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CONFORMED COPY
OTF GRANT NUMBER TF053458
Ozone Projects
Trust Fund Grant Agreement
(CTC Sector Plan Implementation Project)
between
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
acting as Trustee of the Ozone Projects Trust Fund
and
INDUSTRIAL DEVELOPMENT BANK OF INDIA LIMITED
Dated December 10, 2004
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OTF GRANT NUMBER TF053458
OZONE PROJECTS TRUST FUND GRANT AGREEMENT
AGREEMENT dated December 10, 2004, between the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, acting as Trustee of grant funds provided for the Ozone Projects Trust Fund (OTF) by Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer (the Trustee) and the INDUSTRIAL DEVELOPMENT BANK OF INDIA LIMITED (IDBI) (the Recipient) of the other part (the OTF Grant Agreement).
WHEREAS (A) The International Bank for Reconstruction and Development (the Bank) pursuant to Resolution No. 91-5 of March 14, 1991, of the Executive Directors of the Bank (the Resolution), established a Facility, including the OTF, to assist in the protection of the global environment and thereby promote environmentally sound and sustainable economic development;
(B) the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer, and to the Vienna Convention for the Protection of the Ozone Layer have established the Multilateral Fund (the Fund) for the Implementation of the Montreal Protocol to operate under the authority of the said Parties to provide the financing of agreed incremental costs to enable the Parties operating under paragraph 1 of Article 5 of the Protocol to comply with control measures provided for in the Protocol;
(C) the Executive Committee of the Multilateral Fund (the Executive Committee) and the Bank have entered into an agreement effective on July 9, 1991, pursuant to which the Executive Committee has agreed to provide funds into the OTF to be administered by the Bank as Trustee in accordance with the provisions of the said agreement and the Resolution;
(D) the Executive Committee and India, acting by its President (India) have entered into an agreement dated December 19, 2003, whereby the Executive Committee has agreed to make available to India grant funding for carrying out the Project described in Schedule 2 to this Agreement;
(E) India and the Recipient, having satisfied themselves as to the feasibility and priority of the said Project, have requested that grant funding for the Project be provided through the resources of the OTF, and the Trustee has determined that such arrangements would be in accordance with the provisions of the Resolution;
(F) India and the Recipient represent that there are no impediments, under the laws of India, for the Recipient to assist in the carrying out of the Project and to perform its obligations under this Agreement;
(G) the Project will be carried out by India through its Ministry of Environment and Forests (MOEF) with the assistance of the Recipient; and
WHEREAS the Trustee has agreed, on the basis, inter alia, of the foregoing, to extend a grant (the OTF Grant) to the Recipient upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith between India and the Trustee (the Project Agreement);
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. (a) The following provisions of the General Conditions Applicable to Loan and Guarantee Agreements for Currency Pool Loans, dated January 1, 1985 (as amended through October 6, 1999) (the General Conditions) constitute an integral part of this Agreement:
(i) Article I;
(ii) Sections 2.01 (1), (2), (3), (4), (6), (8), (9), (10), (15), and (20) 2.02 and 2.03;
(iii) Section 3.01;
(iv) Section 4.01 and the first sentence of Section4.09;
(v) Sections 5.01, 5.05, 5.06, 5.07, 5.08, and 5.09;
(vi) Sections 6.02 (c), (d), (e), and (p); and 6.06;
(vii) Section 8.01 (b);
(viii) Sections 9.01 (a), 9.05, 9.06 and 9.07;
(ix) Sections 10.01, 10.03 and 10.04;
(x) Article XI; and
(xi) Sections 12.03 and 12.04.
(b) The General Conditions shall be modified as follows:
(i) the term "Bank", wherever used in the General Conditions, other than in Sections 2.01 (8) and 6.02 (f) thereof and the second use of such term in Section 5.01 thereof, means the Trustee except that in Section 6.02, the term "Bank" shall also include the International Bank for Reconstruction and Development acting in its own capacity;
(ii) the term "Borrower", wherever used in the General Conditions, means the Recipient;
(iii) the term "Loan Agreement", wherever used in the General Conditions, means this Agreement;
(iv) the term "Loan" and "loan" wherever used in the General Conditions, means the OTF Grant;
(v) the term "Loan Account" wherever used in the General Conditions, means the OTF Grant Account;
(vi) Section 4.01 is modified to read:
“Except as the Trustee and the Recipient shall otherwise agree, withdrawals from the OTF Grant Account shall be made in the currency of the Special Account specified in Section 2.02 (b) of this Agreement;” and
(vii) a new sub-paragraph is added after sub-paragraph (j) in Section 6.02 of the General Conditions, as follows: “an extraordinary situation shall have arisen in which any further disbursement under the OTF Grant would exceed the resources available for disbursement from the OTF Grant for the Project.”
Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings:
(a) “Agency Service Fee” means the fee referred to in Section 2.05 of this Agreement for the services carried out by the Recipient, as a financial intermediary;
(b) “Annual Verification and Progress Report” means the report of the audit of the implementation of an Annual Program as referred to in Part A.6 (b) of Schedule 2 to the Project Agreement (as hereinafter defined);
(c) “Annual Program” means a program of activities aimed at reducing CTC Production (as hereinafter defined) and CTC Consumption (as hereinafter defined) in the course of a Program Year (as hereinafter defined), as referred to in Part B.9 of Schedule 2 to the Project Agreement (as hereinafter defined);
(d) “Annual Program Amount” means the part of the proceeds of the OTF Grant approved by the Executive Committee as part of the said Committee’s approval of an Annual Program, and to be disbursed for the carrying out of the said Annual Program in accordance with this Agreement;
(e) “Beneficiaries” means CTC Consumers (as hereinafter defined) and CTC Producers (as hereinafter defined);
(f) “Country Program” means India’s Country Program for the Phase Out of Ozone Depleting Substances under the Montreal Protocol, dated September, 1993, as approved by the Executive Committee in November, 1993, and amended from time to time;
(g) “CTC” means Carbon Tetrachloride;
(h) “CTC Consumption” means the consumption of CTC in non-feedstock applications at the national level;
(i) “CTC Production” means the production of CTC for both domestic consumption and exports for non-feedstock applications;
(j) “CTC Consumers” means non-feedstock consumers of CTC;
(k) “CTC Phase-out Program” means the CTC sector plan adopted by India and endorsed by the Executive Committee;
(l) “CTC Producers” means the following five CTC production enterprises which are legal entities established under the Companies Act of India, 1956, namely: (i) the Gujarat Alkalies and Chemicals Ltd.; (ii) the Chemplast Sanmar Ltd.; (iii) the SRF Ltd.; (iv) the Shriram Rayons; and (v) the NRC Limited, and their successors or assigns;
(m) “EMP” means an Environmental Management Plan to be submitted by each Beneficiary prior to modifications of CTC Production lines, or partial or full dismantling following the significant reduction or cessation of CTC Production, or prior to any undertaking to destroy any surplus CTC;
(n) “Financial Monitoring Report” or “FMR” means each report prepared in accordance with Section 4.02 of this Agreement;
(o) “MOEF” means the Ministry of Environment and Forests of the Government of India;
(p) “ODS” means any ozone depleting substance or substances controlled by the Montreal Protocol;
(q) “Ozone Depleting Substances (Regulation and Control) Rules, 2000,” means the regulations issued under the Environment (Protection) Act of India, 1986 for controlling and monitoring the production and use of ODS, as amended from time to time;
(r) “Ozone Cell” means the unit empowered by the MOEF to coordinate India’s ODS phase out program;
(s) “Performance Agreement” means the agreement referred to in Part A.4 of Schedule 2 to the Project Agreement, to be entered into between MOEF and each of the CTC Producers outlining the obligations of the CTC Producers;
(t) “Program Year” means a period of one calendar year covered by an Annual Program;
(u) “Project Implementation Manual” means the manual setting out the detailed operational, financial, administrative, disbursement, accounting, auditing, and monitoring procedures governing the implementation of the Project, as revised from time to time in consultation and agreement with the Trustee;
(v) “Project Management Unit” or “PMU” means the Project Management Unit for Phase-out of Ozone Depleting Substances, a legal entity established under the Societies Registration Act of India, 1860, or any successor thereto;
(w) “Quota Order” means an order issued by MOEF for implementation of a quota system for the production of CTC;
(x) “Special Account” means the account referred to in Section 2.02(b) of this Agreement;
(y) “Sub-Grant” means a grant made or proposed to be made by the Recipient to each of the Beneficiaries, out of the proceeds of the OTF Grant for the carrying out of Parts A and B of the Project as referred to in Schedule 2 to this Agreement; and
(z) “Sub-Grant Agreement” means the agreement referred to in section 3.03 hereof, to be entered into between the Recipient and each of the Beneficiaries, outlining the terms under which payments out of the OTF Grant shall be made to each of the Beneficiaries for phasing out CTC Production and CTC Consumption.
ARTICLE II
The OTF Grant
Section 2.01. The Trustee agrees to make available to the Recipient, on the terms and conditions set forth or referred to in this Agreement, the OTF Grant in an amount not exceeding fifty three million and forty thousand United States Dollars (US$53,040,000) inclusive of the Agency Service Fee of one million and forty thousand United States Dollars (US$1,040,000) (the OTF Grant).
Section 2.02. (a) The amount of the OTF Grant may be withdrawn from the OTF Grant Account in accordance with the provisions of Schedule 1 to this Agreement for: (i) expenditures made (or, if the Trustee shall so agree, to be made) in respect of the Sub-Grants to CTC Producers for reduction in CTC Production for Part A of the Project; (ii) expenditures made (or, if the Trustee shall so agree, to be made) in respect of the Sub-Grants to CTC Consumers for reduction in CTC Consumption for Part B of the Project; (iii) expenditures made (or, if the Trustee shall so agree, to be made) in respect of the Agency Service Fee to the Recipient; and (iv) expenditures made (or, if the Trustee shall so agree, to be made) in respect of the reasonable cost of goods and services required for Part C of the Project and to be financed out of the proceeds of the OTF Grant.
(b) The Recipient may, for the purposes of the Project, open and maintain in dollars a special deposit account (the Special Account), in a commercial bank on terms and conditions satisfactory to the Trustee, including appropriate protection against set off, seizure or attachment. All withdrawals from the OTF Grant Account shall be deposited by the Trustee in dollars into the Special Account. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement.
Section 2.03. The Closing Date shall be September 30, 2010, or such later date as the Trustee shall establish. The Trustee shall promptly notify the Recipient of such later date.
Section 2.04. The Trustee shall not be obligated to make any payment under this Agreement except to the extent it shall have received funds for the purposes of the Project from the Executive Committee.
Section 2.05. The Trustee shall pay to the Recipient, in consideration of the services provided by the Recipient under this Agreement, 2% of: (i) expenditures in respect of the Sub-Grants to be disbursed to the Beneficiaries for Parts A and B of the Project; and (ii) expenditures in respect of the reasonable cost of goods and services required for Part C of the Project, all such fee to be paid out of the proceeds of the OTF Grant in installments. For the purposes of Sub-Grants to the Beneficiaries for Parts A and B of the Project, an initial 0.5% of expenditures in respect of the Sub-Grant amount will be paid upon signature of a Sub-Grant Agreement with each Beneficiary and the remaining 1.5% will be paid in proportion to each disbursement made by the Recipient, payable only after such disbursement is made to the Beneficiaries.
ARTICLE III
Execution of the Project