Page  1
CONFORMED COPY
NUMBER B-108-0
Project Agreement
between
UCH POWER LIMITED
and
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
Dated September 24, 1996
Page  2
CONTENTS
Section
Page
1.
Records and Reports; Provision of Information
1
2.
Confidentiality
1
3.
Insurance
2
4.
Representations and Warranties
2
5.
Covenants of the Project Company
3
6.
Costs and Expenses
4
7.
Notices
4
8.
Law and Jurisdiction
5
9.
Execution in Counterparts
7
10.
 Non-Recourse
7
Page  3
NUMBER B-108-0
This PROJECT AGREEMENT (the “Agreement”) is dated  
September 24, 1996  between:
UCH POWER LIMITED, a Pakistani public limited company 
(the “Project Company”) of H-3 St. 33, F-8/1, 
Islamabad, Pakistan; and
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 
of 1818 H Street, N.W., Washington, D.C.  20433 (the 
“Bank”). 
IT IS AGREED as follows:
The purpose of this Agreement is to record 
certain understandings between the Project Company and 
the Bank in connection with the agreement of the Bank 
(the “World Bank Guarantee Agreement”) to guarantee the 
payment of interest and repayment of the principal of a 
loan to the Project Company to be made available under 
the World Bank Facility Agreement for the purpose of 
funding eligible goods and services and other eligible 
expenditures required for the construction of the 
Project.
For purposes of this Agreement, all capitalized 
terms used herein which are defined in the agreement 
dated as of May 17, 1996 between the Project Company 
and ABN AMRO Bank N.V. as Intercreditor Agent and the 
other parties therein entitled Common Debt Agreement 
shall have the meanings given to them in the Common 
Debt Agreement.
In consideration of the extension of the World 
Bank Guarantee Agreement by the Bank, the Project 
Company hereby agrees with the Bank as follows:
1.
Records and Reports; Provision of 
Information
The Project Company shall allow the Bank’s 
representatives to visit and examine the 
Complex and the operating records, 
detailed designs, books of account and 
other records relating to the Project 
maintained by the Project Company at 
reasonable times and upon reasonable 
notice, and shall provide promptly upon 
request all financial, technical and other 
information available to the Project 
Company concerning the Project Company, 
the Complex and the Project as the Bank 
may from time to time reasonably request, 
including, without limitation, information 
concerning the expenditure of the proceeds 
of the World Bank Facility Loan and the 
expenditures financed out of such 
proceeds.
2.
Confidentiality
(a)
The Project Company waives any 
rights it may have to prevent or 
restrict the Bank from disclosing 
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(and confirms that the Bank may 
disclose) this Agreement and each 
of the Project Documents and the 
Finance Documents and the 
transactions contemplated hereby 
and thereby to any other Person.  
The Project Company waives any 
rights it may have to prevent or 
restrict any Material Entity or any 
other Person that is a party to a 
Project Document or a Finance 
Document from disclosing (and 
confirms that any such Material 
Entity or such other Person may 
disclose) the subject matter of any 
of the Project Documents or the 
Finance Documents to the Bank.
(b)
Except as provided above, the Bank 
agrees with the Project Company 
that it will not disclose outside 
the Bank without the consent of the 
Project Company any information or 
documents concerning the Project 
Company that the Project Company 
has expressly identified as 
confidential and which are received 
by the Bank under this Agreement or 
under any Principal Document to the 
same extent as is provided in 
Clause 48 of the Common Debt 
Agreement (as if the Bank were a 
Lender thereunder).
3.
Insurance 
If, at any time and for any reason:  (a) 
any Public Liability Insurance required to 
be maintained under Part 7 of the Common 
Debt Agreement for the benefit of, inter 
alia, the Bank shall not be in full force 
and effect; or (b) the Project Company 
shall fail to pay punctually any premiums 
or other sums payable in respect of any 
Public Liability Insurance, the Bank shall 
be entitled, but not obligated, on behalf 
of itself to pay such premiums or other 
sums payable or take out any such Public 
Liability Insurance following consultation 
with the Project Company and the Insurance 
Adviser.  The Project Company shall, on 
demand by the Bank, reimburse the Bank in 
respect of any premiums or other costs and 
expenses incurred by the Bank in relation 
to any such Public Liability Insurance and 
shall indemnify the Bank against any 
liabilities, costs, claims and expenses 
resulting from the payment of such premium 
or other costs and expenses except to the 
extent arising from the gross negligence 
or willful misconduct of the Bank, as 
determined by a court of competent 
jurisdiction.
4.
Representations and Warranties
(a)
The Project Company represents and 
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warrants to the Bank that:
(1)
(i) it is in full compliance 
with all Environmental Laws 
which are currently binding 
on the Project Company and 
applicable to the Project and 
(ii) no litigation, 
arbitration or administrative 
proceeding to which it is 
named as a party is current, 
pending or, to the best of 
its knowledge, threatened 
under any Environmental Law, 
and, to the best of its 
knowledge, there are no past 
or present circumstances, 
including, without 
limitation, the release, 
omission, discharge or 
disposal of any Material of 
Environmental Concern, which 
might reasonably be expected 
to form the basis of any 
Environmental Claim against 
it;
(2)
it has the power to enter 
into this Agreement and 
perform its obligations 
hereunder and all requisite 
corporate action has been 
taken for its execution of 
this Agreement and its 
performance of its 
obligations hereunder;
(3)
the obligations expressed to 
be assumed by it in this 
Agreement are legal and valid 
obligations enforceable in 
accordance with the terms 
thereof, except as such 
enforceability may be limited 
by (i) bankruptcy, 
insolvency, reorganization, 
moratorium or other similar 
laws of general applicability 
affecting the enforcement of 
creditors’ rights and (ii) 
the application of general 
principles of equity 
(regardless of whether such 
enforceability is considered 
in a proceeding in equity or 
at law);
(4)
the execution by it of this 
Agreement and the exercise of 
its rights and the 
performance of its 
obligations hereunder do not 
and would not:
(i)
conflict with, result 
in a breach of, or 
constitute a default 
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under any agreement, 
mortgage, bond or 
other instrument to 
which it is a party or 
which is binding upon 
it or any of its 
assets or revenues, 
the consequences of 
which would have a 
Material Adverse 
Impact;
(ii)
conflict with its 
Memorandum and 
Articles of 
Association or any 
approval or 
authorization issued 
by the Corporate Law 
Authority of the 
Government of 
Pakistan; or
(iii)
conflict with any law, 
regulation or official 
or judicial order 
applicable to or 
binding on it or the 
Project.
(b)
Each of the representations and 
warranties of the Project Company 
set out in this Clause 4 shall be 
made on the date hereof (except 
that any representation or warranty 
which relates expressly to an 
earlier date, by direct reference 
or by reference to a document dated 
a certain date, shall be deemed 
made only as of such date).  All of 
these representations and 
warranties shall survive until the 
relevant date set forth in Clause 
19.4 of the Common Debt Agreement.
5.
Covenants of the Project Company
(a)
The Project Company hereby 
covenants and agrees with the Bank 
to comply with each of the 
following covenants:
(1)
Environmental Compliance:  
(i) ensure that the Project 
Company’s business is carried 
out in compliance with all 
applicable Environmental Laws 
and (ii) within fourteen (14) 
days after receipt, deliver 
to the Intercreditor Agent 
copies of any reports 
regarding Environmental 
Matters relating to the 
Project made to the GOP or 
the GOB or any other 
Governmental Authority; 
provided, however that no 
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breach of covenant shall 
result if the Project Company 
remedies such noncompliance 
within thirty (30) days after 
notice of such noncompliance 
from the Intercreditor Agent, 
or if the Technical Adviser 
determines that such 
noncompliance is of a nature 
such that it cannot 
reasonably be remedied within 
such thirty (30) day period, 
but is susceptible to remedy 
within a longer period, and 
the relevant Person, as 
promptly as possible, 
commences action reasonably 
designed to remedy such 
failure and continues 
diligently to pursue such 
action until remedied (but in 
no event for more than an 
aggregate of ninety (90) 
days).
(2)
Use of Proceeds:  use the 
proceeds of all Advances 
exclusively for the Project 
and for the purposes 
permitted hereunder and under 
the World Bank Facility 
Agreement;
(3)
Auditors: furnish to the Bank 
a copy of an authorization by 
the Project Company 
authorizing the Auditors 
(whose fees and expenses 
shall be for the account of 
the Project Company) to 
communicate directly with the 
Bank at any time regarding 
the Project Company’s 
accounts and operations, and 
promptly renew such 
authorization at any time 
upon receipt of a written 
request from the Bank.
6.
Costs and Expenses
The Project Company shall, from time to 
time on demand of the Bank, reimburse the 
Bank for all out-of-pocket costs and 
expenses (including legal fees and 
traveling costs and expenses), reasonably 
incurred by the Bank in connection with:
(a)
the enforcement of any of the 
Bank’s rights under this Agreement; 
and
(b)
the consideration of any requests 
for its consent pursuant to Clause 
10.2 (Waivers, amendments) of the 
World Bank Guarantee Agreement. 
Page  8
7.
Notices
 (a)
Each communication to be made under 
this Agreement shall be made in 
writing but may be made by telex, 
facsimile or letter.
(b)
Any communication or document to be 
made or delivered by one Person to 
another pursuant to this Agreement 
shall (unless that other Person 
has, by thirty (30) days’ written 
notice to the other party, 
specified another address) be made 
or delivered to that other Person 
at the address identified in 
paragraph (c) (and in the case of 
any communication or any document 
sent to Pakistan, shall be sent by 
special courier service) and shall 
be effective only when received by 
the addressee and then only if the 
same is expressly marked for the 
attention of the department or 
officer identified in paragraph (c) 
(or such other department or 
officer as the Project Company or 
the Bank shall from time to time 
specify for this purpose by thirty 
(30) days’ written notice to the 
other).
(c)
(1)
The Bank’s notice details 
are:
Address:
1818 H Street, 
N.W.
Washington, 
D.C.  20433
United States 
of America
Cable Address:
INTBAFRAD
Telex:
248423 (MCI)
 64145 (MCI)
 82987 (TRT)
197688 (TRT)
Facsimile:
(1) (202) 
477-8598
Attention:
Division Chief, 
Energy and 
Project Finance 
Division
Country 
Department 1
South Asia 
Regional Office 
(2)
The Project Company’s notice 
details are:
Address:
Uch Power 
Page  9
Limited
H-3, St-33, 
F-8/1
Islamabad, 
Pakistan
Telex:
Facsimile:
(92)(51) 
260-655
Attention:
Chief Executive
(d)
All documents to be furnished or 
communications to be given or made 
under or contemplated by this 
Agreement shall be in the English 
language, or, if in another 
language, shall be accompanied by a 
translation into English certified 
(by a representative of the party 
making or delivering the same) as 
being a true and accurate 
translation thereof, which 
translation shall be the governing 
version between the parties.
8.
Law and Jurisdiction
(a)
Governing law
This Agreement shall be governed by 
the laws of the State of New York 
of the United States of America and 
shall for all purposes be governed 
by and construed in accordance with 
the laws of such State without 
regard to the conflict of laws 
rules thereof other than Section 
5-1401 of the New York General 
Obligations Law, provided, however, 
that to the extent any terms of 
this Agreement are incorporated in 
and made part of any other Finance 
Documents, any such term so 
incorporated shall for all purposes 
of such Finance Documents be 
governed by and construed in 
accordance with the law governing 
the Finance Documents into which 
such term is so incorporated.
(b)
Submission to Jurisdiction
Each of the parties to this Agreement 
irrevocably:
(1)
submits to the jurisdiction of the courts 
of the State of New York in the County of New 
York or of the United States of America for the 
Southern District of New York in connection with 
any controversy, suit, action or proceeding which 
may arise out of or in connection with this 
Agreement;
Page  10
(2)
waives any objection which it might now or 
hereafter have to such courts referred to in 
Clause 8(b)(1) being nominated as the forum to 
hear and determine any controversy, suit, action 
or proceeding, which may arise out of or in 
connection with this Agreement on the basis of 
improper venue, inconvenient forum or otherwise; 
and
(3)
agrees not to claim that any such court is 
not a convenient or appropriate forum.
(c)
Service of process
(1)
The Bank agrees that the 
process by which any suit, 
action or proceeding is begun 
in the courts of the State of 
New York in the County of New 
York or of the United States 
of America for the Southern 
District of New York may be 
served on the Bank by being 
delivered to the office of 
the General Counsel of IBRD, 
located on the date hereof at 
1818 H Street, N.W., 
Washington, D.C.  20433, and 
hereby irrevocably appoints 
such person as its agent for 
the service of process in 
connection therewith.
(2)
The Project Company agrees 
that the process by which any 
suit, action or proceeding is 
begun in the courts of the 
State of New York in the 
County of New York or of the 
United States of America for 
the Southern District of New 
York may be served on it by 
being delivered to 
Prentice-Hall Corporation 
System, Inc., 375 Hudson St., 
New York, NY 10014 and hereby 
irrevocably appoints such 
Person as its agent for the 
service of process in 
connection therewith.  If the 
appointment of the Person 
mentioned herein ceases to be 
effective the Project Company 
shall immediately appoint a 
further Person in New York to 
accept service of process on 
its behalf in New York and, 
failing such appointment 
within ten (10) days after 
notice thereof to the Project 
Company from the Bank, the 
Bank shall be entitled to 
appoint such a Person by 
notice to the Project 
Company.  The Project Company 
further irrevocably consents 
to the service of process out 
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of any of the aforementioned 
courts in any such suit, 
action or proceeding by the 
mailing of copies thereof 
registered or certified mail, 
postage prepaid, to the 
Project Company, at its 
address set forth above, such 
service to become effective 
ten (10) days after such 
mailing.  Nothing contained 
herein shall affect the right 
to serve process in any other 
manner permitted by law.
(d)
Non-exclusivity
The submission by each of the 
parties to this Agreement to the 
jurisdiction of the courts referred 
to in Section 8 (b) shall not (and 
shall not be construed so as to) 
limit the right of either party to 
take proceedings against the other 
party with respect to this 
Agreement in any other court of 
competent jurisdiction nor shall 
the taking of proceedings in any 
one or more jurisdictions preclude 
the taking of proceedings in any 
other jurisdiction, whether 
concurrently or not, if and to the 
extent permitted by applicable law.
9.
Execution in Counterparts 
This Agreement may be executed in two 
counterparts and both of such counterparts 
taken together shall be deemed to 
constitute one and the same instrument.  
10.
Non-Recourse
Clause 41.8 of the Common Debt Agreement 
is incorporated by reference in this 
Agreement as if fully set forth in this 
Agreement.  For purposes of this Section 
10 only, the Bank shall be considered a 
“Lender” as used in such Clause 41.8 of 
the Common Debt Agreement.
IN WITNESS whereof the parties to this Agreement have 
caused this Agreement to be duly entered into on the 
date first above written.
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
/S/
Mieko Nishimizu
Authorized Representative
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ACTING REGIONAL VICE PRESIDENT
UCH POWER 
LIMITED
/S/
Lyle Bauer
Authorized Representative