India - Singrauli Thermal Power Plant : Credit 0685 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 685 IN DEVELOPMENT CREDIT AGREEMENT (Singrauli Thermal Power Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated April 1, 1977 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 1, 1977, 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; and (B) the Project will be carried out by the National Thermal Power Corporation Limited (hereinafter called NTPC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to NTPC the proceeds of the Credit as herein- after provided; and 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 Project Agreement of even date herewith between the Association and NTPC; NOW THEREFORE the parties hereto hereby agree as follows: - 2 - 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 Applicable to Development Credit Agree- ments of the Association being 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 and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association and NTPC 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; (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and NTPC pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (c) "Electricity (Supply) Act" means the Electricity (Supply) Act, 1948, of the Borrower, as amended; (d) "Memorandum and Articles" means the Memorandum and Articles of Association of NTPC dated November 7, 1975, as amended; (e) "SEB" means a State Electricity Board established Dur- suant to the Electricity (Supply) Act and includes the Delhi Elec- tricitv Supply Undertaking; and (f) "CEA" means the Borrower's Central Electricity Authority established pursuant to Section 3 of the Electricity (Supplv) Act. 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 equiva- lent to one hundred and fifty million dollars ($150,000,000). 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, contracts for the purchase of goods to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions set forth or referred to in Section 2.04 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1983 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. - 5 - Section 2.05. The Borrower shall -ay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the princinal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on May 1 and November 1 in each year. Section 2.07. The Borrower shall repay the princinal amount of the Credit in semi-annual installments payable on each May 1 and November 1 commencing May 1, 1987, and ending November 1, 2026, each installment to and including the installment payable on Novem- ber 1, 1996 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. -6- 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 Agree- ment, the Borrower shall cause NTPC to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan 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 NTPC to perform such obligations, and shall not take or permit any of its political subdivisions or any of its agencies or any agency of any such political subdivisions to take any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Credit to NTPC under a subsidiary loan agreement to be entered into between the Borrower and NTPC under terms and conditions which shall have been approved by the Association, which shall, inter alia, provide that NTPC shall: (i) pay to the Borrower interest at the effective rate of ten and one-quarter per cent (10-1/4%) per annum on the principal amount so relent and withdrawn by NTPC and outstanding from time to time; and (ii) repay to the Borrower the principal amount so relent over a period of twenty years from the date of this Agreement, including therein a period of grace of five years. (c) The Borrower shall exercise its rights under the Sub- sidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. Without limitation or restriction upon the provisions of Section 3.01 (a) of this Agreement, the Borrower specifically undertakes, whenever there is reasonable cause to believe that the funds available to NTPC will be inadequate to meet the estimated expenditures required for the carrying out of the Project, to make arrangements promptly to provide NTPC or cause NTPC to be provided with such funds as are needed to meet such expenditures. Section 3.03. When, with respect to any contract for goods to be procured under Section 2.04 of the 'Project Agreement, the lowest evaluated bid is a bid from group C (as defined in para- graph B.2 (b) (3) of the Schedule to the Project A-reement), the Borrower shall immediately grant permission to import the goods covered by the contract, and no review of such permission to import shall be made by the Borrower or by any of its agencies. When, with respect to any contract, the lowest evaluated bid is a bid from group A or group B (as defined in paragraphs B.2 (b) (1) and (2) of the Schedule to the Project Agreement), the Bor- rower shall (i) promptly upon receipt of the appropriate appli- cations, issue, or cause to be issued, such import licenses as shall be required to implement the contract; (ii) make available, -8- or cause to be made available, promptly as needed, all foreign exchange which shall be required therefor; and (iii) with respect to locally produced materials which are subject to allocation, make, or cause to be made, allocations of such materials promptly and in such quantities as shall be required for such contract. Section 3.04. The Borrower shall take all such steps as shall be necessary to make available adequate coal supplies for the efficient operation of the Project by the time the first generating unit under the Project shall have been commissioned. -9- ARTICLE IV Other Covenants Section 4.01. The Borrower shall take all such steps within the power available to it as shall be necessary to obtain from selected SEBs not later than September 30, 1977, or such other date as the Borrower and the Association shall agree, undertakings satisfactory to the Association and endorsed by the State in which any such SEB is located, to purchase in the aggregate not less than 85% of the output of power from the three generating units to be constructed under the Project at agreed bulk supply points. Section 4.02. (a) In order to assist CEA in carrying out a detailed study of the future interconnected 400 kV transmission system, the Borrower shall cause CEA to employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. (b) The Borrower shall establish a committee not later than March 31, 1977 to set standard design parameters for all components of the 400 kV transmission system to be constructed in India. - 10 - ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) NTPC shall have failed to perform any of its obligations under the Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that NTPC will be able to perform its obliga- tions under the Project Agreement; (c) NTPC or the Borrower, or any other authority having jurisdiction, shall have taken any action for the dissolution or disestablishment of NTPC or for the suspension of its oDerations; (d) a change shall have been made in the Memorandum and Articles without the Association's consent which will materially and adversely affect the financial condition or operation of NTPC; (e) a subsidiary or any other entity shall have been created or acauired or taken over by NTPC without the Association's con- sent, if such creation, acquisition or taking over would materially and adversely affect the conduct of the NTPC's business or the NTPC's financial situation or the efficiency of the NTPC's manage- ment and personnel or the carrying out of the Project; and - 11 - (f) a default shall have occurred in the performance by the Borrower or by NTPC of any of its obligations under the Subsidiary Loan Agreement. Section 5.02. 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), (b), (d), (e) and (f) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower and NTPC; and (b) any event specified in paragraph (c) of Section 5.01 of this Agreement shall occur. - 12 - ARTICLE VI Effective Date; Termination Section 6.01. 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 NTPC has been duly authorized or ratified by all necessary corporate action; and (b) the execution of the Subsidiary Loan Agreement on behalf of the Borrower and NTPC, respectively, has been duly authorized or ratified by all necessary corporate and governmental action. Section 6.02. The following are specified as additional mat- ters, within the meaning of Section 12.02 (b) of the General Con- ditions, 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 NTPC, and is legally binding upon NTPC in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by the Borrower and NTPC, and is legally binding upon the Borrower and NTPC in accordance with its terms. - 13 - Section 6.03. The date June 30, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The provisions of Sections 5.01 and 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or a date twenty-five years after date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Sec- retary, 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 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: ECOFAIRS New Delhi 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. - 15 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment 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 Is/ Kewal Singh Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Ernest Stern Regional Vice President South Asia - 16 - 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 amount of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Turbogenerators and 4,000,ooo associated equipment ) (2) Boiler plant and 58,000,000 ) 100% of foreign associated equip- ) expenditures or ment, including ) 100% of local circulating water ) expenditures pumps, piping and ) (ex-factory) valves ) (3) Instrumentation and 6,000,000 ) controls ) (4) Coal handling plant, 18,000,000 ) wagon loading/unloading ) equipment, power trans- ) formers and associated ) equipment, extra-high ) voltage breakers and ) associated equipment, ) and auxiliary 6.6 kV ) switchgear. - 17 - Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (5) Transmission system 20,000,000 ) equipment (6) Consultants' ser- 1,000,000 ) 100% of foreign vices ) expenditures and ) 100% of local expenditures (7) Unallocated 7,000,000 ) TOTAL 150,000,000 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. - 18 - 3. The disbursement percentages have been calculated in compli- ance 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 re- spect 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 I above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement. 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 in- sufficient 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, re- duce the disbursement percentage then applicable to such expendi- tures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. - 19 - 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 expendi- tures 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, can- cel 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. - 20 - SCHEDULE 2 Description of the Project The Project forms part of the Singrauli Thermal Power Devel- opment located on the fringe of the Rihand Reservoir close to the Singrauli coal field deposits in the State of Uttar Pradesh and consists of the following Parts: Part A: Acquisition of land, and civil works comprising con- struction of roads, culverts, railway and other miscellaneous preliminary works, power station and residential buildings, plant foundations, dam, canals, ducts and other works associated with the circulating water system. Part B: Installation of three 200 MW turbo-generating units and. three boilers rated at about 680 tonnes/hour capa- city each, complete with all auxiliaries and ancillary electrical and mechanical equipment including coal transportation and handling equipment and the switchyard. Part C: Installation and construction of a 400 kV transmission system comprising two single circuit lines, each about 30 km in length, from Singrauli to Obra, and a single circuit line, about 400 km in length, from Obra to Kanpur together with associated equipment. * * e The Project is expected to be completed by December 31, 1982.