<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
DATED JUNE 30, 1999
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 1999
AZURIX CORP.
(Exact name of registrant as specified in its charter)
Delaware 001-15065 76-0589114
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
333 Clay Street, Suite 1000
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 646-6001
(Registrant's telephone number, including area code)
<PAGE> 2
The undersigned Registrant hereby amends the following item of its Current
Report on Form 8-K dated June 30, 1999 and filed with the Securities and
Exchange Commission on July 7, 1999 as set forth below:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of the Acquired Business. The provision of
financial statements is not required.
(b) Pro Forma Financial Information. The provision of pro forma financial
statements is not required.
(c) Exhibits.
(2) Concession Contract dated June 30, 1999, between the Executive
Authorities of the Province of Buenos Aires and Azurix Buenos
Aires S.A.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AZURIX CORP.
Date: August 24, 1999 By: /s/ Rodney L. Gray
Rodney L. Gray
Vice Chairman and
Chief Financial Officer
<PAGE> 3
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2 Concession Contract dated June 30, 1999, between the Executive
Authorities of the Province of Buenos Aires and Azurix Buenos Aires
S.A.
</TABLE>
<PAGE> 1
EXHIBIT 2
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CONTENTS OF ANNEX 13
CONCESSION CONTRACT
<TABLE>
<S> <C>
1) GENERAL MATTERS
1.1 Contract Purpose
1.2 Definitions
1.3 Concession Area
1.4 Purpose of the Concession
1.5 Scope
1.5.1 Activities included
1.5.2 Activities subject to prior authorization by the
Regulatory Agency
1.5.3 Excluded Activities
1.6 Exclusivity. Unattached Systems within the Concession Area
1.7 Term
1.8 Concession Form
1.9 Regulatory Agency
1.10 Applicable Laws and Regulations
1.11 Interpretation
2) THE CONCESSIONAIRE
2.1 Obligations and Liabilities
2.2 Corporate Purpose
2.3 Shareholders
2.4 Stated Capital
2.4.1 Minimum Amount
2.4.2 Subscription and Payment
2.4.3 Increase in Capital
2.5 Duration and Domicile
2.6 Judicial Proceedings
2.7 Amendment of the Concessionaire's Bylaws
2.8 Employee Stock Ownership Plan (ESOP)
2.9 Profit-sharing Bonus
3) SERVICE STANDARDS
3.1 Definition
3.2 Concessionaire's Duties and Powers
3.3 Service Coverage
3.4 Mandatory Nature of the Provision of Service
3.5 Mandatory Nature of Connection and Payment for Service
3.6 Water Quality
3.6.1 Raw Water
3.6.2 Potable Water
3.7 Water Pressure
</TABLE>
- --------------------------------------------------------------------------------
Contents - Concession Contract -
- TOC - 1 -
<PAGE> 2
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
<TABLE>
<S> <C>
3.8 Continuity of Potable Water Service
3.8.1 General
3.8.2 Service Interruptions
3.9 Sewage Overflows
3.10 Surcharge for Connecting Rainwater Drains to the Sewage System.
3.11 Service Interruption in the Sewage System
3.12 Treatment
3.13 Quality of Sewage Effluents
3.14 Industrial Sewage
3.15 Natural Resources and Environmental Protection Standards
3.16 Customer Service
4) RELATIONS WITH THE REGULATORY AGENCY
4.1 General
4.2 Cooperation with the Regulatory Agency
4.3 Role and Duties of the Regulatory Agency
5) OPTIMIZATION AND EXPANSION PLAN (POES)
5.1 Concept
5.2 Purpose
5.3 Five-Year Plans
5.4 Modification of the Five-Year Plans
5.5 Impediments and Obstacles to the Implementation of the Five-Year Plan
5.6 Feasibility of Works Performed by Third Parties
6) CONCESSIONAIRE'S RECORDS, STUDIES AND REPORTS
6.1 General
6.2 Records
6.2.1 Types
6.2.2 Verification
6.2.3 Update
6.3 Auditors
6.4 Study of the Service
6.4.1 Inventory of Assets and Evaluation of Status, Operation
and Performance
6.4.2 Study of the Service
6.4.3 Study on the
Prevention of Emergencies
6.5 Periodic Reports to the Regulatory Agency
6.5.1 Annual Progress Report on the POES
6.5.2 Report on Levels of Service
6.5.3 Update on Inventory of Assets
6.5.4 Annual Financial Statements
6.5.5 Annual Budget
6.5.6 Additional Reports
</TABLE>
- --------------------------------------------------------------------------------
Contents - Concession Contract -
- TOC - 2 -
<PAGE> 3
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
<TABLE>
<S> <C>
7) ASSETS
7.1 Concept
7.2 Title
7.3 Managing Authority
7.4 Maintenance of Assets
7.5 Acquisition of Assets
7.6 Disposition of Assets
7.6.1 Assets Owned by the Province
7.6.2 Assets Owned by the Concessionaire
7.6.3 Proceeds from the Sale of Assets
7.7 Control
7.8 Amortization
7.9 Return of Assets
7.9.1 Anticipated Return
7.9.2 Repossession upon Termination of the Concession
7.10 Liability
7.11 Non-Assignability of Service Related Assets
7.12 Indemnification of Assets Used to Provide Service to the Public.
8) PERSONNEL REGULATIONS
8.1 Applicable Laws
8.2 Work-Related Illnesses and On-Job-Accidents.
8.3 Medical Examination of Personnel
8.4 Social Security
8.5 Adult Literacy Programs and Day Care Centers
8.6 Training
8.7 Termination of the Concession
8.8 Labor Documentation
9) TAX REGIME
9.1 General Principles
9.2 Tax Consequences
9.3 Surcharge to Fund the Regulatory Agency
9.4 Change in the Taxation Regime
9.5 Municipal Taxes or Assessments
9.6 Termination of the Concession
10) CONTRACTS AND CONTRACT PROCEDURES
10.1 General Principles
10.2 Special Procedures
10.3 Compliance with Obligations and Commitments Assumed by the Concessionaire
10.4 Subconcessions
10.5 Continuity of Contracts
</TABLE>
- --------------------------------------------------------------------------------
Contents - Concession Contract -
- TOC - 3 -
<PAGE> 4
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
<TABLE>
<S> <C>
11) SYSTEM OF GUARANTIES AND INSURANCE
11.1 Contract Guaranty
11.1.1 General
11.1.2 Types
11.1.3 Power of the Grantor
11.1.4 Return of the Guaranty
11.1.5 Covered Risks
11.1.6 Execution of the Guaranty
11.1.7 Replacement of the Guaranty
11.2 Operating Guaranty
11.2.1 General
11.2.2 Types
11.2.3 Powers of the Granting Authority
11.2.4 Return of the Bond
11.2.5 Covered Risks
11.2.6 Execution of the Guaranty
11.2.7 Replacement of the Guaranty
11.3 Insurance
11.3.1 General
11.3.2 Types
11.3.3 Default
12) TARIFF VALUES AND PRICES FOR THE SERVICE
12.1 Tariff Regime
12.2 Tariff Values and Prices
12.3 Modification of Tariff Values and Prices
12.3.1 General Principles
12.3.2 Procedure
12.3.3 Automatic Assumption Against Increases in Tariff Values
and Prices
12.3.4 Ordinary Five Year Reviews
12.3.5 Extraordinary Reviews due to Changes in Cost Indices
12.3.6 Extraordinary Reviews due to Prevailing Causes
12.4 Changes to the Tariff Regime
12.4.1 General Principles
12.4.2 Grounds for Modification at the Concessionaire's Request
13) LIABILITY AND SANCTIONS
13.1 Liability of the Concessionaire
13.2 Sanctions
13.2.1 General Principles
13.2.2 Procedure
13.2.3 Interpretive Guidelines
13.2.4 Warnings
13.2.5 Fines
13.2.6 Injunctive Relief
13.2.7 Publication
13.3 Act of God or Force Majeure
</TABLE>
- --------------------------------------------------------------------------------
Contents - Concession Contract -
- TOC - 4 -
<PAGE> 5
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
<TABLE>
<S> <C>
14) TERMINATION OF THE CONCESSION
14.1 Grounds for Termination
14.1.1 Expiration of the Term
14.1.2 Recission due to Acts of Gods or force majeure
14.1.3 Recission due to Fault of the Concessionaire
14.1.4 Recission due to Fault of the Granting Authority
14.1.5 Repossession
14.2 Effect of Termination
14.2.1 No-Fault Termination
14.2.2 Termination due to Fault of the Concessionaire
14.2.3 Termination due to Fault of the Granting Authority
14.2.4 Repossession
14.3 Receipt of the Service by the Granting Authority
14.3.1 Provisional Acceptance
14.3.2 Final Acceptance
14.4 Procedure for Termination of the Concession
14.4.1 Termination due to Expiration of the Term
14.4.2 Termination due to Act of God or Force Majeure
14.4.3 Termination due to Fault of the Concessionaire
14.4.4 Termination due to Fault of the Granting Authority
14.4.5 Termination through Repossession
15) TRANSITION REGIME
15.1 Taking of Possession
15.1.1 Date and Time
15.1.2 Public Deed
15.1.3 Default
15.2 Personnel
15.2.1 General Principles
15.2.2 Obligations arising prior to Taking of Possession
15.2.3 Obligations arising after Taking of Possession
15.2.4 Ongoing Benefits
15.3 Schedule of Assets, Easements and Ownership Restrictions
15.3.1 Transfer of Assets, Easements and Ownership Restriction
15.3.2 Return of Assets
15.4 Contracts
15.4.1 General principles
15.4.2 Continuing Services
15.4.3 Method of Payment
15.5 Taxes
15.5.1 Taxes levied on the Contract and on the Formation of
the Concessionaire
15.5.2 Taxes due and accrued
15.5.3 Method of Payment
15.6 Credits in Favor of OSBA
15.6.1 General Principles
15.6.2 Concessionaire's Credit Collection on Behalf of OSBA
15.7 Debts
15.8 Insurance
</TABLE>
- --------------------------------------------------------------------------------
Contents - Concession Contract -
- TOC - 5 -
<PAGE> 6
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
<TABLE>
<S> <C>
16) FINAL PROVISIONS
16.1 Bid Offer
16.2 OSBA's Representative
16.3 Summons as a Third Party in Administrative or Judicial Procedures
16.4 Powers of the Granting Authority
16.5 Domicile
16.6 Notification
16.7 Jurisdiction
</TABLE>
ANNEXES
A) Concession Area
B) Unattached Systems
C) Quality Standards for Potable Water
D) Quality Standards for Sewage
E) ESOP Standards
F) POES
G) Feasibility Studies consented to by OSBA
H) Outline of User Regulations
I) Requirements of Capital Stock, Contract Bond Amount, Operation Bond
Amount and Insurance Amount Required
J) Text of Guarantee Bond
K) Text of Letter of Credit
L) List of Assets , Easements and Ownership Restrictions
M) List of Personnel
N) List of Contracts
N') Tariff Regime
N'-1) List of Exemptions and Subsidies in force
O) Region A. Paso de las Piedras Dam.
- --------------------------------------------------------------------------------
Contents - Concession Contract -
- TOC - 6 -
<PAGE> 7
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
ANNEX 13
CONCESSION CONTRACT
In the City of La Plata, on this 30th day of June of the year 1999, the
following Concession Contract is entered into by and between THE EXECUTIVE
AUTHORITIES OF THE PROVINCE OF BUENOS AIRES, represented in this act by the
Provincial Governor, Dr. Eduardo Alberto Duhalde, hereinafter referred to as the
"Granting Authority", of the first party ; and AZURIX BUENOS AIRES S.A.,
represented in this act by Ms. Amanda K. Martin, in her capacity as legal
representative, hereinafter referred to as "the Concessionaire", of the second
party, under the terms and conditions hereinafter set forth.
CHAPTER I
GENERAL MATTERS
1.1 CONTRACT PURPOSE
The purpose of the Contract is to grant a Concession for the provision of
Service in the Concession Area, pursuant to the conditions set forth in current
legislation and in the Contract.
1.2 DEFINITIONS
The following terms appearing in upper case letters in the Contract shall have
the meaning as described below:
Awardee AZURIX AGOSBA S.R.L. Y OPERADORA DE BUENOS AIRES S.R.L.
Untreated Water Water coming from surface or underground sources, which can
be made potable for consumption.
Potable Water Water upgraded to the quality parameters set forth in Annex
C, and to those, which may be established in the future.
Annex The annex to the Contract.
Expansion Area The territory within the Concession Area, defined as such in
the Five-Year Plan. Once the Five-Year Plan is implemented
and executed, the Expansion Area shall become the Service
Area.
Remaining Area The territory within the Concession Area that is not included
within the Service Area or the Expansion Area.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 1 -
<PAGE> 8
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Service Area The territory where service is actually provided.
Auditor The technical auditor and the accounting auditor provided for
in Article 6.3.
Granting
Authority The Executive Branch.
Concession All the rights and obligations of the Granting Authority and
the Concessionaire, pursuant to the provisions of the
Regulatory Framework, Terms of Reference and the Contract.
The Concession is in force once the Contract is signed.
Concessionaire AZURIX BUENOS AIRES S.A.
Residential
Connection This is the connection consisting of the extension of the
facility's internal water pipes from the structure's
municipal demarcation line to the Water distribution main or
to the sewage connection main. In the connection of water,
the master key and the meter form part of the Residential
Connection.
Contract This concession contract and its respective Annexes. Terms of
Reference and the Bid Offer are considered integral parts of
this Contract, according to the order of precedence set forth
in Article 1.10.
Sewage All predominantly liquid discharges coming from real estate
in which Water is used for drinking, washing, cleaning and,
in general, for other similar domestic or commercial uses,
complying with the parameters of Annex D.
Industrial Sewage All predominantly liquid discharges generated by industrial
processes, as well as those coming from commercial activities
that use Water for purposes other than domestic.
Effluents Sewage Discharges and Industrial Sewage, in either collective
or indistinct form.
Industrial
Effluents Any gaseous, liquid or solid waste, or mix of any of them,
carried away in a receiving body discharged by any
industrial, commercial, farming, utilities, or product
extraction, fabrication or storage facility.
Feasibility The authorization for performing works related to the
provision of Service granted by OSBA or the Concessionaire in
favor of third parties, as set forth in Section 3-II,
paragraph d) and e) of the Regulatory Framework, and in
Article 5.6.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 2 -
<PAGE> 9
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Bidding Process The procedure for selecting the Concessionaire, as regulated
by Terms of Reference, continued through the signing of the
Contract.
Service Level The Service quality parameter, as contemplated by Chapter 3.
Regulatory
Framework Law 11,820, and future changes or supplements.
Service Standards The standards establishing quality of Service, as stated in
Chapter 3.
Bid Offer The bid proposal submitted by the Awardee in the Bidding
process, which includes the prequalification bid (envelope 1)
and the economic bid (envelope 2).
Operator OPERADORA DE BUENOS AIRES S.R.L.
Provincial
Agencies Any Agency under the Executive Branch.
Regulatory
Agency The Buenos Aires Water and Sanitation Regulatory Agency
(ORBAS), created by the Regulatory Framework.
OSBA/AGOSBA The Buenos Aires Province Sanitary Works company created by
Decree -law 8055/73.
Five-Year Plan The portion of the POES which refers to optimization and
expansion of the Service for a five (5) year period, as set
forth in Chapter 5. The Five-Year Plan is taken into
consideration after being approved by the Regulatory Agency.
Terms of
Reference The Bidding Terms and Conditions, including corresponding
annexes, as approved by Decree 33/99, issued by the Executive
Branch, and decree 1177/99, which modifies it. Terms of
Reference are also integrated through the clarifying and
modifying circulars issued by the privatization commission.
Executive
Authority The Provincial Executive Branch.
POES The Service optimization and expansion programs, consisting
of the quantitative and qualitative goals which the
Concessionaire must attain and of the Five-Year Plans, as
established in Chapter 5 and in Annex F. The POES shall form
an integral part of the Contract. Reference to the POES shall
also entail a reference to the Five-Year Plans integrated
within it.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 3 -
<PAGE> 10
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
ESOP Employee stock ownership plan, by which the Concessionaire's
employees may acquire shares in said company, as established
in Article 2.8 of the Contract.
Price The sum billed to each user for the Concessionaire to provide
service.
Province The Province of Buenos Aires.
Tariff Regime The tariff system set forth in Annex N, composed of the
prices and tariff values as stated in US$.
User Regulations The document prepared by the Concessionaire and approved by
the Regulatory Agency containing customer service
regulations, which regulates the relationship between the
users, the Concessionaire and the Regulatory Agency according
to the guidelines set forth in Annex H.
Service The total scope of the Concession, as described in Article
1.4.
Unattached
Systems The service provision systems set up in those districts
within the Concession Area that are not served by OSBA at the
time of signing the Contract, as provided in Article 1.6 of
Annex B.
Taking of
Possession The act by which the Concessionaire assumes the provision of
Service, as established in Chapter 15.
Primary Treatment The physical treatment of Effluents in order to eliminate at
least fifty percent (50%) of total suspended solids and
thirty five percent (35%) of biochemical demand for oxygen
after five (5) days (DB05), in all cases satisfying laws in
force and also including final treatment and/or disposal of
sludge produced and of solids extracted according to the
conditions established in the Contract, in order to ensure
the protection of the environment.
Secondary
Treatment The treatment of effluents which, together with the Primary
Treatment, enables elimination of at least eighty-five per
cent (85%) of total suspended solids and eighty-five percent
(85%) of biochemical demand for oxygen after five (5) days
(DB05), also including final treatment and or final disposal
of sludge produced and solids extracted by any medium, to
ensure adequate protection of the environment.
User Any person or business entity who owns, possesses or retains
real estate that receives or are may receive the provision of
Service.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 4 -
<PAGE> 11
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Useful life The time period, estimated according to typical technical and
accounting standards, during which it is determined that a
specific asset generates economic profit.
Concession Area The set of districts and localities listed in Annex A, as
provided in Article 1.3. According to Annex A, in some
localities, the Concession Area refers only to one type of
specific service. Therefore, the Concession Area does not
include the territory corresponding to the Potable Water
and/or Sewage, provided by a third party other than OSBA at
the time of signing the contract.
Terms defined in the singular form can be used in the plural form, with the same
meaning.
1.3 CONCESSION AREA
The Concession Area is the set of localities listed in Annex A.
Outside the Concession Area, the Concessionaire may construct, operate and/or
maintain facilities to provide the Service, as provided in Section 15-II,
Paragraph f) of the Regulatory Framework.
New areas shall be incorporated into the Concession Area with the
Concessionaire's agreement and through prior agreement between the respective
municipality and the Regulatory Agency, as provided in Article 11-I and 54-II of
the Regulatory Framework.
In turn, upon the Regulatory Agency's authorization, the Concessionaire may
contract or provide Services to persons or communities which are not included in
the Concession Area, according to the provisions of Section 55-II of the
Regulatory Framework.
1.4 PURPOSE OF THE CONCESSION
The purpose of the Concession includes the performance of the following
activities within the Concession Area: the capture, potibilization,
transportation, distribution and marketing of Potable Water; collection,
treatment, disposal and potential reuse and/or marketing of Sewage, including
Industrial Sewage, as provided in Article 3.14. In all cases, the Service
includes maintenance, planning, construction, rehabilitation and expansion of
necessary work sites.
The Concessionaire is exempt from taxes or and from any other assessment which
may be levied on the capture of water capture and/or discharge of effluents.
1.5 SCOPE
1.5.1 ACTIVITIES INCLUDED
The Concessionaire may engage in all activities aimed at the
adequate provision of the Service.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 5 -
<PAGE> 12
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
1.5.2 ACTIVITIES SUBJECT TO PRIOR AUTHORIZATION BY THE REGULATORY
AGENCY
Upon prior authorization by the Regulatory Agency, the
Concessionaire may: market Water in block amounts, as well as
industrial and market sludge and other subproducts of
treatment, provide technical-sanitary and laboratory services
to third parties, receive and treat Industrial Sewage that can
not be assimilated with non-industrial Sewage according to the
provisions of Article 3.14, and may conduct other activities
in connection with the Service.
1.5.3 EXCLUDED ACTIVITIES
The scope of the Concession does not include activities, which
are not expressly delegated to the Concessionaire by the
Contract. Notwithstanding, and except as provided for in the
Contract the following are hereby expressly excluded: the
inspection of water resources contamination and preservation,
the receipt of special rights to discharge directly into
waterways, the control of permits granted, and the social
activities provided by the OSBA.
1.6 EXCLUSIVITY. UNATTACHED SYSTEMS WITHIN THE CONCESSION AREA
The Service within the Concession Area shall be provided solely by the
Concessionaire, subject to the Regulatory Framework and Article 5.6 and this
section of the Contract.
Notwithstanding, with respect to matters relating to the provision of Service
and the construction of works by third parties within the Concession Area, these
shall be subject to the provisions of Sections 3-II, paragraphs d) and e) of the
Regulatory Framework, as applicable to the Expansion Area or the Remaining Area,
respectively.
OSBA Unattached Systems listed in Annex B, and all other OSBA Unattached Systems
existing in the districts within the Concession Area at the date of execution of
the Contract are deemed to be qualified to continue the provision of Service, so
long as they comply with the Regulatory Framework. Such systems shall be subject
to the application of the provisions of Section 3-II, Clause d), Second
Paragraph of the Regulatory Framework, and other provisions of such law. Private
communities included in Provincial Law 8912, providing Potable Water and Sewage
Service at the date of execution of the Contract, and having obtained
authorization to provide it, shall be considered Unattached Systems with respect
to the provision of the Service.
In this regard, incorporation into the Concession of areas served by third
parties other than OSBA at the date of execution of the Contract, may only be
performed upon prior agreement between the Concessionaire and the corresponding
provider, notwithstanding the powers of the Regulatory Agency set forth in
Article 3-II, Clause d)
of the Regulatory Framework.
The provisions of Article 5.6 shall apply to authorizations granted to construct
works.
In all cases, the Concessionaire shall be subject to the liability established
by the Regulatory Framework with respect to the authorization and control of the
works constructed and the operation of third-party systems providing Service
within the Concession Area, as authorized by the Concessionaire.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 6 -
<PAGE> 13
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Third parties are not allowed to market and/or re-sell water without prior
authorization of the Regulatory Agency.
1.7 TERM
The term of the Concession shall be thirty (30) years counted from the Taking of
Possession.
At the end of this Term, the Granting Authority may automatically extend the
term for an additional twelve- (12) month period. Thereupon, the Concessionaire
shall be obligated to continue the provision of the Service according to the
conditions provided for in the Contract. Once the extension period terminates,
the Granting Authority and the Concessionaire may agree to further extend it
according to Section 50-II of the Regulatory framework. In all cases referred to
in this paragraph, the Regulatory Agency shall intervene.
1.8 CONCESSION FORM
The Concession is granted in return for the Concessionaire's payment of an
initial canon of US$ 438,555,554 (four hundred thirty-eight million five hundred
fifty-five thousand five hundred fifty-four U.S. dollars). Said amount was paid
by the Concessionaire to the Province at the date of execution of the Contract,
and it is equivalent to the amount offered by the Awardee under the Bidding
Competition as the price for the Concession Area. In addition, the
Concessionaire shall be obligated to make all necessary investments to execute
POES and to ensure the adequate provision of Service, as stipulated in the
Contract described in Annex F, subject to the tariff increases predetermined in
Annex N upon completion of said obligations
1.9 REGULATORY AGENCY
The Concessionaire, the Service and all other aspects arising out of the
implementation of the Contract shall be subject to the Regulatory Agency's
control and regulation.
1.10 APPLICABLE LAWS AND REGULATIONS
The laws and regulations applicable to the Concession are listed below in the
order of precedence indicated:
1.10.1 The Regulatory Framework
1.10.2 The Terms of Reference
1.10.3 The Bid Offer
1.10.4 The Contract and its ratifying decree
1.10.5 The regulations enacted by the Regulatory Agency. The
regulatory standards in force at the date of execution of the
Contract that apply to the Service shall continue to be
applied unless they contradict the regulations and provisions
previously cited in this article.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 7 -
<PAGE> 14
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
1.11 INTERPRETATION
1.11.1 The Contract must be interpreted harmoniously and
systematically.
1.11.2 There is no particular preference in the relative order of the
chapters and articles, except when expressly indicated to the
contrary.
1.11.3 The headings employed in the Contract are for reference
purposes only and shall not affect the interpretation of the
text.
1.11.4 Any reference made to chapters, articles and Annexes shall be
deemed to refer to the Contract's chapters, article and
Annexes.
1.11.5 All terms stated in number of days in the Contract shall be
understood as consecutive days, unless otherwise expressly
stated. The terms stated in months and years shall be
considered as calendar periods.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 8 -
<PAGE> 15
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 2
THE CONCESSIONAIRE
2.1 OBLIGATIONS AND LIABILITIES
The Concessionaire assumes all contractual liabilities of the Awardee entered
into during the Bidding Process, notwithstanding the obligations arising under
the Contract.
2.2 CORPORATE PURPOSE
The Concessionaire's corporate purpose shall be limited to the performance of
the Contract.
2.3 SHAREHOLDERS
2.3.1 The Concessionaire's shareholders must consist of the same
entities, with the same shareholdings as those provided for
the Awardee in the Offer, not including the shares assigned to
the Concessionaire's employees under the ESOP, as set forth in
Article 2.8.
2.3.2 The Operator shall hold registered shares representing at
least twenty percent (20%) of the Concessionaire's capital and
voting power. This interest is non-transferable during the
first six (6) years of the Concession. After this period, the
Operator may reduce said percentage, upon the Granting
Authority's prior authorization, provided it retains at least
ten percent (10%) of the Concessionaire's capital and voting
power, represented in registered shares. After the first
twelve (12) year period of the Concession, the Operator may
freely dispose of its shares. The aforementioned restrictions
shall also apply in the event of issuances of shares in the
future.
2.3.3 In addition, fifty-one per cent (51%) of the Concessionaire's
capital stock with voting rights, including the Operator's
minimum percentage and excluding those shares under the ESOP,
shall be represented by registered shares whose ownership
shall be non-transferable during the first six (6) years of
the Concession, except with the prior, express authorization
of the Executive Branch. Such authorization may not affect the
percentage of registered shares of the Operator, as set forth
in Article 2.3.2. The aforementioned restrictions shall also
apply to the Concessionaire's capital increases.
2.3.4 Ten percent (10%) of the capital stock will be transferred to
the Concessionaire's employees under the ESOP, as set forth in
Article 2.8.
2.3.5 According to the provisions of Articles 2.3.2, 2.3.3 and
2.3.4, the Concessionaire may make a public offering of its
shares, and similarly issue new shares, subject to the
provisions of Article 2.4.3.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 9 -
<PAGE> 16
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
2.3.6 Compliance with the system of control and liability shall be
ensured at all times as set forth in Paragraphs 3.3.2 and
3.3.3 of Terms of Reference.
2.3.7 Notwithstanding the provisions of Articles 2.3.2 and 2.3.3,
the Concessionaire shall notify the Regulatory Agency of all
transfers of shares and changes in share ownership affecting
Awardee.
2.4 STATED CAPITAL
2.4.1 MINIMUM AMOUNT
The Concessionaire must maintain a minimum stated capital
equivalent to the amount set forth in Annex I. This capital
may be increased, but may not be reduced below minimum stated
capital requirements, during the entire term of the Contract.
2.4.2 SUBSCRIPTION AND PAYMENT
Capital shall be paid-in solely in cash, at least fifty per
cent (50%) during the first quarter of the Concession period,
and the remainder during the second year. The stated capital
must be fully subscribed and paid in by the Awardee, including
the percentage subject to the ESOP. The provisions of Law
19,550 must be complied with at all times.
2.4.3 INCREASE IN CAPITAL
Every increase in capital by the Concessionaire must be
accomplished according to those mechanisms that will maintain
the minimum ownership percentages set forth in Articles 2.3.2,
2.3.3 and 2.3.4, in the latter, solely to the extent
established in Article 2.8.
2.5 DURATION AND DOMICILE
The corporation designated as Concessionaire shall have a corporate existence of
at least thirty-five (35) years and shall extend at least until those
obligations arising under the Contract have been terminated.
If the term of the Contract is extended, in accordance with the provisions of
Article 1.7, the existence of the Concessionaire's must also be extended.
Domicile and corporate headquarters must be established and maintained in the
City of La Plata, the Provincial capital.
2.6 JUDICIAL PROCEEDINGS
The Granting Authority and the Regulatory Agency are obligated to be parties in
any judicial proceedings filed either by shareholders or by third parties,
affecting the Concessionaire, filed either by shareholders or by third parties,
and for this purpose the Concessionaire shall arrange that they be summoned as
interested third parties.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 10 -
<PAGE> 17
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The Concessionaire must notify the Regulatory Agency regarding any judicial
proceeding, which may affect the title, availability or administration of the
Service or the assets related to the provision of the Service, within
twenty-four (24) hours of receiving notice. The Regulatory Agency is entitled to
appear as a party in the aforementioned proceedings. The provisions set forth in
Article 16.3 shall apply.
2.7 AMENDMENT OF THE CONCESSIONAIRES' BYLAWS
All modification of the Concessionaire's bylaws affecting the Operator's
corporate control mechanism set forth in Paragraph 3.3.2 of Terms of Reference
or the provisions contained in chapter 2 of the Contract shall be previously
authorized by the Regulatory Agency. Modifications to the Bylaws made in the
absence of said authorization shall not be enforceable as against the Granting
Authority or the Regulatory Agency notwithstanding the application of the
provisions contained in Article 14.1.3, Clause j), in case of noncompliance.
2.8 EMPLOYEE STOCK OWNERSHIP PLAN
The Awardee shall form an Employee Stock Ownership Plan with a scope described
in Annex E of the Contract. Ten percent (10%) of the Concessionaire's Capital
Stock, in the form of Common Registered Shares, will be reserved for ESOP.
The Concessionaire will subscribe and pay in all of the Concessionaire shares,
including those belonging to ESOP. ESOP shares included in the Concessionaire's
initial capital (article 2.4.1 and Annex I of the Concession Contract) shall be
transferred, at no cost, by the Awardee to the employees transferred to the
Concessionaire.
The ESOP shareholders shall be entitled to appoint one director and one
alternate to the administrative agency of the Concessionaire, and one Auditor
and one alternate.
The Concessionaire shall acknowledge the validity of the procedures established
in the ESOP agreements and regulations and shall comply with them. Furthermore,
the Concessionaire's bylaws shall include the provisions necessary to ensure
compliance of the procedures and rights provided hereby.
2.9 PROFIT SHARING BONUS
The Concessionaire must issue, to its personnel, regardless of their membership
in the ESOP, a bonus of participation on granting them the right to share in
point five percent (.5%) of net profits after taxes, according to the terms of
Section 230 of Law 19,550. The bonuses shall be assigned to personnel based on
their remuneration, seniority and number of family dependents.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 11 -
<PAGE> 18
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 3
SERVICE STANDARDS
3.1 DEFINITION
The Service Standards ensure the continuity, regularity, quality and
availability of the provision of Service according to the terms of the Contract,
in a manner that ensures an efficient supply to Users, according to the
provisions of the Regulatory Framework, the Contract and applicable regulations.
The Concessionaire shall be bound to provide the Service. Article 3.14 governs
Industrial Sewage Discharges.
3.2 CONCESSIONAIRE'S DUTIES AND POWERS
Regarding provision of the Service, the Concessionaire's duties and powers are
those that are set forth in the Regulatory Framework, in this Contract and in
the regulations of the Regulatory Agency. The Concessionaire shall perform all
tasks inherent to the provision of Service, according to the conditions
established in the applicable provisions, in order to ensure an efficient supply
to Users, to protection of the public health and a rational use of resources.
The provision of the Service shall occur under conditions that assure
continuity, regularity, quality and availability.
3.3 SERVICE COVERAGE
The provision of the Service of Potable Water for Residential Connections must
be extended to meet the needs of the entire urban population residing within the
Concession Area, according to the terms of the POES and the Five-Year Plans. The
Concessionaire shall efficiently satisfy the demand for Potable Water, providing
a Service which meets the quality standards set forth in the Regulatory
Framework and in the Contract.
In turn, the Sewage Service for Residential Connections must be expanded to
serve the urban population so as to comply with the goals established in the
POES and in the Five-Year Plans. The Concessionaire shall ensure that the
capacity of the facilities collecting and transporting residual liquids allows
the demand of the Service to be met efficiently and shall guarantee that systems
function properly. The urban area shall be defined by Law 8912.
3.4 MANDATORY NATURE OF THE PROVISION OF SERVICE
The Concessionaire shall maintain and renovate the civil and electromechanical
facilities and shall extend, renovate and/or recondition the external Potable
Water and Sewage distribution networks so as to ensure the normal provision of
the Service to all real estate in the Service Area, the Expansion Area, and as
provided for in the POES and the Five-Year Plans.
This obligation shall govern the provision of Services to all inhabited real
estate, whether residential or otherwise. The mandatory nature of the provision
of water also extends to the manufacture of goods if technically viable and does
not negatively impact the supply to other Users.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 12 -
<PAGE> 19
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Similarly, the Concessionaire shall guarantee to supply free of charge, water
from hydrants with adequate water flow and pressure conditions for fire
fighting. The provisions of the paragraph above notwithstanding, the
Concessionaire shall at no charge deliver and distribute the volumes of water
indicated below to the users identified by the Regulatory Agency for the purpose
of supplying Potable Water to low-income population sectors, pursuant to a
procedure to be established.
During the first two years, the annual quantity of Potable Water to be delivered
at no cost shall be the following:
Region A: 600,000 cu. m
Subregion C1: 730,000 cu. m
Subregion C2: 900,000 cu. m
Subregion C3 196,000 cu. m
Subregion C4: 143,000 cu. m
As of the third year of the Concession, the volume of Potable Water to be
delivered at no cost will be equivalent to:
2% of the total water produced per year for Region A and Subregions C1, C3 and
C4
4.5% of the total water produced per year for Region B and Subregion C2.
The provisions of article 3.14 shall govern in all matters related to Industrial
Sewage.
3.5 MANDATORY NATURE OF CONNECTION AND PAYMENT FOR SERVICE
Owners, owner's associations as defined in Law 13,512, tenants, holders of real
property located in urban areas and other similarly situated entities located
within the Service area, be obligated to connect to the network, paying the
Concessionaire for the corresponding Residential Connection. Similarly, they
shall be responsible for connecting and installing, at their own expense,
internal Water and Sewer in-house services and keeping said facilities in good
condition.
In turn, owners, owner's associations, beneficial owners, tenants and holders of
real property in charge of Potable Water or Sewer distribution networks shall be
obligated to pay for the Service according to the Tariff Regime, even when the
real estate has no connection to the external Service networks. Uninhabited
properties are excluded if non-connection or disconnection of the service is
requested, subject to the payment of the charges set forth in the Tariff Regime.
The provisions of Article 9-II and 10-II of the Regulatory Framework shall apply
to springs or alternative drains. As a general rule, all other sources providing
water must be isolated and/or all alternative Sewers must be blocked. The
Regulatory Agency may expressly authorize, with notice to the Concessionaire,
the use of springs or maintenance of alternative water systems, as long as there
is no risk to public health, to the protection of water resources or to the
provision of the Service.
3.6 WATER QUALITY
3.6.1 RAW WATER
The Concessionaire shall take all measures technically
necessary to ensure that the quality of Raw Water is
acceptable for the corresponding potabilization treatment. At
a minimum, this shall include sampling it to evaluate
physical, chemical and bacteriological parameters, as
established in Annex C.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 13 -
<PAGE> 20
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
If substantial variances exist in the quality of Raw Water or
if a contamination producing accident occurs impacting the
quality of Water supplied to Users, the Concessionaire shall
adopt and pay for the remedial measures, regularly reporting
to the Regulatory Agency.
3.6.2 POTABLE WATER
The Potable Water provided by the Concessionaire must comply
with the requirements established in Annex C. In all cases,
noncompliance with the technical quality requirements for
Potable Water shall be considered as a potential health hazard
to the population. In the presence of any abnormality in the
quality of Potable Water, the Concessionaire shall take all
necessary measures to rectify the situation and correct it as
soon as possible, informing the Regulatory Agency and, as
applicable, the local authorities, the press and other media
of the existing situation. The report to the Regulatory Agency
must specify the causes, indicate applicable policies and
recommend the appropriate steps necessary to reestablish Water
quality.
Noncompliance with the standards governing chemical levels
shall be evaluated according to duration in time.
Irregularities of a long-standing nature, and those not
associated with occasional operational difficulties shall be
considered quality deficiencies .
Noncompliance with the standards governing bacteriological
levels requires exhaustive investigations to be conducted by
the Concessionaire. The detection of presumed coliform
bacteria in a sample, detected at any point in the Water
system, including the subsurface Raw Water sources,
constitutes sufficient grounds for conducting such
investigations. Within six (6) months following the Taking of
Possession, the Concessionaire shall submit to the Regulatory
Agency for approval a program defining the means for attaining
and maintaining the Service Levels, in accordance with the
provisions of the Regulatory Framework.
3.7 WATER PRESSURE
Potable Water shall be supplied at a continuous pressure of ten (10) meters of
water column (10 mca ) without this being an absolute value, to be measured at
the point of connection to the real properties served. Annex F describes the
time period by which the Concessionaire is required to comply with said pressure
value.
This requirement does not entail taking pressure readings at all connections or
at any particular connection within the system, since this can be accomplished
through mathematical calculations or models that are available for consultation
by the Regulatory Agency and are verified through field measurements. The
Regulatory Agency shall approve the basis for calculation, the number of
readings and the mathematical models.
The Concessionaire shall be exempt from complying with this requirement if it is
demonstrated that the pressure deficiency:
- - Was maintained for less than one continuous hour of flow due to
exceptional peak local demands, with a limit of two (2) times each
twenty-four (24) hours.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 14 -
<PAGE> 21
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
- - Was associated with a leak identified in the distribution network or
with a power outage unattributable to the Concessionaire, regardless of
the obligation to implement measures reestablishing service within 24
twenty-four (24) hours. If this time period for repair is exceeded, the
Concessionaire shall present an explanation before the Regulatory
Agency.
- - Occurred due to work repairing, maintaining, or constructing new
facilities, as long as the Concessionaire notified affected Users
twenty-four (24) hours prior to commencing.
- - Was caused by acts of third parties unrelated to the Concessionaire or
outside the scope of the Concessionaire's responsibility.
In agreement with the results of the Service study to be performed, as described
in Article 6.4.2, the Concessionaire may submit to the Regulatory Agency for its
approval, lower values of water pressure in clearly defined areas, if, due to
technical reasons or to said zones' specific characteristics, the Service can be
satisfactorily provided with a lower water pressure. The Regulatory Agency may
provisionally approve such lower values.
In reference to the above, the satisfactory provision of the Service is the
availability of Potable Water from the elevated reserve tank of the residential
connections to the served real properties.
3.8 CONTINUITY OF POTABLE WATER SERVICE
3.8.1 GENERAL
The provision of the Service of Potable Water shall be
continuous, without interruptions due to foreseeable
shortcomings within the systems, or due to inadequate
capacity, with availability guaranteed 24 hours a day.
Any unexpected supply interruption must be fixed within
twenty-four hours of the event reported.
The Concessionaire is bound by the value in the Service
quality index contained in Annex C of the Contract.
If a Service interruption exceeds twelve (12) hours, the
Concessionaire must provide an emergency supply of Service to
affected Users.
3.8.2 SERVICE INTERRUPTIONS
Potable Water Supply Service cutoffs or interruptions are
categorized according to the size of the area covered, as
follows:
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 15 -
<PAGE> 22
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Number of city blocks covered or the
equivalent within the same system
---------------------------------------------------------------------------------
Inhabitants served
within the District First Order Second Order Third Order
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
More than 250,000 Over Fifteen(15) Five (5) to Fifteen (15) One (1) to Five (5)
- --------------------------------------------------------------------------------------------------------------
50,000 to 250,000 Over Ten (10) Three (3) to Ten (10) One (1) to Three (3)
- --------------------------------------------------------------------------------------------------------------
Less than 50,000 Over Five (5) Two (2) to Five (5) One (1) to Two (2)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Similarly, Service cutoffs shall be classified as follows:
a) Scheduled cutoff: this includes all Service
interruptions that the Concessionaire must undertake
in order to perform maintenance, renovation,
rehabilitation or other tasks, provided the
Concessionaire has given at least (24) twenty-four
hour notice to affected Users. Accordingly, the
Concessionaire shall inform the Regulatory Agency of
scheduled Service cutoffs.
b) Unscheduled cutoff: this includes all Service
interruptions when the Concessionaire has not
notified the Users at least twenty-four (24) hours in
advance, or which were caused by third parties
unrelated to the Concessionaire or outside the scope
of its responsibility.
3.9 SEWAGE OVERFLOWS
The Concessionaire must operate, clean, repair, replace and extend the Sewage
system in order to reduce the risk of roadway flooding, to be evaluated in terms
of the number of real properties or areas affected by floods originating from
overflows from sewer conduits.
Any overflow of untreated Effluents onto public roads or onto privately owned
real property must be fixed within twenty-four (24) hours of the event being
reported.
3.10 SURCHARGE FOR CONNECTING RAINWATER DRAINS TO THE SEWAGE SYSTEM
The Concessionaire shall have the right to eliminate rainwater drainage
connections spliced to the sewer network. To this end, within the first year of
the Concession, the Concessionaire shall investigate the extent of the problem.
Following this period, the Concessionaire shall notify the Users with this type
of connection of the elimination schedule and warn them that the Concessionaire
shall not be responsible for providing alternative rainwater drainage. It shall
be the Concessionaire's responsibility to eliminate sewer connections to
rainwater drainage systems.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 16 -
<PAGE> 23
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
3.11 SERVICE INTERRUPTION IN THE SEWAGE SYSTEM
Service interruptions in the Sewage Systems are categorized according to their
scope, as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Number of city blocks covered or its
Equivalent within the same system
---------------------------------------------------------------------------------
Inhabitants served
within the District First Order Second Order Third Order
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
More than 250,000 Over Fifteen(15) Five (5) to Fifteen (15) One (1) to Five (5)
- --------------------------------------------------------------------------------------------------------------
50,000 to 250,000 Over Ten (10) Three (3) to Ten (10) One (1) to Three (3)
- --------------------------------------------------------------------------------------------------------------
Less than 50,000 Over Five (5) Two (2) to Five (5) One (1) to Two (2)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Similarly, Service cutoffs shall be classified as follows:
c) Scheduled cutoff: this includes all controlled Sewage
overflows that the Concessionaire implements in order
to perform maintenance, clear obstructions, perform
renovation or rehabilitation, shunt liquids to
alternative metering outlets, provided the
Concessionaire gives at least (24) twenty-four hours
prior notice to affected Users. The Concessionaire
shall develop schedules of interruptions and provide
them to the Regulatory Agency with sufficient prior
notice.
d) Unscheduled cutoff: this includes all Service
interruptions when the Concessionaire has not
notified the Users at least twenty-four (24) hours in
advance, or which were caused by third parties
unrelated to the Concessionaire or outside the scope
of its responsibility.
3.12 TREATMENT
The Concessionaire must upgrade the Effluent treatment system to meet the
quality standards of Annex D.
The Five-Year Plans shall include plans to comply with the goals indicated in
Annex F.
In the event of new installations independent of the existing trunk network, the
Concessionaire must proceed as indicated in Article 26-II, Clause f) of the
Regulatory Framework.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 17 -
<PAGE> 24
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
3.13 QUALITY OF SEWAGE EFFLUENTS
Sewage Effluents that the Concessionaire pours into receiving facilities must
fulfill the parameters established in Annex D. The Concessionaire shall maintain
facilities suitable to receive discharges from Sewage Systems and from
Industrial Sewage emptying atmospheric vessels. The conduit's hydraulic capacity
and its similarity to the composition of the Sewage shall limit said receipt.
Accordingly, the Concessionaire shall perform a corresponding analysis in order
to preserve the facilities and the other conduit and treatment elements.
If there are any complications with respect to the treatment resulting in
noncompliance with applicable standards, the Concessionaire shall immediately
notify the Regulatory Agency, describe the causes of the incident and suggest
the necessary actions to be taken in order to reestablish the quality of the
Effluents' and the reliability of the system.
3.14 INDUSTRIAL SEWAGE
Industrial Sewage may be discharged into the sewer network upon the
Concessionaire's express consent, as long as hydraulic capacity exists in the
system and the standards in Annex D are complied with. The Concessionaire shall
be entitled to perform cutoffs in the Industrial Drains whenever the latter fail
to meet the admissible standards. Restrictions imposed by the Concessionaire on
connecting Industrial Drains to the sewer network may only refer to hydraulic
transport capacity, to evacuation of the existing installations and to Effluent
Quality.
Notwithstanding, if any of the standards referred to are not observed, the
Concessionaire may demand that the violation be terminated, and may request that
the Regulatory Agency order the intervention of the competent authority in the
matter. The Concessionaire shall have the right to collect from each industrial
entity the proportional part of treatment costs that correspond to the load of
contaminants discharged.
The Concessionaire shall not receive sludge or other contaminating residues in
the collector network or in individual collectors, as a disposal method. It may
only receive discharges from Industrial Sewage or Drains non compliant with
applicable standards intending to process them to achieve the standards
governing the discharge of treated or untreated Effluents, according to whether
they were poured into waterways or collector piping, respectively, while
adhering to general legislation in force.
Agreements signed by the Concessionaire shall be brought to the Regulatory
Agency's knowledge, and shall be ratified in advance by the competent
environmental authority.
Industrial facilities may be exempt from the obligation to connect to the sewer
network, provided they possess the adequate technical means to treat Industrial
Sewage as described in the applicable standards.
Within a maximum period of eighteen (18) months following the Taking of
Possession, the Concessionaire shall prepare and submit to the Regulatory
Agency, a record of Industrial Drainage generators discharging in the Sewage
networks or to qualified sluiceways or sinks within the Concession Area, duly
certified by the Technical Auditor. Said record, which shall be updated on a
regular basis, shall, at a minimum, contain the following information:
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 18 -
<PAGE> 25
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
o Information identifying the generator.
o Task or process creating the Industrial Sewage.
o Industrial Sewage Description, including sufficiently representative
qualitative and quantitative characteristics.
For these purposes, the Concessionaire shall be entitled to request access to
the corresponding facilities and obtain any necessary information from the
generator.
The Concessionaire shall assume the cost of maintaining the record.
3.15 NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION STANDARDS
At all times, the Concessionaire shall comply with the provincial and national
regulations applicable to natural resources and environmental protection,
subject to the authority of the corresponding agencies.
3.16 CUSTOMER SERVICE
At all times, the Concessionaire shall comply with the Customer Service
Regulations adopted according to Article 4.3.1 and respect the rights of Users
provided for in the Regulatory Framework.
The Concessionaire shall adopt an integrated administrative system allowing
Users to submit their requests or claims and to obtain responses at any office
authorized for that purpose, as provided for in section 22-11 of the Regulatory
Framework.
Users shall be assisted by personnel provided with the appropriate tools to
directly access the necessary information in order to answer questions
immediately.
When a request requires internal administrative procedures, the Concessionaire
must immediately initiate them and inform the User of the results by suitable
means. Management shall assist Users if no resolution occurs and they may record
their claims in complaint books.
The Concessionaire shall provide Users with a permanent emergency service at
each locality served. In this regard, a mechanism must exist to receive and
respond to emergencies twenty-four (24) hours a day without interruption.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 19 -
<PAGE> 26
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 4
RELATIONS WITH THE REGULATORY AGENCY
4.1 GENERAL
The Regulatory Agency is the only authority in charge of supervising compliance
with the Contract, and it shall exercise its powers as provided in the
Regulatory Framework, the Contract and the regulations it issues for that
purpose.
In the absence of a procedural rule or a mechanism applicable to a particular
situation, one may be set forth by the Regulatory Agency in compliance with the
principles contained in the Regulatory Framework and in current legislation.
4.2 COOPERATION WITH THE REGULATORY AGENCY
The Concessionaire shall cooperate with the Regulatory Agency in order to
facilitate the performance of the agency's functions, as provided in the
Regulatory Framework for the Concession Area.
In this regard, and without limiting the generality of the foregoing, the
Concessionaire shall:
4.2.1 Cooperate with the Regulatory Agency in the exercise of its
powers of supervision of compliance with the Regulatory
Framework, the Contract and their supplementary laws, set
forth by agreement or regulations.
4.2.2 Prepare and submit to the Regulatory Agency the records,
studies, reports and other requirements established in the
Contract, according to the applicable terms and conditions set
forth.
4.2.3 Respond within a maximum of twenty (20) days to requests for
clarification on reports submitted to the Regulatory Agency,
as established in Chapter 6. The term mentioned may be
extended by the Regulatory Agency, upon presentation of an
appropriately supported request by the Concessionaire.
4.2.4 Comply with the regulations, provisions and decisions issued
by the Regulatory Agency within the scope of its powers.
4.2.5 Inform Regulatory Agency if it becomes aware of facts or
circumstances facilitating compliance with its functions.
4.2.6 Cooperate with Regulatory Agency investigations conducted to
verify noncompliance with the Contract.
4.2.7 Facilitate the Regulatory Agency's exercise of police power of
the Service by :
a) Allowing the Regulatory Agency to have access to all
plants and/or facilities used by the Concessionaire
in connection the Service.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 20 -
<PAGE> 27
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
b) Permiting the Regulatory Agency to inspect,
photograph and/or film facilities or assets allocated
to the Service, photocopy or take extracts from any
books and records the Concessionaire keeps in
relation with the Concession, and to make use of any
other suitable means of evidence.
c) Permit the Auditors to appear before the Regulatory
Agency in order to report on the fulfillment of their
duties and/or to clarify the contents of the
presented audit reports.
d) Remove the Auditors when the Regulatory Agency so
requested, through a duly justified resolution,
according to the provisions contained in Article 4.3.
The Concessionaire shall not be responsible for damages suffered by the Granting
Authority, the Regulatory Agency or third parties, arising out of the exercise
of the powers of the Regulatory Agency listed above, except upon evidence of the
Concessionaire's negligence or its noncompliance with the duty to act
diligently, independently and confidentially.
4.3 ROLE AND DUTIES OF THE REGULATORY AGENCY
The Regulatory Agency shall exercise its police powers without interfering with
the Concessionaire's management, as provided in Section 13-II, last paragraph,
of the Regulatory Framework. In particular, the Regulatory Agency must consider
the rights and interests of the User's, the characteristics of the Service and
principles of continuity, regularity, quality and availability of provision of
the Service, pursuant to the provisions of the Regulatory Framework.
In this regard, and not limited to the following enumeration, the Regulatory
Agency shall:
4.3.1 Approve User Regulations submitted by the Concessionaire
according to the guidelines set forth in Annex H. These
regulations must be presented to the Regulatory Agency for
consideration within ninety (90) days of the date of execution
of the contract. The Regulatory Agency may demand necessary
modifications and amendments, based on the provisions of the
Regulatory Framework, Terms of Reference and the Contract.
4.3.2 Issue a well-supported decision about requests for approval
submitted by the Concessionaire to act to expropriate and
institute restrictions on ownership, and to enact
administrative measures addressing the provision, improvement,
and expansion of Service, as provided in the Regulatory
Framework. Similarly, it shall approve acts engaged in by the
Concessionaire as the expropriating party.
The aforementioned decisions shall be made within the time
period established by the Regulatory Agency.
4.3.3 It shall receive and decide on proposals made by the
Concessionaire in relation to any aspect of the Concession.
4.3.4 It shall advise the Concessionaire, upon its express request,
in resolving any eventual conflicts that may arise when it is
necessary to move or adapt third party installations, to
permit or facilitate construction and operation of future
works, and to comply with the POES or, when necessary to use
public roads and/or to occupy the subsoil for installing
piping, conduits and other works or construction related to
the Service.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 21 -
<PAGE> 28
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Under no circumstance shall the referenced assistance imply
the Regulatory Agency's assumption of responsibilities or
costs charged to the Concessionaire, which are implied
business risks inherent to the Concession.
4.3.5 It shall process the Concessionaire's requests for public
authority assistance, in those situations described in the
Regulatory Framework.
4.3.6 It shall consider and issue a well-supported decision and
shall take conducive measures relative to Concessionaire
requests for authorization, in order to eliminate the causes
of infractions committed by Users resulting in Water Source
contamination or impairing the Service and/or the facilities
operated by the Concessionaire, according to the terms of
Section 15-II, Paragraph 1) of the Regulatory Framework. The
Regulatory Agency shall issue the decision as quickly as
possible.
The provisions above are not to be construed to impair the
powers of the provincial agency regarding the protection of
the environment and natural resources.
4.3.7 It shall advise the Concessionaire during conflicts which may
arise in exercising its right to use and obtain Water sources,
in dumping Effluents and in installing, constructing or
remodeling works in connection with the Service, pursuant to
the provisions set forth in the Regulatory Framework.
4.3.8 It shall consider and issue well-supported decisions in
relation to requests by the Concessionaire to exercise the
powers OSBA has pursuant to the procurement of land and Water
sources, as provided for in Section 15-II, Paragraph r) of the
Regulatory Framework.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 22 -
<PAGE> 29
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 5
OPTIMIZATION AND EXPANSION PLAN (POES)
5.1 CONCEPT
During the Concession period, the Concessionaire shall comply with the
Optimization and Expansion Plan described in Annex F, which includes expansion
of Service, plan of action to achieve Service goals, the works required to
achieve the quantitative, qualitative and efficiency related Service goals, and
obligations of geographic coverage, which the Concessionaire shall comply with
and execute according to the terms provided therein, according to the provisions
of the Regulatory Framework and the Contract.
The POES is comprised of six (6) consecutive Five-Year Plans, as described in
Article 5.3. It also includes updates, specifications and modifications
incorporated through the annual POES progress report and approved by the
Regulatory Agency pursuant to Article 6.5, once approved by the Regulatory
Agency.
Noncompliance with the POES shall be considered a serious violation, pursuant to
Article 13.2.5.5.
5.2 PURPOSE
The purpose of the POES is to provide for expansion of the Service in the
Concession Area, to ensure that the system is maintained and improved as
necessary to facilitate efficient administration and operation of the Service,
and to comply with the Levels of Service and the obligations established in the
Regulatory Framework and the Contract.
5.3 FIVE YEAR PLANS
For each Five-Year Plan that implements the POES, the Concessionaire shall
submit to the Regulatory Agency the respective proposal that details, adjusts
and provides appropriate updates, in order to comply with the Service coverage
objectives and goals contained in the POES, which specify the localities in
which the POES shall be implemented.
The proposal for the First Five-Year Plan shall be submitted within three (3)
months of the date of execution of the Contract. With respect to subsequent
Five-Year Plans, the corresponding proposals shall be submitted at least one
year before the date on which the respective Five-year period expires. The
Regulatory Agency may request changes and clarification as it deems necessary.
Once the Concessionaire' Proposal is approved, it has the force of a Five-Year
Plan, constitutes integral part of the POES and its completion becomes binding.
The Auditors shall certify the Concessionaire's proposal submissions.
The Five-Year Plans shall describe, in an analytical and organized manner, the
actions and tasks the Concessionaire expects to perform within the respective
period. It shall include the specific Service areas (administration, marketing,
management, operations, maintenance, progressive expansion of the system,
execution of works and installations, acquisition of equipment, etc.) which will
allow for compliance with the POES. The Five-Year Plans shall summarize the
Concessionaire's obligations regarding facilities management and the provision
of the Service, stated in terms of technical-operating, commercial, labor,
economic and financial management indicators. The obligations
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 23 -
<PAGE> 30
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
referred to shall facilitate the evaluation of the proposal to improve company
efficiency over the short, medium and long term, ensuring full compliance with
the terms of the POES.
The efficiency improvement indices shall include:
Technical-operating: Raw Water potabilization tasks (expected evolution of
production volumes, control of plants and networks, and inspection automation),
implementation of macro and micro-mediation systems (reduction of loss of
Potable Water through water loss indicator) quantity of repairs, obstructions
cleared, replacements (indicator evolution), discharge and residual Effluents
Treatment (expected growth of Treatment volumes, development of the process
reducing rainwater infiltration into the collector networks) and detection of
illegal connections.
Commercial: Registering and classifying Users, billing, collection, receipt and
attention to Users;
Labor: the operating capacity of personnel employed in the provision of the
Service.
Economic: the cost of production per volume unit of Potable Water and the unit
cost of Water collection and treatment.
Financial: compliance with the proposed investment commitments.
Investments: the level of each type of Service or activity, synthetically
indicating and describing each investment stage (identification of the problem,
study, design, construction and startup), including the objectives to be
attained, the means and time frame for attaining them, and the estimated time
for implementation.
The Five-Year Plans shall contemplate consultations with the Users, the local
authorities and the Regulatory Agency. Furthermore, they shall estimate
investment amounts and objectives and goals to be attained that correspond to
conditions established by the Contract.
The Five-Year Plan's content shall be itemized according to the Service sectors
listed below:
Water Sector:
- Resources
- Surface and subsurface Water capturing
- Conduction of Raw Water
- Potabilization
- Potable Water Conduction
- Potable Water Distribution
- Macro and micro metering
- Leaks detection and correction
- Water pipes renewal and/or reconditioning
Sewage Sector:
- Collection and transport
- Reconditioning
- Treatment
- Treated liquids and treatment waste final disposal
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 24 -
<PAGE> 31
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Similarly, the commercial, administrative, management and operating aspects of
the Service shall be described.
Capital investment costs, and operating, administrative and marketing costs
shall be presented clearly and separately, indicating the reasons for including
particular works or actions under a specific category.
Moreover, those items of the cost structure deemed most significant by the
Concessionaire shall be stated in tabular form, stating each percentage impact
of each item on the total cost structure.
In all cases, the provisions of the Regulatory Framework, especially Sections
38-II, 39-II and 40-II shall apply.
5.4 MODIFICATION OF THE FIVE-YEAR PLANS
At the request of the Concessionaire or the Regulatory Agency, and upon the
existence of duly justified extraordinary causes, the Five-Year Plan can be
modified through a resolution issued by the Regulatory Agency that shall not
alter the equilibrium of the Concession, notwithstanding the provisions of
Section 13-II of the Regulatory Framework. When the Concessionaire request
modifications, the request shall be included in the annual report described in
Article 6.5.1.
5.5 IMPEDIMENTS AND OBSTACLES TO THE IMPLEMENTATION OF THE FIVE-YEAR PLANS
If any municipality impedes or places obstacles in the execution of the
Five-Year Plan, the Concessionaire shall notify the Regulatory Agency, which
shall take those actions necessary to remove the obstacle. If it is still
impossible to implement the Five-Year Plan, the Concessionaire shall be released
from the obligations impeded by the obstacle. In no instance shall such
circumstance give the Concessionaire the right to present any claims for
indemnity. The Regulatory Agency shall make changes to the Five-Year Plan as
required to maintain the original plans of the investments.
5.6 FEASIBILITY OF WORKS PERFORMED BY THIRD PARTIES
The Concessionaire shall respect the Feasibilities granted by OSBA, contained in
Annex G.
The Concessionaire shall resolve the Feasibility requests that were not granted
before the date of execution of the Contract. Similarly, it shall keep a
register of the Feasibilities granted or in process, pursuant to Article 6.2.1,
Paragraph g).
The Concessionaire shall be responsible for inspecting and checking that all
works performed under Feasibilities already granted are performed in full
compliance with the technical standards in effect that are applicable to works
implemented by the Concessionaire and within the terms established for each.
The Concessionaire shall be responsible for the Service resulting from the above
mentioned works, at the time these are completed and commissioned to receive
technical authorization. In the event works are not completed, due to suspension
and/or shutdown and/or delays of the works commissioned to third parties,
regardless of the cause, the Concessionaire shall propose an appropriate
solution to the Regulatory Agency with the objective of realizing the goals
pursued.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 25 -
<PAGE> 32
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
This being assumed, the Concessionaire shall pay third parties performing the
works for the costs incurred during construction or within the provision of
Service, according to the specific agreement of each Feasibility. With respect
to the Feasibilities granted by OSBA before the date of execution of the
Contract, the Concessionaire shall refund third party costs, pursuant to the
provisions of each Feasibility granted.
The provisions contained in the paragraphs above shall not be interpreted as
restricting the Concessionaire's right to charge the users for work fees
described in Article 10 of Annex N.
The works provided for in this article shall not be considered when evaluating
the compliance of the Concessionaire' with the expansion goals.
The provisions of Section 3-II, Paragraphs d) and e) of the Regulatory Framework
shall apply at all times.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 26 -
<PAGE> 33
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 6
CONCESSIONAIRE'S RECORDS, STUDIES AND REPORTS
6.1 GENERAL
The Concessionaire shall keep the registers and issue the studies and reports
described in this chapter. Similarly, it shall submit additional reports in a
timely manner to the Regulatory Agency upon requests that are within the purview
of its jurisdiction.
6.2 RECORDS
The Concessionaire shall maintain the books and records required by the
applicable laws and regulations.
Moreover, the Concessionaire shall maintain records, archives and other methods
of recording information in sufficient quantity and quality to facilitate the
Regulatory Agency's efficient management and inspection of the Concessionaire.
In addition to the records that may be required by the Regulatory Agency for the
purpose of complying with legal, contractual and regulatory obligations, the
Concessionaire shall keep the following records updated:
6.2.1 TYPES
a) Records of Assets: this shall include all Service
Related Assets, both surface and subsurface, with a
degree of detail that provides adequate information
regarding their existence, location and condition.
Among others, it must include certificates, computer
models, databases, calculation spreadsheets and the
like, as well as construction, repair and maintenance
historic records.
b) Accounting record: this includes the accounting books
required by the Commercial Code and Law 19,550,
according to the generally accepted accounting
principles in the Republic of Argentina. Similarly,
the Concessionaire shall submit its annual audited
accounting reports to the Regulatory Agency.
c) Personnel record: this shall contain the list of the
Concessionaire's personnel, their remuneration,
seniority, position and other information necessary
to reflect the employees' labor situation.
d) Record of Service variances: this shall include
information regarding provision of Service variances
that result in noncompliance with the Service Levels,
as established in Chapter 3, as well as the result of
the investigations conducted relative to such
noncompliances.
e) Record of User requests and claims: this shall
contain information regarding requests and claims
made by Users, including the specific identity of the
real property being served, the date the request was
made, the reason, and the date that the
Concessionaire settled the respective claim.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 27 -
<PAGE> 34
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
f) Contract record: this shall contain all contracts,
agreements and arrangements to which the
Concessionaire is a party or in which it has an
interest. It shall detail the parties, the
contractual amounts, the reciprocal obligations and
the terms in force. Similarly, this record must
display, in tabular format, all commitments and works
assumed by the Concessionaire, identifying the
responsible person in charge of complying with such
obligations.
g) Record of Feasibilities: This shall include detail
regarding all Feasibilities granted according
pursuant to Article 5.6, including information
related to each.
h) Record of Industrial Sewage Generators: this shall
include the information contained in Article 3.14.
i) Record of contracts derived from the POES: this shall
contain all contracts, agreements and accords
executed by the Concessionaire with the purpose of
performing the works and services provided for in
POES, stating the parties, amounts, reciprocal
obligations, terms of duration in force, and the
Contractor's selection procedure.
6.2.2 VERIFICATION
Following a request through reliable means, the records must
be made available to the Regulatory Agency, or whomever it
designates to verify compliance with the preceding
obligations.
6.2.3 UPDATE
The Concessionaire shall update the records regularly so that
they can be consulted periodically to provide an actual and
comprehensive picture of the management and condition of the
Service, to enable efficient implementation of the Concession
the issuance of reports, and the performance of audits.
6.3 AUDITORS
Within four (4) months following the Taking of Possession, the Concessionaire
shall appoint and contract, at its own expense, a technical auditor and an
accounting auditor. Auditors shall be elected by the Concessionaire from a slate
proposed by the Regulatory Agency and according to selection standards
established by it, to be renewed every two (2) years, at least in the case of
one of the two positions. The Auditors shall be appointed for a two (2) year
term and may not serve during consecutive terms.
The Auditors shall constitute an integral part of the regulation system of the
Concession and they must fulfill their duties with independent judgment and a
guarantee of confidentiality. They shall be independent companies sufficiently
experienced and qualified to certify, within their professional scope:
a) that the Concessionaire keeps records in sufficient form, quantity and
quality to ensure compliance with its legal, contractual and regulatory
obligations;
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 28 -
<PAGE> 35
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
b) that the information provided by the Concessionaire to the Regulatory
Agency, as established in the Regulatory Framework and Contract,
reasonably reflects the Concessionaire's management and contains no
omissions of form or substance relative to the commitments assumed by
the Concessionaire under the Contract;
c) that the information specified was compiled in a skilled manner;
d) that the methodologies, systems and procedures employed by the
Concessionaire in compiling the information, and in producing studies
and reports, are adequate for the purposes intended;
e) that the contents of the studies and reports submitted by the
Concessionaire to the Regulatory Agency are adequate for the purposes
intended;
The Auditors' task shall facilitate the Regulatory Agency's exercise of its
police power. In exercising said power, the Regulatory Agency may require the
Concessionaire to remove the Auditors through a well-supported resolution. The
Concessionaire shall assume all costs entailed in such removal.
The reports, studies, proposals and presentations set forth in this chapter, as
well as the others expressly provided for in the Contract, and those the
Regulatory Agency may request from the Concessionaire, shall be accompanied by a
certificate executed by the Auditors. Similarly, the requirements for tariff
reviews or the Auditors shall also certify the reports submitted by the
Concessionaire to the Regulatory Agency in this regard. Said certificates shall
express the degree of consistency between the audited submissions and the
supporting documentation, as well as the analysis about the objective basis of
the reasonableness of the conclusions reached in the Concessionaire's
submissions in the light of the guidelines contained in this article.
The Concessionaire shall fully cooperate with the Auditors in the exercise of
their duties, pursuant to Section 25-II of the Regulatory Framework.
6.4 STUDY OF THE SERVICE
The Concessionaire must perform the special studies established below and must
present them to the Regulatory Agency as provided in each instance.
6.4.1 INVENTORY OF ASSETS AND EVALUATION OF STATUS, OPERATION AND
PERFORMANCE
Within the twelve (12) months of the Taking of Possession, the
Concessionaire shall update inspect and organize an inventory
according to modern methodologies.
The inventory shall include an evaluation of the status,
operation and performance of the assets and/or groups of
assets included. Where applicable, mention shall be made of
deficiencies requiring correction actions. The study and
evaluation shall be adequately documented, and levels of
reliability shall be assigned to the results based on the
accuracy of the data used and of the investigative methodology
adopted.
The Regulatory Agency shall approve the study submitted. The
Technical Auditor shall ratify the soundness of methods used
in performing the referenced evaluations.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 29 -
<PAGE> 36
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
6.4.2 STUDY OF THE SERVICE
Within the first twelve (12) months of the Taking of
Possession, the Concessionaire shall produce and submit to the
Regulatory Agency for approval, an objective study of the
Service describing each of its aspects in detail. The study
shall be performed according to locality or supply system.
The study shall include the analysis of distribution systems
dedicated to Potable Water and Sewage systems, the balance of
Water and any other aspects required by the Regulatory Agency.
The results of this study shall not affect the goals and
objectives established in POES, the tariff regime and prices
of the Service, or the Concessionaire's obligations.
6.4.3 STUDY ON PREVENTION AND EMERGENCIES
Within six (6) months of the Taking of Possession, the
Concessionaire shall prepare a prevention and emergencies
study, which will include the methods and procedures
implemented and the plans to be implemented in the future to
prevent emergency situations, or to resolve them when they
arise. Emergency situations include fires, floods, water
contamination, operating emergencies and any other situation
that, due to its magnitude, could endanger the population and
the normal provision of Service.
The Regulatory Agency shall make proposals to the
Concessionaire to upgrade or modify the study submitted.
Notwithstanding, during the entire Concessionaire period the
Regulatory Agency may require updates, necessary for the
referenced study, which may also consist of proposals made
through the Concessionaire's own initiative.
The approved study shall be implemented and operational within
the first year of the Concession.
6.5 PERIODIC REPORTS TO THE REGULATORY AGENCY
The Concessionaire shall submit the following reports to the Regulatory Agency,
according to the terms and conditions set forth for each.
6.5.1 ANNUAL PROGRESS REPORT ON THE POES
Within two (2) months following the end of each year period
within the Concession, the Concessionaire shall submit to the
Regulatory Agency an annual progress report on the POES. The
report must be relied upon to receive the approval of the
Regulatory Agency. To this effect, the Regulatory Agency may
request clarifications, specifications or amplifications to
the report, as it deems appropriate.
At least two (2) months prior to the submission the report,
the Concessionaire shall present to the Regulatory Agency the
suggested format, subject content and scope. The Regulatory
Agency may require modifications to the proposal. Should no
objections be made within the period set forth in the
Regulatory Agency's procedural rules, the format and subject
content shall be considered approved.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 30 -
<PAGE> 37
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The report shall state the progress made in the provision of
Service, for each of the Concessionaire's Service areas and
management departments, as provided for in Article 5.3,
describing in as much detail as possible the works and actions
to be conducted during the following year.
Moreover, the report shall contain a description of the
Service Levels attained in each area where services are
provided, distinguishing the Service goals and Standards. The
report shall include:
a) All the information necessary for a correct
understanding and for verification of compliance with
the goals and obligations set forth in the POES.
b) The degree of compliance with each of the commitments
assumed under the POES, stating the methodology for
deriving it and the degree of certainty of each
determination.
c) A statement of the methods employed by the
Concessionaire to monitor, determine and maintain the
quality of Service;
d) Any reason precluding compliance with any Service
goal provided for in the POES.
e) Any reason precluding the Concessionaire from
determining to a reasonable degree of certainty
whether a Service goal provided in the POES has been
attained.
In the last two (2) cases listed, the report must include the
Concessionaire's proposals for attaining the goals that could
not be attained, or for upgrading the Service goals set forth
in the POES, notwithstanding the enforcement of corresponding
sanctions. Such proposals shall be subject to approval by the
Regulatory Agency.
Notwithstanding the provisions above, the report may contain
proposals to update, upgrade or modify the POES, which shall
be submitted to the Regulatory Agency for approval, without
waiving those commitments set forth in the Contract. Once the
authorization has been obtained, the proposal referred to
shall be considered an integral part of POES. The provisions
of Article 5.4 shall apply.
Once approved by the Regulatory Agency, the Concessionaire
shall publish a summary of the report and shall make it
available for Users who request it in its business offices.
6.5.2 REPORT ON LEVELS OF SERVICE
Within two (2) months following the end of each annual period
of the Concession, the Concessionaire must submit to the
Regulatory Agency, together with the POES progress annual
report, a report concerning the Service Levels attained in
each of the zones included in the Service Area, according to
the provisions of Chapter 3 and to the goals referred to in
Annex F. The format of the report, proposed by the
Concessionaires, shall be approved by the Regulatory Agency
according to the procedure set forth for the POES progress
report in Article 6.5.1.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 31 -
<PAGE> 38
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
At the time the report is submitted to the Regulatory Agency,
the Concessionaire shall make the Service Standards and the
Service Levels available for Users who request it in its
business offices.
6.5.3 UPDATE ON INVENTORY OF ASSETS
Within thirty (30) days after the end of each annual period of
the Concession, the Concessionaire shall submit an asset
inventory update report, as set forth in Article 6.4.1 to the
Regulatory Agency. Should there be a lack of or inadequate
information available to adequately keep the asset inventory
updated, the Concessionaire shall conduct the investigations
it deems necessary in order to obtain the additional
information.
6.5.4 ANNUAL FINANCIAL STATEMENTS
Within thirty (30) days following its approval by the
competent corporate bodies, which shall be granted according
to the terms established in Business Entities Law 19,550, the
Concessionaire shall submit its annual audited accounting
statements.
6.5.5 ANNUAL BUDGET
Thirty (30) days prior to the closing of the annual period of
the Concession, the Concessionaire shall submit the budget for
the following year, according to the structure and the minimum
contents established by the Regulatory Agency. Through a
well-supported resolution, the Regulatory Agency may request
modifications in the structure of the report submitted.
6.5.6 ADDITIONAL REPORTS
Should the Regulatory Agency consider that the Service
provided by the Concessionaire fails to comply substantially
with the conditions set forth in the Contract, it may require
the Concessionaire to submit special reports containing the
matters and the terms specified by the Regulatory Agency.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 32 -
<PAGE> 39
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 7
ASSETS
7.1 CONCEPT
Assets assigned to the Service are considered to include all present or future
assets necessary in order to supply the Service, whether the Concessionaire
receives them from the Granting Authority or possesses, acquires, constructs or
incorporates them in order to comply with obligations arising out of the
Concession. The following is a non-comprehensive list of assets assigned to the
Service:
- Water Taps and accessories
- Potabilization Plants with systems and accessories:
Pumping
Decanting
Filtration
Reserves
Impulsion
Systems to deposit, haul and dose chemical products
Energy systems
Storage facilities and offices
- Large diameter conduits and aqueducts
- Elevating stations
Motorized pumps
Starters
Command and control systems
Metering elements
Valves and actuators
- Discharge pipes
Drainage valves
Vent valves
Control valves
- Mains and accessories
- Distribution networks and accessories
- Residential Connections and accessories
- Storage facilities and elevator tanks
- Exploitation Drills
Motorized pumps
Startup and control panels
Chlorination accessories
Electrical power supply with corresponding power
transformer
- Residential Sewage connections
- Residential Sewage collectors
- Sewage collectors
- High-point sewers
- Discharge pipes
- Pumping stations for Sewage
Motorized pumps
Startup and control panels
Control valves
Automatic control systems
- Effluents treatment plants
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 33 -
<PAGE> 40
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Other assets assigned to the Service include automotive equipment, computing
equipment and systems, administrative and commercial offices, fixtures and
equipment, documentation and archives, inasmuch as the assets named are used in
the provision the Service.
For the purposes established in this chapter, real estate is limited to the
definitions of Sections 2314 and 2315 of the Civil Code. Fixtures shall be
limited to those assets permanently affixed to the ground.
7.2 TITLE
According to the provisions of Article 15.3, upon the Taking of Possession the
Concessionaire shall receive possession of the assets assigned to the Service
owned by the Province and/or AGOSBA.
The Concessionaire shall own movable assets and real property acquired or
constructed during the term of the Concession. Title shall be recorded in the
Real Property Registry and in the respective registries of movable assets.
7.3 MANAGING AUTHORITY
The Concessionaire shall manage all assets received with the Concession and all
acquired or built in order to fulfill the Contract with the scope required for
the effective provision of Service and implementation of the POES in compliance
with the provisions under this Chapter.
The Concessionaire shall act as an agent with an irrevocable power of attorney
consisting of broad powers and the obligation to account for its actions
according to the provisions of Chapter 6 and the foregoing. The power to manage
the administration of the Service Related Assets shall be irrevocable for as
long as the Concession is in effect. During this same time period, the Granting
Authority, OSBA or any other Provincial agency shall refrain from performing any
administrative acts affecting such assets.
This capacity as agent is granted in order to facilitate the Concessionaire's
administration of the assets assigned to the Service. The allocation of the
Concessionaire's income derived from administering the referenced assets shall
be governed by the general rules of the Concession.
7.4 MAINTENANCE OF ASSETS
Service Related Assets shall be maintained in good working condition, therefore
the Concessionaire shall perform periodic renovations, dispositions and
acquisitions as required according to the nature and characteristics of each
type of asset and the needs of the Service.
7.5 ACQUISITION OF ASSETS
The acquisition of real property or registrable movable assets to be used in the
Service shall be approved by the Regulatory Agency pursuant to the terms set
forth in its procedural regulations. In the absence of a decision, requests are
to be deemed approved.
The procedure set forth in Article 4.3.2 shall govern situations involving
acquisition through expropriation.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 34 -
<PAGE> 41
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
7.6 DISPOSITION OF ASSETS
For the purposes of this article, disposition of Service Related Assets shall
include the creation, modification, transfer or termination of real property
rights, as well as the sale, payment in kind or any other conventional form
resulting in a transfer of ownership, dividing property horizontally, and
creating or exempting from rights of use, use, habitation and easement over the
assets. Similarly, leasing the real property shall also be considered a
disposition.
In disposition of assets owned by the Province, pursuant to this article, the
Concessionaire shall act as the Province's agent, with the obligation of
accounting for its actions pursuant to Chapter 6.
Should the authorization to dispose of real property or registered movable
assets as provided for in this article, be denied, the Concessionaire may return
the real estate or movable assets in question, or else maintain them in good
condition until termination of the Concession.
7.6.1 ASSETS OWNED BY THE PROVINCE
Prior Regulatory Agency authorization shall be necessary in
order to dispose of registered real estate and movable assets
owned by the Province. The Regulatory Agency shall approve the
allocation of the proceeds of the disposal of the property,
pursuant to Article 7.6.3.
Should the Regulatory Agency fail to issue a decision
regarding the application for disposal of real property within
the time period set forth by the procedural regulations, the
application shall be considered denied, regardless of the
Concessionaire's right to present the same request again to
the Regulatory Agency.
Should the Regulatory Agency fail to issue a decision
regarding an application for disposal of registered movable
assets owned by the Province within the time period set forth
in the procedural regulations, the application shall be
considered approved.
7.6.2 ASSETS OWNED BY THE CONCESSIONAIRE
The Concessionaire may dispose its proprietary real property
and registered movable Service Related Assets assigned to the
Service, upon the Regulatory Agency's prior authorization. The
Regulatory Agency shall approve the allocation of the proceeds
derived from the disposition of assets as provided in Article
7.6.3.
Should the Regulatory Agency fail to issue a decision
regarding an application for disposal of real property within
the time period set forth in its procedural regulations, the
application shall be considered approved.
Should the Regulatory Agency fail to issue a decision
regarding an application for disposal of registered movable
assets within the time period set forth in its procedural
regulations, the application shall be considered approved.
The Concessionaire may not dispose of proprietary assets
Service Related Assets, in such a quantity that would
jeopardize adequate provision of the Service.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 35 -
<PAGE> 42
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
7.6.3 PROCEEDS FROM THE SALE OF ASSETS
The proceeds from the disposal of Service Related Assets,
either received with the Concession or acquired by the
Concessionaire, shall be reinvested in the Service. The
proceeds of disposal of the assets shall not be considered in
evaluating tariff changes.
7.7 CONTROL
The Regulatory Agency shall control the administration and disposition of the
Service Related Assets assigned to the Service, for which purpose it shall have
broad powers to examine the assets and the legal and accounting documentation
relating to them.
The Concessionaire shall notify the Regulatory Agency, as established in Article
7.6, of any disposition related to Service Related Assets, as well as any
information directly or indirectly affecting their value or their utilization
for the Service.
At all times, the Regulatory Agency shall act as quickly as possible to decide
upon applications submitted by the Concessionaire. Similarly, if consent is
granted to the respective transactions, the Concessionaire shall be provided
with all necessary cooperation to formalize and execute the corresponding legal
acts.
7.8 AMORTIZATION
The Concessionaire's proprietary Service Related Assets, acquired or constructed
by it, as well as the improvements made, shall be accounted for and fully
amortized during the term of the Concession or during their Useful Lives,
whichever is less. Excepted are the provisions of the fourth paragraph of this
article.
Investments made by the Concessionaire on the assets received from the Province
upon the Taking of Possession shall be considered a cost of acquisition and/or
maintenance of the Concession, as established in Article 1.8, and shall be fully
amortized during the term of the Concession.
Improvements shall include any investments, which extend the Useful Life of the
asset, or essentially change the structure, thereby increasing capacity and
improving efficiency or safety aside from regular maintenance and repair tasks.
On an exceptional basis, and always upon the Regulatory Agency's authorization
sought prior to the Concessionaire's express application, investments made on
Service Related Assets during the last ten (10) years of the Concession may be
amortized, but only on the basis of the asset's Useful Life, provided the
Province duly indemnifies the Concessionaire for the remaining non-depreciated
balance on the date of termination of the Concession. The authorization refers
only to each particular investment.
The provisions of the above paragraph do not include investments undertaken in
accordance with the POES.
7.9 RETURN OF ASSETS
7.9.1 ANTICIPATED RETURN
The Concessionaire shall provide the Regulatory Agency and the
Granting Authority with a list of Service Related Assets
received at the time of the Taking of Possession,
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 36 -
<PAGE> 43
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
or acquired or constructed afterwards, which for any reason
are totally or partly unrelated to the Service. To such
effect, the Concessionaire shall be allowed a term of thirty
(30) days, following the effective transfer, to perform such
communication.
Regarding partially unrelated assets and provided it is
economically feasible to divide the assets and no opposition
is made by the Regulatory Agency due to Service-related
reasons, the Concessionaire shall deliver such assets, under
obligation to provide duly authenticated notice to the
Regulatory Agency informing them of the time period and manner
of return. In all cases, property shall be restored to the
Granting Authority in a condition suitable for use and
operations, except when the return is performed pursuant to
the provisions of Article 15.3.2, in which case the assets
shall be returned with the same conditions as they were
received.
If the Granting Authority were to refuse to receive such
assets, the Concessionaire may assign them through judicial
means, with thirty (30) days authenticated notice served on
the Granting Authority, notwithstanding the application of
Article 7.10.
The Concessionaire shall engage in all necessary acts to
record the transfer of its proprietary real property and
registered movable assets free of charge to the corresponding
registries.
7.9.2 REPOSSESSION UPON TERMINATION OF THE CONCESSION
Upon termination of the Concession, Service Related Assets
shall be returned or delivered free of charge to the Granting
Authority, as provided for in Chapter 14. Similarly, a
sufficient quantity of chemical and fuel supplies shall be
delivered to operate the Service over a sixty (60) day period.
Excluded from the previous paragraph are those assets disposed
of, substituted by others or returned during the term of the
Concession.
The property shall be delivered in suitable condition for use
and operations, including all improvements and technological
innovations to be considered integral parts of the Service,
and returned in perfect operating condition.
The Concessionaire shall engage in all necessary acts to
record the transfer of proprietary real property and
registered movable assets free of charge to the corresponding
registries.
7.10 LIABILITY
The Concessionaire is aware of the general and particular conditions and status
of the Service Related Assets. In no case may the disclosure and occurrence of
defects in such assets justify noncompliance with the obligations assumed by the
Concessionaire.
The Concessionaire shall be liable to the Province and to third parties for
suitably managing and disposing of the Service Related Assets, as well as for
all risks and for complying with all contractual and public liability
obligations inherent to operation, administration, maintenance, acquisition,
construction, rehabilitation and remodeling.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 37 -
<PAGE> 44
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
In this regard, when the Granting Authority is sued due to the contractual
responsibility arising from the Contract, or when it and/or the Regulatory
Agency and/or any Provincial agency is sued by virtue of the State's public
liability due to its police power of the Service, the Concessionaire shall be
summoned to appear at the legal proceedings as a necessary third party, subject
to the provisions of Article 16.3.
7.11 NON-ASSIGNABILITY OF SERVICE RELATED ASSETS
The Service Related Assets, both those received upon the Taking of Possession
and those acquired or incorporated afterwards by the Concessionaire, cannot be
attached during the term of the Concession.
7.12 INDEMNIFICATION OF ASSETS USED TO PROVIDE SERVICE TO THE PUBLIC
Indemnification owed to private parties due to expropriation or creation of
easements and restrictions over their domain , according to the terms set forth
in Section 15, paragraphs d) and e) of the Regulatory Framework, shall be
assumed by the Concessionaire when executed in compliance with the POES.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 38 -
<PAGE> 45
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 8
PERSONNEL REGULATIONS
8.1 APPLICABLE LAWS
In labor relations with the personnel, the Concessionaire shall abide by the
labor contract law (Law 20,744 and its modifying and regulating rules) and by
the collective bargaining agreement to be formalized with SOSBA, subject to
modification by the execution of new agreements between the Concessionaire and
the labor union organization, according to the terms of Law 14,250, and
modifying and regulating rules. Notwithstanding, until the collective bargaining
agreement is negotiated and approved, Law 10,384 shall govern.
8.2 WORK-RELATED ILLNESSES AND ON-THE-JOB ACCIDENTS
The Concessionaire shall not be liable for indemnifying on-the-job accidents
that occurred prior to the date of the Taking of Possession, or for work-related
illnesses diagnosed, caused or originated before said date. The Province shall
pay for such indemnifications. In all situations, the Concessionaire shall be
liable for obligations whose cause and origin occurred after the date of the
Taking of Possession.
In the event of a temporary disability diagnosed prior to the Taking of
Possession, the Concessionaire shall only be liable to pay compensation based on
the number of days after the Taking of Possession. Under the same assumption,
should the disability be permanent, the Province shall be responsible for the
payment of the applicable compensation.
The Concessionaire shall be solely responsible for paying indemnifications
arising from judicial actions begun later than two (2) years after the Taking of
Possession, due to illness, disability or accident. This provision shall not
apply to judicial proceedings started after the specified term, when an
administrative claim has been filed before OSBA, or before the Province or any
of its agencies, submitted on the same grounds before expiration of the two (2)
year term following the Taking of Possession. In these situations, the
provisions of the first and second paragraph of this article govern.
Under no circumstances shall the Concessionaire discharge personnel entitled to
retirement due to disability, until their retirement benefits are in effect.
The provisions of Article 16.3 shall apply.
8.3 MEDICAL EXAMINATION OF PERSONNEL
At its sole and exclusive expense, the Concessionaire shall appoint a medical
board, jointly with AGOSBA and the most representative labor union enrolled in
by its personnel, for the purpose of arranging medical examinations of the
transferred personnel.
Tasks shall be performed under conditions ensuring suitable order, hygiene and
healthiness to the proceedings, as well as correct treatment and sufficient
convenience for personnel subjected to the referenced examination.
The check-up results shall be used for the purposes of the application of
Article 8.2, but shall not entitle the Concessionaire to refuse the transfer of
any employee.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 39 -
<PAGE> 46
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Concessionaire's refusal to accept a transferred employee shall be deemed a
discharge at the Concessionaire's sole expense.
8.4 SOCIAL SECURITY
The Concessionaire's obligation to make social security payments shall be
limited to contributions imposed by applicable laws, if applicable, with
necessary increases in order to be affiliated with the corresponding social
security organization.
8.5 ADULT LITERACY PROGRAMS AND DAY CARE CENTERS
The Concessionaire shall comply with the agreements signed by OSBA, or later
executed by it, to facilitate personnel assistance with adult literacy courses
and day care centers.
8.6 TRAINING
The Concessionaire shall comply with provisions regarding training referenced in
agreements signed by OSBA, or those later executed by it.
8.7 TERMINATION OF THE CONCESSION
Upon termination of the Concession, regardless of the cause, arbitration shall
occur regarding the transfer of personnel employed in the Concession, the mode
of guaranteeing the continuity of Service and the protection of workers' rights,
pursuant to current laws and rules.
The personnel shall be transferred to the Granting Authority or to the entity or
agency designated to continue provision of Service, starting on the established
date.
The Concessionaire assumes payment of all obligations, wages or
indemnifications, related to labor or social security, originated or accrued
prior to the date of transfer of the Service.
The Concessionaire shall be solely responsible in the event of judicial
proceedings or litigation involving personnel transferred for cause prior to the
date of the transfer. The Granting Authority shall be responsible for judicial
proceedings or litigation involving personnel transferred for cause initiated
after the transfer. This shall also apply if the claims were founded on the
transfer itself, unless the Concession is terminated due to the Concessionaire's
fault or fraud causing it to be solely liable.
All debts or liability relating to social benefits arising after the Service is
transferred shall be borne solely by the Granting Authority or by the company or
agency awarded responsibility for providing the Service.
Articles 8.2 and 8.3 apply, adapted to the particular situation. Article 16.3
shall also govern for effects of processing.
8.8 LABOR DOCUMENTATION
When required by the Regulatory Agency, the Concessionaire shall make available
all of the labor, contractual, social security and tax documentation regarding
the Concessionaire's employees, contractors and/or subcontractors engaged in
activities inherent to the objectives of the Contract.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 40 -
<PAGE> 47
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 9
TAX REGIME
9.1 GENERAL PRINCIPLES
The Service provided by the Concessionaire shall be subject to national,
provincial and municipal tax legislation in effect at all times, and it shall be
held absolutely and exclusively responsible for knowledge and payment of all
applicable taxes, fees or contributions on the activity or scope of the services
for which it is responsible.
The obligation indicated in the paragraph above is independent of the situation
of the OSBA with respect to taxes, fees or contributions imposed on the Service.
9.2 TAX CONSEQUENCES
Except for the income tax and the value added tax (VAT) or any taxes that may in
the future substitute these taxes, all national or provincial taxes imposed on
the Concessionaire shall be considered costs for the purpose of rate
calculations.
9.3 SURCHARGE TO FUND THE REGULATORY AGENCY
The Regulatory Agency funding surcharge set forth in Section 30-I, paragraph a)
of the Regulatory Framework shall be itemized in the Service invoice, apart from
the tariff values.
9.4 CHANGE IN TAXATION REGIME
The effect of the imposition of any new national or provincial taxes, and the
substitution or changes of the national or provincial taxes, or of existing
rates of such taxes, recorded after expiration of the term for submitting the
Economic Offer (envelope 2 of the Bid), shall be considered in relation to the
Service's tariff values and prices and conformed to the procedure provided in
Chapter 12. This does not apply to income tax and to value added tax, nor to the
taxes which may replace them, as provided in Article 9.2.
9.5 MUNICIPAL TAXES OR ASSESSMENTS
If municipal taxes or contributions are imposed on the Concessionaire or on
activities related to the provision of the Service, these fees shall be
calculated and itemized on the invoices issued to Users in the municipality that
established them.
9.6 TERMINATION OF THE CONCESSION
Article 15.5 regulates the Granting Authority's and the Concessionaire's
transition program with respect to tax liabilities existing at the date of
Taking of Possession. Reciprocally, this regime shall apply to determine the
liabilities of both parties upon termination of the Concession.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 41 -
<PAGE> 48
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 10
CONTRACTS AND CONTRACT PROCEDURES
10.1 GENERAL PRINCIPLES
Contracts to provide assets, services and leases for the works must be executed
by the Concessionaire in a manner ensuring compliance with the quality and
efficiency objectives sought by the Concession. In this regard, the
Concessionaire shall have decision making freedom and shall be subject to
business risk principles.
Inefficiencies in the contracts executed or in the execution of contracts for
amounts greater than market prices shall not, under any circumstances, enable a
change in tariff values and prices.
It is clearly stated that the laws governing contracts entered into by
provincial public entities shall not apply to the Concessionaire, by virtue of
its capacity as entity subject to the provisions of private law.
10.2 SPECIAL PROCEDURES
All contracts for assets, works and services entered into by the Concessionaire
must comply with the provisions of the general contracting regulations proposed
by the Concessionaire to the Regulatory Agency for its approval within three (3)
months following the Taking of Possession. These regulations shall contain the
following fundamental principles:
a) Contracts for amounts exceeding the sum of one million two
hundred thousand United States dollars (US$ 1,200,000) shall
be entered into through a public bidding process which allows
all interested parties to submit offers. In these cases,
advertisements shall be published in suitable mediums and
form, with descriptions of the work to be contracted for, the
date on which the services are required, and invitations for
bid offers from persons possessing the requisite technical
capacity.
b) Contracts entered into with companies related to the
Concessionaire or its shareholders, for amounts, individually
or jointly (in the case of a series of related individual
contracts), exceeding the sum of three hundred thousand United
States Dollars (US$300,000), shall also be conducted under
public bidding procedures that allow bids to be submitted
according to the procedures in Paragraph (a) above. In
addition, subsidiaries that are awarded bids are prevented
from subcontracting the work. Related companies shall be those
which, either directly or through a controlled or controlling
company, according to the terms of Section 33 of Law 19,550,
are affiliated by virtue of the fact that the company owns at
least twenty-five percent (25%) of the other's capital stock,
either directly or indirectly.
c) Due consideration shall be given to the bids received, in a
way that ensures that the contract is entered into with the
bidder who presents the technical qualifications specified and
whose economic proposal is the least expensive among the
acceptable bid offers.
d) The contracts shall be performed in competitive market-value
terms, in the best interests of the Concessionaire and the
Users, in a way that achieves the best combination of quality
and price.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 42 -
<PAGE> 49
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
e) The Concessionaire may not give advantages or preferences in
the process of contracting for works, goods and services for
the operation, modernization and expansion of the Service.
f) Contracts for works and for the provision of goods and
services financed by loans from multilateral financial
agencies shall be conducted according to the bidding
procedures annexed to the respective loan contracts.
g) In its relations with contractors and subcontractors, the
Concessionaire shall abide by the provisions of Law 25,013.
The amounts referred to in paragraphs (a) and (b) above, may be revised by the
Regulatory Agency for the purpose of maintaining their original value.
10.3 COMPLIANCE WITH OBLIGATIONS AND COMMITMENTS ASSUMED BY THE
CONCESSIONAIRE
The Concessionaire shall have sole and exclusive liability for all obligations
and commitments assumed by it. Theretofore, the Concessionaire may not limit its
liability or justify noncompliance with its obligations, pursuant to contracts
and agreements entered into with third parties or the noncompliance of its
contractors under such agreements.
10.4 SUBCONCESSIONS
The Concessionaire may grant subconcessions for the provision of the Service
subject to the provisions of Sections 16-II and 17-II of the Regulatory
Framework.
As a condition to its validity, the Regulatory Agency must pre-approve the
sub-concession and the text of the respective contract to be executed between
the Concessionaire and the sub-Concessionaire. In this regard, the
Concessionaire shall provide the Regulatory Agency with the necessary
information about the area for which it proposes to grant the sub-concession,
indicating the causes and grounds for its request. Similarly, it shall submit
qualifications of the proposed sub-Concessionaire and any other information
required by the Regulatory Agency for the purpose of ruling on the matter. The
Regulatory Agency shall issue a decision on the request within the time period
set forth in its procedural regulations.
The total amount billed for the Service subject to sub-concession, shall not
exceed twenty percent (20%) of the Concessionaire's total annual billing. This
percentage may not be concentrated within a single locality. The percentage
shall be calculated based on the total amount billed by the Concessionaire
during the year immediately prior to the submission of the application for the
sub-concession and the maximum total amount billed per year that the
Concessionaire believes may be earned during the Concession period in the area
subject to the subconcession. The Auditors shall ratify this estimate.
The sub-concessionaire shall be subject to all obligations cited in the
Concession, particularly those concerning the Service Standards and the Tariff
Regime applicable to the Concessionaire.
The sub-concessionaire shall maintain accounting records absolutely independent
from the Concessionaire, shall be subject to the audit regime provided in
Article 6.3 and to the same controls and reports set forth for the
Concessionaire in the Regulatory Framework and the Contract.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 43 -
<PAGE> 50
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The sub-concession shall also be subject to any regulations set forth by the
Granting Authority or the Regulatory Agency.
10.5 CONTINUITY OF CONTRACTS
Contracts executed by the Concessionaire shall contain a clause expressly
allowing the Granting Authority, or the company or entity charged with the
provision of the Service, to assume the rights and obligations of the
Concessionaire under the Contract, in the event the Concession is terminated,
regardless of the cause of such termination.
In all cases, upon termination of the Concession, steps shall be taken to
provide for the assignment of contracts executed by the Concessionaire that are
still in effect, so as to ensure continuity of Service. Contracts in which the
only remaining obligations are those to be fulfilled by the Concessionaire shall
not be assigned. Similarly, it should be noted that financial debt assumed by
the Concessionaire shall not be assigned to the Province.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 44 -
<PAGE> 51
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 11
SYSTEM OF GUARANTIES AND INSURANCE
11.1 CONTRACT GUARANTY
11.1.1 GENERAL
During the entire term of the Concession, the Concessionaire
shall maintain a performance guaranty in favor of the
Province, covering all of its obligations under the Contract.
The guaranty shall be firm, irrevocable, unconditional and
executable either totally or partially, at the sole
requirement of the Granting Authority.
The initial amount of the guaranty shall be for the amount
provided in Annex I, and shall be adjusted annually in order
to maintain its original value based on the domestic inflation
rate of the United States of America, pursuant to the Consumer
Price Index, CPI-U.(1)
The term shall be of at least one year and shall be renewed or
replaced by the Concessionaire thirty (30) days prior to
expiration.
All modifications to or substitutions of the Contract
guaranty, and everything regarding its release or execution
shall be carried out pursuant to the provisions of this
chapter.
11.1.2 TYPES
The guaranty may consist of any of the instruments listed
below:
a) A cash deposit in the name of the Province at the
Banco de la Provincia de Buenos Aires. The interest
earned on the amounts deposited shall be incorporated
into the guaranty.
b) Securities or bonds of the public debt of the
Province of Buenos Aires or of the Argentine
Republic, validly listed in the respective stock
exchange, deposited in the Banco de la Provincia de
Buenos and evidenced by a certificate of deposit in
favor of the Province. The amount of such deposit
shall be calculated based on its market value on the
second business day prior to the date on which it is
made, and it shall be sufficient to cover the
required guaranty plus an additional twenty percent
(20%), in order to provide for future market
fluctuations.
- ----------
(1) "Consumer Price Index for all Urban Consumers, CPI-U, for the US City
Average for All Items, 1982-85=100, not seasonally adjusted, published for the
"US Bureau of Labor Statistics".
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 45 -
<PAGE> 52
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Should the market value of the deposit fall below the
required amount of the guaranty, the guaranty and the
additional twenty percent (20%) shall be redeposited
within five (5) days of notice of such occurrence.
As long as the required amount of the guaranty is
maintained, the depositor may withdraw the income and
redemption of the securities deposited. In turn,
interest shall be integrated into the guaranty.
c) A bank bond, in which the bank shall be the sole,
full and principal payor according to the laws of the
Argentine Republic, without benefit of excussio
(exhausting remedies) and payable unconditionally
upon the Granting Authority's first request,
executable in the Republic of Argentina, expressly
subject to the local jurisdiction of the ordinary
courts of the City of La Plata. The signature and
powers of the bank representative granting the bond
must be certified by a public notary, with the
corresponding legalizations. The bond shall meet the
requirements cited in the text provided in Annex J-1
or J-2, as appropriate.
d) An irrevocable standby letter of credit granted by a
first level banking entity, payable unconditionally
upon the sole request of the Granting Authority. The
letter of credit shall follow the text provided in
Annex K-1 or K-2, as applicable.
e) An insurance bond where the insurance company shall
be the sole, full and principal payor according to
the laws of the Argentine Republic, without benefit
of excussio (exhausting remedies), executable in the
Republic of Argentina, and expressly subject to the
jurisdiction ordinary courts of the City of La Plata.
A public notary, with the corresponding legalizations
must certify the signature and powers of the
representative of the entity issuing the policy.
11.1.3 POWERS OF THE GRANTING AUTHORITY
The guaranties presented are subject to the complete
satisfaction of the Granting Authority, particularly with
respect to the acceptability of the title offered, the
conditions of the guaranty and the issuing entity. In
addition, the Granting Authority may require changes or
further improvements to be made to the guaranties to ensure
continued satisfaction with the original requirements.
11.1.4 RETURN OF THE GUARANTY
The Contract guaranty shall be returned to the Concessionaire
after the final settlement of the Concession's credits and
debts is finalized, as provided in Article 14.4.
The return of the guaranty shall not include return of
interest or accessory amounts, except for the amounts of
redemption and income accrued on the securities in deposit
according to Article 11.1.2, paragraph (b). The Concessionaire
shall assume costs of the guaranty.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 46 -
<PAGE> 53
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
11.1.5 COVERED RISKS
The text of the guaranty shall expressly state that it covers
compliance with all of the Concessionaire's obligations under
the Contract. The guaranty shall state that it is covers
obligations including, but not limited to, the following:
a) Damages due to the Province caused by the
Concessionaire's noncompliance.
b) Tax, labor and social security obligations due from
the Concessionaire to state agencies or entities.
c) Fines due for termination of the Contract due to
fault of the Concessionaire.
In this situation, the Concessionaire shall be fined
the entire amount of the guaranty, without this
limiting the amount collectable for damages caused by
a termination with fault, pursuant to the provisions
of 14.1.3.
d) The fines established in Article 13.2.5 and Article
15.1.3, Clause (a) third Paragraph.
e) The costs of maintaining and renewing the insurance
required by the Contract.
f) The costs of completing the works agreed to by the
Concessionaire, when these have not been completed,
either totally or partly, due to noncompliance with
this obligation, and the Granting Authority decides
to perform or terminate them, either directly or
through third parties, at the expense of the
Concessionaire.
g) Monetary compensation owed to the Granting Authority.
11.1.6 EXECUTION OF THE GUARANTY
The Contract guaranty shall be executed either totally or
partially, according to the procedure set forth below.
The Regulatory Agency shall declare the pending payment
obligation in an appropriately supported resolution.
The Concessionaire shall be notified of such resolution by
means of a demand for payment within a twenty (20) day period,
or such other term as may be set due to particular
circumstances, subject to summons to execute the guaranty. The
corresponding term may be extended only once, through an
appropriately supported resolution issued by the Regulatory
Agency.
If the Concessionaire fails to pay the claimed debt, the
Regulatory Agency shall notify the Granting Authority of the
situation, informing it of the prior notice and stating the
origin and amount of the debt being claimed.
The Granting Authority shall notify the depository institution
or guarantor regarding execution of the guaranty, and the
latter shall immediately pay the amounts claimed.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 47 -
<PAGE> 54
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Any administrative remedy or challenge, or any judicial
proceedings filed against the administrative resolution that
authorizes the execution of the guaranty, against any act
undertaken during the course of such procedure, or against
demands of payment issued to the Concessionaire, shall not
suspend the enforceability of execution pursuant to the
applicable procedure. Nor shall the Concessionaire's monetary
claims against the Regulatory Agency, the Granting Authority
or the Province suspend execution of the guaranty or
compensate with pending payment obligations.
11.1.7 REPLACEMENT OF THE GUARANTY
When the guaranty is totally or partially extinguished or
executed, the Concessionaire shall provide another
sufficiently compliant guaranty, pursuant to the time period
and terms described in this chapter, which may not be shorter
than ten (10) days. If the term expires without the guaranty
being reinstated, the Granting Authority may propose a
recission of the Contract due to fault of the Concessionaire,
pursuant to Article 14.1.3.
11.2 OPERATING GUARANTY
11.2.1 GENERAL
During the first twelve (12) years of the Concession, the
Operator shall maintain, for the benefit of the Province, a
compliance guaranty bond covering its operating obligations,
as established in this chapter.
The guaranty must be firm, irrevocable, unconditional and
executable either totally or partially, at the sole request of
the Granting Authority.
The initial amount of the guaranty shall be for the amount
provided in Annex I, and shall be adjusted annually in order
to maintain its original value based on the domestic inflation
rate of the United States of America, pursuant to the Consumer
Price Index, CPI-U.(2)
The term shall be of at least one year and shall be renewed or
replaced by the Concessionaire thirty (30) days prior to
expiration.
All modifications to or substitutions of the guaranty, and
everything regarding its release or execution shall be carried
out pursuant to the provisions of this chapter.
11.2.2 TYPES
The guaranty may be constituted through any of the forms
established in Article 11.1.2.
- -----------
(2) "Consumer Price Index for all Urban Consumers, CPI-U, for the US City
Average for All Items, 1982-85=100, not seasonally adjusted, published by the
"US Bureau of Labor Statistics".
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 48 -
<PAGE> 55
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
11.2.3 POWER OF THE GRANTING AUTHORITY
The Granting Authority shall have exclusive discretion to
execute the operating guaranty, the Contract guaranty, or both
when these cover the same breach.
The guaranties presented are subject to the complete
satisfaction of the Granting Authority, particularly with
respect to the acceptability of the title offered, the
conditions of the guaranty and the entity issuing it. In
addition, the Granting Authority may require changes or
further improvements to be made to the guaranties, to ensure
continued satisfaction of the original requirements.
11.2.4 RETURN OF THE GUARANTY
The Operating guaranty shall be returned to the Operator after
it is completely verified that it has no further obligations.
The return of the guaranty shall not include return of
interest or ancillary sums, except for the amounts of
redemption and income accrued on the securities in deposit,
according to Article 11.1.2, paragraph (b).
11.2.5 COVERED RISKS
The text of the operating guaranty shall expressly state that
it covers compliance of the Operator's obligations, as
provided in Terms of Reference and its annexes, specifically
Section 3.3.3 of the Terms of Reference, as well as the
Concessionaire's obligations related to the technical
administration of the Concession, as set forth in Chapters 3,
5 and 6 of the Contract, for which the Operator shall be
jointly liable, according to Section 3.3.3. of the Terms of
Reference.
11.2.6 EXECUTION OF THE GUARANTY
The operating guaranty shall be executed, either totally or
partially, upon completion of the procedure established in
Article 11.1.6, and five (5) days after the Granting Authority
has made a request to the Operator.
11.2.7 REPLACEMENT OF THE GUARANTY
When the guaranty is totally or partially extinguished or
executed, the Operator shall provide another sufficiently
compliant guaranty, according to the terms of this chapter,
within the term established for that purpose, which may not be
shorter than ten (10) days. If such term expires and the
guaranty has not been reinstated, the Granting Authority may
propose a recission of the Contract due to the fault of the
Concessionaire, as set forth in Article 14.1.3.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 49 -
<PAGE> 56
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
11.3 INSURANCE
11.3.1 GENERAL
The insurance required to be maintained by the Concessionaire
during the entire term of the Concession by Article 11.3.2,
and notwithstanding the mandatory insurance required by
applicable laws or regulations, shall be fully satisfactory to
the Granting Authority, in particular with respect to the
acceptability of the issuing entity. Similarly, the Granting
Authority may request a change of insurer when circumstances
demonstrate a failure to fulfill the original requirements.
Upon express request from the Regulatory Agency, the
Concessionaire shall provide conclusive evidence that all
policies required by this article are in effect.
The policies shall require the insurer to notify the
Regulatory Agency of any failure to make payment on behalf of
the Concessionaire, at least fifteen (15) days prior to the
date such failure could result in total or partial termination
or non-enforceability of the policy. Similarly, the policy
shall state that it does not either partially or totally
expire or cease to be in effect until such time as the entire
time period following notification to the Regulatory Agency
has expired without due payment to the insurer.
The Concessionaire's purchase of insurance coverage on its
own behalf, shall in no way diminish or limit its liability
under the Contract.
11.3.2 TYPES
a) CIVIL LIABILITY INSURANCE
The Concessionaire shall purchase civil liability
insurance against all damages, loss or injuries that
may affect assets or persons as a result of any
action related to the provision of the Service.
The minimum amount of insurance per loss is
established in Annex I, and shall be readjusted every
five years in order to maintain its initial value
based on the internal inflation rate of the United
States of America, pursuant to the Consumer Price
Index, CPI-U.3
The policy shall expressly cover the Concessionaire,
its employees, agents, contractors and/or
subcontractors. The insurance policy shall contain a
cross civil liability provision stating that
compensation is to be applied to the monetary
liability of each of the parties named as insured, as
if separate policies had been issued for each of
them, always on condition that the insured's
liability does not exceed the limit of liability
established by the policy.
- -------------
(3) "Consumer Price Index for all Urban Consumers, CPI-U, for the US City
Average for All Items, 1982-85=100, not seasonally adjusted, published by the
"US Bureau of Labor Statistics".
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 50 -
<PAGE> 57
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
b) WORK HAZARDS INSURANCE
The Concessionaire shall, for the benefit of its
personnel, obtain an insurance policy covering work
hazards, according to the terms of Law 24,557.
c) PROPERTY INSURANCE
All Service Related Assets shall be insured against
partial and/or total damage, theft, robbery and/or
fire, according to the nature of each property, and
in the most suitable and appropriate manner.
d) LIFE INSURANCE
The Concessionaire shall purchase, or shall arrange
for, life insurance policies for its personnel and
the personnel of its contractors and subcontractors.
11.3.3 DEFAULT
If the Concessionaire fails to maintain the policies in
effect, the Granting Authority may, at the request of the
Regulatory Agency, ensure their continuity or purchase new
policies. For this purpose, it may execute the Contract
guaranty or pay the applicable premiums at the
Concessionaire's expense. The Concessionaire shall reimburse
the Granting Authority for such amount within a term not to
exceed five (5) days following request for repayment,
notwithstanding the provisions of Article 13.2.5.2(e) and
Article 11.2.7, as applicable.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 51 -
<PAGE> 58
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 12
TARIFF VALUES AND PRICES FOR THE SERVICE
12.1 TARIFF REGIME
The Tariff Regime established for providing the Service is contained in Annex N.
12.1.1 AMOUNT OF THE TARIFF
Determination of the amount of the tariff required pursuant to Article 28 II of
Law 11.820 shall be based on the general principle for determining tariff values
including operation costs, maintenance costs and service amortization costs and
that permit reasonable profits for the Concessionaire due to investments made in
the context of efficient operation and administration, and full compliance with
the service quality and expansion goals involved.
12.2 TARIFF VALUES AND PRICES
The tariff values and prices applicable to the provision of the Service after
the Taking of Possession shall be those resulting from the application of the
terms of the Tariff Regime.
12.3 MODIFICATION OF TARIFF VALUES AND PRICES
12.3.1 GENERAL PRINCIPLES
Notwithstanding the provisions of the Tariff Regime, the
tariff values and prices for provision of the Service shall
apply during the entire term of the Concession, provided they
are not modified by the revision mechanisms provided for in
this article.
Modification of the Tariff Regime shall not be a means of
penalizing the Concessionaire for benefits achieved by
operation of the Service, nor for increased efficiency with
respect to the POES. Nor shall it be used to compensate the
Concessionaire for deficiencies resulting from general
business risk or to offset inefficiencies in the provision of
the Service.
Further, the Concession is based on the general principle of
business risk. Therefore, only changes in market conditions
for goods and services involved in the Concession may be
factored in, provided these arise from express decisions made
by the competent public authority, notwithstanding the
provisions of Articles 12.3.4, 12.3.5 and 12.3.6.
Similarly, modifications to current tariff values and prices
may only be used to compensate for costs resulting from the
provision of the Service, and then, as long as Contract terms
apply.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 52 -
<PAGE> 59
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The incorporation into the Service of new areas located
outside the Concession Area, according to the provisions of
Article 1.3, shall not be cause for modifications to tariff
values and prices for provision of Service in the remaining
jurisdictions of the Concession.
Any modifications shall become effective on the first day of
the billing cycle following the date on which the decree
approving the modification becomes effective.
The principles set forth in Section 30-II of the Regulatory
Framework shall govern at all times.
12.3.2 PROCEDURE
The current tariff values and prices may only be modified by a
decree issued by the Executive Branch following a report
submitted by the Regulatory Agency, as provided for in this
chapter. The Concessionaire may submit revision proposals to
the Regulatory Agency, or the latter may submit a proposal
itself directly to the Executive Branch. Furthermore, the
Executive Branch may decide to make the modification on its
own initiative, following a report issued by the Regulatory
Agency.
All modifications must be duly grounded on prior technical,
economic, financial and legal reports and analyses, and on the
evidence of the facts and actions on which the revision is
based. Furthermore, an evaluation shall be conducted
concerning the impact of such modifications on the provision
of the Service and on the Users.
As a mandatory prerequisite for consideration, proposals for
modifications submitted by the Concessionaire as well as
presentations or responses to requests for information
required by the Regulatory Agency shall be accompanied by the
corresponding Auditors' certification.
According to Article 30-II of the Regulating Framework,
proposals for revisions shall be discussed at a public hearing
prior to acceptance or rejection by the Executive Branch,
pursuant to regulations regarding such procedure issued by the
Regulatory Agency. The hearing proceedings shall not exceed
thirty (30) days. In all cases, the Executive Authority shall
have the final decision regarding the availability and scope
of the revision.
The Regulatory Agency shall rule on any proposals for
modifications brought by the Concessionaire within the time
period set forth by the Regulatory Agency's procedural
regulation.
Rulings on the availability of the reviews shall not exceed
thirty (30) days following finalization of the public hearing.
If the term for the acceptance of proposals for changes is
exceeded, the impact resulting from such delay shall be
considered in the corresponding modifications.
The Concessionaire may not submit a new request for
modification while resolution of a previous proposal is
pending.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 53 -
<PAGE> 60
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
12.3.3 AUTOMATIC ASSUMPTION AGAINST INCREASES IN TARIFF VALUES AND
PRICES
Requests for tariff values and price increases totally or
partially based on the following assumptions may be
immediately rejected by the Regulatory Agency without need for
further action:
a) Any situation or fact related to the status or
non-existence of the assets included in Annex L.
b) Differences between the actual demand for the Service
and the projections made by the Concessionaire.
c) Circumstances attributable to decisions made by the
Concessionaire, when there is no evidence of external
facts and events outside the scope of the general
business risk.
d) Errors or inaccuracies committed in preparation of
the Bid or in the proposals for modification of the
Five-Year Plan prepared by the Concessionaire
according to Article 5.4, regardless of cause.
e) Violation of the principles set forth in Article
12.3.1.
12.3.4 ORDINARY FIVE-YEAR REVIEWS
Ordinary reviews are those which may be held every five years
and are based on modifications in the goals stated in the
POES, beginning with the Five-Year Plan for the second
five-year period.
Such revisions may be discussed from the date the Five-Year
Plan is presented to the Regulatory Agency up to forty-five
(45) days prior to expiration of the respective five-year
period.
Revisions shall be based on sufficiently supported studies and
analyses of current tariff values and prices, and on their
relation to the proposed modification. Consideration shall
also be given to the impact of such modifications given the
costs of the provision of Service, including investment and
maintenance, as well as to an evaluating the need to change
current tariff values and prices.
Modifications shall be effective beginning the first billing
period of the corresponding five-year period.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 54 -
<PAGE> 61
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
12.3.5 EXTRAORDINARY REVIEWS DUE TO CHANGES IN COST INDICES
12.3.5.1 CONCEPT
Revisions shall occur when the Concessionaire or the
Regulatory Agency claims an increase or reduction in
the cost indices of the Concession in excess of three
percent (3%), in absolute value terms, pursuant to
Article 12.3.5.2.
The Concessionaire may not request extraordinary
revisions due to modifications in cost indices within
a twelve (12) months of a prior revision,
notwithstanding the accumulation of changes in the
cost indices for the purpose of calculating the
corresponding rate modification.
12.3.5.2 CALCULATION OF THE PERCENTAGE CHANGE IN COST INDICES
The following formula shall be applied when
calculating the percentage change in cost indices
necessary to justify a revision:
RPI(t) = W(tb) - W(ta) x 100
-------------
W(ta)
Where RPI(i) is the applicable percentage increase.
In the above formula, fifty percent (50%) of the W
coefficient is derived from the changes to consumer
prices in the United States of America ("Consumer
Price Index, CPI")(4) and fifty percent (50%) from
the changes to the prices of industrial commodities
(Producer Price Index, Industrial Commodities,
PPI")(5).
The "TA" subindex refers to the last month of the
previous period for which an application based on
extraordinary revision due to modified cost indices
was made (or the date of submittal of the Awardee's
Economic Offer, if it is the first revision). In
turn, "TB" refers to the last month of the period for
which the change in the cost indices is being
calculated.
For calculation purposes, the "W" coefficient for a
generic "t" period results from applying the indices
corresponding to the month of the date in which such
calculation was made. Thus:
PPI(i) CPI(i)
W(i) = 05 x + 0.5
----- ------
PPI(o) CPI(o)
- ----------
(4) "Consumer Price Index for all Urban Consumers. CPI-U, for the US City
Average for All Items, 1982-84 = 100, not seasonally adjusted", published by "US
Bureau of Labor Statistics".
(5) "Producer Price Index, Industrial Commodities, (PPI), not seasonally
adjusted", published for the "US Bureau of Labor Statistics".
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 55 -
<PAGE> 62
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
where:
PPI(o) is the reference value of the Producer Price
Index, Industrial Commodities, corresponding to the
month in which the Awardee's Economic Bid is
submitted.
CPI(o) is the reference value of the Consumer Price
Index corresponding to the month in which the
Awardee's Economic Bid is submitted.
PPI(t) is the reference value of the Producer Price
Index, Industrial Commodities, corresponding to the
month of the final date of the "T" period.
CPI(t) is the reference value of the Consumer Price
Index corresponding to the month of the final date of
the "T" period.
If a particular CPI or PPI index is not published as
described above, the latest one published shall be
applied, so long as it is representative of the
change in the corresponding category. If not, the
Regulatory Agency shall determine the Alternative
index to be applied in that situation, until the
corresponding index is published again or it is
definitively replaced, if necessary.
12.3.5.3 VERIFICATION OF THE AVAILABILITY OF A REVISION
Once it has been established that the change in the
cost indices exceeds the percentage provided for in
Article 12.3.5.1, the Regulatory Agency shall proceed
to the stage of verifying whether sufficient grounds
exist for the Regulatory Agency to perform the
review, as set forth in Article 12.3.1 and in this
article.
As a result of such verification, the Regulatory
Agency shall determine the acceptability and the
change applicable to the current tariff values and
prices.
If the study conducted by the Regulatory Agency shows
that a modification to the current tariff values and
prices is unnecessary, at least ninety (90) days must
pass, after the rejection of a request, before the
Concessionaire or the Regulatory Agency may begin a
new review process for cost changes.
However, if the study conducted by the Regulatory
Agency indicates that the modification is acceptable,
a public hearing shall be called to discuss the
existence of sufficient grounds for the modification,
as provided in Section 30-II of the Regulatory
Framework and Article 12.3.2 of the Contract. The
Regulatory Agency's findings and the public hearing
record shall be submitted to the Executive Branch in
order to determine the acceptability or
unacceptability of the modification.
If the review is available, the percentage change,
RPIt, calculated according to Article 13.3.5.2, shall
be applied to all tariff values stated in United
States Dollars.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 56 -
<PAGE> 63
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
12.3.6 EXTRAORDINARY REVIEWS DUE TO PREVAILING CAUSES
12.3.6.1 GROUNDS
Extraordinary reviews shall be available in the
following situations:
a) Substantial and unexpected change of Water
and/or Sewer quality standards, amounting to
a substantial change in the conditions of
the provision of Service, which results in
immediate prejudice to the Concession.
b) Creation, substitution or modification of
applicable taxes or rates, excluding income
tax and value added tax, or the taxes that
may replace these in the future.
c) Enactment or issuance of environmental and
natural resource protection rules, or
amendment of current analogous provisions
that directly affects the provision of
Service and causes immediate damage to the
Concession.
d) Substantial and unexpected changes in the
conditions for the provision of Service, as
provided for in Section 30-II of the
Regulatory Framework.
e) Justified changes in the ratio between
investments in assets and operating costs of
Service, as stated in Section 30-II of the
Regulatory Framework.
f) Upon the proposal of an alternative regime
that allows for increases in efficiency and
improves the attainment of the principles
contained in Section 28-II of the Regulatory
Framework.
g) Upon a change, in absolute values, exceeding
ten percent (10%) between: (i) the percent
change in the RPI cost indices, calculated
according to Article 12.3.5.2, unless the
calculation corresponds to the same period
of RPI-LC determination below; and (ii) the
percentage variation in the local cost
indices, as adjusted for variations in the
exchange rate (RPI-LC), determined according
to the following method:
W - L(tb) C(ta)
RPI - LC(t) = [--------- X -----] X 100 =
W - L(ta) C(tb)
In the above formula, the W-L ratio is
calculated based on fifty percent (50%) of
the changes recorded in the non-Agricultural
Wholesale General Price Index published by
the INDEC, and fifty percent (50%) of the
changes recorded in the Consumer Price Index
published by the INDEC. The "C" parameter is
equal to the official United States Dollar
to Peso exchange rate in the Argentine
Republic.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 57 -
<PAGE> 64
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The "TA" subindex corresponds to the last
month of the previous period for which there
was an application for an extraordinary
review pursuant to 12.3.6.1(g) (or the date
on which the Awardee's Economic Offer is
submitted, if it is a first revision). In
turn, "TB" corresponds to the last month in
the period for which the verification
discussed in this article is performed.
For purposes of calculation, the "W-L"
coefficient for a generic "t" period is
produced by applying the indices
corresponding to the month in which the
calculation is performed. In this way:
PPI - L(t) CPI - L(t)
W - L(t) = 0.5 X ---------- + 0.5 X ----------
PPI - L(o) CPI - L(o)
where:
PPI-L(o) is the reference value of the
Non-Agricultural Wholesale Price Level Index
published by the INDEC, for the month when
the Awardee's Economic Bid Offer was
submitted.
CPI-L(o) is the reference value of the
Consumer Price Index published by the INDEC
for the month when the Awardee's Economic
Bid Offer was submitted.
PPI-L(t) is the reference value of the
Non-Agricultural Wholesale Price Level Index
published by the INDEC, for the month of the
final date of period "t".
CPI-L(t) is the reference value of the
Consumer Price Index published by the INDEC
and corresponding to the month of the final
date of period "t".
If a particular CPI-L index or a PPI-L
index, as described above were not
published, the latest published figures
shall apply as long as it represents the
change in the corresponding category.
Otherwise, the Regulatory Agency shall
determine the alternative index to be
applied in that instance, until the new
index is published again or until it is
finally replaced, if necessary.
12.3.6.2 AUTHORIZATION
Subject to the grounds set forth in Article 12.3.6.1,
the Regulatory Agency, either on its own initiative
or at the request of the Concessionaire, shall
authorize in a duly justified manner, the performance
of a special general revision of the tariff values
and prices currently in effect.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 58 -
<PAGE> 65
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Once the Regulatory Agency has authorized the
revision, the Concessionaire shall submit detailed
research on the effect of the change on current rates
and prices, subject to the time periods and
procedures established by the Regulatory Agency.
It is hereby established that authorization of a
general extraordinary revision, or the submission of
the study mentioned above by the Concessionaire, does
not imply that the Regulatory Agency shall rule in
favor of modifying the current rates and prices.
The content of the basic study shall, at a minimum,
include:
a) Supported research and analysis of current
rates and prices.
b) Analysis of the Concession's entire cost
structure (excluding amortization and
deferred accounts) that takes into account
the costs included in the latest Five-Year
Plan and the impact of the change alleged,
and clearly states the side effects of the
change.
c) Determination of the impact of the
identified changes in costs on the
Concession's entire cost structure, and
which, in the judgment of the Regulatory
Agency, should be considered, taking into
account the principles established in
Article 12.3.1, the absence of one or more
grounds for rejection provided for in
Article 12.3.3, and the managerial indices
and goals for expansion, maintenance and
renovation of networks, and other
efficiency-related conditions included under
the Contract's POES.
d) Analysis of revenues obtained by the
Concessionaire, considering the efficiency
of collection procedures against the
projections contained in the Five-Year Plan.
e) Determination of the requested changes, if
applicable,- which shall be of a general and
uniform nature to current rates and prices.
Changes of the rates and prices may only compensate
for costs resulting from the provision of Service
according to the quality standards required, adjusted
to the goals committed to for each period. Under no
circumstances shall weighted benefits for the
Concessionaire be compensated.
If the study indicates the availability of a change
of current tariffs and prices which shall be of a
general and uniform nature- equal to or less than
three percent (3%), the change shall not be approved.
In this event, the Concessionaire or the Regulatory
Agency must wait at least ninety (90) days following
the denial of the change, before requesting
authorization of an Extraordinary Revision based on
the same grounds.
Otherwise, if the study indicates the acceptability
of a change greater than three percent (3%), a public
hearing shall be called in order to discuss the
existence of grounds to authorize the change, as
provided in Section 30-II of the Regulatory Framework
and Article 12.3.2 of the Contract. The decision
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 59 -
<PAGE> 66
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
of the Regulatory Agency and a record of the public
hearing shall be submitted to the Executive Authority
for a ruling on the acceptability of the revision.
12.4 CHANGES TO THE TARIFF REGIME
12.4.1 GENERAL PRINCIPLES
The Tariff Regime may be modified following the third full
year of the Concession.
The Executive Authority shall decide on modifications to the
Tariff Regime. Changes to the Tariff Regime may be suggested
by the Concessionaire to the Regulatory Agency or directly by
the latter to the Executive Authority. Similarly, the
Executive Authority may directly make modifications on its own
initiative, following an opinion issued by the Regulatory
Agency. In all cases, the goal is to comply with the
provisions of Section 28-II of the Regulatory Framework, and,
as applicable, consideration shall be given to necessary
changes to the Concession's rates and prices, subject to the
provisions of Article 12.3. The Regulatory Agency shall be a
party to all proceedings aimed at modifying the Tariff Regime
and shall issue an appropriately supported opinion on the
matter.
Under no circumstances may a modification of the Tariff Regime
alter the Concessionaire's economic-financial balance.
Particularly in the event of changes made by the Granting
Authority to pursue social objectives, the Concessionaire
shall be compensated for said changes.
Any request by the Concessionaire to modify the Tariff Regime
shall state and provide sufficient evidence that the change
constitutes the best available method to comply with each and
every principles established by Section 28-II of the
Regulatory Framework.
The proposal for modification and the reports presented by the
Concessionaire shall be certified by the auditors when the
Regulatory Agency so requires it.
12.4.2 GROUNDS FOR MODIFICATION AT THE CONCESSIONAIRE'S REQUEST
The Tariff Regime may be modified at the Concessionaire's
request only if the Concessionaire is able to prove that:
a) It has not been able to balance the supply and demand
of the Service due to the current Tariff Regime,
despite having taken all actions to achieve a balance
and having acted efficiently.
b) The current tariff regime does not encourage rational
use of the assets and resources used in providing the
Service, or it fails to allow the attainment of
healthiness objectives directly related to the
service.
c) Significant reduction in operating costs will be
achieved through the modification of the current
Tariff Regime, with the resulting benefits to the
Users.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 60 -
<PAGE> 67
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 13
LIABILITY AND SANCTIONS
13.1 LIABILITY OF THE CONCESSIONAIRE
The Concessionaire shall assume the Concession at its own legal, technical,
economic and financial risk, and it shall be liable to the Province, to Users
and third parties for complying with the obligations and necessary requirements
to provide the Service following the Taking of Possession. Under no
circumstances shall the Province, the Regulatory Agency or OSBA be responsible
to Users and to third parties for the obligations assumed by the Concessionaire.
The Concessionaire shall take responsibility for any claim or legal proceedings
against the Province, the Granting Authority, the Regulatory Agency or OSBA, in
which a claim is made for damages caused by acts and facts arising after the
Taking of Possession, by virtue of the State's responsibility, based on the
power to provide, regulate and control the Service being provided by the
Concessionaire, to the extent that such damages are due to the Concessionaire's
noncompliance with its obligations under the Contract. Articles 7.10 and 16.3
shall apply.
13.2 SANCTIONS
Notwithstanding the provisions of Chapter 14, if the Concessionaire fails to
comply with its obligations it shall be sanctioned by warnings, fines and
injunctions, according to the provisions established below:
13.2.1 GENERAL PRINCIPLES
13.2.1.1 The Regulatory Agency shall impose warnings and fines
whereas the Executive Authority shall order
injunctive relief.
13.2.1.2 Infractions shall be of a formal nature and shall be
applied according to Concessionaire's fraud or fault,
and that of the persons under its responsibility,
unless otherwise expressly stated.
13.2.1.3 Application of sanctions shall not exempt the
Concessionaire from fulfilling the underlying
obligation from which the sanction arose. To this
effect, the judgment imposing the sanction shall
require the Concessionaire to comply with the
respective obligation, within a reasonably
established time period, under threat of the possible
application of new sanctions.
13.2.1.4 Second offenses are those where the infraction
committed is similar to a prior infraction, upon
which a final ruling has been made.
13.2.1.5 Along with the penalties established by the Tariff
Regime, sanctions shall be applied independently of
the Concessionaire's obligation to refund or
compensate for tariffs unduly collected from Users in
compensation to the Province, Users or third parties
for any damages
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 61 -
<PAGE> 68
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
resulting from the infraction, and possible
rescission due to fault by the Concessionaire, as
provided in Chapter 14.
13.2.2 PROCEDURE
The application of sanctions shall be done in accordance with
the procedures issued by the Regulatory Agency, in accordance
with the Regulatory Framework and the Contract. Legal
administrative remedies, claims or challenges or judicial
proceedings against an administrative act imposing a sanction
shall not suspend the effects of the decision.
13.2.3 INTERPRETIVE GUIDELINES
Severity of the sanctions imposed shall be weighed according
to the guidelines established below. With respect to fines,
the provisions of Article 13.2.5.1 shall apply.
a) The seriousness and reoccurrence of the infraction.
b) The difficulties or damages caused by the infraction
to Service, Users or third parties.
c) The degree to which the public interest is affected.
d) The existence or absence of negligence, fault or
fraud by the Concessionaire.
e) Diligence shown by the Concessionaire in correcting
the effects of the alleged acts or omissions.
f) Termination of the infraction at the time the
Concessionaire presents its defense, in which case
the Regulatory Agency may weigh said circumstance in
order to reduce the applicable sanction. As regards
fines, the provisions of Article 13.2.5.6 shall
apply.
13.2.4 WARNINGS
Any violation by the Concessionaire of the provisions of the
Regulatory Framework, the Contract, rules issued by the
Regulatory Agency or other provisions issued regarding the
Service, shall be sanctioned by a warning, provided no
stronger sanction is applicable. The Regulatory Agency shall
issue warnings.
13.2.5 FINES
13.2.5.1 GENERAL CONSIDERATIONS
Fines shall be expressed in United States Dollars and
shall be accounted for in an annual fund consisting
of the amounts of all fines the Regulatory Agency
imposes on the Concessionaire during the course of
each Concession year, except for fines applied due to
noncompliance with the POES.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 62 -
<PAGE> 69
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The cumulative amount of the fund of fines shall be
divided by the total number of Users receiving the
Service and shall be applied as a discount from the
tariff in effect on the first invoice immediately
following the communication sent by the Regulatory
Agency to the Concessionaire with instructions on the
applicable discount.
In the event of noncompliance by the Concessionaire,
the amount of the omitted discount shall be
automatically doubled and shall, moreover, accrue
daily interest equal to the rate expressed in the
Consumer Price Index, CPI-U(6) on the total amount.
Moreover, the delay shall be considered a serious
violation.
The Regulatory Agency may require that the total
amount owed by the Concessionaire, be discounted from
the next invoice sent to Users, or it may execute the
Contract performance guaranty provided in Article
11.1 and/or, if applicable, the operating guaranty
provided for in Article 11.2. The amount to be
executed shall be equivalent to the respective fine,
including applicable additional amounts based on the
provisions of the above paragraph. In these
situations, the amounts collected shall be reimbursed
to Users, according to the procedure decided upon by
the Regulatory Agency, at the expense of the
Concessionaire.
The discount to be applied on invoices issued to the
Users and the grounds for the discount shall be
clearly stated on each invoice. The discount and the
calculation of the respective Peso amount shall be
based on the conversion ratio provided in National
Law 23,928, or the legal regime replacing it in the
future.
13.2.5.2 VIOLATIONS
The amounts of the fines provided for in this article
shall be modified in proportion with changes in
tariffs and prices.
For the purpose of this article, serious consequences
shall be understood as those, which, due to their
nature and duration, jeopardize the regularity,
continuity or quality of the provision of the
Service. For determination of the types of Service
interruptions, see the applicable provisions
contained in Chapter 3.
(a) The following violations shall be subject to a fine
of ten thousand United States Dollars (US$ 10,000).
o The reoccurrence, within a one (1) year
period, of a violation previously punished
by a warning.
- ------------
(6) "Consumer Price Index by all Urban Consumers, CPI-U, for the US City Average
for All Items, 1982-84=100, not seasonally adjusted, published by the "US Bureau
of Labor Statistics."
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 63 -
<PAGE> 70
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
o Failure to give twenty-four (24) hour notice
in the event of a scheduled third order
Service interruption.
o Any unexpected third order Service
interruption in the supply of Potable Water,
for a period of less than twelve (12) hours.
o Failure to provide the Service of an
emergency supply of Potable Water according
to the terms of Article 3.8, within eighteen
(18) hours following a fourth order
interruption.
o Unjustified delay in the resolution of
problems related to residential Effluent
discharge.
o Recurrence of an inaccurate bill to a User,
after a duly filed claim by the User of such
inaccuracy.
o Any noncompliance with the provisions of the
User Regulations provided for in Section
13-II of the Regulatory Framework.
o Non-compliance with the provisions of
Article 4.2.
b) The following Violations shall be subject to a fine
of twenty thousand United States Dollars (US$20,000).
o Repetition, within a one (1) year period, of
a previously sanctioned violation described
in Clause (a) of this section.
o Failure to give twenty-four (24) hour notice
in the event of a scheduled second order
Service interruption.
o Any unexpected second order Service
interruption in the supply of Potable Water,
of less than twelve (12) hours.
o Failure to provide an emergency supply of
Potable Water according to the provisions of
Article 3.8, within eighteen (18) hours
following a third order interruption.
o Any unexpected third order Service
interruption in the supply of Potable Water,
extending for a period longer than twelve
(12) hours and shorter than forty-eight (48)
hours
o Receipt of sludge and other contaminating
residues from Industrial Sewerage dumped in
the collection and sewage network.
(c) The following violations shall be subject to a fine
of fifty thousand United States Dollars (US$50,000).
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 64 -
<PAGE> 71
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
o Repetition, within a one (1) year period, of
a previously sanctioned violation described
under Clause (b) of this article.
o Failure to give twenty-four (24) hours
notice in the event of a scheduled first
order Service interruption.
o Any unexpected first order Service
interruption in the supply of Potable Water,
extending for a period of less than twelve
(12) hours.
o Failure to provide an emergency supply of
Potable Water according to the terms of
Article 3.8, within eighteen (18) hours
following a second order interruption.
o Any unexpected second order Service
interruption in the supply of Potable Water,
extending for a period longer (12) hours and
shorter than forty-eight (48) hours.
o Any unexpected third order Service
interruption of in the supply of Potable
Water, greater than forty-eight (48) hours.
o Any unexpected third order Service
interruption in the provision of Sewage
Services that does not have serious
consequences.
o Any dumping of Effluents from a treatment
plant, that does not comply with acceptable
quality levels, without serious
consequences.
o Failure to inform the Regulatory Agency of
an accident resulting in contamination
affecting or that could affect Water quality
for the provision of the Service.
o Any omission related to process controls for
Raw Water quality, both during and after
treatment, incurs no consequences.
o Noncompliance with obligations to provide
information set forth Articles 7.7 and
7.9.1.
(d) The following violations shall be subject to a fine
of one hundred thousand United States Dollars
(US$100,000).
o Repetition, within a one (1) year period, of
a previously punished violation described in
Clause c) of this section.
o Failure to provide an emergency supply of
Potable Water according to the terms of
Article 3.8, within eighteen (18) hours
following a first order interruption.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 65 -
<PAGE> 72
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
o Any unexpected first order Service
interruption in the supply of Potable Water,
extending for a period longer than twelve
(12) hours and shorter than forty-eight (48)
hours
o Any unexpected second order Service
interruption in the supply of Potable Water,
which extends for a period longer than
forty-eight (48) hours.
o Any noncompliance with acceptable Potable
Water quality parameters and failure to
adopt corrective measures regarding such
anomaly in a timely manner and in the proper
form, but which does not result in serious
consequences.
o Any unexpected second order interruption in
Sewer Services, without serious
consequences.
o An incomplete or delayed submission of
proposals for Five-Year Plans according to
Article 5.3.
o An incomplete or delayed submission of the
studies and reports contained in Chapter 6.
o Apparent reticence in the provision of
information required by the Regulatory
Agency or by Users, within the scope of
their respective powers and within a proper
period of time.
o Irregularities experienced in the processing
of information pertaining to amounts owed by
Users for the Service which is requested by
a public notary in the process of the
creation or transfer of real property rights
to real estate served.
o Failure to pay the amount allocated to the
Regulatory Agency as a maintenance fee, as
provided for in Section 30-I of the
Regulatory Framework, regardless of actual
collection from users.
o Noncompliance with the provisions of Article
10.2 or with the essential provisions
included in the Concessionaire's Contracting
Regulations.
o Failure to adopt, in due time and manner,
measures designed to prevent Raw Water
contamination from reaching the
potabilization facilities and/or the
distribution network.
o Unjustified noncompliance with the Service
quality indicators listed in Annexes C and
D.
(e) The following violations shall be subject to a fine
of two hundred fifty thousand United States Dollars
(US$250,000).
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 66 -
<PAGE> 73
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
o Repetition, within a one (1) year period, of
a previously sanctioned violation contained
in Clause d) of this section.
o Any unexpected first order Service
interruption in the supply of Potable Water
lasting more than forty-eight (48) hours.
o Any unexpected first order interruption in
Sewer Services, without serious
consequences.
o Any Sewer Services interruption, with
serious consequences.
o Any dumping of Effluents from a treatment
plant that does not comply with acceptable
quality levels but which does not result in
serious consequences.
o Any change in tariffs and prices for the
Service in violation of the Contract or the
Tariff Regime.
o Any attempt to dispose of Service Related
Assets, or of funds received as a result of
such disposition, in violation of the
procedures set forth in Chapter 7.
o Any noncompliance with accepted Potable
Water quality parameters, with serious
consequences, assessed on the basis of the
hazard created to the health of the general
population.
o Failure to maintain the insurance policies
required in Article 11.3.
o Unjustified retention of sums collected for
the Regulatory Agency maintenance fee, as
set forth in Section 30-I of the Regulatory
Framework.
13.2.5.3 DEFAULT OR SECOND OFFENSE
In the event of continued non-compliance the amount
of the fines set forth in Article 13.2.5.2 shall
increase automatically at the monthly cumulative rate
of ten percent (10%) for the duration of the
non-compliance. Similarly, should a previously
sanctioned violation be repeated within two (2) years
or should noncompliance result in serious social
consequences, the amounts of the fines may rise to
three (3) times their original amount.
13.2.5.4 UNFORESEEN EVENTS
Notwithstanding the provisions of Article 13.2.4, the
Regulatory Agency may impose fines for violations of
the provisions of the
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 67 -
<PAGE> 74
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
Regulatory Framework or the Contract that are not
specifically subject to sanction.
In this case, the amount of the fine shall be
determined according to the guidelines established in
Article 13.2.3.
In such cases, the Regulatory Agency shall give
notice of the actions amounting to noncompliance and
shall instruct the Concessionaire to undertake its
obligation within a time period set for said purpose,
based on the nature and circumstances of the
particular case. The Concessionaire's non-compliance
shall be subject to the application of the sanction.
13.2.5.5 DELAYS IN THE POES
Delays in complying with the POES shall be punished
according to the following provisions:
a) A fine of one hundred thousand United States
Dollars (US$100,000) shall be applied for
non-substantial delays in complying with an
approved Service objective or committed
project. Non-substantial delays are those
that are neither justified nor accepted by
the Regulatory Agency, and which represent
less than ten percent (10%) of the progress
scheduled for a one year period with respect
to a specific Service-related goal or of
progress scheduled for Service related works
for the same period.
b) A fine of up to one million United States
Dollars (US$1,000,000) shall be applied,
calculated according to the provisions of
Article 13.2.3, for substantial delays in
completing approved Service goals or
committed projects. Substantial delays are
those that are neither justified nor
accepted by the Regulatory Agency, equal to
or exceeding ten percent (10%) of the
progress scheduled for a one (1) year period
for a specific Service goal, or of progress
scheduled for Service related works during
the same period.
c) The fines shall be applied at the discretion
of the Regulatory Agency, and shall reflect
all the delays recorded in attaining
approved Service goals, and in completing
committed projects. The Regulatory Agency
shall take into account the degree of
compliance with the POES and with the
Service goals, based on the annual report
cited in Article 6.5.1.
Together with the application of the fines,
the Regulatory Agency shall instruct the
Concessionaire to cure the delay, and shall
establish a reasonable period to that
effect. Should the Concessionaire fail to
comply with the instructions given by the
Regulatory Agency, new fines shall be
applied successively to
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 68 -
<PAGE> 75
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
each case and the amount of such fines shall
always double the amount of the previous
fine. Another time period shall be
established for compliance.
13.2.5.6 FINE REDUCTION
The following assumptions will allow the Regulatory
Agency, in its discretion, to reduce fines.
a) Noncompliance due to an Act of God or force
majeure, not notified within the term
provided in Article 13.3.
b) If, at the time the Concessionaire presents
its defense, it can prove the violation has
ceased. Such reduction shall be granted at
the discretion of the Regulatory Agency, and
shall not apply to non-compliance resulting
in serious and irreparable prejudice or
losses or with serious social repercussions.
Nor shall the reduction apply when there are
similar, prior events of noncompliance. The
cases considered in Article 13.2.5.2, Clause
e), and 13.2.5.5 are not subject to
reduction, unless a justified decision is
issued to the contrary.
During the first twelve (12) months
following the Taking of Possession, the
Regulatory Agency must apply this reduction
every time the Concessionaire cures or
terminates the noncompliance within the time
periods established by the Regulatory
Agency.
Furthermore, the Regulatory Agency shall
exempt the Concessionaire from penalties
applicable in the case of violations
contained in Article 13.2.5.2. during the
first six (6) months following the Taking of
Possession. For the purposes of such
exemption, the Regulatory Agency shall
assess the nature of the non-compliance,
considering the diligence of the
Concessionaire.
13.2.6 INJUNCTIVE RELIEF
In cases listed in Section 13-II, Clause o), of the Regulatory
Framework, the Regulatory Agency may solicit the Executive
Authority to seek injunctive relief against the
Concessionaire.
This relief may be sought against all of the Concessionaire's
assets and activities, or it may be limited to specific
premises or an area of its activities, strictly as proven
necessary.
At all times, rescission of the Contract due to default by the
Concessionaire according to the provisions set forth in
Chapter 14 shall be available.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 69 -
<PAGE> 76
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
13.2.7 PUBLICATION
The Regulatory Agency or the Granting Authority shall arrange
for the publication of the applied penalties.
13.3 ACT OF GOD OR FORCE MAJEURE
The Concessionaire's failure to fulfill its obligations due to an Act of God or
force majeure shall exempt it from any penalty, provided the Concessionaire
reports the circumstances to the Regulatory Agency within five (5) days after
they occur or until the Concessionaire learns of them.
Similarly, when duly reported to the Regulatory Agency within the time periods
provided, such circumstances shall be taken into account in order to prevent
damage to the Concessionaire. To this effect, and independently of the
Concessionaire's obligation to purchase and maintain the insurance provided for
in Article 11.3, the POES may be amended in order to ensure equitable
distribution of the consequences due to an act of God or force majeure,
according to the principle of shared sacrifice between the Concessionaire and
the Granting Authority.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 70 -
<PAGE> 77
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 14
TERMINATION OF THE CONCESSION
14.1 GROUNDS FOR TERMINATION
The Concession may be terminated due to expiration of the term of the Contract,
an Act of God or force majeure, fault of the Concessionaire, fault of the
Granting Authority or repossession of the Service by the Granting Authority.
14.1.1 EXPIRATION OF THE TERM
The Concession shall terminate upon expiration of the
contractual term set forth in Article 1.7, or upon additional
terms resulting from extensions governed by the same article.
14.1.2 RECISSION DUE TO ACTS OF GOD OR FORCE MAJEURE
The Granting Authority may terminate the Contract and the
Concessionaire may request rescission of it if, due to an Act
of God or force majeure, it becomes impossible to comply with
any of the essential obligations assumed under the Contract.
Specifically, as set forth in Section 52-II of the Regulatory
Framework, the Concessionaire may invoke recission due to an
Act of God or force majeure if these events alter or otherwise
impair the regular performance of the contract.
In the event of the above, the affected party shall
communicate and evidence such occurrence, its consequences and
the cause-effect relationship between the occurrence and the
impossibility alleged within ten (10) days either of the event
or after the affected party learns of it. The Concessionaire
shall notify the Regulatory Agency.
Within thirty (30) days following such communication, the
affected party shall propose to the other party either the
necessary measures to ensure regular performance of the
Contract, or its termination. Contract termination may be
proposed only in the event that no other viable options to
normalize the situation are available.
If the affected party fails to give notice of its intention to
terminate the Contract within the time period stated above, it
shall lose the future right to do so for the same cause. In
all cases, the other party may oppose the termination based on
evidence of the nonexistence of an Act of God or force majeure
event.
At all times, any of the parties may offer renegotiation of
the Contract where both parties would equally assume the
consequences of the Act of God or force majeure event.
The Regulatory Agency shall participate in the termination
proceeding herein provided, and it shall submit its
appropriately supported conclusions to the Granting Authority.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 71 -
<PAGE> 78
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
14.1.3 RECISSION DUE TO FAULT OF THE CONCESSIONAIRE
The Granting Authority may rescind the Contract due to fault
of the Concessionaire in the following circumstances:
a) Serious noncompliance with legal, contractual or
regulatory provisions applicable to the Service.
b) Repeated and unjustified delays in complying with the
coverage goals set forth in the POES.
c) Resignation or abandonment of the Service by the
Concessionaire.
d) Failure to Take Possession of the Service on the date
stated in Article 15.1.1, due to causes attributable
to the Concessionaire.
e) Noncompliance with contractual, regulatory and
statutory provisions referred to in the ESOP,
according to the provisions contained in Article 2.8.
f) Failure to issue or pay the amounts corresponding to
the profit sharing bonuses pursuant to Article 2.9.
g) Lease, sale, assignment, transfer, pledge or
engagement in other acts of disposition with respect
to the Service Related Assets, in violation of the
provisions of Chapter 7, or failure of the
Concessionaire to apply funds it received from such
acts for the benefit of the Service.
h) Repeated violations of the User regulations set forth
in Article 13-II of the Regulatory Framework.
i) Repeatedly withholding or concealing information from
the Regulatory Agency.
j) Modification to the Concessionaire's bylaws without
the Regulatory Agency's prior authorization, pursuant
to Article 2.7.
k) Failure to constitute, renew or reconstitute the
Contract guaranty according to the provisions
contained in Article 11.1, and the Operator's
guaranty provided in Article 11.2.
l) Failure to maintain in effect, the insurance
established in Article 11.3.
m) Any noncompliance, on the part of the Concessionaire,
with legal, contractual or regulatory provisions,
resulting in a final judgment for committing a crime
against the public sector that resulted in serious
damage to the Service, the Province or the Regulatory
Agency.
n) Bankruptcy proceedings filed by the Concessionaire,
as well as a final judgment of bankruptcy of the
Concessionaire. Notwithstanding the above, the
Granting Authority may decide to continue the
Concession when the circumstances of the insolvency
proceedings or the bankruptcy does not affect
compliance with the
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 72 -
<PAGE> 79
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
substantial obligations arising from the Contract,
provided the presiding judge allows its continuation.
n') The Concessionaire's dissolution and winding-up.
o) Noncompliance with the provisions of Articles 2.3.2
and 2.3.3.
p) Modification of the Operator's control mechanisms
regarding the technical management of the Concession
as provided in Section 3.3.2 of the Terms of
Reference, without the Granting Authority's prior
authorization.
q) Noncompliance with any of the obligations established
in Numeral 3.3.4 of the Terms of Reference to certify
the operator on the basis of a relationship with a
company it controls, is controlled by or under common
control with. Particularly, this includes failure to
maintain the accountability of the situation in the
situations set forth in the above referenced section
of the Terms of Reference without the prior
authorization of the Granting Authority. At any time,
the Regulatory Agency may require the Concessionaire
or the Operator to evidence the existence of the
referenced control situations.
r) Repeated violation of the contracting regulations
according to Article 10.2.
s) Total or partial subconcession of the Service, in
violation of Article 10.4.
t) Injunctive relief binding the Concessionaire,
pursuant to Article 13.2.6.
The interpretive guidelines set forth in Article 13.2.3 shall
be used to evaluate the existence of the above grounds.
In the event that the noncompliance or the violation may be
cured, the Regulatory Agency shall instruct the Concessionaire
to correct its actions, cure the breach in any suitable way
and submit the corresponding response in writing, within a
term established according to the circumstances, the nature of
the violation and in the view of the public interest, which
may not be less than thirty (30) days. Following expiration of
the term granted to the Concessionaire, provided the violation
or noncompliance has been evidenced, the Regulatory Agency
shall communicate this circumstance to the Granting Authority,
which may terminate the Contract for fault of the
Concessionaire.
Notwithstanding the above, the Regulatory Agency shall
participate in the termination proceedings and shall submit
its justified conclusions to the Granting Authority.
14.1.4 RECISSION DUE TO FAULT OF THE GRANTING AUTHORITY
The Concessionaire may seek recission of the Contract due to
fault of the Granting Authority in the event that a rule,
action, fact or omission by the Granting Authority results in
serious noncompliance with its obligations arising out of the
Contract, and which reasonably impairs the performance of the
Contract.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 73 -
<PAGE> 80
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
In this case, the Concessionaire shall, within thirty (30)
days of the occurrence of the fact or of becoming aware of the
fact, demand that the Granting Authority cease the
noncompliance, and shall grant a reasonable cure period of no
less than thirty (30) days. If the Granting Authority fails to
comply with its obligations, it shall declare the termination
of the contract.
14.1.5 REPOSSESSION
The Contract shall also be terminated upon the decision of the
Granting Authority to repossess the Concession by means of an
administrative act, founded on sufficient grounds and duly
evidencing the public interest that terminates the Concession
and repossesses the provision of the Service. Repossession
shall apply under absolutely exceptional circumstances, after
the prior intervention of the Regulatory Agency, always
provided that there is sufficient evidence as to the grounds
supporting the decision and that the public interest is
served.
14.2. EFFECT OF TERMINATION
The termination of the Concession shall give rise to the monetary rights and
duties provided in each case below:
14.2.1 NO-FAULT TERMINATION
In the event of a termination due to expiration of the
contractual term, or due to an Act of God or force majeure,
the Granting Authority shall return the Contract and Operating
guaranties to the Concessionaire (Articles 11.1 and 11.2) and
shall pay the amounts due for supplies received from the
Concessionaire (Article 7.9.2).
Upon expiration of the term, the Granting Authority shall pay
the Concessionaire the non-amortized value of the investments
made and the Service Related Assets acquired or constructed by
the Concessionaire, according to the terms of Article 7.8,
Paragraph 4, and according to the last audited balance sheet.
Upon termination due to an Act of God or force majeure, the
Granting Authority shall pay the Concessionaire the
non-amortized value of the investments made and the Service
Related Assets acquired or constructed by the Concessionaire,
according to Article 7.8 and the last audited balance sheet.
Termination shall not give rise to any other claim for
compensation between the Parties.
14.2.2 TERMINATION DUE TO FAULT OF THE CONCESSIONAIRE
Upon termination due to fault of the Concessionaire, the
Granting Authority may fully execute the Contract guaranty
according to the provisions contained in Article 11.1. It may
also execute the operating guaranty contained in Article 11.2,
provided there is a case of non-compliance covered by such
guaranty.
Similarly, the Concessionaire shall compensate the Granting
Authority for all damages caused to it and the Service, due to
the breach, so long as these are not otherwise covered by
execution of the guaranties mentioned in the paragraph above.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 74 -
<PAGE> 81
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The Granting Authority shall pay the Concessionaire for the
non-amortized value of the investments made and Service
Related Assets acquired or constructed by the Concessionaire,
according to Article 7.8 and the latest audited balance sheet.
14.2.3 TERMINATION DUE TO FAULT OF THE GRANTING AUTHORITY
Upon termination due to fault of the Granting Authority, the
Contract guaranty and operating guaranty shall be returned
(Articles 11.1 and 11.2) and the Concessionaire refunded for
the non-amortized value of the investments made and the
Service Related Assets acquired or constructed by the
Concessionaire, according to Article 7.8 and the last audited
balance sheet. The Granting Authority shall also pay the
amounts due for supplies received from the Concessionaire
pursuant to Article 7.9.2.
Similarly, the Granting Authority shall compensate the
Concessionaire for damages caused by the termination provided
they are duly evidenced. Compensation shall include
compensatory damages and loss profits. However, lost profits
to be paid shall never exceed the amount of the actual and
realized profits earned by the Concessionaire over the five
(5) fiscal years prior to the termination, or during the
remaining fiscal years before expiration of the term of the
concession, whichever is less.
14.2.4 REPOSSESSION
The provisions of Article 14.2.3 govern repossession.
14.3 RECEIPT OF THE SERVICE BY THE GRANTING AUTHORITY
Upon termination of the contract, the Granting Authority shall receive the
Service, the assets assigned to its provision (Article 7.9.2) and the
Concessionaire's personnel to be transferred to the Granting Authority or to the
public or private entity designated by the latter (Article 8.7). Articles 9.6
and 10.5 also apply.
For the purposes of determining the Concessionaire's liability as provided for
in this article and in Section 1646 of the Civil Code, the Concessionaire shall
be considered the constructor of all Service Related Assets built, improved,
rehabilitated or remodeled by it during the Concession period. Defects in the
works shall include all omissions and non-fulfillment in the operation,
maintenance or construction of the assets, pursuant to the Concessionaire's
obligation under the Contract and POES.
14.3.1 PROVISIONAL ACCEPTANCE
Provisional Acceptance of the Service, the assets related to its
provision and the corresponding personnel shall be executed at the
place, date and time stated by the Granting Authority, giving at least
five (5) days notice to the Concessionaire.
A provisional acceptance deed is to be executed and signed by the
Concessionaire and the competent public authority. Should the
Concessionaire fail to appear, the deed shall be executed with the sole
intervention of the competent authority, which may request the aid of
the public authority if necessary to permit the return of the Service.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 75 -
<PAGE> 82
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The legal effects of provisional acceptance of the Service are as
follows:
a) The operation of the Service, all assets related to
its provision, the corresponding personnel and the
contracts entered into by the Concessionaire shall be
transferred to the Granting Authority or to whomever
it designates pursuant to the provisions contained
Articles 7.9.2, 8.7 and 10.5. Thereinafter, all of
the Concessionaire's rights and powers related to the
provision of the Service, administration and
disposition of assets and management of the personnel
transferred, as well as the contracts executed by the
Concessionaire, shall cease as a matter of law.
b) Three (3) months following the date of provisional
acceptance, the Concessionaire's liability for
apparent defects in the Service and for the assets
shall expire, if the Granting Authority has not
presented a claim, with the exception of
Concessionaire's responsibility arising from Section
1646 of the Civil Code.
14.3.2 FINAL ACCEPTANCE
One (1) year following provisional acceptance, final
acceptance shall enter into effect as a matter of law.
As the sole consequence of final acceptance, the
Concessionaire's liability lapses for hidden defects in the
Service and the assets not noted during said period, with the
exception of the liability arising from the provisions of
Section 1646 of the Civil code.
14.4 PROCEDURE FOR TERMINATION OF THE CONCESSION
14.4.1 TERMINATION DUE TO EXPIRATION OF THE TERM
Prior to a termination due to the expiration of the term of
the Concession, the Regulatory Agency shall state the term
allowed for the revision of the facilities and other Service
Related Assets and the corresponding inventory control.
Provisional acceptance of the Service shall take place on the
date stated for this act in accordance to the provisions set
forth in Article 14.3.1.
In addition, the Regulatory Agency shall perform the final
settlement of the Concession's credits and debts within the
time frame established by the procedural regulations, which
shall run from the moment of provisional acceptance of the
Service. Such settlement shall be communicated to the
Concessionaire and shall be deemed approved unless challenged
within twenty (20) days. Otherwise, the Concessionaire may
challenge the settlement before the Granting Authority or else
file the corresponding judicial proceedings.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 76 -
<PAGE> 83
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
14.4.2 TERMINATION DUE TO AN ACT OF GOD OR FORCE MAJEURE
The procedures established in Article 14.4.1 shall apply in
the event of a termination due to an Act of God or a force
majeure event.
14.4.3 TERMINATION DUE TO FAULT OF THE CONCESSIONAIRE
Upon notice of the Granting Authority's decree that terminates
the Contract, the Concessionaire shall surrender the Service,
the assets related its provision and the personnel to be
transferred, and it shall appear at the act for the execution
of the provisional acceptance decree. Should the
Concessionaire fail to appear, the Regulatory Agency or the
person designated by the Granting Authority may take
possession of the Service, the property and the personnel,
with the assistance of the public authority if necessary.
Once the Service Related Assets have been returned, the
Regulatory Agency shall conduct its review and inventory
during the term established by the procedural regulation.
In turn, within the term set by the procedural regulations,
counted from the time the inventory is performed, the
Regulatory Agency shall conduct final liquidation of the
Concession's credits and debts, unless pending claims or
demands exist. The Concessionaire shall be notified of final
liquidation, and this shall be deemed approved unless
challenged within twenty (20) days. Otherwise, the
Concessionaire may challenge the settlement before the
Granting Authority or else undertake corresponding judicial
proceedings.
Except as provided in the above paragraph, the amount to be
reimbursed to the Concessionaire pursuant to Article 14.2.2.,
shall be retained until mutual credits and debts are
conclusively settled, and until any claim or judicial
proceedings for compensation brought against the
Concessionaire by the Granting Authority or the Regulatory
Agency are ruled upon. The Granting Authority may collect said
amount out of the credits retained against the Concessionaire
arising from the recission.
The Concessionaire may request provisional liquidation of the
credits and debts resulting from the Concession. The
Regulatory Agency shall issue a duly justified ruling on the
matter within the term established by the procedural
regulations. Should the request be granted, the Granting
Authority shall pay the Concessionaire any amounts due,
excluding the reserves it deems necessary to meet any pending
claims or judicial proceedings brought by the Regulatory
Agency or the Granting Authority, including estimates for
interest, costs and all types of ancillary items.
Administrative remedies or judicial proceedings challenging
the decree issued by the Granting Authority to terminate the
Contract due to fault of the Concessionaire shall not suspend
the enforceability of such decision.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 77 -
<PAGE> 84
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
14.4.4 TERMINATION DUE TO FAULT OF THE GRANTING AUTHORITY
Once the Contract has been terminated due to fault of the
Granting Authority, it may require the Concessionaire to grant
the provisional acceptance provided for in Article 14.3.1,
through notice addressed to the Concessionaire and provided
ninety (90) days before the date scheduled for acceptance.
Upon termination of such time period, the Concessionaire may
demand the acceptance be performed at a Court of Law. The
provisions above notwithstanding, the Granting Authority may
require the Concessionaire to surrender the Service, the
assets related to its provision and the personnel.
A final inventory shall be performed within the ninety (90)
calendar days following restitution of the Service Related
Assets.
Except when there are outstanding claims from judicial
proceedings, the Regulatory Agency shall perform a final
settlement of the credits and debts upon expiration of the
term set forth by the procedural regulation, to begin on the
date of the inventory. A provisional final settlement governed
by Article 14.4.3 shall be acceptable.
The Concessionaire shall be notified of the final settlement,
which shall be deemed approved unless challenged within the
term of twenty (20) days. Otherwise, the Concessionaire may
challenge the settlement before the Granting Authority or else
file corresponding judicial proceedings.
Monetary compensation claims between the parties, filed either
with administrative or judicial authorities, shall not affect
restitution of the Service or the Service Related Assets by
the Concessionaire. The Service Related Assets may not be
pledged or be subjected to liens in favor of the
Concessionaire.
14.4.5 TERMINATION THROUGH REPOSSESSION
In the case of repossession, the procedure established in
Article 14.4.1 shall apply.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 78 -
<PAGE> 85
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 15
TRANSITION REGIME
15.1 TAKING OF POSSESSION
15.1.1 DATE AND TIME
The Taking of Possession shall take place on the date set
forth on the Schedule, at 12:00 noon. This shall be the time
and date considered for all contractual effects.
15.1.2 PUBLIC DEED
A public deed shall be executed by the Granting Authority, the
Concessionaire and OSBA on the date and time of the Taking of
Possession, recording the transfer of the Service, possession
and operation of the assets related to its provision and
performance, the transfer of personnel and the contracts of
mandatory continuation. The Deed shall be signed by the
Governor of the Province, the General Manager of OSBA and the
Chairman of the Concessionaire's board of directors, or by
whomever it designates for that purpose.
15.1.3 DEFAULT
a) DEFAULT BY THE CONCESSIONAIRE
If the Concessionaire fails to appear at the act of
Taking of Possession, or fails to comply with any
substantial obligation that precludes the Taking of
Possession on the date agreed upon in Article 15.1.1,
the Granting Authority shall be entitled to:
- Declare the Contract terminated as a
matter of law, subject to the provisions of
Article 14.1.3 paragraph. d) and 14.2.2.
- Demand fulfillment of the contractual
obligations and, in addition, apply a fine
equal to fifty percent of the Awardee's
Contract guaranty for the corresponding
Concession Area per month, as a penalty for
delay in taking possession (incomplete
months subject to the application of the
proportional amount), to accrue
automatically as of the date established for
Taking of Possession. Similarly, the
Concessionaire shall pay the insurance costs
provided in Article 11.3 during the period
of effective noncompliance, or similar costs
paid in advance by the Province.
- The amount established shall be paid as a
one-time penalty by the Concessionaire
within fifteen (15) days following the
Granting Authority's decision. In case of
delays, the applicable interest rate shall
be thirty percent (30%) annually, compounded
monthly. The Granting Authority may execute
the Contract bond provided for in Article
11.1 in order to obtain these amounts.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 79 -
<PAGE> 86
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
The Concessionaire shall not be liable if
noncompliance is due to an Act of God or a force
majeure event.
b) DEFAULT BY THE GRANTING AUTHORITY.
In the event that the Granting Authority or OSBA are
not present at the act of Taking of Possession, or if
they fail to comply with any substantial obligation
which precludes the Taking of Possession on the date
agreed upon in Article 15.1.1, the Concessionaire
shall request the Granting Authority to comply with
the obligation referred to within a term of thirty
(30) days. If non-compliance persists upon the
expiration of such term, the Concessionaire shall be
entitled to demand the termination of the Contract.
In this case, the Granting Authority shall return the
Contract and Operating guaranties (Articles 11.1 and
11.2) and shall compensate the Concessionaire only
for consequential damages and only to the extent to
which they are duly evidenced.
15.2 PERSONNEL
15.2.1 GENERAL PRINCIPLES
The Concessionaire must take all personnel included in Annex
M, or on the list that replaces it, which have maintained
their labor relationship with OSBA at the date of Taking of
Possession. Said list shall be updated to reflect withdrawals
and replacements recorded between the time the Contract is
signed and the Taking of Possession.
Employees transferred to the Concessionaire shall retain their
seniority, remuneration, additional benefits, conditions of
work and labor rights arising from their labor relationship
with OSBA. The Concessionaire shall undertake all obligations
imposed by applicable laws, regulations and collective
bargaining agreements. Law 10,384 shall govern until a
Collective Bargaining Agreement is executed.
The Concessionaire shall ensure work stability to the
transferred personnel, notwithstanding the grounds for
dismissal set forth in the applicable legislation.
15.2.2 OBLIGATIONS ARISING PRIOR TO TAKING OF POSSESSION
All the contributions and debts of OSBA accrued with respect
to its personnel until the Taking of Possession shall be
OSBA's responsibility.
OSBA shall assume payments related to all possible claims or
actions arising from the employee relationship with its
employees that arising from causes occurring prior to the
Taking of Possession.
The above provisions shall not be deemed to impair the terms
of article 8.2 of this Contract.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 80 -
<PAGE> 87
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
15.2.3 OBLIGATIONS ARISING AFTER TAKING OF POSSESSION
The Concessionaire shall assume all labor obligations,
contributions and debts related to the employee relationship
and arising after the Taking of Possession.
The provisions above shall not be deemed to impair the terms
of article 8.2 of this Contract.
15.2.4 CONTINUING BENEFITS
Social security payments accruing on a continuous basis and
payable in periods beginning before and ending after Taking of
Possession shall be subject to the guidelines established in
articles 15.5.2 and 15.5.3 of this Contract.
15.3 SCHEDULE OF ASSETS, EASEMENTS AND OWNERSHIP RESTRICTIONS
15.3.1 TRANSFER OF ASSETS, EASEMENTS AND OWNERSHIP RESTRICTIONS
Annex L contains a list of the Service Related Assets, the
easements and the ownership restrictions to be transferred
upon the Taking of Possession.
As of the date of execution of the Contract, the
Concessionaire may verify the existence of such assets,
easements and restrictions, and shall make pertinent comments
no later than five (5) days prior to the Taking of Possession.
If the Concessionaire becomes aware of any error or omission
in said Annex's contents, OSBA must provide the necessary
cooperation to correct said errors and omissions.
All assets, easements and restrictions shall be transferred in
their current condition upon the Taking of Possession, and no
claims may be made regarding their conditions and existence.
The Concessionaire may take the necessary steps to serve
notice on third parties holding title to the properties
subject to easements and restrictions affected by the transfer
provided for in this article. If necessary, the Province shall
provide the appropriate cooperation to ensure the effective
exercise of Concessionaire's rights.
The provisions governing contracts discussed in Article 15.4
shall govern assets used by OSBA by virtue of contracts signed
with third parties.
15.3.2 RETURN OF ASSETS
Within one (1) year following the Taking of Possession, the
Concessionaire must notify the Granting Authority of the list
of assets that will not be required for the Concession. The
provisions of Article 7.9.1 shall apply.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 81 -
<PAGE> 88
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
15.4 CONTRACTS
15.4.1 GENERAL PRINCIPLES
Contracts in Annex N entered into by OSBA shall be transferred
to the Concessionaire to the extent they are currently in
effect at the time of the Taking of Possession. The
Concessionaire is obligated to assume the contracts so
transferred. Upon acceptance of these contracts by the
contractor or upon notice to such party, the assignment shall
be retroactive to the Taking of Possession. In no case shall
the assignment result in OSBA's assuming obligations arising
prior to the Taking of Possession. If the contractor does not
accept the transfer, the Concessionaire shall not be
responsible for failure to assume the respective contract.
Currently effective contracts are those containing obligations
pending on the Taking of Possession date, be they reciprocal
or only charged to the contractor. Contracts containing only
pending obligations on the part of OSBA shall not be
transferred to the Concessionaire.
Prior to the Taking of Possession, OSBA shall conduct a
partial assessment or survey of the works performed under the
contracts to be transferred, and shall deliver to the
Concessionaire the possession of property built, procured or
provided, regardless of the destination of such contracts. The
Concessionaire may participate in said proceedings and may
comment on the assessment. In case of challenge, the
Regulatory Agency shall rule upon the matter.
15.4.2 CONTINUING SERVICES
With respect to payment of obligations related to services
provided in a continuous manner over time and payable
according to periods starting before and ending after the
Taking of Possession, responsibility is to be determined as
follows:
a) OSBA shall pay the amounts accrued during the period
between the starting date of the term and the date of
Taking of Possession, inclusive.
b) The Concessionaire shall pay the amounts accrued
during the period between the day following the
Taking of Possession and the end of the billing
period.
Funds, documents or policies, held by OSBA as a performance
guaranty securing fulfillment of the Contract shall be
mandatorily continued to the extent possible, delivered and
endorsed in favor of the Concessionaire. Otherwise, they shall
be returned to the contractor whenever contractually required.
15.4.3 METHOD OF PAYMENT
The obligations described in Article 15.4.2 shall be paid for
by the Concessionaire. OSBA shall reimburse the Concessionaire
for the amounts paid in the proportions indicated in the
referenced article. OSBA shall make payments within thirty
(30) days following the Concessionaire's request. In the event
of delay, this obligation shall accrue interest equivalent to
the lending rate of the Banco de la Provincia de Buenos Aires
for thirty (30) day discount operations.
The provisions of Article 16.3 shall apply.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 82 -
<PAGE> 89
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
15.5 TAXES
15.5.1 TAXES LEVIED ON THE CONTRACT AND ON THE FORMATION OF THE
CONCESSIONAIRE
All taxes levied on the Contract, its execution or any acts
necessary for the purpose of executing the Contract, the
Concession and the Taking of Possession shall be borne by the
Awardee or the Concessionaire. This includes all taxes and
expenses inherent in the incorporation of the Concessionaire
as a business corporation, according to Chapter 2.
15.5.2 TAXES DUE AND ACCRUED
OSBA shall be responsible for paying all taxes arising prior
to the Taking of Possession, levied on itself, its activities
and its property.
After the Taking of Possession, the Concessionaire shall be
responsible for paying all taxes levied on itself, its
activities and its property, pursuant to the scope established
by this article.
With respect to taxes accrued on a continuous basis over time
and payable according to periods starting before and ending
after the Taking of Possession, liability is determined as
follows:
a) OSBA shall pay the amounts accrued during the period
between the starting date of the term and the date of
Taking of Possession, inclusive.
b) The Concessionaire shall pay the amounts accrued
during the period between the day following the
Taking of Possession and the end of the billing
period.
15.5.3 METHOD OF PAYMENT
The obligations described in Article 15.5.2 paragraphs a) and
b) shall be paid by the Concessionaire. OSBA shall reimburse
the Concessionaire for the amounts paid, in the proportions
indicated in the referenced article. OSBA shall make payments
within thirty (30) days following the Concessionaire's
request. In the event of delay, this obligation shall accrue
interest equivalent to the lending rate of the Banco de la
Provincia de Buenos Aires for thirty (30) day discount
operations.
The provisions of Article 16.3 shall apply.
15.6 CREDITS IN FAVOR OF OSBA
15.6.1 GENERAL PRINCIPLES
All credits derived from the provision of the Service arising
prior to the Taking of Possession date shall belong to OSBA.
The following credits derived from the provision of the
Service Provision are excluded from the above and therefore
shall be transferred to the Concessionaire:
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 83 -
<PAGE> 90
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
a) Service provided and not billed at the time of Taking of
Possession.
b) Service billed and not due at the time of Taking of
Possession.
c) Service billed and due for payment, provided payment has
not been outstanding for more than 60 days at the time of
Taking of Possession.
d) Debt Consolidation Agreements (balance as of the Taking of
Possession)
The exceptions mentioned do not cover credit amounts subject
to judicial claims or part of a criminal complaint.
Without affecting the validity of Article 15.62, the
collection of other credits for the provision of the Service
prior to the Taking of Possession, which are not indicated in
letters a) through d), shall be considered a serious breach by
the Concessionaire. OSBA may submit to the Concessionaire a
list of credits for the provision of Service, which are being
collected under judicial or extra judicial processes, and may
require that the Service not be reestablished until express
notice to the contrary is given, and shall assume any legal
liabilities arising from such request.
15.6.2 CONCESSIONAIRE'S CREDIT COLLECTION ON BEHALF OF OSBA
Except for those credits mentioned in article (15.6.1 Clauses
a) to d)) above, and in the event it is expressly required by
the Granting Authority and/or OSBA, the Concessionaire shall
undertake collection of the invoices for services rendered
prior to Taking of Possession.
In doing so, the Concessionaire shall act on behalf of OSBA.
The amounts collected shall be delivered to OSBA after
deducting commissions agreed upon with the Concessionaire. In
no case shall the cost exceed ten percent (10%) of the amounts
collected. Users shall make payments to OSBA within ten (10)
days following collection of amounts paid. Failure to pay on
time shall cause the automatic application of an interest rate
equivalent to the lending rate for thirty (30) day
document-discount operations of the Banco de la Provincia de
Buenos Aires.
15.7 DEBTS
As a general criteria, the debts of OSBA arising from a right or interest prior
to the Taking of Possession, of any type or nature, including any increase or
decrease in their value after such date, and contingent liabilities of any
origin or nature, shall not be undertaken by the Concessionaire.
15.8 INSURANCE
Prior to the Taking of Possession, the Concessionaire shall submit to the
Granting Authority the insurance policies provided for in Article 11.3 or the
appropriate coverage certificates, according to the model duly approved pursuant
to Section 7.2.2, Clause d) of the Terms of Reference.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 84 -
<PAGE> 91
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
CHAPTER 16
FINAL PROVISIONS
16.1 OFFER
Any statement and commitment made by the Awardee in the Bid Offer shall be
expressly assumed by the Concessionaire, shall be integrated into the Contract
and shall bind the Concessionaire.
16.2 OSBA'S REPRESENTATIVE
OSBA, represented in this act by Ms. Beatriz Mirta Diaz, in her capacity as
Agent for the Administracion General de Obras Sanitarias, also signs the
Contract as evidence of consent to of all its obligations stated herein.
16.3 INVOLVEMENT IN ADMINISTRATIVE OR JUDICIAL PROCEDURES AS THIRD PARTY
In the event of an administrative or judicial proceeding where payment of a
particular obligations is claimed or demanded from the Concessionaire, and the
Contract provides for the Granting Authority's liability for such obligation
according to the provisions of the applicable articles of the Contract, the
following rules shall apply:
Upon mere notice served by the Concessionaire, the Granting Authority or the
competent provincial authority shall appear in the proceeding and request
intervention as the third party liable for the amounts claimed and for any
applicable cost and expense resulting from a favorable judgement on the judicial
or administrative claim. The Concessionaire shall also request the Granting
Authority be admitted into the proceedings mentioned above. Notwithstanding the
above, in the event Granting Authority or the competent provincial authority
does not appear in the proceeding, or is not admitted as a party thereto, all
means shall be undertaken for the full payment of the amounts claimed from the
Concessionaire upon final decision or judgement, including all applicable costs
and expenses. The Granting Authority expressly states it shall refrain from
asserting any action against the Concessionaire due to negligent defense in the
future.
The same rules shall apply when the subject of the claim or the defendant is the
Granting Authority, the Regulatory Agency, OSBA or any other provincial agency,
in those cases where the liability of the Concessionaire is expressly provided
for according to the terms contained in Articles 7.10 and 13.1.
16.4 POWERS OF THE GRANTING AUTHORITY
The Concessionaire declares that it is fully aware of and accepts the provisions
contained in Decree 4041/96, thus acknowledging the Executive Branch's power to
revoke the Contract in an administrative court, provided sufficient evidence is
submitted proving serious irregularities enabling the procurement of undue
advantages and/or defects affecting the original intent of the contract, and are
capable of rendering it void, or if it is proven that the Contract was executed
through public official breach of trust, bribery, violence or any other
fraudulent actions giving rise to criminal action or subject to criminal
charges.
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 85 -
<PAGE> 92
National and International Public Bid for the Concession of Potable Water
and Sewage Public Service Provision in the Province of Buenos Aires
16.5 DOMICILE
For all matters relating to the Contract, the parties constitute their domicile
at:
The Granting Authority at Calle 7 e/58 y 59 in the City of La Plata, Provincial
Capital.
The Concessionaire at Calle 13, No 847 in the City of La Plata, Provincial
Capital.
16.6 NOTICES
All communications and notices between the Granting Authority and the
Concessionaire in connection to the Contract shall be served in a conclusive
manner and in writing, and shall be addressed to the declared domicile pursuant
to the provisions stated in Article 16.5.
16.7 JURISDICTION
In the event of any dispute related to the interpretation and performance of the
Contract, the Granting Authority and the Concessionaire submit themselves to the
administrative courts of the city of La Plata, hereby expressly waiving the
jurisdiction of any other court.
Mr. Governor of Buenos Aires Province - Mr. Eduardo Alberto Duhalde on behalf of
the Granting Authority.
Amanda Karen Martin on behalf of the Concessionaire
/s/ Amanda Karen Martin
Engineer Beatriz Mirta Diaz on behalf of OSBA/AGOSBA
/s/ Beatriz Mirta Diaz
- --------------------------------------------------------------------------------
Annex 13 - Concession Contract -
- 86 -
<PAGE> 93
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX A
CONCESSION AREA
[SEE MAP IN THE ORIGINAL DOCUMENT]
Annex A - Concession Contract
-1-
<PAGE> 94
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX B
UNATTACHED SYSTEMS
<TABLE>
<CAPTION>
====================================================================================================
DISTRICTS LOCALITIES SERVICE PROVIDER
- ----------------------------------------------------------------------------------------------------
WATER SEWAGES
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ADOLFO GONZALEZ DE LA GARMA SPAR COOP.
CHAVEZ
- ----------------------------------------------------------------------------------------------------
BRAGADO GRAL. O'BRIEN MUNICIPALITY
MECHITA SPAR COOP.
COMODORO PY COOPERATIVE
- ----------------------------------------------------------------------------------------------------
CARLOS CASARES TRES ALGARRABOS COOPERATIVE
- ----------------------------------------------------------------------------------------------------
CHIVILCOY MOQUEHUA SPAR COOP.
- ----------------------------------------------------------------------------------------------------
ESCOBAR GARIN PRIVATE CONC. PRIV. CONC.
MAQ. F. SAVIO PRIVATE CONC. PRIV. CONC.
ING. MASCHWITZ PRIVATE CONC. PRIV. CONC.
MATHEU PRIVATE CONC. PRIV. CONC.
LOMA VERDE PRIVATE CONC. PRIV. CONC.
P.C. NAUTICO PRIVATE CONC. PRIV. CONC.
- -----------------------------------------------------------------------------------------------------
GENERAL ARENALES ASCENSION SPAR COOP.
ARRIBENOS SPAR COOP.
FERRE SPAR COOP.
- -----------------------------------------------------------------------------------------------------
GENERAL VIAMONTE BAIGORRITA COOPERATIVE
- -----------------------------------------------------------------------------------------------------
GENERAL VILLEGAS EMILIO BUNGE SPAR COOP.
F. MARTI - E. CHARLON SPAR COOP.
PIEDRITAS SPAR COOP.
BANDERALO SPAR COOP.
CANADA SECA SPAR COOP.
- -----------------------------------------------------------------------------------------------------
GUAMINI CASBAS COOPERATIVE
LG. ALSINA BONIFACIO COOPERATIVE
GARRE SPAR COOP.
- -----------------------------------------------------------------------------------------------------
LA PLATA M. ROMERO SPAR COOP.
L. OLMOS SPAR COOP.
ABASTO SPAR COOP.
- -----------------------------------------------------------------------------------------------------
LEANDRO N. ALEM J. B. ALBERDI COOPERATIVE
L. N. ALEM SPAR COOP.
- -----------------------------------------------------------------------------------------------------
LINCOLN ROBEN SPAR COOP.
EL TRIUNFO SPAR COOP.
ARENAZA SPAR COOP.
LAS TOSCAS SPAR COOP.
=====================================================================================================
</TABLE>
Annex B - Concession Contract
-1-
<PAGE> 95
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<CAPTION>
=================================================================================================
DISTRICTS LOCALITIES SERVICE PROVIDER
- -------------------------------------------------------------------------------------------------
WATER SEWAGES
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
MAGDALENA MAGDALENA COOPERATIVE
B. BAVIO COOPERATIVE
- -------------------------------------------------------------------------------------------------
MAIPU LAS ARMAS SPAR COOP.
- -------------------------------------------------------------------------------------------------
MONTE ABOTT SPAR COOP.
- -------------------------------------------------------------------------------------------------
MORENO F. Alvarez Cooperative
- -------------------------------------------------------------------------------------------------
M.U. DE VILLA Villa Gesell Municipality Un-attached
GESELL
- -------------------------------------------------------------------------------------------------
NAVARRO Navarro SPAR Coop. Un-attached
Villa Moll
- -------------------------------------------------------------------------------------------------
NUEVE DE JULIO Dudignac SPAR Coop.
A. Demarchi SPAR Coop.
Patricios SPAR Coop.
La Aurora SPAR Coop.
C. M. Naon SPAR Coop.
Morea Quiroga Fournier SPAR Coop.
- -------------------------------------------------------------------------------------------------
PATAGONES J. Casas Development Company
Cardenal Cagliero SPAR Coop.
- -------------------------------------------------------------------------------------------------
PEHUAJO J. J. Paso SPAR Coop.
Mones Cazon SPAR Coop.
- -------------------------------------------------------------------------------------------------
PUNTA INDIO Veronica SPAR Coop. Un-attached
Pipinas SPAR Coop. Un-attached
- -------------------------------------------------------------------------------------------------
RAMALLO Ramallo Municipality Un-attached
Va. Ramallo Municipality
Perez Millan SPAR Coop.
Va Gral Savio Municipality
- -------------------------------------------------------------------------------------------------
SALLIQUELO Quenuma SPAR Coop.
- -------------------------------------------------------------------------------------------------
SUIPACHA Suipacha SPAR Coop.
Gral. Rivas SPAR Coop.
- -------------------------------------------------------------------------------------------------
TORNQUIST Tornquist Municipality Un-attached
Saldungaray SPAR Coop.
Sierra de la Ventana
- -------------------------------------------------------------------------------------------------
TRES ARROYOS Tres Arroyos Municipality
Claromeno SPAR Coop.
Orense SPAR Coop.
- -------------------------------------------------------------------------------------------------
VILLARINO Algarrobo SPAR Coop.
T. Origone SPAR Coop.
Argerich Cooperative
=================================================================================================
</TABLE>
Annex B - Concession Contract
-2-
<PAGE> 96
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX C
QUALITY STANDARDS FOR POTABLE WATER -
SAMPLING FREQUENCY AND ANALYTICAL TECHNIQUES
TABLE I: ALLOWABLE LIMITS FOR
BASIC MICROBIOLOGICAL COMPONENTS
A. WATER ENTERING THE DISTRIBUTION SYSTEM
<TABLE>
<CAPTION>
=============================================================================================================
ALLOWABLE LIMITS (BASED ON ANALYTICAL METHOD)
- -------------------------------------------------------------------------------------------------------------
MULTIPLE LINES FILTERING MEMBRANE PRESENCE / ABSENCE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Coliforms <2.2 NPM/100 Absence in 100 ml Absence in 100 ml (3)
ML (1)
- -------------------------------------------------------------------------------------------------------------
Thermo-resistant <2.2 NPM/100 Absence in 100 ml Absence in 100 ml
Coliforms ML (1)
=============================================================================================================
</TABLE>
B. WATER IN THE DISTRIBUTION SYSTEM
<TABLE>
<CAPTION>
==============================================================================================================
ALLOWABLE LIMITS (BASED ON ANALYTICAL METHOD)
- --------------------------------------------------------------------------------------------------------------
MULTIPLE LINES FILTERING MEMBRANE PRESENCE / ABSENCE (2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Coliforms 2.2 NPM/100 ML (1) Absence in 100 ml Absence in 100 ml (3)
- --------------------------------------------------------------------------------------------------------------
Thermo-resistant 2.2 NPM/100 ML (1) Absence in 100 ml Absence in 100 ml
Coliforms
==============================================================================================================
</TABLE>
(1) Provisional limit conditioned on the modification of the Multiple Line
Method to increase its sensitivity (10 lines).
(2) In those services where the quality of the samples is sufficient, these
should not be present in 100 ml of water in 95% of the extracted
samples during any 12-month period. The samples should never contain
more than 10 coliform bacteria per 100 ml of water and no coliform
bacteria should be found in 100 ml of water in two consecutive samples.
(3) In those services where the number of samples is sufficient, these
should not be present in 100 ml of water in 95% of the extracted
samples during any 12-month period. Provided the samples do not contain
more than 10 coliform bacteria per 100 ml of water and no coliform
bacteria are found in 100 ml of water in two consecutive samples.
ALL WATER INTENDED FOR HUMAN CONSUMPTION MUST BE DISINFECTED.
1
Annex C - Concession Contract
<PAGE> 97
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
TABLE II: COMPONENTS THAT DIRECTLY AFFECT HEALTH - ALLOWABLE LIMITS
<TABLE>
<CAPTION>
========================================================================================================
COMPONENTS UNIT ALLOWABLE LIMIT REFERENCES
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INORGANIC COMPONENTS:
- --------------------------------------------------------------------------------------------------------
Arsenic mg/l 0.05 (P) (I)
- --------------------------------------------------------------------------------------------------------
Cadmium mg/l 0.003
- --------------------------------------------------------------------------------------------------------
Cyanide mg/l 0.07
- --------------------------------------------------------------------------------------------------------
Copper mg/l 2.00 (P)
- --------------------------------------------------------------------------------------------------------
Total Chromium mg/l 0.05 (P)(2)
- --------------------------------------------------------------------------------------------------------
Fluorine mg/l 1.50
- --------------------------------------------------------------------------------------------------------
Manganese mg/l 0.50 (P)
- --------------------------------------------------------------------------------------------------------
Mercury (Total) mg/l 0.001
- --------------------------------------------------------------------------------------------------------
Nitrate (as NO3-) mg/l 50.00
- --------------------------------------------------------------------------------------------------------
Nitrite (as NO2-) mg/l 0.10 (P)
- --------------------------------------------------------------------------------------------------------
Lead mg/l 0.01
- --------------------------------------------------------------------------------------------------------
Selenium mg/l 0.01
- --------------------------------------------------------------------------------------------------------
Silver mg/l 0.05
- --------------------------------------------------------------------------------------------------------
ORGANIC COMPONENTS:
- --------------------------------------------------------------------------------------------------------
CHLORINATED ALKANES
- --------------------------------------------------------------------------------------------------------
1.2 Dichloroethane ug/l 30.00 (P)
- --------------------------------------------------------------------------------------------------------
Carbon Tetrachloride ug/l 2.00
- --------------------------------------------------------------------------------------------------------
CHLORATE ETHENES
- --------------------------------------------------------------------------------------------------------
1.1 Dichloroethane ug/l 30.00
- --------------------------------------------------------------------------------------------------------
Trichloroethane ug/l 70.00 (P)
- --------------------------------------------------------------------------------------------------------
Tetrachloroethane ug/l 40.00
- --------------------------------------------------------------------------------------------------------
AROMATIC HYDROCARBONS
- --------------------------------------------------------------------------------------------------------
Benzene ug/l 10.00
- --------------------------------------------------------------------------------------------------------
Benzo(a)pirene ug/l 0.7
- --------------------------------------------------------------------------------------------------------
PESTICIDES
- --------------------------------------------------------------------------------------------------------
Aldrin/Dieldrin ug/l 0.03
- --------------------------------------------------------------------------------------------------------
Chlordane (total isomers) ug/l 0.20
- --------------------------------------------------------------------------------------------------------
2.4D (Cichlorophenoxyacetic acid) ug/l 30.00
- --------------------------------------------------------------------------------------------------------
DDT (total isomers) ug/l 2.00
- --------------------------------------------------------------------------------------------------------
</TABLE>
2
Annex C - Concession Contract
<PAGE> 98
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
Heptachlorine and heptachloroepoxite ug/l 0.03
- ---------------------------------------------------------------------------
Hexachlorobenze ug/l 1.00
- ---------------------------------------------------------------------------
Lindane ug/l 2.00
- ---------------------------------------------------------------------------
Metoxychlorine ug/l 20.00
- ---------------------------------------------------------------------------
Pentachlorophenol ug/l 9.00
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
===========================================================================
DISINFECTANTS
- ---------------------------------------------------------------------------
<S> <C> <C>
Chlorine (free residual) mg/l 5.0
- ---------------------------------------------------------------------------
Monochloramine mg/l 6.0
===========================================================================
<CAPTION>
===========================================================================
PRODUCTS FROM DISINFECTING
- ---------------------------------------------------------------------------
<S> <C> <C>
CHLOROPHENOLS ug/l
- ---------------------------------------------------------------------------
2,4.6 Trichlorophenol ug/l 200
- ---------------------------------------------------------------------------
TRIBALOMETHANES
- ---------------------------------------------------------------------------
Bromoform ug/l 100
- ---------------------------------------------------------------------------
Dibromochloromethane ug/l 100
- ---------------------------------------------------------------------------
Bromodichloromethane ug/l 60
- ---------------------------------------------------------------------------
Chloroform ug/l 200
===========================================================================
</TABLE>
(I) (P) Provisional Limit. This term is used for those chemicals that present a
potential danger, but where available information on health effects is limited,
or the uncertainty factor used to establish the Allowable Daily Digest (IDT) is
higher than 1000.
(i) The allowable limit calculated for an inferior component, to the limit
of practical detection, of the concentration that can be achieved with
available treatment methods or when the recommended limit can be
exceeded as a result of disinfection.
(2) With respect to non-chlorinated water, trivalent and hexavalent
chromium shall be isolated.
TABLE III. COMPONENTS OR CHARACTERISTICS AFFECTING
CONSUMER'S ACCEPTABILITY OF WATER - ALLOWABLE LIMITS
<TABLE>
<CAPTION>
====================================================================================================================
PARAMETER UNIT ALLOWABLE LIMIT
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PHYSICAL CHARACTERISTICS:
- --------------------------------------------------------------------------------------------------------------------
Color Uc. 15
- --------------------------------------------------------------------------------------------------------------------
Taste and Odor Not offensive for the majority of
Users.
- --------------------------------------------------------------------------------------------------------------------
Turbidity UNT 2
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
3
Annex C - Concession Contract
<PAGE> 99
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
PHYSICOCHEMICAL COMPONENTS
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Aluminum mg/l 0.2
- --------------------------------------------------------------------------------------------
Zinc mg/l 3.0
- --------------------------------------------------------------------------------------------
Chloride mg/l 250
- --------------------------------------------------------------------------------------------
Iron mg/l 0.3
- --------------------------------------------------------------------------------------------
pH mg/l 6.5 - 8.5
- --------------------------------------------------------------------------------------------
Sodium mg/l 200
- --------------------------------------------------------------------------------------------
Sulfate mg/l 250
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================
Total Dissolved Solids Mg/l 1500
- ---------------------------------------------------------------------------------------
<S> <C> <C>
INORGANIC COMPONENTS
- ---------------------------------------------------------------------------------------
Synthetic Detergents Mg/l 0.2
=======================================================================================
</TABLE>
TABLE IV: COMPLEMENTARY BIOLOGICAL PARAMETERS
(Parameters whose determination is subject to specific circumstances or needs)
<TABLE>
<CAPTION>
=======================================================
PARAMETERS GUIDE VALUE
- -------------------------------------------------------
<S> <C>
Heterotrophic Aerobic Bacteria <100 UFo in 1 ml
- -------------------------------------------------------
Aerogenous Pseudomonas Absence in 100 ml
- -------------------------------------------------------
Giardia Lamblia Absence
- -------------------------------------------------------
Phytoplankton and Zooplankton Absence
=======================================================
</TABLE>
SAMPLING FREQUENCY
The Concessionaire shall perform the periodic monitoring and analysis described
for the following parameters.
1. Raw water from Surface Tap
Microbiological components - Table I (daily).
Basic data, pH, turbidity, alkalinity (every 6 hours).
Components that directly affect health - Table II (every three
months).
Components that affect the acceptability of the water (Table
III), heavy metals, DBO, DQO, phenols, hydrocarbons,
detergents (monthly).
Complementary biological parameters - Table IV. Their
determination is subject to localized circumstances or needs.
2. Raw water from Underground Tap
Chemical analysis (every six months)
Microbiological analysis - Table I (quarterly)
4
Annex C - Concession Contract
<PAGE> 100
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
3. Outgoing Potable water from the potabilization plant.
Microbiological components - Table I (every six months).
Basic data, pH, turbidity, alkalinity (every 6 hours).
Components that directly affect health - Table II (quarterly).
Components that affect the acceptability of the water (Table
III), heavy metals, DBO, DQO, phenols, hydrocarbons,
detergents (monthly).
Complementary biological parameters - Table IV. Their
determination is subject to specific circumstances or needs.
4. Potable Water in the distribution system.
Bacteriological analyses: monthly samples every 10,000
inhabitants within the radius of water and sewage.
The sampling points shall be divided into fixed (schools,
hospitals, public offices) and variable points that
proportionally cover the serviced area.
Chemical analyses: residual chlorine shall be measured every
time a bacteriological analysis is performed.
All Table III components shall be measured in 20% of the samples.
The Concessionaire shall submit to ORBAS, with the given time periods, the
results of the specific analyses.
Furthermore, ORBAS shall periodically inspect, take samples and perform analyses
to assure compliance with these allowable parameters and it shall notify the
operator so that it may take simultaneous samples, if it wishes, for purposes of
comparison. ORBAS may require other analysis and sampling methodologies,
according to the situation or the characteristics of the locality in question,
and the urgency of each situation.
For those localities with less than 10,000 users, ORBAS shall determine the
number of samples required for each situation to obtain results representative
of the actual condition of Service.
If the allowable parameters are exceeded, ORBAS shall penalize the
Concessionaire with timely application of the stated fines.
Whenever the application authority verifies the commission of a violation, it
shall prepare a violation statement that shall serve as accusation and evidence
of the violation. The violation statement shall constitute conclusive evidence
unless rebuttal proof is presented.
The Concessionaire shall be subject to sanctions, upon prompt notification, for
failure to submit the results of the periodic analyses.
ANALYTICAL TECHNIQUES
Those set by ORBAS for each parameter can be found standardized in:
SM: Manual of Standardized Methods for Potable and Wastewater Analysis.
Edition 17, APHA-AWWA-WPCF. 1989 or its updates.
EPA: Method of Analysis for Potable Water, Environmental Protection
Agency of the United States.
5
Annex C - Concession Contract
<PAGE> 101
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX D
QUALITY STANDARDS FOR SEWAGE -
SAMPLING FREQUENCY AND ANALYTICAL TECHNIQUES
TABLE 1: QUALITY PARAMETERS -
ALLOWABLE DISCHARGE LIMITS FOR SEWAGE EFFLUENTS
<TABLE>
<CAPTION>
DISCHARGE LIMIT
======================================================================================================
GROUP PARAMETERS UNIT CODE OF WATERWAY OCEAN SOIL
ANALYTICAL ABSORPTION
TECHNIQUES
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
I Temperature oC 02061 <=45 <=45 <=45
pH UpH 10301 6.5-10 6.5-10 6.5-10
S.S. 10 min. ml/l 10430 Absent N.E. Absent
S.S. 2 Hrs. ml/l 10431 <=1.0 <=5.0 <=5.0
Sulfides ml/l 26102 <=1.0 N.E. <=5.0
16203
S.S.E.E. ml/l 06521 <=50(d) (c) <=50
Ammonium nitrate ml/l 07503 <=3.0 N.E. N.E.
Cyanides ml/l 06601 <=0.1 <=0.1 Absent
Total Hydrocarb. ml/l 06525 <=30 <=30 Absent
Total Coliforms NMP/100 36002 <=5000 20000 (k) N.E.
m
- ------------------------------------------------------------------------------------------------------
II DBO5 mg/l 08202 <=50 (c) <=200
DQO(g) mg/l 08301 <=250 (c) <=500
S.A.A.M. mg/l 10702 <=2.0 N.E. <=2.0
Phenolic Salts mg/l 06531 <=0.5 N.E. <=0.1
Sulfates mg/l 16302 N.E. N.E. <=1000
C.O.T. mg/l 06010 N.E. N.E. N.E.
Iron (solub.) mg/l 26007/8 <=2.0 N.E. <=0.1
Manganese mg/l 25002 <=0.5 N.E. <=0.1
(solub.)
- ------------------------------------------------------------------------------------------------------
III Zinc mg/l 82101 <=2.0 N.E. <= 1
Nickel mg/l 81101 <=2.0 <=2.0 1
Total Chromium mg/l 24001 <=0.5 <=0.5 Absent
14010
Cadmium mg/l 48001 <=0.1 <=0.1 Absent
Mercury mg/l 80112 <=0.001 <=0.001 Absent
Copper mg/l 29010 <=0.1 <=0.1 Absent
Lead mg/l 82001 Absent
Pesticides mg/l indicated in
Chlorinated O. Standard <=0.05 <=0.05 Absent
Pesticides mg/l Methods
Phosphated O. <=0.1 <=0.1 Absent
- ------------------------------------------------------------------------------------------------------
IV Total Nitrogen
Kjeldath mg/l 07001 <=10.0 (i) N.E. N.E.
Phosphorus mg/l 15422 <=1.0 (i) N.E. N.E.
======================================================================================================
</TABLE>
1
Annex D - Concession Contract
<PAGE> 102
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
(a) The effluents that are drained out by atmospheric trucks shall adhere
to the limits established for their final destination.
(b) The indication of "absent" is equivalent to less than the limit of
detection of the indicated analytical technique.
(c) N.E. means that allowable limits are not presently established.
(d) In aerated or stabilization pond effluents, determination shall be made
according to a filtered sample to eliminate the influence of algae.
(e) Discharges to the ocean shall be designed to obtain a minimum initial
dissolution of 50:1. Outside the mixing zone or within a 200-meter wide
radius around the point of discharge, the DBO and DQO values shall be
base or natural, and S.S.E.E. values shall not exceed 100 mg/l. If the
initial minimum dilution condition cannot be met, the DBO, DQO and
S.S.E.E. concentration levels shall not exceed: 150 mg/l and 100 mg/l
respectively. The same criteria shall be adopted if the operator of the
service does not commit to periodic control of the quality of the
receiving body in the mixing zone limit.
(g) The DQO determination for effluents treated by means of stabilization
or aerated ponds, shall be performed on filtered samples to eliminate
the influence of algae.
(i) These limits are required in discharges to lakes, ponds or environments
favorable to eutrophication processes. If necessary, the total
allowable daily limit in Kg/day of Total Phosphorus and Total Nitrogen
shall be fixed.
(k) This parameter shall control discharges near beach or health resorts.
The indicated value constitutes the maximum allowable level at a
distance of at least 500 meters from a beach or area intended for
nautical sports.
SAMPLING FREQUENCY:
The Concessionaire shall perform monthly monitoring of its Sewage effluents,
measuring all of the parameters indicated in this ANNEX, and shall submit the
results to ORBAS. Furthermore, ORBAS shall inspect, take samples and
periodically analyze the effluents in order to check compliance with the
allowable parameters, notify the Concessionaire to allow it to take concurrent
samples, if desired in order to compare the results obtained. If the allowable
parameters were exceeded, ORBAS shall penalize the Concessionaire by timely
application of the stated fines. Whenever the application authority verifies the
commission of a violation, it shall prepare a violation statement that shall
serve as an accusation and evidence of the violation. The violation statement
shall constitute conclusive evidence unless rebuttal proof is presented. The
Concessionaire shall be subject to sanctions, upon prompt notification, for
failure to submit the results of the periodic analyses, which will be fixed to
consider the effluent an industrial type effluent, subject to the provisions of
Law 5965 and its regulations.
ANALYTICAL TECHNIQUES
The analytical techniques shall be fixed by Law 5965 or laws arising out of its
modification through a regulatory decree.
2
Annex D - Concession Contract
<PAGE> 103
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX E
ESOP REGULATIONS
1
Annex E - Concession Contract
<PAGE> 104
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX E
EMPLOYEE STOCK OWNERSHIP PLAN
Pursuant to the provisions contained in article 2.8 of the Contract, the ESOP
shall be governed by the following clauses:
FIRST: The ESOP shall receive shares equal to ten percent (10%) of the initial
capital stock of the Concessionaire (article 2.4.1 and Annex I of the Concession
Contract), hereinafter "the Shares", which shall be transferred at no cost by
the Awardee to the beneficiary employees, as set forth in this Annex.
SECOND: Beneficiaries under the ESOP shall be employees of all ranks of OSBA
whom are selected to render service to the Concessionaire ("Beneficiary
Employees") and who agree to adhere to the ESOP. Afterwards, employees of the
Concessionaire who purchase Shares and agree to adhere to the ESOP may also
become Beneficiary Employees. Temporary personnel, contracted personnel and
advisors appointed to represent the Province or its agencies cannot be
Beneficiary Employees.
THIRD: Pursuant to the second clause, Beneficiary Employees shall take part in
the ESOP provided they expressly adhere to its terms and conditions. Such
adherence shall be individual, voluntary and not performed through agents.
FOURTH: Adherence by Beneficiary Employees to the ESOP shall result in their
relinquishing the right to receive dividends from their shares during the first
two (2) fiscal years of the Concession, which shall be expressly stated in the
adherence agreement.
FIFTH: The number of Shares that are ultimately granted to each Beneficiary
Employee shall be determined on a per Concession Zone basis, by means of a
mathematical ratio that the Ministry of Public Works and Services of the
Province shall prepare together with the Union of Sanitation Works of the
Province of Buenos Aires (SOSBA). This ratio shall take into account factors
such as seniority, number of dependents, job title and the previous year's total
income.
SIXTH: If the Concessionaire issues additional shares of stock, the ESOP
Beneficiary Employees shall have the right to participate in such issuance,
pursuant to the terms of Section 194 of Law 19.550. The method of payment for
the subscription price shall be the one established in the seventh clause
hereof, unless otherwise agreed. Such newly issued shares may be encumbered with
a lien or subject to a trust, pursuant to the provisions of Law 24.441, until
the price for such shares has been paid.
SEVENTH: In the event of increases in capital, the Beneficiary Employees shall
pay the price for the Shares with the annual dividends that correspond to the
Shares and with fifty percent (50%) of the net amount to be paid to them as the
personnel participation bonus provided for in section 2.9 of the Contract.
EIGHTH: The beneficiary employees may create a guaranty and repurchase fund,
with a mandatory, indivisible, joint ownership interest of a percentage of the
dividends that correspond to the ESOP Shares, to purchase and redistribute the
Shares that correspond to Beneficiary Employees who cease, for any reason, to be
employees of the Concessionaire. If such Shares are not acquired by the guaranty
and repurchase fund or by other employees of the Concessionaire, they shall not
belong to the ESOP.
2
Annex E - Concession Contract
<PAGE> 105
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX F
POES
1. QUALITY OF THE SERVICE
1.1 MANAGEMENT INDICES
The Concessionaire shall comply with, at a minimum, the goals pertaining to the
quality of the Service and the business measures that are listed below, so as to
achieve the values in the terms indicated in table 1 of the present Annex.
The measurement indices that the Concessionaire shall fulfill are:
1. Unaccounted for Water (ANC)
2. Continuity of the Service (Ts)
3. Metering efficiency (Em)
Each of the indicators previously mentioned is defined as follows:
o Unaccounted for Water (ANC)
The quotient of the difference between the volume of Water produced (Vp) and
that of water invoiced (Vf), over the volume of Water produced (Vp) in a period
of one (1) year, all multiplied by one hundred (100).
ANC (%) = (Vp - Vf) 100
---------
Vp
Water produced shall be understood to be Potable Water delivered to the system
and actually measured at the outlet point of the potabilization plants, drilled
wells, etc. The computation of Invoiced water shall be based on those values
displayed on the User's invoice, and for Users not under the Metered Service
Tariff Regime, a monthly average consumption of 30 m(3)/month shall be assigned.
o Continuity of the Service (Ts)
The yearly average time of continuity in the provision of the Service. expressed
as:
Ts (%) = (1 - (SIGMA) Hi.Ci) 100 =
------------------
H.Cs
where:
Ts = Time in which the Service was provided during the year
Hi = Non-rendered service hours (i)
Ci = Number of Users affected by the interruption (i)
H = Total number of hours in a year = 8,760 hours
Cs = Total number of Users
ANNEX F - CONCESSION CONTRACT
1
<PAGE> 106
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
o Metering Efficiency (Em)
The percentage between the number of meters read and the number of meters
installed.
Em % = Number of Meters Read 100 =
--------------------------
Number of Meters Installed
TABLE 1. MEASUREMENT INDICES
<TABLE>
<CAPTION>
=============================================================================================================
AT THE END EFFICIENCY INDICATORS
OF ========================================================================================
Minimum Values for Metering Maximum Values for Un- Minimum Values for (%)
Efficiency (EM) Accounted for Water (ANC) Continuity of the Service
(%) (%) Ts
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Year 3 75 40 95
Year 4 77 38 95
Year 5 80 35 95
Year 10 90 33 96
Year 15 95 30 97
Year 20 98 28 98
Year 25 98 25 98
Year 30 98 25 100
=============================================================================================================
</TABLE>
The Concessionaire shall include the duly audited values obtained for the
measurement indices indicated in Table 1 in each annual report of Service
(article 6.5.2 of the Contract).
The values for the measurement indices of one year may not, in any case, be
lower than those of the previous year.
2. GOALS
2.1 SERVICE EXPANSION
In relation to the expansion of Potable Water and Sewage Service, the
Concessionaire shall fulfill, for each Region, the global coverage goals set
forth in Tables 2.1.1 and 2.1.2 included below, and shall also ensure that each
of the districts integrated in each Region achieves at least a coverage that is
the same as the minimum specified goal for said district.
The coverage percentages achieved in each case shall be calculated as the ratio
between the values of the served population and those of the urban population.
For such purposes, served population shall be understood as the number of
accounts from the ratio of residences for each locality reported annually by the
Direccion Provincial de Estadistica (Provincial Statistics Office); and the
urban population shall be determined by the census figures, as long as they
match the approved censuses otherwise, it shall be the projected population data
reported annually by the Direccion Provincial de Estadistica.
ANNEX F - CONCESSION CONTRACT
2
<PAGE> 107
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
The Concessionaire shall plan to extend the Service for the supply of Potable
Water for Home Service Connections to the population residing in the Served and
Expansion Areas, in accordance with the provisions set forth in the Contract.
Average coverage values shall not be, in any of the districts, lower than values
of the previous year.
2.1.1 POTABLE WATER SUPPLY
a) EXPANSIONS TO THE POTABLE WATER SYSTEM IN THE FIRST TWO YEARS
OF THE CONCESSION, STATED IN NUMBER OF RESIDENTIAL
CONNECTIONS.
<TABLE>
<CAPTION>
NUMBER OF CONNECTIONS - MINIMUM PER YEAR
=======================================================================================================
REGION/SUBREGION FIRST YEAR SECOND YEAR
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bahia Blanca Region 2,000 2,500
- -------------------------------------------------------------------------------------------------------
La Plata Ppal. Subregion 2,000 3,000
- -------------------------------------------------------------------------------------------------------
Florencio Varela Subregion 4,000 6,500
- -------------------------------------------------------------------------------------------------------
Western Subregion 1,000 1,500
- -------------------------------------------------------------------------------------------------------
Eastern Subregion 1,000 1,000
=======================================================================================================
</TABLE>
b) EXPANSIONS TO THE POTABLE WATER SYSTEM IN THE FIRST TWO YEARS
OF THE CONCESSION, STATED IN NUMBER OF RESIDENTIAL CONNECTIONS
PER DISTRICT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
REGION A MINIMUM NUMBER OF CONNECTIONS PER YEAR
BAHIA BLANCA
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
BAHIA BLANCA 600 1.200
- --------------------------------------------------------------------------------------------------------
C. DE PATAGONES 0 0
- --------------------------------------------------------------------------------------------------------
CNEL. ROSALES 0 0
- --------------------------------------------------------------------------------------------------------
A.G. CHAVES 0 150
- --------------------------------------------------------------------------------------------------------
GRAL. LAMADRID 0 0
- --------------------------------------------------------------------------------------------------------
GUAMINI 0 0
- --------------------------------------------------------------------------------------------------------
SALLIQUELO 0 0
- --------------------------------------------------------------------------------------------------------
SAN CAYETANO 0 0
- --------------------------------------------------------------------------------------------------------
TORNQUIST
- --------------------------------------------------------------------------------------------------------
TRES ARROYOS 0 0
- --------------------------------------------------------------------------------------------------------
VILLARINO 0 150
- --------------------------------------------------------------------------------------------------------
</TABLE>
ANNEX F - CONCESSION CONTRACT
3
<PAGE> 108
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
REGION C1 MINIMUM NUMBER OF CONNECTIONS PER YEAR
LA PLATA
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
BERISSO 200 500
- --------------------------------------------------------------------------------------------------------
ENSENADA 0 150
- --------------------------------------------------------------------------------------------------------
LA PLATA 500 1.200
- --------------------------------------------------------------------------------------------------------
MAGDALENA 0 0
- --------------------------------------------------------------------------------------------------------
PUNTA INDIO
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
REGION C2 MINIMUM NUMBER OF CONNECTIONS PER YEAR
FLORENCIO VARELA
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
F. VARELA 2.000 4.000
- --------------------------------------------------------------------------------------------------------
PRESIDENT. PERON 100 300
- --------------------------------------------------------------------------------------------------------
SAN VICENTE 0 0
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SUBREGION C3 MINIMUM NUMBER OF CONNECTIONS PER YEAR
OESTE (West)
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
C. CASARES 400 500
- --------------------------------------------------------------------------------------------------------
C. TEJEDOR 0 0
- --------------------------------------------------------------------------------------------------------
GRAL. ARENALES 0 0
- --------------------------------------------------------------------------------------------------------
GRAL. VILLEGAS 0 200
- --------------------------------------------------------------------------------------------------------
LEANDRO N. ALEM 0 0
- --------------------------------------------------------------------------------------------------------
LINCOLN 0 200
- --------------------------------------------------------------------------------------------------------
9 DE JULIO 0 0
- --------------------------------------------------------------------------------------------------------
SUIPACHA
- --------------------------------------------------------------------------------------------------------
PEHUAJO 0 0
- --------------------------------------------------------------------------------------------------------
BRGADO 0 100
- --------------------------------------------------------------------------------------------------------
CHIVILCOY 200 400
- --------------------------------------------------------------------------------------------------------
GRAL. VIAMONTE 0 0
- --------------------------------------------------------------------------------------------------------
NAVARRO
- --------------------------------------------------------------------------------------------------------
RAMALLO
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SUBREGION C4 MINIMUM NUMBER OF CONNECTIONS PER YEAR
ESTE (East)
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
AYACUCHO 0 150
- --------------------------------------------------------------------------------------------------------
DOLORES 100 200
- --------------------------------------------------------------------------------------------------------
</TABLE>
ANNEX F - CONCESSION CONTRACT
4
<PAGE> 109
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
GRAL. GUIDO 0 0
- ---------------------------------------------------------------------------------------------------
GRAL. LAVALLE 0 0
- ---------------------------------------------------------------------------------------------------
GRAL. MADARIAGO 100 300
- ---------------------------------------------------------------------------------------------------
GRAL. BELGRANO 0 0
- ---------------------------------------------------------------------------------------------------
GRAL. PAZ 0 0
- ---------------------------------------------------------------------------------------------------
GRAL. ALVEAR 0 0
- ---------------------------------------------------------------------------------------------------
ROQUE PEREZ 0 0
- ---------------------------------------------------------------------------------------------------
TAPALQUE 0 0
- ---------------------------------------------------------------------------------------------------
LAS FLORES 0 0
- ---------------------------------------------------------------------------------------------------
MONTE 0 0
- ---------------------------------------------------------------------------------------------------
MAIPU 0 0
- ---------------------------------------------------------------------------------------------------
MAR CHIQUITA 0 0
- ---------------------------------------------------------------------------------------------------
PILA 0 0
- ---------------------------------------------------------------------------------------------------
M.U. DE V. GESELL
- ---------------------------------------------------------------------------------------------------
</TABLE>
c) EXPANSIONS TO THE POTABLE WATER NETWORK IN TERMS OF PERCENTAGE
(%) OF COVERAGE OF THE URBAN POPULATION, AS FROM THE THIRD
YEAR OF THE CONCESSION.
<TABLE>
<CAPTION>
YEAR OF THE CONCESSION
=====================================================================================================
DISTRICT 3 4 5 10 15 20 25 30
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BAHIA BLANCA REGION
Overall Goal 92% 94% 95% 95% 95% 95% 95% 95%
Minimum Goals per District
1. BAHIA BLANCA 90% 91% 92% 93% 94% 94% 94% 95%
2. CNEL. ROSALES 93% 93% 94% 94% 94% 95% 95% 95%
3. TRES ARROYOS 100% 100% 100% 100% 100% 100% 100% 100%
4. PATAGONES 93% 93% 94% 94% 94% 95% 95% 95%
5. VILLARINO 87% 89% 91% 92% 93% 94% 94% 94%
6. A. GONZALEZ CHAVES 85% 87% 90% 91% 92% 93% 94% 94%
7. GUAMINI 75% 77% 80% 83% 86% 89% 91% 92%
8. TORNQUIST -- -- -- -- -- -- -- --
9. GRAL. LAMADRID 80% 81% 82% 85% 88% 90% 91% 93%
10. SALLIQUELO 93% 94% 94% 94% 95% 95% 95% 95%
11. SAN CAYETANO 96% 96% 96% 96% 96% 96% 96% 96%
</TABLE>
ANNEX F - CONCESSION CONTRACT
5
<PAGE> 110
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
LA PLATA REGION
Overall Goal 91% 93% 94% 95% 95% 95% 95% 95%
Minimum Goals per District
19. LA PLATA 92% 93% 93% 94% 94% 94% 95% 95%
20. BERISSO 79% 80% 82% 84% 87% 90% 91% 92%
21. ENSENADA 91% 92% 93% 94% 94% 94% 95% 95%
22. MAGDALENA 79% 80% 82% 85% 88% 90% 91% 92%
23. PUNtA INDIO -- -- -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------
FLORENCIO VARELA REGION
Overall Goal 65% 67% 70% 78% 85% 90% 95% 95%
Minimum Goals per District
24. FLORENCIO VARELA 52% 56% 60% 66% 72% 77% 82% 86%
25. PRESIDENTE PERON 54% 57% 61% 67% 73% 78% 82% 86%
26. SAN VICENTE 58% 60% 65% 70% 75% 80% 85% 88%
========================================================================================================
WESTERN SUBREGION
Overall Goal 87% 90% 93% 94% 95% 95% 95% 95%
Minimum Goals per District
27. CHIVILCOY 85% 87% 90% 91% 92% 93% 94% 94%
28. LINCOLN 87% 89% 91% 92% 93% 94% 94% 94%
29. BRAGADO 93% 94% 94% 94% 94% 95% 95% 95%
30. PEHUAJO 85% 87% 90% 91% 92% 93% 94% 94%
31. RAMALLO -- -- -- -- -- -- -- --
32. GENERAL VILLEGAS 76% 79% 82% 85% 88% 90% 92% 93%
33. CARLOS CASARES 95% 95% 95% 95% 95% 95% 95% 95%
34. GRAL. VIAMONTE 73% 76% 79% 83% 86% 89% 91% 92%
35. LEANDRO N. ALEM 72% 75% 78% 82% 85% 88% 90% 92%
36. GRAL. ARENALES 81% 83% 85% 87% 89% 91% 92% 93%
37. NAVARRO -- -- -- -- -- -- -- --
38. CARLOS TEJEDOR 79% 81% 83% 85% 87% 89% 91% 92%
39. NUEVE DE JULIO 97% 97% 97% 97% 97% 97% 97% 97%
40. SUIPACHA -- -- -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------
EASTERN SUBREGION
Overall Goal 86% 90% 93% 94% 95% 95% 95% 95%
Minimum Goals per District
41. MONTE 88% 90% 91% 92% 93% 93% 94% 94%
42. GRAL. BELGRANO 90% 91% 92% 93% 93% 94% 94% 95%
43. ROQUE PEREZ 86% 88% 90% 92% 93% 93% 94% 94%
44. GRAL. PAZ 87% 89% 91% 92% 92% 93% 93% 94%
45. VILLA GESELL -- -- -- -- -- -- -- --
46. DOLORES 86% 88% 90% 92% 93% 93% 94% 94%
47. LAS FLORES 95% 95% 95% 95% 95% 95% 95% 95%
48. AYACUCHO 89% 90% 91% 92% 93% 93% 94% 94%
49. GRAL. MADARIAGA 67% 71% 75% 79% 83% 87% 90% 92%
50. MAR CHIQUITA 66% 70% 75% 79% 83% 87% 90% 92%
51. MAIPU 96% 96% 96% 96% 96% 96% 96% 96%
========================================================================================================
</TABLE>
ANNEX F - CONCESSION CONTRACT
6
<PAGE> 111
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
52. GRAL. ALVEAR 96% 96% 96% 96% 96% 96% 96% 96%
53. TAPALQUE 92% 93% 93% 93% 94% 94% 95% 95%
54. GRAL. LAVALLE 79% 81% 83% 85% 87% 89% 91% 92%
57. PILA 97% 97% 97% 97% 97% 97% 97% 97%
58. GRAL. GUIDO 74% 76% 79% 82% 85% 88% 90% 91%
========================================================================================================
</TABLE>
2.1.2 SEWAGE
The Sewage Service through Residential Connections shall be expanded to
progressively serve the population residing in the Serviced Areas, complying
with the conditions listed at the beginning of this article.
a) EXPANSIONS TO THE SEWAGE NETWORK IN THE FIRST TWO YEARS OF THE
CONCESSION, STATED IN NUMBER OF RESIDENTIAL CONNECTIONS.
<TABLE>
<CAPTION>
NUMBER OF CONNECTIONS - MINIMUM PER YEAR
=================================================================================
REGION/SUBREGION FIRST YEAR SECOND YEAR
- ---------------------------------------------------------------------------------
<S> <C> <C>
BAHIA BLANCA REGION 4,000 6,000
- ---------------------------------------------------------------------------------
LA PLATA PPAL. SUBREGION 3,500 5,500
- ---------------------------------------------------------------------------------
FLORENCIO VARELA SUBREGION 4,500 7,000
- ---------------------------------------------------------------------------------
WESTERN SUBREGION 2,500 3,500
- ---------------------------------------------------------------------------------
EASTERN SUBREGION 1,000 2,000
=================================================================================
</TABLE>
b) EXPANSIONS TO THE SEWAGE NETWORK IN THE FIRST TWO YEARS OF THE
CONCESSION, STATED IN TERMS OF RESIDENTIAL CONCESSIONS [SIC]
PER DISTRICT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
REGION A NUMBER OF MINIMUM CONNECTIONS PER YEAR
BAHIA BLANCA
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
BAHIA BLANCA 1.700 3.600
- --------------------------------------------------------------------------------------------------------
C. DE PATAGONES 100 200
- --------------------------------------------------------------------------------------------------------
CNEL. ROSALES 150 350
- --------------------------------------------------------------------------------------------------------
A.G. CHAVES 0 150
- --------------------------------------------------------------------------------------------------------
GRAL. LAMADRID 150 300
- --------------------------------------------------------------------------------------------------------
GUAMINI 0 100
- --------------------------------------------------------------------------------------------------------
SALLIQUELO 0 0
- --------------------------------------------------------------------------------------------------------
SAN CAYETANO 0 0
- --------------------------------------------------------------------------------------------------------
TORNQUIST 0 100
- --------------------------------------------------------------------------------------------------------
TRES ARROYOS 0 0
- --------------------------------------------------------------------------------------------------------
VILLARINO 150 350
- --------------------------------------------------------------------------------------------------------
</TABLE>
ANNEX F - CONCESSION CONTRACT
7
<PAGE> 112
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
REGION B NUMBER OF MINIMUM CONNECTIONS PER YEAR
CONRUBANO (Greater Buenos Aires)
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
ESCOBAR 300 700
- --------------------------------------------------------------------------------------------------------
JOSE C. PAZ 3.000 6.500
- --------------------------------------------------------------------------------------------------------
MALV. ARGENTINAS 3.600 7.400
- --------------------------------------------------------------------------------------------------------
GRAL. RODRIGUEZ 500 1.100
- --------------------------------------------------------------------------------------------------------
MERLO 4.300 8.700
- --------------------------------------------------------------------------------------------------------
MORENO 3.100 6.400
- --------------------------------------------------------------------------------------------------------
SAN MIGUEL 1.800 3.700
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
REGION C1 NUMBER OF MINIMUM CONNECTIONS PER YEAR
LA PLATA
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
BERISSO 300 600
- --------------------------------------------------------------------------------------------------------
ENSENADA 300 600
- --------------------------------------------------------------------------------------------------------
LA PLATA 1.600 3.400
- --------------------------------------------------------------------------------------------------------
MAGDALENA 0 0
- --------------------------------------------------------------------------------------------------------
PUNTA INDIO 0 200
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
REGION C2 NUMBER OF MINIMUM CONNECTIONS PER YEAR
FLORENCIO VARELA
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
F. VARELA 2.300 4.700
- --------------------------------------------------------------------------------------------------------
PRESIDENT. PERON 700 1.300
- --------------------------------------------------------------------------------------------------------
SAN VICENTE 150 350
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SUBREGION C3 NUMBER OF MINIMUM CONNECTIONS PER YEAR
OESTE (West)
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
C. CASARES 100 200
- --------------------------------------------------------------------------------------------------------
C. TEJEDOR 100 200
- --------------------------------------------------------------------------------------------------------
GRAL. ARENALES 100 200
- --------------------------------------------------------------------------------------------------------
GRAL. VILLEGAS 0 200
- --------------------------------------------------------------------------------------------------------
LEANDRO N. ALEM 0 0
- --------------------------------------------------------------------------------------------------------
LINCOLN 300 300
- --------------------------------------------------------------------------------------------------------
9 DE JULIO 100 300
- --------------------------------------------------------------------------------------------------------
SUIPACHA 0 0
- --------------------------------------------------------------------------------------------------------
PEHUAJO 0 200
- --------------------------------------------------------------------------------------------------------
BRGADO 200 300
- --------------------------------------------------------------------------------------------------------
</TABLE>
ANNEX F - CONCESSION CONTRACT
8
<PAGE> 113
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
CHIVILCOY 400 800
- ----------------------------------------------------------------------------------------------------
GRAL. VIAMONTE 0 150
- ----------------------------------------------------------------------------------------------------
NAVARRO 100 200
- ----------------------------------------------------------------------------------------------------
RAMALLO 200 300
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SUBREGION C4 NUMBER OF MINIMUM CONNECTIONS PER YEAR
ESTE (East)
- --------------------------------------------------------------------------------------------------------
DISTRICT FIRST YEAR SECOND YEAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
AYACUCHO 0 0
- --------------------------------------------------------------------------------------------------------
DOLORES 300 600
- --------------------------------------------------------------------------------------------------------
GRAL. GUIDO 0 150
- --------------------------------------------------------------------------------------------------------
GRAL. LAVALLE 0 0
- --------------------------------------------------------------------------------------------------------
GRAL. MADARIAGO 0 200
- --------------------------------------------------------------------------------------------------------
GRAL. BELGRANO 0 150
- --------------------------------------------------------------------------------------------------------
GRAL. PAZ 0 0
- --------------------------------------------------------------------------------------------------------
GRAL. ALVEAR 0 0
- --------------------------------------------------------------------------------------------------------
ROQUE PEREZ 100 300
- --------------------------------------------------------------------------------------------------------
TAPALQUE 0 0
- --------------------------------------------------------------------------------------------------------
LAS FLORES 0 150
- --------------------------------------------------------------------------------------------------------
MONTE 0 0
- --------------------------------------------------------------------------------------------------------
MAIPU 0 200
- --------------------------------------------------------------------------------------------------------
MAR CHIQUITA 0 0
- --------------------------------------------------------------------------------------------------------
PILA 0 0
- --------------------------------------------------------------------------------------------------------
M.U. DE V. GESELL 0 200
- --------------------------------------------------------------------------------------------------------
</TABLE>
c) EXPANSIONS OF THE SEWAGE NETWORK IN TERMS OF PERCENTAGE (%) OF
COVERAGE OF THE URBAN POPULATION, AS FROM THE THIRD YEAR OF
THE CONCESSION.
YEAR OF THE CONCESSION
<TABLE>
<CAPTION>
========================================================================================================
DISTRICT 3 4 5 10 15 20 25 30
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BAHIA BLANCA REGION
Total Goal 70% 75% 83% 88% 93% 93% 94% 95%
Minimum Goals per District
1. BAHIA BLANCA 71% 74% 77% 81% 85% 88% 90% 92%
2. CNEL. ROSALES 90% 91% 92% 93% 93% 94% 94% 95%
3. TRES ARROYOS -- -- -- -- -- -- -- --
4. PATAGONES 48% 50% 52% 58% 64% 70% 76% 80%
5. VILLARINO 30% 35% 41% 50% 59% 67% 74% 79%
6. A. GONZALEZ 72% 75% 78% 82% 86% 88% 90% 92%
CHAVES
7. GUAMINI 64% 68% 73% 78% 82% 86% 89% 91%
8. TORNQUIST 85% 87% 89% 91% 92% 93% 93% 94%
9. GRAL. LAMADRID 17% 25% 34% 45% 55% 64% 72% 77%
</TABLE>
ANNEX F - CONCESSION CONTRACT
9
<PAGE> 114
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
10. SALLIQUELO 50% 52% 53% 58% 64% 70% 76% 80%
11. SAN CAYETANO 91% 92% 93% 93% 94% 94% 95% 95%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
LA PLATA REGION
Overall Goal 78% 83% 87% 90% 92% 93% 94% 95%
Minimum Goals per District
19. LA PLATA 88% 89% 90% 92% 93% 93% 94% 94%
20. BERISSO 44% 47% 49% 55% 63% 69% 76% 80%
21. ENSENADA 40% 44% 47% 54% 62% 69% 76% 80%
22. MAGDALENA 65% 69% 74% 79% 84% 87% 89% 91%
23. PUNA INDIO 62% 67% 72% 78% 83% 86% 89% 91%
- --------------------------------------------------------------------------------------------------------
FLORENCIO VARELA REGION
Total Goal 40% 50% 58% 63% 81% 86% 90% 95%
Minimum Goals per District
24. FLORENCIO VARELA 33% 38% 43% 51% 60% 67% 74% 79%
25. PRESIDENTE PERON 17% 25% 34% 45% 55% 64% 72% 77%
26. SAN VICENTE 69% 73% 76% 80% 84% 87% 90% 91%
WESTERN SUBREGION
Overall Goal 68% 74% 79% 86% 92% 93% 94% 95%
Minimum Goals per District
27. CHIVILCOY 66% 70% 74% 79% 84% 87% 89% 91%
28. LINCOLN 67% 71% 75% 80% 84% 87% 89% 91%
29. BRAGADO 72% 75% 78% 82% 86% 88% 90% 92%
30. PEHUAJO 47% 49% 51% 57% 64% 70% 76% 80%
31. RAMALLO 73% 75% 78% 82% 86% 88% 90% 92%
32. GENERAL VILLEGAS 76% 78% 80% 84% 87% 89% 91% 92%
33. CARLOS CASARES 72% 75% 78% 82% 86% 88% 90% 92%
34. GRAL. VIAMONTE 63% 67% 72% 78% 83% 86% 89% 91%
35. LEANDRO N. ALEM 51% 52% 53% 58% 64% 70% 76% 80%
36. GRAL. ARENALES 17% 25% 34% 45% 55% 64% 72% 77%
37. NAVARRO 61% 66% 72% 78% 83% 86% 89% 91%
38. CARLOS TEJEDOR 17% 25% 34% 45% 55% 64% 72% 77%
39. NUEVE DE JULIO 77% 78% 80% 84% 87% 89% 91% 92%
40. SUIPACHA 65% 70% 75% 80% 85% 88% 90% 92%
EASTERN SUBREGION
Overall Goal 68% 75% 80% 86% 91% 92% 93% 95%
Minimum Goals per District
41. MONTE 75% 77% 80% 83% 86% 89% 91% 92%
42. GRAL. BELGRANO 47% 49% 51% 56% 64% 70% 76% 80%
43. ROQUE PEREZ 17% 25% 34% 45% 55% 64% 72% 77%
44. GRAL. PAZ 68% 72% 76% 80% 84% 87% 89% 91%
- --------------------------------------------------------------------------------------------------------
</TABLE>
ANNEX F - CONCESSION CONTRACT
10
<PAGE> 115
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
45. VILLA GESELL 89% 90% 92% 93% 93% 94% 94% 95%
46. DOLORES 63% 67% 72% 78% 83% 86% 89% 91%
47. LAS FLORES 77% 78% 80% 84% 87% 89% 91% 92%
48. AYACUCHO 94% 94% 94% 95% 95% 95% 95% 95%
49. GRAL. MADARIAGA 77% 78% 80% 84% 87% 89% 91% 92%
50. MAR CHIQUITA 46% 48% 50% 55% 64% 70% 75% 80%
51. MAIPU 65% 69% 74% 79% 84% 87% 89% 91%
52. GRAL. ALVEAR 80% 82% 84% 87% 89% 91% 92% 93%
53. TAPALQUE 70% 73% 76% 80% 84% 87% 90% 91%
54. GRAL. LAVALLE 17% 25% 34% 45% 55% 64% 72% 77%
57. PILA 17% 25% 34% 45% 55% 64% 72% 77%
58. GRAL. GUIDO 17% 25% 34% 45% 55% 64% 72% 77%
========================================================================================================
</TABLE>
2.2 SUPPLY OF THE SERVICE
2.2.1 PROVISION OF POTABLE WATER
o Quality of the Water Supplied
The Concessionaire shall develop a system that meets the "quality standards of
Potable Water- sampling frequency and analytical techniques", included as Annex
C of the Contract, with respect to organoleptic, physical and chemical matters.
From the beginning of the Concession, the Concessionaire shall comply with
microbiological and physical quality standards of the water intended for
consumption, set forth on Tables I and III of said Annex C.
In relation to the chemical parameters set by Table II of such Annex, the
Concessionaire shall attain this level of performance within a term of three (3)
years counted from the time of taking possession, regardless of the provisions
in Article 5 - I, in fine of Law 11.820. During that period, the water supplied
must comply with at a minimum the chemical quality requirements set forth in
Decree 6553/74 (indicated as "tolerable value" in the drinking water
specifications").
o Quality of Water Supply
The Concessionaire shall fulfill the quality indicators of the supply: pressure,
flow volume, metering and continuity of the Service, based on the following
guidelines:
- - Pressure of Water Supply
Within five (5) years, the minimum pressure in the system must reach the value
of ten meters of a column of Water (10 mca).
This requirement may be established by calculations or mathematical models that
the Concessionaire shall make available to the Regulating Authority.
- - Continuity of the Service
ANNEX F - CONCESSION CONTRACT
11
<PAGE> 116
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
The Concessionaire must act so that the Service of the Supply of Water will be
continuous, free of interruptions, guaranteeing its availability twenty-four
(24) hours a day.
Article 1 of this Annex shows the formula used to determine the Service
continuity percentage annually.
- - Minimum Flow Rate
For purposes of guaranteeing a minimum and sufficient flow rate of a supply of
Potable Water to the Users, the Concessionaire is required to fulfill the
established pressure guidelines in the network and to respect the provisions of
current regulations, with respect to the diameter required for the Home Service
Connections.
- - Metering
The installation of residential meters in the technically feasible connections
of the Served Area shall be performed in such a way so as to ensure that the
flow rate of the total Water connections of residential consumption is measured
in accordance the terms indicated in the following table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
RATIO OF NUMBER OF METERS TO NUMBER OF CONNECTIONS
INSTALLED IN WHICH IT IS TECHNICALLY FEASIBLE TO INSTALL
A METER (%), BY THE END OF THE:
- ---------------------------------------------------------------
FIFTH YEAR TENTH YEAR FIFTEENTH YEAR
- ---------------------------------------------------------------
<S> <C> <C>
40 70 100
- ---------------------------------------------------------------
</TABLE>
The foregoing notwithstanding, the Concessionaire shall implement the Tariff
Regime of the Potable Water Metered Service according to the following table,
and must invoice the minimum consumption provided in point 4.a-2) of Annex N of
the Contract, until the consumption is actually metered:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
RATIO OF NUMBER OF METERS TO NUMBER OF CONNECTIONS
INSTALLED IN WHICH IT IS TECHNICALLY FEASIBLE TO INSTALL A METER
(%), BY THE END OF THE:
- ----------------------------------------------------------------
THIRD YEAR FOURTH YEAR FIFTH YEAR
- ----------------------------------------------------------------
<S> <C> <C>
65 80 100
- ----------------------------------------------------------------
</TABLE>
In those connections in which the Metered Service Rating System is being applied
on the date of Taking of Possession, the Concessionaire shall continue applying
the Tariff Regime of the Metered Service.
The Five-Year Plan must set forth in the property records the connections where
the application of the Tariff Regime of the Metered Service shall be implemented
annually.
2.2.2 SEWAGE
o Effluent Control
ANNEX F - CONCESSION CONTRACT
12
<PAGE> 117
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
The Concessionaire shall abide by the quality standards for Sewage provided in
Annex D of the Contract, both for liquids discharged into the systems and for
those discharged into the receiving body.
o Quality of the Service
As established in the Contract, the Concessionaire shall propose in the
Five-Year Plan the Service quality indicators related to floods due to
overloading, Service interruptions, etc. and the actions undertaken to improve
the current situation.
For that purpose, a methodology for determining the duration of the
interruptions occurring in the Service shall be proposed, stated in hours and in
number of affected Users.
o Industrial Sewage Control
The Concessionaire shall implement a system for control of Industrial Sewage
into the networks, subject to Annex D of the Contract.
It shall provide permanent control programs of the discharges at the outlet of
the industrial plants, using automatic or manual samplers.
2.3 REVAMPING AND/OR RECONDITIONING OF PIPES
2.3.1 WATER SUPPLY
The Concessionaire shall annually revamp or recondition at least 1.5% of the
total length of the pipelines in the existing network that are over fifteen (15)
years old. The Concessionaire shall survey the total length and age of the
systems and submit these surveys to the Regulatory Agency for approval within
the first six (6) months of the Concession.
2.3.2 SEWAGE
The Concessionaire shall annually revamp or recondition at least 1.5% of the
total length pipelines in the existing networks that are over fifteen (15) years
old. The Concessionaire shall survey the total length and age of the systems and
submit these surveys to the Regulatory Agency for approval within the first six
(6) months of the Concession.
3. SEWAGE TREATMENT
Sewage dumped by the Concessionaire into the receptive bodies shall meet the
parameters set forth in Annex D of the Contract for quality standards for Sewage
within the first year of the Concession, without prejudice to the provisions set
forth in the paragraph below:
For such purposes, the works program shall provide for the expansion,
reconditioning and/or construction of the Sewage effluent treatment plants.
In those localities that do not have Sewage systems on the date of Taking
Possession, the Concessionaire shall anticipate the provision of Primary
Treatment and Secondary Treatment plants for the purification of sewage liquids,
along with the installation of the networks.
ANNEX F - CONCESSION CONTRACT
13
<PAGE> 118
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
In those localities where, as of the same date, treatment is offered to only
with respect to a part of the Sewage in existing networks, the Concessionaire
shall anticipate expanding treatment capacity, so that at the end of the first
three years of the Concession, such treatment is made available to one hundred
percent (100%) of the Sewage system.
Moreover, all the Sewage system expansion works shall be accompanied by the
respective sewage treatment capacity expansion, so that one hundred percent
(100%) of the flow rates generated by those expansions have purification.
In the localities that on the date of Taking Possession have only Primary
Treatment plants, the Concessionaire shall fulfill with the requirements of
Annex D within the first five-year period of the Concession.
For the purification plants of La Plata and Bahia Blanca localities, the
Concessionaire shall comply, within the first three (3) years of the Concession,
with the quality of Sewage effluents provided for by the Primary Treatment, the
standards of Annex D becoming enforceable by the end of the second five-year
period.
In reference to the Villa Gesell purification plant, the Concessionaire shall
submit within six (6) months of the Taking of Possession together with the
Prevention and Emergencies Study provided for in point 6.4.3 of the Contract, a
preliminary project of the works to be performed to resolve the issue of final
disposal of treated liquids.
4. DISPOSAL OF SLUDGE FROM POTABILIZATION PLANTS
The sludge generated in the washing processes of the decanters, filters or other
potabilization plant facilities shall be adequately processed for final
disposal.
The selected processes must generate, as their end product, ashes or matter that
can be stockpiled and prepared for final disposition, according to the
provincial standards in effect for wastes of this category.
For each specific situation, the Concessionaire shall submit a schedule for
works or actions to be performed to achieve the above-mentioned objective within
the first three (3) years of the concession.
5. DISPOSAL OF SLUDGE FROM SEWAGE TREATMENT PLANTS
The extracted solids and the sludge produced at the sewage purification plants
shall be adequately processed prior to their final disposal, in compliance with
applicable provincial regulations.
ANNEX F - CONCESSION CONTRACT
14
<PAGE> 119
ANNEX G
FEASIBILITIES GRANTED BY OSBA
Refer to Circular N(o)13(A), which is incorporated into this Annex.
ANNEX G - CONCESSION CONTRACT
1
<PAGE> 120
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX H
USER REGULATIONS GUIDELINES
SECTION I
USER REGULATIONS
1. Purpose of the Annex. This Annex sets forth guidelines for the regulations
governing relations between the Users, the Concessionaire and the Regulatory
Agency. The guidelines shall be reflected in the particular regulations issued
by the Concessionaire, once approved by the Regulatory Agency.
2. Specific Definitions. The Annex uses the terms defined in article 1.2 of
Annex 10 (text of the Concession Contract) of the Terms of Reference.
Notwithstanding, the following specific definitions are used:
"Real Estate": all land with or without construction located in urban-developed
areas.
"Applicable Laws and Regulations": the Regulatory Framework, the Terms of
Reference, the Contract, the Regulations, the decisions of the Regulatory
Agency, and any other law, contract or regulation applicable to the provision of
Service by the Concessionaire.
"Regulation": the particular regulation issued by the Concessionaire and
approved by the Regulatory Agency, based on the present Annex.
3. Responsibility of the Regulatory Agency. The Regulatory Agency shall be
responsible for controlling the enforcement and compliance of the guidelines set
forth in this Annex, in accordance with the Applicable Laws and Regulations.
4. Interpretation. In case of a discrepancy or an uncertainty about the
interpretation of the provisions of the Regulations, the resolutions of the
Regulatory Agency shall be executively enforceable and of mandatory application,
regardless of the remedy granted by the Applicable Laws and Regulations.
5. Publicity. The Regulations shall be available for reference in all commercial
offices of the Concessionaire and in offices and branches of the Regulatory
Agency. The Concessionaire shall deliver or send a free copy of the Regulations
to Users upon request.
6. Modifications. The Regulatory Agency may order modifications to the
Regulations at its own initiative or upon proposals by the Users or the
Concessionaire. Such changes shall be made public sixty (60) days before they
become effective.
7. Contents of the Rules. The Concessionaire's internal procedural rules shall
not distort the nature of the obligations of the Concessionaire, limit its
liability for damages, bring about a waiver or restriction on the Users' rights,
or contain any other rule imposing a burden of proof to the detriment of the
Users. The rules shall be uniform, general and standard for all Users.
Annex H - Concession Contract
1
<PAGE> 121
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
SECTION II
USERS RIGHTS AND OBLIGATIONS
8. The following rights and obligations of the Users are established in
connection with the provision of Service, without prejudice to those established
by the Applicable Laws and Regulations. The rights and obligations correspond
with the Concessionaire's obligations and rights.
II.A USERS RIGHTS AND OBLIGATIONS IN CONNECTION WITH THE PROVISION OF
SERVICE
9. To receive, upon request and free of charge, specific information that
enables the Users to know their rights and obligations and to prevent risks that
could result from their actions.
10. To demand the provision of the Service in compliance with Quality Levels and
scopes set forth in the Applicable Laws and Regulations.
11. To receive Potable Water at the pressure and according to the quality
parameters set forth by the Applicable Laws and Regulations, continuously, with
sufficient quantity and on a regular basis twenty-four (24) hours a day, every
day of the year, without interruptions due to system deficiencies or inadequate
capacity of the systems, pursuant to the Applicable Laws and Regulations.
12. Prior express authorization shall be obtained from the Concessionaire before
making connections to the public network or having them made by third parties.
13. To install, under its own responsibility and under the Concessionaire's
supervision, internal residential Water and Sewage services and to maintain
these facilities in suitable operating condition, in a manner that will not
alter the operation of the public network or contaminate the water being
distributed, pursuant to the Applicable Laws and Regulations.
If a contaminating event originates in the in-house facilities, the Users who
created it shall be liable for the consequences generated by the event and
subject to penalties set forth in the Applicable Laws and Regulations.
14. To make the repairs on in-house facilities causing water leaks, water losses
or damages to third parties. Otherwise, after the Concessionaire provides
certified notice of its intention to perform the repair tasks within ten (10)
business days, the Concessionaire may perform the required work billing the
Users for the costs owed and imposing the penalties set forth in the Applicable
Laws and Regulations.
15. To eliminate the Water suction pumps installed directly on the network and
on any other alternate Water source. If the Users wish to keep an alternate
Water source, they shall apply for authorization from the Concessionaire, who
shall decide pursuant to the Applicable Laws and Regulations.
Similarly, it is a prohibited to drill wells of any depth within a minimum
distance of the underground sources of the Concessionaire's Water Supply, as set
forth in the Applicable Laws and Regulations.
16. To cap, at its expense, the existing septic tanks and any other alternate
drainage located on the Property. In case of refusal, the penalties set forth in
the Applicable Laws and Regulations shall be applied ten (10) business days
after reliable notice has been served.
Annex H - Concession Contract
2
<PAGE> 122
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
17. To refrain from dumping Effluents not authorized by the Applicable Laws and
Regulations. In the event of noncompliance, the Regulatory Agency shall impose
the appropriate penalties set forth in the Applicable Laws and Regulations.
18. To refrain from discharging unusual items through the Sewage network,
causing or liable to cause blockage. In the event of a blockage which the
Concessionaire is not specifically obligated to repair, the Users responsible
for the blockage may be required to pay for the work of dislodging it.
19. To allow the inspection and sampling of the Effluents discharged into the
Sewage network.
II.B USERS RIGHTS AND OBLIGATIONS IN RELATION TO THE CONCESSIONAIRE
20. To receive general, accurate and adequate information about the Service for
the effective enforcement of their rights, pursuant to the Applicable Laws and
Regulations.
In particular, the Users shall have the right to request and obtain from the
Concessionaire a written statement with general information on the provision of
Service. In addition, the Concessionaire shall publish and freely distribute a
report on the current quality levels of the Service and the appropriate levels
and the programs to achieve them.
21. Within a minimum of twenty-four (24) hours, receive notice of Service
interruptions or temporary decreases in the pressure and/or supply flow rate,
which states the area affected, estimated duration of the interruption, the
precautions to be adopted and the causes of the interruption or decrease.
The communication shall be made through the mass media (newspapers, radio,
television, etc.).
22. To have access to the annual report describing business developed by the
Concessionaire, as well as the general characteristics of the Five-Year Plans,
the Tariff Regime and the Service in general.
23. To receive courteous, proper and diligent treatment from the personnel of
the Concessionaire, as well as suitable answers to their questions or claims.
The User shall have the right to request the Book of Complaints, which shall be
available to the Users at all locations where the Concessionaire serves the
public. The Regulatory Agency shall have previously authorized the Book of
Complaints. Furthermore, the existence of the Book of Complaints shall be
indicated on an appropriate sign or shop window.
24. To be familiar with and properly anticipate filing the necessary
documentation for applications related to the Service. In particular, the
Concessionaire shall reduce the formal requirements, by establishing expeditious
and non-bureaucratic procedures and allowing Users to apply for proceedings
without complete documentation, provided the User promises in writing to furnish
the documentation in the future.
25. To receive answers on reasonable suggestions and concerns that Users
communicate related to improving the Service. For that purpose, the
Concessionaire shall establish permanent communication channels to which the
Users should have easy access. It shall be deemed a failure of the
Concessionaire if there is a lack of service to the public.
Annex H - Concession Contract
3
<PAGE> 123
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
26. To make requests regarding certain aspects of the Service offered or to be
offered, and bring claims against the Concessionaire that correspond to any
breach of the obligations derived from this Annex and from the Applicable Laws
and Regulations.
27. To receive duly recorded evidence of any claim or application filed before
the Concessionaire as well as an indication of the term for resolution which may
not exceed ten (10) business days counted from receipt of the claim If a claim
is made by telephone, the Users shall verbally receive the information.
28. To have their connections inspected by the Concessionaire free-of-charge in
the event of low pressure or insufficient flow of Potable Water, within the time
periods stated by the Regulatory Agency under the Applicable Laws and
Regulations.
If the problem is solved before the inspection, the User shall notify the
Concessionaire.
If it becomes necessary, in accordance with the Applicable Laws and Regulations,
the Concessionaire shall complement the Service using water vehicles free of
charge to the Users.
29. To request and obtain a free verification that the Water meters are properly
functioning when there is founded and reasonable doubt regarding the consumption
readings taken, based on certifiable measuring elements, which will be
determined by the Applicable Laws and Regulations.
30. To resolve with the Concessionaire the applicable charges for dumping of
Industrial Sewage that does not comply within the allowable standards provided
for by the Applicable Laws and Regulations, as long as the Concessionaire has
agreed to receive such Effluents and to the extent allowable under the
Applicable Laws and Regulations. The agreement shall specify at a minimum, the
chemical and biological quality of the Industrial Sewage to be received, the
anticipated flow rates, and the penalties set forth for instances of breach, in
the framework of the provisions by the Applicable Laws and Regulations.
If the Concessionaire chooses not to receive the Industrial Sewage, it shall be
entitled to interrupt the Sewage Service when the allowable standards are not
complied with as provided by the Applicable Laws and Regulations, or due to
reasons pertaining to the water transportation and drainage capacity of existing
facilities in order to protect the operational facilities.
31. To file the applications for connection at the Concessionaire's commercial
offices, submitting the respective in-house installation plans that determine
the location of the Connection and the evaluation of its diameter.
32. To receive reliable notice of the date of connection. In case of a breach by
the Concessionaire resulting in damages to the Users, the User shall be entitled
to receive compensation pursuant to the Applicable Laws and Regulations.
33. To request supplementary or larger diameter connections when the Users need
to obtain a larger volume of Water for industrial or commercial processes, in
accordance with the Applicable Laws and Regulations.
34. To allow the Concessionaire's personnel to access facilities to conduct
inspections for Service related reasons, or to update commercial files. The
visits shall always take place during reasonable hours and the attending
personnel shall wear an identifying uniform and present the proper
Annex H - Concession Contract
4
<PAGE> 124
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
credentials. The credentials shall be in good condition and include a photograph
of the bearer. The time restriction may be waived in case of serious operational
emergencies.
35. To appeal to the Concessionaire upon confirmation of non-compliance with the
POES and the Five-Year Plans.
II.C USERS RIGHTS AND OBLIGATIONS IN RELATION TO THE REGULATORY AGENCY
36. To request strict compliance with the Applicable Laws and Regulations.
37. To provide the Regulatory Agency with a direct source of information in the
event of silence by the Concessionaire when confronted by a particular claim or
request. In particular, silence by the Concessionaire shall be presumed:
(a) After thirty (30) consecutive days, for questions previously
submitted in writing.
(b) When the Users justifiably require a visit to their domicile after
three (3) consecutive days have elapsed from the time the request was made.
(c) When a complaint is made for repairing damages that jeopardize the
health of a group of Users, without the commencement of repairs within
twenty-four (24) hours of the request being made.
(d) When the claim refers to the quality of the water jeopardizing or
potentially jeopardizing public health, without being resolved within twelve
(12) hours of filing.
38. To appeal to the Regulatory Agency in instances of deficient provision of
Service, over-billing, or any other breach by the Concessionaire, when the claim
has not been addressed in a timely or satisfactory manner.
39. To report any irregular conduct or omission by the Concessionaire that may
affect the User's rights or impair the Service.
40. To obtain a well-supported decision regarding any filed claim.
II.D USERS RIGHTS AND OBLIGATIONS IN EMERGENCY SITUATIONS
41. To receive information from the Concessionaire as soon as possible regarding
repairs, maintenance or others tasks that must be performed or that have been
performed for emergency reasons and that affect the pressure and/or flow rate of
supply or drainage of Effluents.
42. To have access to an emergency response service related to the provision of
the Service, which shall be operated by qualified and competent personnel under
the direction of the Concessionaire twenty-four (24) hours a day.
43. To request and obtain from the Concessionaire research related to those
situations deemed to entail a potential health risk to Users, if reasonable
under the Applicable Laws and Regulations.
44. To have the Concessionaire inspect the User's in house plumbing
installations free-of-charge, in those cases where the public health may be at
risk. If appropriate, the Concessionaire shall perform the required analyses
free of charge.
Annex H - Concession Contract
5
<PAGE> 125
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
45. To receive, through the mass media, necessary information on the procedures
to be followed if the Concessionaire detects any problem in the quality of the
Water that may affect the health of the population.
46. To receive an alternate supply of water free-of-charge in those cases where
the Concessionaire interrupts the Service for a term of longer than twelve (12)
consecutive hours. In instances affecting public and private Hospitals, Clinics
and Health Centers, the time period shall be six (6) hours. In the case of
Industrial Users, the term may be determined by a well-supported resolution of
the Regulatory Agency, based on the uses assigned to the Service and as
established by the Applicable Laws and Regulations.
II.E USERS RIGHTS AND OBLIGATIONS IN RELATION TO THE PAYMENT FOR THE SERVICE
RECEIVED
47. To pay invoices, according to the Tariff Regime, based on the Service
received.
48. To know the Tariff Regime, including any changes, as provided for in the
Applicable Laws and Regulations.
49. To receive communications from the Concessionaire, with proper notice
pursuant to the Applicable Laws and Regulations, regarding any change in the
calculation parameters of the particular tariff amounts, that are not derived
from a general modification of the Tariff Regime.
50. To make a claim against the Concessionaire when the invoiced amount is
inconsistent with the Tariff Regime. Once the claim is made, payment shall not
be demanded from Users for the invoice under dispute if the amount of the last
accepted invoice was paid as a provisional payment, and on account of the amount
resulting from the resolution of the claim.
If the Concessionaire rejects the claim on sufficient grounds, Users shall pay
the amount due, the respective interest and additional charges under the Tariff
Regime, notwithstanding the Regulatory Agency's revisionary authority. In this
regard, the assertion of a recourse before the Regulatory Agency shall not
suspend the payment obligation.
51. To receive the bills at least five (5) business days prior to the due date
at the declared domicile at no additional cost. However, even if the invoice is
not received in a timely manner, the payment obligation shall remain
enforceable. To that end, each invoice shall contain the next due date printed.
52. To know, with a minimum lead-time of thirty (30) calendar days, of any
change in the invoicing periods approved by the Regulatory Agency. The
notification periods shall be of at least thirty (30) calendar days.
53. To know, through the respective invoice, of the places and the methods of
payment and any other information related to payment arrangements.
54. To know, through the invoice, the different components of the applicable
tariff.
55. If a payment plan is granted by the Concessionaire, to know the total amount
of the interest to be paid, the balance of the amount due, the annual effective
interest rate, the procedure for amortization of the principal, the number of
payments to be made and due dates, the extra or additional expenses, if any, and
the total financed amount to be paid.
Annex H - Concession Contract
6
<PAGE> 126
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
56. To pay the charges provided for in the Tariff Regime.
57. To receive refunds for amounts paid in excess of the amounts actually due
for the Service received, either in cash or as a credit of advance payment of
Service received, or to be received at the User's choice. Interest and
surcharges due to delays in refunds shall be equal to those applied in similar
situations of Users' nonpayment.
58. To refuse to pay for the measured consumption of the Service when the amount
due is derived as a result of estimated consumption levels four times per
calendar year, and as long as the situation may not be attributed to the Users.
Estimates shall be made considering the seasonal monthly consumption averages of
the Real Estate in question or of Real Estate with similar characteristics, in
accordance with the Applicable Laws and Regulations.
II.F USERS RIGHTS AND OBLIGATIONS UPON SERVICE CUTOFFS
59. To have the Service reconnected, once the debt which led to the interruption
is paid, including interest, surcharges and a reconnection fee, within the terms
set forth in the Applicable Laws and Regulations. Otherwise, Users shall be
entitled to credit from the Concessionaire, under the criteria established in
the Applicable Laws and Regulations, per day of delay in reconnecting the
Service.
60. Not to suffer a Service cutoff:
a) when there is a documented agreement with the Concessionaire on the
payment of the amount owed.
b) when the Regulatory Agency orders a discontinuance of the Service
cutoff.
c) when the debt exists prior to the Taking of Possession, unless
otherwise provided by the Regulatory Agency or OSBA.
d) when there is a complaint regarding an invoice that is pending
resolution by the Concessionaire or the Regulatory Agency.
e) in those cases of proved urgent need based on a well-founded resolution
by the Regulatory Agency.
61. To receive with sufficient lead time notification of the interruption of the
Sewage Service when the Concessionaire is required to, due to a breach of the
quality parameters of the Effluents, as established by the Applicable Laws and
Regulations.
62. In those instances of service cutoff due to delays in payment of invoices,
notwithstanding the required charges for late-payment and interest, the
Concessionaire shall comply with the following guidelines:
a) The delay incurred for non-payment of a service invoice shall
be of at least six (6) months for residential consumption and
three (3) months for commercial or industrial consumption.
b) The Concessionaire shall have claimed the payment previously
and in writing, on at least on two (2) occasions through
documents other than the invoice.
Annex H - Concession Contract
7
<PAGE> 127
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
c) The Concessionaire shall serve reliable notice of the
interruption on the User seventy-two (72) hours before the
interruption actually takes place.
d) Upon payment by the User of the late payment fee and service
reconnection fee, the Concessionaire shall restore service
within a maximum term of forty-eight (48) business hours.
e) If this period expires, the Concessionaire shall not be
entitled to receive any sum resulting from the applicable
tariff regime until the effective reestablishment of service
and the User shall be credited by an amount equal to twenty
percent (20%) of the total amount billed in the last full
two-month period of the provision of service for each day of
delay in re-establishing service.
f) The Concessionaire shall not cutoff service if there is an
agreement with the User on the payment of the amount due or if
there is an order by the Regulatory Agency to temporarily
discontinue the interruption. The Regulatory Agency may order
the Concessionaire to temporarily discontinue the service
cutoff under contingent or extraordinary conditions and on
sufficient grounds.
g) If the Concessionaire cuts off the service and it is proven
that the measure was not appropriate, the Concessionaire shall
restore the restricted service within twenty-four (24) hours
and shall not be entitled to receive any sum derived from the
Tariff Regime until the Service is actually restored.
Furthermore, the Concessionaire shall reimburse the User
through the payment of an amount equivalent to thirty percent
(30%) of the total amount billed in the last full two-month
period of the provision of Service.
If, upon the expiration of the twenty-four (24) hour term
indicated above, the Service has not yet been restored, the
User shall be entitled to a reimbursement amounting to thirty
percent (30%) of the amount referred to in the paragraph
above, per day of delay in restoring it.
II.G RIGHTS AND OBLIGATIONS OF POTENTIAL USERS (SECTION 22-II OF THE
REGULATORY FRAMEWORK)
63. Potential Users are those located in the Expansion Area or in the Remaining
Area. These Users shall exclusively enjoy the rights stated in sections 9, 20,
22, 23, 24, 26, 27, 35, 37, 38, 39 and 40 of this Annex, regardless of the
conditions contained in Section 22-II of the Regulatory Framework and the rest
of the Applicable Laws and Regulations.
64. Potable Water gathering and distribution systems and Sewage collection and
treatment systems may be built, provided there are no works planned by the
Concessionaire and approved by the Regulatory Agency with an earlier established
date of implementation for the supply of the Service. Users shall file the
appropriate application with the Concessionaire, who shall either authorize or
reject it within a maximum term of ninety (90) calendar days from filing.
The provisions in Section 3-II of the Regulatory Framework shall be enforceable.
Annex H - Concession Contract
8
<PAGE> 128
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX I
REQUIREMENTS OF CAPITAL STOCK, AMOUNT OF THE CONTRACT GUARANTY, AMOUNT OF THE
OPERATING GUARANTY AMOUNT AND AMOUNT OF INSURANCE REQUIRED
<TABLE>
<CAPTION>
======================================================================================================================
REGION / SUBREGION CAPITAL STOCK CONTRACT GUARANTY OPERATING GUARANTY INSURANCE AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A US$15,000,000 US$15,000,000 US$ 5,000,000 US$ 6,000,000
- ----------------------------------------------------------------------------------------------------------------------
B US$45,000,000 US$20,000,000 US$ 5,000,000 US$12,000,000
- ----------------------------------------------------------------------------------------------------------------------
C1 US$10,000,000 US$15,000,000 US$ 5,000,000 US$10,000,000
- ----------------------------------------------------------------------------------------------------------------------
C2 US$10,000,000 US$ 5,000,000 US$ 1,000,000 US$ 6,000,000
- ----------------------------------------------------------------------------------------------------------------------
C3 US$ 6,000,000 US$ 3,000,000 US$ 1,000,000 US$ 3,000,000
- ----------------------------------------------------------------------------------------------------------------------
C4 US$ 4,000,000 US$ 2,000,000 US$ 1,000,000 US$ 3,000,000
======================================================================================================================
</TABLE>
The Concessionaires who are awarded more than one Region or Subregion shall
comply with the following requirements:
Capital Stock and Amount of Insurance: shall be equivalent to the sum
of the capital stock and amount of insurance pertaining to each of the
Regions and/or Subregions that form the Concession. Civil liability
insurance policies may be individually submitted for each of the
Region(s) and/or Subregion(s) or presented to reflect the sum of the
respective Region(s) and/or Subregion(s).
Guaranty of Contract and Guaranty of Concession: these shall be equal
to the greater of the amounts corresponding to the Guaranty of Contract
and Guaranty of Operation set forth for each of the Regions and/or
Subregions that form the Concession.
Annex I - Concession Contract
1
<PAGE> 129
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX J-K
The present Annex is composed of the final text of the Operation and
Contract Guaranties, duly executed pursuant to the provisions of
Article 11.1.2) paragraph. e) of the Concession Contract.
Annex J-K - Concession Contract
1
<PAGE> 130
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX L
LIST OF PROPERTY, EASEMENTS AND
OWNERSHIP RESTRICTIONS
See Circulars N(o) 13(A), 45(A), 49(A), 61(A), 66(A), 68(A) and the
Communications of Information N(o) 27, 28 and 29.
Annex L - Concession Contract
1
<PAGE> 131
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX M
LIST OF PERSONNEL
See Circulars N(o) 60(A) and 67(A).
Annex M - Concession Contract
1
<PAGE> 132
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX N
LIST OF CONTRACTS
See Circulars N(o) 13(A), 17(A), 29(A) and 35(A).
Annex N - Concession Contract
1
<PAGE> 133
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX N'
TARIFF REGIME
TITLE I
GENERAL CONSIDERATIONS
1. GENERAL
The present Annex establishes the Tariff Regime applicable to the provision of
Service by the Concessionaire. The Tariff Regime shall be effective for the
entire period of the Concession, unless modified pursuant to the provisions of
chapter 12 of the Contract. Unless a decision is passed to the contrary by the
Regulatory Agency, on the basis of the Regulatory Framework and the Contract,
Users shall not pay the Concessionaire or third parties any amounts other than
those resulting from the application of the Tariff Regime, for the availability
and supply of the Service.
2. LIABLE PARTIES
Those obligated to pay for the Service, in accordance with the present Tariff
Regime are:
1) The owner or group of owners (pursuant to National Law 13.512) of real
property located in front of Potable Water distribution lines or sewage lines,
even if there is no connections from the property to the external networks of
the Service.
2) The owner, possessor or temporary holder during a period of possession or
leasehold and limited to the water supply and sewer services received.
In determining the payment obligation for the Service, the following guidelines
shall apply:
a) When metered Service of Potable Water is not applicable, for both
the Service of running Water and Sewage, it shall be based on the number of
cubic meters assigned to the valuation tier in which the property is appraised,
as provided in article 4.
b) When the metered Service applies according to the tariff established
on the basis of consumption recorded, pursuant to article 4. In this instance,
Sewage services shall be billed in proportion to consumption.
In all instances, the minimum Service shall be paid at the amounts established
by this Tariff Regime.
3. CUBIC METERS
In all the articles of the Tariff Regime where cubic meters or an amount
equivalent to cubic meters is mentioned, a reference is implied to cubic meters
of Potable Water and to the corresponding price of such Service.
Annex N' - Concession Contract
2
<PAGE> 134
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
TITLE II
GENERAL TARIFF VALUES
4. RATES FOR SERVICE AND SPECIAL CONTRIBUTIONS
The amounts listed below shall be paid for the Service and the special
contributions of Potable Water and Sewage of any inhabited or habitable real
estate contained within the serviced area as from the date Service becomes
available:
a) Water Service
a-1) Non-metered Service
The amount that results when the allotted two-month volume of Potable Water is
multiplied by the price per cubic meter, according to the following scales:
<TABLE>
<CAPTION>
SECTION OF
REAL ESTATE - YEAR 1958 M(3)/TWO-MONTH PERIOD PRICE PER M(3)
VACANT LOT----------- 31 U$S0.276
<S> <C> <C>
1 From 0 to 500 62 U$S0.196
2 More than 501 to 1000 93 U$S0.23
3 More than 1001 to 1500 124 U$S0.276
4 More than 1501 to 2000 155 U$S0.311
5 More than 2000 186 U$S0.368
</TABLE>
With respect to the application of the above scale, the financial real estate
valuations shall be supplied by the Direccion Provincial de Catastro Territorial
("DPCT") (Provincial Office of Real Estate Records) for the basic 1958
valuations or equivalent ones determined by the DPCT.
The tariff that results due to the application of the scale shall not exceed the
one determined by the final billing prior to the Taking of Possession, for the
same real estate, i.e., provided no building developments have been recorded
For real estate that lacks a valuation, the Concessionaire shall perform an
official valuation with prior consent and authorization obtained from the DPCT.
a-2) Metered Service
The value of a cubic meter of Water is US$0.276 for the general category
("General price") and US$0.345 for the special category ("Special Price"). Thus,
the invoiced amount is the result of multiplying the two-month volume of Potable
Water supplied, by the cubic meter price previously stated, according to the
following scale:
Annex N' - Concession Contract
3
<PAGE> 135
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
<TABLE>
<CAPTION>
M(3) Consumption in two month period Two-Month Period Amounts
- ------------------------------------ ------------------------
<S> <C>
0 to 40 m(3) 40 m(3) at General Price
41 to 75 m(3) metered consumption at General Price
76 to 200 m(3) first 75 m(3) at General Price
Amount exceeding 75 m(3) by General Price at m(3) per 1.5
From 201 to 400 m(3) first 75 m(3) at General Price
125 m(3) by General Price of m(3) per 1.5
Amount exceeding 200 m3 by Special Price per 3
More than 400 m(3) first 75 m(3) at the General Price.
The next 125 m(3) at the General Price per 1.5.
The next 200 m(3) at the Special Price per 3.
Amount exceeding 400 m3 at the Special Price per 3.5.
</TABLE>
The applicable discount is described in section 17 of this Annex. Similarly, all
Users subject to the metered system shall be charged a meter maintenance fee
equivalent to 5 m(3) of Potable Water, per two-month period at the General
Price.
a-3) Vacant Lots Special Contribution
The amount equivalent to the value of 31 m(3) per two-month period at the
General Price.
a-4) Complementary Premises Special Contribution
For non-habitable complementary premises identified by districts and subject to
the provisions regulating properties with horizontal characteristics, the
Concessionaire shall charge an amount equivalent to 0.5 cubic meters of Water at
the General Price, per square meter of premises. The minimum billable amount is
five (5) cubic meters per two-month period, per premises.
b) Water and Sewage Service
The amount derived by multiplying the values stated for Water Service by a
coefficient of 1.5. Notwithstanding the tariff regime reviews provided for in
Chapter 12 of the Contract, the mentioned coefficient shall be increased
annually as from the second year of the Concession up to the sixth year, so that
in the year 2000, the coefficient will be 1.6; in 2001, 1.7; in 2002, 1.8; in
2003, 1.9, and in the year 2004, the coefficient will be 2.00. This increase
shall be applied in the first invoice issued as from the month of March of each
of the years above mentioned.
Annex N' - Concession Contract
4
<PAGE> 136
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
This above increases shall go into effect if in the year prior to the one in
which he increase is to be applied, the Concessionaire met all the expansion
goals for the Potable Water and Sewage systems (article 2.1 of Annex F - POES,
of the Contract), and for the replacement and reconditioning of the Potable
Water and Sewage pipelines (article 2.3 of Annex F - POES, of the Contract).
This shall be verified by the Regulatory Agency.
Notwithstanding, and for the purpose of the enforcing the increase, compliance
shall be construed as the satisfaction of ninety percent (90%) of the above
mentioned goals, provided the remaining 10% shall be completed within the first
three (3) months of the following year. This exemption may only be applied in
two nonconsecutive occasions in a period of five (5) years.
c) Sewage Service
This paragraph shall be applicable when Sewage Service is the only existing
service. In this case, the applicable amount will be the one derived by
multiplying the values corresponding to the Water Service (article 40-a1), by a
coefficient of 0.5 at the commencement of the Concession. Subsequently, during a
term of five (5) years, starting in the second year of the Concession and until
the sixth year, the 0.5 coefficient shall increase annually as follows: 0.6 in
2000, 0.7 in 2001, 0.8 in 2002, 0.9 in 2003, and 1 in 2004. This increase shall
apply in the first invoice issued during the month of March of each of year
stated above.
This above increases shall go into effect if in the year prior to the one in
which he increase is to be applied, the Concessionaire met all the expansion
goals for the Potable Water and Sewage systems (article 2.1 of Annex F - POES,
of the Contract), and for the replacement and reconditioning of the Potable
Water and Sewage pipelines (article 2.3 of Annex F - POES, of the Contract).
This shall be verified by the Regulatory Agency.
Notwithstanding, and for the purpose of enforcing the increase, compliance shall
be construed as the satisfaction of ninety-percent (90%) of the above mentioned
goals, provided the remaining 10% shall be completed within the first three (3)
months of the following year. This exemption may only be applied in two
nonconsecutive occasions in a period of five (5) years.
5. POWERS OF THE EXECUTIVE POWER
Notwithstanding the values set in the previous articles and for purposes of
protecting water resources, the Executive Power may, upon prior ruling by the
Regulatory Agency, set differential values, of an increasing and accumulative
nature, and impose a maximum consumption limit per Residential Service
Connection, in those instances where the supply sources have limited potential
and/or low recovery capacity.
6. POWER TO REDUCE TARIFF VALUES
Current tariff values and effective prices shall be deemed maximum regulatory
values. The Concessionaire may establish lower tariff values and lower prices of
a general nature for analogous situations, with the obligation to report a
change to the Regulatory Agency within ten (10) days of having done so.
Discounts granted by the Concessionaire shall not cause direct or indirect
differential treatment for other Users. The corresponding invoice shall display
the amount and concept of the discount. The Concessionaire may revoke the
granted benefit with sixty (60)-days prior notice to the User.
Annex N' - Concession Contract
5
<PAGE> 137
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
TITLE III
SPECIAL SERVICES
7. WATER FOR CONSTRUCTION
The payment for the consumption of Water for construction shall be independent
of the bills for Service that pertain to real estate and shall be paid in the
manner and terms indicated below:
a) For the metered system, a monthly charge shall be collected based on
consumption measured by the meter rate set by article 4.
b) For non-metered consumption, a one-time charge shall be collected
per square meter of developed area, at the following rates:
b-1) Sheds and shelters made from metal materials, asbestos, cement,
wood or similar products: US$ 0.17 per m(2)
b-2) Covered Sheds made from plastic material, wood, asbestos,
concrete, wood or similar materials, and masonry walls without a hardy structure
of reinforced concrete: US$ 0.345 per m(2)
b-3) Sheds with a hardy structure of reinforced concrete and masonry
walls: US$ 0.46 per m(2)
b-4) Buildings in general for homes, business, industry, public and
private offices, schools, hospitals, etc. that are not exempted by section 36-II
of the Regulatory Framework (Law 11,820):
- Without a hardy structure of reinforced concrete: US$ 0.518 per
m(2).
- With a hardy structure of reinforced concrete: US$ 0.805 per m(2).
In applying the rates of the present section, fifty percent (50%) of the actual
area of the corridors and balconies shall be counted.
c) For the construction of pavements and floors in general, the Water
to be used will be paid at the following rate per square meter:
<TABLE>
<S> <C>
c-1) Concrete or concrete-based pavements: US$ 0.69 per m(2)
c-2) Concrete ditch and curb: US$ 0.345 per m(2)
c-3) Steel and mosaic sidewalks, smoothed with cement, etc.: US$ 0.345 per m(2)
</TABLE>
The prices of sections c-1) and c-2) shall receive a discount of thirty percent
(30%) if the concrete is prepared off-site.
Annex N' - Concession Contract
6
<PAGE> 138
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
d) The Water used in remodeling and repairs of buildings shall be
charged according to the recorded-metered consumption. In these instances, the
installation of a meter shall be mandatory.
The amount paid for the various services included in this article shall not, in
any event, be lower than an amount equivalent to the value of seventy-five (75)
cubic meters of Water.
8. SEPTIC TANK DISCHARGE
In connection with the service of emptying septic tanks, each tank with up to
three (3) cubic meters of capacity shall be charged an amount equivalent to 500
m(3), per two-month period.
There will be an additional charge per cubic meter or fraction thereof exceeding
the stated capacity, at a rate equivalent to 150 m(3).
9. SERVICE TO MUNICIPALITIES
With respect to the special services of the supply of Water to the
municipalities for irrigation and cleaning of public streets, squares and
boulevards, charges shall be made per cubic meter of water used by the
municipalities at fifty percent (50%) of the General Price of Water.
TITLE IV
WORK FEE
10. ITEM DESCRIPTION
The work fee is the amount that shall be paid as a financial contribution to the
costs of expansion of the residential system built by the Concessionaire, by the
owner, the possessor or holder of realty existing at the time. Public Service is
implemented, both for the supply of Potable Water Service and Sewage service.
The work fee includes the connection charge and for each property shall be one
hundred and fifty U.S. dollars (US$ 150) for the supply of Potable Water
Service, and three hundred and fifty U.S. dollars (US$350) for Sewage Service.
Financing shall be granted to Users and shall consist of payment over five (5)
years, in thirty (30) equal, bimonthly and consecutive installments, with an
annual interest rate of six percent (6%) on the unpaid balance. The
Concessionaire may offer more favorable financing terms to the Users. The first
installment shall be paid with the first invoice after the connection of
Service, and the remainder shall be invoiced together with the amounts due for
the supply of Potable Water and/or Sewage Service. The amount of the work fee
shall always be clearly itemized in the invoice.
Annex N' - Concession Contract
7
<PAGE> 139
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
TITLE V
CHARGE FOR SERVICE CONNECTION, NON-CONNECTION AND DISCONNECTION
11. ITEM DESCRIPTION
Once a new In-House Connection is installed for a user, the Concessionaire shall
be entitled to bill and collect a connection fee according to the rates below:
- - Potable Water US$ 41
- - Sewage US$ 54
If the In-House Connection covers both types of Services, the rates stated above
shall be added together. The payment shall be made after the In-House Connection
is performed.
The connection fee shall not be applicable in those instances where the work fee
is appropriate, as provided for in article 10.
The fee shall be calculated regardless of the diameter, location or
characteristics of the connection, and may be invoiced on a one-time basis per
property. Improvements, replacements or repairs shall be at the Concessionaire's
expense. The Concessionaire may not receive from the User any other fees or
additional amounts for the provision of the In-House Connection.
Notwithstanding the above, in the event of uninhabited realty and non-connection
or disconnection of the service is chosen (section 8-II of the Regulatory
Framework), a non-connection or disconnection fee shall be paid, pursuant to the
conditions below: (i) when the Service is not metered, an amount equivalent to
invoicing corresponding Service during a period of twelve (12) months; (ii) when
the Service is metered, an amount equivalent to the invoicing during the last
twelve (12) months, unless there has been no consumption during any one or all
of the previous months, in which case, for the period without consumption, the
historic consumption averages shall considered for properties with similar
characteristics. The actual or estimated consumption may not be, in any case,
less than forty (40) cubic meters per two-month period. Payment shall be made
prior to the time of its actual disconnection or non-connection, and any
outstanding balance existing at that time shall be paid off.
TITLE VI
GENERAL CONSIDERATIONS ON METERED SERVICE
12. GENERAL
Tariff Values per metered consumption are set forth in article 4, point a-2).
Metering instruments and facilities shall be of brands that meet the ISO
4064-01/93 standard.
13. METERING IN GROUPS OF PROPERTY OWNERS
For metered Service for properties built pursuant to horizontal property
regulations with a common Water tank and where no individual meters can be
installed, the owners' association shall be charged the rate for metered
Service, pursuant to Title IX. In this situation only, and at the request of the
Annex N' - Concession Contract
8
<PAGE> 140
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
owner's association, the Concessionaire may vary the charging system and apply a
flat Tariff Regime to each of the functional units of co-owners, as provided for
in article 2, point a).
Notwithstanding, the owner's association may request, at its expense, the
metering of volumes on certain functional units, provided that this is
technically possible with respect to the installation and future reading of the
meters. In those instances where individual meters were installed in a common
metering battery directly accessible from the public road in accordance with
regulations, the invoicing to the owner's association shall not apply.
Nevertheless, for properties built pursuant to horizontal property regulations
with a common Water tank, with in-house use of the Service in those situations
where no individual meters can be installed, the following calculation procedure
shall be applied for the billing of Potable Water:
- Pg = General Price of m(3)
- Pe = Special Price of m(3)
- Uh = Dwelling units in the Building
- C = Total consumption of the Building
Hence,
Up to 40 m(3) / unit = (40 x Pg x Uh) + (5 x Pg)
Up to 75 m(3) / unit = (C x Pg) + (5 x Pg)
Up to 200 m(3) / unit = (75 x Uh x Pg) + {[C - (75 x Uh)] x Pg x 1.5} + (5 x Pg)
Up to 400 m(3) / unit = (75 x Uh x Pg) + {125 x Uh x Pg x 1.5) + {[C -
(200 x Uh) x Pe x 3} + (5 x Pg)
Up to 1000 m(3) / unit = (75 x Uh x Pg) + (125 x Uh x Pg x 1.5) +
(200 x Uh x Pe x 3) + {[C - (400 x Uh)] x Pe x 4.5} + (5 x Pg)
Up to 5000 m(3) / unit = Same as the previous calculation but with an 8%
discount before the servicing maintenance of the meter.
Up to 100,000 m(3) / unit = Same as the previous calculation but with a 12%
discount before the servicing maintenance of the meter.
Up to 150,000 m(3) / unit = Same as the previous calculation but with a 15%
discount before the servicing maintenance of the meter.
Over 150,000 m(3) / unit = Same as the previous calculation but with a 30%
discount before the servicing maintenance of the meter.
The discount provided for in section 17 of the present Annex shall apply.
Similarly, regarding the metered system, a fee shall always be charged for
maintenance of the meter equivalent to the value of 5 m(3) of Potable Water per
two-month period, at the General Price.
In contrast, regarding the Sewage Service, the fees shall be applied the ratios
provided in Article 4, paragraphs b) and c).
14. METERING GOALS
As set forth in section 29-II of the Regulatory Framework, the POES, as stated
in the Contract, establish the time periods in which the Concessionaire shall
implement the system of metered
Annex N' - Concession Contract
9
<PAGE> 141
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
consumption of Potable Water. If the actual measurement of consumption levels is
not achieved in the terms stated, the Concessionaire may only bill the minimum
consumption provided for the system in point 4.a-2 of Annex N of the Contract to
those Users without an installed meter. For the purpose of determining who these
Users are, apply the pertinent provision in the Concessionaire's Five-Year Plan.
15. METER READING
Access to the meter shall be restricted to the personnel designated by the
Concessionaire, but the latter must allow the User to be present at the time the
reading is taken or when requested by the User on sufficient grounds. If it is
proved that the meter is working incorrectly, indicating consumption levels in
excess of those that the User proves valid, a new bill shall be issued for the
services provided. If the Concessionaire ascertains an under-reading of the
meter due to events not attributable to the User, rebilling shall not be
applicable.
The reading of newly installed meters shall begin on the day of its
installation. In the event the specified date does not match the first day of a
billing period, the metered consumption actually obtained by metering until the
end of the period shall be added on a pro rata basis, based on the volume
assigned to the realty under the fixed Tariff Regime set forth in article 2,
paragraph a), only once and for those days not metered in that period.
The Concessionaire shall notify the User if it replaces the meter or resets the
installed meter.
At the User's request, the Regulatory Agency shall have access to the meter if
there are any uncertainties concerning the reading taken by the Concessionaire.
16. CONSUMPTION ESTIMATE
With those connections which are metered where the meter is not functioning
properly, a maximum of three (3) consecutive estimates will be allowed, after
which, only the fee for maintenance of the meter may be billed. In all
circumstances, estimates shall be made taking into account the monthly seasonal
consumption averages of the realty in question.
17. DISCOUNTS
Users who receive the supply of Potable Water Service for metered consumption
and who pay the invoiced amounts by the due date shall receive the following
discounts in each invoice:
- Users in the First Level of Metered Consumption
(0 to 40 cubic meters per two-month period) 25%.
- Users in the Second Level of Metered Consumption
(41 to 75 cubic meters per two-month period) 12%.
From the second year of the Concession and up to the sixth year, the discount
shall be progressively reduced at the rate of twenty percent (20%) per year. The
reduction shall be applied in the first invoice issued in the month of March, of
each year for the following years: 2000, 2001, 2002, 2003 and 2004.
These reductions shall go into effect if in the year prior to the one in which
he reduction is to be applied, the Concessionaire met all the expansion goals
for the Potable Water and Sewage systems
Annex N' - Concession Contract
10
<PAGE> 142
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
(article 2.1 of Annex F - POES, of the Contract), and for the replacement and
reconditioning of the Potable Water and Sewage pipelines (article 2.3 of Annex F
- - POES, of the Contract). This shall be verified by the Regulatory Agency.
Notwithstanding, and for the purpose of enforcing the increase, compliance shall
be construed as the satisfaction of ninety-percent (90%) of the above mentioned
goals, provided the remaining 10% shall be completed within the first three (3)
months of the following year. This exemption may only be applied in two
nonconsecutive occasions in a period of five (5) years.
TITLE VII
REGULATORY AGENCY FUNDING FEE
18. ITEM DESCRIPTION
As set forth in section 30-I of the Regulatory Framework (Law 11.820), in
addition to the amount invoiced for the supply of Potable Water and Sewage
Service, the Concessionaire shall bill the Users for the Regulatory Agency
funding fee, which shall be a percentage to be established by the Agency on the
amount invoiced for the supply of Potable Water and Sewage Service (free from
VAT (value added tax) or other taxes), excluding the work fee or other similar
items. The charge shall be included in the Concessionaire's first invoice from
the Taking of Possession, and it shall not exceed, under any circumstances, five
percent (5%) of the Concessionaire's invoicing for the provision of Potable
Water and Sewage Service.
The amounts invoiced for the Regulatory Agency funding fee during each period,
independent of actual collection shall be transferred to the Regulatory Agency
within fifteen (15) days of the month following the date of invoicing, in
accordance with the terms and methods that the Regulatory Agency established for
collection purposes. These amounts shall not be subject to discounts,
withholdings, liens or compensations by the Concessionaire.
Failure of the Concessionaire to pay the charge shall be deemed a serious
violation and, if applicable, an improper withholding, notwithstanding the
application of penalties provided in the Contract. In addition, it will result
in the accrual of interest for late-payment equal to the lending rate charged by
the Bank of the Province of Buenos Aires for thirty (30)-day discount operations
of documents operations, compounded monthly, at the official indices.
TITLE VIII
BILLING AND PAYMENT
19. GENERAL
The Concessionaire shall be entitled to bill and collect for all the Services it
provides, to the extent provided in the Regulatory Framework and the Contract.
The income for the supply of the Service shall be derived from the application
of the provisions of the present Tariff Regime.
Annex N' - Concession Contract
11
<PAGE> 143
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
20. BILLING CURRENCY
Although the rates and prices are stated in American dollars, the invoicing to
the Users shall be done in pesos. The corresponding conversion shall be
performed on the basis of the parity value established in National Law 23.9238
of monetary convertibility or the legal provision succeeding it on the closing
day of the invoicing process.
21. INVOICE ELEMENTS
The Concessionaire shall communicate to the Users all the necessary elements to
enable them to calculate the billed tariff values. Notwithstanding the
requirements established in the current legal and regulatory provisions, the
Concessionaire's invoices shall include, at a minimum, the following
information:
- User's name and home address.
- Issue date.
- Location of the property, property record entry and nomenclature.
- Billing period.
- Due date.
- Next due date.
- Indicate the various components of the current invoice, with an
itemization of the amounts for each part of the Service and
applicable special fees.
- Date on which meter was read, if applicable.
- Supplied, assigned or estimated flow volumes.
- Meter number, if any.
- Previous and current meter readings, for metered Service.
- Interest for late payment and resulting amounts.
- Discounts because of fines to the Concessionaire.
- Amount of other applicable discounts, exemptions, rebates or
subsidies.
- Percentage and amount of the Regulatory Agency funding fee.
- Taxes.
- Total amount due.
- Amount with late payment surcharge.
Annex N' - Concession Contract
12
<PAGE> 144
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
- Places and methods of payment.
- If there are any debts or outstanding balance. If not, this fact
must be stated. The absence of this statement will create a
presumption that the User owes no outstanding debt to the
Concessionaire. If debt is owed, the amounts shall be billed through
a separate document with corresponding details.
22. INVOICING PERIOD
Billing shall be bimonthly for metered Service and monthly for non-metered
Service. All modifications to the invoicing periods shall be approved by the
Regulatory Agency, and shall be communicated to the affected Users at least
thirty (30) days in advance.
23. RECEIPT OF THE INVOICE
The User shall receive the invoice at least ten (10) calendar days prior to the
original due date, at no additional cost. If the User claims that it has not
received the invoice on time, the payment obligation shall still be enforceable
provided the next due date was stated in the last invoice received,
notwithstanding the right to make the respective claim. When the User is unable
to pay his invoice at the places designated by the Concessionaire for payment,
an alternative payment method may be requested. The Concessionaire shall comply
with this request and provide for the proposed method of payment or another
method that allows the User to make payment. Except in the case of Users that
prove physical disability to move about, the expenses required by the special
methods of payment provided as established in this paragraph shall be charged to
the requesting User.
24. BILLING START DATE
The start date for invoicing of the Service that is provided by the
Concessionaire to Users not served at the onset of the effective period of the
Tariff Regime should be determined according to the following:
a) All the Users who have a Home Connection installed for the provision
of Service shall be obligated to pay from the day of Service installation. It is
the Concessionaire's responsibility to give the User notice of the date.
b) All Users without a Home Service Connection shall be obligated to
pay from the day of Service installation or from the expiration of the term
granted for setting up in-house installations, whichever comes first.
c) For non-metered Service for property in which changes are verified
affecting the amounts to be invoiced for the provided Service, due to a change
in the fiscal appraisal, the modified billing shall apply from the first day of
the month following the confirmation of changes by the Concessionaire or upon
communication by the User, whichever occurs first.
25. EXECUTORY INSTRUMENT
Invoices, settlements or certificates of debt issued by the Concessionaire for
the provision of Service, prepared on a computer system, form the executory
instruments anticipated by the provisions of Section 33-II of the Regulatory
Framework.
Annex N' - Concession Contract
13
<PAGE> 145
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
26. DEFAULT
In case of default in the payment of any amount due by the Users under the
Tariff Regime, the applicable interest rate shall be equal to the current rate
charged by the Bank of the Province of Buenos Aires for thirty-day (30-day)
document discount transactions, compoundable monthly according to official
indices. The same interest shall be applied to the Concessionaire's obligation
to grant rebates to the Users, for billing of services contemplated by the
Tariff Regime, upon nonperformance, error or omission by the Concessionaire. The
default shall always operate automatically, without the need for any judicial or
extrajudicial claim.
27. PAYMENT FINANCING CONDITIONS
The Concessionaire may provide debtor Users with payment financing conditions,
abiding by the principles of general accessibility and equal treatment.
28. CLAIM AGAINST AN INVOICE
The filing of a claim against an invoice, before its original due date, shall
confer upon the User a right to partial payment, equivalent to the amount of the
last paid invoice, until the Concessionaire issues a decision on the claim. If
the claim is totally or partially validated, the Concessionaire shall issue a
new invoice, granting a new term for the payment of not less than fifteen (15)
days. If the claim is denied, the Concessionaire may re-bill the amounts,
indicating a new due date of not less than fifteen (15) days after the date of
the resolution, adding a surcharge of ten percent (10%) on the original amount,
plus the interest that may apply under Article 26. The interest shall not apply
during the period for which the claim against the invoice presented by the User
is pending resolution by the Concessionaire.
The Concessionaire shall notify the User of the resolution. Partial payments
made must be deducted from the amount owed. In addition, in the conditions
described above and on sufficient grounds, the Regulatory Agency may suspend, at
the User's request, the possibility of re-invoicing.
If a User makes a claim on a paid invoice, any adjustments granted either by the
Concessionaire or by the Regulatory Agency shall be applied to the amount of the
invoice immediately after the date of resolution, and will successively be
applied until paid off, adding surcharges and interest on behalf of the User's
credit corresponding as applicable to article 26.
29. SERVICE CUTOFF
The Concessionaire has the power to proceed with a Service cutoff due to a delay
in the payment of invoices, pursuant to section 34-II of the Regulatory
Framework. Notwithstanding, the Concessionaire shall not interrupt Service in
the following situations:
a) When there is an agreement with the User on the payment of an
outstanding amount.
b) When the Regulatory Agency orders the Concessionaire to temporarily
suspend the interruption due to contingent or extraordinary conditions and
sufficient grounds.
c) When there is a claim because the invoice in question is pending
resolution by the Concessionaire or the Regulatory Agency within the terms set
forth for that purpose.
Annex N' - Concession Contract
14
<PAGE> 146
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
Once the situation creating the interruption of Service is solved, the User
shall pay an amount equal to the value of thirty-one (31) cubic meters of
Potable Water at the General Price, before Service may be reconnected.
Upon payment of the amounts owed by the User for reconnection of the Service
after interruption, the Concessionaire shall perform the reconnection within a
maximum term of forty-eight (48) working hours. Once this term expires, the
Concessionaire shall not be entitled to collect funds derived from the Tariff
Regime and shall refund to the User an amount equivalent to twenty percent (20%)
of the total amount billed in the last full two-month period of actual provision
of Service, per day of delay.
If the Concessionaire interrupts Service and it is proven that the measure was
not appropriate, the Concessionaire shall reconnect restricted service within
twenty-four (24) hours and shall not be entitled to collect any funds derived
from the Tariff Regime until the reconnection of Service. Furthermore, the
Concessionaire shall compensate the User through the payment of an amount equal
to thirty percent (30%) of the total amount billed in the last full two-month
period of actual provision of Service. If upon the expiration of the twenty-four
(24) hour term indicated above, the Service has not been connected, the User
shall be entitled to compensation amounting to thirty percent (30%) of the
amount referred to in the paragraph above, per day of delay in reconnection.
30. COST OF WORKS FOR USER'S NON-COMPLIANCE
The Concessionaire, with prior authorization granted by the Regulatory Agency
based on its analysis in each general or specific situation, shall be entitled
to bill and collect for work related to the provision of Service resulting from
the non-compliance of individual Users with the laws and regulations in effect.
Related invoicing shall take into account the costs incurred by the
Concessionaire and will solely affect those Users charged with noncompliance.
The Regulatory Agency may check the accuracy of the mentioned costs, requesting
the Concessionaire to submit the corresponding reports.
The Concessionaire's Auditors shall always duly certify the reports.
31. RECEIPT OF THE SERVICE WITHOUT BEING BILLED
Upon detecting Users receiving the Service covertly without being billed, in
absence of fault on the part of the Concessionaire, the Concessionaire may bill
the amounts corresponding to duly documented prices in effect on the detection
date, retroactively for a period of six (6) months or from the time elapsed
since the Taking of Possession, whichever is less. In addition, the surcharges
established in Article 26 shall apply subject to a thirty percent (30%)
increase.
TITLE IX
SERVICE TO GROUPS OF OWNERS
32. BILLING TO GROUPS OF OWNERS
Notwithstanding the provisions contained in Article 13, the Concessionaire may
bill the Service provided to horizontal properties by billing the group's
owner's association established in accordance with National Law No. 13.512,
abiding by the provisions set forth in the Tariff Regime, whether caused by
technical or economic reasons invoked by the Users, or stemming from the cost of
Annex N' - Concession Contract
15
<PAGE> 147
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
necessary transformations for the provision. In these cases, the User will be
the group's owner's association, as a legal entity liable for the total payment
of the amount of the invoice. The foregoing provisions shall not apply if it is
possible to independently provide the various functional units of the owner's
association with Potable Water Service.
33. COMMUNICATION TO THE USERS
Pursuant to article 32, the Concessionaire shall notify the Users in the
involved functional units, and the owner's association, of the change in the
invoicing procedure and its effects, with at a minimum of (60) days advance
notice. Similarly the Concessionaire shall provide related free advice,
especially concerning the possibility of providing independent supply of
service, and about all matters related to the procedures of system
implementation and billing and collection related to the method of invoicing the
condominium owners.
34. METERING IN CONDOMINIUMS
The provisions in Article 13 shall apply to micro-metering in owners'
condominiums.
TITLE X
EXEMPTIONS AND SUBSIDIES
35. CURRENT EXEMPTIONS AND SUBSIDIES
The provisions of Article 36-II of the Regulatory Framework govern exemptions
and subsidies. The Concessionaire shall apply the exemptions and subsidies
anticipated by Annex N-1 of the present Tariff Regime.
The Concessionaire may establish with prior approval by the Regulatory Agency,
in general, the probative elements that the Users shall submit to prove that
they are entitled to exemptions and subsidies.
36. FUTURE EXEMPTIONS AND SUBSIDIES
In any new future exemption or subsidy to be enforced in the area of the
Province, the Province shall compensate the Concessionaire with the amount
equivalent to the cost derived from the exemption or subsidy. Cost will be
understood as the amount not received by the Concessionaire due to the
exemptions, subsidies or discounts. The reports to this effect by the
Concessionaire shall be certified by the Auditors. The Province shall pay
compensation to the Concessionaire within thirty (30) days following the
corresponding billing period. In the event of nonpayment, the interest provided
in article 26 shall apply.
TITLE XI
COMPLEMENTARY PROVISIONS
37. DEFINITIONS
The terms that appear in capital letters in the Tariff Regime are defined in
article 1.2 of the Contract.
Annex N' - Concession Contract
16
<PAGE> 148
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
38. POWERS OF THE CONCESSIONAIRE AND OF THE REGULATORY AGENCY
The Concessionaire shall have the responsibility and duties of determining,
auditing and returning the amounts provided in the Tariff Regime. The Regulatory
Agency shall issue any regulation that it deems necessary for the application of
the Tariff Regime, in accordance with the Regulatory Framework and the Contract.
The Regulatory Agency shall resolve, on sufficient grounds, those cases that,
due to their unique characteristics, require special treatment or have not been
considered in the Tariff Regime.
39. NOTICES
When the Concessionaire is obligated to communicate any situation requiring an
answer or activity to the User, notice shall be served by reliable means at the
real estate serviced or at the domicile indicated by the User for remittance of
invoices.
40. TAXES
The prices or rates indicated in the Tariff Regime do not include rates related
to Value Added Tax (VAT) or to other applicable municipal taxes.
41. COMMUNICATION TO THE USERS
Within two (2) months of the date of Taking of Possession, the Concessionaire
shall issue a descriptive and informative document for the Users, regarding the
provisions, prices and rates contained in the Tariff Regime, as well as any
administrative procedure granted in relation to its application. The document
shall be approved by the Regulatory Agency and shall subsequently be made
available to the Users at the Concessionaire's commercial offices and at the
Regulatory Agency offices.
42. TERMS
The terms contained in the Tariff Regime shall be counted in consecutive days.
Annex N' - Concession Contract
17
<PAGE> 149
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX N'-1
LIST OF CURRENT EXEMPTIONS AND SUBSIDIES
A) The following are exempt from:
a) the payment for the Service and the connection and work fees:
o Public hospitals.
o Public First Aid Rooms.
o Public Schools of Mandatory Elementary Education
b) the payment of the service:
o Natural or legal persons for properties they own that have
been assigned free of charge to be used for Voluntary Fire
Fighting services.
o The Argentine Red Cross for properties they own and Natural or
Legal Persons for properties they own that have been assigned
free of charge for their use.
o The properties assigned in full to recognized religious
groups.
c) 50% of the amount payable:
o Natural Persons whose property is their only property, houses
the family group, and who prove their income is insufficient
to maintain it.
d) 60% of the amount payable:
o Non-profit Public Welfare organizations for strictly
humanitarian purposes that are exclusively dedicated to caring
for and helping children, the handicapped and the elderly.
o Entities exclusively dedicated to the rehabilitation and
protection of people.
o The Armed Forces, Security Forces, and Educational
Establishments that are dependent on the Province, Nation,
Municipalities, Labor Unions and Courts of Justice.
e) 30% of the amount payable:
o Social, Sports and Development Clubs in which amateur sports
are carried out, requiring the use of fields, gymnasiums,
camping, pools and/or similar facilities.
o Day care centers and shelters under state budget.
o Non-profit Civil Entities or Groups, dedicated to education
and promotion in the fields of theater, music, arts, cinema or
any type of cultural activities.
o Public Libraries, if their income stems exclusively from
member contribution, social contributions or private
donations.
B) Excluding those exemptions contained in section A) paragraph a) above,
in all other instances the Concessionaire shall:
o Upon prior approval by the Regulatory Agency, determine on a
regular basis the necessary evidence to be furnished by Users
in order to prove their rights to qualify as beneficiaries for
the exemptions and subsidies.
o After a one-year period has elapsed since the Taking of
Possession, reduce to 20% the current exemptions, this
percentage decrease shall be increased annually until fully
implemented.
Annex N'-1 - Concession Contract
1
<PAGE> 150
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
o The 50% exemptions benefiting retired and senior citizens
contained in section A) paragraph c) above shall be
enforceable during the first and second year of the Concession
following the Taking of Possession. The exemption shall be 30%
during the third and fourth year of the Concession and 20%
during the fifth year.
o The exemption shall be maintained.
i. in reference to metered service with minimum usage described
in point 4.a-2 in Annex N. If consumption exceeds minimum
usage, the excess shall be rated according to the price stated
in the Tariff Regime. The exceeding cubic meter rate shall be
the one set forth by the Tariff Regime for the consumption
tier applicable to total consumption;
ii. in reference to non-metered service, meeting the tiers 1 and 2
in the schedule contained in point 4.a-1 in Annex N.
o Ensure water supply to put out fires free of charge (article
3.4 Concession Contract)
o Ensure portable water supply to low income population sectors
free of charge (article 3.4 Concession Contract)
C) The discounts resulting from the exemptions above shall be included in
the corresponding invoices as an extra item (Point 21 Annex N). Such
communication shall be performed six months before their effective application.
Annex N'-1 - Concession Contract
2
<PAGE> 151
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
ANNEX O
REGION A
PASO DE LAS PIEDRAS DAM
GENERAL GUIDELINES.
1) The entire pumping system, microfilter batteries, flow lines, other accessory
and distribution works, including the Grumbein and Patagonia potable water
plants with their entire infrastructure, the pump house and all metering,
control and operation instrumentation of the system installed in it, shall be
transferred to the Concessionaire, for operation, maintenance and upgrading to
the actual needs of demand and Service,
The Concessionaire shall allow, within the pump house as is presently the
situation, the operation, control, maintenance and monitoring of the
instrumentation for the monitoring of the dam and its foundation, the operation
of the bottom gates, and other necessary components for control of the
reservoir, as well as free and unlimited access of personnel designated
accordingly by the Province for those tasks. Any investment required in the
future to enable access to the personnel of the Province shall be the
responsibility of the Concessionaire.
The access roads to the Dam site, as well as those roads leading to the city and
those in the city district, the workshops, sheds, homes, school, first aid room
and other facilities that make up the district located at the base of the dam
and that have not been granted under the Concession remain under the exclusive
liability of the Province of Buenos Aires.
The operation and maintenance of the Dam and drain, flood drainage channel,
energy dissipation basin, drainage canals, berms, bottom discharge tunnel,
intake tower, inflow lines up to the pump flanges, built-in dam monitoring
system and its foundation, for measurement of the reservoir level and everything
not granted under the Concession by the Bidding Terms and Conditions shall be
the responsibility of the Province of Buenos Aires or the agency/authority to
which this function has been delegated.
The Concessionaire shall:
o consider the Paso de las Piedras dam as one of the alternatives for
capturing water for the supply to the city of Bahia Blanca and its zone of
influence, the Province of Buenos Aires shall not be responsible for the
amount and quality of water delivered.
o pay the Province a price of $0.0325 per cubic meter of delivered water,
which shall be invoiced monthly and payable within five days after the
invoicing. The guidelines established for rate revisions in chapter 12 of
the Concession Contract shall apply to that price.
o within the first two months of the Concession, implement a metering system
of the flow rates delivered by the Dam allowing the appropriate authority
to control it. Within that term and until such metering system is
implemented, the consumption shall be calculated at 200.000 m(3) per day
for billing purposes. The Regulatory Agency shall have responsibility for
granting approval of the metering system Regulatory Agency.
2) In reference to the contracts entered into by the Province and/or AGOSBA with
the companies
Annex O - Concession Contract
1
<PAGE> 152
NATIONAL AND INTERNATIONAL PUBLIC BID FOR THE CONCESSION OF POTABLE WATER
AND SEWAGE PUBLIC SERVICE PROVISION IN THE PROVINCE OF BUENOS AIRES
located in Polo Petroquimico de Bahia Blanca listed in Circulars No. 13 (A) and
17 (A) and exclusively in relation to the supply of Industrial and/or Potable
Water to these companies, the following guidelines shall be observed:
o The Concessionaire shall pay the Province the price stated in
paragraph 1 above for the water delivered from the Dam,
excluding water provided in compliance with the Industrial
Water supply contracts, where the rate to be paid to the
Province shall be $0.02 per m(3) of delivered water.
o The Concessionaire shall have a metering systems for measuring
the flow at the outlet of the industrial water aqueduct
alongside the loading chamber. The Regulatory Agency shall
authorize the metering and data recording system.
o The Province shall be liable for the amount of water to be
delivered, the quality of which shall be equal to that of the
natural condition of the Paso de las Piedras dam with
subsequent treatment at the Micro-Sifting Plant. For the
effects of complying with such undertaking, the water shall
have been delivered to the Concessionaire when made available
at the dam. In all cases, the Province shall be summoned to
the court as an interested third party.
o Within seven years from the beginning of the Concession, the
Concessionaire shall allocate the water coming from the dam to
supply water for Polo, as a priority, pursuant to the
provisions of this section. Should the supply not be enough to
satisfy the needs of the city of Bahia Blanca and its
surroundings, the Concessionaire shall use alternative
sources.
Annex O - Concession Contract
2
