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Proposed Draft

Model Project Development Agreement

(for Hydropower Projects with installed capacity less than 500MW)

Government of Nepal Ministry of Energy

Department of Electricity Development

- and -

[Insert Name of Company]

Kathmandu, Nepal [Date]

[Note: This Model Project Development Agreement is endorsed and authorised by the Ministry of Energy, Government of Nepal. This Model Project Development Agreement is deemed to be generally sufficient. However, it may be varied to meet the facts of a particular case as long as the variance complies with this Model Project Development Agreement. The Department of Electricity Development may require the Developer to justify any proposed variation from this Model Project Development Agreement.]

TABLE OF CONTENTS

Clause Headings Page 1. DEFINITIONS AND INTERPRETATION .................................................................. 2 1.1 Definitions...................................................................................................................... 2 1.2 Interpretation ................................................................................................................ 15 2. CONDITIONS PRECEDENT ..................................................................................... 18 2.1 GON CPs...................................................................................................................... 18 2.2 Company CPs............................................................................................................... 18 2.3 Financing Documents................................................................................................... 19 3. CONCESSION, TERM AND PURPOSE ................................................................... 20 3.1 Scope of the Project...................................................................................................... 20 3.2 The Project ................................................................................................................... 20 3.3 Generation and Transmission Licences........................................................................20 3.4 Term ............................................................................................................................. 20 3.5 Early Termination ........................................................................................................ 21 3.6 Survival ........................................................................................................................ 21 4. INDEPENDENT ENGINEER ..................................................................................... 21 4.1 Appointment of the Independent Engineer .................................................................. 21 4.2 Roles of the Independent Engineer .............................................................................. 21 4.3 Costs of the Independent Engineer............................................................................... 22 4.4 Access .......................................................................................................................... 22 5. TECHNICAL REVIEW PANEL.................................................................................22 5.1 Technical Review Panel ...............................................................................................22 5.2 Responsibilities of the Technical Review Panel ..........................................................22 5.3 Company's obligations ................................................................................................. 23 5.4 Costs of the Technical Review Panel ...........................................................................23 5.5 Access .......................................................................................................................... 23 5.6 Technical Review Panel not to be liable ...................................................................... 24 6. RIGHT AND OBLIGATION ON THE USE OF RIVER WATER ............................ 24 7. COMMISSIONING, CONSTRUCTION AND COMMERCIAL

OPERATIONS DATE ................................................................................................. 24 8. METERING .................................................................................................................25 9. INFORMATION SHARING AND ACCESS ............................................................. 25 9.1 Disclosure of Confidential Information ....................................................................... 25 9.2 Accounts and reports.................................................................................................... 26 9.3 Access and inspection ..................................................................................................27 10. LAND ACQUISITION................................................................................................ 28 11. CARBON AND OTHER ENVIRONMENTAL CREDITS ........................................ 29 11.1 Feasibility of the ER Project ........................................................................................ 29 11.2 Business plan................................................................................................................29 11.3 Consents .......................................................................................................................29 11.4 Regular reports ............................................................................................................. 30 11.5 Costs............................................................................................................................. 30

11.6 Ownership; marketing; sharing of profits ....................................................................31 12. TAXES AND OTHER INCENTIVES......................................................................... 31 12.1 Income tax exemption ..................................................................................................31 12.2 Tax depreciation of Project costs .................................................................................31 12.3 Value added tax............................................................................................................ 32 12.4 Customs and Import Duties..........................................................................................32 12.5 Land tax........................................................................................................................ 32 12.6 Registration fees...........................................................................................................32 13. GON OBLIGATIONS ................................................................................................. 32 13.1 Non discrimination.......................................................................................................32 13.2 Establishment of a Project Coordination Committee ................................................... 33 13.3 Establishment of Project Task Force............................................................................33 13.4 Establishment of a Local Project Coordination Committee .........................................34 13.5 Grant of Government Approvals.................................................................................. 34 13.6 Visas............................................................................................................................. 36 13.7 Communications permits.............................................................................................. 36 13.8 Explosives ....................................................................................................................36 13.9 Fuel............................................................................................................................... 37 13.10 Port of Entry and transport arrangements.....................................................................37 13.11 Exchange facility.......................................................................................................... 37 13.12 Foreign Currency..........................................................................................................37 13.13 Local taxes ................................................................................................................... 38 13.14 Provision of documentation in connection with the Project......................................... 38 13.15 Site access ....................................................................................................................38 13.16 Roads to Project Area................................................................................................... 39 13.17 Security ........................................................................................................................ 39 13.18 Transmission Line ........................................................................................................40 14. REPATRIATION......................................................................................................... 40 15. COMPANY OBLIGATIONS ...................................................................................... 41 15.1 EIA/IEE........................................................................................................................41 15.2 Plans, resettlement and rehabilitation...........................................................................41 15.3 Arm's length transactions ............................................................................................. 41 15.4 Certain Infrastructure Facilities.................................................................................