India - Rural Electrification Project : Credit 0572 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 572 IN Development Credit Agreement (Rural Electrification Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 23, 1975 CONFORMED COPY CREDIT NUMBER 572 IN Development Credit Agreement (Rural Electrification Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 23, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 23, 1975, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and RURAL ELECTRIFICATION CORPORATION LIMITED (hereinafter called REC). 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) By a project agreement of even date herewith between the Association and Rural Electrification Corporation Limited (hereinafter called REC), REC has agreed to undertake certain obligations in respect of the carrying out of the Project; and (C) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in said project agreement; 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, with the same force and effect as if they were fully set forth herein, subject, however, to the following modification thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions), namely that 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) "REC" means Rural Electrification Corporation Limited, a company registered under the Companies Act, 1956, as amended, of India; 4 (b) "Project Agreement" means the agreement between the Association and REC of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and REC pursuant to Section 3.01(b) of this Agreement, as the same may be amended from time to time: (d) "Board" means any State Electricity Board established pursuant to the Borrower's Electricity (Supply) Act, 1948, as amended, in any of the States; (e) "State" means any state of India: (f) "RE Scheme" means a rural electrification scheme to be financed by REC, and (g) "Sub-loan" means a loan made or proposed to be made by REC out of the proceeds of the Credit relent to it by the Borrower to a Board for an RE Scheme. 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 fifty-seven million dollars ($57,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I 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. the goods. works and services (other than consultants' services) for the Project 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 2.02 of the Project Agreement. Section 2.04. The Closing Date shall be December 31, 1979 or such later date as the Association shall establish. The Association shall promptly notify the Borrower and REC of such later date. 5 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 I %) 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 March 1 and September I in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March I and September 1 commencing September 1, 1985 and ending March 1, 2025, each installment to and including the installment payable on March 1, 1995, 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 REC 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 REC 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 funds equivalent to the proceeds of the Credit to REC under a subsidiary loan agreement to be entered into between the Borrower and REC under terms and conditions acceptable to the Association, which shall include, inter alia, those set forth in Schedule 3 to this Agreement. (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, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. When, with respect to any goods to be procured under Section 2.02 of the Project Agreement, the lowest evaluated bid falls under group C (as 6 defined in paragraph B(2)(b) of Schedule I to the Project 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, and all foreign exchange required therefor shall be promptly made available. When, with respect to any contract, the lowest evaluated bid falls under group A or under group B (as defined in paragraph B(2)(b) of Schedule I to 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 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. ARTICLE IV Other Covenants Section 4.01. Without limitation or restriction upon any other provision of this Agreement, the Borrower specifically undertakes to make available cach year to REC funds sufficient to cover the difference, if any, between the disbursements on loans sanctioned by REC up to the beginning of the financial year and funds available with REC for making such disbursements. Section 4.02. Except as the Association shall otherwise agree, the Borrower shall ensure that, (i) REC's internally generated funds in any financial year shall not be less than 1.2 times its debt service requirements during that financial year, and (ii) REC's administrative expenses and interest payments in any financial year shall not exceed 90'< of the aggregate interest charges received by REC from all sources during that financial year, all as defined in Section 4.03 of the Project Agreement. 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: (a) REC shall have failed to perform any covenant. agreement or obligation under the Project Agreement or the Subsidiary Loan Agreement: 7 (b) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of REC or for the suspension of its operations; and (c) an extraordinary situation shall have arisen which shall make it improbable that REC will be able to perform its obligations under the Project Agreement or the Subsidiary Loan Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the event specified in paragraph (a) of Section 5.01 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; and (b) the event specified in paragraph (b) of Section 5.01 of this Agreement shall occur. 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 ieaning of Section 12.01(b) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of REC have been duly authorized or ratified by all necessary corporate and governmental action; and (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and REC, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. Section 6.02. 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 buuil duly authorized or ratified by, and executed and delivered on behalf of, REC, and is legally binding upon REC in accordance with its terms; and 8 (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and REC, respectively, and is legally binding upon the Borrower and REC in accordance with its terms. Section 6.03. The date September 23, 1975, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Section 4.02 of this Agreement and the provisions of paragraph (b) of Section 5.02 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 VII Representative of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary in the Ministry of Finance, Department of Economic Affairs 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 9 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 /s / T. N. Kaul Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / Mervyn L. Weiner Regional Vice President South Asia 10 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 amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated %o of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Conductors 28,600,000 100% of foreign expenditures (c.i.f.) or 100% of local ex- penditures (ex- factory) (2) Transformers and 11,400,000 100% of foreign circuit breakers expenditures (c.i.f.) or 100% of local expenditures (ex-factory) (3) Capacitors, in- 8,500,000 100% of foreign sulators and expenditures meters (c.i.f.) or 100X of local expenditures (ex-factory) (4) Poles 8,500000 50% of local expenditures (ex-factory) TOTAL 57,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from, the territory, and in the currency, of any country other than the Borrower; and 0 11 (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 compliance with the policy of the Association that no proceeds of the Credit shalt 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 any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Credit, the Association may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of expenditures 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 I above. if the Association has reasonably estimated that the amount of the Credit then allocated 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 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, 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 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 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 undcr 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. 12 SCHEDULE 2 Description of the Project The Project is part of the Borrower's program to accelerate rural electrification in India with emphasis on providing energy for minor irrigation wells. It consists of financing approximately 140 RE Schemes for construction of about 40,000 kms of primary and secondary distribution lines; acquisition and installation of distribution transformers with an aggregate capacity of 500 MVA; acquisition and installation of distribution line poles; and acquisition and utilization of miscellaneous equipment. The RE Schemes will be carried out by the Boards after approval by REC. The Project is expected to be completed by June 30, 1979. 13 SCHEDULE 3 Principal Terms of Subsidiary Loan Agreement The following sets forth the principal terms and conditions under which funds equivalent to the proceeds of the Credit shall be lent to REC by the Borrower: (a) In respect of loans to REC other than for Minimum Needs Program: (i) interest rate of 8% per annum, less 1/4 for prompt payment; (ii) repayment over fifteen years after five years of grace. (b) In respect of loans to REC for Minimum Needs Program: (i) interest rate (net of 1/4% relate for prompt repayment): 5-1/4 during the first ten years; 5-3/4 during the next ten years; and 6-1/4 during the last ten years. (ii) repayment over twenty-five years after five years of grace. (c) The Borrower shall bear the foreign exchange risk.