IMPLEMENTATION OF MACHIKE TARU JABBA OIL …isgs.com.pk/wp-content/uploads/2018/02/Section-3... ·...

BUILD, OWN, OPERATE AND TRANSFER CONTRACT –v2

1

[OPERATOR NAME]

AND

INTER STATE GAS SYSTEMS (PRIVATE) LIMITED

BUILD, OWN, OPERATE AND TRANSFER CONTRACT

RELATING TO

IMPLEMENTATION OF MACHIKE TARU JABBA OIL PIPELINE PROJECT

FOR SECTION 3

MADE AT [], ISLAMIC REPUBLIC OF PAKISTAN

ON [], 2018

TO THE EXTENT POSSIBLE, THIS DRAFT IS CONSISTENT WITH THE HEADS OF

AGREEMENT AND SHALL SUBSTITUTE THE HEADS OF AGREEMENT. ISGS RESERVES

THE RIGHT TO AMEND THIS DRAFT DURING THE PROCESS OF CLARIFICATIONS. ISGS

DOES NOT ENVISAGE NEGOTIATIONS ON MATERIAL PROVISIONS POST ISSUANCE OF

LOI. 1

1 The final agreed draft of the BOOT Contract shall depend on the Design submitted by the Selected Bidder and the provisions of the draft

shall be tailored for Section 3 of the Project, as necessary.


2

TABLE OF CONTENTS

1. DEFINITIONS ......................................................................................................................... 1

1.1 DEFINITIONS ........................................................................................................... 1

1.2 RULES OF INTERPRETATION ................................................................................. 12

2. EFFECTIVE DATE, CONDITIONS SUBSEQUENT AND LONG STOP DATE ......... 13

2.1 EFFECTIVE DATE AND LONG STOP DATE ............................................................. 13

3. CONDITIONS SUBSEQUENT ............................................................................................ 13

3.1 CONDITIONS SUBSEQUENT ................................................................................... 13

3.2 WAIVER OF CONDITIONS SUBSEQUENT ............................................................... 14

3.3 NOTICE OF SATISFACTION/WAIVER ..................................................................... 14

3.4 LONG STOP DATE ................................................................................................. 14

3.5 CONSEQUENCES OF TERMINATION ....................................................................... 14

3.6 OBLIGATION TO SATISFY CONDITIONS SUBSEQUENT .......................................... 14

3.7 EXTENSION OF LONG STOP DATE ......................................................................... 14

4. TERM AND COMPLETION ............................................................................................... 15

4.1 TERM .................................................................................................................... 15

4.2 PROGRAMME AND SCHEDULED COMMERCIAL OPERATIONS DATE ..................... 15

4.3 COMMERCIAL OPERATIONS DATE ........................................................................ 16

5. IMPLEMENTATION OF THE PIPELINE SYSTEM ...................................................... 16

5.1 RESPONSIBILITIES OF THE OPERATOR .................................................................. 16

5.2 RESPONSIBILITIES OF ISGS .................................................................................. 18

5.3 AUTHORISED REPRESENTATIVES ......................................................................... 19

5.4 OPERATOR’S PROJECT MANAGER ........................................................................ 19

5.5 APPOINTMENT OF INSPECTION ENGINEER ............................................................ 19

5.6 APPLICATIONS BY THE OPERATOR FOR REQUIRED CONSENTS ............................ 20

5.7 ROLE OF THE ISGS CONSULTANT ........................................................................ 20

6. CONSTRUCTION, TESTING AND COMMISSIONING OF THE PIPELINE

SYSTEM ................................................................................................................................. 20

6.1 TECHNICAL REQUIREMENTS ................................................................................ 20

6.2 APPOINTMENT OF EPC CONTRACT; AMENDMENTS TO EPC CONTRACT ............. 21

6.3 REVIEW OF AGREEMENTS WITH CONTRACTORS .................................................. 21

6.4 PROGRESS REPORTS ............................................................................................. 21

6.5 MONITORING OF PIPELINE SYSTEM CONSTRUCTION ........................................... 22

6.6 NOTICE OF TESTS AND TRIALS; REPORTS ............................................................ 22

6.7 RESTRICTION ON USAGE ...................................................................................... 22

6.8 ADDITIONAL CHANGES ........................................................................................ 22


3

6.9 OPERATOR'S RESPONSIBILITY .............................................................................. 23

6.10 TESTING AND COMMISSIONING ............................................................................ 23

6.11 FAILURE TO PASS PERFORMANCE TESTS ............................................................. 24

6.12 DELAYS IN IMPLEMENTATION .............................................................................. 26

7. OPERATION AND MAINTENANCE OF PIPELINE FACILITY ................................. 26

7.1 OPERATION AND MAINTENANCE OF THE PIPELINE SYSTEM ................................ 26

7.2 O&M AGREEMENT; O&M CONTRACTOR ............................................................ 27

7.3 OPERATION OF THE PIPELINE SYSTEM BY THE OPERATOR .................................. 27

8. TRANSFER ............................................................................................................................ 27

8.1 SCOPE OF TRANSFER ............................................................................................ 27

8.2 TRANSFER UPON EXPIRY ..................................................................................... 28

8.3 TRANSFER UPON EARLY TERMINATION .............................................................. 30

8.4 COMPENSATION UPON EARLY TERMINATION...................................................... 30

8.5 PROVISIONS APPLICABLE TO TRANSFERS GENERALLY ....................................... 31

9. ROUTE AND ROUTE MODIFICATION .......................................................................... 32

9.1 ROUTE .................................................................................................................. 32

9.2 ROUTE MODIFICATION ......................................................................................... 32

10. REPRESENTATIONS AND WARRANTIES .................................................................... 32

10.1 ISGS’S REPRESENTATIONS AND WARRANTIES .................................................... 32

10.2 OPERATOR’S REPRESENTATIONS AND WARRANTIES ........................................... 32

11. LIABILITY ............................................................................................................................ 33

11.1 LIMITATION OF LIABILITY .................................................................................... 33

11.2 INDEMNIFICATION FOR FINES AND PENALTIES .................................................... 33

12. INSURANCE .......................................................................................................................... 33

12.1 INSURANCE COVERAGE ........................................................................................ 33

12.2 APPLICATION OF PROCEEDS ................................................................................. 34

12.3 INSURERS .............................................................................................................. 34

13. ASSIGNMENT AND SECURITY ....................................................................................... 34

13.1 ASSIGNMENT ........................................................................................................ 34

13.2 CREATION OF SECURITY ....................................................................................... 34

14. LIQUIDATED DAMAGES .................................................................................................. 35

14.1 LIQUIDATED DAMAGES FOR TRANSFER CONDITION ........................................... 35

15. GUARANTEES ...................................................................................................................... 35

15.1 IMPLEMENTATION PERFORMANCE BOND ............................................................. 35

15.2 OPERATIONS PERFORMANCE BOND ..................................................................... 35

15.3 SBLC .................................................................................................................... 36

16. FORCE MAJEURE ............................................................................................................... 36


4

16.1 DEFINITION OF FORCE MAJEURE .......................................................................... 36

16.2 NOTIFICATION OBLIGATIONS ............................................................................... 37

16.3 DUTY TO MITIGATE .............................................................................................. 38

16.4 DELAY CAUSED BY FORCE MAJEURE .................................................................. 38

17. TERMINATION .................................................................................................................... 38

17.1 TERMINATION FOR DEFAULT ............................................................................... 38

17.2 TERMINATION AS A RESULT OF FORCE MAJEURE EVENT .................................... 40

17.3 VOLUNTARY TERMINATION ................................................................................. 40

17.4 TERMINATION NOTICES ........................................................................................ 40

17.5 OBLIGATIONS UPON TERMINATION ..................................................................... 41

17.6 OTHER REMEDIES ................................................................................................. 41

18. RESOLUTION OF DISPUTES ............................................................................................ 41

18.1 RESOLUTION BY PARTIES ..................................................................................... 41

18.2 EXPERT ................................................................................................................. 41

18.3 ARBITRATION ....................................................................................................... 43

18.4 PERFORMANCE TO CONTINUE DURING DISPUTE ................................................. 43

19. TAXES .................................................................................................................................... 44

19.1 TAXES APPLICABLE TO THE OPERATOR ............................................................... 44

19.2 TAXES APPLICABLE TO ISGS ............................................................................... 44

20. INVOICING; PAYMENT AND DISPUTED AMOUNTS ................................................ 44

20.1 INVOICING ............................................................................................................ 44

20.2 PAYMENTS AND DISPUTED AMOUNTS ................................................................. 44

21. MISCELLANEOUS PROVISIONS ..................................................................................... 45

21.1 NOTICES................................................................................................................ 45

21.2 ACCOUNTS AND REPORTS .................................................................................... 46

21.3 FOSSIL AND ARCHAEOLOGICAL FINDS ................................................................. 46

21.4 GOVERNING LAW AND JURISDICTION .................................................................. 47

21.5 AMENDMENT ........................................................................................................ 47

21.6 THIRD PARTIES ..................................................................................................... 47

21.7 NO WAIVER .......................................................................................................... 47

21.8 RELATIONSHIP OF THE PARTIES ........................................................................... 47

21.9 SURVIVAL ............................................................................................................. 47

21.10 LANGUAGE ........................................................................................................... 47

21.11 ENTIRETY ............................................................................................................. 48

21.12 CONFIDENTIALITY ................................................................................................ 48

21.13 SUCCESSORS AND ASSIGNS .................................................................................. 48

21.14 NO LIABILITY FOR REVIEW .................................................................................. 48


5

21.15 AFFIRMATION/ INTEGRITY PACT .......................................................................... 48

21.16 COUNTERPARTS .................................................................................................... 49

SCHEDULE 1 – PIPELINE SYSTEM DESIGN AND SPECIFICATIONS ................................ 51

SCHEDULE 2 – DESIGN CAPACITY SCHEDULE ..................................................................... 52

SCHEDULE 3 – ROUTE ................................................................................................................... 53

SCHEDULE 4 – PROGRAMME ...................................................................................................... 54

SCHEDULE 5 – INTEGRITY PACT ............................................................................................... 55

SCHEDULE 6 – SBLC ....................................................................................................................... 56

SCHEDULE 7 – FORM OF PRE-COMMISSIONING TEST REPORT ..................................... 60

SCHEDULE 8 – FORM OF CERTIFICATE OF ACCEPTANCE ............................................... 61

SCHEDULE 9 –WHITE OIL SPECIFICATIONS ......................................................................... 62

SCHEDULE 10– REQUIRED CONSENTS ..................................................................................... 64

SCHEDULE 11 –TRANSFER COMPENSATION UPON EARLY TERMINATION ............... 65

SCHEDULE 12 – FORM OF IMPLEMENTATION PERFORMANCE BOND ......................... 67

SCHEDULE 13 – FORM OF OPERATIONS PERFORMANCE BOND .................................... 69

SCHEDULE 14 – ENTRY POINT, EXIT POINT AND OFFTAKE POINT(S) .......................... 72

SCHEDULE 15 –TECHNICAL REQUIREMENTS ....................................................................... 73

SCHEDULE 16 – FORM OF SPONSOR UNDERTAKING .......................................................... 74

1

THIS BUILD, OWN, OPERATE AND TRANSFER CONTRACT is made on [], 2018

BETWEEN:

[●], a company incorporated under the laws of Pakistan and having its registered address at [●]

("Operator", which term shall be deemed to include its successors and assigns);

-AND-

INTER STATE GAS SYSTEMS (PRIVATE) LIMITED, a company incorporated under the laws

of Pakistan and having its registered office at 8th Floor, Petroleum House, Ataturk Avenue, G-5/2,

Islamabad, Pakistan ("ISGS", which term shall be deemed to include its successors and assigns);

(the Operator and ISGS are hereinafter referred to individually as a "Party" and collectively as the

"Parties"),

WHEREAS:

(A) ISGS intends to implement the Project based on a “Build-Own-Operate-Transfer” model

(“BOOT Model”).

(B) The Operator is a project company, created by the Sponsor(s) solely for the purpose of

developing, owning and operating the Pipeline System on a BOOT Model for ultimate transfer to

ISGS or its nominee in terms of the Pipeline System Documents as provided for in this BOOT

Contract at the end of Term.

(C) The Operator has agreed to develop the Pipeline System on the terms and conditions set forth in

the Pipeline System Documents.

NOW THEREFORE, in consideration of mutual benefits to be derived and the representations and

warranties, conditions and undertakings herein contained and intending to be legally bound hereby,

the Parties agree as follows:

1. DEFINITIONS

1.1 Definitions

Whenever the following capitalised terms appear in this BOOT Contract, the recitals or in the

Schedules, whether in the singular or in the plural, present, future or past tense, they shall have the

respective meanings stated below:

"Acceptable Long-Term Credit Rating" –

(a) with respect to Persons that are incorporated or organised outside of Pakistan or to unsecured,

unguaranteed and unsubordinated instruments issued by such Persons, A- or higher by S&P, A3

or higher by Moody’s or A- or higher by Fitch; and

(b) with respect to Persons that are incorporated or organised in Pakistan or to instruments issued by

such Persons established in Pakistan:

(i) in relation to such a Person, that is rated AA or higher by PACRA or AA or higher by JCR-

VIS or any equivalent mutual fund rating assigned by MUFAP; and

(ii) in relation to such an instrument, that it is rated AA or higher by PACRA or AA or higher by

JCR-VIS or any equivalent mutual fund rating assigned by MUFAP,

provided that where a Person or any instruments are rated by more than one of S&P, Moody’s or Fitch or

by PACRA or JCR-VIS or the equivalent mutual fund rating assigned by MUFAP, as applicable, then the

lowest rating will apply for determining whether the Person or instrument has an Acceptable Long-Term

Credit Rating.

2

"Acceptable Short-Term Credit Rating" –

(a) with respect to Persons that are incorporated or organised outside of Pakistan or to unsecured,

unguaranteed and unsubordinated instruments issued by such Persons, A-1+ or higher by S&P or

P-1 by Moody’s or F1+ or higher by Fitch; and

(b) with respect to Persons that are incorporated or organised in Pakistan or to instruments issued by

such Persons established in Pakistan, A1 or higher by PACRA or A1 by JCR-VIS or the

equivalent mutual fund rating assigned by MUFAP,

provided that where a Person or any instruments (or as the case may be, a mutual fund) are rated by more

than one of S&P, Moody’s or Fitch or by PACRA or JCR-VIS or the equivalent mutual fund rating

assigned by MUFAP, as applicable, then the lowest rating will apply for determining whether the Person

or instrument has an Acceptable Short-Term Credit Rating.

“Acceptance Option” – The meaning ascribed thereto in Clause 6.11(a).

"Affiliate" – In relation to any Person, where such Person controls twenty percent (20%) or more of

the Ordinary Share Capital of another Person directly or indirectly through one or more

intermediaries.

“Agreement Year” – As provided/ to be provided for in the Transportation Agreement.

“Adjusted Annual Reserved Capacity” – As provided/ to be provided for in the Transportation

Agreement.

"BOOT Contract" – This Build, Own, Operate and Transfer Contract, together with all Schedules

attached hereto, dated as of the date first written above, by and between ISGS and the Operator, as

may be amended or supplemented by the Parties from time to time.

“BOOT Direct Agreement” - The agreement to be entered into between the Operator, ISGS and any

Lender(s) in respect of this BOOT Contract.

"Business Day" – Any day that banks in Pakistan are legally permitted to be open for business, as

well as when offices of the Federal Government of the GOP are open and functioning.

“Cancelling Date” – The meaning ascribed thereto in Clause 6.12.

"Certificate of Acceptance" – The meaning ascribed thereto in Clause 6.10.2 (Performance Tests).

“Certificate of Readiness for Commissioning” – The certificate to be issued by the Inspection

Engineer confirming that the Pipeline System is available for the purpose of carrying out the

Performance Tests, which shall be duly endorsed and witnessed by the ISGS Consultant.

“Certificate of Readiness for Pre-Commissioning” – The certificate to be issued by the Inspection

Engineer confirming that the Pipeline System is ready for the purpose of carrying out the Pre-

Commissioning Tests, which shall be duly endorsed and witnessed by the ISGS Consultant.

"Change in Law" –

(a) The adoption, promulgation, repeal, modification or reinterpretation after the date of this BOOT

Contract by any Public-Sector Entity of any Law of Pakistan (including a final, binding and non-

appealable decision of any Public-Sector Entity);

(b) the imposition by a Relevant Authority of any term or condition in connection with the issuance,

renewal, extension, replacement or modification of any Required Consent after the date of this

BOOT Contract; or

3

(c) the imposition by a Relevant Authority of any additional Required Consent;

that in the case of each of clause (a), (b), or (c) above results in either a substantial increase in cost or

substantial decrease in revenue as a consequence of any requirement for the design, construction,

operation or maintenance of the Pipeline System that is more restrictive than the most restrictive

requirements (i) under the Laws of Pakistan as in effect as of the date of this BOOT Contract (ii)

specified in any applications, or other documents filed in connection with such applications, for any

Required Consent filed by the Operator, and (iii) agreed to by the Operator under any of the Pipeline

System Documents.

"Commercial Operations Date – The Day immediately following the date on which the Pipeline

System and the Project is Commissioned, as stated in the Certificate of Acceptance.

"Commissioned" – The successful completion of the Performance Tests as confirmed by the

Certificate of Acceptance.

“Compensation Amounts” – The compensation amounts mentioned in Schedule 11.

"Conditions Subsequent" – The Conditions Subsequent provided for in Clause 3 (Conditions

Subsequent).

“Connected System” – Any White Oil Product transportation or distribution system or section

thereof that is interconnected with the Pipeline System.

"Continuing Contracts" – The meaning ascribed thereto in Clause 8.2.7.

"Contractors" – The contractors and suppliers engaged by the Operator to carry out and perform the

activities required under the Principal Documents, including the EPC Contractor, the O&M

Contractor, and any other direct contractors and any of their direct sub-contractors integrally involved

in Implementation and Operations of the Pipeline System.

“Construction Commencement Date” – The date on which the construction of the Pipeline System

is started.

"Custody Transfer"– The Custody Transfer between the relevant parties as mentioned in the Custody

Transfer and Interface Agreement for the Section of the Project during the stage of Operations

contemplated under the Transportation Agreement.

"Custody Transfer and Interface Agreement"– The Custody Transfer and Interface Agreement, in

relation to each Section of the Project, to be entered into between ISGS, the Operator and such other

parties between whom Interface and Custody Transfer issues may arise, to deal with the Interface and

Custody Transfer issues during the Implementation Period and Operations of the Pipeline System.

“Custody Transfer and Interface Direct Agreement” – The agreement between the Operator, ISGS

and the parties to the Custody Transfer and Interface Agreement and, where relevant, the Lender(s) in

respect of the Custody Transfer and Interface Agreement.

"Day" - means a continuous period of twenty-four (24) hours beginning at 12:00 midnight and

“Daily” shall be construed accordingly.

“Delayed Payment Rate” – One (01) month KIBOR on any amounts payable in Pak Rupees and

calculated for the actual number of Days for which the relevant amount remains unpaid on the basis of

a three hundred and sixty five (365) Day year, prevailing on the date that payment first becomes due.

"Design Life" – The period of time for which the Pipeline System is designed to operate in

accordance with the requirements of the BOOT Contract, which in this case shall be a period of forty

(40) Years from the Commercial Operations Date.

4

“Design Capacity” – The transportation capacity of the Pipeline System over the Term, as per the

Design Capacity Schedule attached as Schedule 2 hereto.

“Direct Agreements” – Together, the BOOT Direct Agreement, the Transportation Agreement

Direct Agreement, EPC Direct Agreement, O&M Direct Agreement and Custody Transfer and

Interface Direct Agreement2.

"Dispute" – Any dispute or disagreement or difference arising under, out of, or in connection with

this BOOT Contract, including, without limitation, any dispute or difference concerning the existence,

legality, validity or enforceability of this BOOT Contract or any provision hereof or the obligations or

performance of a Party under any provision hereof.

"Dispute Notice" – The meaning ascribed thereto in Clause 18.1.1 (Resolution by Parties).

"Effective Date" – The meaning ascribed thereto in Clause 2.

“Entry Point” – The point at which White Oil Products are received from the OMCs and/ or from

any Connected System (as applicable) at the beginning of the Section, as per Schedule 14.

"Environmental Liabilities" – All Losses (including, without limitation, reasonable costs of

investigation, testing, containment, removal, clean-up, abatement or remediation, and reasonable

attorney’s fees and costs), whether or not quantified in amounts relating to the presence in the

environment of Hazardous Materials attributable to the Pipeline System or any liabilities or

obligations arising from any violation by the Operator, its Contractors or their employees or agents of

any environmental Laws of Pakistan.

"Environmental Standards" – Collectively, the environmental guidelines and occupational health

and safety standards established by the Pakistan Environmental Protection Agency and the relevant

Environmental Protection Agency of the relevant Provincial Governments relating to the Pipeline

System.

"EPC" – Engineering, procurement and construction.

"EPC Contract" – The agreement or agreements to be entered into between the Operator and the

EPC Contractor for the design, engineering, procurement, construction, completion, start-up, testing,

and commissioning by the EPC Contractor of the Pipeline System, as may be amended from time to

time.

"EPC Contractor" – The engineering, procurement and construction Contractor or Contractors

appointed by the Operator and not objected to by ISGS pursuant to Clause 6.2.

“EPC Direct Agreement” means the agreement to be entered into between the Operator, ISGS, the

EPC Contractor and, where applicable, the Lender(s) in respect of the EPC Contract.

“Exit Point” – Point at which the White Oil Products are transferred from the Section to the

Connected System (where applicable), as per Schedule 14.3

"Expert" – The meaning ascribed thereto in Clause 18.2.

"Expiry Date" – The last Day of the Term.

2 This is subject to amendment depending on the financing structure of the selected bidder and pipeline system documents. 3 This subject to modification, depending on the Section of the Pipeline System.

5

"Financial Closing" –The execution and delivery of the Financing Documents that evidence

sufficient financing for the construction, testing, completion and commissioning of the Pipeline

System (following the resolution of any objections raised by ISGS to the Term Sheet in accordance

with this BOOT Contract) and the satisfaction, waiver or deferment of conditions precedent for the

initial availability of funds under the Financing Documents.

"Financial Closing Date" – means the date by which Financial Closing is to be achieved as per

Clause 3.1(b)(ii), as may be extended from time to time.

"Financing Documents" – Any and all loan or facility agreements, bonds, indentures, security

agreements, mortgages, subordination agreements, participation agreements, letters of credit, direct

agreements, note or bond purchase agreements, interest rate hedging arrangements, currency hedging

arrangements and other related documents (including Islamic financing agreements), for which the

respective Term Sheets have not been objected to by ISGS, entered into by the Operator with respect

to the financing of the Pipeline System of the Section and any refinancing thereof.

“Fixed Tariff” – The Fixed Tariff, as provided/ to be provided for in the Transportation Agreement.

"Force Majeure Events” – The meaning ascribed thereto in Clause 16.

"Foreign Currency" − The legal currency of any country or countries other than Pakistan.

"Good Industry Practice" – At a particular time, those practices, methods and acts as are in

accordance with good standards of prudence applicable to the international projects akin to the Project

which would be expected to accomplish the desired result at the lowest reasonable cost consistent

with reliability, safety and expedition.

"GOP" − The Government of Pakistan.

"Hazardous Material" – Any pollutant, contaminant, solid waste, toxic or hazardous substance or

waste, any explosive or radioactive materials regulated under, or subject to any Laws of Pakistan.

"HSD" – High Speed Diesel.

"Implementation "– shall comprise of activities arising during the Implementation Period up to the

Commercial Operations Date under this BOOT Contract, in relation to the Pipeline System, including

but not limited to all management, engineering, procurement, including purchasing, supply and

transportation, erection, construction, installation, inspection and testing, completion, including

Mechanical Completion, Pre-commissioning, Performance Tests, start-up, initial operation, and

performing all other works required to achieve the issuance of the Certificate of Acceptance for the

Pipeline System, such activities being provided for in greater detail in Clause 6 below.

“Implementation Performance Bond” – The Performance Bond for the Section to be issued by the

Operator in favour of ISGS in terms of Clause 15.1.1 of the BOOT Contract, to secure the obligations

of the Operator during the Implementation Period in the form set out in Schedule 12 to this BOOT

Contract.

“Implementation Period” – The period beginning from the Effective Date of the BOOT Contract

and ending on the Commercial Operations Date, which shall be twenty-four (24) Months from the

Effective Date of the BOOT Contract or such extended duration as may be determined pursuant to the

terms of this BOOT Contract.

"Inspection Engineer" – The independent engineer appointed by the Operator in accordance with

Clause 5.5 for verification of the Pre-Commissioning Tests, Performance Tests and issuance of the

Certificate of Readiness for Pre- Commissioning, Certificate of Readiness for Commissioning and the

Certificate of Acceptance.

6

“Integrity Pact” – The Integrity Pact in the form set out in Schedule 5 to this BOOT Contract.

"Interface"– The Interface between the relevant parties as mentioned in the Custody Transfer and

Interface Agreement for the Section of the Project during the Implementation Period under this BOOT

Contract.

“Invoice Dispute” - The meaning ascribed thereto in Clause 20.2.1.

“Invoice Dispute Notice” - The meaning ascribed thereto in Clause 20.2.1.

"ISGS Consultant" – The consultant appointed by ISGS in order to provide the services set out in

Clause 5.7.

"ISGS Event of Default”" – The meaning ascribed thereto in Clause 17.1.2 (Termination for

Default).

“ISGS Margin” – The margin of ISGS comprising of the administrative and management charge of

ISGS for the purposes of facilitating and managing the Implementation and Operations of the Pipeline

System, as well as charges for provision of Permanent ROW.

“KIBOR” – The average Karachi Inter Bank Offered Rate, ask side, for the relevant tenor, as

published on Reuters page “KIBOR” or as published by the Financial Markets Association of

Pakistan in case the Reuters page is unavailable.

"Lapse of Consent" – Any Required Consent: (a) ceasing to remain in full force and effect and not

being renewed or replaced within the time period prescribed by the applicable Laws of Pakistan; or

(b) not being issued upon application having been properly and timely made and diligently pursued;

or (c) being made subject, upon renewal or otherwise, to any terms or conditions that materially and

adversely affect the Party’s ability to perform its obligations under any document included within the

Pipeline System Documents, in each of the above instances despite such Party’s compliance with the

applicable procedural and substantive requirements.

"Laws of Pakistan" – Federal, provincial and local laws of Pakistan, and all orders, rules, regulations,

statutory regulatory orders, executive orders, decrees, judicial decisions, notifications, or other similar

directives issued by any Public-Sector Entity pursuant thereto, including the Environmental

Standards, as any of them may be amended from time to time.

“LDs Cap” – An amount of 6.12(c).

"Lenders" – The Person or Persons, including any financial institutions issuing the Term Sheet and

providing financing to the Operator and party to the Financing Documents, or subsequent financial

institutions that become parties to the Financing Documents not objected to by ISGS in accordance

with the terms of this BOOT Contract or the BOOT Direct Agreement, together with their respective

successors and assigns, including any agent or trustee for such Person or Persons.

“Licenses” – The licenses required to be obtained under the applicable Laws of Pakistan, including

the OGRA Rules, in relation to the Implementation and Operations of the Pipeline System.

"Lien" – Any mortgage, pledge, lien, security interest, conditional and instalment sale agreement,

encumbrance, claim or charge of any kind.

"Line Fill" – The minimum volume of White Oil Product required to fill the pipeline, tank bottoms

and working stock in the Pipeline System for the purposes of conducting the Performance Tests and

throughout the period of Operations.

“Long Stop Date” – The date falling [one hundred and eighty (180)] Days from the Effective Date,

as may be extended in accordance with the provisions of Clause 3.7 below.

7

"Loss" – Any loss, damage, liability, payment or obligation (excluding any indirect or consequential

loss, damage, liability, payment or obligation), and all expenses (including, without limitation,

reasonable legal fees).

“Mechanical Completion” – The date on which all the components of the Pipeline System have been

installed in accordance with the Technical Requirements as per Schedule 15.

"Minimum Credit Rating" – Acceptable Long-Term Credit Rating or Acceptable Short-Term Credit

Rating, as the case may be.

"Month" – A calendar month according to the Gregorian calendar, beginning at 12:00 midnight on

the last day of the preceding month and ending at 12:00 midnight on the last day of that month.

"MMTPA"-Million Tonnes per Annum.

"MTPA"-Metric Tonnes per Annum.

"MS" – Motor Spirit.

“MUFAP” – Mutual Funds Association of Pakistan.

“New Scheduled Commercial Operations Date” – The meaning ascribed thereto in Clause

6.12(a)(ii).

“Notice” – Any notice, communication or other document to be given or made by one Party to the

other Party pursuant to this BOOT Contract.

"Notice of Intent to Terminate" – The meaning ascribed thereto in Clause 17.3.1 (Termination

Notices).

“Offtake Point” – Point at which the White Oil Products are delivered to the OMCs at the end of the

Section, as per Schedule 14.

"O&M Agreement" – The operation and maintenance agreement to be entered into between the

Operator and the O&M Contractor, where applicable, for the operation and maintenance of the

Pipeline System.

"O&M Contractor" – Any operation and maintenance contractor or contractors, and any successors

thereto, appointed by the Operator and not objected to by ISGS pursuant to Clause 7.2 (Operation and

Maintenance; Appointment of O&M Contractor).

“O&M Direct Agreement” – The agreement to be entered into between the Operator, ISGS, the

O&M Contractor and, where applicable, the Lender(s) in respect of the O&M Agreement.

"O&M Manual" – As provided for in Clause 8.1.1 below.

“OGRA” – The Oil and Gas Regulatory Authority established pursuant to the Oil and Gas Regulatory

Authority Ordinance, 2002 (Ordinance No. XVII of 2002).

“OGRA Rules” – The Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing)

Rules, 2016, including any re-enactment thereof or any amendments thereto.

“OMC(s)”- oil marketing company(ies).

"Operations"– shall comprise of activities arising from the Commercial Operations Date (i) in

relation to transportation under and in terms of the Transportation Agreement; and (ii) in relation to

O&M activities under this BOOT Contract, in relation to the Pipeline System.

“Operations Performance Bond” – The Performance Bond for the Section to be issued by the

Operator in favour of ISGS in terms of Clause 15.1.2 of the BOOT Contract, to secure the obligations

8

of the Operator during the Operations Period as required under this BOOT Contract and the

Transportation Agreement, in the form set out in Schedule 13 to this BOOT Contract.

“Operations Period” - The period commencing on the Commercial Operations Date and ending on

the last Day of the Term.

"Operator Event of Default" – The meaning ascribed thereto in Clause 17.1.1 (Termination for

Default).

“Ordinary Share Capital” – Such shares comprising the issued share capital of the Operator which

carry voting rights, as per the Laws of Pakistan.

"Other Force Majeure Event" – The meaning ascribed thereto in Clause 16.1.1 (Definition of Force

Majeure).

"Pakistan" − The Islamic Republic of Pakistan.

"Pak Rupee" and "PKR" −The lawful currency of Pakistan.

“Payment Date” - The meaning ascribed thereto in Clause 20.1.2.

"Performance Bonds" – Collectively the Implementation Performance Bond and the Operations

Performance Bonds.

"Performance Tests" – The prescribed tests performed by the Operator under the BOOT Contract in

respect of the Section to establish readiness of the Pipeline System for Operations in accordance with

the Technical Requirements as per Schedule 15 and for the Section to meet the requirements of the

Design Capacity Schedule as set out in Schedule 2.

“Permanent ROW” – The meaning ascribed thereto in Clause 5.2.1.

"Person" – Any natural person, firm, company, corporation, society, government, state or agency of a

state (including any Public-Sector Entity), or any association or partnership (whether or not having

separate legal personality) of two or more of the foregoing.

"Pipeline Ancillary System" – Each of the computers, equipment, machinery, vehicles, spares,

infrastructure, installation, buildings, structures, power generating equipment, telecommunication

equipment together with tele-metering and tele-control facilities, civil works, and system necessary

for the efficient design, construction, operation, and maintenance of the Pipeline System in

accordance with Good Industry Practices.

"Pipeline System" -The pipeline and related facilities and infrastructure, including but not limited to,

storage tanks (operational, batch and transmix), pumps (mainline, booster and transfer), pigging

system, block valve stations, metering system, transmix processing facility, gantry, SCADA and

telecommunication and integrated control & safety system thereto as provided under this BOOT

Contract including all required facilities, equipment and installations, as well as the Pipeline Ancillary

System for the Section.

“Pipeline System Design and Specifications” – The Pipeline System Design and Specifications set

out in Schedule 1 hereto.

"Pipeline System Documents" – Each of the following agreements/ documents relating to the

Pipeline System:

(a) this BOOT Contract;

(b) the Transportation Agreement;

(c) the EPC Agreement;

9

(d) the O&M Agreement;

(e) the ROW Documents;

(f) the Financing Documents;

(g) the Direct Agreements;

(h) the Option Agreement;

(i) the Custody Transfer and Interface Agreement;

(j) the Performance Bonds;

(k) the SBLC; and

(l) the [insurances specified in Clause 12].

Provided that the documents forming the Pipeline System Documents are to be taken as mutually

explanatory of one another, but in case of ambiguities or discrepancies, specific provisions will

prevail over general provisions and the provisions of a document executed later in time will prevail

over provisions of a document executed earlier in time, unless otherwise provided in a Pipeline

System Document.

"Pre-Commissioned" – The successful completion of the Pre-Commissioning Tests as confirmed by

the Pre-Commissioning Report.

“Pre-Commissioning” – The undertaking of the Pre-Commissioning Tests once Mechanical

Completion of the Pipeline System has been achieved.

“Pre-Commissioning Test Report” – The meaning ascribed in Clause 6.10.1(c).

"Pre-Commissioning Tests" – The prescribed tests performed by the relevant EPC Contractor(s) and

the Operator under the relevant EPC Contract(s) for the Section at the time of Pre-Commissioning in

accordance with the Technical Requirements as per Schedule 15 and for the Section to meet the

requirements of the Design Capacity Schedule as set out in Schedule 2.

"Principal Documents" – Each of the following agreements/ documents relating to the Pipeline

System:

(a) this BOOT Contract; and

(b) the Transportation Agreement.

"Programme" – The meaning ascribed thereto in Clause 4.2 and as provided for in Schedule 4.

“Progress Report” – The meaning ascribed thereto in Clause 6.4.

"Project" – means the “Machike – Taru Jabba Oil Pipeline Project” extending over the Route, having

a Design Capacity to transport White Oil Products as per the Design Capacity Schedule and divided

into three (03) Sections, namely, Section-1, Section-2 and Section-3 comprising of the respective

Pipeline Systems.

"Project Documents" – The Pipeline System Documents for all the Sections of the Project.

"Proposed Material Amendment" – The meaning ascribed thereto in Clause 6.2.2.

"Public-Sector Entity" – (a) The GOP, the relevant Provincial Governments, any subdivision of

either, or any local governmental authority with jurisdiction over the Operator, the Project, or any part

thereof, or (b) any department, authority, instrumentality, agency, or judicial body of the GOP, the

Provincial Governments or any such local governmental authority, (c) courts and tribunals in

10

Pakistan, and (d) any commission or independent regulatory agency or body having jurisdiction over

the Operator, the Project or any part thereof.

“Repair Option” – The meaning ascribed thereto in Clause 6.11(b).

“Rejection Date” – The meaning ascribed thereto in Clause 6.11.3.

“Rejection Option” – The meaning ascribed thereto in Clause 6.11(c).

"Relevant Authority" – The department, authority, instrumentality, agency or other relevant entity

from which a Required Consent is to be obtained and any authority, body or other Person having

jurisdiction under the Laws of Pakistan with respect to the Project, this BOOT Contract and the other

Pipeline System Documents or any part thereof, as the case may be.

"Required Consents" – All such valid approvals, consents, authorisations, notifications, concessions,

acknowledgements, agreements, licences, permits, decisions or similar items which is or are required

by the Operator or its Contractors or Lenders for the purposes of the Pipeline System, or to fulfil their

obligations under the Pipeline System Documents.

“Route” – The meaning ascribed thereto in Clause 9 and as set out in Schedule 3 hereto.

"ROW " – Right of Way.

"ROW Documents" – The meaning ascribed thereto in Clause 5.2.1.

“Sanctions” – The meaning ascribed thereto in Clause 10.2.2.

"Section" – The Section of the Project being implemented under this BOOT Contract, namely

Section-3.

"Section-1" –The part of the Project extending from Machike (Sheikhupura) to Chakpirana (Gujrat).

"Section-2" – The part of the Project extending from Chakpirana (Gujrat) to Rawat (Rawalpindi).

"Section-3" – The part of the Project extending from Rawat (Rawalpindi) to Taru Jabba (Peshawar).

"Sections" –Section-1, Section-2 and Section-3 of the Project.

"Sales Tax" − Sales tax levied under the Sales Tax Act 1990, and applicable provincial sales tax on

services.

“SBLC” – The Standby Letter of Credit to be issued by a bank/ financial institution, on behalf of

ISGS in favour of the Operator in terms of Clause 5.2.3 of the BOOT Contract, to secure the

obligations of ISGS during the Operations Period under the Transportation Agreement, in the form set

out in Schedule 6 to this BOOT Contract.

"Scheduled Inspection Date" – As provided for in Clause 8.2.2.1.

“Scheduled Commercial Operations Date” – The date reasonably estimated by the Operator as the

Commercial Operations Date, as notified to ISGS, in terms of the Programme.

“Shareholder” – A shareholder of the Operator holding Ordinary Share Capital in the Operator.

“Sponsor(s)” - The shareholders of the Operator, namely [names to be inserted].

11

“Sponsor Undertakings”4 - Undertaking(s) from the Sponsor(s) , in the form attached hereto as

Schedule 16, in favour of ISGS that the Sponsor(s) will not during the Implementation Period and a

period of five (05) Years from the Commercial Operations Date initiate a change in ownership of the

Operator and will not divest more than forty-nine per cent (49%) of its total shareholding in the

Operator for the remainder of the Term.

“Tariff” – The composite tariff comprising of the Fixed Tariff and the Variable Tariff, as provided/ to

be provided for in the Transportation Agreement, shall be inclusive of all applicable Taxes but

exclusive of Sales Tax.

“Tariff Structure” – The Tariff plus the ISGS Margin.

"Tax" or "Taxes" – means all forms of taxation whether direct or indirect and whether levied by

reference to income, profits, gains, net wealth, excise, import, asset values, turnover, added value or

other reference and statutory, governmental, federal, state, provincial, local governmental or

municipal impositions, duties, contributions, rates and levies (including without limitation social

security contributions and any other payroll taxes), whenever and wherever imposed (whether

imposed by way of a withholding or deduction or otherwise) and in respect of any person as well as

all penalties, fines, charges, costs and interest relating thereto.

“Temporary ROW” – The meaning ascribed thereto is Clause 5.1.6.

"Term" – The period of seventeen (17) Years commencing from the Effective Date (as may be

extended in terms of the provisions of this BOOT Contract) and ending on the earlier of the Expiry

Date or Termination Date of this BOOT Contract.

"Termination Date" – The meaning ascribed thereto in Clause 17.4 (Termination Notices).

"Termination Notice" − A written notice of termination of this Agreement issued by ISGS or the

Operator, as the case may be, pursuant to Clause 17.4 (Termination Notices).

“Term Sheet” – The meaning ascribed thereto in Clause 3.1(b)(i) (Financial Closing).

“Testing” –. As provided for in Clause 6.

"Transfer Date" – The date when the Pipeline System is transferred by the Operator to ISGS upon

the earlier of the Expiry Date or the Termination Date.

"Transfer Conditions" – The meaning ascribed thereto in Clause 8.1.1 (Scope of Transfer).

"Transfer Examiner" – The engineer appointed by ISGS to inspect and examine the Pipeline System

in accordance with Clause 8.2.2 (Transfer).

"Transfer Inspection" – The meaning ascribed thereto in Clause 8.2.2.1.

"Transfer Kick-off Meeting" – The meaning ascribed thereto in Clause 8.2.4.

"Transfer Operator" – A Person designated by ISGS in accordance with Clause 8.1.1 to operate and

maintain the Pipeline System during the Transfer Period.

"Transfer Period" – The period beginning on the Transfer Period Commencement Date and

continuing through and including, and terminating on, the Expiry Date.

"Transfer Period Commencement Date" – The date which is three hundred and sixty (360) Days

before the Expiry Date for the Term.

4 The final form of the Sponsor Undertaking(s) is subject to the composition of the Selected Bidder/ SPV.

12

"Transfer Price" – Pak Rupees One only (PKR 1/-).

"Transfer Process" – The process for effecting the handover and transition of the Pipeline System to

ISGS (or a Transfer Operator), to be undertaken during the Transfer Period, in accordance with the

provisions of Clause 8.

"Transfer Requirements" – The meaning ascribed thereto in Clause 8.2.3.1.

"Transfer Transition Plan" – The meaning ascribed thereto in Clause 8.2.3.1.

"Transfer Warranty" – The Pipeline System will be transferred to ISGS or its nominee with a

warranty for the Design Life of the Pipeline System as provided in Clause 8.1.1.

"Transportation Agreement"– The Oil Transportation Agreement to be entered into between the

Operator and ISGS in connection with the Transportation of White Oil Products through the Pipeline

System.

“Transportation Agreement Direct Agreement” – The agreement between the Operator, ISGS and,

the Lender(s) relating to the rights of the Lenders under the Transportation Agreement.

“Transporter Event of Default”- As provided/ to be provided for in the Transportation Agreement.

“Variable Tariff” – The Variable Tariff, as provided/ to be provided for in the Transportation

Agreement.

"White Oil Product(s)" – HSD and MS, as per the White Oil Specifications provided for in Schedule

9 hereto.

"Year" – Each twelve (12) Month period commencing on 12:00 midnight on the 31st of December

and ending on 12:00 midnight the following 31st of December during the Term.

1.2 Rules of Interpretation

a) In this BOOT Contract, headings are only for convenience and shall be ignored in construing

this BOOT Contract and the singular includes the plural and vice versa;

b) References to Clauses, Sections and Schedules are, unless the context otherwise requires,

references to Clauses, Sections and Schedules to this BOOT Contract;

c) Except as expressly provided to the contrary herein, references to times and dates are, and

shall be construed to be, references to Pakistan standard time;

d) Except as expressly provided to the contrary herein, whenever a consent or approval is

required by one (1) Party from the other Party, such consent or approval shall not be

unreasonably withheld or delayed;

e) In carrying out its obligations and duties under this BOOT Contract, each Party shall have an

implied obligation of good faith;

f) A reference to any legislation or legislative provision includes any reference to statutory

modification or re-enactment of, amendment to or legislative provision substituted for, and

any subordinate legislation under, that legislation or legislative provision;

g) Reference to any document, instrument or agreement are references to that document,

instrument or agreement as amended, consolidated, supplemented, novated or replaced from

time to time; and

h) Except as expressly provided to the contrary herein, nothing herein shall be construed or

interpreted as limiting, diminishing or prejudicing in any way the rights of the Operator, to

claim any benefit provided under the Laws of Pakistan (whether in effect now or in the

future).

13

2. EFFECTIVE DATE, CONDITIONS SUBSEQUENT AND LONG STOP DATE

2.1 Effective Date and Long Stop Date

a) This BOOT Contract will become effective upon signing of both Parties (“Effective

Date”).

b) Simultaneously with the execution by the Parties of this BOOT Contract, the Operator

shall provide to ISGS the Implementation Performance Bond, the Sponsor Undertakings,

the Integrity Pact and all relevant incorporation documents relating to the Operator.

3. CONDITIONS SUBSEQUENT

3.1 Conditions Subsequent

The relevant Party shall ensure that the following conditions for which it is responsible

("Conditions Subsequent") have been satisfied on or before the Long Stop Date:

(a) Licencing and Tariff Notification

The procurement of the necessary Licenses from the Relevant Authorities, as well as the

notification of the Tariff Structure by OGRA, as required under the applicable Laws of

Pakistan.

(b) Term Sheet and Financing Documents

i. The delivery by the Operator to ISGS of a term sheet reflecting the proposed material terms

of the project financing, namely, the project cost, the financing amount, the tenor, the equity

commitments, the pricing, the financial charges payable to the financing parties and the

principal debt repayment schedule, as well as any step-in rights that may be required by the

relevant Lender (the “Term Sheet”). If ISGS has any reasonable objections to the Term

Sheet, it shall, within [●] ([●]) Days of receipt thereof, inform the Operator of its objections

in writing. In the event that ISGS does not raise any objection within the aforesaid [●] ([●])

Day period, ISGS shall be deemed to have no objection to the Term Sheet and the Operator

may proceed with the execution of the Financing Documents, at its own discretion.

ii. The achievement of Financial Closing by the Long Stop Date and delivery to ISGS of written

confirmation from the Lender(s) of the achievement of Financial Closing and the date on

which Financial Closing was achieved, which shall be the Financial Closing Date.

(c) Transportation Agreement

The execution of the Transportation Agreement by both Parties in accordance with the Laws

of Pakistan.

(d) Appointment of EPC Contractor

The appointment of the EPC Contractor and the notification by the Operator of the identity of

the EPC Contractor in accordance with the provisions of Clause 6.2.

(e) Execution of remaining Pipeline System Documents

The delivery by the Operator to ISGS of the following remaining Pipeline System Documents

duly executed by the parties thereto other than ISGS:

i. Direct Agreements (other than the BOOT Direct Agreement);

ii. Option Agreement; and

14

iii. Custody Transfer and Interface Agreement.

(f) Provision of the SBLC

ISGS shall provide the SBLC to the Operator in the form attached hereto as Schedule 6 in

accordance with the provisions of Clause 5.2.3.

(g) Required Consents

The procurement by the Operator of all Required Consents, including but not limited to the

consents and approvals mentioned in Schedule 10 hereto.

(h) Appointment of the O&M Contractor

The appointment of the O&M Contractor and the notification by the Operator of the identity of

the O&M Contractor in accordance with the provisions of Clause 7.2.

3.2 Waiver of Conditions Subsequent

The Conditions Subsequent in Clause 3.1 (a) – (e) and (g) – (h) are inserted for the benefit of

ISGS and may only be waived by ISGS. The Condition Subsequent in Clause 3.1 (f) is

inserted for the benefit of the Operator and may only be waived by the Operator.

3.3 Notice of Satisfaction/Waiver

Upon satisfaction or waiver of any of the Conditions Subsequent referred to above, the Party

for whose benefit such Condition Subsequent has been inserted shall promptly give notice to

the other Party, stating that the relevant Condition Subsequent have been satisfied or waived

(as applicable) and the date of such satisfaction or waiver (as applicable).

3.4 Long Stop Date

If any of the Conditions Subsequent set out in Clause 3.1 have not been satisfied, or waived in

accordance with Clause 3.2 by the Long Stop Date, this BOOT Contract may be terminated

by ISGS by issuing a Termination Notice in accordance with Clause 17.4.

3.5 Consequences of Termination

Except as set for the in Clause 21.9 or in relation to any other provision of this BOOT

Contract that is stated to survive termination, upon termination of this BOOT Contract under

Clause 3.4 above, the Parties shall be discharged from any further obligations or liabilities

under this BOOT Contract, without prejudice to any rights, obligations or liabilities that have

accrued up to the date of termination.

3.6 Obligation to Satisfy Conditions Subsequent

The Parties shall use its best endeavours to satisfy the Conditions Subsequent for which they

are responsible prior to the Long Stop Date.

3.7 Extension of Long Stop Date

If any of the Conditions Subsequent set out in Clause 3.1 have not been satisfied, or waived in

accordance with Clause 3.2 by the Long Stop Date, the Parties may by mutual consent agree

to extend the Long Stop Date, without prejudice to the Scheduled Commercial Operations

Date.

15

4. TERM AND COMPLETION

4.1 Term

This BOOT Contract shall become effective immediately upon the Effective Date, and shall,

unless terminated earlier in accordance with the terms of this BOOT Contract, continue in full

force and effect for the Term.

4.2 Programme and Scheduled Commercial Operations Date

(a) The Operator has prepared and submitted to ISGS a draft programme of work (covering all

the activities for the Implementation of the Pipeline System) setting out the sequence and the

dates by which the Operator intends to perform its obligations and achieve all relevant

milestones, which has been approved by ISGS and is attached as Schedule 4 (the

"Programme").

(b) The Programme, along with the Technical Requirements, shall govern the activities to be

performed by the Operator during the Implementation Period, including, but not limited to,

the following:

(i) the order in which the Operator shall carry out each activity, part and stage of the

Implementation of the Pipeline System, to meet the Technical Requirements as given

in Schedule 15;

(ii) timelines for the following:

A. execution of the Financing Documents (if not already signed);

B. execution of EPC Agreement (if not already signed);

C. execution of the O&M Agreement;

D. execution of each Direct Agreement;

E. execution of the Option Agreement (where applicable);

F. obtaining the Insurance Policies as per Clause 12;

G. obtaining the Required Consents, in accordance with Clause 5.1.7; and

H. based on the timelines for the above activities, the anticipated Financial Closing

Date, Construction Commencement Date, date for Mechanical Completion, date

for Pre-Commissioning, date for Commissioning and the Scheduled Commercial

Operations Date.

(iii) the estimated times when the Inspection Engineer, ISGS Consultant or ISGS's

Representative (as the case may be) will be required to provide approvals, consents

and issue certificates, in each case in accordance with this BOOT Contract.

(c) The Scheduled Commercial Operations Date shall be no later than twenty four (24) Months

from the Effective Date, unless extended in accordance with the terms of this BOOT

Contract.

(d) Without prejudice to the foregoing, efforts shall be made to synchronize the timelines for the

Programme in respect of all Sections of the Project in terms of and in accordance with the

provisions of this BOOT Contract as well as the Custody Transfer and Interface Agreement

16

and the Parties shall cooperate in good faith and utilise their best endeavours to make such

adjustments to the Programme as may be necessary in order to ensure synchronisation of the

Commissioning of all Sections of the Project.

4.3 Commercial Operations Date

(a) The Operator shall achieve the Commercial Operations Date no later than the Scheduled

Commercial Operations Date.

(b) The Scheduled Commercial Operations Date (as stated in the Programme), shall be extended

if there is a delay in the actions to be undertaken pursuant to the Programme as result of: (i)

ISGS’s failure to perform its obligations under the Pipeline System Documents including, but

not limited to, issuance of the SBLC, provision of the ROW Documents, signing of the Direct

Agreements and Option Agreement and issuance of certificates, approvals and consents in

accordance with the provisions of the relevant Pipeline System Documents; (ii) the

occurrence of a Force Majeure Event; or (iii) for any other reason expressly provided for in

this BOOT Contract.

(c) The Parties shall:

(i) utilize their best endeavours to meet the intermediate dates stated in the Programme;

and

(ii) provide evidence to the Inspection Engineer so that the Inspection Engineer may issue

the certificates contemplated in this BOOT Contract.

(d) Subject to successful completion of the Performance Tests, the Commercial Operations Date

shall be the Day, as stated in the Certificate of Acceptance issued by the Inspection Engineer.

5. IMPLEMENTATION OF THE PIPELINE SYSTEM

5.1 Responsibilities of the Operator

The Operator shall cause and be responsible for all activities that are required, directly and

indirectly, for the Implementation of the Pipeline System, Operations and maintenance of the

Pipeline System for the Term and transfer of the Pipeline System to ISGS or its nominee, as

per the terms of this BOOT Contract and in each case, in accordance with all applicable Laws

of Pakistan and the Pipeline System Documents, including but not limited to the following:

5.1.1. Construction and allied activities

The design, engineering, development, procurement, supply, erection, construction,

installation, completion, Testing, Commissioning, Performance Testing of the Pipeline

System, including but not limited to the following activities:

a) The completion of all engineering for the procurement, construction, completion and

operation of the Pipeline System;

b) The provision of management, co-ordination, engineering and supervision services for

of all aspects of the works relating to Implementation;

c) The performance of necessary site surveys and geo-hazard assessments and any other

engineering studies as required for the design and construction of the Pipeline System;

17

d) The preparation and issue of all necessary material take offs, bill of quantities, material

requisitions, material data sheets and other technical documents and evaluation for the

procurement of all necessary equipment including transport, handling and installation;

e) The procurement of all procurement items, including materials, equipment,

consumables, spare parts and any other items required for the construction and

completion of the Pipeline System;

f) The construction of the Pipeline System including but not limited to preparatory

works, clearing, grading, hauling and stringing, welding of pipes, backfilling,

construction of storage tanks and terminal piping, SCADA & Telecommunication

system, etc. in accordance with international and national codes and standards and as

required to ensure the integrity and functionality of the Pipeline System;

g) The completion of the Pipeline System, including pre-commissioning, Commissioning

and start-up and the performance of all tests on completion;

h) The clean-up of all sites and the ROW including the removal of all temporary

attachments, supports and the like as well as the removal of waste and debris and

restoration of all areas in accordance with the requirements and as requested by the

relevant Authorities, affected landowners and ISGS;

i) The provision of services and facilities to ISGS throughout the Implementation Period;

j) Operator’s engineering is subject to review and approval by ISGS and the Operator

shall co-ordinate the review of engineering documents prepared by the Operator with

ISGS, pursuant to which the Operator shall incorporate all relevant comments of ISGS

prior to the re-submission of the relevant documents;

k) To carry out surveillance of the Section of the Pipeline System and ensure its security

and worksite security shall be the sole responsibility of the Operator;

l) To provide all health and safety and environmental protection requirements and any

temporary equipment, fixtures and facilities as required for the execution of the works;

m) The coordination of all internal interface matters with other BOOT operators for the

Project and all external interface matters with external third parties, such as OMCs, in

relation to the Project;

n) Recognise all interface matters resulting from, or otherwise connected with, Project

interfaces and Connected Systems and prepare and issue all engineering documents

including for tie-ins and isolation points and the like;

o) Carrying out the Environmental Impact Assessment study(ies) as per the requirements

of the Relevant Authorities; and

p) The compilation, production and provision of all As-Built documentation of the

Pipeline System.

5.1.2. Financing

Arranging financing for the Implementation of the Pipeline System, notwithstanding any right

of ISGS to review the Term Sheet or otherwise.

18

5.1.3. Operation & Maintenance

Operations and maintenance of the Pipeline System including the operation and maintenance

of all construction sites and all construction equipment, including all health and safety and

environmental protection requirements.

5.1.4. Services and facilities

The provision of such services and facilities as ISGS may reasonably request throughout the

Implementation and Operations period.

5.1.5. Transfer of the Pipeline System

The Transfer of the Pipeline System to ISGS or its nominee at the end of the Term in

accordance with Clause 8.

5.1.6. Temporary ROW

Acquiring such ownership or usage rights of land as are necessary or sufficient to obtain land

for handling and movement of the construction equipment, stringing & welding of pipes,

temporary stores & offices etc. necessary access for the Implementation of the Pipeline

System, including access roads, [●] and [●], other than the Permanent ROW in relation to the

Route (“Temporary ROW”). The Operator shall, whenever required, facilitate ISGS and

provide such information as ISGS may request, from time to time, in order to secure or, where

necessary, modify the Permanent ROW. All costs incurred in relation to the Temporary ROW

shall be borne by the Operator.

5.1.7. Required Consents

Applying for and obtaining all Required Consents and maintaining the same for the Term and

liaise with all third parties and obtain all permits, licenses and approvals required from all

Authorities of Pakistan for the Implementation and the operation of the Pipeline System in

terms required under this BOOT Contract.

5.1.8. Upgrade of the Pipeline System

The Operator may upgrade the Pipeline System in accordance with the frequency and

requirements of the Design Capacity Schedule, in order to fulfill the requirements of the

Design Capacity of the Section for the given period. For the purposes of any upgrade, the

Operator shall be required to submit an upgrade programme to ISGS setting out the tasks and

timelines relating to the upgrade, including but not limited to all activities related to

engineering, procurement, construction, implementation, Mechanical Completion, Pre-

Commissioning, Testing and Commissioning, in the manner set out in Clause 6, which shall

be subject to the prior approval of ISGS. The Operator may hire a Contractor for the

purposes carrying out the upgrade of the Pipeline System, such Contractor being acceptable to

ISGS.

5.2 Responsibilities of ISGS

ISGS shall be responsible for the following activities in relation to the Implementation of the

Pipeline System in accordance with all applicable Laws of Pakistan and the Pipeline System

Documents:

19

5.2.1. Permanent ROW

Procuring all necessary land use and/or ownership rights in relation to the Route

(“Permanent ROW”) in accordance with the Programme and the requirements of the

Operator. The procurement of the Permanent ROW shall commence from the date agreed to

between the Parties in terms of the Programme and shall continue, as required, up to the stage

of Mechanical Completion. ISGS shall be responsible for all payments to be made in

connection with the procurement of the Permanent ROW in its own name along the Route in

accordance with the Laws of Pakistan. Upon acquiring the Permanent ROW in its own name,

ISGS shall grant the Operator a right to use the Permanent ROW in terms of the ROW

documents (“ROW Documents”) in respect of the Permanent ROW or each part thereof.

5.2.2. Facilitation in Relation to Required Consents

Where possible, facilitating the Operator in obtaining the issuance and renewal of the

Required Consents, provided the Operator shall make proper, timely and complete

applications for the Required Consents (and any renewal thereof) throughout the Term.

5.2.3. SBLC

Delivering the SBLC to the Operator by the Long Stop Date.

5.3 Authorised Representatives

In order to facilitate the efficient and timely implementation and progress of the Pipeline

System, and in order to ensure efficient communication between the Parties, each of the

Parties shall designate representative(s) to act as its contact liaison and coordinator to

progress the Project (each called a "Representative" and collectively the "Representatives").

Each Party shall notify the other Party in writing of the appointment of a Representative and

provide details including the name, designation and CNIC/passport number of each

Representative. The Representatives shall act as the principal contacts between the Parties and

shall use their best endeavours to resolve all issues which arise in respect of the

administration or performance of this BOOT Contract. Each Party shall notify the other Party

in writing of its decision to replace its Representative.

5.4 Operator’s Project Manager

On or before the Effective Date, the Operator shall, for a period of at least [five (5)] Years

from the Effective Date or until the [third (3rd)] anniversary of the Commercial Operations

Date (whichever period is longer), employ a senior manager for the Implementation and

Operations of the Pipeline System, who shall be entrusted by the Operator to inter alia

manage and execute the Implementation of the Pipeline System so that to ensure that all

milestones set out in the Programme (or otherwise agreed between the Parties) are

delivered in such a manner and within such time periods as prescribed by the Programme and

the BOOT Contract.

5.5 Appointment of Inspection Engineer

5.5.1. Not later than [●] Days after the Effective Date, the Operator shall appoint an Inspection

Engineer in consultation with, and subject to the approval of ISGS, (and shall by such date be

available to perform the duties of the Inspection Engineer provided herein and shall thereafter

remain appointed and available for as long as may be necessary to discharge the duties of the

Inspection Engineer under this BOOT Contract) to carry out the duties of the Inspection

Engineer specified in this BOOT Contract in accordance with the highest professional

standards and duty of care, both to the Operator and to ISGS. The Operator shall not replace

any Person appointed as the Inspection Engineer without the prior written consent of ISGS.

20

5.5.2. The terms and conditions of appointment of the Inspection Engineer shall oblige the

Inspection Engineer to act independently and impartially, on the basis of his expertise,

experience and knowledge in relation to all matters referred to him pursuant to this BOOT

Contract and in carrying out all other duties ascribed to him under this BOOT Contract. The

costs and remuneration to which the Inspection Engineer is entitled under his terms and

conditions of appointment shall be borne by the Operator. The terms of the appointment of

the Inspection Engineer shall clearly define the relationship of the Inspection Engineer to the

Operator as that of an independent contractor and not as an employee of the Operator.

5.6 Applications by the Operator for Required Consents

The Operator shall make or cause to be made, in a timely fashion, all applications (whether

initial or renewal applications) for the Required Consents to the appropriate Relevant

Authority and shall diligently pursue all such applications. The information supplied in the

applications shall be complete and accurate and shall satisfy the substantive and procedural

requirements of the applicable Laws of Pakistan.

5.7 Role of the ISGS Consultant

The ISGS Consultant, as appointed by ISGS, shall on behalf of ISGS, review, approve,

inspect (as the case may be) all detail design parameters, construction works, operation and

maintenance plans and procedures and activities performed or carried out by the Operator

throughout the Implementation Period of the BOOT Contract and verify that the same are in

accordance with the BOOT Contract including but not limited to, relevant standards,

Technical Requirements/specifications and the provisions of the Transportation Agreement,

as applicable, and in accordance with the provisions of Schedule 15 (Technical

Requirements).

6. CONSTRUCTION, TESTING AND COMMISSIONING OF THE PIPELINE

SYSTEM

6.1 Technical Requirements

6.1.1. The Operator shall develop, engineer, design, procure, supply, erect, construct, install,

conduct Testing and Commission the Pipeline System in all material respects in accordance

with the technical specifications relating to the Pipeline System set forth in Schedule 15 (the

"Technical Requirements").

6.1.2. Subject to Clause 5.2 (Responsibilities of ISGS) of this BOOT Contract, the Operator shall

work to advance the Implementation of the Pipeline System and to construct and Commission

the Pipeline System, and do all other things necessary so as to meet the Scheduled


6.1.3. The Operator shall keep ISGS apprised of the progress of the Implementation of the Pipeline

System and shall notify ISGS of any material deviations or anticipated material deviations

from the Scheduled Commercial Operations Date, promptly upon becoming aware of any

such deviation or anticipated deviation. The aforementioned notice shall identify:

6.1.3.1. the nature of the deviation;

6.1.3.2. the reason for the deviation;

6.1.3.3. the impact which such deviation has had, or in the reasonable opinion of the

Operator, is likely to have or will have, on its ability to achieve the Scheduled

Commercial Operations Date; and

21

6.1.3.4. the steps which the Operator has taken, is taking, and will take, to mitigate the

adverse consequences of such failure.

A deviation pursuant to the aforesaid provision shall become effective and enforceable only

upon receipt of prior consent of ISGS.

6.2 Appointment of EPC Contract; Amendments to EPC Contract

6.2.1 Prior to the date of execution of the EPC Contract, the Operator shall provide ISGS with a

certificate of a duly authorized officer of the Operator setting out name and nationality of the

EPC Contractor, no later than [thirty (30)] Days prior to the execution of any proposed EPC

Contract. ISGS shall then have the right, but not the obligation, to review the certificate, and

may notify the Operator prior to the proposed execution date that it objects to the proposed

EPC Contract because, in its sole discretion, the proposed EPC Contractor or its nationality is

adverse to the national security interests of Pakistan; provided, however, that, by not objecting

to the EPC Contract, ISGS shall not be construed as having approved of the EPC Contract nor

as in any way of having relieved the Operator of its obligations to complete Implementation

of the Pipeline System under this BOOT Contract.

6.2.2 The Operator shall provide ISGS with a certificate of a duly authorized officer of the Operator

setting out any proposed amendment (a “Proposed Material Amendment”) to the EPC

Contract that would result in (i) a change in the EPC Contractor, or (ii) a change in a major

piece of equipment as to either its company or country of manufacture, no later than [twenty-

one (21)] Days prior to execution thereof, setting forth the proposed changes. If ISGS does

not object to such certificate on or before the end of the [twenty-one (21)] Days period

provided for herein, as the case may be, ISGS shall be deemed not to have objected to the

Proposed Material Amendment.

6.3 Review of Agreements with Contractors

Prior to entering into any agreements with Contractors in relation to the Implementation of

the Pipeline System, the Operator shall submit to ISGS final drafts of the same (redacted to

remove pricing information) so as to permit ISGS with sufficient allowance of time, to

determine whether the Operator has secured to itself the means to provide and perform its

obligations under the BOOT Contract. ISGS shall perform such review promptly and without

undue delay. Notwithstanding anything to the contrary in this BOOT Contract, neither the

exercise nor the non-exercise (nor anything done or not done in the exercise or non-exercise)

by ISGS of any right to review the Operator’s agreements with Contractors shall (i) create or

impose any obligation or liability whatsoever on ISGS with respect to such agreements, (ii) in

any way affect or alter the Operator's obligations or liabilities under this BOOT Contract or

(iii) in any way affect or alter the obligations or liabilities of the Operator or the Contractors

under the relevant agreements.

6.4 Progress Reports

Throughout the Implementation Period, the Operator shall provide ISGS with a [Monthly]

report (each a "Progress Report") advising on the status of the development of each

component of the Pipeline System, including, where applicable, the Operator's estimate of the

period of any delay in delivery and acceptance of the relevant component relative to the

agreed timetable for commissioning under the Programme and any other material

developments relating to the construction of the relevant component. The first Progress

Report shall be provided by the Operator no later than the date which is [●] after the Effective

Date. The Operator shall also be responsible to provide any information that ISGS might need

in relation to the Pipeline System from time to time, within a reasonable period of time,

giving due consideration to the urgencies/ exigencies of the matter.

22

6.5 Monitoring of Pipeline System Construction

6.5.1. As and when requested in writing by ISGS, the Operator shall meet with ISGS’s

representatives at the facilities of the Operator (or such other place mutually acceptable to the

Parties) for the purpose of evaluating the progress of the construction of the Pipeline System.

Where applicable, the Operator shall procure that the Contractor shall permit a reasonable

number of ISGS’s Representatives (as determined by ISGS) to be present at the relevant

location for such purposes; provided that any such meetings shall occur during ordinary

working hours and shall not unduly obstruct the normal or orderly construction of the Pipeline

System or any part thereof.

6.5.2. Notwithstanding anything to the contrary in this BOOT Contract, neither the exercise nor the

non-exercise (nor anything done or not done in the exercise or non-exercise) by ISGS of any

right to monitor the construction of the Pipeline System or any component thereof, or any

right of inspection or attendance or otherwise (including the receipt and review of any plans,

drawings or instruction manuals relating to the Pipeline System or any component thereof) in

relation thereto shall (i) create or impose any obligation or liability whatsoever on ISGS with

respect to the construction of the Pipeline System or any such component, or (ii) in any way

affect or alter the Operator's obligations or liabilities under this BOOT Contract.

6.6 Notice of Tests and Trials; Reports

The Operator shall promptly notify ISGS of all tests and trials (including the relevant Pre-

Commissioning Tests and Performance Tests) of each component of the Pipeline System, its

equipment and parts and procure that the relevant Contractor permits ISGS and ISGS’s

representatives, at the cost and expense of Operator, to attend such tests and trials. The

Operator shall provide ISGS with copies of all reports it receives from each Contractor and its

sub-contractors in respect of such tests and trials.

6.7 Restriction on Usage

Other than in connection with the tests and trials or Operations or as otherwise permitted

under the Principal Documents, the Operator shall not, unless otherwise directed by ISGS,

direct or permit the Pipeline System to be used for any purpose until the Commercial

Operations Date or, if the Pipeline System is not accepted by ISGS, the date this BOOT

Contract terminates.

6.8 Additional Changes

The Operator shall approve and shall use all reasonable endeavors to procure that the relevant

Contractor undertakes to change or modify the construction or modification of any

component of the Pipeline System as may be approved in writing by ISGS; provided that any

such changes are compatible with the Pipeline System Design and Specifications and will not,

in the Operator's reasonable opinion, if made, cause it to be in breach of any of the

representations and warranties or obligations relating to the Pipeline System contained in this

BOOT Contract. All cost impacts incurred by the Operator and previously agreed to by ISGS

with respect to such changes shall be proportionately reflected by an adjustment in the Tariff,

as permitted by the Laws of Pakistan. In the event that such changes cause delay in the

construction of the relevant component of the Pipeline System, the Scheduled Commercial

Operations Date shall be extended by the period of delay directly resulting from such changes

and ISGS shall reimburse the Operator for any reasonable documented costs directly

attributable to such delay that were economically and efficiently incurred by the Operator.

23

6.9 Operator's Responsibility

Except as expressly provided otherwise in this BOOT Contract, the exercise by ISGS of any

rights it may have under this BOOT Contract in relation to the Pipeline System shall not

affect or alter (a) the responsibility of the Operator to deliver and operate the Pipeline System

in accordance with this BOOT Contract or (b) any other rights ISGS may have hereunder or

thereunder.

6.10 Testing and Commissioning

6.10.1. Pre-Commissioning Tests

(a) Once Mechanical Completion has been achieved and the Operator and the relevant

Contractor(s) are satisfied that the Pipeline System is in a fit state to conduct the Pre-

Commissioning Tests, the Operator shall request the Inspection Engineer to issue the

Certificate of Readiness for Pre-Commissioning.

(b) Within [●] Days of issuance of the Certificate of Readiness for Pre-Commissioning, the

Operator shall provide notification to ISGS, the ISGS Consultant and the Inspection Engineer

of its programme for carrying out the Pre-Commissioning Tests. ISGS shall, within [●] Days

of receipt of programme for the Pre-Commissioning Tests, confirm its own and the ISGS

Consultant’s attendance, or, alternatively, request an alternative date which shall be not more

than [●] Days after the date proposed by the Operator, provided that for each Day the Pre-

Commissioning Tests are delayed pursuant to ISGS’s request, the Scheduled Commercial

Operations Date shall be commensurately extended.

(c) Following the completion of the Pre-Commissioning Tests, if the Operator, the relevant

Contractor(s), the ISGS Consultant and the Inspection Engineer consider that the Pipeline

System has passed the Pre-Commissioning Tests, the Inspection Engineer shall issue a report

certifying that the Pre-Commissioning Tests have been passed ("Pre-Commissioning Test

Report") substantially in the form of Schedule 7 (Form of Pre-Commissioning Test Report)

for the Pipeline System stating that the Pipeline System has passed the Pre-Commissioning

Tests. The Pre-Commissioning Test Report shall be verified and, if appropriate, endorsed by

the ISGS Consultant. In the event of a dispute between the Independent Engineer and the

ISGS Consultant in relation to the results of the Pre-Commissioning Tests, such dispute will

be referred for resolution to an Expert in accordance with the provisions of Clause 18.2.

6.10.2. Performance Tests and Acceptance

(a) Once the Operator is satisfied that the Pipeline System is in fit state to conduct the

Performance Tests, it shall request the Inspection Engineer to issue the Certificate of

Readiness for Commissioning.

(b) Within [●] Days of issuance of the Certificate of Readiness for Commissioning, the Operator

shall provide notification to ISGS and the Inspection Engineer of its programme for carrying

out the Acceptance Test. ISGS shall, within [●] Days of receipt of programme for the

Acceptance Test, confirm its own and the ISGS Consultant’s attendance and the availability

of Line Fill for the Section at the Entry Point, or alternatively request an alternative date

which shall be not more than [●] Days after the date proposed by the Operator, provided that

for each Day the Acceptance Tests are delayed pursuant to ISGS’s request (“Testing Delay

Period”), the Scheduled Commercial Operations Date shall be extended for a period equal to

the Testing Delay Period (in addition to any period of delay under Clause 6.10.1 (b)),

provided the Certificate of Readiness for Commissioning has been issued. The Line Fill of the

Pipeline System shall be supplied by ISGS to the Operator, however, in the event that there is

24

any spillage or wastage of Line Fill by the Operator, any associated costs including

replacement or top up of Line Fill shall be borne by the Operator.

(c) Following the completion of the Performance Tests, if the Operator and the Inspection

Engineer consider that the Pipeline System has passed the Performance Tests, the Inspection

Engineer shall issue an acceptance certificate report ("Certificate of Acceptance")

substantially in the form of Schedule 8 (Form of Acceptance Certificate Report) for the

Pipeline System certifying that the Pipeline System has passed the Performance Tests and

providing therein the Commercial Operations Date. The Certificate of Acceptance shall be

verified and, if appropriate, endorsed by the ISGS Consultant. In the event of a dispute

between the Inspection Engineer and the ISGS Consultant in relation to the results of the

Performance Tests, such dispute will be referred for resolution to an Expert in accordance

with the provisions of Clause 18.2.

6.10.3. Interface Issues

Interface issues relating to Testing, Commissioning and achieving the Commercial Operations

Date in respect of the Pipeline System will be governed by the applicable provisions of the

Custody Transfer and Interface Agreement, as well as the Project Documents, which shall be

read in conjunction with this BOOT Contract and the Operator undertakes to take into

account all Interface issues during the Implementation Period under this BOOT Contract.

6.11 Failure to Pass Performance Tests

(a) Where the Performance Tests are completed but the Pipeline System does not meet

all of the required performance levels in accordance with the Technical

Requirements or where any of the Performance Tests are not completed within [●]

Days of the commencement of the Performance Tests (in each case, other than at the

request of ISGS or due to the occurrence of a Force Majeure Event), ISGS may elect

to either: subject to Clause 6.12, accept the Pipeline System ("Acceptance Option");

(b) require the Operator to make the necessary repairs or modifications to the Pipeline

System in order to meet the Technical Requirements ("Repair Option"); or

(c) reject the Pipeline System ("Rejection Option").

6.11.1 Acceptance Option

(a) Where ISGS elects to exercise the Acceptance Option, then ISGS shall accept the Pipeline

System as being Commissioned under the BOOT Contract and the Parties shall cause the

Certificate of Acceptance to be executed and delivered in accordance with Clause 6.10.2,

provided that the Tariff under the Transportation Agreement shall be subject to reductions in

accordance with Clause 6.11.1(b) below.

(b) Where ISGS elects to exercise the Acceptance Option in circumstances where the Pipeline

System does not meet the applicable Design Capacity but where the proven capacity of the

Pipeline System is greater than or equal to ninety per cent (90%) of the applicable Design

Capacity, then the Adjusted Annual Reserved Capacity as provided/ to be provided for under

the Transportation Agreement shall be reduced in accordance with the formula below:

25

T= R/A

Where:

T = Adjusted Annual Reserved Capacity

A = Annual Reserved Capacity of the Agreement Year

R = Actual Capacity for the Agreement Year

For the avoidance of doubt, such reduction in the Adjusted Annual Reserved Capacity shall

be in addition to the deductions provided/ to be provided for in Clause 7.5 of the

Transportation Agreement.

Where this Clause 6.11.1 applies, the Operator shall have the right (from time to time during

the Term) upon giving not less than seven (7) Days' notice to demonstrate to ISGS that the

Pipeline System is capable of meeting the required Design Capacity and, if required by ISGS,

the Performance Tests shall be re- performed to confirm the capability of the Pipeline System.

Where the Pipeline System satisfies the Performance Tests, the original Fixed Tariff under the

Transportation Agreement shall apply from the date the Pipeline System passes such

Performance Test.

6.11.2 Repair Option

Where ISGS elects to exercise the Repair Option, then ISGS shall promptly notify the

Operator of its decision and the Operator shall repair or modify (or shall procure the repair

and modification of) the Pipeline System in order to meet the Technical Requirements. When

such repairs or modifications are completed, the Operator shall notify ISGS in writing and the

Parties shall select a mutually acceptable date as soon as practicable thereafter on which the

Operator shall re-tender the Pipeline System for purposes of re-performing the Performance

Tests, which shall be performed as soon as practicable after the retendering. If the Pipeline

System meets the Technical Requirements, ISGS shall accept the Pipeline System as being

Commissioned and the Parties shall cause the Certificate of Acceptance to be executed and

delivered in accordance with Clause 6.10.2. If the Pipeline System does not meet the

Technical Requirements following completion of the relevant repairs or modifications, then

ISGS may again elect to exercise any of the Rejection Option, Acceptance Option or Repair

Option and the same procedures set forth in Clause 6.11 shall apply.

6.11.3 Rejection Option

Where ISGS rejects the Pipeline System the date of rejection being the "Rejection Date"),

then:

(a) no Tariff or other fees shall be payable by ISGS to the Operator under the Transportation

Agreement or this BOOT Contract;

(b) the Operator shall pay to ISGS liquidated damages in an amount not exceeding the LDs

Cap;

(c) the Operator shall promptly notify ISGS in writing of the amount of White Oil Product

remaining within the Pipeline System, if any, on the Rejection Date (the "Remaining

Product"). So long as the Pipeline System is then capable of doing so and without

breaching any applicable Law of Pakistan, ISGS shall have the right to have the Remaining

Product delivered to it at the Exit Point and/or Offtake Point and to recover reasonable

costs, if any, in doing so from the Operator; and

26

(d) ISGS’s rejection of the Pipeline System shall entitle it to terminate this BOOT Contract but

this shall not in any manner adversely affect ISGS’s rights under this BOOT Contract, but

for the avoidance of doubt ISGS’s sole right of recourse against the Operator as a

consequence of the termination of this BOOT Contract under this Clause 6.11.3 (other than

termination resulting from gross negligence or wilful misconduct by the Operator) shall be

to recover the liquidated damages referred to in Clause 6.11.3(b) and costs referred to in

Clause 6.11.3(c).

6.12 Delays in Implementation

(a) In the event that the Pipeline System does not successfully pass the Performance Tests within

a period of [●] Days from the Scheduled Commercial Operations Date (“Cancelling Date”),

then ISGS shall have the right within a further [●] Days of the Cancelling Date to:

(i) terminate this BOOT Contract by serving a Notice of Intent to Terminate in

accordance with the provisions of Clause 17.3.1 ; or

(ii) allow the Operator additional time for the Implementation of the Pipeline System and

agree in writing to a new date by which the Pipeline System shall be Commissioned

(“New Scheduled Commercial Operations Date”).

(b) If ISGS elects to terminate the BOOT Contract in accordance with Clause 6.12 (a) (i), then

such termination shall be treated as a termination triggered by an Operator Event of Default

and shall entitle ISGS to receive compensation from the Operator in an amount not exceeding

the LDs Cap.

(c) If ISGS elects to allow the Operator additional time for the Implementation of the Pipeline

System, then, in consideration of ISGS agreeing to a New Scheduled Commercial Operations

Date, the Operator shall pay to ISGS an amount calculated at the rate of [1.25 multiplied by

the Fixed Tariff] per Day for each Day commencing from the Day immediately after the

original Scheduled Commercial Operations Date until the Commercial Operations Date

(“LDs Cap”). Provided that, in the event that the Pipeline System is not Commissioned on or

before the New Scheduled Commercial Operations Date, then ISGS may exercise either of

the options available to it under Clause 6.11 above within [●] Days of the New Scheduled


(d) Any amounts payable under Clause 6.11 shall be invoiced and paid in accordance with the

provisions of Clause 20.

7. OPERATION AND MAINTENANCE OF PIPELINE FACILITY

7.1 Operation and Maintenance of the Pipeline System

The Operator shall operate and maintain the Pipeline System in accordance with the

provisions of the Pipeline System Documents. Subject to Clause 7.2, the Operator may

contract with the O&M Contractor to operate and maintain the Pipeline System; provided that

the appointment of the O&M Contractor by the Operator shall not relieve the Operator of any

of its obligations or potential liability regarding the Operations or maintenance of the Pipeline

System under the Principal Documents. The Operator shall, in cooperation with ISGS,

establish and issue to ISGS an operating manual, setting out detailed technical requirements

and operating procedures (consistent with Good Industry Practices, applicable standards and

Laws relating to the use of the Pipeline System by ISGS and such other matters as are

contemplated in this BOOT Contract (“O&M Manual”) before the Commercial Operations

Date.

27

7.2 O&M Agreement; O&M Contractor

No later than thirty (30) Days prior to execution of the O&M Agreement, the Operator shall

deliver to ISGS a certificate of a duly authorized officer of the Operator, describing any

proposed O&M Agreement and setting out the name and nationality of the O&M Contractor

and any major subcontractor. ISGS shall then have the right, but not the obligation, to review

the certificate, and may notify the Operator prior to the proposed execution date that it objects

to the O&M Contractor because, in its sole discretion, the appointment of the proposed O&M

Contractor would be adverse to the national security interests of Pakistan; provided, however,

that by not objecting to the O&M Agreement, ISGS shall not be construed as having

approved of the O&M Agreement nor as in any way having relieved the Operator of its

obligations to undertake the operations and maintenance of the Pipeline System in terms of

the Pipeline System Documents. If ISGS does not object to the certificate on or before the end

of the thirty (30) Days provided for herein, ISGS shall be deemed not to object to the O&M

Agreement.

7.3 Operation of the Pipeline System by the Operator

(a) In order to ensure smooth operation of the Pipeline System as provided/ to be provided for

under the Transportation Agreement, (i) the Operator agrees that it shall notify ISGS of the

first maintenance programme of annual planned works to be undertaken by the Operator in

respect of the Pipeline System [•] Days prior to the Commercial Operations Date and which

planned works shall not exceed a maximum of eleven (11) days for the respective annual

maintenance programme; and (ii) ISGS agrees to notify the Operator of the first annual

nomination estimate [eighty (80)] Days before the Commercial Operations Date of the

requirements for transportation and delivery of the Product to the Off Take Point and the Exit

Point, for each Month in the following Year.

(b) Notwithstanding anything contained above, the Operator shall be entitled to engage its own

personnel and operate the Pipeline System or, if the O&M Agreement has been terminated,

engage some or all of the personnel of the former O&M Contractor and operate the Pipeline

System, in either case with prior notice to ISGS.

8. TRANSFER

8.1 Scope of Transfer

8.1.1. Pipeline System

On the Transfer Date, the Operator shall deliver and transfer title of the Pipeline System, to

ISGS or its nominee (“Transfer Operator”) (through an asset transfer agreement), with the

“Transfer Warranty” such that, at the time of such transfer and as at the Expiry Date, the

Pipeline System shall be in a condition to permit such Pipeline System to operate for the

remainder of the Design Life, excluding normal wear and provided that all procedures as per

the O&M Manual are adhered to in the operations and maintenance of the Pipeline System

("Transfer Conditions"). Additional equipment acquired by the Operator from time to time

over the Term in respect of the Pipeline System shall be included and transferred to ISGS or

its nominee within the Transfer Price.

8.1.2. Training

Six (6) Months prior to the Expiry Date, or immediately upon but no later than fourteen (14)

Days from the date of issuance of the Notice of Intent to Terminate, the Operator shall at its

own cost arrange and implement training to be provided for the designated personnel of ISGS

28

or the Transfer Operator to ensure smooth handing over and transfer of the Pipeline System

on the Transfer Date.

8.1.3. Books and Records (financial and operational)

Sixty (60) Days prior to the Expiry Date or immediately upon but no later than seven (7) Days

from the date of issuance of the Notice of Intent to Terminate, the Operator shall provide to

ISGS all material information that is reasonably necessary to ensure efficient operation of the

Pipeline System and relating generally to the Pipeline System (including, but not limited to,

lists of assets, inventory records, lists of capital spares, financial and operational books and

records).

8.1.4. Know-How Transfers

Subject to the rights of any third party and proprietary rights permitted under this BOOT

Contract, the Operator shall transfer to ISGS rights to use all such Pipeline System related

intellectual property and all technical documents, including functional specifications,

operational procedures, and business processes charts, necessary in the opinion of the

Operator to support continued operation of the Pipeline System.

8.2 Transfer Upon Expiry

8.2.1. General Transfer Provisions

8.2.1.1. At the end of the Term, the Operator (or any assignee or nominee or transferee who

has assumed or otherwise acquired the rights, title and interests of the Operator in the

Project) shall transfer the Pipeline System to ISGS or its nominee (complete lock,

stock and barrel) in consideration of the Transfer Price in accordance with the transfer

provisions in this Clause 8.

8.2.1.2. The Operator shall coordinate with ISGS to effect, upon the Expiry Date, a transfer

and handover of the Pipeline System (through an asset transfer agreement) to ISGS

or, if directed by ISGS (in its reasonable discretion), to a Transfer Operator, in

accordance with the requirements of this Clause 8, including without limitation the

applicable Transfer Conditions and the Transfer Requirements with respect to the

Pipeline System.

8.2.2. Within thirty (30) Days after the occurrence of the Transfer Period Commencement Date, the

“Transfer Examiner” shall be appointed to inspect and examine the Pipeline System with

the highest professional standards and duty of care, both to the Operator and to ISGS. The

terms and conditions of appointment of the Transfer Examiner shall oblige the Transfer

Examiner to act independently and impartially, on the basis of his expertise, experience and

knowledge in relation to all matters referred to him pursuant to this BOOT Contract and in

carrying out his other duties ascribed to him under this BOOT Contract. The costs and

remuneration to which the Transfer Examiner is entitled under his terms and conditions of

appointment shall be borne by ISGS or its nominee.

8.2.2.1 Within [fifty (50)] Days after the occurrence of the Transfer Period Commencement

Date, the Operator agrees to perform a major inspection, along with the Transfer

Examiner and the representative of ISGS or its nominee of the Pipeline System in

order to determine the condition of the Pipeline System ("Transfer Inspection").

The Operator shall notify ISGS and the Transfer Examiner of its intention to carry out

the Inspection at least [thirty (30)] Days prior to the intended date therefor. The

Operator will thereafter notify ISGS of the Day(s) of the Transfer Inspection (the

"Scheduled Inspection Date"). If a representative of ISGS or the Transfer Examiner

cannot attend the Scheduled Inspection Date then the Parties and the Transfer

Examiner shall mutually agree such a reasonable day, which shall not be later than

29

fourteen (14) Days after the originally notified Scheduled Inspection Date. The

Transfer Examiner together with the representatives of the Operator and ISGS shall

make a joint inspection of the Pipeline System with a view to ISGS or the Transfer

Operator taking over the Pipeline System.

8.2.2.2. The Pipeline System shall be transferred to ISGS on the Expiry Date in accordance

with the terms of this BOOT Contract. The Operator shall ensure that the Pipeline

System are free of all encumbrances, liabilities, liens, mortgages or the like, other

than those approved by ISGS at the Expiry Date. The Operator agrees to fully

indemnify and hold ISGS or its nominees harmless against every and all claims,

damages, losses, demands, actions, judgments, liabilities, costs, fees and expenses

arising out of any obligation or liability of the Operator (whether by statute, contract

or otherwise) or any act or omission of the Operator provided any said claims,

damages, losses, demands, actions, judgments, liabilities, costs, fees and expenses,

etc. arise from the breach of the Operator’s obligations. In furtherance of the

foregoing, the Operator agrees to execute or cause to be executed by banks such

bonds, assurances and guarantees (in the form and substance acceptable to ISGS) in

order to secure the foregoing indemnity.

8.2.2.3. If the Transfer Inspection reveals that the Pipeline System requires remedial

maintenance to be carried out so that it is fit to continue to meet the Transfer

Conditions and regular operations, the Operator shall promptly carry out whatever

remedial maintenance is so required prior to the Expiry Date. The Operator shall

provide ISGS with such evidence and information as ISGS may reasonably request

regarding the implementation of the remedial maintenance referred to above. Within

[●] Days of receipt of such information, ISGS shall have the right to carry out another

Transfer Inspection to determine whether the Operator has carried out the remedial

maintenance as requested by ISGS.

8.2.2.4. If the Transfer Inspection reveals that the Pipeline System is not in accordance with

the Transfer Conditions and the Operator has not remedied the Pipeline System to

comply with the Transfer Conditions prior to the Expiry Date, ISGS shall be entitled

to claim such liquidated damages as determined by an Expert in terms of Clause 18.2.

8.2.3. Transfer Transition Plan

8.2.3.1 By no later than the Transfer Period Commencement Date, the Operator shall submit

to ISGS, for its review and comment, a draft comprehensive transition plan

("Transfer Transition Plan") outlining the particulars of all responsibilities and

obligations in relation to the transfer of the Pipeline System to ISGS or to a Transfer

Operator, as applicable. The Transfer Transition Plan shall deal with, inter alia, the

requirements for transfer of the Pipeline System ("Transfer Requirements").

8.2.3.2 ISGS shall provide its comments on the draft Transfer Transition Plan, or any

amendments thereof, no later than [three hundred (300)] Days prior to the Expiry

Date, and the Operator shall submit the final version of the Transfer Transition Plan,

reflecting such comments and/or amendments, to ISGS no later than [two hundred

and seventy (270)] Days prior to the Expiry Date.

8.2.4. Transfer Process; Timing

Promptly after delivery of the first draft of the Transfer Transition Plan (as contemplated by

Clause 8.2.3.1 (Transfer Transition Plan)) but in no event later than [two hundred and eighty

five (285)] Days prior to the Expiry Date, ISGS shall meet with the Operator to discuss the

orderly transfer of the Pipeline System to ISGS in accordance with the Transfer Requirements

30

(the "Transfer Kick-off Meeting"). The objective of the Transfer Kick-off Meeting will be to

agree on the detailed procedures and milestones for the Transfer Process.

8.2.5. Cooperation

The Parties agree to cooperate to the maximum extent possible throughout the Transfer

Process in order to achieve an orderly, smooth and efficient transfer of the Pipeline System

and the movable and immovable assets related to the Pipeline System to ISGS or a designated

Transfer Operator.

8.2.6. Transfer Operator

ISGS may, at any time during, or prior to the commencement of, the Transfer Period, may

appoint a Transfer Operator. In such event, ISGS shall promptly notify the Operator of such

appointment, specifying in the notice the name of the Transfer Operator and the individual

who will serve as the Transfer Operator's point of contact throughout the Transfer Process.

8.2.7. Continuing Contracts

8.2.7.1. The scope of transfer of contracts/agreements signed by the Operator with

business, trade, employees and labour covers contracts/agreements which include

periods after the Expiry Date ("Continuing Contracts"), but only to the extent

that the Operator’s obligations and liabilities thereunder will become due and

payable on or after the Expiry Date.

8.2.7.2. The Operator shall be responsible for all obligations and liabilities in respect of the

Continuing Contracts and shall indemnify and hold ISGS and each of its officers

and/or directors, representatives, agents or employees, harmless from and against

any and all losses, damages, expenses or liabilities due, or arising out of,

Continuing Contracts.

8.2.7.3. The Operator shall be responsible for clearing all liabilities/payments concerning

the Continuing Contracts that have accrued and are payable on or before the

Expiry Date.

8.2.7.4. The Operator shall obtain prior written consent of ISGS for all Continuing

Contracts before entering into such Continuing Contracts.

8.3 Transfer Upon Early Termination

8.3.1 Subject to Clause 8.2.7 of this BOOT Contract, in the event that this BOOT Contract is

terminated prior to the Expiry Date, in accordance with Clause 17 (Termination), the Operator

and ISGS shall, within fifteen (15) Days from the date of Notice of Intent to Terminate,

prepare a report setting forth a list of completed works as of the effective date of such

termination which fall under the scope of the Pipeline System, together with the value of the

completed works along with the relevant supporting documentation in respect of costs

incurred by the Operator.

8.3.2 Upon preparation of the said report, ISGS shall pay such amounts to the Operator as

determined pursuant to Clause 8.4 of this BOOT Contract for all Pipeline System related

infrastructure.

8.4 Compensation Upon Early Termination

8.4.1 Operator Event of Default. In the event ISGS terminates this BOOT Contract pursuant to

Clause [17.1] (Termination for Default) as a result of an Operator Event of Default, the

Operator shall transfer the Pipeline System to ISGS or its nominee and ISGS or its nominee

31

shall acquire the Pipeline System. Simultaneously ISGS shall pay to the Operator the

Compensation Amount set forth in Row 1 of Schedule 11 of this BOOT Contract.

8.4.2 ISGS Event of Default. In the event the Operator terminates this BOOT Contract pursuant to

Clause [17.1(b)(i) through (ix)] (Termination for Default) as a result of an ISGS Event of

Default, the Operator shall transfer the Pipeline System to ISGS or its nominee and, in such

event, the Pipeline System shall be transferred to ISGS or its nominee and ISGS shall

simultaneously pay the Operator the Compensation Amount set forth in Row 2 of Schedule

11 of this BOOT Contract.

8.4.3 Termination Following a Force Majeure Event. If, following a Force Majeure Event, ISGS or

the Operator terminates this BOOT Contract in terms of Clause 17.2, the Operator shall

transfer the Pipeline System to ISGS or its nominee and, in such event, the Pipeline System

shall be transferred to ISGS or its nominee and ISGS shall simultaneously pay the Operator

the Compensation Amount set forth in Row 3 of Schedule 11 of this BOOT Contract.

8.4.4 Termination by ISGS under Clause 17.3 (Voluntary Termination). In the event the ISGS

terminates this BOOT Contract pursuant to Clause 17.3 (Voluntary Termination), the

Operator shall transfer the Pipeline System to ISGS or its nominee and ISGS shall

simultaneously pay the Operator the Compensation Amount set forth in Row 4 of Schedule

11 of this BOOT Contract.

8.5 Provisions Applicable to Transfers Generally

8.5.1 Transfer Costs and Expenses

ISGS shall be responsible for bearing all costs and expenses of transfer, including stamp

duties, legal, appraisal and other charges and the fees of the Transfer Examiner. ISGS shall at

its own cost obtain or effect all consents and take such other action as may be necessary for

the transfers contemplated in this Clause 8 (Transfer).

8.5.2 Conditions of Transfer

8.5.2.1 Not later than the Transfer Date, the Operator shall, at its sole cost and expense,

provide to ISGS a report by a reputable and qualified engineer or engineering

consulting firm, approved by ISGS, certifying that as of the date of the report the

Pipeline System meet the Design Life and are in the condition and state of repair and

maintenance required by this BOOT Contract (including, without limitation, spare

parts inventory of the Pipeline System adequate for two years Operation), together

with such inspection reports, tests and other data reasonably adequate to substantiate

the conclusions reached in such report or, if such is not the case, a list of any

discrepancies and/or deficiencies in such condition and a remediation plan and a cost

estimate of the work required to remedy such discrepancies and/or deficiencies as

soon as reasonably practicable and in any event prior to the Transfer Date. The

Operator, at its sole cost and expense, shall cause any such discrepancies and/or

deficiencies to be fully corrected in accordance with the engineer’s remediation plan,

if any, contained in the report prior to the date of transfer.

8.5.2.2 Any transfer of the Pipeline System to ISGS shall be free and clear of all Liens

(except as are contained and maintained in accordance with the terms of this BOOT

Contract and all applicable Laws of Pakistan, and have been notified to ISGS) and

free and clear of all Environmental Liabilities and any Hazardous Materials.

32

9. ROUTE AND ROUTE MODIFICATION

9.1 Route

9.1.1 The Pipeline System shall be constructed along the Route which is attached hereto as

Schedule 3. The costs associated with any increase in the length of the Section along the

Route up to five per cent (5%) of the given length of the Section shall be borne by the

Operator and the Operator shall not be entitled to any revision of the Tariff under the

Transportation Agreement as the result of such increase in the length of the Section.

9.2 Route Modification

In the event that any modifications are required to be made at any stage to the Route,

including any increase in length of the Section in excess of five per cent (5%), the proposed

modifications to the Route shall be agreed to by mutual consent between the Parties, subject

to necessary approvals, pursuant to which this modified route shall become the “Route” for

the purposes of this BOOT Contract. Any increase in the Route above five per cent (5%) of

the length of the Section shall be considered an additional modification only to the extent of

any increase beyond five per cent (5%) and shall be addressed in accordance with the

provisions of Clause 6.8 (Additional Modifications).

10. REPRESENTATIONS AND WARRANTIES

10.1 ISGS’s Representations and Warranties

ISGS represents and warrants to the Operator that:

10.1.1 ISGS is duly incorporated, existing and in good standing under the Laws of Pakistan and has

all requisite power and authority to conduct its business and to execute, to deliver and to

perform its obligations under this BOOT Contract; and

10.1.2 this BOOT Contract has been duly authorised, executed and delivered by it and constitutes the

legal, valid and binding obligation of it.

10.2 Operator’s Representations and Warranties

10.2.1 The Operator represents and warrants to ISGS that:

10.2.2 neither the Operator nor any of its Contractors or any Affiliate or subsidiary, or any director,

officer, employee, or agent, of the Operator is a Person that is, or is owned or controlled by

Persons that are: (a) the subject of any sanctions administered or enforced by the United

Nations Security Council, the Government of Pakistan, or any other relevant sanctions

authority (collectively, "Sanctions"), or (b) located, organized or resident in a country or

territory that is, or whose government or government-owned entities are, the subject of

Sanctions;

10.2.3 the Operator is duly incorporated, existing and in good standing under the Laws of Pakistan

and has all requisite power and authority to conduct its business and to execute, to deliver and

to perform its obligations under this BOOT Contract;

10.2.4 there are no proceedings pending, in any jurisdiction or at any forum against the Operator or

any Contractor, that threaten the liquidation of any Contractor or the Operator, or that could

materially adversely affect the performance by the Operator of its obligations under this

BOOT Contract;

33

10.2.5 this BOOT Contract has been duly authorised, executed and delivered by it and constitutes the

legal, valid and binding obligation of it;

10.2.6 on or before the Commercial Operations Date, the Operator has procured and maintains all

Required Consents;

10.2.7 the execution and delivery of, and performance of its obligations under this BOOT Contract

by the Operator does not and will not constitute a violation of any statute, judgment, order,

decree or regulation or rule of any court, governmental authority or arbitrator of competent

jurisdiction applicable or relating to it, its assets or its businesses; and

10.2.8 it has adequate resources, expertise and personnel to comply with its obligations under this

BOOT Contract for the Implementation of the Pipeline System and the Operations of the

Pipeline System in terms required under this BOOT Contract.

11. LIABILITY

11.1 Limitation of Liability

11.1.1 Neither Party shall be liable to the other Party in contract, tort, warranty, strict liability, or any

other legal theory for any indirect, consequential, incidental, punitive, or exemplary damages.

Neither Party shall have any liability to the other Party except pursuant to, or for breach of

this BOOT Contract or the Transportation Agreement; provided, however, that this provision

is not intended to constitute a waiver of any rights of one (1) Party against the other with

regard to matters unrelated to this BOOT Contract or to any activity not contemplated by this

BOOT Contract.

11.1.2 The limitation of liability provided for in Clause 11.1.1 shall not:

(c) apply in relation to any provision of the BOOT Contract which expressly provides

for an indemnity; or

(d) affect any provision of this BOOT Contract which provides for a Party to make a

payment to the other Party (including payment of liquidated damages); or

(e) where such liability was caused by the gross negligence or wilful misconduct of the

relevant Party.

11.2 Indemnification for Fines and Penalties

Any fines or other penalties incurred by the Operator for non-compliance with applicable

Laws of Pakistan or other governmental directions issued pursuant thereto and in accordance

therewith or the Required Consents shall not be reimbursed by ISGS but shall be the sole

responsibility of the Operator.

12. INSURANCE

12.1 Insurance Coverage

Subject to the relevant insurances being available on commercially reasonable terms in the

international insurance market, the Operator shall obtain and maintain in effect such insurance

policies and coverage as is required by the Financing Documents and Good Industry Practice

in the amounts and on the terms set forth herein and therein and during the periods mentioned

therein; provided, however, that such amounts and terms may be changed from time to time

with the prior written consent of the other Party, which consent shall not be unreasonably

withheld. Nothing shall prevent the Operator, at its sole cost and expense, from procuring

insurance coverages in addition to those specified herein. In that regard, the Operator shall

apprise ISGS of the insurance requirements proposed by the financing parties (including draft

documentation with appropriate explanations thereto).

34

12.2 Application of Proceeds

Subject to the Financing Documents, for the Term, the Operator shall apply any and all

insurance proceeds received by it under any physical damage insurance in connection with the

damage to or loss of the Pipeline System, toward the repair, reconstruction or replacement of

the Pipeline System to the condition existing immediately prior to the event giving rise to

such insurance claim and proceeds.

12.3 Insurers

All the Insurance obtained and maintained by the Operator in accordance with this Clause 12

(Insurance) shall be with creditworthy insurers reasonably acceptable to the other Party and

the financing parties [with a PACRA LT rating or a rating of JCR-VIS Credit Rating Co. Ltd.

of at least A].

13. ASSIGNMENT AND SECURITY

13.1 Assignment

No assignment or transfer by a Party of this BOOT Contract or such Party’s rights or

obligations hereunder shall be effective without the prior written consent of the other Party,

except as provided in Clause 13.2 (Creation of Security).

13.2 Creation of Security

13.2.1. Notwithstanding the provisions of Clause 13.1 (Assignment), for the purpose of financing the

Pipeline System for the Section, the Operator may, with the prior approval of ISGS, assign

pursuant to the Financing Documents to, or create a security interest in favour of, the Lenders

in the Operator’s rights and interests under or pursuant to:

(a) this BOOT Contract;

(b) the Pipeline System Documents, or any agreement or document included within or

contemplated by the Pipeline System Documents;

(c) the Pipeline System;

(d) the present and future movable and immovable property of the Operator;

(e) the present and future revenues or any of the rights or assets or actionable claims of

or debts owed to, the Operator; and

(f) any other present or future interest, right, property or asset of the Operator of any

kind and wherever situated.

13.2.2. The Operator may also create security interests in its rights and assets in favour of financial

institutions acting as short-term lenders providing working capital or other short-term credit

facilities by the Operator, provided such security interests on the Pipeline System shall be (i)

limited to the working capital requirements for the Pipeline System and (ii) subject to an

undertaking furnished by the short-term lenders in favour of and delivered to ISGS stipulating

vacation of such security interest on Pipeline System ipso facto upon payment of

Compensation Amounts by ISGS to the Lenders (and to the Operator where applicable) in

connection with the transfer of the Pipeline System to ISGS or its nominee.

35

14. LIQUIDATED DAMAGES

14.1 Liquidated Damages for Transfer Condition

14.1.1. In the event that the Pipeline System does not conform with the Transfer Conditions at the

time of Transfer, the Operator shall pay liquidated damages as determined by an Expert in

terms of Clause 18.2.

14.1.2. Liquidated damages payable under this BOOT Contract shall be paid by the Operator in

accordance with Clause 20 (Invoicing and Payment Procedure). Failing such payment by the

Operator, the Liquidated Damages due to ISGS shall be drawn from the Implementation

Performance Bond, or deducted from any sums due to the Operator.

14.1.3. Payment of liquidated damages shall be to the exclusion of any other remedy of ISGS in

respect of delays under this BOOT Contract but shall not relieve the Operator from its overall

obligations of the Pipeline System or from any of its other obligations, risks, or liabilities

under this BOOT Contract.

14.1.4. The liquidated damages provided for in this BOOT Contract shall be payable in all events

without set-off or counter claim by the Operator and the Parties hereby agree that the amounts

thereof are reasonable and have been mutually agreed as the pre-determined loss of ISGS in

the circumstances.

15. GUARANTEES

15.1 Implementation Performance Bond

15.1.1. The Operator shall provide to ISGS an unconditional, irrevocable and on-demand

Implementation Performance Bond on or prior to the Effective Date, in the form attached

herewith as Schedule 12 (Form of Implementation Performance Bond), issued by a bank

having a Minimum Credit Rating at all times, for proper performance by the Operator of its

obligations, in the amount of PKR 500,000,000 (Pak Rupees Five Hundred Million only) in

relation to its obligations for Implementation under this BOOT Contract.

15.1.2. The Implementation Performance Bond shall only be cashed by ISGS in the event the

Operator fails to pay any liquidated damages due from the Operator in terms of this BOOT

Contract. The Implementation Performance Bond shall remain in full force and effect until

the Commercial Operations Date, provided that where the original Scheduled Commercial

Operations Date (before any extension) has been extended (i) for delay or default on the part

of ISGS under the Pipeline System Documents, the cost associated with extending the

Performance Bond shall be borne by ISGS; and (ii) due to a Force Majeure Event, the cost

associated with extending the Implementation Performance Bond shall be borne by equally by

ISGS and the Operator.

15.1.3. In the event that ISGS draws against the Implementation Performance Bond and it is

subsequently determined that ISGS was not entitled to do so, then ISGS shall repay such

amount to the Operator, together with all costs and expenses incurred by the Operator in

connection with such drawing (including reasonable attorneys’ fees), plus interest thereon

from the date of the draw through the date of repayment at the Delayed Payment Rate.

15.2 Operations Performance Bond

15.2.1. The Operator shall provide to ISGS an unconditional, irrevocable and on-demand Operations

Performance Bond on or prior to the Effective Date, in the form attached herewith as

Schedule 13 (Form of Operations Performance Bond), issued by a bank having a Minimum

Credit Rating at all times, for proper performance by the Operator of its obligations, in the

amount of PKR 500,000,000 (Pak Rupees Five Hundred Million only) in relation to its

obligations for Operations under this BOOT Contract and the Transportation Agreement.

36

15.2.2. The Operations Performance Bond shall only be cashed by ISGS in the event the Operator

fails to pay any amounts due from the Operator in terms of this BOOT Contract and/or the

Transportation Agreement. The Operations Performance Bond shall remain in full force and

effect from the Commercial Operations Date until the end of the Term, provided that where

there is (i) any delay or default on the part of ISGS under the Pipeline System Documents, the

cost associated with extending the Operations Performance Bond shall be borne by ISGS; and

(ii) due to a Force Majeure Event, the cost associated with extending the Operations

Performance Bond shall be borne by equally by ISGS and the Operator.

15.2.3. In the event that ISGS draws against the Operations Performance Bond and it is subsequently

determined that ISGS was not entitled to do so, then ISGS shall repay such amount to the

Operator, together with all costs and expenses incurred by the Operator in connection with

such drawing (including reasonable attorneys’ fees), plus interest thereon from the date of the

draw through the date of repayment at the Delayed Payment Rate.

15.3 SBLC

15.3.1. ISGS shall provide to the Operator the SBLC which shall be an unconditional, irrevocable

and on-demand SBLC on or prior to the Commercial Operations Date, in the form attached

herewith as Schedule 6 (Form of SBLC), for proper performance by ISGS of its obligations,

in the amount of PKR [●] (the "SBLC").

15.3.2. The SBLC shall only be drawn on by the Operator in the manner as provided for in the

Transportation Agreement.

15.3.3. In the event that the Operator draws against the SBLC and it is subsequently determined that

the Operator was not entitled to do so, then the Operator shall repay such amount to ISGS,

together with all costs and expenses incurred by ISGS in connection with such drawing

(including reasonable attorneys’ fees), plus interest thereon from the date of the draw through

the date of repayment at the Delayed Payment Rate.

16. FORCE MAJEURE

16.1 Definition of Force Majeure

A “Force Majeure Event” shall mean any event or circumstance or combination of events or

circumstances in the nature of natural disasters, beyond the reasonable control of a Party

which (or the effects of which), materially and adversely affects the performance by that

Party of its obligations under or pursuant to the Principal Documents; provided, however,

that, such event or circumstances, or combination of events or circumstances, not constitute a

“Force Majeure Event” hereunder to the extent that it could have been prevented, or

overcome, or remedied by the affected Party through the exercise of such diligence and

reasonable care as would be exercised by a prudent person under similar circumstances, it

being understood and agreed that reasonable care includes acts or activities to protect a

Party’s facilities or operations from a casualty or other reasonably foreseeable event, which

acts or activities are reasonable in the light of likelihood of such event, the probable effect of

such event if it should occur, and the likely efficacy of the protection measures. Without

limiting the generality of the foregoing, “Force Majeure Events” hereunder shall include each

of the following events and circumstances, but only to the extent that each satisfied the above

requirements:

16.1.1. events beyond the reasonable control of the affected Party (each an “Other Force Majeure

Event”), including, but not limited to:

16.1.1.1. lightning, fire, earthquake, tsunami, flood, storm, cyclone, typhoon, or tornado; or

16.1.1.2. any Lapse of Consent that shall have existed for thirty (30) consecutive Days or

more; or

37

16.1.1.3. any strike, work-to-rule, go-slow, or analogous labour action that is not politically

motivated and is not widespread or nationwide; or

16.1.1.4. fire, explosion, chemical contamination, radioactive contamination, or ionizing

radiation;

16.1.1.5. Change in Law;

16.1.1.6. epidemic or plague; or

16.1.1.7. any event of force majeure under transportation agreements between ISGS and

OMCs in relation to the Pipeline System.

16.1.2. Force Majeure Events shall expressly not include the following conditions:

16.1.2.1 late delivery or interruption in the delivery of supplies, materials, machinery,

equipment materials, spare parts or consumables except where the same is caused

by a Force Majeure Event;

16.1.2.2 a delay in the performance of any Contractors not caused by a Force Majeure; or

16.1.2.3 breakdown in machinery or equipment;

16.1.2.4 normal wear and tear or random flaws in supplies, materials and equipment or

breakdown in equipment; or

16.2.1.1. theft.

16.2 Notification Obligations

16.2.1. If, by reason of a Force Majeure Event, a Party is wholly or partially unable to carry out its

obligations under this BOOT Contract, the affected Party shall (i) give the other Party notice

of the Force Majeure Event as soon as practicable, but in any event, no later than the later of

forty eight (48) hours after the affected Party becomes aware of the occurrence of the Force

Majeure Event or six (6) hours after the resumption of any means of providing notice between

the Operator and ISGS, and (ii) give the other Party a second notice, describing the Force

Majeure Event in reasonable detail and, to the extent which can reasonably be determined at

the time of such notice, providing a preliminary evaluation of the obligations affected, a

preliminary estimate of the period of time that the affected Party shall be unable to perform

the obligations and other relevant matters as soon as practicable, but in any event, no later

than seven (7) Days after the initial notice of the occurrence of the Force Majeure Event is

given by the affected Party or six hours after the resumption of any means of providing such

notice between the Parties. When appropriate, or when reasonably requested so to do by the

other Party, the affected Party shall provide further notices to the other Party, more fully

describing the Force Majeure Event and its cause(s) and providing or updating information

relating to the efforts of the affected Party to avoid and/or to mitigate the effect(s) thereof and

estimates, to the extent practicable, of the time that the affected Party reasonably expects it

shall be unable to carry out any of its affected obligations due to the Force Majeure Event.

16.2.2. The affected Party shall also provide notice to the other Party of (i) the cessation of the Force

Majeure Event; (ii) (ii) the affected Party’s ability to recommence performance of its

obligations under this BOOT Contract by reason of the cessation of the Force Majeure Event

and the effects thereof, which notice shall be given as soon as possible, but in any event, no

later than seven (7) Days after the occurrence of each of the clauses (i) and (ii) above.

16.2.3. Failure by the affected Party to give written notice of a Force Majeure Event to the other

Party within the forty-eight (48) hour period or six (6) hour period required under Clause

16.2.1 shall not prevent the affected Party from giving such notice at a later time; provided,

however, that in such case, the affected Party shall not be excused pursuant to Clause 16.4

(Delay Caused by Force Majeure) for any failure or delay in complying with its obligations

under or pursuant to this BOOT Contract until such notice has been given. If such notice is

given within the forty-eight (48) hour period or six (6) hour period required by Clause 16.2.1,

the affected Party shall be excused for such failure or delay pursuant to Clause 16.4 (Delay

38

Caused by Force Majeure) from the date of commencement of the relevant Force Majeure

Event.

16.3 Duty to Mitigate

The affected Party shall use all reasonable efforts (or shall ensure that its Contractors use all

reasonable efforts) to mitigate the effects of a Force Majeure Event, including, but not limited

to, the payment of reasonable sums of money by or on behalf of the affected Party (or such

Contractor), which sums are reasonable in light of the likely efficacy of the mitigation

measures.

16.4 Delay Caused by Force Majeure

Upon the occurrence, and during the continuance of a Force Majeure Event and the effects

thereof, (i) the affected Party shall not be liable for any failure or delay in performing its

obligations (other than an obligation to make a payment) under or pursuant to this BOOT

Contract, and (ii) any performance deadline that the affected Party is obligated to meet under

this BOOT Contract shall be extended; provided, however, that no relief, including without

limitation, extension of performance deadlines, shall be granted to the affected Party pursuant

to this Clause 16.4 (Delay Caused by Force Majeure) to the extent that such failure or delay

would nevertheless have been experienced by the affected Party had the Force Majeure Event

not occurred or that such failure or delay was caused by the failure of the affected Party to

comply with the required obligations. The Party which is not affected by the Force Majeure

Event, shall not bear any liability for any loss or expense suffered by the affected Party as a

result of a Force Majeure Event, except that, notwithstanding the foregoing:

17. TERMINATION

17.1 Termination for Default

17.1.1. Operator Event of Default; Termination by ISGS. Each of the following events shall be an

event of default by the Operator (each a " Operator Event of Default"), which, if not cured

within the time period permitted (if any) to cure, shall give rise to the right on the part of

ISGS to terminate this BOOT Contract pursuant to Clause 17.4 (Termination Notices);

provided, however, that no such event shall be an Operator Event of Default if it results from

a breach or default of any of the Pipeline System Documents by a party thereto (other than the

Operator) or if it occurs as a result of a Force Majeure Event:

17.1.1.1. failure of the Operator to achieve the Commercial Operations Date within [●]

Days after the Scheduled Commercial Operations Date;

17.1.1.2. other than the assignments to and by the Lenders contemplated under Clause 13.2

(Creation of Security), the assignment or transfer of the Operator’s rights or

obligations in the assets identified in Clause 13.2 without obtaining the prior

written consent of ISGS or the transfer, conveyance, loss, or relinquishment of the

Operator’s right to own and/or operate the Pipeline System or any material part

thereof or to occupy the Route, to any Person (other than ISGS) without the prior

written approval of ISGS;

17.1.1.3. except for the purpose of amalgamation or reconstruction (provided, that such

amalgamation or reconstruction does not affect the ability of the amalgamated or

reconstructed entity, as the case may be, to perform its obligations under this

BOOT Contract and further provided that such amalgamation has been agreed to

by ISGS), the occurrence of any of the following events: (a) the passing of a

resolution by the shareholders of the Operator for the winding up of the Operator;

(b) the voluntary filing by the Operator of a petition for bankruptcy, moratorium,

or other similar relief; (c) the appointment of a provisional liquidator in a

proceeding for the winding up of the Operator after notice to the Operator and due

hearing, which appointment has not been set aside or stayed within ninety (90)

Days of such appointment; (d) the making by a court with jurisdiction over the

39

Operator of an order winding up the Operator that is not stayed or reversed by a

court of competent authority within ninety (90) Days;

17.1.1.4. the Operator gives or offers to give (directly or indirectly) to any person any bribe,

gift, gratuity, commission or any other thing of value, as an inducement or reward:

(a) for doing or forbearing to do any action in relation to this BOOT Contract, or

(b) for showing or forbearing to show favour or disfavour to any person in relation

to this BOOT Contract,

17.1.1.5. any statement, representation, or warranty by the Operator in this BOOT Contract

proving to have been incorrect, in any material respect, when made or when

deemed to have been made, and such failure or incorrect statement, representation,

or warranty having a material adverse effect on the Operator’s ability to perform

its obligations under this BOOT Contract or on the obligations or liabilities of

ISGS under this BOOT Contract;

17.1.1.6. if the Operator has repudiated this BOOT Contract or abandons its obligations

under this BOOT Contract;

17.1.1.7. in the event of the termination of the Transportation Agreement and/ or any other

Pipeline System Document, due to a breach of or non-performance by the

Operator of any of its obligations under this BOOT Contract;

17.1.1.8. if the Operator fails to furnish, keep valid and maintain in full effect the

Performance Bonds in accordance with this BOOT Contract and the

Transportation Agreement;

17.1.1.9. if there is breach of the Sponsor(s) Undertaking(s);

17.1.1.10. If the Operator fails to maintain Required Consents for the Implementation and the

operation of the Pipeline System in terms required under this BOOT Contract;

17.1.1.11. if the Operator fails to maintain the required insurances;

17.1.1.12. exercise by the Lenders of their remedies under the Financing Documents with

respect to either the Pipeline System, its assets or the pledged Ordinary Share

Capital, such that either the Operator or its management are removed by the

Lenders from control of the Pipeline System or the Operator and the failure by the

Lenders to deliver an Election Notice within two hundred and forty (240) Days

thereafter;

17.1.1.13. any material breach or material default by the Operator of or under this BOOT

Contract that is not remedied within ninety (90) Days after notice from ISGS,

stating that a material breach of such agreement has occurred that could result in

the termination of this BOOT Contract and identifying the material breach in

question in reasonable detail; or

17.1.1.14. the occurrence of a Transporter Event of Default, under the Transportation

Agreement.

17.1.2. ISGS Event of Default; Termination by the Operator. Each of the following events shall be

deemed an event of default by ISGS (each an "ISGS Event of Default"), which, if not cured

within the time period permitted (if any) to cure, shall give rise to the right on the part of the

Operator to terminate this BOOT Contract pursuant to Clause 17.4 (Termination Notices);

provided, however, that no such event shall be an ISGS Event of Default if it results from a

breach or default of any of the Pipeline System Documents by the Operator or if it occurs as a

result of an Other Force Majeure Event:

17.1.2.1 any material breach or default by ISGS of or under this BOOT Contract that is not

remedied within thirty (30) Days after notice from the Operator to ISGS stating that

a material breach of this BOOT Contract has occurred that could result in the

termination of this BOOT Contract, identifying the material breach in reasonable

detail and demanding remedy thereof;

17.1.2.2 the occurrence of any of the following events:

40

(A) any proceeding being validly instituted under the laws of Pakistan for

the dissolution of ISGS that is not stayed or suspended;

(B) the passing of a resolution for the dissolution or winding up of ISGS;

(C) the voluntary filing by ISGS of a winding up petition;

(D) the appointment of a provisional liquidator in a proceeding for the winding

up of ISGS after notice to ISGS and due hearing, which appointment has

not been set aside or stayed; or

(E) the making by a court with jurisdiction over ISGS of an order winding up

ISGS that is not stayed or reversed by a court of competent jurisdiction;

17.1.2.3 any statement, representation or warranty made by ISGS under any of the Pipeline

System Documents proving to have been incorrect, in any material respect, when

made or when reaffirmed and such incorrect statement, representation or warranty

having a material adverse effect on ISGS’s ability to perform its obligations under

any of the Pipeline System Documents or having a material adverse effect on the

rights or obligations of the Operator under the Pipeline System Documents;

17.2 Termination as a result of Force Majeure Event

If, as a result of a Force Majeure Event, the Operator is prevented from performing its

obligations under this BOOT Contract for a period which exceeds or can with reasonable

certainty be foreseen to exceed a period of [six (06)] continuous Months, either the Operator

or ISGS may terminate this BOOT Contract by giving a Termination Notice to the other of

not less than [two (02)] Months.

17.3 Voluntary Termination

ISGS shall have the right at any time after the tenth (10th) anniversary of the Commercial

Operations Date to serve a Notice of Intent to Terminate on the Operator which shall take

effect no earlier than twelve (12) Months following the date of issue of the Notice of Intent to

Terminate or, if later, on the date specified therein.

17.4 Termination Notices

17.4.1. Upon the occurrence of an ISGS Event of Default or an Operator Event of Default, as the case

may be, that is not cured within the applicable cure period, if any, the non-defaulting Party may,

at its option, initiate termination of this BOOT Contract by delivering a notice (a "Notice of

Intent to Terminate") of its intent to terminate this BOOT Contract to the defaulting Party. The

Notice of Intent to Terminate shall specify in reasonable detail the Operator Event of Default or

the ISGS Event of Default, as the case may be, giving rise to such notice.

17.4.2. Following delivery of the Notice of Intent to Terminate, the Party in default may continue to

undertake efforts to cure the Operator Event of Default or the ISGS Event of Default, as the

case may be, for a period of thirty (30) Days commencing on the delivery date of such notice

in the case of a failure by either Party to make payments, or for a period of ninety (90) Days

commencing on the delivery of such notice in the case of any other Operator Event of Default

or ISGS Event of Default, as the case may be, (or such longer period as the Parties may

mutually agree) and if the default is cured at any time prior to the delivery of a Termination

Notice in accordance with Clause 17.4, then the non-defaulting Party shall have no right to

41

terminate this BOOT Contract in respect of such cured Operator Event of Default or ISGS

Event of Default, as the case may be.

17.4.3. Upon expiration of any cure period from the Notice of Intent to Terminate, and unless the

Parties shall have otherwise agreed or unless the Operator Event of Default or ISGS Event of

Default, as the case may be, giving rise to the Notice of Intent to Terminate shall have been

remedied, the Party having given the Notice of Intent to Terminate ISGS or the Operator, as

the case may be, may terminate this BOOT Contract by delivering a Termination Notice to

the other Party whereupon, this BOOT Contract shall terminate on the date (the

"Termination Date") specified in the Termination Notice, which date shall not be earlier than

the date that is ten (10) Business Days following the date on which the Termination Notice is

delivered to the other Party or later than thirty (30) Days following the date of such delivery

of the Termination Notice to the other Party, [and the provisions of Clause 17.5 (Obligations

Upon Termination) shall apply.

17.5 Obligations Upon Termination

Upon expiration or earlier termination of this BOOT Contract, the Parties shall have no

further obligations (including but not limited to payments of any compensation payments

accruing prior to termination) hereunder except for obligations that arose prior to or arise

upon such expiration or termination and obligations that survive such expiration or

termination pursuant to this BOOT Contract.

17.6 Other Remedies

The exercise of the right of a Party to terminate this BOOT Contract, as provided herein, does

not preclude the Party from exercising other remedies that are provided herein or are available

at law. Remedies are cumulative, and the exercise of, or failure to exercise, one or more

remedy by a Party shall not limit or preclude the exercise of, or constitute a waiver of, other

remedies by that Party; provided, that the remedies and Compensation Amounts are the

exclusive remedies available to each Party with respect to any termination of this BOOT

Contract as a consequence of the events described therein.

18. RESOLUTION OF DISPUTES

18.1 Resolution by Parties

18.1.1. If a dispute arises in respect of this BOOT Contract, a Party may inform the other Party of

such a dispute under this Clause 18 (Resolution of Parties) by written notice ("Dispute

Notice").

18.1.2. The representatives of the Parties shall promptly meet on a without prejudice basis to

endeavour to resolve the dispute:

18.1.2.1 the Representatives of the Parties within 10 Business Days of the date of the

Dispute Notice; and

18.1.2.2 failing resolution under paragraph (i), the Chief Executive Officer of each Party,

within a further 10 Business Days.

18.1.3. The Parties shall act in good faith and use reasonable endeavours to resolve the dispute in all

meetings conducted in accordance with this Clause 18 (Resolution by Parties).

18.2 Expert

18.2.1. In the event that the Parties are unable to resolve a Dispute in accordance with Clause 18.1

(Resolution by Parties) within the time periods set forth therein, then either Party, in

accordance with this Clause 18.2 (Expert), may refer the Dispute to an Expert for

consideration of the Dispute and to obtain a determination from the Expert in the matter.

Notwithstanding the foregoing, either Party may require that any Dispute be referred for

42

resolution to arbitration pursuant to Clause 18.3 (Arbitration) without first referring it to an

Expert.

18.2.2. The Party initiating submission of the Dispute to the Expert shall provide the other Party with

a notice stating that it is submitting the Dispute to an Expert and nominating the person/entity

it proposes to be the Expert, who shall:

(i) in respect of matters or disputes of a commercial or financial nature, as mutually

agreed between the Parties, and in the event the Parties fail to agree within seven (7)

Days from any Party’s notice to the other for appointment of the Expert, the

following order of precedence shall apply:

a. [C/F Expert 1];

b. [C/F Expert 2]; or

c. [C/F Expert 3]; and

(ii) in respect of matters or disputes of a technical nature, as mutually agreed between the

Parties, and in the event the Parties fail to agree within seven (7) Days from any

Party’s notice to the other for appointment of the Expert, the following order of

precedence shall apply:

a. [Technical Expert 1];

b. [Technical Expert 2]; or

c. [Technical Expert 3].

18.2.3. Within ten (10) Days after appointment of an Expert, the Party seeking consideration of

dispute by an Expert shall submit the following to the Expert and the other Party:

(i) a description of the Dispute;

(ii) a statement of the initiating Party’s position, and whether a hearing is requested by

such Party; and

(iii) copies of records.

18.2.4. Within ten (10) Days of the date that a Party has submitted the materials described in Clause

above, the other Party may submit to the Expert, with copies to the other Party:

(i) a description of the Dispute;

(ii) a statement of such Party’s position and, if not already requested, whether a hearing is

requested by such Party; and

(iii) copies of any relevant record.

18.2.5. The Expert shall consider any such information submitted by the Parties and any additional

information submitted by either Party at a later date but, in such event, the other Party shall be

concurrently provided with such information and shall be allowed reasonable opportunity to

respond thereto.

18.2.6. Each Party shall have access to the other Party’s relevant records and be entitled to receive

copies of the records submitted by the other Party.

18.2.7. Each Party shall designate one person knowledgeable about the issues in Dispute who shall be

available to the Expert to answer questions and provide any additional information requested

by the Expert. Except for such person, a Party shall not be required to, but may, provide oral

statements or presentations to the Expert or make any particular individuals available to the

Expert. If a hearing is requested by either Party, the Expert shall nominate a time and place

for a hearing of the Parties on the Dispute.

43

18.2.8. The Expert shall provide a determination within thirty (30) Days after the ten (10) Day

response period provided in Clause above has expired, or within such further time as is agreed

in writing by the Parties. If the Expert’s determination is given within such thirty (30) Day

period, as may be extended by the Parties, the Parties may review and discuss the

determination with each other in good faith for a period of ten (10) Days following delivery

of the determination before proceeding with any other actions.

18.2.9. The proceedings shall be without prejudice to any Party, and any evidence given or

statements made in the course of this process may not be used against a Party in any other

proceedings. The process shall not be regarded as an arbitration and the laws relating to

commercial arbitration shall not apply.

18.2.10. Unless the Parties agree in writing at the time the Expert is selected that the determination of

the Expert shall be binding, the determination of the Expert shall not be binding; provided,

however, that if arbitration proceedings in accordance with Clause 18.3 (Arbitration) have not

been commenced within seventy-five (75) Days from the date the Expert’s determination was

received by the Parties in accordance with Clause 18.2 the Expert’s determination shall be

final and binding on the Parties, and any right of such Parties to resort to arbitral, judicial or

other proceedings in relation to the subject matter of the determination shall stand waived to

the fullest extent permitted by law.

18.2.11. If a Party does not accept the determination of the Expert with respect to the Dispute (where

such determination is not binding or if the Expert has not provided a determination within the

time period specified, any Party may initiate arbitration proceedings in accordance with

Clause 18.3.

18.2.12. The costs of engaging an Expert shall be borne by the Party in default, however in the event

that the determination does not relate to a default by a Party, then the cost of engaging the

Expert shall be borne equally by the Parties and notwithstanding the same, each Party shall

bear its respective costs in preparing materials for, and making presentations to, the Expert.

18.3 Arbitration

18.3.1. Any Dispute arising out of or in connection with this BOOT Contract that has not been

resolved following the procedures set forth in Clause 18.1 (Resolution by Parties) or Clause

18.2 (Expert) has been required by a Party to be referred to arbitration, shall be settled by

arbitration in accordance with the provisions of the Arbitration Act, 1940 (or any re-

enactment thereof) ("Arbitration Act") by two (2) arbitrators, one to be appointed by each of

the Parties, which together shall appoint an umpire, whose decision shall be final in the

matter. The arbitration proceedings shall be conducted, and the award shall be rendered, in the

English language. Unless otherwise provided for in the award, each Party shall bear its own

costs of arbitration and where there are shared costs, the same shall be borne equally between

the Parties.

18.3.2. The venue and seat of arbitration shall be Islamabad, Pakistan.

18.4 Performance to Continue During Dispute

Notwithstanding any reference of a Dispute under Clause 18 the Parties shall (to the extent

practicable) continue to perform their respective obligations under the Agreement, unless they

mutually agree otherwise.

44

19. TAXES

19.1 Taxes Applicable to the Operator

All present and future Taxes applicable to the Operator, the Pipeline System and the

Operator’s other assets shall be paid by the Operator as and when required under the Laws of

Pakistan.

ISGS will apply applicable Taxes, comprising of withholding taxes while making payment of

Tariff to the Operator.

It is clarified that Tariff is inclusive of all Taxes but exclusive of Sales Tax applicable on

Tariff charged by Operator to the extent it is adjustable for ISGS.

It is further clarified that any liability on account of Tax imposed on ISGS arising in respect

of Operator’s obligations under the relevant Laws not properly discharged, shall be

recoverable from the Operator along with any litigation cost suffered by ISGS to defend its

position.

19.2 Taxes Applicable to ISGS

All present and future Taxes applicable to ISGS arising from or in connection with its rights

and obligations under this BOOT Contract shall be paid by ISGS as and when required under

the Laws of Pakistan. Provided that Tax on account of income tax applicable on income/

turnover shall be limited to tax on account of income tax applicable on the ISGS Margin.

It is clarified that Tariff is inclusive of all Taxes but exclusive of Sales Tax applicable on

Tariff charged by Operator to the extent it is adjustable for ISGS.

20. INVOICING; PAYMENT AND DISPUTED AMOUNTS

20.1 Invoicing

20.1.1. With respect to any payments due from ISGS to the Operator or from the Operator to ISGS

under this BOOT Contract, the Party seeking payment shall issue an invoice to the other Party

as soon as reasonable after such payment falling due, detailing amounts due in terms of this

BOOT Contract in respect of the relevant period.

20.1.2. Payment against each correct and complete invoice issued by the Operator or ISGS, as

applicable, shall be made within thirty (30) Days of receipt by the Operator or ISGS, as

applicable, of the relevant invoice (each a “Payment Date”).

20.1.3. All payments to the Operator or ISGS, as applicable, shall be made in PKR to the designated

accounts of the Operator or ISGS, as applicable in Pakistan.

20.1.4. Any amount under any invoice that is not paid in accordance with this Clause 20 (Invoicing

and Payments) on or before the Payment Date shall accrue interest at the Delayed Payment

Rate calculated from, but excluding, the relevant Payment Date to, and including, the Day on

which such payment is made.

20.2 Payments and Disputed Amounts

20.2.1. If either Party disputes any amount in an invoice (“Invoice Dispute”), it shall:

(i) make payment of the amount not in dispute in accordance with Clause 20.1;

45

(ii) notify the other Party, within twenty-eight (28) Days of receipt of such invoice of the

nature of the dispute and the disputed amount(s) (“Invoice Dispute Notice”).

20.2.2. ISGS and Operator shall, within seven (7) Days of the Invoice Dispute Notice, furnish to the

other copies of all records and documents relevant to the Invoice Dispute.

20.2.3. If the Invoice Dispute is not resolved after furnishing the records and documents, as per

Clause 20.2.2, the Parties shall resolve the Invoice Dispute through the mechanism set out in

Clause 18 (Dispute Resolution).

20.2.4. Upon resolution of Invoice Dispute, the relevant Party shall make payment within five (05)

Days of the resolution of the dispute.

21. MISCELLANEOUS PROVISIONS

21.1 Notices

21.1.1. Except as otherwise expressly provided in this BOOT Contract, all notices or other

communications to be given or made hereunder shall be in writing, shall be addressed for the

attention of the persons indicated herein below, and shall either be delivered personally or

sent by courier, registered or certified mail or facsimile. The addresses for service of the

Parties and their respective facsimile numbers shall be:

21.2.1.1 If to ISGS:

Inter State Gas (Private) Limited

8th Floor, Petroleum House,

Ataturk Avenue

G-5/2, Islamabad

Pakistan

Attn: Managing Director, ISGS

21.2.1.2 If to the Operator:

[●]

21.1.2. All notices shall be deemed delivered (i) when presented personally, (ii) if received on a

Business Day for the receiving Party, when transmitted by facsimile to the receiving Party’s

facsimile number specified hereabove and, if received on a Day that this is not a Business

Day for the receiving Party, on the first Business Day of the receiving Party following the

date transmitted by facsimile to the receiving Party’s facsimile number specified hereabove,

(iii) two (2) Days after being delivered to a courier for overnight delivery, addressed to the

receiving Party, at the address indicated hereabove or, (iv) five (5) Days after being deposited

in a regularly maintained receptacle for the postal service in Pakistan, , registered or certified,

return receipt requested, addressed to the receiving Party, at the address specified hereabove

(or such other address as the receiving Party may have specified by written notice delivered to

the delivering Party at its address or facsimile number specified above). Any notice given by

facsimile shall be confirmed in writing delivered personally or sent by registered or certified

mail, but the failure to provide such confirmation shall not void or invalidate the original

notice if it is in fact received by the Party to which it is addressed.

21.1.3. Any Party may by notice change the addressee and/or address to which such notices and

communications to it are to be delivered or mailed.

46

21.2 Accounts and Reports

21.2.1. Appointment of Auditors

The Operator shall, at its own cost, make arrangements with respect to the installation and

operation of an accounting and cost control system and for the appointment, as auditors, of a

reputed firm of independent chartered accountants acceptable to ISGS.

21.2.2. Right of Inspection

The Operator shall, during the Term, permit representatives of ISGS at any time to enter upon

and inspect the Pipeline System.

21.2.3. Periodic Reports

21.2.3.1 The Operator shall, as soon as available but in any event within ten (10) Days of

filing, furnish to ISGS two (2) copies of all documents filed in compliance with

the requirements of the Companies Act, 2017 as amended or superseded from time

to time.

21.2.3.2 The Operator shall, as soon as available, furnish to ISGS: (A) a report on any

factors materially and adversely affecting, or that might materially and adversely

affect, the Project or the Operator’s business and operations; (B) bi-annual audit

reports from either A.F. Ferguson & Co., Ernst & Young Ford Rhodes Sidat

Hyder, or KPMG Taseer Hadi & Co; and (C) copies of the Monthly progress

reports and any other construction related reports given to ISGS in the form and

substance satisfactory to ISGS, which shall include but not be limited to, reports

on inventory of spare parts and Project Ancillary System used or required by the

Operator for the design, construction, operation, and maintenance of the Pipeline

System.

21.2.4. Reporting of Changes

The Operator shall not without the prior written consent of ISGS make any (i) material

change in its Memorandum and Articles of Association; (ii) change in its fiscal year; (iii)

change in the constitution of its Board of Directors; (iv) change in its Chief Executive Officer,

and (v) registration of a transfer of Ordinary Share Capital to any Person who thereby

becomes a registered holder of greater than five (5) percent of the issued Ordinary Share

Capital, or of a transfer of Ordinary Share Capital to or from a Person or entity who,

immediately prior to such transfer, held greater than five (5) percent of the issued Ordinary

Share Capital.

21.2.5. Information Regarding Statutory Notice/Winding Up Proceedings

21.2.6.1 The Operator shall, within seven (7) Days of receipt thereof, provide a copy of any

notice that the Operator may be served under the relevant provisions of the

Companies Act, 2017 (or any re-enactment thereof) by any of the Lenders or its

creditors.

21.2.6.2 The Operator shall provide to ISGS all information in respect of any further actions

taken by the Lenders or its creditors following any notice under the relevant

provisions of the Companies Act, 2017 (or any re-enactment thereof).

21.3 Fossil and Archaeological Finds

All fossils, coins, articles of value or antiquity, and structures and other remains or things of

geological or archaeological interest discovered on or along the Route shall (as between the

Parties) be the property of ISGS. The Operator shall take reasonable precautions to prevent its

staff, labour or other Persons from removing or damaging any such article or thing. The

47

Operator shall, immediately upon discovery of such article or thing, notify ISGS’s

Representative, who may issue instructions for dealing with it. ISGS shall be responsible for

any coordination / liaison with a third party for evacuation of such above mentioned articles

or things.

21.4 Governing Law and Jurisdiction

This BOOT Contract and the rights and obligations of the Parties hereunder shall be governed

by and construed in accordance with the laws of Pakistan. The competent Courts of Pakistan

shall have jurisdiction in all matters relating to the BOOT Contract.

21.5 Amendment

This BOOT Contract can be amended only by agreement between the Parties in writing,

executed by a duly authorized representative of each of the Parties. No amendment of the

Transportation Agreement shall increase the liability of ISGS under this BOOT Contract,

unless such amendment is approved in writing by ISGS.

21.6 Third Parties

This BOOT Contract is intended solely for the benefit of the Parties, and nothing in this

BOOT Contract shall be construed to create any rights in, duty to, standard of care to, or any

liability to, any Person not a Party.

21.7 No Waiver

21.7.1. No waiver by either Party of any default or defaults by the other Party in the performance of

any of the provisions of this BOOT Contract:

21.7.1.1 shall operate or be construed as a waiver of any other or further default whether of a

like or different character; or

21.7.1.2 shall be effective unless in writing duly executed by a duly authorized representative

of such Party.

21.7.2. Neither the failure by either Party to insist on any occasion upon the performance of the

terms, conditions and provisions of this BOOT Contract, nor time or other indulgence granted

by one (1) Party to the other, shall act as a waiver of such breach or acceptance of any

variation or the relinquishment of any such right or any other right hereunder, which shall

remain in full force and effect.

21.8 Relationship of the Parties

This BOOT Contract shall not be interpreted or construed to create an association, joint

venture, or partnership between the Parties or to impose any partnership obligation or liability

upon either Party. Neither Party shall have any right, power or authority to enter into any

agreement or undertaking for, or act on behalf of, or to act as or be an agent or representative

of, or to otherwise bind the other Party.

21.9 Survival

Cancellation, expiration or earlier termination of this BOOT Contract shall not relieve the

Parties of obligations that, by their nature, should survive such cancellation, expiration or

termination, including, without limitation, warranties, remedies, promises of indemnity and

confidentiality.

21.10 Language

The language for the purpose of administering this BOOT Contract shall be English.

48

21.11 Entirety

Upon the occurrence of the Effective Date, this BOOT Contract shall be the full and final

expression of the agreement between the Parties on the matters contained herein. All written

or oral representations, understandings, offers or other communications of every kind between

the Parties in relation to the Pipeline System prior to this BOOT Contract are hereby

abrogated and withdrawn.

21.12 Confidentiality

21.12.1. Each of the Parties and their Contractors, subcontractors, consultants and agents and each of

their respective successors and permitted assigns shall hold in confidence all documents and

other information, whether technical or commercial, supplied to it by or on behalf of the

other Party, relating to the design, construction, insurance, operation, maintenance, transfer,

management and financing of the Pipeline System and/or the Project, and all information and

documents obtained by it in the course of any inspection performed in accordance with the

terms of this BOOT Contract , and shall not, without the consent of the other Party, save as

required by law or appropriate regulatory authorities, prospective lenders to, or investors in

the Operator and their professional advisers, publish or otherwise disclose or use the same

for its own purposes otherwise than as may be required to perform its obligations under this

BOOT Contract . Notwithstanding the above, nothing herein contained shall preclude the

use of provisions similar to those contained in this BOOT Contract and the other Pipeline

System Documents referred to herein and in agreements prepared and issued or to be

prepared and issued in connection with other projects by ISGS.

21.12.2. The provisions of paragraph (a) hereinabove shall not apply to:

21.12.2.1 any information in the public domain otherwise than by breach of this BOOT

Contract; and/or

21.12.2.2 information in the possession of the receiving Party thereof before divulgence as

aforesaid, and which was not obtained under any obligation of confidentiality.

21.13 Successors and Assigns

This BOOT Contract shall be binding upon, and inure to the benefit of, the Parties and their

respective successors and permitted assigns.

21.14 No Liability for Review

No review, non-objection or approval by ISGS or any Relevant Authority of any agreement,

document, instrument, drawing, specifications or design proposed by the Operator shall

relieve the Operator from any liability that it would otherwise have had for its negligence in

the preparation of such agreement, document, instrument, drawing, specification or design or

failure to comply with the applicable Laws of Pakistan with respect thereto, or to satisfy the

Operator’s obligations under this BOOT Contract, nor shall ISGS be liable to the Operator or

any other Person by reason of its review and approval of an agreement, document, instrument,

drawing, specification, or design.

21.15 Affirmation/ Integrity Pact

21.15.1. The Operator has as of the Effective Date provided the Integrity Pact as per Schedule 5 and

further hereby declares that it has not obtained or induced the procurement of this BOOT

Contract, the Transportation Agreement or any contract, consent, approval, right, interest,

privilege or other obligation or benefit related to this BOOT Contract or the Pipeline System

from ISGS or any Public-Sector Entity through any corrupt or illegal business practice.

21.15.2. Without limiting the generality of the foregoing, the Operator represents and warrants that it

has fully disclosed in writing all commissions, brokerage and other fees, and other

49

compensation (other than compensation paid to employees of the Operator for services

provided) paid or payable to any Person within or outside Pakistan in relation to the Pipeline

System and has not given or agreed to give and shall not give, or agree to give to any Person

within or outside Pakistan either directly or indirectly through any natural or juridical Person,

including its Affiliates, employees, agents, associates, brokers, consultants, officers, directors,

promoters, shareholders, sponsors or subsidiaries (and any of their employees, agents,

associates, brokers, consultants, officers, directors, promoters, shareholders or sponsors), any

commission, gratification, bribe, finder’s fee or kickback, whether described as consultation

fee or otherwise, with the object of obtaining or inducing the procurement of this BOOT

Contract or the Transportation Agreement or any contract, right, interest, privilege or other

obligation or benefit related to this BOOT Contract or the Pipeline System from ISGS or any

Public-Sector Entity, except that which has been expressly declared pursuant hereto.

21.15.3. The Operator accepts full responsibility and strict liability for making any false declaration,

not making full disclosure, misrepresenting facts or taking any action likely to defeat the

purpose of the representations and warranties contained herein and the declarations required

hereby. It agrees that any contract, consent, approval, right, interest, privilege or other

obligation or benefit obtained or procured as aforesaid shall, without prejudice to any other

right and remedies available to ISGS, shall be voidable and without legal effect at the option

of ISGS.

21.15.4. Notwithstanding any rights and remedies that are available to and may be exercised by ISGS

in this regard, the Operator agrees to indemnify ISGS for any loss or damage incurred by it on

account of its corrupt business practices and further pay compensation to ISGS in an amount

equivalent to ten (10) times the amount of any commission, gratification, bribe, finder’s fee or

kickback paid or given by the Operator (either directly or indirectly through any natural or

juridical Person, including its Affiliates, employees, agents, associates, brokers, consultants,

officers, directors, promoters, shareholders, sponsors or subsidiaries (and any of their

employees, agents, associates, brokers, consultants, officers, directors, promoters,

shareholders or sponsors), as aforesaid for the purpose of obtaining or inducing the

procurement of this BOOT Contract or the Transportation Agreement or any contract,

consent, approval, right, interest, privilege or other obligation or benefit related to this BOOT

Contract or the Project from ISGS or any Public-Sector Entity.

21.16 Counterparts

This BOOT Contract may be executed in two (2) or more original copies and each such copy

may be executed by each of the Parties in separate counterparts, each of which copies when

executed and delivered by the Parties, shall constitute an original, but all of which shall

together constitute one (1) and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

50

IN WITNESS WHEREOF, the Parties have entered into this BOOT Contract as of the date first

hereinabove written.

INTER STATE GAS SYSTEMS (PRIVATE) LIMITED

____________________________________________

By:

Title: [Managing Director]

Witness: _____________________________________

Name: _______________________________________

OPERATOR

__________________________________

By:

Title: [Chief Executive Officer]

Witness: _____________________________________

Name: _______________________________________

51

SCHEDULE 1 – PIPELINE SYSTEM DESIGN AND SPECIFICATIONS 5

5 To be added as per Design of selected bidder for the Section.

52

SCHEDULE 2 – DESIGN CAPACITY SCHEDULE AND ANNUAL RESERVED CAPACITY

DESIGN CAPACITY:

[•]6

ANNUAL RESERVED CAPACITY:

1-5 Years 6-10 Years 11-15 years

Annual Reserved Capacity 1.5 MMTPA 2 MMTPA 2.5 MMTPA

6 As per the design submitted by the Selected Bidder.

53

SCHEDULE 3 – ROUTE7

7 To be added as per the relevant Section.

54

SCHEDULE 4 – PROGRAMME8

8 Will be incorporated as submitted by successful bidder in its Technical Bid.

55

SCHEDULE 5 – INTEGRITY PACT

(INTEGRITY PACT)

DECLARATION OF FEES, COMMISSION AND BROKERAGE ETC.

Contract No. Dated

Contract Value:

Contract Title:

by and between:

Inter State Gas Systems (Pvt.) Limited

And

[●]

[●] hereby declares that it has not obtained or induced the procurement of any contract, right, interest,

privilege or other obligation or benefit from Government of Pakistan or any administrative

subdivision or agency thereof or any other entity owned or controlled by it (hereinafter collectively

referred to as the “GOP”) through any corrupt business practice.

Without limiting the generality of the foregoing, [●] represents and warrants that it has fully declared

the brokerage, commission, fees etc. paid or payable to anyone and not given or agreed to give and

shall not give or agree to give to anyone within or outside Pakistan either directly or indirectly

through any natural or juridical person, including its affiliate, agent, associate, broker, consultant,

director, promoter, shareholder, sponsor or subsidiary, any commission, gratification, bribe, finder's

fee or kickback, whether described as consultation fee or otherwise, with the object of obtaining or

inducing the procurement of a contract, right, interest, privilege or other obligation or benefit in

whatsoever form from GOP, except that which has been expressly declared pursuant hereto.

[●] certifies that it has made and will make full disclosure of all agreements and arrangements with

all persons in respect of or related to the transaction with GOP and has not taken any action or will

not take any action to circumvent the above declaration, representation or warranty.

[●] accepts fixed responsibility and strict liability for making any false declaration, not making full

disclosure, misrepresenting facts or taking any action likely to defeat the purpose of this declaration,

representation and warranty. It agrees that any contract, right, interest, privilege or other obligation or

benefit obtained or procured as aforesaid shall, without prejudice to any other right and remedies

available to GOP under any law, contract or other instrument, be voidable at the option of GOP.

Notwithstanding any rights and remedies exercised by GOP in this regard, [●] agrees to indemnify

GOP for any loss or damage incurred by it on account of its corrupt business practices and further pay

compensation to GOP in an amount equivalent to ten time the sum of any commission, gratification,

bribe, finder's fee or kickback given by [●] as aforesaid for the purpose of obtaining or inducing the

procurement of any contract, right, interest, privilege or other obligation or benefit in whatsoever form

from GOP.

Chief Executive Officer

(Operator)

[●]

Managing Director,

Inter State Gas Systems

(Pvt.) Limited

56

SCHEDULE 6 – SBLC

FORM OF STAND BY LETTER OF CREDIT

(to be finalised by ISGS’ Bank(s))

[Date of issue]

STANDBY LETTER OF CREDIT NUMBER [ ]

Dear Sirs,

OIL TRANSPORTATION AGREEMENT DATED [ ]

We refer to the above agreement (“Agreement”) between yourselves (the “Beneficiary”

under this Standby Letter of Credit) and Inter State Gas Systems (Private) Limited (the “Applicant”).

We, [Insert name of the Bank], a banking company incorporated under Companies Ordinance,

1984 (now the Companies Act, 2017) and having valid licence from the State Bank of Pakistan

having its registered office at [Insert address] (the “Issuer”) hereby establish our irrevocable Standby

Letter of Credit No. __________ (“SBLC”), subject to clause 6 below, in the sum of PKR _______/=

(Pak Rupees __________________) (“SBLC Amount”) in favour of the Beneficiary under the

instructions of the Applicant to secure all obligations of the Applicant under the Agreement and we

undertake as follows:

i. to make unconditional payment on demand upon presentation of a signed statement in the

form set out below at (A) of the amount due set out in such statement notwithstanding any

objection or dispute with the Applicant;

ii. to make such payment within two (2) business days of demand;

iii. to permit partial drawings and multiple presentations; and

This SBLC is subject to the following terms:

1. Presentation must be made by paper document in the form set out at Schedule (A) below, at

[insert name of branch] signed by the Beneficiary, for the attention of the Applicant’s account

manager, unless we agree that electronic presentation may be made subject to an authorisation

code provided by us.

2. The expiry date is [ ] ([ ]) months from date of issue (“Expiry Date”) and all claims under

this SBLC must be received on or before the Expiry Date failing which we shall stand

released of all liability hereunder irrespective of whether the original instrument is returned to

us or not.

3. The foregoing cumulative aggregate limit or Expiry Date may be increased or extended by

amendment by notice to the Beneficiary in the form set out below at (B).

4. This SBLC is subject to [UCP 600].

5. Issuer will issue a notice to the Beneficiary thirty (30) days prior to expiry of the SBLC, that

the SBLC is due to expire in 30 days.

57

6. All payments under this SBLC shall be free and clear of, and without deduction for or on

account of, any present or future taxes, duties, charges, fees or withholdings of any nature and

by whomsoever imposed.

ANY CLAIM MADE UNDER THIS SBLC MUST BE IN WRITING AND DELIVERED

TO THE ISSUER'S OFFICE AT ON OR BEFORE UPTO 1.30 P.M.

FOR COMPLETION OF OUR RECORDS, WE REQUEST THE BENEFICIARY TO

RETURN THE ORIGINAL SBLC ON ITS EXPIRY OR UPON FULFILLMENT OF THE

TERMS OF THE SBLC WHICHEVER MAY FIRST OCCUR.

THIS SBLC SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF

PAKISTAN.

THIS SBLC IS ASSIGNABLE AND TRANSFERRABLE BY THE BENEFICIARY TO ITS

LENDERS. IT MUST BE ENSURED THAT THE TRANSFEREE IS NOT UNDER ANY

SANCTIONS OR EMBARGOES OF THE UNITED NATIONS ORGANISATION,

UNITED STATES OF AMERICA, EUROPEAN MEMBER STATES OR ANY OTHER

ENTITY OR NATION.

OTHER THAN THE CLAUSES MENTIONED ABOVE THE SBLC INSTRUMENT

MIGHT BE ALTERED AT THE TIME OF ISSUANCE TO INCORPORATE THE

POSSIBILITY OF THE ISSUER BEING A SYNDICATE OF FINANCIAL

INSTITUTIONS ACCEPTABLE TO THE BENEFICIARY.

_____________________________

Signature of an authorised signatory

For and On behalf of the Issuer

58

Schedule (A)

Format of Drawing Certificate

[Date]

Drawing under Standby Letter of Credit No. ________________of

(Name of Issuing Bank)

We, ______________, the Beneficiary, hereby make drawing under the subject Standby

Letter of Credit in the sum of ________ (________ only) payable to us as per the provisions of the

Oil Transportation Agreement dated ________ (“Agreement”) executed between us and Inter State

Gas Systems (Private) Limited. The amount of our drawing represents the amount payable by Inter

State Gas Systems (Private) Limited to us in respect of non payment of tariff. In view of the default of

Inter State Gas Systems (Private) Limited to make payment of the applicable amounts due under the

Agreement and pursuant to Standby Letter of Credit No. ____________, we hereby request you to

make payment to our Account No. ______________ with __________ under telex advice to us.

_____________________________

Signature of an authorized signatory

For and on behalf of the Beneficiary

59

Schedule (B)

Form of Notice to the Beneficiary for Extension of the SBLC

[Date of extension]

We refer to our Standby Letter of Credit Number [ ] (“SBLC”). The expiry date

has been extended to [{at least 9 months from date of extension}], and the cumulative aggregate limit

available for drawing under this SBLC is [{being the then current PKR ____________}].

_____________________________

Signature of an authorised signatory

For and on behalf of the Issuer

60

SCHEDULE 7 – FORM OF PRE-COMMISSIONING TEST REPORT9

9 To be as per Technical Requirements.

61

SCHEDULE 8 – FORM OF CERTIFICATE OF ACCEPTANCE10

10 To be as per Technical Requirements and will be design specific. The final format will be approved by ISGS.

62

SCHEDULE 9 –WHITE OIL SPECIFICATIONS

MS SPECIFICATION

Test Title

Specification Limits Test Method

Min. Max.

Color Pink Visual

Appearance Clear and free from

Suspended impurities Visual

Distillation 1 BP 45 °C

ASTM D-86

10% Vol. Recovered @ °C … 80



End Point °C … 205

Residue: Vol.% … 2

Reid Vapour Pressure, @ 37.8°C

9.0 (Mar - Oct)

ASTM D-323

10.0 (Nov - Feb)

Existent Gum, ( Air Jet ) mg/100ml … ASTM D-381

Oxidation Stability, minutes. 240 … ASTM D-525

Total Sulphur wt.% … 0.05 ASTM

D-1266/4294

Lead Content gm pb / Litre … 0.013 IP-352

Copper Corrosion 3Hrs.@ 50 °C … 1 ASTM D-130

Research Octane No. (RON) 87 … ASTM D-2699

Mercaptan Sulphur wt.ppm … 10 ASTM D-3227

Doctor Test Negative ASTM D-4952

Specific Gravity 60/60 °F To be reported ASTM D-1298

Benzene , Vol % … 5 ASTM D-5134

Odour Marketable

63

HSD SPECIFICATION

Test Title

Specification Limit Test Method

Min. Max

Specific Gravity @ 15.6/15.6 °C … 0.87 ASTM D-1298

Distillation 50% Vol. Recovery °C Report ASTM D-86

Distillation 90% Vol. Recovery °C … 365 ASTM 0-86

Colour ASTM … 3 ASTM D-1500

Kinematic Viscosity @ 40°C, cSt 1.5 6.5 ASTM D-445

Flash Point °C 54 … ASTM D-93

Pour Point °C

+6 (March - Oct) ASTM D-97

… +3 (Nov - Feb)

Cloud Point °C

+9 (March - Oct) ASTM D-2500

… +6 (Nov - Feb)

Cold Filter Plugging Point (CFPP). °C

To be reported ASTM D-6371

Conradson Carbon Residue on 10% Distillation Residue, wt.%

… 0.2 ASTM

D-189/4530

Sulphur wt.% / (ppm) … 0.05%

500 ASTM D-4294

Copper strip Corrosion, 3hr @ 100°C

… 1 ASTM D-130

Ash, wt.% … 0.01 ASTM D-482

Water Content, Vol. % … 0.05 ASTM D-95

Sediment by Extraction, wt. % … 0.01 ASTM D-473

Cetane lndex 45 … ASTM D-976

Strong Acid No.mg KOH/g Nil … ASTM

D-974/664

Total Acid No.mg KOH/g … 0.5 ASTM

D-974/664

64

SCHEDULE 10– REQUIRED CONSENTS11

11 As identified by selected bidder and agreed to by ISGS.

65

SCHEDULE 11 –TRANSFER COMPENSATION UPON EARLY TERMINATION

This Schedule explains in a matrix format the amounts payable by the ISGS in connection with a

transfer of the Pipeline System following a termination in accordance with Clause [•]. The

calculations with respect to each such compensation element shall be verified by an international

accounting firm acceptable to the Parties.

TERMINATION EVENT COMPENSATION PAYABLE

1. Termination for an Operator Event of Default

The Operator shall be not be

entitled to any compensation

following an Operator Event of

Default.

[2. Termination for an ISGS Event of Default

ISGS shall pay the depreciated

value of the Pipeline System. For

the purpose of calculation of

depreciated value of the Pipeline

System, the total cost of the

Pipeline System shall be reduced

on straight line basis from the

Commercial Operations Date

through the term of this BOOT

Contract.

3. Termination by the Operator or ISGS following a

Force Majeure Event

ISGS shall pay the depreciated

value of the Pipeline System. For

the purpose of calculation of







Contract.]

4. Voluntary Termination by ISGS In case ISGS terminates the BOOT

Contract pursuant to the Clause [●]

(Voluntary Termination), ISGS

shall pay the depreciated value of

the Pipeline System. For the

purpose of calculation of







Contract.

66

Formula:

The depreciated value of the Pipeline System shall be calculated as under:

DV = TC – (TC/15 x (N/12))

Where

DV = Depreciated value of the Pipeline System

TC = Total Cost of the Pipeline System

N = No of Months from the Commercial Operations Date till the time of termination.

67

SCHEDULE 12 – FORM OF IMPLEMENTATION PERFORMANCE BOND

FORMAT OF PERFORMANCE BOND FOR IMPLEMENTATION/ CONSTRUCTION PHASE OF

MACHIKE – TARU JABBA OIL PIPELINE PROJECT (MTOPP)

FOR SECTION 3

(ON NON-JUDICIAL STAMP PAPER @ APPLICABLE RATE, BASED ON

GUARANTEE VALUE)

Inter State Gas Systems (Private) Limited Guarantee No……..……

8th Floor, Petroleum House

Ataturk Avenue, G-5/2, Islamabad, Date of Issue……………

Date of Expiry………….

Amount…………………

Dear Sirs,

Ref: Our Guarantee No. _____________________ in the sum of PKR 500,000,000/- (Pak Rupees

Five Hundred Million Only)_ on behalf of ________________ (“Company”) as Performance Bond

under the BOOT Contract for design, construction and commissioning of Section [•] of Machike –

Taru Jabba Oil Pipeline Project.

In consideration of you having issued the Letter of Intent for implementation of the subject Project the

Company shall furnish you a Performance Bond in the form of bank guarantee for an amount of PKR

500,000,000/- (Pak Rupees Five Hundred Million Only) having validity of twenty-five (25) months

from the date of issue.

AND WHEREAS in consideration of value received from we have agreed to

give the Company the required bank guarantee and we, ____________________ (a banking

company incorporated under ______________ and having valid license from the State Bank of

Pakistan) which expression shall mean and include its successors, administrators and legal

representatives, whether jointly or severally, having its registered office at

______________ (hereinafter called the “Surety”) hereby agree and undertake as follows:

1. To make unconditional, immediate and forthwith payments to you as called upon of an amount

of Pak Rupees 500,000,000/- (Pak Rupees Five Hundred Million Only) on your written FIRST

and SIMPLE demand without further recourse, question, query, deferment, contestation or

reference to the Company or any other person in the event of default, non-performance or non-

fulfillment by the Company of its obligations, liabilities, responsibilities under the said BOOT

Contract of which you shall be the sole and absolute judge.

2. To accept written intimation from you as conclusive, sufficient and final evidence of the

existence of a default or breach as aforesaid on the part of the Company and to make payment

immediately and forthwith upon receipt of your FIRST and SIMPLE written intimation.

3. The Performance Bond shall come into force on the date of the BOOT Contract and shall remain

in full force, operative, effective and binding upon us for up to the Expiry Date, as this may be

extended by the Company from time to time. The Surety shall notify Inter State Gas Systems

(Private) Limited (ISGS) in the event that the Company does not apply for renewal of this

Performance Bond thirty (30) days prior to the Expiry Date of this Performance Bond, as this

may be extended from time to time.

68

4. That no grant of time or other indulgence to, amendment in the terms of the BOOT Contract, or

imposition of the BOOT Contract with the Company in respect of the performance of its

obligation under and in pursuance of said BOOT Contract with or without notice to us, shall in

any manner discharge or otherwise however affect this guarantee and our liabilities and

commitments there under.

5. This Performance Bond shall be binding on us and our successors-in-interest and shall be

irrevocable.

6. This Performance Bond shall not be affected by any change in the constitution of the guarantor

bank or the constitution of the Company.

7. The Surety warrants and represents that it is fully authorized, empowered and competent to issue

this Performance Bond.

8. No delay or failure to exercise any right or remedy under this Performance Bond by ISGS shall

constitute a waiver of such right or remedy. No single or partial exercise of any right or remedy

shall preclude any other or further exercise thereof or of any other right or remedy. No waiver by

ISGS shall be valid unless made in writing and duly signed by concerned representatives of the

ISGS.

9. No set-off counter claim, reduction, or diminution of any obligations that the Surety has or may

have against ISGS shall be available to the Surety against ISGS in connection with any of the

Surety’s obligations to ISGS under this Performance Bond. The Surety shall make all payments

under this Performance Bond in full, without set-off or counter claim and free and clear of any

deductions or withholdings in immediately available, freely transferable, cleared funds for value

on the due date to ISGS, provided that if the Surety is required to make any deduction or

withholding from such payments under applicable law, the Surety shall pay to ISGS such

additional amount necessary to ensure that ISGS receives an amount equal to the amount which

it would have received had no such deduction or withholding been made.

10. The Performance Bond shall be binding upon and inure to the benefit of ISGS and the Surety and

to their respective successors and assigns, provided that the Surety shall not assign or transfer all

or any of its rights, benefits and obligations under this Performance Bond except with the prior

written consent of ISGS. ISGS shall be free to assign its rights, benefits and obligations under

this Performance Bond without permission of the Surety.

11. No payment to ISGS under this Performance Bond pursuant to any judgement or order of any

court or otherwise shall operate to discharge the Surety’s obligations in respect of which it was

made unless and until payment in full shall have been received by ISGS.

12. If one or more of the provisions of this Performance Bond is held or found to be invalid, illegal,

or unenforceable for any reason whatsoever, in any respect, any such invalidity, illegality, or

unenforceability of any provision shall not affect the validity of the remaining provisions of this

Performance Bond.

13. On the anniversary of the issuance of this Performance Bond, or upon its renewal, the Surety will

issue its replacement guarantee or addendum to this effect.

SIGNATURE AND SEAL OF

THE GUARANTOR

69

SCHEDULE 13 – FORM OF OPERATIONS PERFORMANCE BOND

FORMAT OF PERFORMANCE BOND FOR OPERATIONS PHASE OF MACHIKE – TARU

JABBA OIL PIPELINE PROJECT (MTOPP)

FOR SECTION 3

(ON NON-JUDICIAL STAMP PAPER @ APPLICABLE RATE, BASED ON

GUARANTEE VALUE)

Inter State Gas Systems (Private) Limited Guarantee No……..……

8th Floor, Petroleum House

Ataturk Avenue, G-5/2, Islamabad. Date of Issue……………

Date of Expiry………….

Amount…………………

Dear Sirs,

Ref: Our Guarantee No. _____________________ in the sum of PKR 500,000,000/- (Pak Rupees

Five Hundred Million Only) on behalf of ________________ (“Company”) as Performance Bond

under the BOOT Contract for the operation of Section [•] of Machike – Taru Jabba Oil Pipeline

Project.

WHEREAS, in the BOOT Contract dated it has been stipulated that the

Company shall furnish you a Performance Bond in the form of bank guarantee for an amount of PKR

500,000,000/- (Pak Rupees Five Hundred Million Only) having validity of (15) years from the

effective date of the BOOT Contract. The amount of the Performance Bond will be reduced three (03)

percent after completion of each operational year as per attached Schedule.

AND WHEREAS, in consideration of value received from we have agreed to

give the Company the required bank guarantee and we, ____________________ (a banking company

incorporated under ______________ and having valid license from the State Bank of Pakistan)

which expression shall mean and include its successors, administrators and legal representatives,

whether jointly or severally, having its registered office at ______________ (hereinafter

called the “Surety”) hereby agree and undertake as follows:

1. To make unconditional, immediate and forthwith payments to you as called upon the

applicable amount, as per attached Schedule, in Pak Rupees on your written FIRST and

SIMPLE demand without further recourse, question, query, deferment, contestation or

reference to the Company or any other person in the event of default, non-performance or of

the non-fulfillment by the Company of its obligations, liabilities responsibilities under the

operation phase of the BOOT Contract of which you shall be the sole and absolute judge.

2. To accept written intimation from you as conclusive, sufficient and final evidence of the

existence of a default or breach as aforesaid on the part of the Company and to make payment

immediately and forthwith upon receipt of your FIRST and SIMPLE written intimation.

3. The Performance Bond shall come into force on commencement of the operation phase as

stipulated in the BOOT Contract and shall remain in full force, operative, effective and

binding upon us for up to the Expiry Date, as this may be extended by the Company from

time to time. The Surety shall notify Inter State Gas Systems (Private) Limited (ISGS) in the

70

event that the Company does not apply for renewal of this Performance Bond thirty (30) days

prior to the Expiry Date of this Performance Bond, as this may be extended from time to time.

4. That no grant of time or other indulgence to, amendment in the terms of the BOOT Contract

or imposition of the BOOT Contract with the Company in respect of the performance of its

obligation under and in pursuance of said BOOT Contract with or without notice to us, shall

in any manner discharge or otherwise however affect this guarantee and our liabilities and

commitments there under.

5. This Performance Bond shall be binding on us and our successors-in-interest and shall be

irrevocable.

6. This Performance Bond shall not be affected by any change in the constitution of the

guarantor bank or the constitution of the Company.

7. This Surety warrants and represents that it is fully authorized, empowered and competent to

issue this Performance Bond.

8. No delay or failure to exercise any right or remedy under this Performance Bond by ISGS

shall constitute a waiver of such right or remedy. No single or partial exercise of any right or

remedy shall preclude any other or further exercise thereof or of any other right or remedy.

No waiver by ISGS shall be valid unless made in writing and duly signed by concerned

representatives of the ISGS.

9. No set-off counter claim, reduction, or diminution of any obligations that the Surety has or

may have against ISGS shall be available to the Surety against ISGS in connection with any

of the Surety’s obligations to ISGS under this Performance Bond. The Surety shall make all

payments under this Performance Bond in full, without set-off or counter claim and free and

clear of any deductions or withholdings in immediately available, freely transferable, cleared

funds for value on the due date to ISGS, provided that if the Surety is required to make any

deduction or withholding from such payments under applicable law, the Surety shall pay to

ISGS such additional amount necessary to ensure that ISGS receives an amount equal to the

amount which it would have received had no such deduction or withholding been made.

10. The Performance Bond shall be binding upon and inure to the benefit of ISGS and the Surety

and to their respective successors and assigns, provided that the Surety shall not assign or

transfer all or any of its rights, benefits and obligations under this Performance Bond except

with the prior written consent of ISGS. ISGS shall be free to assign its rights, benefits and

obligations under this Performance Bond without permission of the Surety.

11. No payment to ISGS under this Performance Bond pursuant to any judgement or order of any

court or otherwise shall operate to discharge the Surety’s obligations in respect of which it

was made unless and until payment in full shall have been received by ISGS.

12. If one or more of the provisions of this Performance Bond is held or found to be invalid,

illegal, or unenforceable for any reason whatsoever, in any respect, any such invalidity,

illegality, or unenforceability of any provision shall not affect the validity of the remaining

provisions of this Performance Bond.

13. On the anniversary of the issuance of this Performance Bond, or upon its renewal, the Surety

will issue its replacement guarantee or addendum to this effect.

71

REDUCTION SCHEDULE OF

OPERATIONAL PHASE

PERFORMANCE BOND (BANK GUARANTEE)

S. No. End of Each Operational

Year Amount of Performance Bond

Reduced Available Amount of

Performance Bond

1. Start of Operational Phase

2. One (01)

3. Two (02)

4. Three (03)

5. Four (04)

6. Five (05)

7. Six (06)

8. Seven (07)

9. Eight (08)

10. Nine (09)

11. Ten (10)

12. Eleven (11)

13. Twelve (12)

14. Thirteen (13)

15. Fourteen (14)

16. Fifteen (15)

SIGNATURE AND SEAL OF

THE GUARANTOR

72

SCHEDULE 14 – ENTRY POINT, EXIT POINT AND OFFTAKE POINT(S)12

12 To be added for each Section.

73

SCHEDULE 15 –TECHNICAL REQUIREMENTS13

(As attached)

13 To be attached as per the Technical Requirements for the Pipeline System for each Section. The Technical Requirements are deemed modified to be consistent with the clarifications provided to the Prospective Bidders on Bidders’ queries.

74

SCHEDULE 16 – FORM OF SPONSOR UNDERTAKING

Undertaking

(Draft - to be issued by Sponsor)

This Undertaking is executed on this [●] day of [●], by [●] having its registered office at [●]

(hereinafter the “Sponsor”),

In favour of,

Inter State Gas Systems (Private) Limited, having its registered office at [●] (hereinafter “ISGS”),

WHEREAS, as required under the Build, Own, Operate and Transfer Contract (the “BOOT

Contract”) entered into or about to be entered into between ISGS and [●] (the “Operator”), the

Sponsor hereby undertakes to ISGS not to permit a Change of Ownership (as defined hereunder) as

set out in this Undertaking:

NOW THIS UNDERTAKING WITNESSETH AS UNDER:

1. All capitalized terms not defined herein shall be read in accordance with and as defined in the

BOOT Contract and provided that “Change of Ownership”, shall mean:

(a) any sale, transfer or disposal of, or the creation of, any legal, beneficial or equitable

interest in or over, any or all of the shares or shareholder loans in the Operator

(including the transfer or the ceding of control, whether by proxy, contract, agency or

otherwise, over the exercise of voting rights conferred on those shares, or over the

right to appoint or remove directors or other officers or over the rights to receive

distributions or the debt service in respect of such shareholder loans); and/or

(b) any other arrangements that have or may have or which result in the same effect as

above including, without limitation, the grant of security over any such shares or

rights attaching thereto or shareholder loans.

2. That the Sponsor shall not initiate during the Implementation Period and a period of five (05)

Years from the Commercial Operations Date, a Change of Ownership in the Operator, except

that the shares of the Operator may be pledged or charged to the Lenders, as permitted under

the BOOT Contract.

3. That the Sponsor shall not divest more than 49% of its shareholding in the Operator for the

remainder of the Term, except that the shares of the Operator may be pledged or charged to

the Lenders, as permitted under the BOOT Contract.

_____________________________

For [●]

IMPLEMENTATION OF MACHIKE TARU JABBA OIL …isgs.com.pk/wp-content/uploads/2018/02/Section-3... ·...

Documents

Transcript of IMPLEMENTATION OF MACHIKE TARU JABBA OIL …isgs.com.pk/wp-content/uploads/2018/02/Section-3... ·...