India - Indira Sarovar Hydroelectric Project : Loan 2416 - Loan Agreement - Conformed

OF FICAL1 LOAN NUMBER 2416 IN DocuMENTS Loan Agreement (Indira Sarovar Hydroelectric Project) between INDIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated 1985 LOAN NUMBER 2416 IN LOAN AGREEMENT AGREEMENT, dated -aA/," / 7 , 1985, between INDIA, acting by its Presiden (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) by Resolution No. IDA 82-6, adopted on October 26, 1982, of the Executive Directors of the International Development Association (hereinafter called the Association) there has been established by the Association a Special Fund constituted by the funds which shall be contributed by certain members of the Association and administered by the Association, acting as Administrator of such Special Fund, for the purposes of, and in accordance with, the provisions of said Resolution; (C) the Borrower has requested the Administrator for assis- tance from the resources of the Special Fund in the financing of the Project described in Schedule 2 to this Agreement and the Administrator has determined that such assistance would be in accordance with the provisions of the Resolution referred to above; (D) by the Special Fund Credit Agreement (hereinafter called the Special Fund Credit Agreement) of even date herewith, the Administrator has agreed to make available to the Borrower a Special Fund Credit (hereinafter called the Special Fund Credit) to assist in the financing of such Project in an aggregate principal amount equivalent to one hundred twenty-two million Special Drawing Rights (SDR 122,000,00), on the terms and condi- tions therein set forth; (E) the Project will be carried out by the State of Madhya Pradesh through the Madhya Pradesh State Electricity Board with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the State of Madhya Pradesh the proceeds of the Loan as hereinafter provided; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to make the Loan available to the Borrower upon -2- the terms and conditions hereinafter set forth and in the Proje-t Agreement of even date herewith between the Administrator, the Bank and State of Madhya Pradesh; 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 Guar- antee Agreements of the Bank, dated October 27, 1980, with the same force and effect as if they were fully set forth herein, subject, however, to the following modification thereof, namely, that the terms "Association" and "Development Credit Agreement" wherever used shall include also to mean, "International Development Association acting as Administrator of the Special Fund" and "Special Fund Credit Agreement", respectively (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank 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, in the Preamble to this Agreement, in the Special Fund Credit Agreement and in the General Conditions Applicable to the Special Fund Credit Agreement have the respec- tive meanings therein set forth and the term "Special Fund Credit Agreement" means the agreement of even date herewith between the Borrower and the Administrator 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 Development Credit Agreements of the Association, dated June 30, 1980, as modified and made applicable to such agreement, all agreements supplemental to the Special Fund Credit Agreement and all schedules to the Special Fund Credit Agreement. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to one hundred fifty-seven million four hundred thousand dollars ($157,400,000). -3- Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to the Development Credit Agreement, as such Schedule may be amended from time to time, for expenditures made (or, if the Bank 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 Loan. Section 2.03. Except as the Bank shall otherwise agree, pro- curement of the goods and civil works required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1992, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Bank a fee equivalent to three hundred ninety-two thousand five hundred nineteen dollars ($392,519). (b) On or promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount of the said fee in such currency or currencies as the Bank shall determine. Section 2.06. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the loan not withdrawn from time to time. Section 2.07. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time at a rate per annum for each Interest Period equal to one half percent per annum above the Cost of Qualified Borrowings for the last Semester ending prior to the commencement of such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings for such Semester. (c) For purposes of this Section: (i) "Interest Period" means the six-month period com- mencing on each date specified in Section 2.08 of -4- this Agreement, including the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, expressed as a percentage per annum, as reasonably determined by the Bank, provided that the amount of $8,520.5 million referred to in (iii) (B) here- under shall be reckoned at a cost of 10.93% per annum. (iii) "Qualified Borrowings" means (A) outstanding borrowings of the Bank drawn down after June 30, 1982; and (B) until July 1, 1985, the amount of $8,520.5 million (representing borrowings of the Bank between July 1, 1981 and June 30, 1982) less any part thereof repaid earlier than July 1, 1985. (iv) "Semester" means the first six months or the second six months of a caltndar year. Section 2.08. Interest and other charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.09. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restric- tion upon any of its other obligations under the Loan Agreement, the Borrower shall cause Madhya Pradesh to perform in accordance with the provisions of the Project Agreement all the obligations of Madhya Pradesh therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable Madhya Pradesh 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 make the proceeds of the Loan available to Madhya Pradesh in accordance with the Borrower's -5- standard arrangements for developmental assistance to the States of India. ARTICLE IV Other Covenants Section 4.01. (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, special 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 Borrower, 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 administrative subdivisions, the Borrower 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 or as security for the payment of debt incurred for the purpose of financing the purchase of such property; and (ii) any lien aris- ing 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 Borrower, of any political or administrative sub- division thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Bor- rower. -6- Section 4.02. The Borrower shall carry out a study on the metering practices in a number of selected States of India and shall exchange views with the Administrator and the Bank on the recommendations arising from said study. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 (k) of the General Conditions, the events set forth in Section 4.01 of the Special Fund Credit Agreement are specified. Section 5.02. For the purposes of Section 7.01 (h) of the General Conditions, the events set forth in Section 4.02 of the Special Fund Credit Agreement are specified. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Loan Agreement with- in the meaning of Section 12.01 (c) of the General Conditions, namely, that all conditions precedent to the effectiveness of the Special Fund Credit Agreement, except for the effectiveness of this Agreement, have been fulfilled. Section 6.02. The date, c> 4 1985, is hereby specified for the purposes of 6'ction 12.04 of the General Conditions. Section 6.03. If the Special Fund Credit Agreement termi- nates prior to the termination of this Agreement, the provisions of the Special Fund Credit Agreement referred to in this Agree- ment shall continue in full force and effect between the Borrower and the Bank. -7- ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary or Under 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 Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. -8- 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 Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President South Asia -9- SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Categorj Dollar Equivalent) to be Financed (1) Works: (a) water 25,000,000 60% conductor system (b) power house, 8,000,000 60% access roads, site buildings, staff quarters and site uti- lities (2) Goods 110,000,000 100% of foreign expenditures, 100% of local ex- penditures (ex- factory cost) and 50% of local ex- penditures for other items pro- cured locally (3) Consultants' 2,000,000 100% services and training (4) Fee 392,519 Amount due under Section 2.05 (a) of this Agreement (5) Utallocated 12,007,481 TOTAL 157,400,000 - 10 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or 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 Bank that the proceeds of the Loan shall not 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; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the dis- bursement percentage then applicable to such Category as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Cate- gory, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disburse- ment 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 Bank shall have reasonably determined that the pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditure for such item shall be financed out of the proceeds - 11 - of the Loan, and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in 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 Loan. - 12 - SCHEDULE 2 Description of the Project The objectives of the Project are to provide additional power generation capacity in Madhya Pradesh and thereby in the Western Region of India and to strengthen the Board's data processing facilities. The Project consists of the following: Part A: The construction of a power house housing four 125 MW turbo generating sets and associated electrical and mechanical equipment. Part B: The constuction of a combined gravity and rock-fill dam, about 90 m high and 1,650 m long, in the Indravati River. Part C: The construction of a water conductor system composed of a head race tunnel of about 12 m in diameter and 3,000 m long, a surge tank, and four pressure shafts about 400 m long and 6 m diameter. Part D: The construction of a tailrace open channel about 5 km long. Part E: The acquisition and erection of step-up transformers (11/220 kV), switchyard equipment, and about 5 km of 220 kV double circuit transmission line to connect the Project to the nearby existing Barsoor substation. Part F: The carrying out of a plant rehabilitation program in Madhya Pradesh, through repairs to and upgrading of identified thermal units. Part G: The construction of roads, bridge, residential quarters and buildings, and provision of site services and facilities. Part H: The upgrading, expansion and modernization of the Madhya Pradesh State Electricity Board's data process- ing facilities, including development of software and purchase of necessary computer equipment. The Project is expected to be completed by September 30, 1991. - 13 - SCHEDULE 3 Amortization Schedule Payment of Principal Date of Payment Due (Expressed in dollars)* On each March 15 and September 15 beginning September 15, 1989 through September 15, 2003 5,245,000 On March 15, 2004 5,295,000 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal; see General conditions, Section 3.04. - 14 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.04 (b) of the General Conditions: Time of Prepayment Premium The inturest rate (ex- pressed as a percentage per annum) applicable to the balance outstanding on the Loan on the day of prepayment multiplied by: Not more than three years 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than 11 years before maturity More than 11 years but not 0.80 more than 16 years before maturity More than 16 years but not 0.90 more than 18 years before maturity More than 18 years before 1.00 maturity 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