India - Third Trombay Thermal Power Project : Loan 1549 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1549 IN Guarantee Agreement (Third Trombay Thermal Power Project) between INDIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 19, 1978 LOAN NUMBER 1549 IN GUARANTEE AGREEMENT AGREEMENT, 'ated June 19, 1978, between INDIA, acting by its President (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank of the one part and THE TATA HYDRO-ELECTRIC POWER SUPPLY COMPANY LIMITED, THE ANDHRA VALLEY POWER SUPPLY COMPANY LIMITED, and THE TATA POWER COMPANY LIMITED (hereinafter collectively called the Borrowers) of the other part, the Bank has agreed to make to the Borrowers a loan in various currencies equivalent to one hundred and five million dollars ($105,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrowers in respect of such loan as hereinafter provided; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrowers, has agreed so to guarantee such obligations of the Borrowers; 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 Loan and Guarantee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the modification thereof set forth in Section 1.01 of the Loan Agreement (said General Conditions, as so modified, 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 Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee Section 2.01. Without limitation or restriction upon any of its other obliga,tions under the Guarantee Agreement, the -2- Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan, all as set forth in the Loan Agreement. ARTICLE III Other Covenants Section 3.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, specific security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined', as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto, and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Guarantor, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or adminis- trative subdivisions, the Guarantor shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Guarantor, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Guarantor or any such subdivision, including gold and other foreign exchange -3- assets held by any-institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Guarantor. Section 3.02. The Guarantor covenants that it will not take, or cause 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 the performance by the Borrowers of their obligations contained in the Loan Agreement and will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrowers to perform such obligations. Section 3.03. When, with respect to any contract for goods to be procured under Section 2.04 of the Loan Agreement, the selected bid is a bid from Group C (as defined in paragraph C.2 (b) (3) of Schedule 4 to the Loan Agreement), the Guarantor shall immediately grant or cause to be granted permission to import the goods covered by the contract, and no further review of such permission to import shall be made by the Guarantor or by any of its agencies. When, with respect to any contract, the selected bid is a bid from Group A or Group B (as defined in paragraphs C.2 (b) (1) and (2) of Schedule 4 to the Loan Agreement), the Guar- antor shall (i) promptly upon receipt of the appropriate applica- tions, issue, or cause to be issued, such import licenses as shall be required to implement the contract; (ii) make available, 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 Guarantor shall take or cause to be taken all such action as shall be necessary to ensure the availability of (i) adequate coal supplies for the efficient operation of the Project at its fully installed capacity; and (ii) rail transport facilities for up to two million tons of coal each year to serve the Project, by the time the Project shall have been completed. Section 3.05. The Guarantor covenants that, in consideration of its guaranteeing the obligations of the Borrowers in respect of the Loan as set forth in this Agreement, it will enter into an agreement satisfactory to the Bank, whereby the Borrowers undertake to pay the Guarantor on January 1 and July 1 in each year until the entire principal amount of the Loan and the inter- est and other charges thereon have been repaid, an effective fee -4- of two and three-fourths per cent (2-3/4%) per annum on the principal amounts of the Loan withdrawn and outstanding from time to time. Section 3.06. The Guarantor shall take all steps necessary to secure from the State of Maharashtra undertakings that the State of Maharashtra shall: (a) not take, or cause or permit to be taken, any action which would prevent or interfere with the performance by the Borrowers of their obligations contained in the Loan Agreement, or which would have the effect of delimiting the Borrowers' licensed area of supply in such a manner as to adversely affect the Borrowers' financial position; and (b) take, or cause to be taken, all action necessary or appropriate to enable the Borrowers to perform the covenants, agreements and obligations of the Borrowers under the said Loan Agreement. ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary in the Department of Economic Affairs of the Ministry of Finance of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: Telex: ECOFAIRS 953-313546 New Delhi -5- For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 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 BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ W. David Hopper Regional Vice President South Asia