India - Third Power Transmission Project : Credit 0377 - Credit Agreement - Conformed

CONFORMED COPY S CREDIT NUMBER 377 IN Development Credit Agreement (Third Power Transmission Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 9, 1973 CONFORMED COPY CREDIT NUMBER 377 IN Development Credit Agreement (Third Power Transmission Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED MAY 9, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated May 9, 1973, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). 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 January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) Section 5.01 is deleted; (b) Section 6.02(h) is deleted and Section 6.02(i) becomes 6.02(h); and (c) paragraph 5 of Section 2.01 is amended to read as follows: "5. The Term "Borrower" means India, acting by its President." Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "State" means any of the following six States of India: Kerala, Madhya Pradesh, Mysore, Orissa, Assam and Tamil Nadu; (b) "Electricity (Supply) Act" means the Borrower's Electricity (Supply) Act, 1948, as amended; (c) "Board" means (i) any of the State Electricity Boards established pursuant to the Electricity (Supply) Act in one of the States, (ii) the Delhi Electricity Supply Undertaking, and (iii) the Beas Construction Board, and "Boards" 4 means (except where otherwise indicated) all of such Boards, the Delhi Electricity Supply Undertaking and the Beas Construction Board; (d) "Southern Regional Board" means the Southern Regional Electricity Board of the Borrower set up by Resolution No. EL-II-35(1)/63 of February 7, 1964; (e) "Northern Regional Board" means the Northern Regional Electricity Board of the Borrower set up by Resolution No. EL-II-35(3)/63 of February 13, 1964; (f) "Company" means the Tata Power Company, Ltd.; (g) "Loan Agreement 416-IN" means the Loan Agreement (Power Transmission Project) between the Borrower and the Bank, dated June 11, 1965; and (h) "Development Credit Agreement 242-IN" means the Development Credit Agreement (Second Power Transmission Project) between the Borrower and the Association, dated May 3, 1971. 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 equivalent to eighty-five million dollars ($85,000,000). 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 shall 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 described in Schedule 2 to this Agreement and to be financed under the Development Credit Agreement; provided, however, that, except as the Association shall otherwise agree, (a) no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories, and (b) no withdrawal shall be made with respect to contracts for the purchase of goods and services which are awarded more than eighteen months after the date of this Agreement. 5 Section 2.03. (a) Except as the Association shall otherwise agree, the goods and services (other than services of consultants) required for the Project and to be financed out of the proceeds of the Credit, shall be procured on the basis of international competition under procedures consistent with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in April 1972 as revised in October 1972 (hereinafter called the Guidelines), and in accordance with, and subject to, the provisions set forth in Schedule 3 to this Agreement. (b) When, with respect to any contract for goods described in paragraph (a) above, the lowest evaluated bid is a Foreign Bid (as defined in paragraph B(2)(c) of Schedule 3 to this Agreement), the Borrower shall immediately grant permission to import the goods covered by the contract, and no reviews of such permission to import shall be made by the Borrower or by any of its agencies, including the Directorate General of Technical Development. When, with respect to any contract, the lowest evaluated bid is a Preferred Domestic Bid or a Non-preferred Domestic Bid (as defined in paragraphs B(2) (a) and (b) of Schedule 3 to this 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 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 2.04. The Closing Date shall be September 30, 1977 or such other date as shall be agreed between the Borrower and the Association. 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 semi-annually on February 15 and August 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Crf.dit in semi-annual installments payable on each February 15 and August 15 commencing August 15, 1983, and ending February 15, 2023, each installment to and including the installment payable on February 15, 1993 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. 6 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. The Borrower shall obtain from each Board and the Company, respectively, an undertaking, in a form to be agreed upon between the Borrower and the Association and (except in case of the Delhi Electricity Supply Undertaking, the Beas Construction Board and the Company) endorsed by the State in which such Board is established and in the case of the Assam State Electricity Board, also endorsed by the state of Meghalaya and the Union Territory of Mizoram: (i) to carry out its part of the Project under the general supervision of the Borrower with due diligence and efficiency and in conformity with sound engineering, financial and public utility practices; (ii) to obtain the goods to be acquired out of the proceeds of the Credit free and clear of all encumbrances; and in accordance with the provisions set forth as referred to in Section 2.03 of this Agreement and to use such goods exclusively in the carrying out of the Project; (iii) to furnish to the Association through the Borrower promptly upon their approval by the Borrower the plans, specifications, justification, and construction schedule for its part of the Project and any material modifications subsequently made therein, in such detail as the Association shall from time to time request; (iv) to maintain records adequate to identify the goods and services acquired out of the proceeds of the Credit, to disclose the use thereof in the Project, to record the progress of its part of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound public utility accounting practices the operations and financial condition of such Board and Company; (v) to allow the Association's representatives to inspect the Project, the goods financed out of the proceeds of the Credit and the 7 sites, works and construction included in the Project, the operation thereof and any relevant records and documents; (vi) to insure with responsible insurers, or make adequate provision for the insurance of, all goods acquired out of the proceeds of the Credit; such insurance shall cover such marine, transit and other risks incident to the acquisition, transportation and delivery thereof to the place of use or installation; shall be for such amounts as shall be consistent with sound business practices; and for such insurance any indemnity shall be payable in a currency freely usable by the insured party to replace or repair such goods; (vii) in addition, to insure against such risks and in such- amounts as shall be consistent with sound business and public utility practices or to make other adequate arrangements to cover promptly any damage or losses resulting from such risks; (viii) to inform the Borrower and the Association promptly of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the carrying out of its part of the Project, or which shall increase or threaten to increase materially the estimated cost of its part of the Project; (ix) to give all such information as the Borrower and the Association shall reasonably request relating to the foregoing and to the financial condition, the operation and administration of such Board and Company; (x) to furnish to the Association all such information as the Association shall reasonably request concerning its part of the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds; (xi) except for the Beas Construction Board, to (a) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements in respect of each fiscal year) audited; (b) furnish to the Association as soon as available, but, in any case no. later than six months after the end of each such year, (i) certified copies of its financial statements for such year as so audited and (ii) report of such audit; and (c) furnish 8 to the Association such other information concerning the foregoing accounts and financial statements as the Association shall from time to time reasonably request; (xii) except for the Beas Construction Board and the Company, to perform its obligations in accordance with the obligations set forth under Section 7.03(a)(ii) of Loan Agreement 416-IN as the same may be modified from time to time by agreement between the Borrower and the Association; and (xiii) except for the Beas Construction Board and the Company, to transmit to the Borrower and to the Association for the fiscal year ending March 31, 1973, and for each fiscal year thereafter, financial data (including, inter alia, pro forma income statements, statements of sources and application of funds, rate bases and details of indebtedness) in the form prescribed by the Borrower, such data (A) to be separated relating to rural electrification and relating to such Board's other supply functions, and (B) to be submitted to the Association no later than November 30 following the end of the respective fiscal year, except if the Association shall otherwise agree. (xiv) except for the Beas Construction Board, the Delhi Electricity Supply Undertaking, and the Company to agree to the provisions set forth in Section 4.04 hereof. Section 3.02. (a) The Borrower shall at all times make available, or cause to be made available, to the Boards, promptly as needed, all sums, including the proceeds of the Credit, which shall be required for the carrying out of their respective parts of the Project, all such sums to be made available on terms and conditions satisfactory to the Borrower and the Association. (b) The Borrower shall take or cause to be taken all action which shall be necessary on its part to enable the Boards and the Company to carry out their respective parts of the Project and shall not take, or permit any agency of the Borrower to take, any action that would prevent or interfere with the prompt carrying out of their respective parts of the Project by the Boards or the Company. (c) The Borrower shall exercise its rights in relation to each Board in such manner as to protect the interests of the Borrower and the Association and in particular to cause each Board and the Company to carry out its respective 9 obligations under the undertakings referred to in Section 3.01 of this Agreement and under the assurances specified in Section 4.04 of this Agreement. (d) The portion of the proceeds of the Credit to be made available to each Board, the Southern and Northern Regional Boards and the Company, respectively, shall be as allocated in Schedule 4 to this Agreement, subject to modification by further agreement between the Borrower and the Association. Section 3.03. In carrying out the part of the Project to be carried out by the Borrower on behalf of the Southern and Northern Regional Boards, respectively, the Borrower shall: (i) assume the obligations specified in paragraphs (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) and (x) of Section 3.01 hereof; and (ii) provide, promptly as needed, the funds, facilities, services and other resources required for the purpose, including such amount of the proceeds of the Credit as is allocated to the Borrower in Schedule 4 to this Agreement, subject to modification by further agreement between the Borrower and the Association. ARTICLE IV Other Covenants Section 4.01. The Borrower undertakes to strengthen the coordination of its power sector planning with that of its other economic sectors and with the work of other of its agencies operating in the field of energy planning, to extend the scope of such planning to cover a 15-year period and to initiate forthwith the preparation of a comprehensive power development plan to be updated annually. Section 4.02. The Borrower shall constitute an expert committee within three months of the date of this Agreement to consider amendments to the Electricity (Supply) Act, in regard to the financial and accounting provisions contained therein. The Borrower shall keep the Association reasonably informed as to the work progress and recommendations of the expert committee. Section 4.03. Except as the Association shall otherwise agree no later than December 31, 1973, the Borrower shall (i) provide all states of India as well as their Electricity Boards with appropriate guidelines for the capitalization of interest 10 during construction and (ii) obtain from each State an assurance satisfactory to the Association to cause its Board to capitalize interest during construction in accordance with the said guidelines. Section 4.04. The Borrower shall obtain from each State an assurance, in a form to be agreed upon between the Borrower and the Association: (i) to provide its Board with an annual subsidy equivalent to the amount by which such Board's operating expenses in respect of its rural electrification operations exceed its revenues from such operations; and (ii) to waive. or to make other arrangements acceptable to the Association for the disposal of, any claim such State may have against its Board for payment of interest arrears accumulated up to March 31, 1970, or such other later date as may be mutually agreed to between the States and their Boards with respect to the respective loans made by each State to its Board, provided, however, that with respect to the State of Assam, such action and all payments of principal and interest on suci loans shall be deferred until such time as the division of the assets and liabilities of its Board between the States of Assam and Meghalaya and the Union Territory of Mizoram shall have been determined. Section 4.05. The Borrower shall furnish to the Association, not later than one month after the date of this Agreement, a feasibility study in regard to the setting up of a load dispatch center for the Northern Regional Board, satisfactory to this Association. ARTICLE V Consultation, Information and Inspection Section 5.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the administration, operations and financial condition of the Boards 11 and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial condition of the Boards and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service * thereof or the performance by either of them of its obligations under the Development Credit Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions Section 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 6.02. The Development Credit Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 6.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. 12 ARTICLE VII Remedies of the Association Section 7.01. If any event specified in Section 7.01 of the General Conditions or in Section 7.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon, and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 7.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) a default shall have occurred on the part of any Board or the Company in the performance of any undertaking referred to in Section 3.01 of this Agreement. (b) a default shall have occurred in the performance of any obligation of the Borrower under Loan Agreement 416-IN, or in the performance by any Board (as defined in Section 1.02(c) of this Agreement) of any undertaking referred to in Section 7.03 of such Agreement. (c) A default shall have occurred in the performance of any obligation of the Borrower under Development Credit Agreement 242-IN. Section 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified: any event specified in Section 7.02 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower. ARTICLE VIII Effective Date; Termination Section 8.01. This Development Credit Agreement shall not in any event come into force and effect in respect of any portion of the Credit until the 13 Association shall have dispatched to the Borrower notice of its acceptance of the evidence called for in Sections 10.01 and 10.02 of the General Conditions. Section 8.02. Except as the Borrower and the Association shall otherwise agree, this Development Credit Agreement shall come into force and effect in respect of the portion of the Credit allocated in Schedule 4 to this Agreement to any of the Boards, the Company or to the Borrower, respectively, as follows: (a) with respect to the portion of the Credit allocated to any Board (except the Beas Construction Board and the Delhi Electricity Supply Undertaking), when: (i) the Association shall have received such Board's undertaking referred to in Section 3.01 of this Agreement; and (ii) the Association dispatches to the Borrower notice of its acceptance of such respective undertaking. (b) with respect to the portion of the Credit allocated to either the Beas Construction Board, the Delhi Electricity Supply Undertaking, or the Company, when: (i) the Association shall have received the undertaking referred to in Section 3.01 of this Agreement in relation to the Board in question or the Company; and (ii) the Association dispatches to the Borrower notice of its acceptance of such undertaking. (c) with respect to the portion of the Credit allocated to the Borrower for the Southern and Northern Regional Boards, respectively, when the condition specified in Section 10.01(a) of the General Conditions shall have occurred. Section 8.03. (a) The date of September 30, 1973 is hereby specified for the purposes of Section 10.04 of the General Conditions. (b) If by the date specified in paragraph (a) of this Section 8.03, there shall be a portion of the Credit in respect of which this Development Credit Agreement shall not have come into force and effect, then all obligations of the parties hereunder with respect to such portion of the Credit shall terminate and such portion of the Credit shall be deemed to be cancelled pursuant to Article VI of the General Conditions, unless the Association, after consideration of the reasons for the delay, establishes a later date for purposes of this paragraph. The Association shall promptly notify the Borrower of such later date. 14 Section 8.04. The obligations of the Borrower under Article III and IV of this Agreement and the provisions of paragraphs (b) and (c) of Section 7.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date thirty years after the date of this Agreement, whichever shall be the earlier. ARTICLE IX Representative of the Borrower; Addresses Section 9.01. Any Secretary, Additional Secretary, Joint Secretary or Deputy Secretary to the Government of India in the Ministry of Finance of the Borrower, acting singly is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions. Section 9.02. The following addresses are specified for the purposes of Section 9.01 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 Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ Eric Gonsalves Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ I.P.M. Cargill Regional Vice President 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 amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Conductors and 20,730,000 100% of total groundwire expenditures II. Towers 8,550,000 100% of total expenditures III. Insulators 2,940,000 100% of total expenditures IV. Substation 28,740,000 100% of total Equipment expenditures V. Load Despatch 9,670,000 100% of total Equipment expenditures VI. Miscellaneous 2,610,000 100% of total Equipment expenditures VII. Unallocated 1 1,760,000 TOTAL 85,000,000 2. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; (b) payments for taxes imposed directly under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, 17 manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes; (c) payment for any local equipment or materials except the ex-factory cost thereof; and (d) expenditures for freight and insurance within the territories of the Borrower. 3. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above: (a) if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association by increasing correspondingly the unallocated amount of the Credit; (b) if the estimate of the expenditures under any Category shall increase, a corresponding amount will be allocated by the Association, at the request of the Borrower, to such Category from the unallocated amount of the Credit, subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other expenditures; and (c) 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 Section 2.03 of this Agreement, no expenditures 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, cancel 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. 4. Notwithstanding the percentages set forth in the third column of the table in paragraph I above, if the estimate of total expenditures under any of the Categories I through VI shall increase and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 18 SCHEDULE 2 Description of the Project The Project is part of the Borrower's Development Plan covering the period of 1972 through 1977 and consists of the supply and construction of about 4,000 km of transmission lines operating at voltages between 110 kv and 400 kv, about 60 substations with an aggregate capacity of about 4,600 MVA and communications equipment for two load despatch centers. The Project is to be carried out by: (i) the Borrower on behalf of the Southern and Northern Regional Boards, respectively (ii) the Boards of the States of Kerala, Madhya Pradesh, Mysore, Orissa, Assam and Tamil Nadu, (iii) the Beas Construction Board, (iv) the Delhi Electricity Supply Undertaking, and (v) the Company. The Project is expected to be completed by December 31, 1976. 19 SCHEDULE 3 Procurement A. Contracts Governed by Guidelines 1. With respect to any contract for machinery, equipment or material estimated to cost the equivalent of $50,000 or more: (a) If bidders are required to prequalify, the Borrower shall, before qualification is invited, inform the Association in detail of the procedure to be followed and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification, shall be furnished by the Borrower to the Association for its comments before the applicants are notified and the Borrower shall make such additions to or deletions from the said list as the Association shall reasonably request. (b) Except if the Borrower and the Association shall otherwise agree, such standard conditions of contract shall be used in inviting bids as were agreed upon between the Borrower and the Association for the purposes of procurt nent under Development Credit Agreement 242-IN. (c) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedure as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (d) After bids have been received and evaluated, the Borrower shall, before a final decision on the award is made, inform the Association of the name of the bidder to whom it intends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the reasons for the intended award. The Association shall, if it determines that the intended award would be inconsistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borr6wer and state the reasons for such determination. 20 (e) The terms and conditions of the contract shall not, without the Association's prior concurrence, materially differ from those on which bids were asked. (f) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract. 2. With respect to any other contract for machinery, equipment or material, the Borrower shall furnish to the Association, promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of any such contract, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract is not consistent with the procedures set forth or referred to in Section 2.03 of this Agreement, promptly inform the Borrower and state the reasons for such determination. 3. Identical or similar items of machinery, equipment or material shall, to the extent possible, be consolidated in a single invitation for the purposes of bidding by each participant. B. Supplemental Rules on Bid Evaluation and Comparison 1. For the purpose of evaluation and comparison of bids, customs duties and other import taxes on imported goods, and sales and similar taxes on locally produced goods, shall be excluded, except to the extent hereinafter provided, and bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for locally produced goods. The cost to the Borrower of inland freight, insurance and other expenditures incidental to the delivery of goods to the place of their use or installation shall be taken into account in the evaluation of bids in accordance with paragraph 4.7 of the Guidelines. 2. For purposes of the provisions hereinafter set forth, the following terms shall have the following meanings: (a) Preferred Domestic Bid means a bid offering goods manufactured in India for which the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in India of not less than 20% of the ex-factory bid price. 21 (b) Non-preferred Domestic Bid means any other bid offering goods manufactured in India. (c) Foreign Bid means any bid other than those specified in (a) or (b) above. 3. For goods included in Categories I through VI of the table set out in paragraph 1 of Schedule 1 to this Agreement, a margin of preference may be granted by the Borrower to Preferred Domestic Bids. Such preference shall be granted by adding to each Foreign Bid, for the purpose only of comparison with Preferred Domestic Bids, an amount (hereinafter called "Domestic Preference Margin") equal to the smaller of (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the goods offered in the bid, or (ii) 15% of the c.i.f. bid price of such goods. 4. If Preferred Domestic Bids are received, the comparison among all evaluated bids for each contract shall be made in the stages and with the preferences indicated below: Stage Bids to be Compared Preference 1. All Preferred Domestic Bids and None Non-Preferred Domestic Bids. 11. (a) Lowest evaluated bid under Stage 1, Add Domestic if Preferred Domestic Bid, with all Preference Foreign Bids; Margin to Foreign Bids U1, (b) Lowest evaluated bid under Stage I, None if Non-preferred Domestic Bid, with all Foreign Bids. III. If lowest evaluated bid under Stage None II is not the lowest evaluated bid under Stage I, all Foreign Bids. 5. The bidding documents shall clearly indicate any preference which will be granted to 'referred Domestic Bids, the information required to establish the eligibility of a bid for such preference and the methods and stages that will be followed in the evaluation and comparison of bids to give effect to such preference. 22 SCHEDULE 4 Allocation of the Proceeds of the Credit Millions of (JS$ equivalent State Electricity Board of Assam 2.47 State Electricity Board of Kerala 8.39 State Electricity Board of Madhya Pradesh 8.93 State Electricity Board of Mysore 12.21 State Electricity Board of Orissa 12.69 State Electricity Board of Tamil Nadu 8.49 Beas Construction Board 15.89 Delhi Electricity Supply Undertaking 4.56 Tata Power Company Ltd. 5.89 Borrower for the Southern Regional Electricity Board 0.48 Borrower for the Northern Regional Electricity Board 5.00 TOTAL 85.00