province shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of its Respective Part of the Project, the accomplishment of the purposes of the Loan, or the performance by said 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 separate records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures related to the carrying out of its Respective Part of the Project. Page 3 (b) Each Project Province 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 standards consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank such other information concerning such records and accounts and the audit thereof, as the Bank may, 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 the Loan Agreement becomes effective. Section 4.02. This Agreement and all obligations of the Bank and of the Project Provinces thereunder shall terminate on date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly notify the Project Provinces thereof. 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. 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 addresses 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 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 (MCI) or Washington, D.C. 64145 (MCI) For ANHUI PROVINCE: Anhui Provincial Office for Comprehensive Agricultural Development Anhui Financial Bureau No. 238 Fu Nan Road Hefei 230061 Anhui Province People