This memorandum of Understanding (hereinafter referred to as "MOU") is entered into this 12" day of June 2001 by and

BETWEEN

Government of Gujarat (hereinafter referred to as "GoG" which expression shall mean include its assignees).

AND

Government of Chhattisgarh (hereinafter referred to as "GoCG" which expression shall mean include its assignees).

WHEREAS Hon'ble Chief Minister of Chhattisgarh vide his letter dated 29^th March 2001 invited GoG to set-up power generation units in the state of Chhattisgarh utilising resources available in the state.

WHEREAS GoCG has shown its willingness to assist providing labour, coal and other resources.

WHEREAS pursuant to the above invitation, Hon'ble Chief Minister of Gujarat has evinced interest for investment in power sector in the state of Chhattisgarh to put-up pit head coal based power project in the state of Chhattisgarh.

Now, therefore, it is agreed by both the Governments

1. To co-operate and co-ordinate for exploiting opportunities for setting up a coal based pit head 500 MW power project in the state of Chhattisgarh (hereinafter referred to as "The Project") within the frame-work of legal provisions.
   
2. The project can be put-up as a joint venture of GoCG and GOG or entirely by GoG with State sponsored Public Sector Undertakings of Gujarat and/or with private sector strategic partner, as agreed by the two State governments at appropriate time.

This MOU is signed subject to the following conditions –

1. GoG or GoG-GoCG shall form a new Company for the execution of the project (hereinafter referred to as "The Company").

2. The Shareholder Agreement of "the company" shall be drafted so as to give effect to the MOU.

3. GoG and GoCG shall take all necessary and effective steps for implementation of the project till "The Company is formed. Effective steps will be taken by GoG and GoCG for obtaining proper long-term fuel linkage from coal mines of Chhattisgarh from Government of India.

4. GoCG shall assist the company for getting mining lease / fuel linkage all necessary clearances environment clearances procurement of land, water and other infrastructure facilities for successful implementation of the project.

5. GoCG will extend all assistance in providing geological reports of exploration carried out in the area identified for the projects and feasibility reports of mines as well as power plant.

6. "The Company" shall sell the power generated by the project to power distribution company nominated by GoG in consultation with GoCG and GOG shall arrange to evacuate at their cost its share of the net power output from the project through the Western Grid Transmission System or through Transmission System dedicated to GoG's nominated companies. The company will execute PPA, FSA, Transmission Agreement and PSM with the concerned Agencies / Authorities at appropriate time.

7. Neither GoG nor GoCG shall be liable to each other for any liability or any consequential loss incurred by the Government individually in respect of the Project till the company is formed.

8. It is agreed by both the government that no major financial commitments shall be made by either Government without much consultation in connection with this project.

9. This MOU shall become effective from the date of signing representatives of both the governments hereto.

10. Unless extended by mutual consent, the MOU shall be valid for twelve (12) months from the date of signing, during which period Governments will take effective steps for the implementation of the project.

11. Both the Governments agree that they shall bear its own cost on formation of the company and on execution of agreements mentioned herein above, the liabilities of GoG and GoCG should cease.

12. the company shall endeavour to undertake socio-economic development and environmental protection of the area as agreed by GoG and GoCG.

Accordingly both the Governments resolve to act in good faith and to implement the provisions of this MOU.