The Singareni Collieries Company Limited (A Government ...



Project Agreement

For

Deploying Longwall technology,

Development of Longwall Panels

And their Extraction

At

Kakatiya Longwall Project

PROJECT AGREEMENT

Between

The Singareni Collieries Company Limited

(A GOVERNMENT COMPANY)

And

[NAME OF TPO]

Date: XX -XX-XXXX

Agreement Between

The Singareni Collieries Company Limited (A Government Company) and [NAME OF TPO]

THIS AGREEMENT IS MADE ON THE …………. day of ……………. XXXX

BETWEEN

The Singareni Collieries Company Ltd., an existing company under the Companies Act, 1956 and having its registered office at Kothagudem Collieries, Khammam District, (Andhra Pradesh, India) hereinafter called “SCCL”, which term shall, unless excluded by or repugnant to the subject or context, include its successors and permitted assigns, of the FIRST PART.

AND

[NAME OF TPO], a company duly incorporated in [Name of the country where company is incorporated] and having its offices at [LOCATION OF OFFICE] (hereinafter referred to as [NAME OF TPO]), which term shall, unless excluded by or repugnant to the subject or context, include its successors and permitted assigns, of the SECOND PART.

The TPO and SCCL shall be individually known as a “Party” and collectively referred to as the “Parties”.

WHEREAS

A. The Singareni Collieries Company (SCCL) is a Government company with equity participation of 51% by Government of Andhra Pradesh and 49% by Government of India. SCCL is a profit making company and is paying dividend to its share holders for the last 6 years. The company with a history of over 119 years in coal mining is moving ahead to retain its leadership by taking proactive measures to meet the emerging challenges in the coal industry both in technical and financial terms.

B. KTK Longwall is a mine owned and operated by M/s. SCCL in Bhoopalpalli area, in Warangal district, with a view to deploy Longwall Mining Technology to produce not less than 2.75 MTPA. It is proposed to operate the mine with the concept of TPO (Technology Provider cum Operator), who can design & deploy suitable LW machinery, produce & deliver coal at a designated Transfer point on surface, on CPT basis, at a guaranteed rate of production with globally competent conservation measures and globally competent safety standards and practices.

C. The LW Panel development and extraction in the mine is to be undertaken by the TPO in accordance with the Applicable Laws including but not limited to applicable provisions of the Mines Act – 1952, Coal Mines (Nationalization) Act, 1973, The Coal Mines Regulation – 1957, the Contract Labour (Regulation and Abolition) Act 1970 and all Mineral, Environmental, Labour laws and other regulations governing and applicable to the coal mining and industry.

D. It is proposed to operate the mine with the concept of TPO (Technology Provider cum Operator), who can design & deploy suitable LW machinery, produce & deliver coal at a designated Transfer point on surface, on CPT basis, at a guaranteed rate of production with globally competent conservation measures and globally competent safety standards and practices.

E. Consequently, SCCL had invited sealed tenders vide notification no. …….. dated ……. (the “Tender”) from eligible bidders for selection of a Technology Provider cum Operator (TPO), undertake all activities starting from, design of LW mining equipment, equipment selection for deployment of longwall technology, planning and development of the Mine, mining of Coal, transportation of coal up to designated point at surface.

F. [NAME OF TPO] participated in the Tender and has been selected as the successful bidder.

G. SCCL has agreed to appoint [NAME OF TPO] as “The Technology Provider cum Operator”. [NAME OF TPO] agrees to accept the appointment, and to carry out the coal mining operations including, the design of the Longwall machinery, get technology approved by DGMS and obtain other DGMS approvals for the working of the mine, mine development, coal extraction, deployment, operation and repair and maintenance of equipment, transportation of coal up to designated point at surface and the undertaking of peripheral activities in accordance with the terms and conditions as set out in this Project Agreement.

NOW, THEREFORE, in consideration of the agreement and covenants hereinafter set out, and intending to be legally bound hereby, the Parties hereto covenant and agree with each other as follows:

DEFINITIONS AND INTERPRETATIONS

1 Definitions

When used in this Agreement, the defined terms set out in this Clause 1 shall, unless the context otherwise require, have the following meanings:

1. “Affected Party” shall mean the party whose performance obligations under this Agreement is affected due to the actions of the opposite party and/ or Force Majeure.

2. “Affiliate” means in relation to any Party, any entity, which directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with the Party. For the purposes of this definition, the term “control” means effective management control of the Party, including without limitation, control through the power to select a sufficient number of directors, or to appoint a sufficient number of senior managers to exercise control, or similar powers. Further a party shall be presumed to control another person or entity, if it owns 51% or more of the beneficial interest or the voting power of that person or entity.

3. “Agreement” or “Project Agreement ” means this Project Agreement (along with all Schedules and Annexures) comprised by the documents set out in Clause 2 of this contract document; as of the date hereof, as may be amended or supplemented in accordance with the provisions hereof.

4. “Annual Contracted Quantity” or “ACQ” means the quantity of Coal set out in Clause 8

5. “Applicable Laws” means any law, rule, regulation, ordinance, order, code, treaty, judgment, decree, injunction, permit or decision of any central, state or local government, authority, agency, court, regulatory body or other body having jurisdiction over the matter(s) in question, as in effect from time to time.

6. “Approvals” mean the DGMS approvals for various equipment, goods, components, apparatus and instruments to be used in the Kakatiya longwall Mine.

7. “Ash (ADB)” shall mean the ash percentage in the Coal on an air dried basis.

8. “Authority” includes any government or governmental, semi-governmental, administrative, fiscal or judicial body, local governing body, department, commission, authority, tribunal, agency or entity having jurisdiction over the subject matter(s) in question;

9. “BCM (bcm)” means bank cubic meters.

10. “Bid” shall mean the bid submitted by the TPO to SCCL dated ……… in response to the tender and subsequent correspondence between the TPO and SCCL in this regard, accepted by SCCL in relation to the matters set out in this agreement.

11. “BIS” means the Bureau of Indian Standards or any successor or any other similar organization mutually agreed to by the Parties, which performs substantially the same role as that currently performed by the Bureau of Indian Standards.

12. “Business Day” means a day other than a Sunday or a public holidays in India on which banks are open for business in Hyderabad.

13. “Certified (1st and 2nd Class) Mine Manager” means the person nominated by SCCL in accordance with the requirements of Applicable Laws and Regulations, and is in sole charge, subject to the direction, supervision and policies of SCCL and the provisions of this agreement;

14. “Change in Law” means:

a) The enactment, adoption, promulgation, modification or repeal (including any change in interpretation or application by competent authorities), after the date of this Agreement of any Law applicable or enforceable in the state of Andhra Pradesh; or

b) The imposition of any material condition on the issuance or renewal or continuation of any Government Approval after the date of the Contract; or

c) The failure by any relevant Government Authority to issue or renew any Government Approval,

After the effective date that shall make it more burdensome or expensive for the TPO to meet its obligations herein.

15. “Claim” means any claim, notice, demand, debt, account, action, expense, cost, lien, liability, proceeding, litigation (including reasonable legal costs), investigation or judgment of any nature, whether known or unknown;

16. “Coal” means Coal as defined by the Colliery Control Order, 2000 but does not include Washery Rejects.

17. “Coal Mines (Nationalisation) Act” means the Coal Mines (Nationalisation) Act, 1973 by the Government of India (GOI) and all subsequent amendments made to the Act.

18. “Commencement Date” means the date on which the Work under the terms of this Agreement has commenced and shall be the date when all Conditions Precedent under Clause 3 have been satisfied.

19. “Commencement of Coal Production Date” means the date on which the first consignment of Coal is delivered at the designated point at surface. For the purpose, total coal quantity in the first consignment shall be calculated as the each day’s production requirement to achieve the annual production target on pro rata basis for the first year.

20. “Completion” means the date when the TPO has carried out all work under the Agreement in accordance with the terms of this Agreement;

21. “Consignment” means each day’s coal delivered at the designated point at surface.

22. “Contract Price” means the price as agreed between [NAME OF TPO] and SCCL in accordance with the letter dated ……… from …………….. to ………, and which shall be determined in accordance with Clause 9 (for Adjustment of Rates) and Schedule of Rates

23. “Contract Representative SCCL” means the person from time to time nominated by SCCL to be its representative in accordance with Clause 28.1

24. “Contract Representative TPO” means the person from time to time nominated by TPO to be its representative in accordance with Clause 28.2;

25. “CIL” means Coal India Limited having its registered office at 10, Netaji Subhas Road, Kolkata 700 001, India or its relevant subsidiary.

26. “Coal Block” means the Kakatiya Longwall Block Peddapur and Gollapalli in Godavari Valley Coalfields which belongs to SCCL from which TPO shall mine the coal and deliver to SCCL under the terms of this Agreement.

27. “Delivery Point” means the Coal unloading facilities at the destination identified by SCCL for the delivery of Coal by the TPO under this agreement.

28. “Effective Date” means the date as mentioned in Clause 4.1 of this Agreement.

29. “Environmental Laws” means any legislation, regulation, judgment, by-law or proclamation (whether of a local authority, a State or Central Government) or common law which has as its object, purpose or effect:

a) The protection of the environment

b) The storage, handling or transportation of any waste, dangerous goods or hazardous material;

c) The prevention, control, abatement or investigation of pollution or contamination or their effect;

30. “Event of Default” means the event leading to default by the TPO and/ or SCCL, excluding the events of Force Majeure and as defined in this document.

31. “Force Majeure” has the meaning given in Clause 32 of this Agreement;

32. “GOI” means the Government of India;

33. “Invoice” means an invoice raised by the TPO in accordance with Payment Clauses in this Agreement;

34. “Lenders” means collectively all of the entities (including banks, non-banking financial institutions, multilateral’s and export credit agencies if applicable) providing to the TPO, financing or political risk insurance under the financing agreements or otherwise, and any trustee or agent acting on those entities behalf.

35. “Management Plan” means the plan required under clause 12.2;

36. “MT” shall mean Million Tonnes.

37. “Mine Plan” means the plan described in Clause 19.

38. “Mining Lease” means the rights of excavation of coal from Kakatiya Coal Block which lies with SCCL.

39. “Mine” means the underground working from where coal being extracted forming part of the Coal Blocks area shall have the meaning as defined by the Mines Act, 1952;

40. “Mine Safety Management Plan” means the mine safety management plan as approved by the Certified Mine Manager in accordance with Coal Mines Regulations 1957;

41. ”Mining Concessions” means the mining lease’(s) granted under the Mines and Minerals (Development and Regulation) Act, 1957.

42. “Operating Year” means the Financial Year commencing from April 01 of each year to the March 31 of the following year.

43. “Pollution Control Clearance” means any clearance or approval issued by the Ministry of Environment and Forests, India (MoEF) and the State Pollution Control Board’s (SPCB) or any other body authorized to do so which are governed by the prevailing Environmental Laws in India;

44. “Power” means any right, power, authority, discretion or remedy;

45. “Progress Certificate” means the Progress Certificate issued by SCCL in accordance with Clause 26;

46. “Production Requirements” means the requirements as to quantity and quality for production of ROM Coal in accordance with the production schedules of the Mine Plan and as otherwise adjusted from time to time under this Agreement;

47. “Quarterly Contracted Quantity” or “QCQ” is the quantity of coal to be delivered by TPO at designated delivery point at surface in an operating quarter.

48. “ROM Coal” means Run of Mine coal from the Mine;

49. “Sampling Standards” means sampling and testing standards for Coal in accordance with the procedure laid down in BIS (436 Part I / Sec I), 1964, for Manual Sampling , BIS (436 Part I / Sec 2), 1976, for Mechanical Sampling and BIS (1350 Part I), 1984, for Proximate Analysis respectively. Method of sampling such as augur method or any other suitable method shall be decided by SCCL.

50. “Site Strikes” means any strike or other industrial action which materially affects the TPO ‘s ability to perform the Work;

51. “Sub-Contractors” mean TPO’s sub-contractors approved by SCCL in terms of Clause 35.1;

52. “Technical Information” means all copyright, patents, designs or other intellectual property rights, techniques, process and know how of SCCL or TPO as the case may be.

53. “Term” means the period from the Commencement Date until termination as referenced in several clauses of this Agreement.

54. “TPO” means company/JV/Consortium of companies who has been appointed by SCCL to carry out the terms of this Agreement and includes the [NAME OF TPO] employees, agents, consultants or sub-contractors.

55. “TPO’s Employees” means the employees to be furnished by [NAME OF TPO] for the purpose of carrying out the Work as itemised and described in the Scope of this Agreement.

56. “TPO’s Technical Information” means all copyright, patents, designs or other intellectual property rights, techniques, process and know-how of the TPO.

57. “TPO’s Equipment” means the equipment to be furnished by [NAME OF TPO] for the purpose of carrying out the Work as itemised and described in the Scope of this Agreement.

58. “Work” means all work required to operate the Mine in accordance with this Agreement.

3 Interpretation

In this agreement unless the context otherwise requires:

a) the headings are for convenience of reference only and shall not be used in and shall not affect the construction or interpretation of this Agreement

b) (singular) words in the singular include the plural and words in the plural include the singular, according to the requirements of the context.

c) (gender) words importing a gender include every gender.

d) (include) a reference to “include”, “includes” or “including” means “includes but is not limited to;

e) (corresponding meanings) where a word or phrase is defined, its other grammatical forms have a corresponding meaning;

f) (legislation) a reference to any legislation or provision of legislation or a policy includes all amendments, consolidations or replacements and all regulations or instruments issued under it;

g) (successors and assigns) a reference to Party to a document includes that Party’s permitted successors, assignees, administrators and substitutes;

h) (Business Day) where a day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day;

i) (writing) a reference to a notice form, consent or approval of a Party and agreement between the Parties, means a written notice, consent, approval or agreement;

DOCUMENTS COMPRISING THE AGREEMENT AND PRECEDENCE OF DOCUMENTS

This Project Agreement consists of the following documents in decreasing order of priority to the extent of any inconsistency:

a) any variation made in accordance with this Agreement, with the later variation having priority to the extent of inconsistency between variations;

b) the Schedules, Annexure and other Attachments,

c) this Agreement;

CONDITIONS PRECEDENT

6 Effectiveness of Agreement

This Agreement shall become effective after the Bank Guarantee referred to in Clause 6.1 has been submitted by the TPO within the specified time herein and subsequent signing of the agreement. Signing of the Project Agreement will signify the Effective Date for the purpose of this Agreement

7 Commencement Date shall be effected from the date when SCCL certifies and so declares, in consultation with the TPO, the completion of all of the following conditions precedent by the TPO:

a) obtaining all the necessary clearances and Approvals for commencing development Work of the Mine.

b) Deployment of the mine development equipments i.e. Road header or any other cutting technology without drilling & blasting and SDL with supporting equipments.

Commencement Date shall be effected within 180 days of Effective Date.

8 Commencement of coal Production at rated capacity shall begin within 90 days of Commencement Date.

9 Best Endeavors

The Parties shall use their best endeavors and provide reasonable assistance to the other Party wherever possible to ensure the conditions precedent contained herein are satisfied expediently.

TERM OF AGREEMENT

11 Effective Date

This Agreement shall come into effect from the date it is executed subject to fulfilling the conditions precedent set out in Clause 3.1

14 Term of Agreement

This Agreement, unless terminated earlier in accordance with terms hereof or upon revocation of mining lease by competent authority, shall continue to remain in force until expiry of 13 years from the effective date or achieving a total production of 27.50 million tonnes of coal whichever is earlier. .

15 Commencement of Work

The commencement of all works mentioned in Clause 3.2 and elsewhere in this Agreement such as seeking approvals and clearances from DGMS etc. shall begin from the Effective Date. Any work carried out by the TPO prior to the commencement date of this Agreement shall be governed by the Scope of Works and the Terms of this Agreement.

16 Commencement of Coal Production

The production of coal shall begin from the production date, subsequent to the precedent conditions in Clause 3.2 and Clause 3.3 being fulfilled.

17 Extension of Agreement

The Term of this Agreement may be extended by the Parties through mutual agreement not later than one year before the expiry of the Term. The Parties may agree to extend the Term for such further period as they mutually agree. Unless otherwise agreed by the Parties the terms of this agreement, as relevant to the context shall apply during any extended Term.

SCOPE OF AGREEMENT

SCCL’s RESPONSIBILITIES

20 Maintain Approvals

SCCL shall maintain all the approval like Mining license, Environmental clearance, forest clearance, license for the possession and use of explosives etc. except the approvals for which TPO shall be responsible under the terms of this Agreement.

For the approval from DGMS, TPO shall prepare a proposal which shall be presented by SCCL to DGMS. TPO shall be responsible to defend proposals made to DGMS for the approval of the technology to be employed and obtain DGMS permissions for the proposals made and that of equipment.

SCCL shall assist the TPO to ensure that all the necessary Approvals from DGMS are granted and maintained for the operation of the Mine throughout the Term of this Agreement.

21 Provision of Certified Mine’s Manager and other statutory officers

SCCL shall appoint a Certified Mine Manager and key personnel at all the statutory positions. For the purposes of this Agreement and unless notified otherwise, the Certified Mine Manager shall be SCCL’s Site Representative.

22 Non Obligation

SCCL shall not be obligated to provide any financial funding, share in funding capital, equipment, facilities or support services except as expressly provided for in this Agreement. No mobilization advance or allowance shall be extended by SCCL.

23 Additional Compensation

There shall be no additional compensation payable to the TPO for implementing SCCL directives for work that falls within the scope of work under this Agreement, except for a directive which gives rise to a change in the agreed Scope of Work.

TPO’s RESPONSIBILITIES

25 Obtain Approvals

The TPO must, at its cost, obtain and maintain throughout the Term, all Approvals and Permissions from DGMS necessary for the implementation of technology and operation of the mine from the DGMS to perform the Work, except as defined within this Agreement.

TPO is responsible to defend proposals made to DGMS for the approval of the technology to be employed and obtain DGMS permissions for the proposals made and that of equipment. In case for any reason DGMS do not permit the methodology, this Project Agreement automatically gets cancelled. Consequent upon Scientific study, the protective works, if suggested, shall be carried out by TPO only.

SCCL shall assist the TPO to ensure that all the necessary Approvals from DGMS are granted and maintained for the operation of the Mine throughout the Term of this Agreement.

27 TPO Responsible for all Mining Operations

Except as otherwise expressly provided in this Agreement or as otherwise directed or agreed by SCCL, in writing, the TPO is responsible for all mining operations and remedial work in accordance with the Scope of Work and as agreed in terms of reference of this agreement.

28 TPO Responsible for Mine Ventilation

SCCL shall maintain and operate the main mechanical ventilator (MMV), of 3 lakh/ 150 m/sec (as measured in the fan drift) located on surface. It shall be the responsibility of the TPO to maintain the statutory ventilation requirements at the face and trunk roadways and make necessary arrangements for distribution and coursing of air at the face and at the sealed-off panels at his cost.

29 TPO responsible for the Mine Drainage

TPO shall be responsible for the drainage of gate road Drivages and Longwall face up to the main sump. Pumping from main sump shall be done by SCCL. SCCL shall on its own discretion locate and relocate main sump. It shall be liability of TPO to drain water upto the main sump so maintained.

30 TPO responsible for Mine illumination and providing Mine safety lamps

Required electrical power at 6.6 KV or higher shall be provided by SCCL free of charge at the surface sub-station. The TPO shall make arrangements to distribute and stabilize the voltage, if necessary, to counteract any fluctuations of drop on the voltage of the electricity supply. The TPO is required to specify total power requirements for all equipment proposed to deploy and specific power consumption. Further, the TPO shall ensure efficient transmission and use of electric energy at power factor not less than 0.9. If power factor goes below the minimum required to be maintained, TPO shall pay for extra power consumed.

It is the responsibility of TPO to maintain the illumination level in the mine according to standards prescribed by DGMS.

TPO shall also be responsible for construction and maintenance of safety lamp room according to standards. TPO shall maintain in good condition, atleast minimum number of safety lamps as required by applicable laws or as directed by DGMS and for efficient working of mine.

32 Safe Work Systems

TPO must develop safe work systems and seek the approval of SCCL following which such systems would be implemented on the Mine site. If any penalty or compensation is required to be paid to any one including workmen of TPO due to any accident or violation of the safety standards, TPO shall pay the same. The compensation shall be paid at the rate at which SCCL pay compensation to its workmen.

TPO shall provide Personnel Protective Equipment (PPE) to all its workmen and maintain them in good working order at its cost.

34 Security of Mine

TPO shall ensure safety of all the equipment and facilities of the TPO. In no circumstances, SCCL shall be liable to compensate for any damage, theft or loss of TPO’s facilities including equipment. SCCL shall maintain the security of its facilities and mining lease boundaries.

35 TPO to maintain records

TPO shall be responsible for maintaining all the registers like mine safety lamp room register, accidents records, air sampling report, etc. required by the Coal Mines Regulation – 1957, DGMS and all other statutes applicable for the working of underground coal mine.

TPO shall present weekly report on the compliance of the statutes to the SCCL for the mine working.

SCCL can inspect any record maintained at any time during the term of this contract and if TPO is found default, necessary action shall be taken by SCCL management.

36 Good Housekeeping

TPO shall at all times keep the Mine and associated operational areas and environs in a neat, clean and safe condition. In the event of TPO’s failure to comply, SCCL may accomplish such clean-up as required at the cost of the TPO, if after 7 days written notice from SCCL, the TPO has failed to take appropriate action.

37 Administration of Agreement

TPO must administer the Agreement and the Work and in doing so must:

a) Attend site meetings and any other meetings with SCCL, as reasonably necessary for the operation of the Mine and the administration of this Agreement or as otherwise required by SCCL;

b) Keep accurate minutes of such meetings which must include list of actions agreed at those meetings;

c) Provide the necessary information and assistance to SCCL to enable SCCL:

(1) To carry out its obligations and responsibilities under this Agreement; and

(2) To comply with the conditions of any Approvals and the requirements of any Applicable Law;

d) Provide such written reports as required by SCCL. To ensure that SCCL is fully informed about the operation of the Mine and the Work, the reports are to be provided at regular intervals and in such a format as reasonably required by SCCL

38 Utilities

SCCL shall supply electricity at the surface sub station free of cost subject to the conditions agreed in this Agreement. SCCL shall also supply required water at surface at designated point. TPO shall make all the arrangements required for the supply and distribution of electricity and water in the mine. TPO shall also make arrangement for the supply of clean drinking water as required by statutes. The TPO must arrange for the supply of all other utilities required for TPO’s own work including communications, accommodation and messing, and pay for all charges for metering, connection and consumption of those utilities unless agreed by SCCL in this agreement.

For the purpose of this Agreement SCCL shall provide covered and unfurnished ware house, space for office and a maximum of twenty block (twin room) accommodation in “as is where is” condition. Electricity charges shall be borne by the TPO.

39 Monthly Report

TPO shall submit to SCCL a monthly report describing the major activities for the preceding month. The report shall illustrate key performance indicators. The exact content of the report shall be agreed upon between SCCL’s Contract Representative and the Contract Representative TPO.

40 Daily Report

The TPO shall submit daily the detailed progress report to the Mines Manager in the proforma, prescribed by the Mines Manager.

TPO’s obligation to comply with Law

41 Compliance with all the applicable Laws

TPO shall ensure that none of the TPO’s employees, or any Sub-Contractors or the employees of any Sub-Contractor are allowed to work in contravention of the provisions of the Mines Act - 1952, CMR-1957, Mines Rules and other Applicable Laws, any other orders, instructions, amendments etc, connected with the above Act, Rules & Regulations as applicable in relation to the carrying out of the Works under this Agreement.

In the event of TPO’s failure to do so, SCCL shall be free without prejudice to its other rights, to remedy the breach and recover the cost thereof by making deduction from the TPO’s bill, security deposit or otherwise. The TPO shall hold the SCCL indemnified against all cost, damages, loss or any payment whatsoever, that the SCCL may incur as a result of such non-compliance.

42 Contract Labour (Regulation &Abolition) Act’ 1970.

The TPO is required to obtain Labour License under Section 12 of the Contract Labour (Regulation and Abolition) Act 1970 read with Rule-21 of the Contract Labour (Regulation and Abolition) Central Rule, 1971 and submit the same to Mines Manager of the Mines valid from date of work till the end of the work period. It will be the TPO’s responsibility to pay the wages/salaries to his employees on the payment date fixed as per their own standing order and in absence thereof the standing order of the concerned mines.

43 Workmen Compensation

TPO shall report occurrence of all accidents of their employees arising in the course of the work and shall effect payment of compensation at the rate at which SCCL pay compensation to its workmen whichever is higher, within the prescribed time limit. In case of any accidents the TPO must immediately bring it to the notice of the Manager in writing, who will send necessary notice to the concerned authorities within 24 hours of accident. In the event of TPO’s failure to pay compensation, the SCCL shall have the right to set apart the relevant amount from pending bills or other assets of the TPO with them for due settlement of the claim arising under the said Act and Rules at their own discretion and TPO shall bear the full responsibility in this behalf. In case TPO fails to report after occurrence of accident within 2 hours, then the non-reporting will be taken as violation of the agreement by TPO and SCCL reserves the right to take action as deemed fit under the statute and this will be treated as breach of agreement provision / terms.

44 Industrial Disputes Act

TPO shall comply with all provisions laid down in the Industrial Dispute Act, 1947 and matters relating to the settlement of various disputes arising in the work allotted to him and shall abide by the provisions of the said Act and Rules framed there under by the Central Government in matters of retrenchment, lay off and conditions of service of the employees engaged in his works. Besides, he shall adopt all measures in the direction of maintenance of perfect industrial peace in the work allotted to him.

45 Standing Order

TPO shall make his own standing orders for the employees/labourers engaged by him and get the same approved through the concerned Regional Commissioner or appropriate authorities and implement the same in conformity with provisions of Industrial Employment (Standing Orders) Act, 1946. In the absence of such Standing Orders, the Model Standing Order has to be implemented.

46 TPO shall abide by the decision/recommendations/award of the Labour Court/Industrial Tribunal or Commissions appointed by the appropriate Government in respect of the Industry and shall arrange/ implementation of the provision of the decision/award/recommendations from time to time and maintain such relevant records and registers as are required to be maintained under these legislation/award/decision and produce them before the Officer of the SCCL and other statutory authorities, as and when required.

47 Employee’s Provident Fund

TPO shall have their P.F. Code No. and shall be solely responsible for deductions of employees contribution and deposit of contributions regarding the provident fund under Coal Mines Provident Fund (CMPF) Act and any other applicable law made there under as amended from time to time. He shall be solely responsible for the maintenance of the records in respect of payment of contribution and submission of returns, in accordance with the provisions of the said Act and Schemes. A copy of such return along with original deposit challan duly certified by TPO that the amount has been deposited for the instant work, shall be submitted to Mines Manager appointed by SCCL and failure to submit sufficient proof on compliance of the above stated obligation, the TPO’s monthly bill shall not be released. If any liability arises on account of the failure of the TPO with regard to these provisions, SCCL will be entitled to recover the same from the bills or otherwise.

48 Minimum Wages & Provisions under Statute:

TPO shall adhere to the provisions of Minimum Wages Rules of Government of Andhra Pradesh at all the time during the tenure of the Project Agreement in regard to payment of minimum wages in respect of mine workers and shall pay in conformity with the provision of the same to all categories of workers employed or to be employed by him and shall also fix the norm of payment under different items in conformity with the above Act.

49 TPO shall be responsible to fulfill the provisions under the Mines Act, Coal Mines Regulations -1957 and Rules framed there under as amended but not limited to, from time to time in the matter of mining operations, health, cleanliness, working hours, annual leave with wages, drinking water, sanitation etc. and various other provisions in the said Act for the works connected with the operation of Mines. The TPO shall abide by all other applicable laws, rules and regulations.

50 Medical Facilities, Vocational training & Safety equipments:

SCCL shall provide medical facilities to the employees of TPO on chargeable basis. The medical facilities shall be provided at the Bhoopalpalli Area Hospital of SCCL as available. Vocational training to the TPO’s workers is compulsory and shall be provided by the TPO. All the cost of Vocational Training shall be borne by the TPO. No labour shall be employed by TPO without training at Vocational Training centre.

51 Bonus

TPO shall solely be responsible in respect of payment to his employees under the Payment of Bonus Act, 1965 as amended from time to time. TPO shall also be solely responsible for maintenance of records in respect of the above payment and submission of returns in accordance with the provisions of the said Act.

52 Standing Order

In the matters connected with labour and staff under this Tender schedule/contract, TPO shall be “EMPLOYER” as defined in the various Acts, Rules, and Regulations pertaining to the nature of work involved.

53 Epidemic/ Contagious diseases

TPO shall report immediately to the SCCL, every case of epidemic or contagious disease occurring in colonies occupied by his employees. Failure to do so will render the TPO liable to the SCCL for any expenses or liabilities incurred by reason of such failure. TPO shall also take all the steps necessary to prevent such epidemic or contagious disease from spreading and to curb them. If TPO fails to do so, SCCL may take all necessary steps at TPO’s cost. Any such expenses shall be recovered from the bills payable to TPO, Bank Guarantee or Assets. The failure on the part of TPO shall be treated as breach of contract and default by TPO.

54 Medical Examination

TPO at his cost shall arrange for initial Medical examination & periodical medical examination of his employees as per Mines Rule, 1955. However, in case TPO fails to do the same, SCCL may do the same on behalf of TPO and the entire cost so borne shall be deducted from the bills payables of the TPO.

55 TPO shall be responsible to comply with all other applicable laws, Acts, rules, regulations, orders and amendments irrespective of whether they are provided expressly in this Agreement or not.

BANK GUARANTEE

57 The TPO shall provide to SCCL, a Performance Bank Guarantee, of INR 20 Crores on pursuant to the execution of this Agreement. This Bank Guarantee provided by the TPO would be valid till the Production Bank Guarantee is provided to SCCL. The Performance Bank Guarantee issued by Public Sector, Scheduled Commercial Banks (list is provided in the section A 21 of NIT) only shall be accepted. TPO must submit the performance bank guarantee within 20 days of effective date.

58 From the Commencement of Coal Production Date the TPO shall provide to SCCL, a Production Bank Guarantee the value of which would be equivalent to the value of 3-months of coal production (the mining and transportation costs from mine working faces upto the delivery point at surface shall be considered for such value determination). The Bank Guarantee provided by the TPO would be valid on a yearly revolving basis, for every year of the Term of Agreement beginning from the Commencement of Coal Production date. The value of coal production shall be calculated based on the Mining fees (excluding royalty and taxes) quoted for the corresponding year by the TPO. The Performance Bank Guarantee issued by Public Sector, Scheduled Commercial Banks (List provided in NIT) only shall be accepted.

The Performance Bank Guarantee shall be released upon the issuance and verification thereof, of the Production Bank Guarantee.

Quantity of Coal

Delivery of Coal

61 The TPO shall deliver 2.75 million tones (or the annual contracted quantity for the particular year as agreed in the agreement and mentioned in the attachment – 3) of Coal per operating year (the “Annual Contracted Quantity” or “ACQ”) to the delivery points at surface of the mine, provided that where an operating year is less than 12 (twelve) months ACQ shall be pro-rated accordingly.

62 Subject to Clause 7.1, SCCL may alter the quantity of Coal being supplied at surface delivery point depending on the requirements by giving a 30 day notice to the TPO.

63 At least 60 (sixty) days before any Operating Year, SCCL shall intimate the TPO of the quantity of Coal to be supplied in such operating year provided that SCCL may increase or decrease the ACQ for any operating year by 20% from the quantity agreed in this agreement for respective year.

64 At least 30 (thirty) days before the beginning of any quarter, SCCL shall intimate the TPO of the Quarterly Contracted Quantity (QCQ) to be supplied in the quarter.

65 If TPO fails to supply the agreed QCQ, he can make up for the deficit quantity in the subsequent quarters subject to the condition that TPO shall supply the agreed quantity of coal in any operating year.

Measurement of Coal

67 The quantity of coal delivered at the designated delivery point (at surface) shall be measured in the pre weigh bins provided and maintained by TPO at the surface. Representatives of the parties shall be present to witness the weighment and sign the challan.

68 Quantity of coal supplied shall also be calculated on volumetric basis. Volumetric measurement shall be done by multiplying the volume of the coal excavated as measured in the survey which shall be conducted by SCCL at specified interval multiplied with the average density of coal which is 1.4 for the mine. TPO’s representative may witness the survey conducted by SCCL.

69 For the payment of the coal supplied, lower of the two weights shall be considered.

70 If, as a result of any inspection by the SCCL or any statutory inspection authority, any weigh bin is found defective and erroneous in excess of the tolerances provided by law (or if no such tolerance is provided by law, then in excess of the tolerance provided by BIS or if not provided by BIS, then as established in the manufacturer’s specification), an appropriate adjustment shall be made in the invoices and payments affected by such inaccuracy; provided, however, no such adjustment shall be made for a period in excess of the lesser of :

i) One-half of the period since the date that purchaser first questioned the accuracy of the weights and the date of the last test of the scales, or

ii) Three (3) months prior to the date of the request for verification.

TPO shall rectify the defect found within 15 days of the day on which such defect is identified.

Variation in Quantities

71 SCCL may also alter the Annual Contracted Quantity to be delivered in an Operating Year by giving at least 60 days notice to the TPO. Such a notice may be served provided that SCCL may not increase or decrease the Contracted Quantity by more than 20% (twenty percent) in an Operating Year.

73 Similarly TPO can also alter the ACQ to be delivered in an Operating Year by giving at least 60 days notice to SCCL. Such a notice may be served provided that TPO may not increase or decrease the ACQ by more than 20% (twenty percent) in an Operating Year.

Quality of Coal

75 All coal delivered hereunder shall be free of stones and metal objects. The TPO shall adopt prudent industrial practices to avoid a mixture of foreign materials like stones and metallic objects during mining of Coal and ensure that no stones or foreign material extraneous to Coal shall be delivered.

Take-or-pay and serve-or-pAY

77 SCCL may alter the Contracted Quantity to be delivered in an Operating Year by giving at least 60 days notice to the TPO. Such a notice may be served provided that SCCL may not increase or decrease the ACQ by more than 20% (twenty percent) in an Operating Year. Any deviation resulting in lower off-take of coal by SCCL than the permitted 20% deviation shall attract Take-Or-Pay as described in Clause 8.2. except if the deviation is due to a Force Majeure Event or results to an Event of Default of the TPO.

79 When the offtake by SCCL is lowered by more than 20% from the production plan specified for the half-year, SCCL shall pay to TPO for the differential quantity of coal (% reduction in coal offtake less 20%) an amount equal to the fixed component of the mining fee for the year in which SCCL reduces its off-takes by more than 20% the volume specified in production plan for the year.

80 The TPO may also alter ACQ to be delivered in an Operating Year by giving at least 60 days notice to SCCL. Such a notice may be served provided that the TPO may not increase or decrease the ACQ by more than 20% (twenty percent) in an Operating Year. Any deviation resulting in lower delivery of coal by the TPO than the permitted 20% deviation shall attract Serve-Or-Pay as described in Clause 8.4.

81 Obligation under Serve or Pay Basis

In the event of the TPO’s inability to meet the production requirements on annual basis, TPO shall be liable to financial penalty.

In the event of deficit in the Coal delivery without prior notice and approval thereof, the serve-or-pay shall be attracted to the entire deficit quantity.

The financial penalty shall be governed by the schedule provided below.

|Shortfall in the Quantity Supplied |Penalty when notice of shortfall is given |Penalty when notice of shortfall is not |

| |by TPO |given by TPO |

|Shortfall < 20% of ACQ |NIL |0.25 times the notified basic price for the|

| | |same grade of coal by SCCL. |

|20% of ACQ ................
................

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