Conformed Copy - L3239 - Private Power Utilities (TEC) Project - Guarantee Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3239 IN (Private Power Utilities (TEC) Project) between INDIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated October 3, 1990 LOAN NUMBER 3239 IN GUARANTEE AGREEMENT AGREEMENT, dated October 3, 1990, between INDIA, acting by its President (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Guarantor and The Tata Hydro- Electric Power Supply Company Limited, The Andhra Valley Power Supply Company Limited and The Tata Power Company Limited (the Borrowers), having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to the Loan Agreement, have requested the Bank to assist in the financing of the Project; and (B) by the Loan Agreement of even date herewith between the Bank and the Borrowers, the Bank has agreed to extend to the Borrowers a loan in various currencies equivalent to ninety-eight million dollars ($98,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree Page 2 to guarantee the obligations of the Borrowers in respect of such loan as provided in this Agreement; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrow- ers, has agreed so to guarantee such obligations of the Borrowers; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the modifications set forth in the Loan Agreement (the General Conditions), constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to and Section 1.02 of the Loan Agreement have the respective meanings therein set forth. ARTICLE II Guarantee Section 2.01. The Guarantor declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan, all as set forth in the Loan Agreement. ARTICLE III Other Covenants Section 3.01. The Guarantor shall not take, or cause or permit any of its constituent States and union Territories or any agency of any such constituent States and union Territories to take, any action which would prevent or interfere with the performance by the Borrow- ers of their obligations contained in the Loan Agreement and will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrowers to perform such obligations. Section 3.02. The Guarantor shall enter into an agreement satisfactory to the Bank, with the Borrowers for the payment by the Borrowers of a guarantee fee of two and three-fourths percent (2-3/4%) per annum to the Guarantor on the principal amounts of the Loan withdrawn and outstanding from time to time. Section 3.03. The Guarantor shall take all steps necessary to ensure that the State of Maharashtra shall: (i) not take, or cause or permit to be taken, any action which would have the effect of delimiting the Borrowers' licensed area of supply in such a manner as to adversely affect the Borrowers' operational performance and financial position at least up to September 15, 2010 the last maturity date of the Loan; (ii) not later than June 30, 1991, extend the validity of the Licenses at least up to September 15, 2010 the last maturity date of the Loan; and (iii) continue to allow the Borrowers the current practice of collecting certain special appropriations as Page 3 are permissible under the Electricity Act. Section 3.04. The creation of an equitable mortgage and, if required, the Trust Deed, shall be free from any taxes (including stamp duty and fees) that shall be levied under the laws of the Guarantor or its constituent States or union Territories on or in connection with the execution, issue, delivery or registration thereof. Section 3.05. The Guarantor shall take or cause to be taken all such action as shall be necessary to ensure the availability of adequate supplies of suitable fuel for the economic operation of the combined cycle generat- ing scheme to be constructed under Part C of the Project. ARTICLE IV Representatives of the Guarantor; Addresses Section 4.01. Any Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary and Under Secretary of the Guarantor is designated as representa- tive of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Condi- tions: For the Guarantor: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi India Cable address: Telex: ECOFAIRS 953-3166175 New Delhi 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 82987 (FTCC) Washington, D.C. 197688 (TRT) 248423 (RCA) or 64145 (WUI) 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. INDIA By /s/ Prem Singh Authorized Representative Page 4 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Attila Karaosmanoglu Regional Vice President Asia