India - Hazira Fertilizer Project : Credit 1125 - Credit Agreement - Conformed

]C CREDIT NUMBER 1125 IN Development Credit Agreement (Hazira Fertilizer Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated ,1981 CREDIT NUMBER 1125 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated UCtQA-XPV /, 1981, between INDIA, Acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Project will be carried out by Krishak Bharati Cooperative Limited (hereinafter called KRIBHCO) with the Bor- rower's assistance and, as part of such assistance, the Borrower will make available to KRIBHCO the proceeds of the Credit as hereinafter provided; (C) by arrangements agreed between the Borrower and the Indian Farmers Fertilizer Cooperative Limited (hereinafter called IFFCO), IFFCO has agreed to subscribe an amount of Rs. one billion to the equity of KRIBRCO; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and KRIBHCO. 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 June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have - 2 the respective meanings therein set forth and the following additional terms have the following meanings: (a) "KRIBHCO" means the Krishak Bharati Cooperative Limited, a multi-unit cooperative society registered under the Delhi Cooperative Societies Act 1972 (Act No. 35 of 1972); (b) "Project Agreement" means the agreement between the Association and KRIBHCO of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; (c) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and KRIBHCO pursuant to Section 3.01 (b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Subsidiary Loan Agreement; (d) "Cooperative Societies" means the cooperative societies registered as such under any State or Central Act for the time being in force in India; and (e) "Rs." means rupees in the currency of the Borrower. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to three hundred twenty-one million five hundred thousand Special Drawing Rights (DR 321.500,000). 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 may be amended from time to time by ag,.eement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods to be financed out of the proceeds of the Credit, shall be governed by the provisions set forth or referred to in Section 2.03 of the Project Agree- ment. Section 2.04. The Closing Date shall June 30, 1986 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06.. Service charges shall be payable semiannually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing May 15, 1991, and ending November 15, 2030, each installment to and including the installment payable on November 15, 2000, 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 States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. C. 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 KRIBHCO to perform in accor- dance 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 KRIBHCO to perform such obliga- tions, and shall not take or permit to be taken any action which would prevent or interfere with such performance. .. (b) The Borrower shall relend the proceeds of the Credit to KRIBHCO under a Subsidiary Loan Agreement to be entered into between the Borrower and KRIBHCO under terms and conditions acceptable to the Association which shall include, inter alia, the following: (i) an effective interest rate of not less than 10.75% per annum; and (ii) repayment over 15 years including 5 years of grace. (c) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.02. Without limitation or restriction upon the provisions of Secticn 3.01 of this Agreement, the Borrower speci- fically undertakes to make available to KRIBHCO: (i) as and when required, an equity contribution of at least Rs. 2,300,000,000; (ii) such other equity as may be required to cover the gap, if any, from insufficient equity contributions received from IFFCO and other Cooperative Societies; and (iii) promptly as needed, funds equal to the difference, if any, between the funds referred to in Section 2.01 (b) of the Project Agreement and the actual amounts contracted by KRIBHCO for the Project. ARTICLE IV Other Covenants Section 4.01. The Borrower shall not take or cause to be 'taken any action which, assuming production under conditions of efficient operation, would prevent fertilizer manufacturers in the territories of the Borrower from meeting their expenses and servicing debt out of their revenues, and from earning a reason- able return on invested capital. Section 4.02. The Borrower shall, by January 31, 1984 or such other date as the Association may agree, ensure adequate and timely supply of gas for the Project, and to that end, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources necessary or appropriate for the completion of a gas project in accordance with a schedule agreed with the Association. Section 4.03. (a) The Borrower shall take, or cause to be taken, all action necessary to provide road and railway facilities adequate for the supply of coal to the Project site, and for the movement of finished products to be manufactured under the Pro- ject. (b) The Borrower shall take adequate measures for distribu- tion of fertilizer and to regulate railway operations related to the fertilizer industry to ensure the efficient movement of the Project input and output. (c) The Borrower shall cause to be completed in time for the Project a railway spur connecting the Project site to Udhna Junction Railway Station. Section 4.04. (a) When, with respect to any goods to be financed out of the proceeds of the Credit, the lowest evaluated bid is for goods manufactured from outside of India, the Borrower shall promptly grant permission to import the goods covered by the contract, and no review of such permission to import shall be made by the Borrower or by any of its agencies, and all foreign ex- change required therefor shall be promptly made available. (b) When, with respect to any goods to be financed out of the proceeds of the Credit, the lowest evaluated bid is for goods manufactured in India, 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, 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 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 pursuant to paragraph (h) thereof: (a) KRIBHCO shall have failed to perform any covenant, agreement or obligation under the Project Agreement or the Subsid- iary Loan Agreement; -6- (b) a change shall have been made in the Memorandum and Articles of Association or in the by-laws of KRIBHCO without the Association's consent which would materially and adversely affect the financial condition or operation of KRIBHCO; (c) a subsidiary or any other entity shall have been created or acquired or taken over by KRIZ3CO without the Association's consent, if such creation, acquisition or taking over would materially and adversely affect the conduct of KRIBHCO's business or KRIBHCO's financial condition or the efficiency of KRIBHCO's management and personnel or the carrying out of the Project; (d) an effective resolution shall have been passed for winding up of KRIBHCO; and (e) an extraordinary situation shall have arisen which shall make it improbable that KRIBHCO will be able to perform its obli- gations under the Project Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraphs (a), (b) or (c) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have bLei given by the Association to the Borrower and KRIBHCO; and (b) the event specified in paragraph (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Subsidiary Loan Agreement has been executed on behalf of the Borrower and KRIBHCO. 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: -7- (a) that the Project Agreement has been duly authorized or ratified by KRIBHCO, and is legally binding upon KRIBHCO in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly autho- rized or ratified by the Borrower and KRIBHCO and is legally binding upon the Borrower and KRIBHCO in accordance with its terms. Section 6.03. The date " is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Sections 4.01 and 4.03 of this Agreement and the provisions 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 twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses i 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary or Under Secretary in the Department of Economic Affairs of the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 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 110001, 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 addre;s: 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 Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By . x Regional Vice President South Asia 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 % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Equipment, materials 257,200,000 100% of foreign and spares expenditures, 100% of local expenditures (ex-factory) and 70% of other local expenditures (2) Consultants' services 32,150,000 100% (3) Unallocated 32,150,000 TOTAL 321,500,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on go,-ds or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement, except that with- drawals, in an aggregate amount not exceeding the equivalent of $15,000,000 may be made on account of payments made for such expenditures before that date but after October 1, 1980. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit 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 expendi- tures, ar (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 Associatiun 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 under the Deve-opment 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. 611 --011-- SCHEDULE 2 Description of the Project The Project consists of the design, construction and start-up of a fertilizer plant at Hazira on the Northern bank of river Tapti in the State of Gujarat, as follows: Acquisition, construction and installation of: (i) two single-train ammonia units, based on natural gas from the South Bassein gas fields, with a capacity of about 1,350 metric tons per day each; (ii) four urea units with a capacity of about 1,100 metric tons per day each; (iii) three steam generation plants with a capacity of about 275 metric tons per hour each; (iv) two power generation plants with a capacity of 15 MW each; (v) ammonia storage facilities for about 20,000 metric tons; (vi) urea bagging facilities; (vii) silos for about 90,000 metric tons of bulk storage; (viii) a township; and (ix) offsite facilities for workshops, gas terminal plant, water treatment plant, administra- tion building, laboratories and other facilities. * * * The Project is expected to be completed* by October 31, 1985. * The Project will be deemed completed only when the facilities included therein shall have been in satisfactory operation for not less than 60 consecutive days at an average produc- tion rate per day of not less than 80% of its respective daily capacity stated above. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the 2g ?Lday of 198 FOR SECRETARY