CONFORMED COPY

LOAN NUMBER 1198 T-TH

PROJECT AGREEMENT

(Northeast Thailand RuralDevelopment Project)

between

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

and

PROVINCIAL ELECTRICITY AUTHORITY

Dated February 27, 1976

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PROJECT AGREEMENT

AGREEMENT, dated February 27, 1976, between INTERNATIONAL

BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the

Bank) and PROVINCIAL ELECTRICITY AUTHORITY (hereinafter called

PEA).

WHEREAS by the Loan Agreement of even date herewith between

Kingdom of Thailand (hereinafter called the Borrower) and the Bank,

the Bank has agreed to make available to the Borrower an amount in

various currencies equivalent to twenty-one million dollars

($21,000,000), on the terms and conditions set forth in the Loan

Agreement, but only on condition that PEA agree to undertake such

obligations toward the Bank as hereinafter set forth: and

WHEREAS by a subsidiary loan agreement between the Borrower

and PEA, a portion of the proceeds of the loan provided for under

the Loan Agreement will be made available to PEA on the terms and

conditions therein set forth: and

WHEREAS PEA, in consideration of the Bank's entering into the

Loan Agreement with the Borrower, has agreed to undertake the obli-

gations hereinafter set forth:

NOW THEREFORE the parties hereto hereby agree as follows:

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ARTICLE I

Definitions

Section 1.01. Wherever used in this Agreement, unless the con-

text shall otherwise require, the several terms defined in the Loan

Agreement and in the General Conditions (as so defined) have the

respective meanings therein set forth.

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ARTICLE II

Execution of the Project

Section 2.01. PEA shall carry out Part G of the Project des-

cribed in Schedule 2 to the Loan Agreement with due diligence and

efficiency and in conformity with appropriate administrative, fi-

nancial and engineering practices.

Section 2.02. Except as the Bank shall otherwise agree, the

goods and works for Part G of the Project to be financed out of

proceeds of the an, shall be procured in accordance with the

provisions of Schedule 4 to the Loan Agreement.

Section 2.03. (a) PEA undertakes to insure, or make adequate

provision for the insurance of, the imported goods to be financed

out of the proceeds of the Loan relent to it by the Borrower against

hazards incident to the acquisition, transportation and delivery

thereof to the place of use or installation, and for such insurance

any indemnity shall be payable in a currency freely usable by PEA

to replace or repair such goods.

(b) Except as the Bank may otherwise agree, PEA shall cause

all goods and services financed out of the proceeds of the Loan

relent to it by the Borrower to be used exclusively for the Project.

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Section 2.04. (a) PEA shall furnish to the Bank, promptly up-on their preparation, the plans, specifications, reports, contractdocuments and construction and procurement schedules for Part G ofthe Project, and any material modifications thereof or additionsthereto, in such detail as the Bank shall reasonably request.

(b) Without any limitation or restriction upon its obliga-tions under paragraph (a) of this Section, PEA shall prepare andfurnish to the Bank for review, within a period of three monthsafter the date of this Agreement (or such other period as the Bankmay agree), and thereafter by September 30 (or such other date asthe Bank may agree) of each year, a program for the execution ofPart G of the Project during the next year, in such detail as theBank shall reasonably request.

(c) PEA: (i) shall maintain records adequate to record theprogress of Part G of the Project (including the cost thereof) andto identify the goods and services financed out of the proceeds ofthe Loan relent to it by the Borrower, and to disclose the usethereof in Part G of the Project; (ii) shall, without limitationupon the provisions of paragraph (d) of this Section, enable theBank's representatives to visit the facilities and constructionsites included in Part G of the Project and to examine the goodsfinanced out of such proceeds and any relevant records and docu-ments; and (iii) shall furnish to the Bank all such informationas the Bank shall reasonably request concerning Part G of the Proj-ect, the expenditure of the proceeds of the Loan so relent to itand the goods and services financed out of such proceeds.

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(d) PEA shall enable the Bank's representatives to examine

all plants, installations, sites, works, buildings, property and

equipment of PEA and any relevant records and documents.

Section 2.05. PEA shall duly perform all its obligations un-

der the Subsidiary Loan Agreement. Except as the Bank shall other-

wise agree, PEA shall not take or concur in any action which would

have the effect of amending, abrogating, assigning or waiving the

Subsidiary Loan Agreement or any provision thereof.

Section 2.06. (a) PEA shall, at the request of the Bank, ex-

change views with the Bank with regard to the progress of Part G

of the Project, the performance of its obligations under this

Agreement and under the Subsidiary Loan Agreement, and other mat-

ters relating to the purposes of the Loan.

(b) PEA shall promptly inform the Bank of any condition which

interferes or threatens to interfere with, the progress of Part G

of the Project, the accomplishment of the purposes of the Loan, or

the performance by PEA of its obligations under this Agreement and

under the Subsidiary Loan Agreement.

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ARTICLE III

Management and Operations of PEA

Section 3.01. (a) PEA shall at all times manage its affairs,

maintain its financial position, plan its future expansion and

carry on its operations all in accordance with appropriate engi-

neering, administrative and financial practices and under the sup-

ervision of experienced and competent management assisted by expe-

rienced and competent staff in adequate numbers.

(b) Except as the Bank shall otherwise agree, PEA shall with-

in two months after the date of this Agreement appoint its Manager,

Office of Rural Electrification, to serve as Project Director with

over-all responsibility for the supervision and direction of Part

G of the Project.

Section 3.02. (a) PEA shall maintain its existence and right

to carry on operations, and shall take all steps necessary to ac-

quire, maintain and renew all interests in land and other proper-

ties and all rights, powers, privileges and franchises which are

necessary or useful in the carrying out of Part G of the Project

or in the conduct of its business.

(b) PEA shall at all times operate and maintain its plants,

facilities, equipment, machinery and other property, and promptly

as required make all necessary repairs and renewals thereof, in

accordance with appropriate engineering and management practices.

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(c) Except as the Bank shall otherwise agree, PEA shall not

sell, lease, transfer or otherwise dispose of any of its property

or assets, which shall be required for the efficient operation of

its business and undertaking.

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ARTICLE IV

Financial Covenants

Section 4.01. PEA shall maintain records adequate to reflect

in accordance with consistently maintained appropriate accounting

practices its operations and financial condition.

Section 4.02. PEA shall: (i) have its 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 Bank; (ii) furnish to the

Bank as soon as available, but in any case not later than four

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, c such scope and in such detail as

the Bank shall have reasonably reqL ted; and (iii) furnish to the

Bank such other information concerning the accounts and financial

statements of PEA and the audit thereof as the Bank shall from time

to time reasonably request.

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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 Loan Agreement becomes effective.

Section 5.02. (a) This Agreement and all obligations of the

Bank and of PEA thereunder shall terminate on the earlier of the

following two dates:

(i) the date on which the Loan Agreement shall termi-

nate in accordance with its terms; or

(ii) a date 25 years after the date of this Agreement.

(b) If the Loan Agreement terminates in accordance with its

terms before the date specified in paragraph (a)(ii) of this Sec-

tion, the Bank shall promptly notify PEA of this event.

Section 5.03. All the provisions of this Agreement shall

continue in full force and effect notwithstanding any cancella-

tion or suspension under the Loan Agreement.

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ARTICLE VI

Miscellaneous Provisions

Section 6.01. Any notice or request required or permitted tobe 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 ormade when it shall be delivered by hand or by mail, telegram, ca-

ble, telex or radiogram to the party to which it is required orpermitted to be given or made at such party's address hereinafter

specified or at such other address as such party shall have desig-

nated by notice to the party giving such notice or making such re-quest. The addresses so specified are:

For the Bank:

International Bank forReconstruction and Development

1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address:

INTBAFRADWashington, D.C.

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For PEA:

Provincial Electricity Authority200 Ngam-Wongwan Road, Bang KhenBangkok 9Thailand

Cable Address:

PEA

Bangkok

Section 6.02. Any action required or permitted to be taken,

and any documents required or permitted to be executed, under this

Agreement on behalf of PEA may be taken or executed by its General

Manager or such other person or persons as PEA shall designate in

writing.

Section 6.03. PEA shall furnish to the Bank sufficient evi-

dence of the authority and the authenticated specimen signature

of the person or persons who will, on behalf of PEA, take any ac-

tion or execute any documents required or permitted to be taken

or executed by PEA pursuant to any of the provisions of this

Agreement.

Section 6.04. This Agreement may be executed in several

counterparts, each of which shall be an original, and all

collectively but one instrument.

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IN WITNESS WHEREOF, the parties hereto, acting through their

representatives thereunto duly authorized, have caused this Agree-

ment 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 BANK FORRECONSTRUCTION AND DEVELOPMENT

By /s/ Gregory B. VotawActing Regional Vice President

East Asia and Pacific

PROVINCIAL ELECTRICITY AUTHORITY

By /s/ Upadit PachariyangkunAuthorized Representative