LOAN NUMBER 2346-IND
PROJECT AGREEMENT
(Madhya Pradesh Power Sector Investment Program – Project 3)
between
ASIAN DEVELOPMENT BANK
and
STATE OF MADHYA PRADESH
MADHYA PRADESH POWER TRANSMISSION COMPANY LIMITED
DATED 23 August 2007
PAL:IND 32298
PROJECT AGREEMENT
PROJECT AGREEMENT dated 23 August 2007 between ASIAN
DEVELOPMENT BANK (hereinafter called ADB) on the one part and the STATE OF
MADHYA PRADESH, acting by its Governor (hereinafter called the State) and MADHYA
PRADESH POWER TRANSMISSION COMPANY LIMITED (hereinafter called TRANSCO)
on the other part.
WHEREAS
(A) by a Loan Agreement of even date herewith between INDIA
(hereinafter called the Borrower) and ADB, ADB has agreed to make to the Borrower a loan
of one hundred forty four million Dollars ($144,000,000) on the terms and conditions set forth
in the Loan Agreement, but only on condition that the proceeds of the Loan be made
available to the State and TRANSCO, and that the State and TRANSCO agree to undertake
certain obligations towards ADB as hereinafter set forth; and
(B) the State and TRANSCO, in consideration of ADB entering into the
Loan Agreement with the Borrower, have agreed to undertake the obligations hereinafter set
forth;
NOW THEREFORE the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Wherever used in this Project Agreement, unless the
context otherwise requires, the several terms defined in the Loan Agreement and in the Loan
Regulations (as so defined) have the respective meanings therein set forth.
ARTICLE II
Particular Covenants
Section 2.01. (a) The State and TRANSCO shall carry out the
Project with due diligence and efficiency, and in conformity with sound administrative,
financial, engineering, environmental and power sector development practices.
(b) In the carrying out of the Project and operation of the Project facilities,
the State and TRANSCO shall perform all obligations set forth in the Loan Agreement to the
extent that they are applicable to the State and TRANSCO.
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Section 2.02. The State and TRANSCO shall make available,
promptly as needed, the funds, facilities, services, equipment, land and other resources
which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.
Section 2.03. (a) In the carrying out of the Project, the State and
TRANSCO shall employ competent and qualified consultants and contractors, acceptable to
ADB, to an extent and upon terms and conditions satisfactory to ADB.
(b) Except as ADB may otherwise agree, all Goods, Works and consulting
services to be financed out of the proceeds of the Loan shall be procured in accordance with
the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract
where Goods, Works or consulting services have not been procured under procedures
substantially in accordance with those agreed between the Borrower and ADB or where the
terms and conditions of the contract are not satisfactory to ADB.
Section 2.04. The State and TRANSCO shall carry out the Project in
accordance with plans, design standards, specifications, work schedules and construction
methods mutually acceptable to the State, TRANSCO and ADB. The State and TRANSCO
shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans,
design standards, specifications and work schedules, and any material modifications
subsequently made therein, in such detail as ADB shall reasonably request.
Section 2.05. (a) The State and TRANSCO shall take out and
maintain with responsible insurers, or make other arrangements satisfactory to ADB, for
insurance of the Project facilities to such extent and against such risks and in such amounts
as shall be consistent with sound practice.
(b) Without limiting the generality of the foregoing, the State and
TRANSCO undertake to insure, or cause to be insured, the Goods to be imported for the
Project and to be financed out of the proceeds of the Loan against hazards incident to the
acquisition, transportation and delivery thereof to the place of use or installation, and for such
insurance any indemnity shall be payable in a currency freely usable to replace or repair
such Goods.
Section 2.06. The State shall cause TRANSCO to maintain, or cause
to be maintained, records and accounts adequate to identify the Goods, Works and
consulting services and other items of expenditure financed out of the proceeds of the Loan,
to disclose the use thereof in the Project, to record the progress of the Project (including the
cost thereof) and to reflect, in accordance with consistently maintained sound accounting
principles, its operations and financial condition.
Section 2.07. (a) ADB, the State and TRANSCO shall cooperate
fully to ensure that the purposes of the Loan will be accomplished.
(b) The State and TRANSCO shall promptly inform ADB of any condition
which interferes with, or threatens to interfere with, the progress of the Project, the
performance of its obligations under this Project Agreement or the onlending agreement, or
the accomplishment of the purposes of the Loan.
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(c) ADB, the State and TRANSCO shall from time to time, at the request
of either party, exchange views through their representatives with regard to any matters
relating to the Project, TRANSCO and the Loan.
Section 2.08. (a) The State and TRANSCO shall furnish to ADB
all such reports and information as ADB shall reasonably request concerning (i) the Loan and
the expenditure of the proceeds thereof; (ii) the Goods, Works and consulting services and
other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the
administration, operations and financial condition of TRANSCO; and (v) any other matters
relating to the purposes of the Loan.
(b) Without limiting the generality of the foregoing, the State and
TRANSCO shall furnish to ADB quarterly reports on the execution of the Project and on the
operation and management of the Project facilities. Such reports shall be submitted in such
form and in such detail and within such a period as ADB shall reasonably request, and shall
indicate, among other things, progress made and problems encountered during the quarter
under review, steps taken or proposed to be taken to remedy these problems, and proposed
program of activities and expected progress during the following quarter.
(c) Promptly after physical completion of the Project, but in any event not
later than three (3) months thereafter or such later date as ADB may agree for this purpose,
the State and TRANSCO shall prepare and furnish to ADB a report, in such form and in such
detail as ADB shall reasonably request, on the execution and initial operation of the Project,
including its cost, the performance by the State and TRANSCO of its obligations under this
Project Agreement and the accomplishment of the purposes of the Loan.
Section 2.09. (a) The State shall cause TRANSCO to (i) maintain
separate accounts for the Project; (ii) have such accounts and related financial statements
(balance sheet, statement of income and expenses, and related statements) audited
annually, in accordance with appropriate auditing standards consistently applied, by
independent auditors whose qualifications, experience and terms of reference are acceptable
to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later
than 6 months after the close of the fiscal year to which they relate, certified copies of such
audited accounts and financial statements and the report of the auditors relating thereto
(including the auditors' opinion on the use of the Loan proceeds and compliance with the
covenants of the Loan Agreement as well as on the use of the procedures for imprest
account/statement of expenditures), all in the English language. The State and TRANSCO
shall furnish to ADB such further information concerning such accounts and financial
statements and the audit thereof as ADB shall from time to time reasonably request.
(b) The State and TRANSCO shall enable ADB, upon ADB's request, to
discuss TRANSCO’s financial statements and its financial affairs from time to time with the
auditors appointed by the State and TRANSCO, pursuant to Section 2.09(a) hereabove, and
shall authorize and require any representative of such auditors to participate in any such
discussions requested by ADB, provided that any such discussion shall be conducted only in
the presence of an authorized officer of the State and TRANSCO, unless the State and
TRANSCO shall otherwise agree.
Section 2.10. The State and TRANSCO shall enable ADB's
representatives to inspect the Project, the Goods and Works financed out of the proceeds of
the Loan, and any relevant records and documents.
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Section 2.11. (a) The State and TRANSCO shall, promptly as
required, take all action within their powers to maintain TRANSCO’s corporate existence, to
carry on its operations, and to acquire, maintain and renew all rights, properties, powers,
privileges and franchises which are necessary in the carrying out of the Project or in the
conduct of its business.
(b) The State shall cause TRANSCO at all times conduct its business in
accordance with sound administrative, financial, environmental and power sector
development practices, and under the supervision of competent and experienced
management and personnel.
(c) The State shall cause TRANSCO at all times operate and maintain its
plants, equipment and other property, and from time to time, promptly as needed, make all
necessary repairs and renewals thereof, all in accordance with sound administrative,
financial, engineering, environmental, power sector development, and maintenance and
operational practices.
Section 2.12. Except as ADB may otherwise agree, the State shall
ensure that TRANSCO shall not sell, lease or otherwise dispose of any of its assets which
shall be required for the efficient carrying on of its operations or the disposal of which may
prejudice its ability to perform satisfactorily any of its obligations under this Project
Agreement.
Section 2.13. Except as ADB may otherwise agree, the State shall
ensure that TRANSCO shall apply the proceeds of the Loan to the financing of expenditures
on the Project in accordance with the provisions of the Loan Agreement and this Project
Agreement, and shall ensure that all Goods, Works and consulting services financed out of
such proceeds are used exclusively in the carrying out of the Project.
Section 2.14. Except as ADB may otherwise agree, the State and
TRANSCO shall duly perform all its obligations under the onlending agreement, and shall not
take, or concur in, any action which would have the effect of assigning, amending, abrogating
or waiving any rights or obligations of the parties under the onlending agreement.
Section 2.15. The State shall ensure that TRANSCO promptly notifies
ADB of any proposal to amend, suspend or repeal any provision of its Charter and shall
afford ADB an adequate opportunity to comment on such proposal prior to taking any action
thereon.
ARTICLE III
Effective Date; Termination
Section 3.01. This Project Agreement shall come into force and effect
on the date on which the Loan Agreement shall come into force and effect. ADB shall
promptly notify the State and TRANSCO of such date.
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Section 3.02. All the provisions of this Project Agreement shall
continue in full force and effect notwithstanding any partial cancellation or suspension under
the Loan Agreement.
ARTICLE IV
Miscellaneous
Section 4.01. Any notice or request required or permitted to be given
or made under this Project Agreement and any agreement between the parties contemplated
by this Project 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, facsimile or radiogram to the party to which it is required or permitted to be given or
made at its 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 ADB
Asian Development Bank
P.O. Box 789
0980 Manila, Philippines
Cable Address:
ASIANBANK
MANILA
Telex Numbers:
29066 ADB PH (RCA)
42205 ADB PM (ITT)
63587 ADB PN (ETPI)
Facsimile Numbers:
(632) 636-2444
(632) 636-2338.
For the State
Secretary (Energy)
Energy Department, Government of Madhya Pradesh
Mantralaya, Vallabh Bhawan
Bhopal, Madhya Pradesh
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Facsimile Number:
0755-2441642.
For TRANSCO
Chairman and Managing Director
Shakti Bhawan, Vidyut Magar
Jabalpur, Madhya Pradesh
Facsimile Number:
0761-2664141.
Section 4.02. (a) Any action required or permitted to be taken,
and any documents required or permitted to be executed, under this Project Agreement by or
on behalf of the State and TRANSCO may be taken or executed by either the Principal
Secretary or Secretary, Energy Department of the State and Chairman and Managing
Director of TRANSCO, respectively, or by such other person or persons as he shall so
designate in writing notified to ADB.
(b) The State and TRANSCO shall furnish to ADB sufficient evidence of
the authority of each person who will act under paragraph (a) of this Section, together with
the authenticated specimen signature of each such person.
Section 4.03. No delay in exercising, or omission to exercise, any
right, power or remedy accruing to either party under this Project Agreement upon any
default shall impair any such right, power or remedy or be construed to be a waiver thereof or
an acquiescence in such default; nor shall the action of such party in respect of any default,
or any acquiescence in any default, affect or impair any right, power or remedy of such party
in respect of any other or subsequent default.
