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FAX N0.

ia,4925t92t5723

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GOVERNMENT OF PAI(ISTAN
MINISTRY OF WATER AND POWER
(PRIVATE POWIR & INFRASTRUCTUREDOARD)
No. t ( 1i.)2)l)l'l lt-A11trs/()7/l'llJ

7,r'APfil2i)07

Mr. Saqtib Shirazi


Director, Atlas .l'owcr Liuritccl
I {or.rse
Federa'tiorr
2,' Flcx)r',
Cli f ton
Slrahrnh-e-Iiir:tlousi,
Knrilctri

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Subjcct:

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LETTEROFSUPPORT(LOS)FORa2_5_A4tg_G_R_g"S$_AII]5_QL-II"O-I{-.E
PROTECTON LAI-IORE.SIIEIKUPURAROAD ON FAST TRACK
BASIS BY ATLAS POWER.LIMII*ED

L)c.rrSir,
f'ha Privatc Powcr & lnfrastructrrre Boarcl (1.'l)TB)is;rleaser:l trr issue the
Lctterof Strpport (LOS), itt clttplicatc, to Atlas Power Limjfed l'or an
"rpproximately
225 MW (gross TSO) power proje(rt lo be localetl on Lahore-Sheiklurpura

2.

Rc'racl.

Yor: are reqr-resl-ed


to sign and retrrrn one copy r>fLOS by 130'April 2007,
Wltlt regards,
Yours sinccrcly,

alic{ L Rahffani

Encl: As abovc:

i.r.

:'
i:

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'

H o u s eN o .6 0 ,N azl mtrddiR
- paktstan
n oad,F-7l 4,l stamabad
Tel:(9251)9201848,92063s7,9222378,9222425
Fax:(92S1
) g7t7735,sz157z3
Emai|: AptilAEpib.g|p!,DE
Intrnet: http:,//www.
ppib.gov.pk

IB ISLRI'IRBRD

FRX NO. iAa925!92L5723

Apr. E? 2AA7 Z?iZzPn P2

GOVERNMENT
OF PAKISTAN
MINISTRY
OFWATERAND POWER
(PRIVATEPOWER& TNFRASTRUCTURE
BOARD)

N o . 1( 10 2 ) P P IB -A tl a s/O7 /PRJ

7tr ' Apr il


2007

M r . S a q u i bS h i ra zi
Director,Atlas Power Llmited
2noFloor,FederationHouse
Shahrah-e-Firdousi,
Clifton
Karachi
Subject:

eEr.4Errglverur
oi a rne

T tso coNDtTl
TED ON

i'b*

D e a rS i r,

REFERENQE
whereas,(i) the Government
of pakistan(Gop), throughthe private
Powerand Infrastructure
Board(pplB),Ministry
of water &-power,lslamic
Republicof Pakistan,is issuingthis Letter bf sLrpport(Los) io Aflas
l9y".r Limited( hereinafterihe "projectcompany'')unoei the fast track
initiative
andthe ProjectCompany
(i)

having applied to NEPRA for determinationof the tariff for


reciprocating
enginetechnology
and havingreceivedfrom NEpRA
a tariffdeterminationno. NEpRA/TRF-68/AF
L,2007/,1
336-38dated
6thMarch 2007,on the termsand conditionsset out thereinas
amendedfromtimeto time(the,,Tariff,);
and

(ii)

havingappliedto the NationalElectricpowerRegutatory


Authority
("NEPRA')
for the issuance
of a generation
license-;
and

(iii)

havingpaid a non-refundabre
processing/evaluation/regar
fee of
one hundredthousanddoilars(US$ 10O,bO0t)
paid in lquivalent
PakistanRupees,in favourof pplB;ano

(iv)

havingdeliveredan irrevocable,
unconditional,
on demandbank
guarantee,on terms acceptableto pplB, dated 5rhApril
2007
issuedby NationarBankof pakistan,corporatearancrr,chapat
Plaza'HasratMohaniRoad,Karachi,in the amountof us Dottars

@.--

IB ISLCNRBRD

FRX N0. iAA9251,92L5723

a1 2ea7 z7:z2Pt1 P3

one Miilionone Hundredrwenty FiveThousand(USg1,12s,ooe)


(hereinafter
referredto as the ,'performance
Guarantee',)
in favour
of PPIB
the Projectcompanyis nowbeingissuedthis Los, on the termsand conditions
g9t9ut herein,by the Managing
Director,privatepower& Infrastructure
Board,
Ministry
of Water& Power,Government
of Pakistan
on behalfof the presidentof
thelslamic
Republic
of Pakistan.
The PerformanceGuaranteeshall secLrrethe sponsor(s)
'theand the project
company'sobligationto (i) cause the executionof
lmplementaiion
Agreement
(lA)andthe PowerPurchase
(ppA) (together
Agreement
the project
Agreements)
(ii)achieveFinancial
Closing(as definedheielnler) no latertiran
nine(9)monthsfromthe issuance
dateof thisLOSunderand in accordance
with
the termsof this LOS(iii)achievethe commercial
operations
dateno laterthan
the 31"t of March, 2009 ("commercialoperationsDate',)under and in
accordance
with the terms of this Los, and (iv) the sponsor(s)and the project
company'sobligationsif the project company exercises'ihe',Termination
option"(as definedhereunder)
underand in accordance
withthe termsof this
LOS.
The Projectcompanyshall negotiateand sign,withintwo monthsbeforethe
FinancialclosingDate frornthe date of issuinceof this Los, an tA with the
Presidentof the lslamicRepublicof pakistanand a ppA with the power
Purchaser
(as definedin the lA) in the formof the standardized
draftsof the lA
and PPA providedby PPIB. Failureto causethe executionof these project
Agreementsby the requireddate, shall entifle the pplB to encash the
Performance
Guaranteein full withoutany noticeto or demandon eitherthe
MainSponsoror the ProjectCompany.

The. Projecl^9gTp3nvshalr achieveFinancialcrosing no rater than the


6"'January2008("Financial
ClosingDate")failingwhichpFts shaltbe entifled
to
encashthe Performance
Guaranteein the full amountthereofwithoutany notice
to or demandon tha Mainsponsor/ the projectcompany.In additionto any
otherconsequences
set out in this Los, if pplB actingin its sole discretion
determines
that any delayby the projectcompanyin alhievingthe Financial
ClosingDateis due to.eYentg
beyondthe reasonable
controlof ifr"elvtainSponsor
/ ProjectcompanyandthatFinancialclosing
canbe achieved
shortly,ppl'Bshall
be entitledaclin-gon an apptication
in writin! madeto it by tho projectGompany
lgas^t
(30)
thirty
days
before
the
Financial
blosingDatetb grantin writingto the
3!
Mainsponsor/ Projectcompanya one time eitensionoi up to a maximum
periodof three(3) monthsbeyondthe FinancialclosingDate (suchextended
datebeinghereinafter
referred
to as the "Extended
FinanjialclosingDate,,).
This
approvalby PPIBis subjectto thefulfillment
of the following
actionJbeingtaken
by the Main sponsor,/ projectcompanyto the satisfaitionor ppteii) the
maximumamountin whichthe Performance
Guarantee
can OecatteO
is doubled
till three (3) months beyondthe Ertendeorinaniial croJng- D"te; provided
howeverthat upon achievingFinanciarclosing rrv *,u g*i"nJed Financial

IB ISLRI.4RBAD

FRX NO. iAe925L92rS723

Apr.

27 2EA7 27 i A3Pl1 P4

ClosingDate the PerformanceGuaranteemay be renewedto its originalamount


o f U S Do l l a rsOn e Mi l l i o nOn e Hundr edTwentyFiveThousand( US$ 1,125,000)
and (ii) a reportis submittedby the Main Sponsor/ ProjectCompanyto PPIB of
the proposedadditionalactionsit will seek to undertaketo achieveany proposed
Extended Financial Closing Date. lf such extension is allowed the Project
Companyshallfurthersubmitmonthlyreportsthat set out in adequatedeiailthe
additionalactionsnnadeby the Main Sponsor/ ProjectCompanyto achievethe
ExtendedFinancialClosingDate and the progressachievedin that regard.
For the purposesof this LOS, "FinancialClosing"means (a) the executionand
delivery of the financing documentsthat together with equity commitments
evidence sufficientfinancing for the construction,testing, completionand
(as definedin the PPA) of the Complex(as definedhereinafter)
Comrnissioning
(followingthe resolutionof any objectionsraisedby PPIBto a term sheetor debt
that sets out a principalrepaymentscheduleand the other
repaymentschedr.rle
principalterms of the transactionbetweenthe ProjectCompanyand the lenders)
and evidenceof commitmentsfor such equity as is required by the Project
Company to satisfy the requirementsof the lenders and this LOS and the
satisfaction
of all conditionsprecedentfor the initialavailabilityof fundsunderthe
financingdocumentsand (b) the deliveryof the Company Letter of Credit (as
definedin the PPA) to the Power Purchaser,In no event shall FinancialClosing
be deemed to have occurred unless the Main Sponsor and/or the Project
Companyhave paid all amountsthen due and owingto PPIB underthis LOS.

-l

a
.tt

The ProjectCompanyshall have the option(to be exercisedin writingonly),to


terminatethis LOS and any of the ProjectAgreementsexecuted at any time
before the required Financial Closing Date by foregoing a portion of the
PerformanceGuaranteeequal to the face value of the PerformanceGuarantee
multipliedby the numberof monthssincethe issuanceof this LOS (roundedup
to the next whole number)dividedby the total numberof months allowedin the
LOS to FinancialClosing (the 'TerminationOption")under and in accordance
with the terms of this LOS. For the avoidanceof any doubt,in the eventthat the
Project Company exercises the Termination Option during the Extended
FinancialClosingDate periodprovidedfor achievingFinancialClose,the entire
doubledamount of the PerformanceGuaranteeshall be encashableon call bv
PPIB.
The Cornplexshall be Commissioned(as definedin the PPA) and achievethe
ComrnercialOperationsDate failing which the PerformanceGuaranteemay be
encashedon a pro rata basis over a periodof ninety(90) days dependingupon
the extent of the actual delay in achievingthe CommercialOperationsDate
withoutany noticeto or demanduponthe Main Sponsoror the ProjectCompany
b y PP I B .
The PerformanceGuaranteeshall remainvalid and in full force until the 2nd of
August 2009 an d shall be encashableby the PPIB in accordancewiih this
ParagraphA on demand at any time followingthe dates specifiedabove and
duringthe period of its validity.lf the PerformanceGuaranteeis due to expire
withinten (10) days and it is requiredto be maintainedbythe ProjectCompany

Q"

IB ISLNHRBRD

FRX NO. iAA925t92!5723

A pr. @ ? 2A Zf A Ti A 3PY

the PPIB shall be entitledto encashthe PerformanceGuaranteein full and hold


such cash as securltyfor the obligationsof the Sponsor(s)and the Project
Company hereunder. The Sponsor(s) and the Project Company hereby
by a
agreethat in the eventof any determination
irrevocably
and unconditionally
court of competent jurisdictionthat the PerformanceGuarantee has been
enchased by the PPIB when no encashment is permitted hereunder,the
Sponsor(s)and the ProjectCompany'ssole and exclusiveremedyshall be the
returnof the proceedsof such encashmentand the Sponsor(s)and the Project
Companyshallhave no otherclaimagainstthe Governmentof Pakistan('GOP"),
the PPIB or any agencyor instrumentality
or componentthereofon any grounds
whatsoeverfor any act or omissionof the GOP or the PPIB hereunderor in
relationheretoand the Sponsor(s)and the ProjectCompanyherebywaive,to the
Closing,the LO S
f u l l e s exte
t
n tp e rmi ssi b lbey l a w any suchclaim .UntilFinancial
provisions
and the
of the ProjectAgreementswhich have becomeeffectiveupon
signingand executionof the ProjectAgreements,shall governthe projectand
supersedeall understandings,
documentsand agreements.In the event of any
conflict between this LOS and the provisionsof the Project Agreementswhich
have becorneeffeotiveupon signing,this LOS shall govern and prevail. After
FinancialClosing,the ProjectAgreementsshallsupersedethe LOS.

B.

AUTHOR|ZATIqII

of the lslamicRepublic
herebyconveyshis permission
The President
of Pakistan
to the ProjectCompanyfor the development,
design,engineering,
manufacture,
procurement,financing,construction,completion,testing, Commissioning,
insurance,
ownership,
operation
and maintenance
of an approximately
225 MW
Project(grossISO)powergeneration
facility(the "Complex")
to be locatedon
Lahore-Sheikhupura
Road, Provinoeof Punjabusing ResidualFurnaceOil
("RFO')as thefuelandto implement
(the"Project")
all activities
incidentalthereto
in accordancewith the termsof this LOS and with the provisionsof the Project
Agreementswhich havobecomeeffective,in accordancewith the lA and PPA.
produced
throughthe Complexshallbe Boldto the PowerPurchaser
Electricity
in
accordancewith the GenerationLicenceand the Tariff determinedby the
NationalElectricPowerRegulatory
Authority(NEPRA) underthe Regulation
of
Generation,Transmission& Distributionof ElectricPowerAct, 1997 and the
provisionsof a PPA to be enteredinto betweenthe ProjectCompanyand the
PowerPurchaser.
c.

FUEL$._U-PPLYAGREEMENT

Thesponsor(s)andthe Projectcompanyshallalsodiligently
pursue,negotiate,
'finalizeand executea Fuel supply
Agreementfor RFo with a competentfirel
supplier.

P5

IB iSLRI"IRBAD

D-

FRX NO. :Z,2925!3'21"5'723

epr.

E f 2gA 7 v / iv4Pr l

EQUITY.CONTRIBUTION

M/s shirazi lnvestments(Pvt) Limited(hereinafter


referredto as the ,,Main
sponsor")shallholdat leastfiftyone percent(s1o/o)
of the equityin the project
companyfronrthe dateof issuance
of thisLos untilthe sixtn(o,l,janniversary
of
thesuccessful
Commissioning
of theComplex.
E.

TERMTNATTON
OFTHELETTEROF SUPPORT

In the eventof termination


of this Los, whichshallbe donethrougha written
noticeby PPIBto the Mainsponsor/project
companyor conversely,
tne project
Agreementsas well as the Projectwill automatically
terminate.Neitherthe
sponsorsnorthe Projectcompanyshallhaveanyclaimagainstthe Gop or any
of its cornponents/organizations/
provinces/institutionion any ground(s)
whatsoever
arisingfromthe expiration
or termination
of thisletteras aforesaid.

Q.,

F.

GENERAL

't.

ThisLos shallbecomeeffective
on thedateof its issuance
by the pplB.
Capitalizedterms shall bear the meanings ascribedto them in the
pertinentparagraphsherein.
Other than where the context determines otherwise,the singular
includesthe pluraland vice versa.

4.

The obligations
of the Mainsponsorand the Projectcompanyunderthis
LOSshallbe jointandseveral.

5,

Any noticeor communication


by or to the Main sponsoror the project
companyunderthis Los shallbe deemeda noticeor communicalion
to
or by alltheSponsors
andthe ProjectCompany.

o.

Th-eMain sponsorand the Projectcompanyrepresentand warrantto


PPIB that they are duly authorisedto accept,agree and enter into this
Los and deliverand performthe same in accorbancewith its terms on
behalfof the Main sponsor,the othersponsorsas well as the project
Company.
ThisLos shallbe governedby and construed
in accordance
withthe laws
of Pakistanand the courtsof pakistanshailhaveexcfusive
jurisdiction
in
relation
to anydisputeor matterarisingoutof or in connection
herewith,

IB ISLAMCBAD

FRX NO. iAA925L92L5123

Fpr.

E 7 zZe? A 7i A4Pl1 P1

Kindlysign the attachedcopy of this LOS at the place indicatedand returnthe


sameto us no latertl'lan13tnApril2007.
With regards,

Yourssincerely,

Government
of Pakistan
For and on behalfof the Presidentof the
lslamicRepublicof Pakistan

Received,Agreedand Acceptedby

Name
Title:
on behalfof the Main Sponsor and the
ProjectCompany.
Dated:

1 . Secretary
Water& Power,lslamabad
2. Chairman,
WAPDA,WAPDAHouse,Lahore
3. CEO.NTDC