Conformed Copy - C1822 - Madras Water Supply and Sanitation Project - Agreement 1

Page 1 CONFORMED COPY CREDIT NUMBER 1822 IN LOAN NUMBER 2846 IN Tamil Nadu Agreement (Madras Water Supply and Sanitation Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and STATE OF TAMIL NADU Dated December 21, 1987 CREDIT NUMBER 1822 IN LOAN NUMBER 2846 IN TAMIL NADU AGREEMENT AGREEMENT, dated December 21, 1987, among INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank), and the STATE OF TAMIL NADU acting by its Governor (hereinafter called Tamil Nadu). WHEREAS (A) by the Development Credit Agreement of even date herewith between India, acting by its President (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twelve million five hundred thousand Special Drawing Rights (SDR 12,500,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that Tamil Nadu agrees to undertake such obligations toward the Association as are set forth in this Agreement; (B) by the Loan Agreement of even date herewith between the Borrower and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to fifty three million dollars ($53,000,000) on the terms and conditions set forth in the Loan Agreement, but only on condition that Tamil Nadu Page 2 agrees to undertake such obligations towards the Bank as are set forth in this Agreement; (C) by an agreement of even date herewith among the Association, the Bank and the Madras Metropolitan Water Supply and Sewerage Board (hereinafter called MMWSSB), MMWSSB has agreed to undertake certain obligations in respect of the carrying out of the Project; (D) the proceeds of the Credit and the Loan provided for under the Development Credit Agreement and the Loan Agreement respectively, will be made available by the Borrower to Tamil Nadu in accordance with the Borrower's standard arrangements for developmental assistance to the States of India; and WHEREAS Tamil Nadu, in consideration of the Association's entering into the Development Credit Agreement and the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Whenever used in this Agreement, unless the content otherwise requires: (a) reference to the Association shall also be deemed as reference to the Bank; (b) reference to the Credit shall also be deemed as reference to the Loan; and (c) the several terms defined in the Development Credit Agreement and in the General Conditions applicable thereto (as so defined), in the Loan Agreement, and in the General Conditions applicable thereto (as so defined) and in the Preamble to this Agreement have the respective meanings therein set forth. ARTICLE II Particular Covenants Section 2.01. (a) Tamil Nadu declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, without any limitation or restriction upon any of its obligations under this Agreement, shall cause MMWSSB to perform in accordance with the provisions of the Project Agreement all the obligations of MMWSSB 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 WSSB to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) Tamil Nadu shall relend the proceeds of the Credit and the Loan to MMWSSB under terms and conditions which shall have been approved by the Association and shall include the following terms: (i) proceeds to be made available for a term of 25 years from the date of the first advance by Tamil Nadu to MMWSSB, Page 3 including a grace period of five years; (ii) interest to be charged at a rate not less than 8.75% per annum, payable semiannually or annually, on amounts withdrawn and outstanding; and (iii) proceeds to be made available promptly as required to enable MMWSSB to meet expenditures required for the Project. (c) Tamil Nadu shall ensure that funds not less than 64% of the annual capital expenditures in respect of the Project are made available on the same terms and conditions as those enumerated in the preceding paragraph to enable MMWSSB to complete the Project. (d) Tamil Nadu shall exercise its rights under the preceding financial arrangements enumerated in (b) and (c) above in such manner as to protect the interests of the Borrower, Tamil Nadu, and the Association and to accomplish the purposes of the Credit and the Loan. Section 2.02. (a) Tamil Nadu shall, at the request of the Association, exchange views with the Association with regard to the progress of the Project, the performance of its obligations under this Agreement, the performance of MMWSSB under the Project Agreement, and other matters relating to the purposes of the Credit and the Loan. (b) Tamil Nadu shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit and the Loan, or the performance by Tamil Nadu of its obligations under this Agreement. Section 2.03. Tamil Nadu 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 carrying out of the Project and, if requested by the Association, shall furnish to the Association, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. ARTICLE III Effective Date; Termination; Cancellation and Suspension Section 3.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 3.02. (a) This Agreement and all obligations of the Association, of the Bank and of Tamil Nadu thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement and the Loan Agreement shall terminate in accordance with their respective terms; or (ii) the date 25 years after the date of this Agreement. (b) If the Development Credit Agreement and the Loan Agreement terminate in accordance with their Page 4 respective terms before the date specified in paragraph (a) (ii) of this Section, the Association and the Bank shall promptly notify Tamil Nadu of this event. Section 3.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE IV Miscellaneous Provisions Section 4.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radio gram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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 Tamil Nadu: Chief Secretary to the Government of Tamil Nadu Fort St. George Madras, India Cable address: Telex: CHIEFSEC 41-238/7400 Madras Section 4.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of Tamil Nadu may be taken or executed by the Chief Secretary or such other person or persons as the Chief Secretary shall Page 5 designate in writing, and Tamil Nadu shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 4.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ B. Alisbah Acting Regional Vice President Asia INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ B. Alisbah Acting Regional Vice President Asia STATE OF TAMIL NADU By /s/ N. Misra Authorized Representative