CREDIT NUMBER 1552 INS LOAN NUMBER 2497 IN

Gujarat Project Agreement

(Narmada River Development (Gujarat) SardarSarovar Dam and Power Project)

among

INTERNATIONAL DEVELOPMENT ASSOCIATION

and

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

. Nand

STATE OF GUJARAT

Dated ic 1985

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CREDIT NUMBER 1552 INLOAN NUMBER 2497 IN

GUJARAT PROJECT AGREEMENT

AGREEMENT, dated C , 1985, amongINTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called theAssociation), INTERNATIONAL BANK FOR RECONSTRUCTION ANDDEVELOPMENT (hereinafter called the Bank) and the STATE OFGUJARAT, acting by its Governor (hereinafter called GUJARAT).

WHEREAS (A) by to Deve" opment Credit Agreement (NarmadaRiver Development (Gujarat) !ardar Sarovar Dam and Power Project)of even date herewith between India, acting by its President(hereinafter called the Borrower), and the Association, the Asso-ciation has agreed to make available to the Borrower an amountin various currencies equivalent to ninety nine million sevenhundred thousand Special Drawing Rights (SDR 99,700,000), on theterms and conditions set forth in the Development Credit Agree-ment (Narmada River Development (Gujarat) Sardar Sarovar Dam andPower Project), but only on condition that Gujarat agrees toundertake such obligations toward the Association as are herein-after set forth;

(B) by the Loan Agreement (Narmada River Development(Gujarat) Sardar Sarovar Dam and Power Project) of even dateherewith between the Borrower and the Bank, the Bank has agreedto make available to the Borrower an amount in various curren-cies equivalent to two hundred million. dollars ($200,000,000),on the terms and conditions set forth in the Loan Agreement(Narmada River Development (Gujarat) Sardar Sarovar Dam and PowerProject), but only on condition that Gujarat agrees to undertakesuch obligations toward the Bank as are hereinafter set forth;and

WHEREAS Gujarat, in consideration of the Association'sentering into the Development Credit Agreement (Narmada RiverDevelopment (Gujarat) Sardar Sarovar Dam and Power Project) andthe Bank's entering into the Loan Agreement (Narmada River Devel-opment (Gujarat) Sardar Sarovar Dam and Power Project), with theBorrower, has agreed to undertake the obligations hereinafter setforth;

NOW THEREFORE the parties hereto hereby agree as follows:

ARTICLE I

Definitions

Section 1.01. Wherever used in this Agreement, unless thecontext shall otherwise require: (a) the several terms defined

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in the Development Credit Agreement (Narmada River Development

(Gujarat) Sardar Sarovar Dam and Power Project), in the Loan

Agreement (Narmada River Development (Gujarat) Sardar Sarovar Dam

and Power Project), and in the General Conditions (as so defined)

have the respective meanings therein set forth; (b) reference to

the Association shall also be deemed as reference to the Bank;

and (c) reference to the Credit shall also be deemed as reference

to the Loan.

ARTICLE II

Execution of the Project

Section 2.01. Gujarat declares its commitment to the objec-

tives of the Project as set forth in Schedule 2 to the Develop-

ment Credit Agreement, and, to this end, shall:

(a) carry out Parts A through 0 (i) of the Project des-

cribed in said Schedule with due diligence and efficiency and in

conformity with appropriate administrative, financial, engineer-

ing, agricultural, environmental, sociological and public utili-

ties practices, and shall provide, promptly as needed, the funds,

facilities, staffing, services and other resources required for

the purposes; provided, however, that Gujarat's obligation to

carry out Parts L and N of the Project is limited to such com-

ponents of such Parts of the Project to be implemented within

Gujarat's State boundaries. Provided, further, that Gujarat

shall, in a manner and substance satisfactory to the Association,

coordinate with Madhya Pradesh, Maharashtra and NCA the procure-

ment, construction, installation, operation and maintenance of

such portions of the hydrometeorological network under Part N of

the Project to be located within Gujarat's State boundaries;

(b) without limitation to the provisions of paragraph (a)

of this Section, provide, or cause to be provided, to NCA, promp-

tly as needed and pursuant to the cost-sharing provisions of the

Decision, the funds, facilities, services and other resources

required to enable'NCA to carry out its responsibilities provided

for in the Decision, inter alia, the overall operation and main-

tenance of the hydrometeorological network under Part N of the

Project, and shall not take or permit to be taken, any action

which would prevent or interfere with such responsibilities; and

(c) without limitation to the provisions of paragraph (b)

of this Section, provide, or cause to be provided, to NCA, promp-

tly as needed and pursuant to the cost-sharing provisions of the

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Decision, the funds, facilities, services and other resources

required to enable NCA to assist the Borrower in carrying out

Part P of the Project with due diligence and efficiency and shall

not take, or permit to be taken, any action which would prevent

or interfere with such performance.

Section 2.02. Without limitation to the provisions of Sec-

tion 2.01 of this Agreement, Gujarat shall:

(a) carry out the planning, design and construction of the

works (located within Gujarat's State boundaries) under Parts A,

B, D, E, G, H, I, J and N of the Project, and the installation

of the equipment under Parts C, F and N of the Project, all in

accordance with standards and criteria acceptable to the Asso-

ciation;

(b) by December 31, 1987, prepare and furnish to the Asso-

ciation, for its approval, an operation and maintenance plan,

including the provision of funds, staff and other resources, for

the dams, powerhouses, canals and related structures and equip-

ments (located within Gujarat's State Boundaries) under Parts A,

B, C, D, E, F, G, H, I and J of the Project, respectively, and

thereafter, adopt and implement such plan as so approved;

(c) without limitation to the provisions of paragraph (a)

of this Section, by December 31, 1986, in coordination with

Madhya Pradesh, Maharashtra and NCA, prepare and furnish to the

Association,. for its approval, a final system design for the

hydrometeorlogical network under Part N of the Project, including

equipment specifications and construction schedules, and, there-

after, carry out such Part of the Project pursuant to such system

design and construction schedule, as so approved;

(d) by December 31, 1987, in coordination with Madhya

Pradesh, Maharashtra and NCA, prepare and furnish to the Associa-

tion, for its approval, an operation and maintenance plan for

the hydrometeorological network under Part N of the Project,

which plan shall include the provision of funds, staff and other

resources, and, thereafter, adopt and implement such plan as so

approved.

(e) take all such action as shall be necessary to maintain,

at all times, an adequate supply of materials critically needed

for carrying out the construction works under Parts A, B, D, E,

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G, H, I, J and N of the Project (located within Gujarat's Stateboundaries), including cement and steel;

(f) by December 31, 1991 or such other date as may beagreed upon between the Association and Gujarat, complete withinGujarat's State boundaries, the construction of the transmissionlines and substations required for the full integration of thepower-related facilities under the Project with the Borrower'swestern region power grid; and

(g) by June 30, 1988, have such components of the hydro-meteorological network under Part N of the Project located withinGujarat's State boundaries, installed and operational in amanner satisfactory to the Association.

Section 2.03. (a) In order to assist Gujarat in carrying outParts M (i), M (ii) and M (iii) of the Project, Gujarat shallemploy consultants and/or experts whose qualifications, expe-rience and terms and conditions of employment shall be satis-factory to the Association, such consultants and/or experts to beselected in accordance with principles and procedures satis-factory to the Association on the basis of the "Guidelines forthe Use of Consultants by World Bank, Borrowers and by the WorldBank as Executing Agency" published by the Bank in August 1981.

(b) For purposes of paragraph (a) of this Section, Gujaratshall, by April 1, 1985, prepare and furnish to the Association,for its approval, a list of consultants and/or experts in thefollpwing area, inter alia, quality control; design of gates andvalves and related control equipment; concrete design and place-ment; steel fabrication and erection; tunnels; rock mechanics,including controlled blasting and rock support systems for theunderground powerhouse; design and installation of large rotat-ing equipment and accessory electrical equipment; emergenciesencountered during construction of the Project, such as earth-quakes and other unforeseen events which may affect the Project;and, operation and maintenance of dams, spillways and powerplants.

(c) In order to assist Gujarat in carrying out Part N ofthe Project, Gujarat shall employ, in coordination with MadhyaPradesh and Maharashtra, consultants and/or experts whose quali-fications, experience and terms and conditions of employmentshall be satisfactory to the Association, such consultants and/or

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experts to be selected in accordance with principles and proce-

dures satisfactory to the Association on the basis of the "Guide-

lines 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 2.04. Except as the Association shall otherwise

agree, procurement of the goods and civil works required for

Parts A, B, H, K and N of the Project and to be financed out of

the proceeds of the Credit shall be governed by the provisions of

Schedule 1 to this Agreement.

Section 2.05. (a) Gujarat 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 pay-

able in a currency freely usable by Gujarat to replace or repair

such goods.

(b) Gujarat shall cause all goods and services financed out

of the proceeds of the Credit made available to it by the Bor-

rower to be used exclusively for the purposes of the Project.

Section 2.06. Gujarat shall take all such action as shall be

necessary to maintain, at all times, the Narmada Control Author-

ity, the Sardar Sarovar Construction Advisory Committee and the

Narmada Review Committee, each with such powers, functions,

responsibilities and membership as provided for in the Decision,

and staffing and funds as shall be required to enable each of

them to accomplish its purposes, and shall not take, or cause to

be taken, any action which shall prevent or interfere with such

purposes.

Section 2.07. Gujarat shall maintain the Narmada Development

Department, headed by a qualified and experienced officer, such

Department to be assigned, at all times, with such powers, func-

tions, responsibilities, organization, staffing and funds as

shall be required to enable it to adequately undertake its

responsibilities for the overall implementation and management of

the Sardar Sarovar Project, including:

(a) the operation and maintenance of the irrigation,

municipal, industrial and domestic water facilities under Part B

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of the Sardar Sarovar Project, which Project is described inSchedule 4 to the Development Credit Agreement (Gujarat) SardarSarovar Dam and Power Project;

(b) the operation and maintenance of Parts A, D, E, H and Iol the Project described in Schedule 2 to the Development CreditAgreement (Gujarat) Sardar Sarovar Dam and Power Proj.-,ct;

(c) pursuant to the provisions of the Decision, the supplyand distribution of irrigation, municipal, industrial anddomestic water resulting from the Sardar Sarovar Project, whichProject is described in Schedule 4 to the Development CreditAgreement (Gujarat) Sardar Sarovar Dam and Power Project; and

(d) through an appropriate agency to be established byDecember 31, 1988: (i) the operation and maintenance of Parts B,C, F, G and J of the Project described in Schedule 2 to theDevelopment Credit Agreement (Gujarat) Sardar Sarovar Dam andPower Project; and (ii) pursuant to the provisions of theDecision, the supply of hydroelectric power to Gujarat, MadhyaPradesh and Maharashtra resulting from the Project described inSchedule 2 to the Development Credit Agreement (Gujarat) SardarSarovar Dam and Power Project.

Section 2.08. Gujarat shall maintain:

(a) the Narmada High Power Committee, at all times, withsuch powers, functions, membership and responsibilities as shallbe required to enable such Committee to adequately undertake itsresponsibilities for the coordination and timely interactionamong the various departments and agencies of Gujarat responsiblefor the carrying out of the Project or a Part thereof; and

(b) the Narmada Planning Group, at all times, with suchpowers, functions, responsibilities, membership, staffing, orga-nization and funds as shall be required to enable it to adequate-ly undertake its responsibilities for carrying out planningstudies of the Narmada River Development Program, including thoserequired to develop a Plan for the operation and maintenance ofthe hydroelectric power and water delivery and drainage facili-ties under the Sardar Sarovar Project.

Section 2.09. For purposes of enabling the Narmada Develop-ment Department to adequately implement and manage the SardarSarovar Project, Gujarat shall:

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(a) maintain, within the Narmada Development Department,

the Central Procurement Unit, headed by a qualified and

experienced officer and assigned, at all times, with such powers,

functions, responsibilities, staffing, organization and funds as

shall be required to enable it to adequately undertake its res-

ponsibilities for the procurement of all goods and services re-

quired for the implementation of the Sardar Sarovar Project; and

(b) by December 31, 1985, establish and, thereafter,

maintain within the Narmada Development Department, a cell

responsible for the monitoring and evaluation of the various

activities under the Sardar Sarovar Project, such. cell to be

headed by a qualified and experienced officer and assigned, at

all times, with such powers, functions, responsibilities,

staffing, organization and funds as shall be required to enable

it to accomplish its purposes.

Section 2.10. Gujarat shall adopt and, thereafter, imple-

ment, within its State boundaries, a rehabilitation and resettle-

ment plan for the Oustees, satisfactory to the Association, which

plan shall include the principles and objectives set forth or

referred to in Schedule 3 to the Development Credit Agreement

(Narmada River Development (Gujarat) Sardar Sarovar Dam and Power

Project), and the institutional arrangements provided for in

Schedule 2 to this Agreement.

Section 2.11. (a) Gujarat shall, in collaboration with

Madhya Pradesh and Maharashtra, prepare and furnish to the

Association, for its approval:

(i) by December 31, 1985, a work plan for the environ-

mental effects derived and to be derived from the

implementation of the- Sardar Sarovar Project,

which work plan shall include (A) suitable train-

ing programs for the Project's staff of Gujarat,

Madhya radesh and Maharashtra, including plans,

schedules, syllabi and provision of funds, and (B)

studies and implementation schedules therefor, for

fish and fisheries, forest and wildlife, and

public health aspects;

(ii) by June 30, 1989, a suitable training program of

operation and maintenance of the facilities under

the Sardar Sarovar Project, including plans,

schedules, syllabi and provision of funds; and

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(iii) by December 31, 1985, a suitable training programon resettlement and rehabilitation of the Ousteesfor the Project's staff of Gujarat, Madhya Pradeshand Maharashtra,including plans, schedules,syllabi and provision of funds.

(b) Gujarat shall, in coordination with Madhya Pradeshand Maharashtra, implement the work plan and training programsreferred to-in paragraph (a) above, as so approved.

Section 2.12. (a) Gujarat shall furnish to the Association,promptly upon their preparation, the plans, specifications,reports, and construction and procurement schedules for Parts Athrough 0 (i) of the Project, located within Gujarat's Stateboundaries, and any material modifications thereof or additionsthereto, in such detail as the Association shall reasonablyrequest.

(b) Gujarat shall: (i) maintain records and proceduresadequate to record and monitor the progress of Parts A through 0(i) of the Project, located within Gujarat's State boundaries(including their cost -and the benefits to be derived from them),to identify the goods and services financed out of the proceedsof the Credit, and to disclose their use in such Parts of theProject; (ii) enable the Association's representatives to visitthe facilities and construction sites included in such Parts ofthe Project and to examine the goods financed out of the proceedsof the Credit and any relevant records and documents; and (iii)furnish to the Association at regular intervals all such informa-tion as the Association shall reasonably request concerning suchParts of the Project, their cost and, where appropriate, thebenefits to be derived from them, the expenditures of such pro-ceeds and the goods and services financed out of such proceeds.

(c) Upon the award by Gujarat of any contract for goods,works or services to be financed out of the proceeds of theCredit, the Association may publish a description thereof, thename and nationality of the party to whom the contract wasawarded and the contract price.

(d) Promptly after completion of the Project, but in anyevent not later than six months after the Closing Date or suchlater date as may be agreed for this purpose between Gujarat andthe Association, Gujarat shall, in coordination with MadhyaPradesh and Maharashtra prepare and furnish to the Association a

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report, of such scope and in such detail as the Association 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 Gujarat and the Association of theirrespective obligations under the Gujarat Project Agreement, theperformance by Madhya Pradesh and the Association of theirrespective obligations under the Madhya Pradesh Project Agree-ment, the performance by Maharashtra and the Association of their

resp.,ctive obligations under the Maharashtra Project Agreement,the performance by the Borrower in carrying out Part P of the

Project and the accomplishment of the purposes of the Credit.

Section 2.13. Without limitation to the generality of para-graph (b) of Section 2.12 of this Agreement, Gujarat shallfurnish to the Association semiannual and annual reports, of such

scope and in such detail as the Association shall reasonablyrequest, on the progress of Parts A through 0 (i) of the Project(located within Gujarat's State boundaries), such reports to befurnished within three months after the end of each reportingperiod.

Section 2.14. (a) Gujarat shall, at the request of theAssociation, exchange views with the Association with regard tothe progress of Parts A through 0 (i) of the Project (locatedwithin Gujarat's State boundaries), the performance of its

obligations under this Agreement and other matters relating to

the purposes of the Credit.

- (b) Gujarat shall promptly inform the Association of anycondition which interferes or threatens to interfere with the

progress of Parts A through 0 (i) of the Project (located withinGujarat's State boundaries), the accomplishment of the purposesof the Credit, or the performance by Gujarat of its obligationsunder this Agreement.

Section 2.15. Gujarat shall take, or cause to be taken, all

such action as shall be necessary to acquire, within its Stateboundaries, all such land and rights in respect of land as shall

be required for carrying out the Project and shall furnish tothe Association, promptly after such acquisition, evidence

satisfactory to the Association that such land and rights inrespect of land are available for purposes related to the

Project.

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Section 2.16. Gujarat shall, at all times, cause the facili-ties provided under the Project to be efficiently maintained, aswell as the vehicles and equipment provided under the Projectefficiently operated and maintained, and all necessary repairsand renewals thereof to be made, all in accordance with soundengineering and financial practices.

Section 2.17. Gujarat shall, within its State boundaries,take all such measures as shall be considered necessary tominimize the risk of malaria, filaria, schistosomiasis, and otherwater-related diseases that may result from the implementation ofthe Project.

Section 2.18. Gujarat shall:

(a) by April 1, 1985, for the purposes set forth in para-graphs (b) and (c) of this Section, establish and, thereafter,maintain the Dam Safety Panel with terms of reference and member-ship satisfactory to the Association;

(b) cause the Dam Safety Panel to review the adequacy ofthe plans and designs of the dams, spillways, by-pass tunnel,weir, powerhouses, channels, related structures and facilitiesincluded in the Project;

(c) cause the Dam Safety Panel to: (i) conduct semiannualreviews during design and construction of the dams, spillways,by-pass tunnel, weir, powerhouses, channels, related structuresand facilities included in the Project, to examine, inter alia,whether there is any need for making changes in the design and/or

construction of such dams, spillways, by-pass tunnel, weir.,powerhouses, channels, related structures and facilities; (ii)not later than seven days from the date of each of the above-mentioned reviews, furnish to the Association and Gujarat a

report of its findings, conclusions and recommendations; and

(d) under arrangements satisfactory to the Association,cause the dams, spillways, by-pass tunnel, weir, powerhouses,channels, related structures and facilities constructed under theProject to be periodically inspected in accordance with soundengineering practice in order to determine whether there are anydeficiencies in the condition of such structures, or in thequality and adequacy of maintenance or methods of operation of

the same, which may endanger their safety.

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ARTICLE III

Financial Covenants

Section 3.01. Gujarat shall cause its departments and other

agencies and authorities responsible for carrying out Parts A

through 0 (i) of the Project or any part thereof to:

(a) maintain separate records and accounts adequate to

reflect, in accordance with sound accounting principles and

procedures consistently applied, its resources, expenditures and

operations related to Parts A through 0 (i) of the Project; and

(b) furnish to the Association copies of their accounts and

financial statements related to such Parts of the Project for

(J 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 each such year.

Section 3.02. Gujarat shall cause its departments and other

agencies and authorities responsible for carrying out Parts A

through 0 (i) of the Project or any part thereof to:

(a) have their accounts and financial statements related to

such Parts of the Project for each fiscal year audited, in accor-

dance with appropriate auditing principles consistently applied,

by independent auditors acceptable to the Association;

(b) furnish to the Association immediately following its

finalization, the report of such audit by said auditors, of such

scope and in such detail as the Association shall have reasonably

requested; and

(c) furnish, or cause to be furnished, to the Association

such other information concerning said accounts and records,

financial ste.ements and the audit thereof as the Association

shall from time to time reasonably request.

Section 3.03. Except as the Association shall otherwise

agree, Gujarat shall, by a date not later than six months before

the commissioning of the first turbine-generator unit under

either Part C or F of the Project, enter into a bulk supply

contract, satisfactory to the Association, with appropriate

electric utility organization[s] for the sale of electricity

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generated from the facilities installed under the project; suchcontract shall include a sales price or sales prices, such thatthe present value of the annual revenues over the expected lifeof the power facilities, discounted at an appropriate rate, shallbe greater than the sum of the present value of Gujarat's shareof annual operation and maintenance cost over the expected lifeof the facilities, similarly discounted, and of Gujarat's shareof annual investment costs of the said facilities, similarlydiscounted. Such prices shall be subject to review and, ifrequired, revised every three years from the date of the saidcontract.

For purposes of this Section, the term "appropriate rate"means a financial reference rate or rates which will reflect anacceptable real rate of return to capital -and expected futureinflation.

ARTICLE IV

Effective Date; Termination;Cancellation and Suspension

Section 4.01. This Agreement shall come into force andeffect on the date upon which the Development Credit Agreement(Narmada River Development (Gujarat) Sardar Sarovar Dam and PowerProject) and the Loan Agreement (Narmada River Development(Gujarat) Sardar Sarovar Dam and Power Project) become effecti*e.

Section 4.02. (a) This Agreement and all obligations of theAssociation and of Gujarat thereunder shall terminate on theearlier of the following two dates:

(i) the date on which the Development Credit Agreement(Narmada River Development (Gujarat) SardarSarovar Power and Dam Project) and the LoanAgreement (Narmada River Development (Gujarat)Sardar Sarovar Dam and Power Project) shallterminate in accordance with their respectiveterms; or

(ii) a date 20 years after the date of this Agreement.

(b) If the aforementioned Development Credit Agreement andLoan Agreement terminate in accordance with their terms beforethe date specified in paragraph (a) (ii) of this Section, theAssociation shall promptly notify Gujarat of this event.

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Section 4.03. All the provisions of this Agreement shallcontinue in full force and effect notwithstanding any cancella-tion or suspension under the General Conditions.

ARTICLE V

Miscellaneous Provisions

Section 5.01. Any notice or request required or permitted tobe given or made under this Agreement and any agreement betweenthe parties contemplated by this Agreement shall be in writing.Such notice or request shall be deemed to have been duly given ormade when it shall be delivered by hand or by mail, telegram,cable, telex or radiogram to the party to which it is required orpermitted to be given or made at such party's address hereinafterspecified or at such other address as such party shall havedesignated by notice to the party giving such notice or makingsuch request. The addresses so specified are:

For the Association:

International Development Association1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address: Telex:

INDEVAS 440098 (ITT)Washington, D.C. 248423 (RCA) or

64145 (WUI)

For Gujarat:

Chief SecretaryGovernment of GujaratGandhinagar, Gujarat382010, India

Cable address: Telex:

CHIEFSEC 285-SCGJ-IN-Gandhinagar, India

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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 Gujarat may be taken or executed by the

Chief Secretary or such other person or persons as Gujarat shall

designate in writing, and Gujarat shall furnish to the

Association 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.

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 e f^c?CtRegional Vice President

South Asia

STATE OF GUJARAT

B y/ Authorized Representative

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SCHEDULE 1

Procurement

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 August 1984 (hereinafter called the

Guidelines).

2. Bidders for: (a) civil works contracts for the dam under

Part A of the Project, the powerhouse under Part B of the

Project, and the irrigation by-pass tunnel under Part H of the

Project; and (b) fabrication contracts for the gates for the dam

under Part A of the Project, shall be pre-qualified as described

in paragraph 2.10 of Part A of the Guidelines.

B. Preference for Domestic Manufacturers

In the procurement of goods in accordance with the proce-

dures described in Part A (1) of this Schedule, goods manufac-

tured 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.

C. Preference for Domestic Contractors

In the procurement of works in accordance with the proce-

dures described in Part A (1) of this Schedule, the Borrower may

grant a margin of preference 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.

D. Other Procurement Procedures

1. Contracts for civil works estimated to cost the equivalent

of $6,000,000 each or less, may be procured on the basis of

competitive bidding advertised locally, in accordance with

proce-

dures satisfactory to the Association.

7

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2. Audio visual and other specialized equipment under Part K of

the Project may be procured through local shopping on the basisof at least three price quotations from qualified sources.

E. Review by the Association of Procurement Decisions

1. Review of.prequalification:

With respect- to the pre-qualification of bidders as provided

for in Part A (2) of this Schedule, 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 each contract for civil works estimated

to cost the equivalent of $1,000,000 or more, and with respect

to each contract for goods estimated to cost the equivalent of

$100,000 or more, the procedures set forth in paragraphs 2 and 4

of Appendix 1 to the Guidelines shall apply.

(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.

(c) The provisions of the preceding sub-paragraphs (a) and

(b) shall not apply to contracts on account of which the Associa-

tion has authorized withdrawals from the Credit Account on the

basis of statements of expenditure.

3. The figure of 15% is hereby specified for purposes of para-

graph 4 of Appendix 1 to ths Guidelines.

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SCHEDULE 2

Institutional Arrangements

Gujarat shall:

(a) maintain the Resettlement and Rehabilitation Wing,

within the Narmada Development Department, responsible for

planning, coordinating and implementing the resettlement and

rehabilitation of the Oustees, as the case may be, within

Gujarat's State boundaries pursuant to the provisions of the

Decision and the objectives and principles set forth or referred

to in Schedule 3 to the Development Credit Agreement (Gujarat)

Sardar Sarovar Dam and Power Project, such Wing to be headed by a I

qualified and experienced officer and assigned, at all times,

with such powers, functions, responsibilities, staffing and funds

as shall be required to enable it to accomplish its purposes.

(b) commencing on March 31, 1985 and thereafter until

March 31, 1995, employ suitable research institutions, satis-

factory to the Association, for purposes of monitoring and

evaluating the implementation of the Plan for Resettlement an&-

Rehabilitation of the Oustees within Gujarat's State boundaries,

such research institutions tQ prepare and furnish to the Narmada

Development Department semiannual and annual reports of their

findings and recommendations. Gujarat undertakes to take into

account such findings and recommendations in the implementation

of the Plan for Resettlement and Rehabilitation of the Oustees;

(c) commencing on September 30, 1985 and thereafter until

March 31, 1995, prepare and furnish to the Borrower and the

Association semiannual and annual reports on the implementation

of the Plan for Resettlement and Rehabilitation of the Oustees,

which reports shall include those of the research institutions

provided for in paragraph (b) of this Schedule. Such reports

shall be furnished within three months after the end of each

reporting period; and

(d) by March 31, 1985, establish and, thereafter, main-

tian a committee for purposes of advising the Resettlement and

Rehabilitation Wing of the Narmada Development Department with

regard to the implementation of the Plan for Resettlement and

Rehabilitation of the Oustees, such committee to be headed by a

qualified and experienced officer and include in its membership

- 18 -

representatives of Gujarat's social science research institu-

tions, Oustees interest groups, including non-governmental social

workers and welfare organizations from Gujarat, and of the

Oustees relocated within Gujarat's State boundaries. Such com-

mittee shall be assigned, at all times, with such functions,

responsibilities, staffing and funds as shall be required to

enable it to accomplish its purposes.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

CERTIFICATE

I hereby certify that the foregoing is a true

copy of the original in the archives of the Interna-

tional Bank for Reconstruction and Develop-

ment.

In witness whereof I have signed this Certifi-

cate and affixed the Seal of the Bank thereunto

this day of 198-

FOR SECRETARY

INTERNATIONAL DEVELOPMENT ASSOCIATION

CERTIFICATE

I hereby certify that the foregoing is a true

copy of the original in the archives of the Interna-

tional Development Association.

In witness whereof I have signed this Certifi-

cate and affixed the Seal of the Association

thereunto the 4Ae- day of

198F SC T

FOR SECRETARY