A CREDIT NUMBER 1514 IN UMENTS Project Agreement (Kerala Social Forestry Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF KERALA Dated T4CciRO ( I , 1984 CREDIT NUMBER 1514 IN PROJECT AGREEMENT AGREEMENT, dated (C/VA r 2, 1984, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and STATE OF KERALA, acting by its Governor (hereinafer called Kerala). WHEREAS by the Development Credit Agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to thirty million six hundred thousand Special Drawing Rights (SDR 30,600,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Kerala agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS, in accordance with the Borrower's standard arrangements for developmental assistance to the States of India, the proceeds of the credit provided for under the Development Credit Agreement will be made available to Kerala on the terms and conditions therein set forth; and WHEREAS Kerala, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit 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) Kerala 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 -2- the Project described in said Schedule with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and forestry practices. (b) Kerala shall ensure that, in carrying out the Project, the implementation procedures set forth in Schedule 2 to this Agreement are complied with. Section 2.02. In order to assist Kerala in carrying out the Project, Kerala shall, as and when required, employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such consul- tants to 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. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to this Agree- ment. Section 2.04. (a) Kerala undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit made available to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by Kerala to replace or repair such goods. (b) Except as the Association shall otherwise agree, Kerala shall cause all goods and services financed out of the proceeds of the Credit made available to it by the Borrower to be used exclusively for the purposes of the Project. Section 2.05. (a) Kerala shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents, and work and procurement schedules for the Project, and any material modifications thereof or addi- tions thereto, in such detail as the Association shall reasonably request. -3- (b) Kerala shall: (i) maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) enable the Association's representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditures of such proceeds and the goods and services financed out of such proceeds. (c) Upon the award by Kerala of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between Kerala and the Association, Kerala shall prepare and furnish to the Associa- tion a report, of such scope and in such detail as the Associa- tion shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by Kerala and the Associa- tion of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (e) Kerala shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property, equipment, records and documents relevant to the performance of Kerala's obligations under this Agreement. Section 2.07. (a) Kerala 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) Kerala shall promptly inform the Association of any condition which interferes or threatens to interfere with the -4- progress of the Project, the accomplishment of the purposes of the Credit, or the performance by Kerala of its obligations under this Agreement. ARTICLE III Particular Covenants Section 3.01. (a) Kerala shall cause its departments and other agencies and authorities responsible for carrying out the Project or any part thereof to: (i) maintain separate records and accounts adequate to reflect, in accordance with sound accounting principles and procedures consistently applied, their resources, expenditures and operations related to the Project; and (ii) furnish to the Association copies of their accounts and financial statements related to the Project for each fiscal year, certified as to their accuracy and authenticity by an independent auditor acceptable to the Association, as soon as available but in any case not later than nine months after the end of such year. (b) Kerala shall cause its departments and other agencies and authorities responsible for carrying out the Project or any Part thereof to: (i) have their accounts and financial statements related to the Project for each fiscal year audited, in accor- dance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association immediately following its finaliza- tion, 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 such accounts and records, financial statements and the audit thereof as the Association shall from time to time reasonably request. Section 3.02. Kerala shall undertake a joint mid-term review of the Project with the Borrower and the Association promptly after completion of the third year's tree planting and not later than March 31, 1987. 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. -5- Section 4.02. (a) This Agreement and all obligations of the Association and of Kerala 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) a date 20 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 Kerala of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any can- cellation 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 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 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. For Kerala: Chief Secretary Government of Kerala Secretariat Trivandrum, Kerala, India Cable address: CHIEF SEC Trivandrum 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 Kerala may be taken or executed by the Chief Secretary or such other person or persons as Kerala shall designate in writing, and Kerala shall furnish to the Association sufficient evidence of the authority and the authenticated speci- men 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 collec- tively but one instrument. 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By (S IftQ W{ 4 Regional Vice President Acting South Asia STATE OF KERALA By Authorized Representative -7- SCHEDULE 1 Procurement A. General Procedures Except as provided in Part C hereof, contracts for civil works, vehicles, equipment and materials shall be let on the basis of competitive bidding advertised locally under procedures satisfactory to the Association, provided, however, that con- tracts for (i) research equipment estimated to cost the equiva- lent of $20,000 each or less may be procured through normal com- mercial channels after obtaining quotations from at least three suppliers; and (ii) proprietary and highly specialized items may be procured through direct purchase from known sources of supply. B. 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 estimated to cost the equiva- lent of $150,000 or more: (a) Before bids are invited, Kerala shall 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 docu- ments 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. (b) After bids have been received and evaluated, Kerala shall, before a final decision on the award is made, 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 evalua- tion and comparison of the bids received, and such other informa- tion as the Association shall reasonably request. The Association shall, if it determines that the intended award would be incon- sistent with the Guidelines or this Schedule, promptly inform Kerala and state the reasons for such determination. -8- (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification was invited. (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 not governed by the preceding paragraph, Kerala shall furnish to the Association, promptly after its execution and prior to the submission to the Associa- tion 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 Kerala and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, Kerala shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform Kerala and state the reasons for its determination. C. Procurement Without Contracting All plantation activities, construction of residential quarters, and construction of small office buildings estimated to cost the equivalent of $50,000 each or less, may be carried out through force account or piece rates established by Kerala for such works. -'9- SCHEDULE 2 Implementation Procedures 1. The positions of Regional Conservators of Forests shall be filled by December 31, 1984. 2. Principles governing the arrangements for the sale of fuel- wood from the Forests Department's lands shall be finalized by June 30, 1986, in consultation with the Association. 3. Beginning with the 1985-86 planting season, up to 3500 casuarina seedlings (including replacement for losses) per family and up to 500 seedlings for all other species per family shall be distributed free of charge. Seedlings in excess of said limit shall be charged at the actual cost of production. Forests Department nurseries shall maintain registers in the number of seedlings distributed to each family, and Social Forestry Wing shall conduct field reviews during each planting season to ascer- tain that wastage of seedlings is being minimized. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interria- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day ofD_______ 198 FOR SECRETARY