Page 1 CONFORMED COPY CREDIT NUMBER 2263 BD (Liquefied Petroleum Gas Transport and Distribution Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and RUPANTARITA PRAKRITIK GAS COMPANY LIMITED Dated June 21, 1991 CREDIT NUMBER 2263 BD RPGCL PROJECT AGREEMENT AGREEMENT, dated June 21, 1991, between INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and RUPANTARITA PRAKRITIK GAS COMPANY LIMITED (RPGCL). WHEREAS (A) by the Development Credit Agreement of even date herewith between People's Republic of Bangladesh (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to forty-nine million eight hundred thousand Special Drawing Rights (SDR 49,800,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that RPGCL agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by a subsidiary loan agreement to be entered into between the Borrower and RPGCL, part of the proceeds of the credit provided for under the Development Credit Agreement will be relent to RPGCL on the terms and conditions set forth in said RPGCL Subsidiary Loan Agreement; and WHEREAS RPGCL, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; Page 2 NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) RPGCL declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Deve- lopment Credit Agreement, and, to this end, shall carry out Part A of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering, and environmental and operational safety practices and procedures, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for Part A of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association and RPGCL shall otherwise agree, RPGCL shall carry out Part A of the Project in accordance with the Implementation Program set forth in the Schedule to this Agreement. Section 2.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to the Development Credit Agreement. Section 2.03. RPGCL shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement. Section 2.04. RPGCL shall duly perform all its obligations under the RPGCL Subsidiary Loan Agreement. Except as the Association shall otherwise agree, RPGCL shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the RPGCL Subsidiary Loan Agreement or any provision thereof. Section 2.05. (a) RPGCL shall, at the request of the Association, exchange views with the Association with regard to the progress of Part A of the Project, the performance of its obligations under this Agreement and under the RPGCL Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) RPGCL shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Credit, or the performance by RPGCL of its obligations under this Agreement and under the RPGCL Subsidiary Loan Agreement. ARTICLE III Management and Operations of RPGCL Section 3.01. RPGCL shall carry on its operations and conduct its affairs in accordance with sound administrative and financial practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. Section 3.02. RPGCL shall at all times operate and maintain its plant, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound engineering, environmental and financial practices. Section 3.03. RPGCL shall take out and maintain with responsible insurers, or make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE IV Page 3 Financial Covenants Section 4.01. (a) RPGCL shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operations and financial condition, including separate Project accounts and separate accounts for its CNG and NGL operations. (b) RPGCL shall: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year: (A) certified copies of its financial statements for such year as so audited; and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Association shall from time to time reasonably request, including, without limitation on the foregoing, unaudited accounts as soon as available but not later than three months after the end of each such year. Section 4.02. (a) Except as the Association shall otherwise agree, RPGCL shall not incur any debt unless the net revenues of RPGCL for the fiscal year immediately preceding the date of such incurrence or for a later twelve-month period ended prior to the date of such incurrence, whichever is the greater, shall be at least 1.5 times the estimated maximum debt service requirements of RPGCL for any succeeding fiscal year on all debt of RPGCL, including the debt to be incurred. (b) For the purposes of this Section: (i) The term "debt" means any indebtedness of RPGCL maturing by its terms more than one year after the date on which it is originally incurred. (ii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment on the date of such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into. (iii) The term "net revenues" means the difference between: (A) the sum of revenues from all sources related to operations adjusted to take account of RPGCL's prices in effect at the time of the incurrence of debt even though they were not in effect during the twelve-month period to which such revenues relate and net non-operating income; and (B) the sum of all expenses related to operations including administration, adequate maintenance, taxes and payments in lieu of taxes, but excluding provision for depreciation, other non-cash operating charges and interest and other charges on debt. (iv) The term "net non-operating income" means the difference between: (A) revenues from all sources other than those related to operations; and (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above. (v) The term "debt service requirements" means the aggregate amount of Page 4 repayments (including sinking fund payments, if any) of, and interest and other charges on, debt. (vi) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Association. Section 4.03. (a) Except as the Association shall otherwise agree, RPGCL shall, commencing July 1, 1994, not incur any debt, if after the incurrence of such debt the ratio of debt to equity shall be greater than 65 to 35. (b) For purposes of this Section: (i) The term "debt" means any indebtedness of RPGCL maturing by its terms more than one year after the date on which it is originally incurred. (ii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment on the date of such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into. (iii) The term "equity" means the sum of the total unimpaired paid-up capital, retained earnings and reserves of RPGCL not allocated to cover specific liabilities. (iv) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Association. Section 4.04. (a) Except as the Association shall otherwise agree, RPGCL shall not declare any dividend with respect to its share capital or make any other distribution of profits, unless RPGCL's financial requirements have been met. (b) For purposes of this Section, the term "financial requirements" means requirements for operating expenses, debt service, working capital, and not less than 35% of RPGCL's capital expenditure. Section 4.05. RPGCL shall, by March 31 of each year, commencing March 31, 1992, review, in consultation with the Association, its capital expenditures program for the following year, and, thereafter, take all actions necessary to ensure the availability of the funds required for the carrying out of such program. Section 4.06. RPGCL shall, not later than June 30, 1992, complete the carrying out of a program, satisfactory to the Association, for the financial restructuring of its CNG operations. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of RPGCL thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) the date twenty years after the date of this Agreement. Page 5 (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify RPGCL of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) For RPGCL: Rupantarita Prakritik Gas Company Limited Petro Center 3 Kawran Bazar Dhaka 1215 Bangladesh Cable address: Telex: PETROBANGLA 642765 HNXNBJ DHAKA Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of RPGCL may be taken or executed by the General Manager or such other person or persons as such General Manager shall designate in writing, and RPGCL shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Shinju Asanuma Acting Regional Vice President Page 6 Asia RUPANTARITA PRAKRITIK GAS COMPANY LIMITED By /s/ A.H.S. Ataul Karim Authorized Representative SCHEDULE Implementation Program 1. RPGCL shall, not later than December 31, 1992, carry out a staffing plan, satisfactory to the Association. 2. RPGCL shall, not later than December 31, 1991, enter into an agreement with the Titas Gas Transmission and Distribution Company for the supervision of maintenance of its pipelines by that company. 3. RPGCL shall cause its staff to be trained in accordance with the training plan agreed with the Association. 4. In carrying out Part A.6 (i) of the Project, RPGCL shall: (a) not later than June 30, 1992, furnish a copy of the recommendations of the assessment to the Association for comments; (b) by December 31, 1992, prepare an action plan taking into account the comments of the Association on the recommendations; and (c) thereafter, promptly carry out such action plan. 5. In carrying out Part A.6 (ii) and (iii) of the Project, RPGCL shall by December 31, 1992, furnish to the Association for comments the recommendations of the studies. 6. RPGCL shall offer for sale to private sector companies any surplus propane produced at its NGL fractionation plant at Ashuganj.