India - Ramagundam Thermal Power Project : Credit 0874 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 874 IN Development Credit Agreement (Ramagundam Thermal Power Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated February 2, 1979 CREDIT NUMBER 874 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated February 2, 1979, 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; (B) the Borrower has also requested the Bank to provide additional assistance toward the financing of the Project and by an agreement of even date herewith between the Borrower and the Bank (hereinafter called the Loan Agreement), the Bank is agreeing to provide such assistance in an aggregate principal amount equivalent to fifty million dollars ($50,000,000). (C) the Borrower and the Association intend, to the extent practicable, that the proceeds of the Credit provided for in this Agreement be disbursed on account of expenditures of the Project before disbursements of the proceeds of the Loan provided for in the Loan Agreement are made; (D) 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 hereinafter 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, the Bank and NTPC; 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 Development Credit Agreements of the Association, dated March 15, 1974, -2- with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements 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, the Bank 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 for the purpose of relending the proceeds of the Credit and of the Loan, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (c) "Loan Agreement" means the agreement of even date herewith between the Borrower and the Bank for the purpose of the Project, as such agreement may be amended from time to time, and such term includes the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974 as made applicable to such agreement, all agreements supplemental to the Loan Agreement and all schedules to the Loan Agreement; and (d) "Memorandum and Articles" mean the Memorandum and Articles of Association of NTPC applicable at the date of this Agreement. 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 two hundred million dollars ($200,000,000). -3- Section 2.02. The amount of the C edit 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 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, procurement of the goods to be financed out of the proceeds of the Credit, shall be governed by the provisions of the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1985 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on June 15 and December 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 15 and December 15 commencing June 15, 1989, and ending December 15, 2028, each installment to and including the installment payable on December 15, 1998, 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. 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 Agreement, the Borrower shall cause NTPC to perform in accordance -4- 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 to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend the proceeds of the Credit and the Loan to NTPC under a subsidiary loan agreement to be entered into between the Borrower and NTPC under terms and condi- tions which shall have been approved by the Association and which shall, inter alia, provide that NTPC shall: (i) pay to the Borrower interest at an 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, including therein a period of grace of five years. (c) The Borrower shall exercise its rights under the Subsidiary 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, 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 2.03 of the Project Agreement, the selected bid is a bid from group C (as defined in paragraph B.2 (3) of the Schedule to the Project Agreement), 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 selected bid is a bid from group A or group B (as defined in paragraphs B.2 (1) and (2) of the Schedule to -5- the Project Agreement), the Borrower shall (i) promptly upon receipt of the appropriate applications, 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 waterials 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 ensure adequate coal supplies for the efficient operation of the Project by the time the first generating unit under the Project shall have been commissioned. ARTICLE IV Remedies of the Association Section 4.01. 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 covenant, agreement or obligation under the Project Agreement; (b) a subsidiary or any other entity shall have been created or acquired or taken over by NTPC without the Association's consent, if such creation, acquisition or taking over would materially and adversely affect the conduct of NTPC's business or NTPC's financial condition or the efficiency of NTPC's management and personnel or the carrying out of the Project; (c) a default shall have occurred in the performance by the Borrower or by NTPC of any of its obligations under the Subsidiary Loan Agreement; (d) 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; (e) the Borrower or NTPC, or any other authority having jurisdiction, shall have taken any action for the dissolution or disestablishment of NTPC or for the suspension of its operations; and -6- (f) a change shall have been made in the Memorandum and Articles without the Association's consent which would materially and adversely affect the financial condition or operations of NTPC. Section 4.02. 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) and (c) of Section 4.01 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 paragraphs (e) and (f) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional 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 acti-n; (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 governmental and corporate action; and (c) all conditions precedent to the effectiveness of the Loan Agreement have been fulfilled. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, 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 -7- (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by the Borrower and NTPC, and is legally binding upon the Borrower and NTPC in accordance with its terms. Section 5.03. The date May 4, 1979, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty- five years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary in the Department of Economic Affairs of 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 6.02. The following addresses are specified for the purpose 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 -8- Cable address: INDEVAS Washington, D.C. 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 Is/ N.A. Palkhivala Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Is/ W. David Hopper Regional Vice President South Asia -9- 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 and the Loan, the allocation of the amounts of the Credit and the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit and of the Loan % of Allocated (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Turbo generators 115,000,000 ) and boilers ) ) 100% of foreign (2) Electrical equipment 35,000,000 ) expenditures and ) 100% of local (3) Other power station 25,000,000 ) expenditures equipment ) (ex-factory) (4) Coal handling 14,000,000 ) and transportation ) (5) Transmission equip- 50,000,000 ) ment (6) Consultants' 1,000,000 100% services (7) Unallocated 10,000,000 TOTAL 250,000,000 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 - 10 - (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. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association and the Bank that no proceeds of the Credit and of the Loan 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, manufac- ture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit and of the Loan 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 and the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement. In addition, except as the Borrower, the Association and the Bank shall otherwise agree, and until all amounts of the Credit shall have been with- drawn or committed, no withdrawal shall be made from the Loan Account except under committments entered into by the Bank pursuant to Section 5.02 of the General Conditions referred to in Section 1.01 of the Loan Agreement. 5. Notwithstanding the allocation of an amount of the Credit and the Loan 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 and the Loan then allo- cated to any Category will be insufficient 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 and the Loan which are then allocated to another Category and which in the opinion of the Association and the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association and the Bank shall have reasonably deter- mined that the procurement of any item in any Category is - 11 - inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Loan and the Association and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Association and the Bank under the Development Credit Agreement and the Loan Agreement, by notice to the Borrower, cancel such amount of the Credit and of the Loan as, in the Association's and the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit and of the Loan. - 12 - SCHEDULE 2 Desctiption of the Project The Project forms part of NTPC's thermal power development at Ramagundam in the Karimnagar District of the State of Andhra Pradesh. The Project consists of the following Parts: Part A: Construction of roads, culverts, railway and other miscel- laneous preliminary works, power station and residential buildings, plant foundations, canals, ducts, cooling towers and other works associated with the circulating water system, including the provision of land therefor. Part B: Acquisition and installation of three 200 MW turbo-generating units and three boilers rated at about 680 tons/hour capacity each, complete with all auxiliaries and ancillary electrical and mechanical equipment including coal transportation and handling equipment and a switchyard. Part C: Acquisition and installation of a 400 kV transmission system comprising two single circuit lines, each about 200 km in length, from Ramagundam to Hyderabad, a single circuit line, about 400 km in length, from Hyderabad to Cuddapah, a single circuit line about 200 km in length from Cuddapah to Bangalore, and a single circuit line, about 200 km in length from Cuddapah to Katpadi, together with associated equipment. The Project is expected to be completed by June 30, 1984.