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EXHIBIT 10.21
1(a)
DATED 9th November, 1991
ENERGY CONVERSION AGREEMENT
for
A COAL FIRED THERMAL POWER STATION
AT BARANGAY IBABANG PULO, PAGBILAO,
QUEZON, PHILIPPINES
between
NATIONAL POWER CORPORATION
and
HOPEWELL ENERGY INTERNATIONAL LIMITED
Clifford Chance
Hong Kong
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TABLE OF CONTENTS
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Article Heading Page
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Article 1 Definition of Terms ...................................... 2
Article 2 Scope of Agreement ....................................... 5
Article 3 Part A - Construction of the Power Station ............... 8
Part B - Construction Timetable .......................... 11
Article 4 Testing .................................................. 12
Article 5 Operation of the Power Station ........................... 13
Article 6 Supply of Fuel ........................................... 14
Article 7 Part A - Supply of Electricity ........................... 16
Part B - Fees ............................................ 16
Part C - Foreign Exchange ................................ 18
Part D - Change in Circumstances ......................... 19
Article 8 Part A - Transfer of Ownership ........................... 19
Part B - Buyout .......................................... 20
Article 9 Representations and Warranties of HOPEWELL ............... 21
Article 10 Representations and Warranties of NAPOCOR ................ 22
Article 11 Taxes .................................................... 23
Article 12 Insurance ................................................ 23
Article 13 Transmission Line ........................................ 23
Article 14 Force Majeure ............................................ 24
Article 15 Delay, Termination and Abandonment ....................... 25
Article 16 Several Obligations ...................................... 26
Article 17 Notices .................................................. 26
Article 18 Non-Waiver ............................................... 27
Article 19 Benefit of Agreement ..................................... 27
Article 20 Dispute Resolution ....................................... 28
Article 21 Entire Agreement ......................................... 28
Article 22 Law ...................................................... 28
Article 23 Disclaimer ............................................... 28
Article 24 Jurisdiction ............................................. 29
Article 25 Effect of Article/Section Headings ....................... 29
Article 26 Separability ............................................. 29
Article 27 Liability ................................................ 29
Article 28 Conditions Precedent ..................................... 30
Article 29 Late Payment ............................................. 33
FIRST SCHEDULE
PROJECT SCOPE AND SPECIFICATIONS .......................... 34
SECOND SCHEDULE
OPERATING PARAMETERS ...................................... 40
THIRD SCHEDULE
PENALTY ON DELAYS ......................................... 43
FOURTH SCHEDULE
SPECIFICATIONS FOR FUEL SUPPLY AND START-UP ELECTRICITY ... 44
FIFTH SCHEDULE
TRANSMISSION LINE SPECIFICATIONS .......................... 46
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SIXTH SCHEDULE
ELECTRICITY DELIVERY PROCEDURES ........................... 49
SEVENTH SCHEDULE
MEASUREMENT AND RECORDING OF ELECTRICITY .................. 51
EIGHTH SCHEDULE
DELIVERY OF POWER AND ENERGY .............................. 53
NINTH SCHEDULE
DOCUMENTARY REQUIREMENTS FOR THE EFFECTIVE DATE ........... 59
TENTH SCHEDULE
INSURANCE ................................................. 61
ELEVENTH SCHEDULE
FORM OF PERFORMANCE UNDERTAKING ........................... 62
TWELFTH SCHEDULE
FORM OF ACCESSION UNDERTAKING ............................. 63
THIRTEENTH SCHEDULE
FORM OF LEGAL OPINION OF NAPOCOR'S GENERAL COUNSEL ........ 66
FOURTEENTH SCHEDULE
TESTS AND TEST PROCEDURES ................................. 68
FIFTEENTH SCHEDULE
REQUIRED PROJECT DESCRIPTION DATA FOR
ENVIRONMENTAL IMPACT ASSESSMENT STUDY ..................... 73
SIXTEENTH SCHEDULE
SAMPLE COMPUTATIONS OF MONTHLY BILLINGS,
START-UP CHARGES, PENALTIES AND INCENTIVES ................ 75
SEVENTEENTH SCHEDULE
ACCESS ROAD AND BRIDGE SPECIFICATIONS ..................... 82
SIGNATURE .................................................................. 84
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KNOW ALL MEN BY THESE PRESENTS
This Agreement is made and entered into by and between:
HOPEWELL ENERGY INTERNATIONAL LIMITED, a private corporation, duly
organised and existing under the laws of Hong Kong with its principal
address at 64th Floor, Hopewell Centre, 183 Queen's Road East, Hong
Kong represented by its Directors Gordon Wu Ying Sheung and Eddie Ho
Ping Chang, who are duly authorised to represent it in this Agreement,
hereinafter referred to as HOPEWELL
- and -
NATIONAL POWER CORPORATION, a government owned and controlled
corporation duly organised and existing under and by virtue of Republic
Act No. 6395, as amended, with its principal office at the corner of
Agham Road and Quezon Avenue, Diliman, Quezon City, Philippines,
represented herein by its President Pablo Malixi, who is duly
authorised to represent it in this Agreement, hereinafter referred to
as NAPOCOR.
RECITALS
WHEREAS NAPOCOR has called for the development of new power facilities to
support and maintain the country's rapid economic growth.
WHEREAS on 15th March, 1989, NAPOCOR issued to the public a notice inviting
interested parties to prequalify to bid for a 2 x 350 MW coal fired thermal
power plant project on a build-own-transfer (BOT) and/or
build-own-operate-transfer (BOOT) basis.
WHEREAS in response to an invitation to tender from NAPOCOR, Hopewell Holdings
Limited ("HHL") submitted a bid to undertake the construction and operation of a
2 x 350 MW coal fired thermal power plant on a build-own-operate-transfer basis.
WHEREAS NAPOCOR, after having evaluated project proposals and selecting the one
most advantageous to NAPOCOR, issued a letter of award on the 16th July, 1990
following which it was agreed that HOPEWELL would supply a coal fired thermal
power station to NAPOCOR on such a basis.
WHEREAS Pursuant to the said letter HOPEWELL has agreed to construct and
operate and NAPOCOR has agreed to accept a coal fired thermal power station upon
the terms and subject to the conditions hereinafter set forth.
WHEREAS HOPEWELL has caused the formation of a subsidiary Philippine corporation
called Hopewell Power (Philippines) Corporation, for the purpose of undertaking
certain of the work in respect of the building and operating of the Power
Station and performing other undertakings specified in this Agreement.
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NOW IT IS HEREBY AGREED as follows:-
Article 1
Definition of Terms
1.1 In this Agreement and in the recitals hereto:
"ACCESSION UNDERTAKING" means an agreement in the form substantially
set out in the Twelfth Schedule (Form of Accession Undertaking)
pursuant to which HOPEWELL PHILIPPINES agrees to become a party hereto
as therein provided;
"ACCESS ROAD" means the road or roads identified as such in the map
contained in the Seventeenth Schedule (Access Road and Bridge
Specifications);
"AVAILABILITY" means the maximum generating capacity from time to time
of the Power Station as determined pursuant to the Availability
Schedule;
"AVAILABILITY SCHEDULE" means the schedule of the generating capacity
of the Power Station agreed pursuant to Article 5.7;
"BOI" means the Board of Investments of the Republic of the
Philippines;
"BRIDGE" means the bridge connecting Pagbilao Grande island to the
mainland as shown in the Seventeenth Schedule (Access Road and Bridge
Specifications) and to be constructed by HOPEWELL;
"CAPACITY FEES" means Capital Recovery Fees, Fixed Operating Fees,
Infrastructure Fees and Service Fees;
"CAPITAL RECOVERY FEES" means the fees payable by NAPOCOR to HOPEWELL
in respect of the recovery of HOPEWELL's capital costs incurred in
relation to the Project as provided in Part B of Article 7;
"CENTRAL BANK" means the Central Bank of the Philippines;
"COAL" means coal supplied for the use of the Power Station in
accordance with the provisions of the Fuel Specifications;
"COMPLETION DATE" means the day upon which HOPEWELL certifies that the
Power Station, capable of operating in accordance with the Operating
Parameters, has successfully completed its testing, or would have had
had NAPOCOR performed its obligations hereunder relating to access
(Articles 2.4, 2.5, 3.6) fuel and start-up electricity and the taking
of electricity (Articles 2.9, 2.10, 4.4, 6.1 and 6.7) and transmission
line (Articles 2.9, 3.6, 13) in a timely manner;
"CONTRACTED CAPACITY" shall have the meaning given to it in the Eighth
Schedule (Delivery of Power and Energy);
"COOPERATION PERIOD" means, in relation to a Unit, the period of
twenty-five (25) years from the later of the Target Completion Date in
respect of such Unit and the Unit Completion Date in respect of such
Unit, as the same may be extended from time to time pursuant to the
terms hereof;
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"DELIVERY POINTS" means the metering points referred to in the Seventh
Schedule (Measurement and Recording of Electricity);
"DOWNTIME" shall have the meaning given to it in the Sixth Schedule
(Electricity Delivery Procedures);
"EFFECTIVE DATE" means the date on which NAPOCOR and HOPEWELL certify
that all the conditions contained in Articles 28.1, 28.2 and 28.3 have
been fulfilled or waived to the satisfaction of NAPOCOR in the case of
Article 28.1 and fulfilled or waived to the satisfaction of HOPEWELL in
the case of Articles 28.2 and 28.3;
"ENERGY FEES" means the fees payable by NAPOCOR to HOPEWELL in respect
of energy supplied to NAPOCOR as provided in Part B of Article 7;
"EMERGENCY" means unforeseen circumstances affecting the Luzon grid
which reasonably require NAPOCOR to request HOPEWELL to supply it with
power and energy as soon as practicable in order to avoid damage to
NAPOCOR's electric system and/or a failure in the continuous supply of
electricity from the grid;
"FIXED OPERATING FEES" means the fees payable by NAPOCOR to HOPEWELL in
respect of the recovery of HOPEWELL's fixed operating costs incurred in
relation to the Project as provided in Part B of Article 7;
"FORCE MAJEURE" shall have the meaning specified in Article 14.1;
"FORCED OUTAGE" shall have the meaning given to it in the Sixth
Schedule (Electricity Delivery Procedures);
"FUEL" means any and all Coal and/or Oil;
"FUEL SPECIFICATIONS" means the specifications as to the quality and
method of storage, supply and delivery of the Fuel for the Power
Station described in Article 6 and the Fourth Schedule (Specifications
for Fuel Supply and Start-Up Electricity);
"HOPEWELL PHILIPPINES" means Hopewell Power (Philippines) Corporation;
"INFRASTRUCTURE" means the Jetty, the Bridge, the fuel handling
equipment and the fuel storage equipment;
"INFRASTRUCTURE FEES" means the fees payable by NAPOCOR to HOPEWELL in
respect of the recovery of HOPEWELL's capital costs and debt service
incurred in relation to relevant Infrastructure as provided in Part B
of Article 7;
"JETTY" means the jetty or wharf described in the First Schedule
(Project Scope and Specifications);
"MONTH" means the period commencing immediately after the taking of a
photograph of the electricity meters on the 25th of each calendar
month, pursuant to the Seventh Schedule (Measurement and Recording of
Electricity) and ending upon the taking of such photograph on the 25th
of the next calendar month; in the case of the first month in the
Cooperation Period in respect of a Unit "MONTH" means the period
commencing on the first day of that Cooperation Period and ending upon
the taking of a photograph of the electricity meters on the 25th of the
current calendar
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month (or the next calendar month if the period commenced on or after
the 25th of the current calendar month) and in the case of the last
month in the Cooperation Period in respect of a Unit "MONTH" means the
period commencing immediately after the end of the immediately
preceding Month and ending upon the taking of a photograph of the
electricity meters on the last day of the Cooperation Period in respect
of that Unit;
"NOMINAL CAPACITY" shall mean in respect of the Power Station 700 MW
and in respect of each Unit 350 MW;
"OIL" means oil supplied for the use of the Power Station in accordance
with the provisions of the Fuel Specifications;
"OPERATING PARAMETERS" means the operating parameters of the Power
Station and the Units described in the Second Schedule (Operating
Parameters);
"PERFORMANCE COAL" means Coal which satisfies the Fuel Specifications
set out in Part I of the Fourth Schedule (Specifications for Fuel
Supply and Start-Up Electricity);
"PERFORMANCE UNDERTAKING" means the agreement referred to in Article
28.3(i);
"POWER STATION" means the power station built, or to be built, pursuant
to Article 2.1;
"PROJECT" means the design, construction, equipping, completion,
testing, commissioning and operation of the Power Station;
"SERVICE FEES" means the fees payable by NAPOCOR to HOPEWELL in respect
of return on HOPEWELL's investment in the Project as provided in Part B
of Article 7;
"SITE" means the site for the Power Station at Barangay Ibabang Pulo,
Pagbilao, Quezon, Philippines as more particularly described in the
First Schedule (Project Scope and Specifications);
"SPECIFICATIONS" means the specifications of the Power Station and the
Units described in the First Schedule (Project Scope and
Specifications);
"T-BILL RATE" means, in respect of any day for which interest based on
such rate is being calculated under this Agreement, the rate per annum
at which Philippine Treasury Bills (with terms of 30 days or, for the
purposes of Article 2.8(c), 91 days, or if no such bill is issued such
bill which is issued having the term nearest to 30 days, or in the case
of Article 2.8(c), 91 days) were issued by the Philippine Government on
the Friday immediately preceding such day, or, if there were no
Treasury Bills issued on such Friday, on the day immediately preceding
such Friday on which Treasury Bills were issued provided that if for 30
days no Philippine Treasury Bills are issued, then "T-Bill Rate" shall
mean such alternative rate of interest as may be agreed between
HOPEWELL and NAPOCOR at such time, or, in the absence of agreement, the
rate per annum certified and evidenced by HOPEWELL to be its effective
cost of borrowing at such time;
"TARGET COMPLETION DATE" means, subject to Article 3.12:-
(a) in relation to Unit 1, 31st July, 1995;
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(b) in relation to Unit 2, 30th October, 1995; and
(c) in relation to the Power Station, 30th October, 1995;
"TRANSFER DATE" means the day following the last day of the
Cooperation Period in respect of Unit 2;
"TRANSMISSION LINE" means the transmission line to be installed and
connected by NAPOCOR pursuant to Articles 2.9 and 3.6(iv) and having
the specifications set out in the Fifth Schedule (Transmission Line
Specifications);
"UNIT" means each of the two 350 MW coal fired thermal units which
together and together with the ancillary equipment form the Power
Station and "UNIT 1" means the first Unit to be completed and "UNIT 2"
means the second Unit to be completed;
"UNIT AVAILABILITY" means the maximum generating capacity from time to
time of a Unit as determined pursuant to the Availability Schedule; and
"UNIT COMPLETION DATE" means the day upon which HOPEWELL certifies that
a Unit, capable of operating in accordance with the Operating
Parameters, has successfully completed its testing, or would have had
had NAPOCOR performed its obligations hereunder relating to access
(Articles 2.4, 2.5, 3.6) fuel and start-up electricity and the taking
of electricity (Articles 2.9, 2.10, 4.4, 6.1 and 6.7) and transmission
line (Articles 2.9, 3.6, 13) in a timely manner.
1.2 Any reference in this Agreement to an "ARTICLE", "PART" or a "SCHEDULE"
is a reference to an article or part hereof or a schedule hereto.
1.3 In this Agreement:
(i) "$" and "DOLLAR(S)" denote lawful currency of the United
States of America;
(ii) "PS" and "PESO(s)" denote lawful currency of the Republic of
the Philippines;
(iii) "MW" denotes a megawatt;
(iv) "KW" denotes a kilowatt;
(v) "KWHR" denotes a kilowatt hour; and
(vi) "KVA" denotes a Kilovolt-ampere.
ARTICLE 2
SCOPE OF AGREEMENT
2.1 DESIGN AND CONSTRUCTION OF POWER STATION. HOPEWELL shall cause and be
responsible for the design, development, construction, completion,
testing and commissioning of a coal fired thermal power station.
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2.2 CONSTRUCTION. The Power Station shall be constructed and equipped in
accordance with the First Schedule (Project Scope and Specifications).
2.3 COST OF CONSTRUCTION. All costs of HOPEWELL in connection with the
construction of the Power Station as provided in Article 2.1 shall be
borne by HOPEWELL. All necessary funding including any available
preferential credits shall be arranged by and be the responsibility of
HOPEWELL.
2.4 THE SITE. NAPOCOR shall make full access available to and from the Site
to HOPEWELL its employees, contractors, sub-contractors and advisors
along the Access Road (and for such purpose construct on a timely basis
and maintain at NAPOCOR's cost the Access Road), for the purpose of
constructing and operating the Power Station, at no cost to HOPEWELL,
for the period from the Effective Date until the Transfer Date and
shall make available reasonable access to and from the Site between the
date hereof and the Effective Date for the purpose of allowing
preliminary contract works, except that, subject to NAPOCOR providing
the necessary and timely access and land for the purpose, HOPEWELL
shall be responsible for the construction, maintenance and cost of the
Bridge.
2.5 START-UP ELECTRICITY. NAPOCOR shall ensure that start-up electricity is
made available at the Site as necessary for the timely construction,
testing and commissioning of the Power Station.
2.6 OPERATION. Following the Completion Date, the Power Station and the
Units shall be capable of operating within the Operating Parameters set
out in the Second Schedule (Operating Parameters).
2.7 RESPONSIBILITIES OF HOPEWELL. HOPEWELL shall be responsible for:
(a) the importation and transportation of equipment to the Site,
(b) the obtaining of building, construction, operating and other
permits (save that HOPEWELL shall only be responsible for
obtaining permits of an environmental nature on the basis only
of an Environmental Impact Study prepared by NAPOCOR at its
own cost and submitted to HOPEWELL to form the basis of their
application for an Environmental Compliance Certificate),
licences and approvals for the Project, and of visas and work
permits for foreign personnel, the recruitment of local labour
and compliance with all local and other regulations including
the payment of all fees and costs thereof, and
(c) constructing, to the specifications set out in Part V of the
First Schedule (Project Scope and Specifications) and in
compliance with the requirements of the Environmental
Compliance Certificate, a 10,000 KVA electricity sub-station
to provide electricity (other than start-up electricity which
shall be provided by NAPOCOR) required by HOPEWELL during the
construction of the Power Station and transfer the ownership
thereof to NAPOCOR upon the later of (i) the date on which the
purchase price payable therefor has been paid in full pursuant
to Article 2.8(c) or (ii) the Project Completion Date.
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2.8 RESPONSIBILITIES OF NAPOCOR. NAPOCOR shall:-
(a) subject to having received from HOPEWELL the information
described in the Fifteenth Schedule, provide HOPEWELL with an
environmental impact assessment report (including, without
prejudice the foregoing generality, an Environmental Impact
Study) which shall be necessary for HOPEWELL to obtain an
Environmental Compliance Certificate,
(b) otherwise assist HOPEWELL with respect to its responsibilities
under Article 2.7 on a best efforts basis and
(c) pay to HOPEWELL the sum of the equivalent in pesos (calculated
using the official guiding rate of the Bankers Association of
the Philippines published on the Effective Date) of US$525,000
together with interest thereon at the T-Bill Rate from the
date of the bill of lading for the transformer for the
sub-station referred to in Article 2.7(c), to the date such
sum has been paid in full by way of purchase price for the
said sub-station. NAPOCOR and HOPEWELL agree that HOPEWELL
shall set-off any amounts payable to NAPOCOR in respect of
electricity delivered to HOPEWELL pursuant to the terms of
this Agreement against firstly accrued interest on and
thereafter the principal amount of the said price Provided
that (a) if HOPEWELL reasonably believes that no further
electricity (other than start-up electricity) shall be
required from NAPOCOR under this Agreement then the balance of
the said price and any interest accrued thereon shall become
due and payable on demand of HOPEWELL and (b) any balance of
the said price and interest accrued thereon not paid by the
Completion Date shall be paid in full on the Completion Date.
2.9 FUEL AND TRANSMISSION LINE. NAPOCOR shall at its own cost supply Fuel
in accordance with the specifications set out in the Fourth Schedule
(Specifications for Fuel Supply and Start-Up Electricity) and start-up
electricity of the required quantity and quality and at the required
time for the testing, commissioning and operation of the Power Station,
shall construct, install and connect the Transmission Line and shall
take all electricity generated during testing and commissioning.
2.10 FUEL SUPPLY AND ELECTRICITY DELIVERY. Until the Transfer Date, NAPOCOR
shall, at its own cost, supply and deliver all Fuel for the Power
Station in accordance with the specifications set forth in this
Agreement and the Schedules and shall take all electricity generated by
the Power Station at the request of NAPOCOR and shall pay to HOPEWELL
fees as provided in Part B of Article 7.
2.11 COSTS OF NAPOCOR. NAPOCOR shall be responsible for and shall bear all
costs incurred by it in connection with the performance of its
obligations hereunder.
2.12 OWNERSHIP OF POWER STATION. From the Effective Date until the Transfer
Date, HOPEWELL shall, directly or indirectly, own the Power Station and
all the fixtures, fittings, machinery and equipment on the Site or used
in connection with the Power Station which have been supplied by it or
at its cost. HOPEWELL shall operate, manage and maintain the Power
Station for the purpose of converting Fuel of NAPOCOR into electricity.
2.13 ELECTRICITY. During the Cooperation Period NAPOCOR shall ensure the
continuing and uninterrupted provision of electricity to the Power
Station
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to be provided by it as provided in the First Schedule (Project Scope
and Specifications).
2.14 TRANSFER. On the Transfer Date the Power Station shall be transferred
by HOPEWELL to NAPOCOR without the payment of any compensation and
otherwise in accordance with the provisions of Part A of Article 8.
2.15 COOPERATION. The parties hereto shall mutually cooperate with each
other in order to achieve the objectives of this Agreement and the
performance by each of the parties hereto of their respective
obligations hereunder.
ARTICLE 3
PART A
CONSTRUCTION OF THE POWER STATION
3.1 CONSTRUCTION RESPONSIBILITY. HOPEWELL shall be responsible for the
design, construction, equipping, completion, testing and commissioning
of the Power Station and shall commence work on the Effective Date or
may commence work earlier upon being instructed in writing by NAPOCOR.
3.2 HOPEWELL'S RIGHTS. In pursuance of its obligations under Article 3.1
HOPEWELL shall among other things have full right to:
(i) call for tenders and award contracts with or without tender;
(ii) arrange for the preparation of detailed designs and approve or
reject the same;
(iii) appoint and remove consultants and professional advisers;
(iv) purchase equipment;
(v) appoint, organise and direct staff, manage and supervise the
Project;
(vi) enter into contracts for the supply of materials and services,
including contracts with NAPOCOR; and
(vii) do all other things necessary or desirable for the completion
of the Power Station in accordance with the Specifications and
generally accepted engineering standards by the Target
Completion Date.
3.3 LOCAL CONTRACTS. In pursuance of its obligations under Article 3.1
HOPEWELL shall, where possible, award contracts to Philippine
contractors and suppliers of materials and services provided that, in
its opinion, the quality, delivery times, costs, reliability and other
terms are comparable to those offered by foreign contractors and/or
suppliers.
3.4 MONITOR PROGRESS. NAPOCOR shall be entitled at its own cost to monitor
the progress and quality of the construction and installation work and
for this purpose HOPEWELL shall:
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(i) submit to NAPOCOR a quarterly report of construction progress
which shall be in such detail as is reasonable in the
circumstances;
(ii) ensure that NAPOCOR and any experts appointed by NAPOCOR in
connection with the Project are afforded reasonable access to
the Site at times to be agreed with HOPEWELL provided that
such access does not materially interfere with the works
comprising the Project or expose any person on the Site to any
danger;
(iii) make available for inspection at the Site copies of all plans
and designs other than any proprietary information of HOPEWELL
or any sub-contractor in relation to the Project or any part
thereof; and
(iv) within six months of the completion of the Power Station,
supply NAPOCOR with one set of reproducible copies and five
sets of white print copies (or equivalent) of all "as built"
plans and designs required for the operation or maintenance of
the Power Station.
3.5 DISCLAIMER. HOPEWELL:
(i) accepts that any engineering review conducted by NAPOCOR is
solely for its own information and accordingly by conducting
such review NAPOCOR makes no representation as to the
engineering soundness of the Power Station;
(ii) shall in no way represent to any third party that, as a result
of any review by NAPOCOR, NAPOCOR is responsible for the
engineering soundness of the Power Station; and
(iii) shall, subject to the other provisions of this Agreement, be
solely responsible for the economic and technical feasibility,
operational capability and reliability of the Power Station.
3.6 ROADS AND ELECTRICITY. NAPOCOR shall at its own cost:
(i) ensure that there is provided to the Site by not later than
the Effective Date the Access Road capable of taking traffic
to and from the Site (and shall maintain and repair the Access
Road to ensure that it is so capable at all times);
(ii) provide all land required by HOPEWELL in connection with the
construction of the Bridge and ensure that there is provided
to and from the Site access along the Access Road from the
National Highway on the mainland to the Bridge and from the
Bridge to the Site, in each case in accordance with the
requirements of the Seventeenth Schedule (Access Road and
Bridge Specifications);
(iii) ensure that there is provided to the Site electricity
(including start-up electricity) as provided, and no later
than the times set out, in the First Schedule (Project Scope
and Specifications) the cost of the utilization of which shall
be for HOPEWELL's account Provided that NAPOCOR shall only be
obliged to provide electricity (other than start-up
electricity) if HOPEWELL has complied with its obligations
under Article 2.7(c); and
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(iv) ensure that there is installed and connected a transmission
line from the outgoing gantry of the switching facility within
the Site and which is capable of operating within the
specifications, set out in the Fifth Schedule (Transmission
Line Specifications).
3.7 SITE. NAPOCOR shall, at its own cost, give vacant possession of the
Site to HOPEWELL by not later than the Effective Date and hereby
warrants to HOPEWELL that from the Effective Date the Site will be
owned by NAPOCOR free from all liens and encumbrances and warrants and
guarantees to HOPEWELL its peaceful and exclusive possession of the
Site from the Effective Date to the Transfer Date. NAPOCOR shall, at
its expense, take all steps necessary to ensure that it has registered
legal title to the Site in its name within 180 days after the Effective
Date and shall execute such instruments as may be necessary to permit
the annotation thereon of HOPEWELL's right to use the Site under this
Agreement. The Power Station will be located at the Site, which (a)
shall be made available to HOPEWELL at no cost to HOPEWELL for the
period from the Effective Date until the Transfer Date and (b) shall
not be used for any purpose other than for power generation and support
activities as contemplated herein without the prior consent of NAPOCOR.
3.8 CONSULTATION. Where appropriate, HOPEWELL will consult with NAPOCOR
concerning the development of the design of the Power Station and if
and to the extent that operation of the Luzon grid may be affected will
discuss with NAPOCOR the possibility of alterations to the
Specifications.
3.9 DRAWINGS AND TECHNICAL DETAILS. HOPEWELL shall furnish NAPOCOR with
three (3) hard copies and one (1) reproduceable copy of the main group
of drawings and technical details such as, but not limited to, the
following:
(i) final arrangement plans for the general layout of machinery
and equipment;
(ii) general and detailed drawings and specifications for
electromechanical works;
(iii) general and detailed design drawings for civil and
architectural works;
(iv) test procedures;
(v) calibration curves for the boiler and turbine efficiency
output;
(vi) curve showing boiler capability vs. coal quality based on
performance coal; and
(vii) energy balance calculation at the following different loads
25%, 50%, 75%, 100% and 110%.
3.10 CONFIDENTIALITY. Each of NAPOCOR and HOPEWELL agrees that all
information and documents (whether financial, technical or otherwise)
obtained by it or its agents from HOPEWELL or from NAPOCOR or its
agent's inspections which are not generally publicly available shall be
kept confidential and not disclosed to any other person or entity
without the prior written approval of HOPEWELL or, as the case may be,
NAPOCOR, except as required by law Provided that each of NAPOCOR and
HOPEWELL may, with the consent of the other, issue from time to time
press releases containing nonsensitive information in relation to the
progress of the construction of
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the Power Station. This covenant shall survive the termination of this
Agreement.
PART B
CONSTRUCTION TIMETABLE
3.11 PROJECT MILESTONE DATES. The parties shall work together in order to
endeavour to achieve the timely completion of the Project in accordance
with the following timetable:-
<TABLE>
<CAPTION>
Stage Completed Date
--------------- ----
<S> <C>
Effective Date 30th June, 1992
Mobilisation 30th June, 1992
Commencement of Work 31st July, 1992
Target Completion Date of Unit 1 31st July, 1995
Target Completion Date of Unit 2 30th October, 1995
Target Completion Date of Power Station 30th October, 1995
</TABLE>
3.12 NO FAULT DELAY. In the event that the Effective Date occurs, or the
instructions referred to in Article 3.1 are given, after 30th June,
1992 each of the other dates set out in Article 3.11 shall be adjusted
to occur later by the number of days that the Effective Date occurs, or
such instructions are given, after 30th June, 1992.
3.13 HOPEWELL DELAY. In the event that, due to the fault of HOPEWELL and
through no fault of NAPOCOR, HOPEWELL fails to complete a Unit in
accordance with the First Schedule (Project Scope and Specifications)
within 30 days after the Unit Target Completion Date for such Unit,
HOPEWELL shall pay NAPOCOR for each day thereafter until the Unit
Completion Date for such Unit as provided in the Third Schedule
(Penalty on Delays) and the obligation of HOPEWELL to make such
payments shall be supported by the bond referred to in Article 28.1(iv)
and the Third Schedule (Penalty on Delays).
3.14 PROLONGED DELAY/ABANDONMENT. In the event that due to the fault of
HOPEWELL and through no fault of NAPOCOR (a) the Completion Date of the
Power Station has not occurred on or before the day falling three
hundred and sixty-five (365) calendar days after the Target Completion
Date of the Power Station or (b) the construction of the Power
Station is deemed to have been abandoned, and in any such case, in the
judgment of NAPOCOR after confirmation from HOPEWELL, it does not
appear reasonably likely that the Completion Date will ever occur,
HOPEWELL shall pay to NAPOCOR by way of liquidated damages the balance
of the amount payable under the Bond (as defined in the Third Schedule)
after any amount paid or payable by HOPEWELL to NAPOCOR pursuant to
Article 3.13 has been paid but shall have no other liability in respect
of such failure to complete the Power Station and upon such balance
becoming payable, or being paid by HOPEWELL prior to it becoming due,
HOPEWELL shall have no further liability to make payments pursuant to
Article 3.13 or this Article 3.14. For the purposes of this Agreement,
construction of the Power Station shall be deemed to have been
abandoned if HOPEWELL:
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(i) notifies NAPOCOR in writing that it has terminated all works of
construction (other than following completion) and does not
intend to recommence such works; or
(ii) fails to commence work at the Site within one hundred and
eighty (180) days from the Effective Date other than by reason
of Force Majeure or an act or omission of NAPOCOR; or
(iii) fails to resume work within one hundred and eighty (180) days
of the termination or cessation of any event of Force Majeure,
other than by reason of other Force Majeure or act or omission
of NAPOCOR and subject always to Article 14.7.
3.15 SUBSTANTIAL COMPLETION. Upon substantial completion of a Unit and/or
the Power Station, HOPEWELL may certify that that Unit and/or the Power
Station has successfully completed its testing and that accordingly the
Unit Completion Date for that Unit and/or the Completion Date has
occurred notwithstanding that that Unit and/or the Power Station is
unable to produce 350 MW or, as the case may be, 700 MW or to achieve
the heat rates provided in Section 6 of the Second Schedule (Operating
Parameters) but in that event adjustments shall be made to the Capacity
Fees and Energy Fees as provided in the Eighth Schedule (Delivery of
Power and Energy).
3.16 EARLY COMPLETION. If the Unit Completion Date in respect of a Unit
occurs prior to the commencement of its Cooperation Period then NAPOCOR
shall pay to HOPEWELL PHILIPPINES/HOPEWELL a bonus on early completion
an amount equal to Capital Recovery Fees, Infrastructure Fees and
Service Fees for the period commencing on such Completion Date and
ending on the day falling immediately prior to the first day of such
Cooperation Period.
ARTICLE 4
TESTING
4.1 TESTING PROCEDURES. The parties shall meet and agree on procedures,
standards, protective settings and a programme to be followed by
HOPEWELL for the testing of the Units and the Power Station in
accordance with the Fourteenth Schedule (Tests and Test Procedures) and
NAPOCOR undertakes to take all electricity generated during any such
testing and to pay an amount equal to the Energy Fee for the energy
delivered to the system.
4.2 COAL. All coal used in the testing of the Units and the Power Station
shall be Performance Coal and of the quality described in Article 6
and, the Fourth Schedule (Specifications for Fuel Supply and Start-up
Electricity).
4.3 NOTICE OF TESTING. HOPEWELL shall give to NAPOCOR not less than 14
days' notice, or such lesser period as the parties hereto may agree, of
its intention to commence any testing at the Site.
4.4 NAPOCOR'S RESPONSIBILITIES. NAPOCOR shall ensure that there is made
available for any testing supplies of Fuel and start-up electricity in
sufficient quantity for the proper carrying out of such testing and of
the quality specified in the Schedules hereto.
4.5 COST OF UTILITIES. The cost of the Fuel to be supplied by NAPOCOR
pursuant to Article 4.4 shall be for NAPOCOR's account.
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4.6 ATTENDANCE AT TESTING. NAPOCOR and/or its experts shall be entitled to
be present at any testing at the Site; Provided notice has been given
pursuant to Article 4.3, tests may be conducted validly at the notified
times in the absence of representatives of NAPOCOR.
4.7 CERTIFICATION. Forthwith upon the completion of any testing HOPEWELL
shall certify whether or not the Unit or the Power Station has
satisfied such test and shall provide NAPOCOR with a copy of such
certificate.
ARTICLE 5
OPERATION OF THE POWER STATION
5.1 HOPEWELL'S RESPONSIBILITIES. HOPEWELL shall, at its own cost, be
responsible for the management, operation, maintenance and repair of
the Power Station until the Transfer Date and shall use its best
endeavours to ensure that during such period the Power Station is in
good operating condition and capable of converting Fuel supplied by
NAPOCOR into electricity in a safe and stable manner within the
Operating Parameters.
5.2 DOWNTIME. Notwithstanding Article 5.1, it is understood and agreed by
NAPOCOR and HOPEWELL that in order to undertake necessary overhaul,
maintenance, inspection and repair HOPEWELL shall be entitled to
periods of Downtime as provided in the Sixth Schedule (Electricity
Delivery Procedures). By not later than the Completion Date of Unit 1
and each anniversary thereof, the parties hereto shall agree an annual
schedule for Downtime during the course of the succeeding year which
shall be revised as provided in the Sixth Schedule (Electricity
Delivery Procedures). HOPEWELL shall notify NAPOCOR immediately upon
the occurrence of any unscheduled outage and provide its best estimate
of the probable duration of such outage.
5.3 OPERATION. HOPEWELL undertakes that until the Transfer Date, subject to
the supply of the necessary Fuel pursuant to Article 6 and to the other
provisions hereof, it will operate the Power Station to convert such
Fuel into electricity in accordance with Part A of Article 7.
5.4 HOPEWELL'S RIGHTS. In pursuance of its obligations under Article 5.1
HOPEWELL shall among other things have full right to:
(i) enter into contracts for the supply of materials and services,
including, contracts with NAPOCOR;
(ii) appoint and remove consultants and professional advisers;
(iii) purchase replacement equipment;
(iv) appoint, organise and direct staff, manage and supervise the
Power Station;
(v) establish and maintain regular inspection, maintenance and
overhaul procedures; and
(vi) do all other things necessary or desirable for the running of
the Power Station within the Operating Parameters.
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<PAGE> 17
5.5 NAPOCOR'S OBLIGATIONS. NAPOCOR shall at its own cost:
(i) ensure that there is provided to the Site on a continuing and
uninterrupted basis, electricity to be provided by NAPOCOR as
provided in the First Schedule (Project Scope and
Specifications) the cost of the utilization of which shall be
for HOPEWELL's account;
(ii) notwithstanding the generality of (i) above, ensure that
start-up electricity to be provided by it pursuant to the
terms hereof, necessary for the operation of the Power Station
within the Operating Parameters, is made available in a timely
fashion;
(iii) maintain and repair the Transmission Line to ensure that at
all times it is capable of operating within the specifications
set out in the Fifth Schedule (Transmission Line
Specifications);
(iv) ensure that HOPEWELL retains complete possession of the Site
on a continuing and uninterrupted basis; and
(v) maintain and repair the Access Road.
5.6 SAFETY AND TECHNICAL GUIDELINES. NAPOCOR and HOPEWELL shall organise a
steering committee which shall, from time to time, meet and discuss and
agree safety and technical guidelines for the operation of the Power
Station within the Operating Parameters and NAPOCOR's system
requirements and following such agreement HOPEWELL shall operate the
Power Station within such safety and technical guidelines.
5.7 AVAILABILITY. Availability will be determined by reference to Downtime
calculated as provided in the Sixth Schedule (Electricity Delivery
Procedures) and the parties will agree an annual schedule of
Availability which shall be reviewed from time to time taking into
consideration the requirements of both parties hereto; in agreeing such
Availability Schedule HOPEWELL shall take account of the requirements
of NAPOCOR.
5.8 ENVIRONMENTAL IMPACT. HOPEWELL will monitor and produce reports on the
environmental impact of the Power Station in accordance with and will
comply with the requirements of the Environmental Compliance
Certificate and shall operate the Power Station in compliance with the
requirements of the Environmental Compliance Certificate.
ARTICLE 6
SUPPLY OF FUEL
6.1 SUPPLY OF FUEL. Throughout the period from the testing and
commissioning of Unit 1 until the Transfer Date, NAPOCOR shall at all
times supply and deliver all Fuel and start-up electricity required by
HOPEWELL and necessary for the Power Station to generate the
electricity required to be produced by it pursuant to Part A of Article
7.
6.2 DELIVERY. NAPOCOR and HOPEWELL will liaise to prepare Fuel schedules
showing anticipated times and quantities of Fuel to be utilised by the
Power Station and NAPOCOR shall be responsible for ensuring the
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<PAGE> 18
availability of Fuel supplies, for the payment therefor and for all
arrangements with the suppliers.
Delivery to the Power Station will be arranged and paid by NAPOCOR,
and, in respect of Coal, will be by sea to the Jetty at the Site and in
respect of Oil, will be by road or sea to the oil delivery point
identified as such by HOPEWELL and then by pipeline to the oil storage
tanks at the Site. HOPEWELL will be responsible for unloading, stacking
out and reclaiming Coal to and from the coal stockpile on the Site.
6.3 COST. The cost of the Fuel to be supplied by NAPOCOR pursuant to
Article 6.1 shall be for NAPOCOR's account.
6.4 QUALITY. All Fuel and start-up electricity to be supplied by NAPOCOR
shall be of the quality described in the Fourth Schedule
(Specifications for Fuel Supply and Start-Up Electricity).
6.5 TESTING. Upon each delivery of Fuel to the Site and, if so required by
HOPEWELL, from time to time thereafter, a suitable sample will be taken
and analysed jointly by HOPEWELL and NAPOCOR to ensure that it meets
the specifications as shown in the Fourth Schedule (Specifications for
Fuel Supply and Start-Up Electricity), and HOPEWELL shall, at all
times, be entitled to reject, and NAPOCOR shall then remove at
NAPOCOR's cost, any Fuel if the results of any test relating to it show
that it does not comply with the Fuel Specifications but NAPOCOR shall
not have any liability to HOPEWELL for damage to the Power Station
resulting from the Fuel not complying with the Fuel Specifications.
6.6 MEASUREMENT. Measurement of Coal usage will be by weighers installed at
the coal feeders to each coal pulveriser. Measurement of Oil usage will
be by flow meters installed between the oil storage tanks and the oil
burners.
6.7 SUFFICIENCY. NAPOCOR shall ensure that at all times the necessary
stocks of Fuel as required by HOPEWELL have been delivered and are
stored at the Site or are available for immediate delivery to the Site.
6.8 STORAGE AND SECURITY. Coal delivered to the Site shall be stored at the
coal stockpile identified as such by HOPEWELL. Oil delivered to the
Site shall be stored in the Oil storage tanks erected by HOPEWELL.
6.9 INSURANCE. NAPOCOR shall be responsible for and shall bear the risk of
damage to or loss of the Fuel, for whatever reason, at all times prior
to the Fuel being used by HOPEWELL for the purposes of converting such
Fuel into electricity pursuant to the terms hereof, and NAPOCOR shall
accordingly ensure that at all such times the Fuel is insured for full
reinstatement value with a reputable insurance company against such
loss or damage.
6.10 FUEL MANAGEMENT. Following delivery thereof, HOPEWELL shall manage the
stocks of Fuel and shall ensure the safe storage thereof in accordance
with the standards of a prudent operator of a plant such as the Power
Station and, to the extent not covered by any policy of insurance
issued pursuant to the terms hereof, HOPEWELL shall be responsible for
any loss of Fuel caused as a direct consequence of its gross negligence
or wilful misconduct.
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ARTICLE 7
PART A
SUPPLY OF ELECTRICITY
7.1 SUPPLY. Subject to NAPOCOR supplying the necessary Fuel and start-up
electricity pursuant to Article 6, HOPEWELL agrees to convert such Fuel
into electricity and NAPOCOR agrees to take and pay for all electricity
requested by NAPOCOR in accordance with the procedures set out in the
Sixth Schedule (Electricity Delivery Procedures) and the Operating
Parameters set out in the Second Schedule (Operating Parameters).
HOPEWELL shall dedicate the entire Power Station output (net of Power
Station usage) to NAPOCOR.
7.2 QUANTITY. The quantities of electricity delivered to NAPOCOR by
HOPEWELL from time to time shall be monitored, measured and recorded in
accordance with the provisions of the Seventh Schedule (Measurement and
Recording of Electricity).
7.3 FAILURE TO SUPPLY/ACCEPT ELECTRICITY. HOPEWELL shall notify NAPOCOR
promptly of the occurrence of any event (other than scheduled Downtime)
which results or may result in the Power Station being unable to
operate in accordance with the Specifications and within the Operating
Parameters and NAPOCOR shall notify HOPEWELL promptly of the occurrence
of any event which results or may result in NAPOCOR being unable to
accept electricity in accordance with requirements previously notified
to HOPEWELL.
7.4 DELIVERY OF ELECTRICITY. The place for delivery of the electricity
shall be the Delivery Points. Without prejudice to the provisions of
Part B and NAPOCOR's obligations to make fee payments, it is
acknowledged that the Power Station is a despatchable provider of
electricity and accordingly, subject to NAPOCOR giving the necessary
notice, NAPOCOR shall only be obliged to accept power that it has
requested.
PART B
FEES
7.5 FEES. (a) Save as provided in (b) below, in respect of each Month,
or part thereof, falling within the Cooperation Period in respect of
each Unit NAPOCOR shall pay to HOPEWELL PHILIPPINES/HOPEWELL Capital
Recovery Fees, Fixed Operating Fees, Service Fees, Infrastructure Fees
and Energy Fees in each case calculated as provided in the Eighth
Schedule (Delivery of Power and Energy).
(b) If the Unit Completion Date in respect of a Unit occurs
prior to the commencement of its Cooperation Period then, for the
period commencing on such Completion Date and ending on the day falling
immediately prior to the first day of such Cooperation Period, and also
for the period commencing twenty-five (25) years after such Completion
Date and ending on the last day of such Cooperation Period, NAPOCOR
shall pay to HOPEWELL PHILIPPINES/HOPEWELL by way of fees under this
Article only the amounts pertaining to Fixed Operating Fees and Energy
Fees, in
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each case calculated as provided in the Eighth Schedule (Delivery of
Power and Energy).
(c) After the end of the Cooperation Period in respect of Unit
1, NAPOCOR will make payments on the same basis as provided in (b)
above in respect of electricity which HOPEWELL certifies is available
to it from Unit 1.
7.6 INVOICES FOR FEES. In respect of each Month HOPEWELL
PHILIPPINES/HOPEWELL will deliver to NAPOCOR an invoice in respect of
Capital Recovery Fees, Fixed Operating Fees, Service Fees,
Infrastructure Fees and Energy Fees for such Month and NAPOCOR shall
pay to HOPEWELL PHILIPPINES/HOPEWELL the amount of such invoice within
30 days after the delivery of such invoice.
7.7 PAYMENT. All fees payable to HOPEWELL PHILIPPINES/HOPEWELL pursuant to
this Article shall be paid in the currencies stipulated in the Eighth
Schedule (Delivery of Power and Energy) save that any Value Added Tax
thereon (which shall be separately stated in all invoices) shall be
paid in pesos and each sum payable shall be increased so as to ensure
that after NAPOCOR has deducted therefrom any and all taxes or charges
required to be deducted therefrom pursuant to Article 7.11 by NAPOCOR
there remains a sum equal to the amount that would have been payable to
HOPEWELL PHILIPPINES/HOPEWELL had there been no requirement to deduct
or withhold such taxes or other charges.
7.8 ENERGY FEES. During commissioning and testing, NAPOCOR shall pay to
HOPEWELL PHILIPPINES/HOPEWELL Energy Fees calculated as provided in the
Eighth Schedule (Delivery of Power and Energy) in respect of all
electricity generated.
7.9 CAPACITY FEES. Subject to Article 13, NAPOCOR shall pay HOPEWELL
PHILIPPINES/HOPEWELL Capacity Fees calculated as provided in the Eighth
Schedule (Delivery of Power and Energy), on the basis that the Unit or
Units shall be deemed to have been successfully tested to their Nominal
Capacity, in respect of the period, if any, from the date upon which
HOPEWELL PHILIPPINES/HOPEWELL provides notice of its intention to
commence testing following mechanical and electrical completion of one
or both of the Units until the date upon which NAPOCOR confirms that
installation and connection of the Transmission Lines has been
completed and that they are capable of operating within the
specifications contained in the Fifth Schedule (Transmission Line
Specifications).
7.10 INVOICES FOR CAPACITY FEES AND ENERGY FEES. In respect of each calendar
month or part thereof, HOPEWELL PHILIPPINES/HOPEWELL will deliver to
NAPOCOR an invoice in respect of Capacity Fees and Energy Fees payable
pursuant to Articles 7.8 and 7.9 for such month and any bonus or fees
payable hereunder for such month or part thereof and NAPOCOR shall pay
to HOPEWELL PHILIPPINES/HOPEWELL, the amount of such invoice within 30
days after the delivery of such invoice.
7.11 NO SET OFF. All payments made by NAPOCOR hereunder shall be made free
and clear of and without any deduction for or on account of any
set-off, counterclaim, tax or otherwise except as required by the law
of the Republic of the Philippines or in payment of penalties referred
to in Article 3.13.
7.12 DISPUTES. If NAPOCOR disputes the amount specified in any invoice it
shall so inform HOPEWELL PHILIPPINES/HOPEWELL within seven (7) days of
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receipt of such invoice; if the dispute is not resolved by the due date
NAPOCOR shall pay the undisputed amount on or before such date and the
disputed amount shall be resolved within fourteen (14) days after the
due date for such invoice and all or any part of the disputed amount
paid to HOPEWELL PHILIPPINES/HOPEWELL shall be paid together with
interest pursuant to Article 29.1 from the due date of such invoice.
Part C
Foreign Exchange
7.13 DOLLAR PAYMENTS. All sums payable to HOPEWELL PHILIPPINES/HOPEWELL in
dollars shall be payable in dollars in New York, in same-day funds not
later than 11:00 a.m., New York time, on the day when payment is due,
to the account of HOPEWELL PHILIPPINES/HOPEWELL (which HOPEWELL
PHILIPPINES/HOPEWELL shall notify to NAPOCOR) at Citibank, N.A. of
Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong, New York
or such other account as HOPEWELL PHILIPPINES/HOPEWELL may specify and
is acceptable to NAPOCOR.
7.14 COST OF PAYMENTS. Any costs incurred by NAPOCOR in connection with the
remittance of funds outside the Philippines shall be for NAPOCOR's
account and NAPOCOR shall ensure that the amount received by HOPEWELL
PHILIPPINES/HOPEWELL shall be the full gross amount free from any
claims or deductions whatsoever.
7.15 PESO PAYMENTS. All sums payable to HOPEWELL PHILIPPINES/HOPEWELL in
pesos shall be payable in pesos in Manila, in same-day funds not later
than 11:00 a.m., Manila time, on the day when payment is due, to the
account of HOPEWELL PHILIPPINES /HOPEWELL with a bank in Manila that
HOPEWELL PHILIPPINES/HOPEWELL shall specify to NAPOCOR.
7.16 DOLLAR DEFICIENCY. In the event that any payment, whether pursuant to
judgment or otherwise, upon prompt conversion to dollars and transfer
to New York, as provided in Article 7.13, does not result in payment of
the dollar amount stipulated in this Agreement, HOPEWELL
PHILIPPINES/HOPEWELL shall be entitled to immediate payment of, and
shall have a separate cause of action for, the dollar deficiency.
However, should any such payment (upon conversion to dollars and
transfer to New York as aforesaid) result in the receipt by HOPEWELL
PHILIPPINES/HOPEWELL of a sum in excess of the dollar amount stipulated
in this Agreement, HOPEWELL PHILIPPINES/HOPEWELL shall notify and pay
the excess amount to NAPOCOR immediately upon HOPEWELL's receipt of
notice of the over-payment and its agreement to the same.
7.17 PAYMENTS TO NAPOCOR. All sums payable by HOPEWELL PHILIPPINES/HOPEWELL
to NAPOCOR, whether pursuant to judgment or otherwise, shall be payable
in same-day funds not later than 11:00 a.m., Manila time, on the day
when payment is due, to the account of NAPOCOR with a bank in Manila
that NAPOCOR shall specify.
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Part D
Change in Circumstances
7.18 CHANGE IN CIRCUMSTANCES. In the event that as a result of any laws or
regulations of the Republic of Philippines, or any agency or other body
under the control of the Government of the Republic of the Philippines
or any regional or municipal authority thereof, coming into effect
after 15th March, 1989, or as a result of any such laws or regulations
(including any official interpretation thereof which HOPEWELL has
relied upon in entering into this Agreement) in force at the date
hereof being amended, modified or repealed, the interest of HOPEWELL in
the Site, the Project or the Power Station and/or HOPEWELL's economic
return (net of tax or other imposition, including, without limitation
any withholding or remittance tax on the payment of dividends) on its
investment is materially reduced, prejudiced or otherwise adversely
affected (including without limitation, any restriction on the ability
to remit funds in dollars outside of the Philippines) then the parties
hereto shall meet and endeavour to agree amendments to this Agreement
and if after 90 days no such agreement has been reached the provisions
of Article 8.5 shall apply.
Article 8
Part A
Transfer of Ownership
8.1 TRANSFER. Prior to the Transfer Date HOPEWELL shall arrange for
training to be provided for an adequate number of NAPOCOR personnel in
relation to the operation of the Power Station. On the Transfer Date
HOPEWELL shall transfer to NAPOCOR (and shall execute such documents as
may reasonably be considered necessary to effect such transfer), free
from any lien or encumbrance created by HOPEWELL and without the
payment of any compensation, all its right, title and interest in and
to the fixtures, fittings, spare parts, plant and equipment (including
test equipment and special tools and vehicles used solely in plant
management and operation) and all improvements comprising the Power
Station. HOPEWELL shall also deliver to NAPOCOR on such date such
operating manuals, operation summaries/transfer notes, design drawings
and other information as may reasonably be required by NAPOCOR to
enable it to take over the operation of the Power Station. HOPEWELL
shall arrange a maintenance schedule which ensures that a scheduled
overhaul of the Power Station shall occur within twelve months of the
Transfer Date. NAPOCOR acknowledges and agrees that ownership of the
Jetty may have to be turned over to the Philippine Ports Authority on
or before the Transfer Date in accordance with the regulations issued
by such Authority.
8.2 INVENTORIES. Six months prior to the Transfer Date, NAPOCOR and
HOPEWELL shall meet and agree the inventories involved, the mechanics
of transfer and security arrangements but HOPEWELL shall not be liable
for any discrepancies between such inventories and the actual fixtures,
fittings, plant and equipment and vehicles transferred provided that
following agreement on inventories HOPEWELL shall exercise the same
care regarding the fixtures, fittings, plant and equipment and all
improvements therein as it did prior to agreeing the same and provided
further that NAPOCOR shall be entitled to provide a security unit
within the Site.
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8.3 WARRANTIES. The Power Station and all other equipment transferred
pursuant to Article 8.1 or otherwise pursuant to this Agreement shall
be transferred on an "as is" basis and any warranties which would
otherwise be implied by statute or otherwise, including, without
limitation, warranties as to title, fitness for the purpose, the
absence of patent or inherent defects, description or otherwise of
whatsoever nature will be excluded and after the Transfer Date HOPEWELL
shall be under no liability whatsoever to NAPOCOR in respect of the
operation or otherwise of the Power Station by NAPOCOR or a person
designated by NAPOCOR and NAPOCOR shall indemnify and keep indemnified
HOPEWELL against any liability to any person arising from the use or
operation of the Power Station after the Transfer Date Provided however
that HOPEWELL shall, provided the cost of such subrogation or
assignment is met by NAPOCOR, subrogate or assign to NAPOCOR any and
all rights and benefits which it is able to subrogate or assign of any
unexpired warranties in respect of the building, plant and equipment of
the Power Station under applicable laws or otherwise.
8.4 NAPOCOR'S RESPONSIBILITIES. NAPOCOR shall be responsible for all costs
and expenses (including legal fees and taxes or duties) incurred in
connection with the transfer referred to in Article 8.1 and shall at
its own cost obtain or effect all governmental and other approvals,
licences, registrations and filings and take such other action as may
be necessary for the transfer contemplated in Article 8.1, and
reimburse HOPEWELL on demand for all such costs and expenses incurred
by HOPEWELL in respect of such transfer.
Part B
Buyout
8.5 BUYOUT. If the circumstances set out in Article 7.18, Article 9.4,
Article 14.4 or Article 28.4 arise or if, not earlier than 20 years
after the Completion Date, NAPOCOR gives not less than 90 days notice
to HOPEWELL that it wishes to close the Power Station or, if NAPOCOR
has failed to ensure the due payment of any sum due hereunder within
three months of its due date then, upon HOPEWELL giving to NAPOCOR not
less than 90 days notice requiring NAPOCOR to buy out HOPEWELL or, as
the case may be, NAPOCOR giving not less than 90 days notice requiring
HOPEWELL to sell out to NAPOCOR, NAPOCOR shall purchase all HOPEWELL's
right, title and interest in and to the Power Station and thereupon all
HOPEWELL's obligations hereunder shall cease.
8.6 WARRANTIES AND RESPONSIBILITIES. In respect of any transfer of the
Power Station pursuant to Article 8.5 the provisions of Articles 8.3
and 8.4 shall apply thereto and the Power Station shall be transferred
free from any lien or encumbrance created by HOPEWELL.
8.7 BUYOUT PRICE. Subject to Article 8.8, the purchase price in dollars,
payable pursuant to Article 8.5, will be the total remaining amount of
the Capacity Fees (except Fixed Operating Fees) payable to HOPEWELL
pursuant to Article 7.5 until the Transfer Date upon the assumption
that the Contracted Capacity during each year of the Cooperation Period
for such period is equal to the lower of the Contracted Capacity last
nominated by HOPEWELL and the Nominal Capacity and the resulting figure
discounted to its value on the date of completion of the buyout by
applying a discount rate equal to the last published Commercial
Interest Reference Rate for
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dollars published by the Organization for Economic Cooperation and
Development Provided that no buyout may take place without the consent
of HOPEWELL if the purchase price calculated as above is not positive
Provided further that if NAPOCOR is to buy out HOPEWELL pursuant to
Article 8.5 pursuant to a notice given by NAPOCOR not earlier than 20
years after the Completion Date that NAPOCOR wishes to close the Power
Station in calculating the purchase price pursuant to this Article the
Service Fees shall be reduced by five per cent (5%).
8.8 PRE COMPLETION BUYOUT PRICE. If the provisions of Article 8.5 apply
prior to the Completion Date, the purchase price payable shall be an
amount equal to the aggregate of all the costs, expenses and
liabilities incurred by HOPEWELL in connection herewith as estimated by
an independent accountant jointly appointed by both parties plus an
amount equal to ten per cent (10%) of such aggregate provided such
additional amount shall not be payable if the provisions of Article 8.5
are applicable pursuant to Article 14.4.
8.9 TIMING. Completion of a buyout pursuant to Article 8.5 shall take place
on the date of the expiry of the notice specified therein at which time
NAPOCOR will pay to HOPEWELL the purchase price calculated in
accordance with Article 8.7 or, as the case may be, Article 8.8 and
payable in dollars and HOPEWELL shall warrant that following such
buyout the Power Station shall be free from any lien or encumbrance
created by HOPEWELL.
8.10 DEDUCTIONS. In the event that the provisions of Article 8.5 apply
pursuant to Article 14.4. then there shall be deducted from the sum
payable pursuant to Article 8.8 an amount equal to the value, if any,
of any insurance proceeds received by HOPEWELL in respect of the event
leading to the operation of the provisions of Article 14.4.
Article 9
Representations and Warranties of HOPEWELL
9.1 CORPORATE EXISTENCE. HOPEWELL represents that it is a private
corporation, duly organised and existing under the laws of Hong Kong
with the corporate power and authority to execute, deliver and perform
the terms and conditions to be performed by it under this Agreement.
9.2 GOVERNMENT AUTHORISATIONS. HOPEWELL represents and warrants that it has
taken or, by the Effective Date it will have taken, all necessary
corporate action and secured or caused to be secured all orders,
consents, approvals, licences and permits of all relevant governments
or governmental agencies in order for it to construct, own and operate
the Power Station.
9.3 COMPLIANCE WITH STANDARDS. HOPEWELL warrants that the Power Station
shall be constructed, operated and maintained in accordance with
internationally acceptable engineering standards and internationally
accepted environmental standards adopted in the Philippines.
9.4 COMPLIANCE WITH LAWS. HOPEWELL shall operate the Power Station in
accordance with all environmental and other Philippine and local laws
and regulations in force as at 15th March, 1989 and shall comply with
any changes in such laws and regulations and with any new laws and
regulations
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provided that if to comply with such change or new laws and regulations
would:
(i) result in the Power Station being unable to operate in
accordance with the Specifications or within the Operating
Parameters; or
(ii) result in the interest of HOPEWELL in the Site, the Project or
the Power Station and/or HOPEWELL's expectation of its
economic return (net of tax or other imposition) on its
investment being materially and adversely affected,
then the parties shall meet and endeavour to agree on amendments to
this Agreement and if after 90 days no such agreement has been reached
the provisions of Article 8.5 shall apply.
9.5 WARRANTY AGAINST CORRUPTION. HOPEWELL hereby warrants that neither it
nor its representatives have offered any government officer and/or
NAPOCOR official or employee any consideration or commission for this
Agreement nor has it or its representatives exerted or utilized any
corrupt or unlawful influence to secure or solicit this Agreement for
any consideration or commission; that HOPEWELL shall not subcontract
any portion or portions of the scope of the work of the Agreement
awarded to any person known by HOPEWELL to be an official or employee
of NAPOCOR or to the relatives within the third degree of consanguinity
or affinity of NAPOCOR officials who are directly or indirectly
involved in contract awards or project prosecution and that if any
commission is being paid to a private person, HOPEWELL shall disclose
the name of the person and the amount being paid and that any material
violation of this warranty shall constitute a sufficient ground for the
recission or cancellation of this Agreement or the deduction from the
contract price of the consideration or commission paid without
prejudice to the filing of civil or criminal action under the
Anti-Graft Law and other applicable laws against HOPEWELL and/or its
representatives and NAPOCOR's officials and employees.
Article 10
Representations and Warranties of NAPOCOR
10.1 CORPORATE EXISTENCE. NAPOCOR represents that it is a corporation duly
organised and existing under and by virtue of the laws of the Republic
of the Philippines, and has the corporate power and authority to
execute, deliver and carry out the terms and conditions of this
Agreement.
10.2 GOVERNMENT AUTHORISATIONS. NAPOCOR represents and warrants that it has
taken (or, in relation to the purchase of power and the making of
payments as aftermentioned, by the Effective Date it will have taken)
all necessary corporate action, and has secured or caused to be secured
all necessary Government orders, consents or approvals, permits and
licenses to enter into this Agreement, purchase power from HOPEWELL and
make payments therefor in the respective currencies referred to herein.
10.3 COMPLIANCE WITH LAWS. NAPOCOR shall, at all times, conform to all laws,
rules, regulations and ordinances applicable to NAPOCOR, the failure to
comply with which will have a material adverse effect on its ability to
perform its obligations hereunder.
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Article 11
Taxes
11.1 RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all
taxes, import duties, fees, charges and other levies imposed by the
National Government of the Republic of the Philippines or any agency or
instrumentality thereof to which HOPEWELL or HOPEWELL PHILIPPINES may
at any time be or become subject in or in relation to the performance
of their obligations under this Agreement (other than (i) taxes imposed
or calculated on the basis of the net income HOPEWELL/HOPEWELL
PHILIPPINES and (ii) construction permit fees, environmental permit
fees and other similar fees and charges) and (b) all real estate taxes
and assessments, rates and other charges in respect of the Site, the
buildings and improvements thereon and the Power Station.
11.2 PAYMENTS FREE AND CLEAR. Without limiting the generality of the
foregoing Article, all sums payable by NAPOCOR hereunder, whether by
way of fees, reimbursement of expenses or taxes, or otherwise shall be
paid in full, without set-off or counterclaim, free of any deductions
or withholdings imposed by the National Government of the Republic of
the Philippines or any political subdivision or taxing authority
thereof, all of which shall be for the account of NAPOCOR. In the event
that NAPOCOR is prohibited by law from making payments hereunder free
of deductions or withholdings, then NAPOCOR shall pay such additional
amounts to HOPEWELL as may be necessary in order that the actual amount
received after deduction or withholding (and after payment of any
additional taxes or other charges due as a consequence of the payment
of such additional amounts) shall equal the amount that would have been
received if such deduction or withholding were not required.
Article 12
Insurance
HOPEWELL shall be responsible to ensure that there is effected insurance as
provided in the Tenth Schedule (Insurance) and shall provide NAPOCOR with copies
of all policies of insurance effected by it. Subject to the terms of Article
14.7 and unless NAPOCOR has failed to perform any of its payment obligations
hereunder and such failure is continuing, the proceeds of claims against such
insurances, except third party liability and workmen's compensation insurance,
with respect to damage or other casualty to the Power Station shall be applied
by HOPEWELL to the extent necessary to repair or restore the Power Station to
its previous condition.
Article 13
Transmission Line
NAPOCOR shall ensure that the Transmission Line is installed and connected in
accordance with the agreed programme referred to in Article 28.3(ix) and that it
is by such time capable of operating within the specifications set out in the
Fifth Schedule (Transmission Line Specifications). If the Unit/Power Station
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completion is anticipated to be earlier than originally scheduled, NAPOCOR and
HOPEWELL shall use their best efforts to adjust the programme accordingly.
Article 14
Force Majeure
14.1 FORCE MAJEURE. No failure or omission to carry out or observe any of
the terms, provisions or conditions of this Agreement shall give rise
to any claim by any party hereto against any other party hereto, or be
deemed to be breach of this Agreement if the same shall be caused by or
arise out of:
(a) (other than as referred to in paragraph (b) below), any war,
declared or not or hostilities, or of belligerence, blockade,
revolution, insurrection, riot, public disorder,
expropriation, requisition, confiscation or nationalization,
export or import restrictions by any governmental authorities,
closing of harbours, docks, canals, or other assistances to or
adjuncts of the shipping or navigation of or within any place,
rationing or allocation, whether imposed by law, decree or
regulation by, or by compliance of industry at the insistence
of any governmental authority, or fire, unusual flood,
earthquake, volcanic activity, storm, typhoons, lightning,
tide (other than normal tides), tsunamis, perils of the sea,
accidents of navigation or breakdown or injury of vessels,
accidents to harbours, docks, canals, or other assistances to
or adjuncts of the shipping or navigation, epidemic,
quarantine, strikes or combination of workmen, lockouts or
other labour disturbances, or any other event, matter or
thing, wherever occurring, which shall not be within the
reasonable control of the party affected thereby; or
(b) war, declared or not or hostilities occurring in or involving
the Republic of the Philippines, or of belligerence, blockade,
revolution, insurrection, riot, public disorder,
expropriation, requisition, confiscation or nationalization by
or occurring in or involving the Republic of the Philippines,
export or import restrictions by any governmental, regional or
municipal authorities of or within the Republic of the
Philippines, closing of harbours, docks, canals, or other
assistances to or adjuncts of the shipping or navigation of or
within the Republic of the Philippines, rationing or
allocation, whether imposed by law, decree or regulation by,
or by compliance of industry at the insistence of, any
governmental authority of or within the Republic of the
Philippines, or any other event, matter or thing, wherever
occurring, which shall be within the reasonable control of
NAPOCOR or the government of the Republic of the Philippines
or any agency or regional or municipal authority thereof,
each of the foregoing events, matters or things being called "Force
Majeure" in this Agreement.
14.2 EXCEPTIONS. Notwithstanding Article 14.1 NAPOCOR (i) shall not be
entitled to claim for itself Force Majeure in respect of any Force
Majeure mentioned in sub-paragraph (b) of Article 14.1; and (ii) shall
not be relieved of its obligation to make payments of Capacity Fees or
other fees
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as provided in Part B of Article 7 by the occurrence of any Force
Majeure mentioned in sub-paragraph (b) of Article 14.1 whether
affecting NAPOCOR or HOPEWELL.
14.3 PROCEDURE. The party invoking Force Majeure shall:
(a) notify the other parties as soon as reasonably possible by
telex or cable of the nature of the Force Majeure and the
extent to which the Force Majeure suspends the affected
party's obligations under this Agreement; and
(b) resume performance of its obligations as soon as possible
after the Force Majeure condition no longer exists.
14.4 REVISED TIMETABLE. If Force Majeure applies prior to the Completion
Date the parties will meet to discuss a revised timetable for the
completion of the Project indicating the proposed completion dates of
the Units and the Power Station. If the Force Majeure has applied for a
period in excess of 180 days and such Force Majeure is mentioned in
sub-paragraph (b) of Article 14.1 the provisions of Article 8.5 shall
apply.
14.5 COOPERATION PERIOD. If Force Majeure applies by the occurrence of any
Force Majeure mentioned in sub-paragraph (a) of Article 14.1 during the
Cooperation Period the Cooperation Period shall be extended by a period
equal to that during which the effect of the Force Majeure applies
provided that if such effect applies for a period in excess of 180 days
the parties hereto will meet to discuss the basis and terms upon which
the arrangements set out in this Agreement may be continued.
14.6 CONSULTATION. The parties hereto will consult with each other and take
all reasonable steps to minimise the losses of either party resulting
from Force Majeure.
14.7 UNINSURED FORCE MAJEURE. If any event of Force Majeure occurs which
causes material damage to the Project or the Power Station and such
event or such damage would not ordinarily be insured against by NAPOCOR
then HOPEWELL shall not be obliged to reinstate the Power Station, or,
as the case may be, complete the building of the same, until the
parties hereto have agreed upon the terms for such reinstatement or
completion in a manner which will ensure that HOPEWELL's economic
return on its investment is substantially maintained and not prejudiced
in any material way and NAPOCOR agrees that it shall promptly, and in
good faith, enter into discussions with HOPEWELL to reach such
agreement.
Article 15
Delay, Termination and Abandonment
15.1 COST REIMBURSEMENT. If, on or before the 30th June, 1992, or such later
date as the parties hereto may agree, the Effective Date has not
occurred, NAPOCOR shall reimburse and indemnify HOPEWELL for all costs
and liabilities incurred by HOPEWELL in respect of its obligations
under Part A of Article 3 provided that NAPOCOR has given its prior
written approval to HOPEWELL incurring such cost or liability;
NAPOCOR's obligations under this Article 15.1 shall be effective
notwithstanding that the Effective Date has not occurred or that all or
any of the conditions precedent set out in Articles 28.1, 28.2 and 28.3
have not been satisfied or waived.
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15.2 NEW EFFECTIVE DATE. If all the conditions set forth in Articles 3.1,
28.1, 28.2 and 28.3 hereof have not been satisfied as of 30th
September, 1992, the parties hereto shall meet and endeavour to agree a
new effective date; if no agreement is reached on or before 31st
December, 1992, this Agreement shall, subject to Article 15.1, be
declared automatically cancelled (except as required in respect of
Article 15.1) and the parties shall have no liability with respect to
each other except as provided in Article 15.1.
Article 16
Several Obligations
Except where specifically stated in the Agreement to be otherwise, the duties,
obligations, and liabilities of the parties hereto are intended to be several
and not joint or collective. Nothing contained in this Agreement shall ever be
construed to create an association, trust, partnership, or joint venture among
the parties hereto. Each Party hereto shall be liable individually and severally
for its own obligations under this Agreement.
Article 17
Notices
17.1 WRITING. Unless otherwise stated, each communication to be made
hereunder shall be made in writing but, unless otherwise stated, may be
made by telex or letter.
17.2 ADDRESSES. Any communication or document to be made or delivered by one
party to another pursuant to this Agreement shall be made or delivered
to that other at the following address or telex number:
NATIONAL POWER CORPORATION
President
Agham Road corner Quezon Avenue
Quezon City, Philippines
Telex Number: 40120 NAPOCOR PM
HOPEWELL ENERGY INTERNATIONAL LIMITED
Managing Director
183 Queen's Road East
Hong Kong
Telex Number: 72485 or 76437 HOWEL HX
HOPEWELL POWER (PHILIPPINES) CORPORATION
President
Ground Floor Legaspi Towers 300
2600 Roxas Boulevard, Manila
Philippines
or such other address notified by that party to the other parties by
giving not less than 15 days notice of such change of address, and
shall
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be deemed to have been made or delivered (i) in the case of any
communication made by telex with correct answerback, when despatched
to such telex number, and (ii) in the case of any communication made
by letter, when left at that address or otherwise received by the
addressee.
Article 18
Non-Waiver
None of the provisions of this Agreement shall be considered waived by either
party except when such waiver is given in writing. The failure of either party
to insist, in any one or more instances, upon strict performance of any of the
provisions of this Agreement or to take advantage of any of its rights hereunder
shall not be construed as a waiver of any such provisions or the relinquishment
of any such rights for the future, but the same shall continue and remain in
full force and effect.
Article 19
Benefit of Agreement
19.1 ASSIGNMENT BY NAPOCOR. NAPOCOR may not assign or transfer all or any
part of its rights, benefits or obligations hereunder Provided that
this Article shall not prevent NAPOCOR from merging or consolidating
with any other company which is wholly or substantially owned by the
Republic of the Philippines where the surviving entity adopts and
becomes fully liable to perform NAPOCOR's obligations hereunder and
such merger or consolidation does not affect the validity and
enforceability of the Performance Undertaking.
19.2 ASSIGNMENT BY HOPEWELL. HOPEWELL may not without the consent of
NAPOCOR, subject to Article 19.3, transfer all or any of its
obligations hereunder but may, for the purposes of arranging or
rearranging finance for the Project, assign or transfer to any person
providing finance to the Project all or any part of its rights and
benefits hereunder but not its obligations and NAPOCOR shall duly
acknowledge any such assignment or transfer of which it is given
notice.
19.3 HOPEWELL PHILIPPINES. The importation into the Philippines of all
equipment for the Project and all other work in connection with the
Project which necessarily has to be performed in the Philippines and
which HOPEWELL agrees to be responsible for hereunder shall be carried
out by HOPEWELL PHILIPPINES which shall undertake to perform HOPEWELL's
obligations to perform such work and in consideration of which NAPOCOR
shall pay fees as provided Part B of Article 7; HOPEWELL PHILIPPINES,
in carrying out such work and receiving such fees shall act on its own
behalf and for its own benefit, and not as an agent or representative
of HOPEWELL; for such purpose, HOPEWELL, NAPOCOR and HOPEWELL
PHILIPPINES (whose participation HOPEWELL shall procure) shall execute
and deliver the Accession Undertaking, upon the effectiveness of which
HOPEWELL PHILIPPINES shall become a party hereto without the need for
any further action on the part of HOPEWELL or NAPOCOR and the rights
and obligations of NAPOCOR and HOPEWELL under this Agreement shall be
transferred and amended in accordance with the terms of the Accession
Undertaking, as if
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HOPEWELL PHILIPPINES had executed this Agreement as amended by the
terms of the Accession Undertaking.
Article 20
Dispute Resolution
20.1 REGULAR MEETINGS. Throughout the term of this Agreement representatives
of the Directors of NAPOCOR, HOPEWELL and HOPEWELL PHILIPPINES shall
meet regularly at not less than yearly intervals to discuss the
progress of the Project and the operation of the Power Station in order
to ensure that the arrangements between the parties hereto proceed on a
mutually satisfactory basis.
20.2 AMICABLE SETTLEMENT. The parties hereto agree that in the event that
there is any dispute or difference between them arising out of this
Agreement or in the interpretation of any of the provisions hereof they
shall endeavour to meet together in an effort to resolve such dispute
by discussion between them but failing such resolution the Chief
Executives of Hopewell Holdings Limited and NAPOCOR shall meet to
resolve such dispute or difference and the joint decision of such Chief
Executives shall be binding upon the parties hereto and in the event
that a settlement of any such dispute or difference is not reached
pursuant to this Article 20.02 then the provisions of Article 24 shall
apply.
Article 21
Entire Agreement
This Agreement and its Schedules and figures supersede any previous agreements,
arrangements or representations between the parties, whether oral or written, in
respect of the subject matter hereof and shall constitute the entire agreement
between the parties in relation thereto.
Article 22
Law
This Agreement shall be governed by and construed in accordance with the laws of
the Republic of the Philippines.
Article 23
Disclaimer
Notwithstanding anything to the contrary in this Agreement, in no event shall
either party be liable to the other party for any indirect, special, incidental,
consequential or exemplary damages with respect to any claim arising out of this
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Agreement, whether based upon contract, tort (including negligence), strict
liability, patent, trademark, or servicemark or otherwise.
Article 24
Jurisdiction
24.1 PHILIPPINE COURTS. The parties hereto submit to the non-exclusive
jurisdiction of the proper courts of the Republic of the Philippines
for the hearing and determining of any action or proceeding arising out
of or in connection with this Agreement.
24.2 IMMUNITY. To the extent that NAPOCOR may in any jurisdiction claim for
itself or its assets or revenues immunity from suit, execution,
attachment (whether in aid of execution, before judgment or otherwise)
or other legal process and to the extent that in any such jurisdiction
there may be attributed to itself or its assets or revenues such
immunity (whether or not claimed) NAPOCOR agrees not to claim and
irrevocably waives such immunity to the full extent permitted by the
laws of such jurisdiction
Article 25
Effect of Article/Section Headings
Article, Part, paragraph and/or Section headings appearing in this Agreement are
inserted for convenience only and shall not be construed as interpretation of
text.
Article 26
Separability
If any part or parts of this Agreement shall be declared invalid by competent
courts, the other parts hereof shall not thereby be affected or impaired.
Article 27
Liability
27.1 LIMIT OF LIABILITY. HOPEWELL's liability to NAPOCOR arising from any
breach of this Agreement or otherwise in connection with the Power
Station shall be limited to payments as provided in Articles 3.13, 3.14
and 6.10.
27.2 NAPOCOR INDEMNITY. NAPOCOR shall indemnify and hold HOPEWELL, its
officers and employees harmless against any claims of any person who
directly or indirectly suffers as a result of an interruption of
electricity supply or any other disruption or surge of electricity
supply arising out of or in connection with this Agreement and any of
HOPEWELL's, its officers' or employees' actions or omissions in
connection with the
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same and NAPOCOR shall indemnify HOPEWELL against any loss, cost or
expense resulting from damage to the Power Station caused or resulting
from any interruption or disruption or surge of electricity along the
Transmission Line, unless and to the extent that such loss, cost or
expense would have been avoided had any safety and protective equipment
installed on the Site by HOPEWELL not failed to operate to
specifications agreed between NAPOCOR and HOPEWELL.
27.3 CROSS INDEMNITY. Subject to Article 27.1, NAPOCOR and HOPEWELL shall
each indemnify, defend, and save harmless the other, its directors,
officers, employees and agents (including but not limited to affiliates
and contractors and their employees) from and against all liabilities,
damages, losses, penalties, claims, demands, suits, costs, expenses
(including reasonable attorney's fees and expenses) and proceedings of
any nature whatsoever for bodily injury (including death) or property
damage (but not economic loss or any other consequential damage) that
result from the performance under this Agreement by or on behalf of
that party (including, with respect to HOPEWELL/HOPEWELL PHILIPPINES,
the engineering, design, construction, financing, purchase,
acquisition, acceptance, delivery, ownership, possession, operation,
use, leasing, maintenance, repair, reconditioning, return, abandonment
or other application or disposition of the Power Station and any fuel,
equipment, materials or supplies used therein, by-products (including
steam, waste products or emissions therefrom), except to the extent
that such injury and/or any damage is attributable to the negligent or
intentional act or omission of the party seeking to be indemnified or
its directors, officers, employees, representatives or agents); in the
event such injury or damage results from the joint or concurrent
negligent or intentional act or omission of the parties, each shall be
liable under this indemnification in proportion to its relative degree
of fault.
Article 28
Conditions Precedent
28.1 NAPOCOR CONDITIONS PRECEDENT. It shall be a condition precedent to this
Agreement that by 30th June, 1992, or such later date as the parties
hereto may agree, the following are supplied to NAPOCOR by HOPEWELL,
each in form and substance satisfactory to NAPOCOR or that such a
condition precedent is waived by NAPOCOR:
(i) copies of the Memorandum and Articles of Association of
HOPEWELL, as certified by the company secretary of HOPEWELL in
a manner satisfactory to NAPOCOR;
(ii) copies of resolutions adopted by HOPEWELL's Board of Directors
authorising the execution, delivery and performance by
HOPEWELL of this Agreement certified by the company secretary
of HOPEWELL in a manner satisfactory to NAPOCOR;
(iii) approval of the Central Bank to make payments to HOPEWELL in
dollars as provided in this Agreement;
(iv) a bond, guarantee or standby letter of credit of a financial
institution securing a maximum amount of $16,000,000 (which
shall reduce by fifty per cent (50%) upon the Unit Completion
Date in
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respect of Unit 1) and otherwise reasonably acceptable to
NAPOCOR in respect of HOPEWELL's obligations under Articles
3.13 and 3.14;
(v) a copy of the Articles of Incorporation of HOPEWELL
PHILIPPINES, as registered with the Securities and Exchange
Commission, certified by the company secretary in a manner
satisfactory to NAPOCOR.
28.2 HOPEWELL CONDITIONS PRECEDENT. It shall be a condition precedent to
this Agreement that by 30th June, 1992, or such later date as the
parties hereto may agree, the following are supplied to HOPEWELL by
NAPOCOR, each in form and substance satisfactory to HOPEWELL or that
such a condition precedent is waived by HOPEWELL:
(i) copies of the Charter and By-Laws of NAPOCOR, and of
resolutions adopted by its Board of Directors authorising the
execution delivery and performance by NAPOCOR of this
Agreement, each certified by the corporate secretary of
NAPOCOR in a manner satisfactory to HOPEWELL;
(ii) copies of such consents, licences, permits, approvals and
registrations by or with any governmental agency or other
authority in the Philippines or elsewhere as may be necessary
to ensure the validity and binding effect of this Agreement
and to permit the performance by each of NAPOCOR and HOPEWELL
of its obligations under this Agreement;
(iii) a certificate of the corporate secretary of NAPOCOR confirming
that all necessary corporate and other approvals and action
have been duly obtained and taken for the execution, delivery
and performance by NAPOCOR of this Agreement;
(iv) a copy of an absolute deed of sale conveying title to the Site
to NAPOCOR in a manner satisfactory to HOPEWELL; certified by
the corporate secretary of NAPOCOR in a manner satisfactory to
HOPEWELL; evidence that NAPOCOR will have legal title to the
Site within 180 days of the Effective Date and evidence that
NAPOCOR has acquired the right of way for the Access Road;
(v) evidence of the approval of NAPOCOR to HOPEWELL's occupation
and use of the Site, as contemplated in this Agreement and at
no cost to HOPEWELL, from the Effective Date to the Transfer
Date;
(vi) a legal opinion of NAPOCOR's General Counsel in the form set
out in the Thirteenth Schedule (Form of Legal Opinion of
Napocor's General Counsel).
28.3 GENERAL CONDITIONS PRECEDENT. It shall be a condition precedent to this
Agreement that by 30th June, 1992, or such later date as the parties
hereto may agree, the following are received by HOPEWELL, each in form
and substance satisfactory to HOPEWELL or that such a condition
precedent is waived by HOPEWELL:
(i) a performance undertaking of the Republic of the Philippines
in respect of NAPOCOR's obligations hereunder duly executed
and delivered by the Republic of the Philippines in the form
set out in the Eleventh Schedule (Form of Performance
Undertaking);
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(ii) copies of all such consents, licences, permits, approvals and
registrations by or with any governmental agency or other
authority in the Philippines as may be necessary to ensure the
validity and binding effect of the Performance Undertaking,
and to permit the performance by the Republic of the
Philippines of its obligations thereunder;
(iii) a legal opinion of the Secretary of Justice of the Republic of
the Philippines as to the validity, enforceability and binding
effect of the Performance Undertaking in form and substance
satisfactory to HOPEWELL;
(iv) the Accession Undertaking, duly executed by HOPEWELL
PHILIPPINES;
(v) each of the documents referred to in the Ninth Schedule
(Documentary Requirements for the Effective Date);
(vi) final financial plans and unconditional commitments for the
provision of the required debt financing;
(vii) evidence that insurance as provided in paragraph 1 of the
Tenth Schedule (Insurance) is in full force and effect;
(viii) an Environmental Compliance. Certificate for the Power
Station; and
(ix) the agreed programme for the installation and connection of
the Transmission Line as referred to in Article 13.
It is understood that NAPOCOR shall use its best efforts to assist
HOPEWELL to obtain the same but shall not be responsible to ensure that
any of the above is received by HOPEWELL.
28.4 In the event that the title referred to in Article 28.2(iv), or any
of the approvals, consents, registrations exemptions or other rights,
laws or regulations referred to in Articles 28.2 or 28.3 or the Ninth
Schedule (Documentary Requirements for the Effective Date) is
subsequently terminated, withdrawn, rescinded or amended or any new
required extension, approval, consent or registration cannot be
obtained and as a result thereof the interest of HOPEWELL in the Site,
the Project or the Power Station and/or HOPEWELL's economic return (net
of tax or other imposition) on its investment is materially reduced,
prejudiced or otherwise adversely affected (including, without
limitation, any restriction on the ability to remit funds in dollars
outside of the Philippines) then the parties hereto shall meet and
endeavour to agree on amendments to this Agreement and if after 60 days
no such agreement has been reached the provisions of Article 8.5 shall
apply.
28.5 NAPOCOR and HOPEWELL shall jointly certify that this Agreement is no
longer conditional and that the Effective Date has occurred.
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Article 29
Late Payment
29.1 BY NAPOCOR. If any amount payable by NAPOCOR hereunder whether in
respect of fees or otherwise and whether pursuant to judgment or
otherwise is not paid on or before the due date NAPOCOR shall pay
interest thereon, calculated at the rate of overnight U.S. Federal
Funds plus 2% per annum if the amount was due in dollars, and the
T-Bill Rate plus 3% per annum if the amount was due in pesos, from the
date upon which it was due until the date which such amount is received
by HOPEWELL.
29.2 BY HOPEWELL. If any amount payable by HOPEWELL, whether pursuant to
judgment or otherwise, is not paid on or before the due date, HOPEWELL
shall pay interest thereon, calculated at the rate of overnight U.S.
Federal Funds plus 2% per annum if the amount was due in dollars, and
the T-Bill rate plus 3% per annum if the amount was due in pesos, from
the date that it was due until the date upon which such amount is
received by NAPOCOR.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto on the 9th day of November in the year nineteen hundred and ninety one.
33
<PAGE> 37
FIRST SCHEDULE
PROJECT SCOPE AND SPECIFICATIONS
I. SCOPE OF AGREEMENT
HOPEWELL shall be responsible for the design, supply, delivery,
installation/erection and operation, including civil works, testing and
commissioning, of a 700 MW Coal-Fired Thermal Power Station consisting
of 2 x 350 MW generating units.
II. THE SITE
The plant site with a land area of approximately 100 hectares is
located in Barangay Ibabang Pulo, in the island of Pagbilao Grande,
town of Pagbilao in the Province of Quezon. The site itself is
approximately 10 kilometres from Pagbilao town proper. Pagbilao is 145
kilometres from Manila. The battery limits of the Site will be agreed
by HOPEWELL and NAPOCOR not later than the Effective Date.
Presently, access to the site is by sea from Pagbilao Port which is
within the Pagbilao town proper. An access road within the island will
be constructed which will connect to the mainland with a bridge from
either Pagbilao proper or Luaya Point.
NAPOCOR shall make available the Site to HOPEWELL for the purpose of
building and operating the Power Station.
NAPOCOR shall prepare the design and specifications of the
interconnection facilities in accordance with NAPOCOR's engineering
standards and practices as well as to the operational requirements of
the power system.
III. EXTENT OF WORKS/SUPPLY
In pursuance of its obligations under Section I above, HOPEWELL shall
be responsible for:
1. Detailed site investigation which includes, but is not limited
to, geologic/geotechnic studies, seashore and barometric studies and
topographic and hydrographic survey.
2. Civil Works
(a) Site development such as grading, gravel surfacing,
construction of roads within the Site, fence, and
drainage facilities, etc.
(b) Ash disposal system.
(c) Fuel oil and demineralized water foundations, raw
water tank including foundation and neutralization
pond.
(d) Fly ash silo and related facilities for the
accumulation of ash prior to disposal outside of the
Site.
(e) Switchyard foundations.
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<PAGE> 38
(f) Buildings and other structures such as powerhouse,
turbine generator, steam generator and equipment
foundations, smokestack, service and auxiliary
buildings, etc.
(g) Circulating water system and related facilities.
(h) Raw water intake, piping and related structures.
(i) Meteorological Tower.
3. Infrastructure Facilities
(a) Jetty or wharf capable of handling sixty thousand
(60,000) deadweight tonner vessel, unloading
structures and related facilities.
(b) Coal storage yard and related facilities with a
storage capacity of forty-five (45) days coal supply
requirement of the plant operating at 100% load at
Contracted Capacity.
(c) Oil Storage facilities to store light oil required by
the Power Station
(d) The Bridge
4. Electro-Mechanical Works Designed for 60-Hertz Operation
(a) Boiler Island and auxiliaries consisting of steam
generator, pulverized coal system, air ducts and gas
ducts, oil handling equipment, ash handling system,
coal loading and unloading equipment, boiler
feedwater pumps, feedwater booster pumps, boiler
feedwater pumps, raw water supply equipment, filtered
water equipment, drinking water equipment, house
service water equipment, demineralizer, cycle-water
chemical treatment, and waste-water treatment.
(b) Steam-Turbine Island consisting of steam-turbine,
condensing equipment, feedwater heaters, circulating
water system, chlorinator equipment, bearing cooling
water system, pipe valves, fittings, hangers,
insulations and lagging.
(c) Alternating Current Equipment and Auxiliaries
consisting of generator, excitation system, generator
lead busbar, potential transformer/s and surge
arrester cubicle, power system stabiliser and neutral
grounding device.
(d) Controls such as steam generator control, electrical
equipment control and data logging system, and other
instrumentation indicators complete with the
necessary supervisory devices, computers and
protective controls for the Power Station and the
interconnecting transmission lines, at the Power
Station end.
(e) Power Plant Mechanical Equipment such as turbine room
crane, fire protection equipment, house service air
compressors, instrument air compressor, sump pumps,
maintenance machines and machine shop equipment.
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<PAGE> 39
f. Power Plant Electrical Equipment such as main power
and auxiliary transformers, switchyard equipment,
switchgear cubicle, power centre, motor control
centre, alternating current power supply, direct
current power supply equipment complete with battery
charger, emergency diesel generator, lighting system,
paging system, clock system, meteorological
observation equipment, wirings and tubings, grounding
system, and the required high voltage equipment
devices and accessories including necessary cables
and hardware for interconnection to the 230 KV
switchyard. The switchyard shall be configured as one
and one-half (1-1/2) breaker system to ensure the
reliability and flexibility of the system
interconnection.
(g) Air Conditioning System for the protection of
electrical equipment and instruments at the control
room and various offices.
(h) Communication System inside the Power Station, and
Supervisory Control and Data Acquisition (SCADA)
equipment and microwave communication system
compatible with the NAPOCOR Power Management Centre.
(i) Chemical Analysis Equipment such as water testing
equipment, coal testing equipment, oil testing
equipment, laboratory glasswares supplies and
chemicals.
(j) Fuel oil tanks for light oil including piping system
and metering.
(k) Test instruments, special tools and spare parts.
(1) Motor vehicles for management and operation personnel
and ash disposal transport.
IV. DESIGN CRITERIA
The Power Station with an aggregate gross-rating of 2 x 350 MW (100%)
shall have the following characteristics:
1. Rated Output
The rated output of the Power Station shall be the continuous
output at the generator terminal with the following
conditions:
<TABLE>
<S> <C>
Steam Pressure at H.P. turbine, bar 165
Steam temperature at H.P. turbine, deg. C 538
Steam temperature at I.P. turbine, deg. C 538
Opening of all extractions, % 100%
Make-up water, % 0
Generator power factor 0.85
Turbine governing inlet valve throttling
Circulating water temperature at condenser inlet,
deg. C 26
</TABLE>
36
<PAGE> 40
2. Maximum Continuous Output
The maximum continuous output of the Power Station shall not
be less than 110% of the rated output at 30 deg. C circulating
cooling water inlet temperature.
3. No-Load Operation
In case of complete load rejection, the Power Station shall be
able to operate safely while it is disconnected from the
external network and feed only its own auxiliary services.
4. Automatic Control Range
The Power Station shall allow automatic operation control on
the range from 25% to 100% of the rated output.
5. Minimum Output
The minimum output at which the Power Station shall be able to
operate continuously under automatic control shall be 25% of
the rated output.
6. Plant Operative Characteristics
The Power Station shall be designed for the following
operative conditions:
(a) Base load despatchable operation.
(b) Programmed loading up to an average rate of not less
than 3MW per minute per unit.
(c) Contribution to the grid frequency control. The Power
Station shall be capable of instantaneous load
variations of not less than 5% of the rated output.
7. Fuel
The Fuel specification to be used by HOPEWELL for the design
of the Facility shall be as provided in the Fourth Schedule.
8. System Fault Level
The projected 230 KV bus fault at Kalayan Switchyard where the
Coal-Fired Thermal Power Plant unit is connected in the Luzon
Grid shall be 40 KA.
9. System Voltage Level
(a) Generator terminal voltage - 21 KV
(b) Main Transformer:
High voltage (Nominal) - 230 KV
37
<PAGE> 41
Off Load Tap Change - -/+ 2 x 2.5%
Low Voltage - 21 KV
(c) Nominal voltage for auxiliary equipment (for
information purposes):
AC System - MV - 21 KV and/or 13.8 KV
- 6 KV and/or 6.6 KV and/or 4.16 KV
LV - 480 V
- 240 V
DC System - 220 V, 125 V, 48 V
10. System Frequency - 60 Hertz
11. Generator and Accessories
The generator shall be designed to match the steam
turbine unit to assume base operating modes. The
design characteristics shall be as follows:
(a) Nominal apparent power output at rated power
394 MVA rated voltage +/-5% and rated speed
+/-5%, 37 deg. C ambient temperature.
(b) Three phase, wye grounded.
(c) Rated terminal voltage - 21 KV
(d) Rated power factor, lagging - 0.85
(e) Short circuit ratio (saturated)
The measure value of the short circuit ratio
at rated MVA and rated voltage shall not be
less than 0.58.
(f) Allowable voltage variations
At rated MVA, frequency, power factor and
inlet air temperature, the turbine-generator
can operate satisfactorily even though the
terminal voltage may vary +/-5% operated
value.
(g) Estimated generator reactive capability
1. Active power per unit - 350 MW
2. Reactive power per unit - 216.9 MVAR
12. 69 KV Electricity Supply for construction purposes by
the Effective Date
13. Start-Up Electricity
To be provided when necessary and in any event for
testing after notice of testing has been given under
this Agreement.
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<PAGE> 42
V. SPECIFICATIONS FOR SUB-STATION
The sub-station will consist of:
- High voltage equipment and accessories
- Main Power Transformer
- Medium Voltage Switchgear and accessories
and will have the following descriptions and ratings:
The sub-station is outdoor type. The 69 KV transmission line is
terminated in a steel lattice tower H-frame. The high voltage equipment
are steel lattice-type mounted/supported. The main power transformer is
mounted in concrete foundations. The medium voltage switchgear is cable
duct connected to the power transformer. It consists of one (1) main
and four (4) feeder breakers, complete with standard protection and
metering control accessories.
The sub-station has the following rating:
Capacity - 10,000 KVA
Voltage - 67 KV (Primary)
13.8 KV (Secondary)
BIL - 350 KV (Primary)
- 95 KV (Secondary)
Primary Protection - SF6 Type GCB, rated 72.5 KV at 20 KAIC, 350
KV BIL, with standard accessories, phase
and ground overcurrent relays
Secondary Protection - SF6, Type GCB, rated 15KV at 20 KAIC, 95 KV
BIL, with standard accessories phase and
ground overcurrent protection on the main
and feeders breakers
Control Power Supply - 125 VDC closing and tripping and motor
charging for the main HV (69 KV) GCB
- 125 VDC closing and tripping but at 230 VAC
motor charging for the 15 KV breakers
The sub-station shall be complete in all aspect in accordance with the
standard requirements for such applications and installations.
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<PAGE> 43
SECOND SCHEDULE
OPERATING PARAMETERS
HOPEWELL shall operate the Power Station in accordance with the operating
criteria and guidelines of NAPOCOR. HOPEWELL shall cooperate with NAPOCOR in
establishing emergency plans including, but not limited to, recovery from a
local or widespread electrical blackout; voltage regulation to effect load
curtailment; and other plans which may arise. HOPEWELL shall operate the Power
Station, provide start-up time and minimum load-carrying ability, as follows:
1. Frequency Limitation
The frequency limitation of coal fired power plants for continuous
operation shall be between the range of 58.5 Hertz and 61.5 Hertz.
The under frequency tripping relay shall be set at 57.5 Hertz.
2. Maximum Continuous Load Operation
The Power Station shall be guaranteed to operate satisfactorily at not
less than 700 MW at the generator terminal by admitting the maximum
guaranteed throttle flow of the turbine at rated pressure and
temperature with one or two high pressure heaters out of service.
3. Minimum Load Operation
The Power Station shall be guaranteed to operate continuously under
automatic control at 25% of the rated load.
4. Range and Ratio of Load Changing
At normal operation, except during start-up and shutdown, the
generating units shall be capable of being operated as follows:
a. Cold Start-up to Synchronization - 8 hours
(off line for more than 72 hours)
b. Warm Start-up to Synchronization - 6 hours
(Off line between 12 and 72 hours)
C. Hot Start-up to Synchronization - 1 hour
(Off line for less than 12 hours)
d. Synchronization and loading to full
load under normal condition,
ramp increase
Cold Start-up - 0.6%/min
Warm Start-up - 1.0%/min
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<PAGE> 44
e. Instantaneous load variation - 5% of rated capacity if a Unit
has been operated over a sufficient period under steady
conditions. Intervals of 15 min are the minimum necessary
between two instantaneous load variations.
5. Operation Mode
The Power Station shall be utilized as a despatchable base load plant
and be expected to operate seven (7) days per week.
6. Beat Rates
The net heat rate based on coal firing at rated load of the Power
Station following completion shall not be greater than 2300 Kcal/KWHR
based an coal HHV. The Power Station will be tested to establish the
Guaranteed Plant Net Heat Rate of 2300 Kcal/KWHR. If results of the
Guarantee Tests show a plant net heat rate greater than 2300 Kcal/KWHR,
then HOPEWELL shall endeavour to undertake corrective measures on the
units to achieve the Guaranteed Plant Net Heat Rate. In the event that
the tested Plant Net Heat Rate exceeds 2300 Kcal/KWHR at commissioning
and HOPEWELL declares the Power Station to be complete, then the
application of Section 6.2 of the Eighth Schedule (Delivery of Power
and Energy) shall be based an the tested Plant Net Heat Rate for such
period as HOPEWELL is unable to correct the Plant Net Heat Rate.
The permitted step increase in the Guaranteed Plant Net Heat Rate shall
be 1% (cumulative) of the original Guaranteed Plant Net Heat Rate after
the lapse of every year and at the end of each period of five years the
Guaranteed Plant Net Heat Rate shall decrease by 80% of the increase
during the preceding five years.
OPERATING PROCEDURES
1. Dispatch Procedure
HOPEWELL shall control and operate the Power Station consistent with
NAPOCOR's system control and dispatch requirements, provided that (i)
the minimum operating load (other than in Emergency Conditions) of any
Unit shall not be less than 30% of nominated capacity of each Unit and
(ii) during the initial five (5) years following the Plant Commercial
Operations Date, NAPOCOR shall use its best endeavours to dispatch the
Power Station at a level which will achieve a monthly average plant
capacity factor of not less than seventy five per cent (75%) of
nominated capacity.
2. Engineering Standards
The Power Station including, but not limited to, the protective
apparatus shall be operated and maintained in accordance with good
engineering practices in respect of synchronizing, voltage and reactive
power control.
3. Protective Devices
The Power Station shall be operated with all of its protective
apparatus in service whenever the facility is connected to or is
operated in parallel with the NAPOCOR electric system. Any deviation
for brief periods of emergency or maintenance shall only be by mutual
agreement.
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<PAGE> 45
4. Integrity Loss
If, at any time, NAPOCOR has reason to doubt the integrity of any
HOPEWELL protective apparatus and suspects that such loss of integrity
could jeopardise the NAPOCOR electric system, HOPEWELL shall
demonstrate, to NAPOCOR's satisfaction, the correct calibration and
operation of the equipment in question.
5. Testing of Protective Devices
HOPEWELL shall test all protective devices with qualified personnel at
intervals not to exceed one (1) year.
6. Notice of Tests
HOPEWELL shall notify NAPOCOR at least fourteen (14) calendar days
prior to any testing.
7. Service Commitment
At NAPOCOR's request, HOPEWELL shall make all reasonable efforts to
deliver power during periods of Emergency.
8. Maintenance During Emergency
In the event that HOPEWELL's scheduled Downtime coincides with an
Emergency, HOPEWELL shall make all reasonable efforts to reschedule the
Downtime.
9. Daily Operating Report for Record Purposes
HOPEWELL shall keep NAPOCOR's Power Management Centre informed as to
the daily operating schedule and generation capability of its Power
Station, including, without limitation to, any Forced Outages.
10. Operating and Maintenance Records
HOPEWELL shall maintain the operating and maintenance records for each
Unit for a period of at least five (5) years with records of: real and
reactive power production, changes in operating status, outages,
protective apparatus operations and any unusual conditions found during
inspections. Changes in the setting of protective apparatus shall also
be logged. In addition, HOPEWELL shall maintain records applicable to
the Power Station, including the electrical characteristics of the
generator and settings or adjustment of the generator control equipment
and protective devices. Such information shall be made available to
NAPOCOR upon request.
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<PAGE> 46
THIRD SCHEDULE
PENALTY ON DELAYS
To guarantee the faithful performance by HOPEWELL of its obligation to construct
the Power Station in accordance with the terms and conditions of this Agreement,
HOPEWELL shall post the bond, guarantee or standby letter of credit (the "Bond")
referred to in Article 28.1(iv).
In the event that HOPEWELL fails to complete a Unit as provided in Article 3.13
or Article 3.14 by the day (the "Bond Day") falling 30 days after the Target
Completion Date of that Unit, which day shall be extended day for day for (1)
delays caused by Force Majeure or the failure of NAPOCOR to fulfil any of its
obligations hereunder, or (2) extensions granted by NAPOCOR, NAPOCOR shall be
entitled to draw on the Bond at the rate of (i) $10,000 per Unit for each day
that the Completion Date of such Unit is delayed after the Bond Day, for the
first sixty (60) days after the Bond Day, and (ii) $24,700 per Unit for each day
thereafter until the Bond has been fully drawn upon.
In the event that the Bond has been fully drawn upon HOPEWELL shall have no
further liability to make payments pursuant to Article 3.13 or Article 3.14.
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<PAGE> 47
FOURTH SCHEDULE
SPECIFICATIONS FOR FUEL SUPPLY AND START-UP ELECTRICITY
Specifications
The specifications for the Fuel Supply and Start-Up electricity will be as
follows:-
I. Coal
(a) Coal Analysis (As-Fired Basis)
<TABLE>
<CAPTION>
Performance
Average Coal Coal Range
------- ----------- ----------
<S> <C> <C> <C>
Total Moisture (%) 14.23 7.13 7.13 - 23.40
Volatile Matter (%) 36.70 38.33 34.33 - 40.26
Fixed Carbon (%) 41.93 40.70 38.87 - 49.26
Ash (%) 7.00 13.84 3.33 - 13.84
Carbon (%) 70.76 62.08 65.96 - 75.88
Hydrogen (%) 5.19 4.93 4.60 - 5.79
Nitrogen (%) 1.43 0.99 1.07 - 1.60
Sulphur (%) 0.54 0.53 0.23 - 0.99
Oxygen (%) 13.20 10.50 9.54 - 16.85
HHV, Kcal/kg 6040 6140 5240 - 6770
Grindability (HGI) 46.00 37.00 37.00 - 50.00
</TABLE>
(b) Coal Ash Analysis (Dry Basis)
<TABLE>
<CAPTION>
Performance
Coal Range
----------- -----
<S> <C> <C>
Na20 (%) 0.67 0.27 - 1.56
K20 (%) 1.08 0.20 - 1.89
Ti02 (%) 1.52 0.82 - 3.10
S03 (%) 5.03 0.55 - 10.59
P205 (%) 0.56 0.10 - 1.69
Br 0 (%) - -
Sr 0 (%) - -
Si02 (%) 47.31 36.07 - 60.44
A1203 (%) 28-62 14.36 - 36.60
Fe203 (%) 11.77 3.68 - 23.53
Ca 0 (%) 6.44 1.35 - 10.99
Mg 0 (%) 3.12 0.40 - 6.59
</TABLE>
44
<PAGE> 48
(c) Ash Fushion Temperature (Reducing)
<TABLE>
<CAPTION>
Typical Range
------- -----
<S> <C> <C>
Initial
Deformation (C) +1450 1130-1600
Spherical
Deformation (C) +1560 -
Hemispherical
Deformation (C) +1570 1260-1600
Flow (C) +1580 1360-1600
</TABLE>
II. Light Oil specifications:
<TABLE>
<CAPTION>
Fuel Oil
--------
<S> <C>
Specific Gravity, API @ 60 deg. F 36
Density, kg/liter 0.843
Flash Point, PM, deg. F 130 min.
Pour Point, deg. F 50 max.
Viscosity, SSU @ 100 deg. F 35 - 50
Water and Sediments, % Vol. 0.10 max.
Sulfur, % Wt. 1.0 max.
Ash, % Wt. 0.005
Higher Heating Value, Btu/lb 19,650
(kcal/kg) (10,917)
Lower Heating Value, Btu/lb 18,400
(kcal/kg) (10,222)
</TABLE>
III. Start-Up Electricity
Subject to Article 13, start-up electricity of sufficient capacity and
rating shall be provided when necessary and in any event for listing
after notice has been given.
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<PAGE> 49
FIFTH SCHEDULE
TRANSMISSION LINE SPECIFICATIONS
Location
From the outgoing sides of the high voltage switchyard within the Site to the
relevant and specific termination and interconnection point, on the Luzon Grid
as determined by NAPOCOR, through a route shown approximately by attached plan,
"Proposed 230 KV Transmission Line".
Specifications
The Transmission Line shall be designed and constructed in accordance with
internationally accepted standards.
The Transmission Line shall be capable of providing sufficient electricity for
testing, commissioning and starting the Power Station and shall be capable of
taking the maximum output of the Power Station, and shall be completed within
the agreed construction programme for the Power Station as stipulated in Article
13 of this Agreement.
The Transmission Line shall be complete in all aspects and composed of but not
limited to: Structural steel towers capable of withstanding all stresses induced
and/or caused by environmental, electrical and mechanical stresses, aluminum
wires and cables, dampers insulators attachment hardwares, other appurtenances
and hardwares, protective shields and earthling systems.
The Site terminal attachment scope of supply shall be as shown in the attached
figure "230 KV Transmission Line Site Terminal Attachment Scope of Supply".
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<PAGE> 50
L ' A M O N B A Y
PROPOSED 230 KV TRANSMISSION LINE
FROM 2x350 MW PAGBILAO COAL FIRED THERMAL POWER PLANT
TO 110 MW KALAYAAN HYDRO POWER PLANT
[MAP]
<PAGE> 51
[CHART]
230KV TRANSMISSION LINE
SITE TERMINAL ATTACHMENT
SCOPE OF SUPPLY
<PAGE> 52
SIXTH SCHEDULE
ELECTRICITY DELIVERY PROCEDURES
1. Definition
"Downtime" means the seventy-three (73) days per Unit per year allowed
to HOPEWELL by NAPOCOR to allow HOPEWELL to undertake the normal
inspection, maintenance, repair and overhaul Provided that the amount
of Downtime for the Power Station shall, in any year, be calculated by
reference to that aggregate allowance of one hundred and forty six
(146) days for both Units.
"Forced Outage" is defined as the inability due to the fault of
HOPEWELL to meet Contracted Capacity when requested by NAPOCOR (other
than as a result of any faults in or failure of the power transformers
or high voltage switchgear) Provided that any failure to meet the
Contracted Capacity as a result of a reduction in the Availability of
the Power Station as a result of Downtime or as a result of the Power
Station commencing generation after a period of non generation shall
not be Forced Outage.
2. Measurement of Power Generated
Measurement of power generated transferred to NAPOCOR shall be made at
the high voltage side of the main power transformer.
3. Notice in Change of Output
Specific procedures for notifications of power requirements shall be
agreed between HOPEWELL and NAPOCOR prior to the Unit Completion Date
in respect of Unit 1. Subject to such procedures, the outputs of the
Units shall be as required by the system controller from time to time,
provided that changes in output requested by the system controller
remain within the Specifications and the Operating Parameters.
4. NOTICE OF DOWNTIME
NAPOCOR shall prepare annual, monthly and weekly systems operating
plans and in so doing shall coordinate with HOPEWELL to agree on
Downtime. NAPOCOR shall grant HOPEWELL allowable Downtime to undertake
all regular inspection and maintenance in accordance with the
manufacturer's recommendations.
HOPEWELL will be allowed a total of 73 days per Unit per year
(calculated on the basis of an aggregate of one hundred and forty six
(146) days for both Units) Downtime for normal inspection, maintenance,
repair and overhaul. If in any year total available period of Downtime
is not utilised the excess shall be carried forward and added to the
allowance for the next year.
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<PAGE> 53
HOPEWELL will plan with NAPOCOR to ensure that as far as practicable,
Downtime is undertaken at times to cause minimum disruption to the
NAPOC power supply.
5. Notice of Required Electricity
Whilst the annual, monthly and weekly system operating plans will be
prepared by NAPOCOR in consultation with HOPEWELL, it is agreed that
the weekly plan for the following seven days will be the control plan
and will be that plan referred to as "normal operation plan".
6. Normal Operations
Normal operations of the Units are as defined below:
(a) Operating in accordance with the weekly normal operation plan
as defined in Section 5 above as agreed in writing between
NAPOCOR and HOPEWELL.
(b) Operating with Fuel within the specifications set out in the
Fourth Schedule (Specifications for Fuel Supply and Start-Up
Electricity).
(c) Subject to the provisions of Article 3.15, operating at 700 MW
with a cooling water temperature rise not exceeding 7 deg. C.
(d) Operating frequencies of the system to be within the limits of
the Operating Parameters.
(e) Operating at a system voltage of 230 KV plus or minus 5%.
(f) Start-up, synchronizing and loading to be within the limits of
the Operating Parameters.
(g) Full access to the Site at all times for materials and
personnel.
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<PAGE> 54
SEVENTH SCHEDULE
MEASUREMENT AND RECORDING OF ELECTRICITY
1. Meter Ownership And Maintenance
NAPOCOR shall own and maintain as part of the Interconnection
Facilities, meters and related equipment to be utilized for the
measurement of electric power and energy in determining NAPOCOR's
payments to HOPEWELL pursuant to this Agreement.
2. Meter Location
The equipment used for metering the power and energy delivered to
NAPOCOR shall be located at the high voltage side of the step-up
transformer.
3. Metering Devices
For the purpose of monitoring the Power Station's operation, NAPOCOR
shall have the right to require, at HOPEWELL's expense, the
installation of metering devices at the generation side which will be
specified to HOPEWELL prior to the Effective Date.
4. Meter Reading and Verification
In order to verify the quantity of electricity delivered by HOPEWELL to
NAPOCOR in each month, NAPOCOR and HOPEWELL shall at noon or at such
other time agreed between NAPOCOR and HOPEWELL on the twenty fifth day
of each month take a photograph of the electricity meters in the Power
Station recording the supply of electricity by HOPEWELL provided always
that if either party shall not be present at the relevant meter or
meters at the agreed time, the above-mentioned photograph shall be
taken by the party present and shall be binding on the party absent.
5. Meter Tests
NAPOCOR'S meters, installed in pursuance to this Agreement, shall be
tested by NAPOCOR at its own expense every six months. Other tests may
be conducted at any reasonable time upon request by either party, at
the requesting party's expense. If HOPEWELL makes such request,
HOPEWELL shall reimburse said expense to NAPOCOR within thirty (30)
days after presentation of a bill therefor. NAPOCOR's meter test
results shall be deemed final and conclusive.
6. Meter Accuracy
Metering equipment found to be inaccurate shall be repaired, adjusted,
or replaced by NAPOCOR such that the accuracy of said equipment shall
be within 100% plus or minus two per cent (2%). Should the inaccuracy
exceed plus or minus two per cent (2%), the correct amount of power
energy
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<PAGE> 55
delivered during the previous billing period shall be estimated by
NAPOCOR and agreed by the parties. Adjustment for meter inaccuracy
shall cover only the current billing period and the billing period
immediately preceding it except when such meter inaccuracy is due to
fraud.
7. Meter Seals And Inspection
NAPOCOR's meters shall be sealed and the seals shall be broken only
when the meters are to be read, inspected or tested pursuant to Section
5 above. HOPEWELL shall be given reasonable notice of such occasions
and shall have the right to have its representative present.
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<PAGE> 56
EIGHTH SCHEDULE
DELIVERY OF POWER AND ENERGY
1. OBLIGATIONS OF PARTIES. HOPEWELL hereby agrees to convert Fuel supplied
by NAPOCOR into electricity and NAPOCOR hereby agrees to take at the
high voltage side of the step-up transformer, the electric power and
energy delivered by HOPEWELL to NAPOCOR until the end of the
Cooperation Period in respect of Unit 2.
2. CAPACITY PROVISION. HOPEWELL shall deliver and NAPOCOR shall receive
and pay for the electric power output capacity of the Units as provided
in Section 6.1 of this Schedule in respect of the amount of Contracted
Capacity which, in respect of each year, shall be the actual net
Kilowatt (KW) capability of the Units nominated by HOPEWELL for such
year provided that:-
(a) such nominated amount may not exceed 105% of the Nominal
Capacity unless NAPOCOR so agrees; and
(b) if, at the beginning of any year HOPEWELL nominates an amount
less than the Nominal Capacity it may subsequently nominate an
increased amount in which case such increased amount shall be
the Contracted Capacity for the remainder of such year.
At the commencement of each year of the Cooperation Period, if so
requested by NAPOCOR, HOPEWELL shall demonstrate its ability to provide
NAPOCOR the Contracted Capacity; if, following any test, HOPEWELL has
failed to demonstrate its ability to provide NAPOCOR with the
Contracted Capacity, it may, at any time thereafter, arrange for
further tests to establish the amount of capacity that it is able to
make available.
If, on the Completion Date or any anniversary thereof HOPEWELL fails to
notify NAPOCOR of the nominated amount of Contracted Capacity for the
following year; the Contracted Capacity for such year shall be the
Nominal Capacity.
3. DELIVERED ENERGY. HOPEWELL shall convert Fuel supplied by NAPOCOR into
electricity and deliver it to NAPOCOR, and NAPOCOR shall take such
electricity from HOPEWELL as requested by the NAPOCOR Power Management
Center. The energy delivered shall be paid for by NAPOCOR pursuant to
the terms and conditions as provided in Section 6.2 of this Schedule.
4. START-UPS. NAPOCOR shall provide start-up electricity to the Units, the
cost of utilisation of which and normal fees shall be for HOPEWELL's
account.
5. STATION FACILITIES. Electricity required for use in connection with
the Power Station facilities such as air conditioners, lighting,
domestic water systems when the Units are not running will be sourced
from the NAPOCOR Grid with HOPEWELL paying for its cost.
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6. TERMS OF PAYMENT
6.1 Capacity Fees. The Total Capacity Fees shall be the sum of
the Capital Recovery Fee, the Fixed Operating Fee, the
Infrastructure Fee and the Service Fee. The Capacity Fees
shall be computed on the basis of the following formulae:
6.1.1 Capital Recovery Fee (A):
A = {(CCR x CC x F)-(Y x 1.05)(CCR)(NC - CC)}
6.1.2 Fixed Operating Fee (B):
B = {(OCR x CC x F)-(Y x 1.05)(OCR)(NC - CC)}
6.1.3 Service Fee (C):
C = {(SFR x CC x F)-(Y x 1.05)(SFR)(NC - CC)}
6.1.4 Infrastructure Fee (D):
D = {(BIF x CC x F)-(Y x 1.05)(BIF)(NC - CC)}
6.1.5 Capacity Fee Contract Rates are:
6.1.5.1 Contract Capacity Rate for Capital
Cost (CCR) is $21.00 per KW per
month
6.1.5.2 Contract Capacity Rate for Fixed
Operating Cost (OCR) are $1.60 and
Ps 1.71 per KW per month
6.1.5.3 Contract Capacity Rate for
Infrastructure (BIF) is $1.50 per
KW per month
6.1.5.4 Service Fee Rate (SFR) is $1.80 per
KW per month
6.1.6 Variables in the above Capacity Fee formulae are:
A = Capacity Fee to recover Capital
Costs for the billing period
B = Capacity Fee to recover Fixed
Operating Costs for the billing
period
C = Capacity Fee to reflect return on
investments for the billing period
D = Capacity Fee to recover
Infrastructure Cost for the billing
period
CCR = Contract Capacity Rate for capital
costs per KW per month
OCR = Contract Capacity Rate for fixed
operating costs per KW per month
SFR = Service Fee Rate for return on
investments per KW per month
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BIF = Basic Infrastructure Fee per KW per
month
NC = Nominal Capacity in KW
CC = Contracted (Nominated) Capacity for
the year in KW
F = Outage Factor as derived using the
following formula to be used. If
Forced Outage does not occur, or if
the following formula results in F
being greater than 1, then F shall be
1:
F = monthly actual gross generation
-------------------------------
TMEG
where TMEG = Theoretical Maximum
Energy Generation, being the Nominal
Capacity of the Unit/Power Station
multiplied by the hours in the
relevant month, less any adjustments
made for allowable Downtime, dispatch
order, allowable Force Majeure and for
the Unit/Power Station commencing
generation after a period of non
generation
Y = Variable
The variable is defined as follows:
if (X NC) < CC, then Y = 0
-
if CC < (X NC), then Y = 1
Where X = 0.95 for the first 12 years of the Cooperation Period and
0.90 thereafter.
6.1.7 In the event there is Forced Outage due to accident, manufacturing
defect, defects in materials or assembly or any other similar
reasons other than fault or failure of the power transformers or
high voltage switchgear, and rectification of the Forced Outage to
restore normal operations has taken a period in excess of 15 days,
then the formula for the calculation of Capacity Fees shall be as
provided above for the first 15 days of Forced Outage and shall be
as follows for the period of Forced Outage in excess of 15 days:
Al = CCR x IC x F
B1 = OCR x IC x F
C1 = SFR x IC x F
D1 = BIR x IC x F
where:
CC = Contracted Capacity in effect immediately prior
to the Forced Outage
IC = CC less the capacity lost due to such Forced
Outage
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provided that if HOPEWELL is unable to make available
the Contracted Capacity for reasons which would have
been Forced Outage but for the fact they relate to
faults in or failure of the power transformers or
high voltage switchgear and such failure continues
for more than 30 days thereafter the Capacity Fees
shall be reduced by reference to the amount of
capacity that HOPEWELL is so unable to make available
and the Cooperation Period shall be extended by a
period equal to the period for which such reduction
is applicable.
6.2 Energy Fees. Energy Fees shall be computed on the basis of the
following formula:
E = {(BER x ED) + (U x Va)}
where:
E = Energy Fees, in dollars and pesos, for the billing
period
BER = Base Energy Rate, in dollars and pesos, per
kilowatthour delivered
ED = KWHR delivered during the billing period
U = Weighted average of coal price in $ or pesos per
metric ton based on the average of last three (3)
purchases made by NAPOCOR
Va = Coal consumption in metric tons computed on the basis
of the following:
0, (where m < HRT < n)
- -
Vb - Vt, (where HRT < m)
Vg - Vt, (where HRT > n)
where:-
m = HRG with an initial assumed value of
2,193 Kcal/KWHR and thereafter
adjusted, if necessary, in
accordance with Section 6 of the
Second Schedule
n = HRG with an initial assumed value of
2,300 Kcal/KWHR and thereafter
adjusted, if necessary, in
accordance with Section 6 of the
Second Schedule
Vg = Coal consumption in metric tons
computed on the basis of the
Guaranteed Plant Net Heat Rate (HRG)
with an initial assumed value of
2,300 Kcal/KWHR (and thereafter
adjusted, if necessary, in
accordance with Section 6 of the
Second Schedule) and the High
Heating Value (HHV) of the coal
multiplied by the energy delivered;
by formula,
Vg = ED x HRG x 1/HHV
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Vb = Coal consumption in metric tons computed on
the basis of the HRG with an initial assumed
value of 2,193 Kcal/KWHR (and adjusted, if
necessary, in accordance with Section 6 of
the Second Schedule) and the HHV of the coal
multiplied by the energy delivered; by
formula,
Vb = ED x HRG x 1/HHV
Vt = Coal consumption in metric tons computed on
the basis of the tested net plant Heat Rate
(HRT), and the High Heating Value (HHV) of
the coal multiplied by the energy delivered;
by formula,
Vt = ED x HRT x 1/HHV
where:-
HRT is the tested plant heat rate taken
during the commissioning date and after
every general overhaul of the Units;
HHV is the weighted high heating value of
the coal for the last three (3) purchases
made by NAPOCOR in accordance with ASTM
standards
The Base Energy Rate shall be:
A. Up to the first 75% of Unit/Power Station capacity:
For Unit: (350,000 x 24 x Nd) x 0.75
For Power Station: (700,000 x 24 x Nd) x 0.75
$0.0020/KWHR and Ps0.0107/KWHR
where Nd is the number of calendar days in the month; and
B. Above 75% of Unit/Power Station capacity - $0.0019/KWHR
and Ps0.0107/KWHR
6.3 Fees Adjustment Provision.
On 1st March and 1st September of each year, the amount of (i) the
Energy Fee and (ii) the Fixed Operating Fee shall be
increased/decreased proportionately to the average of any
increase/decrease of
(a) (i) the Japanese Export Price Index taken from the
International Financial Statistics published by the
International Monetary Fund (the "JAPANESE INDEX"); and
(ii) the U.S. Export Price Index (excluding Agricultural
Products) taken from the International Financial Statistics
published by the International Monetary Fund (the "U.S.
INDEX"); or
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(b) the National Economic and Development Authority's consumer
price index for all items in Metropolitan Manila (the
"Philippines Index"),
as from the levels of such indices prevailing as at 15th March, 1989.
If any of the indices referred to in Section 6.3 above ceases to exist
or to be published, the relevant increase/decrease shall be the
increase/decrease in the index replacing or revising such index or such
other index nominated by HOPEWELL. And accordingly, at any given time
(the "Current Date"), the Energy Fee and the Fixed Operating Fee, shall
be escalated by a factor as follows:-
{(JIC) + (USIC)}
Dollar denominated fees: AF = {(JIB) (USIB)}
-----------------
2
PIC
Peso denominated fees: AF = -----
PIB
Where:-
AF = the Adjustment Factor
JIB = the Japanese Index as at 1st March, 1989
J1C = the Japanese Index as at the 1st March or 1st September,
whichever is the later, immediately preceding the Current
Date
USIB = the U.S. Index as at 1st March, 1989
USIC = the U.S. Index as at the 1st March or 1st September,
whichever is the later, immediately preceding the Current
Date
PIB = the Philippines Index as at 1st March, 1989
PIC = the Philippines Index as at the lst March or 1st September,
whichever is the later, immediately preceding the Current
Date
6.4 For clarity in the interpretation and application of the above
formulae, sample computations of the Capacity and Energy Fees as well
as the penalty for delayed completion are shown in the Sixteenth
Schedule (Sample Computations of Monthly Billings, Start-Up Charges,
Penalties and Incentives).
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NINTH SCHEDULE
DOCUMENTARY REQUIREMENTS FOR THE EFFECTIVE DATE
1. Central Bank approval for:
1.1 any bridge or other loans to be made in foreign currency by
HOPEWELL or any other person to HOPEWELL PHILIPPINES and for
the payment of interest thereon and the payment of the
principal thereof in foreign currency;
1.2 incurring by HOPEWELL PHILIPPINES of foreign currency debt
from international financial institutions or agencies,
including International Finance Corporation and Asian
Development Bank, for the purpose of repaying bridge loans (if
any) extended by HOPEWELL or any other person, and for meeting
the balance of the capital requirements of the Project;
1.3 repatriation of HOPEWELL's investment in HOPEWELL PHILIPPINES
and the profits of such investment as allowed by the laws,
rules and regulations of the Republic of the Philippines on
the date the investment is made; and
1.4 HOPEWELL PHILIPPINES to receive payment in dollars as provided
herein and to maintain an offshore dollar bank account or
accounts.
2. Philippine Government approval of the employment of foreign nationals
in supervisory, technical and advisory positions and for the positions
of president, treasurer and general manager or their equivalent
throughout the Cooperation Period.
3. Other national and local approvals as may be necessary to proceed with
the Project and the construction, operation and maintenance of the
Infrastructure and the reclamation, occupation and use of any land
required to be reclaimed for the purposes of the Project.
4. Evidence that under the current law of the Philippines, remittance of
dividends by HOPEWELL PHILIPPINES to HOPEWELL will not be subject to
Philippine Withholding Tax in excess of fifteen per cent of the amount
remitted.
5. The approval by the Central Bank, BOI and other relevant Philippine
government agencies for the immediate importation into the Philippines
of all equipment required for the Power Station, and the payment
thereof in foreign currency.
6. A Certificate of Registration issued by the BOI in relation to the
Project, confirming that HOPEWELL PHILIPPINES is a registered pioneer
enterprise under the Omnibus Investment Code of 1987, containing
conditions acceptable to HOPEWELL and providing:-
6.1 Approval for up to 100% foreign ownership by HOPEWELL or
HOPEWELL PHILIPPINES;
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<PAGE> 63
6.2 Exemption from all national internal revenue taxes by the
National Government for a minimum period of six (6) years,
from the start of the Cooperation Period in respect of Unit 1
with the right to apply for extensions allowable under law;
6.3 Full exemption from custom duties and national internal
revenue taxes on importation of capital equipment and spare
parts the importation process in respect of which is commenced
on or before August 12, 1992, with the right to apply for
extensions allowable under law;
6.4 Tax credit equivalent to 100% of custom duties and national
internal revenue taxes for locally supplied capital equipment;
6.5 Full exemption from value added tax and local contractor's tax
for HOPEWELL PHILIPPINES and for contractors associated with
the Project;
6.6 Exemption from customs duties and national internal revenue
taxes for importation and unrestricted use of the consigned
equipment for the Project.
7. A Certificate of the Investment Coordination Committee approving the
Project.
8. A Certificate of the National Economic and Development Authority for
the purposes of the Uniform Currency Act of the Philippines.
9. An opinion of the Securities and Exchange Commission to the effect that
HOPEWELL is not required to obtain a license to do business in the
Philippines.
10. An opinion of the National Electrification Administration and the
Energy Regulatory Board confirming that the operation by HOPEWELL of
the Power Station will not constitute a public utility so as to require
a franchise, certificate of public convenience or other similar
license.
11. An Environmental Compliance Certificate.
12. Others as advised by Philippine counsel.
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TENTH SCHEDULE
INSURANCE
1. INSURANCES DURING CONSTRUCTION. From the Effective Date until the
commissioning of the Power Station, HOPEWELL shall, at its own expense,
obtain and maintain in force the following insurances:
(a) a Marine insurance in respect of plant and equipment to be
imported into the Philippines;
(b) All Risks "Builder's Risk Insurance" to cover the entire works
from any and all kinds of damages arising out of any cause
whatsoever;
(c) "Third Party Liability Insurance" to cover injury to or death
of persons (including those of NAPOCOR) or damages to property
caused by the works or by HOPEWELL's vehicles, tools and/or
equipment or personnel including its sub-contractors; and
(d) "Workmen's Compensation Insurance" as required under the
Social Security Law.
2. INSURANCE DURING COOPERATION PERIOD. During the period commencing on
the first day of the Cooperation Period in respect of Unit I and ending
on the Transfer Date, HOPEWELL shall at its own expense keep the Power
Station insured against accidental damage from all normal risks and to
a level normal for prudent operators of facilities similar to the Power
Station. In addition, HOPEWELL shall secure adequate insurance cover
for its employees as may be required by law.
3. The insurances effected shall be no less favourable to the insured in
terms of risks covered than that normally effected by NAPOCOR in
respect of its own similar operations.
4. HOPEWELL shall provide NAPOCOR with copies of all policies of insurance
effected by it.
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ELEVENTH SCHEDULE
FORM OF PERFORMANCE UNDERTAKING
To: Hopewell Energy International Limited ("HOPEWELL") and Hopewell Power
(Philippines) Corporation ("HOPEWELL PHILIPPINES" and, together with
HOPEWELL, the "Beneficiaries" which expression includes each
Beneficiary)
Dear Sirs,
We refer to the arrangements for HOPEWELL to make an investment in a
power station to be built in the Philippines recorded in an energy conversion
agreement dated [ ] made between National Power Corporation ("NAPOCOR")
(which is wholly-owned by us) and HOPEWELL and an accession undertaking dated
[ ], whereby HOPEWELL PHILIPPINES was joined as a party to the energy
conversion agreement (the energy conversion agreement, as supplemented by the
accession undertaking and as further supplemented and amended from time to
time, the "Agreement"). We are fully aware of the terms and conditions of the
Agreement.
In order to facilitate these investment arrangements we hereby confirm
that the obligations of NAPOCOR under the Agreement carry the full faith and
credit of the Republic of the Philippines, and that the Republic of the
Philippines will see to it that NAPOCOR will be able to discharge, at all times,
such obligations as they fall due. Such obligations are hereby affirmed and
guaranteed by the Republic of the Philippines.
Any dispute, controversy or claim arising out of or relating to this
undertaking, or the breach or termination thereof or the failure to pay or the
late payment of any sum due shall be settled by Arbitration in Sydney, Australia
in accordance with the UNCITRAL Arbitration Rules in force it the date of this
undertaking. The appointing authority shall be The Australian Commercial
Disputes Centre, Sydney, the number of arbitrators shall be three and the
language to be used in the arbitral proceedings shall be English. The parties
exclude any right of application or appeal to any courts in connection with any
question of law arising in the course of arbitration or with respect to any
award made.
We waive for ourselves and our assets and revenues to the extent
permitted by applicable law any and all immunity from suit, execution or other
legal process; notwithstanding the foregoing, we do not waive any such immunity
in respect of property which is (i) used by a diplomatic or consular mission of
the Philippines, (ii) property of a military character and under the control of
a military authority or defence agency and (iii) located in the Philippines and
dedicated to a public or governmental use.
Yours faithfully,
THE REPUBLIC OF THE PHILIPPINES
By:
--------------------------------
Secretary of Finance
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TWELFTH SCHEDULE
FORM OF ACCESSION UNDERTAKING
THIS ACCESSION UNDERTAKING is made the day of 19[ ]
BY
HOPEWELL ENERGY INTERNATIONAL LIMITED, a private corporation, duly
organized and existing under the laws of Hong Kong with its principal
address at 64th Floor, Hopewell Centre, 183 Queen's Road East, Hong
Kong represented by its [ ] who is duly authorized to represent
it in this Agreement, hereinafter referred to as HOPEWELL
NATIONAL POWER CORPORATION, a government owned and controlled
corporation duly organised and existing under and by virtue of Republic
Act No. 6395, as amended, with its principal office at the corner of
Agham Road and Quezon Avenue, Diliman, Quezon City, Philippines,
represented herein by its [ ], who is duly authorised to
represent it in this Agreement, hereinafter referred to as NAPOCOR
HOPEWELL POWER (PHILIPPINES) CORPORATION, a corporation incorporated in
the Philippines and having its registered office at [ ],
Philippines represented by its Director, [ ], who is duly
authorised to represent it in this Agreement, hereinafter referred to
as HOPEWELL PHILIPPINES.
WHEREAS
(A) This Undertaking is supplemental to an energy conversion agreement
(the "Project Agreement") dated [ ], 19[ ] and made between (1) NAPOCOR
and (2) HOPEWELL whereby HOPEWELL has agreed to design, build and operate a coal
fired thermal power station in the Philippines and transfer the same to NAPOCOR
on the Transfer Date (as defined therein).
(B) HOPEWELL PHILIPPINES is a Philippine corporation and a subsidiary
of HOPEWELL.
(C) It is a condition precedent to the effectiveness of the Project
Agreement that the parties hereto enter into this Accession Undertaking.
NOW IT IS HEREBY AGREED as follows:-
Article 1
Interpretation
(A) Terms defined in the Project Agreement shall bear the same meaning
herein.
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(B) This Undertaking shall take effect on the Effective Date.
(C) Article headings are for ease of reference only.
(D) In this Undertaking, the singular includes the plural and vice
versa.
Article 2
Accession of HOPEWELL PHILIPPINES
(A) HOPEWELL PHILIPPINES shall become a party to the Project
Agreement and shall perform and comply with all obligations on the part of
HOPEWELL under the Project Agreement which necessarily have to be performed in
the Philippines in respect of the development, construction and operation of the
Project, including the importation into the Philippines of all equipment for the
Project and the operation of the Power Station and all references to "HOPEWELL"
in the Project Agreement (including without limitation in Articles 2, 3, 4, 5,
7, 8, 9 and 27 thereof) shall be construed to be reference to HOPEWELL
PHILIPPINES to the full extent necessary to give effect to the foregoing.
(B) NAPOCOR shall perform all obligations on its part under the
Project Agreement as if HOPEWELL PHILIPPINES were named in the Project Agreement
as a party thereto and HOPEWELL PHILIPPINES shall be entitled to all the rights,
benefits and interests under the Project Agreement as if it were named as a
party thereto including (without limitation) the benefits of all warranties and
undertakings on the part of NAPOCOR in the Project Agreement.
(C) HOPEWELL shall be jointly and severally liable with HOPEWELL
PHILIPPINES for the performance of the obligations undertaken by HOPEWELL
PHILIPPINES under Article 2(A) above, and undertakes to NAPOCOR that it shall,
promptly upon its receipt of written demand from NAPOCOR, perform such
obligations in accordance with the provisions of the Project Agreement.
(D) Subject only to the above provisions, the Project Agreement
and the respective rights and obligations of the Parties thereto under it shall
continue in full force and effect.
Article 3
Reference in the Project Agreement
As from the Effective Date, any reference in the Project Agreement to "this
Agreement" and any reference, whether express or implied, to a clause or
provision of the Project Agreement shall be deemed to be a reference to the
Project Agreement and to an article or provision thereof as hereby supplemented
and amended.
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Article 4
Assignment
HOPEWELL PHILIPPINES and HOPEWELL may for the purposes of arranging or
rearranging finance for the Project, assign or transfer all or any part of its
rights and benefits under the Project Agreement as hereby supplemented and
NAPOCOR shall duly acknowledge any such assignment or transfer of which it is
given notice.
Article 5
Law and Jurisdiction
The provisions of Articles 20, 22 and 24 of the Project Agreement shall apply to
this Undertaking as if the same were herein repeated in full mutatis mutandis.
HOPEWELL ENERGY INTERNATIONAL LIMITED
By:
Telex:
Fax:
NATIONAL POWER CORPORATION
By:
Telex: 742-40120 NAPOCOR PM
Fax: 2 9224 339
HOPEWELL POWER (PHILIPPINES) CORPORATION
By:
Telex:
Fax:
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THIRTEENTH SCHEDULE
FORM OF LEGAL OPINION OF NAPOCOR'S GENERAL COUNSEL
From: General Counsel to NAPOCOR
To: Hopewell Energy International Limited and
Hopewell Power (Philippines) Corporation
Dear Sirs,
I have acted on behalf of National Power Corporation (NAPOCOR) in
connection with an agreement ("the Project Agreement") dated [ ] and made
between NAPOCOR (1) and Hopewell Energy International Limited (HOPEWELL) (2) and
an agreement ("the Accession Undertaking" and together with the Project
agreement "the agreements") dated [ ], 19[ ] and made between HOPEWELL
(1), NAPOCOR (2) and Hopewell Power (Philippines) Corporation (3), I have
examined an executed copy of the Agreements and such other documents as I have
considered necessary or desirable to examine in order that I may give this
opinion. Terms defined in the Agreements shall have the same meaning herein.
I am of the opinion that:
(i) NAPOCOR is a public corporation and validly existing under the
laws of the Republic of the Philippines pursuant to Republic
Act No. 6395 (as amended);
(ii) NAPOCOR has the corporate or other power to enter into the
Agreements and to exercise its rights and perform its
obligations thereunder, and execution of the Agreements on
behalf of NAPOCOR by the person(s) who executed the Agreements
was duly authorised by NAPOCOR;
(iii) all acts, conditions and things required by the laws and
constitution of the Republic of the Philippines to be done,
fulfilled and performed in order (a) to enable NAPOCOR
lawfully to enter into, exercise its rights under and perform
the obligations expressed to be assumed by it in the
Agreements, (b) to ensure that the obligations expressed to be
assumed by it in the Agreements are valid and enforceable by
appropriate proceedings and (c) to make the Agreements
admissible in evidence in the Republic of the Philippines have
been done, fulfilled and performed in compliance with the laws
and constitution of the Republic of the Philippines;
(iv) the obligations expressed to be assumed by NAPOCOR in the
Agreements are legal and valid obligations binding on NAPOCOR
enforceable in accordance with the terms thereof;
(v) the obligations expressed to be assumed by NAPOCOR in the
Agreements are legal and valid obligations binding on NAPOCOR
enforceable in accordance with the terms thereof;
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(vi) NAPOCOR is not entitled to claim any immunity from suit,
execution attachment or other legal process in the Republic
of the Philippines; and
(vii) under the Constitution of the Philippines, it is recognized
that no law impairing the obligation of contracts shall be
passed and consequently the validity of the Agreements and the
binding nature of the obligations of the parties thereunder
are constitutionally safeguarded.
This opinion is confined to matters of Philippine law and no opinion is
expressed as to the laws of any other jurisdiction.
Yours faithfully,
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FOURTEENTH SCHEDULE
TESTS AND TEST PROCEDURES
INTRODUCTION
Tests are to be undertaken by HOPEWELL to ensure that the Power Station will
perform in accordance with agreed specifications and parameters.
METHODOLOGY
The test methods employed and the test result calculations shall be in
accordance with the latest American Society of Mechanical Engineers (ASME),
Power Test Code, Institute of Electrical and Electronics Engineering (IEEE),
Energy Power Research Institute (EPRI) or equivalent internationally-accepted
standards.
The tests shall be conducted using all panel instruments installed in the
control room unless otherwise required to use additional instrumentation. All
instruments shall be calibrated prior to testing.
Detailed test procedures shall be agreed by NAPOCOR and HOPEWELL not later than
three (3) months before actual test.
TEST
The following are the tests to be conducted by HOPEWELL:
1. Preliminary Tests at Site
Preliminary tests shall be carried out at site to ascertain correct
execution of the erection works and tuning of the installed equipment
and to verify characteristics and performance of equipment.
Preliminary tests at site shall include the following:
(a) Radiographic Examination
(1) 100% of main steam and reheat steam line welding.
(2) 30% of water wall tubes, economizer, superheater,
reheater and other pressure parts. Should welding
failure occur, the percentage shall be subsequently
doubled.
(b) Hydrostatic test of pressure parts at 1.5(1) times the design
pressure.
(c) Leak test on condenser and generator H2 cooling system.
(d) Pressure tests on ducts.
---------------
(1) not valid for all parts
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(e) Functional test of all equipment and plant system.
(f) Safety valve setting.
(g) Automatic intervention of standby equipment, where possible.
(h) Balancing and vibration test of rotating equipment, where
useful.
(i) No load test of the plant.
(j) Checking of all safety devices.
(k) Other tests necessary to ascertain the safety and reliability
of the Facility.
All the above tests shall meet all the requirements of the
specifications before any Performance and Efficiency Tests shall be
performed.
2. Performance Test
Performance Tests on the Power Station shall ascertain the safety and
reliability of the Power Station and its associated equipment in
accordance with the contract provisions and guarantees. Performance
Tests shall be performed prior to Efficiency Tests.
The Performance Tests shall include the following:
(a) Steam Generator and Auxiliaries (without any manual adjustment
during the test).
(1) Attainment of guaranteed output using pulverized
coal.
(2) Guaranteed start-up time from cold start to full
load, and hot start to full load
(3) Keeping of the main steam pressure at rated value
from 50% to 110% of the rated load.
(4) Keeping of rated value of main steam temperature from
60% to 110% of rated output.
(5) Capability to sustain emergency output. After having
the plant load at 50%, 75%, 100% and 110% of rated
output, the unit shall be disconnected from the
network and it shall remain in operation feeding its
own auxiliaries.
(6) Tripping of the plant at loads of 50%, 75%, 100% and
110% of rated output shall be tested. No perduring
malfunction or endangering of the equipment shall
take place and all controls shall operate safely.
(7) Rapid reduction of load when the load is above 50% of
rated output, due to failure of either forced draft
fan or induced draft fan, or failure of circulating
water pump or of boiler feedwater pump without
intervention of the standby pump, or turbine load
reduction due to turbine auxiliary failure.
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<PAGE> 73
(8) Verification of silica content of main steam and
steam from the drum at all loads.
(9) Excess air at various loads.
(10) Air leakage in the air heaters.
(11) Guaranteed performance of steam coil air heaters.
(12) Guaranteed flue gas temperature at furnace exit and
air heaters outlet.
(13) Automatic change-over of standby equipment (if any)
at all load.
(14) Correct operation of high pressure by-pass system.
(15) Verification of dust emission and S02 ground
concentration level.
(16) Correct operation of soot blowing system.
(17) Operating at minimum load firing pure coal.
(b) Steam Turbine and Auxiliaries (without any manual adjustment
during the test).
(1) Correct deaerating effect of condenser and deaerator.
(2) Verification of the guaranteed output.
(3) Performance and correct operation of all equipment.
(4) Load rejection from 25%, 50%, 75%, 100% and 110% of
rated load feeding its own auxiliaries only.
(5) Correct operation of low pressure by-pass system.
(6) Tripping.
(7) Capability to sustain rapid reduction of load arising
from failure of turbine auxiliaries.
(8) Automatic change-over of standby equipment, if any.
(9) Capability to sustain rapid reduction of load arising
from failure of boiler and its auxiliaries.
(c) Coal Handling Plant
(1) Verification of the guaranteed capacity of coal
unloader, conveyors, stacker/reclaimer and crusher.
(2) Verification of power requirement of coal unloader,
conveyor, stacker/reclaimer and crusher.
70
<PAGE> 74
(d) Ash Handling Plant
(1) Verification of the guaranteed capacity.
(2) Verification of automatic change-over of standby
equipment.
(3) Verification of power requirements of blowers, pumps,
etc.
(e) Water Treatment Plant
(1) Verification of demineralized water quality.
(2) Verification of plant capacity.
(3) Verification of active life of filters.
(4) Verification of automatic change-over of standby
equipment.
(5) Verification of automatic operation of the plant.
(f) Auxiliary Equipment
(1) Load test of overhead crane.
(2) Load test of other cranes and hoisting equipment.
(3) Operation of firefighting equipment.
(4) Load test of air conditioning system.
(5) Performance of sodium hypochlorinator equipment.
(g) Metereological and Environmental Monitoring Equipment.
3. EFFICIENCY TEST
Efficiency tests on each major equipment shall be conducted in order to
assure that the functioning of each part of the equipment is in
accordance with the contract provisions and guarantees.
The efficiency test to be conducted are as follows:
(a) Steam Generator
The efficiency test shall be carried out in accordance with
the provisions of ASME Power Test Code 4.1 - Heat Loss Method.
All conditions stipulated in the ASME PTC 4.1 shall be
followed as much as possible but certain provisions can be
waived if the conditions of the Code cannot be met.
The efficiency test shall be conducted at 50%, 75% and 100% of
rated load.
(b) Turbine Generator
The efficiency test shall be carried out in accordance with
the provisions of ASME PTC 6.1.
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<PAGE> 75
Efficiency test shall be conducted at 50%, 75% and 100% of
rated load.
(c) Auxiliary Power Consumption
All auxiliary power consumption at 100% load shall be
measured. The total auxiliary power consumption of the Power
Station shall be measured simultaneously and include but not
limited to turbine auxiliaries, boiler auxiliaries, controls,
water treatment, coal handling, domestic water supply and
other consumers. The power consumption of coal handling, water
treatment and other intermittent auxiliaries shall be
pro-rated to the tested load measured in item (b).
The measurement shall be in accordance with ASME PTC 19.6 by
watthour meter method.
All tests shall be carried out within a period of six months after first
synchronisation. All tests not executed within this period shall be considered
as having been successful executed.
72
<PAGE> 76
FIFTEENTH SCHEDULE
REQUIRED PROJECT DESCRIPTION DATA FOR
ENVIRONMENTAL IMPACT ASSESSMENT STUDY
HOPEWELL shall provide NAPOCOR with the following project details which will be
the bases for the environmental impact assessment study to be conducted by
NAPOCOR:
1. Name and Address of Project Proponent
2. Type of Project
3. Overview/Summary
4. Project Setting
(a) Declaration and Objectives
(b) The Need for Project (Power)
(c) Associated Projects
5. The Proposal
(A) General Layout and Location
Exact project location properly superimposed on a 1:50,000
scale topographic map and detailed site layout of project
facilities
(b) Size and scale of project in terms of electricity output and
fuel/other inputs, its projected life span and project cost
(c) Pre-Construction Details
(d) Construction Details
Detailed work program (i.e. from construction and
implementation stage), including the number of workers in each
phase of project development
(e) Operation and Maintenance
(1) Plan of operation, process flow description and flow
chart
(2) All outputs of project, including gaseous and
particulate emissions, liquid effluents, solid waste
outputs etc. (Liquid effluents and atmospheric
emissions should be described in terms of components
and rate of production and discharge)
(3) Description of waste disposal or management system,
including detailed description of facilities and
measures to be adopted to minimise adverse
environmental effects.
73
<PAGE> 77
(f) Contingency Plans
(1) Spontaneous Combustion
(2) Fire
(3) Oil Spill
(4) Coal Spill
(g) Abandonment
(h) Air Pollutant Dispersion Modelling Data
(1) Plant Capacity and Capacity Factor
(2) Plant Efficiency
(3) Stack Diameter
(4) Stack Height
(5) Stack Gas Exit Temperature and Velocity
(6) Fuel Consumption, tons/hr
(7) Coal HHV, kcal/kg
(8) Coal Sulfur and ash content, trace metals
(9) S02 emission concentration, sulfur in bottom ash
(10) NOx emission concentration
(11) Ambient temperature
(i) Wastewater Quality and Water Use
(1) temperature rise in cooling water system, CWS flow
rate
(2) freshwater use rate (provide breakdown)
(3) wastewater volumes and characteristics
(4) solid waste volumes and characteristics
74
<PAGE> 78
SIXTEENTH SCHEDULE
SAMPLE COMPUTATIONS OF MONTHLY BILLINGS,
START-UP CHARGES, PENALTIES AND INCENTIVES
1. PENALTY FOR LATE COMPLETION:
<TABLE>
<S> <C> <C>
Target Unit Completion Date - July 31, 1995
Actual Unit Completion Date - December 1, 1995
Delay in Completion - 123 days
--------
Grace Period - 30 days
-------
Net delay subject to penalty - 93 days
Penalty rates:
First 60 days - $10,000 per day
Succeeding 33 days - $24,700 per day
Penalty for delays:
First 60 days = 60 x 10,000 = $ 600,000
Succeeding 33 days = 33 x 24,700 = $ 815,100
----------
Total Penalties = $1,415,100
==========
</TABLE>
2. MONTHLY CAPACITY BILLINGS; OUTAGES WITHIN ALLOWED LIMITS:
<TABLE>
<S> <C>
Nominal Capacity (NC) - 350,000 KW
Contracted Capacity (CC) - 350,000 KW
Outage for the month - 6 days
Accumulated Outages - 0 days
Allowable Outages - 73 days
Outages subject to penalty - 0 days
</TABLE>
350,000 KW x 24 days x 24 hrs
Outage Factor = --------------------------------- = 1
350,000 KW x (30-6) days x 24 hrs
X NC < CC Y = 0
Capacity Fees:
<TABLE>
<S> <C> <C>
A. Capital Recovery Fee:
($21.00 x 350,000 x1) - (0) = $7,350,000
B. Fixed Operating Fee:
($1.60 x 350,000 x 1) - (0) = $ 560,000
(Psl.71 x 350,000 x 1) - (0) = Ps 598,500
C. Service Fee:
($1.80 x 350,000 x 1) - (0) = $ 630,000
</TABLE>
75
<PAGE> 79
<TABLE>
<S> <C> <C>
D. Infrastructure Fee:
($1.50 x 350,000 x 1) - (0) = $ 525,000
-----------
Total Capacity Fees = $ 9,065,000
Ps 598,500
===========
</TABLE>
3. MONTHLY CAPACITY BILLINGS; OUTAGES IN EXCESS OF ALLOWED LIMITS:
<TABLE>
<S> <C>
Nominal Capacity (NC) - 350,000 KW
Contracted Capacity (CC) - 350,000 KW
Outages for the month - 7 days
Accumulated Outages, previous months - 70 days
----------
Total Outages - 77 days
Allowed Outages - 73 days
----------
Outages subject to penalty - 4 days
</TABLE>
350,000 KW x (30-7) days x 24 hrs
Outage Factor = --------------------------------- = 0.85
350,000 KW x (30-3) days x 24 hrs
X NC < CC Y = 0
Capacity Fees:
<TABLE>
<S> <C> <C>
A. Capital Recovery Fee:
($21.00 x 350,000 xO.85) - (0) = $6,247,500
B. Fixed Operating Fee:
($1.60 x 350,000 x 0.85) - (0) = $ 476,000
(Psl.71 x 3,500,000 x 0.85) - (0) = Ps 508,725
C. Service Fee:
($1.80 x 350,000 x 1) - (0) = $ 535,500
D. Infrastructure Fee:
($1.50 x 350,000 x 1) - (0) = $ 446,250
----------
Total Capacity Fees = $7,705,250
Ps 508,725
==========
</TABLE>
4. REDUCED CONTRACTED CAPACITY DUE TO MANUFACTURING/MATERIAL DEFECT:
Plant Capacity is reduced to 300,000 KW
Duration = 30 days
Accumulated Outages > Allowed Outages
76
<PAGE> 80
300,000 KW x 30 days x 24 hours
Outage Factor = ------------------------------- = 1
300,000 KW x 30 days x 24 hours
For the first 15 days:
Formula applied in accordance with provisions of 6.1.1 to 6.1.4.
Where CC < x NC Y=l
Capacity Fees:
A. Capital Recovery Fee:
($21.00 x 300,000 x 1) (15 divided by 30) - (1 x 1.05) (21.00)
(350,000 - 300,000) (15 divided by 30)
= $2,598,750
B. Fixed Operating Fee:
($1.60 x 300,000 x 1) (15 divided by 30) - (1 x 1.05) (1.6)
(350,000 - 300,000) (15 divided by 30)
= $198,000
(Ps 1.71 x 300,000 x 1) (15 divided by 30) - (1 x 1.05)
(1.71) (350,000 - 300,000) (15 divided by 30)
= Ps277,612.50
C. Service Fee:
($1.80 x 300,000 x 1) (15 divided by 30) - (1 x 1.05) (1.80)
(350,000 - 300,000) (15 divided by 30)
= $222,750
D. Infrastructure Fee:
($1.50 x 300,000 x 1) (15 divided by 30) - (1 x 1.05) (1.50)
(350,000 - 300,000) (15 divided by 30)
= $185,625
For the second 15 days:
Formulae applied in accordance with provisions of 6.1.7.
Capacity Fees:
<TABLE>
<S> <C> <C>
A1. Capacity Recovery Fee:
($21.00 x 300,000 x 1) (15 divided by 30) = $3,150,000
B1. Fixed Operating Fee:
($1.60 x 300,000 x 1) (15 divided by 30) = $ 240,000
(Ps 1.71 x 300,000 x 1) (15 divided by 30) = Ps 256,500
C1. Service Fee:
($1.80 x 300,000 x 1) (15 divided by 30) = $ 270,000
D1. Infrastructure Fee:
($1.50 x 300,000 x 1) (15 divided by 30) = $ 225,000
------------
Total Capacity Fees = $7,090,125
Ps 468,122.50
=============
</TABLE>
77
<PAGE> 81
5. MONTHLY ENERGY BILLINGS; PLANT HEAT RATES WITHIN 2193 KCAL/KWHR TO 2300
KCAL/KWHR
<TABLE>
<S> <C>
Energy Generated (ED) - 252,000,000 KWHR
Price of Coal (U) - $45.00/MT
HRT = 2200 KCAL/KWHR
m = 2193 KCAL/KWHR (initial value)
n = 2300 KCAL/KWHR (initial value)
Va = 0; m =< HRT =< n
</TABLE>
Energy Fees
<TABLE>
<S> <C> <C> <C>
US$ Portion:
First 75% of energy = 189,000,000 x 0.0020 = $378,000
Succeeding energy = 63,000,000 x 0.0019 = 119,700
--------
BER X ED = $497,700
========
Energy Fees = 497,700 + 0 = $497,700
========
</TABLE>
<TABLE>
<S> <C> <C>
Philippines Peso Portion:
First 75% of Energy = 189,000,000 x 0.0107 = Ps 2,022,300
Succeeding Energy = 63,000,000 x 0.0107 = Ps 674,100
------------
BER X ED = Ps 2,696,400
Energy Fees = 2,696,400 + 0 = Ps 2,696,400
</TABLE>
6. MONTHLY ENERGY BILLINGS; PLANT HEAT RATES IN EXCESS OF GUARANTEE:
<TABLE>
<S> <C>
HRT = 2,500 KCAL/KWHR
HRG = 2,300 KCAL/KWHR
HHV = 6,140 KCAL/KG
U = $45.00 per Metric Ton
ED = 252,000,000 KWHR
</TABLE>
Vg = 252,000,000 x 2,300 x 1/6,140 x 1/1,000 = 94,397.39
Vt = 252,000,000 x 2,500 x 1/6,140 x 1/1,000 = 102,605.76
Vg - Vt = 94,397.39 - 102,605.76 = -8,208.47
Energy Fees
<TABLE>
<S> <C>
US$ Portion
First 75% of energy: 189,000,000 x $0.002 = $378,000
Succeeding energy: 63,000,000 x $0.0019 = $119,700
--------
BER x ED = $497,700
Energy Fees: 497,700 + $45 (-8,208.4) = $128,318.71
</TABLE>
78
<PAGE> 82
Philippine Peso Portion:
Where:
U = Peso equivalent price of coal per metric ton corrected with
a landing factor
= US$45.00 x Landing Factor x (Forex: $ to Ps)
Landing Factor = (1 + Duty + Insurance + Handling Fees)
= (1 + 0.20 + 0.010 x 0.03)
= 1.24 (to be adjusted at the time of coal
purchase)
Forex: $ to Ps = 28 (to be adjusted at the time of coal
purchase)
U = 45 x 26 x 1.24
Ps 1,562.40
<TABLE>
<S> <C>
First 75% of Energy: 189,000,000 x Ps 0.0107 = Ps 2,022,300
Succeeding Energy : 63,000,000 x Ps 0.0107 = Ps 674,100
------------
BER X ED = Ps 2,696,400
Energy Fees = 2,696,400 + 1,562.40 (-8,208.47)= Ps10,128,513.53
===============
(Penalty)
</TABLE>
7. MONTHLY ENERGY BILLINGS; PLANT HEAT RATE BELOW GUARANTEE:
<TABLE>
<S> <C>
HRT = 2,100 KCAL/KWHR
HRG = 2,193 KCAL/KWHR
HHV = 6,140 KCAL/KG
U = $45.00 per Metric Ton
ED = 252,000,000 KWHR
</TABLE>
Vg = 252,000,000 x 2,193 x 1/6,140 x 1/1,000 = 90,005.86
Vt = 252,000,000 x 2,100 x 1/6,140 x 1/1,000 = 86,188.93
Vg - Vt = 90,005.86 - 86,188.93 = 3,816.93
Energy Fees:
<TABLE>
<S> <C>
US$ Portion
First 75% of energy: 189,000,000 x $0.002 = $378,000
Succeeding energy: 63,000,000 x $0.0019 = $119,700
----------
BER x ED = $497,700
Energy Fees = 497,700 + $45 (3,816.93) = $669,461.85
===========
Philippine Peso Portion:
First 75% of Energy = 189,000,000 x 0.0107 = Ps 2,022,300
Succeeding Energy = 63,000,000 x 0.0107 = Ps 674,100
---------------
BER x ED = Ps 2,696,400
Energy Fees = 2,696,400 + 1,562.4 (3,816.93) = Ps 8,659,971.43
</TABLE>
79
<PAGE> 83
8. EARLY COMPLETION INCENTIVE:
Target Unit Completion Date July 31, 1995
Actual Unit Completion Date July 1, 1995
Early Completion 30 days
Plant Heat Rate is within Guarantee
HRT = 2200 KCAL/KWHR
m = 2193 KCAL/KWHR (initial value)
n = 2300 KCAL/KWHR (initial value)
Va = 0; m =< HRT =< n
Energy Generated (ED);
350,000 KW x 24 hours per day x 30 days = 252,000,000 KWHR
350,000 KW x 30 days x 24 hrs
F = ----------------------------- = 1
350,000 KW x 30 days x 24 hrs
X NC < CC Y = 0
Early Completion Bonus
<TABLE>
<S> <C>
Capital Recovery Fee:
(350,000 x $21.00 x 1) - (0) = $7,350,000
Infrastructure Fee:
(350,000 x $1.50 x 1) - (0) = $ 525,000
Service Fee:
(350,000 x $1.80 x 1) - (0) = $ 630,000
Total Bonus = $8,505,000
==========
</TABLE>
Fees
<TABLE>
<S> <C>
Fixed Operating Fee:
(350,000 x $1.60 x 1) - (0) = $ 560,000
(350,000 x Ps 1.71 x 1) - (0) = Ps598,500
Energy Fees:
US$ Portion:
First 75% of energy:
189,000,000 KWHR x $0.002/KWHR = $ 378,000
Succeeding energy:
63,000,000 KWHR x $0.0019/KWHR = 119,700
----------
Energy Fees - US$ Portion = 497,700 + 0 = $ 497,700
==========
</TABLE>
80
<PAGE> 84
<TABLE>
<S> <C>
Philippine Peso Portion:
First 75% of Energy:
189,000,000 KWHR x 0.0107/KWHR = Ps 2,022,300
Succeeding Energy:
63,000,000 KWHR x 0.0107/KWHR = Ps 674,100
------------
BER X ED = Ps 2,696,400
Energy Fees - Peso Portion = 2,696,400 + 0 = Ps 2,696,400
==============
Total Fees: US$ Portion = US$ 1,057,700
Philippine Peso Portion = Ps 3,294,900
==============
</TABLE>
81
<PAGE> 85
SEVENTEENTH SCHEDULE
ACCESS ROAD AND BRIDGE SPECIFICATIONS
LOCATION
The Access Road and Bridge shall be constructed from the main access gate of the
Power Station to the main national highway with approximate route as shown in
the attached plan.
SPECIFICATIONS
The Access Road and Bridge shall be capable of taking, carrying and handling the
loads of all types of vehicles in all weather conditions during the
construction, operation and maintenance of the Power Station and shall be
completed before the Effective Date.
The Access Road shall be complete in all aspect to include but not limited to:
drainage crossings and/or access, culverts, containment walls, embankments,
approaches to bridges, railings, shoulders & corresponding stabilization means.
82
<PAGE> 86
PROPOSED ACCESS ROAD
[MAP]
<PAGE> 87
SIGNATURE PAGE
HOPEWELL ENERGY INTERNATIONAL LIMITED
SIGNED by GORDON WU YING )
SHEUNG and EDDIE HO PING )
CHANG for and on behalf of ) /s/ Gordon Wu Ying Sheung
HOPEWELL ENERGY INTERNATIONAL ) ---------------------------
LIMITED (Telex No. 72485 or ) Gordon Wu Ying Sheung
76437 HOWEL HX) )
/s/ Eddie Ho Ping Chang
---------------------------
Eddie Ho Ping Chang
NATIONAL POWER CORPORATION
SIGNED by PABLO MALIXI )
for and on behalf of ) /s/ Pablo Malixi
NATIONAL POWER CORPORATION ) ---------------------------
(Telex No. 40120 NAPOCOR PM) ) Pablo Malixi
Representatives of the parties hereto have signed this Agreement in the
presence of the following witnesses:
/s/ Ernesto Aboltil /s/ Stewart WG Elliott
-------------------------- --------------------------
Ernesto Aboltil Stewart WG Elliott
Chairman Director
NATIONAL POWER CORPORATION HOPEWELL HOLDINGS LIMITED
84
