POWER PURCHASE AGREEMENT MAHARASHTRA STATE ELECTRICITY DISITRIBUTION COMPANY LIMITED (MSEDCL) LANCO ENERGY PRIVATE LIMITED (LEPL) - Dated _ ...

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POWER PURCHASE AGREEMENT

                    between

    MAHARASHTRA STATE ELECTRICITY
DISITRIBUTION COMPANY LIMITED (MSEDCL)

                      and

  LANCO ENERGY PRIVATE LIMITED (LEPL)

           Dated ___ August, 2006

      For the Salable energy generated from
500 MW Teesta Stage - VI Hydroelectric Power Project
TABLE OF CONTENTS

            RECITALS                                           1-3
ARTICLE 1   DEFINITIONS AND INTERPRETATION                     4-17
1.1         Definitions                                        4-16

1.2         Interpretation                                     16-17

ARTICLE 2   TERM OF AGREEMENT                                  18
2.1         Effective Date and Term of Agreement               18
2.2         Early Termination                                  18
ARTICLE 3   CONDITIONS PRECEDENT                               19-21
3.1         Conditions Precedent                               19-21
3.2         Satisfaction of Conditions Precedent               21
3.3         Right to Terminate                                 21

ARTICLE 4   PRINCIPAL OBLIGATIONS OF THE PARTIES               22-24
4.1         LEPL’s Obligations                                 22
4.2         MSEDCL’s Obligations                               22-23
4.3         Right to Electrical Output                         23-24
4.4         MSEDCL’s Observation Visits                        24
ARTICLE 5   CONSTRUCTION                                       25-26
5.1         LEPL’s Construction Responsibilities               25
5.2         The Site                                           25

5.3         Construction Contractor                            25
5.4         Information Regarding Interconnection Facilities   25
5.5         Construction Standards and Design Criteria         25

5.6         Consents                                           25

5.7         Documents to be Submitted by LEPL                  26
5.8         LEPL’s Construction and Start-up Power             26
5.9         Construction Reports                               26
ARTICLE 6   SYNCHRONISATION, TESTING AND                                 27-32
            COMMISSIONING
6.1         Synchronization                                              27
6.2         Performance Test Procedures                                  27-28

6.3         Initial Performance Test                                     28-29
6.4         Unit Capacity Test                                           29
6.5         Project Capacity Test                                        29
6.6         Maximum Project Capacity Test                                29
6.7         Notice of Test Results                                       29-30
6.8         Repeat Tests                                                 30
6.9         Costs of Tests                                               30-31
6.10        Commercial Operation Date of Project                         31
6.11        Delayed Commissioning                                        31-32
6.12        Evacuation of Output until COD of Units                      32
6.13        Evacuation of Output after COD of the first Unit but prior   32
            to COD of Project
ARTICLE 7   OPERATION AND MAINTENANCE                                    33-39
7.1         LEPL’s Operation and Maintenance Responsibilities            33
7.2         Operating Procedures                                         34
7.3         Annual Scheduled Outage Plan                                 34-35
7.4         Annual Generation Plan                                       35-36
7.5         Review of Scheduled Outage and Annual Generation Plans 36
7.6         Maintenance and Forced Outages                               36
7.7         Operation                                                    36
7.8         Emergency Plans                                              37
7.9         Supply of Power in Emergency                                 37
7.10        De-Silting Operation                                         37
7.11        Efficient and Reliable Operation                             37

7.12        Maintenance of Operating Records                             37-38
7.13        Examination of Records                                       38
7.14        Monitoring Notice                                            38
7.15        Desynchronisation of Project                                 39
ARTICLE 8   SCHEDULING AND DESPATCH                                      40-43
8.1         General                                                      40
8.2         Daily Generation Capability Schedule and Daily Drawal        40-41
            Schedule
8.3         Daily Despatch Schedule                       41
8.4         Revised Generation and Drawal Schedules       41
8.5         Revised Despatch Schedule                     41
8.6         Revised Schedules during the operation day    41-42
8.7         Implementation of Despatch Instructions       42
8.8         Unscheduled interchange                       42
8.9         Deemed Power                                  43
ARTICLE 9   INTERRCONNECTION, TRANSMISSION,               44-49
             METERING AND ENERGY ACCOUNTING
9.1         Interconnection Facilities and Transmission   44-45
            Facilities
9.2         Metering                                      45-49
9.3         Energy Accounting                             49
9.4         Load dispatch centre charges                  49
ARTICLE 10 BILLING AND PAYMENT                            50-56
10.1        General                                       50
10.2        Delivery of Monthly Bills                     50
10.3        Payment of Monthly Bills                      50-51
10.4        Payment Security Mechanism                    51-53
10.5        Disputed Bill                                 53-54

10.6        Change in Law Claim and Payment               54-55
10.7        Quarterly and Annual Reconciliation           56
10.8        Payment of Supplementary Bill                 56
10.9        Payment for Construction and Start-up Power   56
ARTICLE 11 FORCE MAJEURE                                  57-59
11.1        Definitions                                   57-58
11.2        Notification of Force Majeure Event           58
11.3        Duty to perform and duty to mitigate          59
11.4        Failure or delay caused by Force Majeure      59
11.5        Extended Force Majeure                        59

ARTICLE 12 CHANGE IN LAW                                  60
12.1        Definitions                                   60
12.2        Payment for Change in Law                     60
12.3        Appeal against Change in Law                  60
ARTICLE 13   LIABILITY AND INDEMNIFICATION                       61
13           Limitation on Liability                             61
ARTICLE 14   GOVERNING LAW AND DISPUTE RESOLUTION                62-63
14.1         Governing Law                                       62
14.2         Amicable Settlement                                 62

14.3         Not used                                            62
14.4         Arbitration                                         62-63
14.5         Arbitration Awards to be Binding                    63
14.6         Finality and Enforcement of Award                   63
14.7         Parties to Perform Obligations                      63
14.8         Costs of Arbitration                                63
ARTICLE 15   EVENTS OF DEFAULT AND TERMINATION                   64-67
15.1         LEPL Event of Default                               64
15.2         MSEDCL Event of Default                             65
15.3         Extended Force Majeure                              65
15.4         Termination procedure for LEPL Event of Default     65-66

15.5         Termination Procedure for MSEDCL Event of Default   66-67

15.5A        Termination by Mutual Consent                       67
15.6         Consequences of Termination                         67
15.7         Project Lender to be Notified                       67
ARTICLE 16   MISCELLANEUOS PROVISIONS                            68-72
16.1         Amendment                                           68
16.2         Third Party Beneficiaries                           68
16.3         No Waiver                                           68
16.4         Language                                            68
16.5         Remedies                                            68
16.6         Entirety                                            68
16.7         Assignment                                          68-69
16.8         Confidentiality                                     69-70
16.9         Affirmation                                         70
16.10        Severability                                        70
16.11        No Partnership                                      70
16.12        Survival                                            71
16.13        Counterparts                                      71
16.14        Notices                                           71
16.15        Schedules                                         72
SCHEDULE A   CONSENTS                                          73
1.0          Initial Consents                                  73
2.0          Consents for Construction and Commissioning of the 73
             Project
3.0          Consent for operation of the Project               73
SCHEDULE B   TECHNICAL FEATURES OF PROJECT                     74-77
1.0          Location                                          74
2.0          Hydrology                                         74
3.0          Power & Energy Parameters                         74
4.0          Reservoir                                         74-75

5.0          Dam                                               75
6.0          Power Draft                                       75
7.0          Scouring Sluice                                   75
8.0          Feeder Tunnel, Intake & Trash Racks               75
9.0          Power Tunnel                                      75-76
10.0         Power House                                       76
11.0         Turbine                                           76
12.0         Generator                                         76
13.0         Transformer                                       77
14.0         Switchyard                                        77
15.0         Tie Line                                          77
SCHEDULE C   INSURANCE                                         78-79
1.0          Maintenance of Insurance Policies                 78
2.0          Certificates of Insurance                         78
3.0          Required Coverage                                 78-79
4.0          Evidence of Coverage                              79
5.0          Application of Proceeds from Risk Property/       79
             Comprehensive and Machinery Insurance
6.0          Cost of Insurance                                 79
7.0          Preference for Indian Insurers                    79
8.0          Compensation                                      79
SCHEDULE D   TARIFF                                                 80-81
1.0          General                                                80
2.0          Tariff Rate                                            80-81
3.0          Computation of Energy in Case of Difference with REA   81
SCHEDULE E   TECHNICAL LIMITS                                       82
SCHEDULE F   DETERMINATION OF WATER SPILLAGE FOR 83
             COMPUTING DEEMED GENERATION
SCHEDULE G DETAILS OF INTER CONNECTION FACILITIES                   84
*********
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                                       ARTICLE 1

                           DEFINITIONS AND INTERPRETATION

1.1        Definitions

           The terms used in this Agreement, unless as defined below or repugnant
           to the context, shall have the same meaning as assigned to them by the
           Electricity Act, 2003 and the rules or regulations framed there under.

      1.     "ABT Order"             means CERC's order on the Availability Based
                                     Tariff issued on the 4th day of January, 2000
                                     and      subsequent    amendments       to or
                                     replacement/substitution of this order;

      2.     "Affected Party"        has the meaning specified in Article 11.1.1;

      3.     “Affiliate”             has the meaning specified in Article 16.7.2(i);

      4.     "Agreement"  or         means this document including its Schedules
             "Power Purchase         containing the terms and conditions for
             Agreement"   or         purchase of Saleable Energy by MSEDCL from
             "PPA"                   LEPL from the Project;

      5.    “Appropriate             means the Central Electricity Regulatory
            Commission"              Commission or a State Electricity Regulatory
                                     Commission, competent to determine the Tariff
                                     for the Project pursuant to the Electricity Act,
                                     2003, or their successors;

      6.     "Annual          Fixed shall mean the tariff rate (Rs./Kw) fixed as set
             Tariff”                out in paragraph 2 of Schedule D;

      7.     "Arbitration"           means the resolution of a dispute between the
                                     Parties in accordance with Article 14;

      8.     “Auxiliary      means in relation to a period, the energy
             Consumption and consumed by auxiliary equipment and
             transformation  transformation losses within the generating
             losses”         station in aggregate expressed as 1.20 percent
                             of the gross energy generated at generator
                             terminals during the relevant period.

      9.     "Bill Dispute Notice" means the notice issued by a Party raising a
                                   dispute regarding a Monthly Bill or a
                                   Supplementary Bill issued by the other Party;

      10.    “Billable Energy”       means in relation to a period, the Energy
                                     Output during such period including Deemed
                                     Generation.
5

11.   “Business Day”      means a day other than a Sunday or a
                          statutory holiday on which banks are open for
                          business in Mumbai;

12.   "Capital Cost"      means the completion cost of the Project as
                          approved by the Competent Authority.

13.   "CEA"               means the Central Electricity Authority as
                          defined in the Electricity Act, 2003, or its
                          successors;

14.   "Central            means the utility as defined in the Electricity
      Transmission        Act, 2003, namely, Power Grid Corporation of
      Utility" or "CTU"   India Limited (“PGCIL”), or its successors;

15.   "CERC"              means the Central Electricity Regulatory
                          Commission, as defined in the Electricity Act,
                          2003, or its successors; and includes
                          Maharashtra Electricity Regulatory Commission
                          ( MERC ), wherever applicable;

16.   "CERC Interstate means the Central Electricity Regulatory
      Transmission     Commission (Open Access in Inter-State
      Regulations"     Transmission) Regulations, 2004 notified by
                       CERC vide its order dated 30th January 2004,
                       as amended from time to time;

17.   "CERC        Tariff means the Central Electricity Regulatory
      Regulations"        Commission (Terms and Conditions of Tariff)
                          Regulations, 2004, notified by CERC on March
                          26, 2004 and which has come into effect on
                          April 01, 2004.

18.   "Change in Law"     has the meaning specified in Article 12.1;

19.   "Check Meters"      means the metering system identical to the
                          Main Meters installed at the Delivery Point for
                          verifying the performance of the Main Meters;

20.   "Commercial        means, in relation to a Unit, the date on which
      Operation Date" or such Unit has been Commissioned; or in
      "COD"              relation to the Project, the date on which the
                         last Unit comprised in the Project is
                         Commissioned;

21.   “Commission”   or means in relation to a Unit, the commencement
      "Commissioned"    of operation of such Unit after it successfully
                        completes the Unit Capacity Test in
                        accordance with Article 6.4.

22.   “Competent Court”   has meaning specified in Article 12.1.2;
6

23.   "Confidential       has the meaning specified in Article 16.8.1;
      Information"

24.   "Conditions         means all the conditions as specified in Article
      Precedent"          3.1 that are to be fulfilled or waived by the
                          relevant Party;

25.   "Connection         means the agreement entered into, or to be
      Agreement"          entered into, between the MSEDCL and the
                          Central    Transmission       Utility / State
                          Transmission Utility in accordance with the
                          Indian Electricity Grid Code;

26.   "Consent"           means any consent, licence, approval, permit,
                          no-objection certificate, concession, right of
                          way or any other authorisation required to be
                          granted by a Governmental Instrumentality for
                          construction, operation and maintenance of the
                          Project, including but not limited to those
                          specified in Schedule A;

27.   "Construction       means one or more main contractors,
      Contractor"         appointed by LEPL to design, engineer,
                          construct and Commission the Project in
                          accordance with the provisions of Article 5;

28.   "Consultation       means the period, commencing from the date
      Period"             of issue of a Preliminary Termination Notice,
                          for consultation between the Parties to:

                          (i)     mitigate the consequence of the
                          relevant event           having regard to all
                          the circumstances; and

                          (ii)    prevent termination of this Agreement;

29.   "Contracted         means the Saleable Energy.
      Energy”

30.   “Control Centre”    is defined in Article 8.1.3;

31.   “Corporate Income means the tax (including minimum alternate
      Tax”              tax) on income arising from the core business
                        of LEPL i.e. production and sale of the
                        Saleable Energy and associated charges, cess
                        etc. which is built-in component of Tariff;

32.   "Daily    Despatch means the daily schedule for the following day
      Schedule"          containing the details of Declared Capacity and
                         the Despatched Power for the relevant day for
                         each Settlement Period of a day notified by the
                         RLDC to the Control Centre and then by the
                         Control Centre to LEPL;
7

33.   “Daily         Drawal means the daily schedule for the following day,
      Schedule”             given by the SLDC to the RLDC, containing the
                            draw-able power as the Purchaser / SLDC may
                            decide to draw, out of the Declared Capacity,
                            for each Settlement Period;

34.   "Daily Generation means the daily schedule containing the
      Capability        Declared Capacity, and other generation data
      Schedule"         for each Settlement Period for the following
                        day, pursuant to Article 8.2.1, notified by LEPL
                        to the Control Centre and the Purchaser;

35.   "Debt"                 means the sum of borrowed principal amounts
                             expressed in the relevant currency(ies) in the
                             Financing Agreements at the Financial Close;

36.   "Declared              means the net capacity during any Settlement
      Capacity"              Period at the Delivery Point, as declared by
                             LEPL in its Daily Generation Capability
                             Schedule or Revised Generation Capability
                             Schedule and expected to be available from
                             the Generating Station over the peaking hours
                             of the next day taking into account the
                             availability of water, optimum use of water and
                             availability of machines provided that the
                             Declared Capacity in any Settlement Period
                             shall not exceed the Maximum Available
                             Capacity (for Units actually available in such
                             Settlement Period )

37.   "Deemed                means, in relation to a period, the Energy
      Generation"            Output corresponding to the Deemed Power
                             during such period;

38.   "Deemed Power"         has the meaning specified in Article 8.9.

39.   "Delivery Point"       means busbar of the switchyard of the Project
                             at which the risk and title to the Energy Output
                             and Power Output shall pass from LEPL to
                             MSEDCL;

40.   "Designated            has the meaning specified in Article 10.3.4;
      Account"

41.   "Despatch              means any instruction issued by the Control
      Instruction"           Centre / RLDC to LEPL in accordance with
                             IEGC;
8

42.   "Despatched       or means the Power Output specified by the
      Instructed Power"    Control Centre / RLDC in its Daily Despatch
                           Schedule or Revised Despatch Schedule;

43.   "Due Date"             means the thirtieth (30th) day after a Monthly
                             Bill or a Supplementary Bill is received by
                             MSEDCL (or, if such day is not a Business
                             Day, the immediately succeeding day) by which
                             date such bill is payable by MSEDCL,

                             provided that in the event a Monthly Bill is
                             received prior to the fifth (5th) day of a Month,
                             such bill shall be deemed to have been
                             received on the fifth (5th) day of such Month;

44.   “Electricity Laws”     means the Electricity Act, 2003 and the Rules
                             and Regulations made there under from time to
                             time along with amendments and replacements
                             thereof in whole or in part and all other Laws
                             pertaining to electricity including any other
                             norms and regulations laid down by CERC or
                             State Electricity Regulatory Commissions;

45.   "Energy Output"        means the metered electrical energy, in kWh or
                             multiples thereof, delivered by LEPL at the
                             Delivery Point;

46.   "Engineer"             means the independent consulting engineering
                             firm / agency / body, jointly appointed by
                             MSEDCL and LEPL to monitor the
                             commissioning and testing of the Project on
                             their behalf;

47.   "Equity"               means the amount contributed towards the
                             share capital of LEPL in accordance with the
                             Financing Agreements;

48.   not used

49.   “Extended       Force shall have the meaning assigned to it Article
      Majeure”              15.3;

50.   "Expiry Date"          means the twenty fifth (25th) or thirty fifth (35th)
                             anniversary of the Commercial Operation Date
                             of the Project, as the case may be;

51.   "Financial Close"      means the first Business Day on which LEPL
                             can draw down funds under the Financing
                             Agreements;

52.   "Financing             means all the loan agreements, guarantees,
      Agreements"            credit facilities, notes, indentures, security
                             agreements, letters of credit, share subscription
                             agreements and other documents relating to
                             the financing or re-financing of the Project at
                             the Financial Close, as may be amended,
                             modified or replaced from time to time;

53.   "Force Majeure"        means an event defined in Article 11.1.2;
9

54.   "Forced Outage"       means an interruption or reduction of Power
                            Output of a Unit or Project due to unforeseen
                            failure of equipment;

55.   "Governmental         means any legislative, judicial, regulatory,
      Instrumentality"      executive or other governmental body
                            (including any agency, department, board,
                            instrumentality, commission, office or authority)
                            of the Government of India or any political
                            subdivision thereof. For the purpose of this
                            Agreement, MSEDCL will not be a Government
                            Instrumentality;

56.   "Grid"                means the transmission network including the
                            Tie Line beyond the Delivery Point, through
                            which the Energy Output is to be evacuated
                            from the Project and upto the point of drawal
                            into the Purchaser’s system;

57.   "MSEDCL"              means       Maharashtra    State    Electricity
                            Distribution Company Limited as defined in the
                            recitals;

58.   "MSEDCL Event of has the meaning specified in Article 15.2;
      Default"

59.   "MSEDCL               means the notice issued by MSEDCL to LEPL
      Preliminary           stating MSEDCL's intention to terminate this
      Termination Notice"   Agreement due to a LEPL Event of Default;

60.   "MSEDCL               means the notice issued by MSEDCL to LEPL
      Termination Notice"   for termination of this Agreement due to a
                            LEPL Event of Default;

61.   “Infirm Power”        means the electrical energy generated by an
                            Unit prior to the COD;

62.   not used

63.   "Implementation       means the agreement that has been entered
      Agreement"            into between the Project State Government
                            and LEPL for facilitating implementation of the
                            Project;

64.   "Indian Electricity means the rules, guidelines and standards
      Grid   Code"    or notified from time to time by the CTU for
      "IEGC"              efficient and reliable operation of the Grid;

65.   “Initial Consents”    means the consents specified in Paragraph 1.0
                            of Schedule A;
10

66.   "Initial Performance means the performance test conducted on an
      Test"                Unit or the Project, as the case may be, in
                           accordance with Article 6.3.1;

67.   "Interconnection      means the interconnection equipment and
      Facilities"           associated     automatic     communications,
                            switching equipment and line protection
                            devices installed, owned, operated and
                            maintained by the CTU / Project State Utility or
                            LEPL as described in Schedule G;

68.   "Law"                 means, in relation to this Agreement, all laws
                            and Electricity Laws in force in India and
                            includes any statute, decree, ordinance,
                            regulation, notice, circular, code, rule or
                            direction, or any interpretation of any of them
                            by Governmental Instrumentality in India and/or
                            in relevant States and also includes all
                            applicable rules, regulations, orders, directions,
                            notifications by a Governmental Instrumentality
                            pursuant to or under any of them;

69.   "Lender"              means any Indian or foreign institution,
                            corporation, partnership, firm, individual or
                            organization providing Debt to LEPL;

70.   "LEPL"                means Lanco Energy Private Limited as
                            defined in the Recitals of this Agreement;

71.   "LEPL Event        of means any of the events set out in Article 15.1
      Default"              of this Agreement;

72.   "LEPL Preliminary means the notice issued by LEPL to MSEDCL,
      Termination       stating LEPL's intention to terminate this
      Notice"           Agreement as a result of a MSEDCL Event of
                        Default;

72A   "LEPL Termination means the notice issued by LEPL to MSEDCL
      Notice"           for termination of this Agreement due to a
                        MSEDCL Event of Default;

73.   "Letter of Credit" or means the letter of credit as set out in Articles
      "LC"                  10.4, 15.4 and 15.5;

74.   "Maintenance          means the interruption or reduction in Power
      Outage"               Output of a Unit or the Project for the purpose
                            of repair or replacement of specific components
                            of equipment.;

75.   "Main Meters"         means the metering system installed at the
                            Delivery Point for measurement of the Energy
                            Output and other parameters specified in
11

                              Article 9.2;

76.   "Maximum                means the Tested Capacity of the Project, the
      Capacity"               same being determined at maximum head and
                              with flow at hundred percent (100%) gate
                              opening or nozzle opening or design discharge,
                              determined in the Initial Performance Test or in
                              a subsequent test;

77.   “Maximum                means the maximum capacity in MW which
      Available Capacity”     LEPL can generate with all Units running under
                              the prevailing conditions of water levels and
                              flows over the peaking hours of next day;

78.   "Maximum Project means the tests to demonstrate the Maximum
      Capacity Test"   Capacity of the Project;

79.   "Meters"                means Main Meters and Check Meters;

80.   "Month"                 means a calendar month;

81.   "Monthly Bill"          means a bill raised by LEPL to MSEDCL for
                              Tariff Payment in respect of Billable Energy in
                              each completed Month;

82.   “Monthly         Tariff shall mean the payment of Annual Fixed Tariff
      Payment”                against the Monthly Bill for each of the 12
                              months comprised in the relevant Tariff Year.;

83.   "O&M Contract"          means the contract entered into, or to be
                              entered into, between LEPL and the Operator,
                              relating to the operation and maintenance of
                              the Project, in accordance with this Agreement;

84.   "Operating              has the meaning specified in Article 7.2;
      Procedures"

85.   "Operation Period"      means the period from the Commercial
                              Operation Date of the Project to the Expiry
                              Date;

86.   "Operation Year"        means the period beginning on the COD of the
                              Project and ending on completion of one full
                              year and each successive twelve (12) Month
                              period thereafter till the Expiry Date;

87.   "Operator"              means one or more contractors appointed as
                              operator of power generation facilities of the
                              Project pursuant to an O&M Contract, if any;

88.   "Party"           and has the meaning specified in the recital to this
      "Parties"             Agreement;

89.   "Payment Security means the payment security provided by
                        MSEDCL to the LEPL, in accordance with
12

      Mechanism"             Article 10.4;

90.   "Payment               means the surcharge payable by MSEDCL for
      Surcharge"             delay in payment of a Monthly Bill or a
                             Supplementary Bill, as the case may be,
                             beyond the Due Date in accordance with Article
                             10.3.5;

91.   "Performance Test has the meaning specified in Article 6.2.1;
      Procedures"

92.   "Power Output"         means the electrical power in kW or multiples
                             thereof, delivered by LEPL at the Delivery
                             Point;

93.   "Project"              means the Run of River hydroelectric
                             generating facilities comprising of 4 (four) Units
                             of 125 MW each on Teesta river in the State of
                             Sikkim, the technical specifications of which are
                             more particularly described in Schedule
                             hereof, , whether completed or at any stage of
                             development and construction including without
                             limitation, all land, buildings, dams, gates,
                             spillways, hoists, weirs, canals, penstocks,
                             tunnels, surge tanks, electrical energy
                             generating equipment (and its auxiliary
                             equipment),         switchyard,     and       the
                             Interconnection Facilities which is to be
                             designed, built, owned, operated and
                             maintained by LEPL at Site and including any
                             residential colony / unit welfare facilities and
                             offices;

94.   "Project     Capacity means the tests to demonstrate the            Rated
      Test"                 Capacity of the Project;

95.   "Project State"        means the State in which the Project is located,
                             i.e. the State of Sikkim;

96.   "Project    State means the government of the State in which
      Government"       the Project is located, i.e. the Government of
                        State of Sikkim;

97.   "Prudent       Utility means exercise of that degree of skill,
      Practices"             diligence, prudence and foresight which would
                             reasonably and ordinarily be expected from a
                             skilled and experienced agency or operator,
                             engaged in the same type of undertaking, and
                             adopting the practices, methods and standards
                             that are generally followed by electric utilities in
                             India including customary industry practice in
                             regard thereto and any improvements or
                             innovations that may be made to all such
                             practices, methods and standards during the
                             Term of Agreement for ensuring the safe,
13

                          efficient,   and      economic     construction,
                          commissioning, operation and maintenance of
                          power generation facilities of a size and type
                          applicable to the Project;

98.   "Rated Capacity"    means the gross Tested Capacity of the
                          relevant                                   Unit;
                          and in relation to the Project the gross Tested
                          Capacity of all the Units comprised in the
                          Project,

                          in each case such Tested Capacity being that
                          determined at rated head and rated flow in
                          each case in the Initial Performance Test or
                          subsequent tests ;

99.   "Reactive Power"    means the product of voltage and current and
                          the sine of the phase angle between them,
                          measured in units of volt-amperes reactive, or
                          multiples thereof;

100. "Regional Energy means the accounts of power and energy
     Accounts" or "REA" delivered by LEPL and drawn by the
                        Purchaser, as issued by the appropriate
                        agency for each Week and for each Month,
                        including the revisions and amendments
                        thereof;

101. “Repeat Tests”       means the repeat tests specified in Article 6.10
                          for Initial Performance Test

102. "Required          means in relation to the Project, a date which
     Commercial         falls upon the expiry of 60 months from the
     Operation Date" or date of Financial Closure.
     "Required COD" or
     “RCOD”

103. "Revised Despatch means the Daily Despatch Schedule, revised in
     Schedule"         accordance with Article 8.5;

104. Revised      Drawal means the Daily Drawal Schedule, revised in
     Schedule            accordance with Article 8.4;

105. “Revised             means the Daily Generation Capability
     Generation           Schedule revised in accordance with Article 8.4
     Capability           hereof;
     Schedule”

106. "RLDC"               means the relevant Regional Load Despatch
                          Centre as defined in the Electricity Laws, in the
                          region in which the Project is located;
14

107. “Royalty”             means the quantum of electrical energy to be
                           supplied by the LEPL to the Project State free
                           of cost during the Term of the Agreement which
                           shall be equivalent to 12% (Twelve percent) of
                           the total energy generated by the Project after
                           deducting       Auxiliary    Consumption       &
                           transformation losses for the first 15 years and
                           15% (Fifteen Percent) thereafter.

108. "Rupees" or "Rs."     Means the lawful currency of India;

109. “Saleable Energy”     means the total electrical energy generated by
                           the Project including the Infirm Power available
                           for sale (ex bus) after allowing for Auxiliary
                           Consumption, transformation losses and
                           Royalty.

110. "Scheduled            means a planned interruption of the generating
     Outage"               capacity of a Unit or the Project for the purpose
                           of inspection, testing, preventive maintenance,
                           repair or replacement of components or
                           equipment, or improvement in the performance
                           of equipment;

111. "Scheduled            means in respect of a Unit or Project, the date
     Synchronisation       which falls 15 days before the Required COD;
     Date"

112. "SERC"                means the State Electricity Regulatory
                           Commission, as defined in the Electricity Act,
                           2003, or its successors, having jurisdiction over
                           the Purchaser;

113. "Settlement Period"   means the time block for issue of daily
                           generation, drawal and despatch schedules as
                           may be defined by IEGC

114. "Site"                means the land, spaces, waterways, roads and
                           rights for the purpose of building, operating and
                           maintaining the Project including all rights of
                           way and access from public highways and
                           rights of way for the Tie Line at one or more
                           places;

115. "Site    Reference means the values of various parameters of the
     Conditions"        Site specified as reference values in Schedule
                        B;

116. "SLDC"                means the State Load Despatch Centre as
                           defined in the Electricity Act, 2003, in relation to
                           the Purchaser ;

117. "Supplementary        means a bill other than a Monthly Bill raised by
     Bill"                 either Party in accordance with Article 10.8;
15

118. "Tariff"                 means the tariff as set out in accordance with
                              Schedule D;

119. "Tariff Adjustment means increase or decrease in the Tariff
     Payment"           Payment on account of Change in Law or any
                        applicable changes, other than on account of
                        Payment Surcharge;

120. "Tariff Payment"         means the Monthly Tariff Payments to LEPL;

121. "Tariff Year"            means the period beginning on the COD of the
                              Project and ending on completion of one full
                              year and each successive twelve (12) Month
                              period thereafter till the Expiry Date;

122. "Tax"                    means any Indian tax, duty, cess, fees, impost,
                              surcharge or levy of any nature howsoever
                              called charged, levied or imposed by a
                              Governmental Instrumentality (whether central,
                              state or local) in relation to the Project;

123. “Technical Limits”       means the technical limits of the Project
                              specified in Schedule E;

124. "Technical               means the salient technical features in relation
     Specifications"          to the Project specified in Schedule B and the
                              elaboration of such technical features as may
                              be provided in the construction contracts of the
                              Construction Contractor, covering the design,
                              construction, testing and commissioning of the
                              Project;

125. "Term                of has the meaning specified in Article 2.1;
     Agreement"

126. "Tested Capacity"        means, in relation to a Unit or the Project, the
                              tested capacity during the Initial Performance
                              Test under specific conditions as applicable for
                              each test;

127. "Testing                 means a reputed laboratory for testing and
     Laboratory"              calibration of Main Meters and Check Meters,
                              acceptable to the CTU, LEPL and the
                              Purchaser;
128. "Tie Line"               means the transmission lines from the
                              switchyards of the Project to inter connection
                              point of CTU whether completed or at any
                              stage of development and construction,
                              including without limitation, all right of way,
                              towers, conductors and accessories, land,
                              structures,    sub-station   equipment,     line
                              protection system and communication system;
                              designed, built, owned, operated and
                              maintained by or on behalf of LEPL;

129. “Unit”                   means a generating set and all equipment and
                              installation that can be assigned independently
                              and exclusively to such generating set;

130. "Unit        Capacity means the tests          to   demonstrate     Rated
     Test"                 Capacity of a Unit;
16

      131. "Week"                 means a calendar week commencing from
                                  00:00 hours of Monday, and ending at 24:00
                                  hours of the following Sunday;

1.2     Interpretation

        Save where the contrary is indicated, any reference in this Agreement to:

        1.2.1   a "Recital", an "Article" a "Schedule" and a "Paragraph" shall be
                construed as a reference to a "Recital", an "Article" a "Schedule"
                and a "Paragraph" respectively of this Agreement.

        1.2.2   a "day" means a calendar day.

        1.2.3   an "encumbrance" shall be construed as a reference to a
                mortgage, charge, pledge, lien or other encumbrance securing
                any obligation of any person or any other type of preferential
                arrangement (including, without limitation, title transfer and
                retention arrangements) having a similar effect.

        1.2.4   a "person" shall be construed as a reference to any person, firm,
                LEPL, MSEDCL, society, trust, government, state or agency of a
                state or any association or partnership (whether or not having
                separate legal personality) of two or more of the above and a
                person shall be construed as including a reference to its
                successors, permitted transferees and permitted assigns in
                accordance with their respective interests.

        1.2.5   the "winding-up", "dissolution", "insolvency", or "reorganization" of
                a LEPL or MSEDCL shall be construed so as to include any
                equivalent or analogous proceedings under the law of the
                jurisdiction in which such LEPL or MSEDCL is incorporated or any
                jurisdiction in which such LEPL or MSEDCL carries on business
                including the seeking of liquidation, winding-up, reorganization,
                dissolution, arrangement, protection or relief of debtors.

        1.2.6   words importing the singular shall include the plural and vice
                versa.

        1.2.7   this Agreement or any other agreement or document shall be
                construed as a reference to this or to such other agreement or
                document as it may have been, or may from time to time be,
                amended, varied, novated, replaced or supplemented.

        1.2.8   a Law shall be construed as a reference to such Law including its
                amendments or re-enactments from time to time.

        1.2.9   a time of day shall, save as otherwise provided in any agreement
                or document, be construed as a reference to Indian Standard
                Time.

1.3     different parts of this Agreement are to be taken as mutually explanatory
        and supplementary to each other and if there is any inconsistency
        between or among the parts of this Agreement, they shall be interpreted
        in a harmonious manner so as to give effect to each part. If, however, any
        such inconsistency cannot be reconciled, the Schedules shall supersede
        the main body of the Agreement..
17

1.4   the table of contents and any headings or sub-headings in this Agreement
      have been inserted for ease of reference only and shall not affect the
      interpretation of this Agreement.

1.5   all interest payable under this Agreement shall accrue from day to day
      and be calculated on the basis of a year of three hundred and sixty five
      (365) days.
18

                                        ARTICLE 2

                                 TERM OF AGREEMENT

2.1   Effective Date and Term of Agreement

      The Articles 1, 2, 3, 4.1 (i) and (ii) (to the extent applicable), 4.1(iii) (to the
      extent applicable), 4.1(vi and vii) (to the extent applicable), 12, 14 and 16
      of this Agreement shall become effective upon the date of its execution by
      the Parties while the remaining Articles shall not become effective until
      the Conditions Precedent specified in Article 3 are either satisfied or
      waived in accordance with Article 3 of this Agreement.

      The Agreement shall have a term from such date of execution by the
      Parties until the Expiry Date ("Term of Agreement"), when it shall
      automatically terminate, unless terminated earlier, pursuant to Article 2.2

      The effective date means the date on which Conditions Precedent
      pursuant to Article 3.1 are either satisfied in full or such Conditions
      Precedent which are unfulfilled are waived pursuant to Article 3.1.3

2.2   Early Termination

      This Agreement shall terminate before the Expiry Date:

      (i)     If either LEPL or MSEDCL exercises a right to terminate, pursuant
              to Article15 or Article 3.3; or
      (ii)    If LEPL and MSEDCL does not come to an understanding of Tariff
              rate applicable for the period between 26th year to 35th year before
              completion of 25th year;
      (iii)   In such other circumstances as LEPL and MSEDCL may
              subsequently mutually agree, in writing.
19

                                    ARTICLE 3

                            CONDITIONS PRECEDENT

3.1   Conditions Precedent

      The Conditions Precedent and obligations of the Parties with regard
      thereto, are as specified below. The Parties shall make reasonable
      endeavours to provide the required documents and take all actions to
      satisfy the Conditions Precedent within twelve (12) months from the date
      of execution of this Agreement or such extended period as may be
      mutually agreed by the Parties.

             (i)    LEPL shall have received a legal opinion, reasonably
                    satisfactory to LEPL, from a legal counsel to MSEDCL,
                    confirming MSEDCL's authority to enter into this
                    Agreement and the enforceability of the provisions
                    contained herein;

           (ii)     MSEDCL shall obtain the approval of              Appropriate
                    Commission in relation to the PPA;

           (iii)    MSEDCL shall have received copies of                 the
                    charter/constituent documents of LEPL, duly certified by
                    LEPL;

           (iv)     MSEDCL shall have received copies of resolutions
                    adopted by LEPL's board of directors authorizing the
                    execution, delivery and performance by LEPL of this
                    Agreement, which resolutions shall be certified by LEPL;

           (v)      MSEDCL shall have received a legal opinion, reasonably
                    satisfactory to MSEDCL, from a legal counsel to LEPL,
                    confirming LEPL's authority to enter into this Agreement
                    and the enforceability of the provisions contained herein;

           (vi)     LEPL shall have received valid,           enforceable and
                    unencumbered right of way and title to    the Site and such
                    other tangible and intangible property    rights as may be
                    required or necessary to construct,        Commission and
                    operate the Project;

           (vii)    LEPL shall have received all Initial Consents;

           (viii)   LEPL shall have achieved Financial Close in relation to the
                    Project;

           (ix)     MSEDCL and LEPL shall have agreed, in writing, to the list
                    of pre-qualified engineering consulting firms, which shall be
                    eligible to be appointed as the Engineer;

           (x)      Long Term open access in accordance with CERC
                    Interstate Transmission Regulations for the supply of
                    power and energy to MSEDCL shall have been obtained
                    by MSEDCL;
20

        (xi)      LEPL shall have duly executed an Implementation
                  Agreement with the Project State Government; and

        (xii)     the Appropriate Commission shall have approved the
                  Tariff.

3.1.1     Conditions Precedent that may be waived by LEPL

          The following Condition Precedent for the effectiveness of LEPL's
          obligations under this Agreement, which may be unilaterally
          waived by LEPL by notifying MSEDCL in writing:

          (I)     LEPL shall have received a legal opinion, reasonably
                  satisfactory to LEPL, from a legal counsel to MSEDCL,
                  confirming MSEDCL's authority to enter into this
                  Agreement and the enforceability of the provisions
                  contained herein.

3.1.2     Conditions Precedent that may be waived by MSEDCL

          The following are the Conditions Precedent for the effectiveness
          of MSEDCL's obligations under this Agreement, which may be
          unilaterally waived by MSEDCL by notifying LEPL in writing:

          (i)     MSEDCL shall have received copies of                 the
                  charter/constituent documents of LEPL, duly certified by
                  LEPL;

          (ii)    MSEDCL shall have received copies of resolutions
                  adopted by LEPL's board of directors authorizing the
                  execution, delivery and performance by LEPL of this
                  Agreement, which resolutions shall be certified by LEPL;

          (iii)   MSEDCL shall have received a legal opinion, reasonably
                  satisfactory to MSEDCL, from a legal counsel to LEPL,
                  confirming LEPL's authority to enter into this Agreement
                  and the enforceability of the provisions contained herein;

3.1.3     Conditions Precedent that may be waived by mutual consent

          The following are the Conditions Precedent, which may be waived
          by mutual written consent of both the Parties:

          (i)     LEPL shall have received valid,          enforceable and
                  unencumbered right of way and title to   the Site and such
                  other tangible and intangible property   rights as may be
                  required or necessary to construct,       Commission and
                  operate the Project;

          (ii)    LEPL shall have received all Initial Consents;

          (iii)   LEPL shall have achieved Financial Close in relation to the
                  Project;
21

              (iv)   MSEDCL and LEPL shall have agreed, in writing, to the list
                     of pre-qualified engineering consulting firms, which shall be
                     eligible to be appointed as the Engineer;

              (v)    Long Term open access in accordance with CERC
                     Interstate Transmission Regulations for the supply of
                     power and energy to MSEDCL shall have been obtained
                     by MSEDCL;

              The Party that is responsible for satisfying a particular Condition
              Precedent under this Article 3.1.3 may request waiver of such
              Condition Precedent by notifying the other Party in writing of its
              intention to seek such waiver. If the other Party provides its
              consent in writing that it no longer requires the satisfaction of such
              Condition Precedent, the performance of such Condition
              Precedent shall be waived.

3.2   Satisfaction of Conditions Precedent

      Each Party, that is responsible for satisfying a particular Condition
      Precedent, shall keep the other Party informed in writing of the progress
      being made in fulfilling such Condition Precedent and also upon the
      fulfilment or waiver of such Condition Precedent, as the case may be.
      Each Party shall use reasonable endeavour to satisfy the Conditions
      Precedent, which it is responsible for.

3.3   Right to terminate

      3.3.1   If the Conditions Precedent listed in Article 3.1 are not duly
              satisfied or waived by MSEDCL or LEPL, as the case may be,
              within twelve (12) months of the date of execution of this
              Agreement, or such extended time as may be mutually agreed
              between the Parties in writing, either Party may terminate this
              Agreement by giving a written notice of termination to the other
              Party which notice shall not be issued before the expiry of twelve
              (12) months from the date of execution of this Agreement..
22

                                                ARTICLE 4

                              PRINCIPAL OBLIGATIONS OF THE PARTIES

             4.1    LEPL's Obligations

                    Notwithstanding anything to the contrary specified in this Agreement,
                    LEPL agrees and undertakes to:

                    (i)     design, construct, complete, test, and commission the Project
                            using only material and equipment that are new and of
                            international/Indian Power utility-grade quality, and always in
                            accordance with Prudent Utility Practices, in such a manner as to
                            ensure that the useful life of the Project, with proper maintenance
                            and operations, shall be at least equal to the Term of Agreement;

(ii) design, construct, complete and maintain during the subsistence of this Agreement using
all material and equipments for transmission of Saleable Energy from the Delivery Point to the
Interconnecting point owned, operated and maintained by CTU facilitating interconnection by
deploying Prudent Utility Practices;

                    (iii)   obtain and keep valid and subsisting all requisite permits,
                            clearances, licenses, approvals, consents / way leaves, necessary
                            for the Project;

                    (iv)    ensure reliable availability of the Contracted Energy by use and
                            application of Prudent Utility Practices, consistent with the
                            Technical Limits and meet the Despatch Instructions throughout
                            the Operation Period;

                    (v)     Maintain insurance coverage in accordance with the requirements
                            set out in Schedule C;

                    (vi)    always be in compliance with Law and Electricity Laws;

                    (vii)   obtain and maintain in full force and effect all Consents and
                            insurances pursuant to this Agreement and Law, and

             4.2    MSEDCL's Obligations

                    MSEDCL agrees and undertakes to:

                    (i)     Off take Contracted Energy and pay Monthly             Bills and
                            Supplementary Bills in accordance with this Agreement;

                    (ii)    Co-operate with LEPL at its request to facilitate the Initial
                            Performance Test, Repeat Test, any other subsequent tests and
                            Commissioning of the Units and the Project by the dates notified
                            by LEPL;

                    (iii)   obtain and maintain the requisite transmission open access to
                            ensure evacuation of the Contracted Energy from the Delivery
                            Point, from the Early Synchronisation Date or the Scheduled
                            Synchronisation Date, as the case may be, upto the expiry date;

                    (iv)    obtain and maintain at all times the required licenses that is
                            required under Law to purchase and further sell and distribute the
                            Energy Output;
23

                     (v)     open and maintain the Letter of Credit and open the Escrow
                             Account as required under the terms and conditions specified in
                             Article 10.4 of this Agreement; and

                     (vi)    always be in compliance with Law and Electricity Laws; and

                     (vii)   Coordinate with the CTU in accordance with Article 5.4;

              4.3    Right to Electrical Output

                     4.3.1 LEPL undertakes to sell at the agreed Tariff as per this Agreement
                           to MSEDCL the Contracted Energy, and MSEDCL undertakes to
                           purchase such Contracted Energy and pay Tariff for the Billable
                           Energy to LEPL in accordance with this Agreement..

                     4.3.2 not used

                    4.3.2A MSEDCL shall off take the contracted energy from LEPL. In the
                           event, MSEDCL fails to off take power generated by LEPL for any
                           reasons other than CTU breakdown/outages, MSEDCL and LEPL
                           agree to the following:

                             4.3.2.1 LEPl shall be free to sell such energy between its declared
                                     off take and 95% of declared off take to a third party at a
                                     mutually agreed tariff rate between LEPL and third party.
                                     Any profit resulting out of such sale by LEPL to any third
                                     party shall be retained by LEPL. MSEDCL shall not take
                                     any deemed generation obligations for such sale.

If MSEDCL fails to off take less than 95% of the contracted energy, the provisions stipulated in
Clause 4.3.5 and Clause 8.9 shall prevail for such reduction below 95% off take of contracted
energy by MSEDCL

An illustration giving details is set out in Annexure 1 hereto.

                     4.3.3 Subject to Articles 4.3.5 and 4.3.6, LEPL shall not grant or sell to
                           any third party or allow any third party to obtain any entitlement to
                           the Contracted Energy without the prior written consent of
                           MSEDCL, provided that such consent shall not be required in the
                           event a notice is issued to MSEDCL pursuant to Article 15.5.1 or
                           in the event of an Extended Force Majeure. .

                     4.3.4   Subject to Law, LEPL shall not, during the Term of Agreement,
                             use any electricity generated by the Project, except for the
                             purpose of meeting the Auxiliary Consumption including power
                             requirements for, housing colony any other related establishment
                             of the Project.

                     4.3.5   In the event MSEDCL refuses or fails to offtake electrical output
                             post COD of the relevant unit or Project as the case may due to
                             the breakdown of Grid or non-availability of Open Access at any
                             time due to any reason then during the continuance of such
                             breakdown and/or non availability of Open Access, MSEDCL may,
                             request LEPL to continue generating electrical energy and sell the
                             energy output to any third party (such third party either nominated
                             by MSEDCL or identified and nominated by LEPL in absence of
24

              any nomination by MSEDCL) at a tariff rate (“third party tariff”)
              mutually agreed between LEPL and such third party.

              In the event, Third Party Tariff is lower than the Annual Fixed Tariff
              for the relevant Tariff Year, then MSEDCL shall pay to LEPL the
              difference between the Third Party Tariff and the Annual Fixed
              Tariff for the Energy Output sold to such third party. However, in
              the event Third Party Tariff is higher than the Annual Fixed Tariff
              for the relevant Tariff Year, then MSEDCL and LEPL shall equally
              share the net amount by which the Annual Fixed Tariff is higher
              than the Third Party Tariff.

      4.3.6   (i)    Upon receiving the notice of Early Synchronisation Date
                     under Article 6.1.1, MSEDCL shall, in accordance with
                     Article 4.2(iii), ensure and arrange the transmission open
                     access to achieve synchronisation of the Unit(s) to the Grid
                     by the Early Synchronisation Date, conducting the Initial
                     Performance Test and Commissioning of the Unit(s) and
                     off-take Contracted Energy. However, in the unlikely event,
                     transmission open access is not available due to any
                     reason by the Early Synchronisation Date, then in such an
                     event and subject to the Law and Technical Limits, LEPL
                     shall be entitled to synchronise the Unit/Project to the Grid
                     and sale the Saleable Energy to a third party buyer at a
                     mutually agreed rate of tariff till the RCOD and the
                     provisions relating to Deemed Generation would not be
                     applicable for such period.

              (ii)   However, if MSEDCL is unable to offtake the Contracted
                     Energy by the Scheduled Synchronisation Date on account
                     of non availability of transmission long term open access,
                     subject to Article 4.3.5 MSEDCL shall make Tariff Payment
                     (attributable to the first Tariff Year) towards Deemed
                     Generation from the date of Scheduled Synchronisation
                     Date for the period of continued inability of MSEDCL to
                     offtake Contracted Energy.

4.4   MSEDCL's Observation Visits

      MSEDCL or its authorized representatives shall have the right, upon
      reasonable prior written notice to LEPL (except that no such notice shall
      be required in an emergency), to observe the progress of the construction
      of the Project, the Commissioning of the Units or Project, as the case may
      be, or operation of the Project. LEPL shall co-operate with all reasonable
      requests of MSEDCL and assist in arranging any such observation visits
      to the Project. All such authorized representatives undertaking such
      observation visits on behalf of MSEDCL shall comply with reasonable
      safety and other applicable procedures notified to them by LEPL. All costs
      in relation to any such visit shall be borne by MSEDCL.
25

                                                   ARTICLE 5

                                                CONSTRUCTION

            5.1    LEPL's Construction Responsibilities

                   LEPL shall be responsible for designing, constructing, completing and
                   Commissioning the Project in accordance with the Technical limits,
                   Technical Specifications, Prudent Utility Practices, the terms of this
                   Agreement and Laws applicable to the Project.

Further, LEPL shall design, construct, complete and maintain during the subsistence of this
Agreement using all material and equipments for transmission of saleable energy from the
Delivery Point to the Interconnection point owned, operated and maintained by CTU
facilitating interconnection by deploying Prudent Utility Practices

                   LEPL agrees and undertakes to co-ordinate and co-operate with the
                   Central Transmission Utility, including with regard to any acquisition of
                   land for construction and installation in relation to the Interconnection
                   Facilities.

            5.2    The Site

                   LEPL agrees that it shall bear full responsibility for Site condition
                   (including but not limited to its geological condition and the adequacy of
                   the road, rail or other transportation links to the Site) and the acquisition
                   of title to the Site free of all encumbrances. LEPL further agrees that
                   under no circumstances shall it be entitled to any financial compensation
                   due to the unsuitability of the Site.

            5.3    Construction Contractor

                   LEPL shall appoint one or more of the Construction Contractors to
                   design, procure, construct, complete, test, remedy defects, operate and
                   Commission the Project. The appointment of any or all such Construction
                   Contractors shall not release LEPL of any of its responsibilities under this
                   Agreement.

            5.4    Information Regarding Interconnection Facilities

                   MSEDCL shall assist LEPL, if requested to do so, to co-ordinate with the
                   Central Transmission Utility on a timely basis for all information with
                   regard to the Interconnection Facilities of the CTU, if any, as is
                   reasonably necessary to enable LEPL to design, install and operate the
                   Interconnection Facilities.

            5.5    Construction Standards and Design Criteria

                   LEPL shall ensure that the Project is designed, built and completed in a
                   professional manner, adopting good workmanship, sound engineering
                   and construction practices in accordance with Prudent Utility Practices
                   and consistent with the Site conditions, Grid conditions.

            5.6    Consents

                   LEPL shall obtain and keep in effect all Consents required by LEPL in
                   order to carry out its obligations under this Agreement.
26

5.7   Documents to be submitted by LEPL

      LEPL agrees to provide the following documents to MSEDCL:

      (i)        Copies of Consents received for project execution within 30 days
                 of receipt of such Consent;

      (ii)       Not later than one hundred and fifty (150) days before the
                 Scheduled Synchronization Date of the first Unit, a copy of draft
                 Performance Test Procedures in relation to the Project;

      (iii)      Not later than one hundred and twenty (120) days before the
                 Scheduled Synchronization Date of the first Unit, a copy of LEPL’s
                 drafts Operating Procedures in relation to the Project;

      (iv)      On or before the scheduled date of the Initial Performance Test of
                the first Unit, copies of all Consents that are required and have
                been issued to LEPL for operation and maintenance of the Project;
                and

5.8   LEPL's Construction Power and start- up power

      All the electrical power and energy required for the purpose of
      construction, synchronisation and Commissioning of the Units shall be
      arranged by LEPL at its own cost and expense. LEPL shall, if necessary,
      enter into arrangement/understanding with CTU for the supply of Start-
      Up power and power required during shut down on adjustment basis from
      the Energy Output.

5.9   Construction Reports

      5.9.1      On or before the tenth (10th) day of the first month of each quarter
                 following commencement of construction and continuing until the
                 COD of the Project, LEPL shall provide MSEDCL with quarterly
                 construction reports (for the immediately preceding quarter) on the
                 status of construction of the Project. LEPL shall comply with any
                 reasonable information request made by MSEDCL in relation to
                 the contents of any such construction report.

      5.9.2      The construction report described in Article 5.9.1 above shall
                 include the following:

              (i)   Executive Summary;
              (ii)  Status of initial Consents;
              (iii) bar chart highlighting the progress of engineering,
                    procurement, construction, testing and commissioning
                    activities of the Project, indicating the scheduled and actual
                    progress;
               (iv) Description of any major problems, which could affect the
                    Required COD of the Units or the Project, including corrective
                    measures proposed thereof.
27

                                  ARTICLE 6

          SYNCHRONISATION, TESTING AND COMMISSIONING

6.1   Synchronization

      6.1.1   LEPL shall give MSEDCL and CTU at least thirty (30) days' written
              notice of the Scheduled Synchronisation Date. However, if LEPL
              intends to Commission a Unit/Project at any time earlier than the
              RCOD, then LEPL, in order to synchronize a Unit/Project to the
              Grid for the purpose of Commissioning such Unit/Project, shall
              give MSEDCL and CTU at least one hundred and eighty (180)
              days' written notice of the proposed date of synchronisation
              (“Early Synchronisation Date”). The Early Synchronisation Date
              shall be fifteen (15) days prior to the date of the proposed COD of
              the Unit/Project.

              Upon the receipt of notice from LEPL in relation to the Scheduled
              Synchronisation Date or the Early Synchronisation Date, MSEDCL
              would facilitate and assist CTU and LEPL to synchronise the
              Unit/Project with the Grid on the Scheduled Synchronisation Date
              or the Early Synchronisation Date as the case may be.

      6.1.2   A Unit may be synchronized to the Grid when:
              (i)     its construction has been completed in accordance with the
                      Technical Specifications;

              (ii)    the Performance Test Procedures and the Operating
                      Procedures have been agreed to by the Parties;

              (iii)   it meets all prevailing connection conditions prescribed in
                      the IEGC and fulfils other requirements provided by Law
                      for synchronization to the Grid;

              (iv)    it is capable of being operated safely in accordance with
                      Prudent Utility Practices; and

              (v)     CTU has agreed to synchronization and evacuation of
                      Infirm Power

6.2   Performance Test Procedures
      6.2.1   Not later than one hundred and fifty (150) days before the
              Scheduled Synchronization Date or the Early Synchronisation
              Date, LEPL shall provide MSEDCL with a document specifying the
              procedure for Initial Performance Tests and Commissioning
              ("Performance Test Procedures"). This document shall be
              consistent with this Agreement, Technical Specifications, the
              IEGC, State Grid code, if applicable and Prudent Utility Practices
              and shall also specify the levels of acceptable performance in
              each case.

      6.2.2   Within thirty (30) days of the receipt of the draft Performance Test
              Procedures, MSEDCL shall notify LEPL of any amendments,
              deletions or additions that MSEDCL reasonably requires. Such
              amendments, deletions or additions shall not be inconsistent with
              this Agreement, Technical Specifications, the IEGC, State Grid
              code, if applicable and Prudent Utility Practices.
28

      6.2.3   The Performance Test Procedures shall be mutually finalized
              within thirty (30) days of the receipt of MSEDCL's comments. If no
              agreement is reached on any issue, the Parties shall meet and
              resolve such issue, failing which the issue shall be referred to the
              Engineer.

      6.2.4   The Parties shall comply with the Performance Test Procedures
              established pursuant to Article 6.2.3. MSEDCL shall arrange to
              make available necessary load required for LEPL to successfully
              complete the Initial Performance Test, Repeat Tests and any
              other subsequent test prior to the COD.

6.3   Initial Performance Test

      6.3.1 Following the finalization of the Performance Test Procedures
            pursuant to Article 6.2, after:

              (i)    a Unit is complete in all respects in accordance with the
                     Technical Specifications such that it is capable of safe
                     operation in accordance with Prudent Utility Practices, the
                     Consents, and Laws and has been synchronised in
                     accordance with Article 6.1.1.; and

              (ii)   that LEPL has delivered MSEDCL and CTU a completion
                     certificate provided by the Construction Contractor..

              LEPL shall, at its own expense, conduct an Initial Performance Test
              comprising:

              (a)       Unit Capacity Tests;

              (b)       Project Capacity Test; and

              (c)       Maximum Project Capacity Test.

              in accordance with this Article 6.

              LEPL shall give MSEDCL and CTU and the Engineer at least thirty
              (30) days' prior written notice of the date on which an Initial
              Performance Test will commence. MSEDCL may, within ten (10)
              working days of the notice received from LEPL, for reasonable
              cause, ask for deferment of an Initial Performance Test for up to
              fifteen (15) days from the date notified by LEPL and such test shall
              be deferred accordingly. LEPL, MSEDCL, CTU and the Engineer
              shall each designate and ensure attendance of their authorized
              representatives to witness the Initial Performance Test specified in
              this Article 6, and to monitor the measurements of various
              parameters required to be met under this Agreement. Testing and
              measuring procedures used in the Initial Performance Test shall be
              in accordance with the Performance Test Procedures pursuant to
              Article 6.2.

      6.3.2   If the water flow is insufficient to conduct the Unit Capacity Test to
              determine the Rated Capacity of the Unit but the Site conditions and
              the Grid parameters are within the Technical Limits, then subject to
              technical feasibility, such Unit Capacity Test shall be performed
              under the available conditions and the results of such unit capacity
              test shall be extrapolated in accordance with the procedure agreed
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