Conformed Copy - L3907 - Second Madras Water Supply Project - State Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3907 IN Tamil Nadu Agreement (Second Madras Water Supply Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and STATE OF TAMIL NADU Dated November 20, 1995 LOAN NUMBER 3907 IN TAMIL NADU AGREEMENT AGREEMENT, dated November 20, 1995, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and STATE OF TAMIL NADU, acting by its Governor (Tamil Nadu). WHEREAS (A) by the Loan Agreement of even date herewith between India, acting by its President (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to two hundred seventy- five million eight hundred thousand dollars ($275,800,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that Tamil Nadu agree to undertake such obligations toward the Bank as are set forth in this Agreement; (B) the proceeds of the loan provided for under the Loan Agreement will be made available to Tamil Nadu; (C) Part A of the Project will be carried out by Tamil Nadu on behalf of Metro Water; (D) Part B of the Project will be carried out by TWAD on behalf of Metro Water; (E) Part C of the Project will be carried out by Metro Water; (F) by a Project Agreement of even date herewith between the Bank, and Metro Water and TWAD, Metro Water and TWAD have Page 2 undertaken certain obligations towards the Bank as set forth in the Project Agreement; and WHEREAS Tamil Nadu, in consideration of 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. Unless the context otherwise requires, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) Tamil Nadu declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, shall carry out Part A of the Project with due diligence and efficiency and in conformity with appropriate administrative and financial practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for such Part of the Project. (b) Without limitation or restriction upon any of its other obligations under this Agreement, Tamil Nadu shall cause Metro Water and TWAD to perform all of their respective obligations set forth in the Project Agreement, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources necessary or appropriate to enable Metro Water and TWAD to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. Section 2.02. Tamil Nadu shall relend the proceeds of the Loan made available to it by the Borrower to Metro Water under a Subsidiary Loan Agreement to be entered into between Tamil Nadu and Metro Water under terms and conditions approved by the Bank, which shall include, an interest rate of not less than 13.50% per annum and repayment in 20 years including therein a period of grace of five years. Section 2.03. (a) Tamil Nadu shall carry out the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Tamil Nadu Agreement. (b) With limitation upon the provisions of paragraph (a) of this Section, Tamil Nadu shall: (i) prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Bank and Tamil Nadu, a plan for the future operation of Part A of the Project; (ii) afford the Bank a reasonable opportunity to exchange views with Tamil Nadu on said plan; and (iii) thereafter, carry out said plan with due diligence and efficiency and in accordance with Page 3 appropriate practices, taking into account the Bank