EPC (ENGINEERING PROCUREMENT AND CONSTRUCTION) …

1 EPC (ENGINEERING PROCUREMENT AND CONSTRUCTION) AGREEMENT FOR CONSTRUCTION OF TWO-LANE NATIONAL HIGHWAY WORKS MINISTRY OF road TRANSPORT & HIGHWAYS NEW DELHI AUGUST, 2012 morth/epc/nh/37010/4/2010 Contents Overview of the Framework 1 PART I Preliminary Recitals 9 1 Definitions and Interpretation 11 Definitions 11 Interpretation 11 Measurements and arithmetic conventions 14 Priority of agreements and errors/discrepancies 14 Joint and several liability 15 PART II Scope of the Project 2 Scope of the Project 19 Scope of the Project 19 3 Obligations of the Contractor 20 Obligations of the Contractor 20 Obligations relating to sub-contracts and any other agreements 21 Employment of foreign nationals 22 Contractor s personnel 23 Advertisement on Project Highway 23 Contractor's care of the Works 23 Electricity, water and other services 23 Unforeseeable difficulties 23 4 Obligations of the authority 25 Obligations of the authority 25 Maintenance obligations prior to the Appointed Date Environmental Clearances 26 27 5 Representations and Warranties 28 Representations and warranties of the Contractor 28 Representations and warranties of the authority 29 Disclosure 30 6 Disclaimer 31 Disclaimer 31 PART III Construction and Maintenance 7 Performance Security 35 Performance Security 35 Extension of Performance Security 36 Appropriation of Performance Security 36 Release of Performance Security Retention Money 36 36 morth/epc/nh/37010/4/2010 8 Right of Way 38 The Site 38 PROCUREMENT of the Site 38 Damages for delay in handing over the Site 39 Site to be free from Encumbrances 40 Protection of Site from encroachments 41 Special/temporary Right of

2 Way 41 Access to the authority and the authority s Engineer 41 Geological and archaeological finds 41 9 Utilities and Trees 43 Existing utilities and roads 43 Shifting of obstructing utilities 43 New utilities 43 Felling of trees 44 10 Design and Construction of the Project Highway 45 Obligations prior to commencement of Works 45 Design and Drawings 47 Construction of the Project Highway 49 Maintenance during Construction Period 50 Extension of time for completion 50 Incomplete Works 52 Maintenance Manual 52 11 Quality Assurance, Monitoring and Supervision 54 Quality of Materials and workmanship 54 Quality control system 54 Methodology 54 Inspection and technical audit by the authority 55 External technical audit 55 Inspection of construction records 55 Monthly progress reports 55 Inspection 55 Samples 56 Tests 56 Examination of work before covering up 57 Rejection 57 Remedial work 57 Delays during construction 58 Quality control records and Documents 58 Video recording Suspension of unsafe Construction Works 58 58 12 Completion Certificate 60 Tests on completion 60 Provisional Certificate 60 Completion of remaining Works 62 Completion Certificate 62 Rescheduling of Tests 62 13 Change of Scope 63 Change of Scope 63 Procedure for Change of Scope 63 Payment for Change of Scope 65 Restrictions on Change of Scope 65 Power of the authority to undertake works

3 65 morth/epc/nh/37010/4/2010 14 Maintenance 67 Maintenance obligations of the Contractor 67 Maintenance Requirements 68 Maintenance Programme 68 Safety, vehicle breakdowns and accidents 68 Lane closure 69 Reduction of payment for non-performance of Maintenance obligations 69 authority s right to take remedial measures 69 Restoration of loss or damage to Project Highway Overriding powers of the authority 70 70 15 Supervision and Monitoring during Maintenance 72 Inspection by the Contractor 72 Inspection and payments 72 Tests 73 Reports of unusual occurrence 73 16 Traffic Regulation Traffic regulation by the Contractor 74 74 17 Defects Liability Defects Liability Period 75 75 Remedying Defects Cost of remedying Defects 75 75 Contractor s failure to rectify Defects 76 Contractor to search cause Extension of Defects Liability Period 76 76 18 authority s Engineer Appointment of the authority s Engineer 77 77 Duties and authority of the authority s Engineer Delegation by the authority s Engineer 77 77

4 Instructions of the authority s Engineer Determination by the authority s Engineer 78 78 Remuneration of the authority s Engineer Termination of the authority s Engineer 79 79 PART IV Financial Covenants 19 Payments 83 Contract Price 83 Advance Payment 83 Procedure for estimating the payment for the Works 85 Stage Payment Statement for Works 85 Stage Payment for Works 85 Monthly Maintenance Statement of the Project Highway 86 Payment for Maintenance of the Project Highway 86 Payment of Damages 87 Time of payment and interest 87 Price adjustment for the Works 88 Restrictions on price adjustment 91 Price adjustment for Maintenance of Project Highway 92 Final Payment Statement 92 Discharge 93 Final Payment Certificate 93 morth/epc/nh/37010/4/2010 Final payment statement for Maintenance 93 Change in law 94 Correction of Interim Payment Certificates 94 authority s claims 95 Bonus for early completion 95 20 Insurance 96 Insurance for Works and Maintenance 96 Notice to the authority 97 Evidence of Insurance Cover 97 Remedy for failure to insure 97 Waiver of subrogation 98 Contractor s waiver 98 Cross liabilities 98 Accident or injury to workmen 98 Insurance against accident to workmen 99 Application of insurance proceeds 99 Compliance with policy conditions 99 Part V Force Majeure and Termination 21 Force Majeure 103 Force Majeure 103 Non-Political Event 103 Indirect Political Event 104 Political Event 104 Duty to report Force Majeure Event 105 Effect of Force Majeure Event on the Agreement 105 Termination Notice for Force Majeure Event Termination Payment for Force Majeure Event Dispute resolution Excuse from performance of obligations 106 106 107 107 22 Suspension of Contractor s Rights

5 Suspension upon Contractor Default 109 109 authority to act on behalf of the Contractor Revocation of Suspension Termination 109 109 110 23 Termination 111 Termination for Contractor Default 111 Termination for authority Default 113 Termination for authority s convenience 114 Requirements after Termination 114 Valuation of Unpaid Works 114 Termination Payment 115 Other rights and obligations of the Parties 116 Survival of rights 117 PART VI Other Provisions 24 Assignment and Charges Restrictions on assignment and charges Hypothecation of Materials or Plant 121 121 121 morth/epc/nh/37010/4/2010 25 Liability and Indemnity 122 General indemnity 122 Indemnity by the Contractor 122 Notice and contest of claims 123 Defence of claims 123 No consequential claims 124 Survival on Termination 125 26 Dispute Resolution 126 Dispute Resolution 126 Conciliation 126 Arbitration 126 Adjudication by Regulatory authority , Tribunal or Commission 127 27 Miscellaneous 128 Governing law and jurisdiction 128 Waiver of immunity 128 Delayed payments 128 Waiver 129 Liability for review of Documents and Drawings 129 Exclusion of implied warranties etc.

6 129 Survival 129 Entire Agreement 130 Severability 130 No partnership 130 Third Parties 131 Successors and assigns 131 Notices 131 Language 131 Counterparts 132 Confidentiality 132 Copyright and Intellectual Property rights Limitation of Liability 132 133 28 Definitions 134 Definitions 134 Schedules A Site of the Project 148 1. The Site Annex-I:Site Annex-II: Dates for providing Right of Way Annex-III: Alignment Plans Annex-IV : Environmental Clearances 148 149 154 155 156 B Development of the Project Highway 157 1. Development of the Project Highway 157 2. [Rehabilitation and augmentation] 157 3. Specifications and Standards 157 Annex-I: Description of [Two-Laning and strengthening] 158 C Project Facilities 171 1. Project Facilities 171 2. Description of Project Facilities 171 D Specifications and Standards 172 morth/epc/nh/37010/4/2010 1.

7 Construction 172 2. Design Standards Annex-I: Specifications and Standards for Construction 1. Specification and Standard 2. Deviations from the Specifications and Standard 172 173 173 173 E Maintenance Requirements 174 1. Maintenance Requirements 174 2. Repair/rectification of Defects and deficiencies 174 3. Other Defects and deficiencies 174 4. Extension of time limit 177 5. Emergency repairs/restoration 175 6. Daily inspection by the Contractor 175 7. Pre-monsoon Inspection/Post-monsoon Inspection 175 8. Repairs on account of natural calamities Annex-I: Repair/rectification of Defects and deficiencies 175 176 F Applicable Permits 180 1. Applicable Permits 180 G Annex-I: Form of Guarantee for Performance Security 181 Annex-II: Form of Guarantee for Withdrawal of Retention Money Annex-III: Form of Guarantee for Advance payment 185 188 H Contract Price Weightages 192 I Drawings 201 1.

8 Drawings 2. Additional drawings Annex-I: List of Drawings J Project Completion Schedule 1. Project Completion Schedule 2. Project Milestone-I 3. Project Milestone-II 4. Project Milestone-III 5. Scheduled Completion Date 6. Extension of time 201 201 202 203 203 203 203 203 203 204 K Tests on Completion 1. Schedule for Tests 2. Tests 3. Agency for conducting Tests 4. Completion Certificate 205 205 205 206 206 L Provisional/ Completion Certificate 207/208 M Payment reduction for non-compliance 1. Payment reduction for non-compliance with the Maintenance Requirements 209 209 2. Percentage reductions in lump sum payments 209 N Selection of authority s Engineer 1. Selection of authority s Engineer 2. Terms of Reference 211 211 211 morth/epc/nh/37010/4/2010 3. Appointment of Government entity as authority s Engineer Annex-I: Terms of Reference for authority s Engineer 211 212 O Forms of Payment Statements 1.

9 Stage Payment Statement for Works 2. Monthly Maintenance Payment Statement 3. Contractor s Claim for Damages 219 219 219 220 P Insurance 221 1. Insurance during Construction Period 2. Insurance for Contractor's Defects Liability 3. Insurance against injury to persons and damage to property 4. Insurance to be in joint names 221 221 221 222 morth/epc/nh/37010/4/2010 morth/epc/nh/37010/4/2010 1 Overview of the framework The Twelfth Plan envisages investment of USD 1 trillion in infrastructure for a sustained and inclusive growth of the economy. To meet these expanding demands, large investments will be needed in roads, railways, ports and civil aviation sectors for augmentation of capacities and modernization. The public sector is expected to continue to play an important role in building transport infrastructure.

10 India has the second largest road network in the world totaling million km but most of it is of poor quality. A significant part of the existing National Highways (NH) consists of single-lane roads, which have suffered from a prolonged neglect. Their length is about 20,000 km, which could increase further during the Twelfth Plan on account of expansion of the NH network. These single lane national highways would have to be upgraded and augmented to two-lane standards. Since most of these roads have low density traffic, they may not be viable on PPP basis. Experience also suggests that annuity based projects are comparatively expensive, while conventional contracts are prone to time and cost overruns. It has, therefore, been decided to adopt the Engineering, PROCUREMENT , Construction (EPC) mode of construction. A programme for upgradation of 20,000 km to two-lane standards on EPC basis is to be taken up during the Twelfth Plan.