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RuralE.Evolution Deliverable D 4.2. “Drafting of PPP contract scheme” RuralE.Evolution Public-Private Partnerships for RES Agro-energy districts Issued by: CRB/HANGYA DATE: February 2011 CONTRACT N°:IEE/07/579/SI2.499063 1 Table of Contents 1. PPP CONTRACTS ...................................................................................................................................... 3 1.1 INTRODUCTION ............................................................................................................................................. 3 1.2 CONCESSION AGREEMENT .......................................................................................................................... 4 1.3 CONSORTIUM AGREEMENT .......................................................................................................................... 6 1.4 PROJECT VEHICLE ....................................................................................................................................... 7 1.5 CONSTRUCTION CONTRACT......................................................................................................................... 7 1.6 OPERATION AND MAINTENANCE AGREEMENT ............................................................................................. 9 1.7 OTHER KEY CONTRACTS - SUPPLY AND OFFTAKE CONTRACTS ................................................................ 10 1.8 BIBLIOGRAPHY............................................................................................................................................ 10 2. ITALY ........................................................................................................................................................ 11 2.1. INTRODUCTION.......................................................................................................................................... 11 2.2) CONCESSION CONTRACT ......................................................................................................................... 12 3. PORTUGAL .............................................................................................................................................. 31 3.1. INTRODUCTION.......................................................................................................................................... 31 3.2) PPP CONTRACT ....................................................................................................................................... 32 4. 4. GREECE ................................................................................................................................................ 40 4.1. INTRODUCTION.......................................................................................................................................... 40 4.2) PPP CONTRACT ....................................................................................................................................... 41 5. HUNGARY ................................................................................................................................................ 43 5.1. INTRODUCTION.......................................................................................................................................... 43 5.2 PPP CONTRACT ........................................................................................................................................ 43 6. SPAIN ......................................................................................................................................................... 46 6.1. INTRODUCTION.......................................................................................................................................... 46 6.2 PPP CONTRACT ........................................................................................................................................ 48 2 1. PPP Contracts 1.1 Introduction The long-term success of a new infrastructure/service project is dependent on the correct identification of both the benefits and the risks associated with it. Correct identification must be allowed by appropriate allocation of these benefits and risks - the latter to the party best able to minimize or control them at realistic cost. The project sponsors and the PPP key actors should, in conjunction with consultant lawyers, analyze the risks arising under the project, identify each project contract to be put in place, and which party is to take these risks and ensure that the appropriate provisions appear in the relevant contracts to achieve this. The lenders and their advisers will need to satisfy themselves that this has been achieved under the contractual structure and other relevant laws, in a way that is consistent with the assumptions underlying the financial plan. Given that a number of parties with differing interests will be involved in the project, the final pattern of risk allocation will be made within a contractual framework that reflects the outcome of negotiations and commercial compromise, and one that also takes into account the relevant legislative framework. For example, in those countries that have enacted concession laws, certain areas of risk allocation may be predetermined by those laws and not susceptible to consensual allocation by contract. There are several different perspectives to keep in mind in any general discussion of project contracts. These documents will typically be long-term commercial agreements and designed to protect the interests of the project sponsors. Secondly, they will allocate the perceived risks associated with the project between the different participants. Finally (at least on a project financing) the resulting allocation will need to be 'bankable'. Each of these considerations will pull the parties to them in somewhat different directions as the documents are structured and negotiated. There is, of course, no single definition of the term 'project contracts'. It tends to be used loosely to describe all the documents needed to allow the project to go ahead, other than the financing documents. It represents all of the commercial agreements, licences, contracts, leases and corporate documents that underpin the project that is being financed. A typical list might include the following: a concession agreement or government licence; a consortium (or other collaboration) agreement between the sponsors; a shareholders' or other joint venture agreement; corporate documents for the eventual SPV (and any other project company); management contract for the eventual SPV; a construction contract (or engineering, procurement and construction contract (EPC)); construction sub-contracts, equipment supply agreements and warranties; security for the construction contractor's and, depending on the responsibilities assumed by the construction contractor, the equipment supplier's, performance (for example, a performance bond, advance payment bond and/or retention bond); an operation and maintenance agreement or technical services agreement; a supply contract (for example, fuel and feedstock supply) and, possibly, a transportation contract for those supplies; an offtake agreement for the purchase of the completed facility's product (for example, a power purchase agreement with an electricity supply company or included in the concession agreement or a product purchase agreement with a manufacturer or a throughput (for example, a process plant project) or 'tolling' agreement (on a pipeline project or power project); a site lease or other document of entitlement to land; 3 possibly specific enabling legislation; ancillary government permits and planning consents (for example, import licences, central bank permits, planning consents); agreements with local utilities (for example, water and electricity); project insurances and related documents; and technology/operating licences. It should be noted that not all the rights required by the key actors will be acquired by contract. Some rights may arise as a matter of general law (for example, the EU is promoting the concept of third party access to transmission systems for such supplies as gas, electricity, rail and telecommunications) while in other cases the rights to be granted as part of a concession may result from the holding of a competitive tender. Generally applicable laws relating to such diverse matters as environmental liability and labour rights will have an effect on the SPV's business. It is necessary to identify on a project-by-project basis the impact of such rights and liabilities. Whether specific provision needs to be made for them, will depend on the nature of the project business and where the associated risks fall. The project contracts form the heart of any BOT project. The scope of the individual contracts will inevitably vary from project to project. The project contracts encountered on a power project will in many respects look very different from those needed on a road or rail project or a telecommunications financing. 1.2 Concession agreement Concession agreements are the backbone of BOT and BOO projects. The government entity initiating a project of this kind will bestow on its sponsors the right and obligation to finance, develop, construct and complete it, and subsequently to operate and maintain it. This amalgam of rights and responsibilities is often loosely referred to as a 'concession', and the relationship between private and public sectors will usually be regulated by contract - by a 'concession agreement'. This agreement will in a sense underpin the entire matrix of contracts needed to implement the project. Many of the key provisions of these other contracts will be driven by its terms. At the very least, they will have to be compatible with it. For that reason, the key participants in the project in addition to the government and the sponsors - the contractors, lenders, investors, guarantors, offtakers, major suppliers, and the like will take a keen interest in the contents of the concession agreement. It will, in other words, define the commercial parameters of the deal, and it will constitute an essential part of the lenders' security package. In essence, a concession is simply a form of license. On a major project it mayor may not be coupled with an interest in land (a site lease, for example). It is a long term commercial agreement bestowing the right to develop and implement the project. Partly for that reason, the term 'concession' is sometimes eschewed in favour of 'development agreement', 'project agreement' or 'implementation agreement'. There are usually several overlapping but different objectives that the parties to a concession agreement will aim to meet. Each of them needs to be given its due weight. They include the following: 1) Project implementation The concessionaire will want a clear, enforceable right to implement the project - to develop, finance, construct and operate it. Failure to discharge these obligations will allow it to terminate the concession and take back the project. 2) Public body facilitation There are usually a number of steps that the public body may be willing or able to take in order to facilitate the project. These can be identified in the agreement. For example, it may be necessary for the concessionaire to obtain a large number of subsidiary permits, licences 4 and consents in connection with the project's implementation. The agreement can 'grant' and guarantee many of these authorizations, or put in place a procedure to facilitate the private sector sponsor in applying for them. Provision of the project site is another typical example of public facilitation. The public body may offer a range of commercial incentives to the concessionaire in order to attract interest in the project, and the concession agreement will set these out. Economic regulation Conversely, the concession agreement may contain a mechanism for economic regulation of the completed facility by the public body. Financing The concession agreement will have to promote the financeability of the project, for lenders, investors and guarantors. At the very least, its terms will have to be compatible with all the different sources of finance. The length of time that the concession is to subsist is the most obvious instance. It will have to be sufficiently long to accommodate the maturity(ies) of the loan(s), and allow the investors to make a suitable return. In addition, certain financial assurances may be essential - relating to the guaranteed availability of foreign exchange, for instance, or protection against political risk. Where a multi-sourced financing is involved, this will make the process of settling the agreement's terms more complex. Account will have to be taken of the requirements of each source of funding. It will be apparent from what has been above said that a wide range of contentious issues can arise as the terms of the concession agreement are negotiated. One can never anticipate in advance exactly where the areas of greatest difficulty will be. Set out below, however, are some of the major issues typically encountered. 1) Risk allocation One of the fundamental questions in negotiations is bound to be how the project risks are to be allocated between the parties. Usually the projects will in a sense (at least as a starting point) involve a wholesale assumption of project risk by the concessionaire and the sponsors. The question, then, is what risks will be retained or assumed by the public body? Again, by definition, these risks will be limited. Nevertheless the relevant areas are likely to include [1]: political events; financial safeguards; change of law; timely provision of utilities; legislative authority; licenses, consents and competent authority actions; inflation and economic dislocation; potential competition; subsidies and pricing risk; and legislative authority. The real challenge to the participants in the negotiation process is to find an appropriate balance. Each side strives to impose as much risk on the other as it thinks is possible. In the end, there is no real substitute for a rational approach to risk allocation, leaving risks where they can be managed and controlled most effectively. Indeed, it is often the case that the most constructive approach is to foster a 'partnership ethic' - to put in place mechanisms that encourage a spirit of cooperation rather than confrontation. The relationship between the parties will be a long-term one, and unforeseen problems will inevitably arise over time. At some stage, revisions will almost certainly be needed to the 5 agreement. If incentives and procedures are structured in such a way as to allow both sides to gain if possible from problem solving, much will have been done to provide for the project's long-term success. Practical controls One notorious area of difficulty in negotiations is the extent of the public control over the concessionaire’s activities as the project is implemented. This applies both to construction and operation. The concessionaire will usually seek maximum freedom to implement the project as it sees fit. The concession agreement will contain a number of parameters that the concessionaire will have to meet. 3) Economic control Not surprisingly, the area where this issue of control tends to cause the greatest anguish is in the context of the charges levied by the concessionaire for the completed facility (fares or tolls). In what circumstances will the concessionaire be allowed to increase them? 4) Exceptional events The aim of any fare-revision clause would be to compensate the concessionaire for the occurrence of identified risks: to allow it to recover losses and costs and/or protect profits. There are various ways of approaching this subject in the concession agreement. Indeed, a variety of different mechanisms are likely to be included, reflecting the range of different risks to which the concessionaire may be exposed and the appropriate response to them. It is usually convenient, however, to draw a number of these threads together in a single provision, sometimes labeled 'exceptional events'. 5) Dispute resolution Concession agreements are complex, long-term, commercial agreements giving effect to a difficult process of risk allocation. For that reason, the dispute resolution mechanisms they embrace need careful consideration. In fact, three distinct kinds of dispute resolution are likely to be addressed: legal disputes involving arbitration or litigation and questions of law; expert determination; and revisions to the agreement - in particular to give effect to exceptional event clauses (for example, revisions to tolls). 6) Termination Termination clauses in concession agreements tend to be debated at length because their effect would be to collapse the entire PPP structure. Some of the termination events will be straightforward - the insolvency of the concessionaire, for example, or the nationalisation or expropriation by the public body of (key) project assets. 1.3 Consortium agreement In almost every large-scale infrastructure project a number of sponsors will come together in order to promote a project and participate in it as a consortium. Typically in a PPP structure, a construction company and/or supplier of major plant or feedstock and a future operator of the new business will cooperate to establish or bid for a project. They may be joined by a future purchaser (an offtaker) of the product or service to be provided by the new project business. These parties have a common interest in seeing that the project business is established and financed. From an early stage the sponsors will need to define their mutual obligations. Questions include: 6 What exactly is the role of each party? How much human and economic resource will each party commit to different phases of project planning and development? How will each party protect its commercial interests in the project, whilst placing suitable restrictions on its potential liabilities? How will decisions be made by the consortium/SPV and contracts with it drawn up? How will losses be apportioned? At the initial stages of development, the sponsors may draw up heads of agreement or a memorandum of understanding which focuses on such issues, to decide the form of their initial and future cooperation. The document may be legally binding or may be an expression of intention not intended to create enforceable rights and obligations. 1.4 Project vehicle Whatever the differing interests amongst the consortium and whatever the rules under which it operates, clearly the promoters will need to agree the legal form in which the project business will operate and the nature of their individual participation in that form. They will generally wish to establish a new SPV which is a legal entity distinct from the constituent members of the consortium. The number and type of available forms will differ from jurisdiction to jurisdiction, but the commonest form is a single purpose limited liability company. A diagram showing a typical comrporate structure is set out in figure 1.1 As the diagram makes clear, sponsors often hold their shares in any project holding company, through a special purpose company. Sponsor holding company Sponsor holding company Sponsor holding company Sponsor Sponsor Sponsor 331/3% 331/3% 331/3% Holding company 100% Concessionaire/ SPV Concession agreement Public sector entity Figure 1.1: A typical corporate structure [1] 1.5 Construction contract This is a fundamental commercial contract for all concerned because: 7 1. it is likely to absorb a large amount of the SPV's capital expenditure; 2. the quality and efficacy of the design and construction of the project will impact on project expenditure and revenues throughout project operation; 3. the overall construction cost and how certain it is will determine the bankability of the project; and 4. timeliness or delay in completion of the construction will impact on project economics. In particular, in the case of concession-based contracts or licences to operate, completion of construction and commissioning by a specific date is likely to be a fundamental condition of the concession or licence. The standard industry forms are rarely used without extensive amendment. This is a direct reflection of the process of risk allocation that determines the contents of the project documents. It is also necessary to mirror the construction-related provisions of a concession agreement (if there is one) in the construction contract, to effectively pass down to the contractor the requirements and risks carried by the SPV relative to construction. The construction phase is often considered the riskiest phase of the project. The contractor will inevitably be expected to carry much of this risk in the construction contract, which may have a very substantial value. Quite understandably, however, he will try to limit his exposure to these risks. The contracting strategy adopted may vary significantly as between one project and another. This can lead to considerable differences in the way issues are approached. A 'traditional form' approach may be adopted, for example, with the employer (the SPV) engaging a design consultant directly himself, and then hiring a contractor separately to implement the construction works. This structure will basically absolve the contractor from liability for design faults in the works and of responsibility for the design development process as the works proceed. Typically, the design consultant (architect or engineer) would also 'administer' the construction contract during the course of the works. This would effectively leave the SPV with greater responsibility for managing the works than might otherwise be the case. Alternatively, a construction management strategy may be selected. This would involve placing a series of discrete 'works packages' contracts (which might otherwise be subcontracts) directly with the SPV, leaving a project or construction manager with responsibility for organising and directing them and managing their performance in terms of budget and timetable. By far the most common approach encountered on PPP project financings, however, is the. :turn-key' design-and-build (or 'engineer-and-construct') contract. This places responsibility for essentially all aspects of design and construction in the hands of a single contractor (or group of contractors), giving the SPV the benefit of single-point responsibility should defects appear in the works, and avoiding the greater administrative and organizational complexity that often goes with the alternative contract strategies. When structuring or reviewing a construction contract on a PPP project, the key issues tend to fall into six distinct categories: 1) Cost The lenders to the project will usually have an expectation that there will be a 'fixed price' for the works. Certain contract forms in fact allow the contractor to be remunerated (in whole or part) on a 'reimbursable' basis, by reference to cost plus a margin. 2) Time for completion The construction contract will specify a date for completion of the works. The question is, in what circumstances can it be altered? Lenders will tend to want to restrict the scope of such circumstances, since delayed completion will imply a delayed revenue stream. 8 3) Quality The contract will contain various provisions relating to the quality of the completed works. For example: specifications, warranties, tests and liquidated damages, warranty period etc. 4) Control The employer and its lenders will always seek a minimum level of control over the contractor's activities during performance of the works to provide them with a safeguard. 5) Liability Arguably the most difficult area of all is the question of the contractor's liability for breach of contract. The employer and its lenders will have two objectives in mind. They will want sufficient protection against the costs and losses that stand to flow from sub-standard performance. 6) Security for performance Finally, there is the question of security for the contractor's performance. They will also want to be sure that the contract contains sufficient disincentives on the contractor against poor performance. 1.6 Operation and maintenance agreement The public body requirements as to the operation and maintenance of the project facilities will be set out in the concession agreement. The financing documents will also contain certain operation and maintenance obligations on the part of the SPV. To ensure that the relevant operational requirements are met, the SPV will usually need to enter into an agreement with a specialist operator. Depending on the type of project and the expertise of the operator, the operator will also normally undertake certain maintenance obligations under that agreement. For this reason, the agreement is customarily referred to as an operation and maintenance (O&M) agreement. Where the operator is unable to undertake the full maintenance program, it might sub-contract all or part of the maintenance work to a separate contractor. A typical O&M agreement is likely to address the following issues: 1) Timing The O&M agreement will normally come into effect not later than the beginning of commissioning and testing of the project facilities. 2) Payment There are various means of remunerating the operator, including the following: - Fixed price. The operator receives a lump-sum fee for providing its services. - Cost plus fee. The operator will be reimbursed for the costs incurred by it in operating and maintaining the facility and in addition will receive a fee which may be a fixed percentage of cost or a lump-sum amount. - Performance-based fees .. The fee is tied to the performance of the project facilities, so that (at least) a proportion of it is 'incentivized' under a bonus/penalty mechanism depending on actual performance. ' Warranties The operator will normally be expected to give assurances as to the standard of performance of its obligations under the O&M agreement. Insurance The O&M agreement will determine which party is responsible for placing the required insurance cover in relation to the operational phase of the project. Record keeping and inspection Each of the SPV, the host government and the lenders will wish to reserve the right to inspect the facilities and the records of the operator. 9 Technology and training The O&M agreement should address issues such as the ownership and use of any intellectual property rights relating to the project and restrictions on the transfer of technology. Remedies and termination The O&M agreement should provide for the circumstances under which it may be terminated by either party, typically following unremedied breach of contract or insolvency-related events. 1.7 Other key contracts - supply and offtake contracts Depending on the nature of the project business, supply and offtake contracts are likely to be project contracts of central importance. 1) Supply contracts These set up contractual commitments of the supplier to supply to the SPV a minimum quantity or volume of a raw material or specialist product (for example, oil for a refiner) of a specified quality over a given length of time. Where certain supplies are a major component of the product of the project, it is often possible for the price of those supplies to be linked to the price the SPV receives for its product. The obligation to supply a minimum quantity will often be coupled with an obligation on the SPV to purchase, or at least pay for, a minimum quantity - a 'take-or-pay contract'. Such contracts not only ensure feedstock, but also establish the cost to the SPV of its major raw material over a long period, usually by indexing the purchase price to a relevant basket of commodities where there is no recognized market price. 2) Offtake contracts An offtake contract will commit a purchaser to take a certain quantity or volume or percentage of production from the project business on an agreed pricing formula. As with supply contracts, if the offtake agreement does not correspond in duration with the financing term, both sponsors and lenders will need to assess the future market for the product, including demand and price, once the offtake contract comes to an end. In many countries the purchaser of the output from an SPV with a BOT concession (for example, to generate electricity) will be the state or a state agency, and the purchase price may be controlled either by the terms of the concession or by the law establishing the framework for the industry. In such situations investors and lenders will need to understand the existing legal framework and how the pricing structures (often tariffs) are set, and will also need to consider the possibility of legislative change as well as political risk. Projects where there are no committed offtake arrangements are, in theory, the most risky types of project. 1.8 bibliography [1]: D. Wilde Sapte, Public Private Partnerships: BOT techniques and project finance, second edition, Euromoney Books, ISBN 1 84374 275 6. 10 2. ITALY 2.1. Introduction The Public Body (Municipality of Montefalco) will make a public call for a concession to realize a biomass heating plant. The plant will be realized by a private partner. The biomass will be produced by private partners. Table 2.1: PPP characteristics in Italy PPP Key factors PLANT BIOMASS INCOME SOURCE Description PUBLIC PRIVATE SELLING HEAT Figure 2.1: PPP scheme for Italy The heat obtained from biomass conversion will be sold to a public school, with the following characteristics: - surface of 1300 m2; - volume of 5150 m3; - thermal exchange coefficient about 1-1.5 W/m2K; - Boiler capacity: 400 kW; - biomass required 250 ton. 11 2.2) Concession Contract Concession of construction and management of a biomass plant between: Montefalco Municipality, P.zza del Comune, C.F. e P.IVA 00450630546. In the person of the responsible of the Territorial and Technical Service Andrea Locci And .......... SECTION I: OBJECT AND DURATION OF THE CONCESSION Art.1 Object of the concession The agreement is characterized as a “concession of construction and management of the plant”. The object is the review of the executive project, the realization of the biomass plant, the functional and economical management of the plant to provide the energy service to the administration. Art.2 Responsible of the procedure The responsible of the procedure of concession is the ….. The administration can substitute the responsible in every moment. According to art. 141, comma 7, of D.lgs 12th of april 2006 n.163 the responsible of the procedure accomplishes to the functions of control and revision during the design phase, realization and management, and verifies the respect of the agreement. Art.3 Agreement duration The agreement will last …from the communication of the beginning of the management phase communicated to the concessionaire according to art.24. SECTION 2 WORK Art. 4 Object of the work The Municipality entrusts a concessionaire, that takes the commitment to execute the work in concession for the realization of the biomass plant that will furnish thermal energy to the public building, that is the school F. Melanzio, Via Ugo Foscolo, 11 (Montefalco) - Cap: 06036. Characterized by those data: - Surface 1300 m2; - Volume 5150 m3; - thermal exchange coefficient about 1-1,5 W/mqK°. 12 The total amount of the investment is calculated at about: 475.682 €, VAT excluded. The concession of the work is accepted if the conditions presented in the following section are verified. Art.5 Project documentation and attachments The construction and management concession is disciplined by the documentation attached to the following agreement: A) Technical proposal produced during the tendering phase; B) Economical and financial plan produced during the tendering phase; C) Scheme of the energy selling contract; D) Further project documentation: 1. General descriptive report; 2. Geological and geotechnical report; 3. Photographic report; 4. General Zoning Plan regulation; 5. Gannt chart of the work; 6. Security and coordination plan; 7. Special tender, general norms; 8. Economical framework; 9. Economical and financial plan; 10. Technical report of the coverage; 11. Mechanical plants; a. Technical report; b. Special tender, materials and technical specifications; c. Technical draw of the boiler and pipes; d. Metrical computation and economical estimation; e. List of unitary prices; f. Manutemption plan; 12. Electrical plants; a. Technical report; b. Special tender, materials and technical specifications; c. Technical draw of the boiler electrical connections; d. Metrical computation and economical estimation; e. List of unitary prices; f. Manutemption plan; 13 13. Civil works a. Technical report; b. Special tender, materials and technical specifications; c. Technical draw of the boiler electrical connections; d. Metrical computation and economical estimation; e. List of unitary prices; f. Manutemption plan. Art.6 Integrative parts of the contract Integrating parts of the agreement are the documents proposed in the before mentioned art.1 – metric computation excluded- that will be signed by the parties and attached to the present contract. Art.7 Executive project revision and relative authorizations The concessionaire declares to have carefully examined the executive project of the work in all its documents and elaborations. The concessionaire takes the commitment to revise the executive project, with the modalities indicated in the technical offer produced for the tender within 30 days consecutive to the stipulation of the present agreement. During the control phase of the project the concessionaire, if the execution of the work will be entrusted to third parties, will organize the contract scheme that is supposed to be conform to the actual legislation and will be inserted in the project documentation. The revision of the executive project: a) has to be performed only by the subjects indicated in the art. 90 of D.lgs 12th april 2006 n.163; b) it will not vary substantially the complexive value of the work indicated in the metric computational estimate neither decrease the value of the due linked to security and reported in the security and coordination plan; c) it has not to be reduced the qualitative level of the work neither the efficiency of the plants in managing phase; d) it has not to imply changes that will need a new approval by the Manucipality council and will interact with the definitive level of the design; e) it has not to be varied the deadline of the end of work; 14 f) the preparations, infrastructures and equipment, the services and means of collective protection, adequate to prevent the manifestation of dangerous situations, to protect the workers from risks for their health are reported in the security and coordination plan. g) the project revision has to be approved by the responsible of he procedure; h) it has to accomplish to the prescriptions given by the responsible of the procedure, who even in approval procedure can ask for variations, insights and clarification referred to the revision approved; The responsible of the procedure will express regarding the revision of the executive project within 30 natural days and consecutive to the delivery of all the elaborates by the concessionaire. In the case of integrations requested, variations, insights and clarifications made by the responsible of the procedure, the above mentioned deadline will be interrupted and the 30 days will start newly from the date in which the document integration, variations, insights and clarifications will be performed by the concessionaire within the deadline indicated by the responsible of the procedure. The revision activity will in any case assure the conformity of the project to the actual legislation, to the actual regulation, to the urban structure, neither assure the executive level of the project. The concessionaire has to ask for all the authorizations, for approbations, acts of assent, however mentioned and requested by the actual legislation. Art.8 Area delivery and beginning of the work The concessionaire has to commit to take over the area and begin the works within 30 days from the approval date from the responsible of the procedure of the reviewed executive project. If the concessionaire has to assign the execution of the work or of part of it to one or more contracting enterprises through the procedures defined by D.lgs 12th april 2006 n.163, the area take over and the beginning of the works will be performed within 3 months from the approval by the Responsible of the procedure of the reviewed executive project. If the concessionaire will refuse to begin the works or delay the above mentioned deadline, for his fault, the responsible of the procedure will assign a new deadline not inferior to 15 days, after which the present contract will be solved following the art.1456 of the civil code. Art.9 Work execution The concessionaire will commit himself to execute the works, with the modality and the technology specified in the elaborates of the reviewed project, according to the specified phases in the Gannt chart and respecting the final deadline for the completion of the work. The concessionaire declares to be responsible exclusively of the accuracy and congruity of the 15 executive project and of the possibility of its practical and functional execution in the agreed deadline and renounces to find exceptions and claims to this point. The concessionaire declares that for the work in which he is qualified he has the organization of technicians, of the machines and equipment that are required for the execution of this in order to be conform to the contractual conditions, with personal that has a stable continuative working position. The concessionaire declares that for the work in which he is not qualified he will contact contracting enterprises qualified according to the actual regulation. Art. 10 Legislation and regulation observance The concession is subject to the observance to all the laws, regulation, dispositions, and prescriptions dealing with building that will be valid during the execution of the work and in particular will observe the Municipality prescriptions and the prescription of bodies dedicated to the monitoring of the work and the protection of environmental goods with the exception of what is stated in the present contract, from D.lgs 12th april 2006 n.163, from D.P.R. 21 December 1999 n.554 and from D.M. 19th april 2000 n.145. Art. 11 Work director, responsible of work and security coordinator in execution phase The concessionaire according to the art.149 and following of D.lgs 12th april 2006 n.163, has to indicate the director of the work so he can deal with the work economical accounting in conformity with the article 152 and following of the D.P.R. 21st December 199 n.554. The functions of the work director will be implemented by a subject qualified according to the actual legislation, indicated under the supervision and responsibility of the concessionaire. The director of the work has to refer constantly, also in written form, to the responsible of the procedure with regard to the state of advancement of the work. The responsible of the procedure can verify in every moment the conformity of the realized works or those that have to be still realized respect to the executive project that has to be approved and the relative accountability of the works. If some differences will be individuated, the responsible of the procedure can make some prescriptions to the concessionaire and to the Work Direction and to contract enterprises individuated by the same. The functions of responsible of the work and security coordinator in the execution phase of the work according to D.lgs 14th of august 1996 n.494, will be performed by qualified subjects according the actual legislation, nominated under the supervision and the responsibility of the Concessionaire. 16 The names of the work director, the responsible of the works and of the security coordinator in the phase of execution will be indicated by the responsible of the procedure before the beginning of the work. The concessionaire has the faculty to nominate other professionals in their substitution through a communication to the Responsible of the procedure. Art.12 Particular dues of the concessionaire Besides what is already mentioned in this agreement and its attachments, the concessionaire has to deal also with the following particular dues and the necessary administrative authorizations: a) The formation of the construction equipped in conformity with what is requested by the security plan, with all the modern and improved plants to assure the safety of things and persons and the perfect and fast execution of the works; the enclosure of the construction; the daily cleaning and maintenance of the construction; b) The organization of streets and accesses to the construction to make safe the transit and circulation of vehicles and persons and the adoption of all the measures, deposits, works apt to grant the continuity and safety of circulation in the streets of access to the construction and in the surrounding areas and the access to the buildings near the construction area; c) The adoption of adequate measures with the aim of preventing the pollution of sanitation following national, regional and municipal dispositions; d) the continuous and accurate surveillance of the construction; e) the supply and maintenance of indicator signs, and lights for the signaling, according to what has been excepted by the actual legislation; f) the obtaining through own expenses of all the licenses and permissions that have not been achieved by the administration and necessary to the conduction of the works. The concessionaire will be responsible in case of the withdrawal of those; g) the rent of equipment and tools, machines etc. provisional works and what is required for the perfect execution of the works; h)the supply of electric energy and other sources of energy for the use of machines and illumination; the supply of the water required for the works; i) the measures, checks and polls to verify the reported measures in the project until the trial; j) the production of the detailed project drawings; k) the predisposition and presentation of the documentation required to obtain the approval of the works to be executed by Telecom, Enel, etc. l) the realization of the elaborates as built of the realized plants before the trial. In case of no presentation the administration will have the right to withdraw the deposit; 17 m) the assistance to the trial, comprised the supply of materials, of the equipment and occurring skilled workers; n) The disposal of the used materials and of the earth derived from excavations; Art. 13 Responsibility of the project and work The concessionaire is fully responsible towards the administration, and in particular he has to grant. Every fault of the work that is consequent to an error in the project will be exclusively on his charge and he will be obliged to take some remedy, with its own expenses, being the only responsible of the executed work; He will be exclusively responsible for every damage that will occur in every moment, depending on the execution of the work, to the persons, the activities and things the workers of the Administration and the own workers; To be economically responsible for the damaged produced. Art.14 Variations to the project and contingencies No variation or addition to the reviewed project and approved by the responsible of the procedure can be introduced by the concessionaire if it has not been approved by the Administration with written documentation. If the variations and modifies are not approved by the municipal administration the concessionaire will not have the right to obtain the revision of the economic and financial plan or of the tariff, or of prices and incomes not comprised in the agreement. In this case the municipal administration can prescribe the adjustment of the work to the approved executive project. The concessionaire assumes the economic and executive responsibility of the variations that will be necessary according to art.132 of D.lgs. 12 th april 2006 n.163. Art.15 Invariability of the economical and financial plan Dealing with concession of construction and management the economic and financial plan, the tariff and the relative adjustment criteria will be not varied in the case in which the conditions of the art. 133, comma 3 and 4 of D.lgs 12th april 2006 n.163 to adequate the prices indicated in the executive project will be verified, being this process under the concessionaire responsibility. 18 Art.16 Work completion deadline The work will be performed with the maximal diligence and velocity in respect to the phases indicated in the Gannt chart, with the obligation to recover interruptions or delaysin order to complete the work and come to the trial of each part and element within 180 days from the date of the beginning of the work. The deadline is fundamental for the interest of the Administration. Art.17 Delay penalty In case of delay respect to the date of project revision, or respect to the requests of integrations and modifies produced by the Responsible of the procedure, respect to the date of beginning of the work or the date of its finish, excluding compensation for further damages, the concessionaire will correspond to the administration the penalty of 400 € for each day of delay. In case of rescission of the contract consequent to the failure of the formal warning sent by the Procedure Responsible for delays in the revision of the project, in the requests for integrations and modifies, in the date of beginning of the work and except the compensation of any further damage, it will be withdraw the deposit of the penalty. The causes at the basis of the delay have to be motivated within 15 days form their happening. The concessionaire is economically responsible for any delay in the completion of the work. Art.18 Resolving clause for the execution of the work The agreement will be solved in case of protest of non-compliance according to art.1456 of the civil code. The administration can withdraw the guarantee indicated in the art.7 and require a further compensation of the damage, in case of: a) work performed with negligence, slowness and not completely satisfactory; in the case in which the concessionaire if requested by the Responsible of the procedure will not provide within the assigned deadline to the elimination of the problems encountered; b) unjustified suspension and interruption of the work; c) repeated violations to the dispositions of the responsible of the procedure; d) violation of the security and coordination plan. Art.19 Definitive deposit for the work As a grant of the exact fulfillment of all the obligations linked with the execution of the work object of the present agreement, the concessionaire will give to the administration a bank guarantee (that is an assurance bill) released by ….. of the amount of 49.670,00 € of the 19 duration till the obtainment of the trial certificate, conforming to art. 113 of D.lgs of the 12th April 2006 n.163. In any case of withdrawal of the guarantee, the concessionaire is obliged to reconstitute it to avoid the rescission according to art. 1456 of the civil code. Art.20 Assurance bill CAR The concessionaire has to consign to the administration, at least ten days before the beginning of the work, an assurance bill type C.A.R. (Constructor all Risks) according to art.103 of D.P.R. n. 554 of 1999 or to the actual legislation. This could be the done by the same concessionaire or by a contracting enterprise that will actually be responsible of the realization of the work and will cover every risk in the construction of civil works against damages caused by different causes: a) damages to works in construction, with maximum not inferior to 500.000 €; b) damages to pre-existent works, with maximum not inferior to 300.000 €; c) civil responsibility toward third parties with maximum not inferior to 500.000 €. Compensation of damages that are not covered by the assurance bill will be completely in charge of the concessionaire. Art.21 Entrusting of the work to third enterprises The concessionaire that is not qualified has the faculty to assign to third enterprises the execution of the work object of the present agreement in observance to the dispositions contained in the art. 142 and following of the D.lgs 12th April n.163 and of the legislation in force in the moment in which the work is realized. The administration, according to art. 149, comma 7, of the above mentioned decree will monitor the respect of the obligations. Art 22 Social assurance of the workers The concessionaire has to grant to the workers the obligatory contribution and the respect of the National Collective Labour Contract. Art 23 Security plan The concessionaire declares to receive, examine and review the security and coordination plan referred in art.12 of D.lgs 14th august 1996 n.494, inserted in the executive project and approved. The concessionaire is obliged to: - realize, eventually together with other contracting enterprises, the prescriptions contained in the security and coordination plan; 20 - to indicate under his own responsibility the coordinator of security in the project reviewing phase and execution; Art.24 Work completion and start of management Once the work has been completed the concessionaire will communicate this to the responsible of the procedure through a letter. Following this communication and assuming that the work has been completed in every part, the responsible of the procedure will produce the certificate of completion that will be signed also by the legal agent of the concessionaire. Once the certificate has been produced and the structures have undergone a static trial, the concessionaire has to begin the financial and economical management phase of the work through the supply of the energy service, within 30 days from the publication of the certificate. The beginning of the management phase will be communicated to the administration through a letter useful also to determine the terms of duration of the agreement. The concessionaire also after the beginning of the agreement will be the guardian of the work for the whole length of the agreement and will be in charge of maintenance. Before the beginning of the management phase the concessionaire is obliged to produce an energetic certification of the building according to the attachment II of D.L. 30th may 2008 n.115. Art. 15 Trial during the work and final trial The administration within 30 days from the date of the production of the minutes of the delivery of the area will indicate a tester of own trust, whose expenses will be covered by the concessionaire, that will perform the trial during the work and the final trial. Within 6 months from the production of the certificate of the completion of the work the tester will produce the certificate of provisional trial of the work according to law dispositions. The trial certificate has provisional character and assumes definitive features only after expressed approval by the administration, that is after two years have passed from its emission. The static trial and functional trials of the plants will be realized under the responsibility of the Concessionaire through professionals of own trust: the relative certificates will be transmitted to the responsible of the procedure. Within 90 days from the date of the trial the administration will proceed to the payment of the sum indicated in the art.33, if before it has been paid the guarantee indicated in art. 48. 21 Art.26 Guarantee for faults and defects in the work The guarantee is produced by the concessionaire as follows: - the guarantee is produced even if the administration has accepted the work; - all the faults and defects of the work except those indicated in the art.1669 of the civil code can be protested by the administration within 10 years starting from the provisional trial (as it is described by art. 1669 of the civil code); Art.27 Responsibility of work execution The concessionaire assess and grants to have analyzed the terms and the income of the investment assuming in his charge only the responsibility of: 1) the realization of the works; 2) Eventual design errors; 3) Costs for eventual variations not required by the administration; 4) Scarce work of the contracting enterprises; 5) every risk and responsibility of the quality and quantity of the work necessary to execute the whole work. SECTION 3 FUNCTIONAL AND ECONOMICAL MANAGEMENT Art. 28 Object of the management The concessionaire will manage the energy service, defined as the supply of thermal energy through the operation of the realized biomass heating plant, in respect of the actual laws dealing with the intelligent use of energy, safety, environment protection, according to art.1, let p), of D.P.R. 26th august 1993 n.412 of the attachment II of D.L. 30th may 2008. For the entire duration of the energy service the concessionaire will: - supply the biofuel (biomass) necessary for the operation of the plant; - manage the normal and emergency regimen of the plant fed with biomass; - effectuate ordinary and extraordinary maintenance of the biomass plant; - assume the role of third responsible of the plant and maintainer of it. Art.29 Incomes from management and tariff The income of the concessionaire besides the contribution mentioned in the art.33, consists of only the right to manage functionally and economically the realized plant taking the maximum tariff determined and adequate with the modalities indicated in the present act. The energy production during the project is estimated in ….. MWh. 22 The total unitary price of the KWh of the “energy service” with biomass (chipped wood), comprehensive of the fuel, of the ordinary and extraordinary maintenance service, of the role of third responsible of the plant object of the present agreement, is about …. €/KWh besides the VAT and other eventual fiscal dues and rights requested by the law, as it is measured and accounted after the biomass boiler and the control instrumentation. This price is defined as maximum tariff. The sum relative to each ordinary rate corresponds to ¼ of the annual sum derived form the annual complex KWh registered in the year ago and will be emitted in the following dates: 15th January, 15th April, 15th July, 15th October. The administration will pay the rates within the day 20th of the month after the trimester of reference. Art. 30 Tariff adjustment After the second year from the beginning of the management phase and within the 15th of June, the total unitary price of the kWh of the energy service with biomass (chips) con be adjusted for the next year through a previous investigation of the responsible of the procedure according to art.115 of D.lgs 12th april 2006 n.163 as follows. The total price of the unitary kWh of the “energy service”, with the only purpose to adequate the tariff, in intended as composed by: a) amortization of the plant = 55%; b) fuel supply = 33%; c) electrical energy = 3%; d) manpower and maintenance = 9%. To evaluate the variations happened it has to be considered that: 1) the component relative to the amortization is not variable; 2) the component relative to biomass price (chips) will be adequate based on the prices reported on official lists and other sources; 3) the component relative to the cost of electric energy will be adequate based on the price determined by the Authority for Energy; 4) the component relative to the cost of manpower will be adjusted based on the variations of the hourly cost determined according to CCNL ASSITAL. The price per kWh must be anyway inferior to that of methane. Art. 31 Amortization The concessionaire attests that at the end of the concession there will be no residual value in the investment not amortized. 23 Art. 32 Contribution or price The municipality will correspond, according to art. 143, comma 4 of the D.lgs 12th April 2006 n.163 a sum equal to 150.570 within 90 days from the production of the provisory trial certificate, if before has been produced the guarantee indicated in the art.48 and the accounting of the work has been organized as indicated in the art.11. Art.33 Responsibility of management The concessionaire attests: a) that the total and unitary price of the kWh of the energy service and the criteria of adequacy of the same permit to maintain in equilibrium the economical and financial plan prepared by the concessionaire and attached to the offer formulated during the tender; b) to have weighted the terms and the income coming from the investment taking the responsibility of the management; Art.34 Periods and time of the service The duration of the heating period, for each winter season, will be established on the basis of the actual legislation 10/91 and linked implementation decrees, for daily and weekly steps. The possible extensions with extraordinary hours can be executed on demand of the administration, taking into account the needs for use and management of the plant, based on the needs imposed by the environment conditions. This will not vary the maximum tariff of the concessionaire. The values of environment temperature will be respected with a tolerance of increase of 2°C and will be indicated by DPR 412/93. Art.35 Extraordinary maintenance of the plant The extraordinary maintenance activities that will imply an interruption of the supply of energy will be agreed with the administration and it will be possible to be executed also in night time or holiday period. Art.36 Modifies to the plants It is not avoided to the concessionaire to introduce modifications to the plant and buildings without an explicit authorization of the administration. This authorization will be assigned to all the modifications proposed by the concessionaire and that have been recognized by the administration to posses the requested benefits in the functioning of the plant, in the performance of the service and in the economical convenience of the management, with the aim to reduce the consumptions and adequate to the actual 24 norms. The authorized modifications will be executed by the concessionaire based on his own finances. At the end of the agreement all the improvements will belong to the administration. Art.37 Maintenance legislation and normative The maintenance of the work and of the thermal plants will be executed in observance of the following norms: law 9 January 1991 n.10; DPR 26th August 1993 n.412; DPR 21 december 1999 n.551; D.M. 22nd January 2008 n.37; Norm UNI 9615, UNI CTI8364 and FA 146 “Control and maintenance of thermal plants”; Norm UNI CTI 9317 “Heating plants, conduction and control”. The concessionaire or the contracting enterprise contacted has to fill the “plant booklet” according to art.11 of D.P.R. 26th august 1993 n.412. The maintenance of the work and of the thermal plant will be executed through periodical verifies as reported in the CEI normative. Art.38 Heat supply contracts and further dues The concessionaire has to sign an energy supply contract with the public sink, following the model c) approved by the municipal administration. Art.39 Accounting devices The concessionaire has to present to the responsible of the procedure a report on the accounting devices installed. The concessionaire will verify yearly the accounting devices in an authorized laboratory the reliability of the equipment of thermal energy accounting and will give to the administration the relative certification. Art.40 Conduction and technical assistance The concessionaire before the beginning of the management will communicate to administration the nominatives and qualifies of the technical personal charged of the assistance and conduction of the plant, and the telephone contacts that have to be always available. The concessionaire before the beginning of the management has to indicate the chief of the thermal management (Third Responsible according to D.P.R. 412 of 1993) who is supposed to coordinate and control the activity of all the personal charged of the management, maintenance and control of the thermal plants, of their efficiency and of the fuel supply. The third responsible has to inform constantly the responsible of the procedure about the state of the management phase. For the duration of the agreement the concessionaire will grant the 25 night availability and the availability during holydays to be completed in 4 hours from the call. Art.41 Facilities and contributions The concessionaire, if requested by the administration, will undertake all the possible actions necessary to the obtainment of eventual contributions and incentivations relative to the energy service object of the agreement. Besides further public contributions can be used to reduce the maximum tariff related to the administration and other users. Art.42 Responsibility of the management and other penalties The concessionaire is responsible for the damages caused to persons and things happened in the plant. The responsibility of the concessionaire obliges he to the compensation of the damages with its own economical resources not considering also the penal consequences of the above mentioned damages and the possibility of rescission of the contract. If the concessionaire will not observe the normative of reference and the present agreement, the administration can: a) apply a precaution deduction of 10% on the payments subsequently to the reporting of inobservance; b) apply a further precaution deduction of 10% on the payments at the point a) in case of noncompliance to the requests within 15 days from the official reporting; c) execute a direct intervention in the case that in 30 days the problem was not solved and assigning the cost to the concessionaire. For every non-compliance to the obliges indicated in the agreement the following penalties will be applied: a) for the non-compliance to the request of intervention within 6 hours from the reporting of bad functioning of the plant it will be applied a penalty of 100 € per each hour of delay; b) for faults in the functioning of the plant for more than 24 hours 1000 € for each 24 hours of bad service. In case of repeated and bad failures made by the concessionaire the contract can be subject to rescission and penalties will be applied. Art.43 Delivery of the work, of the plant and final verify The work and the realized plants are property of the administration and at the end of the agreement will be assigned to the administration in optimal state of maintenance. 26 Six months before the end of the agreement the administration will have the faculty to nominate a subject in charge of the scope: a) to accept the result of the management phase and the conditions of efficiency and maintenance of the work, of the plant, and the materials and buildings, etc.; b) to execute any other operation apt to define the relationships between the administration and the concessionaire relatively to the rescission of the contractual report; The state of conservation of the plants will be assured and declared in the minutes of delivery taking into account: a) the exam of the documentation of the maintenance service executed, in particular the machine schedules and trial certificates etc.; b) visits and audits to the plants. In particular the efficiency of the plant has not to be inferior to that indicated in the actual normative referred to the time of delivery. In case of low efficiencies it will be care and due of the concessionaire to provide immediately to the functional reparation. Art.45 Assurance policies The concessionaire with the beginning of the management will be obliged to stipulate an assurance policy to grant all the risks connected with the management and the civil responsibility towards the administration and its personal, towards third persons and its workers with the following maximum: - € 2,500,000 for an accident; - € 2,500,000 for personal damage; - € 2,500,000 for damages to things and animals. The concessionaire since the beginning of the management phase ha to stipulate an assurance policy with adequate maximums for fire risk and damages caused by third parties. The concessionaire has to produce in time the assurance prices and to maintain the above mentioned policies for the entire duration of the concession, transmitting a copy of the same and a receipt of the payment to the administration. Eventual damages that will have no cover by the above mentioned assurance policies will be anyway covered by the concessionaire. Art.45 Contract transfer It is avoided the total and partial transfer of the present contract and the sub-concession without authorization of the Administration. 27 Art.47 Management of the rescission clause The agreement will be ended by the administration and without the compensation of the damage, in the following cases: a) in case of serious and repeated violations of the normative applicable in matter; b) in case of serious and repeated violations of the obligations indicated in this agreement; c) in case of transfer of subconcession without previous authorization. Art.48 Guarantee for the management To grant of the exact compliance of all the obligations assumed with the present act for the whole duration of the concession, the concessionaire is obliged to constitute a bank guarantee or insurance policy to deliver to the administration within 30 days from the date of the trial. The policy will report the following clauses: a) sum equal to 50,000 €; b) renounce to the preventive payment of the main debtor; c) payment within 15 if requested by the Administration. d) renounce of the exception of the art. 1957, second comma, of the civil code. In every case of payment of the guarantee, the concessionaire is obliged to reconstitute it, if this will not happen the contract will be interested by rescission according to art. 1456 of the civil code, with the exception of the compensation of the damage renouncing to every possible exception at this regard. IV END OF THE CONTRACT Art. 49 Economical accounting The concessionaire has to produce all the accounting financial and economical documentation relative to the execution of the work and the management under expressed request of the administration. Art. 50 Contract decay The rescission of the agreement for a cause not linked to the concessionaire during the execution of the work and the management of the energy service, will imply the contextual decay of the concession and the anticipated delivery of all the works and plants realized totally or partially. In this case the work will return to the administration without giving to the concessionaire any compensation. 28 Art 51 Disagreement between the documents Every time there will be contradiction or discrepancy between the prescriptions of various documents that form an integral part of this agreement, the prescription that is more favorable for the administration will be considered. Art. 52 Competent forum For every controversy that will arise due to the present agreement it will be referred to te competent forum of Perugia. The Municipality The Concessionaire The concessionaire declares to have carefully read and evaluated ad to approve accordin to the art. 1341 and 1342 of the civil code the following clauses: Art.7 “Revision of the executive project”; Art.8 “Delivery of the area and beginning of the work and rescission clause”; Art.12”Particular dues of the concessionary”; Art.13”Responsibility for the project and of the work”; Art.14”Variation of the project and contingencies”; Art.15”Invariability of the economic and financial plan”; Art.17”Panalties and delays”; Art.18”Rescission clause of the execution work”; Art.24”Work completion and beginning of the management”; Art.26”Guarantee for the defects and vices of the works”; Art.27”Responsibilityof the execution of the work”; Art.30”Income of the management and tariff”; Art.31”Tariff adjustment”; Art.32”Amortment”; Art.33”Tarif anticipation”; Art.34”Responsibility of the management”; Art.39”Further dues” Art.42”Contributions” Art.43”Management responsibilities and penalties” Art.44”Contract transfer and subconcession” Art.45”Management rescission clause” Art.46”Conditions variation” 29 Art.47”Interferences and plant removal” Art.48”Tariff exemption for the administration” Art.49”Concession decay” Art.50”Competent forum” THE CONCESSIONAIRE 30 3. PORTUGAL 3.1. Introduction Table 3.1: PPP characteristics in Portugal PPP Key factors PLANT BIOMASS INCOME SOURCE Description PRIVATE PRIVATE SELLING POWER (PPA) – Power sold to the distributer. The license to connect the grid is given by the Minister of Economy. The Tariff for renewable energy is fixed by law and the Contract must be approved by the Minister of Economy. LOCAL AUTHORITY (MUNICIPALITY) SUPPORT for the implementation of the project Figure 3.1: PPP scheme for Portugal 31 3.2) PPP Contract Framework for the scheme With the aim of promoting local development and for environmental reasons, the Public Body (Municipality of ALVITO) will support the Union of Cooperatives who owns the biomass, UCASUL, to implement in the Municipality a solution to produce electric power from this Biomass. This Biomass is a byproduct of the activity of UCASUL. UCASUL must have a technological and financial partner to implement the solution, with experience in construction and management of plants of renewable energy. The contact scheme details the agreement between the partners who will be involved in the consortium to build and manage the plant, UCASUL and the technological partner. The second contact will be signed between the Consortium and the Distributor of the electricity. The Contract scheme is approved by the DGEG of the Ministry of Economy Contract Schemes A.Consortium Agreement between: UCASUL – União de Cooperativas do Sul, CRL, located in the Municipality of Alvito, with VAT ____________, in the person of ______________, as____________ designated as UCASUL, And ……………designated as technological partner (TP) Section 1 - 1. UCASUL will make all necessary efforts to obtain a license to supply the electric grid, for Alvito area network or to another area of the network that could be technically, economically and financially feasible. 2. UCASUL and TP will produce together the technical design of industrial, economical and environmental studies necessary for achieving the objective stated of electricity production from biomass 32 3. UCASUL and TP, together, will make all the effort to obtain the necessary licenses and permits for the purposes mentioned in point 2 4. UCASUL, will supply all the biomass available to the unit of energy production, with the quality required by the installed technology. 5. Obtained the license to supply the grid, the PT bound: a) to formalize the establishment of a commercial company that has the aim of exploration and commercialization of renewable energy b) to "deliver" on terms to be agreed, the UCASUL a ..........% share capital of the new company. c) to develop the technical and industrial project for the installation of the unit to produce energy from biomass by UCASUL; UCASUL must provide all the necessary information and collaboration. e) to develop the study of economic viability. f) to negotiate the “financial plan” with the bank in order to obtain the necessary financing for the project. 6. Obtained the license to supply the grid, the UCASUL bound: a) to provide assistance at all levels to the PT for the successful implementation of the project concerned. b) to celebrate an agreement with the PT or the company to be established, to supply the raw material, in quality and quantity (pomace extracted) c) to lease out the conditions to be agreed, for a minimum of 20 years the land identified on the attached map or to sale surface rights for that minimum period. The rental terms of the land shall be agreed upon delivery of the project implementation of the unit. The assignment of space may take any other legal form to be agreed d) to provide the means and the amount of water needed for the industrial process for the same period. e) to provide all technical and scientific information about the raw material (pomace, or other). 7. The validation of this agreement is subject to the economic and financial viability, technical studies and engineering, as well as the issuance of all licenses and official permits, environmental, political and administrative provisions necessary to implement the project. 33 B. CONTRACT FOR PURCHASE OF ELECTRICITY IN SPECIAL SCHEMES Between EDP Serviço Universal, S.A., located in Rua Camilo Castelo Branco, 43, in Lisboa,…………………, represented by………., in the quality of ……………. ………., designated as EDP And ……………designated as Producer Art 1 EDP agrees to purchase from the producer all the energy power generated in Central ... ... ...., located in........ ... ...., in accordance with the rules contained in the Establishment License issued by the General Service for Energy and Geology, in ... ... ...., which is in Annex 4 to this contract and it is an integral part of it. Art 2 1. The Plant ………. Is composed by ………..(elements of the plant) 2. The power to inject into the public network is limited to ... ... ...., according to description in the establishment license 3. The entry into operation of the facility defined in paragraph 1 was granted by... ... ... .. issued by the Regional Direction of Economy... ..... on ... ... .... that is Annex 5 to this contract and it is an integral part of it. Art 3 The Producer may receive power from the receiver network to feed auxiliary services or other self consumption of the plant, and for this purpose establish a specific contract, as a customer, with EDP Service Universal, as a last resort, or any other legally authorized retailer Art 4 The parties undertake to comply with the rules for implementing this contract, producer will comply with norms of protocol operation which concluded with the network operator, which is in Annex 1 to this contract and it is an integral part of it. Art 5 (obligations of the producer) 1. The producer is obligated to adopt the following procedures: a) Conduct the operation of the plant in accordance with the diagram provided for the supply, which is Annex 2 to this contract and is an integral part of it, and streamline the means of production available so as to provide maximum power during the peak hours and hours filled 34 b) Install the necessary technical equipment, and develop the appropriate procedures to reduce the impact of any shots of the production facility at appropriated levels to the quality of existing service network receiver c) Report, by the end of each year, estimates for the conservation work programs and maintenance to be carried out next year; d) Report any malfunction to occurring in its facilities or receiving network equipment, particularly any seal broken or violation of any closure or lock as soon as it is noticed. e) Run in its facilities, the manoeuvres required, or if necessary, to allow its implementation by properly accredited staff of the Network Operator properly accredited, giving them, for this purpose, the available means, being the Network Operator responsible for the eventually consequences thereof. 2. The amendment of the diagram provided for the supply should be made after hearing EDP Universal Service. 3. The communications referred to in subparagraph d) of paragraph 1 should be directed to Network Operator, and confirmed in writing within 5 days 4. The information referred in paragraph c) of point 1 of this clause should be reported by the Producer to EDP, by 15 December each year. Art. 6º 1. The electrical energy received by the receiving network will be measured through appropriate devices, including accountants, power indicators and accessories. 2. The measuring instruments should have the functionality of telemetry, be similar to those used in Electrical Network of Public Service, comply with the provisions of the Guide to Measuring, Reading and the Availability of Data approved by ERSE, and be properly calibrated and sealed. 3. The Producer is responsible for the supply, installation and maintenance, in good operating status of the measurement equipment, including system information transmission for telemetry. 4. EDP or the Network Operator may order to install on their account, a second measuring equipment with the same characteristics as the Producer`s equipment, properly calibrated and sealed. 5. In the case of the preceding paragraph, the consumption to be considered is the result of the average of the readings given by the two devices. Art. 7º 35 1. The reading of the measuring instruments will be made by telemetry, through appropriate equipment in accordance with the Guide for Measuring, Reading and Available Data, approved by ERSE. 2. EDP and the Universal Service Network Operator have free access to equipment measurement. 3. When is not possible to get data telemetry due to anomalies in the equipment of the Producer or data transmission channel, payment billing will be suspended until the resumption of a functioning telemetry and subsequent data collection. Art 8º 1. The instruments will be checked and calibrated periodically in accordance with the Guide for Measuring, Reading and Available Data approved by ERSE, and as soon as any flaw is found or suspected in the operation. 2. If there is double-measuring equipment, calibration of the devices is required whenever there is any condition laid down Guide on Measurement Reading and Disposition Data approved by ERSE. 3. The calibration in laboratory accredited by the initiative of one party, will accounted by that party, if the measurement instrument doesn`t meet the legal limits of tolerance and the account from another party, otherwiseLer foneticamente 4. Any procedure which could distort the normal operation or collection of information from the measurement devices or checking the electrical power constitutes a violation of this contract. 5. The Producer communicates to the EDP any seal breaks or opening or tampering of the measuring instruments, soon as it is detected Art. 9º 1. The invoice of the energy delivered by the Producer shall be made under legal legislation contained in the establishment permit`s mentioned in 1st clause. 2. Invoices will be sent to: EDP Serviço Universal, S.A. Av. Urbano Duarte, 100 3030-215 COIMBRA. 3. To monitor issues related to billing, EDP and the producer designate an interlocutor each, no later than 30 days from the date of this contract. Art.10 º 36 1. Payment of invoices by EDP shall be made within the period that is established for supplies to customers fed medium voltage and since the bill has been correctly elaborated. 2. At the date of signature of this contract, the term referred to above is 26 days from the date of the invoice. 3. If the invoices were not properly prepared EDP will send it back in order to be corrected. Art. 11º Failure to pay within the period specified in the preceding clause, if there was no return of the invoice constitutes a delay to EDP and consequent obligation to pay interest at the rate that, in each time, is fixed for non-payment of bills related to their supply to customers supplied in medium voltage. Art 12º 1. Measurement errors of energy and power arising from any malfunction verified in the measurement equipment will be corrected taking in account all elements relevant for the determination of the actual supply checked during the period that the damage remained and, in particular, the characteristics of the production plant, its system of operation, diagram supply and readings prior to the date on which of the malfunction. 2. The referred importance does not produce interest and shall be paid within 30 days when in favor of the Producer, and compensated in payment of the next bills, when for the EDP. 3. The right to rectification of the importance established pursuant to paragraph 1 prescribes within three years from the know ledge on the error Art 13º For the reading errors or invoicing, including those resulting from improper application of factors affecting the meter reading it is applicable, with the necessary adaptations, what was in the preceding clause Art 14.º If any change occurs in the identification data any of parts of this contract, including name, company name, residence or headquarters, should the fact, within the period of 15 days from the date of the amendment be, communicated to other parties, failing which the defaulting support the consequences arising from the omission. The Producer shall submit proof of the change noted, when required by EDP . 37 Art 15.º 1. In the case of transfer to third parties, of the production facility, the transferor must be communicated to EDP within 15 days from the transfer date, indicating the name, business name and, in addition, the address or headquarters of the new producer, otherwise suffer the consequences for the omission. 2. It is also required the submission by the Producer of the permit transfer of ownership of the license issued by the competent authorities for conclusion of the relevant addendum to this contract. Art 16º 1. The change of circumstances in which the parties formed the decision to contract, involving modification of contractual clauses and amendment of the legislation the date of the signature of this contract constitute a motive for its renegotiation. 2. The party wishing to use the right mentioned in the preceding paragraph shall challenge in writing the other party, proposing changes and giving reasons it considered necessary. Until the granting of a new version of the contract remains into force the previous contract. 3. The renegotiation is expected to close within the period of three months from the notice referred to the preceding paragraph. Art.17º 1. This contract begins on the date that it is celebrated and produces effect from the date of signature of auto connection, which is in Annex 3 of this contract and it is an integral part of it. 2. The contract will be suspended upon expiry of the operating license interim, if has not been issued a final operating license. Art. 18º This contract prevails indefinitely, but the Producer may terminate it at any time as long as it presents a competent declaration complaint 180 days before the term date. Art. 19º 38 This contract solves itself in the cases provided in existing legislation and in the license exploration of the production facility. The non-compliance with the Guide for Measuring, Reading and Available Data, approved by ERSE, is cause for suspension of this contract. Art. 20º The litigation of any nature arising between the parties on the interpretation or enforcement of legal or contractual provisions applicable to its relations, including the breach of obligations, shall be decided by an arbitral court if the parties in the dispute agree beforehand, or, failing that agreement, by recourse to the courts. This agreement is made on ... ... .... in (date)2 copies, one for each party, By the producer in special scheme Serviço Universal By EDP 39 4. 4. GREECE 4.1. Introduction Table 4.1: PPP characteristics in Greece PPP Key factors Description PLANT PRIVATE BIOMASS PRIVATE INCOME SOURCES SELLING ELECTRICITY AND HEAT In figure 4.1 a PPP is shown, the Public Body is represented by the Municipality of Evropos, that will be the user of the energy (heat/electricity) produced, the biomass will be furnished by a private society, that is the cooperative of Toumpa Kilkis. The energy conversion plant will be owned by the private investors and by the agricultural cooperative. Figure 4.1: PPP scheme description for Greece 40 4.2) PPP Contract The Tobacco Cooperative of Toumpa Kilkis (TCTK) plans to construct a plant in the Municipality of Evropos in order to produce pomegranate juice. The PPP concept considers the use of biomass residues from this plant (such as seeds and peels) as well as the use of biomass residues from the adjacent areas cultivations for the production of energy. The produced energy can be used for the following purposes: (a) (b) (c) cool and preserve the fruit and fruit juice produced from pomegranates; heat/cool public buildings in the Municipality; sell the surplus energy to the National Public Power Corporation as energy from RES. The energy plant that will be built within the framework of the PPP agro-energy district aims to collect biomass residues from a maximum radius of 30km. In relation to the plant’s operations, the Tobacco Cooperative of Toumpa Kilkis will provide the land and invest in the construction of the plant. It will motivate its members for the provision of biomass to the plant. The Municipality of Evropos will use the energy produced from the plant to cover the electricity needs of its buildings. The company “Rodonas” Ltd will provide raw material to the plant. Area farmers will provide raw material to the plant. The company Philippopoulos energy technical S.A. will provide the technical expertise. The Aristotle University of Thessaloniki will provide the know-how and steer the process. Banks / financiers will provide loan funding for the venture. A MoU has already been signed among the parties, clarifying actions for each one, and setting implementation goals. The pre-feasibility study for the PPP has also been completed. A detailed description of the technical requirements for the construction of the energy production plant, as well as a detailed estimation of the operating costs of the plant is ongoing, due to be completed in 2011. Upon completion of these, the draft contract / tender will be prepared, according to Greek regulations, and especially according to Greek Law 3389/2005 in relation to Public Private Partnerships. Law 3389/2005 defines the legal framework for the implementation of Public - Private Partnerships in Greece. This legal framework aims at regulating the implementation of projects and the provision of services through PPP schemes. Specifically, the law defines the Entities that can implement partnership contracts, together with areas falling within the scope of their competence. PPPs are not allowed to engage in projects or activities that are the direct and exclusive province of the State under the terms of the Greek Constitution, such as national defence, police work, the award of justice and the execution of judicially imposed penalties. Law 3389/2005 also provides for the establishment of special purpose companies that will operate as sociétés anonymes for the purposes of a PPP. The first PPP project under Law 3389/2005 was launched in March 2007 by the Hellenic Real Estate Corporation, involving the design, construction, financing and facility management of seven new buildings of the Hellenic Fire Service. The award of a PPP contract can be made under one of the following procedures: a) open tender; b) restricted tender; c) competitive dialog; d) negotiations. In the restricted tenders, competitive dialog procedures and negotiations procedures, the contracting authority may short-list the tenderers. The criteria based on which tenderer is awarded the contract are: a) financial capacity; b) technical and professional capacities. 41 PPPs are typically governed by Greek law like public contracts. PPP contracts need to remain confidential according to Greek regulations, so further details on them cannot be published at this stage. Interested tenderers receive the call for tenders for each PPP in due time, and after the payment of an appropriate fee. A PPP contract, according to Law 3389/2005, should include any of the following clauses that are applicable to it: 1. Summary of the PPP scheme, including major requirements for the plant operation, contractual payments, applicable laws / regulations, methodology to allocate payments among partners. 2. Description of the procedures for the monitoring the operation of the plant, either through independent (third) companies, or through public services. 3. Methodology for quality assurance of the provided services. 4. Time plan, including prerequisites for possible amendments, penalty clauses in relation to non-compliance with the time plan, duration of validity of the PPP contract, and prerequisites for extension or reduction of its time. 5. The way with which the private party will utilise any public assets needed for the development and operation of the plant, and the foreseen compensatory payments. 6. The way with which the PPP scheme will be financed. 7. Any needed approvals of the financing plans of the private entities by the public partners. 8. Risk allocation and liabilities among public and private parties, and force majeure clauses. 9. Insurance policies in place, either directly concerning the plant, or the operation of the private party in general. 10. Protection of environmental and cultural resources, including antiquities. 11. Protection and management of Intellectual Property Rights. 12. The method of operation, maintenance, and commercial exploitation of the plant. 13. Payments in place for the use of the plant’s services by the end users, including billing and payment procedures, and prerequisites for any changes to the level of payments. 14. The way to allocate benefits among the public and the private parties, including any re-financing provisions or the set up of financial targets. 15. The level and form of guarantees that the private partiies offer in relation to the timely and according to plan development, operation and maintenance of the plant. 16. Any provisions for the replacement of the private partners operating the plant, or of the financiers. 17. Any provisions for remunerations in case that one of the parties defaults in its contractual obligations. 18. Any reasons for brining court action to terminate the contract. 19. Applicable law. 20. Conflict resolution procedures. 21. Clear references to the Annexes of the contract. 22. Analysis of the minimum technical requirements for the operation and maintenance of the plant, following the descriptions and requirements set in the tender documents. 23. Definition of the procedures for the passing of the plant to the public sector after the end of the commercial exploitation period by the private party, including provisions for the training and know-how transfer from the private parties to the public parties. 24. Health and safety requirements for the employees of the plant. Greek PPP contracts have generally been modeled according to the UK Treasury contracts. 42 5. HUNGARY 5.1. Introduction Table 5.1: PPP characteristics in Hungary PPP Key factors PLANT/SERVICE BIOMASS STORAGE INCOME SOURCE Description PUBLIC PRIVATE SHARED PRIVATE LOCAL AUTHORITIES SELLING POWER Figure 5.1: PPP scheme for Hungary The project aims to produce power from the co-combustion of biomass and coal in the Matra Power plant that is public-private shared. The biomass will be produced by private farmers and other private enterprises. The public body will be involved in the storage of biomass. 5.2 PPP Contract 43 Agreement amongst - Abasár local authority - Domoszló local authority - Halmajugra local authority - Karácsond local authority - Kisnána local authority - Markaz local authority - Visonta local authority (hereinafter: partner local authorities), item - Mátrai Erőmű Co.. (hereinafter together: agreed partners) to utilise the wastes from agricultural origin in territory of partner local authorities by conversion to energy. 1. Aims and legal form: The agreed partners are ready to establish a company or cooperative (hereinafter: joint venture) which will utilize the wastes from agricultural origin in territory of partner local authorities by conversion to energy according to the Hungarian legal frame and to the thereinafter determined principles. The agreed partners will determine the legal form of the joint venture accordingly to their nonprofit aim concerning the utilization of the wastes from agricultural origin which arising from private agricultural activity in territory of partner local authorities. 2. Headquarters: The agreed partners determine Abasár as the headquarters of joint venture. 3. Legal status of partners: The agreed partners will own same legal status in the Board of joint venture independently from their assets. 4. Objects of company: The objects of joint venture include the following activities: handling of agricultural wastes (TEÁOR 38.21), transportation (TEÁOR 49.41.) storage and buffering (TEÁOR 52.10). 5. Assets to establish company: The partner local authorities also can provide assets to the joint venture by infrastructure, its actuation and human resources. The Mátrai Erőmű Zrt. also can provide assets to the joint venture in cash and equipments to the handling of raw materials.. 6. Detailed activities: The partner local authorities will care the suitability of industrial park, its infrastructure and activity including the collection, temporary buffering, and preparation to energy conversion and transportation of wastes from agricultural origin in territory of partner local authorities according to the determined timing of Mátrai Erőmű Zrt., as energy utilizer. The private agricultural producer or - according to separate contract – the joint venture will care the transportation of the agricultural wastes to the industrial park. 7. Transport: The joint venture will care the transportation of agricultural waste after the primary preparation to the energy conversion in Mátrai Erőmű Zrt. with trucks (own or rental). 8. Energy conversion and prices: The Mátrai Erőmű Zrt. as energy utilizer will qualify the transported bulk on the basis of its energy value which will basis in the calculation of the price of transportation unit. The Mátrai Erőmű Rrt. over the basic price to the third supplier will pass 50 % of the subvention related to the green energy arising from the transported raw material. 9. Payment terms, undertaking to obligation towards suppliers: The agreed partners guarantee to the suppliers that their payment will base also on the energy value and 44 premium from green energy. The Mátrai Erőmű as energy utilizer will assume that they will remit the price to the joint venture according to the point 8. within 15 days and the joint venture will transfer its proportional part within 15th days according to the energy value of the supplied raw material. 10. Duration and validity: The agreed partners declare that this agreement has indeterminate validity and open to joining any legal entities which ready and able to contribute to the aims as point 1., by emergence of determined principles. The agreed partners will determine detailed legal rules of joint venture at latest till …………… and the joint venture will care its registration in the court. The agreed partners accept that from this contract- force agreement is allowed to leave before the establishment of joint venture without any legal consequence immediate effect, and from the joint venture at the and of year with 6 months renunciation. „ „ December 2010 in Abasár Signatures: ……………………….. ……………………………. ……………………….. ……………………………. ……………………….. ……………………………. ……………………….. ……………………………. 45 6. SPAIN 6.1. Introduction Table 6.1: PPP characteristics in SPAIN PPP Key factors PLANT (land and concession)) PLANT (investments) BIOMASS (manure, slurry, organic biomass) INCOME SOURCE Description PRUBLIC PRIVATE PRIVATE Public Grant for m3 biomass treated and energy recovered, Kwe selling grid network (national law RD667, Kwt applied in processes for N removal) Figure 6.1: PPP scheme for Spain The Castellón Province Government (Diputación Provincial de Castellón) will make a public contract concession to Biogas Castellón for a EPMC biomass AD and energy recovery. The plant will be realized by Biogás Castellón like private partner. The biomass will be collected from livestock farms integrated in the municipality cooperatives of Intercoop Group an terciary producers as well as part of private partners. The electrical energy produced by 46 means biogas generated in AD conditions and cogeneration will be exported (invoiced) to the electrical network grid and the thermal energy recovered and applied for partial or total removal of N forms contained in the digestato liquid fraction for further agronomical application, increasing the competitiveness of the farmers involved as part of Intercoop Group cooperatives and contributing to solve an address a sustainable issue for make environmentally friendly the livestock production in the area target group`. 47 6.2 PPP Contract Concession SECTION I: OBJECT AND DURATION OF THE CONCESSION Concession EPCM for a AD biomass plant and cogeneration between: Diputación Provincial de Castellón in the person of the responsible of the Territorial and Technical Service ….. And Biogás Castellón in the person of the official representative ……. Section 1 Object and duration of the concession Art.1 Object of the concession The agreement is characterized as a “concession for EPCM of the plant”. The object is the review of the previous public concession with Escomat-Lubasa and the news cession to Biogas Castellón for the EPCM executive project, the realization of the AD biomass plant and cogeneration for energy recovery , the functional and economical management of the facility plant to export electric energy generated to the network grid, application of thermal energy generated for N removal contained in the digestate liquid fraction and hes contribution to solve a environmental, social an economical problem like generated for the intensive livestock in the Castellón province in general and in the municipalities of Benassal-Alcocasser specially. Art.2 Responsible of the procedure The responsible of the procedure of concession is the ….. The administration can substitute the responsible in every moment. According to the Spanish Laws the responsible of the procedure accomplishes to the functions of control and revision during the design phase, realization and management, and verifies the respect of the agreement. 48 Art.3 Agreement duration Please check the Annexes SECTION 2 WORK Art. 4 Please check the Annexes Art.5 Project documentation and attachments The construction and management concession is disciplined by the documentation attached in the annexes to the following agreement: A) Technical proposal produced during the tendering phase; B) Economical and financial plan produced during the tendering phase; C) Scheme of the energy selling contract; D) Further project documentation: 14. General descriptive report; 15. Geological and geotechnical report; 16. Photographic report; 17. General Zoning Plan regulation; 18. Gannt chart of the work; 19. Security and coordination plan; 20. Special tender, general norms; 21. Economical framework; 22. Economical and financial plan; 23. Technical report of the coverage; 24. Mechanical plants; a. Technical report; b. Special tender, materials and technical specifications; c. Technical draw of the boiler and pipes; d. Metrical computation and economical estimation; e. List of unitary prices; f. Manutemption plan; 25. Electrical plants; 49 a. Technical report; b. Special tender, materials and technical specifications; c. Technical draw of the boiler electrical connections; d. Metrical computation and economical estimation; e. List of unitary prices; f. Manutemption plan; 26. Civil works a. Technical report; b. Special tender, materials and technical specifications; c. Technical draw of the boiler electrical connections; d. Metrical computation and economical estimation; e. List of unitary prices; f. Manutemption plan. Art.6 Integrative parts of the contract Integrating parts of the agreement are collected in the public notarial new company created by the partners, please verify in the annexes. Art.7 Executive project revision and relative authorizations As a part of integrative final public concession publication The revision activity will in any case assure the conformity of the project to the actual legislation, to the actual regulation, to the urban structure, neither assure the executive level of the project. The concessionaire has to ask for all the authorizations, for approval, acts of assent, however mentioned and requested by the actual legislation. Art.8 Area delivery and beginning of the work According with the compulsory regulation issued by Autonomus Government of Valencia Region (Generalitat Valenciana). Art.9 Work execution Idem supra The concessionaire declares that for the work in which he is qualified he has the organization of technicians, of the machines and equipment that are required for the execution of this in order to be conform to the contractual conditions, with personal that has a stable continuative working position. 50 The concessionaire declares that for the work in which he is not qualified he will contact contracting enterprises qualified according to the actual regulation. Art. 10 Legislation and regulation observance The concession is subject to the observance to all the laws, regulation, dispositions, and prescriptions dealing with building that will be valid during the execution of the work and in particular will observe the Municipality prescriptions and the prescription of bodies dedicated to the monitoring of the work and the protection of environmental goods with the exception of what is stated in the Diputacion de Castellón final public concession contract. Art. 11 Project Management and work director, responsible of work and security coordinator in execution phase. The functions of the work director will be implemented by a subject qualified according to the actual legislation, indicated under the supervision and responsibility of the concessionaire. The director of the work has to refer constantly, also in written form, to the responsible of the procedure with regard to the state of advancement of the work. The responsible of the procedure can verify in every moment the conformity of the realized works or those that have to be still realized respect to the executive project that has to be approved and the relative accountability of the works. If some differences will be individuated, the responsible of the procedure can make some prescriptions to the concessionaire and to the Work Direction and to contract enterprises individuated by the same. The names of the work director, the responsible of the works and of the security coordinator in the phase of execution will be indicated by the responsible of the procedure before the beginning of the work. The concessionaire has the faculty to nominate other professionals in their substitution through a communication to the Responsible of the procedure. Art.12 Particular dues of the concessionaire Besides what is already mentioned in this agreement and its attachments, the concessionaire has to deal also with the following particular dues and the necessary administrative authorizations: a) The formation of the construction equipped in conformity with what is requested by the security plan, with all the modern and improved plants to assure the safety of things and persons and the perfect and fast execution of the works; the enclosure of the construction; the daily cleaning and maintenance of the construction; 51 b) The organization of streets and accesses to the construction to make safe the transit and circulation of vehicles and persons and the adoption of all the measures, deposits, works apt to grant the continuity and safety of circulation in the streets of access to the construction and in the surrounding areas and the access to the buildings near the construction area; c) The adoption of adequate measures with the aim of preventing the pollution of sanitation following national, regional and municipal dispositions; Art. 13 Responsibility of the project and work The concessionaire is fully responsible towards the administration, and in particular he has to grant. Every fault of the work that is consequent to an error in the project will be exclusively on his charge and he will be obliged to take some remedy, with its own expenses, being the only responsible of the executed work; He will be exclusively responsible for every damage that will occur in every moment, depending on the execution of the work, to the persons, the activities and things the workers of the Administration and the own workers; To be economically responsible for the damaged produced. Art.14 Variations to the project and contingencies No variation or addition to the reviewed project and approved by the responsible of the procedure can be introduced by the concessionaire if it has not been approved by the Administration with written documentation. If the variations and modifies are not approved by the municipal administration the concessionaire will not have the right to obtain the revision of the economic and financial plan or of the tariff, or of prices and incomes not comprised in the agreement. In this case the municipal administration can prescribe the adjustment of the work to the approved executive project. Art.15 Invariability of the economical and financial plan Dealing with concession of construction and management the economic and financial plan, the tariff and the relative adjustment criteria will be not varied in the case in which the conditions of the RD 667/2007 and further updates. Art.16 Work completion deadline The work will be performed with the maximal diligence and velocity in respect to the phases indicated in the Gannt chart, with the obligation to recover interruptions or delays in order to 52 complete the work and come to the trial of each part and element within xxxx days from the date of the beginning of the work. The deadline is fundamental for the interest of the Diputación de Castellón (Province Government). Art.17 Delay penalty To be defined in the final agreement public concession Art.18 Resolving clause for the execution of the work Idem supra SECTION 3 FUNCTIONAL AND ECONOMICAL MANAGEMENT Art. 19 Object of the management To be defined in the final official public concession For the entire duration of the energy service the concessionaire will: - supply the biofuel (biomass) necessary for the operation of the plant; - manage the normal and emergency regimen of the plant fed with biomass; - effectuate ordinary and extraordinary maintenance of the biomass plant; - assume the role of third responsible of the plant and maintainer of it. Art.20 Incomes from management and tariff The income of the concessionaire besides the contribution mentioned are contained in a) RD 667/2007 Generación en Regimen Especial; b) Plan Nacional de Biodigestión de Purines; c) Escritura de subrogación de concesión Dipcas-Biogás Castellón IV END OF THE CONTRACT Art. 21 Economical accounting The concessionaire has to produce all the accounting financial and economical documentation relative to the execution of the work and the management under expressed request of the administration. 53 Art. 22 Contract decay The rescission of the agreement for a cause not linked to the concessionaire during the execution of the work and the management of the energy service, will imply the contextual decay of the concession and the anticipated delivery of all the works and plants constructed totally or partially. In this case the work will return to the administration without giving to the concessionaire any compensation. Art.23 Disagreement between the documents Every time there will be contradiction or discrepancy between the prescriptions of various documents that form an integral part of this agreement, the prescription that is more favorable for the administration will be considered. Art.24 Competent forum For every controversy that will arise due to the present agreement it will be referred to te competent forum of Castellón de la Plana Diputación Provincial de Castellón Biogás Castellón 54
