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

CONFORMED COPY LOAN NUMBER 1549 IN Loan Agreement (Third Trombay Thermal Power Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and THE TATA HYDRO-ELECTRIC POWER SUPPLY COMPANY LIMITED THE ANDHRA VALLEY POWER SUPPLY COMPANY LIMITED and THE TATA POWER COMPANY LIMITED Dated June 19, 1978 LOAN NUMBER 1549 IN LOAN AGREEMENT AGREEMENT, dated June 19, 1978, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) of the one part and THE TATA HYDRO-ELECTRIC POWER SUPPLY COMPANY LIMITED (hereinafter called Hydro), THE ANDHRA VALLEY POWER SUPPLY COMPANY LIMITED (hereinafter called Andhra) and THE TATA POWER COMPANY LIMITED (hereinafter called Power), all being companies duly incorporated under the Indian Companies Acts (hereinafter collectively called the Borrowers), of the other part. WHEREAS (A) the Borrowers have 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 an agreement (hereinafter called the Guarantee Agreement) of even date herewith between India, acting by its President (hereinafter called the Guarantor), and the Bank, the Guarantor has agreed to guarantee the obligations of the Borrowers in respect of the Loan; (C) the Borrowers intend to contract from local financial institutions and banks a loan or loans in the amount of about Rs550,000,000 on terms and conditions satisfactory to the Bank to assist in the financing of the Project; (D) the Borrowers intend to collect from their consumers security deposits and/or to conclude arrangements satisfactory to the Bank pursuant to which the State of Maharashtra will make available to the Borrowers funds equivalent to about Rsl72,000,000 to assist in the financing of the Project; (E) the Guarantor intends to contract from the Federal Republic of Germany, acting through the Kreditanstalt fUr Wiederaufbau (hereinafter called KfW), a loan (hereinafter called the KfW Loan) in an amount equivalent to DM85,000,000 to assist in the financing of the turbo-generating unit and its associated equipment for the Project under the terms and conditions to be set forth in a loan agreement (hereinafter called the KfW Loan Agreement) to be entered into between the Guarantor and KfW and in a Pr-ject Agreement (hereinafter called the KfW Project Agreement) to be entered into between KfW and the Borrowers; (F) the Loan is to be secured as provided in Section 5.06 of this Agreement, which security is to be constituted by and -2- provided for in the Trust Deed as hereinafter defined in Section 1.02 (f) of this Agreement; (G) the Borrowers have agreed to cause all other necessary parties to consent to modifications of the Existing Deeds, as hereinafter defined in Section 1.02 (e) of this Agreement, so as to ensure that full effect may be given to the provisions of Section 5.06 of this Agreement; and (H) the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein, subject, however, to the following modification thereof, namely, the substitution of the term "Borrowers" for the term "Borrower" wherever the latter appears in said General Conditions (said General Conditions, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Hydro Deeds" means the trust deeds executed by Hydro to secure certain of its Debentures as set forth in paragraph (A) of Schedule 5 to this Agreement; (b) "Andhra Deeds" means the trust deeds executed by Andhra to secure certain of its Debentures as set forth in paragraph (B) of Schedule 5 to this Agreement; (c) "Power Deeds" means the trust deeds executed by Power to secure certain of its Debentures as set forth in paragraph (C) of Schedule 5 to this Agreement; -3- (d) "Joint Deed" means the trust deed jointly executed by the Borrowers to secure a joint loan as set forth in paragraph (D) of Schedule 5 to this Agreement; (e) "Existing Deeds" means the trust deeds referred to in paragraphs (a) through (d) of this Section; (f) "Trust Deed" means the Trust Deed to be executed and delivered pursuant to Section 5.06 of this Agreement, and such term includes any deed supplemental thereto that may be executed and delivered; (g) "Guarantor" means India, acting by its President; (h) "Borrower" means any of the Borrowers; (i) "Subsidiary" means any company which is a subsidiary of any of the Borrowers within the meaning of the Guarantor's Com- panies Act, 1956, as amended; (j) "Rupees" and "Rs" mean the currency of India; and (k) "Licence" means the Trombay Thermal Power Electric Licence, 1953, granted by the then Government of Bombay to the Borrowers, and this term includes any amendments, extensions or renewals of the Licence. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrowers, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to one hundred and five million dollars ($105,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan 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 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, procurement of the goods to be financed out of the proceeds of the -4- Loan, shall be governed by the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be March 31, 1984 or such later date as the Bank shall establish. The Bank shall promptly notify the Guarantor and the Borrowers of such later date. Section 2.05. The Borrowers 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 2.06. The Borrowers shall pay interest at the rate of seven and one half per cent (7.50%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on January 1 and July 1 in each year. Section 2.08. The Borrowers shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. Section 2.09. The Borrowers shall pay to the Guarantor the guarantee fee provided for in Section 3.05 of the Guarantee Agreement. Section 2.10. (a) All obligations of the Borrowers under this Agreement and the Trust Deed shall be joint and several and the obligations of any of them to comply with any provi- sion of this Loan Agreement is not subject to any prior notice to, demand upon or action against or in relation to any of the others. (b) The Bank may release, or grant extension of time or forbearance to, any of the Borrowers in respect of the perfor- mance of any obligations under this Agreement or the Trust Deed without affecting the obligations of the other or others of the Borrowers. (c) Notwithstanding any other provision of this Agreement any notice, demand or protest given or made by the Bank to any of the Borrowers shall be deemed to have been given or made to all the Borrowers. -5- ARTICLE III Execution of the Project Section 3.01. (a) The Borrowers shall carry out the Project with due diligence and efficiency and in conformity with appro- priate administrative, financial, engineering and public utility practices. (b) For the purpose of carrying out the Project and without limitation or restriction upon the generality of subsection (a) of this Section, the Borrowers shall, not later than March 31, 1982, or such later date as the Bank may agree, increase their equity by a sum of approximately Rsl75,000,000, Section 3.02. In order to assist the Borrowers in the design of, preparation of specifications and bidding documents for, and the supervision of the construction of the Project, the Borrowers shall employ engineering consultants whose qualifica- tions, experience and terms and conditions of employment shall be satisfactory to zhe Bank. Section 3.03. (a) The Borrowers undertake to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or inatallation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrowers to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrowers shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. Section 3.04. (a) The Borrowers shall furnish to the Bank, promptly upon their preparation, the plans, specifications, repor,, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrowers: (i) shall maintain records and procedures adequate to record and monitor the progress of the Project (in- cluding its cost and impact), to identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in the Project; (ii) shall enable the Bank's accredited -6- representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, its impact, the expendi- ture of the proceeds of the Loan and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the the Bank and the Borrowers, the Borrowers shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, its cost and impact, the performance by the Bank and the Borrowers of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. (d) The Borrowers shall enable the Bank's representatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrowers and any relevant records and documents. Section 3.05. The Borrowers shall take all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construc- tion (and operation) of the facilities included in the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related - the Project. Section 3.06. The Borrowers shall take all measures necessary to ensure that the execution and operations of the Project are carried out with due regard to appropriate ecological and environ- mental factors in accordance with the environmental quality standards prescribed by the relevant national, state or local authorities. ARTICLE IV Management and Operations of the Borrowers Section 4.01. The Borrowers shall at all times manage their affairs, maintain their financial positions, plan their future expansion and carry on their operations, all in accordance with -7- sound business, financial, administrative and engineering prac- tices and under the supervision of experienced and competent management, assisted by qualified staff. Section 4.02. The Borrowers shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 4.03. The Borrowers shall operate and maintain their plants, equipment and properties, and from time to time make all necessary renewals and repairs thereof, all in accordance with sound engineering practices. Section 4.04. The Borrowers shall at all times take all steps necessary to maintain their corporate existence and the right to carry on their operations, including the Project, and shall, except as the Bank shall otherwise agree, take all steps necessary to acquire and to retain such land, interests in land and pro- perties, and to acquire, maintain and renew such licenses, con- sents, franchises or other rights, as may be necessary or useful for the construction and operation of the Project and the conduct of their businesses and undertakings. Section 4.05. Except as the Bank shall otherwise agree, the Borrowers shall not sell, lease, transfer or otherwise dispose of any of their properties or assets which shall be required for the efficient carrying on of their businesses 3nd undertakings, including the Project, but the Borrowers shall be at liberty to dispose of any of their properties or assets which are not so required. Section 4.06. Each of the Borrowers shall cause each of its subsidiaries (if any) to observe and perform the obligations of the Borrowers under this Agreement to the extent to which the same may be applicable thereto as though such obligations were binding upon each such subsidiary. ARTICLE V Financial Covenants Section 5.01. The Borrowers shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their operations and financial conditions. -8- Section 5.02. The Borrowers shall: (i) each have its accounts and financial statements (statements of income, sources and application of funds, balance sheets and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of their financial statements for such year as so audited and (B) certified copies of the auditors' reports; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of the Borrowers and the audits thereof as the Bank shall from time to time reason- ably request. Section 5.03. The Borrowers shall consult with the Bank on any proposal to alter or modify the existing limitation of Rs2,379,300,000 in the aggregate on the powers of the Borrowers' Boards of Directors to borrow funds before placing such proposals on the agendas for consideration by the Borrowers in general meetings. Section 5.04. (a) The Borrowers shall, for the fiscal year commencing April 1, 1983, and each year thereafter, include provision for such special appropriation as may be necessary to meet the cash shortfall for debt redemption for purposes of determining their tariffs under Section XVII 2 (c) of the Sixth Schedule of the Electricity (Supply) Act, 1948. (b) The Borrowers shall secure all necessary permissions under the Electricity (Supply) Act, 1948, from the Government of the State of Maharashtra to enable them to carry out their obli- gations under this Section. Section 5.05. Except as the Bank may otherwise agree, if the Borrowers or any of the Borrowers shall directly or indirectly pay or otherwise settle for a consideration, before maturity, part or all of any outstanding secured debt of the Borrowers or of any of the Borrowers, the Borrowers or the concerned Borrower, as the case may be, shall repay a proportionate part, or all, as the case may be, of the Loan. Section 5.06. (a) The Borrowers shall execute and deliver a Trust Deed in favor of such Trustees and in such form as the Bank may reasonably require to constitute by way of security for the Loan: (i) a First Specific Mortgage upon all the assets included or to be included in the Project or subsequently added thereto together with all rights and interests appertaining to or necessary for said assets to which the Borrowers or any of them are now or may hereafter become beneficially entitled, such Mortgage to rank in point of security, subject to the provisions of subsection (b) of this Sec- tion, prior to any other lien upon any of the assets of the Borrowers or any of them, now exist- ing or hereafter created, including the Existing Deeds; (ii) an Assignment by way of Mortgage of the Licence, together with any extensions, amendments or renewals thereof, such Assignment to rank in point of security equally and ratably with the assignment by way of mortgage provided in the Joint Deed; and (iii) a First Specific Charge upon all immovable and a First Floating Charge upon all movable assets or rights of the Borrowers at and in respect of the Trombay Thermal Station, now existing or subse- quently added thereto, but excluding the assets and rights mentioned in subsections (a) (i) and (ii) of this Section, together with all rights and inter- ests appertaining to or necessary for said assets to which the Borrowers or any of them are now or may hereafter become beneficially entitled; such Charge to rank in point of security equally and ratably with the liens provided for in the Existing Deeds upon the assets of the Borrowers or any of them, and, subject to the provisions of subsection (b) of this Section, prior to any other lien upon such assets, now existing or hereafter created. (b) Each of the Borrowers undertakes that, except as the Bank may otherwise agree, no lien shall be created on any of its assets at and in respect of the Trombay Thermal Station as security for any debt, or extended to secure any additional debt, except that any or all of the Borrowers may: (i) (A) create liens, ranking in point of security equally and ratably with the assignment of the - 10 - Licence under subsection (a) (ii) of this Section and the First Specific Mortgage referred to in subsection (a) (i) of this Section, upon all the assets included or to be included in the Project or subsequently added thereto together with all rights and interests appertaining to or necessary for said assets to which the Borrowers or any of them are now or may hereafter become benefi- cially entitled; (B) create liens, ranking in point of security equally and ratably with the First Specific Floating Charge under the Trust Deed and referred to in subsection (a) (iii) of this Section, upon all or any assets of the Borrowers or any of them not referred to in subsection (a) (iii) of this Section; and (C) without prejudice to the provisions of sub- section (b) (i) (A) and (B) above and subject to the priority of the security created or to be created by or pursuant to the Trust Deed, create liens upon any of the assets referred to in subsection (a) of this Section, of the Borrowers or any of them; for securing debts or borrowings up to an aggregate for all the Borrowers under (A), (B) and (C) of this subsection of seven hundred fifty million Rupees (Rs750,000,000) for the purposes of financing or refinancing the original cost of the Project; and (ii) create liens, including hypothecations, on their stores, spare parts and fuel including coal, securing debts or borrowings maturing not more than one year (at a time) from their respective dates and incurred to bankers in the ordinary course of business, in an amount not exceeding in the aggre- gate for all the Borrowers at any one time one hundred million Rupees (RslOO,000,000). (c) The Trust Deed shall, inter alia, provide that no subsidiary (if any) of any Borrower shall at any time without the - 11 - consent of the Bank create any lien on its undertakings or assets (including uncalled capital) or any part thereof otherwise than in favor of such Borrower and that all liens created by any subsid- iary of any Borrower in favor of such Borrower shall be retained by such Borrower and shall not be sold, transferred or otherwise disposed of by it and that it will not sell, transfer or otherwise dispose of any shares for the time being held by it in any sub- sidiary. (d) The Borrowers shall: (i) take all necessary steps and shall require all other necessary parties to take all necessary steps to ensure that all liens, including those provided for in the Existing Deeds, outstanding upon the assets to be subject to a lien by or pursuant to the Trust Deed shall be discharged or be varied to the reasonable satisfaction of the Bank so as to ensure that full effect may be given to the fore- going provisions of this Section; and (ii) obtain all necessary consents for the valid exe- cution and delivery of the Trust Deed and shall duly register, or cause to be duly registered, the Trust Deed, together with such other documents as may be necessary or proper in order to render the same fully effective in accordance with its terms. (e) The Borrower shall secure all necessary permissions from the Government of the State of Maharashtra to enable them to carry out their obligations under this Section. Section 5.07. The Borrowers shall pay or cause to be paid all taxes, if any, imposed under the laws of the Guarantor or laws in effect in its territories on, in connection with or pursuant to the execution, issue, delivery or registration of the Trust Deed. Section 5.08. Except as the Bank may otherwise agree, the Borrowers and each of them undertake not to reissue any debentures secured by any of the Existing Deeds after the respective dates fixed therein for their final payment. ARTICLE VI Remedies of the Bank Section 6.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: - 12 - (a) The Memorandum or Articles of Association of any of the Borrowers as at the date of this Agreement shall have been amended without the prior consent of the Bank. (b) The Licence shall have been amended, abrogated, waived, assigned, suspended or revoked without the prior consent of the Bonk. (c) Any action shall have been taken for the dissolution or disestablishment of any of the Borrowers or for the suspension of its operations. (d) A default shall have occurred in the implementation of any undertaking referred to in Section 3.06 of the Guarantee Agreement. (e) (i) The Borrowers shall have failed to increase their equity as provided in Section 3.01 (b) of this Agreement by the date specified therein, or (ii) the collection or arrangements referred to in Recital (D) of this Agreement shall have failed to be made by March 31, 1982, or such later date as the Bank may establish, or (iii) all conditions precedent to the disbursement of funds pursuant to the KfW Loan and Project Agreements shall have failed to be satisfied by August 31, 1978, or such later date as the Bank may establish; provided, however, that the provisions of this paragraph shall not apply if the Borrowers establish to the satisfaction of the Bank that adequate funds for the Project are available to the Borrowers from other sources on terms and conditions consistent with the obligations of the Borrowers under this Agreement. (f) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrowers to withdraw the proceeds of any loan or grant made to, or made available to, the Borrowers for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. - 13 - (ii) Subparagraph (i) of this paragraph shall not apply if the Borrowers establish to the satisfac- tion of the Bank that: (A) such suspension, cancel- lation, termination or prematuring is not caused by the failure of the Borrowers or any of them to perform any obligation under such agreement, and (B) adequate funds for the Project are available to the Borrowers from other sources on terms and conditions consistent with the obligations of the Borrowers under this Agreement. Section 6.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to paragraph (h) thereof, namely, any event specified in paragraphs (a) through (e) and (f) (i) (B) of Section 6.01 of this Agreement shall occur. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Condi- tions: (a) arrangements satisfactory to the Bank for the provision of the loan or loans referred to in Recital (C) of this Agreement have been made; (b) the requirements of Section 5.06 of this Agreement have been validly complied with; and (c) the undertakings and permissions referred to in Sections 5.04 (b) and 5.06 (e) of this Agreement and Section 3.06 of the Guarantee Agreement have been duly secured. Section 7.02. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that all action necessary or proper in order to render the requirements of Section 5.06 of this Agreement fully effective in accordance with the provisions of said Section has been taken. -14 - Section 7.03. The date September 19, 1978, is hereby speci- fied for the purpose of Section 12.04 of the General Conditions. ARTICLE VIII Addresses Section 8.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Borrowers: Tata Electric Companies Bombay House Homi Mody Street Bombay 400023 India Cable address: Telex: HYDROCO 011-2618 Bombay 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 - 15 - of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ W. David Hopper Regional Vice President South Asia THE TATA HYDRO-ELECTRIC POWER SUPPLY COMPANY LIMITED THE ANDHRA VALLEY POWER SUPPLY COMPANY LIMITED THE TATA POWER COMPANY LIMITED By /s/ K.M. Chinnappa Authorized Representative - 16 - 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 Category Dollar Equivalent) to be Financed (1) Electrical and 90,000,000 100% of foreign mechanical equip- expenditures and ment 100% of local expenditures (ex-factory) (2) Consultants' 7,000,000 100% services (3) Unallocated 8,000,000 TOTAL 105,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor; and (b) the term "local expenditures" means expenditures in the currency of the Guarantor and for goods or services supplied from the territory of the Guarantor. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; - 17 - 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 Loan decreases or increases, the Bank may, by notice to the Borrowers, increase or decrease the disbursement percentage then applicable to such item 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: (a) in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $250,000 may be made on account of such expenditures before that date but after March 15, 1978; (b) in respect of all Categories, until and unless the Bank has been furnished with satisfactory evidence that the Government of Maharashtra has extended the following licenses of the Borrowers for a period not less than the duration of the Loan: (i) Bombay (Hydro Electric) Licence, 1907; (ii) The Andhra Valley (Hydro Electric) Licence, 1919; (iii) The Nila Mula Valley (Hydro Electric) Licence, 1921; and (iv) The Trombay Thermal Power Electric Licence, 1953. 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 Category, the Bank may, by notice to the Borrowers: (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 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. - 18 - 6. If the Bank 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 expendi- tures for such item shall be financed out of the proceeds 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 Borrowers, 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. - 19 - SCHEDULE 2 Description of the Project The Project consists of associated civil works for, and the provision and installation at the Trombay Thermal Power Station of, one 500 MW turbo-generating unit and boiler rated at about 1,680 tonnes/hour capacity, complete with all auxiliaries and ancillary electrical and mechanical equipment. The Project is expected to be completed by December 31, 1982. - 20 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each January 1 and July 1 beginning January 1, 1984 through July 1, 1998 3,500,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 21 - 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 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.15% More than three years but not more than six years before maturity 2.25% More than six years but not more than eleven years before maturity 4.15% More than eleven years but not more than sixteen years before maturity 6.00% More than sixteen years but not more than eighteen years before maturity 6.75% More than eighteen years before maturity 7.50% - 22 - SCHEDULE 4 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international com- petitive bidding under the Project, the Borrowers shall prepare and forward to the Bank as soon as possible, and in any event not later than 60 days prior to the proposed date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. The Borrowers shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. B. Other Procurement Procedures Notwithstanding the provisions set forth in Part A.1 above, procurement of items costing the equivalent of $100,000 or less each and with an aggregate value not exceeding the equivalent of $500,000 may be procured on the basis of competitive bidding advertised locally in accordance with procedures satisfactory to the Bank. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with local procedures: (i) 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 domestically manufactured goods; (ii) customs - 23 - duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrowers of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in India if the bidder shall have established to the satisfaction of the Borrowers and the Bank that the manufacturing cost of such goods includes a value added in India equal to at least 20% of the ex- factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in India. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further -24- comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c,i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts estimated to cost the equiva- lent of $500,000 or more: (a) Before bids are invited, the Borrowers shall furnish to the Bank, 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 procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rowers shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said consultants and such other information as the Bank shall reasonably request, The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrowers and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. - 25 - (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sicn to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Loan and not governed by the preceding paragraph, the Borrowers shall furnish to the Bank, promptly after its execution and prior to the submission to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrowers and state the reasons for such determination. - 26 - SCHEDULE 5 Existing Deeds A. Hydro Deeds 1. Trust Deed dated December 12, 1957, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Hydro and floating charge on all of Hydro's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Hydro's 7-3/4% First Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 2. Trust Deed dated June 7, 1963, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Hydro and floating charge on all of Hydro's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Hydro's 7-3/4% "B" Second Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 3. Trust Deed dated April 30, 1969, as modified from time to time, creating a concurrent first 7ortgage and first charge on the immovable properties, plant and licences of Hydro and floating charge on all of Hydro's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Hydro's 7-3/4% Third Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 4. Trust Deed dated November 19, 1976, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Hydro and floating charge on all of Hydro's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Hydro's 8-1/2% Fourth Debentures, redeemable at par in four equal annual installments commencing from September 30, 1984 and ending on September 30, 1987. B. Andhra Deeds 1. Trust Deed dated September 25, 1940, as modified from time to time, creating a concurrent first mortgage and first - 27 - charge on the immovable properties, plant and licences of Andhra and floating charge on all of Andhra's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Andhra's 7-3/4% First Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 2. Trust Deed dated January 9, 1958, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Andhra and floating charge on all of Andhra's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Andhra's 7-3/4% Second Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 3. Trust Deed dated April 6, 1961, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Andhra and floating charge on all of Andhra's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Andhra's 7-3/4% Third Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 4. Trust Deed dated September 26, 1967, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Andhra and floating charge on all of Andhra's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Andhra's 7-3/4% Fourth Debentures, maturing by their terms on April 1. 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 5. Trust Deed dated December 31, 1975, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Andhra and floating charge on all of Andhra's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Andhra's 8-1/2% Fifth Debentures, redeemable at par in four equal annual installments commencing from September 30, 1984 and ending on September 30, 1987. - 28 - C. Power Deeds 1. Trust Deed dated August 22, 1940, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Power and floating charge on all of Power's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Power's 7-3/4% First Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 2. Trust Deed dated June 29, 1949, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Power and floating charge on all of Power's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Power's 7-3/4% "B" Second Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 3. Trust Deed dated December 12, 1957, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Power and floating charge on all of Power's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Power's 7-3/4% Third Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 4. Trust Deed dated April 6, 1961, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Power and floating charge on all of Power's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Power's 7-3/4% Fourth Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. 5. Trust Deed dated June 7, 1963, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Power and floating charge on all of Power's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Power's 7-3/4% "B" Fifth Debentures, maturing by their terms on April 1, 1980, with the option to redeem them on April 1, 1978 or on any interest payment date thereafter. - 29 - 6. Trust Deed dated December 19, 1975, as modified from time to time, creating a concurrent first mortgage and first charge on the immovable properties, plant and licences of Power and floating charge on all of Power's other assets, subject, however, to the priority of the security created pursuant to the Joint Deed, securing Power's 8-1/2% Sixth Debentures, redeemable at par in four equal annual installments commencing from September 30, 1984 and ending on September 30, 1987. D. Joint Deed Trust Deed dated November 4, 1955, as modified from time to time, creating a first mortgage, charge and a floating charge on the assets of the Trombay Thermal Station and the Carnac Receiving Station and the License, securing a loan jointly con- tracted by Hydro, Andhra and Power from the United States Agency for International Development repayable in accordance with its terms by January 2, 1981.