ESTABLISHMENT OF A DEDICATED
FLOATING LIQUEFIED NATURAL GAS TERMINAL
AT PORT QASIM
IMPLEMEMTATION AGREEMENT
between
PORT QASIM AUTHORITY
PAKISTAN GASPORT LIMITED
April 2007
TABLE OF CONTENTS
Page #
Article 1 -Interpretation and Definitions 1
Article 2 - Execution of Agreement6
Article 3 - Grant of License: Right and Concession 7
Article 4 -Consents12
Article 5 - Insurance, Indemnities and Risk Management 13
Article 6 - Land Lease 15
Article 7 - Construction Phase 17
Article 8 -Immigration and Controls18
Article 9 - Safety and Security, Emergency and Hazards 19
Article 10 - Custom Duties and Import Controls 21
Article 11 - Foreign Exchange and Transfer of Funds22
Article 12 - Assignment and Transfer 23
Article 13 - Force Majeure24
Article 14 - Operations 26
Article 15 -Termination and Compensation 27
Article 16 - Resolution of Disputes 28
Article 17 - Notices 29
Article 18 -Miscellaneous30
Article 19 - Overriding Provisions35
Article 20 - Tariff Arrangements 36
Article 21 - Royalty and its Payment37
C:\Documents and Settings\Services\My Documents\SVC1\BKP_SVC-1(2)\Proposal\LNG-Terminal\Implementation Agreement\Final Imp. Agreement\IMP-AGREEMENT-Final 29-3-07.doc (1)
IMPLEMENTATION AGREEMENT
This Agreement is made on this ______day of ______2007 between the Port Qasim Authority, established under the Port Qasim Authority Act, 1973 (Act XLIII of 1973) and having its headquarters at Port Muhammad Bin Qasim, Karachi (hereinafter referred to as “PQA” which expression shall include its successors in-interest and assigns) of the one part.
AND
The Pakistan GasPort Limited,a Company incorporated under the Law of Pakistan having its registered office at7 Egerton Road Lahore, 54000 (hereinafter referred to as the “Company” which expression shall include its successors in-interest and assigns) of the other part;
WHEREAS:
(A)M/s. Associated Group (AG), hereinafter referred as the Sponsors,being desirous of establishing a dedicated FloatingLiquefied Natural GasTerminal at Port Qasim on Build, Operate and Transfer basis, submitted proposals as per PQA Guidelines.
(B)The Sponsors vide their letter No. 1350/06 dated January 12, 2007accepted terms and conditions of the Guidelines and agreed to finance, design, construct, manage, operate and maintain the Floating LNG Terminal.
(C)The Company has been formed in accordance with the laws of Pakistan for the purpose of financing, planning, designing, constructing, operating, maintaining and managing the Floating LNG Terminal subject to terms and conditions set forth herein which have been mutually agreed upon and are, therefore, binding on both the parties.
NOW IT IS HEREBY AGREED AS FOLLOWS:
Article 1 Interpretation and Definitions
In this Agreement,
1.1Expressions defined in Article 1.6 shall bear the respective meanings set out therein;
1.2The headings of Articles, clauses, schedules are for convenience only and shall be ignored in interpreting this Agreement;
1.3The singular includes the plural and vice versa;
1.4References to Articles, clauses, and schedules are, unless the context otherwise requires, references to Articles and clauses of, and schedules to this Agreement; and
1.5References to any Agreement, enactment, ordinance or regulation include any amendment thereof or any replacement of it in whole or in part.
1.6Definitions
“Agreement” – means this Implementation Agreement between PQA and the Company including the following Schedules which shall form an integral part thereof:
SCHEDULES
SCHEDULE 1 - Implementation Schedule
SCHEDULE 2 - Project Execution Guidelines
SCHEDULE 3 - Project Scope
SCHEDULE 4 - Site Plans
SCHEDULE 5 - Proforma of Certificate of Successful Commissioning
SCHEDULE 6 - Indenture of Lease
SCHEDULE 7 - Form of Performance Bond
SCHEDULE 8 - The Financial Model
SCHEDULE 9 - Financing Plan
SCHEDULE 10 - Letter of Intent
SCHEDULE 11 - The Proposal
SCHEDULE 12 - Consents
SCHEDULE 13 - Schedule Formula of Royalty Payments to PQA by the Company
SCHEDULE 14 - Draft of Security Manual
SCHEDULE 15 - Draft of Port Operation Manual
SCHEDULE 16 - Draft of Accident Prevention and Safety Manual
SCHEDULE 17 - Draft of Emergency Manual
SCHEDULE 18 - Schedule of Charges to be paid to PQAby the Company
SCHEDULE 19 - Draft of Environmental Impact Assessment
SCHEDULE 20 - Schedule of Depreciation of Assets
SCHEDULE 21 - Schedule of Tariff
SCHEDULE 22 -Integrity Pact
"Company Representative" - means the chief executive of the Company or any other nominee duly appointed and notified in writing by the Company from time to time.
"Concession" shall have the meaning as set forth in Article 3.1 (a).
"Concession Period" means the duration of concession set out in Article 3.23.
"Completion Date" - means the date of completion of the project as evidenced by the certificate of successful commissioning.
"Consents" - means undertakings, all approvals, consents, Agreements, permits, decisions or matters required from Government of Pakistan (GOP) or any relevant authority.
Consultants" - mean any Consultant(s) experienced in LNG, LPG & NGLTerminal design, its engineering and appointed by the Company under intimation to PQA from time to time to carry out Investigations and to perform such other engineering and consultancy services for various components of the project as the Company may require.
"Contractors" - means all Contractors engaged by the Company in the performance of the Project including Contractors under the engineering procurement and construction Contract(s) (and their respective Sub-Contractors) in their respective capacities as such and their respective successors and permitted assigns as notified from time to time by the Company to PQA.
"Customers" - means all the persons/companies who intend to or allowed to use the facility.
"Day" - means a calendar day.
"Dispute" - bears the meaning attributed thereto in Article 16.
"Dollar" and "$" - means the lawful currency of the United States of America.
"Draught" - means the depth of water a ship draws required to keep it afloat.
"DWT" - denotes dead weight tonnage.
"Date of Signing" - means the date indicated in this implementation Agreement.
"Date of Effectiveness”– means the date from which this implementation Agreement becomes effective as defined in Article 2.
“Engineering, Procurement and Construction (EPC) Contract” –means the Agreements to be entered into between the Company and the Contractor for design, engineering, procurement, construction and erection of works and erection, completion, testing and commissioning of various facilities for the project.
“Expert” - means an internationally experienced design engineer of LNG, LPG & NGL handling facilities, appointed by the Company, as recommended by the Consultants and agreed by PQA, or appointed by the International Chamber of Commerce Paris (ICC), under the ICC rules for expertise, upon the disagreement of the parties on the appointment of the expert. The expenses for appointment of the experts in either case shall be on account of the Company.
"Facility" - includes the jetty, trestle / submerged pipeline, pipingand other allied facilities.
"Financial Closing" - means the signing of the Financing Agreements for the Project and the fulfillment of all conditions precedent to the first disbursement of funds thereunder.
"Financing Agreements" - means the Agreement or Agreements and documents (to be) entered into between the Company and certain local and foreign lenders for the purpose of providing the funds necessary to complete the Project including any and all Agreements and documents providing for security for such financing.
"Financial Model"- means the model contained in schedule 8 to this Agreement.
"Financing Plan" - means the schedule of the cost of the project including interest during construction, financial cost, working capital, equity subscriptions, overall capital, as contained in schedule 9.
"GOP" - means the Government of Pakistan.
"GOS" - means the Government of Sindh.
"Guidelines" - means the guidelines issued by PQA for the Project.
"Implementation Schedule" - means the timetable for the implementation of the project set forth in Schedule I.
“Jetty” – means the jetty to be constructed by the Company at Port Muhammad Bin Qasim between Link Creek (Asad) & Korangi Creek, capable of handling upto 75000 DWT vessels in accordance with the projectscope including, without limitation, a loading/unloading platform, mooring and berthing dolphinsloading/unloading arrangements, trestle structure, pipelines whether underground or otherwise and all other sections, systems and parts incidental thereto.
“Laws of Pakistan” – means all laws of Pakistan or, where applicable, any political or administrative subdivision thereof and all rules, regulations, policies and notifications made pursuant thereto.
“Land Lease” – means the Agreement to lease and the indenture of lease to be entered into between the PQA and the Company in the form of Schedule 6 for leasing of the site to the Company.
"Lenders" - means (i) the parties who have made or will make available to the Company credit in the form of loan(s), export credit(s) or other financing Agreement(s), to finance the project pursuant to the financing Agreements and (ii) parties who, from time to time make other credit facilities available to the Company, together, in each case, with their respective successors and assigns.
"Month" - means a month according to the gregorian calendar.
"Performance Bond" - means the unconditional bond to be issued by a scheduledbank of Pakistanhaving AA ratingand furnished by the Company to PQA in the form as prescribed in schedule 7 in accordance with the terms of Article 3.18.
"PQA Act" - means the Port Qasim Authority Act, 1973 (XLIII of 1973) duly amended from time to time.
"PQA Charges" - includes port dues, pilotage, extra pilotage, light dues, wharfage, royalty, berthing and mooring fees, tug charges, fire fighting service charges, lease charges, and other PQA scale of rates, dues and charges pursuant to PQA Act as promulgated from time to time, charges of utilities and other common services.
"PQA Representative" - means the DG (P&CW) PQA, or any other nominee duly appointed and notified in writing by PQA from time to time.
"PQA Engineer" - means DGM (PSP), PQA .or, any other duly authorized representative of PQA, appointed from time to time and notified in writing to theCompany to act as PQA Engineer.
“PQA Consultants” – means the Consultant carrying out the business as Consulting Engineer(s) under the laws of Pakistan or any professional appointed by PQA pursuant to Clause 3.16.
"Project" - means the establishment of a dedicated Floating LNGterminal and will also handle LPG & NGL at Port Qasim Karachi, including the Jetty, ancillary structures, storage area and development after designing, drawing, financing, engineering,constructing, start up, commissioning, procurement, supply, completion, insurance, operation, maintenance, and management of the facility by the Company and all activities incidental thereto.
"Project Scope" - means the scope of work of the project as set forth in schedule 3.
"Relevant Authority" - includes GOP, GOS or any department, authority, institution or agency of GOP or GOS and, without limitation, shall include City District Government, Karachi, (CDGK)Karachi Water and Sewerage Board (KWSB), Water and Power Development Authority (WAPDA), Karachi Electricity Supply Corporation (KESC), Pakistan Railways, Pakistan Telecommunications Company (PTCL), Central Board of Revenue (CBR), Sui Southern Gas Company Limited (SSGCL), the State Bank of Pakistan (SBP), Oil & Gas Regulatory Authority (OGRA), Sindh Environmental Pakistan Agency (SEPA), Pakistan Navy and Pakistan Customs.
"Royalty" - means the agreed amount the Company shall pay to PQA as set forth in schedule 13.
"Rupee" - means the lawful currency of Pakistan.
"Services" - means all those services which are rendered by the Company and are not compensated by the tariff including but not limited to the supply of utilities i.e. water, power, labour etc. to the customers.
“Sponsor” - means the Associated Group (A.G.), Lahore.
“Security Package” means:
(i) this Agreement;
(ii) the land lease;
(iii) the engineering, procurement and construction Contract(s) (the "EPC Contracts");
(iv) any of the Company's assets and/or liabilities and usage Agreements with customer's of the Company;
(v) Consents including GOP concessions;
(vi) the insurance policies, and
(vii) the securities to be established under or pursuant to the Financing Agreements.
"Site" - means an area of adequate space to accommodate the facility at Port Muhammad Bin Qasim, togetherwith any ancillary project on, through, above or below the ground on which, or on any part of which, the facility is to be built and operated, and all easements, rights of way and access from public highways, railways and the sea, all as are particularly described and shown on the "Site Plan" schedule 4of this Agreement.
"Successful Commissioning" - shall have the meaning as set forth in Article 3.26.
"Tariff' - shall have the meaning as set forth in Article 20.
"Terminal" - means the dedicated Floating LNGTerminal to be developed for the Project at Port Muhammad Bin Qasim, including the Jetty, trestle / submerged pipeline, pipingand any other associated facility and equipment required to handle LNG, LPG & NGLas per project scope defined in schedule-3 of this Agreement.
"Year" - means a year according to the Gregorian calendar.
Article 2 - Execution of Agreement
2.1 This Agreement shall become effective on the date when all the events referred to in Article 2.3 have taken place (hereinafter referred to as date of effectiveness), provided that Article 6 will become effective on the date of signing. In case all the events as mentioned in Article 2.3 have not taken place within 180 (one hundred and eighty) days from the date of signing then the parties shall mutually agree to extend the period for all the event in Article 2.3 to be fulfilled.
2.2 Before the date of signing the following events will have taken place:
1. Preliminary financing plan would have been provided to PQA.
2. Performance bond as per schedule 7 effective from the date of signing will have been furnished.
3. Written approval of the board of directors of the Company and PQA for entering into this Agreement obtained.
2.3 The Date of Effectiveness, is achieved when all the following events will have taken place:
1. Agreement to Lease is executed by the parties and vacant possession of the site given in accordance with the terms of Agreement to lease
2. Financing Agreement in place.
3. EPC Contracts executed.
4. Insurance Policies obtained.
5. The consents, as mentioned in schedule 12 are obtained.
Article 3 - Grant of License: Right and Concession
3.1 (a) PQA hereby grants to the Company the effective concession right and license.
(i)to design, finance, insure, construct, test, commission, complete, operate, manage and maintain the dedicated Floating LNGTerminal at Port Qasim on build, operate and transfer (BOT) basis in accordance with project scope and the terms and conditions, contained in this Agreement.
(ii)The concession to operate Floating LNG Terminal is being offered on a non-exclusive basis. PQA shall retain itsright to offer setting up of similar LNG, LPG & NGL Terminal toother parties at Port Qasim.
3.2 The Terminal shall be sufficiently complete to be capable of handling 75,000 DWT vessels and have the capability to handle (import, produce, export and distribute subject to relevant Government authorities approvals) not less than 3 milliontonnesof LNG, LPG & NGL per year.
3.3 PQA shall maintain sufficient depth in the channel at all times to accommodate ships drawing draft upto 12 meters.
3.4.1The Companyshall be responsible for the capital dredging of the berthing basin, the approach channel & turning basinforFloating LNG Terminal. The Company however, shall be responsible for the maintenance dredging of the berthing basin only as illustrated in the sketch attached to the Schedule No. 4 and maintain the berthing basin. PQA shall be responsible for the maintenance dredging of the approach channel and the turning basin. Location for the dumping of dredged material shall be decided between PQA and the Company based on relevant studies by the Company.
3.4.2The cost of capital dredging of turning basin only shall be recovered by the Company by paying 50% of applicable royalty to PQA in the amount equal to the capital dredging cost thereof. The Company will not charge any interest on the amount so adjustable, from PQA.
3.4.3The quantities of the capital dredging in respect of the turning basin only shall be verified by the PQA hydrographic department.
3.5All work for the construction of the facility and any expansion or modification thereof shall be undertaken in a manner that does not unreasonably interfere with the safety of navigation, or pose an unreasonable threat to human safety or health or to the environment. Construction of thefacility shall be undertaken diligently and expeditiously.
3.6The Company shall allow Inspection of the construction, operation and maintenance of the facility at any time by the PQA or its duly authorized representatives and by GOP or other relevant government officials, pursuant to their responsibilities under the laws of Pakistan. The Company shall cooperate with all such inspection personnel and shall provide them such access, facilities, services and information as they reasonably may require in the performance of their responsibilities, but it shall not diminish or reduce the obligation of the Company to design, construct, maintain, manage, operate the facility without any interference or interruption.
3.7Jetty operations, will be governed by the Port Qasim Authority Regulation 1981, published in theextra ordinary gazette ofPakistan dated'October 17, 1981 and operations manual which shall be developed and be completed during construction of the facility. PQA is allowed use of the jetty in case of any special requirement, free of cost.
3.8The facilities constructed by the Company shall conform to the standards of Oil & Gas Regulatory Authority (OGRA) and Sindh Environmental Pakistan Agency (SEPA).
The Company, during the process of constructing its facilities and later on during the operation of the Facility, will comply with all federal andprovincial regulations as well as rules and bye-laws framed by PQA consistent with the notified statutory standards, Including International Maritime Organization (IMO) and International Maritime Dangerous Goods (IMDG)regulations related to the protection of the environment and to discharge from the premises any trade or other effluent.
3.9Before the date of effectiveness, the Company shall have submitted to PQA a firm financing plan describing the financial structure of the Project sources and amounts of both debt and equity, and the schedule upon which financing shall be secured.
3.10The Company shall adopt all measures necessary to prevent hazards to human safety and health property and to the environment that may arise from any activity concerning the construction, operation or maintenance of all or any part of the facility.