REQUEST FOR PROPOSAL

for

CONSTRUCTION OF HYDERABAD – SUKKUR, 296 KM

6-LANE DIVIDED MOTORWAY On

BUILD-OPERATE-TRANSFER BASIS

Issued to: ___________ Issued on: __________

NATIONAL HIGHWAY AUTHORITY

(Procurement & Contract Administration Section) 28-Mauve Area, Sector G-9/I, Islamabad (Pakistan)

Phone # 92-51-9032727, Fax # 92-51-9260419

Contents of RFP

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REQUEST FOR PROPOSAL

CONSTRUCTION OF HYDERABAD – SUKKUR 296 KILOMETRES, 6-LANE DIVIDED MOTORWAY

D.5.2 Financial Close Bond

ON BUILD-OPERATE-TRANSFER BASIS Table of Contents PART I: INTRODUCTION PART II: INSTRUCTIONS TO BIDDERS

A. PROJECT DESCRIPTION A.1. Background A.2 Site Location A.3 Scope of the Project A.4 The Concession A.5 Basic Parameter of the Concession

A.6 Disclaimer A.7 Bribery & Collusion

B. MINIMUM TECHNICAL INFORMATION REQUIRED B.1. Executive Summary B.2 Statement of Bid Conformity B.3 BOT Managerial, Technical and Construction Qualifications B.4 Preliminary Design Drawings B.5 Methodology B.6 Operations and Maintenance B.7 Project Implementation Timetable B.8 Bid Security B.9 Statement of Proposed Technical Changes to the Conforming

Scheme B.10 Statement of Land Requirement B.11 Innovation and Trainings

C. MINIMUM FINANCIAL INFORMATION REQUIRED C.1 Minimum Financial Information C.2 Currency

D. EVALUATION PROCESS, CRITERION AND PROCEDURES D.1 The Overall Evaluation Process D.2 Technical Proposal Evaluation Criteria D.3 Financial Proposal Evaluation Criteria D.4 Final Evaluation Results D.5 Bond and Security Requirements

D.5.1 Bid Security

D.5.3 Construction Performance Bond D.5.4 Operation Bond D.5.5 Transfer Bond

D.6 Award and Notice to Proceed

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E. PROPOSAL SUBMISSION PROCEDURES E.1. Introduction E.2. General

E.2.1 Cost of Bidding E.2.2 Site Visit E.2.3 Amendment of RFP E.2.4 General Considerations for Bidding E.2.5 Change in composition of the Consortium

E.3. Preparation of Bid E.3.1 Proposal Validity Period E.3.2 Two Envelope System of Tendering E.3.3 Language E.3.4 Conformity with the RFP E.3.4.1 Conforming Bids E.3.4.2 Non-Conforming Bids

E.4. Proposal Due Date E.5 Processing of Proposals before Evaluation E.6 Pre-Bid Conference E.7 Confidentiality E.8 Negotiations

APPENDICES Appendix – 1 Project Description and Project Scope of Work

Appendix – 2 Draft Concession Agreement to be negotiated and entered into between the successful Bidder and the NHA

Appendix – 3 Board of Investment (“BOI”)’s Investment Policy

Appendix – 4 Form of Bid Security

Appendix – 5 Financial Data Forms

Appendix – 6 General Design Criteria, Construction Performance Standards and Operation & Maintenance Requirements / Standards

Appendix – 7 Performance Indicators

Appendix – 8 NHA PPP Policy and Regulatory Framework

Request for Proposal (RFP)

REQUEST FOR PROPOSAL CONSTRUCTION OF HYDERABAD – SUKKUR

296 KILOMETRES, 6-LANE DIVIDED MOTORWAY ON

PART I: INTRODUCTION

BUILD-OPERATE-TRANSFER BASIS

The National Highway Authority (“NHA”) hereby disseminates this Request for Proposal (“RFP”) to invite all prequalified Bidders to submit technical and financial proposals to compete for the “Construction of Hyderabad – Sukkur, 296 Kilometres, 6-Lane Divided Motorway” (“the Project”) on a limited recourse basis under Public Private Partnership (“PPP”) on Build-Operate-Transfer (“BOT”) basis. The Project, once completed, shall integrate into Karachi-Lahore Motorway (“KLM”), which is 1,152 Kilometres long Motorway starting from Karachi and connecting major cities of Hyderabad (NHA is in process of awarding Karachi-Hyderabad (M-9) under BOT arrangement), Sukkur, Multan, Khenewal and Lahore, terminating at M-2. NHA is envisioning and planning extension of the KLM to Peoples Republic of China, Afghanistan and Central Asian States.

NHA envisages and desires from the private sector to come up with best, affordable, efficient, cost effective solutions providing value for money for the road users without compromising with international standards of safety and reliability, and, as well as come up with the development and financial arrangements, design and construction, commissioning and maintenance solutions for the road infrastructure without any recourse to NHA under Public Private Partnership modality.

Subsequent to this Part I, Introduction, the RFP is divided into the following parts:

PART II: "Instructions to Bidders" that include:

A. A description of the Project; including a statement of the objectives, scope, and expected outputs.

B. The Minimum Technical Design Parameters required of Bidders to be considered responsive.

C. The Minimum Financial Data required of Bidders to be considered responsive.

D. The evaluation criteria to be used by NHA to determine the most advantageous proposal, price and other factors considered.

E. Proposal submission procedures; including the date, time and location of proposal submission and proposal validity period, and the permissible mode of proposal transmission.

Appendix – 1 Project Description and Project Scope of Work Appendix – 2 Draft Concession Agreement to be negotiated and entered into between

the successful Bidder and the NHA Appendix – 3 Board of Investment (“BOI”)’s Investment Policy Appendix – 4 Form of Bid Security Appendix – 5 Financial Data Forms Appendix – 6 General Design Criteria, Construction Performance Standards and

Operation & Maintenance Requirements / Standards Appendix – 7 Performance Indicators Appendix – 8 NHA PPP Policy and Regulatory Framework

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PART II: INSTRUCTIONS TO BIDDERS

A. PROJECT DESCRIPTION

A.1. Background In conjunction to Part I above, Pakistan motorway program envisages development of “A PLANNED ECONOMIC CORRIDOR” running in north-south direction facilitating maximum domestic production centers as well as serving international and regional connectivity with the objective to provide a safe, reliable, modernized, high speed and environment friendly motorway. The NHA’s motorway program forms part of trade corridor linking ports of Karachi and Gwadar with China, Afghanistan and Central Asian States. Motorway network starts from Khunjrab (Chinese border), Torkham (Afghan border) and through Peshawar – Islamabad Motorway (M-1), Islamabad – Lahore Motorway (M-2) and Pindi Bhattian – Faisalabad Motorway (M-3) reaches provincial capital Lahore and industrial city Faisalabad. The Government of Pakistan, Ministry of Communications, National Highway Authority now intends to further extend its motorway program through building Karachi – Lahore Motorway (“KLM”) to connect port of Karachi with the upcountry and onward to Peoples Republic of China, Afghanistan and Central Asian States. Location Map of Karachi – Lahore Motorway

For the purpose of implementation, KLM is divided into following four Sections: i. Karachi – Hyderabad Motorway, 136 KM: Bids have been received on Build-

Operate-Transfer (“BOT”) basis and Letter of Support has been issued to M/s Frontier Works Organization.

ii. Hyderabad – Sukkur Motorway, 296 KM: This section is being procured by inviting

Bid Proposals from prequalified Bidders in accordance with the provisions of this RFP. iii. Sukkur – Multan Motorway, 387 KM: Implementation of this project is planned to be

undertaken through concession loan from Peoples Republic of China.

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iv. Multan – Lahore Motorway, 333 KM: This 333 Km long stretch of KLM is divided into following two segments: a. Multan – Khanewal, 57 Km: This portion of KLM is being constructed

through financial assistance of Islamic Development Bank (“IDB”), which shall be completed in near future.

b. Khanewal – Lahore, 276 Km: This portion of KLM is being procured by NHA

through separate process by inviting Bid Proposals to pre-qualified Bidders in accordance with provisions of RFP of that KLM project section.

A.2 The Project

This RFP is issued for inviting technical and financial proposals from Pre-qualified Bidders to compete for the “Construction of Hyderabad - Sukkur, 296 Kilometres, 6-Lane Divided Motorway” (“the Project”) BOT basis.

A.3 Site Location

The Project starts from Hyderabad, at end point of Karachi – Hyderabad Motorway (M-9) and terminates at Sukkur. Following is the location map of the Project.

A.4 Scope of the Project

A detailed Scope of the Project that includes, key engineering features of the Project for construction of a world-class motorway is at Appendix–1

A.5 The Concession

.

Under the terms of the Concession Agreement, NHA envisages granting a Concession to the selected Bidder to develop, design, finance, construct, insure, commission, manage, operate, maintain and, at the end of the Concession Period, transfer to NHA all the Project Assets of the Hyderabad-Sukkur Motorway Project, including but not limited to, Service Areas, Allied

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Facilities and all the superstructures, buildings and civil works built on Right of Way (“ROW”) for the purposes of the Project. The Concession will also include the exclusive right, subject to the terms of the Concession Agreement, of the selected Bidder to demand, collect toll from vehicles using the Project, except exempted vehicles, generate revenue by exploiting the commercial use of the Service Areas and other Allied Facilities and to appropriate the same during the Concession Period in accordance with the terms and conditions of the Concession Agreement.

All requirements, terms and conditions of the Concession will be agreed during negotiation with the selected Bidder. The form and content of the negotiated concession are expected to conform closely to the Draft Concession Agreement included here as Appendix–2

A.6 Basic Parameter of the Concession

. Bidders are expected to address all of the aspects of the draft Concession Agreement in their submissions.

Following basic parameters of the Concession are fixed. Bidders are required to consider these parameters for preparing their proposals.

a) Concession Period

b)

: The Concession will be for a maximum period of thirty (30) years, commencing from signing date of the Concession Agreement.

Equity Requirement

c)

: The successful Bidder will have to incorporate a Road Building and Operating Company (“RBOC”), in the form of Special Purpose Vehicle (“SPV”), with a minimum equity investment of twenty percent (20%) of the Project Cost, to be held by the proponent / sponsor or as proposed in the proposal throughout the concession term and/or as per Concession Agreement.

Financial Close Period

d)

: the Concessionaire will have to achieve Financial Close within, one hundred and eighty (180) calendar days from signing of Concession Agreement. During this phase the Concessionaire shall keep NHA well posted of its activities / correspondence with potential lenders / financial institutions. The Financial Close period may be extendable for another period of one hundred and twenty (120) days subject to approval of NHA upon providing sufficient evidence of efforts made by the Concessionaire for achievement of Financial Close.

Land/Concession Area

Working area will be made available by NHA, which will be fenced and will become Concession Area. The width of Concession Area may vary at different stretches of the Project according to site requirements.

: NHA shall, at its own cost and expense, provide to the Concessionaire the land / Right of Way / Project Site / Concession Area required for the Project and deliver the encumbrance free vacant possession to the Concessionaire at the Financial Close. However, all the pre-qualified Bidders will have access to the Project Site for conducting surveys for preparation of their respective Bids.

e) Construction Period

f)

: Construction period for the Project will be thirty six (36) months from achievement of Financial Close.

Riding Quality

i. Upon Construction Completion: IRI less than 1.0

: Since KLM is a green field project, NHA expects that riding quality of the Project would meet high quality international standards. The roughness of the pavement level (riding quality) for the Concession Period, in terms of International Roughness Index (IRI – m/km), over each lane per kilometre of the Project shall be as follows:

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ii. During Operation Phase, when IRI reaches the limit of 2.5 over 1/3rd of project in aggregate (1/3RD of total project length) Periodic Overlay/Rehabilitation shall be programmed and agreed with NHA and commenced within 60 days of such findings. Program shall be commenced with the worst portion and cover entire length of the Project. In case IRI reaches or exceeds 2.5 in any particular reach on a stretch more than one (01) kilometre on any lane, the Concessionaire is expected to immediately initiate the work to bring back the IRI to the acceptable limit.

iii. At Transfer : IRI less than 2.0

The above riding quality standards, among others, shall be a major performance criteria of the Concessionaire’s performance failing which shall be considered as default of the Concessionaire and may tantamount to termination of Concession Agreement.

g) Additional Interchange

h)

: Government of Pakistan / NHA may build any additional interchange during Concession Period, depending upon the requirement. This new interchange will become part of Project Assets and the Concessionaire shall be responsible for the Operation and Maintenance of interchange and allied facilities.

Public Utilities

i) The Concessionaire shall be responsible for:

: The Concessionaire shall be responsible for providing service corridor in order to provide space for cables / utilities and Concessionaire can charge rentals, subject to the approval of NHA and as per rules and regulations of NHA.

routine (preventive) maintenance; and periodic (preservative) maintenance; time based recovery; and emergency & rescue services.

Proper Manuals and Standard Operating Procedures shall be developed for operation and maintenance of the Project at international standards.

j) Sectional Completion

Sectional opening of the Project is offered to support Concessionaire’s cash flow during construction, whereas, actual base year toll rates and annual toll escalation shall be applied upon completion of whole stretch of 296 km of the Project.

: Upon sectional completion of the Project, i.e. completion of minimum 60 Km continuous stretch of the Project, the Concessionaire shall be allowed to open that stretch to traffic and levy base year toll rates subject to ensuring the safety and reliability standards as set by NHA and verification of Quality Assurance Inspector (to be appointed after signing of Concession Agreement).

k) Base Year Toll Rates: The Base Toll rates, applicable from the date of Commercial Operations of the Project, i.e. once the Project is fully operational after completion of 296 Km Motorway along with ancillary facilities, are fixed as under:

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Vehicle Category Base Toll Rate (Rs/Km

Class 1-Car/Jeep/Taxi 1.58

Class 2-Wagon 2.64

Class 3-Coaster 3.70

Class 4-Buses 5.28

Class 5-Trucks (2 & 3 Axle) 6.86

Class 6-Articulated Truck 8.84

l) Annual Toll Escalation

No toll escalation shall be allowed during construction phase.

:

Eight percent (8%) annual toll escalation shall be applied during debt servicing period commencing from second (2nd) year of operation, the proponent may propose lower annual toll escalation (if deemed appropriate) for the balance years.

m) Project Risks

n)

: The Concessionaire, among others, shall exclusively bear the risks of demand including traffic, Forex and cost & time overrun and NHA shall share the risk of change in law, force majeure and political risk. NHA will also support the Project Lenders by giving them step-in-rights.

Facilities for NHA Representative

The Concessionaire shall be obliged to provide all the above facilities subsequent to achievement of Financial Close and shall replace all the vehicles with new vehicles after every interval of five (5) years throughout the Concession Period. Upon completion of the Concession Period all these facilities shall be transferred to NHA along with the other Project Assets at no cost to NHA.

: The Concessionaire shall provide for the NHA Representative an office at the Concession Area (measuring minimum 10,000 sq. feet covered area) with all fitting and fixtures including furnishing (twice during concession period). The Concessionaire shall also provide transportation that includes: six (6) Nos. 1800 cc Cars, four (4) Nos. 1500/1600 cc 4x4 Jeeps, four (4) Nos. single cabin Pickup and four (4) Nos. 1300 cc Cars with the cost of operation (i.e. driver & fuel) and repair/maintenance throughout the Concession Period.

o) Training to NHA Officials

•

: The Concessionaire shall arrange, at least for ten (10) officials of NHA, training abroad in the fields of:

PPP project structuring / development

•

: The training level must be equal to or better than that provided by the IP3 Institute USA.

PPP project implementation

p)

: Arranging a visit abroad to visit PPP projects to have experience of implementation of PPP projects.

Rules & Regulations

q)

: The rules and regulations, manuals and standards made by NHA or otherwise adopted by NHA shall be incorporated in the Concession Agreement for the purposes of achieving harmony and uniformity.

Subsidy required from NHA: The minimum subsidy required from NHA (which shall be, inter alia, major evaluation criteria) shall be given by the bidders in terms of Net Present Value (NPV).

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r) NHA Revenue Share:

s)

Higher revenue share offered to NHA, during Concession Period, shall be one of the evaluating criteria for selection of successful bidder.

Transfer of Project

A.7 Disclaimer

: At the end of the Concession Period, the Project shall be returned to NHA in a well maintained operational condition and meeting the riding quality standards, at no cost to the NHA.

All information, assumptions and projections contained in the RFP including its appendices are indicative only and are provided solely to assist in a preliminary assessment of the Project. Nothing in these documents or elsewhere shall create any contractual relationship between the NHA and any Bidder, nor shall it commit the NHA to any policy described in these documents or elsewhere and neither Government of Pakistan nor the NHA or any of its consultants or advisers will have any liability or responsibility if the information, assumptions or projections contained herein or otherwise in respect of the Project prove to be incorrect. It is the responsibility of the Bidder to verify the information, assumptions and projections contained in these documents or elsewhere.

A.8 Bribery & Collusion

The NHA shall be entitled to terminate the Concession Agreement and recover from the successful Bidder the amount of any loss resulting from such termination if the successful Bidder shall have offered or given to any person any gift or consideration of any kind as an inducement or reward for doing, or forbearing to do, any action in relation to obtaining, or execution of the Concession or any other contract with the NHA, or for showing favour to any person in relation to the Concession or any other contract with the NHA, or if any of the like acts shall have been done by any person employed by the successful Bidder or acting on its behalf (whether with or without the knowledge of the successful Bidder), or if the successful Bidder shall have come to any agreement with another Bidder or number of Bidders whereby an agreed quotation or estimate shall be offered as a Bid to the NHA by one or more Bidders.

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B. MINIMUM TECHNICAL INFORMATION REQUIRED

The minimum technical information the NHA requires Bidders to submit in their Technical Proposal to be considered responsive to the technical requirements are set out in Sections B.1 to B.10 below:-

B.1. Executive Summary

A covering letter identifying the company(s), firm(s), joint venture(s) or consortium, the relationship of the parties, the lead and associated company(s)/firm(s) and an Executive Summary of the Bidder’s Technical Proposal (not to exceed five pages).

B.2 Statement of Bid Conformity

A Statement of Bid Conformity, stating whether or not the Bid conforms with all requirements of the RFP. The requirements of bid conformity are set out in Section B.3.4.1 above.

Bidders should note when preparing their submissions that all deviations from the Conforming Scheme should be listed. Such deviations may include, but are not limited to:

i) any changes to the layout, form or scope of the Conforming Scheme;

ii) any changes to the land requirement plan; and

iii) any proposed changes to the Draft Concession Agreement at Appendix-3.

B.3 BOT Managerial, Technical and Construction Qualifications

A narrative and graphic presentation of the Bidder’s current managerial, corporate, technical, construction and other non-financial related qualifications to undertake and successfully design, finance, construct, commission, develop, manage, operate, maintain, insure and transfer at the end of the Concession Period, the Project under a BOT arrangement. It should also highlight the organizational chart of the Bidder. It should further elaborate in detail the relevant experience of the Bidder, internationally as well as in local conditions. The narrative must explain the Bidder’s BOT institutional arrangements; including its proposed project organization, particularly during the construction, operation and maintenance phases. The narrative must contain the curriculum vitae (CV) of key personnel for the Project such as the Construction Manager, Operations Manager, Maintenance Manager, Finance Manager, key operating and maintenance personnel, detailing their relevant experience and qualifications. The CV of the Chief Executive Officer for the proposed RBOC must also be provided. Within this section, the Bidder may also provide comments to the Draft Concession Agreement. The following shall be the critical evaluation factors within this section:

• Corporate Structure and organization of the Bidder

• Relevant Experience of the Bidder

• Design related Experience

• Proposed CEO/ MD of the RBOC

• Proposed Finance Manager/ Financial Consultant of the RBOC

• Proposed Construction Manager of the RBOC

• Proposed Operations Manager of the RBOC

• Proposed Maintenance Manager of the RBOC

In case prequalified firms/joint ventures opt to make/expand joint venture, the prequalified firms/joint ventures are allowed subject to the condition that the new member(s) should

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possess better or equivalent capacity than the firm which is being replaced. However, the already prequalified firm would remain lead partner of the joint venture.

B.4 Project Appreciation

Project Appreciation based upon the Bidder’s survey and technical studies conforming to the minimum design/construction requirements as outlined in Appendix-1 & 6 of the RFP. Project Appreciation shall, among other topics, include the following information:

i. typical cross-section of the motorway;

ii. number, location and type of interchanges, flyovers and pedestrian crossings;

iii. linear plan, indicating all important features and the Bidder’s concept;

iv. typical drawings for toll plazas and weigh stations;

v. type of service areas, their facilities and typical drawings;

vi. allied motorway facilities and systems well explained in a pictorial and linear manner;

B.5 Project Implementation Methodology

A narrative and graphic presentation of the Bidder’s Project Implementation Methodology to execute the works is required. The Bidder shall clearly explain its construction methodology, time period, state of the art practices, tentative plans, type of structures and erection technology, the machinery, plant and labour needs of the Project, requirement for associated working and accommodation areas, anticipated construction problems and measures to overcome these etc. It should also include traffic plans, work zone safety plans, major roadside facilities like service areas etc. The methodology shall be clearly elaborated in layout plans.

B.6 Operations and Maintenance

During the operational phase of the Project, the NHA shall measure the Concessionaire’s compliance with operations and maintenance standards included in an Operations and Maintenance Manual. For the Technical Proposal, Bidders must include a narrative of the contents of an Operations and Maintenance Manual the Bidder will prepare, subject to NHA approval, for the Project, as well as a narrative and graphic presentation of the Bidder’s proposed organization and approach to implementation of the Operations and Maintenance requirements for the Project conforming to the minimum operation & maintenance requirements as outlined in Appendix-6 of the RFP.

B.7 Project Implementation Timetable

A narrative and graphic presentation of the Bidder’s proposed Implementation Timetable, including a narrative of how the Bidder, as the Concessionaire, would work with the NHA to coordinate land clearance and road construction activities. Bidders are cautioned that material negative deviations from the estimated timetable contained in the Section A.5 (c) & (e) may be cause for a determination of non-responsiveness.

B.8 Bid Security

Bidders are required to submit a Bid Security as specified in Section D.5.1 below.

B.9 Statement of Proposed Technical Changes to the Conforming Scheme

In the event that the bidder shall conclude, as a result of its methodology, or otherwise, that it wishes to modify the proposals contained in the Conforming Scheme, either materially or otherwise, the Bidder shall provide supporting drawings and calculations to justify the proposed deviations from the Conforming Scheme.

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Such deviations shall be designed and evaluated, by the Bidder, in sufficient detail as to indicate, as a minimum:

• any changes in the horizontal and/or vertical alignment;

• any changes in the land requirements for the proposal;

• any changes in the choice of the materials; and

• any consequential changes in the terms of the design life, operational characteristics and maintenance needs of the facility.

The results of these studies shall be included, by the Bidder, in a Statement of Proposed Technical Changes to the Confirming Scheme.

In the event that the Bidder should decide to adopt the Conforming Scheme, without amendment, a statement to this effect should be given.

B.10 Statement of Land Requirement

In case additional land is required, a statement of such land. All cost relating to additional land requirements, shifting of utilities, resettlement issues etc. shall be borne by the bidder. NHA shall however provide all possible assistance in this regard except financial.

B.11 Innovation and Trainings

Propose innovations and other state-of-the-art motorway features to help ensure public safety and convenience for the Project. Bidders proposing innovative approaches, concepts or other features for general public welfare acceptable to the NHA shall receive score as detailed in Section D.2 below. In addition, Bidders are encouraged to propose transfer of knowledge mechanism such as training for human resource development in the fields of Public-Private Partnerships and other state of the art construction practices. This may include international training as well as on-the-job training components.

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C. MINIMUM FINANCIAL INFORMATION REQUIRED

C.1 Minimum Financial Information

The minimum financial information the NHA requires each Bidder to submit in its Financial Proposal to be considered responsive is:-

(a) Estimated total cost of the Project in a Work Breakdown Structure (“WBS”); A breakdown of capital/construction costs, covering the scope of work as mentioned Appendix-1 of the RFP, on yearly basis divided into the following categories.

(b) Financing Structure:

(i) Total amount of loan(s) to finance the Project, as well as its operation and maintenance; including type, sources, term, grace period, interest and any other relevant factors.

(ii) The total amount of Bidder's equity to be committed to finance the Project. (The NHA requires each Bidder to commit to equity financing a minimum of thirty percent (30%) of the total Project cost. Bidders proposing less than the minimum shall be declared non-responsive.)

(iii) Cash flow projections during the Concession Period;

(iv) Minimum amount of subsidy, if any, required by the Bidder from NHA; and

(v) Maximum amount of NHA Revenue Share, if any, offered by the bidder.

(c) Financial Model: Revenue Analysis/Projection, Expenditure Analysis/Projection, Debt Servicing Analysis, Cash Flows, Return on Investment Analysis.

(d) Project Balance Sheet, Project Income Statement and Project Profit & Loss Statement.

(e) Toll Charge computation and traffic computation with rationale; including minimum base toll rates (as has been provided) and escalations/projections (as has been provided) in toll rates.

(f) Duly filled in Financial Data Forms as provided in Appendix–5

(g) The Bidder’s audited financial statements (Balance Sheet, Income Statement, Profit & Loss Statement) for the last 3 years and in case of firms bank statements for the last 3 years.

.

(h) Proof of the Bidder’s capability to finance minimum thirty percent (30%) of equity and intent of bank(s) to finance the balance Project Cost.

(i) Intents of banks / financial institutions for project debt financing support.

(k) NHA Revenue Share: NHA Revenue Share, if offered, may clearly be reflected in the Financial Model.

C.2 Currency Bidders are required to express all financial calculations in Pakistan Rupees.

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D. EVALUATION PROCESS, CRITERION AND PROCEDURES

D.1 The Overall Evaluation Process

The NHA will use the evaluation criteria described in this Section of the RFP to determine the highest evaluated Bid. The evaluation process will consist of a four-step approach, that includes:

i. responsiveness; ii. conformity; iii. technical evaluation; and iv. financial evaluation.

At the date, time and location specifically announced by the NHA, proposal packages received from the Bidders shall be opened in the manner described in Section E.5. The NHA shall first determine whether or not the Bidders’ Technical and Financial Proposals are contained in separately sealed envelopes. The NHA shall announce to those persons present at the Proposal Opening (and upon request to a Bidder who submitted a proposal but is not present or represented at the Proposal Opening), the name and address of each Bidder whose package is opened. Such announcement shall be recorded immediately in the record of the tendering proceedings. In order to objectively evaluate Technical Proposals without being influenced by financial data, Bidders failing to separate Technical and Financial Proposals shall be deemed non-responsive and will be so recorded in the record of the tendering proceedings.

The NHA shall then determine whether or not Bidders have included Bid Securities in their Technical proposals. The NHA shall announce, to those persons present at the Proposal Opening (and, on any request by a Bidder who submitted a proposal but is not present or represented at the Proposal Opening), the name and address of each Bidder whose Technical proposal is opened. Such announcement shall be recorded immediately in the record of the tendering proceedings. Bidders failing to provide the required Bid Security shall be deemed non-responsive and so recorded immediately in the record of the tendering proceedings.

The NHA shall not evaluate either the Technical or the Financial Proposal from any Bidder determined to be non-responsive, as reflected in the record of the tendering proceedings.

The public portion of the Proposal Opening will then be closed.

The NHA shall separately, and privately, evaluate responsive proposals in accordance with the evaluation criteria detailed in this Section D of the RFP.

The NHA shall first evaluate and score each Technical Proposal on a scale up to one hundred (100) points. In the event the NHA has evaluated and assigned a score of less than seventy (70) points to a Technical Proposal, the NHA shall not evaluate the Financial Proposal submitted by that Bidder. Provided the NHA has evaluated and assigned a score of seventy (70) points or more of a Technical Proposal, the NHA shall then individually evaluate and individually score the Financial Proposal submitted by that Bidder.

D.2 Technical Proposal Evaluation Criteria

The NHA has developed a list of evaluation factors that will be used to evaluate each Technical Proposal based on assessments to determine which factors were of critical importance to the selection of the Bidder. The following is a list of the quantitative factors and their associated maximum Technical score which will be used for the technical component evaluation:

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Sr. No. Evaluation Factor Max. Marks

1 BOT Managerial, Technical & Construction Qualifications 25 2 Project Appreciation 20 3 Project Implementation Methodology 20 4 Operations & maintenance procedures and systems 20 5 Implementation Timetable 05 6 Innovation 10

TOTAL: 100

The NHA shall first evaluate and score each Technical Proposal on a scale up to one hundred (100) points. In the event the NHA has evaluated and assigned a score of less than seventy (70) points to a Technical Proposal, the NHA shall not evaluate the Financial Proposal submitted by that Bidder.

D.3 Financial Proposal Evaluation Criteria

The Financial Proposals of only those bidders shall be opened who will qualify by scoring minimum 70 marks, out of total 100 marks, in technical evaluation. The bidders shall be awarded points based upon the following financial criteria, which will determine the ranking of the bidders in evaluation process:

Sl # Evaluation Factor Max. Marks

1 Subsidy required from GoP/NHA in terms of Net Present Value 90

2 Revenue Share offered in terms of Net Present Value to NHA 10

Total: 100 Subsidy

: Bidders requiring the lowest amount of subsidy (as specified above) shall be awarded full marks and other bidders shall be awarded proportionately lower marks. Following formula shall be used to award the marks against Serial No. 1 above:

Marks awarded = (1- ( CB – CL ) / CL) x maximum marks

WhereCB: Subsidy required by the bidder

:

CL: Lowest Subsidy required by the bidder. If CB exceeds hundred percent (100%) from CL, the bidder will be awarded zero points. For example:

“In case PKR 50.00 Billion is the lowest amount of subsidy requires by the Bidder-A, whereas the Bidder-B requires PKR 100.00 Billion, the Bidder-B will be awarded zero marks and Bidder-A shall be awarded full marks.”

NHA Share

: Bidder offering the highest amount of Revenue Share (in terms of NPV) to NHA shall be awarded full marks and other bidders (who offer lower Revenue Share) shall be awarded proportionately lower marks. Following formula shall be used to award the marks against the criteria at Serial No. 2 above:

Marks awarded = [1 – (Max. S – Share)/Max. S] x maximum marks

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WhereMax. S: Maximum NHA share offered by the Bidder

:

Share: NHA share offered by any other Bidder For example:

“In case PKR 100.00 Billion is the highest amount (“Max. S”) offered by the Bidder-A, whereas the Bidder-B offered PKR 30.00 Billion (“Share”), the bidder-A will be awarded full marks (i.e. 10 marks) and the Bidder-B shall be awarded 03 marks.

D.4 Final Evaluation Results

(a) The results of Financial Evaluation shall be considered as final results of the evaluation process to determine the final ranking of each proposal.

The NHA may ask Bidders for clarifications or presentation of their proposals in order to assist in the scrutiny, evaluation and comparison of proposals. No change in a matter of substance in the proposal, including changes in price and changes aimed at making a non-responsive Bid responsive, shall be sought, offered or permitted.

When clarification or presentation of proposals requires, the NHA shall maintain a written "Minutes of Clarification" report. Adequate notice will be given to the Bidder prior to conducting the meeting.

(b) It may be necessary for the NHA to reject all proposals:

(i) Subject to approval by the Chairman NHA, the NHA may reject all Bids at any time prior to signing of the Concession Agreement.

(ii) Notice of the rejection of all Bids shall be given promptly to all Bidders who submitted proposals. The NHA shall upon request communicate to any Bidder which submitted a Bid, the grounds for rejection of all the bids.

(iii) The NHA shall incur no liability, solely by virtue of its invoking this provision and rejecting all submitted Bids.

(c) It may be necessary for the NHA to reject a responsive Bid. Subject to approval by the Chairman NHA, the NHA shall reject a Bid if the Bidder offers, gives or agrees to give, directly or indirectly, to any officer or employee of the NHA or any other governmental authority a gratuity in any form, an offer of employment or any other thing of service or value, as an inducement with respect to an act or decision of, or procedure followed by, the NHA in connection with this tendering process. Such rejection of the Bid and the reasons thereof shall be recorded in the record of the proceedings and promptly communicated to the Bidder.

D.5 Bond and Security Requirements

D.5.1 Bid Security

For a Bid to be responsive, each Bidder is required to provide as a part of its Technical Proposal a Bid Security in the amount of Rs 250,000,000.00 (Rupees Two hundred and Fifty Million only)

(a) a cash deposit; or

. The Bid Security shall be denominated in Pakistani Rupees, and shall be in the form of:-

(b) a pay order or demand draft drawn on a scheduled bank having a branch in Islamabad; or

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(c) a confirmed irrevocable letter of credit, payable at sight of a request from Chairman NHA requiring payment there under, issued by a bank located in the Islamic Republic of Pakistan or a country abroad acceptable to the NHA and confirmed by a bank having a branch in Islamabad; or

(d) a bank guarantee in the form specified in Appendix–4

(e) In case Bid Security is arranged in the form of Bank Guarantee issued by a bank abroad, the same shall be counter-guaranteed by a local scheduled bank.

.

Bidders are cautioned that no other format will be acceptable and will result in their Bid being declared as non-responsive.

The Bid Securities specified in (c) and (d) above should be valid for a period of at least eighteen (18) calendar months from the date of opening of Technical Proposals. The NHA shall return Bid Securities of all Bidders, once the successful Bidder (as the Concessionaire) has achieved Financial Close or in the event the NHA has rejected all Bids. The Bid Security may be forfeited if the Bidder withdraws its Bid during the period of bid validity or, if it is the successful Bidder, fails to fulfil the obligations specified in Section D.4 above or having satisfied them fails to provide the required construction phase bond specified in the Concession Agreement.

D.5.2 Financial Close Bond The successful bidder shall extend the validity of its Bid Security prior to signing of Concession Agreement. This extended Bid Security shall be treated as financial close bond, which will guarantee that financial close will be achieved as agreed. The financial close bond shall be valid for at least eleven (11) months from signing of the Concession Agreement and will be returned once financial close is achieved and Construction Performance Bond is provided by the Concessionaire.

D.5.3 Construction Performance Bond Prior to commencement of construction activities after financial close, the successful Bidder (as Concessionaire) shall provide to the NHA a Construction Performance Bond to ensure the completion of the construction of the Project in accordance with the Bid Offer. The Construction Performance Bond shall have a face amount equal to Five percent (05%) of the Project’s Construction Cost. The Construction Performance Bond shall answer for, and guarantee the completion of the Project in accordance with the Performance Standards and the Timetable, and the payment of Liquidated Damages which Concessionaire may be required to pay pursuant to the Concession Agreement. The Construction Performance Bond shall be valid for a period of at least forty-eight (48) calendar months from the date of issuance.

D.5.4 Operation Bond Three (3) months prior to the completion of construction Date, the Concessionaire shall deliver to the NHA an Operation and Maintenance Bond with a face amount equal to Two Percent (02%) of the Projected Gross Revenue for forthcoming year of the Operation Phase. The Operation Bond shall answer for, and guarantee the timely Operation and Maintenance of the Project in accordance with the Performance Standards and the Timetable.

D.5.5 Transfer Bond

Eight (8) months prior to the Transfer Date, the Concessionaire shall deliver to the NHA a Transfer Bond with a face amount equal to Two Percent (02%) of the Total Project Cost. The Transfer Bond shall answer for, and guarantee the timely transfer of the Project in accordance with the Performance Standards and the Timetable as per Concession

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Agreement.

D.6 Award and Notice to Proceed

The NHA shall recommend the Bidder announce the highest evaluated Bid as successful. Thereafter:-

(a) Whether or not it successfully passed prequalification proceedings, the NHA may require the successful Bidder to certify that its prequalification data have not significantly changed since the Bidder's original submission. When reasonable circumstances require, the NHA may require the successful Bidder who has been prequalified and executed the aforesaid certification to demonstrate again its qualifications in accordance with the same criteria used to prequalify such Bidder. The criteria and procedures to be used for such further demonstration shall be the same as those used in the prequalification proceedings.

(b) If the Bidder submitting the successful proposal is requested to demonstrate again its qualifications but fails to do so, the NHA shall reject that Bid and shall select the next highest ranking Bid, subject to the right of the NHA to reject all remaining Bids.

(c) The NHA shall promptly notify all Bidders of the Bidder submitting the highest-evaluated Bid. As stipulated in this RFP, the NHA shall then request the successful Bidder to negotiate and execute a Concession Agreement. Accordingly, the successful Bidder is required to negotiate and execute the agreements within a reasonable period of time.

(d) If the successful Bidder and NHA fail to agree or execute the Concession Agreement, the NHA may, at its discretion, announce the next highest evaluated Bidder as successful, subject to the right of the NHA to reject all remaining Bids.

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E. PROPOSAL SUBMISSION PROCEDURES

E.1. Introduction

This RFP invites prequalified Bidders to submit technical and financial proposals to compete for the Project on a limited recourse basis under a BOT arrangement. To be considered for this award, Bidders are required to submit responsive Technical and Financial proposals for the Project.

E.2. General

E.2.1 Cost of Bidding

The Bidder shall be responsible for all fees, costs and expenses incurred in preparing and negotiating any proposal submitted by it, and under no circumstances shall the NHA become liable to reimburse any Bidder for any such fees, costs or expenses regardless of the conduct or outcome of the bidding process.

E.2.2 Site Visit

The Bidder is advised to visit and examine the Project Site/Concession Area and its surroundings and to obtain for itself on its own responsibility, all information that may be necessary for preparing the Bid and entering into a Concession Agreement. The costs incurred in visiting the site shall be at the Bidder’s own expense.

E.2.3 Amendment of RFP

At any time prior to the Bid Submission Date, NHA may, for any reason, whether at its own initiative or in response to a clarification requested by a prospective Bidder, modify the RFP by amendment.

The amendment will be notified in writing or by e-mail, telex, cable or facsimile to all prospective Bidders who have purchased the RFP, and will be binding upon them.

In order to afford prospective Bidders reasonable time in which to take the amendment into account in preparing their Bids, NHA may, at its discretion, extend the deadline for the submission of Bids.

E.2.4 General Considerations for Bidding

a. No Bidder shall submit more than one Bid for the Project. A Bidder bidding individually or as a member of a Consortium shall not be entitled to submit another bid either individually or as a member of any Consortium, as the case may be.

b. Notwithstanding anything to the contrary contained in this RFP, the detailed terms specified in the draft Concession Agreement shall have overriding effect; provided, however, that any conditions or obligations imposed on the Bidder hereunder shall continue to have effect in addition to its obligations under the Concession Agreement.

c. Any condition or qualification or any stipulation contained in the Bid shall render the Bid liable to rejection as a non-responsive Bid.

d. A Bidder shall be liable for disqualification and forfeiture of Bid Security if any legal, financial or technical adviser of NHA in relation to the Project is engaged by the Bidder, its members or any associate thereof, as the case may be, in any manner for matters related to or incidental to such Project during the Bidding Process, preparation of Bid, evaluation or award of the Concession Agreement.

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e. This RFP is not transferable.

f. Any award of Concession Agreement pursuant to this RFP shall be subject to the terms of this RFP.

E.2.5 Change in composition of the Consortium

E.2.5.1 Where the Bidder is a Consortium, change in composition of the Consortium may be permitted by NHA during the Bid Stage, only where:

(a) the Lead Member continues to be the Lead Member of the Consortium;

(b) the substitute is at least equal, in terms of Technical Capacity or Financial Capacity, to the Consortium Member who is sought to be substituted and the modified Consortium shall continue to meet the pre-qualification and short-listing criteria during pre-qualification process; and

(c) the new Member(s) expressly adopt(s) the Application already made on behalf of the Consortium as if it were a party to it originally, and is not an Applicant Member/ Associate of any other Consortium bidding for this Project.

E.2.5.2 Approval for change in the composition of a Consortium shall be at the sole discretion of NHA and must be approved by NHA in writing. The Bidder must submit its application for change in composition of the Consortium no later than 15 (fifteen) days prior to the Proposal Due Date.

E.2.5.3 The modified/reconstituted Consortium shall submit a revised Power of Attorney, prior to the Proposal Due Date.

E.3. Preparation of Bid

E.3.1 Proposal Validity Period

The NHA will award the Project to the Bidder submitting the most acceptable proposal for the Project. The NHA will negotiate and grant to the successful Bidder an exclusive concession for a maximum period of twenty-five (25) years to design, finance, construct, insure, commission, develop, manage, maintain, operate and transfer at the end of the Concession Period, the Project. Due to the nature of the process relating to internal approvals in the NHA, each Bidder's proposal is required to be valid for a period of at least two hundred and forty (240) days from the last submission date.

E.3.2 Two Envelope System of Tendering

The NHA will separately evaluate all Technical and Financial proposals; therefore Bidders are required to submit their Technical and Financial proposals in two separately sealed "envelopes". The NHA requires the first envelope, marked TECHNICAL PROPOSAL, to contain the original and five copies of the Bidder's technical proposal. The NHA requires the second envelope, marked FINANCIAL PROPOSAL, to contain the original and five copies of the Bidder's financial proposal. Bidders are cautioned to ensure that their Technical and Financial proposals are contained in separately sealed envelopes clearly marked as indicated above. The NHA requires Bidders to submit the separately sealed envelopes in one bound package. In the event of any discrepancy between the original and copies, the original shall govern.

The original and copies of the Bid shall be typed or written in indelible ink and shall be signed by a person or persons duly authorised to bind the Bidder to the offer. Proof of authorisation shall be furnished in the form of a written Power-of-Attorney (along with the authorising board resolution if the Bidder is a corporate entity), which shall accompany the Bid. All pages of the

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bid, except for unamended printed material, shall be initialled by the person or persons signing the Bid.

The complete Bid shall be without alterations, interlineations or erasures, except as necessary to correct errors made by the Bidder, in which case such corrections shall be initialled by the person or persons signing the Bid.

The Bidders are required to submit, along with their bid(s), a CD or USB containing soft copy of Technical and Financial Proposals in pdf format and also soft copy of Financial Model in the MS Excel format for evaluation. The CD or USB shall be attached with the respective proposals.

E.3.3 Language

All proposals shall be presented in the English language.

E.3.4 Conformity with the RFP

The Bidder must submit a Conforming (Bona Fide) Bid that conforms in all respects with the requirements of the RFP. In addition, the Bidder may submit one or more Alternative Conforming (Bona Fide) Bids and/or one or more Non-Conforming Bids, if it so wishes.

E.3.4.1 Conforming Bids

A Conforming Bid is a bid that conforms in full, both in engineering and operational terms with the NHA’s Conforming Scheme set out in Sections A.5 & Appendix-1 of the RFP, and in financial, organisational and obligation terms with the Draft Concession Agreement, except for minor departures that do not materially affect the design, financing, construction method or operational characteristics of the Project or the financial, organisational or obligation regime under which the Concession will be conducted. All such minor departures, if they exist, must be clearly identified and fully described in the Bid. If the Bid contains no deviations from the Conforming Scheme a positive statement to this effect must be made.

The NHA reserves the right to determine whether a Bid is a Conforming (Bona Fide) Bid. The NHA’s decision will be final and not subject to appeal.

If more than one Conforming (Bona Fide) Bid (e.g. involving different financial and commercial terms) is to be submitted, each must be clearly numbered according to the Bidder’s preference.

E.3.4.2 Non-Conforming Bids

Alternative designs and alternative proposals which differ in whole or part from the requirements of the Sections A.5 and Appendix-1 of the RFP may be considered by the NHA, at its discretion. Such Bids will only be considered if they are accompanied by a Conforming (Bona Fide) Bid and a Statement of Proposed Technical Changes to the Conforming Scheme as specified in Section B.9 of the RFP.

If a Non-Conforming Bid is submitted, it must be clearly identified as such and, in cases where more than one Non-Conforming Bid is to be submitted, each must be clearly numbered according to the Bidder’s preference.

For the NHA to examine a Non-Conforming Bid the Bidder must demonstrate with full supporting evidence that the proposal is well researched and technically feasible; the proposed Work Programme is well researched and there are engineering, financial, programming and/or operational advantages over the proposals set out in the RFP.

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E.4. Proposal Due Date

The Bidders are required to transmit Technical and Financial proposals, in two separately sealed envelopes in one bound package to be received by NHA on or before September 24, 2014 by 1200 hours

at the following address:

General Manager (P&CA) National Highway Authority

28 – Mauve Area, G-9/1

E.5 Processing of Proposals before Evaluation

Islamabad, Pakistan

(a) The NHA intends to facilitate and sustain an environment of competitiveness, transparency and fairness in the procurement process by, among other means, fairly and impartially processing and evaluating Bidders’ Technical and Financial proposals in accordance with the procedures and pre-established evaluation criteria specified in this RFP.

(b) The NHA shall receive and keep secure all Bids submitted before the Proposal Due Date specified in Section E.4 above. Any and all Bids received by the NHA after the above stipulated date and time for Proposal Closing will be returned unopened to the submitting Bidder.

(c) The NHA shall keep, secure and unopened, all timely submitted proposals until Bid Opening at 1230 hours on September 24, 2014

(d) The Bidders’ representatives who are present shall sign a register evidencing their attendance. NHA will examine the Bids to determine:

, when only Technical Proposals will be publicly opened. The Financial Proposals shall remain secure and unopened for later private opening, scrutiny and evaluation.

i. whether they are complete; ii. whether the requisite Bid Securities have been furnished; iii. whether the bid documents have been properly signed; and iv. whether the Bids are otherwise in order.

(e) The Bidders’ names, bid withdrawals (if any), the presence of the requisite Bid Security and such other details as the NHA, at its discretion, may consider appropriate will be announced after the Bid Opening takes place. NHA shall prepare minutes of Bid Opening for its own record. The public portion of the Bid Opening Session will then be closed.

(f) NHA shall separately, and privately, evaluate each Bidder's Technical and Financial proposals in accordance with the evaluation criteria specified in this RFP.

(g) From the date and time of Bid Opening until the time the Concession Agreement is executed, any Bidder wishing to contact the NHA on any matter related to this RFP must do so in writing at the NHA's address specified in Section E.4 above. Any effort by any Bidder to influence the NHA in its evaluation of Technical and/or Financial proposals is a violation of the laws of Pakistan, shall result in the rejection of that Bidder’s Bid(s) and may lead to necessary action under law.

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E.6 Pre-Bid Conference

Bidders are invited, and strongly encouraged, to attend a pre-bid conference organized, and to be conducted, by the NHA: Date: August 28, 2014 Time: 1100 hours Location: NHA Auditorium, Islamabad

Prior to the Pre-Bid Conference, Bidders are invited to submit written questions concerning the Project, this RFP, the Proposal Due Date or other related matters. All such questions should be submitted to General Manager (P&CA), NHA, by August 22, 2014

E.7 Confidentiality

. The NHA will conduct the Pre-Bid Conference, record all questions, both oral and written, posed by Bidders, record all answers provided thereto, and provide a written Pre-Bid Conference Memorandum or, if required, RFP amendment to each Bidder. The NHA will not, during the Pre-Bid Conference, modify in any material respect any provision or term of this RFP unless such modification is made as a written amendment hereto prepared by the NHA and disseminated to all Bidders.

After the Bid Opening, information relating to the examination, clarification, evaluation and comparison of Bids and recommendations concerning the award of a Concession shall not be disclosed to Bidders, or other persons not officially concerned with such process, until the award of the Concession is announced.

Any effort by a Bidder to influence the NHA in the process of examination, clarification, comparison and evaluation of Bids, or decisions concerning award of a Concession is contrary to the laws of Pakistan, shall result in the rejection of that Bidder’s Bid(s) and may lead to action under law.

E.8 Negotiations

Subsequent to the detailed evaluation of the Bids and announcement of the successful Bidder as set out in Section D.6 above, the NHA shall issue a revocable Letter of Intent (“LOI”) to such Bidder and carry out negotiations for the purposes of finalizing the detailed terms and conditions of the Concession Agreement.

As a part of this negotiation process the NHA may, if it deems appropriate, require the Bidder to submit one or more revised Bids in accordance with revised requirements put forward by the NHA. At this stage the NHA will issue a Letter of Support (“LOS”) to the successful Bidder stipulating the meeting of certain requirements within a specified time.

Upon finalization of the negotiations, NHA shall issue Bid Acceptance Letter to the successful Bidder. Thereafter, the Concessionaire through RBOC, will be required to enter into a Concession Agreement with the NHA and renew the Bid Security (if required by the NHA). The successful Bidder will be required to achieve the financial close within a period of one hundred and eighty (180) (excluding allowable extensions under the terms of the Concession Agreement) days from Effective Date of Concession Agreement.

Failure to fulfil any of the above requirements as contained in the LOI or LOS within the time specified, as the case may be, may, result in the forfeiture of the Bidder’s Bid Security. Whether Bid Security is forfeited or not NHA may, at its discretion, withdraw the LOI or LOS, as the case may be, either invite the Bidder scoring next highest to the successful Bidder in the evaluation carried out by the NHA to negotiate, or terminate the Bidding Process without accepting any Proposal.

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In the event of the successful Bidder forfeiting its Bid Security the NHA may, at its discretion, either invite the Bidder scoring next highest to the successful Bidder in the evaluation carried out by the NHA to negotiate, or terminate the Bidding Process.

* * * * * * * * * * * * *

Project Description & Scope of Work Appendix – 1

Draft Concession Agreement Appendix – 2

CONCESSION AGREEMENT

RELATING TO

THE PROJECT FOR CONSTRUCTION OF THE [ ] 6-LANE

DIVIDED MOTORWAY ([ ] KILOMETERS) ON A BUILD, OPERATE AND TRANSFER (BOT) BASIS

BETWEEN

THE NATIONAL HIGHWAY AUTHORITY

AND

[ ]

MADE AT

ISLAMABAD, PAKISTAN ON ___ _____________ 2014

COUNSEL FOR NHA: COUNSEL FOR THE CONCESSIONAIRE: AJURIS, Advocates & Corporate Counsel

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TABLE OF CONTENTS

1. DEFINITIONS AND INTERPRETATION ............................................................................ 3 1.1 DEFINITIONS .................................................................................................................... 3 1.1.1 “ABANDONMENT” ............................................................................................................. 3 1.1.2 “ACCEPTABLE CONTRACTOR” ............................................................................................ 3 1.1.3 “ACCOUNTING YEAR” ....................................................................................................... 3 1.1.4 “ADDITIONAL LANDS” ....................................................................................................... 3 1.1.5 “ADMINISTRATIVE OFFICE” ............................................................................................... 3 1.1.6 “AFFECTED PARTY” .......................................................................................................... 4 1.1.7 “AGREEMENT” ................................................................................................................. 4 1.1.8 “ANCILLARY FACILITIES” ................................................................................................... 4 1.1.9 “ANCILLARY RIGHTS” ........................................................................................................ 4 1.1.10 “APPOINTED DATE” .......................................................................................................... 4 1.1.11 “APPROVAL” ..................................................................................................................... 4 1.1.12 “APPROVED DESIGN PROPOSAL” ........................................................................................ 4 1.1.13 “APPROVED DETAILED DESIGN” ........................................................................................ 4 1.1.14 “ASSOCIATE” .................................................................................................................... 5 1.1.15 “BOT” ............................................................................................................................. 5 1.1.16 “BUILDING LINE” ............................................................................................................. 5 1.1.17 “BUSINESS DAY” ............................................................................................................... 5 1.1.18 “COD” ............................................................................................................................ 5 1.1.19 “CERTIFICATE OF COMPLETION” ........................................................................................ 5 1.1.20 “CERTIFICATE OF SUBSTANTIAL COMPLETION” .................................................................... 5 1.1.21 “CHANGE IN LAW” ............................................................................................................ 5 1.1.22 “CHANGE OF CONTROL” ................................................................................................... 5 1.1.23 “COMMISSIONING” ............................................................................................................ 5 1.1.24 “COMMISSIONING NOTICE” ............................................................................................... 6 1.1.25 “COMPARABLE MOTORWAY” .............................................................................................. 6 1.1.26 “COMPENSATION EVENT” .................................................................................................. 6 1.1.27 “COMPETING ROUTE” ....................................................................................................... 6 1.1.28 “CONCESSION” ................................................................................................................. 6 1.1.29 “CONCESSION AREA” ........................................................................................................ 6 1.1.30 “CONCESSION END DATE” ................................................................................................ 6 1.1.31 “CONCESSION PERIOD” ..................................................................................................... 6 1.1.32 “CONCESSIONAIRE” .......................................................................................................... 6 1.1.33 “CONCESSIONAIRE EVENT OF DEFAULT” ............................................................................ 7 1.1.34 “CONCESSIONAIRE REPRESENTATIVE” ................................................................................ 7 1.1.35 “CONDITIONS PRECEDENT” ............................................................................................... 7 1.1.36 “CONDITIONS PRECEDENT CERTIFICATE” ........................................................................... 7 1.1.37 “CONFIDENTIAL INFORMATION” ........................................................................................ 7 1.1.38 “CONSENTS” ..................................................................................................................... 7 1.1.39 “CONSTRUCTION CONTRACTOR” ........................................................................................ 7 1.1.40 “CONTRACTORS COSTS” ..................................................................................................... 7 1.1.41 “CONSTRUCTION COSTS” ................................................................................................... 8 1.1.42 “CONSTRUCTION PERFORMANCE BOND” ............................................................................ 8 1.1.43 “CONSTRUCTION PERFORMANCE STANDARDS” .................................................................... 8 1.1.44 “CONSTRUCTION PHASE” ................................................................................................... 8 1.1.45 “CONTRACTOR” ................................................................................................................ 8 1.1.46 “CONTROLLED PARTY DISCLOSEE” ..................................................................................... 8 1.1.47 “COURT” .......................................................................................................................... 8 1.1.48 “DAY” .............................................................................................................................. 8 1.1.49 “DEBT DUE”..................................................................................................................... 8 1.1.50 “DEDUCTIBLE AMOUNTS” .................................................................................................. 9

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1.1.51 “DEFAULT NOTICE” .......................................................................................................... 9 1.1.52 “DELAY DURATION” ......................................................................................................... 9 1.1.53 “DESIGN PROPOSAL” ......................................................................................................... 9 1.1.54 “DETAILED DESIGN”......................................................................................................... 9 1.1.55 “DISCLOSING PARTY” ........................................................................................................ 9 1.1.56 “DISPUTE” ........................................................................................................................ 9 1.1.57 “EPC CONTRACT” ........................................................................................................... 10 1.1.58 “EFFECTIVE DATE” ......................................................................................................... 10 1.1.59 “ENCUMBRANCE” ............................................................................................................ 10 1.1.60 “EQUITY” ....................................................................................................................... 10 1.1.61 “EQUITY COMPENSATION” .............................................................................................. 10 1.1.62 “EVENT OF DEFAULT” ..................................................................................................... 10 1.1.63 “EVENT OF LOSS” ........................................................................................................... 10 1.1.64 “EXEMPTED VEHICLES” ................................................................................................... 11 1.1.65 “EXPERT” ....................................................................................................................... 11 1.1.66 “EXPERT REFERENCE NOTICE” ........................................................................................ 11 1.1.67 “FINANCIAL CLOSE” ........................................................................................................ 11 1.1.68 “FINANCIAL CLOSE BOND” .............................................................................................. 11 1.1.69 “FINANCIAL CLOSE PERIOD” ............................................................................................ 11 1.1.70 “FINANCIAL MODEL” ...................................................................................................... 11 1.1.71 “FINANCING AGREEMENTS” ............................................................................................ 11 1.1.72 “FORCE MAJEURE EVENT” ............................................................................................... 11 1.1.73 “FORCE MAJEURE PERIOD” .............................................................................................. 11 1.1.74 “GOP” OR “GOVERNMENT” ............................................................................................ 12 1.1.75 “GOOD INDUSTRY PRACTICE” .......................................................................................... 12 1.1.76 “HANDBACK CERTIFICATE” ............................................................................................. 12 1.1.77 “HANDBACK REQUIREMENTS” ......................................................................................... 12 1.1.78 “IRR” ............................................................................................................................. 12 1.1.79 “INCOMPLETE WORKS LIST”............................................................................................. 12 1.1.80 “INDEBTEDNESS/LOAN/DEBT” ....................................................................................... 12 1.1.81 “INDEMNIFIED PARTY” .................................................................................................... 12 1.1.82 “INDEMNIFYING PARTY” ................................................................................................. 12 1.1.83 “INDIRECT POLITICAL EVENT” ......................................................................................... 13 1.1.84 “INTELLECTUAL PROPERTY” ............................................................................................ 13 1.1.85 “JOINT AUDITOR” ........................................................................................................... 13 1.1.86 “LAWS OF PAKISTAN” ...................................................................................................... 13 1.1.87 “LENDERS” ..................................................................................................................... 13 1.1.88 “MATERIAL ADVERSE EFFECT”......................................................................................... 13 1.1.89 “MATERIAL BREACH” ...................................................................................................... 13 1.1.90 “MONTH” ....................................................................................................................... 13 1.1.91 “MOTORWAY” ................................................................................................................. 14 1.1.92 “MOTORWAY SERVICE AREAS” ......................................................................................... 14 1.1.93 “MOTORWAY SERVICES AREAS FACILITIES” ....................................................................... 14 1.1.94 “MOTORWAY SERVICE AREAS REVENUE” .......................................................................... 14 1.1.95 “NHA” .......................................................................................................................... 14 1.1.96 “NHA ACT” .................................................................................................................... 14 1.1.97 “NHA BANK ACCOUNT” .................................................................................................. 14 1.1.98 “NHA EVENT OF DEFAULT” ............................................................................................ 14 1.1.99 “NHA MANUAL” ............................................................................................................. 15 1.1.100 “NHA REPRESENTATIVE” ................................................................................................ 15 1.1.101 “NEW TOLL PLAZAS” ....................................................................................................... 15 1.1.102 “NON-POLITICAL EVENT” ............................................................................................... 15 1.1.103 “O&M CONTRACT” ......................................................................................................... 15 1.1.104 “O&M CONTRACTOR” ..................................................................................................... 15

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1.1.105 “O&M MANAGER” .......................................................................................................... 15 1.1.106 “O&M MANUAL” ............................................................................................................ 15 1.1.107 “O&M REQUIREMENTS” .................................................................................................. 15 1.1.108 “OPERATIONAL YEAR” .................................................................................................... 16 1.1.109 “OPERATIONS BOND”...................................................................................................... 16 1.1.110 “OPERATIONS PHASE” ..................................................................................................... 16 1.1.111 “OTHER REVENUE” ......................................................................................................... 16 1.1.112 “PEPA”.......................................................................................................................... 16 1.1.113 “PPP” ............................................................................................................................ 16 1.1.114 “PAKISTAN” .................................................................................................................... 16 1.1.115 “PANEL OF EXPERTS” ...................................................................................................... 16 1.1.116 “PARTIES” ...................................................................................................................... 16 1.1.117 “PARTY” ......................................................................................................................... 16 1.1.118 “PERFORMANCE TESTING” ............................................................................................... 16 1.1.119 “PERSON” ....................................................................................................................... 17 1.1.120 “POLICY”........................................................................................................................ 17 1.1.121 “POLITICAL EVENT” ........................................................................................................ 17 1.1.122 “PREMISES COMPLETION CERTIFICATE” ............................................................................ 17 1.1.123 “PREMISES COMPLETION NOTICE” ................................................................................... 17 1.1.124 “PROJECT” ...................................................................................................................... 17 1.1.125 “PROJECT ACCOUNT” ...................................................................................................... 17 1.1.126 “PROJECT ASSETS” .......................................................................................................... 17 1.1.127 “PROJECT COLLECTION ACCOUNT” .................................................................................. 18 1.1.128 “PROJECT COMPLETION DATE” ........................................................................................ 18 1.1.129 “PROJECT COMPLETION NOTICE” ..................................................................................... 18 1.1.130 “PROJECT MAINTENANCE ESCROW ACCOUNT” .................................................................. 18 1.1.131 “PROJECT MANAGER” ...................................................................................................... 18 1.1.132 “PROPOSAL” ................................................................................................................... 18 1.1.133 “PUBLIC SECTOR ENTITY” ................................................................................................ 18 1.1.134 “PUBLIC UTILITIES” ......................................................................................................... 18 1.1.135 “QUALITY ASSURANCE INSPECTOR” .................................................................................. 18 1.1.136 “RFP” ............................................................................................................................ 19 1.1.137 “RELIEF EVENT” ............................................................................................................. 19 1.1.138 “REPRESENTATIVE” ......................................................................................................... 19 1.1.139 “REVENUES” ................................................................................................................... 19 1.1.140 “RIGHT OF WAY” OR “ROW” ........................................................................................... 19 1.1.141 “RUPEES” AND “PKR” ..................................................................................................... 19 1.1.142 “SCHEDULES” ................................................................................................................. 19 1.1.143 “SECTION” ..................................................................................................................... 19 1.1.144 “SECTIONAL COMPLETION CERTIFICATE” ......................................................................... 19 1.1.145 “SECTIONAL COMPLETION NOTICE” ................................................................................. 19 1.1.146 “SHAREHOLDER LOANS” .................................................................................................. 19 1.1.147 “SHAREHOLDERS” ........................................................................................................... 20 1.1.148 “SUBSTANTIAL COMPLETION” .......................................................................................... 20 1.1.149 “TAKE-OVER DATE” ....................................................................................................... 20 1.1.150 “TARGET IRR” ................................................................................................................ 20 1.1.151 “TENANCY AGREEMENTS” ............................................................................................... 21 1.1.152 “TERMINATION” ............................................................................................................. 21 1.1.153 “TERMINATION DATE” .................................................................................................... 21 1.1.154 “TERMINATION EVENT” .................................................................................................. 21 1.1.155 “TERMINATION NOTICE” ................................................................................................. 21 1.1.156 “TERMINATION PAYMENT” .............................................................................................. 21 1.1.157 “TOLLS” ......................................................................................................................... 21 1.1.158 “TOLL OPERATIONS MANUAL” ......................................................................................... 22

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1.1.159 “TOLL OPERATOR” .......................................................................................................... 22 1.1.160 “TOLL REVENUE” ........................................................................................................... 22 1.1.161 “TOLL STRUCTURE” ......................................................................................................... 22 1.1.162 “TOTAL PROJECT COSTS” ................................................................................................. 22 1.1.163 “TRAFFIC MANAGEMENT PLAN” ....................................................................................... 22 1.1.164 “TRANSFER BOND” ......................................................................................................... 23 1.1.165 “TRANSFER DATE” .......................................................................................................... 23 1.1.166 “VACANT POSSESSION” .................................................................................................... 23 1.1.167 “VARIATION” .................................................................................................................. 23 1.1.168 “VARIATION NOTICE” ..................................................................................................... 23 1.1.169 “WORKS” ....................................................................................................................... 23 1.1.170 “WORKS COMMENCEMENT DATE” .................................................................................... 23 1.1.171 “YEAR” .......................................................................................................................... 23 1.2 INTERPRETATION ............................................................................................................ 23 1.3 AMBIGUITIES AND DISCREPANCIES ................................................................................... 25

2. CONCESSION ................................................................................................................... 27 2.1 PROJECT IMPLEMENTATION STRUCTURE............................................................................ 27 2.2 GRANT OF CONCESSION .................................................................................................. 28 2.3 CONCESSION PERIOD ...................................................................................................... 29 2.4 ACCEPTANCE OF THE GRANT OF CONCESSION ................................................................... 29 2.5 CONDITIONS PRECEDENT ................................................................................................ 29 2.6 COVENANTS ................................................................................................................... 32 2.7 DATES AND DURATION .................................................................................................... 32 2.8 APPROVALS AND CONSENTS FOR PROJECT IMPLEMENTATION ............................................. 34

3. PROJECT SCOPE AND OBLIGATIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE PARTIES ................................................................................................ 35

3.1 PROJECT SCOPE ............................................................................................................... 35 3.2 OBLIGATIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE CONCESSIONAIRE ....................................................................................................................... 35 3.3 OBLIGATIONS, COVENANTS, REPRESENTATIONS AND WARRANTIES OF NHA ....................... 39 3.4 OBLIGATION TO NOTIFY CHANGE .................................................................................... 41 3.5 EXCLUSION OF IMPLIED WARRANTIES ............................................................................... 41 3.6 SURVIVAL ....................................................................................................................... 42 3.7 RIGHTS OF THE CONCESSIONAIRE ..................................................................................... 42

4. CONCESSION PERIOD AND EXCLUSIVITY .................................................................... 43 4.1 CONCESSION PERIOD ...................................................................................................... 43 4.2 KEY TARGET DATES ........................................................................................................ 43 4.3 ENTIRE AGREEMENT ....................................................................................................... 44 4.4 EXCLUSIVITY .................................................................................................................. 44

5. MANAGEMENT AND SUPERVISION ............................................................................... 45 5.1 NHA MANUAL ................................................................................................................ 45 5.2 NHA REPRESENTATIVE ................................................................................................... 45 5.3 CONCESSIONAIRE REPRESENTATIVE ................................................................................. 46 5.4 PROJECT MANAGER ......................................................................................................... 46 5.5 QUALITY ASSURANCE INSPECTOR ..................................................................................... 46 5.6 O&M MANAGER ............................................................................................................. 47 5.7 JOINT AUDITOR .............................................................................................................. 48 5.8 INDEPENDENT CONSULTANT ........................................................................................... 49

6. CONCESSION AREA, ADDITIONAL LANDS AND ANCILLARY RIGHTS ........................ 51 6.1 CONDITIONS FOR THE COMMENCEMENT OF THE WORKS .................................................... 51 6.2 CONVEYANCE OF THE VACANT POSSESSION OF THE CONCESSION AREA, THE ADDITIONAL LANDS AND GRANT OF THE ANCILLARY RIGHTS ........................................................ 51 6.3 RIGHTS TO USE THE CONCESSION AREA AND THE ADDITIONAL LANDS ............................... 52 6.4 PEACEFUL POSSESSION .................................................................................................... 52 6.5 COSTS AND EXPENSES ..................................................................................................... 54

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6.6 REVERSION OF UNUTILIZED PORTION OF CONCESSION AREA ............................................. 54 6.7 UTILIZATION OF EXISTING ROADS AND LAND AREAS ......................................................... 54 6.8 AFFIRMATIONS ................................................................................................................ 54

7. PUBLIC UTILITIES ............................................................................................................ 56 7.1 ASCERTAINMENT OF AFFECTED PUBLIC UTILITIES ............................................................. 56 7.2 REMOVAL, RELOCATION AND DIVERSION OF AFFECTED PUBLIC UTILITIES .......................... 56 7.3 PUBLIC UTILITIES REQUIRED FOR THE WORKS ................................................................... 56 7.4 WORKS UNDERTAKEN BY PUBLIC UTILITIES ...................................................................... 56

8. TREATMENT OF ONGOING CONTRACTS ...................................................................... 58 8.1 ASSIGNMENT OF AGREEMENTS ......................................................................................... 58 8.2 TRANSFER OF LIABILITIES AND OBLIGATIONS .................................................................... 58

9. FINANCES FOR THE PROJECT ........................................................................................ 59 9.1 CONCESSIONAIRE TO OBTAIN FINANCES FOR THE PROJECT ................................................ 59 9.2 FINANCIAL CLOSE BOND ................................................................................................. 59 9.3 FINANCIAL MODEL AND FINANCING TERM SHEET ............................................................. 59 9.4 PERIOD TO ACHIEVE FINANCIAL CLOSE ............................................................................ 60 9.5 FINANCING AGREEMENTS ................................................................................................ 60

10. STEP-IN RIGHTS ............................................................................................................... 62 10.1 STEP-IN RIGHTS .............................................................................................................. 62

11. DESIGN ............................................................................................................................ 63 11.1 DESIGN PROPOSAL APPROVALS ........................................................................................ 63 11.2 DETAILED DESIGN APPROVALS ........................................................................................ 63 11.3 AMENDMENTS TO THE APPROVED DESIGN PROPOSAL OR THE APPROVED DETAILED DESIGN BY THE CONCESSIONAIRE ............................................................................................... 65 11.4 VARIATION REQUESTS BY NHA ........................................................................................ 66

12. CONSTRUCTION TOLLING, TEMPORARY TOLL PLAZAS AND NEW TOLL PLAZAS .... 68 12.1 PRE-COMMENCEMENT ..................................................................................................... 68 12.2 TOLL COLLECTION OPERATIONS AT THE TOLL PLAZAS ...................................................... 68 12.3 UTILIZATION OF THE TOLL REVENUE DURING THE CONSTRUCTION PHASE ......................... 69

13. CONSTRUCTION .............................................................................................................. 70 13.1 COMMENCEMENT OF THE WORKS ..................................................................................... 70 13.2 CONSTRUCTION WORKS ................................................................................................... 70 13.3 CONSTRUCTION PERFORMANCE BOND .............................................................................. 72 13.4 PREMISES COMPLETION CERTIFICATE, SECTIONAL COMPLETION CERTIFICATE, CERTIFICATE OF SUBSTANTIAL COMPLETION AND CERTIFICATE OF COMPLETION ............................ 73 13.5 LIQUIDATED DAMAGES ................................................................................................... 74 13.6 INTERCHANGES AND NEW TOLL PLAZAS ........................................................................... 75 13.7 EXTENSION OF TIME TO CONSTRUCTION PHASE ................................................................ 76 13.8 AS-BUILT AND ROW DRAWINGS ....................................................................................... 77

14. MOTORWAY SERVICE AREAS FACILITIES AND ANCILLARY FACILITIES .................... 78 15. TITLE TO THE PROJECT ASSETS ..................................................................................... 79

15.1 TITLE TO CONCESSION AREA, WORKS AND PROJECT ASSETS ............................................... 79 16. TOLLING, REVENUES AND O&m ARRANGEMENT ....................................................... 80

16.1 COMMENCEMENT OF COMMERCIAL OPERATIONS ............................................................... 80 16.2 PERSONNEL MANAGEMENT ............................................................................................. 80 16.3 TOLLS AND OTHER REVENUES ......................................................................................... 81 16.4 UTILIZATION OF THE TOLL REVENUE DURING THE OPERATIONS PHASE ............................. 83 16.5 COMPETING ROUTES ....................................................................................................... 83 16.6 REDUCTION IN TOLL RATES BY THE CONCESSIONAIRE ....................................................... 84 16.7 SHARING OF REVENUE .................................................................................................... 85 16.8 O&M MANUAL ............................................................................................................... 85 16.9 CATALOGUES CONCERNING SPARE PARTS FOR TOLLING AND SAFETY EQUIPMENT ............... 86 16.10 SUBMISSION OF OPERATION, MAINTENANCE AND REPAIR INSTRUCTIONS ............................ 86 16.11 INVENTORY MANAGEMENT ............................................................................................. 86 16.12 REGULATIONS ................................................................................................................. 86

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16.13 OPERATING PRACTICE ..................................................................................................... 86 16.14 ACCIDENT PREVENTION/SAFETY ..................................................................................... 86 16.15 ALARM SYSTEM ............................................................................................................... 87 16.16 SERVICES AND AIDS ......................................................................................................... 87 16.17 MANAGEMENT STRUCTURE .............................................................................................. 87 16.18 COMMUNICATION ........................................................................................................... 87 16.19 LABOUR ......................................................................................................................... 87 16.20 CLEANLINESS .................................................................................................................. 87 16.21 TEMPORARY TAKE-OVER OF OPERATIONS BY NHA ........................................................... 87 16.22 INSPECTION .................................................................................................................... 89 16.23 OPERATIONS BOND ......................................................................................................... 90 16.24 NO BREACH .................................................................................................................... 90

17. RELIEF EVENTS, COMPENSATION EVENTS AND UNFORESEEABLE DISCRIMINATORY GOVERNMENT CONDUCT ........................................................................ 92

17.1 RELIEF EVENTS ............................................................................................................... 92 17.2 COMPENSATION EVENTS ................................................................................................. 94

18. BANK ACCOUNTS ............................................................................................................ 96 18.1 PROJECT ACCOUNT ......................................................................................................... 96 18.2 PROJECT COLLECTION ACCOUNT ...................................................................................... 96 18.3 PROJECT MAINTENANCE ESCROW ACCOUNT ..................................................................... 96 18.4 OTHER BANK ACCOUNTS ................................................................................................. 97 18.5 ENCUMBRANCE OVER BANK ACCOUNTS ........................................................................... 97

19. INSURANCE ...................................................................................................................... 98 19.1 TAKAFUL OR INSURANCE DURING THE CONSTRUCTION PHASE ........................................... 98 19.2 TAKAFUL OR INSURANCE DURING THE OPERATIONS PHASE ............................................... 98 19.3 GENERAL PROVISIONS ..................................................................................................... 99 19.4 VALIDITY OF INSURANCE ................................................................................................. 99 19.5 APPLICATION OF INSURANCE PROCEEDS ......................................................................... 100 19.6 WAIVERS/EXEMPTIONS ................................................................................................. 100 19.7 TOTAL LOSS .................................................................................................................. 100 19.8 SAVINGS ....................................................................................................................... 100

20. INDEMNITIES ................................................................................................................ 101 20.1 NO WAIVER OF INDEMNITY ........................................................................................... 101 20.2 INDEMNITY .................................................................................................................. 101

21. ASSIGNMENT, SECURITY AND PUBLIC LISTING ......................................................... 104 21.1 ASSIGNMENT ................................................................................................................ 104 21.2 CREATION OF SECURITY ................................................................................................ 104 21.3 LISTING AND TRADING OF SHARES ................................................................................. 104

22. CHANGE IN LAW ........................................................................................................... 105 22.1 INTERPRETATION .......................................................................................................... 105 22.2 NEGATIVE IMPACT OF CHANGE IN LAW .......................................................................... 105 22.3 POSITIVE IMPACT OF CHANGE IN LAW ............................................................................ 106

23. FORCE MAJEURE ........................................................................................................... 108 23.1 INTERPRETATION .......................................................................................................... 108 23.2 MITIGATION MEASURES ................................................................................................. 109 23.3 OBLIGATION TO NOTIFY ............................................................................................... 109 23.4 PERFORMANCE OF OBLIGATIONS .................................................................................... 110 23.5 TERMINATION OCCASIONED BY FORCE MAJEURE ............................................................. 110

24. EVENTS OF DEFAULT ................................................................................................... 112 24.1 INTERPRETATION .......................................................................................................... 112 24.2 TERMINATION OCCASIONED BY A CONCESSIONAIRE EVENT OF DEFAULT .......................... 113 24.3 TERMINATION OCCASIONED BY AN NHA EVENT OF DEFAULT ......................................... 114 24.4 TERMINATION NOTICE .................................................................................................. 114 24.5 WITHDRAWAL OF DEFAULT NOTICE ............................................................................... 115 24.6 TERMINATION NOTICE FINAL ........................................................................................ 115

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25. TERMINATION AND TERMINATION PAYMENT ......................................................... 115 25.1 EXPIRY OF CONCESSION PERIOD .................................................................................... 115 25.2 TERMINATION EVENT ................................................................................................... 116 25.3 TERMINATION PAYMENT ............................................................................................... 117 25.4 RIGHTS AND LIABILITIES UPON EXPIRATION OR EARLIER TERMINATION ........................... 118

26. HANDBACK .................................................................................................................... 120 26.1 HANDBACK REQUIREMENTS ........................................................................................... 120 26.2 TRANSFER BOND ........................................................................................................... 120 26.3 HANDBACK .................................................................................................................. 120

27. RESOLUTION OF DISPUTES .......................................................................................... 122 27.1 AMICABLE RESOLUTION ................................................................................................. 122 27.2 EXPERT DETERMINATION .............................................................................................. 122 27.3 ARBITRATION ............................................................................................................... 124

28. PROVISION OF DOCUMENTS ........................................................................................ 125 28.1 DOCUMENTS ................................................................................................................. 125 28.2 COPY OF DRAWINGS ...................................................................................................... 125

29. MISCELLANEOUS ........................................................................................................... 126 29.1 VARIATIONS IN WRITING ............................................................................................... 126 29.2 WAIVERS ...................................................................................................................... 126 29.3 COMPLIANCE WITH GOVERNMENT RULES AND REGULATIONS .......................................... 126 29.4 HEADINGS; GRAMMATICAL USAGE; NAMES ..................................................................... 126 29.5 MUTUAL TRUST ............................................................................................................. 126 29.6 NON-RELINQUISHMENT OR NON-WAIVER OF RIGHTS ...................................................... 126 29.7 SEVERABILITY ............................................................................................................... 127 29.8 CONSULTATION ON MODIFICATIONS TO THIS AGREEMENT ............................................... 127 29.9 SPECIAL WARRANTY ...................................................................................................... 127 29.10 CUTTING OF TREES OR LOGGING ................................................................................... 127 29.11 INTELLECTUAL PROPERTY.............................................................................................. 127 (A) DESIGN AND OTHER DATA ............................................................................................ 127 (B) LICENCES ..................................................................................................................... 128 (C) COMPUTERIZED DATA ................................................................................................... 128 29.12 ENVIRONMENT ............................................................................................................. 129 29.13 CONFIDENTIALITY ........................................................................................................ 129 29.14 LANGUAGE ................................................................................................................... 130 29.15 INSPECTION .................................................................................................................. 130 29.16 CONFLICT ..................................................................................................................... 130 29.17 FURTHER ASSURANCES .................................................................................................. 130 29.18 SURVIVAL ..................................................................................................................... 130 29.19 ASSIGNMENT AND CHARGES .......................................................................................... 130 29.20 LATE PAYMENT AND RIGHT OF SET-OFF ......................................................................... 131 29.21 GOVERNING LAW AND JURISDICTION ............................................................................. 132 29.22 NO PARTNERSHIP .......................................................................................................... 132 29.23 ENTIRE AGREEMENT ..................................................................................................... 132 29.24 SCHEDULES TO THE AGREEMENT ................................................................................... 132 29.25 COUNTERPARTS ............................................................................................................ 132 29.26 NOTICES ...................................................................................................................... 132 29.27 COSTS AND EXPENSES ................................................................................................... 133

1

CONCESSION AGREEMENT THIS CONCESSION AGREEMENT (“Agreement”) is entered into at Islamabad on this [insert Day] Day of [insert Month], 2014 by and between: 1. NATIONAL HIGHWAY AUTHORITY, a statutory body corporate established

pursuant to the NHA Act, with its headquarters at 27 Mauve Area, G-9/1, Islamabad, Pakistan (“NHA”, which expression shall mean and include, where the context so permits, its successors-in-interest and permitted assigns) OF THE FIRST PART;

AND

2. [Concessionaire Name], a private company limited by shares duly incorporated,

registered and existing under the Laws of Pakistan, with its registered office at [Address of Concessionaire] (“Concessionaire”, which expression shall mean and include, where the context so permits, its successors-in-interest and permitted assigns) OF THE OTHER PART.

NHA and the Concessionaire are also hereinafter referred to individually as a “Party” and collectively as the “Parties”.

A. NHA intends to undertake the Project, namely, develop, design, engineer, finance, construct, Performance Test, Commission, manage, operate, maintain, insure and, on the Transfer Date, transfer, the Project Assets, all under a build, operate and transfer (“BOT”) arrangement, and during the Concession Period, to collect, receive and earn the Revenues from the Project;

RECITALS WHEREAS:

B. NHA:

(i) considered alternative ways to finance the implementation of the Project; (ii) determined that the Project was suitable for private sector participation through

the BOT mode; (iii) determined that a private entity would be competitively selected to undertake

the Project;

(iv) prepared the selection criteria and bidding documents required to competitively procure the services of a private entity to undertake the Project; and

(v) prepared, in respect of the Project request for proposals (“RFP”) for

dissemination;

C. On [insert date], NHA caused the publication in Pakistani newspapers of general circulation of a request for proposal, inviting interested parties to submit technical and

2

financial proposals for the Project in accordance with the requirements stipulated in the RFP;

D. In response to the RFP, the sponsors of the Concessionaire submitted its technical and financial proposal (“Proposal”) to undertake the Project on a BOT basis on [insert date];

E. After fulfilling the requirements of due process, NHA accepted the Proposal and issued a letter of support bearing reference number [ ] on [month] [date], 2014;

F. The sponsors of the Concessionaire, in accordance with the requirements stipulated in the LOS, duly promoted and incorporated the Concessionaire as a private limited company to enter into this Agreement, undertake the Project and fulfill and perform the obligations and exercise the rights under this Agreement; and

G. NHA and the Concessionaire have now agreed to implement the Project subject to and in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED TO BY AND BETWEEN THE PARTIES AS FOLLOWS:

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1. DEFINITIONS AND INTERPRETATION In this Agreement, the words and phrases in capitalized letters shall, unless repugnant to the context, have the meaning given below:

1.1 Definitions 1.1.1 “Abandonment”

Shall mean the following: by virtue of the withdrawal of all, or substantially all, personnel by the Concessionaire from the Concession Area (a) during the Construction Phase, the failure of the Concessionaire to carry out the Works, in the opinion of the Quality Assurance Inspector, for at least ninety (90) consecutive Days without justifiable cause; or (b) during the Operations Phase, the failure of the Concessionaire to undertake such material obligations the failure to undertake which amounts to a Material Breach, in the opinion of the Joint Auditor, for at least ninety (90) consecutive Days without justifiable cause; provided, however, that subject to the terms of this Agreement, an NHA Event of Default, a Force Majeure Event, a Compensation Event, a Relief Event, Unforeseeable Conduct or causes directly attributable to a Public Sector Entity shall be deemed justifiable causes.

1.1.2 “Acceptable Contractor” A contractor that has no derogatory record that would adversely reflect on its capability to undertake the Works in accordance with the Construction Performance Standards or undertake its operations and maintenance obligations pursuant to the terms of this Agreement, and that has not been blacklisted by the GOP or NHA nor been found to deliver unsatisfactory quality of work or unsatisfactory performance of its obligations due to fault or negligence, upon verification of its performance in any ongoing or past government or private project in which the contractor is or was involved.

1.1.3 “Accounting Year”

The financial year commencing from the 1st of July of any Year and ending on the 30th of June of the next Year.

1.1.4 “Additional Lands” Subject to the terms of this Agreement, additional lands, as determined in the Approved Design Proposal or the Approved Detailed Design (including any amendment or Variation thereto), as the case may be, that may be required to be procured by NHA, free from any Encumbrance, for the construction or improvement of the Works or to meet the requirements of the Approved Design Proposal or the Approved Detailed Design (including any amendment or Variation thereto), as the case may be, and upon procurement, the Additional Lands shall form part of the Concession Area.

1.1.5 “Administrative Office”

An office building to be built by the Concessionaire for the operation, management and maintenance of the Motorway, which office building shall be built at such place on the Concession Area, as may be deemed appropriate by the Concessionaire.

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1.1.6 “Affected Party”

The Party claiming to be affected by a Force Majeure Event.

1.1.7 “Agreement”

This concession agreement, including, the Schedules to this concession agreement, and includes any amendment hereto or hereof executed by the authorized signatories of the Parties after the Effective Date.

1.1.8 “Ancillary Facilities”

Any additional facilities and installations, which NHA, subject to the terms of the RFP, may authorize the Concessionaire to erect, install, develop or make available at the Concession Area pursuant to the terms of this Agreement.

1.1.9 “Ancillary Rights”

The rights of passage over, and of access to and egress, from the Concession Area, right of way, easements, licenses and all other permissions necessary to grant full access to and egress, from the Concession Area, and such other rights pertaining to the building, repair and maintenance of the Motorway, rights of access to maintain and repair structures and all such other ancillary rights as may reasonably be required for undertaking the Project or any part thereof.

1.1.10 “Appointed Date”

Subject to the terms of this Agreement, the date on which Financial Close is achieved in accordance with Article 9 [Finance].

1.1.11 “Approval”

The prior written agreement of NHA to a proposed action by the Concessionaire, which shall not be withheld, conditioned or delayed unreasonably; provided, that the obligation of NHA to grant an Approval pursuant to the terms of this Agreement shall be subject to the Concessionaire taking all actions and/or submitting all relevant documents required under the Laws of Pakistan as a pre-requisite to grant of such Approval. The words “Approve”, “Approved” and other grammatical variations of the word “Approval” shall be construed accordingly. A list of the Approvals is set out in Schedule [ ] [Approvals and Consents].

1.1.12 “Approved Design Proposal”

The Design Proposal as Approved or deemed Approved by NHA pursuant to Article 11.1.

1.1.13 “Approved Detailed Design”

The Detailed Design of one or more parts of the Works, as Approved or deemed Approved by NHA pursuant to Article 11.2.

5

1.1.14 “Associate” A Person that controls, is controlled by, or is under the common control with the Joint Venture or any of the Joint Venture Members. As used in this definition, the expression “control” means with respect to a Person that is a corporation, the ownership, directly or indirectly, of more than fifty percent (50%) of the voting shares of such Person, and with respect to a Person which is not a corporation, the power to direct the management and policies of such Person, whether by operation of law or by contract or otherwise.

1.1.15 “BOT”

Shall have the meaning ascribed to it in Recital A. 1.1.16 “Building Line”

The line notified by NHA, pursuant to the NHA Act, between which and the ROW it is unlawful to carry out any form of construction or excavation without the concurrence of NHA.

1.1.17 “Business Day”

A Day on which banks are legally permitted to be open in Pakistan for the transaction of business and remittances. For the avoidance of doubt, if an act prescribed under this Agreement to be done by a Party on or by a given Day is done after 5.30 p.m. on that Day, it is to be taken to be done on the following Business Day.

1.1.18 “COD”

The date of commencement of Tolling in accordance with the Toll Structure set out in Schedule [ ] [Toll Structure], which shall be the Day immediately following the Project Completion Date.

1.1.19 “Certificate of Completion”

The certificate issued or to be issued by Quality Assurance Inspector certifying that all the Works in respect of the Project have been completed.

1.1.20 “Certificate of Substantial Completion” The certificate issued or to be issued by the Quality Assurance Inspector certifying that the Works are Substantially Complete.

1.1.21 “Change in Law”

Shall have the meaning ascribed to it in Article 22 [Change in Law].

1.1.22 “Change of Control” A significant change in the shareholding interest in the Concessionaire resulting in the aggregate shareholding of the Joint Venture Members and/or the Associates in the Concessionaire becoming less than fifty percent (50%) plus one (1) share.

1.1.23 “Commissioning”

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The commissioning of the Motorway in accordance with the procedures set out in Schedule [ ] [Commissioning Procedures]. The words “Commission”, “Commissioned” and other grammatical variations of the word “Commissioning” shall be construed accordingly.

1.1.24 “Commissioning Notice”

The notification by the Concessionaire that the Motorway may be Commissioned in accordance with the procedures set out in Schedule [ ] [Commissioning Procedures].

1.1.25 “Comparable Motorway”

A divided six (6) or more lanes controlled access motorway the quality and level of service whereof is at least equivalent to the Motorway.

1.1.26 “Compensation Event”

Shall have the meaning ascribed to it in Article 17.2(a).

1.1.27 “Competing Route” Any existing road materially improved whereby it becomes a Comparable Motorway or a newly constructed Comparable Motorway, which is so materially improved or constructed by or on behalf of NHA or a Public Sector Entity during the Concession Period and is in competition with the Motorway.

1.1.28 “Concession”

The concession granted to the Concessionaire by NHA under Article 2.2 of this Agreement.

1.1.29 “Concession Area” The fenced-to-fenced land on which the Project shall be undertaken by the Concessionaire, which includes the ROW, as more particularly described in Schedule [ ] [ROW and Concession Area] and any other land subsequently acquired by NHA and made part of the Concession Area.

1.1.30 “Concession End Date”

The date of expiry of the Concession Period which is the twenty fifth (25th) anniversary date of the Effective Date, or any extension thereof pursuant to the terms of this Agreement.

1.1.31 “Concession Period”

The period specified in Article 2.3. 1.1.32 “Concessionaire”

[ ]

7

1.1.33 “Concessionaire Event of Default”

Shall have the meaning ascribed to it in Article 24.1(a).

1.1.34 “Concessionaire Representative”

The representative of the Concessionaire appointed from time to time by the Concessionaire pursuant to Article 5.3.

1.1.35 “Conditions Precedent”

The conditions specified in Article 2.5(a) and Article 6.1(a).

1.1.36 “Conditions Precedent Certificate”

Shall have the meaning ascribed to it in Article 2.5(d).

1.1.37 “Confidential Information” The terms of this Agreement and all information of a Party including information relating to technology, processes, products, specifications, know-how, expertise, inventions or designs used or developed by such Party, trade secrets and information of a commercially sensitive nature, marketing information and such information that is specified by such Party as confidential or that by its nature a reasonable Person would consider confidential. Confidential Information does not include information that (a) at the time of the first disclosure to or observation by another Party, was already in the lawful possession of such other Party, (b) is in or comes into the public domain otherwise than by disclosure in breach of this Agreement, or (c) becomes available to such other Party from any other source; provided, that it was not acquired directly or indirectly from a Party in violation of an obligation of confidentiality pursuant to this Agreement.

1.1.38 “Consents”

All authorizations, consents, clearances, exemptions, registrations, permits and approvals from or with the Public Sector Entities under or pursuant to the Laws of Pakistan or the terms of this Agreement that are required to be obtained and maintained for the purpose of implementing the Project in accordance with the terms of this Agreement.

1.1.39 “Construction Contractor”

Any Acceptable Contractor with whom the Concessionaire has, or may enter into, the EPC Contract or other form of contract(s) for purposes of undertaking any or all of the Works.

1.1.40 “Contractors Costs”

All amounts properly due and payable under any contracts entered into by the Concessionaire in connection with the Project, for the purpose of discharging its obligations under this Agreement, prior to the Termination Date (including amounts

8

arising as a result of such Termination) excluding any accrued payments due and payable to, or redundancy payments for, employees of the Concessionaire not transferring to NHA under the terms of this Agreement; provided, always, that such contracts have been entered into on bona fide arm’s length terms.

1.1.41 “Construction Costs”

The projected design and construction costs of the Works as provided in the Financial Model.

1.1.42 “Construction Performance Bond”

The bond to be submitted or assigned by the Concessionaire pursuant to Article 13.3, substantially in the form and content as provided in Schedule [ ] [Form of Construction Performance Bond].

1.1.43 “Construction Performance Standards”

The level of performance or output which has been agreed to between the Parties for the implementation of the Works, as more particularly set out in Schedule [ ] [Construction Performance Standards].

1.1.44 “Construction Phase”

The period required for undertaking the Works commencing on the Works Commencement Date and having a duration of thirty six (36) Months or such extended duration as may be determined pursuant to the terms of this Agreement.

1.1.45 “Contractor”

The Construction Contractor, the O&M Contractor and any Acceptable Contractor with whom the Concessionaire has, or may enter into, any agreement/contract for purposes of undertaking any or all of (a) the Works, (b) its operations and maintenance obligations pursuant to the terms of this Agreement, or (c) its other obligations pursuant to the terms of this Agreement.

1.1.46 “Controlled Party Disclosee”

Shall have the meaning ascribed to it in Article 29.13(c). 1.1.47 “Court”

Any Court of competent jurisdiction.

1.1.48 “Day” A day according to the Gregorian calendar.

1.1.49 “Debt Due”

The aggregate of the following sums expressed in Rupees outstanding and payable to the Lenders up to the date immediately preceding the Termination Date pursuant to the Financing Agreements:

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(a) the principal amount of the debt provided and disbursed by the Lenders under the Financing Agreements for financing the Project; and

(b) the interest or mark-up (or any other term connoting the return paid to the Lenders on debt) accruing on the aforesaid principal; and

1.1.50 “Deductible Amounts”

To the extent it is a positive amount, the aggregate, as at the Termination Date, of: (a) all credit balances on any bank accounts, held by or on behalf of the

Concessionaire on the Termination Date, the value of any right of the Concessionaire and/or the Lenders to receive insurance proceeds and of any such proceeds actually received (save where such credit balances or proceeds are paid to NHA and/or to be applied in reinstatement) and sums due and payable from the Contractors and any third parties;

(b) all amounts payable by the Lenders (or the counter-parties to the interest rate or exchange rate hedging arrangements provided for in the Financing Agreements) to the Concessionaire in connection with early termination of such hedging arrangements as a result of prepayment of amounts outstanding under the Financing Agreements; and

(c) amounts NHA is entitled to set-off under Article 29.20.

1.1.51 “Default Notice” The written notice issued either by (a) the Concessionaire declaring the occurrence of an NHA Event of Default, or (b) NHA declaring the occurrence of a Concessionaire Event of Default.

1.1.52 “Delay Duration”

The period of delay caused by a Compensation Event, a Relief Event or any other event expressly stated in this Agreement as being the cause of a Delay Duration.

1.1.53 “Design Proposal”

The design proposal and specifications whereby the concept design submitted by the Concessionaire in the Proposal can be carried forward to the Detailed Design, which shall be prepared by the Concessionaire in accordance with Article 11.1.

1.1.54 “Detailed Design”

The technical specifications, construction drawings, construction methodology, quality assurance procedures, schedule for completion of the Works and other documents prepared by the Concessionaire pursuant to Article 11.2.

1.1.55 “Disclosing Party”

Shall have the meaning ascribed to it in Article 29.13(b).

1.1.56 “Dispute” Shall have the meaning ascribed to it in Article 27.1(a).

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1.1.57 “EPC Contract”

The contract or contracts, if any, entered into by the Concessionaire with one or more Construction Contractor, inter alia, for the purpose of designing, engineering, procurement of equipment and materials, construction, completion, Performance Testing and Commissioning of the Project Assets in accordance with the terms of this Agreement.

1.1.58 “Effective Date”

The date of signing of this Agreement by NHA and the Concessionaire i.e. the [insert Day] of [insert Month], 2014.

1.1.59 “Encumbrance”

Any mortgage, charge, pledge, lien, hypothecation, assignment, privilege, security interest or priority of any kind having the effect of security or other similar obligation and shall include encroachment and any other physical hindrances, right of entry, use of way, easement, restrictive covenants, licenses and/or leases or any form of physical encumbrances whatsoever, whether licences and/or leases have been granted or not, or any interest, claim or arrangement impinging on unrestricted use of the Concession Area or the Right of Way or any part thereof, or any put or call option or a first right of refusal, or an agreement to grant, create, allow or register any of the foregoing, whether registered or unregistered, and whether statutory, legal or equitable.

1.1.60 “Equity”

The share capital of the Concessionaire, represented in Rupees, subscribed to by any of the Shareholders for meeting the equity component of the Total Project Costs; provided, however, that for purposes of computing the Termination Payment under this Agreement, Equity shall be reckoned as an amount that is actually invested in respect of the Project up to the Termination Date pursuant to the terms of this Agreement.

1.1.61 “Equity Compensation”

The amount which, when taken together with all amounts already paid in respect of Equity (by way of dividends and other distributions) and taking into account the actual timing of all such payments, provides the Shareholders with the Target IRR.

1.1.62 “Event of Default”

Either a Concessionaire Event of Default or an NHA Event of Default, or both, as the context may admit or require.

1.1.63 “Event of Loss”

The occurrence of actual or constructive total loss to any of the Project Assets or the destruction or damage beyond repair, condemnation, expropriation or any confiscation, requisition, seizure, forfeiture or other taking of title to or use of any of the Project Assets whether by Change in Law, a Force Majeure Event or otherwise, which renders or is likely to render the Existing Project Assets and/or the Project Assets inoperable by the Concessionaire or which leads or is likely to lead to a Material Adverse Effect.

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1.1.64 “Exempted Vehicles”

Vehicles exempted from the payment of the Tolls in accordance with the Policy, as enumerated in Schedule [ ] [Toll Structure].

1.1.65 “Expert”

A member of the Panel of Experts nominated to consider a Dispute under Article 27.2.

1.1.66 “Expert Reference Notice”

The notice issued by a disputing Party referring a Dispute for expert determination by the Expert under Article 27.2.

1.1.67 “Financial Close”

When the Financing Agreements providing for funding by the Lenders have become effective and the Concessionaire has immediate access to such funding under the Financing Agreements.

1.1.68 “Financial Close Bond” The bond to be submitted by the Concessionaire pursuant to Article 9.2, substantially in the form and content as provided in Schedule [ ] [Form of Financial Close Bond].

1.1.69 “Financial Close Period”

The period stipulated or determined in accordance with Article 9.4(a), which may be extended pursuant to the terms of this Agreement, during which the Concessionaire is required to achieve Financial Close.

1.1.70 “Financial Model”

The financial model submitted as part of the Proposal as endorsed by NHA for the funding of the financing requirement for the Works, and the financial projections (together with the financial parameters, accounting and tax assumptions), which form the basis for the determination of the Toll Structure during the Concession Period, as detailed in Schedule [ ] [Financial Model].

1.1.71 “Financing Agreements”

Collectively, the agreements entered or to be entered into by the Concessionaire evidencing the commitment of the Lenders to finance the implementation of the Project.

1.1.72 “Force Majeure Event”

The occurrence of any or all of the events listed in Article 23.1(a).

1.1.73 “Force Majeure Period”

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The period commencing from the date of occurrence of a Force Majeure Event and ending on (a) the date on which the Affected Party acting in accordance with Good Industry Practice resumes or should have resumed such of its obligations the performance whereof was excused in terms of Article 23.4, or (b) the Termination Date, as the case may be.

1.1.74 “GOP” or “Government”

The Government of Pakistan.

1.1.75 “Good Industry Practice”

The exercise of that degree of skill, diligence, prudence and foresight in compliance with the undertakings and obligations under this Agreement which would reasonably and ordinarily be expected from a skilled and experienced Person engaged in the implementation, operation and maintenance or supervision or monitoring of a project similar to the Project.

1.1.76 “Handback Certificate”

The certificate to be issued by the Independent Consultant in the form attached hereto as Schedule [ ] [Form of Handback Certificate], certifying that the Project Assets comply with the Handback Requirements in accordance with Schedule [ ] [Handback Requirements].

1.1.77 “Handback Requirements”

The requirements that the Project Assets must comply with on the Transfer Date (or such other date as agreed upon by the Parties in writing), as set out in Schedule [ ] [Handback Requirements].

1.1.78 “IRR”

The real post tax internal rate of return which a holder of Equity is forecast in the Financial Model to achieve on its investment in Equity over the life of the Project.

1.1.79 “Incomplete Works List”

The list prepared or to be prepared by the Quality Assurance Inspector of the Works or things forming part of the Works which have not been completed or are outstanding on the relevant date.

1.1.80 “Indebtedness/Loan/Debt” Any financial arrangement relating to the Project between the Concessionaire and the Lenders pursuant to the Financing Agreements.

1.1.81 “Indemnified Party”

Shall have the meaning ascribed to it in Article 20.2(c).

1.1.82 “Indemnifying Party”

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Shall have the meaning ascribed to it in Article 20.2(c).

1.1.83 “Indirect Political Event”

Shall have the meaning ascribed to it in Article 23.1(d).

1.1.84 “Intellectual Property”

All current and future legal and equitable interests in registered or unregistered trademarks, service marks, patents, registered designs, utility marks, applications for any of the foregoing, copyrights, unauthorized extraction and/or re-utilization rights, unregistered designs, inventions, confidential information, know-how or other intellectual property rights of either Party or arising in connection with or relating in any way to the performance of any obligations of the Concessionaire under this Agreement.

1.1.85 “Joint Auditor”

The independent firm of chartered accountants jointly appointed by NHA and the Concessionaire pursuant to Article 5.7.

1.1.86 “Laws of Pakistan”

All federal, provincial and local laws of Pakistan and all orders, rules, regulations, bye-laws, ordinances, statutory notifications or orders, executive orders, decrees, policies, judicial decisions, notifications or other similar lawful directives made pursuant thereto issued by any executive, administrative, legislative or judicial authority or any one or more of them as may be amended from time to time.

1.1.87 “Lenders”

All Persons, banks, financial institutions and other finance-providers for the time being, providing, raising or making available, directly or indirectly, finance or refinance (and, for the avoidance of doubt, finance and refinance shall not include amounts subscribed for ordinary share capital by the Shareholders) for the Project through the Financing Agreements, and shall include their respective successors-in-title and assigns, and the term “Lenders” also includes a consortium of Lenders, if any.

1.1.88 “Material Adverse Effect”

The material adverse effect on (a) the ability of a Party to exercise any of its rights, or perform/discharge any of its duties/obligations under and in accordance with the terms of this Agreement, or (b) the legality, validity, binding nature or enforceability of this Agreement against the Parties or any of them.

1.1.89 “Material Breach”

A breach by a Party of any of its obligations under this Agreement which has or is likely to have a Material Adverse Effect, upon the occurrence whereof Article 24 [Events of Default] shall apply.

1.1.90 “Month”

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A period starting on one Day in a calendar month and ending on the numerically corresponding Day in the next calendar month, save that where any such period would otherwise end on a Day which is a public holiday in Pakistan, it shall end on the next Day, unless that Day falls in the calendar month succeeding that in which it would otherwise have ended, in which case it shall end on the preceding Day; provided, however, that if a period starts on the last Day in the month in which that period ends, that period shall end on the last Day in that later month, and references to “Months” shall be construed accordingly.

1.1.91 “Motorway”

The [City Name - City Name] motorway with a length of [ ] kilometres, as more particularly described in Schedule [ ] [ROW and Concession Area].

1.1.92 “Motorway Service Areas”

The service areas to be designed, constructed, Commissioned, operated, managed and maintained by the Concessionaire as part of the Concession Area, as more particularly described in Schedule [ ] [Motorway Service Areas and Facilities].

1.1.93 “Motorway Services Areas Facilities”

The facilities, amenities, fixtures, furniture, equipment, assets and buildings to be designed, constructed, Commissioned, operated, managed and maintained by the Concessionaire at the Motorway Service Areas during the Concession Period, as more particularly described in Schedule [ ] [Motorway Service Areas and Facilities].

1.1.94 “Motorway Service Areas Revenue”

All income derived by the Concessionaire from the Motorway Service Areas and the Motorway Service Areas Facilities.

1.1.95 “NHA”

The National Highway Authority, a statutory body corporate established pursuant to

the NHA Act.

1.1.96 “NHA Act” The National Highway Authority Act, 1991 (Act XI of 1991), as amended or substituted from time to time.

1.1.97 “NHA Bank Account”

The bank account designated in writing by NHA for making and receiving payments under this Agreement.

1.1.98 “NHA Event of Default”

Shall have the meaning ascribed to it in Article 24.1(b).

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1.1.99 “NHA Manual”

The current version of the National Highway Authority Code or Manual of Rules and Regulations for management and control of the National Highway System issued by NHA and/or notified in the Official Gazette of Pakistan.

1.1.100 “NHA Representative”

The Person appointed in writing by NHA pursuant to Article 5.2 to act on its behalf under this Agreement.

1.1.101 “New Toll Plazas”

The new toll plazas to be established by the Concessionaire as part of the Works, as more particularly enumerated in Schedule [ ] [New Toll Plazas], and any other toll plazas created, or caused to be created, by NHA after the Effective Date for the collection of the Tolls and/or management of Tolling operations and the related management of the Motorway.

1.1.102 “Non-Political Event”

Shall have the meaning ascribed to it in Article 23.1(b).

1.1.103 “O&M Contract”

The contract, if any, between the Concessionaire and the O&M Contractor which shall be entered into by the Take-Over Date.

1.1.104 “O&M Contractor”

The Concessionaire itself or an Acceptable Contractor with whom the Concessionaire has entered or may, if so required, enter into an O&M Contract for performance of the Concessionaire’s operations and maintenance obligations pursuant to this Agreement.

1.1.105 “O&M Manager”

An individual or a team of professionals of the Concessionaire or from a firm or company of repute, with substantial experience in projects similar to the Project, appointed by the Concessionaire for the purposes of monitoring the operation and maintenance of the Project, including, the performance of the O&M Contract.

1.1.106 “O&M Manual”

The manual to be prepared by the Concessionaire in accordance with this Agreement which provides, amongst other things, acceptable standards and practices for operating and maintaining a modern and efficient motorway comparable to the Motorway.

1.1.107 “O&M Requirements”

The specifications, requirements and procedures for undertaking operations and maintenance in respect of the Project, as more particularly set out in Schedule [ ] [O&M Requirements].

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1.1.108 “Operational Year”

A period of one (1) year commencing on each consecutive anniversary of the COD and ending as of the end of the Day preceding the next anniversary of the COD, except for the first Operational Year which shall start on the COD.

1.1.109 “Operations Bond”

The bond to be submitted by the Concessionaire pursuant to Article 16.23, substantially in the form and content as provided in Schedule [ ] [Form of Operations Bond].

1.1.110 “Operations Phase”

Subject to the terms of this Agreement, the period commencing on the COD and ending on the Concession End Date (or the Termination Date, if earlier).

1.1.111 “Other Revenue”

All income derived by the Concessionaire from the Project Assets, other than the Toll Revenue and the Motorway Service Areas Revenue, including, police fines and weigh stations’ collections.

1.1.112 “PEPA” The Pakistan Environmental Protection Agency, a statutory body corporate established pursuant to the Pakistan Environmental Protection Act, 1997.

1.1.113 “PPP”

Public-Private Partnership.

1.1.114 “Pakistan”

The Islamic Republic of Pakistan.

1.1.115 “Panel of Experts”

The panel of Experts constituted for purpose of resolution of a Dispute by way of expert determination, as more particularly set out in Article 27.2.

1.1.116 “Parties”

The parties to this Agreement collectively.

1.1.117 “Party”

Any of the parties to this Agreement individually.

1.1.118 “Performance Testing”

The tests to be carried out in accordance with the Construction Performance Standards.

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1.1.119 “Person”

Any individual, partnership, firm, company, corporation, joint venture, trust, association, organization or other entity (whether or not having a separate legal personality).

1.1.120 “Policy” NHA’s PPP Policy and Regulatory Framework Concerning Private Sector Participation in National Highways, Motorways, Tunnels and Bridges of 2009, as amended or substituted from time to time.

1.1.121 “Political Event”

Shall have the meaning ascribed to it in Article 23.1(c).

1.1.122 “Premises Completion Certificate”

The certificate issued or to be issued by the Quality Assurance Inspector in accordance with Article 13.4(b), certifying that the Works in respect of the Administrative Office have been completed.

1.1.123 “Premises Completion Notice”

The notice issued by the Concessionaire pursuant to Article 13.4(b) that the Concessionaire has completed the Works in respect of the Administrative Office.

1.1.124 “Project”

The development, designing, engineering, financing, construction, Performance Testing, Commissioning, management, operation, maintenance, insurance and, on the Transfer Date, transfer, of the Project Assets, under a BOT arrangement, and during the Concession Period, collecting, receiving and earning the Revenues generated in accordance with this Agreement, from the Motorway, as more particularly described in Schedule [ ] [Description of the Project and Scope of Work].

1.1.125 “Project Account”

The bank account to be opened, maintained and operated by the Concessionaire with a scheduled commercial bank in accordance with Article 18.1.

1.1.126 “Project Assets”

All physical assets created by the Works in connection with the Project including (a) the Motorway, (b) the Administrative Office, (c) civil works such as the foundation, embankments, pavements, roads surface, interchanges, ramps, drainage works, lighting facilities, traffic signals, sign boards, milestones, the New Toll Plazas to be established by the Concessionaire as part of the Works, emergency services systems, electrical works for lighting on the Motorway, telephone and other communication systems and equipment for the Project, (d) the assets established, created, installed or deployed as a result of the Project, and (e) the Ancillary Facilities.

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1.1.127 “Project Collection Account” The bank account to be opened, maintained and operated by the Concessionaire with a scheduled commercial bank in accordance with Article 18.2.

1.1.128 “Project Completion Date”

The date on which the Certificate of Substantial Completion or the Certificate of Completion, as the case may be, is issued.

1.1.129 “Project Completion Notice”

The notice issued by the Concessionaire that it has completed all the Works in respect of the Project.

1.1.130 “Project Maintenance Escrow Account” The bank account to be opened, maintained and operated by the Concessionaire with a scheduled commercial bank in accordance with Article 18.3.

1.1.131 “Project Manager”

A reputed firm, company, a body corporate or a team of in-house professionals, appointed by the Concessionaire in accordance with Article 5.4 for purposes of, inter alia, supervision and monitoring of the Works and the Project.

1.1.132 “Proposal”

The technical and financial proposal of the Concessionaire for undertaking the Project attached with this Agreement as Schedule [ ] [Proposal].

1.1.133 “Public Sector Entity”

The GOP, NHA or any federal, provincial, district or local government, ministry, department, commission, board, body, bureau, agency, authority, instrumentality, Court or other statutory, regulatory, judicial or administrative body, having jurisdiction over the Concessionaire, the Concession Area, the ROW, the Works, the Project Assets, the Ancillary Facilities, the Motorway or any portion thereof, or the performance of all or any of the services or obligations of the Concessionaire under or pursuant to this Agreement.

1.1.134 “Public Utilities”

Water supply, electricity supply, telecommunication system, optic fiber cable, sewerage system, gas supply and other utilities and amenities provided for the public.

1.1.135 “Quality Assurance Inspector”

A reputed firm, company or a body corporate appointed in accordance with Article 5.5(a) for supervision and monitoring of compliance by the Concessionaire with the Construction Performance Standards, and specifically assigned with the functions and duties as set out in Article 5.5(b).

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1.1.136 “RFP” Shall have the meaning ascribed to it in Recital B.

1.1.137 “Relief Event”

Shall have the meaning ascribed to it in Article 17.1(a). 1.1.138 “Representative”

Either the NHA Representative or the Concessionaire Representative, or both, as the context may admit or require.

1.1.139 “Revenues”

The Toll Revenue, the Motorway Service Areas Revenue and the Other Revenue.

1.1.140 “Right of Way” or “ROW”

The land to be acquired and owned by NHA (if not already so acquired and owned), which shall be handed over to the Concessionaire for the purpose of implementation of the Project in accordance with the terms of this Agreement, as more particularly described in Schedule [ ] [Right of Way and Concession Area].

1.1.141 “Rupees” and “PKR”

The lawful currency of Pakistan.

1.1.142 “Schedules”

Schedule A to Schedule Z to this Agreement.

1.1.143 “Section”

A part or section of the Works, as more particularly described in Schedule [ ] [Description of the Project and Scope of Work].

1.1.144 “Sectional Completion Certificate”

The certificate issued or to be issued in accordance with Article 13.4(c) by the Quality Assurance Inspector certifying that a Section has been completed.

1.1.145 “Sectional Completion Notice”

The notice issued or to be issued in accordance with Article 13.4(c) by the Concessionaire notifying that a Section has been completed.

1.1.146 “Shareholder Loans”

The aggregate of the following sums expressed in Rupees outstanding and payable to the Shareholders up to the date immediately preceding the Termination Date in respect of any Shareholder loan provided by the Shareholders, or any of them, to the Concessionaire:

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(a) the principal amount of any Shareholder loan provided and disbursed by the

Shareholders, or any of them, for financing the Project; and

(b) the interest or mark-up (or any other term connoting the return paid to the Shareholders on the Shareholder loan) accruing on the aforesaid principal.

1.1.147 “Shareholders”

The holders of the Equity.

1.1.148 “Substantial Completion” The satisfactory completion, as confirmed by the issue of the Certificate of Substantial Completion Certificate, of the Works (excluding Works with respect to the Ancillary Facilities) in accordance with the Construction Performance Standards and all other applicable standards and specifications referred to or set out in this Agreement to such extent as is necessary to permit the safe, uninterrupted and unobstructed public use of the Motorway, including:

(a) paving of all road surfaces;

(b) completion of all structures and drainage systems;

(c) full operation of all traffic lighting and signalization, if any;

(d) all permanent pavement markings at all intersections and on all major roads;

(e) installation of all regulatory and guide signing;

(f) installation of all median and roadside barrier and other safety devices;

(g) all construction staging areas have been returned to their original condition; and

(h) all debris, superfluous materials and equipment have been removed from the Concession Area and the Concession Area has been satisfactorily cleared,

and the words “Substantially Completed”, “Substantially Complete” and other grammatical variations of the word “Substantial Completion” shall be construed accordingly.

1.1.149 “Take-Over Date”

The Day immediately following the Appointed Date. 1.1.150 “Target IRR”

The return on Equity that the Concessionaire shall be entitled to receive from NHA in the event of a Termination of this Agreement. The Target IRR, which shall vary depending on the cause of Termination, shall be as follows: (a) Non-Political Event: [ ];

(b) Political Event: [ ];

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(c) Indirect Political Event: [ ];

(d) Concessionaire Event of Default: [ ]; and

(e) NHA Event of Default: [ ].

1.1.151 “Tenancy Agreements”

Collectively, refers to the lease or licence agreements or other contractual arrangements which the Concessionaire may enter into with third parties for the design, construction, management, operation and/or maintenance of the Ancillary Facilities, the Motorway Service Areas, the Motorway Service Areas Facilities, booths, advertising or other commercial spaces within or above the Concession Area, the Motorway Service Areas or on the identified areas of the Concession Area, the Motorway Service Areas or otherwise howsoever relating to the Project, including, agreements which the Concessionaire may enter into with third parties with respect to sales to be made or services to be rendered therein.

1.1.152 “Termination”

Early termination of this Agreement pursuant to a Termination Notice or otherwise in accordance with the terms of this Agreement, but shall not, unless the context otherwise requires, include the expiry of this Agreement due to efflux of time in the normal course. The words “Terminate”, “Terminated” and other grammatical variations of the word “Termination” shall be construed accordingly.

1.1.153 “Termination Date”

The date specified in a Termination Notice as the date on which Termination occurs.

1.1.154 “Termination Event”

The occurrence of a Termination or an Event of Loss.

1.1.155 “Termination Notice”

A notice of Termination given by a Party to the other Party in accordance with the terms of this Agreement.

1.1.156 “Termination Payment”

The amount payable by NHA to the Concessionaire upon Termination of this Agreement, as more particularly set out in Article 25.3; provided, that for purposes of determining Termination Payment to be made under this Agreement, the capital cost of the Project shall at all times be reckoned as an amount not exceeding the Total Project Costs and the liability of NHA to make such Termination Payment relating to the Debt, the Shareholder Loans, the Equity or any other component of the Termination Payment shall be determined as if such capital cost was restricted to the Total Project Costs.

1.1.157 “Tolls”

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The fees to be levied by the Concessionaire at the New Toll Plazas to vehicular traffic for usage of the Motorway based on the Toll Structure set out in Schedule [ ] [Toll Structure]. The words “Toll”, “Tolling”, “Tolled” and other grammatical variations of the word “Tolls” shall be construed accordingly.

1.1.158 “Toll Operations Manual”

Shall have the meaning ascribed to in Article 12.1(a).

1.1.159 “Toll Operator” The Concessionaire itself or the Person, if any, with whom the Concessionaire has entered or shall enter into an agreement for purposes of the Concessionaire’s operations for collection and handling of the Tolls under this Agreement.

1.1.160 “Toll Revenue” All income derived by the Concessionaire from the Project generated from collection of the Tolls.

1.1.161 “Toll Structure”

The Toll rates and structure set out in Schedule [ ] [Toll Structure] which shall be levied by the Concessionaire at the New Toll Plazas to the vehicular traffic liable to pay the Tolls for usage of the Motorway.

1.1.162 “Total Project Costs”

The aggregate of: (a) all amounts outstanding and payable to the Lenders including principal sum,

interest (including interest payable, capitalized interest and accumulated interest), and other costs, fees and charges payable arising from the Debt;

(b) all amounts owing to the Shareholders towards financing of the Project; and

(c) all costs and expenses incurred by the Concessionaire in raising

financing/funding for the Project including costs and fees for various bonds, insurance, fees to financial consultants, fees and expenses payable to the Lenders (including participation fee, arrangement fee, lead bank fee, agency fee, underwriting fee, guarantee fee etc.), documentation fees and expenses (including legal fees and disbursements), stamp duty payable on the Financing Agreements and this Agreement, and costs and fees towards incorporation of the Concessionaire;

provided, that the Total Project Costs shall not exceed Rupees [insert amount in words] (PKR [insert amount in numbers]) (a breakdown whereof is detailed in Schedule [ ] [Total Project Costs]), unless the Total Project Costs so exceeds in accordance with the terms of this Agreement.

1.1.163 “Traffic Management Plan”

The plan for effective management of the traffic, during the Construction Phase, of the Motorway so as not to unnecessarily impede the flow of traffic on the existing

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Motorway or the access by public of the ingress to and egress from any public and private roads and footpaths to or from any properties of any Person affected by the Works, as set out in Schedule [ ] [Traffic Management Plan].

1.1.164 “Transfer Bond”

The bond to be submitted by the Concessionaire pursuant to Article 26.2, substantially in the form and content as provided in Schedule [ ] [Form of Transfer Bond].

1.1.165 “Transfer Date”

The date when the Project Assets shall be transferred to NHA, which date shall be the Day following the Concession End Date (or the Termination Date, if earlier).

1.1.166 “Vacant Possession”

In relation to any part of the Concession Area means the right to and delivery of exclusive possession thereof.

1.1.167 “Variation”

A variation in the design, quality or quantity of the Works and may include additions, substitutions or alterations in the Approved Detailed Design.

1.1.168 “Variation Notice”

The notice issued by NHA to the Concessionaire through the Quality Assurance Inspector pursuant to Article 11.4(a) requesting it to make a Variation to the Approved Detailed Design.

1.1.169 “Works”

All works at the Concession Area undertaken or required to be undertaken by the Concessionaire during the Construction Phase pursuant to the terms of this Agreement, as more particularly described in Schedule [ ] [Description of the Project and Scope of Work].

1.1.170 “Works Commencement Date”

Subject to Article 6.1, the date for the commencement of the Works on the Concession Area falling no later than thirty (30) Days from the Appointed Date.

1.1.171 “Year”

A year according to the Gregorian calendar.

1.2 Interpretation

In this Agreement, unless the context otherwise requires: (a) any reference to a statutory provision shall include such provision as is from

time to time modified, re-enacted or consolidated so far as such modification,

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re-enactment or consolidation applies or is capable of applying to any transactions entered into hereunder, unless otherwise specified;

(b) references to the Laws of Pakistan shall include the laws, acts, ordinances, rules, regulations, notifications, guidelines or bye-laws which have the force of law in Pakistan;

(c) the words importing singular shall include plural and vice versa, and words

denoting Persons shall include partnerships, firms, companies, corporations, joint ventures, trusts, associations, organizations or other entities (whether or not having a separate legal personality);

(d) 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;

(e) any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms;

(f) references to “construction”, where the context so permits, include

investigation, design, engineering, procurement, delivery, transportation, installation, processing, fabrication, Performance Testing, Commissioning and other activities incidental to construction;

(g) any reference to any period of time shall mean a reference to that according to

Pakistan Standard Time;

(h) any reference to “Day” shall mean a reference to a calendar day in Pakistan (and reference to “Days” shall be construed accordingly);

(i) if an act prescribed under this Agreement to be done by a Party on or by a

given Day is done after 5.30 p.m. on that Day, it is to be taken to be done on the following Business Day;

(j) unless otherwise stated, any reference to any period commencing “from” a

specified Day or date and “till” or “until” a specified Day or date, shall include both such Days or dates;

(k) whenever there shall appear any reference to a time within which an act should

be done or agreement reached or consent given, such reference shall be deemed to be read as including the expression, “or any other period agreed between the Parties from time to time”;

(l) if any provision in Article 1 [Definitions and Interpretation] is a substantive

provision conferring rights or imposing obligations on any Party, effect shall be given to it as if it were a substantive provision in the body of this Agreement;

(m) the rule of construction, if any, that a contract should be interpreted against the

party responsible for the drafting and preparation thereof, shall not apply;

(n) the Schedules to this Agreement form an integral part of this Agreement and shall be in full force and effect as though they were expressly set out in the body of this Agreement;

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(o) reference to Recitals, Articles, sub-Articles, and Schedules in this Agreement shall, except where the context otherwise requires, be deemed to be references to Recitals, Articles, sub-Articles and Schedules of or to this Agreement;

(p) any reference at any time to any agreement, deed, instrument, licence or

document of any description shall be construed as reference to that agreement, deed, instrument, licence or document as amended, varied, supplemented, modified or suspended at the time of such reference, unless otherwise specified;

(q) any agreement, consent, approval, authorization, notice, communication,

information or report required under or pursuant to this Agreement from or by any Party or the Quality Assurance Inspector, the Joint Auditor and/or the Independent Consultant shall be valid and effectual only if it is in writing under the hands of duly authorized representative of such Party or the Quality Assurance Inspector, the Joint Auditor and/or the Independent Consultant, as the case may be, in this behalf and not otherwise; and

(r) in carrying out its obligations and duties under this Agreement, each Party shall

be obliged to act in good faith. 1.3 Ambiguities and Discrepancies

(a) This Agreement, and all other agreements and documents forming part of or

referred to in this Agreement are to be taken as mutually explanatory and, unless otherwise expressly provided elsewhere in this Agreement, the priority of this Agreement and the other documents and agreements forming part hereof or referred to herein shall, in the event of any conflict between them, be in the following order:

(i) this Agreement;

(ii) all other agreements and documents forming part hereof or referred to

herein.

(b) Subject to the provisions of Article 1.3(a), in the event of any ambiguity and/or discrepancies with regard to this Agreement, the following shall apply:

(i) between two or more Articles of this Agreement, the provisions of a

specific Article relevant to the issue under consideration shall prevail over those in other Articles;

(ii) between the Articles of this Agreement and the Schedules, the Articles

shall prevail unless the issue in question/matter is specifically provided for in the Schedule and only referred to in the Articles, as the case may be;

(iii) between any two Schedules, the Schedule relevant to the issue shall prevail;

(iv) between the written description on the Approved Detailed Design and the

Construction Performance Standards, the former shall prevail;

(v) between the written description on the O&M Manual and the O&M Requirements, the former shall prevail;

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(vi) between the dimension scaled from the Approved Detailed Design and its specific written dimension, the latter shall prevail;

(vii) between the dimension scaled from the O&M Manual and its specific

written dimension, the latter shall prevail; and

(viii) between any value written in numerals and that in words, the latter shall prevail.

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2. CONCESSION

2.1 Project Implementation Structure Subject to the terms of this Agreement, the implementation of the Project is premised on the following implementation structure: (a) NHA shall, at its own efforts, cost and expense, if not already procured,

procure, free from any Encumbrance the Concession Area, and the Additional Lands, if required, at such times and in such manner as stated in this Agreement;

(b) NHA shall give the Concessionaire access and the necessary rights to the Concession Area to enable the Concessionaire to inter alia conduct technical and financial studies and other feasibility studies on the Project, soil investigation of the Concession Area and other preliminary studies in connection therewith as required by the Lenders and/or for proper implementation of the Project, at such time and in such manner as stated in this Agreement;

(c) immediately after grant of access to the Concessionaire of the Concession Area, the Concessionaire shall conduct technical and financial studies and other feasibility studies on the Project, soil investigation of the Concession Area and other preliminary studies in connection therewith as required by the Lenders and/or for proper implementation of the Project. In this regard, NHA shall coordinate with the Concessionaire and use its best endeavours to facilitate the procurement of all necessary information, data, drawings and records whatsoever from the Public Sector Entities required by the Concessionaire for the Works on a date no later than the Works Commencement Date;

(d) the Concessionaire shall expeditiously commence the Detailed Design of the Works upon the execution of this Agreement, submit for the Approval of NHA (which Approval shall not be unreasonably withheld, conditioned or delayed) the Design Proposal of the Works, and submit all components of the Detailed Design for the Approval of NHA, at such time and in such manner as stated in this Agreement;

(e) The Concessionaire shall, at its own efforts, procure to be removed, relocated, diverted or reinstated all affected Public Utilities necessary for the commencement of the Works, if required by the Concessionaire and intimated in writing to NHA, at such times and in such manner as stated in this Agreement;

(f) the Concessionaire shall, with the facilitation of NHA, procure the supply of

Public Utilities and ancillary services to the Concession Area required by the Concessionaire for the Works, at such times and in such manner as stated in this Agreement;

(g) the Concessionaire shall achieve Financial Close, at such time and in such

manner as stated in this Agreement;

(h) NHA shall hand-over to the Concessionaire the Vacant Possession of the Concession Area free from any Encumbrance, together with the Ancillary Rights, at such time and in such manner as stated in this Agreement;

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(i) subject to the grant and maintenance with full effect of all the Approvals and

the Consents to the Concessionaire for the commencement of the Works (including the Approvals for the Design Proposal and the Detailed Design), the Concessionaire shall commence the Works on the Works Commencement Date and complete the same, at such time and in such manner as stated in this Agreement;

(j) the Concessionaire shall commence collecting the Tolls at the New Toll Plazas

on the basis of the Toll Structure set out in Schedule [ ] [Toll Structure], at such time and in such manner as stated in this Agreement;

(k) the Concessionaire shall commence collecting the Revenues other than the Toll Revenue from the Motorway Service Areas Facilities and continue such collection until the Concession End Date (or the Termination Date, if earlier), and (ii) the Ancillary Facilities on the date the Ancillary Facilities and/or the other facilities provided by the Concessionaire as part of the Project, or any of them, become operational and/or the Tenancy Agreements come into force and effect, and, unless otherwise provided herein, continue such collection until the Concession End Date (or the Termination Date, if earlier);

(l) the Concessionaire shall operate and maintain the Project Assets from the COD

until the Concession End Date (or the Termination Date, if earlier) and hold the Concession for the duration of the Concession Period; and

(m) the Concessionaire shall transfer the ownership rights to the Project Assets to NHA, stop collecting the Revenues, and cease to operate and maintain the Project Assets, at such time and in such manner as stated in this Agreement.

2.2 Grant of Concession

(a) Subject to the terms of this Agreement, NHA hereby grants to the

Concessionaire the exclusive right and authority to: (i) undertake the design, engineering, construction, Performance Testing,

Commissioning, management, operation and maintenance of the Project Assets (the parameters whereof shall be made part of the Detailed Design and subsequently the Approved Detailed Design);

(ii) supply and install the electronic Tolling system and other equipment at the Toll Plazas as set forth in Schedule [ ] [Tolling Activities];

(iii) design, construct, manage, own, operate and maintain the Ancillary

Facilities;

(iv) operate, manage and maintain the Motorway Service Areas Facilities;

(v) exclusively demand, collect and retain the Tolls for its own benefit from all vehicular traffic liable to pay the Tolls at the New Toll Plazas on the COD based on the Toll Structure set out in Schedule [ ] [Toll Structure], and continue such collection until the Concession End Date (or the Termination Date, if earlier);

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(vi) exclusively demand, collect and retain all other Revenues from the Motorway Service Areas Facilities and continue such collection until the Concession End Date (or the Termination Date, if earlier), and (B) from the Ancillary Facilities commencing on the date the Ancillary Facilities and/or the other facilities provided by the Concessionaire as part of the Project, or any of them, become operational and/or the Tenancy Agreements come into force and effect, and, unless otherwise provided herein, continue such collection until the Concession End Date (or the Termination Date, if earlier);

(vii) design, construct, manage, own, operate and maintain the

Administrative Office during the Concession Period; and

(viii) otherwise undertake the Project in accordance with the terms of this Agreement.

(b) The Concessionaire shall exercise and enjoy all rights, powers, benefits,

privileges, authorizations and entitlements as set forth in this Agreement.

2.3 Concession Period The Concession Period shall be for a period of twenty five (25) years commencing from the Effective Date and ending on the Concession End Date (or the Termination Date, if earlier).

2.4 Acceptance of the Grant of Concession

Subject to the terms of this Agreement, the Concessionaire hereby accepts the grant of the Concession and agrees to:

(a) perform and fulfill all its obligations hereunder; and (b) bear such costs and risks incurred in the fulfillment of the Concessionaire’s

obligations hereunder, as specified in this Agreement. 2.5 Conditions Precedent

(a) The obligations of the Parties under this Agreement post Financial Close are

conditional upon the fulfillment of the following pre-requisite conditions, in addition to the conditions specified in Article 6.1(a), notwithstanding any overlap with the conditions enumerated under this Article 2.5(a) (collectively referred to as the “Conditions Precedent”): (i) NHA shall procure, subject to the fulfillment of all requisite formalities

by the Concessionaire, that all the Approvals required to be granted by it to enable the Concessionaire to achieve Financial Close have been granted to the same and are maintained with full effect, within two (2) Months of the Effective Date;

(ii) the Concessionaire shall, with the facilitation of NHA, procure that all the Consents required to be procured by it to achieve Financial Close have been procured and are maintained with full effect, within six (6) Months of the Effective Date;

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(iii) NHA shall procure, subject to the fulfillment of all requisite formalities by the Concessionaire, that all the Approvals required to be granted by it to enable the Concessionaire to commence the Works on the Concession Area for the duration of the Construction Phase have been granted to the same and are maintained with full effect, within six (6) Months of the Effective Date;

(iv) the Concessionaire shall, with the facilitation of NHA, procure that all the Consents required to be procured by it to commence the Works on the Concession Area for the duration of the Construction Phase have been procured and are maintained with full effect, within six (6) Months of the Effective Date;

(v) NHA shall ensure, subject to the fulfillment of all requisite formalities by the Concessionaire, grant of all the Approvals and the Concessionaire shall ensure procurement of all the Consents, with NHA’s facilitation, not covered by Articles 2.5(a)(i) to 2.5(a)(iv) required under the Laws of Pakistan or pursuant to the terms of this Agreement necessary for the implementation of the Project, within six (6) Months of the Effective Date;

(vi) the Concessionaire shall confirm in writing its acceptance or satisfaction with the conditions (if any) imposed subject to which the Approvals under Articles 2.5(a)(i), 2.5(a)(iii) and 2.5(a)(v) have been issued, granted or made; provided, that if, in the reasonable opinion of the Concessionaire, any condition thus imposed is unreasonable and/or excessively burdensome, the Concessionaire shall promptly notify NHA of the unreasonable and/or burdensome condition, in which event NHA shall procure to have any unreasonable and/or burdensome condition removed or mitigated, whereafter the Concessionaire shall confirm in writing its acceptance or satisfaction with the conditions imposed subject to which the Approvals under Articles 2.5(a)(i), 2.5(a)(iii) and 2.5(a)(v) have been issued, granted or made;

(vii) NHA shall obtain, free from any Encumbrance, the Concession Area

and the Additional Lands, if required, for the commencement of the Works, within two (2) Months of the Effective Date; and

(viii) NHA shall procure that all affected Public Utilities obstructing the commencement of the Works have been or shall be removed, relocated, diverted and reinstated, within two (2) Months of the Effective Date, if required by the Concessionaire and intimated in writing to NHA.

(b) Each Party shall satisfy its respective Conditions Precedent within the relevant

time period specified in Article 2.5(a) above; provided, that each Party may, upon the written request of the other Party, extend the time period for fulfilment of one or more unfulfilled Condition Precedent for such further time period as may be mutually agreed upon by the Parties in writing. Each Party agrees, acknowledges and recognizes that (i) because of the size, scope and long term nature of the Project, it is more likely that the Project may be significantly undermined by events and occurrences outside the control of either NHA or the Concessionaire, and, therefore, delays in fulfillment of one or more Condition Precedent by a Party may be attributable to extraneous events as opposed to the default or negligence of the Party unable to satisfy the relevant

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Condition(s) Precedent within the stipulated time period, (ii) it is not in the best interest of either Party to mechanically Terminate this Agreement without considering the factors causing delay in fulfillment of the relevant Condition(s) Precedent by the other Party, and (iii) mechanical Termination of this Agreement and re-tendering of the Project is likely to cause delay in provision of a vital infrastructure facility to the public and unwarranted loss to the public exchequer. Accordingly, in considering the request of a Party for extension of the time period for fulfilment of one or more unfulfilled Condition Precedent pursuant to this Article, the other Party shall act in good faith, be under a positive obligation to assess and take into account the cause(s) of delay and shall not unreasonably withhold, condition or delay its consent to extend the time period for satisfaction of the relevant unfulfilled Condition(s) Precedent, rather than Terminate this Agreement.

(c) Each Party may, upon the written request of the other Party, waive one or more Conditions Precedent required to be fulfilled by the other Party, to the extent permitted by the Laws of Pakistan. For the avoidance of doubt, waiver by either Party of any Condition Precedent required to be fulfilled by the other Party and issuance of the Conditions Precedent Certificate in such event shall by no means be construed as discharging the other Party from the obligation of fulfilling such Condition Precedent, unless otherwise agreed by the waiving Party in writing. The responsibility of the other Party to fulfill such Condition Precedent shall subsist but may be deferred by the waiving Party to a later date in the circumstances as the waiving Party shall deem fit; provided, that such deferment may be granted by the waiving Party subject to the fulfillment by the other Party of any additional reasonable conditions which the waiving Party may deem fit to impose.

(d) Upon the fulfillment or waiver, or the partial fulfillment and partial waiver, as the case may be, of all the Conditions Precedent, the Quality Assurance Inspector and the Joint Auditor shall jointly issue a certificate (“Conditions Precedent Certificate”) confirming that (i) all of the Conditions Precedent have been fulfilled, or (ii) if any Condition(s) Precedent is/are waived, the Conditions Precedent have been partially fulfilled and partially waived.

(e) The Parties hereby jointly undertake to procure that the Quality Assurance Inspector and the Joint Auditor issue the Conditions Precedent Certificate within three (3) days of the date on which the Quality Assurance Inspector and the Joint Auditor are satisfied, acting reasonably, that:

(i) each of the Concessionaire’s Conditions Precedent stand satisfied (and/or

waived or deferred by NHA); and

(ii) each of NHA’s Conditions Precedent stand satisfied (and/or waived or deferred by the Concessionaire).

(f) If all the Conditions Precedent have not been fulfilled or waived, or partially

fulfilled and partially waived, as the case may be, by the date which is six (6) Months of the Effective Date, the Parties may (depending on the circumstances then prevailing) agree on an extension of such period and any additional condition or amendment to this Agreement as may be required.

(g) If the Concessionaire fails to fulfill a Condition Precedent and that Condition Precedent has not been waived by NHA pursuant to Article 2.5(c) or the time

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period for fulfillment of such Condition Precedent has not been extended pursuant to Articles 2.5(b) and 2.5(f), NHA shall be entitled to declare a Concessionaire Event of Default, Terminate this Agreement and forfeit the Financial Close Bond, and the Concessionaire shall not be liable to receive any Termination Payment from NHA if Termination takes place prior to achievement of Financial Close due to a Concessionaire Event of Default.

(h) If NHA fails to fulfill a Condition Precedent and that Condition Precedent has not been waived by the Concessionaire pursuant to Article 2.5(c) or the time period for fulfillment of such Condition Precedent has not been extended pursuant to Articles 2.5(b) and 2.5(f), the Concessionaire shall be entitled to declare an NHA Event of Default, Terminate this Agreement and NHA shall immediately and in any event within seven (7) Days of the date of the Termination Notice return the Financial Close Bond to the Concessionaire. In the event that NHA does not return the Financial Close Bond as above, the Financial Close Bond shall be deemed to have been cancelled.

(i) All costs and expenses in connection with any Condition Precedent expressed to be fulfilled and/or complied on part of NHA or the Concessionaire shall be borne and paid by the respective Party accordingly.

2.6 Covenants

(a) From the date hereof up to the Appointed Date, the Parties shall cooperate

with each other in order to permit Financial Close to be consummated by the Appointed Date.

(b) From the date hereof up to the Appointed Date, each Party shall use all reasonable efforts (i) to take, or cause to be taken, all actions necessary to comply promptly with all legal requirements which may be imposed on such Party to consummate Financial Close as promptly as practicable, and (ii) to obtain (and cooperate with the other Party to obtain) any Consent of any Public Sector Entity or any approval of a public or private third party which is required to be obtained or made by such Party in connection with the consummation of Financial Close. Each Party shall promptly cooperate with and promptly furnish information to the other in connection with any such efforts by, or requirement imposed upon, any of them in connection with the foregoing.

(c) If any Public Sector Entity of competent jurisdiction issues a preliminary or permanent injunction or temporary restraining order or other order before the Appointed Date which would prohibit or materially restrict or hinder achievement of Financial Close, each Party shall use all reasonable efforts to have such injunction, decree or order dissolved or otherwise eliminated as promptly as possible and, in any event, prior to the Appointed Date. Any and all costs in accordance with this sub-Article (c) shall be borne by the Party in respect of which such injunction, restraining order or other order has been entered.

2.7 Dates and Duration

(a) This Agreement shall take effect on the Effective Date and shall continue with

full force and effect until the Concession End Date (or the Termination Date, if earlier).

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(b) Notwithstanding Article 2.7(a), the obligations of the Concessionaire under this

Agreement shall only come into full force and effect after the Conditions Precedent have been fulfilled and/or waived, in accordance with Article 2.5 above, and shall continue to accrue with full force and effect until the Concession End Date (or the Termination Date, if earlier).

(c) The Concession Period shall be the period commencing from the Effective

Date and ending on the Concession End Date (or the Termination Date, if earlier), and shall comprise of (i) the period commencing on the Effective Date and concluding on the Day immediately prior to the Works Commencement Date, (ii) the Construction Phase, and (iii) the Operations Phase. The Construction Phase shall commence on the Works Commencement Date and conclude on the Project Completion Date and the Operations Phase shall commence on the COD and conclude on the Concession End Date (or the Termination Date, if earlier).

(d) NHA shall, at the Concessionaire’s cost and expense, procure, free from any Encumbrance the Additional Lands, if required, within two (2) Months of the Effective Date.

(e) NHA shall give the Concessionaire access and the necessary rights to the Concession Area to enable the Concessionaire to inter alia conduct technical and financial studies and other feasibility studies on the Project, soil investigation of the Concession Area and other preliminary studies in connection therewith as required by the Lenders and/or for proper implementation of the Project, within fifteen (15) Days of the Effective Date.

(f) Immediately after grant of access to the Concessionaire of the Concession Area, the Concessionaire shall conduct technical and financial studies and other feasibility studies on the Project, soil investigation of the Concession Area and other preliminary studies in connection therewith as required by the Lenders and/or for proper implementation of the Project. In this regard, NHA shall coordinate with the Concessionaire and use its best endeavours to facilitate the procurement of all necessary information, data, drawings and records whatsoever from the Public Sector Entities required by the Concessionaire for the Works on a date no later than the Works Commencement Date.

(g) The Concessionaire shall expeditiously commence the Detailed Design of the

Works upon the execution of this Agreement, submit for the Approval of NHA (which Approval shall not be unreasonably withheld, conditioned or delayed) the Design Proposal of the Works, within two (2) Months of the Effective Date, and submit all components of the Detailed Design for the Approval of NHA no later than eight (8) weeks prior to the Works Commencement Date.

(h) The Concessionaire shall, at its own efforts procure to be removed, relocated, diverted or reinstated all affected Public Utilities necessary for the commencement of the Works, within two (2) Months of the Effective Date.

(i) The Concessionaire shall, with the facilitation of NHA, procure the supply of Public Utilities and ancillary services to the Concession Area required by the Concessionaire for the Works, by the Works Commencement Date.

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(j) Subject to the terms of this Agreement, the Concessionaire shall achieve Financial Close within the Financial Close Period.

(k) NHA shall hand-over to the Concessionaire the Vacant Possession of the Concession Area, free from any Encumbrance, together with the Ancillary Rights, by the Take-Over Date.

(l) Subject to the terms of this Agreement, the Concessionaire shall commence the Works on the Works Commencement Date and complete the same on or before the Project Completion Date.

(m) Subject to the terms of this Agreement, the Concessionaire shall undertake Toll collection operations at the New Toll Plazas based on the Toll Structure set out in Schedule [ ] [Toll Structure] from the issuance of Sectional Completion Certificate for a particular Section and continue such collection until the Concession End Date (or the Termination Date, if earlier).

(n) The Concessionaire shall commence collecting the Revenues other than the Toll

Revenue from the Motorway Service Areas Facilities as they become operational and continue such collection until the Concession End Date (or the Termination Date, if earlier), and (ii) from the Ancillary Facilities on the date the Ancillary Facilities and/or the other facilities provided by the Concessionaire as part of the Project, or any of them, become operational and/or the Tenancy Agreements come into force and effect, and, unless otherwise provided herein, continue such collection until the Concession End Date (or the Termination Date, if earlier).

(o) Subject to the terms of this Agreement, the Concessionaire shall commence

routine and periodic maintenance of the Project Assets on the COD and continue the same until the Concession End Date (or the Termination Date, if earlier), which routine and periodic maintenance shall be undertaken at such times and in such manner as stipulated in the O&M Manual.

(p) On the Transfer Date, the Concessionaire shall transfer the ownership rights to the Project Assets to NHA, stop collecting the Revenues, and cease to operate and maintain the Project Assets.

2.8 Approvals and Consents for Project Implementation

Subject to the terms of this Agreement, NHA shall expeditiously grant all the Approvals and facilitate procurement of all the Consents, and the Concessionaire shall ensure that all necessary steps which the Concessionaire or any of its representatives/agents are required to take on its part for obtaining the Approvals and the Consents are expeditiously taken, to enable the Concessionaire to undertake the Project in a timely manner in accordance with the relevant dates and durations set out in this Agreement.

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3. PROJECT SCOPE AND OBLIGATIONS, COVENANTS,

REPRESENTATIONS AND WARRANTIES OF THE PARTIES

3.1 Project Scope

(a) Subject to the terms of this Agreement, NHA hereby grants to the Concessionaire the exclusive franchise, license and right to develop, design, engineer, finance, construct, Performance Test, Commission, manage, operate, maintain, insure and, on the Transfer Date, transfer, of the Project Assets, under a BOT arrangement, and during the Concession Period, collect, receive and earn the Revenues generated in accordance with this Agreement, as more particularly described in Schedule [ ] [Description of the Project and Scope of Work].

(b) Subject to the terms of this Agreement, the Concessionaire hereby confirms that it has inspected and examined the Concession Area and has fully satisfied itself before signing this Agreement as to the nature, location, physical conditions and suitability thereof, the general and local conditions as applicable to the Works, including, the existing communication network, climate conditions, rainfall, water, electrical power, Public Utilities (including those Public Utilities which are to be relocated in connection with the implementation of the Project) and the topographic, geotechnical and seismic features of the Concession Area.

(c) Subject to the terms of this Agreement, this Agreement shall take effect on the

Effective Date and shall continue with full force and effect until the Concession End Date (or the Termination Date, if earlier).

3.2 Obligations, Covenants, Representations and Warranties of the Concessionaire

(a) The Concessionaire covenants that it shall:

(i) develop, design, engineer, finance, construct, Performance Test,

Commission, manage, operate, maintain, insure and, on the Transfer Date, transfer the Project Assets, under a BOT arrangement, and during the Concession Period, collect, receive and earn the Revenues, all in accordance with the terms of this Agreement;

(ii) pay to NHA such percentage of the Revenues generated from the Project that NHA is entitled to pursuant to the terms of this Agreement;

(iii) obtain all registrations required by the Laws of Pakistan to enable it to

undertake its obligations under this Agreement in conformity with the Laws of Pakistan and be in compliance thereof at all times during the Concession Period after obtaining the same;

(iv) procure and maintain in full force and effect, appropriate proprietary

rights, licenses, agreements and permissions for materials, methods, processes and systems used in or incorporated into the Project;

(v) undertake and complete the Works in accordance with the Construction

Performance Standards;

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(vi) make its own arrangements for construction materials and observe and fulfill the environmental and other requirements under the Laws of Pakistan and the Consents;

(vii) appoint, supervise, monitor and control, as necessary, the activities of

the Contractors under their respective contracts;

(viii) staff the Project with such professional managerial, technical, construction, operations and maintenance personnel as deemed fit by the Concessionaire;

(ix) equip the Project with such facilities and equipment as stated in this Agreement, and upgrade the said facilities and equipment as may be deemed fit by the Concessionaire from time to time;

(x) be responsible for quality, soundness, durability, safety and the overall

standard of the Works, notwithstanding the appointment by it of Contractors to undertake the Works;

(xi) ensure that, subject to the terms of this Agreement, the completed

Motorway, or a completed Section thereof, as the case may be, is open to traffic throughout the Concession Period;

(xii) afford access to the Motorway to the Exempted Vehicles;

(xiii) enable the Quality Assurance Inspector to inspect the Works to ensure that the Works comply with the Construction Performance Standards;

(xiv) inspect the Works to ensure that they are being carried out in

accordance with the Construction Performance Standards and, in consultation with the Quality Assurance Inspector, Performance Test and Commission the Motorway;

(xv) operate, manage and maintain the Project Assets in accordance with the

O&M Requirements set out in Schedule [ ] [O&M Requirements] and the O&M Manual during the Operations Phase;

(xvi) cooperate with law enforcement agencies with a view to maintaining law

and order at the Concession Area;

(xvii) maintain, at all times during the Concession Period, a minimum Equity ratio of thirty percent (30%) of the Total Project Costs;

(xviii) provide all necessary assistance to the NHA Representative, the Quality

Assurance Inspector, the Joint Auditor and the Independent Consultant, as may be reasonably required, in the performance of their respective duties and services;

(xix) use reasonable endeavors to maintain harmony and good industrial

relations amongst the personnel employed in connection with the performance of its obligations under this Agreement;

(xx) maintain its corporate existence and its rights to carry on its business;

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(xxi) obtain the prior Approval of NHA should there be any proposed change in the shareholding interest in the Concessionaire which shall result in a Change of Control during the Concession Period, which Approval shall not be unreasonably withheld, conditioned or delayed; and

(xxii) transfer to NHA, on the Transfer Date, its ownership rights to the

Project Assets free and clear of any Encumbrance and without any further act or deed, unless otherwise required by the Laws of Pakistan.

(b) The Concessionaire shall not be considered to be in breach of its covenants

under this Agreement nor shall it incur or suffer any liability if and to the extent performance of any of its obligations under this Agreement is affected by or on account of any of the following: (i) the occurrence of a Force Majeure Event; (ii) the occurrence of an NHA Event of Default;

(iii) the occurrence of a Compensation Event;

(iv) the occurrence of a Relief Event;

(v) the occurrence of Unforeseeable Conduct; (vi) the compliance with the instructions of the Quality Assurance

Inspector, the NHA Representative or the directions of any Public Sector Entity; or

(vii) the closure of access to the Concession Area or any part thereof during

the Construction Phase with the concurrence of the Quality Assurance Inspector or the NHA Representative; or its inability to remove any accident debris due to non-completion of any police/insurance related inquiry/survey despite prompt steps having been taken by the Concessionaire in that regard.

(c) The Concessionaire represents and warrants that:

(i) the Concessionaire is a private company limited by shares and is validly

incorporated and existing in Pakistan under the Laws of Pakistan and has full power to carry on its business and to own its property and assets;

(ii) the Concessionaire shall have as its main object in its memorandum of association the implementation of the Project, and it shall not during the Concession Period undertake any other project or business activity unrelated to the Project;

(iii) the Concessionaire shall be duly authorized to undertake the Project and

all activities related thereto, subject to the terms of this Agreement;

(iv) the memorandum and articles of association of the Concessionaire incorporate terms which authorize, and all necessary corporate actions

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have been or shall be taken to authorize, the Concessionaire to own its assets, carry on its business and operations as it is now conducting and deliver and perform the transactions contemplated in this Agreement, and to perform its obligations under this Agreement, the Financing Agreements and any other agreements entered into by the Concessionaire in respect of the Project;

(v) subject to all the Approvals and the Consents being granted or obtained,

this Agreement constitutes the legal, valid and binding obligations of the Concessionaire enforceable in accordance with its terms;

(vi) it has ready access to the Equity component of the Total Project Costs,

and subject to the occurrence of Financial Close, the Concessionaire has the financial capacity to undertake the Project;

(vii) the execution, delivery and performance of its obligations under this

Agreement by the Concessionaire, subject to all the Approvals and the Consents being granted or obtained, does not constitute a violation of any statute, judgment, order, decree, regulation or rule of any Court, Public Sector Entity or arbitrator of competent jurisdiction applicable or relating to it, its assets or its business;

(viii) the Concessionaire is subject to the civil and commercial Laws of

Pakistan with respect to this Agreement;

(ix) there are no actions, suits, proceedings or investigations pending or to the Concessionaire’s knowledge threatened against it at law or in equity before any Court or before any judicial, quasi-judicial or other authority, the outcome of which may constitute a Concessionaire Event of Default or which individually or in the aggregate or any combination may result in Material Adverse Effect;

(x) no steps have been taken by the Concessionaire nor have any legal

proceedings been started or threatened for the dissolution or winding-up of the Concessionaire or for the appointment of a receiver, liquidator, judicial manager or similar officer in respect of all or any part of the business or assets of the Concessionaire, the outcome of which may constitute a Concessionaire Event of Default, and it has no knowledge of any violation or default with respect to any order, writ, injunction or any decree of any Court or any legally binding order of any Public Sector Entity which may result in a Concessionaire Event of Default;

(xi) no event has occurred which constitutes, or which with the giving of

notice and/or the lapse of time and/or relevant determination would constitute, a Concessionaire Event of Default under this Agreement;

(xii) the Concessionaire has complied with all the applicable Laws of

Pakistan and has not been subject to any fines, penalties, injunctive relief or any other civil or criminal liabilities which in the aggregate have or may have a Material Adverse Effect;

(xiii) no representation or warranty by the Concessionaire contained herein or

in any other document furnished by it to NHA or to any other Public

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Sector Entity in respect of the Project contains or shall contain any untrue statement of material fact or omits or shall omit a material fact necessary to make such representation or warranty not misleading;

(xiv) no bribe or unlawful payment or illegal gratification has been or shall be

paid in cash or kind by or on behalf of the Concessionaire to any Person to procure the Concession; and

(xv) the Concessionaire has not nor shall participate in fraud, nor provide

any financial information with the intent of misleading NHA. 3.3 Obligations, Covenants, Representations and Warranties of NHA

(a) NHA covenants that it shall:

(i) not, and shall procure that no other Public Sector Entity shall (A) in any

way amend, modify or obstruct the Concessionaire from undertaking the Project or any part thereof, save in accordance with this Agreement; and (B) do any act or omit to do any act which would cause, or be likely to cause, damage to any part of the Project Assets or be otherwise inconsistent with the terms of this Agreement;

(ii) exercise its powers under the NHA Act in a manner that is consistent with this Agreement;

(iii) ensure the timely grant of all the Approvals and facilitate procurement of

all the Consents;

(iv) ensure peaceful use of the Concession Area, the Additional Lands, if required, by the Concessionaire under and in accordance with the terms of this Agreement without any let or hindrance from NHA or any Public Sector Entity or any other Person whether or not claiming through or under them;

(v) upon reasonable request by the Concessionaire, use its good offices to

support the Concessionaire’s performance of its obligations to undertake the Project;

(vi) provide all such reasonable assistance as the Concessionaire may

reasonably request to support in obtaining permissions and licenses which are required by the Concessionaire from time to time for the purposes of the Project;

(vii) prohibit ribbon development along the Concession Area and immediately

remove all unauthorized development/construction and encroachments between the Building Line and the ROW, to the extent required by the Laws of Pakistan;

(viii) upon written request from the Concessionaire, assist and facilitate, to the

fullest extent possible, the Concessionaire in obtaining access to all necessary Public Utilities, including, water, electricity and telecommunication facilities at rates and on terms no less favourable to the Concessionaire than those generally available to commercial customers receiving substantially equivalent facilities;

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(ix) ensure that the Concessionaire is enabled to exercise necessary authority

to regulate traffic on the Concession Area subject to and in accordance with the Laws of Pakistan;

(x) ensure that the Concessionaire obtains assistance from law enforcement

personnel for traffic regulation, patrolling and provision of security on the Concession Area and for purposes of this Agreement;

(xi) support applications for subordinated loans made by the Concessionaire

on terms and conditions mutually agreed between the Lenders and the Concessionaire;

(xii) observe and comply with all its obligations set forth in this Agreement in

a timely manner;

(xiii) secure or obtain the Concession Area and the Additional Lands, if required, and transfer Vacant Possession thereof to the Concessionaire;

(xiv) ensure that the Concession Area and the Additional Lands, if required,

are made available to the Concessionaire, free from any Encumbrance, and unless otherwise stated in this Agreement, without the payment by the Concessionaire to NHA of any costs, expenses and charges; and

(xv) assist the Concessionaire to apply and/or procure all incentives and

exemptions granted by any Public Sector Entity for the Project (including any tax holidays and exemptions from withholding tax).

(b) NHA represents and warrants that:

(i) it is duly established under NHA Act;

(ii) it has taken all necessary actions to authorize the execution, delivery and

performance of this Agreement, and to perform its obligations herein contained;

(iii) this Agreement constitutes legal, valid and binding obligations of NHA

enforceable in accordance with its terms;

(iv) this Agreement has the approval of the competent authority of NHA as per the NHA Act and the execution, delivery and performance of its obligations under this Agreement by NHA does not infringe any Law of Pakistan, statute (including, without limitation, the NHA Act), judgment, order, decree, regulation or rule of any Court, Public Sector Entity or arbitrator of competent jurisdiction applicable or relating to it or its assets;

(v) it has all necessary authority and powers to complete the Project and in

respect of all other matters which are the subject of this Agreement and has the right to transfer and has transferred such of those powers to the Concessionaire as may be required, to uphold the terms of this Agreement;

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(vi) save and except as disclosed herein in Schedule [ ] [List of Legal Proceedings in Respect of the Project], no suits or investigations or other legal proceedings are pending or threatened in respect of the Project, at law or in equity, before any Court or before any other judicial, quasi-judicial or other authority, or any arbitrator, the outcome of which may constitute an NHA Event of Default, and it has no knowledge of any violation or default with respect to any order, writ, injunction or any decree of any Court or any legally binding order of any Public Sector Entity or arbitration which may result in an NHA Event of Default, including, the withdrawal or revocation of its powers under NHA Act;

(vii) NHA is subject to the Laws of Pakistan with respect to this Agreement;

(viii) the Concession Area and the Additional Lands, if procured in

furtherance of the terms hereof, shall be free of any Encumbrance whatsoever and any financial, legal or other restraint or obligation;

(ix) the Project is under the exclusive jurisdiction of NHA to the extent provided by the Laws of Pakistan;

(x) no event has occurred which constitutes, or which with the giving of

notice and/or the lapse of time and/or relevant determination would constitute an NHA Event of Default under this Agreement or any agreement or instrument by which NHA or any of its assets are bound or affected; and

(xi) no representation or warranty by NHA contained herein or in any other

document furnished by NHA to the Concessionaire contains or shall contain any untrue statement of material fact or omits or shall omit a material fact necessary to make such representation or warranty not misleading. Notwithstanding any independent verification, study, review, search or observation having been carried out or made by the Concessionaire to any such statements, data or information contained in NHA’s representation and warranties as aforesaid, NHA shall not by virtue of the aforesaid be discharged from any of its representations or warranties made hereunder, in whole or in part.

3.4 Obligation to Notify Change

In the event that any of the representations, warranties or assurances made or given under Article 3.2 or Article 3.3 ceases to be true or stands changed, the Party who has made such representation or given such warranty or assurance shall promptly notify the other Party of the same for its recourse.

3.5 Exclusion of Implied Warranties

This Agreement expressly excludes any warranty, condition or undertaking implied by law or by custom or otherwise arising out of any other agreement between the Parties or any representation made by either Party not contained in a binding legal agreement executed by the Parties.

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3.6 Survival

The representations and warranties set out in Article 3.2 and Article 3.3 shall survive the signing and delivery of this Agreement until the payment of all monies due under this Agreement, as if repeated by reference to the then existing circumstances from time to time.

3.7 Rights of the Concessionaire

The Concessionaire shall have, among others, the following rights in respect of the Project:

(a) subject to the Laws of Pakistan, call for tenders and award contracts for the

Project, with or without tender; provided, that the chosen contractors of the Concessionaire are Acceptable Contractors;

(b) arrange for site preparation activities and the preparation of all design and

engineering plans required for the Project, approve or reject equipment, facilities and other materials required for the Works;

(c) appoint and remove consultants and professional advisers;

(d) purchase materials, equipment and facilities;

(e) appoint, organize and direct staff to implement, manage and supervise the

Project;

(f) enter into contracts for the supply of goods, works and services;

(g) enter into the Tenancy Agreements; and

(h) do and perform such other acts and things as are necessary or desirable for the completion of the Project in the opinion of the Concessionaire.

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4. CONCESSION PERIOD AND EXCLUSIVITY 4.1 Concession Period

The Concession Period shall be as defined in Article 1.1.32. Unless renewed or extended pursuant to the terms of this Agreement, the Concession Period shall be for a period of twenty five (25) years commencing from the Effective Date and ending on the Concession End Date (or the Termination Date, if earlier).

4.2 Key Target Dates

Key target dates in respect of the Project are as under:

Financial Close Subject to the terms of this Agreement, the

Concessionaire shall achieve Financial Close within [ ] Months from the Effective Date

Detailed Design Commencement

The Concessionaire shall expeditiously commence the

Detailed Design of the Works upon the execution of this Agreement, submit for the Approval of NHA (which Approval shall not be unreasonably withheld, conditioned or delayed) the Design Proposal of the Works within [ ] Months of the Effective Date, and submit all components of the Detailed Design for the Approval of NHA no later than [ ] weeks prior to the Works Commencement Date

Completion of Construction

Subject to the terms of this Agreement (in particular

Article 6.1), the Concessionaire shall commence the Works on the Works Commencement Date and shall complete the same by the Project Completion Date

Commencement of Toll Collection Operations Subject to the terms of this Agreement, the

Concessionaire shall be entitled to commence collecting the Tolls at the New Toll Plazas (a) at a prorated toll rate (in accordance with the percentage of the Works completed on the Motorway as at that date) upon the issuance of a Sectional Completion Certificate for a Section of the Motorway, and (b) at the full toll rate on the COD, based on the Toll Structure set out in Part II of Schedule [ ] [Toll Structure], and continue such collection until the Concession End Date (or the Termination Date, if earlier)

Commencement of Routine and Periodic Maintenance

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Subject to the terms of this Agreement, the Concessionaire shall commence routine and periodic maintenance of the Project Assets on the COD and continue the same until the Concession End Date (or the Termination Date, if earlier), in accordance with the O&M Manual

4.3 Entire Agreement

This Agreement, the Schedules hereto and the other documents and agreements referred to herein constitute the entire agreement of the Parties with respect to the subject matter hereof. This Agreement supersedes all earlier agreements/representations or understandings of the Parties (whether written or oral, including, any previous correspondence between the Parties) with respect to their subject matter.

4.4 Exclusivity

(a) During the Concession Period, NHA undertakes that the Concessionaire shall

have the exclusive right to undertake the Project, and that no other Person shall have the right to enter, block or otherwise impede the domain of the Concessionaire inconsistent with this Agreement.

(b) In the event NHA develops or authorizes the development of any divided, limited access road within twenty (20) kilometers of the Concession Area, NHA shall ensure, upon such terms and conditions as the Concessionaire may agree to in writing, that the tolls charged on such road are equivalent to the then prevailing Tolls under this Agreement. In the event that NHA cannot ensure the same, it may compensate the Concessionaire for any loss incurred by it due to diversion of traffic to the said road.

(c) Except as otherwise expressly provided herein, nothing in this Agreement shall

be construed or interpreted as limiting, restricting, diminishing or prejudicing in any way (i) the rights of the Concessionaire to claim any benefit provided under the Laws of Pakistan whether in effect now or in the future, or (ii) the exercise by the Concessionaire of any right that may be restricted hereunder if and to the extent that it is or becomes otherwise permitted under the Laws of Pakistan for the Concessionaire to exercise such right.

(d) The Concessionaire may inform NHA from time to time of any difficulties

encountered in the activities it is to perform under this Agreement. If any such difficulties create a significant possibility that the Concessionaire shall be prevented or materially impaired in meeting its obligations hereunder, then upon the request of the Concessionaire, NHA shall take or cause to be taken such actions as are reasonable, appropriate and permissible under the Laws of Pakistan to remove or mitigate such difficulties to the satisfaction of the Concessionaire.

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5. MANAGEMENT AND SUPERVISION 5.1 NHA Manual

(a) The regulations and responsibilities of NHA as specified in the NHA Manual

shall continue to be in force in respect of the Project except in so far as they are waived or amended, explicitly or implicitly, by this Agreement or are otherwise repugnant to this Agreement or to the detriment of the Concessionaire. Subject to the Laws of Pakistan, in the event there is any discrepancy between the NHA Manual and this Agreement and the terms of the NHA Manual and this Agreement cannot be read together harmoniously, the terms of this Agreement shall prevail over the NHA Manual to the extent of such discrepancy.

(b) Notwithstanding Article 5.1(a), the Concessionaire shall enjoy such rights, privileges and benefits as are granted under this Agreement, and shall only have such obligations to third parties as are expressly mentioned in this Agreement.

5.2 NHA Representative

NHA shall, within thirty (30) Days of the Effective Date, appoint, at its own cost and expense, the NHA Representative, and shall duly notify the same to the Concessionaire in writing. The functions of the NHA Representative shall include the following:

(a) exercising and enforcing the rights of NHA pursuant to the terms of this

Agreement; (b) coordinating and facilitating on the request of the Concessionaire, services to be

provided by the Public Sector Entities, including, the Public Utilities, emergency services and necessary traffic police assistance during the Concession Period;

(c) ensuring that all the relevant Approvals are provided within the prescribed time

period, and procurement of all the relevant Consents is facilitated, so that the same are procured within the prescribed time period;

(d) monitoring the progress of the Works and reporting to NHA on their quality in

accordance with the Approved Detailed Design, the Construction Performance Standards, Good Industry Practice, the terms of this Agreement and the Laws of Pakistan;

(e) attending the joint inspection of the Works; (f) monitoring and reporting to NHA the Concessionaire’s compliance with

appropriate motorway safety standards approved by NHA or any other applicable standards;

(g) monitoring and reporting to NHA the operation, management and maintenance

of the Project Assets by the Concessionaire in accordance with the O&M Requirements, the O&M Manual and the terms of this Agreement;

(h) facilitating the Concessionaire so that it complies with the terms of this

Agreement; (i) seeking and receiving all information and documents from the Concessionaire

pursuant to the terms of this Agreement;

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(j) clarifying and resolving with the Concessionaire Representative, any difficulties

and disputes arising pursuant to this Agreement and any complaints by or against third parties; and

(k) taking any and all steps and actions in discharge of NHA’s obligations under

this Agreement to facilitate the smooth implementation of the Project. 5.3 Concessionaire Representative

The Concessionaire shall, within thirty (30) Days of the Effective Date, appoint, at its own cost and expense, an authorized representative, being a natural Person or a firm/company/body corporate, to be the Concessionaire Representative to liaise with the NHA Representative on all matters pursuant to this Agreement and to ensure the efficient and safe execution, operation and maintenance of the Project on a Day-to-Day basis.

5.4 Project Manager The Concessionaire shall appoint, from time to time, at its own cost and expense, one or more established consulting engineering firms to design and supervise the Works, and in particular to ensure that the Works are in accordance with the prescribed standards and specifications, including, the Construction Performance Standards. The appointment of the consulting engineering firm shall not in any way absolve the liability of the Concessionaire of its design obligations pursuant to Article 11 [Design]. The duties and responsibilities of the Project Manager shall include:

(a) advising the Concessionaire on all aspects of design, including, design criteria,

the Detailed Design, terms of the EPC Contract(s) or other form of contract and contract procedures;

(b) monitoring the Works carried out by the Construction Contractors to ensure

that they conform with the Construction Performance Standards and the Approved Detailed Design; and

(c) ensuring that construction of the Works is carried out within the relevant cost projections and otherwise in accordance with the terms of this Agreement.

5.5 Quality Assurance Inspector

(a) The Concessionaire shall, within seven (7) Days of the Effective Date, forward

to NHA a list of five (5) firms/companies/bodies corporate who are eligible and willing to act as the Quality Assurance Inspector. The list shall comprise of independent Persons of repute with substantial experience in projects similar to the Project. NHA shall, within seven (7) Days of receipt of the said list, shortlist two (2) firms/companies/bodies corporate and communicate the same to the Concessionaire within two (2) Days. The Concessionaire shall within seven (7) Days thereafter (i) select a shortlisted entity to be the Quality Assurance Inspector, (ii) in consultation with NHA, finalize the fees and other terms of appointment of the Quality Assurance Inspector, and (iii) appoint the Quality Assurance Inspector on the finalized fee and other terms of appointment.

(b) The Quality Assurance Inspector shall have such duties and responsibilities as set out in Schedule [ ] [TORs of the Quality Assurance Inspector].

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(c) The remuneration, cost and expenses of the Quality Assurance Inspector shall

be paid by the Concessionaire and shall be reimbursed to the extent of fifty percent (50%) by NHA against quarterly claims for reimbursement submitted by the Concessionaire to NHA, which shall be paid by NHA within thirty (30) Days of receiving the relevant claim from the Concessionaire.

(d) Subject to the mutual consent of the Parties, the Concessionaire shall replace the Quality Assurance Inspector in any of the following circumstances:

(i) if NHA or the Concessionaire has reason to believe that the Quality

Assurance Inspector has not discharged its duties in a fair, appropriate and diligent manner;

(ii) if the Concessionaire and NHA mutually agree to replace the Quality Assurance Inspector;

(iii) if, in accordance with the terms of its appointment, the Quality Assurance Inspector resigns or notifies its intention not to continue as the Quality Assurance Inspector; or

(iv) any other circumstance arises which in the opinion of the Parties warrants the replacement of the Quality Assurance Inspector.

(e) The duration of the appointment of the Quality Assurance Inspector (or the

replaced Quality Assurance Inspector, as the case may be) shall be until the expiry of the Construction Phase, unless otherwise agreed in writing by the Parties.

(f) The Parties agree to cooperate with each other generally in relation to all matters within the scope of or in connection with the functions of the Quality Assurance Inspector. The Parties agree to act in accordance with the advice, recommendations and determinations of the Quality Assurance Inspector, in so far as the same are in accordance with the terms of its appointment and this Agreement, and any advice, recommendations, and determinations of the Quality Assurance Inspector shall, save in the face of manifest error, be conclusive as to the matters set out therein and be binding on the Parties. All instructions and representations issued or made by either Party to the Quality Assurance Inspector shall be simultaneously copied to the other Party and each Party shall be entitled to attend all inspections performed by and meetings involving the Quality Assurance Inspector.

(g) The appointment of the Quality Assurance Inspector shall not in any way absolve the Concessionaire of its obligations pursuant to the terms of this Agreement.

5.6 O&M Manager

(a) The Concessionaire shall appoint, at its own cost and expense, the O&M Manager.

(b) The O&M Manager shall design a cost effective management procedure to ensure that the Project is operated and maintained effectively, in accordance with this Agreement and the Laws of Pakistan.

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(c) The O&M Manager shall monitor the performance of the O&M Contractor, if

any, and ensure that the O&M Contractor complies with the O&M Contract.

(d) The appointment of the O&M Manager shall not in any way absolve the liability of the Concessionaire of its obligations with respect to the operation and maintenance of the Project in accordance with this Agreement.

5.7 Joint Auditor

(a) The Concessionaire shall, within seven (7) Days of the Effective Date, provide a list of five (5) reputable firms of chartered accountants from amongst the panel of auditors maintained by the State Bank of Pakistan. The list shall comprise of independent professional firms of repute with substantial experience in projects similar to the Project. NHA shall, within seven (7) Days of receipt of the said list, shortlist two (2) of the firms and communicate the same to the Concessionaire within two (2) Days. The Concessionaire shall within seven (7) Days thereafter (i) select a shortlisted entity to be the Joint Auditor, (ii) in consultation with NHA, finalize the fees and other terms of appointment of the Joint Auditor, and (iii) appoint the Joint Auditor on the finalized fee and other terms of appointment.

(b) The Joint Auditor shall have such duties and responsibilities as set out in Schedule [ ] [TORs of the Joint Auditor].

(c) The Joint Auditor shall, for purposes of rendering opinions, certifications or

determinations in respect of technical matters pursuant to the terms of this Agreement, have as part of its team of professionals, a well reputed Person with the technical expertise necessary to enable the Joint Auditor to render the aforesaid opinions, certifications and/or determinations.

(d) The remuneration payable to the Joint Auditor shall be paid by the Concessionaire and shall be reimbursed to the extent of fifty per cent (50%) by NHA against quarterly claims for reimbursement submitted by the Concessionaire to NHA, which shall be paid by NHA within thirty (30) Days of receiving the relevant claim from the Concessionaire.

(e) Subject to the mutual consent of the Parties, the Concessionaire shall replace the Joint Auditor in any of the following circumstances: (i) if NHA or the Concessionaire has reason to believe that the Joint Auditor

has not discharged its duties in a fair, appropriate and diligent manner;

(ii) if the Concessionaire and NHA mutually agree to replace the Joint Auditor;

(iii) if, in accordance with the terms of its appointment, the Joint Auditor resigns or notifies its intention not to continue as the Joint Auditor; or

(iv) any other circumstance arises which in the opinion of the Parties warrants the replacement of the Joint Auditor.

(f) The duration of the appointment of the Joint Auditor (or the replaced Joint Auditor, as the case may be) shall be until the Concession End Date (or the Termination Date, if earlier), unless otherwise agreed in writing by the Parties. The term of the appointment of a chartered accountancy firm as the Joint

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Auditor shall be for a period of three (3) years and such chartered accountant firm may serve for a maximum of two (2) consecutive terms.

(g) The Parties agree to cooperate with each other generally in relation to all matters within the scope of or in connection with the functions of the Joint Auditor. The Parties agree to act in accordance with the advice, recommendations and determinations of the Joint Auditor, in so far as the same are in accordance with the terms of its appointment and this Agreement, and any advice, recommendations, and determinations of the Joint Auditor shall, save in the face of manifest error, be conclusive as to the matters set out therein and be binding on the Parties. All instructions and representations issued or made by either Party to the Joint Auditor shall be simultaneously copied to the other Party and each Party shall be entitled to attend all inspections performed by and meetings involving the Joint Auditor.

5.8 Independent Consultant

(a) The Concessionaire shall, twenty five (25) Months prior to the Concession End

Date or within seven (7) Days of issuance of the Termination Notice (to the extent such Termination Notice is served after the Project Completion Date), as the case may be, forward to NHA, a list of five (5) firms/companies/bodies corporate who are eligible and willing to act as the Independent Consultant. The list shall comprise of independent Persons of repute with substantial experience in projects similar to the Project. NHA shall, within seven (7) Days of receipt of the said list, shortlist two (2) of the firms and communicate the same to the Concessionaire within two (2) Days. The Concessionaire shall within seven (7) Days thereafter (i) select a shortlisted entity to be the Independent Consultant, (ii) in consultation with NHA, finalize the fees and other terms of appointment of the Independent Consultant, and (iii) appoint the Independent Consultant on the finalized fee and other terms of appointment.

(b) The Independent Consultant shall have such duties and responsibilities as set out in Article 26 [Handback].

(c) The remuneration, cost and expenses of the Independent Consultant shall be paid by the Concessionaire and shall be reimbursed to the extent of fifty percent (50%) by NHA against a claim for reimbursement submitted by the Concessionaire to NHA, which shall be paid by NHA within thirty (30) Days of receiving the relevant claim from the Concessionaire.

(d) The Parties agree to act in accordance with the advice, recommendations and determinations of the Independent Consultant, in so far as the same are in accordance with the terms of its appointment and this Agreement, and any advice, recommendations, and determinations of the Independent Consultant shall, save in the face of manifest error, be conclusive as to the matters set out therein and be binding on the Parties.

(e) The duration of the appointment of the Independent Consultant shall be until the issuance of the Handback Certificate.

(f) The Parties agree to cooperate with each other generally in relation to all matters within the scope of or in connection with the functions of the Independent Consultant. All instructions and representations issued or made by

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either Party to the Independent Consultant shall be simultaneously copied to the other Party and each Party shall be entitled to attend all inspections performed by and meetings involving the Independent Consultant.

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6. CONCESSION AREA, ADDITIONAL LANDS AND ANCILLARY RIGHTS 6.1 Conditions for the Commencement of the Works

(a) Subject to Article 2.5, the obligation of the Concessionaire under this

Agreement to commence the Works are conditional upon the fulfillment of the following Conditions Precedent by NHA: (i) subject to the fulfillment of all requisite formalities by the

Concessionaire, the grant and maintenance with full effect of all the Approvals to the Concessionaire required for the commencement of the Works (including the Approvals for the Design Proposal and the Detailed Design), under the Laws of Pakistan and/or pursuant to the terms of this Agreement, within six (6) Months of the Effective Date;

(ii) the delivery to the Concessionaire of the Vacant Possession of the Concession Area, if required, free from any Encumbrance, together with the Ancillary Rights, within six (6) Months of the Effective Date;

(iii) resolution, settlement and satisfactory conclusion of all controversies,

disputes, claims, suits, objections or restraints whatsoever by the public or any Person, if any, over or in relation to the Concession Area or in relation to the implementation of the Project by the Concessionaire or otherwise to such extent that the same do not impinge on the ability of the Concessionaire to undertake the Works pursuant to the terms of this Agreement or interfere with the construction programme for such Works, within six (6) Months of the Effective Date.

(b) As in the case of the Conditions Precedent stipulated in Article 2.5(a), Articles 2.5(b) to 2.5(i) shall apply mutatis mutandis to the Conditions Precedent stipulated in Article 6.1(a).

6.2 Conveyance of the Vacant Possession of the Concession Area, the Additional Lands and Grant of the Ancillary Rights

(a) NHA shall expeditiously handover to the Concessionaire, the Vacant

Possession of the Concession Area and the Additional Lands, if required, free from any Encumbrance and together with the Ancillary Rights, for the purpose of implementing the Project, within the time period specified in this Agreement.

(b) Where the Laws of Pakistan require the entry of any lease or the issuance of any

easement or licence for the grant of superficies, NHA shall expeditiously, at its own efforts, cost and expense (including the payment of any related registration fees and stamp duties), enter into, grant, issue or convey such lease, easement or licence to enable the Concessionaire to undertake the Works at the Concession Area and the Additional Lands, if required, and to effectively enable the Concessionaire to retain ownership rights to the Works and the Project Assets.

(c) Upon the Vacant Possession of the Concession Area and the Additional Lands,

if required, being handed over and the Ancillary Rights being granted, the Concessionaire shall have the irrevocable right to enter upon, occupy and use the Concession Area and such part of the Additional Lands and the irrevocable right to exploit the Ancillary Rights and undertake the Works on the

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Concession Area and the Additional Lands as may be necessary or appropriate to implement the Project in accordance with the terms of this Agreement.

(d) If the Vacant Possession of any part of the Concession Area or the Additional

Lands, if required, has not been made available and the Ancillary Rights have not been granted, to the Concessionaire, within the time period specified in this Agreement, the Concessionaire may (without thereby adversely affecting its rights under this Agreement) enter into those parts of the Concession Area and the Additional Lands, as have been made available, and exploit such of the Ancillary Rights, as have been granted, and may at its sole discretion commence the relevant part of the Works; provided, that exercise of any rights conferred by this Article shall not operate nor be construed as a waiver of any obligation on the part of NHA nor as a waiver of any right that the Concessionaire may have or acquire under this Agreement.

(e) If NHA is unable to comply with its obligation to deliver the Vacant Possession

of the Concession Area and the Additional Lands, if required, and grant the Ancillary Rights, within the time period specified in this Agreement, NHA shall as soon as reasonably practicable notify the Concessionaire in writing. On receipt of such notification from NHA, the Concessionaire may (but shall not be obliged to) agree with NHA an extension of time to fulfill its obligations; provided, that NHA agrees to the revised Financial Model, if necessary in the opinion of the Quality Assurance Inspector, the revised programme of activities, the revised Works Commencement Date, and the revised duration of the Construction Phase as required by the Concessionaire.

6.3 Rights to Use the Concession Area and the Additional Lands

(a) NHA shall ensure that all necessary access to and from the Concession Area

and the Additional Lands, if required, is made available to the Concessionaire, its employees, agents, representatives, any other authorized Persons, the Contractors and subcontractors, and the Concessionaire and any such employees, agents, representatives, authorized Persons, Contractors and subcontractors shall have the exclusive right to occupy and use the Concession Area and such part of the Additional Lands as shall be required for the carrying out of the relevant part of the Works during the Construction Phase and for this purpose the Concessionaire may regulate the entry and use of the Concession Area and the Additional Lands by third parties in the manner as the Concessionaire shall deem fit.

(b) The Concessionaire shall use the Concession Area, the Additional Lands, and the Ancillary Rights for any purpose as it deems necessary in its sole discretion which is incidental or necessary to the implementation of the Project.

6.4 Peaceful Possession On and from the Effective Date, NHA hereby warrants that:

(a) the Concession Area and the Additional Lands, if required, together with the Ancillary Rights, have been acquired through the due process of law, belong to and are vested in NHA and NHA has full powers to hold, dispose of and deal with the same consistent, inter alia, with the terms of this Agreement, and that the Concessionaire, subject to the terms of this Agreement, shall, in respect of

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the Concession Area, the Additional Lands, and the Ancillary Rights, have no liability regarding any compensation payment on account of land acquisition or rehabilitation or resettlement of any Persons affected thereby, or otherwise;

(b) the Concession Area and the Additional Lands do not comprise of any area on which NHA does not have legal authority to authorize the construction of the Works or the Project Assets;

(c) all requisite statutory, regulatory and other consents, approvals and

authorizations for the Project required to be procured by NHA pursuant to the terms of this Agreement have been obtained and are maintained with full effect;

(d) subject to the terms of this Agreement, the Concessionaire shall, to the extent

that it complies with the terms and conditions of this Agreement, enjoy the Vacant Possession of the Concession Area and the Additional Lands, if required, and the Ancillary Rights, and in the event the Concessionaire is obstructed by any Person claiming any right, title or interest in or over the Concession Area, the Additional Lands, or the Ancillary Rights or any part thereof or in the event of any enforcement action including any attachment, distraint, appointment of receiver or manager or liquidator being initiated by any Person claiming to have any interest in or charge on the Concession Area, the Additional Lands, or the Ancillary Rights or any part thereof, NHA shall, if called upon by the Concessionaire, defend such claims and proceedings and also keep the Concessionaire fully indemnified and harmless against any consequential loss or damages which the Concessionaire or any Contractor may suffer, on account of any such right, title, interest or charge;

(e) In furtherance of Article 6.4(d), if the progress of the Works has been disrupted

by the obstruction of such Person claiming any right, title or interest in or over the Concession Area, the Additional Lands, if required, and the Ancillary Rights or any part thereof or as a result of any enforcement action as stated in that Article initiated by such Person, then the Concessionaire shall notify NHA the financial impact of such disruption and the additional costs caused thereby. NHA agrees to provide the Concessionaire compensation for such additional costs which are calculated and verified for the Delay Duration, inclusive of the lost Revenues that would have been generated had the Works programme been implemented on schedule but for the aforesaid disruption;

(f) NHA agrees to consider requests to provide the Concessionaire compensation for such additional costs which are caused by the delay of the entire Works programme. NHA further agrees to consider requests for the revision of the Financial Model, if necessary in the opinion of the Quality Assurance Inspector, the program of activities, the Construction Phase and provide the Concessionaire compensation calculated and verified for the Delay Duration inclusive of the lost Revenues that would have been generated had the Works programme been implemented on schedule but for the aforesaid disruption;

(g) the Concessionaire shall make the necessary notification to NHA and provide the components of the additional costs to the Quality Assurance Inspector for verification and issuance of the relevant certificate;

(h) in the event NHA fails, or is otherwise unable, to pay the additional costs, then the Concessionaire shall be entitled to recover compensation in accordance with Article 29.20; and

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(i) in the event NHA fails, or is otherwise unable, to pay the additional costs, then,

at any time thereafter, at the Concessionaire’s option (i) the Parties shall negotiate in good faith with a view to agreeing upon such other modification of this Agreement as shall adequately compensate the Concessionaire, or (ii) if the Concessionaire deems that a Material Adverse Effect has occurred, the Concessionaire shall be entitled to declare an NHA Event of Default in accordance with Article 24.1(b) whereupon the applicable sub-Articles of Articles 24 [Events of Default] and 25 [Termination and Termination Payment] shall apply.

6.5 Costs and Expenses

Subject to the terms of this Agreement, NHA shall bear and pay all costs, expenses and charges incurred or levied in making available the Concession Area and the Additional Lands, if required, and grant the Ancillary Rights, to the Concessionaire, including, any compensation required to be paid for the acquisition thereof (including compensation granted by any Court to the landowners) and/or costs of rehabilitation or resettlement of any Person (legally or illegally) occupying theConcession Area, the Additional Lands or enjoying the Ancillary Rights or any part thereof and any legal cost arising from legal actions taken by the landowners and/or any Person claiming any right, title or interest over the Concession Area, the Additional Lands, or the Ancillary Rights in relation to the acquisition thereof and shall fully indemnify the Concessionaire and hold the Concessionaire harmless in such respect.

6.6 Reversion of Unutilized Portion of Concession Area

Any portion of the Concession Area made available to the Concessionaire by NHA in accordance with this Article 6 [Concession Area, Additional Lands and Ancillary Rights] which the Concessionaire does not require for the purposes of the Project or any other purpose as agreed to by the Parties, shall revert to NHA within three (3) Months of the notice to such effect by the Concessionaire; provided, however, that the Concessionaire shall not unreasonably delay issuance of such notice.

6.7 Utilization of Existing Roads and Land Areas

(a) The Concessionaire shall, in carrying out construction of the Works, use its best endeavours to utilize all existing roads and land areas as per the Approved Detailed Design.

(b) NHA shall furnish to the Concessionaire, as soon as reasonably practicable, detail of all relevant data, reports, drawings and all other information concerning the access roads which may be required by the Concessionaire to undertake its obligations under this Agreement.

6.8 Affirmations

(a) Subject to the terms of this Agreement, on and from the Effective Date, the

Concessionaire confirms that it (i) has made a complete and careful examination and an independent evaluation of the Concession Area and information provided by NHA, (ii) accepts the risk of inadequacy, mistake or error in or relating to any of the information provided by NHA, and (iii) has determined to

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its satisfaction the nature and extent of risks and hazards as are likely to arise or it may face in the performance of its obligations under this Agreement.

(b) Subject to Article 7.4, on and from the Effective Date, NHA undertakes not to give possession of the Concession Area or the Additional Lands to any other Person and no Person shall have the right to enter or establish an access to the Concession Area or the Additional Lands except with the prior consent of the Concessionaire (which consent shall not be unreasonably withheld, conditioned or delayed), or otherwise impede or hinder the Concessionaire in the performance of its obligations under this Agreement.

(c) Upon taking the Vacant Possession of the Concession Area and the Additional

Lands, the Concessionaire undertakes that the Concessionaire shall utilize the same only for the purposes provided in this Agreement, and the Concessionaire shall not create any Encumbrance nor restrict the utility thereof in any other manner save and except as permitted in this Agreement.

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7. PUBLIC UTILITIES 7.1 Ascertainment of Affected Public Utilities

Upon the execution of this Agreement, NHA shall procure all such information from the Public Sector Entities and use its best endeavours to identify and ascertain the type and location of all the Public Utilities and ancillary services at the Concession Area, and to prepare an inventory of those Public Utilities and ancillary services which shall be or are expected to be affected by the Works, and provide details thereof to the Concessionaire in a timely manner so as not to interfere with the regular progress of the Works.

7.2 Removal, Relocation and Diversion of Affected Public Utilities

(a) The Concessionaire shall use it best endeavours to undertake the Detailed

Design in a manner that removal, relocation or diversion of the Public Utilities and services ancillary thereto is not required for the undertaking the Works.

(b) Notwithstanding Article 7.2(a), the Concessionaire shall, if so required by upon intimation to NHA in writing, procure the removal, relocation or diversion of the Public Utilities and services ancillary thereto necessary for commencement of the Works at its own cost and expense.

7.3 Public Utilities Required for the Works

The Concessionaire shall procure the supply of the Public Utilities and ancillary services to the Concession Area as required for the Works and other purposes under this Agreement and NHA shall to the fullest extent facilitate the Concessionaire to procure the said supply and all costs and expenses incurred in respect thereof shall be borne and paid by the Concessionaire. The Concessionaire, if required, shall expeditiously comply with all statutory and other legal requirements necessary for such applications to the concerned Public Utilities service providers.

7.4 Works Undertaken by Public Utilities

(a) To the extent that a Public Utilities service provider must seek approval from

NHA to carry out works at or in the Concession Area, NHA shall not grant any such approval, whether conditional or otherwise, until it has obtained the prior written consent of the Concessionaire subject to the Concessionaire’s reasonable requirements as to any restrictions or conditions to be imposed on the timings and execution of the works by the Public Utilities service provider. NHA shall take such reasonable requirements into consideration, including, where applicable, the imposition of restrictions or conditions when granting any approval to the Public Utilities service provider.

(b) Subject to Article 7.4(a), and all such reasonable conditions or requirements (including any conditions as to indemnity against loss, damage, costs or expenses suffered or incurred by the Concessionaire as a result of granting access), the Concessionaire shall at all times during the Construction Phase permit the authorized personnel of all Public Utilities service provider to have access to the Concession Area for the purpose of: (i) routine maintenance of any Public Utilities already located within the

Concession Area;

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(ii) strengthening, replacing or upgrading of any Public Utilities already

located within the Concession Area;

(iii) reinstating any foundations, structures, building, pavements, cabling and the like which may be disturbed or affected by reason of such works undertaken by a Public Utilities service provider; or

(iv) any other work, including, the installation of any new additional services

of a Public Utilities service provider within the Concession Area; Provided, however, that such works do not hamper or delay the execution of the Works or the operation and maintenance of the Project Assets by the Concessionaire, save and except for emergencies on account of major disruption to any Public Utilities.

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8. TREATMENT OF ONGOING CONTRACTS 8.1 Assignment of Agreements

(a) With regard to construction contracts, maintenance contracts, supply agreements,

service agreements, employment agreements, toll collection concessions or other agreements/contracts previously entered into by NHA or by any other Public Sector Entity relating to any matter covered by this Agreement, if any, NHA, if required to do so through written notice by the Concessionaire, shall assign or cause the assignment of such agreements/contracts to the Concessionaire.

(b) Subject to the terms of this Agreement, NHA shall ensure that any of the aforesaid agreement/contracts which are not assigned to, or required to be assigned by, the Concessionaire shall be terminated or be deemed to be so terminated by the Take-Over Date without the Concessionaire being liable for any termination costs or the consequences of any litigation ensuing as a result of such termination.

8.2 Transfer of Liabilities and Obligations

The taking-over of the Concession Area or any other facility covered by this Agreement shall not render the Concessionaire liable for any claims, liabilities and obligations of NHA, any Public Sector Entity or any other Person arising out of or in connection with agreements/contracts of whatever nature or description existing before such taking-over or accruing prior to assignment of agreements and/or contracts under Article 8.1(a) except where expressly agreed to by the Concessionaire in writing.

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9. FINANCES FOR THE PROJECT

9.1 Concessionaire to Obtain Finances for the Project

The Concessionaire shall be solely responsible for obtaining all the finances, Debt, Equity and/or any other component of the Total Project Costs, necessary to undertake the Project in accordance with the terms of this Agreement.

9.2 Financial Close Bond

(a) Within two (2) Months of the Effective Date, the Concessionaire shall submit

the Financial Close Bond to NHA with a face amount equal to Rupees Two Hundred and Fifty Million (PKR 250,000,000/-). The Concessionaire shall keep the Financial Close Bond valid till such time that it is replaced by the Construction Performance Bond.

(b) The Financial Close Bond shall secure the Concessionaire’s obligation to achieve Financial Close in accordance with the terms of this Agreement. If the Concessionaire fails to achieve Financial Close in accordance with the terms of this Agreement, NHA shall be entitled to declare a Concessionaire Event of Default, Terminate this Agreement and forfeit the Financial Close Bond. If, however, the Concessionaire is unable to achieve Financial Close due to NHA’s failure to fulfill a Condition Precedent within the prescribed time period, the Concessionaire shall be entitled to declare an NHA Event of Default, Terminate this Agreement and NHA shall immediately and in any event within seven (7) Days of the date of the Termination Notice return the Financial Close Bond to the Concessionaire. In the event that NHA does not return the Financial Close Bond as above, the Financial Close Bond shall be deemed to have been cancelled.

(c) The Financial Close Bond may be in the form of (i) cash, (ii) a pay order or

demand draft confirmed by a scheduled commercial bank having a branch in Islamabad, (iii) an unconditional, irrevocable and without recourse letter of credit from a scheduled commercial bank located in Pakistan or a country abroad acceptable to NHA and confirmed by a scheduled commercial bank having a branch in Islamabad, or (iv) a bank guarantee in the form specified in Appendix-5 to the RFP.

(d) The Concessionaire shall be entitled to assign all its rights, title and interests under the Financial Close Bond to the Lenders as security for the Debt raised pursuant to the Financing Agreements.

9.3 Financial Model and Financing Term Sheet

(a) The Financial Model forming part of the Concessionaire’s Proposal and

endorsed by NHA as set forth in Schedule [ ] [Financial Model] reflects inter alia the proposed material terms of the Financing Agreements, and the financial projections (together with the financial parameters, accounting and tax assumptions), which form the basis for the determination of the Toll Structure during the Concession Period. The Concessionaire shall use its best endeavours to raise financing for the Project based on the projections and assumptions set forth in the Financial Model.

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(b) Prior to Financial Close, the Concessionaire shall deliver to NHA and the Joint Auditor for information and record a schedule or a copy of the term sheet reflecting the proposed material terms of the Financing Agreements, and setting forth a principal repayment schedule that provides for Debt repayment that is not more than the aggregate of the Debt component set out in the Financial Model using the assumptions of the Financial Model, together with the maximum principal amounts and interest (or markup) rate or rates and any schedules or formulae that will be included in the Financing Agreements for the computation of principal and interest (or markup), fees and charges payable to the Lenders upon the winding up for early termination of the financing under the Financing Agreements, and shall also identify the Equity commitments, individually and in total, of key investors and Shareholders. The Concessionaire shall execute the Financing Agreements consistent with the aforesaid term sheet.

9.4 Period to Achieve Financial Close

(a) Subject to the terms of this Agreement, the Concessionaire shall achieve

Financial Close within six (6) Months from the Effective Date (“Financial Close Period”), which period shall be subject to further extensions pursuant to the terms of this Agreement.

(b) If despite the procurement of the requisite Approvals and Consents and the fulfillment of the other Conditions Precedent, the Concessionaire is unable to achieve Financial Close within the time period prescribed in Article 9.4(a) above, the period may be further extended for such period as may be mutually agreed upon by the Parties.

(c) Subject to the terms of this Agreement, if despite procurement of the requisite

Approvals and Consents and the fulfillment of the other Conditions Precedent, the Concessionaire is unable to achieve Financial Close within the time period prescribed and any extension thereof pursuant to Article 9.4(b) or the other applicable terms of this Agreement, NHA shall be entitled to declare a Concessionaire Event of Default pursuant to Article 24.2(a), whereupon the applicable sub-Articles of Articles 24 [Events of Default] and 25 [Termination and Termination Payment] shall apply.

9.5 Financing Agreements

(a) The Concessionaire shall provide a copy of the executed Financing Agreements

to NHA within two (2) weeks after the execution of the same by the Concessionaire and upon receipt of the same from the Lenders. Subject to the terms of this Agreement, the service of the Financing Agreements upon NHA shall constitute express notice to NHA of the rights, interest, title, recourse and remedies of the Lenders, including, the security interests of the Lenders and the step-in rights of the Lenders upon the occurrence of an event of default under the Financing Agreements; provided, that NHA shall not be subjected to any direct financial repercussions under any such direct agreement or the Financing Agreements, save as otherwise expressly stated in this Agreement.

(b) Notwithstanding anything to the contrary contained herein, the Concessionaire shall not make any addition, replacement or amendments to any of the Financing Agreements without the prior written consent of NHA if such addition, replacement or amendment has, or may have, the effect of imposing

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or increasing any financial liability or obligation on NHA, and in the event that any replacement or amendment is made without such consent, the Concessionaire shall not enforce such replacement or amendment nor permit enforcement thereof against NHA.

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10. STEP-IN RIGHTS 10.1 Step-in Rights

The Parties hereby agree that NHA and the Lenders shall have the right to nominate a Person to step-in substituting the Concessionaire under this Agreement on the occurrence of such events as stated in the Financing Agreements, subject to such terms and conditions as may be agreed between the Lenders and NHA.

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11. DESIGN 11.1 Design Proposal Approvals

(a) The Concessionaire shall expeditiously commence the Detailed Design of the

Works upon the execution of this Agreement and submit for the Approval of NHA (which Approval shall not be unreasonably withheld, conditioned or delayed) the Design Proposal of the Works within two (2) Months of the Effective Date, through the Quality Assurance Inspector. The Design Proposal shall inter alia determine any Additional Lands required to undertake the Works. The Design Proposal shall include the entire scope of the Works including the details of all temporary Works, arrangements for diversion and control of traffic along, and public access across, any existing roads which will be affected by the Works.

(b) The Concessionaire shall submit five (5) copies of the Design Proposal to the Quality Assurance Inspector within two (2) Months from the Effective Date. The Quality Assurance Inspector shall submit four (4) copies of the Design Proposal to the NHA within two (2) Days of its receipt, review the Design Proposal and submit detailed comments to the NHA within one (1) week of receipt of the Design Proposal from the Concessionaire. NHA may seek clarification from the Concessionaire on the Design Proposal within two (2) weeks of receipt of the same and the Concessionaire shall supply those clarifications to NHA. After clarification by the Concessionaire, NHA shall, taking into account, inter alia, the comments of the Quality Assurance Inspector, inform the Concessionaire in writing of its Approval or rejection, partial Approval or partial rejection (along with comments) of the Design Proposal within four (4) weeks from the date of submission or clarifications by the Concessionaire. Upon Approval, such Design Proposal shall be the Approved Design Proposal.

(c) If NHA informs the Concessionaire in writing of its objection to or partial

rejection of the Design Proposal within the period provided in Article 11.1(b), the Concessionaire shall, after making any appropriate changes, re-submit the Design Proposal (or the relevant parts thereof, as the case may be) to NHA for Approval. If the Concessionaire has not received any request for clarifications or written Approval or any written objection from NHA on the re-submitted Design Proposal (or the relevant parts thereof, as the case may be) within two (2) weeks after the date of receipt by NHA of the said re-submission, the said re-submitted Design Proposal shall be deemed Approved by NHA and be deemed the Approved Design Proposal.

(d) Notwithstanding the actual or deemed Approval of the Design Proposal as

aforesaid, NHA shall endorse four (4) sets of the Approved Design Proposal. Three (3) sets of such Approved Design Proposal shall be retained by NHA and the other set shall be returned to the Concessionaire.

(e) Approval of the Design Proposal shall not be construed as a warranty by NHA

of the safety, durability, reliability or viability of the Approved Design Proposal.

11.2 Detailed Design Approvals

(a) The Detailed Design shall be in accordance with the Approved Design Proposal and Construction Performance Standards and all relevant Laws of Pakistan, and

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shall meet functional adequacy, structural integrity and prescribed safety requirements.

(b) The Concessionaire may submit the Detailed Design for components of the Works in batches; provided, however, that all components of the Detailed Design are submitted for the Approval of NHA, through the Quality Assurance Inspector, no later than eight (8) weeks prior to the Works Commencement Date.

(c) By submitting the Detailed Design to NHA, the Concessionaire shall be

deemed to represent that it has determined and verified that the design and engineering, including, field construction criteria related thereto, conform to the prescribed standards and specifications, are in accordance with the Construction Performance Standards, and shall meet the functional adequacy, structural integrity and safety requirements.

(d) The Concessionaire shall submit to the Quality Assurance Inspector, five (5)

copies of the Detailed Design, which shall be based on the Design Proposal no later than eight (8) Weeks prior to the Works Commencement Date. The Quality Assurance Inspector shall submit four (4) copies of the Detailed Design to NHA within two (2) Days of its receipt, review the Detailed Design and submit its comments to the NHA within one (1) Week of receipt of the Detailed Design from the Concessionaire. NHA may seek clarification from the Concessionaire on the Detailed Design within two (2) weeks of receipt of the same and the Concessionaire shall supply those clarifications to NHA. After clarification by the Concessionaire to NHA, NHA shall, taking into account, inter alia, the comments of the Quality Assurance Inspector, inform the Concessionaire in writing of its Approval or rejection, partial Approval or partial rejection (along with comments) of the Detailed Design within four (4) weeks from the date of submission. Upon Approval, such Detailed Design shall be the Approved Detailed Design.

(e) If NHA informs the Concessionaire in writing of its objection to or partial

rejection of the Detailed Design within the period provided in Article 11.2(d), the Concessionaire shall, after making any appropriate changes, re-submit the Detailed Design (or the relevant parts thereof, as the case may be) to NHA for Approval. If the Concessionaire has not received written Approval or any written objection from NHA on the re-submitted Detailed Design (or the relevant parts thereof, as the case may be) within two (2) weeks after the date of receipt by NHA of the said re-submission, the said re-submitted Detailed Design shall be deemed approved by NHA and be deemed the Approved Detailed Design.

(f) Notwithstanding the actual or deemed Approval of the Detailed Design as

aforesaid, NHA shall endorse four (4) sets of the Approved Detailed Design. Three (3) sets of such Approved Detailed Design shall be retained by NHA and the other set shall be returned to the Concessionaire.

(g) The Concessionaire shall be solely responsible for the adequacy of the Detailed

Design, and shall not be relieved or absolved in any manner whatsoever from any of its obligations hereunder notwithstanding any review, comment or observation made by NHA or the absence of the same from NHA in approving the Detailed Design. Approval of the Detailed Design shall not be construed as

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a warranty by NHA of the safety, durability, reliability or viability of the Approved Detailed Design.

(h) The Concessionaire shall be responsible for delays in submitting the Detailed

Design and/or caused by the inadequacy thereof, and shall not be entitled to seek any relief in that regard from NHA.

11.3 Amendments to the Approved Design Proposal or the Approved Detailed

Design by the Concessionaire

(a) The Concessionaire shall not make any amendments to the Approved Design Proposal or the Approved Detailed Design without the prior written Approval of NHA.

(b) The Concessionaire may propose amendments to the Approved Design Proposal or the Approved Detailed Design to improve the design or to reduce the costs of the construction or to make the construction of a particular aspect of the Works more practical. Any proposed amendment to the Approved Design Proposal or the Approved Detailed Design shall be in accordance with the terms and conditions of this Agreement and shall not result in the reduction in the capacity, quality or safety of the Project.

(c) Should NHA inform the Concessionaire in writing of its rejection or partial

rejection of any deviation proposed by the Concessionaire from the Approved Design Proposal or the Approved Detailed Design, the Concessionaire may proceed with the Approved Design Proposal or the Approved Detailed Design; provided, however, that the Concessionaire shall not be responsible for any adverse consequences which may arise from the inherent defects of the Approved Design Proposal or the Approved Detailed Design which were sought to be rectified by the deviation proposed by the Concessionaire which has been wholly or partially rejected by NHA.

(d) The Concessionaire shall bear the cost of preparation of detailed technical drawings pursuant to any amendment to the Approved Design Proposal or the Approved Detailed Design or for any additional construction cost which may result from such amendment proposed by the Concessionaire.

(e) The amendment to the Approved Design Proposal or the Approved Detailed

Design by the Concessionaire shall, wherever possible, not cause any Additional Land acquisition to be undertaken by NHA. In the event acquisition of any Additional Lands is necessary for the implementation of any Approved amendment to the Approved Design Proposal or the Approved Detailed Design, NHA shall arrange to acquire and deliver to the Concessionaire such Additional Lands and remove or cause to be removed any Encumbrance therefrom. The cost and expense involved in acquiring and delivering the Additional Land to the Concessionaire shall be borne by the Concessionaire. The Concessionaire shall not be obliged to undertake those portions of the Works affected by the Approved amendment to the Approved Detailed Design till such time that the Vacant Possession of the Additional Lands has been handed over free of any Encumbrance to the Concessionaire.

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11.4 Variation Requests by NHA

(a) NHA may request a Variation to the Approved Detailed Design, by issuing a Variation Notice to the Concessionaire through the Quality Assurance Inspector, setting out in detail the changes required to the Approved Detailed Design.

(b) The Concessionaire shall within four (4) weeks of receipt of the Variation Notice, provide to the Quality Assurance Inspector such information as is necessary and reasonable together with preliminary documentation and detail including where necessary, in support of the following: (i) the impact (if any) which the Variation proposed in the Variation Notice

to the Approved Detailed Design is likely to have on the Works or the construction requirements for the Works;

(ii) the options for implementing the proposed Variation and the effect, if any, each such option would have on the costs and time thereof;

(iii) the estimate of the costswhich would be incurred for implementing the

proposed Variation;

(iv) the assessment of the time (in number of Days) which is required to make the proposed Variation, and the time implication on the schedule for completion of the Works; and

(v) the revised duration of the Construction Phase.

(c) The Quality Assurance Inspector shall review the aforesaid information and documents submitted by the Concessionaire, and consult with the Concessionaire, and based on the preferred option:

(i) settle the rates, approve the quantities and certify the additional costs

which shall be payable by NHA to the Concessionaire; (ii) if the Works are delayed as a consequence of the Variation to the

Approved Detailed Design, certify the revised duration of the Construction Phase and the additional costs which shall be payable by NHA to the Concessionaire to compensate the Concessionaire for any estimated loss, cost or expense incurred as a consequence of the delay;

(iii) forward to NHA for its consideration a statement incorporating the

certified additional costs, and the time within which the Variation to the Approved Detailed Design shall be carried out by the Concessionaire; and

(iv) forward to the Concessionaire a copy of the statement for the

Concessionaire’s records.

(d) NHA may, within a period of thirty (30) Days from the date of such statement, issue a written confirmation that the Variation proposed by the relevant Variation Notice to the Approved Detailed Design is to be carried out by the

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Concessionaire, whereupon the Concessionaire shall proceed with the implementation of such changes to the Approved Detailed Design, and NHA shall make payment of the certified additional costs in accordance with the pre-agreed schedule of progress billings, and in any event within seven (7) Days of the relevant invoice from the Concessionaire.

(e) Subject to the terms of this Agreement, where any Additional Lands are necessary for purposes of implementing the Variation requested by NHA to the Approved Detailed Design, NHA shall make available such Additional Lands as soon as reasonably practicable (but in any event prior to the date on which the relevant Section of the Works are required to be undertaken on such Additional Lands), at its own efforts and at no cost or expense to the Concessionaire, free from any Encumbrance. For the avoidance of doubt, any such Additional Lands made available by NHA under this Article 11 [Design] shall form part of the Concession Area.

(f) If the Concessionaire does not receive the written confirmation of NHA within

a period of thirty (30) Days from the Quality Assurance Inspector’s statement, the Variation Notice issued by NHA under Article 11.4(a) shall be deemed to be void, and NHA shall reimburse the Concessionaire, within seven (7) Days of the relevant invoice from the Concessionaire, the costs and expenses certified by the Quality Assurance Inspector as having been incurred by the Concessionaire in preparing and submitting the drawings, documents, estimates and other information in compliance with the Variation Notice.

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12. CONSTRUCTION TOLLING, TEMPORARY TOLL PLAZAS AND NEW

TOLL PLAZAS

12.1 Pre-Commencement

(a) At least one (1) Month prior to the Take-Over Date, the Concessionaire shall provide a copy of a toll operations manual (“Toll Operations Manual”) for the review of NHA. If upon review of the Toll Operations Manual, NHA determines that the procedures set forth therein require amendments, the Concessionaire shall, at its sole cost and expense, incorporate such reasonable changes as are required in the Toll Operations Manual and undertake periodic review and revision of the Toll Operations Manual as reasonably instructed by NHA.

(b) The Concessionaire shall conduct at-site training for its employees who shall be undertaking the Toll collection operations at the Toll Plazas. The Concessionaire shall complete all such at-site training at least forty five (45) Days prior to the Take-Over Date.

12.2 Toll Collection Operations at the Toll Plazas

(a) During the Construction Phase, the Concessionaire shall be authorized, pursuant

to the authority granted by NHA in accordance with the terms of this Agreement, to collect, demand, levy and charge the Tolls at the Toll Plazas with effect from the date of issuance of a Sectional Completion Certificate for a particular Section, in accordance with Schedule [ ] [Toll Structure] and shall continue such collections until the Project Completion Date; provided that no tolls escalation shall be put into effect during the Construction Phase.

(b) The Concessionaire shall have the right to levy, demand or collect, upon completion of the Works in a minimum continuous stretch of one hundred (100) kilometers out of the entire Motorway, as evidenced by the issuance of a Sectional Completion Certificate for such Section, a prorated toll rate (in accordance with the percentage of the Works completed on the Motorway as at that date) of the Toll Structure set out in Schedule [ ] [Toll Structure].

(c) The full toll rate of the Toll Structure as set out in Schedule [ ] [Toll Structure] shall be implemented upon the completion of the entire Motorway, as evidenced by the issuance of the Certificate of Completion or Certificate of Substantial Completion (along with the Incomplete Works List), as the case may be.

(d) For smooth implementation of the Toll Structure pursuant to Article 12.2(b) and 12.2(c) above, NHA shall, if necessary, upon being notified by the Concessionaire/Quality Assurance Inspector of the scheduled dates of imposition of such Toll Structure, not later than two (2) weeks prior to such dates, gazette and/or notify the public through publication in Pakistani newspapers of general circulation and facilitate the procurement of all the Approvals and the Consents whatsoever conferring on the Concessionaire the full authority to collect the Tolls based on the Toll Structure pursuant to Article 12.2(b) and 12.2(c) above.

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12.3 Utilization of the Toll Revenue During the Construction Phase

Save and except as otherwise specified in this Agreement, the Concessionaire shall utilize the Toll proceeds collected from the Toll Plazas from the Take-Over Date until the Project Completion Date exclusively for undertaking the Works.

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13. CONSTRUCTION 13.1 Commencement of the Works

(a) Subject to Articles 2.5(a) and 6.1 above, the Concessionaire shall, before the

commencement of the Works on the Works Commencement Date: (i) provide its plan for safety and accident prevention;

(ii) procure that the appointed Quality Assurance Inspector is responsible

for all necessary exchange of information required pursuant to this Agreement;

(iii) provide and maintain a reasonably furnished site office for the Quality

Assurance Inspector at the Concession Area;

(iv) provide to the Quality Assurance Inspector, the Concessionaire’s proposed construction programme and completion schedule, which shall form the basis for monitoring the progress of the Works, as well as the schedule for opening of a Section or the entire stretch of the Motorway to traffic, as the case may be; and

(v) subject to Article 13.3, furnish to NHA the Construction Performance

Bond, substantially in the form and content as provided in Schedule [ ] [Form of Construction Performance Bond].

(b) Upon achieving Financial Close, the Concessionaire shall notify NHA and the

Quality Assurance Inspector of the Works Commencement Date, which date shall be no later than thirty (30) Days from the Appointed Date. Subject to the terms of this Agreement, the Concessionaire shall only be required to commence the Works after satisfaction of the Conditions Precedent.

13.2 Construction Works

(a) The Concessionaire may undertake the Works itself or by appointing one or

more Contractors possessing the requisite technical, financial and managerial expertise and capability, as it deems necessary; provided, however, that the Concessionaire shall remain solely responsible for the Works. The Concessionaire shall appoint, at its own cost and expense, only Acceptable Contractors to undertake the Works or portions of the Works. The cost, fee and expense payable to such Contractors shall be in accordance with the terms and conditions contained in the EPC Contract(s) or other form of contract(s) entered into by the Concessionaire and such Contractors. The Concessionaire shall ensure that provisions are incorporated in the relevant EPC Contract(s) or other form of contract(s) with such Contractors for (i) the rectification of defects in the relevant portions of the Works during the agreed defects liability period/defects notification period, and for this purpose, may consult with NHA on the quantum and period therefor, and (ii) the payment of liquidated damages for delays in the completion of the relevant portions of the Works.

(b) In awarding contracts in respect of the Project, the Concessionaire shall endeavour to (but not be obliged to) give preference to Pakistani contractors, consultants, suppliers of materials and service providers, the qualifications and capabilities whereof are, in the sole judgment of the Concessionaire, comparable

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with foreign contractors, consultants, suppliers of materials and service providers and the products and services whereof are comparable in quality, delivery time, costs, reliability and in respect of other significant terms to those offered by foreign counterparts, and meet or exceed the Construction Performance Standards.

(c) The Concessionaire shall execute the Works in a proper workmanlike manner

and shall use material, plant and equipment in accordance with the Construction Performance Standards.

(d) For the purpose of determining that the Works are being undertaken in

accordance with the Construction Performance Standards, the Concessionaire shall, with due diligence, carry out all necessary and periodical Performance Tests in accordance with the Construction Performance Standards and shall issue a certificate to the effect that the materials being used for the construction of the relevant portion of the Works are suitable and meet the required standard. The Concessionaire shall maintain proper records of such Performance Tests and the remedial measures taken to cure the defects or deficiencies, if any, indicated by the Performance Tests’ results.

(e) In ensuring that the Works meets the requisite quality requirements, if the

Quality Assurance Inspector, after appropriate inspections and Performance Tests, reasonably considers that materials which are not in accordance with the Construction Performance Standards are being used for the carrying out the Works, it may notify the Concessionaire, setting out the basis of such consideration and changes which the Concessionaire should undertake to comply with the Construction Performance Standards. If after appropriate Performance Tests, the Concessionaire determines that the relevant materials are indeed not in accordance with the Construction Performance Standards, the Concessionaire shall ensure that those materials are promptly replaced with suitable materials in accordance with the Construction Performance Standards.

(f) The Concessionaire shall provide, as part of the Works, one emergency

telephone service as an aid to users of the Motorway, and fire and alarm services at the identified Toll Plazas and the Administrative Office or at such other location as may be deemed appropriate by the Concessionaire.

(g) NHA shall use its good offices to facilitate the reasonable requests of the

Concessionaire in connection with the execution of the Works (including making arrangements with the traffic police to divert or control traffic).

(h) During the Construction Phase, the Concessionaire shall undertake the Works,

and the organization and implementation of temporary traffic diversions and controls in such a manner so as to ensure proper levels of safety for road users, the public in general and those engaged in undertaking the Works in accordance with Good Industry Practice.

(i) Subject to the terms of this Agreement, the Concessionaire shall complete the

Works in a timely manner and in accordance with the implementation schedule set out in Schedule [ ] [Project Implementation Schedule].

(j) Upon the completion of the Works, the Concessionaire shall undertake to clear

away and remove all construction plant, surplus materials, rubbish and

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temporary Works of every description and shall ensure that the Concession Area is clean and in a condition satisfactory to NHA for commencement of the Operations Period.

13.3 Construction Performance Bond

(a) The Concessionaire shall, on or before the Works Commencement Date,

submit to NHA a Construction Performance Bqond with a face amount equal to five per cent (5%) of the Construction Costs. The Construction Performance Bond shall answer for, and guarantee the completion of, the Works in accordance with this Agreement. The Construction Performance Bond shall be valid for at least forty eight (48) Months from the date of its issuance.

(b) The Construction Performance Bond shall secure all of the Concessionaire’s

obligations, liabilities, payments, liquidated damages, indemnities, representations, guarantees, warranties and responsibilities during the Construction Phase, including the integrity and quality of the Concessionaire’s and its Contractors’ workmanship, the timely and continuous performance of the Works, the quality and quantity of the any equipment, materials, items and components supplied, the performance of the Works by the Concessionaire and compliance of the same with the Construction Performance Standards, the Approved Detailed Design and all other applicable standards set out in this Agreement and all other works and services to be provided by the Concessionaire during the Construction Phase.

(c) The Construction Performance Bond may be in the form of (i) cash, (ii) a pay order or demand draft confirmed by a scheduled commercial bank having a branch in Islamabad, (iii) an unconditional, irrevocable and without recourse letter of credit from a scheduled commercial bank located in Pakistan or a country abroad acceptable to NHA and confirmed by a scheduled commercial bank having a branch in Islamabad, or (iv) a bank guarantee in the form specified in Appendix-5 to the RFP.

(d) The Construction Performance Bond shall be partially released from time to

time to the extent of the percentage of completion of the Works certified by the Quality Assurance Inspector.

(e) NHA hereby agrees to return the Construction Performance Bond for cancellation within seven (7) Days of (i) its receipt of the Commissioning Notice, or (ii) the occurrence of a Termination Event not occasioned by a Concessionaire Event of Default. NHA agrees to reimburse the Concessionaire for all costs and expenses at actual that the Concessionaire incurs on account of any non-return or delayed return for cancellation of the Construction Performance Bond, in accordance with the terms of this Agreement. In the event that NHA does not return the Construction Performance Bond as above, the Construction Performance Bond shall be deemed to have been cancelled.

(f) The Concessionaire shall be entitled to assign all its rights, title and interests under the Construction Performance Bond or the construction bond(s) issued by its Construction Contractor(s), as the case may be, to the Lenders as security for the Debt under the Financing Agreements.

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13.4 Premises Completion Certificate, Sectional Completion Certificate, Certificate of Substantial Completion and Certificate of Completion

(a) The Quality Assurance Inspector shall periodically on the expected date of

completion of each Section of the Motorway (or if so requested by the Concessionaire) conduct all necessary inspections of the Works.

(b) Upon the completion of the Works in respect of the Administrative Office, the Concessionaire shall so notify the Quality Assurance Inspector (“Premises Completion Notice”). Within three (3) Days of receipt of the Premises Completion Notice, the Quality Assurance Inspector shall undertake the inspection of the Works in respect of the Administrative Office, and if the Quality Assurance Inspector is satisfied that the Works in respect of the Administrative Office have been completed, it shall, in consultation with NHA, issue the Premises Completion Certificate within seven (7) Days of the inspection.

(c) Upon substantial completion of a Section, the Concessionaire shall so notify the

Quality Assurance Inspector (“Sectional Completion Notice”). Within seven (7) Days of receipt of a Sectional Completion Notice, the Quality Assurance Inspector shall undertake the inspection of the relevant Section and if the Quality Assurance Inspector is satisfied with the Section so substantially completed, the Quality Assurance Inspector shall issue the Sectional Completion Certificate in respect thereof within fourteen (14) Days of the inspection. The Concessionaire shall be entitled to commence Tolling operations at the Toll Plazas on such substantially completed Section at a prorated toll rate (in accordance with the percentage of the Works completed on the Motorway as at that date) of the Toll Structure set out in Schedule [ ] [Toll Structure] immediately with effect from the Day following the date of issuance of the Sectional Completion Certificate.

(d) Upon the completion of the Works in respect of the entire Motorway, the

Concessionaire shall so notify the Quality Assurance Inspector (“Project Completion Notice”). The Quality Assurance Inspector shall, jointly with NHA and the Concessionaire, undertake inspection of the Works, and record any defects in the Works and/or produce the Incomplete Works List. The Quality Assurance Inspector shall within fifteen (15) Days of the inspection, issue: (i) the Certificate of Completion, if the Quality Assurance Inspector is

satisfied that the Works have been completed;

(ii) the Certificate of Substantial Completion together with the Incomplete Works List (which shall include all identified defects in the Works), if the Quality Assurance Inspector determines that although the Works have been Substantially Completed, certain Works or items forming part of the Works are not complete; or

(iii) the Incomplete Works List (which shall include all identified defects in

the Works), if the Quality Assurance Inspector determines that the Works have not been Substantially Completed.

(e) All Incomplete Works List items shall be completed by the Concessionaire

within such time as may be determined by the Quality Assurance Inspector.

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Upon satisfactory completion by the Concessionaire of the items forming part of the Incomplete Works List, and the rectification of all identified defects in the Works: (i) if no Certificate of Substantial Completion has been issued, the

Concessionaire shall issue a new Project Completion Notice to the Quality Assurance Inspector and NHA in accordance with this Article; or

(ii) if the Certificate of Substantial Completion has been issued, the Quality Assurance Inspector shall within seven (7) Days of the request from the Concessionaire, carry out another inspection jointly with NHA and the Concessionaire, and if the Quality Assurance Inspector is satisfied with the completion of the items forming part of the Incomplete Works List and/or rectification of all identified defects in the Works, the Quality Assurance Inspector shall issue the Certificate of Completion within fifteen (15) Days of the inspection; provided, that the Concessionaire shall remain under an obligation to complete the remaining items forming part of the Incomplete Works List and/or rectification of all remaining defects in the Works, if any, at the earliest.

(f) Any Dispute in relation to the issuance of the Premises Completion Certificate, a Sectional Completion Certificate, the Certificate of Substantial Completion, the Incomplete Works List or the Certificate of Completion shall be referred for amicable settlement in accordance with Article 27.1. If any Dispute referred for amicable settlement remains unresolved for a period of fifteen (15) Days, the Dispute shall be referred to expert determination in accordance with the procedure set out in Article 27.2.

(g) Upon the receipt of the Certificate of Substantial Completion or the Certificate of Completion, as the case may be, the Concessionaire Representative shall notify the NHA Representative that the Project is ready to be Commissioned (“Commissioning Notice”). The Concessionaire shall be entitled to commence full Tolling operations at the Toll Plazas based on the Toll Structure set out in Schedule [ ] [Toll Structure] immediately with effect from the Day following the date of issuance of the Certificate of Substantial Completion or the Certificate of Completion, as the case may be, which date shall be the COD.

13.5 Liquidated Damages

(a) Unless NHA grants, upon the prior written request of the Concessionaire, an

extension to the Construction Phase for verifiable and justifiable reasons suggesting and proving the inability of the Concessionaire to Substantially Complete the Works in accordance with the implementation schedule set out in Schedule [ ] [Project Implementation Schedule] or if the Construction Phase otherwise stands extended in accordance with the terms of this Agreement, the Concessionaire shall be bound to achieve Substantial Completion within thirty six (36) Months from the Works Commencement Date.

(b) If Substantial Completion of the Works is not achieved within a period of thirty

seven (37) Months from the Works Commencement Date for any reason other than those enumerated in Article 13.5(a), the Concessionaire shall pay to NHA as weekly liquidated damages for delay in Substantial Completion, an amount calculated at the rate of point zero one percent (0.01%) of the Total Project

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Costs per week or part thereof, up to a maximum of five percent (5%) of the Total Project Costs. Notwithstanding anything contained herein, the recovery of liquidated damages under this Article 13.5 shall be without prejudice to the rights of NHA under this Agreement (including the right of Termination in accordance with Article 24 [Events of Default]).

(c) The Parties agree that the amounts of liquidated damages provided under this Article 13.5 are in lieu of actual damages and are the Parties’ reasonable and genuine estimates of the losses and damages that may reasonably be anticipated from such failures in respect of such matters, and do not constitute a penalty.

13.6 Interchanges and New Toll Plazas

(a) In the event NHA wishes to establish an interchange connected to the

Motorway and/or a New Toll Plaza (other than the New Toll Plazas to be established as part of the Works) after the Effective Date, NHA shall establish, or cause to be established, the same at its own cost and expense, in accordance with the procedure set out in this Article 13.6.

(b) In the event NHA wishes to establish an interchange connected to the Motorway and/or a New Toll Plaza after the Effective Date, NHA shall intimate the Concessionaire of the same through the Quality Assurance Inspector, if the request is made during the Construction Phase, or directly, if the request is made during the Operations Phase, setting out in detail the reasons necessitating establishment of the interchange and/or the New Toll Plaza and other relevant matters. Such written intimation shall be accompanied by a detailed design of the interchange and/or New Toll Plaza prepared, or caused to be prepared by NHA. NHA shall ensure that such detailed design conforms to the Construction Performance Standards and the operational requirements of the Concessionaire as prevalent in respect of the Toll Plazas already existing on the relevant date.

(c) If the request for establishment of the interchange and/or the New Toll Plaza is made by NHA during the Operations Phase, the Concessionaire shall forthwith re-engage a Person as the Quality Assurance Inspector to specifically perform such duties as specified in this Article 13.6, in accordance with the appointment mechanism specified in Article 5.5.

(d) The Concessionaire shall within four (4) weeks of receipt of the written request made by NHA pursuant to Article 13.6(b), provide to the Quality Assurance Inspector such information as is necessary and reasonable together with preliminary documentation and detail including where necessary, in support of the following: (i) any proposed modification/rectification of the detailed design of the

interchange and/or New Toll Plaza provided by NHA pursuant to Article 13.6(b), so as to ensure that the same complies with the Construction Performance Standards and the operational requirements of the Concessionaire as prevalent in respect of the Toll Plazas already existing on the relevant date;

(ii) the impact (if any) which the construction of the interchange and/or the New Toll Plaza is likely to have on the Works or the construction requirements for the Works;

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(iii) the options for construction of the interchange and/or the New Toll

Plaza and the effect, if any, each such option would have on the costs and time thereof;

(iv) the estimate of the additional costs, which would be incurred for

construction of the interchange and/or the New Toll Plaza;

(v) the assessment of the time (in number of Days) which is required to construct the interchange and/or the New Toll Plaza, and the time implication (if any) on the schedule for completion of the Works; and

(vi) the revised duration of the Construction Phase required by the

Concessionaire.

(e) The Quality Assurance Inspector shall review the aforesaid information and documents submitted by the Concessionaire, and consult with NHA, and based on the preferred option:

(i) settle the rates, approve the quantities and certify the additional costs

which shall be payable by NHA to the Concessionaire;

(ii) if the Works are delayed as a consequence of the construction of the interchange and/or the New Toll Plaza, certify the revised duration of the Construction Phase and the further additional costs which shall be payable by NHA to the Concessionaire to compensate the Concessionaire for any estimated loss, cost or expense incurred as a consequence of the delay;

(iii) forward to the Concessionaire for its consideration a statement incorporating the certified additional costs, and the time within which the construction of the interchange and/or the New Toll Plaza shall be carried out by the Concessionaire; and

(iv) forward to NHA a copy of the statement for NHA’s records.

(f) Upon receipt of the statement from the Quality Assurance Inspector, the Concessionaire shall proceed with the construction of the interchange and/or the New Toll Plaza forthwith and complete the same within prescribed time period, and NHA shall make payment of the certified additional costs in accordance with the pre-agreed schedule of progress billings.

(g) Subject to the terms of this Agreement, where any Additional Lands are necessary for purposes of constructing the interchange and/or the New Toll Plaza, NHA shall make available such Additional Lands as soon as reasonably practicable (but in any event prior to the date on which the works are required to be undertaken on such Additional Lands), at its own efforts and at no cost or expense to the Concessionaire, free from any Encumbrance. For the avoidance of doubt, any such Additional Lands made available by NHA under this Article 13.6 shall form part of the Concession Area.

13.7 Extension of Time to Construction Phase

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(a) Notwithstanding the other reliefs/remedies available to the Concessionaire pursuant to the terms of this Agreement, the Quality Assurance Inspector shall, with the concurrence of NHA, grant a fair and reasonable extension of time for completion of the Works in any of the following situations after duly notifying NHA, namely where:

(i) additional or extra work beyond the scope of the Works is ordered to be

done by NHA or the NHA Representative or in the event of a Variation to the Approved Detailed Design, drawings or specifications for the Works, in which case the Concessionaire shall also be entitled to additional costs in accordance with Article 11.4;

(ii) there is a delay on the part of NHA in delivery of the Vacant Possession

of the Concession Area or the Additional Lands, if required, or grant of the Ancillary Rights or any part thereof upon which the construction Works for a specified Section or Sections of the Motorway are to be carried out by the Concessionaire;

(iii) there is a delay on the part of NHA in the removal, relocation, diversion

or reinstatement of any affected Public Utilities obstructing the progress of the construction Works of any specified Section or Sections of the Motorway which are to be carried out by the Concessionaire;

(iv) there is a delay in the progress of the construction Works of any specified

Section or Sections of the Motorway which are to be carried out by the Concessionaire, or any part thereof, due to obstruction by any Person claiming any right, title or interest in or over the Concession Area or the Additional Lands;

(v) there is a delay as a result of a Force Majeure Event;

(vi) there is a delay as a result of an NHA Event of Default;

(vii) there is a delay as a result of a Compensation Event;

(viii) there is a delay as a result of a Relief Event; or

(ix) there is a delay as a result of Unforeseeable Conduct.

(b) As a result of Article 13.7(a), NHA shall accordingly grant the Concessionaire extension to the Concession Period for the Delay Duration with due notification to NHA.

13.8 As-Built and ROW Drawings

(a) The Concessionaire shall ensure that NHA is provided with a complete set of

as-built drawings and final ROW drawings and one (1) soft copy in compact disk form with the Approved as-built drawings within three (3) Months from the COD. Such drawings shall become the property of NHA.

(b) All costs incurred in the preparation of the as-built drawings and final ROW drawings shall be borne by the Concessionaire.

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14. MOTORWAY SERVICE AREAS FACILITIES AND ANCILLARY

FACILITIES 14.1 Motorway Service Areas Facilities

The Concessionaire shall design, construct, manage, operate and maintain Motorway Service Areas and Motorway Service Areas Facilities as set out in Schedule [ ] [Motorway Service Areas and Facilities] on the Concession Area as per the Approved Detailed Design. The Concessionaire shall have the right to collect and retain the Motorway Service Areas Revenue generated therefrom and pay such percentage thereof to NHA as stated in Article 16.7 of this Agreement. The Concessionaire shall ensure that, throughout the Concession Period, the Motorway Service Areas Facilities are operated, managed and maintained in accordance with the terms of this Agreement, Good Industry Practice and the Laws of Pakistan.

14.2 Ancillary Facilities (a) NHA may in its discretion, at the request of the Concessionaire at any time

prior to the expiration of the Concession Period, Approve the establishment, operation and maintenance of Ancillary Facilities at the Concession Area.

(b) The Concessionaire shall make use of the development rights granted to it under this Article 14.2 in such a manner so as not to impair the general integrity of the Project and with full regard for the safety of all users of the Motorway and shall implement the development rights so as to avoid danger to any such users.

14.3 Ownership

For the avoidance of doubt, upon the establishment of the Ancillary Facilities, or any of them, the ownership rights thereof shall be vested in the Concessionaire and the Concessionaire shall retain ownership rights thereto until the Concession End Date (or the Termination Date, if earlier) (to the extent that the Ancillary Facilities are of such nature that are capable of being so owned).

14.4 Tenancy Agreements

(a) The Concessionaire may enter into such Tenancy Agreements and licensing,

franchise or other contractual arrangement as the Concessionaire shall deem appropriate for the design, construction, management, operation and maintenance of the Ancillary Facilities and the operation, management and maintenance of the Motorway Service Areas Facilities. The term of all Tenancy Agreements shall be coterminous with the Concession Period except when the Tenancy Agreements are for periods of shorter duration or are extended with the mutual written consent of the Parties.

(b) Subject to the terms of the Tenancy Agreements, the Concessionaire shall retain the

Other Revenue received from the operations of the Ancillary Facilities and the Motorway Service Areas Revenue received from the operations of the Motorway Service Areas Facilities, and such Revenues shall, subject to the Financing Agreements, be deposited in the Project Collection Account.

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15. TITLE TO THE PROJECT ASSETS

15.1 Title to Concession Area, Works and Project Assets

(a) Subject to the terms of this Agreement, the Concessionaire has, and shall have,

no title to, ownership interest in or liens on, the land constituting the Concession Area nor shall creat any Encumbrance with respect thereto.

(b) The Concessionaire shall retain all rights and claims on the Works, and shall remain the legal and beneficial owner of the Works from the date as and when the ownership rights accrue thereto till the issuance of the Certificate of Completion (including the Works in respect of the Administrative Office and any other Project Asset).

(c) Upon the issuance of the Premises Completion Certificate, the ownership rights of the Administrative Office shall be vested in the Concessionaire and the Concessionaire shall retain ownership rights thereto till the Concession End Date (or the Termination Date, if earlier).

(d) Upon the issuance of a Sectional Completion Certificate, the Concessionaire

shall retain ownership and claims on the completed Works constituting that relevant Section till the issuance of the Certificate of Completion.

(e) Upon the issuance of the Certificate of Substantial Completion or the

Certificate of Completion, as the case may be, the substantially completed Works or the completed Works, respectively, constituting the Project Assets shall be vested in the Concessionaire and the Concessionaire shall retain ownership rights thereto during the balance of the Concession Period till the Concession End Date (or the Termination Date, if earlier). In the event of issuance of the Certificate of Substantial Completion, the ownership rights of the Works or items forming part of the Works specified in the Incomplete Works List shall accrue to the Concessionaire once they are completed in accordance with the terms of this Agreement.

(f) Upon the establishment of the Ancillary Facilities, or any of them, the ownership rights thereof shall be vested in the Concessionaire and the Concessionaire shall retain ownership rights thereto till the Concession End Date (or the Termination Date, if earlier) (to the extent that the Ancillary Facilities are of such nature that are capable of being so owned).

(g) On the Transfer Date, the Concessionaire shall transfer the ownership rights to the Project Assets to NHA in accordance with the terms of this Agreement.

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16. TOLLING, REVENUES AND O&M ARRANGEMENT

16.1 Commencement of Commercial Operations

(e) The Concessionaire shall commence commercial operations at the New Toll

Plazas (i) upon the issuance of a Sectional Completion Certificate for a particular Section of the Motorwar, at a prorated toll rate based on the Toll Structure set out in Schedule [ ] [Toll Structure], and continue such collection until the Project Completion Date, and (ii) on the COD, at the full toll rate based on the Toll Structure set out in Schedule [ ] [Toll Structure], and continue such collection until the Concession End Date (or the Termination Date, if earlier).

(f) The Concessionaire shall provide the necessary operation, maintenance and management personnel and labour in accordance with Good Industry Practice to ensure operation and maintenance of the Project in accordance with the terms of this Agreement, the O&M Requirements, the O&M Manual and the Laws of Pakistan.

(g) The Concessionaire may undertake the operation and maintenance of the Project Assets either itself or through the O&M Contractor appointed in accordance with the terms and conditions set out in the O&M Contract. The Concessionaire shall appoint the O&M Manager for the purposes of monitoring the operation and maintenance of the Project Assets, including, the performance of the O&M Contractor.

(h) The Concessionaire may undertake the Toll operations itself or through the Toll Operator, which entity may be an Associate of the Joint Venture or any of the Joint Venture Members or, if otherwise, an Acceptable Contractor.

(i) Notwithstanding the appointment of any Person as the O&M Manager, the O&M Contractor or the Toll Operator, the Concessionaire shall continue to account to NHA for the obligations to be completed under this Article 16 [Tolling, Revenues and O&M Arrangement].

16.2 Personnel Management

(a) Within one (1) Month of the Effective Date, the Concessionaire shall provide to

NHA a detailed organizational chart of the Concessionaire for the implementation by the Concessionaire of its obligations under this Article 16 [Tolling, Revenues and O&M Arrangement]. The Concessionaire shall, upon taking possession of the Administrative Office, display the organizational chart in an appropriate place within the Administrative Office. The displayed organizational chart shall be updated from time to time, and shall indicate the names and functions of all key personnel of the Concessionaire (and its Toll Operator and/or O&M Contractor, as the case may be) in the execution of the Toll operations and maintenance of the Administrative Office and the Project Assets.

(b) The Concessionaire shall recruit such additional personnel as may be required to man the Toll Plazas, to supervise the Toll operations, to manage the Toll operations and the surveillance system and for the upkeep and maintenance of the Administrative Office and the Project Assets. The Concessionaire shall

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comply with the Laws of Pakistan relating to employees, including, the payment of prescribed provident or other social benefit contributions.

(c) The Concessionaire shall provide to NHA a detailed list of the key personnel of

the Concessionaire, and any change of such key personnel from time to time. The Concessionaire shall also provide to NHA the updated list of contact details to enable NHA to contact the key personnel in case of emergencies or as the need may arise.

(d) The Concessionaire shall, in consultation with NHA, design and develop a

training program for its personnel comprising classroom course training and on-site training with the intent that after such training, the trained personnel shall have the requisite skills to undertake their respective functions and responsibilities when the Motorway is opened to traffic.

16.3 Tolls and Other Revenues

(a) NHA hereby gives the Concessionaire the exclusive right and authority to:

(i) levy, demand, collect and earn the Tolls:

(A) at the New Toll Plazas on the issuance of a Sectional

Completion Certificate for a particular Section of the Motorway at a prorated toll rate based on the Toll Structure set out in Schedule [ ] [Toll Structure], and continue such collection until the Project Completion Date;

(B) at the New Toll Plazas on the COD based on the Toll Structure set out in Schedule [ ] [Toll Structure], and continue such collection until the Concession End Date (or the Termination Date, if earlier);

(C) all other Revenues other than those mentioned in sub-Articles

16.3(a)(i)(A) and 16.3(a)(i)(B) above, commencing from the date such Revenues start accruing to the Concessionaire pursuant to the terms of this Agreement until the Concession End Date (or the Termination Date, if earlier); and

(ii) undertake the operation and maintenance of the Project Assets and, if required, modify, repair, refurbish or otherwise make improvements to the Project Assets during the Operations Phase in accordance with Schedule [ ] [O&M Requirements] and the O&M Manual.

(b) The rights and obligations of the Concessionaire under Article 16.3(a) specifically include the following: (i) collecting the Tolls based on the Toll Structure set out in Schedule [ ]

[Toll Structure]; (ii) minimizing the disruption to traffic in the event of accidents or other

incidents affecting the safety and use of the Concession Area or the Motorway by providing a rapid and effective response mechanism and maintaining liaison procedures with emergency services;

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(iii) undertaking routine maintenance including prompt repairs of potholes, cracks, concrete joints, drains, line markings, lighting and signage;

(iv) undertaking periodic maintenance such as resurfacing, repairs to

structures, repairs and refurbishment of the Tolling system and hardware and other equipment;

(v) carrying out periodic preventive maintenance to the Motorway

including the Tolling system; (vi) preventing, with the assistance of NHA and the concerned law

enforcement agencies, the assistance whereof shall be procured by NHA whenever required by the Concessionaire, unauthorized entry to and exit from the Motorway and to erect barriers along both sides of the Motorway;

(vii) preventing, with the assistance of NHA and the concerned law

enforcement agencies, the assistance whereof shall be procured by NHA whenever required by the Concessionaire, encroachments on the Concession Area;

(viii) carrying out interface and co-ordination activities with the Contractors

and the O&M Contractor engaged by the Concessionaire and all operations connected therewith in accordance with this Agreement, the O&M Requirements and the Laws of Pakistan;

(ix) maintaining a public relations unit to interface with and attend to

suggestions from users of the Motorway, the media, the Public Sector Entities, and other external agencies;

(x) entering into Tenancy Agreements; and (xi) performing such other services as mutually agreed to between the

Parties from time to time for the satisfactory attainment of the objects of the Project.

(c) For smooth implementation of the Toll Structure set out in Schedule [ ] [Toll Structure] pursuant to Article 16.3(a)(i) above, NHA shall, if necessary, upon being notified by the Concessionaire/Quality Assurance Inspector of the scheduled date of imposition of a new Toll rate in accordance with Schedule [ ] [Toll Structure], not later than two (2) weeks prior to such date, gazette and/or notify the public through publication in Pakistani newspapers of general circulation and facilitate the procurement of all the Approvals and the Consents whatsoever (i) pertaining to the opening of a Section or the entire stretch of the Motorway for traffic, as the case may be, and (ii) conferring on the Concessionaire the full authority to collect the Tolls, based on the Toll Structure set out in Schedule [ ] [Toll Structure].

(d) If required under the Laws of Pakistan, NHA shall do all acts and things to

procure for the Concessionaire the necessary rights and authority to levy and collect the Tolls and the other Revenues.

(e) The Concessionaire shall bear all related costs incurred in the Toll collection

operations including payroll expenses, supervision and monitoring costs, and costs incurred in cash counting and tallying, cash delivery and deposits.

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(f) The Tolls shall be periodically adjusted during the Concession Period in such

manner as set out in Section A.5(i) of the RFP and in more detail in Schedule [ ] [Toll Structure].

(g) Notwithstanding anything to the contrary contained in this Agreement, the

Concessionaire: (i) shall not levy any Tolls from the Exempted Vehicles; provided, that any

change to the vehicles exempted by the Policy as they exist on the Effective Date shall, if such change has adverse revenue consequences for the Concessionaire, be deemed to be a Change in Law for the purposes of Article 22 [Change in Law]; and

(ii) may, at its sole discretion, levy Tolls at rates lower than those set out in

or determined in accordance with Schedule [ ] [Toll Structure] or offer and negotiate concession packages to or with such class or classes of users of the Motorway as may be determined by the Concessionaire in its discretion.

(h) The Concessionaire shall maintain, during the Operations Phase, detailed and accurate records of its Toll collection operations and shall make copies of such records available to NHA at no cost, upon being given a five (5) Business Days’ notice by NHA.

(i) The Concessionaire shall conduct on-site training for its employees who shall be undertaking the Toll operations at the Toll Plazas. The Concessionaire shall complete all such on-site training at least forty five (45) Days prior to commencement of Toll collection operations.

16.4 Utilization of the Toll Revenue During the Operations Phase

Subject to the terms of the Financing Agreements, during the Operations Phase, the Concessionaire shall use the Toll Revenue for Debt service pursuant to the Financing Agreements and for the costs necessary for the proper operation and maintenance of the Motorway (including reconstruction, resurfacing, and restoration of the Motorway in compliance with the requirements of this Agreement) prior to making any distribution of such Toll Revenue to any Shareholder.

16.5 Competing Routes NHA undertakes and assures:

(a) that as of the Effective Date, should NHA or any Public Sector Entity decide to

establish a Competing Route, then NHA shall undertake that the said Competing Route shall be tolled at toll rates equivalent to the then prevailing Toll rates imposed at the Motorway under this Agreement;

(b) that in the event NHA is not agreeable to Article 16.5(a) above, as the case may

be, or is otherwise unable to comply with the same, then monetary compensation shall be payable by NHA to the Concessionaire, within fifteen (15) Days of certification of the said amount by the Joint Auditor. The Joint Auditor shall certify the amount due to the Concessionaire within fifteen (15) Days of a written request by the Concessionaire. The monetary compensation for the Operational Year concerned, to be deposited in the Project Collection

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Account and distributed in accordance with the terms of this Agreement, shall be in the sum calculated as the difference between (a) the aggregate projected Toll Revenue of the Motorway based on the Toll Structure set out in Schedule [ ] [Toll Structure], that would have been generated but for establishment of the Competing Route and/or non-imposition of the toll rates in accordance with Article 16.5(a), which projected Toll Revenue will be calculated based on the annual traffic growth trends observed in the five (5) years’ period preceding the year in which the need to compensate the Concessionaire pursuant to this Article 16.5(c) arises, against (b) the aggregate actual Toll Revenue collected, which difference shall be duly substantiated by the Concessionaire through a traffic and revenue study;

(c) in the event NHA fails, or is otherwise unable, to pay the monetary

compensation, then the Concessionaire shall be entitled to recover compensation in accordance with Article 29.20;

(d) that in the event NHA is not agreeable to Article 16.5(a), as the case may be, or is otherwise unable to comply with the same, fails to pay the monetary compensation in accordance with Article 16.5(b), and the Concessionaire does not elect to exercise the rights stipulated in Article 16.5(c) or despite exercise of such rights, the Concessionaire is not adequately compensated, then, at any time thereafter, at the Concessionaire’s option (i) the Parties shall negotiate in good faith with a view to agreeing upon such modification of this Agreement as shall adequately compensate the Concessionaire, or (ii) if the Concessionaire deems that a Material Adverse Effect has occurred, the Concessionaire shall be entitled to declare an NHA Event of Default in accordance with Article 24.1(b) whereupon the applicable sub-Articles of Articles 24 [Events of Default] and 25 [Termination and Termination Payment] shall apply.

16.6 Reduction in Toll Rates by the Concessionaire

(a) If, at the request of NHA and upon giving the Concessionaire two (2) Months

prior notice in writing, the Concessionaire is required to reduce the Toll rates or otherwise not to implement the Toll hike or Toll escalation in the manner set out in Schedule [ ] [Toll Structure], then monetary compensation shall be payable by NHA to the Concessionaire on account of such reduction or non-implementation, as the case may be, within fifteen (15) Days of certification of the said amount by the Joint Auditor. The Joint Auditor shall certify the amount due to the Concessionaire within fifteen (15) Days of a written request by the Concessionaire. The monetary compensation for the Operational Year concerned, to be deposited in the Project Collection Account and distributed in accordance with the terms of this Agreement, shall be in the sum calculated as the difference between (a) the aggregate Toll Revenue of the Motorway based on the Toll Structure set out in Schedule [ ] [Toll Structure] that would have been generated but for the reduction or non-escalation of Toll rates, against (b) the aggregate actual Toll Revenue collected based on the reduced or non-escalated Toll rates, which difference shall be duly substantiated by the Concessionaire through a traffic and revenue study.

(b) In the event NHA fails, or is otherwise unable, to pay the monetary compensation, then the Concessionaire shall be entitled to recover compensation in accordance with Article 29.20.

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(c) In the event NHA fails to pay the monetary compensation in accordance with Article 16.6(a), and the Concessionaire does not elect to exercise the rights stipulated in Article 16.6(b) or despite exercise of such rights, the Concessionaire is not adequately compensated, then, at any time thereafter, at the Concessionaire’s option (i) the Parties shall negotiate in good faith with a view to agreeing upon such modification of this Agreement as shall adequately compensate the Concessionaire, or (ii) if the Concessionaire deems that a Material Adverse Effect has occurred, the Concessionaire shall be entitled to declare an NHA Event of Default in accordance with Article 24.1(b) whereupon the applicable sub-Articles of Articles 24 [Events of Default] and 25 [Termination and Termination Payment] shall apply.

16.7 Sharing of Revenue

(a) The Concessionaire agrees with NHA that NHA shall be entitled to such

percentage (%) of the Toll Revenue generated from the Motorway, as specified in the Financial Model detailed in Schedule [ ] [Financial Model] and Schedule [ ] [NHA Revenue Share]. In addition, the Concessionaire shall share such portion of the Motorway Service Areas Revenue and the Other Revenue with NHA, as specified in the Financial Model Such percentage of the Toll Revenue, the Motorway Service Areas Revenue and the Other Revenue shall be paid by the Concessionaire to NHA within fifteen (15) Days of the close of each year of the Concession Period during which such share is due; provided, that in case of Termination of this Agreement, NHA shall be entitled to be paid the accrued share as determined by the Joint Auditor in writing.

(b) In the event the Concessionaire fails to pay to NHA the amount pursuant to Article 16.7(a), then NHA shall be entitled to recover such compensation in accordance with Article 29.20.

(c) In the event the Concessionaire fails to pay to NHA the amount pursuant to Article 16.7(a), and NHA does not elect to exercise the rights stipulated in Article 16.7(b) or despite exercise of such rights, NHA is not adequately compensated, then, at any time thereafter, if NHA deems that a Material Adverse Effect has occurred, NHA shall be entitled to declare a Concessionaire Event of Default in accordance with Article 24.1(a) whereupon the applicable sub-Articles of Articles 24 [Events of Default] and 25 [Termination and Termination Payment] shall apply.

16.8 O&M Manual

(a) The Concessionaire shall prepare and provide to NHA, three (3) hard-bound

sets of the O&M Manual prior to the COD. Upon the preparation and issuance of the O&M Manual, the Toll Operations Manual shall cease to have force and effect.

(b) The O&M Manual shall specify detailed instructions as per manufacturer’s requirements, and the steps and standard operating procedures that the Concessionaire shall take for carrying out the Toll operations, emergency services, routine maintenance, periodic maintenance and emergency maintenance, and the specifications and standards to be applied by the Concessionaire in undertaking the maintenance works. The Concessionaire shall ensure that the instructions, steps, standard operating procedures, specifications

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and standards are consistent with the Approved Detailed Design and the O&M Requirements.

16.9 Catalogues Concerning Spare Parts for Tolling and Safety Equipment

The Concessionaire shall prepare an information catalogue or lists concerning necessary spare parts for the machinery and equipment employed in the Project in accordance with Good Industry Practice, the O&M Requirements and the Laws of Pakistan.

16.10 Submission of Operation, Maintenance and Repair Instructions

The Concessionaire shall submit to the NHA Representative the final drawings, pamphlets, manuals and the operating and maintenance instructions related to the prescribed machinery and equipment employed for the Project at the time of transfer of the Project to NHA.

16.11 Inventory Management

The Concessionaire shall at all times keep an inventory of spare parts and other consumables for the machinery and equipment employed in accordance with Good Industry Practice and the O&M Manual.

16.12 Regulations

(a) The Concessionaire shall comply with all regulations, rules and orders made or issued under the Laws of Pakistan which are applicable generally to road networks such as the Motorway together with the NHA Manual (to the extent of being brought to the notice of the Concessionaire and consented to by the Concessionaire).

(b) NHA shall ensure, and procure that the GOP and/or the relevant Public Sector Entities shall ensure, that at all times there are adequate law enforcement services for the operation of the Project and the protection and safety of the public and the Project Assets, and that the concerned law enforcement personnel shall follow proper practice in enforcing the Laws of Pakistan and, save for any fine or penalty in accordance with the Laws of Pakistan, shall not impose any other charges. NHA, with the assistance of the GOP and/or the relevant Public Sector Entities, shall ensure that the law enforcement personnel shall not unlawfully hamper or hinder the Concessionaire in the performance of its obligations or the exercise of its rights pursuant to this Agreement or the users of the Motorway.

16.13 Operating Practice

(a) Except as otherwise specified by the Laws of Pakistan, the Concessionaire is authorized to refuse entry to vehicles in respect whereof no Toll has been paid.

(b) The Concessionaire shall have the right to weigh vehicles and inspect vehicles and their load in circumstances where there is a doubt about the vehicles’ compliance with regulations, rules and/or orders applicable to the Project.

(c) The Concessionaire shall be authorized to exercise similar authority as NHA exercises in respect of overloading of vehicles where the gross vehicle weight or any axle load exceeds the limits specified in the applicable Laws of Pakistan.

16.14 Accident Prevention/Safety

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Subject to the terms of this Agreement, the Concessionaire shall be responsible for accident prevention and safety of the Project. The Concessionaire shall ensure implementation of its accident prevention/safety policies and administration of the Concessionaire’s safety programme, including, accident prevention and safety procedures.

16.15 Alarm System

Fire and emergency alarm systems shall be implemented and coordinated by the Concessionaire at adequate location(s) at the Concession Area.

16.16 Services and Aids (a) The Concessionaire shall provide, at its own cost and expense, one emergency

telephone service as an aid to users of the Motorway.

(b) The Concessionaire shall provide breakdown/patrol services at reasonable costs to provide assistance to users of the Motorway in distress or during emergency.

16.17 Management Structure

The Concessionaire shall design a cost effective management structure to ensure that the Project shall operate in a harmonious manner through the O&M Manager and the O&M Contractor.

16.18 Communication The Concessionaire shall establish a state-of-the-art system of communication between management, staff, clients and customers.

16.19 Labour Employment of workers/labour/personnel for the Concessionaire shall be undertaken by the Concessionaire subject to such restrictions as may be imposed under the Laws of Pakistan.

16.20 Cleanliness The Concessionaire shall, during the Operations Phase, be responsible for the cleanliness and safe and reliable operation of the Motorway.

16.21 Temporary Take-Over of Operations by NHA

(a) NHA shall temporarily take-over the operations of the Motorway upon the written request of Concessionaire in case of emergencies that are of such nature and/or extent which require the intervention of NHA, including:

(i) emergencies occasioned by the occurrence of a Force Majeure Event,

which the Concessionaire is unable to cope with;

(ii) emergencies occasioned by political upheavals or disturbances;

(iii) emergencies created by acts or omissions constituting a criminal offence;

(iv) labour-related emergencies such as major labour strikes, lock-outs, pickets and stoppage of work; and

(v) such other emergencies which may be best addressed by NHA, the GOP and/or the relevant Public Sector Entities.

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(b) In making the request for the temporary take-over of the operations pursuant to Article 16.21(a) above, the Concessionaire shall identify the specific functions which are to be turned over to NHA. NHA shall return to the Concessionaire the identified functions turned over immediately upon receiving a notice from the Concessionaire upon the cessation of the emergency which occasioned the temporary take-over.

(c) In the event the Concessionaire fails to carry out the operations of the Motorway in accordance with the O&M Manual for a continuous period of fourteen (14) Days which is not occasioned by a Force Majeure Event, a Compensation Event, a Relief Event, Unforeseeable Conduct or any of the events as described under Article 16.21(a), NHA may by written notice require the Concessionaire to rectify the failure. If the Concessionaire, despite having received such notice, still fails to carry out its operation and maintenance obligations for a further continuous period of thirty (30) Days, NHA may at its own volition and upon written notice thereof to the Concessionaire, temporarily take-over from the Concessionaire those functions (other than the Concessionaire’s administrative and fiscal functions) which are necessary for the uninterrupted operations of the Motorway.

(d) The Concessionaire shall within ten (10) Days from the temporary take-over

pursuant to Article 16.21(c) above, make a request in writing expressing its readiness to resume those functions taken-over by NHA. NHA shall, upon reasonable certification and/or assurance to its satisfaction that the Concessionaire is in a position to resume control of the operations of the Motorway, immediately return to the Concessionaire those functions it has taken-over upon the receipt of such request, and in any event within fourteen (14) Days from the temporary take-over. A failure by the Concessionaire to make the request herein or the failure to resume control of the operations of the Motorway upon the cessation of the temporary take-over by NHA shall constitute a breach by the Concessionaire of its obligation with regard to the operations of the Motorway.

(e) In the event the Project Assets or any part thereof or the operations of

Motorway or any part thereof become the subject-matter of or are included in any notice, notification or declaration concerning or relating to acquisition, seizure or appropriation by the GOP or other Public Sector Entity in times of war, armed conflicts, hostilities or national emergency, NHA shall by written notice to the Concessionaire, be entitled to immediately take-over the operations of the Motorway. NHA shall, upon the cessation of the war, armed conflicts, hostilities or national emergency, return the operations of the Motorway to the Concessionaire. The Concession Period shall be suspended for the duration of the take-over by NHA. Where the Project Assets or the Motorway is subject to any loss or damage, NHA and the Concessionaire shall agree on the additional works to be undertaken by the Concessionaire to restore the Project Assets or the Motorway in a state which meets the Construction Performance Standards and the O&M Requirements, and the Concessionaire shall be entitled to payment of reasonable compensation by NHA, as verified by the Joint Auditor, for the costs and expenses of such restoration works and for the lost Revenues during the take-over period, such compensation being of an amount not less than the Debt service obligations of the Concessionaire which amount shall include interest/capitalized interest, penalty charges, mark-up, financing costs (where the take-over occurs at any time when the Concessionaire is still servicing its Debts for the Project); provided, however,

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that NHA’s liability for such compensation shall not be affected by any insurance in respect of the matters covered by this Article 16.21(e) which may be available to or availed by the Concessionaire.

(f) To the extent that for the duration of the temporary take-over by NHA under Articles 16.21(a) and 16.21(c), NHA is collecting the Toll Revenue and the other Revenues, NHA shall deposit the same in the Project Collection Account on a Daily basis. NHA shall be entitled to such compensation for the operation and maintenance expenses incurred by it for the duration of such temporary take-over, as certified by the Joint Auditor.

(g) Subject to Article 16.21(e), NHA shall be liable for any loss or damage to any of

the Project Assets (which is attributable to NHA during the period of temporary take-over) to the extent the same is not recoverable pursuant to the insurance policies procured and maintained in accordance with the terms of this Agreement.

16.22 Inspection

(a) During the Operations Phase, NHA shall have the right, to be exercised

through the Joint Auditor, to inspect the performance by the Concessionaire of its obligations and the Project Assets on an annual basis and the Concessionaire shall make all reasonable arrangements for the same.

(b) The Joint Auditor shall make a report of such inspection stating in reasonable detail the defects and deficiencies, if any, in the Concessionaire’s compliance with its obligations pursuant to this Agreement and/or the Project Assets with particular reference to the O&M Manual.

(c) The Joint Auditor shall, within seven (7) Days of the inspection, provide a copy of its inspection report to the Concessionaire and NHA.

(d) The Concessionaire hereby undertakes that, within such reasonable time period as specified in the Joint Auditor’s inspection report, it shall rectify and remedy the defects and deficiencies, if any, stated in the said inspection report, at its own cost and expense.

(e) The inspection or submission of the inspection report by the Joint Auditor shall not relieve or absolve the Concessionaire of its obligations and liabilities hereunder in any manner whatsoever.

(f) In addition to NHA’s right to inspect exercisable through the Joint Auditor as stipulated in Articles 16.22(a) to (e) above, NHA shall also have the right to inspect the Concession Area, throughout the Concession Period, either itself or through an independent third party duly authorized by NHA in writing; provided, that such inspection shall not in any way fetter, impede or obstruct the Concessionaire’s exercise of its rights and/or discharge of its obligations under this Agreement; provided, further, that if the objective of the said inspection is to measure the international roughness index (IRI) of the Motorway, such inspection shall not be carried out more than twice in any period of twelve (12) Months throughout the Concession Period.

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16.23 Operations Bond

(a) The Concessionaire shall, three (3) Months prior to the Project Completion Date, provide NHA with an unconditional, irrevocable and without recourse Operations Bond with a face amount equal to two per cent (2%) of the projected gross Revenues for the following Accounting Year of the Operations Phase. Such Operations Bond shall be submitted on an annual basis and kept valid throughout the Operations Phase.

(b) The Operations Bond shall secure all the Concessionaire’s obligations, liabilities, warranties, indemnities, representations, guarantees and responsibilities under this Agreement in relation to the operations and maintenance of the Project and all other works and services to be provided by the Concessionaire under this Agreement during the Operations Phase, including the integrity and quality of the Concessionaire’s and its Contractors’ workmanship, the timely and continuous performance of the works and services during the Operations Phase, the quality and quantity of the any equipment, materials, items and components supplied, the performance of the works and services during the Operations Phase by the Concessionaire and compliance of the same with the O&M Requirements, the O&M Manual and all other applicable standards set out in this Agreement and all other works and services to be provided by the Concessionaire during the Operations Phase.

(c) The Operations Bond may be in the form of (i) cash, (ii) a pay order or demand draft confirmed by a scheduled commercial bank having a branch in Islamabad, (iii) an unconditional, irrevocable and without recourse letter of credit from a scheduled commercial bank located in Pakistan or a country abroad acceptable to NHA and confirmed by a scheduled commercial bank having a branch in Islamabad, or (iv) a bank guarantee in the form specified in Appendix-5 to the RFP.

(d) The Operations Bond shall remain in full force and effect from the date of its issuance until the expiry of a period of twelve (12) Months from the date of its issue. Prior to expiry of an Operations Bond as aforesaid, it shall be replaced by another such Operations Bond in an amount, computed as aforesaid, for the next Operational Year. The Operations Bond shall continue to be replaced at one (1) Operational Year intervals as aforesaid until the Concession End Date (or the Termination Date, if earlier).

(g) The Concessionaire shall be entitled to assign all its rights, title and interests

under the Operations Bond to the Lenders as security for the Loan under the Financing Agreements.

16.24 No Breach

(a) The Concessionaire shall not be considered in breach of its obligations under

this Article 16 [Tolling, Revenues and O&M Arrangement] if any part of the Motorway is not available to traffic on account of any of the following for the duration thereof:

(i) a Force Majeure Event;

(ii) an NHA Event of Default;

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(iii) a Compensation Event;

(iv) a Relief Event;

(v) Unforeseeable Conduct;

(vi) measures taken to ensure the safe use of the Motorway except when unsafe conditions on the Motorway occurred because of failure of the Concessionaire to perform its obligations under this Agreement; or

(vii) compliance with a request from NHA or the directions of any

Governmental Agency or due to an action of a Public Sector Entity, the effect of which is to close all or any part of the Motorway;

Provided, however, that the Concessionaire shall keep all unaffected parts of the Motorway open to traffic and use if they can be safely operated and kept open to traffic.

(b) If a breach by the Concessionaire of its obligations under this Article 16 [Tolling, Revenues and O&M Arrangement] is continuing or repeated, has a serious effect on the benefit that NHA would have otherwise derived from this Agreement but for such breach, and constitutes a Material Breach by the Concessionaire pursuant to Article 24.1(a)(v), in such event, NHA shall be entitled to declare a Concessionaire Event of Default in accordance with Article 24.1(a) whereupon the applicable sub-Articles of Articles 24 [Events of Default] and 25 [Termination and Termination Payment] shall apply.

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17. RELIEF EVENTS, COMPENSATION EVENTS AND UNFORESEEABLE

DISCRIMINATORY GOVERNMENT CONDUCT 17.1 Relief Events

(a) “Relief Event” means and includes any of the following events, which could not reasonably be avoided by the Concessionaire acting in accordance with Good Industry Practice:

(i) any fire, explosion, tempest, adverse weather conditions, flood, ionizing

radiation, earthquakes, riots and civil commotion, or pressure waves caused by devices travelling at supersonic speed, to the extent the same do not constitute a Force Majeure Event;

(ii) any failure by NHA or any Public Sector Entity to carry out works or

provide services of a nature which have a direct bearing on performance by the Concessionaire of its obligations under this Agreement;

(iii) any accidental loss or damage to the Works and/or the Project Assets;

(iv) any off-site failure or shortage of power, fuel or transport;

(v) any blockade or embargo which does not constitute a Force Majeure Event;

(vi) the discovery of any heritage objects or resources that could not reasonably have been discovered by proper due diligence as contemplated in Article 3.1(b);

(vii) any official or unofficial strike, lockout, go slow or other such labour

disputes generally affecting the transport sector or a significant sector of it, unless any of the events listed in sub-Articles (i) to (vi) inclusive arises (directly or indirectly) as a result of any negligence, willful conduct or default of the Concessionaire or any Contractor.

(b) Consequences of a Relief Event

(i) If and to the extent that a Relief Event:

(A) causes a delay in the COD; and/or

(B) has a Material Adverse Effect on the ability of the Concessionaire to

perform any of its obligations under this Agreement, then the Concessionaire shall be entitled to apply for relief from any rights of NHA arising under Article 24 [Events of Default].

(ii) To obtain relief, the Concessionaire shall:

(A) as soon as practicable, and in any event within fifteen (15) Days after it

becomes aware that the Relief Event has caused or is likely to cause delay and/or have a Material Adverse Effect on the ability of the Concessionaire to perform its obligations pursuant to the terms of this Agreement, give to the Quality Assurance Inspector (during the

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Construction Phase) or the Joint Auditor (during the Operations Phase), as the case may be, a written notice of its claim for relief from its obligations under this Agreement, including, full details of the nature of the Relief Event, the date of occurrence and its likely duration;

(B) within ten (10) Days of receipt by the Quality Assurance Inspector or

the Joint Auditor, as the case may be, of the notice referred to in sub-Article (ii)(A) above, give full details of the relief claimed; and

(C) demonstrate to the reasonable satisfaction of the Quality Assurance

Inspector or the Joint Auditor, as the case may be, that:

(AA) the Concessionaire and its Contractors could not have avoided such occurrence or consequences by steps which they might reasonably be expected to have taken, without incurring material expenditure;

(BB) the Relief Event directly caused the delay to the COD or the

need for relief from other obligations under this Agreement;

(CC) the time lost and/or relief from the obligations under this Agreement claimed could not reasonably be expected to be mitigated or recovered by the Concessionaire acting in accordance with Good Industry Practice, without incurring material expenditure; and

(DD) the Concessionaire is using reasonable endeavours to perform

its obligations under this Agreement.

(iii) In the event that the Concessionaire has complied with its obligations under sub-Article (ii) above, then:

(A) the COD shall be postponed by the Delay Duration or such longer

period of time as shall be reasonable, in the opinion of the Quality Assurance Inspector or the Joint Auditor, as the case may be, for such a Relief Event, taking into account the likely effect of delay; and/or

(B) NHA shall not be entitled to exercise its rights to Terminate this

Agreement under Article 24 [Events of Default].

(iv) The Concessionaire shall notify the Quality Assurance Inspector or the Joint Auditor, as the case may be, with a copy to NHA, if at any time it receives or becomes aware of any further information relating to the Relief Event, giving details of that information to the extent that such information is new or renders information previously submitted materially inaccurate or misleading.

(v) In the event of a Relief Event stipulated in Article 17.1(a)(vi) that continues

for a period in excess of six (6) Months, the Parties shall meet in order to find a mutually satisfactory solution for dealing with such prolonged Relief Event.

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(vi) If the Parties cannot agree on the extent of the relief required, or NHA disagrees that a Relief Event has occurred or that the Concessionaire is entitled to any extension of the COD and/or other relief from its obligations under this Agreement, the Parties shall resolve the matter in accordance with Article 27 [Resolution of Disputes].

17.2 Compensation Events

(a) “Compensation Event” means and includes any of the following:

(i) the delayed delivery of

the Concession Area and/or grant of the Ancillary Rights as stated in Article 6.3 (but only if and so long as such breach or failure does not constitute an NHA Event of Default pursuant to the terms of this Agreement whereupon the Concessionaire elects to Terminate this Agreement);

(ii) interference with peaceful possession of the Concession Area and/or grant of the Ancillary Rights as stated in Article 6.4;

(iii) a Variation to the Approved Detailed Design pursuant to the request of

NHA in accordance with Article 11.4;

(iv) the delayed completion of the Works due to delay in the removal, relocation, diversion or reinstatement of Public Utilities, to the extent such removal, relocation, diversion or reinstatement is not carried out by the Concessionaire on behalf of NHA;

(v) if NHA or the Concessionaire refers a Dispute for resolution pursuant to

Article 13.4(f), a determination that the Premises Completion Certificate, the Certificate of Substantial Completion or the Certificate of Completion which is the subject matter of the Dispute was properly issued or wrongfully withheld by the Quality Assurance Inspector;

(vi) failure or inability of NHA to comply with Article 16.5(a) or Article 16.5(b); (vii) at the request of NHA, reduction in the Toll rates or non-implementation

of the Toll hike or Toll escalation in the manner set out in Schedule [ ] [Toll Structure] by the Concessionaire, as stated in Article 16.6;

(viii) temporary take-over of the operations of the Motorway by NHA in

accordance with Article 16.21;

(ix) Change in Law pursuant to Article 22 [Change in Law]; and

(x) any other event which, by the terms of this Agreement, is deemed to be a Compensation Event or in respect of which this Article is stated to be applicable.

(b) Consequences of a Compensation Event

(i) If, as a direct result of the occurrence of a Compensation Event:

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(A) the Concessionaire is unable to commence the commercial operations of the Motorway by the COD;

(B) the Concessionaire is unable to comply with its obligations under this Agreement; and/or

(C) the Concessionaire incurs additional costs or loses Revenues; then the Concessionaire is entitled to exercise the rights under such Articles of this Agreement, as correspond to and are relevant to such Compensation Event.

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18. BANK ACCOUNTS

18.1 Project Account

(a) Immediately after the Effective Date, the Concessionaire shall open, maintain and operate a Project Account. All contributions towards the Equity of the Concessionaire, the Shareholder Loans, if any, the disbursement of Debt by the Lenders under the Financing Agreements, as well as receipts from the Project Collection Account shall be credited to the Project Account. All expenditures made in furtherance of performance of its obligations by the Concessionaire under this Agreement shall be through such Project Account.

(b) From the time that the Project Account is established until the Concession End Date (or the Termination Date, if earlier), the Concessionaire shall maintain detailed records of the transactions in respect of the Project Account. The Concessionaire shall provide Monthly summaries of these transactions to the Joint Auditor. The Joint Auditor shall carry out audits of the Project Account bi-annually or at such other intervals as reasonably requested by NHA or the Concessionaire and submit its report to both NHA and the Concessionaire.

18.2 Project Collection Account

(a) By the Take-Over Date, the Concessionaire shall open, maintain and operate the Project Collection Account with a scheduled commercial bank for the purpose of, inter alia, collecting, depositing and disbursing the Toll Revenue, the Motorway Service Areas Revenue and the Other Revenue in accordance with the terms of this Agreement.

(b) From the time that the Project Collection Account is established until the

Concession End Date (or the Termination Date, if earlier), the Concessionaire shall maintain detailed records of the transactions in respect of the Project Collection Account. The Concessionaire shall provide Monthly summaries of these transactions to the Joint Auditor. The Joint Auditor shall carry out audits of the Project Collection Account bi-annually or at such other intervals as reasonably requested by NHA or the Concessionaire and submit its report to both NHA and the Concessionaire.

18.3 Project Maintenance Escrow Account

(a) Upon completion of the Construction Phase, the Concessionaire shall open,

operate and maintain a Project Maintenance Escrow Account with a scheduled commercial bank for the purpose of maintenance of the Project Assets. Every Month or after such period as deemed necessary by the Concessionaire, the Concessionaire shall transfer to the Project Maintenance Escrow Account from the Project Collection Account such amount required to cater for routine maintenance works as specified in the O&M Manual. If, at any time during the Operations Phase, the money held/deposited in the Project Maintenance Escrow Account should fall below the said threshold, the Concessionaire shall forthwith deposit such further money therein from the Project Collection Account as may be required to cover the shortfall.

(b) From the time that the Project Maintenance Escrow Account is established till the Concession End Date (or the Termination Date, if earlier), the

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Concessionaire shall maintain detailed records of the payments made into the Project Maintenance Escrow Account and the disbursements made therefrom. The Concessionaire shall provide Monthly summaries of these transactions to the Joint Auditor. The Joint Auditor shall carry out audits of the Project Maintenance Escrow Account bi-annually or at such other intervals as reasonably requested by NHA or the Concessionaire and submit its report to both NHA and the Concessionaire.

18.4 Other Bank Accounts

The Concessionaire shall open, operate and maintain such other bank accounts as may be required by the Lenders and set out in the Financing Agreements. In the event of conflict between this Article 18 [Bank Accounts] and the Financing Agreements, the Financing Agreements shall prevail.

18.5 Encumbrance Over Bank Accounts

During the period the Debt remains outstanding to the Lenders under the Financing Agreements, the Concessionaire may create an Encumbrance over the Project Account, the Project Collection Account, the Project Maintenance Escrow Account and any other bank account established pursuant to the terms of this Agreement as security for pre-payment and payment obligation to the Lenders.

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19. INSURANCE 19.1 Takaful or Insurance During the Construction Phase

(a) The Concessionaire shall, at its own cost and expense, procure and maintain at

all times from takaful or insurance companies with at least a AA rating such takaful or insurance as is necessary, including, the following in accordance with the minimum amounts specified in Schedule [ ] [Insurance Cover]:

(i) a contractor’s all risks policy for the full value of the Works to include

cover for all goods, equipment, materials, plants and other items necessary for the Works including when they are in transit to the Concession Area;

(ii) comprehensive third party liability insurance, including, against injury or death to personnel or representatives or natural Persons that may enter the Concession Area;

(iii) cover for any damage to the Works, in part or whole, caused by the Concessionaire’s vehicles, tools, equipment or personnel;

(iv) workmen’s compensation insurance as required under the Laws of Pakistan;

(v) any other cover that may be necessary for the Works including against such Force Majeure Events that are insurable in accordance with the norms of the industry; and

(vi) cash-in-transit insurance to cover movement of the Toll Revenue at the Toll Plazas (and the Administrative Office once completed), and the deposit thereof into the Project Collection Account.

(b) The takaful or insurance cover referred to in Article 19.1(a) shall commence on

or prior to the Works Commencement Date and shall continue till the Project Completion Date. The Concessionaire shall be named the loss payee, jointly with the security agent on behalf of the Lenders, in the policy of takaful or insurance.

19.2 Takaful or Insurance During the Operations Phase

(a) The Concessionaire shall, at its own cost and expense, procure and maintain takaful or insurance from takaful or insurance companies with at least a AA rating as necessary, including, the following in accordance with the minimum amounts specified in Schedule [ ] [Insurance Cover]:

(i) cover for any damage to the Project Assets (excluding Existing Project

Assets), in part or whole, as shall be prudent to insure against having regard to the practice of the industry;

(ii) comprehensive third party liability insurance, including, against injury or death to personnel or representatives or natural Persons for each incident (the number of the incidents to be unlimited);

(iii) workmen’s compensation insurance as required under the Laws of Pakistan;

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(iv) any other cover that may be necessary, including, against such Force

Majeure Events that are insurable in accordance to the norms of the industry; and

(v) cash-in-transit insurance to cover movement of the Toll Revenue at the Toll Plazas (and the Administrative Office once completed), and the deposit thereof into the Project Collection Account.

(b) The takaful or insurance cover referred to in Article 19.2(a) shall commence on

the COD and shall continue till the Concession End Date (or the Termination Date, if earlier). The Concessionaire shall be named the loss payee, jointly with the security agent on behalf of the Lenders so long as any Debt remains outstanding, in the policy of takaful or insurance, whereafter the Concessionaire shall be the sole loss payee.

19.3 General Provisions

(a) The Concessionaire shall, upon receipt of the duly executed policies of takaful

or insurance, provide to NHA with one (1) copy each of all such policies within fifteen (15) Days.

(b) The Concessionaire shall be liable for any cost deficiency should any insurance proceeds be insufficient to cover the necessary repair and or restoration works, or the cost of replacement as the case may be; provided, however, that any excess of the said insurance proceeds shall inure to the exclusive benefit of the Concessionaire.

(c) If any risk which has been insured becomes uninsurable due to the fact that the

insurers have ceased to insure that risk, and the takaful or insurance cannot be maintained or reinstated in respect to such risk, the Concessionaire shall not be in a breach of its obligation regarding insurance under this Agreement.

(d) Any takaful and or insured sums received and/or obtained by the

Concessionaire from the takaful and/or insurance companies pursuant to the takaful and or insurance policy(ies), shall not absolve any Party of any obligations and/or liabilities that may have accrued under this Agreement or any other agreement entered into by the Concessionaire for the purposes of implementing the Project.

19.4 Validity of Insurance

The Concessionaire shall, from time to time, promptly pay all insurance premiums, keep the insurance policies in force and valid throughout the Construction Phase or, as the case may be, the Operations Phase and furnish one (1) copy each thereof to NHA. Each insurance policy shall provide that the same shall not be cancelled or terminated unless ten (10) Days clear notice of cancellation is provided to NHA in writing. If at any time, the Concessionaire fails to obtain or maintain in full force and effect any and all of the insurance required under this Agreement, NHA may at its option obtain and maintain such insurance and all sums incurred by NHA in relation thereto shall be reimbursed by the Concessionaire to NHA within fourteen (14) Days from the receipt of claim in respect thereof made by NHA (to the extent the same relates to the insurance during the Construction Phase) or otherwise settle with the Concessionaire as deemed fit.

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19.5 Application of Insurance Proceeds

Subject to the terms of the Financing Agreements and unless otherwise provided herein, the proceeds of all insurance policies received shall be promptly applied by the Concessionaire towards repair, renovation, restoration or re-instatement of the Project Assets or any part thereof which may have been damaged or destroyed. The Concessionaire shall carry out such repair, renovation, restoration or re-instatement, to the fullest extent possible, and in such manner that the Project Assets, after such repair, renovation, restoration or re-instatement be as far as possible in the same condition as they were prior to such damage or destruction, normal wear and tear excepted.

19.6 Waivers/Exemptions

(a) All takaful/insurance covers taken under this Article 19 [Insurance] shall include a

waiver of any right of subrogation of the insurers therein against, inter alia, the Concessionaire and its Contractors, employees, successors, permitted assigns, insurers and underwriters and of any right of the insurers of any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of any such Person insured under any such policy.

(b) NHA hereby releases and waives any and all rights of recovery against, inter alia, the Concessionaire and its Contractors, employees, successors, permitted assigns, insurers and underwriters, which NHA may otherwise have or acquire in or from or in any way connected with any loss covered by policies of insurance (other than third party liability insurance policies) maintained or required to be maintained by the Concessionaire pursuant to this Agreement, or because of deductible clauses in or inadequacy of limits of any such takaful/insurance covers.

(c) NHA shall facilitate the Concessionaire in procurement of exemptions under

Section 166 of the Insurance Ordinance, 2000, if applicable. (d) Subject to Article 19.6, if the Debt repayment obligations remain outstanding,

the Lenders and the Concessionaire shall be the joint beneficiaries of all takaful/insurance covers taken by the Concessionaire.

19.7 Total Loss

Upon the occurrence of an Event of Loss, NHA may elect to issue a Termination Notice, whereupon this Agreement shall be deemed Terminated. Any proceeds from takaful or insurance received by the Concessionaire shall constitute part payment of the Termination Payment payable by NHA to the Concessionaire and in the event there is an excess of monies after making of the Termination Payment, the same shall be disbursed to NHA.

19.8 Savings

Neither failure to comply nor full compliance with this Article 19 [Insurance] shall relieve the Concessionaire of its liabilities and obligations under this Agreement, and in particular the Concessionaire’s obligation to hold NHA harmless in compliance with any indemnity provisions contained in this Agreement.

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20. INDEMNITIES 20.1 No Waiver of Indemnity

Except as provided in Article 20.2, neither Party shall be liable to the other Party in contract, tort, warranty, strict liability or any other legal theory for any indirect, consequential, incidental, punitive, or exemplary damages. Neither Party shall have any liability to the other Party except pursuant to, or for breach of, this Agreement; provided, however, that this provision is not intended to constitute a waiver of any rights of one Party against the other with regard to matters unrelated to this Agreement or to any activity not contemplated by this Agreement.

20.2 Indemnity

(a) Indemnity by the Concessionaire: The Concessionaire shall expeditiously

defend and indemnify NHA and its officers and employees against and hold NHA and its officers and employees harmless, at all times after the Effective Date, from any and all losses incurred, suffered, sustained, or required to be paid, directly or indirectly, by, or sought to be imposed upon, NHA and its officers or employees for personal injury or death to natural Persons or damage to property arising out of the negligent or intentional act or omission of the Concessionaire in connection with this Agreement.

(b) Indemnity by NHA: NHA shall expeditiously defend and indemnify the

Concessionaire and its directors, officers and employees against, and hold the Concessionaire and its directors, officers and employees harmless at all times after the date of this Agreement, from any and all losses incurred, suffered, sustained, or required to be paid, directly or indirectly, by, or sought to be imposed upon, the Concessionaire and its respective directors, officers and employees for personal injury or death to natural Persons or damage to property arising out of the negligent or international act or omission of NHA in connection with this Agreement.

(c) Third Party Claim: In the event that either Party receives a claim from a

third party in respect of which it is entitled to the benefit of any indemnity under this Article 20.2 (“Indemnified Party”) it shall notify the other Party (“Indemnifying Party”) within fourteen (14) Days of receipt of the claim and shall not settle or pay the claim without the prior approval of Indemnifying Party; provided, however, that such approval shall not to be unreasonably withheld, conditioned or delayed. In the event that the Indemnifying Party wishes to contest or dispute the claim, it may conduct the proceedings in the name of the Indemnified Party, subject to the Indemnified Party being secured against any costs involved to its reasonable satisfaction.

(d) Defence of Claim:

(i) The Indemnified Party shall have the right, but not the obligation, to contest, defend and litigate any claim, action, suit or proceeding by any third party alleged or asserted against such Party in respect of, resulting from, related to or arising out of any matter for which it is entitled to be indemnified hereunder and its reasonable costs and expenses shall be indemnified by the Indemnifying Party. If the Indemnifying Party acknowledges in writing its obligation to indemnify the Person

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indemnified in respect of loss to the full extent provided by this Article 20.2, the Indemnifying Party shall be entitled, at its option, to assume and control the defence of such claim, action, suit or other proceedings, liabilities, payments and obligations, at its expense and through counsel of its choice; provided, it gives prompt notice of its intention to do so to the Indemnified Party and reimburses the Indemnified Party for the reasonable costs and expenses incurred by the Indemnified Party prior to the assumption by the Indemnifying Party of such defence. The Indemnifying Party shall not be entitled to settle or compromise any claim, action, suit or proceeding without the prior written consent of the Indemnified Party, unless the Indemnifying Party provides such security to the Indemnified Party as shall be reasonably required by the Indemnified Party to secure the loss to be indemnified hereunder to the extent so compromised or settled.

(ii) If the Indemnifying Party has exercised its rights under Article 20.2(c) above, the Indemnified Party shall not be entitled to settle or compromise any claim, action, suit or proceeding without the prior written consent of the Indemnifying Party (which consent shall not be unreasonable withheld, conditioned or delayed).

(iii) If the Indemnifying Party exercises its rights under Article 20.2(c) above, then the Indemnified Party shall nevertheless have the right to employ its own counsel and such counsel may participate in such action, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party when and as incurred, unless:

(A) the employment of counsel by such Party has been authorized

in writing by the Indemnifying Party;

(B) the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in the conduct of the defence of such action;

(C) the Indemnifying Party shall not in fact have employed independent counsel reasonably satisfactory to the Indemnified Party to assume the defence of such action, and shall have been so notified by the Indemnified Party; or

(D) the Indemnified Party shall have reasonably concluded and specifically notified the Indemnifying Party either:

(AA) that there may be specific defences available to it which

are different from or additional to those available to the Indemnifying Party; or

(BB) that such claim, action, suit or proceeding involves or

could have a Material Adverse Effect upon it beyond the scope of this Agreement.

provided that if sub-Articles (B), (C) or (D) of Article 20.2(d)(iii) shall be applicable, the counsel for the Indemnified Party shall have the right to direct the defence of such claim, action, suit or proceeding on behalf

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of the Indemnified Party and the reasonable fee and disbursements of such counsel shall constitute legal or other expenses reimbursable by the Indemnifying Party to the Indemnified Party under this Agreement.

(e) Other Indemnity

(i) Without limiting the generality of Article 20.2, the Concessionaire shall

fully indemnify, save harmless and defend NHA including its officers and employees from and against any and all loss and damages arising out of or with respect to failure of the Concessionaire to (A) comply with the Laws of Pakistan, (B) make payments of taxes relating to the Concessionaire’s, Contractors’, suppliers’ and representatives’ income or other taxes required to be paid by the Concessionaire without reimbursement hereunder, or (C) pay amounts due as a result of materials or services furnished to the Concessionaire or any of its Contractors which are payable by the Concessionaire or any of its Contractors.

(ii) Without limiting the generality of Article 20.2, the Concessionaire shall fully indemnify, save harmless and defend NHA from and against any and all damages which NHA may hereafter suffer, or pay by reason of any demands, claims, suits or proceedings arising out of claims of infringement of any domestic or foreign patent rights, copyrights or other intellectual property, proprietary or confidentiality rights with respect to any materials, information, design or process used by the Concessionaire or by the Concessionaire’s Contractors in performing the Concessionaire’s obligations or in any way incorporated in or related to the Project. If, in any such suit, claim or proceedings, a temporary restraint order or temporary injunction is granted, the Concessionaire shall make every reasonable effort, by giving a satisfactory bond or otherwise, to secure the suspension of the injunction or the restraint order. If, in any suit, claim or proceedings, the Project or any part thereof comprised therein is held to constitute an infringement and its use is permanently injuncted, the Concessionaire shall promptly make every reasonable effort to secure for NHA a licence, at no cost to NHA, authorizing the continued use of the infringing work. If the Concessionaire is unable to secure such licence within a reasonable time, the Concessionaire shall, at its own cost and expense and without impairing the requirements and standards under this Agreement, either replace the affected work, or part, or process thereof with non-infringing work or parts or process, or modify the same so that it becomes non-infringing.

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21. ASSIGNMENT, SECURITY AND PUBLIC LISTING

21.1 Assignment

No assignment or transfer by a Party of this Agreement or such Party’s rights or obligations hereunder shall be effective without the prior written consent of the other Party, except as provided in this Agreement.

21.2 Creation of Security

Notwithstanding the provisions of Article 21.1, for the purpose of financing the Project, in connection with the Financial Close, the Concessionaire may assign pursuant to the Financing Agreements to, or create a security interest in favour of, the Lenders in the Concessionaire’s rights and interests under or pursuant to inter alia (a) this Agreement, (b) any agreement or document included within or contemplated by this Agreement, (c) the Project Assets (excluding the Existing Project Assets), (d) the present and future movable, immovable, and intellectual property of the Concessionaire, (e) the bonds submitted by the Concessionaire to NHA pursuant to the terms of this Agreement, (f) the present and future Revenues or any of the rights or assets or actionable claims of or debts owed to, the Concessionaire, and (g) any other present or future interest, right, property or asset of the Concessionaire of any kind and wherever situated.

21.3 Listing and Trading of Shares

(a) The Parties hereby agree that, to the extent permitted by the Laws of Pakistan,

the Concessionaire may, at an appropriate stage during the Concession Period, make an application to the stock exchanges of Pakistan, or any of them, or to one or more foreign stock exchange, for the listing and trading of the shares of the Concessionaire thereon, and to this end undertake all necessary acts and things whatsoever, including, converting the status of the Concessionaire from a private limited company to a public limited company.

(b) Prior to making any such application, the Parties shall agree to any amendments to this Agreement as may be required by the Concessionaire or the relevant stock exchange(s) and shall make public any relevant information as may be required by the relevant stock exchange(s).

(c) Notwithstanding Articles 21.3(a) and 21.3(b), during the Concession Period the

Concessionaire shall ensure that a change shall not occur in its ownership structure without the prior Approval of NHA which results in a Change of Control, which Approval shall not be unreasonably withheld, conditioned or delayed.

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22. CHANGE IN LAW

22.1 Interpretation

(a) For purposes of this Agreement, Change in Law shall be construed as the

occurrence or coming into force of any of the following, after the Effective Date:

(i) the adoption, promulgation, modification or reinterpretation after the

Effective Date by any Public Sector Entity of any of the Laws of Pakistan (including a decision of a Public Sector Entity after the Effective Date which amends or conflicts with the Laws of Pakistan established or in effect as at the Effective Date);

(ii) the imposition by any Public Sector Entity of any condition in connection with the issuance, renewal, extension, replacement or modification of any Consent after the Effective Date, that establishes requirements for development, designing, engineering, financing, construction, Commissioning, management, insuring, operation, maintenance or transfer of the Motorway and the Project Assets that are materially more restrictive than the most restrictive or onerous requirements (A) in effect on the Effective Date; (B) specified in any application, or other documents filed in connection with such applications for any Consent filed by the Concessionaire; or (C) agreed to by the Concessionaire in the Financing Agreements;

(iii) the repeal, modification or re-enactment of any of the Laws of Pakistan;

(iv) a change in the interpretation or application of any of the Laws of Pakistan by a Court; and

(v) any change in the rates of any of the taxes; (b) Change in Law shall not include:

(i) the coming into effect, after the Effective Date, of any provision of a

statute which is already in place as of the Effective Date; or

(ii) any new legislation or any change in the existing legislation under the active consideration of or in the contemplation of any Public Sector Entity as of the Effective Date, which is a matter of public knowledge.

(c) Subject to the terms of this Agreement, the Parties agree that the matters set out

in Schedule [ ] [Financial Model] in respect of the Financial Model, are to the best of their knowledge the present interpretation or application of the Laws of Pakistan, and any change in the interpretation or application thereof shall be construed as a Change in Law for purposes of this Agreement.

22.2 Negative Impact of Change in Law

(a) If as a result of Change in Law, the Concessionaire suffers an increase in costs,

reduction in net after tax return or other financial burden, the aggregate financial effect of which exceeds Rupees Ten Million (PKR 10,000,000/-) in

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any Accounting Year, the Concessionaire may notify NHA and the Joint Auditor of the following:

(i) the nature and the impact of the Change in Law on the Project;

(ii) in sufficient detail, the estimate of the additional costs likely to be

incurred by the Concessionaire on account of the Change in Law;

(iii) proposed amendments to this Agreement so as to put the Concessionaire in the same financial position as it would have occupied had there been no such Change in Law resulting in an increase in costs, reduction in net after tax return or other financial burden as aforesaid; and

(iv) the measures, which the Concessionaire has taken or proposes to take to mitigate the impact of the Change in Law, including, in particular, minimizing the additional costs.

(b) The Joint Auditor shall review the notification of the Concessionaire, and issue

a determination and/or certification as to the (i) increase in costs, reduction in net after tax return or other financial burden to be suffered by the Concessionaire on account of the Change in Law and the additional costs, and (ii) proposed amendments to this Agreement so as to put the Concessionaire in the same financial position as it would have occupied had there been no such Change in Law resulting in such increased cost, reduction in return or other financial burden as aforesaid.

(c) Upon the determination and/or certification of the Joint Auditor as aforesaid, the Parties shall meet as soon as reasonably practicable and either agree on the amendments to this Agreement proposed by the Joint Auditor or on alternative arrangements to implement the foregoing; provided, that if no agreement is reached as aforesaid between the Parties within ninety (90) Days of the meeting pursuant to this Article 22.2(c), the Concessionaire may by notice in writing require NHA to pay the additional costs certified by the Joint Auditor pursuant to Article 22.2(b) that would put the Concessionaire in the same financial position it would have occupied had there been no such Change in Law resulting in such increased cost, reduction in return or other financial burden as aforesaid. NHA shall make such payment within fifteen (15) Days of receiving such notice. If NHA shall Dispute such claim of the Concessionaire, the same shall be finally settled in accordance with Article 27 [Resolution of Disputes].

22.3 Positive Impact of Change in Law

(a) If as a result of Change in Law, the Concessionaire enjoys a reduction in costs,

increase in net after tax return or other financial benefit, the aggregate financial effect of which exceeds Rupees Ten Million (PKR 10,000,000/-) in any Accounting Year, the Concessionaire shall share such information with NHA within ninety (90) Days of the close of the Accounting Year, and NHA may notify the Concessionaire and the Joint Auditor of the following:

(i) the nature and the impact of the Change in Law on the Project;

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(ii) in sufficient detail, the estimate of the likely reduction in costs, increase in net after tax return or other financial benefit to be enjoyed by the Concessionaire on account of the Change in Law; and

(iii) proposed amendments to this Agreement so as to put the Concessionaire in the same financial position as it would have occupied had there been no such Change in Law resulting in such decreased cost, increase in return or other financial benefit as aforesaid.

(b) The Joint Auditor shall review the notification of NHA, and issue a

determination and/or certification as to the (i) reduction in costs, increase in net after tax return or other financial benefit to be enjoyed by the Concessionaire on account of the Change in Law, and (ii) proposed amendments to this Agreement so as to put the Concessionaire in the same financial position as it would have occupied had there been no such Change in Law resulting in such decreased cost, increase in return or other financial benefit as aforesaid.

(c) Upon the determination and/or certification of the Joint Auditor as aforesaid,

the Parties shall meet as soon as reasonably practicable and either agree on the amendments to this Agreement proposed by the Joint Auditor or on alternative arrangements to implement the foregoing; provided, that if no agreement is reached as aforesaid between the Parties within ninety (90) Days of the meeting pursuant to this Article 22.3(c), NHA may by notice in writing require the Concessionaire to pay the amount certified by the Joint Auditor pursuant to Article 22.3(b) that would put the Concessionaire in the same financial position it would have occupied had there been no such Change in Law resulting in such decreased cost, increase in return or other financial benefit as aforesaid. The Concessionaire shall make such payment within fifteen (15) Days of receiving such notice. If the Concessionaire shall Dispute such claim of NHA, the same shall be finally settled in accordance with Article 27 [Resolution of Disputes].

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23. FORCE MAJEURE

23.1 Interpretation

(a) For purposes of this Agreement, a Force Majeure Event shall mean the occurrence in Pakistan of a Non-Political Event, a Political Event or an Indirect Political Event, as defined in Articles 23.1(b), (c) and (d), respectively (and includes the impact or consequence thereof), which is beyond the reasonable control of the Affected Party, and the occurrence whereof could not have been reasonably foreseen on the Effective Date by exercise of due diligence and which makes performance and discharge of the obligations of the Affected Party under this Agreement impossible or impractical.

(b) A Non-Political Event shall mean one or more of the following acts or events

which makes it impossible or impractical for the Concessionaire to perform any of its obligations for a continuous period of not less than two (2) weeks from the date of its occurrence:

(i) major earthquake, unusual flood, inundation, landslide;

(ii) storm, tempest, hurricane, cyclone, lightening, thunder or other extreme

atmospheric disturbances;

(iii) fire caused by reasons not attributable to the Concessionaire or NHA or any of the representatives of the Concessionaire or NHA; or

(iv) disruption in the procurement of raw materials for the Works. (c) A Political Event shall mean any event, including, the following, which makes it

illegal, impossible or impractical for the Concessionaire to perform its obligations:

(i) Change in Law;

(ii) an action of the GOP, NHA or a Public Sector Entity having a

Material Adverse Effect; or

(iii) an action of the GOP, NHA or a Public Sector Entity of expropriation, nationalization or compulsory acquisition or take-over of the Project Assets or any part thereof (other than in accordance with Article 16.21(a)) or of the Concessionaire’s rights under this Agreement;

Provided, however, that a Change in Law which materially increases the cost of undertaking the Project (for which no relief is provided under the terms of Article 22 [Change in Law]) shall be deemed to be a Political Event.

(d) An Indirect Political Event shall mean any of the following which makes it

impossible for the Concessionaire to perform any of its obligations for a continuous period of not less than two (2) weeks from the date of its occurrence:

(i) ionizing radiation, serious epidemics, contamination by radioactivity

from nuclear fuel, any nuclear waste or radioactive toxic explosion;

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(ii) strikes, boycotts, labour disruptions or any other industrial disturbance

not arising on account of the acts or omissions of the Concessionaire;

(iii) war, hostilities (whether war be declared or not), acts of terrorism, rebellion, riots or ethnic violence, civil commotion, unrest, disruption civil war or armed conflicts or state of emergency; or

(iv) invasion, act of foreign enemy, conflict with weapons or military actions.

23.2 Mitigation Measures

NHA and the Concessionaire acknowledge their mutual interest to direct, to the extent possible, their decisions as a consequence of a Force Majeure Event towards the completion of the Works and the continued operation of the Project for the full duration of the Concession Period in accordance with the terms of this Agreement, and shall to this end formulate damage mitigation measures in accordance with Article 23.3(b)(iii).

23.3 Obligation to Notify

(a) As soon as practicable and in any case within one (1) Month of the date of

occurrence of a Force Majeure Event or the date of knowledge thereof, the Affected Party shall notify the other Party of the Force Majeure Event setting out inter alia the following in reasonable detail:

(i) the nature and extent of the Force Majeure Event;

(ii) the estimated Force Majeure Period;

(iii) the nature of and the extent to which, performance of any of its

obligations under this Agreement is affected by the Force Majeure Event;

(iv) the measures which the Affected Party has taken or proposes to take to alleviate or mitigate the impact of the Force Majeure Event and to resume performance of such of its obligations as are affected thereby; and

(v) other relevant information concerning the Force Majeure Event and/or

the rights and obligations of the Parties under this Agreement. (b) As soon as practicable and in any case within seven (7) Days of notification by

the Affected Party in accordance with the preceding Article 23.3(a), the Parties shall meet, hold discussions in good faith and where necessary conduct physical inspection/survey of the Project in order to:

(i) assess the impact of the underlying Force Majeure Event;

(ii) determine the likely duration of the Force Majeure Period;

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(iii) formulate damage mitigation measures and steps to be undertaken by the Parties for resumption of obligations the performance of which shall has been affected by the underlying Force Majeure Event.

(c) The Affected Party shall, during the Force Majeure Period, provide to the other

Party with regular (not less than weekly) reports concerning the matters set out in the preceding Article 23.3(b) and also any information, details or documents which the other Party may reasonably require.

(d) Notwithstanding the terms of this Article 23.3, the Concessionaire is entitled to issue a Termination Notice forthwith upon the occurrence of an event set out in Article 23.1(c)(iii), in which case the applicable sub-Articles of Article 25 [Termination and Termination Payment] shall apply.

23.4 Performance of Obligations

If the Affected Party is rendered wholly or partially unable to perform any of its obligations under this Agreement because of a Force Majeure Event, it shall be excused from performance of such obligation to the extent it is unable to perform the same on account of such Force Majeure Event; provided, however, that: (a) the excuse from performance shall be of no greater scope and of no longer

duration than is necessitated by the Force Majeure Event;

(b) the Affected Party shall make all reasonable efforts to mitigate or limit damage, if any, caused or likely to be caused to the Project Assets as a result of the Force Majeure Event and to restore the Project Assets, in accordance with Good Industry Practice and its relative obligations under this Agreement;

(c) the Affected Party shall take all remedial measures, including, duly prosecuting

and exhausting all such remedies available to the Affected Party under the Laws of Pakistan;

(d) when the Affected Party is able to resume performance of its obligations under

this Agreement, it shall give to the other Party written notice to that effect and shall promptly resume performance of its obligations hereunder;

(e) the Affected Party shall continue to perform such obligations which are not

affected by the Force Majeure Event and which are capable of being performed in accordance with this Agreement.

23.5 Termination occasioned by Force Majeure

(a) If a Force Majeure Event, which is a Non-Political Event or an Indirect Political

Event, continues or is in the reasonable judgment of the Parties likely to continue beyond a period of six (6) Months, the Parties may mutually decide to Terminate this Agreement or continue this Agreement on mutually agreed revised terms. If the Parties are unable to reach an agreement in this regard, either Party shall, after expiry of the said period of six (6) Months, be entitled to Terminate this Agreement.

(b) If a Force Majeure Event, which is a Political Event, continues or is in the

reasonable judgment of the Parties likely to continue beyond a period of six (6) Months, either Party shall be entitled to Terminate this Agreement.

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(c) If either Party, having become entitled to Terminate this Agreement pursuant

Articles 23.5(a) or (b), so decides to Terminate this Agreement, it shall issue a Termination Notice setting out:

(i) in sufficient detail the underlying Force Majeure Event;

(ii) the Termination Date which shall, other than in respect of an event

specified in Article 23.3(d), be a date occurring not earlier than sixty (60) Days from the date of the Termination Notice;

(iii) the estimated Termination Payment, including, details of computation thereof; and

(iv) any other relevant information.

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24. EVENTS OF DEFAULT

24.1 Interpretation

(a) Any of the following events shall, subject to the terms of this Agreement,

constitute a Concessionaire Event of Default:

(i) the Concessionaire fails to achieve Financial Close within the time period specified in Article 9.4;

(ii) after achieving Financial Close, the Concessionaire has not commenced the Works for a continuous period exceeding ninety (90) Days without justifiable cause;

(iii) after the commencement of the Works, the Concessionaire has Abandoned the Works;

(iv) any representations made or warranties given by the Concessionaire under this Agreement are found to be false or misleading in a material aspect;

(v) continuing or repeated Material Breach by the Concessionaire of any of its obligations under this Agreement;

(vi) at any time during the Concession Period a change occurs in the ownership structure of the Concessionaire without the prior Approval of NHA which results in a Change of Control;

(vii) a resolution has been passed or a petition for winding-up of the Concessionaire has been admitted and a liquidator or provisional liquidator has been appointed or the Concessionaire has been ordered to be wound up by a Court (except for the purpose of amalgamation or reconstruction with the prior consent of NHA as a consequence of which the property, assets and undertaking of the Concessionaire are transferred to the amalgamated or reconstructed entity and the amalgamated or reconstructed entity has unconditionally assumed the obligations of the Concessionaire under this Agreement and the other agreements entered into pursuant hereto);

(viii) default has occurred under any of the Financing Agreements which default has or shall have a Material Adverse Effect on the Concessionaire, and which default is not occasioned by a default by NHA;

(ix) the Concessionaire has Abandoned the Project Assets;

(x) the Concessionaire has repudiated this Agreement or has otherwise expressed an intention not to be bound by this Agreement; or

(xi) the Concessionaire has suffered an attachment levied on any of its assets which results in a Material Adverse Effect on the Project and such attachment has continued for a period exceeding six (6) Months.

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(b) Any of the following events shall, subject to the terms of this Agreement, constitute an NHA Event of Default:

(i) subject to this Agreement, NHA is in breach of any of its obligations

under this Agreement, and NHA has failed to cure such breach within thirty (30) Days of receipt of notice thereof issued by the Concessionaire;

(ii) any representations made or warranties given by NHA under this Agreement have been found to be false or misleading in a material aspect;

(iii) NHA takes any action, administrative, political or legislative in nature, that is in derogation of the terms of this Agreement and has the consequence of suspending or terminating or changing the terms of this Agreement to the detriment of Concessionaire;

(iv) NHA obstructs the Concessionaire for undertaking any of its obligations or exercising any of its rights pursuant to this Agreement;

(v) NHA fails to make available or cause to be made available to the Concessionaire the Vacant Possession of the Concession Area and the Additional Lands, if required, free from any Encumbrance, together with the Ancillary Rights within the time period stipulated in this Agreement;

(vi) NHA interrupts, interferes, suspends or takes over the right of the Concessionaire to operate the Project Assets, including, the right to collect the Toll Revenue, the Motorway Service Areas Revenue and/or the Other Revenue during the Concession Period, except in accordance with the terms of this Agreement;

(vii) NHA fails facilitate the Concessionaire to adjust the Tolls as per the Toll escalation procedures set out in Schedule [ ] [Toll Structure];

(viii) NHA has repudiated or has otherwise expressed an intention not to be bound by this Agreement.

24.2 Termination Occasioned by a Concessionaire Event of Default

(a) Upon the occurrence of a Concessionaire Event of Default, NHA shall serve a Default Notice to the Concessionaire declaring the Concessionaire Event of Default, and giving the Concessionaire a period of thirty (30) Days within which to initiate the relevant action to remedy the breach or default and a further reasonable period of not less than sixty (60) Days to complete the said action to the satisfaction of NHA.

(b) If no satisfactory action is initiated by the Concessionaire after the lapse of thirty (30) Days, then NHA shall be entitled to Terminate this Agreement, and NHA may issue a Termination Notice to the Concessionaire indicating the effective Termination Date (which date shall in no case be earlier than three (3) Months from date of the Termination Notice).

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(c) The issuance of the Default Notice or the Termination Notice by NHA occasioned by a Concessionaire Event of Default shall not prejudice any other right or remedy that NHA may have against the Concessionaire under this Agreement or by law, including, on account of any antecedent breach of any obligation of the Concessionaire.

(d) If, upon the occurrence of a Concessionaire Event of Default, NHA decides not to issue the Default Notice or (after having issued the Default Notice) NHA decides not to issue the Termination Notice, NHA shall notify the Concessionaire of its decision, but the same shall not prejudice any of NHA’s rights to any remedy that it may have under this Agreement, the law and/or equity nor prejudice its right to re-issue a Default Notice at a later date if it so decides, in which case this Article 24 [Events of Default] shall apply mutatis mutandis.

24.3 Termination Occasioned by an NHA Event of Default

(a) Upon the occurrence of an NHA Event of Default, the Concessionaire shall

serve a Default Notice to NHA declaring an NHA Event of Default and giving NHA a period of thirty (30) Days within which to initiate the relevant action to remedy the breach or default and a further reasonable period of not less than sixty (60) Days to complete the said action to the satisfaction of the Concessionaire.

(b) If no satisfactory action is initiated by NHA after the lapse of thirty (30) Days, then the Concessionaire shall be entitled to Terminate this Agreement, and the Concessionaire may issue a Termination Notice to NHA indicating the effective Termination Date (which shall in no case be earlier than three (3) Months from the date of the Termination Notice).

(c) The issuance of the Default Notice or the Termination Notice by the

Concessionaire occasioned by an NHA Event of Default shall not prejudice any other right or remedy that the Concessionaire may have against NHA under this Agreement or by law, including, on account of any antecedent breach of any obligation of NHA.

(d) If, upon the occurrence of an NHA Event of Default, the Concessionaire

decides not to issue the Default Notice or (after having issued the Default Notice) the Concessionaire decides not to issue the Termination Notice, the Concessionaire shall notify NHA of its decision, but the same shall not prejudice any of the Concessionaire’s rights to any remedy that it may have under this Agreement, the law and/or equity nor prejudice its right to re-issue a Default Notice at a later date if it so decides, in which case this Article 24 [Events of Default] shall apply mutatis mutandis.

24.4 Termination Notice

If a Party, having become entitled to do so, decides to Terminate this Agreement pursuant to the preceding Articles 24.2 or 24.3, it shall issue a Termination Notice setting out: (a) in sufficient detail the underlying Event of Default;

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(b) the Termination Date which shall be a date occurring not earlier than three (3) Months from the date of the Termination Notice;

(c) the estimated Termination Payment, including, details of the computation

thereof; and (d) any other relevant information.

24.5 Withdrawal of Default Notice

Notwithstanding anything inconsistent contained in this Agreement, if the Party who has been served with the Default Notice subsequently cures the underlying Event of Default within the time period specified herein or within such other time period as specified by the Party serving the Default Notice, to the satisfaction of the Party who issued the Default Notice, the Default Notice shall be withdrawn by the Party which had issued the same; provided, however, that the Party in breach shall compensate the other Party for any direct costs or consequences occasioned by the underlying Event of Default which caused the issue of the Default Notice, which shall be determined by the Quality Assurance Inspector if the underlying Event of Default occurs during the Construction Phase and the Joint Auditor if the underlying Event of Default occurs during the Operations Phase.

24.6 Termination Notice Final

The Termination Notice, once issued, is irrevocable, and upon the issuance thereof this Agreement shall stand determined, and the terms of Article 25 [Termination and Termination Payment] shall apply.

25. TERMINATION AND TERMINATION PAYMENT

25.1 Expiry of Concession Period

(a) This Agreement shall, unless otherwise Terminated prior to the Concession End Date, stand concluded on the Day following the Concession End Date. On the Day following the Concession End Date, the Concessionaire shall:

(i) transfer the ownership rights to the Project Assets to NHA, at its own

cost and expense, free from any Encumbrance, for a consideration of Rupee One (PKR 1); and

(ii) the Concessionaire shall (A) cease to operate and maintain the Project Assets (including the Toll collection operations at the Motorway), (B) completely remove from the Concession Area all its workmen, employees, servants, agents and Contractors, (C) handover physical possession of the Project Assets to NHA, and (D) vest with NHA all assets, rights and entitlements which have been transferred or conveyed by NHA to the Concessionaire under this Agreement.

(b) If there remain any sums payable by NHA to the Concessionaire, the

Concessionaire shall submit any such claims (together with relevant supporting evidence thereof) to NHA and the Joint Auditor within fifteen (15) Days from the Concession End Date, and subject to the presentment of such claims and

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the verification thereof by the Joint Auditor, NHA shall make payment of such claims within seven (7) Days thereafter.

25.2 Termination Event

(a) Upon the issuance of the Termination Notice, the Parties shall promptly take all

such steps which are necessary or required to enable:

(i) the Parties to discharge their respective obligations to the fullest extent possible, so as to maintain the continuity of service to the users of the Motorway until the Termination Date;

(ii) the Termination Payment and all other amounts payable by NHA to the Concessionaire pursuant to the terms of this Agreement, if any, to be paid by the Termination Date; and

(iii) the Works or the Project Assets to be handed over to NHA on the Termination Date free from any Encumbrance.

(b) On the Termination Date, the Concessionaire shall:

(i) if the Concessionaire is undertaking Toll collection operations at the

Toll Plazas (A) to the extent permissible, transfer to NHA all staff and employees engaged in the Toll collection operations, at the option of NHA, subject to the said personnel agreeing to such transfer, and (B) handover the Toll collection operations to NHA; or

(ii) if the Termination Date is prior to Financial Close (A) transfer all its rights and interests in the Detailed Design to NHA, and (B) vacate the Concession Area completely; or

(iii) if the Termination Date is after Financial Close and prior to the Project Completion Date (A) transfer all of its rights and interests in the Detailed Design and the Works to NHA, (B) cease all Works in or at the Concession Area, remove from the Concession Area all its workmen, employees, servants, agents, and Contractors, and (C) vacate the Concession Area completely; or

(iv) if the Termination Date is after the Project Completion Date (A) transfer all of its rights and interests in the Detailed Design, and (B) transfer the ownership rights to the Project Assets to NHA at its own cost and expense, free from any Encumbrance, for a nominal consideration of Rupee One (PKR 1); and

(v) hand-over to NHA the Project Assets; and

(vi) if the Termination Date is after the Project Completion Date (A) cease the activities relating to the operations and maintenance of the Project Assets (including the Toll collection operations at the Motorway), (B) remove from the Concession Area all its workmen, employees, servants, agents and Contractors, (C) handover physical possession of the Concession Area to NHA, (D) vest with NHA all assets, rights and entitlements which have been transferred or conveyed by NHA to the Concessionaire, and (E) vacate the Concession Area completely.

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(c) After fulfillment of the requirements stipulated in Article 25.2(b), NHA shall,

have the power and authority to:

(i) enter upon and take possession and control of the Project Assets forthwith;

(ii) prohibit the Concessionaire and any Person claiming through or under the Concessionaire from entering upon the Concession Area and/or dealing with the Concession Area;

(iii) step-in and succeed upon election by NHA without the necessity of any further action by the Concessionaire, to the interests of the Concessionaire under such of the agreements/contracts entered into pursuant to this Agreement, as NHA may in its discretion deem appropriate with effect from the date of communication of such election to the other counterparty to the relative agreement/contract entered into pursuant hereto; provided, however, that any sums claimed by such counterparty as being due and owing for work and services performed or accruing on account of any act, omission, or event prior to such date of election shall and shall always constitute debt between the Concessionaire and such counterparty and NHA shall in no way or manner be liable or responsible for such sums. The Concessionaire shall ensure that the agreements/contracts entered into pursuant hereto contain terms necessary to give effect to the terms of this Article 25.2(c);

Notwithstanding anything contained in this Agreement and subject to mutual agreement of NHA and the Concessionaire, NHA shall not, as a consequence of Termination, have any obligation whatsoever to compensate for a loss of employment, continuance or regularization of employment, absorption or re-employment on any ground, in relation to any Person in the employment of or engaged by the Concessionaire in connection with the Project.

(d) In the event the Termination Payment is not received by the Concessionaire by

the Termination Date, all costs, including, interest (including capitalized and accrued interest), mark-up, penalty charges and financing/funding costs shall continue to accrue against NHA until full and final settlement of the Termination Payment.

25.3 Termination Payment

(a) In the event of Termination of this Agreement, NHA shall pay to the

Concessionaire the following Termination Payment:

(i) Non-Political Event

(A) the Debt Due; (B) the Shareholder Loans; (C) the Equity Compensation; and (D) the Contractors Costs; less, the Deductible Amounts

(ii) Political Event

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(A) the Debt Due; (B) the Shareholder Loans; (C) the Equity Compensation; and (D) the Contractors Costs; less, the Deductible Amounts

(iii) Indirect Political Event

(A) the Debt Due; (B) the Shareholder Loans; (C) the Equity Compensation; and (D) the Contractors Costs; less, the Deductible Amounts

(iv) Concessionaire Event of Default

(A) the Debt Due; (B) the Shareholder Loans; (C) the Equity Compensation; and (D) the Contractors Costs; less, the Deductible Amounts

(v) NHA Event of Default

(A) the Debt Due; (B) the Shareholder Loans; (C) the Equity Compensation; and (D) the Contractors Costs; less, the Deductible Amounts

Provided, that in case of a Concessionaire Event of Default resulting in Termination of this Agreement prior to achievement of Financial Close, the Financial Close Bond submitted by the Concessionaire shall be forfeited by NHA pursuant to Article 9.2(b) above and NHA shall not be liable to make any Termination Payment to the Concessionaire.

(b) Computation of Termination Payment: For purposes of ascertaining the components of the Termination Payment, the Concessionaire shall submit supporting evidence of such relevant costs and expenses to the Joint Auditor who shall verify the amount payable to the Concessionaire. The verified amount(s) shall (save for any manifest error) be adopted for purposes of the determination of the Termination Payment due to the Concessionaire. The Party intending to issue the Termination Notice shall compute the Termination Payment in accordance with this Article 25.3 and provide a copy of the computation thereof to the Joint Auditor for verification. The Joint Auditor shall verify the same within three (3) Days thereof, and the verified amount shall (save for any manifest error) constitute the Termination Payment payable by NHA to the Concessionaire and shall be binding on both the Parties.

(c) Insurance Proceeds: In the event the Concessionaire receives any insurance proceeds, (to the extent the same are not already applied to rectify or to make good any of the Project Assets in accordance with this Agreement), the Concessionaire shall hold the sum thereof for the account of NHA, and apply the same towards part payment of the Termination Payment on the Termination Date. In the event the said proceeds (after any application thereof in accordance with this Agreement) are in excess of the Termination Payment, the Concessionaire shall retain such excess sum.

25.4 Rights and Liabilities upon Expiration or Earlier Termination

Subject to the terms of this Agreement, the expiry or the earlier Termination of this Agreement pursuant to any terms of this Agreement:

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(a) shall be without prejudice to accrued rights of either Party including its right to claim and recover such other money damages and other rights and remedies, which it may have in law or equity or pursuant to the terms of this Agreement. The rights and obligations of each Party under this Agreement, including, those relating to the Termination Payment and all other amounts payable by either Party to the other Party, shall survive the Termination but only to the extent that such survival is necessary for giving effect to such rights and obligations, or for the recovery of any such sums owed; and

(b) shall not affect the liability of any Party for any of its acts or omissions during the Concession Period and each such Party shall thereafter continue to be so liable and shall keep each affected Party indemnified and held harmless in respect of any claims arising therefrom.

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26. HANDBACK 26.1 Handback Requirements

The Concessionaire shall ensure that, on the Concession End Date or the Termination Date, as the case may be, each element of the Project Assets shall comply with the Handback Requirements set out in Schedule [ ] [Handback Requirements].

26.2 Transfer Bond

(a) Eight (8) Months prior to the Concession End Date or immediately upon but

not later than thirty (30) Days from the date of issuance of the Termination Notice (to the extent such Termination Notice is served after the Project Completion Date), the Concessionaire shall submit to NHA the Transfer Bond with a face amount equivalent to two per cent (2%) of the Total Project Cost.

(b) The Transfer Bond shall secure all the Concessionaire’s obligations, liabilities, warranties, indemnities, representations, guarantees and responsibilities under this Agreement in relation to ensuring that the Project Assets comply with the Handback Requirements on the Transfer Date.

(c) The Transfer Bond may be in the form of (a) cash, (b) a pay order or demand draft confirmed by a scheduled commercial bank having a branch in Islamabad, (c) an unconditional, irrevocable and without recourse letter of credit from a scheduled commercial bank located in Pakistan or a country abroad acceptable to NHA and confirmed by a scheduled commercial bank having a branch in Islamabad, or (d) a bank guaranteed in the form specified in Appendix-5 to the RFP.

(d) The Transfer Bond shall remain in full force and effect from the date of its issuance until the Transfer Date. NHA shall return the Transfer Bond to the Concessionaire by the Transfer Date, failing which it shall be deemed to have been cancelled.

26.3 Handback

(a) At least twenty four (24) Months prior to the Concession End Date, or in the event of early Termination of this Agreement, immediately upon but not later than thirty (30) Days from the date of issuance of the Termination Notice (to the extent such Termination Notice is served after the Project Completion Date), the Independent Consultant shall verify, in the presence of the Concessionaire Representative and the NHA Representative, compliance by the Concessionaire with the Handback Requirements set out in Schedule [ ] [Handback Requirements] in relation to the Project Assets and, if required, cause appropriate tests to be carried out at for determining the compliance therewith, the cost thereof to be shared jointly by NHA and the Concessionaire. If any shortcomings in the Handback Requirements are found by the Independent Consultant, the Independent Consultant shall, within fifteen (15) Days of such inspection, prepare and furnish to the Concessionaire a list of works, if any, to be carried out. The Concessionaire shall immediately thereafter, at its own cost and expense, undertake and complete such works at least two (2) Months prior to the Concession End Date, or in the event of early Termination of this Agreement, by the Termination Date, and also ensure that the Project Assets

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continue to meet the Handback Requirements until the same are transferred to NHA.

(b) Upon the Concessionaire conforming to all the Handback Requirements and

handing over actual or constructive possession of the Project Assets to NHA, the Independent Consultant shall issue the Handback Certificate to the Concessionaire in the form attached hereto as Schedule [ ] [Form of Handback Certificate], certifying that the Project Assets comply with the Handback Requirements, which shall have the effect of constituting evidence of divestment of all rights and title in the Project Assets by the Concessionaire and vesting thereof in NHA. Issuance of the Handback Certificate shall not be unreasonably withheld or delayed by the Independent Consultant.

(c) NHA shall be entitled to encash the Transfer Bond if the Concessionaire fails to ensure that the Project Assets comply with the Handback Requirements in accordance with the terms of this Agreement; provided, that any excess amount after defraying the costs and expenses to ensure that the Project Assets comply with the Handback Requirements shall be refunded by NHA to the Concessionaire forthwith.

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27. RESOLUTION OF DISPUTES 27.1 Amicable Resolution

(a) Save where expressly stated to the contrary in this Agreement, any dispute, difference or controversy of whatever nature between the Parties, howsoever arising under, out of or in relation to this Agreement, including, any question regarding its existence, validity or Termination or disputes, if any, with regard to any acts, decision or opinion of the Quality Assurance Inspector, the Joint Auditor and/or the Independent Consultant and so notified in writing by either Party to the other (“Dispute”), shall in the first instance be attempted to be resolved amicably in accordance with the procedure set forth in Article 27.1(b) below.

(b) Any Party may require such Dispute to be referred to the Chairman of NHA and the Chief Executive Officer of the Concessionaire then in office, for amicable settlement. Upon such reference, the two (2) shall meet at their earliest mutual convenience and in any event within fifteen (15) Days of such reference to discuss and attempt to amicably resolve the Dispute.

(c) If the Dispute is not amicably settled within fifteen (15) Days of such meeting

between the two or if the two have not met during the time specified in Article 27.1(b), and the matter relates to the audit, computations, determinations, certificates or reports issued by the Quality Assurance Inspector, the Joint Auditor or the Independent Consultant pursuant to the terms of this Agreement or the issuance of the Premises Completion Certificate, the Sectional Completion Certificate, the Certificate of Substantial Completion, the Incomplete Works List or the Certificate of Completion, either Party may refer the Dispute to resolution via expert determination pursuant to Article 27.2.

(d) If the Dispute relates to other matters not covered in Article 27.1(c) and is not

amicably settled within fifteen (15) Days of the aforesaid meeting between the Chairman of NHA and the Chief Executive Officer of the Concessionaire or if the two have not met during the time specified in Article 27.1(b), either Party may refer the Dispute to arbitration in accordance with Article 27.3.

27.2 Expert Determination

(a) For purposes of resolution of a Dispute under Article 27.1(c), NHA and the

Concessionaire shall jointly establish a Panel of Experts within sixty (60) Days of the Effective Date. The Panel of Experts shall be appointed in the following manner:

(i) all the Experts on the Panel of Experts shall be wholly independent of

either the Quality Assurance Inspector, the Joint Auditor, the Independent Consultant, NHA or the Concessionaire, and any of their major competitors;

(ii) the Panel of Experts shall comprise of three (3) Experts. The NHA Representative and the Concessionaire Representative shall each appoint one (1) Expert within thirty (30) Days of the Effective Date, and the two (2) appointed Experts shall then consult with each other and appoint the third Expert within fifteen (15) Days of the date of

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appointment of the second Expert, keeping the criteria at Article 27.2(a)(i) in mind;

(iii) in the event the two (2) Experts duly appointed by the Concessionaire Representative and the NHA Representative are unable to appoint the third Expert within the prescribed period, the Joint Auditor shall appoint such Expert within fifteen (15) Days of any application for such appointment by either the NHA Representative or the Concessionaire Representative;

(iv) in the event either the NHA Representative or the Concessionaire Representative fails or refuses to appoint an Expert pursuant to Article 27.2(a)(ii), then the appointed Expert shall appoint the two (2) remaining Experts within thirty (30) Days of the appointment thereof, keeping the criteria at Article 27.2(a)(i) in mind, after consultation with the Representative failing to appoint an Expert;

(v) if any Expert on the Panel of Experts resigns or is otherwise unable to continue as such during the Concession Period, a replacement Expert shall be appointed jointly by the NHA Representative and the Concessionaire Representative as soon as practicable, and in any event within thirty (30) Days of the Day on which the Expert discontinues his membership on the Panel of Experts. In the event the NHA Representative and the Concessionaire Representative are not able to agree and jointly appoint the replacement Expert, then the remaining Experts on the Panel of Experts shall consult with each other and promptly appoint the third Expert, keeping the criteria at Article 27.2(a)(i) in mind; provided, that in the event the two (2) remaining Experts are not able to appoint the third Expert, the Joint Auditor shall appoint such Expert within thirty (30) Days of any application for such appointment by either the NHA Representative or the Concessionaire Representative.

(b) Either Party may refer the resolution of the Dispute to the Panel of Experts by

issuing a notice to that effect (“Expert Reference Notice”).

(c) Within fifteen (15) Days of receipt of the Expert Reference Notice, each of the disputing Parties shall submit their respective arguments in respect of the Dispute to the Panel of Experts in writing. The Panel of Experts shall, in its absolute direction, consider whether a hearing is necessary in order to resolve the Dispute. The Panel of Experts shall in any event provide to both the disputing Parties with its written decision on the Dispute within fifteen (15) Days of Expert Reference Notice (or such longer period as mutually agreed upon by the disputing Parties). The Panel of Experts shall state the reasons for its decision, and the disputing Parties shall forthwith give effect to the decision.

(d) Each disputing Party shall bear its own costs arising out of the reference, including, legal costs and the costs and expenses of any witnesses, while the Panel of Experts’ costs shall be borne as the Panel of Experts shall specify or, in default, equally by the disputing Parties.

(e) If within thirty (30) Days of the Panel of Experts’ decision, a disputing Party is not satisfied with the decision of the Panel of Experts, that disputing Party may, after due consultation with the NHA Representative and the Concessionaire

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Representative, refer the Dispute to arbitration in accordance with Article 27.3 below.

27.3 Arbitration

(a) Subject to the terms of Article 27.1, any Dispute which is not resolved amicably or any Dispute upon which the Panel of Experts has given its decision in accordance with Article 27.2 with which a disputing Party is not satisfied and is accordingly referred to arbitration, shall be finally settled by binding arbitration. The language of the arbitration shall be English. Arbitration as aforesaid shall be a condition precedent to any other action under law.

(b) The arbitration shall be conducted by three (3) arbitrators. The Concessionaire

and NHA shall appoint one arbitrator each within three (3) weeks of reference of the Dispute to arbitration, whilst the third arbitrator shall be appointed by the two appointed arbitrators within a period of a further three (3) weeks. In the event either the Concessionaire or NHA fails to appoint an arbitrator within the prescribed period, the appointed arbitrator shall appoint two (2) other arbitrators for this purpose, after consultation with the Party failing to appoint an arbitrator, and the appointment thereof shall be binding on both the Parties.

(c) The arbitration shall be conducted in accordance with the Pakistani Arbitration

Act, 1940, as amended or substituted from time to time and the venue for arbitration shall be Islamabad, Pakistan.

(d) The decision of the arbitrators shall be final and binding. Unless otherwise

provided herein and except as awarded by the arbitrators, each Party shall be responsible for its own costs incurred by it in connection with an arbitral proceeding hereunder.

(e) Pending the submission of and/or decision on a Dispute and until the arbitral award is published; the Parties shall continue to perform their respective obligations under this Agreement without prejudice to a final adjustment in accordance with such award.

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28. PROVISION OF DOCUMENTS 28.1 Documents

The Concessionaire shall submit to NHA, such number of copies as specified in this Agreement, of the following documents on or before the dates specified herein:

(a) the Design Proposal of the Works, within two (2) Months of the Effective Date,

and all components of the Detailed Design, no later than eight (8) weeks prior to the Works Commencement Date;

(b) the Financing Agreements within two (2) weeks after the execution of the same by the Concessionaire and upon receipt of the same from the Lenders, and in respect of the Equity financing of the Concessionaire, the name of each Shareholder holding more than five percent (5%) of the paid-up capital of the Concessionaire and the total shares held or subscribed, as the case may be, by such Shareholder, within fifteen (15) Days of the Appointed Date;

(c) at least fifteen (15) Days before the Appointed Date (i) the EPC Contract(s) or other form of contract(s) as executed for the Project, together with all amendments thereto executed on or before the Appointed Date and all schedules thereto, (ii) a complete set of signed and scale final plans and specifications for the construction and equipping of the Motorway, and (iii) the Financial Model;

(d) as soon as available but in no event later than the COD, the proposed schedule for the manufacture and supply of traffic control, Toll collection and communications equipment for the Project;

(e) on or before the Works Commencement Date, the contractor’s all risks policy pursuant to Article 19.1(a)(i);

(f) beginning from thirty (30) Days of the Effective Date till the Project Completion Date, Monthly progress reports in the format mutually agreed upon between the Concessionaire and NHA; and

(g) all other insurance policies specified in Article 19 [Insurance] within the time period specified therein.

28.2 Copy of Drawings

(a) The Concessionaire shall ensure that NHA is provided with a complete set of as-built drawings and final right of way drawings and one (1) soft copy in compact disk form with the Approved as-built drawings within three (3) Months from the COD. Such drawings shall become the property of NHA.

(b) All costs incurred in the preparation of the as-built drawings and final right of way drawings shall be borne by the Concessionaire.

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29. MISCELLANEOUS 29.1 Variations in Writing

This Agreement may be varied or amended only by the mutual consent of the Parties. All such variations and amendments shall be binding only if they are in writing and are signed by duly authorized representatives of the Parties.

29.2 Waivers

(a) No waiver by either Party of any default by the other in the performance of any of the provisions of this Agreement: (i) shall operate or be construed as a waiver of any other or further default

whether of a like or different character; or (ii) shall be effective unless in writing and duly executed by an authorized

representative of such Party.

(b) The failure by either Party to insist on any occasion upon the performance of the terms, conditions and provisions of this Agreement or time or other indulgence granted by one Party to the other shall not thereby act as a waiver of such breach or acceptance of any variation.

29.3 Compliance with Government Rules and Regulations

Except as expressly provided in this Agreement, the Concessionaire shall, during the Concession Period, strictly comply with the Laws of Pakistan and policies, guidelines, rules and regulations promulgated thereunder, and the same shall be read into and made an integral part of this Agreement.

29.4 Headings; Grammatical Usage; Names

Words in the singular number are deemed to include the plural, if the context so requires, and the plural shall similarly include the singular. Where the Public Sector Entity or any of them are named in this Agreement, the name used is deemed to include any successor entity in the event the name is changed or the relevant functions are transferred to the successor entity.

29.5 Mutual Trust

In entering into this Agreement, the Parties recognize that it is impracticable to make provision for every contingency that may arise in the course of performance hereof. Accordingly, the Parties hereby declare it to be their intention that this Agreement shall operate between them with fairness and without detriment to the interest of either of them. If in the course of performance of this Agreement, a particular circumstance or event occurs which is not otherwise covered by this Agreement, then the Parties shall use their best endeavors to agree upon such action as may be necessary and equitable to address the same.

29.6 Non-Relinquishment or Non-Waiver of Rights

The failure of any Party to this Agreement to insist upon strict performance of any of the terms, conditions and covenants hereof shall not be deemed a relinquishment or waiver of any right or remedy that either Party may have, nor shall it be construed as a waiver of any subsequent breach or default of the terms, conditions or covenants

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herein contained, which shall be deemed to be in full force and effect. No waiver of any right by either Party shall be deemed to have been made unless expressed in writing and signed by both the Parties.

29.7 Severability If for any reason whatsoever, any term of this Agreement is or becomes invalid, illegal or unenforceable or is declared by any Court or any other instrumentality to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining terms shall not be affected in any manner, and the Parties shall negotiate in good faith with a view to agreeing upon one or more terms which may be substituted for such invalid, unenforceable or illegal provisions, as nearly as is practicable to the original term; provided, however, that the failure to agree upon any such terms shall not be subject to dispute resolution under this Agreement or otherwise.

29.8 Consultation on Modifications to this Agreement

If the Concessionaire advises NHA that any amendments, modifications or revisions to this Agreement are necessary or desirable to satisfy requirements of the Lenders and the shareholders of the Concessionaire, NHA and the Concessionaire shall promptly consult as to any mutually acceptable action necessary or desirable under the circumstances and negotiate in good faith with a view toward amending, modifying and revising this Agreement in a mutually satisfactory manner.

29.9 Special Warranty The Concessionaire hereby warrants that it has not given or promised any consideration to any official of NHA or any other Public Sector Entity in order to obtain award of the Project and execution of this Agreement, and that the execution of this Agreement shall not result, directly or indirectly, in violation of the anti-corruption Laws of Pakistan.

29.10 Cutting of Trees or Logging

Subject to the Laws of Pakistan, the Concessionaire may, with the prior Approval of NHA, cut down or remove trees or timber grown on or make any use of forested lands comprised in the Concession Area or the NHA Adjacent Areas for purposes of generation of Revenue or for any other purpose deemed fit by the Concessionaire.

29.11 Intellectual Property

(a) Design and Other Data

Subject to the terms of this Agreement, the Concessionaire shall make available to NHA all materials, documents and data of any nature (including the Approved Design Proposal, the Approved Detailed Design and the O&M Manual) acquired or brought into existence in any manner whatsoever by the Concessionaire for the purposes of the design or construction of the Works, and/or the operation, maintenance, rehabilitation or improvement of the Project Assets and the Concession Area, which might reasonably be required by NHA for the purposes of exercising rights or carrying out duties under this Agreement or carrying out any statutory or other duty or function.

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(b) Licences

(i) Subject to the terms of this Agreement, the Concessionaire shall grant

to NHA a perpetual, unrestricted, transferable and assignable, non-exclusive, worldwide, irrevocable and non-terminable royalty-free licence to use for any purpose relating to the design or construction of the Works and/or the operation, maintenance, rehabilitation or improvement of the Project Assets and the Concession Area, all and any Intellectual Property which is or becomes vested in the Concessionaire during the Concession Phase for any purpose relating to the design or construction of the Works and/or the operation, maintenance, rehabilitation or improvement of the Project Assets and the Concession Area and to make any alterations, adaptations or additions to the Approved Design Proposal, the Approved Detailed Design and the O&M Manual which is or becomes vested in the Concessionaire.

(ii) Subject to the terms of this Agreement, NHA shall grant to the

Concessionaire a non-transferable, nonexclusive, royalty-free licence to use (during the Concession Period only) all and any Intellectual Property which is or becomes vested in NHA for any purpose relating to the design or construction of the Works and/or the operation, maintenance, rehabilitation or improvement of the Project Assets and the Concession Area.

(iii) NHA shall, acting reasonably, upon receipt of a written request from

the Concessionaire grant to the Concessionaire a non-transferable, non-exclusive, royalty-free licence to use the designated name, logo, trademarks and official marks of NHA during the Concession Period only. NHA may at any time by notice to the Concessionaire add any name, logo, trademark or official mark to those already in effect at the relevant time during the Concession Period; whereafter the Concessionaire shall have a non-transferable, non-exclusive, royalty-free licence to use the same.

(c) Computerized Data

To the extent that any of the data, materials and documents referred to in Article 29.11(a) are generated by or maintained on a computer or in any other machine readable format, the Concessionaire shall use its best endeavours to obtain for the benefit of NHA the grant of a licence or sub-licence for and/or supply of any relevant software or database, if required by NHA, at such charge and on such terms and conditions as agreed upon between NHA and the owner of the relevant software or database, to enable NHA and its respective employees, agents, contractors, subcontractors and other nominees to access and otherwise use such data for the purposes set out in this Agreement or, following its Termination, for the purposes of the design or construction of the Works and/or the operation, maintenance, rehabilitation or improvement of the Project Assets and the Concession Area.

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29.12 Environment

The Concessionaire shall keep the Concession Area in a safe condition and in compliance with the environmental requirements and mitigation measures specified in the environmental compliance certificate issued in respect of the Project and otherwise in accordance with the Laws of Pakistan.

29.13 Confidentiality

(a) Each Party undertakes that it shall not:

(i) use Confidential Information of the other Party; (ii) disclose such Confidential Information to any Person; (iii) allow or make it possible for any Person to observe Confidential

Information; or

(iv) disclose the terms of this Agreement to any Person who is not a Party hereto;

except for the purpose for which the Confidential Information was given to the Disclosing Party, (ii) with the prior approval of the Party whose Confidential Information it is, or (iii) as permitted by this Article 29.13.

(b) Subject to Article 29.13(c), a Party (each such Party, a “Disclosing Party”) may

disclose Confidential Information of another Party:

(i) to an Associate of the Disclosing Party if necessary for the reporting purposes;

(ii) to employees, officers and agents of the Disclosing Party whose duties in relation to the Disclosing Party require the disclosure;

(iii) to the Lenders (and the professional advisers thereof) in connection with any Loan or other financial accommodation sought to be arranged by the Disclosing Party or an Associate thereof;

(iv) to professional advisers (including legal advisers) and consultants of the Disclosing Party whose duties in relation to the Disclosing Party require the disclosure; and

(v) if and to the extent required by the Laws of Pakistan, but only after the Disclosing Party has consulted with the other Party and has taken all practical legal steps to prevent the need to make the disclosure.

provided, that the Disclosing Party shall ensure that the Persons mentioned in Articles 29.13(b)(iii) and 29.13(b)(iv) above are under an obligation, substantially the same as set forth in this Article 29.13, not to disclose the Confidential Information disclosed thereto. Any breach by such Persons of any obligation with regard to Confidential Information shall be deemed to be a breach of this

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Article 29.13 by the Disclosing Party that disclosed such Confidential Information.

(c) Each Disclosing Party shall use its best endeavors to procure that each entity

under its control and each of its and their employees, officers or agents to whom Confidential Information is or has been disclosed or by whom that Confidential Information has been observed (each of whom is in referred to as a “Controlled Party Disclosee”) shall not improperly disclose or improperly use any of that Confidential Information contrary to the requirements of this Article 29.13, either during or after the termination of the Controlled Party Disclosee’s employment, office or agency with the Disclosing Party or, in case of a legal entity, after such legal entity ceases to be controlled by the Disclosing Party. Any breach by a Controlled Party Disclosee of any obligation with regard to Confidential Information shall be deemed to be a breach of this Article 29.13 by the Disclosing Party that disclosed such Confidential Information.

29.14 Language All communication between the Parties shall be conducted in the English language and all

notices, if in any other language, shall be accompanied by a duly certified translation in English. In the event of a conflict between the English text and the text in any other language, the English text shall prevail.

29.15 Inspection

The Concessionaire shall maintain detailed and accurate records of its Toll collection operations and shall make copies of such records available to NHA at no cost, upon being given a five (5) Business Days’ notice by NHA.

29.16 Conflict

In case of a conflict between any provision of this Agreement and any provision of any document or instrument relating to the Project, the provision hereof shall prevail.

29.17 Further Assurances

The Parties shall at all times and from time to time do all such further acts and execute all such further deeds, documents and instruments as may be necessary or desirable in order to give full effect to and carry out the terms of this Agreement.

29.18 Survival

Termination of this Agreement (a) shall not relieve the Concessionaire or NHA of any obligation already incurred hereunder which expressly or by implication survives Termination hereof, and (b) except as otherwise provided in any term of this Agreement expressly limiting the liability of either Party, shall not relieve either Party of any obligation or liability for loss or damage to the other Party arising out of or caused by any act or omission of such Party prior to the effectiveness of such Termination or arising out of such Termination.

29.19 Assignment and Charges

(a) Unless otherwise expressly provided in this Agreement, none of the Parties shall

assign this Agreement or the rights and benefits hereto nor shall any of the

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Parties novate the obligations herein save and except with the prior consent of the other Party in writing.

(b) Notwithstanding Article 29.19(a), the Concessionaire may assign to the Lenders any, partial or all its rights, title and interests whatsoever in, through and/or under this Agreement (to the exclusion of any liabilities therein) or otherwise assign or create an Encumbrance over its interest in the Project for the purpose of financing the Project, including, the Equity; provided, however, that the assignment or Encumbrance or its endorsement does not impair the obligations of the Concessionaire under this Agreement, or prevent it directly or indirectly from complying with the said obligations or deprive the public of the appropriate use of the Motorway during the Concession Period. Any such Encumbrance shall be duly intimated to NHA by due notification to NHA prior to its creation and duly recorded in the appropriate register of deeds of the relevant Public Sector Entity.

29.20 Late Payment and Right of Set-off

(a) If any sum which becomes payable under any term of this Agreement by one

Party to the other Party is not paid within the time allowed for payment thereof, the Party responsible for payment thereof shall together with such delayed payment also pay an additional amount on such sum of two per cent (2%) per annum above the base lending rate of the National Bank of Pakistan as at the due date for payment calculated from the due date for payment thereof until the same is paid to or otherwise realized by the Party entitled to the same. The said additional amount shall be deemed to be the agreed reasonable compensation payable for such delayed receipt by the relevant Party under this Agreement, and shall be without prejudice to any other right or remedy that may be available under this Agreement or otherwise under law or equity.

(b) The stipulation regarding additional amounts payable in respect of delayed payments contained in Article 29.20(a) above shall not be construed nor be deemed to authorize any delay in payment of any amount due to a Party nor be construed or deemed to be a waiver of the underlying breach of payment obligations.

(c) If there are any duly certified and undisputed payments that a Party has agreed to make to the other Party under the terms of this Agreement, it shall do so within the time period specified in this Agreement. In case a Party fails to make any such payments within a period of sixty (60) Days from the due date of payment, the other Party shall have a right to set-off any and all such payments (including interest payments under Article 29.20(a)), against any payments that it is obliged to make to the Party that has failed to make such duly certified and undisputed payments pursuant to the terms of this Agreement.

(d) A Party’s right of set-off shall trigger immediately upon the expiry of the sixty (60) Days’ period specified in the preceding Article.

(e) In exercise its right of set-off, a Party shall communicate its intent to exercise such right to the other Party through a written notice in which it shall clearly indicate (a) the quantum of the set-off, and (b) the source from where it intends to set-off. A Party shall not send such notice to the other Party earlier than sixty (60) Days after the expiry of the original due date for payment, subject to any extensions for such payment pursuant to the terms of this Agreement.

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(f) To the extent a Party, after service of the notice mentioned in Article 29.20(e),

does not exercise its right of set-off; the payment due by the other Party shall remain due and payable unless cleared by the other Party.

(g) In case a Party clears its dues to the other Party before the exercise of the right of set-off pursuant to this Article 29.20, the right of the other Party to set-off shall automatically extinguish to the extent of the dues cleared by the Party that has cleared its dues, partly or wholly, as the case may be.

29.21 Governing Law and Jurisdiction

This Agreement shall be governed by the Laws of Pakistan. The Courts at Islamabad, Pakistan shall have jurisdiction over all matters arising out of or relating to this Agreement and the Parties submit to the exclusive jurisdiction of such Courts.

29.22 No Partnership

Nothing contained in this Agreement shall be construed or interpreted as constituting a partnership between the Parties. No Party shall have any authority to bind the other Party in any manner whatsoever, unless otherwise specified in this Agreement.

29.23 Entire Agreement

This Agreement, the Schedules hereto and the other documents and agreements referred to herein, contain the entire agreement of the Parties with respect to the subject matter hereof. This Agreement supersedes all earlier agreements/representations or understandings of the Parties (whether written or oral, including, any previous correspondence between the Parties) with respect to their subject matter.

29.24 Schedules to the Agreement

This Agreement and the Schedules hereto together constitute a complete and exclusive understanding of the terms of the arrangement between the Parties on the subject matter hereof and no amendment or modification of any of the Schedules hereto shall be valid and effective unless agreed to and evidenced in writing by the Parties.

29.25 Counterparts

This Agreement may be executed in two counterparts, each of which when executed and delivered shall constitute an original of this Agreement but shall together constitute one and the same Agreement.

29.26 Notices Unless otherwise stated, all notices, requests, demands, claims and other communications hereunder, including, a notice of waiver of any term, breach of any term of this Agreement and Termination of this Agreement, shall be in writing and shall be delivered by hand, by facsimile providing a transmission receipt or delivered by a nationally recognized overnight delivery service, and addressed as described below. Notices sent by hand shall be deemed effective upon receipt or refusal of delivery. Notices sent by facsimile shall be deemed effective upon receipt or, if sent after 5:30 PM or on other than a Business Day, on the next Business Day after transmission.

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Notices sent by a nationally recognized overnight delivery service shall be deemed effective on the next Business Day after deposit with such service prior to the deadline for delivery on such Business Day. (a) if to NHA

For the attention of the Chairman of National Highway Authority at: Address: 27 Mauve Area, G-9/1, Islamabad, Pakistan Telephone number: +92-51-9260417 or +92-51-9260717 Facsimile number: +92-51-9260404

(b) if to the Concessionaire

For the attention of the Chief Executive Officer at: Address: Telephone number: Facsimile number:

It is agreed that, if any Party is represented by legal counsel, such legal counsel, if authorized to deliver written notice directly to the other Party on behalf of his or her client, may deliver such notice and the same shall be deemed proper notice hereunder if delivered in the manner hereinabove specified. Any Party may, at any time by giving three (3) Days’ written notice to the other Party, designate any other address in substitution of the foregoing address to which such notice shall be given and other Persons to whom copies of all notices hereunder shall be sent. No Party shall have any right to refuse to take delivery of a notice or to refuse signing the receipt thereof.

29.27 Costs and Expenses

Other than in the event of Termination and as otherwise stated in this Agreement, all the respective costs and expenses of the Concessionaire and NHA incidental to the preparation and completion of this Agreement shall be borne and paid by the Concessionaire and NHA, respectively.

THIS SPACE IS LEFT BLANK INTENTIONALLY

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IN WITNESS WHEREOF the Parties have executed this Agreement on the Effective Date. NATIONAL HIGHWAY AUTHORITY EXECUTED For and on behalf of National Highway Authority

By: .................................................................

Designation: ...............................................

) ) ) ) ) ) )

.......................................................................... Signature

In the presence of witness:

Signature ........................................................

Name ..............................................................

Address ..........................................................

CNIC ..............................................................

In the presence of witness:

Signature .........................................................

Name ...............................................................

Address ...........................................................

CNIC ...............................................................

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CONCESSIONAIRE EXECUTED For and on behalf of

By: .................................................................

Designation: ...............................................

) ) ) ) ) ) )

.......................................................................... Signature

In the presence of witness:

Signature ........................................................

Name ..............................................................

Address ..........................................................

CNIC ..............................................................

In the presence of witness:

Signature .........................................................

Name ...............................................................

Address ...........................................................

CNIC ...............................................................

Board of Investment (BOI)’s Policy Appendix – 3

INVESTMENT POLICY 2013

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TABLE OF CONTENTS

Subject Page(s)

I. INTRODUCTION 5

1.1 Investment Liberalization in Pakistan 5

1.2 Evolutionary Enhancement of 1997 Investment Policy 5

1.3 Goal of Investment Policy 2013 5

1.4 Guiding Principles 6

1.4 (a) Reducing the cost of doing business in Pakistan 6

1.4 (b) Reducing the processes of doing business(one-window operations) 6

1.4(c) Ease of doing businesses with creation of industrialclusters and Special Economic Zones (SEZs) 7

1.4 (d) Linkages of trade, industrial and monetarypolicies for greater convergence 7

1.5 Creation of Special Economic Zones throughout the Country 7

1.6 Approach of the Investment Policy 8

a) From comparative advantage to competitive advantage 8

b) Intergovernmental and Interagency Context 8

II. LIBERAL INVESTMENT REGIME 10

2.1 Free Entry for Foreign Investors 10

2.2 Ease of Registration and Entry 10

2.3 Flexibility in Financial Procedures 11

2.4 Flexibility in Land and Real Estate Procedures 12

2.5 Agriculture Policy 12

2.6 Pioneer Industry 13

2.7 Sector Specific Policies 13

2.8 Small & Medium Sized Enterprises 13

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2.9 Alternate and Renewable Energy 13

2.10 Research and Human Resource Development 14

INVESTMENT PROTECTION 15

3.1 Investor Rights 15

3.2 Right to due process of Law 16

3.3 Enhancement of Physical Security 16

3.4 Intellectual Property Rights Protection 16

ESTABLISHMENT OF SPECIAL ECONOMIC ZONES 18

4.1 SEZ Policy 18

4.2 Salient Features of SEZ Act 2012 18

4.3 Incentive/ Exemption/ Policy Package 19

FACILITATION 20

5.1 Visa Facilitation 20

5.2 Pakistani Diaspora 20

5.3 Women Entrepreneurs 20

III.

IV.

V.

VI STRATEGIZING THE POLICY FOR IMPLEMENTATIONAND DEVELOPMENT 21

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ABBREVIATION

AEDB Alternate Energy Development Board

ARE Alternate and Renewable Energy

BCO Banking Companies Ordinance

BITs Bilateral Investment Treaties

BOA Board of Approvals

BOI Board of Investment

BVL Business Visa List

CAF Corporate Agriculture Farming

ECC Economic Coordination Committee

FDI Foreign Direct Investment

GoP Government of Pakistan

IA Implementation Agreement

IPAs Investment Promotion Agencies

IPO Intellectual Property Organization

IPRs Intellectual Property Rights

MIGA Multilateral Investment Guarantee Agency

PPD Public Private Sector Dialogue

SBP State Bank of Pakistan

SECP Securities and Exchange Commission of Pakistan

SEZs Special Economic Zones

SMEs Small and Medium Sized Enterprises

***

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I. INTRODUCTION

A distinguishing feature of the era of globalization is cross-border flows of foreign direct investment (FDI) and creation ofproduction networks by multinational companies. During lastdecades investment liberalization has been the strongest driverof growth, giving a significant boost to economies in developedand developing countries. The global integration of economiesand related gains is compelling. Around the world countries areadopting liberalized policies to attract FDI.

1.1 Investment Liberalization in Pakistan

The first Investment Policy by Board of Investment (BOI) wasgiven in 1997 which opened services, social, infrastructure andagriculture sectors for foreign and local investors. It was a majorstep forward for integration of Pakistan’s economy intointernational markets as prior to this policy; foreign investmentwas restricted to manufacturing sector only. The 1997 Policy laida solid foundation for the gains in FDI inflows experienced overthe subsequent decade.

1.2 Evolutionary Enhancement of 1997 Investment Policy

Investment Policy 2013 is a logical evolutionary enhancement ofthe 1997 Policy. The new document reinforces the componentsof the old Policy, consolidates existing policies promulgated bythe related line ministries, and introduces further liberalizedpolicy along with futuristic strategic programs to implement thepolicy

The revision of Investment Policy has been done keeping in viewthe global investment trends, regional trends and experiences,Pakistan investment data/ flows over time and present dayeconomic challenges.

1.3 Goal of Investment Policy 2013

The goal of Investment Policy 2013 is to address and adjusteconomic priorities in the face of changing global scenario ofeconomic slowdown coupled with domestic difficulties of poweroutages and continued pressure on economy due to war onterror. It is an endeavor to address the changed economicrealities and to achieve the targets given in National PolicyDocument, Vision 2030.

The Policy will be instrumental to achieve progressive increasein net FDI inflows of US $ 2 billion in the first year then growing byabout 25% in subsequent years taking it to US $ 2.5 billion in2014, $ 2.75 in 2015 , $ 3.25 in 2016 and $ 4 billion in 2017 andthereafter at least $5.5 billion per year.

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Assuming average annual GDP growth of 5%, the FDI stockwould account for 20% of GDP, which is close to the currentglobal average.

The Policy has been designed to provide a comprehensiveframework for creating a conducive business environment forthe attraction of FDI. For implementation of the policy, FDIStrategy for Pakistan, 2013-2017, outlining a detailed plan forstructuring the platforms has been dovetailed with it.

The Policy 2013 is supported by FDI Strategy for 5-year (2013-2017), outlining enhanced facilitation procedures and role of BOIas one-window-operation.

1.4 Guiding Principles

Following basic principles provide theme of the Policy

a) Reducing the cost of doing business in Pakistan,b) Reducing the processes of doing business,c) Ease of doing business with creation of industrial clusters

and Special Economic Zones,d) Linkages of trade, industrial and monetary policies for

greater convergence.

1.4 (a) Reducing the cost of doing business in Pakistan

To facilitate market entry of Small and Medium SizedEnterprises (SMEs) steps have been taken to reduce the costof doing business (money and time) SBP and SECP haveremoved equity caps on Banking and non-banking financialservices.

BOI has under taken an incremental process aiming at toreduce cost of doing business. Investment opportunities andinformation vital to start business in Pakistan and online visaregistration has been introduced.

1.4 (b) Reducing the processes of doing business (one-windowoperations)

BOI is moving towards one-window operations. The aim is tooffer constructive policy parameters for removingunnecessary regulations (deregulation) and minimizing thecost to business by necessary regulations (streamlining).Creation of Special Economic Zones (SEZs) is a step towardsthis direction.

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1.4 (c) Ease of doing businesses with creation of industrialclusters and Special Economic Zones (SEZs)

World over, SEZ has contributed towards national economies.The phenomenal economic development in the neighboringcountries is motivating. Introduction of industrialclusterization with promulgation of SEZ Act 2012, BOI hasendeavored to establish forward and backward linkages inthe market with supply chain availability. Adequate businessinfrastructure coupled with BOI one window facilitationservices will make doing business easy and more profitable

1.4 (d) Linkages of trade, industrial and monetary policies forgreater convergence

Linkages of macro and micro economic policies will bring allstake holders: Line Ministries, Provincial Governments,Regulators and other relevant Departments in unison forgreater convergence on important nation public policyagenda. This will enhance transparency, predictability andconsistency in the system.

1.5 Creation of Special Economic Zones throughout theCountry

The Guiding Principles necessitate the provision of setting up ofSEZs throughout the country to meet global competitivenesseffectively and efficiently. The law to establish SEZs has beenpromulgated which is the capstone of the Investment Policy2013. The incentives and exemption granted for creation of theseindustrial clusters are beyond the political divide being protectedby law and cannot be withdrawn. The SEZ will play a pivotal rolein the socio-economic development of the country as has beenwitnessed in case of China, Malaysia, Thailand and in othercourtiers. Pakistan though was the first country in the region inoffering a liberal and market oriented investment regime, butlagged behind in creation of such cost effective and efficientindustrial clusters.

Therefore, the challenge was primarily to redraw national policyand, do investment architecture in a manner that would create amore conducive environment for generation of economicopportunities and promotion of FDI in the country. BOI, afterundertaking, a benchmarking study of the best practices in SEZsin regional countries developed a policy framework for SEZs inPakistan.

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1.6 Approach of the Investment Policy

The current policy document is designed to align Federal Policyfor foreign Investment to further easing out all sectors for foreignand domestic investors through specific interventions for ease ofdoing business with reduced processes.

a) From comparative advantage to competitive advantage

Strategically located between the Middle East, East Asia, CentralAsia, and South Asia, Pakistan has a great potential to becomeregional trade and investment hub with more connectivitythrough land, sea, and air routes.

The country has a large and growing domestic consumer market,which could become a powerful draw with enhanced buyingpower parity and can skilled and semi skilled work force. Thereis no dearth of abundance of natural resources. Vast tracks ofagricultural land can make Pakistan the food basket of theregion.

The Policy thereby has a forward looking and out-reachapproach and thereby designed to keep “what an investor looksfor” in a preferred investment location;

• Level of relative risk – including economic, political,currency, and natural disaster;

• Market access – including size of local market and accessto international markets;

• Cost/availability/quality of inputs – including land, labor,raw materials, components, energy, and taxes;

• Connections to global transportation and communicationnetworks – includes time, cost, reliability of sea, road, rail,and communications; and

• Openness of regulatory regime – includes approvalsprocess, regulations, and rule of law.

The Policy seeks to remove obstacles and impediments forforeign and domestic investment while instituting supportingprograms that can put Pakistan’s investment environment on amore level ground with its international competitors.

b) Intergovernmental and Interagency Context

The Investment Policy takes a horizontal approach to improvingthe underlying investment climate in Pakistan. Policiesgoverning investment in all sectors are equally liberal andfavorable towards investor and conditions in specific sectors areapplicable to all investors, domestic and foreign. Investment andsectoral policies are in tandem and does not differentiatebetween the two. Policies for sector verticals promulgated byvarious related economic ministries are transparent. BOI

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coordinates with all stake holding ministries so that investors gettimely, accurate and quality information.

The New Growth Framework launched by the PlanningCommission focuses on four areas that intersect closely with theInvestment Policy:

• Productivity – Increased factor productivity is importantfor attracting foreign investors into Pakistan; conversely,the presence of foreign investors will play a large role inincreasing productivity by introducing new technologiesand management practices.

• Better governance – Improved public service delivery isrequired to attract and allow investors to succeed inPakistan. Reducing interventions that distort markets willalso create space for investors to enter and thrive as willthe streamlining of regulations, laws, and enforcement.

• Competitive markets – Foreign companies, like allcompanies, should be able to enter and exit the market asfreely as possible without overly burdensome regulation ordistortive policies.

• Innovation and entrepreneurship – Foreign investors bringvaluable experience and resources to spur innovation andentrepreneurship. Their presence in the market alsocreates competitive pressures that spur innovation fromdomestic firms.

The BOI is working closely with the Planning Commission,Provincial Governments and all other Ministries & Departmentsto ensure that there is a mutual feedback loop so that conditionsare improved to attract foreign investment and investment isleveraged to achieve the national growth objectives.

The Investment Policy has been prepared in consultation with allrelevant ministries and agencies at the federal and provinciallevels. Input from the Private Sector was also taken to makedocument a comprehensive one.

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II. LIBERAL INVESTMENT REGIME

A fundamental issue for foreign investors is their freedom toenter a market and conduct business without burdensomerestrictions. Historically, since 1997, Pakistan has establishedand maintained an open investment regime, which serves as astrong advantage compared to regional competitors.

In order to increase its competitiveness as an investmentdestination, the Investment Policy 2013, maintains the openpolicies and continues to expand the opening and liberalizationprocess to all sectors and generalizes the policies across allsectors to have uniformity and openness across the economy.

2.1 Free Entry for Foreign Investors:

2.1.1 All sectors and activities are open for foreign investmentunless specifically prohibited or restricted for reasons ofnational security and public safety.

a) Specified restricted industries include arms andammunitions; high explosives; radioactivesubstances; securities, currency, and mint; andconsumable alcohol.

2.1.2 There is no minimum requirement for the amount of foreignequity investment in any sector.

2.1.3 There is no upper limit on the share of foreign equityallowed, except in specific sectors including airline,banking, agriculture and media.

2.1.4 Foreign investors in any sector shall at any time repatriateprofits, dividends, or any other funds in the currency of thecountry from which the investment was originated. As perclause 6 of the Foreign Private Investment (Promotion &Protection) Act 1976, and subject to proceduralrequirements set under the Foreign Exchange Manual2002 of the State Bank of Pakistan.

2.2 Ease of Registration and Entry

2.2.1 Pakistan has an open-admission system that does notrequire pre-screening and approval for entrants.However, foreign companies must fulfil the conditions ofcorporate registration under the Companies Ordinance,1984.

2.2.2 Foreign companies that are in compliance with theCompanies Ordinance 1984, Competition Act 2010, and

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the laws of Pakistan do not require any separate approvalsfor their investments, with the exception of certainbanking, finance, and insurance sectors as regulated bythe SECP and State Bank of Pakistan. For Acquiring orMerging with a company operating within Pakistan arerequired to apply to the Competition Commission ofPakistan and also follow the procedures under theCompanies Ordinance 1984.

2.2.3 The BOI has instituted an online registration1 procedurefor foreign companies entering and operating in Pakistan.Registration serves as a notification to the Government ofPakistan of the presence of the investor and guaranteesthe investor to entitlements specified in the InvestmentPolicy, but is not an approval mechanism. For renderingefficient services, BOI charges a nominal fee as well.

2.2.4 Requirements for approvals of branch, representative, orliaison offices of foreign companies shall continue to bepermitted by BOI. The application process will take sevenweeks after giving other relevant agencies opportunity forconsultation. If comments from agencies are not receivedwithin the allocated period, the application will beconsidered approved on a “no objection” basis. Approvalsshall be granted for a period of maximum five years andrenewals/ extensions shall be granted after fulfilment of allrequirements involved in the rules and BOI will charge thefee charges on rendering of the services.2

2.2.5 Permission for opening of branches of foreign banks willcontinue to be granted by the State Bank of Pakistan.

2.2.6 Foreign investors shall be entitled to sell shares, transferownership, and de-register under Companies Ordinance1984 and Banking Companies Ordinance 1962.

2.2.7 Winding up of the companies takes place underCompanies Ordinance 1984 and Banking Companies exittakes place under BCO 1962. SECP and SBP have furtherstreamlined the process for filling of bankruptcy andliquidation.

2.3 Flexibility in Financial Procedures:

2.3.1 The BOI will work with the SBP, SECP and Ministry ofFinance to open up and promote foreign investment in theinsurance, banking and financial sectors.

1 www.pakboi.gov2 ibid

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2.3.2 SBP and SECP have relaxed equity caps for setting up ofbanks, life and non-life insurance business and forinsurance brokerage companies to bring foreign and localinvestors at par.

2.3.3 Foreign investors shall have the right to exchange the localcurrency into any other freely convertible foreigncurrency, subject to Foreign Exchange Regulations ofSBP.

2.3.4 There shall be no restrictions on the use of foreign privateloans within three major loan categories as defined in SBPForeign Exchange Manual 2002 or the debt-to-equity ratiosused to finance the foreign investment projects. The use ofthe funds if received from foreign loans shall be extendedto any purpose, not limited to imported plant andmachinery.

2.3.5 Foreign Investors in all sectors shall be allowed to accessdomestic borrowing subject to prevailing rules/ regulationsof SECP and SBP and observance to Debt-Equity ratio.

2.3.6 Venture capital and private equity funds are regulated bythe Private Equity and Venture Capital Fund Regulations,2008 promulgated by the SECP. Foreign funds and fundmanagers are allowed to invest under these regulations.

2.4 Flexibility in Land and Real Estate Procedures:

2.4.1 Foreign investors shall be entitled to lease land withoutlimitation under the rules & regulations of the concernedauthority.

2.4.2 There will be no limitation on the transfer of any land heldby a foreign investor unless contractually specified in anagreement between the land holder and subject to theFederal or Provincial regulations.

2.4.3 Restrictions on foreign real estate developers have beenremoved and now they will be subject to the same rulesand treatment as domestic real estate developers.

2.5 Agriculture Policy:

2.5.1 The foreign investor is allowed to hold 60% stake inagriculture projects.

2.5.2 For Corporate Agriculture Farming (CAF), foreign investorshall be allowed to hold 100% equity.

13

2.6 Pioneer Industry:

2.6.1 Industrial Units bringing in technology for the first time thatis not available in Pakistan shall be declared pioneerindustry3 avail incentives at par with special EconomicZones (SEZs).

2.7 Sector Specific Policies:

2.7.1 The Investment Policy seeks to uniformly improve theconditions for investment across all sectors. It isnecessary and prudent to promote or restrict activities inspecific industries. To this extent, BOI is working closelywith the relevant line ministries in Sectors likeInfrastructure-Communication, Manufacturing (Textile,Food Processing, Consumer Goods, and Engineering),Energy, Mining & Exploration, Construction & Real Estate,Automotive, and Agriculture-Livestock-Dairies-Fisheries.

2.8 Small & Medium Sized Enterprises (SMEs):

2.8.1 BOI shall promote SMEs and their projects with a view toattract investment. To overcome constraints of domesticSMEs on availability of capital fund and pursuing theirrights, a level playing field will envisage.

2.9 Alternate and Renewable Energy:

2.9.1 Pakistan has significant potential in tapping alternativeenergy sources including geothermal, wind, solar,biomass, and bio fuels. The Alternative EnergyDevelopment Board Act, 2011 to develop policies,facilitate projects, and provide technical expertise inincreasing the generation of alternative energy.

2.9.2 The Alternative and Renewable Energy (ARE) Policy of2011 is being developed by Alternative EnergyDevelopment Board (AEDB) as an update of the ARE Policy2006. The policy has a goal of generating 5% of thecountry’s power through ARE sources by 2030.The AREPolicy provides for incentives, tariffs, guarantees, andfacilitation for investors in ARE.

2.9.3 In view of the technology and know-how that foreigninvestors can bring to ARE projects, the BOI shallstrengthen its cooperation with Ministry of Water & Power,

3 Details available websites of BOI and Ministry of Industries

14

AEDB and other line ministries in respect to promoting andfacilitating projects with foreign investors.

2.10 Research and Human Resource Development:

2.10.1 BOI shall promote investment in research/ education andhuman resource development. BOI shall also supportlinkages between foreign investors and universities/research institutes or design the training programs tointroduce innovation and upgrade the skills of staffaccording to their needs.

15

III. INVESTMENT PROTECTION

The main consideration for foreign investors is their ability toprotect their investments from risks. Investors avoid entering amarket if risks are difficult to ascertain and mitigate.

BOI is cognizant that the role of the government is to eliminate orreduce the level of risk and provide tools for to mitigate/ alleviatethem. Though law and order and macro-level risks are difficult tocontrol, there are many means for the government to createmechanisms for risk management. This can be achieved throughassurance of basic rights of due process, enforcement of lawsand contracts, and provision of security. Investment Policy 2013reinforces the commitment to investors regarding security andsafety of their investments.

3.1 Investor Rights:

3.1.1 All foreign investors in relation to the establishment,expansion, management, operation, and protection of theirinvestments shall be accorded fair and equitable treatmentwithout discrimination. They shall have the right to dueprocess of law as per the Foreign Private Investment(Promotion & Protection) Act 1976 and Protection ofEconomic Reforms Act of 1992.

3.1.2 All foreign investors in relation to the establishment,expansion, management, operation, and protection of theirinvestments shall be entitled to treatment “no lessfavorable” than that granted to national investors in likecircumstances as per the Foreign Private Investment(Promotion & Protection) Act 1976 and Protection ofEconomic Reforms Act of 1992.

3.1.3 Pakistan has signed4 Bilateral Investment Treaties (BITs)with 47 countries, of which 26 are in force. A further 27 areunder negotiations. Foreign investors look favourablyupon the existence of a BIT between their home and hostcountry as a means to have stronger protections of theirinvestments. However, the existing BITs have beennegotiated over a period of 50 years by various ministriesand there are great inconsistencies between them, whichcreate legal uncertainty for both investors and thegovernment. BOI will develop a model text with assistanceof Law & justice Division, which will ensure protection toinvestment on reciprocity basis and that model BIT willreplace the existing to possible extent while all new BITswill be negotiated on new templates.

4 ibid

16

3.1.4 PPIB has developed a security package consisting of anImplementation Agreement (IA) to be signed between theGovernment of Pakistan (GoP) and the project sponsors, aPower Purchase Agreement (PPA) to be signed betweenthe power purchaser and the project sponsors and aGuarantee from the GoP backstopping the paymentobligations of the power purchaser. This security packagehas already been approved by the Economic CoordinationCommittee (ECC) of the Cabinet. The aforesaidsecurity/investment protection instruments are well-accepted by the market and 12 power projects have beencompleted, utilizing the same.

3.1.5 The Multilateral Investment Guarantee Agency (MIGA) ofthe World Bank provides guarantees and insurance forinvestors’ projects in developing countries. Ministry ofFinance and BOI will make sure that investors in Pakistanhave cost effective access to these risk managementproducts.

3.2 Right to due process of Law

3.2.1 Commercial Arbitration Act 2011 has been promulgatedthat gives right to investors to go to Higher Courts.Recognition and Enforcement (Arbitration Agreements andForeign Arbitral Awards) Act 2011 is also in place.

3.2.2 An investor can go for international arbitration in case ofdisputes arising from an agreement if that provision isprovided in the contract and after exhaustion of the localremedies for a period of 6-months.

3.3 Enhancement of Physical Security

3.3.1 The BOI, in coordination with Provincial InvestmentPromotion Agencies (IPAs) provides coordination for“airport-to-airport” security for foreign investors. To availthis service, registered foreign investors or bona fidepotential investors shall make the request to the BOI withadequate notice and the details of the itinerary. Theservice includes coordination with local police for escortand advice on making secure lodging and transportationarrangements.

3.4 Intellectual Property Rights Protection:

3.4.1 The Intellectual Property Organization (Cabinet Division)established in 2005 and has upgraded IPR policies.

17

3.4.2 Statutory penalties for violations are enhanced,particularly for copyright and patent infringements andother measures have been taken to enforce the policies.

3.4.3 Recognizing the role of foreign investment in innovation,IPO will establish a window for facilitation with foreigninvestors. The foreign investment window would assistcompanies in obtaining patents, trademarks, andcopyrights as well as respond on an expedited basis torequests for enforcement of infringements.

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IV. ESTABLISHMENT OF SPECIALECONOMIC ZONES

Special Economic Zones (SEZ) Act 2012, the center piece ofInvestment Policy 2013 will encourage industrial clusterization,and bring Pakistan on international economic radar offeringliberal investment regime and adequate physical infrastructure.The investment and incentives will stand fully protected to staythrough this Law5. BOI will provide secretariat services todifferent approval forums for establishment of SEZ clusters in thecountry. Within the Zones, BOI will offer one- window –facilitation- services to investors. The SEZs will reduce the costof doing business, enhance productivity and will help ineconomic development and poverty reduction.

4.1 SEZ Policy

4.1.1 The SEZ policy approved by the Parliament is designed tostimulate the provision of industrial areas with qualityinfrastructure. The policy provides for incentives fordevelopers and enterprises, transparent governance, andclear standards for compliance.

4.1.2 SEZ rules and regulations6 framed under clause 40 of theSEZ Act 2012 are sets of standard procedures forimplementation of the policy and ensure quality andquantity of investment in the Zones.

4.2 Salient Features of SEZ Act 2012

4.2.1 The SEZ Act that allows minimum of 50 acres to bequalified as SEZ and with no upper limits have followingfeatures;

i. It extends to the whole of Pakistan and overrides otherlaws (anything contrary)

ii. The Government shall establish SEZs by itself, or incollaboration with private parties under various modes ofcollaboration including public- private partnership oraccord recognition to the privately established economicactivity zones as SEZ to be governed under this Act;

iii. Board of Approvals (BOA) shall be headed by the PrimeMinister of Pakistan with the Minister for Finance as theVice Chairman and includes the Chief Minister of eachProvince, heads of economic Ministries, executive heads

5 ibid6 ibid

19

of the Provincial Investment Boards and representatives ofPrivate sector;

iv. BOA may grant additional benefits to a Developer, ZoneEnterprise, Region and Sector with respect to a particularSEZ, or to all or certain Zone Enterprises in a particularSEZ, Region and Sector if justified;

v. Approvals Committee shall be chaired by the Chairman ofthe BOI and comprises of the representatives of theFederal/ Provincial economic Ministries, Private sectorrepresentatives;

vi. Every Province shall have its own SEZ Authority whichshall be a legal entity headed by Chief Minister or a personnominated by the Chief;

vii. Any Existing Zone at its desire may apply to the SEZAuthority in which they are located to become eligible forSEZ but can avail only one set of incentives;

viii. Incentive / exemptions once granted to SEZ clusters, SEZDevelopers and Zone Enterprises cannot be withdrawn.

4.3 Incentive/ Exemption/ Policy Package

a) Zone developers and Zone Enterprises to have duty freeimport of capital goods for establishment, maintenance ofZones and projects therein.

b) Income tax exemption for Zone Developers and ZoneEnterprises for a period of ten years.

c) All utilities and infrastructure till zero point of the Zone.d) Captive power generation allowed to zone developers, and

excess can be sold.e) One -Window -Facilities by BOIf) Dry Ports Facilitiesg) Security arrangements by the provincial government

20

V. FACILITATION

5.1 Visa FacilitationEasy access to counselor services plays an important rolein investment attraction. Pakistan has adopted acomprehensive and investor friendly visa policy7.

5.1.1 Pakistan Missions abroad are authorized to grant fiveyears validity (multiple entry) visa within 24 hours tobusinessmen of 69 countries of Business Visa List (BVL),with the duration of each stay restricted to three monthson production of required documentation. Alloweddocumentation will be expanded to include invitation fromPakistani companies, BOI, or Provincial IPAs.

5.1.2 Visa-On-Arrival for 30 days validity and stay will be given tothe businessmen of 69 countries of Business Visa List(BVL) mentioned above on production of any of thedocuments as for entry business visa by Missions forbusinessmen.

5.1.3 Pakistan Missions abroad are also authorized to grantWork Visas to foreign technical and managerial personnelas defined by BOI for the purpose of imparting technicalknow-how and skills to the local population. The durationof work visa is one year and extendable on yearly basis.As per Visa Policy cases of grant or extension of WorkVisas and conversion of Business Visas to Work Visas areprocessed within 4 weeks by BOI.

5.1.4 All foreigners who have been issued work visas shall beexempt from registration with the police, except fornationals of countries on the negative list.

5.2 Pakistani Diaspora

5.2.1 BOI has established a dedicated cell to facilitate andsupport Pakistani Diaspora in their efforts to invest in thecountry.

5.3 Women Entrepreneurs

5.3.1 BOI is cognizant of role of women in economicdevelopment of Pakistan and offers support andencouragement to Women Entrepreneurs and theirAssociations to do successful business.

7 ibid

21

VI. STRATEGIZING THE POLICY FORIMPLEMENTATION AND DEVELOPMENT

The Investment Policy is a dynamic document and subject torevisions and improvements to meet evolving challenges bothwithin Pakistan and with its competitors. In order to effectivelyimplement the Investment Policy measures and framework, astrategic institutional platform has been created to coordinatewith the various actors involved.

A 5-year Investment Strategy has been evolved to implement thePolicy with the following operational windows;

• Policy Formulation & Public-Private Sector Dialogue (PPD);• FDI Promotion Campaign;• Investment Facilitation (one window);• Development of Special Economic Zones (SEZs);• Coordination Networks with Stakeholders Ministries;• Re-organization & Capacity Development of the BOI and• BOI as self Financing Organization.

Investment Policy making is a moving target as the goal post(economic development) keeps changing and more is less.However, BOI has made an attempt to create enablingenvironment in the county through Policy interventions andstrategic approaches.

Form of Bid Security Appendix – 4

1

Format of Bid Bond [To be stamped in accordance with the Stamp Act, 1899]

IRREVOCABLE AND UNCONDITIONAL BID BOND GUARANTEE BANK GUARANTEE No: DATE: To, The Chairman, National Highway Authority, 27-Mauve Area, G-9/1, P.O Box 1205, Islamabad, Pakistan.

Dear Sir,

Ref: Bid for [the Project name]

WHEREAS [name and legal status of the bidder] (hereinafter referred to as the “Bidder”) has submitted his/its bid dated ________ for granting of a Concession to design, finance, construct, commission, develop, manage, operate, maintain, insure and transfer, at the end of the Concession Period, the [the project name] on a Build, Operate, Transfer basis (hereinafter referred to as the “Bid”), a requirement of which is that the Bidder submit a bid bond in the amount of Rs _________ (Rupees ____________________ Only).

AND WHEREAS to satisfy the aforestated requirement, this Deed of Bid Bond Guarantee(hereinafter referred to as the “Guarantee”) is made on this __ day of ____, 2011 by [name of the bank] a banking company lawfully undertaking business in the Islamic Republic of Pakistan, having its registered office at __________________________ (hereinafter referred to as the “Bank” which expression shall, wherever the context so admit, include its executors, administrators and successors-in interest) in favour of the National Highway Authority, a statutory body established pursuant to the National Highway Authority Act, 1991 (hereinafter referred to as “NHA”)

NOW THEREFORE in consideration of NHA accepting the Bank’s obligations contained in the following paragraphs for the due discharge of the Bidder’s obligation to provide a Bid Bond, THE BANK,BY THIS GUARANTEE AGREES TO THE FOLLOWING:

1. The Bank hereby undertakes and guarantees that it shall, on the first written demand of NHA, without any caveat, demur, protest or contest and without reference or recourse to the Bidder or any other person, organization or authority, pay NHA within three (3) working days, in clear funds, without any deduction or withholding on any account whatsoever, a sum of Rs. _______________ (Rupees _____________________ Only).

2. The obligation of the Bank to NHA to pay the sum specified in paragraph 1 above within the time and in the manner specified therein shall be that of principal debtor in the first instance without NHA proceeding against the Bidder and notwithstanding any security or other guarantee NHA may have in relation to the Bidder’s liabilities.

2

3. Any demand specified in paragraph 1 above, made by NHA on the Bank, will be conclusive and binding between NHA and the Bank notwithstanding any dispute or difference between NHA and the Bidder or any dispute or lis pending before any court, tribunal, arbitrator or any other judicial, quasi-judicial or other authority. The Bank hereby affirms that it shall pay NHA the amount specified in paragraph 1 above within the time and in the manner specified therein, without NHA needing to prove or show grounds or reasons for NHA’s demand. The Bank further affirms that it shall support and uphold the right of NHA to make a demand specified in paragraph 1 above and be paid the sum specified therein, if a dispute relating to the same is raised by the Bidder before any court, tribunal, arbitrator or any other judicial, quasi-judicial or other authority.

4. The Bank hereby waives, to the fullest extent possible by law, any defence whether in law or equity, that may be raised to prevent or delay NHA from making a demand specified in paragraph 1 above or being paid the sum specified therein.

5. NHA shall be at liberty, without affecting the Bank’s obligations to NHA contained in thisGuarantee, to postpone for any time or from time to time, the enforcement of any rights accruing to NHA against the Bank or the Bidder and to enforce the same at any time and in any manner and to enforce or forbear to enforce any remedies available to NHA against the Bank or the Bidder. The Bank accepts that it shall not be released of its obligations to NHA contained in this Guarantee by any exercise by NHA of its liberty in relation to the aforesaid matters or any of them or by time or other indulgence including the granting of any waiver to either the Bank or the Bidder or by any variation in this Guarantee or by any other act or omission whatsoever which, under law or equity, but for this provision would have the effect of releasing the Bank of its obligations under this Guarantee notwithstanding that any such postponement, forbearance, extension of time or other indulgence, waiver, variation or any other thing was granted, made, given or happened without the consent or knowledge of the Bank.

6. The Bank hereby undertakes not to revoke this Guarantee during its currency without the prior written approval of NHA and agrees that the obligations of the Bank under this Guarantee are continuous obligations and shall remain in full force and effect and be enforceable against the Bank notwithstanding any change in the constitution, legal status or organisation of the Bank, the Bidder or NHAuntil all dues of NHA under or by virtue of this Guarantee have been paid by the Bank in full or until NHA discharges this Guarantee in writing.

7. The Bank hereby affirms that it has the power and authority under its Memorandum and Articles of Association and all necessary consents and authorisations, including without limitation, those required from its board of directors, regulator or other relevant governmental body, to enter into, execute, deliver and perform the Bank’s obligations under this Guarantee in favour of NHA and that the signatory(ies) hereto has/have the capacity and power to sign and bind the Bank to the Bank’s obligations contained herein under [Power of Attorney/Board Resolution] dated _____________ .

8. Notwithstanding anything contained in paragraphs 1 to 7 above, the Bank’s liability to NHA under this Guarantee is restricted to and shall remain in force upto and including __ day of _____ 20 __ and shall be extended for such period as may be desired by the Bidder.

9. This Guarantee shall be governed by and construed in accordance with the laws of the Islamic Republic of Pakistan.

3

IN WITNESS WHEREOF the Bank, through duly and lawfully authorised representative(s), has executed this Guarantee on the date first written above in the presence of the witnesses mentioned below.

[ Name (s) and Designation (s) of signatory (ies) ]

WITNESSES:

1. [name, address and CNIC number] 2. [name, address and CNIC number]

Financial Data Forms Appendix – 5

General Design Criteria, Construction Performance Standards, and

Appendix – 6

Operation & Maintenance Requirements/Standards

1

1. OUTLINE DESIGN CRITERIA

1.1 GENERAL

1.1.1 This section sets out the minimum design criteria that the Company shall be required to attain when carrying out the detailed design of the Project. These criteria have been developed with the following aims in mind:

• to provide road users with a comfortable stress-free driving environment;

• to provide the highest practical and feasible level of road safety;

• to accommodate existing and future traffic needs;

• to accommodate local weather, terrain and soil conditions;

• to meet international design standards;

• to minimize future maintenance requirements; and

• to minimize adverse community and environmental impacts.

1.2 DESIGN LIFE

1.2.1 The design life to be adopted for the various elements of the main carriageway is set out in Table 1.1. All elements shall be designed to withstand the effects of anticipated traffic and other loadings, and deterioration over the specified periods.

1.2.2 The design life specification for the electrical and electronic systems reflects the requirement that as part of the maintenance, refurbishment and replacement program all systems must be upgraded to comply with the standards then prevailing.

Table 1.1: Design Life Periods to be Adopted

Element Design Life

New Buildings, Structures and Drainage 50 years

Carriageway Pavement 10 years (Min)

Communication and Electrical System (if

required).

Cabling 40 years

Electrical and electronic systems 15 years

2

1.3 LONGITUDINAL GEOMETRIC DESIGN

General

1.3.1 The geometric design of both carriageway facilities shall generally be in accordance with the requirements and recommendations of the American Association of State Highway and Transportation Officials (AASHTO) Guideline 2004 or the latest version.

Design Speed

1.3.2 The design speeds to be adopted for main carriageways shall be as set out in Table 1.2.

Table 1.2: Design Speeds to be Adopted Type of Terrain

Carriageway Section Flat

120 Kph

Rolling

Two/Three lane Carriageway 100 Kph

Horizontal and Vertical Curvature

1.3.3 The design standards to be adopted for horizontal and vertical curvature shall be as set out in Table 1.3-b.

Table 1.3-a: Design Speeds to be adopted

Carriageway Section

Main Carriageways 120 kph

Slip Roads 60 kph

Service Roads 60Kph

a) dual carriageway

Expressway 120 kph

Non expressway 80 Kph

b) single carriageway 60 Kph

Sight Distance

1.3.4 Desirable minimum stopping sight distances for expressways, slip roads and connecting roads shall be as set out in Table 1.3-b. Departures below these levels may be allowed at the discretion of the NHA where significant economic savings can be shown to result.

3

Gradients

1.3.5 Maximum longitudinal gradients to be adopted shall be as set out in Table 1.3-b.Departures beyond these limits will only be allowed where additional climbing lanes are provided.

1.3.6 Minimum longitudinal gradients will depend on the form of drainage adopted. Where a longitudinal surface drainage system is employed, Minimum gradients should be 0.5% to ensure effective clearance of surface water.

Table 1.3-b: Geometric Design Criteria

Geometric Design Criteria Item 120

Minimum stopping sight distance (m) 260

Minimum passing sight distance (m)

Maximum rate of super-elevation (%) 6

Horizontal curvature:

i) absolute minimum radius (m) 790

ii) desirable minimum radius (m) 900

Iii) radius above which no super- elevation is required (m)

4950

Spiral curve parameter (m) 330

Maximum gradient (%) (and slip roads) 3

Minimum gradient (%) 0.3% or steeper if conditions permit; special consideration to be given to drainage.

Rate of vertical curvature - `K'-value (m/%):

52

i) Crest curves (m)

- stopping sight distance – desirable 210

- minimum 105

- passing sight distance 720

ii) Sag curves - desirable minimum (m)

75

- absolute minimum 50

Minimum length of vertical curve 70

4

1.4 CROSS-SECTIONAL GEOMETRIC DESIGN

General

14.1 The General Cross Sectional requirements of the expressway, in terms of the width of construction, the number of traffic lanes and the provision of climbing lanes shall be set out in Section 1.

Traffic Lane and Widths

1.4.2 Traffic lanes on the main carriageway of expressways, on multi-lane slip roads and on connecting link roads shall have a width of 3.65 meters. On single lane slip roads traffic lane widths shall be 4.88 meters.

Shoulder Widths

1.4.3 On dual two and dual three lane Expressway a 3.0 meter paved outer shoulder and a 1.0 meter paved inner shoulder shall be provided. In addition, an unpaved shoulder of 0.5 meters and 0.7 meters shall be provided beyond the paved area on the outer and inner sides of the carriageway, respectively.

1.4.4 On dual and single carriageway connecting link roads, a 3.0 meter shoulder (2 meters surface sealed and 1 meter untreated) shall be provided on the outer side of the carriageway.

Median Widths

1.4.5 On dual two-lane Expressway a minimum central median width of 11.3 meters shall be provided. (This allows for widening within the central median to accommodate a third lane in each direction).

1.4.6 On dual three-lane Expressway a minimum central median width of 4.0 meters shall be provided.

1.4.7 Elsewhere, on connecting link roads, a minimum central median width of 4 meters shall be provided.

Note: Incase median is not provided; Standard Jersey Barrier is to be used.

Pavement Cross-fall and Super elevation

1.4.8 Generally, the pavement cross-fall gradient should be 2.5 percent. This may however be varied within the range of 2 percent to 3 percent, if required.

1.4.9 On both Motorway and dual–carriageway connecting link roads, where horizontal curvature is less than the radius shown in Table 1.3-b for a particular design speed, superelevation up to a maximum of 6 percent shall be introduced.

5

Lateral Clearances

1.4.10 The minimum lateral clearance between any structures, roadside barrier of other street furniture shall be 0.6 meters from the edge of the usable shoulder.

Vertical Clearance

1.4.11 A clear vertical clearance of 5.33 meters must be provided between the carriageway and the soffit of all underpasses and over bridges.

1.4.12 where any roadway passes over Pakistan Railways track, a clear vertical clearance of 6.4 meters shall be provided between the top of rail level and the soffit of the roadway bridge.

1.4.13 In cases where an expressway passes over water courses and rivers, the minimum level of the bridge soffit shall be 2 meters above the local recorded (or anticipated) maximum 100-year flood level for that river or water.

Walkway

1.4.14 The walkway on each side of flyover bridge shall be provided ensuring the following dimensions.

Height of walkway 0.25 m Width of walkway 1.20 m Height of railing 1.05 m Note: No Walkways to be provided on motorway bridges.

1.5 PAVEMENT DESIGN

General

1.5.1 The road pavement shall be designed generally in accordance with the AASHTO Guide 2004, using site specific data for:

• Sub-grade characteristics, (including bearing capacity, water table level and drainage properties);

• Construction material characteristics; and

• Expected traffic volumes during the life of the pavement.

• Country specific factors as determined by NHA

• Design to be confirmed using the Mechanistic Analysis

6

Riding Quality 1.5.2 The roughness of the pavement, over any one kilometer length on any lane, after construction, upon opening to traffic shall be less than 1.6 m/Km IRI with a tolerance of ± 0.2m/Km IRI.

Materials

1.5.3 In general, Asphaltic Concrete pavements shall be used, except in cases of unusually high traffic volumes, or where poor sub-grade conditions exist. In these situations a Portland Cement Pavement may be proposed if it can be shown to be more economical over the whole life of the road. Alternatively, ground improvement techniques involving geotextile, chemical of mechanical stabilization or polymer modified asphalt may be used. All service roads and ramp facilities incorporate asphalt concrete pavements.

On all Toll Plazas and in climbing lanes, rigid pavement will be used.

1.6 STRUCTURAL DESIGN

General

1.6.1 All structures shall be designed in accordance with the latest AASHTO Standard Specification for Highway Bridges, using local environmental factors to determine seismic, flood water, wind and temperature loads and Government of West Pakistan Highway Department Code of Practice for Highway Bridges 1967 (WPCHB) for vehicle loads.

Vehicle Loading Conditions

1.6.2 Vehicle live loads, as defined in the WPCHB, shall be either:

a) Class `AA' military loading consisting of the 70 ton tracked vehicle defined in WPCHB Section 4; or

b) Class `A' loading consisting of 55.4 ton truck train defined in WPCHB Clauses 1.4 to 1.7.

depending on which produces the maximum stresses. The number and placing of these vehicles, as well as the impact factors shall be as defined in WPCHB 1967.

[It should be noted that the live loads specified in WPCHB (1967) are reported to be exceeded due to overloading and the use of modern high capacity vehicles. There is a therefore a need to review the above design vehicle loads to more closely reflect current conditions]

1.6.3 In addition, a single abnormal wheel load of 9,525 kg, applied over an area of 0.3 meters by 0.6 meters, shall be applied at any location on the deck to produce the most severe load effect in the structural element.

7

Other Loading Conditions

1.6.4 Other loading conditions that shall be taken account of in design shall include, but not be limited to:

• longitudinal traction or braking forces due to sudden stoppage of vehicle as per WPHBC;

• Live load of 5KN/m2 (100 psf) of footway area between parapet and/or railing to be applied continuously or discontinuously over both length and width of structure in order to produce maximum stresses in member under consideration.

• Horizontal live load on railing/posts depends upon the configuration of railing/posts/barrier system. Generally New Jersey Barrier is being adopted at the edge of the bridge and at the median.

• wind loads on all bridges to be considered in accordance with Clause 3.15 of AASHTO (for a base wind speed of 100 mph [44.7 m/s]);

• temperature effects causing movements and stresses in the structure according to Clause 3.16 of AASHTO (for a temperature rise of 20 degrees Centigrade or a fall of 20 degrees Centigrade from the assumed temperature at the time of construction);

• earth pressure loading in accordance with Clause 3.20 of AASHTO;

• Seismic loads: Earthquake forces shall be calculated according to Clause 3.21 of AASHTO. Detailing of individual component for ductility requirement shall be done according to AASHTO.

• Stream current forces on piers in accordance with Clause 3.22 of AASHTO.

• Stresses and movements arising from pre-stressing, creep, shrinkage and differential shrinkage; and

• Erection loads imposed on structural members at every stage of construction.

Load Combination

1.6.5 Load combination for service and ultimate load condition shall be in accordance with Clause 3.22 of AASHTO.

Design Strength of Material

1.6.6 Deformed billet steel bars (Grade 60 and Grade 40) conforming to ASTM. A615 or High yield deformed bars with minimum yield or characteristic strength of 425/460 N/mm2 to BS 4461.

8

Steel for prestressing will be either seven wire low relaxation strand or seven wire normal relaxation strand conforming to ASTM A416 Grade 270.

All structural steel, plates angles etc. shall conform ASTM A36 steel.

Design Methods

1.6.7 The methods and requirements of latest AASHTO should be taken into account in all cases.

1.6.8 The seismic analysis of bridges should include a computer-based eigen value analysis to determine the natural frequency and time period of the substructure. As an alternative, for regular structure types, the method given in AASHTO 1992 may be used to determine these factors.

1.6.9 The design of superstructures shall be based on Finite Element Analysis (FEM), and should include grid analysis for determination of forces in longitudinal and transverse flexural members, and plate analysis for bridge deck slabs. Empirical methods should not be used.

1.6.10 For irregular structures, such as curved or skewed bridges, or where new or unusual types of structural form are employed, a more detailed analysis should be performed to completely capture the behavior of the structure (e.g. a `three dimensional analysis').

1.6.11 Localized stress concentrations should be given due consideration. FEM should be used to determine the magnitude of these stresses, and any special reinforcement requirements included in the design.

1.7 HIGHWAY DRAINAGE DESIGN

General

1.7.1 In general, drainage provision on the highway shall be in accordance with the requirements of AASHTO Highway Drainage Guidelines 1989.

1.7.2 Where practical, whole the Expressway shall be improved with positive surface water drainage systems, with all `run-off' water passing through oil interceptors before being discharged into neighboring water courses. 1.7.3 All drainage systems shall be improved to be self cleansing, in terms of design velocities and design gradients. 1.7.4 All oil interceptors shall be easily emptying.

1.8 HYDROLOGICAL DESIGN

1.8.1 In designing river bridge structures, associated river training works, culverts and storm water drainage systems the flood return periods shown in Table 1.4 shall be used.

9

Table 1.4: Design of Structures, Flood Return Periods to be adopted

Type of Crossing Flood Return

Period

River Bridges 100 years

Culverts 50 years

Storm drainage system 5 years

1.9 LIGHTING

General 1.9.1 The design of road lighting, where specified in the Project Description, shall conform to the requirements of British Standard BS 5489 or other similarly approved international standard.

Type 1.9.2 Unless otherwise approved by the NHA, all lighting shall be by High Pressure Sodium Vapour Lamps conforming to IEE 662 or other similarly approved international standard.

Electrical Wiring and Connections

1.9.3 All electrical connections or wiring associated with road lighting shall conform to the requirements of United Kingdom, Institution of Electrical Engineers Wiring Regulations, 15th Edition, or similarly approved International Standard. In addition, the regulations of the Water and Power Development Authority (WAPDA) and the requirements of the Pakistan Electricity Act shall also be adhered to.

1.10 ROAD SIGNS

General

1.10.1 All road signs shall be set out to accord with the Standard Manual for Highway Signs (National Transport Research Centre, Pakistan) and shall generally conform to the `Manual for Uniform Traffic Control Devices (FHWA), the UK Traffic Signs Manual or other approved international standards.

Materials 1.10.2 All road signs shall be faced with retro-reflective material and, where indicated in the detailed Project Specification, shall be illuminated during hours of darkness.

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Construction

1.10.3 The constructional elements of road signs shall conform to the requirements of British Standard 873 or similarly approved national or international standard.

Electrical Wiring and Connections

1.10.4 Any electrical connections or wiring associated with road signs shall conform to the requirements of United Kingdom, Institution of Electrical Engineers Wiring Regulations, 15th Edition, or similarly approved international standard. In addition, the regulations of the Water and Power Development Authority and the requirements of the Pakistan Electricity Act shall also be adhered to.

1.11 ROAD MARKINGS

1.11.1 All road markings shall be formed using Thermoplastic paint conforming to AASHTO M249-77 or equivalent international standard and shall be set out to accord with the Standard Manual for Highway Signs (National Transport Research Centre, Pakistan) and generally meet the requirements of the United Kingdom Traffic Signs Manual or other approved international standard.

1.12 SAFETY FENCES AND BARRIERS

1.12.1 Safety fences or barriers shall be provided on Expressway in all of the situations set out below. The form, layout and vertical profile of such barriers shall conform to the requirements of United Kingdom, Department of Transport Standards TD 19/85 or other similar approved international standards.

1.12.2 At the edge of the carriageway:

• On the embankment 6 meters or more in height or where there is a road, railway, water hazard or other feature at or near the foot of the slope;

• On the outside of curves of less than 850 meter radius on embankment of between 3 and 6 meters in height;

• Adjacent to all retaining walls, rock face cuttings or earth banks (steeper than 1 in 1 slope) that there are less than 4.5 meters from the edge of the running carriageway.

1.12.3 On the central reserve where the width of the central reserve is less than 10 meters and at all following locations:

• Adjacent to obstruction such as bridge piers, sign posts and trees;

• Where there are lighting columns on the central reserve; and

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• Where the difference in the inner channel levels of the two carriageways exceeds 1 metre and the slope across the central reserve exceeds 1 in 4.

1.13 TOLL COLLECTION AREAS 1.13.1 Toll collection areas shall be designed to ensure that an adequate

number of toll booths are provided at each toll collection point so as to ensure that the operational standards with regard to delays to road users are adhered to;

1.13.2 The toll collection area should be of Rigid Pavement. The layout of the

toll collection area and its approaches shall be designed in such a manner as to provide safe conditions for both road users and toll collection staff. This shall include, but not be limited to;

• The provision of adequate advance warning signs and road

markings; • Lighting at times of darkness; and • Protection of staff from vehicle emissions and vehicle impact • Parking and toilet facilities shall be provided as per parameters

stipulated in Para 1.6 above. 1.13.3 In the case of `closed' toll systems, the ticket issuing procedures shall be such that:

• The opportunity for fraud is reduced to a minimum;

• The information provided on the ticket conforms with the operational standards; and

• Data can be retrieved regarding the entry and exit points of all traffic using the facility, by time of day and by vehicle type.

1.14 SERVICE (AND REST) AREAS 1.14.1 Service Areas are defined as areas which contain a full range of services to travelers, Including but not limited to filling station, toilet and restaurant facilities. Rest Areas are areas, generally located between Service Areas and often in areas of special scenic or other interest, which provide a safe stopping place for motorists. Toilet facilities will usually be required at Rest Areas. 1.14.2 When providing Service (and Rest) Area the following requirements must be met by the Concession Company.

• The minimum spacing between Service (or Rest) Areas shall be 35 kilometres.

• Service Areas shall be provided at a maximum interval of 70 kilometre;

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• Access and egresses to each Service (or Rest) Area must conform to AASHTO Guidelines in terms of geometric layout and position in relation to adjacent intersections;

• Facilities provided within the Service (or Rest) Area shall be limited to those directly related to the needs of Expressway users (in other words these areas should not be a destination in their own right but should simply cater for the needs of travellers already using the Motorway network);

• Adequate parking provision shall be available within Service (or Rest) Areas to cater for parking needs throughout the Concession Period (such provision could however be brought into use in a phased implementation);

• Parking provision for private vehicles, public transport vehicles and commercial vehicles shall be segregated;

• All parking areas shall be adequately screened from view from areas outside the Concession Area, using appropriate materials;

• No pedestrian or vehicular access shall exist between Service (or Rest) Area and land outside the Concession Area;

• The layout of Service (or Rest) Area shall be such that pedestrians are fully segregated from vehicular traffic on the main Expressway;

• All Service (or Rest) Area shall provide an adequate number of staffed toilet facilities, adequate seating areas, sufficient levels of lighting to ensure public safety and adequate facilities for the collection and disposal of litter; public telephones should be available in all Service Areas and, wherever possible, should also be provided in Rest Area;

• All Service (or Rest) Area are to be adequately signed, using approved signs that indicate the basic facilities that are available at each site; and

• The layout and form of all buildings, filling stations, etc. shall be subject to the requirements local planning controls.

1.14.3 The approval of the NHA shall be sought prior to the development of any Service (or Rest) Area. The NHA will not unreasonably withhold consent, provided the minimum standards set out above are met. 1.15 MAINTENANCE COMPOUNDS 1.15.1 The Concession Company may, subject to the approval of the NHA, provide a Maintenance Compound within the Concession Area. However, the following requirements must be observed:

• Access and egress to the Maintenance Compound shall conform to AASHTO Guidelines, in terms of geometric layout and position in relation to adjacent intersections;

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• All plant, materials and equipment stored within the Maintenance Compound must be directly related to the general maintenance and operational requirements of the Expressway and approach roads;

• Adequate provision shall be made within the confines of the compound for the storage of all equipment and the parking of all vehicles;

• The limits of the maintenance compound shall be clearly defined by the erection of a permanent perimeter fence or wall;

• No activities, either directly or indirectly related to the Maintenance Compound, shall occur in any other part of the Concession Area, beyond the perimeter fence of the Maintenance Compound;

• Vehicle washing facilities shall be provided and maintained in good order throughout the duration of the Operations Phase of the Concession;

• No vehicle shall be allowed to leave the Maintenance Compound in an un-roadworthy condition;

• The Maintenance Compound shall be signed to indicate to the general public that access is restricted; and

• The layout and form of all buildings, etc. shall be subject to the requirements local planning controls.

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2. OPERATIONS REQUIREMENTS 2.1 GENERAL 2.1.1 During the Operations Phase of the Concession, the Concession Company shall be responsible for the efficient operation of the Expressway/ Motorway, the recovery and removal of broken down vehicles, the removal of debris and spillage from the Concession Area, the provision of other basic services to users of the facility and all toll collection activities. 2.1.2 All regulations, rules and orders applicable to Expressway/Motorway in Pakistan will apply to this Expressway, and the NHA will ensure that adequate police services are provided for the regulation of the Expressway and the safety of users and the general public. The Concession Company will be required to liaise closely with the police and the emergency services to ensure that performance and safety standards are met at all times. 2.1.3 In this section, a series of minimum performance standards are set out that must be met at all times by the Concession Company. The Concession Company will be required to prepare an Operations Manual, to be approved by the NHA, setting out procedures whereby these standards - or higher performance standards as may be agreed upon - are to be met. 2.2 RESTRICTIONS ON VEHICULAR ACCESS 2.2.1 Access to the Expressway will be limited to the interchanges specified in Section 1, and its use will be limited to the vehicle types specified in the "Policy Framework and Package of Incentives". 2.2.2 Limitations on permissible gross vehicle weight, maximum axle load, and vehicle width, height and length will be as follows, by vehicle classification: [ This shall be provided during negotiations ] 2.3 IDENTIFICATION OF INCIDENTS AND INITIATION OF ACTION 2.3.1 In normal circumstances, all emergency telephones shall be in working order at all times. In the event of two or more consecutive telephones being disconnected, due to either maintenance needs or service faults, mobile patrols shall be operated at 30 minute intervals to detect the presence of broken down vehicles or any other incidents that may affect the smooth flow of traffic. 2.3.2 The Project Control Centre shall be staffed by at least two personnel at all times. The principal function of these personnel shall be to receive information and to initiate appropriate actions to overcome reported incidents. Such actions shall include mobilization of vehicle

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recovery and emergency maintenance personnel, and liaising with the appropriate emergency services. 2.3.3 The response time between receipt of information and initiation of appropriate action shall normally be no longer than five minutes. 2.4 RECOVERY OF STRANDED VEHICLES 2.4.1 Throughout the duration of the Operations Phase of the Concession the Concession Company shall provide, free of charge, a vehicle recovery service to remove stranded vehicles from the Concession Area. 2.4.2 This recovery service shall operate in such a manner as to provide, as a minimum, that all stranded vehicles shall, within one hour of being reported, be located and removed from the Expressway to the nearest service area or local repair facility. 2.4.3 The vehicles deployed and the methods used for removal of stranded vehicles shall conform with internationally recognized standards. In addition, all staff employed in such activities shall be fully trained in all aspects of vehicle removal and road safety, and shall wear appropriate reflective clothing. 2.5 REMOVAL OF DEBRIS AND SPILLAGE 2.5.1 At all times throughout the duration of the Operations Phase of the Concession the Concession Company shall provide and maintain a mobile rapid response maintenance team to attend at the scene of any reported incident. 2.5.2 The primary functions of this rapid response team will include, but not be limited to:

• the removal of debris and spillage from the carriageway;

• the rendering safe of any identified safety hazards; and

• The introduction and monitoring of any emergency traffic management systems that are required in connection with emergency situations.

2.5.3 The vehicles deployed and the methods and equipment used for carrying out these emergency activities shall conform with internationally recognized standards. In addition, all staff employed in such activities shall be fully trained in all aspects of traffic safety, emergency procedures and remedial maintenance and shall wear appropriate reflective clothing.

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2.6 PROVISION OF BASIC LEVELS OF SERVICE 2.6.1 In addition to the above specific operational requirements, the following basic levels of service shall be maintained at all times throughout the Operations Phase of the Concession:

• The Expressway shall remain open for use by traffic at all times, except as may be agreed from time to time by the NHA;

• 24 hour a day, and seven days a week, fuel, toilet, and restaurant facilities shall be provided in service (Rest)Area;

• All road lighting, on the Expressway, its approach roads and within operational Service (and Rest) Areas, shall be illuminated throughout the hours of darkness, except as provided for under the maintenance regime in Section 4.

• All toilet facilities shall be continually staffed and the toilets shall be maintained in a clean condition throughout the operational hours of the Service (and Rest) Areas.

• All parts of the Concession Area shall be kept clean, tidy and free from litter.

2.7 TRAFFIC MANAGEMENT AND ROAD SAFETY 2.7.1 When undertaking any maintenance or other activity, on or adjacent to the Expressway, adequate precautions shall be taken to protect the safety of both the general public and the Concession Company's employees and representatives. These precautions shall include, but not be limited to, the provision of adequate advance signing, the provision of appropriate traffic management systems on the approaches to and adjacent to the works area, and when appropriate, the provision of adequate illumination of all signing and traffic management systems. 2.7.2 The layout of all such signing and of the traffic management systems themselves shall be in accordance with the requirements of Chapter 8 of the United Kingdom Traffic Signs Manual (published by HMSO), or other approved international standard. 2.8 TOLL COLLECTION 2.8.1 The toll collection system employed on the Expressway shall be capable of providing the following information and levels of service:

• For `closed' toll collection systems, the ticket issued on entry must clearly indicate the date and time of issue, the vehicle category, the location at which the Bridge was accessed; additional information, such as the charge to be levied at each Bridge exit, the location of service area or the method of calling for emergency assistance, may also be provided;

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• For both `open' and `closed' systems, a receipt must be issued at the point where payment is made, again indicating the time, date and place of issue, together with the vehicle type and the charge levied;

• Sufficient toll collection booths shall be operational at any one time to ensure that the maximum delay experienced by drivers on the approach to the booths is limited to no more than 2 minutes at any location;

• All toll collection staff shall be fully trained in the use of the toll collection equipment, shall be appropriately dressed in such a manner that they are easily identifiable as employees of the toll operator, and shall be respectful and courteous at times towards members of the public;

• Accurate accounts shall be kept of daily toll revenue at each of the toll collection points; and

• Wherever possible, either continuously or periodically, data regarding the entry and exit points of all traffic using the facility, by time of day and by vehicle type, shall be collected (or retrieved from the toll collection equipment).

2.8.2 Where required to do so by the NHA, the Concession Company shall make suitable arrangements to integrate and/or co-ordinate its toll collection activities with those of adjacent Concessions. 2.8.3 In order to minimize fraud and to provide an independent check on the use of the facility, traffic counts shall be undertaken, at least at monthly intervals, by (or on behalf of) the Concession Company, and at the Concession Company's own expense, to establish the level of traffic on Bridge (between consecutive interchanges), by time of day and vehicle type. In addition, at least every six months, variations in daily traffic patterns shall be monitored over a period of one week. 2.8.4 All toll collection records and traffic data collected by the Concession Company shall be passed to the NHA.

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3. MAINTENANCE REQUIREMENTS 3.1 GENERAL 3.1.1 It is an implicit requirement of the Concession that the Concession Company shall maintain the facility in good order throughout the Concession Period. It is also a requirement that the Concession Company shall transfer the facility to the NHA, at the end of the Concession period, in an acceptable and well maintained condition. 3.1.2 The assessment of condition at transfer will be made by an independent engineer in accordance with the requirements of the Concession Agreement. Before issuing the Certificate of Transfer the independent engineer must be satisfied that all elements of the Expressway are of an adequate condition such that, in his professional opinion:

• No heavy repairs or structural overlay to the pavement will be required within 5 years from transfer;

• No major replacement or rehabilitation of toll collection, lighting or traffic management equipment within 5 years from transfer;

• No heavy repairs to structures are required within 10 years from transfer.

3.1.3 The Concession Company will be required to prepare and undertake a Maintenance Programme with the objectives of ensuring that the Expressway can be operated efficiently throughout the Concession Period and satisfies the condition criteria at transfer. 3.1.4 Maintenance of the facility can be broadly divided into two specific areas: day-to-day corrective action to remedy faults due to vehicle damage, vandalism and reported malfunctions; and planned maintenance based on regular inspection, assessment of condition against specified performance thresholds. 3.1.5 For both of these types of maintenance activity, a comprehensive database shall be established by the Concession Company, detailing in date order, all reported faults (whether through planned maintenance inspections or reports from members of the public, police or other government bodies) and the corrective action taken. All such records shall remain available for inspection by the NHA for a period of six years. 3.1.6 To assist the Bidder in preparing his Bid the following sub-sections

set out the minimum levels of monitoring and maintenance performance that will be expected of the Concession Company. It should be noted that in setting these minimum standards the NHA does not relieve the Concession Company of its overall obligations as set out in paragraphs 3.1.1 and 3.1.2 above.

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3.2 ROAD PAVEMENT 3.2.1 The need for periodic maintenance of the road pavement will be determined by the use of annual condition and usage surveys. The function of these surveys will be to record, in both absolute and relative terms, the road pavement's performance with regard to skid resistance, rideability and structural integrity. 3.2.2 On an annual basis, condition surveys shall be undertaken of the whole road pavement within the Concession Area. These surveys shall be divided into one kilometer sections and shall record:

• The location, type and magnitude of all cracking in the road pavement (block cracking, alligator cracking, longitudinal and transverse cracking, and edge cracking);

• The location, condition and magnitude of all existing sealing compound in the road pavement;

• The extent of all potholes and patching, both within the pavement and at the pavement edge;

• The structural strength of the road pavement and its sub layers, as indicated by the extent of any depressions, or rutting in the inner and outer wheel tracks of the nearside lane;

• The extent of any bleeding, stripping or spreading of the road surface;

• The skidding resistance of the wearing surface; and

• The riding quality (roughness) of the pavement.

3.2.3 Based on the findings of these surveys, a planned maintenance programme shall be developed and agreed with the NHA for the following year, the objective of such a programme being to take remedial action at the earliest possible time to both reduce the overall need for maintenance and the consequent disruption to traffic. 3.2.4 In determining this maintenance programme, it will be a mandatory requirement that the condition of the road pavement conforms to the following minimum performance standards throughout the period of the Concession:

Extent of Cracking and Joint Sealing 3.2.5 Within any one kilometer section of road, the extent of pavement cracking shall not exceed the limits set out in Table 3.1. In all cases, cracking should either be non-spalling or with minor spalling of less than 6mm.

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Table 3.1: Road Pavement, Maximum Acceptable Extent of Cracking

Type of Cracking Maximum Acceptable Levels

Centre Line Cracking

Wheel Track Cracking

Block Cracking

Less than 25 percent of the section length

Extent of Potholes 3.2.6 Within any one kilometer length of road there shall be no more than five existing or patched potholes with a size greater than 500mm x 500mm x 25mm.

Extent of Rutting 3.2.7 The depth of rutting at any particular location shall not exceed 5 (five) millimeters and, additionally, over a one kilometer length of carriageway no more than 250 meters shall be rutted up to a depth of 5 (five) millimeters. These criteria shall apply to the mean depth of rutting computed from measurements taken every 20 feet (6 meters) along the length of the road.

Degree of Skid Resistance 3.2.8 The skidding resistance of the road surface shall exceed the SCRIM levels set out in Table 3.2, or other equivalent standards established through use of alternative testing methods. The provisions of the AASHTO Guideline for Skid Resistant Pavement Design should also be followed. Table 3.2: Skidding Resistance, Minimum Performance Levels

Location Minimum SCRIM co-efficient

Main Carriageway 0.35

Slip Roads 0.45

Slip Roads with Curvature less that

100m Radius

0.60

Roundabout or Traffic Signal

Approaches

0.55

Within Roundabouts 0.55

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Riding Quality 3.2.9 At any time, the roughness of the pavement, over any one kilometer length on any lane, shall not exceed a value of 4.2 m/Km IRI. 3.2.10 In addition to ensuring that the road pavement meets the above stated minimum performance criteria, the Concession Company will also be required to conduct a `rolling routine maintenance programme' to ensure that the road pavement and shoulders are adequately protected from rapid deterioration through the day-to-day actions of traffic and water penetration. This programme shall include, but not be limited to:

• Making good all potholes and edge failures within seven days of their being identified or reported;

• Sealing all pavement cracks at the earliest possible opportunity following the annual inspection; and

• Repairing any existing joint or crack-filling sealant that have ceased to be effective.

3.3 STRUCTURES 3.3.1 All structures shall be fully inspected at two-yearly intervals as part of a planned monitoring procedure, and any identified defects shall be remedied within a period of six months from the date of inspection. 3.3.2 In addition, any structure that has been the subject of collision or other damage shall be inspected as soon as is practical, and in any event within a period of 24 hours of the incident taking place. 3.3.3 If such an inspection shows that the structure's structural integrity has been compromised, appropriate action shall be taken immediately to ensure the safety of road users. Remedial repairs should then be undertaken, as soon as is practical, to restore the structure to a safe operational condition. 3.3.4 Minor damage that does not in any way compromise the structural integrity of the structure shall be carried out within six months as part of a rolling maintenance programme. 3.4 EARTHWORKS 3.4.1 All earthworks shall be inspected for signs of deterioration, at three- monthly intervals, and more frequently during the monsoon season, as part of a `rolling planned maintenance programme' and appropriate remedial action shall be taken to make good any identified defects. 3.4.2 In addition, daily inspections of any susceptible areas of earthworks (including rip-rap embankment linings) shall be made during periods when unusually high water levels are identified adjacent to the

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Concession Area, and appropriate action shall be taken to both safeguard the structural integrity of the facility and to remedy any defects that occur. 3.5 DRAINAGE 3.5.1 The drainage system shall be inspected and routinely maintained at six-monthly intervals. The timing of these inspections shall be such as to ensure that the system is fully functional at times of heaviest rainfall and there is no water ponding which may cause damage to the road pavement. 3.5.2 The six-monthly inspection and routine maintenance shall be designed to ensure that the system is free of silt and other debris, that all covers and manholes are in place and secured, and that all oil interceptors are cleaned and are fully functional. Catch basins and culvert inlets and outlets should also be cleaned regularly to remove accumulated debris. 3.5.3 In addition, at two-yearly intervals the drainage system shall be fully inspected to ascertain its structural integrity, and appropriate remedial action shall be taken as necessary. 3.6 ROAD LIGHTING 3.6.1 Routine maintenance activities shall be undertaken at the intervals specified in Table 3.3. Table 3.3: Road Lighting, Maintenance Schedule

Interval Maintenance Activity

Every 14 days Remedy any defect leading to non illumination of the lamp fitting

Every 12 months Clean all lanterns and examine the water tightness, mechanical, structural and electrical integrity of the installation and carry out all necessary remedial repairs

Every 36 months Bulk change all High Pressure Sodium lamps (SON and SON-T)

Every 10 years or earlier if

necessary

Repaint all lamp column in accordance with United Kingdom Department of Transport Standard BD 18/83 or similar.

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3.6.2 All faults that are not rectified at the time of inspection shall be rectified as follows:

• Where the identified fault represents a structural or electrical safety hazard, steps shall be taken to effect a permanent or temporary repair within 24 hours and all temporary repairs shall be permanently rectified within a period of 14 days;

• Where lighting failures constitute a road safety hazard the failure shall be rectified as soon as possible and at least within 14 days of the inspection; and

• Isolated lamp failures that do not constitute a road safety hazard, and any other defects that do not compromise safety, shall be rectified within six months as part of a `rolling' 6-monthly maintenance programme.

3.7 ROAD SIGNS 3.7.1 Routine maintenance of road signs shall be of two types. The first relates to the visibility and safety of the sign installation and the second relates to the overall condition of the sign. 3.7.2 Routine maintenance activities shall be undertaken at the intervals specified in Table 3.4 3.7.3 The maintenance activities set out in Table 3.4 shall include the inspection of all signs at the intervals specified, for the purpose of identifying and rectifying the particular category of fault. All faults that are not rectified at the time of inspection shall be rectified as follows:

• Where the identified fault represents a safety hazard, steps shall be taken to effect a permanent or temporary repair within 24 hours and all temporary repairs shall be permanently rectified within a period of 28 days;

• Where the identified fault does not represent a safety hazard, remedial action shall be undertaken as soon as is practical within the next six-month period, as part of a `rolling' 6-month maintenance programme; and

• Any road sign that is damaged beyond repair shall be replaced at the earliest opportunity and in any event within 7 days of the damage occurring.

3.7.4 In addition to the routine maintenance regime set out in Table 3.4, bulk changes of all lamps shall be carried at intervals appropriate to the type of lamp used.

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Table 3.4: Road Signs, Maintenance Schedule

Interval Maintenance Activity Daily Visual inspection for damage

or vandalism and the effecting of all emergency repair work identified through inspection or reported by the public, police or other body.

Every 28 days Remedy any defect resulting in non illumination of lamps.

At least every 6 months but

more regularly if needed

Clean the surface material of all signs and luminaries and take appropriate action to ensure that unobstructed visibility is maintained in accordance with the design criteria.

Every 2 years Maintain all electrical installations and remedy any identified faults in accordance with United Kingdom IEE Wiring Regulations (15th Edition) or similarly approved standard.

Every 2 years Check the structural integrity of all signs including the security of all brackets, bolts and other fittings, the condition of all rivets, welded joints, frames, posts and gantries, and carry out all necessary remedial works.

Check the appearance and condition of the sign in terms of legibility, luminance, colour and retro-reflective properties, and carry out all necessary remedial works.

3.8 ROAD MARKINGS 3.8.1 All thermoplastic road markings shall be subjected to routine inspection at least once every year. These inspections shall be aimed at determining the extent of degradation of the markings due to:

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a) Normal wear and tear or damage;

b) Spread due to movement of the road surface or plasticity of the material;

c) Loss of colour;

d) Reduction in skid resistance; and

e) Reduction in retro-reflective properties.

3.8.2 Apart from subjective inspections of retro-reflective properties, all inspections shall be carried out in daylight conditions. 3.8.3 In all cases where the level of degradation exceeds the limits set out in Table 3.5 corrective maintenance shall be undertaken within a period of six months. 3.9 PERIMETER SECURITY FENCING 3.9.1 All perimeter security fencing shall be inspected for damage and vandalism at least on a weekly basis, and necessary repairs shall be effected within a further seven days. 3.9.2 In addition, a condition survey shall be carried out every six months and all necessary repairs, painting and replacement measures that are required to maintain the perimeter security fence in good order shall be carried out as part of a `rolling' 6-monthly maintenance programme. 3.10 VEHICULAR SAFETY BARRIERS 3.10.1 Maintenance of safety barriers shall be of two types. The first relates to identifying and rectifying collision damage, and the second relates to maintaining the overall condition of the safety barrier. Table 3.5: Road Markings, Maintenance Performance Thresholds

Type of Degradation Threshold for Corrective Maintenance

Wear (erosion) 70% or less of the thermoplastic material remaining on the road surface

Spread 10% or greater increase in the dimension of the markings, when compared with specified dimensions

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Colour (luminance factor) Luminance factor 45% or less

Skid resistance For normal longitudinal markings, a skid resistance value of 45 or less

For markings with a large surface area, e.g. arrows or lettering, a skid resistance value of 55 or less

Retro-reflectivity Nominal 100mcd/m2/lux

3.10.2 All vehicular safety barriers shall be visually examined on a daily basis to identify damage. All such damage that is identified shall be made safe at the earliest opportunity, and in any event within a period of 24 hours. In addition, permanent repairs to all damaged sections of safety barrier shall be effected within a period of seven days. 3.10.3 All safety barriers shall be inspected at six-monthly intervals to determine their condition in terms of structural integrity and horizontal and vertical alignment. Any identified defects that relate directly to user safety shall be rectified as soon as is practical, and in any event made temporarily safe within a period of 24 hours and fully rectified within the following seven days. 3.10.4 Other identified defects that do not affect user safety shall be rectified as part of a `rolling' six-monthly maintenance programme. 3.11 TOLL COLLECTION AND TRAFFIC MANAGEMENT EQUIPMENT 3.11.1 The Maintenance Programme shall specify procedures for regularly checking the condition of toll collection and traffic management equipment and the planned refurbishment or replacement of equipment in order to minimize losses of revenue due to equipment failure and to ensure levels of service are maintained.

3.11.2 The Maintenance Programme shall also take account of the technology life of the electrical and electronic equipment, which may be expected to be obsolete within 10 to 15 years, and shall include provision for system upgrading to ensure that the systems comply with international standards then prevailing.

CONSTRUCTION PERFORMANCE STANDARDS CONSTRUCTION PERFORMANCE STANDARDS AND DESIGN CRITERIA

PROJECT ASSETS

MINIMUM REQUIREMENTS

Site Clearance Concession Area/Project Assets shall be free from debris, surplus material or leftover construction material

Pavement Including Shoulders and Slopes

IRI per lane per km

Less than 1.2

Potholes/Depressions Nil

Slopes (Pavement, Shoulder) As per the Approved Detailed Design/Approved O&M Manual

Structural Cracking Nil

Rutting Nil

Bleeding, Raveling As per the Approved O&M Manual

Pavement Edge Deformation As per the Approved O&M Manual

Pavement Edge Drop As per the Approved O&M Manual

Paved Shoulders No reverse slope, no scouring and no drop off from hard shoulder and width as per the Approved Detailed Design

New Jersey Barrier (NJB) In case of overlay without milling of existing asphalt concrete the NJB needs to be lifted to safeguard its safety serviceability

Skid Resistance The degree of skid resistance of the road surface (i.e. asphalt wearing course).

PROJECT ASSETS

MINIMUM REQUIREMENTS

Roadside

Grass/Turfing Neat and not more than 6 inches high, sight distance clear in intersections, passing zones, curves etc.

Slopes No erosion and slope is stable

Slope Pitching Neat and no disturbed pitching

Drainage

Cross Pipes No erosion, structurally sound, joints are all intact, clear, upstream and downstream side are clear and drains properly

Box Culverts/Slab Culverts No erosion, structurally sound, joints are all intact, clear, upstream and downstream side are clear and drains properly

Drains/Ditches (Lined or Unlined) All drains are clean, no structural damage and fully functional

Drainage Structures Structurally sound, joints intact, no structural crack and drains properly

Kerb and Gutter Structurally sound, functional and no spalling

Structures

Bridges/Culverts Smooth ride, structurally sound, no structural crack and fully functional. Parapet walls and railings are in acceptable condition, NJB in acceptable condition, wearing course properly sloped, expansion joints in working condition, bearings are all checked and approved by the Quality Assurance Inspector

Other Structures like Retaining Wall, Toe Wall, etc.

Structurally sound with no structural cracks, cleaned and painted where required

PROJECT ASSETS

MINIMUM REQUIREMENTS

Ancillary Works

Crash Barriers Structurally sound, replaced with new one wherever broken, damaged or missing

Road Signs/Markings, Delineators, Road Studs etc. and Other Road Furniture

Good reflectivity, visible, undamaged, replaced with new ones wherever broken, damaged or missing, painted, present in proper location, properly mounted and all are functional

Illumination/Lighting All lighting shall be functional

Administrative Office and Centralized Operation Centre

All buildings are in good shape and functional, properly painted inside and outside the building, no structural damage inside and outside the building, water supply, drainage system and electrical appliances if any are all functional.

O&M REQUIREMENTS

Asset Outcome

Performance Target: % of asset that shall be in the outcome described

condition

Condition Assessment Acceptance, Criteria and Services Delivery

1. Pavement including Shoulders and Slopes Paved Lanes (Asphalt)

Smooth Safe Adequate Skid Resistance Durable

95

IRI not greater than 3.5 per lane per km

Tolerances / Criteria

no ruts >10 mm

no unsealed (non-structural) cracks larger than 2 to 6 mm on 95% of road length. Tolerance for structural cracks is Nil no potholes > 100.00 sq mm area and 25 mm deep no shoving > 7 spot per km

no bleeding / raveling

no edge deformation > 100 mm no shallow depression > 3 spot per km Patching even +/- 5 mm higher or lower Roughness not > 3.5 m/km no false ditch (shoulder build up causes water to drain back on to the pavement)

Timelines Requirement: Potholes causing a threat to safety will be responded to immediately Others within 2 days of notification Bleeding surface to be treated immediately within 1 day

Paved Shoulders (If any)

Safe Smooth (No standing of water) Adequate width

90

Tolerances / Criteria <10% drop of> 25mm (linear measure)

no false ditch (shoulder build up causes water to drain back on to the pavement) no scouring order formation Timelines Requirement: Shall be corrected within 2 days if shoulder are deformed and lower than 25mm from the adjacent carriageway

Asset Outcome

Performance Target: % of asset that shall be in the outcome described

condition

Condition Assessment Acceptance, Criteria and Services Delivery

2. Roadside

Grass / Turf Neat Attractive Sight Distance Present Roadway free of obstruction

90

Tolerances / Criteria Grass height 6 inches or less Sight distance is clear in intersections, passing zones and curves etc Neat around crash barrier, headwalls, paved ditches Adequate cover

Timelines Requirement: Respond immediately upon notification Roadfill promptly and properly disposed of within 4 hours

Debris and Road Fill

Neat Attractive

100

Tolerances / Criteria Roadside appears neat and clean

Litter / Malba Neat Attractive

95

Tolerances / Criteria Roadside appears neat and clean

Landscaping Stable No erosion

95

Tolerances / Criteria Minimal erosion and no erosion showing a pattern that will endanger the stability of the slope

Slope Stable No erosion

100

Tolerances / Criteria Minimal erosion and no erosion showing a pattern that will endanger the stability of the slope

Slope Pitching No Disturbed pitching

95

Tolerances / Criteria The slope of pitching surface should be as per design slope, slight variation

Road Blockade

No blockade 100

Tolerances / Criteria Inform traffic police and remove blockage, if required construct temporary diversion

Asset Outcome

Performance Target: % of asset that shall be in the outcome

described condition

Condition Assessment Acceptance, Criteria and Services

Delivery

3. Drainage Cross pipes Structurally sound

Open drains properly Joints intact Adequate Capacity No erosion

95

Tolerances / Criteria <10% deteriorated barrel >90% diameter open drains properly

joints intact no evidence of flooding minimal erosion at ends end protection intact no dip in road over pipe indicating structural problems

Box Culverts / Slab Culverts

Structurally sound Open Drains properly Joints intact Adequate Capacity No erosion

95

Tolerances / Criteria <10% deteriorated barrel >90% diameter open drains properly joints intact no evidence of flooding minimal erosion at ends end protection intact no dip in road over pipe indicating structural problems

Ditches Paved / Lined drains

Aligned Structurally sound Clean

Tolerances / Criteria no undermining or undercut requiring action <25% spalled no obstruction to flow of water that requires action

Ditches, Unpaved / Unlined drains

Drain Functional 90

Tolerances / Criteria grade drains minimal erosion outfalls functional no obstruction to flow of water that requires action no siltation

Asset Outcome Performance Target: % of asset that shall be in the outcome described

condition

Condition Assessment Acceptance, Criteria and Services Delivery

Storm Drains Drop inlets

Open No flooding No settlement

100

Tolerances / Criteria

100% open no evidence of flooding

Kerb and Gutter

In line Clean/drain Sound No undermining

95

Tolerances / Criteria minimal obstruction no unsealed cracks > 6 mm no spalling > 1/4 inch deep <25% of surface spalled

Erosion or Scour in upstream/ downstream

No erosion due to Scour

100

Tolerances / Criteria Erosion not to be allowed to continue

Timelines Requirement:

For all the above cases repair or reconstruction shall be attended and completed within a week

4. Bridges/Culverts Overall Bridge

Smooth ride, Strong, aesthetic, wide enough and available at legal speed limit

0% scour critical – 0 % posted – 0

no graffiti on structures Timelines Required: structurally critical conditions must be notified immediately and reported within a reasonable time frame

Traffic Safety Features (Railings Parapet, Wing walls, Drainage spouts etc)

Present Functional

95%

Tolerances / Criteria Functional Timelines Required: Repair or replace badly damaged traffic safety features within 1-2 days damaged but functional traffic safety

Deck Smooth Strong Wide enough Drains properly

95%

Tolerances / Criteria minimal spalls cracks or scaling clean deck Drains / scuppers are clean and functional

Asset Outcome Performance Target: % of asset that shall be in the outcome described

condition

Condition Assessment Acceptance, Criteria and Services Delivery

Super structure

Strong Clearance Aesthetic

Tolerances / Criteria no loss of section or cracks paint in good shape no spalling proper vertical clearance proper opening

Sub structure Joints

Strong looks good safe from settlement all components Smooth do not leak

Tolerances / Criteria no spalls, cracks, scaling bearing assemblies functional abutment seats cleaned and sound pier seats clean and sound bearings clean, sound and lubricated periodically

Tolerances / Criteria No joints loose joint are sealed

Structural culverts

Structurally sound Open Proper Passage Joints intact Adequate Capacity No erosion

95

Tolerances / Criteria <10% deteriorated barrel >95% diameter open minimal erosion at ends correct grade joints intact no evidence of flooding end protection intact no dip in road over pipe indicating structural problems

Retaining Walls

Stable Strong

95

Tolerances / Criteria no spalling or cracks weep holes open no indication of settlement or rotation

Drainage Functional and Efficient

95

Tolerances / Criteria Vegetation clean Protection present and functional no embankment erosion no channel drift

Asset Outcome Performance Target: % of asset that shall be in the outcome described

condition

Condition Assessment Acceptance, Criteria and Services Delivery

5. Road Signs and Road Furniture Signs (includes overhead signs)

Good reflectively visible undamaged placed according to standards

100 – regulatory and

warning 95 - other

Tolerances / Criteria 100% clear of obstruction 95% surface free of damage placement works for motorist at posted speed Timelines Required: replace warning and regulatory signs within 24 hours of notification

Pavement marking

Bright visible 95

Tolerances / Criteria 100% clear of debris <5% of surface damaged placement meets industry standards

Object markers and Delineators

Reflective present in right location

95

Tolerances / Criteria

95% reflective Properly mounted

Km stone / 5 km stone

present painted in 2 languages intact upright

100

Tolerances / Criteria

100% clear of obstruction <5% of surface damaged placement meets NHA/Design standards

Asset Outcome Performance Target: % of asset that shall be in the outcome described

condition

Condition Assessment Acceptance, Criteria and Services Delivery

Bench marks reference pillars

Present reinforced painted

100

Tolerances / Criteria 100% clear of obstruction Placement meets industry standards <10% damaged

Painting & printing letters on road Signs km stone And 5km stone

painted to match with existing

100

Tolerances / Criteria 100% clear of obstruction To match with the existing

6. Other Facilities Street Lighting Functional

Wiring proper undamaged painting

98

Tolerances / Criteria 100% lights functional 100% clear obstruction Timelines Required: Remedy the reason of non-functional of lights so that lighting is restored within 6 hours replace any damaged poles, switch

Wayside amenity/ truck lay by

functional building toilet

Tolerances / Criteria water supply, drainage & lighting always shall be functional 98% lights functional in the building or outside the building

Asset Outcome Performance Target: % of asset that shall be in the outcome described

condition

Condition Assessment Acceptance, Criteria and Services Delivery

Water supply drainage pavement lighting landscaping

95% of total time the water supply and drainage functional 100% of total paved area are crack free / pot hole free 100% of kerbs and channel are in perfect condition Building to be repainted every year

Timelines Required: Any rectification or replacement or repair shall be done within one day

Project Implementation Unit office/ Operations and Maintenance buildings including laboratory building toilet water supply drainage lighting pavement Equipment Furniture

Functional clean hygienic structures efficient dry comfortable

98

Tolerances / Criteria 100% functional PIU office and laboratory 98% functional laboratory testing equipment and apparatus 100% testing facility of any type of tests 98% lights functional, water supply and drainage functional 98% time equipment (like AC, water cooler, heater) functional 100% furnishing item to be refinished once in every two years 100% furniture functional Total buildings to be painted every year Timelines Required: Repair/replace/refinish within one day

Toll equipment Toll Plaza ITS Weigh station

Functional / efficient Clean Lighting Safety

100

Tolerances / Criteria 100% functional toll equipment / ITS / weigh station

100% lightings power 95% furnished / painted Timelines Required: Repair/replace/refinish within one day

Accident Management recovery

Safety Lane availability

100

Tolerances / Criteria 100% accident management and vehicle recovery 90% lane availability Timelines Required: Vehicle recovery and accident management response to be made with 15 minutes

Reporting Roughness Condition Bridge Management System (BMS) Pavement Management System (PMS)

Condition Monitoring

100

Tolerances / Criteria 100% Required detailed reporting bi-annually

Toll Plazas Performance Target

Toll Processing Time

The Toll processing time for each vehicle per lane shall not exceed ten (10) seconds. In the event the Toll processing time at any Toll Plaza exceeds ten (10) seconds for a duration of one (1) Month at any time during the Concession Period (in the ordinary course), the Concessionaire shall forthwith add an additional lane or upgrade the system deployed at the Toll Plaza to ensure that the Toll processing time for each vehicle per lane shall not exceed ten (10) seconds

Performance Indicators Appendix – 7

1

CONTRACT TECHNICAL SPECIFICATION AND PENALTIES FOR MAINTENANCE (ROUTINE)

Service

Provided Performance Indicators Penalties in Rupees Response

Time

Riding Quality Smoothness

Safety Features

1. No pothole on paved roads. 2. No edge failure on paved roads

3. No rutting more than 20 m long and 10 mm

deep on paved road

4. No potholes on paved shoulders 5. Drains, ditches, culverts and other drainage

Structures to be cleaned. Bridge parapets/barriers, expansion joints to be maintained

6. No obstructions on the pavement, such as fallen Trees, dead animals, broken down vehicles, slope slides.

7. Vertical signs to be well-placed, cleaned and visible day and night.

8. Horizontal lane markings to be well maintained.

9. Guardrails to be cleaned, well maintained and visible during day and night.

6000/day/pothole 6000/day/failure 3000/day/rut 2000/day/pothole 2000/day/culvert or drain 2000/hr or fraction per obstruction 4000/day/stata.Sign 2500/sq.m/day 2500/day/section

2 days 2 days 5 days 3 days 10 days 1 day 5 days 5 days 5 days

2

Aesthetics and attractiveness

of roadside

10. Traffic control and safety in work zones to be fully operational and in accordance with standard specifications.

11. Bush height not to exceed 0.15 m on shoulders and slopes and 1 m beyond (up to “Right of Way”).

12. No litter or residues on or around pavement. 13. Maintain an operation center for supervision

Team with adequate furniture, rest room and Communication system (radio, phone)

1000/day/km or part of 1000/day/km or part of 2500/day of delay 44/day

5 days 8 days 5 days 5 days

CONTRACT TECHNICAL SPECIFICATION AND PENALTIES FOR MAINTENANCE (PERIODIC)

• For main carriageway the Ride quality (IRI) shall not exceed 4.0 m/Km. Incase IRI exceeds the limit then

Overlay/Rehabilitation shall be undertaken to bring back IRI below 2.0 m/Km.

• For bridges on the project, the deflection shall not exceed span length divided by 300 i.e. (Span/300) or the structure shall not reflect any structural cracking. Incase the bridges/ culverts exceed the limits or reflect structural cracking, periodic rehabilitation or replacement would be undertaken accordingly.

NHA PPP Policy and Regulatory Framework Appendix – 8

NATIONAL HIGHWAY AUTHORITY MINISTRY OF COMMUNICATIONS

GOVERNMENT OF PAKISTAN

PRIVATE SECTOR PARTICIPATION IN

NATIONAL HIGHWAYS, MOTORWAYS TUNNELS AND BRIDGES

IN PAKISTAN

PPP POLICY and REGULATORY FRAMEWORK

MAY 2009

Table Of Contents A.  POLICY OBJECTIVES AND STRATEGY .......................................................... 1 

1.   Introduction ............................................................................................................. 1 2.   Private Sector Participation Through Public Private Partnership (PPP) ............... 2 

B. FUNDAMENTALS OF PPP PROJECTS ............................................................ 3

1. Introduction ............................................................................................................. 3 2. Developing a PPP Highway Program .................................................................... 4 3. Need for, and Content of, the Pre-Feasibility Study .............................................. 4 4. Institutional Arrangements ...................................................................................... 5

C. TOLL POLICY ...................................................................................................... 5

1. Toll Levels ............................................................................................................... 6 2. Toll Structure ........................................................................................................... 6 3. Toll Escalation ........................................................................................................ 6 4. Toll Exemptions ...................................................................................................... 6 5. Toll Competition ...................................................................................................... 7

D. OPERATIONAL AND ROAD MANAGEMENT POLICY .................................... 7

1. Vehicle Type Prohibition ......................................................................................... 7 2. Vehicle Weight Limits ............................................................................................. 7 3. Speed Limits ........................................................................................................... 7 4. Provision of Emergency Services .......................................................................... 7 5. Tax Collection ......................................................................................................... 8

E. FINANCIAL AND CONTRACTUAL ARRANGEMENTS ................................... 8 F. INCENTIVES FOR INVESTMENT ....................................................................... 9 G. SECURITY PACKAGE ........................................................................................ 9 H. ONE WINDOW OPERATION ............................................................................ 10 I. PPP TENDERING PROCEDURES ................................................................... 10

1. PPP Projects to be Tendered ............................................................................... 10 2. Prequalification Applications ................................................................................ 10 3. Content of Prequalification Applications ............................................................... 11 4. Review of Prequalification Applications ............................................................... 11 5. Shortlist of Prequalified Bidders ........................................................................... 12 6. Issuance of the Request for Proposal to all Prequalified Bidders ....................... 12 7. Projects in the Pipeline ......................................................................................... 12

APPENDIX - I: TOLL ESCALATION RULES .................................................................. 14   

Policy and Regulatory Framework

1

A. POLICY OBJECTIVES AND STRATEGY 1. Introduction

The Government of the Islamic Republic of Pakistan (GoP) through its National

Highway Authority intends to accelerate National highway, motorway, tunnel and bridge development through increased private sector participation thereby promoting economic growth and reducing poverty. This Policy and Regulatory Framework (hereinafter referred to as the “Policy”) sets forth the reasons for, and the manner in which, private sector participation shall be encouraged and the public sector interest protected.

With sound macroeconomic fundamentals achieved and key sectors strengthened

by reforms implemented over the past few years, Pakistan’s economy is continuing to expand and the economy is well positioned to sustain six percent or more annual growth in the medium term.

Transportation is an important sector of Pakistan’s economy, making up 10% of the

GDP and over 17% of Gross Capital Formation. The sector consumes 35% of the total energy annually and is the recipient of substantial portion of the annual federal public sector development program.

An efficient transport system is a pre-requisite for Pakistan to become globally

competitive, and the growth in capacity must be achieved while increasing service levels and decreasing costs.

The transport sector covers roads, road transport, railways, ports and shipping, and

aviation. The sector has direct and indirect linkages with all important sectors of the economy which influence economic and social development.

The National Highway Authority (NHA), under the National Highway Act 1991, and

amendment 2001, is responsible for managing the design, development and operation of national highways, motorways, tunnels and bridge infrastructure in Pakistan. The NHA has the task of ensuring that the standards of design, construction and maintenance of the network in the country, including the supporting infrastructure, is continually improved to standards internationally recognized as compliant with the objectives of ensuring public safety and convenience.

Currently, Pakistan’s road network is approximately 258,000 kilometers. NHA

maintains the national highways, those defined by Article 2 (g) of the NHA Act of 1991, as amended in 2001; motorways; limited access, minimum of four lanes, and such other roads as may be entrusted to it, while the provincial Communications and Works (C & W) Departments are responsible for the provincial road network.

NHA considers that the technical, managerial and financial resources of the private

sector can make a useful addition to its own efforts. After carefully evaluating a wide range of alternatives, NHA has decided to encourage the private sector to participate in a significant number of national highways and motorways, as well as a limited number of tunnel and bridge, projects needed to facilitate public safety and convenience, as well as to support and sustain Pakistan's rapid rate of economic growth.

Policy and Regulatory Framework

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2. Private Sector Participation Through Public Private Partnership (PPP) 2.1 Introduction

The concept of Public Private Partnership (PPP) covers a wide range of situations and is subject to various interpretations. A now well-known definition is: “a PPP is a risk-sharing relationship between the public and private sectors based upon a shared aspiration to bring about a desired public policy outcome,” typically, the provision of new or improved infrastructure to provide a new public service.

2.2 Existing Federal Framework for PPP in Infrastructure

In order to ensure the private sector is attracted to assisting with the country’s infrastructure needs, the Government at all levels has to put in place a combination of policy reforms, institutional support, incentives and financing modalities. These are essential to ensure private sector participation in financing, constructing and managing future infrastructure development projects. In the early 1990’s, Pakistan established a policy and regulatory framework for PPP in the telecom and energy sectors, sectors which have seen great advances. The framework for PPP infrastructure service procurement in other sectors such as transport and logistics, water supply, sanitation, solid waste management, social sectors, and real estate was developed in the early 2000’s and the policy framework was passed by the Ministry of Finance and subsequently by ECC in November 2007. Its features are described below. The Ministry of Finance is spearheading the development of PPP, particularly at the federal level and considerable progress has been achieved in developing a conducive PPP environment in Pakistan. The Government has set up the Infrastructure Project Development Facility (IPDF) under the auspices of the Ministry of Finance (MOF), to promote, help generate and generally assist PPP projects in cooperation with public sector Institutions (line ministries, provincial Government, local bodies, state owned enterprises etc.) that are or want to undertake PPP. The NHA policy contained herein fills the need for PPP in Highways and related facilities under NHA responsibility and is consistent with the ECC approved PPP policy.

2.3 PPP in National Highways

Basically PPP is an extension of public procurement rules, putting the emphasis on output service rather than on input specifications. The Policy shall refer to the PPP acronym for any contractual arrangement, which differs from the traditional contracts awarded under public procurement rules (design & build, outsourcing), including concessions. For NHA national highways and motorways, PPP generally refer to concessions or Build-Operate-Transfer (BOT) contracts, or any variant of them, i.e. contracts where risks and responsibilities transferred to the private sector are much wider than in traditional public works or service contracts. They usually entail a mix of construction, operation, commercial and financial issues, with a variable degree of risk sharing between public and private partners.

Policy and Regulatory Framework

3

For NHA, and the government, the main attraction is that the private sector can bear part of the financial burden of investing in national highways and Motorways. Since the private sector is expected to be more efficient than the state in running certain concerns and is also likely to charge actual costs of services from customers, the burden of subsidies can be diminished if not eliminated. The other attraction for the NHA is that resources can be freed to provide funds in areas and sectors needed for the socioeconomic uplift and stabilization of the less advantaged citizens. The state can thus return to its core business of providing good governance, enhancing knowledge and skills, providing their basic health needs, economy, and increasing opportunities and security for its citizens. PPP involves the investment of private capital to design, finance, construct, operate, and maintain a project for public use for specific term during which a private investment consortium is able to collect revenue from the users of the facility. When the consortium’s limited term of ownership expires, title to the project reverts to the NHA at a cost of one rupee, or, as provided in the tender documents, the NHA may decide to extend the concession or re-tender. By then, the consortium should have collected enough revenue to recover its investment and earn a profit; i.e., made a reasonable return on the investment. To protect the public interest, the NHA has decided the primary mechanism for the award of concessions to the private sector will involve competitive tendering, where technical and financial bidding conditions shall be made public in advance. However in cases where multilateral financing agencies or bilateral financiers or other external agencies/or governments are involved, requiring a different procurement process, then the NHA may agree to their proposal or otherwise, as deemed appropriate. The process of procurement shall still remain transparent, open, and fair in all cases. • Transparency means that (a) the "rules of the game" are made available to

all participants and (b) the "game" will be followed in accordance with those rules. Transparency means that clear and acceptable guidelines for bidding are made available to all participants and that those guidelines are consistently followed.

• Openness means free and open competition. The first step to maximize free

and open competition is through widely-circulated public advertising, which opens-up and instils greater confidence in the process, encourages more bidders to compete for PPP projects, and results in overall lower prices for the benefit of the public.

• Fairness means all participants are treated fairly and consistently over time

and as between each other, which will further encourage capable, responsible potential bidders to compete for PPP projects.

B. FUNDAMENTALS OF PPP PROJECTS 1. Introduction

PPP Projects in the highway sector will involve a number of key steps and

procedures to be implemented by the NHA.

Policy and Regulatory Framework

4

These steps include preparing an overall Program of projects suitable for PPP and which for specific projects includes preparatory studies such as Pre-feasibility studies and initial environmental impact studies. It also includes providing design standards and generating sufficient information to enable NHA to assess a PPP proposal. 2. Developing a PPP Highway Program

The NHA shall identify and continue to update a programme of national highway,

motorway, tunnel and bridge projects that may be suitable for private sector participation. Motorways will normally be limited access highways of minimum dual 2-lane

carriageway standard, with grade separated interchanges and closed toll systems. The NHA shall carry out all PPP projects, whether solicited or unsolicited1, using

standard bidding procedures described in Section below. The PPP program shall be developed within the national transport policy and sector program for Pakistan within which pre feasibility studies will have determined the characteristics and viability of each PPP project. These pre feasibility studies will be updated on a regular basis as necessary. This is amplified in Section 3, below.

3. Need for, and Content of the Pre-Feasibility Study

The first step in the PPP process starts with NHA identifying a road transport need

that may be fulfilled as a PPP project. To be processed as a PPP project, the NHA shall satisfy itself (through preparing a detailed pre-feasibility study2) that the project is technically, environmentally, economically and financially viable (with or without government support) and in conformity with the principles of this Policy.

The purpose of a pre-feasibility study is to carefully analyze the size, location,

technical options, socio economic impact, socio-environmental impacts and the broad potential financial viability of the project. In particular, the NHA shall ensure that each pre-feasibility study shall provide all the key information needed for the proposed implementation of a PPP project including among others the following:

(i) a defined rationale, scope and description of the PPP project

(ii) preliminary project cost estimates based on preliminary engineering designs

(iii) robust traffic forecasts; and revenues analysis from traffic and other sources

(iv) economic cost benefit analysis

(v) full social and environmental analyses including the mitigation costs

(vi) financial and sensitivity analysis

1 A basic principle is that most, if not all projects, will be solicited, that is based on a list of projects developed by NHA. Unsolicited projects are projects proposed by the private sector and will not generally be supported by NHA unless there are clear and overriding advantages such as new technology, opening up disadvantaged areas or other very strong reasons. Unsolicited projects should not come from the NHA’s medium term PPP program already under implementation.

2 The proponent of an unsolicited tender must itself prepare a full pre feasibility study.

Policy and Regulatory Framework

5

(vii) an assessment of the issues and risks to be included under a risk management plan.

(viii) Market sounding, willingness to pay and other consultation (ix) Viability gap and need for subsidy analysis

4. Institutional Arrangements

By putting the private sector in charge of the provision of a service the NHA does

not waive its responsibility for the public service, it only changes the type of responsibility, which can even bring an increase in its technical and political complexity. Granting the service to the private sector means that the NHA has to adopt legal and institutional mechanisms to ensure that the service is provided efficiently and the responsibilities assumed by the private sector are fulfilled. The responsibility is heightened because the inefficiencies that the public used to accept from the government will not be tolerated from the private sector. The higher the rates the consumer pays for the service, the higher the expectations of improved service.

Attracting Private sector finance is a complex task and such a task dictates a

dedicated PPP organization in NHA with skills necessary for management of all the phases in PPP project development. The personnel of this cell should be capable of project development and negotiating with the private sector on equal footing. This requires a level of professionalism and compensation comparable to that of market.

The Public Private Partnership unit of NHA (hereinafter referred to as the “PPP

Cell”) shall be established comprising of highly professional and committed staff and shall be responsible for developing and processing all PPP Projects.

For administrative purposes, the PPP Cell shall maintain a list of PPP projects

approved by the NHA, include these on an Approved Projects List and advertise same and shall:

(i) verify that all projects before tendering are supported by an adequate pre-

feasibility study. In the event the pre-feasibility study is inadequate, the PPP Cell shall liaise with relevant departments of NHA to strengthen and improve the pre-feasibility study; and

(ii) if necessary, the PPP Cell may review or arrange for an independent, professional review and strengthening of pre-feasibility studies, and other documentation accompanying the submission.

The Pre-Feasibility study shall be included in the tender documents provided to all

short listed bidders. The NHA, will include alignment, pre-feasibility and preliminary design studies of all of the projects on the Approved Projects List, and these will be made available to prospective bidders only as guidelines for establishing the viability of the projects offered. However, it is the ultimate responsibility of the bidder to prepare its own complete feasibility study, and not rely on the NHA Pre-Feasibility study. C. TOLL POLICY

It is the NHA's policy to mobilise the maximum resources possible from the users of

new or improved facilities.

Policy and Regulatory Framework

6

Consistent with the Concession Agreement, Concessionaires will be given the right to collect tolls at locations they consider appropriate and are approved by NHA, within their specified Concession Area, using either an “open” or “closed” toll system as contained in the bidding documents. The tolling arrangements at the interface between two Concession Areas shall be agreed between the Concessionaires concerned and NHA in consultation with any other provincial and/or local governments, if involved. 1. Toll Levels

a. For Financially viable Projects;

The tolls charged for use of the national highway, motorway, tunnel or bridge will be one of the key evaluation factors used to decide which bidder is awarded the Concession. It should be noted that toll levels estimated by NHA in its pre feasibility study will take into account a number of factors including cost recovery, levels of tolls on other toll roads, affordability, types of traffic and other factors relevant to the specific project.

b. For Projects needing Government Financial Support

In a few cases, if a project is economically viable but needs financial support to attract the private sector. In this case, tolls will be set by NHA through its pre feasibility study, and the criteria for tender award will be least subsidy/support from NHA and/or GOP. It should be noted that this follows current ECC approved PPP policy which specifies that support may be provided in a number of ways including through the MOF Viability Gap Fund or PSDP.

2. Toll Structure

The PPP Cell will monitor the Concessionaires’ implementation of the contracted toll

structure contained in the Concession Agreement and will exercise its powers to penalize or take necessary action against default under the provisions of the Concession Agreements. 3. Toll Escalation

Escalation of toll rates and toll charges will be permitted, using the formula

contained in the Concession Agreement. The Concessionaire shall propose to the PPP Cell proposed toll escalation consistent with the formula in the Concession Agreement. The PPP Cell will confirm the mathematical accuracy of the Concessionaire’s proposed toll, consistent with the Concession Agreement, as summarized in Appendix I.

When applying the above rules, Concessionaires will be allowed to apply a lower

level of toll escalation at any time, if they consider that this would improve the overall amount of toll revenue. 4. Toll Exemptions

Concessionaires will not be required to exempt any specific vehicle types or group

of road users from the payment of tolls except the following:

Policy and Regulatory Framework

7

• Provincial and National Highways & Motorway Police

• Fire Brigades

• Ambulances

• Armed Forces of Pakistan vehicles bearing broad arrow number plates

• Vehicles conveying MNA’s/MPA’s and Senators in person

• Vehicles having Supreme Court/High Court Flags/Insignia Plates. However, Concessionaires can make arrangements with regular users of the facility

(either individuals, companies or others), only to reduce the toll charged in individual cases. 5. Toll Competition

The introduction of new roads and bridges that depend on user charges (toll

revenues) for their financial viability will need to take account of existing non-tolled or partially tolled competing routes, as well as any new routes that are planned. The NHA will endeavour to ensure that competing routes, especially roads of a similar standard, are tolled appropriately. D. OPERATIONAL AND ROAD MANAGEMENT POLICY 1. Vehicle Type Prohibition

Concessionaires shall prohibit the use of motorways by pedestrians, non-motorised

vehicles and other slow-moving vehicles such as motorcycles and tractors, to promote safety and smooth traffic flow. 2. Vehicle Weight Limits

The vehicle weight limits to be applied to any given project will be included in the

functional specification and minimum design criteria issued with the bidding documents, and the NHA will undertake to ensure that appropriate legislation, rules and regulations are provided through appropriate agencies of the government to ensure that such vehicle weight limits can be enforced.

Under normal circumstances, Concessionaires shall exercise the power to weigh

heavy vehicles if found violating the law of the land, prohibit them from passing through their Concession Area. 3. Speed Limits

Design speeds on individual PPP Projects sections will be part of the functional

specification that is provided to Concessionaires at the time of bidding. 4. Provision of Emergency Services

Concessionaires will be required to arrange for the provision of emergency

breakdown facilities as well as a means of liaising effectively with the emergency services. Provisions will be included in the Concession Agreement to accomplish this objective, and the PPP Cell shall monitor the Concessionaires compliance thereto.

Policy and Regulatory Framework

8

5. Tax Collection

The collection of local taxes by the government agencies will not be allowed within a

Concession Area. Entry and exit slip roads shall not be tolled by any entity other than the Concessionaire within 5 km of concession road entry and exit point and even then (ie beyond 5 km) it shall be ensured that wherever tolled, it will carry proper justification. E. FINANCIAL AND CONTRACTUAL ARRANGEMENTS 1. PPP projects will involve limited recourse financing, which means that the funds for a project will be raised without any sovereign guarantee of repayment. The investors in, and lenders to, Concessionaires must therefore look to the revenues earned from toll collection, and other ancillary activities, for the returns on their equity and the servicing of their loans. Pre-financial close costs are non-recoverable, and Concessionaires shall bear all the costs associated with:

(i) studies carried out by them to establish the financial and environmental viability of the project;

(ii) legal and other expenses incurred by them in preparing Concession Agreements and arranging finance;

(iii) construction and maintenance costs of the project (preferably including costs associated with relocation of utilities and construction supervision, where appropriate); and

(iv) toll collection and operating costs (including the cost of providing breakdown services, and routine maintenance costs).

2. If so provided in the Concession Agreement, Concessionaires will be required to make annual contributions into a Maintenance/Rehabilitation Escrow Account to make provision for periodic maintenance and asset replacement costs. 3. The NHA will support applications of project sponsors in accessing facilities provided by multi-lateral and bi-lateral funding agencies to underwrite country risk for international loans but, without assuming any liability; 4. Where a public sector grant or other support; including but not limited to traffic guarantees, revenue guarantee, equity stake, annuity, a contribution to project cost, and other similar support, is available for selected projects, the extent will be indicated in the relevant bidding documents. However, it may vary depending upon the project viability and payback. 5. Concession Periods will generally be of 25 years. The Concession Period applicable to each individual project will be decided in advance by the NHA, and announced in the relevant bidding documents depending upon the project viability and payback. 6. At the end of the agreed Concession Period, the facility will be transferred to the NHA in a properly maintained and operational condition, at a cost of one Pakistan rupee to NHA.

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F. INCENTIVES FOR INVESTMENT To facilitate the implementation of NHA PPP projects incentives are available

according to the regulations of Board of Investment (BOI) the tax regulations of the Federal Board of Revenue (FBR) and the administrative requirements of the Securities and Exchange Commission. G. SECURITY PACKAGE 1. Model Concession Agreements have been prepared as a basis for privately financed and operated highway, tunnel and bridge projects to facilitate the tendering process. Each Request for Proposal will contain a project specific concession agreement which tenderers are expected to abide by, thus leading to a more efficient process of contract award. 2. The National Highway Authority Act 1991 amended in 2001, ensures that all the powers required by the NHA to initiate, operate and award projects to be undertaken through private sector financing. Further, BOT highway concessions are in place, and that those powers can be transferred to the Concessionaires, as necessary. In addition, details of all national highways and strategic roads, including the main elements of the national toll motorway and expressway system, have been Notified in the Official Gazette under the provisions of the NHA Act. 3. Detailed Rules and Regulations for the management and operation of the National Highway System have also been developed by the NHA. In addition, the location of all existing and proposed toll collection points on national highways and major Provincial roads has been documented by the NHA, and shall be stated in the bid documents. 4. For all PPP projects, the NHA will provide in the Concession Agreement:

(i) procedures such as time extensions or termination to deal with specific `force majeure' risks; and

(ii) procedures for dealing with changes in costs and losses caused by changes in laws which are not reflected in the General Consumer Price Index. Such changes will be adjusted through suitable adjustment in the Concession Period.

5. The NHA will also undertake that:

(i) appropriate assistance will be given to Concessionaires in obtaining the necessary Government Approvals for a project;

(ii) land for projects will be made available to Concession Companies in a timely manner, clear and free from encumbrances (unless otherwise provided in the bid documents);

(iii) agreements regarding the methods, costs and time-scales associated with any necessary removal or relocation of public utility services will be obtained from the utility companies, on the Concessionaires's behalf;

(iv) appropriate steps will be taken to prevent encroachments onto the right of way, and to control roadside facilities and advertising material, and to limit access to expressways and motorways to specific entry and exit points; and

(v) the undertakings given in Section D of this document regarding operational and road management matters will also apply.

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H. ONE WINDOW OPERATION Under the new Policy, the NHA, under the direction of the National Highway

Council, is being given the responsibility for coordinating and managing all PPP for designated national highway and bridge projects in Pakistan. At the working level, the PPP Cell has been formed within the NHA to interface with the private sector interested in PPP and all Concessionaires. The PPP Cell, on behalf of the NHA, will be responsible for:

1. Promotion of PPP including providing information

2. coordinating with all the agencies and Ministries concerned (including Provincial governments);

3. preparing and negotiating Concession Agreements;

4. monitoring the Concessionaires performance in accordance with the respective Concession Agreements; and

5. generally safeguarding the public interest. I. PPP TENDERING PROCEDURES 1. PPP Projects to be Tendered

The NHA shall carryout all PPP projects using standard bidding procedures

described in this Policy. Standard bidding involves a transparent, open and fair process summarized in this Section I, and to be detailed in a PPP Procedures Manual.

The PPP Cell shall maintain a list of PPP projects to be tendered on an Approved

Projects List. To encourage prospective, capable bidders to compete for PPP projects, the PPP Cell shall ensure that the Approved Projects List is widely disseminated through: advertising in the print media [widely circulated newspapers, trade publications and periodicals]; the PPP Cell internet website and a printed copy of the same Approved Projects List shall provided free of charge to any party requesting such a copy.

The PPP Cell may commence to tender PPP projects only after it has been

published on the Approved Projects List for a minimum period of thirty (30) days. 2. Prequalification Applications

Upon request by any interested party, the PPP Cell shall provide, for a non

refundable fee of Rs 3,000, a prequalification application for any PPP project on the Approved Projects List. The PPP Cell will register all parties requesting prequalification applications after their due evaluation.

Any requirement established by the PPP Cell shall be set forth in the

prequalification application and, subsequently in the bid/Request For Proposal documents or other documents for solicitation of proposals and shall apply equally to all bidders. The PPP Cell shall impose no criterion, requirement or procedure with respect to the qualifications of prospective bidders other than those provided for in this Policy.

The prequalification application shall include the manner and place for the

submission of applications to prequalify and the deadline for the submission, expressed as a specific date and time and allowing sufficient time for bidders to prepare and submit their applications, taking into account requirements set out by NHA.

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3. Content of Prequalification Applications

In order to compete for a PPP project, any interested party must timely submit to the

PPP Cell a completed Prequalification Application showing that it qualifies by meeting such of the following criteria as the PPP Cell considers appropriate in the particular project:

(a) That they possess the necessary professional and technical qualifications, professional and technical competence, financial resources, equipment and other physical facilities, managerial capability, reliability, experience, and reputation, and the personnel, to perform the project.

These criteria include, but are not limited to, the bidder's; (i) general experience in the sector;

(ii) past performance on similar projects, including references from past clients for such projects;

(iii) experience in similar geographical/topographical/climatic areas;

(iv) capabilities with respect to personnel and equipment; and

(v) financial capability to carry out the project as reflected in its audited accounts, tax returns and bank’s certificate

(vi) Legal status of the bidder. (b) That they have legal capacity to enter into the PPP contract; (c) That they are not insolvent, in receivership, bankrupt or being wound up,

their affairs are not being administered by a court or a judicial officer, their business activities have not been suspended, and they are not the subject of legal proceedings for any of the foregoing;

(d) That they have the required legal status, and the proper tax status i.e. they

will show that they have legally fulfilled their obligations to pay taxes to the State and that they are duly registered with the competent registration authority/body;

(e) That they have not, and their directors or officers have not, been convicted

of any criminal offence related to their professional conduct or the making of false statements or misrepresentations as to their qualifications to enter into a procurement contract within a period of five (5) years preceding the commencement of the procurement proceedings, or have not been otherwise disqualified pursuant to administrative suspension or disbarment proceedings.

4. Review of Prequalification Applications

The PPP Cell shall evaluate the qualifications of prospective bidders in accordance

with the qualification criteria and procedures set forth in the prequalification application. The PPP Cell shall disqualify a prospective bidder if it finds at any time that the

information submitted concerning its qualifications was false, materially inaccurate or materially incomplete.

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5. Shortlist of Prequalified Bidders

The PPP Cell shall make a decision with respect to the qualifications of each

prospective bidder submitting an application to prequalify. 6. Issuance of the Request for Proposal to all Prequalified Bidders

Upon payment of a non-refundable fee of Rs 10,000, the PPP Cell shall

simultaneously issue to all prequalified prospective bidders a comprehensive bid document/Request for Proposal which, among other objectives, establishes the rules of bidding and shall include, among others, the prefeasibility study. Grading criteria will be included in each Request for Proposal/Bidding Document.

At the time of bidding, each bidder will be required to provide a Bid Security, which

will be returnable once the successful bidder, as the Concessionaire, has achieved Financial Closure. This Bid Security will be in the form of an irrevocable bank guarantee from a scheduled local bank or from a reputable foreign bank acceptable to the PPP Cell, encashable without recourse to the applicant. Insurance or Corporate Bonds will not be acceptable as Bid Security. The amount of the Bid Security will be specified in the bid documents/Request for Proposal.

After receipt of bids, the proposals will be ranked according to pre-determined

criteria, including the extent to which the Outline Design has been met, the proposed level of equity and the proposed toll rates. In cases where GoP and/or NHA financial support is available for a project, a premium evaluation factor, stated in the bid documents, will also be given to the bidder that minimises the extent of the support required. At this stage, the NHA may also wish to re-confirm that the successful bidder has all the skills and experience required to execute the project. Accordingly, at the commencement of the PPP tender process, bidders may find it necessary to form a consortium of organisations to enhance their overall capabilities.

The first ranked bidder will be given 60 (sixty) days to negotiate an acceptable

Concession Agreement and a specific timeframe to achieve Financial Closure, usually six months. The definition of financial close will be included in the Concession Agreement. In the event of failure to achieve Financial Close, the first ranked bidder will forfeit his Bid Security and the second ranked bidder will be invited to achieve Financial Closure, and if necessary extend the validity of his Bid Security. Once Financial Closure is achieved, the Bid Security of all remaining bidders will be returned.

7. Projects in the Pipeline

(i) The new Policy will not be applied to privately funded highway and bridge

projects that are being negotiated by the NHA at the time the Policy comes into force.

(ii) However, it will be applied to all other such projects in the pipeline at that time. The Sponsors of these projects will be issued an Invitation Letter, along with a copy of the new Policy document and Model Concession Agreement, by the PPP Cell.

(iii) The project's Sponsors will be expected to finalise/initial the Concession Agreement within six weeks of their acceptance of the Invitation, and to achieve Financial Close within specified timeframe from initialling the Concession Agreement. In case Financial Close is not achieved within this

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time, the Security will be encashed. Under normal circumstances, no extensions will be granted. However, if on the Sponsors' request for extension, the PPP Cell is satisfied that delays are due to factors beyond the Sponsors' control, and Financial Close is expected to be achieved very shortly, an extension may be given against an extension of the validity period of the Security.

If the Sponsors decline to proceed further under the new Policy, the NHA will be

entitled to allocate the project to any other investor.

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APPENDIX - I

TOLL ESCALATION RULES

The maximum toll escalation factor that will be allowed in any year will be calculated

as (1+(r/100)) where: r is the annual rate of growth (%) in the Consumer Price Index, over

the most recent 12-month period for which statistics are available. The Consumer Price Index is maintained by the Federal Bureau of Statistics, and is

published regularly. After revision, all toll charges are expected to be rounded to the nearest Rs5 (toll

rates per Km for each vehicle type will be calculated to the nearest 1000th of a Rupee). Any residual amounts (positive or negative) will be carried over to the next toll revision.

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FURTHER INFORMATION

For further information, please contact:

General Manager PPP Cell National Highway Authority, Ministry of Communications Government of Pakistan 27 - Mauve Area, G-9/1, Islamabad Phone: ________________ Fax: ________________ e-mail: _______________ Website: _______________