Conformed Copy - L3344 - Private Power Utilities (BSES) Project - Guarantee Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3344 IN (Private Power Utilities (BSES) Project) between INDIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated July 12, 1991 LOAN NUMBER 3344 IN GUARANTEE AGREEMENT AGREEMENT, dated July 12, 1991, between INDIA, acting by its President (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Guarantor and Bombay Suburban Electric Supply Limited (the Borrower), 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 Borrower, the Bank has agreed to extend to the Borrower a loan in various currencies equivalent to two hundred million dollars ($200,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as provided in this Agreement; and Page 2 WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrow- er, has agreed so to guarantee such obligations of the Borrower; 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, and the term "Tribal Development Program" means the program referred to in Section 3.03 of this Agreement. 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 Borrower of its obligations contained in the Loan Agreement and will take or cause to be taken all reasonable action necessary or appropriate to enable the Borrower to perform such obligations. Section 3.02. The Guarantor shall enter into an agreement satisfactory to the Bank, with the Borrower for the payment by the Borrower of a guarantee fee of 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 restricting the Borrower's licensed area of supply in such a manner as to adversely affect the Borrower's operational performance and financial position at least up to August 15, 2011 the last maturity date of the Loan; (ii) allow the Borrower to collect certain special appropriations as are permis- sible, including a special appropriation for repayment of the Borrower's debt as defined in Section 5.04 (b) (i) of the Loan Agreement, at least equal to the difference between the principal repayments and the depreciation Page 3 allowable under the Electricity Act; (iii) carry out the audit of the Borrower's environmental monitoring program through the Maharashtra Pollution Control Board; (iv) en- sure that any loan made to the Borrower for the purposes of the Project shall be treated as a loan from an "approved institution" for the purposes of paragraph XVII of the Sixth Schedule to the Electricity Act; and (v) prepare and furnish to the Bank for its review by March 31, 1992 a tribal development program in respect of incremental support for development activities in the neighbouring tribal communities near the site of the Project and carry out the Tribal Development Program in a manner satisfactory to the Bank. 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 facilities constructed under the Project. ARTICLE IV Representatives of the Guarantor; Addresses Section 4.01. Any Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary or 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 Page 4 names in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ Anil Kumar Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Heinz Vergin Acting Regional Vice President Asia