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EXHIBIT 10.20
NAVOTAS II
DATED 29 JUNE, 1992
BUILD, OPERATE AND TRANSFER ("BOT")
PROJECT AGREEMENT
for
A GAS TURBINE POWER STATION
IN NAVOTAS, MANILA
BETWEEN
NATIONAL POWER CORPORATION
AND
HOPEWELL ENERGY INTERNATIONAL LIMITED
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Clause Heading Page
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<S> <C> <C>
1. Definition of Terms 2
2. The Project 6
3. Construction of the Power Station 7
4. Specifications and Operating Parameters 9
5. Construction Timetable 10
6. Testing 11
7. Conditions Precedent 11
8. Operation of the Power Station 15
9. Supply of Fuel 17
10. Supply of Electricity 18
11. Fees 18
12. Foreign Exchange 19
13. Insurance 20
14. Transfer of Ownership 21
15. Liability 22
16. Force Majeure 22
17. Buyout 25
18. Change in Circumstances 26
19. Benefit of Agreement 26
20. Warranty 27
21. Notices 28
22. Dispute Resolution 28
23. Law 28
24. Jurisdiction 28
25. Taxes 29
</TABLE>
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<TABLE>
<CAPTION>
Schedules Heading Page
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<S> <C> <C>
First Schedule Project Scope and Specifications 30
Second Schedule Operating Parameters 35
Third Schedule Penalty of HOPEWELL on Delay of
Completion Date 39
Fourth Schedule Specifications for Fuel Supply and
Start Up Electricity 40
Fifth Schedule Transmission Line Specifications 43
Sixth Schedule Electricity Delivery Procedures 44
Seventh Schedule Measurement and Recording of
Electricity 47
Eighth Schedule Delivery of Power and Energy 49
Ninth Schedule Documentary Requirements for
the Effective Date 53
Tenth Schedule Insurance 55
Eleventh Schedule Form of Performance Undertaking 56
Twelfth Schedule Form of Accession Undertaking 58
Thirteenth Schedule Form of Legal Opinion of NAPOCOR's
General Counsel 62
Fourteenth Schedule Testing Procedures 64
Figures
-------
Figure 1 Location Plan
Figure 2 Temporary Fence Detail
Figure 3 Scope of Supply
Figure 4 Communication
Figure 5 Fuel Oil System
Figure 6 Metering
</TABLE>
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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
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 Director Stewart WG Elliott, who is duly
authorised to represent it in this Agreement, hereinafter referred to
as HOPEWELL
- and -
NATIONAL POWER CORPORATION, a government owned and controlled
corporation 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 meet the immediate power requirements of the Luzon Grid.
Whereas NAPOCOR issued a notice to the public inviting interested
parties to submit proposals to supply power generating units on a Fast
Track basis.
Whereas in response to such notice from NAPOCOR, HOPEWELL submitted a
proposal to undertake the construction and operation of a 100 MW gas
turbine power station on a build-operate-transfer basis.
Whereas NAPOCOR, after having evaluated project proposals and selecting
the most advantageous to NAPOCOR, issued a letter of award to HOPEWELL
following which it was agreed that HOPEWELL will supply a 100 MW gas
turbine power station to NAPOCOR on such basis.
Whereas pursuant to the said letter, HOPEWELL has agreed to construct
and operate and NAPOCOR has agreed to accept a 100 MW gas turbine 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 Tileman (Philippines) Corporation, for the
purpose of undertaking certain of the work in
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respect of the building and operating of the power station and
performing other undertaking specified in this Agreement.
NOW IT IS HEREBY AGREED as follows:
1. Definition of Terms
1.01 In this Agreement and in the recitals hereto:
"Accession Undertaking" means an agreement in the form
substantially set out in the Twelfth Schedule pursuant to
which HOPEWELL PHILIPPINES agrees to become a party hereto as
therein provided;
"Availability" means the maximum generating capacity from the
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 Clause 8.08;
"BOI" means the Board of Investments of the Republic of the
Philippines;
"Capacity Fees" means the fees payable by NAPOCOR to HOPEWELL
in respect of the Contracted Capacity as provided in Clause
11;
"Central Bank" means the Central Bank of the Philippines;
"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;
"Contracted Capacity" shall have the meaning given to it in
the Eighth Schedule;
"Co-operation Period" means the period of twelve (12) years
from the later of the Target Completion Date and the
Completion Date, as the same may be extended from time to
time pursuant to the terms hereof;
"Delivery Points" means the metering points referred to in the
Seventh Schedule;
"Downtime" shall have the meaning given to it in the Sixth
Schedule;
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"Effective Date" means the date on which NAPOCOR and HOPEWELL
certify that all the conditions contained in Clauses 7.01,
7.02 and 7.03 have been fulfilled to the satisfaction of
NAPOCOR in the case of Clause 7.01 and fulfilled or waived to
the satisfaction of HOPEWELL in the case of Clauses 7.02 and
7.03;
"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;
"Energy Fees" means the fees payable by NAPOCOR to HOPEWELL in
respect of energy supplied to NAPOCOR as provided in Clause
11;
"Evaluated Operating Hour(s)" and "EOH" means the number of
actual operating hours per generating unit of the Power
Station plus twenty (20) hours times the number of starts per
generating unit;
"Force Majeure" shall have the meaning specified in Clause
16.01;
"Forced Outage" shall have the meaning given to it in the
Sixth Schedule;
"Forced Outage Hour" shall have the meaning given to it in the
Sixth Schedule;
"Fuel Management Agreement" means the agreement to be entered
into pursuant to Clause 9.06;
"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 Clause 9.03 and the Fourth
Schedule;
"Fuel Supply Procedures" means the procedures and parameters
for the supply and delivery of fuel by NAPOCOR described in
Clause 9 and the Fourth Schedule;
"HOPEWELL PHILIPPINES" means Hopewell Tileman (Philippines)
Corp., a Philippine corporation in the process of being
formed, and which is or shall be a subsidiary of HOPEWELL;
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"Major Overhaul" means, in relation to a turbine, the
overhaul as specified by the manufacturer of such turbine;
"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 and
ending upon the taking of such photograph on the 25th of the
next calendar month; in the case of the first month "Month"
means the period commencing on the first day of the
Co-operation Period and ending upon the taking of a photograph
of the electricity meters on the 25th of the current calendar
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 "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 Transfer Date;
"Nominal Capacity" shall mean 100,000 KW;
"Operating Parameters" means the Operating parameters of the
Power Station described in the Second Schedule;
"Performance Undertaking" means the agreement referred to in
Clause 7.03(i);
"Power Station" means the power station built, or to be built,
pursuant to Clause 2.01;
"Prime" means, on any day, the rate per annum which is the
average of the prime or equivalent rates of Citibank, N.A.,
New York, Bankers Trust Company, New York and Chemical Bank of
New York as publicly announced from time to time, in force on
such date and, for the purposes of this Agreement, a change in
any such rate shall be effective on and from the day on which
it is announced or, if such announcement provides for such
change to come into effect on a later date, on and from such
later date;
"Project" means the design, construction, equipping,
completion, testing, commissioning and operation of the Power
Station;
"Project Scope" means the scope of the supply of work of
HOPEWELL in connection with the construction of the Power
Station as described in the First Schedule;
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"Site" means the site for the Power Station described in the
First Schedule;
"Specifications" means the specifications of the Power Station
described in the First Schedule;
"Start Up Fees" means the fees payable by NAPOCOR to HOPEWELL
in respect of start ups of the gas turbines as provided in
Clause 11;
"Supply Procedures" means the procedures and parameters for
the requesting of the supply of electricity by NAPOCOR
described in Clause 10.01 and the Sixth Schedule;
"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 if no such bill with a term of 30 days is
issued such bill which is issued having the term nearest to 30
days) were issued by the Philippines 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 Clause 5.02, 1st
April, 1993;
"Transfer Date" means the day following the last day of the
Co-operation Period; and
"Transmission Line" means the transmission line to be
installed and connected by NAPOCOR pursuant to Clause 3.06
(iv) and having the specifications set out in the Fifth
Schedule.
1.02 Any reference in this Agreement to a "Clause" or a "Schedule"
is a reference to a clause hereof or a schedule hereto.
1.03 In this Agreement:
(i) "$" and "dollar(s)" denote lawful currency of the
United States of America;
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(ii) "Ps" and "peso(s)" denote lawful currency of the
Republic of the Philippines;
(iii) "MW" denotes a megawatt;
(iv) "KW" denotes a kilowatt; and
(v) "KWH" denotes a kilowatt hour.
2. The Project
2.01 HOPEWELL, having inspected the Site and finding it physically
suitable for the construction and operation of a gas turbine
power station, shall cause the design, development,
construction, completion, testing and commissioning of a gas
turbine power station, capable of operating at a level within
the Operating Parameters and in accordance with the
Specifications and the Project Scope.
2.02 Subject as herein provided, all costs of HOPEWELL in
connection with the building of the Power Station as provided
in Clause 2.01 shall be borne by HOPEWELL and HOPEWELL shall
be responsible for arranging all necessary funding including
any available preferential credits.
2.03 NAPOCOR shall make available the Site to HOPEWELL for the
purpose of building and operating the Power Station at no
cost to HOPEWELL for the period from the Effective Date until
the Transfer Date and NAPOCOR shall be responsible for the
payment of all real estate taxes and assessments, rates and
other charges in respect of the Site and the buildings and
improvements thereon.
2.04 NAPOCOR shall ensure that all necessary access to and from
the Site is made available to HOPEWELL, its employees,
contractors, subcontractors and advisors and that all
necessary utilities as provided in Section V of the First
Schedule are made available at the Site as necessary for the
construction, testing and commissioning of the Power Station.
2.05 HOPEWELL shall be responsible for the importation and
transportation of equipment to the Site, the obtaining of
building, construction, operating and other permits, 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.
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2.06 NAPOCOR shall supply fuel and start up electricity (through
the interconnection facilities with MERALCO) of the required
quantity and quality and at the required time for the testing
and commissioning of the Power Station, shall construct,
install and connect the Transmission Line and shall take all
electricity generated during testing and commissioning.
2.07 All costs of NAPOCOR (except in respect of start up
electricity) in connection with its obligations under Clause
2.03, 2.04 and 2.06 shall be borne by NAPOCOR.
2.08 From the date hereof 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 and it shall operate and manage
the Power Station for the purpose of converting fuel of
NAPOCOR into electricity.
2.09 Until the Transfer Date, NAPOCOR shall, at its own cost,
supply and deliver all fuel for the Power Station and shall
take all electricity generated by the Power Station at the
request of NAPOCOR which shall pay to HOPEWELL fees as
provided in Clause 11.
2.10 During the Co-operation Period NAPOCOR shall ensure the
provision of all necessary utilities to the Power Station as
provided in Section VI of the First Schedule. Provided that
NAPOCOR shall have no liability under this sub-clause where
such utility is withdrawn as a result of HOPEWELL failing to
pay for the utilization of the same.
2.11 On the Transfer Date the Power Station shall be transferred by
HOPEWELL to NAPOCOR without the payment of any compensation.
2.12 The parties hereto shall mutually collaborate 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.
3. Construction of the Power Station
3.01 HOPEWELL shall be responsible for the design, construction,
equipping, completion, testing and commissioning of the Power
Station and shall commence work upon being instructed by
NAPOCOR by instructions in writing.
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3.02 In pursuance of its obligations under Clause 3.01 HOPEWELL
shall 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 new and/or refurbished equipment including
the gas turbine sets;
(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.
3.03 In pursuance of its obligations under Clause 3.01 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.
3.04 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:
(i) 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;
(ii) make available for inspection at the Site copies of
all plans and designs; and
(iii) within two months of the completion of the Power
Station, supply NAPOCOR with one set of reproduceable
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copies and five sets of white print copies (or
equivalent) of all "as built" plans and designs.
3.05 HOPEWELL:
(i) 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
(ii) 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.
3.06 NAPOCOR shall ensure that all infrastructural requirements
and utilities necessary for the completion of the Power
Station in accordance with the Specifications by the Target
Completion Date are made available in a timely fashion and
accordingly shall at its own cost, inter alia:
(i) give vacant possession of the Site to HOPEWELL by not
later than 15 days after the Effective Date;
(ii) ensure that there is provided to the Site by not
later than 15 days after the Effective Date access
roads capable of taking traffic to and from the Site
and ensure that the Site is enclosed by a temporary
fence as described in the First Schedule;
(iii) ensure that there is provided to the Site water,
electricity, telephone, telex and fax as provided and
at the times set out in Section V of the First
Schedule the cost of the utilization of which and
normal fees shall be for HOPEWELL's account; and
(iv) ensure that there is installed and connected a
transmission line from the outgoing gantry of the
switching facility within the Site boundary and which
is capable of operating within the specifications set
out in the Fifth Schedule.
3.07 NAPOCOR warrants and undertakes that the Site shall be
suitable for the construction and operation of the Power
Station including for its construction and operation within
all environmental and other Philippine and local laws and
regulations.
4. Specifications and Operating Parameters
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4.01 The Power Station shall be constructed and equipped in
accordance with the Specifications and Project Scope set out
in the First Schedule.
4.02 Following the Completion Date the Power Station shall be
capable of operating within the Operating Parameters set out
in the Second Schedule.
5. Construction Timetable
5.01 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 1st July, 1992
Target Completion Date 1st April, 1993
</TABLE>
5.02 In the event that the Effective Date occurs, or the
instructions referred to in Clause 3.01 are given, after 1st
July, 1992 the other date set out in Clause 5.01 shall be
adjusted to occur later by the number of days that the
Effective Date occurs, or such instructions are given after
1st July, 1992.
5.03 In the event that, due to the fault of HOPEWELL, HOPEWELL
fails to complete the Power Station as provided in Clause 4.01
HOPEWELL shall pay NAPOCOR for each day thereafter until the
Completion Date as provided in the Third Schedule.
5.04 In the event that, due to the fault of HOPEWELL, the
Completion Date has not occurred on or before the day falling
ninety (90) calendar days after the Target Completion Date and
it does not appear reasonably likely that the Completion Date
will ever occur. HOPEWELL shall pay to NAPOCOR the sum of
$1,500,000 by way of liquidated damages but shall have no
other liability in respect of such failure to complete the
Power Station other than that provided in Clause 15.01 and
upon such sum becoming payable, or being paid by HOPEWELL
prior to it becoming due, HOPEWELL shall have no further
liability to make payments pursuant to Clause 5.03.
5.05 Upon substantial completion of the Power Station, HOPEWELL may
certify that the Power Station has successfully completed its
testing and that accordingly the Completion Date has occurred
notwithstanding that the Power Station is unable to produce
100 MW or to achieve the heat rates provided in Section 9 of
Part A of the Second Schedule but in that event
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adjustments shall be made to the Capacity Fees and Energy Fees
as provided in the Eighth Schedule.
6. Testing
6.01 The parties shall meet and agree procedures, standards,
protective settings and a programme for the testing of the
Power Station in accordance with the Fourteenth Schedule and
NAPOCOR undertakes to take all electricity generated during
any such testing.
6.02 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.
6.03 During the Co-operation Period, in order to ensure the proper
functioning and maintenance of the Power Station, HOPEWELL
shall be entitled to require that each gas turbine be operated
for a period of two hours in each Month including start up
time.
6.04 NAPOCOR shall ensure that there is made available for any
testing supplies of fuel, start up electricity and water in
sufficient quantity for the proper carrying out of such
testing and of the quality specified in the Schedules hereto.
6.05 The cost of the fuel to be supplied by NAPOCOR pursuant to
Clause 6.04 shall be for NAPOCOR's account.
6.06 NAPOCOR shall ensure that the Transmission Line is installed
and connected in time for the first testing to take place in
accordance with the agreed program and that it is by such time
capable of operating within the specifications set out in the
Fifth Schedule.
6.07 NAPOCOR and/or its experts shall be entitled to be present at
any testing.
6.08 Forthwith upon the completion of any testing HOPEWELL shall
certify whether or not the Power Station has satisfied such
test and shall provide NAPOCOR with a copy of such
certificate.
7. Conditions Precedent
7.01 It shall be a condition precedent to this Agreement that by
1st July, 1992, or such later date as the parties hereto may
agree, the following are supplied to NAPOCOR by HOPEWELL,
each
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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 or guarantee of a financial institution
acceptable to NAPOCOR in respect of HOPEWELL's
obligations under Clause 5.04; and
(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.
7.02 It shall be a condition precedent to this Agreement that by
1st July, 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 as may be necessary to ensure the
validity and binding effect of this Agreement and to
permit the performance by NAPOCOR 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
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for the execution, delivery and performance by
NAPOCOR of this Agreement;
(iv) a copy of the lease to NAPOCOR of the Site, certified
by the corporate secretary of NAPOCOR in a manner
satisfactory to HOPEWELL together with the agreement
of the lessor and NAPOCOR that, in the event NAPOCOR
shall fail to pay any rental or perform any of its
obligation when due under the said lease, HOPEWELL or
its assignee shall be entitled, at its sole option,
to pay such rental or perform such obligation on
behalf and for the account or NAPOCOR;
(v) evidence that the lease referred to in paragraph
(iv) above has been recorded in the office of the
Register of Deeds and that HOPEWELL's interest in the
Site has been duly recorded on such lease and in the
office of the Register of Deeds; and
(vi) a legal opinion of NAPOCOR's General Counsel in the
form set out in the Thirteenth Schedule.
(vii) 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.
7.03 It shall be a condition precedent to this Agreement that by
1st July 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;
(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
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binding effect of the Performance Undertaking in form
and substance satisfactory to HOPEWELL;
(iv) the Accession Undertaking, duly executed by HOPEWELL
PHILIPPINES; and
(v) each of the documents referred to in the Ninth
Schedule.
(vi) an Environmental Compliance Certificate for the Power
Station; and
(vii) an advice from HOPEWELL to NAPOCOR that HOPEWELL has
been able to arrange for the purchase of appropriate
gas turbines and auxiliaries for the construction of
the power station.
it is understood that NAPOCOR shall not be responsible to
ensure that any of the above is received by HOPEWELL.
7.04 If, on or before the 1st September, 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 Clause 3 provided that NAPOCOR has given
its prior written approval to HOPEWELL incurring such cost or
liability; NAPOCOR's obligations under this Clause 7.04 shall
be effective notwithstanding that the Effective Date has not
occurred or that all or any of the conditions precedent set
out in Clauses 7.01, 7.02 and 7.03 have not been satisfied or
waived.
7.05 In the event that the lease referred to in Clause 7.02(iv), or
any of the approvals, consents, registrations, exemptions or
other rights, laws or regulations referred to in Clause 7.02,
7.03 or the Ninth Schedule 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 expectation of
its 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 Clause 17.01 shall apply.
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7.06 NAPOCOR and HOPEWELL shall meet and jointly certify that this
Agreement is no longer conditional and that the Effective
Date has occurred.
7.07 If all the conditions set forth in Clauses 3.01, 7.01, 7.02
and 7.03 hereof have not been satisfied as of 1st September,
1992, the parties hereto shall meet and endeavour to agree a
new effective date; if no agreement is reached on or before
1st November, 1992, this Agreement shall, subject to Clause
7.04, be declared automatically cancelled (except as required
in respect of Clause 7.04) and the parties shall have no
liability with respect to each other except as provided in
Clause 7.04.
8. Operation of the Power Station
8.01 HOPEWELL shall, at its own cost, be responsible for the
management, operation, maintenance and repair of the Power
Station during the Co-operation Period and shall use its best
endeavours to ensure that 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.
8.02 Notwithstanding Clause 8.01, it is understood and agreed by
NAPOCOR 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 and,
by not later than the Completion Date 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.
8.03 HOPEWELL undertakes that during the Co-operation Period,
subject to the supply of the necessary fuel pursuant to
Clause 9 and to the other provisions hereof, it will operate
the Power Station to convert such fuel into electricity in
accordance with Clause 10.
8.04 In pursuance of its obligations under Clause 8.01 HOPEWELL
shall 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;
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(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.
8.05 NAPOCOR shall ensure that all infrastructural requirements and
utilities necessary for the operation of the Power Station
within the Operating Parameters are made available in a timely
fashion and accordingly shall at its own cost, inter alia:
(i) ensure that there is provided to the Site water,
electricity, telephone, telex and fax as provided in
Section VI of the First Schedule the cost of the
utilization of which (other than electricity) and
normal fees shall be for HOPEWELL's account; and
(ii) maintain and repair the Transmission Line to ensure
that all times it is capable of operating within the
specifications set out in the Fifth Schedule.
8.06 NAPOCOR and HOPEWELL shall, from time to time, meet and
discuss and agree safety guidelines for the operation of the
Power Station within the Operating Parameters and following
such agreement HOPEWELL shall operate the Power Station within
such safety guidelines.
8.07 HOPEWELL shall operate the Power station in accordance with
all environmental and other Philippine and local laws and
regulations in force as at the date of this Agreement and
shall comply with any changes in such laws and regulations and
with any new laws and regulations provided that if to comply
with such changes 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) in the opinion of HOPEWELL, 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 reduced, prejudiced or
otherwise adversely affected,
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then the parties 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 Clause 17.01
shall apply.
8.08 Availability will be determined by reference to Downtime
calculated as provided in the Sixth Schedule and the parties
will agree an annual schedule of Availability which shall be
reviewed from time to time; in agreeing such Availability
Schedule HOPEWELL shall take account of the requirements of
NAPOCOR but in no event shall HOPEWELL be obliged to agree to
Availability in excess of, or at times other than, that
permitted after taking account of Downtime.
9. Supply of Fuel
9.01 Throughout the Co-operation Period 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
Clause 10.
9.02 The cost of the fuel to be supplied by NAPOCOR pursuant to
Clause 9.01 shall be for NAPOCOR's account.
9.03 All fuel and start up electricity to be supplied by NAPOCOR
shall be of the quality and supplied and delivered in the
manner described in the Fourth Schedule.
9.04 All fuel shall be tested as provided in the Fourth Schedule,
and HOPEWELL shall, at all times, be entitled to reject 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.
9.05 NAPOCOR shall ensure that at all times the necessary stocks as
required by HOPEWELL are stored adjacent to the Site or are
available for immediate delivery to the Site.
9.06 NAPOCOR and HOPEWELL shall enter into a fuel management
agreement as further described in the Fourth Schedule pursuant
to which HOPEWELL shall agree to manage, but shall have no
responsibility for security in respect of the fuel of NAPOCOR
which has been delivered to the off Site fuel tanks upon the
terms and conditions therein appearing and subject to the
payment by NAPOCOR of the fees therein provided.
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10. Supply of Electricity
10.01 Subject to NAPOCOR supplying the necessary fuel and start up
electricity pursuant to Clause 9, HOPEWELL agrees to convert
such fuel into electricity and NAPOCOR agrees to take all
electricity requested by NAPOCOR in accordance with the
procedures set out in the Sixth Schedule and the Operating
Parameters set out in the Second Schedule.
10.02 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.
10.03 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.
10.04 The place for delivery of the electricity shall be the
Delivery Points.
11. Fees
11.01 In respect of each Month from the Completion Date until and
including the Month in which the Transfer Date falls NAPOCOR
shall pay to HOPEWELL PHILIPPINES Capacity Fees, Energy Fees
and Start Up Fees calculated as provided in the Eighth
Schedule.
11.02 In respect of each Month HOPEWELL will deliver to NAPOCOR an
invoice in respect of Capacity Fees, Energy Fees and Start Up
Fees for such Month and NAPOCOR shall pay to HOPEWELL the
amount of such invoice within 30 days after the delivery of
such invoice.
11.03 All fees payable to HOPEWELL pursuant to this Clause shall be
paid together with Value Added Tax thereon (which shall be
separately stated in all invoices) in dollars in respect of
the dollar portion and in pesos in respect of any pesos
portion 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 by NAPOCOR
there remains a sum equal to the amount that would have been
payable to HOPEWELL had there been no requirement to deduct or
withhold such taxes or other charges.
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11.04 NAPOCOR shall pay to HOPEWELL Energy Fees in respect of all
electricity generated during commissioning and testing.
11.05 NAPOCOR shall pay to HOPEWELL Energy Fees and Start Up Fees
calculated as provided in the Eighth Schedule in respect of
any requested energy and requested start up prior to the start
of the Co-operation Period.
11.06 NAPOCOR shall pay HOPEWELL Capacity Fees calculated as
provided in the Eighth Schedule in respect of the period, if
any, from the Completion Date until Target Completion Date.
11.07 In respect of each month, HOPEWELL will deliver to NAPOCOR an
invoice in respect of Capacity Fees, Energy Fees and Start Up
Fees payable pursuant to Clauses 11.04, 11.05 or 11.06 for
such month and NAPOCOR shall pay to HOPEWELL, the amount of
such invoice within 30 days after the delivery of such notice.
11.08 If any amount payable by NAPOCOR hereunder whether in respect
of fees or otherwise is not paid on or before the due date
NAPOCOR shall pay interest thereon, calculated at the rate of
Prime plus 2% p.a. if the amount was due in dollars and the
T-Bill Rate plus 3% p.a. if the amount was due in pesos, from
the date upon which it was due until the date upon which such
amount is received by HOPEWELL.
11.09 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
law of the Republic of the Philippines or in payment of
penalties referred to in Clause 5.03.
11.10 If NAPOCOR disputes the amount specified in any invoice it
shall so inform HOPEWELL within seven (7) days of 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 of the due date for such invoice and any sum paid to
HOPEWELL shall be paid together with interest pursuant to
Clause 11.08 from the due date of such invoice.
12. FOREIGN EXCHANGE
12.01 All sums payable to HOPEWELL in dollars shall be payable in
dollars in Hong Kong, in same-day funds not later than 11:00
a.m., Hong Kong time, on the day when payment is due, to the
account of HOPEWELL (which HOPEWELL shall notify to NAPOCOR)
at Citibank, N.A. of Citicorp Centre, 18 Whitfield
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Road, Causeway Bay, Hong Kong or such other account as
HOPEWELL may specify and is acceptable to NAPOCOR.
12.02 Any costs incurred by NAPOCOR in connection with the
remittance of funds outside the Philippines may be deducted
from the amount so remitted up to a maximum amount equal to
0.15% of the amount remitted, all other costs incurred in
making payments in accordance with the terms of this
Agreement shall be for NAPOCOR's account.
12.03 All sums payable to 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 with a bank in Manila that HOPEWELL shall specify
to NAPOCOR.
12.04 In the event that any payment, whether pursuant to judgment
or otherwise, upon prompt conversion to dollars and transfer
to Hong Kong, as provided in Clause 12.01, does not result in
payment of the dollar amount stipulated in this Agreement,
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 Hong Kong as aforesaid) result in the receipt
by HOPEWELL of a sum in excess of the dollar amount
stipulated in this Agreement, HOPEWELL shall pay the excess
amount to NAPOCOR immediately upon HOPEWELL's receipt of
notice of the overpayment and its agreement to the same.
12.05 All sums payable by 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.
12.06 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 Prime plus 2% p.a. if the amount was due in dollars, and
the T-Bill rate plus 3% p.a. 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.
13. Insurance
HOPEWELL shall be responsible to ensure that there is effected
insurance as provided in the Tenth Schedule and shall provide NAPOCOR
with copies of all policies of insurance effected by it. Subject to the
terms of Articles 16.07 and unless NAPOCOR has failed
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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.
14. Transfer of Ownership
14.01 On the Transfer Date HOPEWELL shall transfer to NAPOCOR, 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, plant and equipment
(including test equipment and special tools) and all
improvements comprising the Power Station.
14.02 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 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.
14.03 The Power Station and all other equipment transferred pursuant
to this Clause 14 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
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.
14.04 NAPOCOR shall be responsible for all costs and expenses
(including legal fees and taxes or duties) incurred in
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connection with the transfer referred in this Clause 14 and
shall at its own cost obtain or effect all governmental and
other approvals, licenses, registrations and filings and
take such other action as may be necessary for the transfer
contemplated in this Clause 14, and reimburse HOPEWELL on
demand for all such costs and expenses incurred by HOPEWELL
in respect of such transfer.
15. Liability
15.01 In the event that, in breach of its obligations hereunder,
HOPEWELL fails to construct the Power Station, HOPEWELL shall
reimburse and indemnify NAPOCOR for all costs and liabilities
incurred by NAPOCOR in respect of NAPOCOR's obligations under
Clause 2 or Clause 3.
15.02 HOPEWELL's liability to NAPOCOR arising from any breach of
this Agreement or otherwise in connection with the design,
construction and operation of the Power Station shall be
limited to payments as provided in Clauses 5.03, 5.04 and
15.01 and the penalties as provided in Sections 5.1 and 5.2 of
the Eighth Schedule.
15.03 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 same.
15.04 Subject to Clause 15.03, HOPEWELL shall hold NAPOCOR, its
officers and employees free of and harmless from any claims or
suits of any third party, other than claims for economic loss,
arising from HOPEWELL's operation of the Power Station.
15.05 Except where otherwise stated in this Agreement, the duties,
obligations and liabilities of the parties hereto are intended
to be several and not joint or collective and nothing
contained in this Agreement shall be construed to create an
association, trust, partnership or joint venture amongst the
parties hereto and each party shall be liable individually and
severally for its own obligations under this Agreement.
16. Force Majeure
16.01 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.
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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 assistences to
or adjuncts of the shipping or navigations 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, lightning, tide
(other than normal tides), tidal wave, perils of the
sea, accidents of navigation or breakdown or injury
of vessels, accidents to harbours, docks, canals, or
other assistences 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 involving the
Republic of the Philippines, or of belligerence,
blockade, revolution, insurrection, riot, public
disorder, expropriation, requisition, confiscation or
nationalization by 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 assistences 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.
16.02 Notwithstanding Clause 16.01 NAPOCOR (i) shall not be entitled
to claim for itself Force Majeure in respect of any
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Force Majeure mentioned in sub-paragraph (b) of Clause 16.01;
and (ii) shall not be relieved of its obligation to make
payments of Capacity Fees as provided in Clause 11.01 by the
occurrence of any Force Majeure mentioned in sub-paragraph (b)
of Clause 16.01 whether affecting NAPOCOR or HOPEWELL.
16.03 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.
16.04 If Force Majeure applies prior to the Completion Date the
parties will meet to discuss a revised timetable for the
completion of the Project and if the Force Majeure has applied
for a period in excees of 180 days and such Force Majeure is
mentioned in sub-paragraph (b) of Clause 16.01 the provisions
of Clause 17.01 shall apply.
16.05 If Force Majeure applies by the occurrence of any Force
Majeure mentioned in sub-paragraph (a) of Clause 16.01 during
the Co-operation Period the Co-operation 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.
16.06 The parties hereto will consult with each other and take all
reasonable steps to minimize the losses of either party
resulting from Force Majeure.
16.07 If any event of Force Majeure occurs which causes 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.
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17. Buyout
17.01 If the circumstances set out in Clause 7.05, Clause 8.07,
Clause 16.04, Clause 16.07 or Clause 18 arise or if, not
earlier than 5 years after the Completion Date NAPOCOR gives
not less than 90 days notice to HOPEWELL that either it
wishes to close the Power Station or it wishes to move the
gas turbines to elsewhere in the Philippines 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 buyout 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.
17.02 In respect of any transfer of the Power Station pursuant to
Clause 17.01 the provisions of Clause 14 (other than Clauses
14.01 and 14.02) shall apply thereto.
17.03 Subject to Clause 17.04, the purchase price in dollars,
payable pursuant to Clause 17.01 will be the total amount of
the Capacity Fees payable to HOPEWELL pursuant to Clause
11.01 until the Transfer Date upon the assumption that the
Contracted Capacity during each year of the Co-operation
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 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.
17.04 If the provision of Clause 17.01 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 and subject to a maximum amount of $30,000,000
plus an amount equal to ten percent (10%) of such aggregate
provided such additional amount shall not be payable if the
provisions of Clause 17.01 are applicable pursuant to Clause
16.04.
17.05 Completion of a buyout pursuant to Clause 17.01 shall take
place on the date of the expiry of the notice specified
therein at
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which time NAPOCOR will pay to HOPEWELL the purchase price
calculated in accordance with Clause 17.03 or, as the case
may be, Clause 17.04 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.
17.06 In the event that the provisions of Clause 17.01 apply
pursuant to Clause 16.04 then there shall be deducted from
the sum payable pursuant to Clause 17.04 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 Clause 16.04.
18. Change in Circumstances
In the event that as a result of any laws or regulations of the
Republic of the 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 the
date hereof, 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 or as a result of an increase in the
cost of insurances or inability to renew insurances (unless such
increase is due solely to HOPEWELL's prior performance in the
operation of the Power Station) 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 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 Clause 17.01 shall apply.
19. Benefit of Agreement
19.01 NAPOCOR may not assign or transfer all or any part of its
rights, benefits or obligations hereunder Provided that this
Clause shall not prevent NAPOCOR from merging or consolidating
with any other company which is wholly owned by the Republic
of the Philippines where the surviving entity adopts and
becomes fully liable to perform NAPOCOR's obligations
hereunder.
19.02 HOPEWELL may not, subject to Clause 19.03, transfer all or any
of its obligations hereunder but may, for the purposes of
arranging or rearranging finance for the Project, assign or
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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.
19.03 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 in
Clause 11; 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 HOPEWELL PHILIPPINES had executed this
Agreement as amended by the terms of the Accession
Undertaking.
20. Warranty
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 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
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.
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21. Notices
21.01 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.
21.02 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 its address specified above 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 be deemed to have been made or delivered (i) in the
case of any communication made by telex with correct answer
back (at the number identified with the relevant party's
signature below), when despatched, and (ii) in the case of any
communication made by letter, when left at that address or
otherwise received by the addressee.
22. Dispute Resolution
22.01 Throughout the term of this Agreement representatives of the
Directors of NAPOCOR, Hopewell Holdings Limited, 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.
22.02 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 sub-clause then the provisions of Clause 24
shall apply.
23. Law
This Agreement shall be governed by and construed in accordance with
the laws of the Republic of the Philippines.
24. Jurisdiction
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24.01 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.
24.02 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.
25. Taxes
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 of 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.
AS WITNESS the hands of the duly authorized representatives of the
parties hereto on the twenty ninth day of June in the year nineteen
hundred and ninety two.
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<PAGE> 33
FIRST SCHEDULE
PROJECT SCOPE AND SPECIFICATIONS
I. Scope of Agreement
HOPEWELL shall be responsible for the design, supply, delivery,
installation/erection including civil works, testing and commissioning
of a gas turbine power station.
II. The Site
The Site is located at the Navotas Fishing Complex or any other site
agreed by HOPEWELL and NAPOCOR.
NAPOCOR will clear and prepare the Site for occupation and give
HOPEWELL vacant possession. Overhead distribution electricity lines
currently running across the Site will be relocated off the Site by
NAPOCOR and NAPOCOR will erect a temporary fence around the perimeter
as shown in figure 2 attached.
III. Extent of Works/Supply
In pursuance to its obligations under Section I, HOPEWELL shall be
responsible for:
1. Complete design, development and construction on the Site of
the Power Station based on the final mix of turbine units
decided upon by HOPEWELL.
2. Civil Works
2.1 Site development including grading, gravel surfacing
and drainage facilities.
2.2 Construction of concrete foundations.
2.3 Construction of access road within the Site and
permanent fence around the Site and the tank farm.
2.4 Construction of cable trenches.
2.5 Pile driving.
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<PAGE> 34
2.6 Construction of office, laboratory, workshops,
storehouses.
2.7 Construction of an oil/water separator and a septic
tank.
3. Electro-Mechanical Works
Supply, installation/erection, tests and commissioning to put
into operation the required number of generation units and its
corresponding minimum gross aggregate capacity of 100 MW
(subject to the provisions of Clause 5.05).
3.1 Gas turbine packages, consisting of the turbine,
compressor, combustor and its auxiliaries, including
air intake system, exhaust gas system, cooling
system, lubricating oil system, fuel oil system,
starting system.
3.2 Generator package, complete with necessary equipment
and accessories.
3.3 Electrical equipment; including main and auxiliary
transformers; metal clad switchgear, control
switchboard; motor control centre, including control
panels, direct current system complete with battery
charger, inverters; required high voltage equipment
devices and accessories including necessary cables
and hardwares for interconnection to the proposed 115
KV switchyard; metering and line protection
compatible with the existing Meralco system (which
will be notified to HOPEWELL prior to the Effective
Date), as shown in figure 3 attached.
3.4 The extent of the work and supply of HOPEWELL
pursuant to 3.3 shall be in accordance with figure 4
attached.
3.5 Required instrumentation indicators, protection,
control and automation of gas turbine units and their
auxiliaries, complete with necessary supervisory
devices, electronic modules for control and
protection, data acquisition system, for safe and
reliable operation of the Power Station.
3.6 Air conditioning system for the protection of
electrical equipment and instruments at the local
control room.
3.7 Fire protection and alarm systems.
3.8 Instrument air system (if necessary).
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<PAGE> 35
3.9 Handling facilities for maintenance and repair.
3.10 Miscellaneous electrical works, including
lighting, grounding and lightning protection.
3.11 Voice and data communication systems in accordance
with figure 5 attached inside the Power Station and
to and from NAPOCOR Power Management Center details
of which will be notified to HOPEWELL prior to the
Effective Date.
3.12 Fuel oil valve and piping system and metering as
shown in figure 6 attached.
3.13 Water tank,hydrant and piping systems.
3.14 Special tools.
IV Design Criteria
1. Gas Turbine Units
The gas turbine units, with an aggregate capacity of not less
than 100 MW (subject to the provisions of Clause 5.05) shall
be capable of delivering the said output at the following Site
conditions:
1.1 Elevation (Above Mean
Sea Level) - 2.0 meters
1.2 Ambient air temperature - 37 (degrees)
Centigrade
1.3 Relative humidity - 85%
1.4 Temp. range - 18-37 (degrees)
Centigrade
1.5 Noise level - to comply with
NPCC Regulation
No. 4479 dated 5th
June, 1978
2. Heat Rates
The guaranteed heat rate shall be based on the net kilowatt output for
the conditions specified in paragraph 1 of Section IV above and the
Lower Heating Value of the fuel as specified in the Fourth Schedule.
3. Fuel
Fuel specifications will be in accordance with the Fourth Schedule.
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<PAGE> 36
4. System Fault Level
The present 110 KV bus fault level when the gas turbine units
are connected in the Luzon Grid shall be as follows:
<TABLE>
<C> <C> <C>
4.1 Line to ground fault : 5,100 MVA
4.2 3-phase fault : 5,000 MVA
4.3 Interrupting Capacity at 110 KV: 40 KA
</TABLE>
5. System Voltage Level
<TABLE>
<C> <C> <C>
5.1 Generator terminal voltage : 13.8 KV + 5%
-
5.2 Main transformer:
High Voltage (Nominal) : 110 KV
Off Load Tap Change : 105/110/115 KV
Low Voltage : 13.4 KV
5.3 Nominal voltage for auxiliary equipment
(for information purposes)
AC System : 3.45 KV, 460 V and 230 Volts
DC System : 125 V, 48 V and 24 Volts
</TABLE>
6. System Frequency : 60 Hertz
7. Generator and Accessories
The generator shall be designed to match the gas turbine units
to assume base and peak operating modes. The design
characteristics shall be as follows:
<TABLE>
<C> <C> <C>
7.1 Nominal MVA power output at rated power factor,
20(degrees)C ambient temperature, 150 MVA
7.2 Three phase wye grounded, through resistance
7.3 Rated terminal voltage : 13.8 KV + 5%
-
7.4 Rated power factor : 0.9 lagging
7.5 Short circuit ratio (saturated)
The measured value of the short circuit ratio at rated
MVA and rated voltage shall be not less than 0.47.
7.6 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.
-
</TABLE>
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<PAGE> 37
V. Utilities During Construction Period
<TABLE>
Requirements Time of Supply
------------ --------------
<S> <C>
Electricity - 750 KW By 15 days after the
3 Phase Supply 220V Effective Date
Water - 12,000 Litres By 15 days after the
per day Effective Date
Fresh potable quality
Telephone ) By 15 days after the
Fax ) 3 I.D.D. Lines Effective Date
Telex )
</TABLE>
VI. Utilities During Co-operation Period
<TABLE>
Requirements Time of Supply
------------ --------------
<S> <C>
Water - 20 Liters per second Throughout
Fresh potable quality Co-operation Period
Telephone ) Throughout
Fax ) 3 I.D.D. Lines Co-operation Period
Telex )
Sewage piping and storm drains from Throughout
the side of the perimeter fence nearest Co-operation Period
to the sea.
</TABLE>
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<PAGE> 38
SECOND SCHEDULE
OPERATING PARAMETERS
A. 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
reduction to effect load curtailment and other plans which may arise.
HOPEWELL shall make technical references available concerning start-up
times and minimum load carrying ability, broken down into:
1. Capacity
Subject to the provisions of Clause 5.05, the capacity of the
Power Station shall not be less than 100 MW at 37 (degrees) C
site conditions, as measured at the generator terminals.
2. Frequency Limitation
The frequency limitations of gas turbine set for continuous
operation shall be between the range of 58.2 Hz and 61.5 Hz.
The under frequency tripping relay shall be set at 57.5 Hz.
The gas turbine overspeed trip shall be set at 10% above
normal speed.
3. Normal Voltage
The normal voltage at the high side of the main power
transformer shall be 110 KV, plus or minus 5 percent.
4. Load Sharing Operation
The units shall operate satisfactorily and without structural
damage in daily load sharing from 100 per cent of the
Contracted Capacity to the minimum capacity of the units
depending on the dispatch requirements of NAPOCOR Power
Management Center.
5. Range and Ratio of Load Changing
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<PAGE> 39
At normal operation mode, except during start up and shut
down, the generating units shall be capable of being operated
as follows:
- Turbine preparation and : 15 minutes per
up to synchronous start unit
speed not less than
- Synchronizing and loading : 4 MW per minute
to full load under normal
condition, ramp increase
not greater than
In Emergency, the generating units shall be capable of being
operated as follows:
- Turbine preparation and : 8 minutes per
up to synchronous start unit
speed
- Synchronizing and loading : 12 MW per minute
to full load under normal
condition, ramp increase
not greater than
6. Operation Mode
The Power Station shall be utilized as a despatchable peaking
and base load plant and be expected to be able to operate
seven (7) days per week, 24 hours per day.
7. Variation of Power Load
At any given load, it is estimated that the allowable load
change per unit should be not more than 4 MW per minute.
8. Emergency Starts
It is estimated that 10 minutes notice should be given for an
emergency start during which the loading rates should be
restricted to those shown in Item 5.
9. Heat Rates
Subject to the provisions of Clause 5.05, the net heat rate
of the Power Station following completion shall not be
greater than 12,300 BTU/KWH reckoned at full load condition
in
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<PAGE> 40
accordance with the Guarantee Tests described in the
Fourteenth Schedule. The Power Station will be tested to
establish the Guaranteed Plant Net Heat Rate of 12,300
BTU/KWH. If results of the Guarantee Tests show a plant net
heat rate greater than 12,300 BTU/KWH then HOPEWELL shall
endeavour to refurbish or rehabilitate the units or to
otherwise correct the units in order to achieve the Guaranteed
Plant Net Heat Rate. NAPOCOR shall not be obliged to pay the
Capacity and Energy fees for such period that the Tested Plant
Net Heat Rate at maximum continuous rating is equal to or more
than 13,500 BTU/KWH except as permitted below (including
permitted tolerances). In the event that the Tested Plant Net
Heat Rate exceeds 12,300 BTU/KWH at commissioning and Hopewell
declares the Power Station to be complete, then the
application of Section 5.2 Energy Fees of the Eighth Schedule
shall be based on 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 no greater than 73.8 BTU/KWH after the lapse of
every average 6,000 EOH of the units up to 30,000 EOH and 123
BTU/KWH per every average 6,000 EOH thereafter. Prior to the
Completion Date the parties hereto shall agree on the dates,
time and duration for the Guarantee Tests in accordance with
the Fourteenth Schedule.
B. Operating Procedures
1. DISPATCH PROCEDURE. HOPEWELL shall control and operate the
Power Station consistent with NAPOCOR's systems dispatch
requirements.
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.
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
37
<PAGE> 41
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: (1) the initial
parallel operation of each HOPEWELL generator and (2) testing
of all protective apparatus. NAPOCOR shall have the right to
have a representative present at such times.
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 Center 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 generating
unit at HOPEWELL's Power Station 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> 42
THIRD SCHEDULE
PENALTY OF HOPEWELL ON DELAY OF COMPLETION DATE
The following formula shall apply in computing the amount of penalty to be paid
by HOPEWELL to NAPOCOR due to delays:
Base Capacity ( Nominal Actual )
P = (1/Nd) x Payment per x ( Capacity - Capacity ) x 1.05
kilowatt (in kilowatt in kilowatt)
where:
P = Amount to be paid by HOPEWELL to NAPOCOR for each day of delay
in respect of which HOPEWELL is required to make a payment
pursuant to Clause 5.03. Such amount shall be payable on the
last day of each calendar month.
Nd = Number of days in the month.
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<PAGE> 43
FOURTH SCHEDULE
SPECIFICATIONS FOR FUEL SUPPLY AND START UP ELECTRICITY
FUEL SUPPLY
SPECIFICATIONS
The specifications for the Fuel Supply will be as follows:
<TABLE>
<CAPTION>
ITEM FUEL ANALYSIS
-------------------------------
MIN. MAX.
<S> <C> <C> <C>
Gravity, @ 36 (degrees) AP (Ave.) 0.8448
Viscosity, ssu at 100 (degrees) F 35 50
Flash point, PM, (degrees) F 130 --
Cloud point, (degrees) F -- 50
Pour point, (degrees) F -- 50
Water & Sediments, % Vol. -- 0.1
Ash % -- 0.005
Sulfur, Wt. % -- 1.0
Calorific Value, BTU/lb (LHV) (Ave.) 18,400
Trace Metal Contaminants, ppm
Sodium plus potassium -- 0.5
Lead + Zinc -- 1
Vanadium -- 0.5
Calcium -- 2
Nickel -- 1
Barium + Manganese + Phosphorous -- 2
Carbon residue (10% bottom) -- 1
</TABLE>
SUPPLY ARRANGEMENTS
Delivery NAPOCOR and HOPEWELL will liaise to prepare weekly
fuel schedules showing anticipated times and
quantities of fuel to be utilised by the Power
Station and NAPOCOR shall be responsible for ensuring
the availability of fuel supplies, for the payment
therefor and for all arrangements with the suppliers.
Fuel Oil Storage Fuel oil will be stored by NAPOCOR outside the Site
and Tank Farm in tanks of sufficient capacity to permit the fuel
to stand for at least 5 days after delivery to allow
water and solids to settle. The water shall be
drained off weekly.
40
<PAGE> 44
The tanks and tank farm will be constructed at
NAPOCOR's cost generally in accordance with figure 6
attached. The off Site fuel tanks are to be provided
with floating suctions and will be calibrated in an
approved manner. The tank farm shall be provided with
appropriate fire fighting facilities.
Testing Upon each delivery of fuel oil to an off Site tank
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 above. The
laboratory for analysing the oil will be agreed
between HOPEWELL and NAPOCOR.
Metering Meters will be provided by NAPOCOR on the off Site
tanks. As a check, the off Site Tank ullages will be
taken before and after each delivery of fuel oil and
in the case of discrepancy, the ullages will prevail.
HOPEWELL will provide a fuel oil meter with
temperature compensation for measuring the delivery
of fuel oil from the off Site tanks. Such meter will
be installed within the Site area bounded by
permanent Site fence. Meters shall be tested every
six months at NAPOCOR's cost by a third party agreed
between HOPEWELL and NAPOCOR.
Variation in rate HOPEWELL and NAPOCOR will liaise in estimating the
of delivery fuel required to comply with NAPOCOR's annual,
monthly and weekly systems operating plans.
Fuel management The parties will enter into a fuel management
agreement pursuant to which, for agreed fees,
HOPEWELL will undertake the day to day routine
maintenance and cleaning of the Off Site tanks but
NAPOCOR shall be responsible for any repairs and/or
replacement.
Security NAPOCOR shall be responsible for all security and
safety arrangements in respect of the fuel in the off
site tanks.
Insurance NAPOCOR shall be responsible for effecting insurance,
acceptable to HOPEWELL in respect of the off Site
tanks and fuel stored therein and HOPEWELL shall be
named therein as a co-insured.
41
<PAGE> 45
START UP ELECTRICITY
3.5 MW at 13.8 KV if turbines started consecutively (normal operations).
7.5 MW at 13.8 KV if turbines started concurrently (in emergency).
42
<PAGE> 46
FIFTH SCHEDULE
TRANSMISSION LINE SPECIFICATIONS
Location
From the outgoing switching facility within the Site boundary at
Navotas Fishing Port Complex.
Specifications
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.
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<PAGE> 47
SIXTH SCHEDULE
ELECTRICITY DELIVERY PROCEDURES
1. Definition
"Downtime" means the 1750 hours per unit per year allowed to HOPEWELL
by NAPOCOR to allow HOPEWELL to undertake normal inspection,
maintenance, repair and overhaul plus any other hours during which
HOPEWELL is unable fully to operate the relevant unit as a consequence
of NAPOCOR's failure to perform any of its obligations hereunder;
"Forced Outrage" is defined as the inability due to the fault of
HOPEWELL to meet Contracted Capacity 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 less any reduction in the Availability of other
units of the Power Station as a result of Downtime shall not be Forced
Outage;
"Forced Outage Hour" means an hour during the whole of which, due to
Forced Outage, HOPEWELL failed to deliver power at least 95% of the
amount KW requested by NAPOCOR.
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 Completion Date.
Subject to such procedures, the outputs of the gas turbine generators
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 the
Downtime.
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<PAGE> 48
HOPEWELL will be allowed a total of 1750 hours per unit per year
Downtime for normal inspection, maintenance, repair and overhaul. If in
any year, the total allowable period of Downtime is in excess or
deficient, the excess or deficiency shall be carried forward to future
years up to and including the year during which the next major overhaul
is scheduled to occur, or if the last such major overhaul have
occurred, until the end of the Co-operation Period.
HOPEWELL will plan with NAPOCOR to ensure that as far as practicable,
Downtime is undertaken at times to cause minimum disruption to the
NAPOCOR 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 gas turbines are as defined below:-
(1) Operating in accordance with the weekly normal operation plan
as defined in Section 5 above as agreed in writing between
NAPOCOR and HOPEWELL with no more than one start per day.
(2) Operating with fuel within the specification set out in the
Fourth Schedule.
(3) Subject to the provisions of Clause 5.05, operating at 100 MW
with an ambient temperature not exceeding 37 (degrees) C.
(4) Operating with an adequate supply of water as specified in
Section VI of the First Schedule.
(5) Start up power of 3.5 MW at 13.8 KV is available (normal
operations is to start units consecutively).
(6) Operating frequencies of the system to be within the limits of
the Operating Parameters.
(7) Operating at a system voltage of 110 KV plus or minus 5%.
45
<PAGE> 49
(8) Start-up, synchronising and loading to be within the limits
of the Operating Parameters.
(9) Full access to the Site at all times for materials and
personnel.
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<PAGE> 50
SEVENTH SCHEDULE
MEASUREMENT AND RECORDING OF ELECTRICITY
1. The meter locations to record the KW and KWH delivered to NAPOCOR
shall be at the high voltage side of the power transformer.
2. The quantity of power and energy delivered to NAPOCOR shall be given
by the in/out meters.
3. 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.
4. HOPEWELL shall supply and install and NAPOCOR shall 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.
5. 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.
6. The 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 therefore NAPOCOR's meter test result shall be
deemed final and conclusive.
7. The meters and metering transformers shall be in accordance with
NAPOCOR's specifications.
8. Metering equipment found to be inaccurate shall be required,
adjusted, or replaced by NAPOCOR at HOPEWELL's expense such that the
accuracy of said equipment shall be 100%. If metering
47
<PAGE> 51
equipment inaccuracy exceeds plus or minus two percent (2%), the
correct amount of energy delivered during the period of said inaccuracy
shall be estimated by NAPOCOR and agreed by the parties. Adjustment for
meter inaccuracy shall cover only the current Month and the Month
immediately preceding it.
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<PAGE> 52
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
Co-operation Period.
2. CAPACITY PROVISION. HOPEWELL shall provide and NAPOCOR shall pay for
the electric power output capacity of the Power Station as provided in
Section 5.1 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 Power Station 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 95% of 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 Co-operation Period, if so
requested by NAPOCOR, HOPEWELL shall demonstrate its ability to
provide NAPOCOR the Contracted Capacity within 14 days of any
nomination by HOPEWELL.
If, on the Completion Day 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 100,000
KW.
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 5.2 of
this Schedule.
4. START UPS. NAPOCOR shall pay HOPEWELL for each start up of the gas
turbines as provided in Section 5.3 of this Schedule.
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<PAGE> 53
5. TERMS OF PAYMENT
5.1 CAPACITY FEES. Capacity Fees shall be computed on the basis
of the following formula:
A = {[(BCR * CC)(1 - TFOH/Nh)] - [(y * 1.05)(BCR)(NC - CC)]}
where:
A = Total Capacity Payment in Dollars for the
Month
BCR = Base Capacity Rate in $/KW/Month
NC = Nominal Capacity, in KW
TFOH = Total Forced Outage Hours
Nh = Total No. of Hours in the Month
CC = Contracted Capacity for the year, in KW
y = variable
The Base Capacity Rate shall be $5.02 KW/Month.
The variable y is defined as follows:
if 0.95 NC < CC, then y = 0
-
if CC < 0.95 NC, then y = 1
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 or
can reasonably be expected to take a period in excess of 15
days, then the formula for the calculation of Capacity Fees
shall be as follows for the entire period of Forced Outage:
A = (BCR x IC) (1 - TFOH/Nh)
Where:
CC = the Contracted Capacity in effect immediately
prior to the Forced Outage
and,
IC = CC less the capacity lost due to such Forced
Outage.
50
<PAGE> 54
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 Fee shall be reduced by reference to the
amount of capacity that HOPEWELL is so unable to make available and
the Co-operation Period shall be extended by a period equal to the
period for which such reduction is applicable.
5.2 ENERGY FEES. Energy Fees shall be computed on the
basis of the following formula:
L = (BER) * ED) + O(Vg - Vt)
where:
L = Energy Fees, in dollars and pesos
BER = Base Energy Rate in $/KWH
ED = KWH delivered during the Month
O = Oil Price in dollars per litre last published
as the Wholesale Posted Price for diesel by the
Energy Regulatory Board, subject to a maximum
equal to 130% of the most recently published
price at the date of this agreement
Vg = Volume of fuel consumption in litres computed
on the basis of the Guaranteed Plant Net Heat Rate
as provided in Section 9 of Part A of the Second
Schedule, the Lower Heating Value ("LHV") of the fuel
and the density ("d") of the fuel, multiplied by the
energy delivered, by formula
1 1
Vg = ED x HRg x --- x ---
LHV d
BTU 1 1
= ED, KWH x 12,300 ---- x ---------- x ------
KwHr 18,400 BTU 1.8586 lb
--- -----
lb liter
= ED, KWH x 0.359 litres/KWH
Vt = Volume of fuel consumption in litres computed on the basis
of the Tested Plant Net Heat Rate as provided in Section
9 of Part A of the Second Schedule, the Lower Heating
Value ("LHV") of the fuel and density ("d") of the fuel,
multiplied by the energy delivered, by formula
51
<PAGE> 55
Vt = ED x HRt x 1 x 1
--- ---
LHV d
= ED x HRt
---------
34,198.24
where: HRt = is the Tested Plant Net Heat
Rate, taken at the commissioning
date and the lapse of every
average 6,000 EOH of the units.
The Base Energy Rate shall be $0.0005 per KwHr.
5.3 START UP FEES. For each start-up of a gas turbine requested by
NAPOCOR, or for mutually agreed testing, NAPOCOR shall pay a
fee computed on the following bases:
S = (RE * AER)
where:
S = Start Up Fee.
RE = The required energy to start up the gas turbine as
agreed by the parties at the time such turbine first
becomes available to supple energy to NAPOCOR.
AER = The adjusted energy rate per KWH for the period in
which the start-up occurs based on the formula
provided in Section 5.2 of this Schedule.
Provided no Start Up Fee shall be payable in respect of the start up of
a gas turbine in circumstances where another turbine is already running
and connected to the grid system.
52
<PAGE> 56
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 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 Asia
Development Bank, for the purpose of repaying any bridge loans
extended by HOPEWELL, 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 Co-operation Period.
3. Other national and local approvals as may be necessary to proceed with
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, including the gas turbine sets, for the Power
Station, and the payment thereof in foreign currency.
53
<PAGE> 57
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 of
HOPEWELL PHILIPPINES.
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 Co-operation Period 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 until and including December 30, 1994, 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.
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<PAGE> 58
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. 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 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 Cooperation Period,
HOPEWELL shall at its own expense keep the Power Station insured
against accidental damage from all normal risks and to 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.
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<PAGE> 59
ELEVENTH SCHEDULE
FORM OF PERFORMANCE UNDERTAKING
To: Hopewell Energy International Limited ("HOPEWELL") and
Hopewell Tileman (Philippines) Corp. ("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 a project agreement
dated ________________ and 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 project
agreement (the project 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 at 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 proceeding 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 wave 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
56
<PAGE> 60
under the control of a military authority or defense agency and (iii) located
in the Philippines and dedicated to a public or governmental use.
Yours faithfully,
THE REPUBLIC OF THE PHILIPPINES
By:
---------------------------
57
<PAGE> 61
TWELFTH SCHEDULE
FORM OF ACCESSION UNDERTAKING
THIS ACCESSION UNDERTAKING is made the ____ day of ________ 1992 ______________
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 _____________, who is duly authorized to represent
it in this Agreement, hereinafter referred to as HOPEWELL.
NATIONAL POWER CORPORATION a government owned and controlled
corporation 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
__________________________ who is duly authorized to represent it in
this Agreement, hereinafter referred to as NAPOCOR.
HOPEWELL TILEMAN (PHILIPPINES) CORP., a corporation incorporated in the
Philippines and having its registered office at Suite 202, CTC
Building, 2232 Roxas Boulevard, Pasay City, Metro Manila, Philippines
represented by ___________________, who is duly authorized to represent
it in this Agreement, hereinafter referred to as HOPEWELL PHILIPPINES.
WHEREAS
(A) This Undertaking is supplemental to a project agreement (the
"Project Agreement") dated _________________ and made between
(1) NAPOCOR and (2) HOPEWELL whereby HOPEWELL has agreed to
design, build and operate a gas turbine 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.
58
<PAGE> 62
(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:
1. Interpretation
(A) Terms defined in the Project Agreement shall bear the same
meaning herein.
(B) This Undertaking shall take effect on the Effective Date.
(C) Clause headings are for ease of reference only.
(D) In this Undertaking, the singular includes the plural and vice
versa.
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 Clauses 2, 3, 6, 8,
10, 11, 12, 14, 15 and 17 thereof) shall be construed to be
references 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 interest
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 Clause 2(A) above, and
undertakes to NAPOCOR that is shall, promptly upon its receipt
of written demand from NAPOCOR, perform such obligations in
accordance with the provisions of the Project Agreement.
59
<PAGE> 63
(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.
3. References in the Project Agreement
As from 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 a clause or provision thereof as hereby
supplemented and amended.
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.
5. Law and Jurisdiction
--------------------
The provisions of Clauses 22, 23 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:
Fax :
60
<PAGE> 64
HOPEWELL TILEMAN (PHILIPPINES) CORP.
By:
Telex:
Fax:
61
<PAGE> 65
THIRTEENTH SCHEDULE
FORM OF LEGAL OPINION OF NAPOCOR'S GENERAL COUNSEL
From: General Counsel to NAPOCOR
To: Hopewell Energy International Limited and
Hopewell Tileman (Philippines) Corp.
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 ( ) and made between
HOPEWELL (1) NAPOCOR (2) and Hopewell Tileman (Philippines) Corp. (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
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<PAGE> 66
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) NAPOCOR is not entitled to claim any immunity from suit,
execution, attachment or other legal process in the Republic
of the Philippines; and
(vi) 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,
63
<PAGE> 67
FOURTEENTH SCHEDULE
TESTING PROCEDURES
I. GUARANTEE TESTS
(1) Purpose of the Guarantee Tests
To demonstrate to NAPOCOR that the Power Station generator
output and the Plant Net Heat Rate are in accordance with the
Specifications (the "Guarantee Tests").
(2) Test Conditions
(a) All gas turbine generating units of the Power Station
will be tested by HOPEWELL and the weighted average
results compared to the Guaranteed Plant Net Heat
Rate and generating capacity described in the
Specifications.
(b) The measuring points will be the fuel supply meters,
and the electricity billing meters.
(c) The Power Station is to be tested when the units are
in clean condition and the tests will be conducted
within 100 hrs. of loaded operation of the unit, or
of cleaning, or as agreed between HOPEWELL and
NAPOCOR.
(d) Throughout the Guarantee Tests, measurements will be
taken while the Power Station is operated at maximum
continuous rating ("MCR").
(e) If HOPEWELL notifies NAPOCOR that the Power Station
is to be tested for partial completion (for example,
(100MW) then the test conditions above and the test
procedures below shall apply to such testing provided
that (i) in respect of generating capacity, HOPEWELL
shall only be required to achieve the minimum
capacity which is the object of the test and (ii) in
respect of the Tested Plant Net Heat Rate, a value in
excess of the Guaranteed Plant Net Heat Rate a value
in excess of the Guaranteed Plant Net Heat Rate shall
not mean a failure of the of the Guarantee Tests for
partial completion if, upon the weighted averaging of
the Tested Plant Net Heat Rate with the results from
the Guarantee Tests for plant
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<PAGE> 68
completion, such average Tested Plant Net Heat Rate
remains within the Guaranteed Plant Net Heat Rate.
(f) If HOPEWELL has successfully completed a partial
completion test, then the final Guarantee Test for
plant completion shall only be in respect of those
units untested.
(3) Test Procedures
(a) During testing, both NAPOCOR and HOPEWELL will make
every effort to maintain the frequency, load, power
factor and stator voltage steady and as near possible
to specified values.
(b) Electrical power output will be measured by a three
phase integrating watt hour meter (the Billing
meter), calibrated at a laboratory approved by
HOPEWELL and NAPOCOR immediately prior to the tests.
(c) Fuel flow will be measured by the volumetric flow
meter located on the fuel supply pipelines. The
meter will be calibrated by an aproved establishment
for the load range and calibration curves will be
produced for inspection.
(d) All tests points are to be taken under steady state
conditions. Steady-state sonditions are assumed to
exist when the variation in gas turbine exhaust
temperatures and wheelspace temperatures reach a
minimum.
(e) When the following fluctuations are exceeded the test
results shall be considered by both NAPOCOR and
HOPEWELL to determine whether they are acceptable or
not. The term "fluctuation" is intended to mean the
difference between the maximum or minimum value of a
variable for a single test point and average of the
values recorded for that variable at the test point.
<TABLE>
<CAPTION>
Maximum Fluctuation
-------------------
<S> <C>
Compressor inlet air = 1.5 degree C
temperature
Fuel rate = 2%
Speed of load turbine = 1%
</TABLE>
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<PAGE> 69
Measured load = 2%
(f) The tests will be conducted using normal operating
fuel with specifications in accordance with the
Fourth Schedule. Fuel heating value and specific
gravity will be determined by a properly qualified
laboratory.
(g) Test readings for the Guarantee Tests will be
recorded at ten minutes intervals during one hour
period after the units have achieved a steady state
condition.
(h) Instrumentation
Instruments used to measure performance are all
panel instruments unless otherwise mentioned.
Only those measurement items with an
asterisk (see Table I) are required for the
Guarantee Tests.
Instruments used to measure the quantities required
for the Guarantee Tests will be calibrated over
their expected operating ranges.
In addition other instruments will be monitored to
ensure the units are operated under steady state
conditions.
(4) Tolerance
Only output and heat rate at MCR are guaranteed with
tolerance.
The measuring tolerance values at MCR are as follows:
Tolerance of output : 1.75%
Tolerance of heat rate : 3.0%
(5) Heat Rate Calculation
Station Heat Rate, Btu = Total Heat of Fuel Input
---- ---------------------------
KWh Net Electrical Power Output
Total Heat Input of Fuel, Btu = Weight of Fuel Input,
---
hr
lb x Heating Value, Btu
-- ---
hr lb
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<PAGE> 70
Net Electrical output is measured by the KWhr meter on the high voltage
side of the generator transformer.
Note: The Tested Plant Net Guaranteed Net Heat Rate is the weighted average
of the Tested Plant Net Heat Rates of the Guarantee Tests.
II. Information Tests
(1) Purpose of Information Tests
To provide information only on the operating characteristics
of the Power Station and its performance at various
conditions.
(2) Generator Tests
The following tests will be conducted at the time of the
Guarantee Tests or as agreed between HOPEWELL and NAPOCOR.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
No. Test items Symbol Remarks
-------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Insulation resistance test 0 By a 1.000V megger for
alternator armature
windings. By 500 V
megger for field
-------------------------------------------------------------------------------
2 Temperature rise test 0 Temperature rise test
will be made with the
machine operating at
loading condition.
-------------------------------------------------------------------------------
3 Vibration test 0 Vibration will be
measured at
no-load and load.
-------------------------------------------------------------------------------
4 Insulation of bearing 0 Bearing insulation will
be checked at
installation.
--------------------------------------------------------------------------------
</TABLE>
67
<PAGE> 71
(3) Instrumentation
The measurement items which are not asterisked in Table I are
to be tested as part of the Instrumentation Tests.
In addition to the measurement items listed in Table I, the
following information will also be taken:
(i) Lube oil header pressure and temperature
(ii) Bearing drain temperature
(iii) Wheel space temperature
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<PAGE> 72
TABLE I
Instrumentation for Heat Rate Testing
<TABLE>
<CAPTION>
Measurement Primary Secondary Location of
Item Qty. Device Device Primary Dev.
----------- ---- ------- --------- ------------
<S> <C> <C> <C> <C>
*Atmospheric 1 Barometer -- In plant at
pressure turbine level
*Compressor 2 Thermometer -- Inlet to air
inlet temp. filter
Compressor 2 Thermocouple Unit Compressor
discharge temp. discharge
temp. ind. passage
Compressor 1 Pressure Unit Compressor
discharge gauge pressure discharge
pressure gauge passage
Turbine speed Generator -- At generator
frequency panel
meter
Turbine 12 Thermocouple Unit Exhaust duct
exhaust temp. temp.
ind.
*Fuel flow 1 Fuel flow -- Fuel supply
meter line
*Fuel temp. 1 Thermometer -- At fuel meter
*Fuel specific 1 -- Lab. --
gravity tests
*Fuel heating 1 -- Lab. --
value tests
Generator 1 Unit Kilowatt At generator
output instrument hour panel
transformer meter
*Net power 1 Precision -- HV side of
output kilowatt transformer
hour meter
</TABLE>
69
<PAGE> 73
[CHART]
THE SITE
Fig. 1
<PAGE> 74
[CHART]
DETAIL: TEMPORARY FENCE and GATE
Fig. 2
<PAGE> 75
[CHART]
SCOPE OF SUPPLY
Fig. 3
<PAGE> 76
[CHART]
COMMUNICATION
Figure 4
<PAGE> 77
[CHART]
FUEL OIL HANDLING SYSTEM
SCHEMATIC DIAGRAM
Fig. 5
<PAGE> 78
SIGNATURE PAGE
HOPEWELL ENERGY INTERNATIONAL LIMITED
SIGNED by STEWART WG ELLIOTT )
for and on behalf of ) /s/ Stewart WG Elliott
HOPEWELL ENERGY INTERNATIONAL ) ----------------------
LIMITED (Telex No. 72485 or ) STEWART WG ELLIOTT
76437 HOWELL HX) )
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
This Agreement was signed in the presence of:
/s/ ??? /s/ ???
--------------------------- ---------------------------
76
