Public Disclosure Authorized CONFORMED COPY Public Disclosure Authorized CREDIT NUMBER 815-IN Development Credit Agreement Public Disclosure Authorized (Andhra Pradesh Fisheries Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized Dated June 19, 1978
CREDIT NUMBER 815-IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 19, 1978, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) by an agreement of even date herewith between the Association and the State of Andhra Pradesh, the State of Andhra Pradesh has agreed to undertake certain obligations in respect of the carrying out of the Project; and (C) by an agreement of even date herewith between the Association and Agricultural Refinance and Development Corporation, the Agricultural Refinance and Development Corporation has agreed to undertake certain obligations in respect of the carrying out of the Project. WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Agreements of even date herewith referred to in Recitals (B) and (C) above; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applic, le to Development Credit Agreements of the Association beinf. hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings:
-2- (a) "Andhra Pradesh" means the State of Andhra Pradesh, a State of India, or any successor thereof; (b) "Project Agreement" means the agreement between the Association and Andhra Pradesh of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (c) "ARDC" means the Agricultural Refinance and Development Corporation, a statutory corporation established and operating under the laws of the Borrower; (d) "ARDC Agreement" means the agreement between the Association and ARDC of even date herewith, as the same may be amended from time to time and such term includes all agreements supplemental to the ARDC Agreement; (e) "Participating Banks" means banks listed in the Second Schedule to the Reserve Bank of India Act of 1934; (f) "APFC" means Andhra Pradesh Fisheries Corporation Private Limited, a corporation established and operating under the Companies Act, 1956 of the Borrower; (g) "VPT" means Visakhapatnam Port Trust, a Port Trust established and operating under the Major Port Trust Act, 1963 of the Borrower; (h) "APFD" means Andhra Pradesh Fisheries Department; and (i) "SPD" means the State Ports Department of Andhra Pradesh. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to seventeen million and five hundred thousand dollars ($17,500,000).
-3- Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall b governed by the provisions set forth in Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be September 30, 1984 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on February 15 and August 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each February 15 and August 15 commencing August 15, 1988, and ending February 15, 2028, each installment to and including the installment payable on February 15, 1998, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01.(a) Without any limitation or restriction upon any of its other obligations under the Development Credit
-4- Agreement, the Borrower shall cause Andhra Pradesh and ARDC to perform in accordance with the provisions of the Project Agreement and the ARDC Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable Andhra Pradesh and ARDC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make available out of the proceeds of the Credit, funds equivalent to $13,600,000 to Andhra Pradesh and VPT in accordance with the Borrower's standard arrangements for developmental assistance to the States of India and its agencies. (c) The Borrower shall relend funds equivalent to $3,900,000 out of the proceeds of the Credit to ARDC under financial arrangements to be entered into between the Borrower and ARDC which includes terms and conditions set forth in Schedule 4 to this Agreement or such other terms and conditions as shall be agreed among the Borrower, the Association and ARDC. Section 3.02. The Borrower shall cause VPT to make necessary arrangements for the operation of the fishing harbor, slipway and repair facilities at Visakhapatnam harbor by December 31, 1978 or such later date as the Association shall otherwise agree. Section 3.03. The Borrower shall cause the Central Coordinating Committee established under Development Credit Agreement No. 695-IN (Gujarat Fisheries Project) dated April 22, 1977 between the Borrower and the Association to provide policy guidance and work coordination under the Project. This Committee shall include a representative from Andhra Pradesh. Section 3.04. The Borrower shall cause VPT, in conjunction with Andhra Pradesh, to make provision for endorsement of bank liens on licenses of fishing vessels registered at Visakhapatnam harbor by June 30, 1979 or such later date as the Association shall otherwise agree. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof:
-5- (a) Andhra Pradesh shall have failed to perform any of its obligations under the Project Agreement; (b) ARDC shall have failed to perform any of its obligations under the ARDC Agreement; (c) ARDC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARDC or by others whereby any of the property of ARDC shall or may be distributed among its creditors; (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARDC or for the suspension of its operations; and (e) an extraordinary situation shall have arisen which shall make it improbable that (i) Andhra Pradesh will be able to perform its obligations under the Project Agreement, or (ii) ARDC. will be able to perform its obligations under the ARDC Agreement. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraphs (a) or (b) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower and Andhra Pradesh or ARDC; and (b) any event specified in paragraphs (c) or (d) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the execution of the Project Agreement on behalf of Andhra Pradesh has been duly authorized or ratified by all necessary governmental action;
-6- (b) the execution of the ARDC Agreement on behalf of ARDC has been duly authorized or ratified by all necessary corporate action; (c) a banking plan satisfactory to the Association has been prepared by ARDC under Part C of the Project; and (d) the Project Coordinating Committee has been duly established by Andhra Pradesh. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the Project Agreement has been duly authorized or ratified by Andhra Pradesh, and is legally binding upon Andhra Pradesh in accordance with its terms; and (b) that the ARDC Agreement has been duly authorized or ratified by ARDC and is legally binding upon ARDC in accordance tith its terms. Section 5.03. The dat2 September 19, 1978 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of paragraph (b) of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions:
-7- For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Telex: ECOFAIRS 312282 or New Delhi 313546 For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. Telex: 440098 (ITT) 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, 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. INDIA By /s/ J.S. Baijal Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. David Hopper Regional Vice President South Asia
-8- SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works 11,300,000 50% (2) Equipment and 800,000 materials 100% of for- eign expenditures (a) directly imported (b) manufactured locally 100% of local expenditures (ex-factory) (c) imported and 50% procured locally (3) Loan by ARDC 3,900,000 55% (4) Consultants' ser- 1,200,000 100% vices, study tour and two experimental trawlers (5) Unallocated 300,000 TOTAL 17,500,000
-9-2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $500,000 may be made in respect of Category (1) on account of payments made for expenditures on civil works at Kakinada harbor before that date but after February 28, 1978. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made.
- 10-6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit.
- 11 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: 1. Construction of quay and jetty facilities and buildings; expansion of slipway facilities; completion of roads, drains and culverts; provision of electrical and water supply systems; acquisition of land and dredging at Visakhapatnam harbor. 2. Construction of breakwater, four jetties for mechanized fishing vessels and one jetty for trawlers; dredging of trawler basin and channel; construction of boat repair facility, buildings and roads; and provision of drainage, power, light, w.ter and fuel supply facilities at Kakinada harbor. 3. Completion of quay, revetments, boat ramp, workshop, buildings and approach road; dredging of harbor basin; and provision of harbor working area, fuel and marine facilities, and drainage, power, light and water supply systems at Nizampatnam harbor. Part B: Improvement and construction of about 215 kilometers of coastal fishing village access roads in Visakhapatnam, East Godavari and Guntur districts and a water supply system for Nizampatnam village. Part C: A credit program to finance: (i) Procurement of about 300 mechanized fishing vessels, 10 meters long; about 60 mechanized fishing vessels, 9 meters long; and about 60 non-mechanized fishing vessels, 12 meters long; and (ii) construction of two seafood processing plants one each at Visakhapatnam and Nizampatnam harbors.
- 12 - Part D: Provision of about 9 man-months of consultants' services and 20 man-months of overseas study tour and construction of two experimental wooden hull shrimp trawlers, 23 meters lon$. The Project is expected to be completed by December 31, 1983.
- 13 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of equipment for seafood processing plants estimated to cost the equivalent of $200,000 or more each or for civil works at Visakhapatnam and Kakinada harbors shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of international competitive bidding under the Project and in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall cause to be prepared and forwarded to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall cause to be provided the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. Contracts for the purchase of equipment, including those under Part B of this Schedule, shall be grouped so as to encourage competition and to permit bulk procurement consistent with appropriate technical and procurement practices. 4. VPT and SPD shall be responsible for the civil works contracts under this Part. B. Other Procurement Procedures 1. Contracts for civil works at Nizampatnam harbor and improvement and construction of village access roads, water supply system and seafood processing plants shall be let on the basis of local
-14- competitive bidding and in accordance with procedures satisfactory to the Association. 2. Contracts for dredging works at Viskhapatnam, Kakinada and Nizapatnam harbors shall be executed through force 'account. 3. Contracts for the purchase of equipment and materials estimated to cost less than the equivalent of $200,000 each shall be let on the basis of local competitive bidding and in accordance with procedures satisfactory to the Association. 4. Contracts for the purchase of equipment and materials estimated to cost less than the equivalent of $50,000 each may be procured by prudent shopping through normal commercial channels. 5. Fishing vessels procured by ultimate borrowers under the credit program provided for under Part C (i) of the Project shall be in accordance with the ultimate borrowers' preference. 6. Construction of two experimental shrimp trawlers under Part D of the Project shall be made by Kakinada Boat Building Yard of APFC. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with local procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the purchaser of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids.
- 15 - (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in India if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in India equal to at least 20% of the ex-factory bid price of such goods. (2) G roup B: all other bids offering goods manufactured in India. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Evaluation and Comparison of Bids for Civil Works; Preference for Domestic Contractors With respect to any contract for civil works included under Category (1) of the table set forth in Schedule 1 to this Agreement and to be procured in accordance with the procedures described in Part A.1 of this Schedule, a margin of preference of
- 16-7-1/2% may be granted to domestic contractors, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification applying also for such preference shall be asked to provide, as part of the data for qualification, such information, including details of ownership, as shall be required to determine whether, according to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. (b) After bids have been received and reviewed, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. E. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for civil works at Visakhapatnam and Kakinada harbors: (a) Before bids are invited, the Borrower shall cause Andhra Pradesh to furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders.
- 17 - (b) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, cause Andhra Pradesh to inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, the Borrower shall cause Andhra Pradesh to furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and Andhra Pradesh and state the reasons for such determination.
- 18 - SCHEDULE 4 Principal Lending Terms and Conditions 1. Borrower to ARDC (a) For ARDC refinancing up to 9 years: (i) annual interest rate of 6.75%, less 0.25% for prompt payment; and (ii) repayment at the end of 9 years. (b) For ARDC refinancing up to 15 years: (i) annual interest rate of 7.25%, less 0.25% for prompt payment; and (ii) repayment at the end of 15 years. (c) Borrower to carry exchange risk. 2. ARDC to Participating Banks (a) Annual interest rate of 8%. (b) Installment repayments to coincide approximately ;with collections from ultimate borrowers. (c) Refinancing by loans not exceeding 80% of individual loans. 3. Participating Banks to Ultimate Borrowers (a) A loan ceiling of: (i) 80% for fishing vessels procured by cooperatives or seafood processing plant of APFC: and (ii) 85% for fishing vessels procured by private companies and individuals. (b) Annual interest rate of 11%.
.19-19 - (c) Repayment periods not exceeding: (1) 8 years including a grace period not exceeding 1 year from the date of each withdrawal for 9 meters and 10 meters mechanized fishing vessels procured by cooperatives; (ii) 6 years including a grace period not exceeding onehalf year from the date of each withdrawal for 12 meters non-mechanized fishing vessels; and (iii) 10 years including a grace period not exceeding 1 year from the date of each withdrawal for seafood processing plants of APFC. (d) An evaluation fee of 0.5% of the cost of project investments may be charged. 4. General (a) ARDC and the Participating Banks to maintain separate accounts for each of the above financing schemes. (b) Security to be in accordance with arrangements between Participating Banks and ARDC. (c) ARDC to assist Participating Banks and ultimate borrowers in the preparation and evaluation of investment plans. (d) ARDC to assist APFC in the improvement of its financial management.