04CFFICIAL CREDIT NUMBER 5310-IN Project Agreement (Rajasthan Road Sector Modernization Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and STATE OF RAJASTHAN Dated :YptjoPv-1 ,201 CREDIT NUMBER 5310-IN PROJECT AGREEMENT Agreement datedra , 201, entered into between INTERNATIONAL DEVELOPMENT ASSOCIATION ("A sociation") and the STATE OF RAJASTHAN ("Project Implementing Entity") ("Project Agreement") in connection with the Financing Agreement ("Financing Agreement") of same date between INDIA ("Recipient) and the Association. The Association and the Project Implementing Entity hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to the Financing Agreement) constitute an integral part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Financing Agreement or the General Conditions. ARTICLE II - PROJECT 2.01. The Project Implementing Entity declares its commitment to the objectives of the Project. To this end, the Project Implementing Entity shall carry out the Project in accordance with the provisions of Article IV of the General Conditions, and shall provide promptly as needed, the funds, facilities, services and other resources required for the Project. 2.02. Without limitation upon the provisions of Section 2.01 of this Agreement, and except as the Association and the Project Implementing Entity shall otherwise agree, the Project Implementing Entity shall carry out the Project in accordance with the provisions of the Schedule to this Agreement. ARTICLE III - TERMINATION 3.01. For purposes of Section 8.05 (c) of the General Conditions, the date on which the provisions of this Agreement shall terminate is twenty (20) years after the date of this Agreement. ARTICLE IV - REPRESENTATIVE; ADDRESSES 4.01. The Project Implementing Entity's Representative is the Principal, PWD, Government of Rajasthan. 4.02. The Association's Address is: International Development Association 1818 H Street, NW Washington, DC 20433 United States of America Cable: Telex: Facsimile: INDEVAS 248423(MCI) 1-202-477-6391 Washington, D.C. 4.03. The Project Implementing Entity's Address is: Principal Secretary, PWD Secretariat, Rajasthan Jaipur Facsimile: 91-141-2227683 2 AGREED at j) , India, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By A zed presentative Name: \ T Title: ia -- - STATE OF RAJASTHAN By Authorized Representative Name: -5 .l 3 SCHEDULE Execution of the Project Section I. Implementation Arrangements A. Institutional Arrangements. 1. The Project Implementing Entity shall vest the overall responsibility for the implementation of Project activities in its PWD. To this end, the Project Implementing Entity shall: (a) maintain throughout the period of implementation of the Project, a Project Management Unit ("PMU"), headed by Chief Engineer (PMGSY), assisted by competent, experienced and qualified staff, in sufficient numbers and under terms of reference acceptable to the Association, vested with powers, financial resources, functions and competences, acceptable to the Association, to serve as the focal unit for the carrying out of the day-to-day implementation of Project activities; (b) maintain throughout the period of implementation of the Project, an environmental and social management cell ("the ESMC"), with competent, experienced and qualified staff, in sufficient numbers and under terms of reference acceptable to the Association, vested with powers, financial resources, functions and competences, acceptable to the Association, in order to: (i) assist the PWD with the preparation and implementation of the Safeguard Documents; (ii) monitor and evaluate contractors' and consultants' compliance therewith, and report their outcome to the PWD and the Association, and (iii) carry out any necessary updates thereto; and (c) prior to the commencement of civil works on any road, or section thereof in each District, establish and thereafter maintain throughout the period of implementation of such civil works, a District-specific Project Implementation Unit ("PIU") for such District comprised of competent, experienced and qualified staff, in sufficient numbers and under terms of reference acceptable to the Association; which unit shall be vested with such powers, financial resources, functions and competencies acceptable to the Association as shall be required in order to assist the PMU with the carrying out of the day-to-day implementation of Project Activities in the respective District. 2. Notwithstanding paragraph I above: (a) for purpose of implementing Component B of the Project, the Project Implementing Entity shall maintain throughout the period of implementation of such Component, a road sector modernization task force, established by the 4 Principal Secretary (PWD); which group shall be vested with powers, functions, competencies and resources acceptable to the Association, as shall be required to: (i) review and facilitate/expedite the implementation of the Rajasthan's roads sector modernization plan; and (ii) provide general oversight to the PWD's implementation of Component B of the Project; and (b) for purposes of implementing Component C of the Project, the Project Implementing Entity shall: (i) establish by no later than one month after the Effective Date, and thereafter maintain throughout the period of implementation of such Component, a Project Working Group, headed by the Commissioner of the TD, and comprised by technical experts representing the TD, PWD, HD, HeD, ED and UDD; which group shall be vested with powers, functions, competencies and resources acceptable to the Association, as shall be required to: (i) provide technical support to the road safety cell of the TD; (ii) coordinate inter-agency cooperation in the prioritization, design and implementation of activities, including the establishment of road safety cells in each of the line departments; and (iii) provide support to the PWD in the day-to-day implementation of the Project; and (ii) maintain, throughout the period of implementation of such Component, a Project Road Safety Cell within the PWD, headed by the Chief Engineer (PWD), which shall be vested with powers, functions, competencies and resources acceptable to the Association, as shall be required to implement various road safety activities. 3. The Borrower shall select and engage: (a) by no later than two (2) months after the Effective Date , and thereafter maintain throughout the period of implementation of the Project, the services of a project management consulting firm ("PMC") with qualification and experience and under terms of reference acceptable to the Association, in order to assist the PWD with Project planning and implementation including, inter alia: (i) monitoring the implementation of Project activities, carrying out periodic visits to project sites; (ii) ensuring/monitoring the Project Implementing Entity's compliance with the legal covenants/requirement provided for in this Agreement; (iii) providing guidance and recommendation 6n technical and policy matters; (iv) providing oversight in the preparation of bidding documents and subsequent changes/variations thereof, (v) assisting the PWD in the preparation of terms of references and requests for proposal, as well the evaluation of technical and financial proposals; (vi) handling contractual matters and procurement disputes, and establishing an automated contract management system; (vii) acting as technical agent of the PWD, insuring the quality of deliverables and contractors' performances; (viii) overseeing of payments to service providers and/or Project 5 contractors; (ix) supporting monitoring, supervising, documentation and training PWD staff and contractors in the implementation of the Safeguard Documents, and providing guidance and recommendations to ensure compliance therewith; and (x) preparing the Project Reports and the interim financial reports set forth in Section II.B.2 of this Schedule; and (b) by no later than one (1) month after the Effective-Date, and thereafter maintain throughout the period of implementation of the Project, the services of an audit consulting firm ("TFAC") with qualification and experience and under terms of reference acceptable to the Association, in order to: (i) carry out quarterly internal audits of the Project pursuant to the protocols set forth in the FM Manual, and report their outcome to the PWD and the Association, covering: (A) the Project financial management performance, PWD's procurement decisions and contract administration; (B) contract performance (i.e. quality of construction, compliance with technical specifications, design requirements and maintenance plans, and timely deliverables); and (C) compliance with statutory/regulatory requirements, the covenants set forth in this Agreement, and the implementation of, and compliance with, the Safeguard Documents, the GAAP, the FM Manual and the Procurement Manual; (ii) provide feedback to PWD on any control weaknesses, and issues observed that might require management attention; and (iii) assist the PWD in order to strengthen the internal control systems and address any concerns raised. B. Project Documents The Project Implementing Entity shall: (a) implement the Project in accordance with the FM Manual, the Procurement Manual, the GAAP and the Safeguard Documents; provided however that in the event of conflict between the provisions of said manual and plans, on the one hand, and those of this Agreement, on the other hand, the provisions of the latter shall prevail; and (b) refrain from amending, suspending, waiving, and/or voiding any provision of the FM Manual, the Procurement Manual, the GAAP and the Safeguard Documents, whether in whole or in part, without the prior written concurrence of the Association. C. Anti-Corruption The Project Implementing Entity shall ensure that the Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines. 6 D. Safeguards 1. The Project Implementing Entity shall: (a) carry out the Project in accordance with the EMF, the ECoPs and the SMF, VF & RPF, and the instruments (to be) prepared pursuant to paragraph 2(b) of this Section LD in conformity with the objectives, policies, procedures, time schedules, compensation arrangements and other provisions set forth in the EMF, the ECoPs and the SMF,VF & RPF, and in a manner and substance satisfactory to the Association (all these documents collectively referred to as the "Safeguard Documents"); and (b) refrain from taking any action which would prevent or interfere with the implementation of the Safeguard Documents, including any amendment, suspension, waiver, and/or voidance of any provision of the Safeguard Documents, whether in whole or in part, without the prior written concurrence of the Association. 2. With respect to each Rural Road to be constructed or upgraded under Component A of the Project, as well as any construction work for road safety interventions under Component C of the Project, the Project Implementing Entity shall refrain from inviting bids or undertaking any construction works, until and unless: (a) the proposed construction/upgrading activities have been screened by the PWD, in accordance with the guidelines, standards and procedures set forth in the EMF and SMF, VF & RPF, and PWD has produced a screening report in each case as required by the EMF and the SMF, VF & RPF; (b) as required by such foregoing screening and pursuant to the provisions of the EMF and SMF, VF & RPF, all necessary environmental and social documentation, as the case may be, has/have been prepared; and (c) the summary of the foregoing Safeguard Documents has been publicly disclosed by the Project Implementing Entity, in local language(s) at least thirty (30) days prior to the respective bidding invitation or the initiation of any contractor selection process for the related works. 3. The Project Implementing Entity shall, by no later than forty-five (45) days after the end of each calendar semester, furnish to the Association, for its records, a compilation of all the social and environmental documentation prepared by the PWD pursuant to paragraph 2.(a) of this Section L.D during such calendar semester. 7 4. The Project Implementing Entity shall ensure that, prior to commencing any civil works on a Rural Road, a safety demonstration road-corridor, or any sections thereof, under the Project: (a) all necessary governmental permits and clearances for such civil works in the relevant road, or section, shall have been obtained from the competent governmental authority/ies; (b) all pre-construction stage conditions imposed by the governmental authority/ies under such permit(s) or clearance(s) shall have been complied with/fulfilled; and (c) all resettlement measures set forth in the applicable resettlement action plans prepared pursuant to paragraph 2(b) of this Section LD, shall have been fully executed, including the full payment of compensation prior to displacement and/or the provision of relocation assistance to all Displaced Persons, as per the entitlements provided in the SMF, VF & RPF and/or the resettlement action plans; and all development actions set forth in the applicable Vulnerable Communities development plans, if any, prepared pursuant to paragraph 2(b) of this Section LD shall have been undertaken as per the provisions of the SMF, VF & RPF. 5. The Project Implementing Entity shall ensure that each contract for civil works under the Project includes the obligation of the relevant contractor to comply with the relevant Safeguard Documents applicable to such civil works commissioned/awarded pursuant to said contract. 6. The Project Implementing Entity shall ensure that the following Project expenditures are financed exclusively out of the Project Implementing Entity's own resources, and, to this end, shall provide, as promptly as needed, the resources required therefor, namely: (a) all land acquisition required for the purpose of the Project; (b) any compensation, resettlement and rehabilitation assistance or payments to Displaced Persons in accordance with the provision of the applicable resettlement action plans; and (c) tree cutting, forest land diversion costs, and/or other expenditures associated with the obtaining of any regulatory clearances and/or utilities relocation . 7. In the event of any conflict between the provisions of any of the Safeguard Documents, on the one hand, and the provisions of this Agreement and/or the Financing Agreement, on the other hand, the provisions of this Agreement and/or the Financing Agreement shall prevail. 8 E. Project Surveys The Project Implementing Entity shall carry out at least two (2) road user surveys with scope, methodologies, and terms of reference satisfactory to the Association, in order assess road users' satisfaction with Project results and its implementation, their opinions regarding current and potential sector targets, and their behavioral/attitudinal changes. The above referred surveys shall take place no later than twelve (12) months after the Effective Date (the first survey) and six (6) months prior to the Closing Date (the second one). Section II. Project Monitoring, Reporting and Evaluation A. Project Reports 1 . The Project Implementing Entity shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 4.08 of the General Conditions and on the basis of indicators as agreed with the Association. Each such Project Report shall cover the period of one calendar quarter, and shall be furnished to the Recipient and the Association not later forty-five (45) days after the end of the period covered by such report. 2. Notwithstanding the provisions of paragraph I and 2 of this Sub-Section II.A., the Project Implementing Entity shall: (a) prepare, under terms of reference satisfactory to the Association, and furnish to the Association on or about December 31, 2015, a mid-term report, integrating the results of the monitoring and evaluation activities performed pursuant to paragraph I of this Sub-Section, on the progress achieved in the carrying out of the Project during the period preceding said report, identifying weaknesses and/or delays in Project implementation, and setting out the measures recommended to ensure the efficient carrying out of the Project and the achievement of the objectives thereof for the remainder of this Financing; and (b) review with the Association, by March 31, 2016, or such later date as the Association shall request, the mid-term report referred to in sub-paragraph (a) above, and, thereafter, take all measures required to ensure the efficient completion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Association's views on the matter. 3. The Project Implementing Entity shall: (a) prepare the Project execution/completion report referred to in Section 4.08(c) of the General Conditions; and (b) furnish it to the Recipient and the Association not late than six (6) months after the Closing Date. 9 4. For purposes of this Section II.A. the Project Implementing Entity shall maintain throughout the period of implementation of the Project, a management information system within the PWD, in form and substance satisfactory to the Association; which system shall be computerized by no later than eighteen (18) months after the Effective Date, in a manner an substance acceptable to the Association. B. Financial Management, Financial Reports and Audits 1. The Project Implementing Entity shall maintain a financial management system and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, both in a manner adequate to reflect the operations and financial condition of the Project Implementing Entity, including the operations, resources and expenditures related to the Project. 2. Etity shall pre aread fush to the Association, by no later than forty-five (45) days after the end of each calendar quarter, interim financial reports for the Project covering the calendar quarter, in form and substance satisfactory to the Association. 3. The Project Implementing Entity shall have its financial statements referred to above audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association. Each audit of these financial statements shall cover the period of one fiscal year of the Project Implementing Entity. The Project Implementing Entity shall ensure that the audited financial statements for each period shall be: (a) furnished to the Recipient and the Association not later than six (6) months after the end of the period; and (b) made publicly available in a timely fashion and in a manner acceptable to the Association. Section III. Procurement All goods, works and services required for the Project and to be financed out of the proceeds of the Financing shall be procured in accordance with the provisions of Section III of Schedule 2 to the Financing Agreement. 10