HIGHLIGHTS OF GAS TRANSPORTATION AGREEMENT

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HIGHLIGHTS OF GAS TRANSPORTATION AGREEMENT

• PRESENTED BY
• Barrister I.N. Inyang(CSLA, NGC)
• AT THE ELECTRIC POWER SECTOR TRANSACTION AND
  INDUSTRY REVIEW CONFERENCE
• HELD AT THE BANQUET HALL OF THE PRESIDENTIAL
  VILLA ON 28-29TH NOVEMBER, 2011

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CONTENT

• PARTIES
• KEY TERMINOLOGIES
• CONDITIONS
• TRANSPORTERS OBLIGATIONS
• TITLE AND RISK
• LOST GAS
• CAPACITY RESEVATION
• TRANSPORTATION CHARGES
• INVOICING AND PAYMENTS
• QUALITY AND OFF-SPECIFICATION GAS
• MEASUREMENT AND TESTING
• LIABILITES AND LIMITATION
• FORCE MAJEURE AND THIRD PARTY TRANSPORTATION OF
  GAS
• TERMINATION
• DISPUTE RESOLUTION
• GENERAL

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PARTIES

• NGC - as Transporter
• PHCN or GENCO - as Shipper
• GENCO refers to any power generation company
  which emerges as a successor company to PHCN.

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KEY TERMINOLOGIES

• Shipper's Stock Account
• A designated account of the Shipper to be
  maintained by the Transporter and which shall
  record the volumes of Gas from time to time held
  in the pipeline by the Transporter for the
  account of the Shipper
• Entry Point
• A Gas producers outlet flange along the Pipeline
  at which Gas can be delivered into the Pipeline
• Includes any other agreed entry point on the
  Pipeline for delivery of Gas into the Pipeline
• This may be the same as the Delivery Point under
  the GSAA
• Exit Point
• Point where the outlet flange of the Pipeline is
  connected to the Shipper's facilities

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KEY TERMINOLOGIES

• Nominated Quantity
• The quantity of Gas which has been nominated or
  deemed nominated by the Shipper for delivery by
  the Transporter at the Delivery Point
• Reserved Capacity
• Capacity in the Pipeline which the Transporter
  reserves, and makes available to receive Gas from
  the Shipper at the Inlet Point, transport and
  deliver the received quantities of Gas to the
  Shipper at the Delivery Point
• Freed Capacity
• The amount of capacity in the Pipeline by which
  the Reserved Capacity is reduced in accordance
  with any Capacity Reduction Notice
• Lost Gas
• The quantity of Gas received by the Transporter
  at the Inlet Point but not delivered to the
  Shipper at the Delivery Point

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TIMELINES

• Execution Date
• Effective Date
• Start Date

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CONDITIONS

• Shipper
• Evidence of creditworthiness and ability to
  fulfill payment obligations
• Execution of Gas Purchase Agreement
• Execution of Allocation and Attribution Agreement
• Transporter
• Approvals to transport Gas
• Execution of Entry Point Tie-in Agreement with
  Gas Producer.

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TRANSPORTERS OBLIGATIONS

• To receive and take delivery of Gas at inlet
  point
• Transporter will not be obliged to receive Gas
  where
• the safe operating pressure of the pipeline will
  be affected or
• the failure of the Shipper to take delivery of
  Gas at the Exit Point might adversely affect the
  interests of any other customer
• To transport through the pipeline and deliver at
  Exit Point the volumes of Gas from the Shipper's
  Stock Account required to meet each Nominated
  Quantity
• aggregate of such Nominated Quantities for a Day
  should not exceed the Reserved Capacity for that
  Day
• no obligation to deliver where nominated quantity
  will result in a less than zero balance in the
  Shipper's Stock Account

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TRANSPORTERS OBLIGATIONS

• To deliver Gas above Nominated Quantity on a
  reasonable endeavour basis where Shipper makes a
  request
• No obligation to deliver where the excess volume
  requested will result in a less than zero balance
  in the Shipper's Stock Account
• Maintain Shipper's Stock Account
• The designated account of the Shipper to be
  maintained by the Transporter and which will
  record the volumes of Gas from time to time held
  in the pipeline by the Transporter for the
  account of the Shipper

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TITLE AND RISK

• Title to transported Gas remains with Shipper at
  all times
• Custody and risk of loss passes to Transporter at
  the Inlet Point
• Passes back to Shipper at the Exit Point

11
LOST GAS

• Any quantity of Gas received by the Transporter
  at the Delivery Point which is not delivered to
  Shipper shall be considered to be Lost Gas
• Transporter will pay the Shipper the Lost Gas
  Price in respect of any quantity of Lost Gas
• Lost Gas will not include Gas not delivered
• as a result of Force Majeure
• as a result of any act or omission of the Shipper
• due to Maintenance
• during the Commissioning Period
• as a result of Shipper's failure to make payment
  as and when due

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CAPACITY RESERVATION

• Shipper is expected to pay for and reserve
• Capacity in the pipeline.
• Transporter shall on each day make available
• and provide Shipper the capacity paid for the
• Transportation of Shippers gas to exit point.

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Transportation Charges -

• Capacity Charge
• Commodity Charge
•  
• Overrun Charge
•  Send or Pay.

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INVOICING AND PAYMENT

• Transporter at the end of each contract month
  shall issue an invoice to Shipper containing the
  applicable transportation charge, nominated
  quantity, delivered quantity, adjustments, taxes
  etc.
• Shipper baring any dispute, pays the full
  invoiced amount within 15 working days of receipt
  of the invoice.

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CREDIT RISK MANAGEMENT

• Shipper is required to provide and maintain a
  stand by Letter of Credit (LoC) or such other
  security specified by the Transporter
• Amount of security to be equivalent to total
  tariff payable by the Shipper for twelve months
  as estimated by Transporter
• Amount may be increased if Shipper increases
  Annual Capacity Reservation
• Transporter entitled to draw down on the LoC
  where Shipper fails to pay amount due
• Shipper to replenish LoC to original amount
  within time specified in the Agreement (45
  working days)

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QUALITY AND OFF SPECIFICATION

• Quality and Specification of gas is agreed upon
  by parties and made part of the agreement.
• Both Shipper and Transporter have obligations to
  ensure that gas entering and exiting the pipeline
  conform with the agreed specification.
• Liabilities for off-spec gas exists for both
  Transporter and Shipper depending on
  circumstances provided in the GTA.

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NOMINATIONS AND DELIVERIES

• Nominated Quantity - Quantity of Gas nominated by
  Shipper for delivery within a Nomination Period
• Shipper to give a daily notice in respect of each
  Nomination Period for the next Day
• Aggregate of the Nominated Quantities specified
  in a Daily Notice shall not be less than an
  agreed quantity and shall not be greater than the
  Reserved Capacity for that Day
• Shipper is required to provide a good faith best
  estimate of its hourly, weekly and monthly
  estimates of Gas
• Where Maintenance Notification has been given,
  the aggregate of the Nominated Quantities in
  respect of that day shall not exceed the reduced
  Reserved Capacity

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MEASUREMENT AND TESTING

• The quality, quantity, delivery pressure and
  heating value of Gas is to be measured and
  calculated at each Entry Point and at the Exit
  Point
• Shipper responsible for measurement at Entry
  Point
• Transporter responsible for measurement at Exit
  Point
• Parties to grant each other free access to
  facilitate monitoring of Gas quantities and Gas
  quality

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LIABILITIES AND LIMITATIONS

• Remedies in the agreement are exclusive and
  exhaustive
• No liability for Consequential Losses
• Cap on total cumulative liability
• Liability cap does not apply to
• losses caused by Willful Misconduct
• personal injury or death
• Indemnified party to mitigate losses which would
  otherwise be recovered
• Reasonable and Prudent Operator Standard to be
  used

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FORCE MAJEURE

• FM Events Acts typically beyond the control of
  the parties and which excuses them from any legal
  responsibility or liability
• They include
• Acts of God
• Acts or serious threats of war, riots,
  insurrection, terrorism, etc
• Strikes, lock outs or industrial disturbances
• Pollution, chemical or radioactive contamination
• Damage to/loss of/inoperability of
  Shippers/Transporters Facilities other than
  breakdown/failure caused by normal wear and tear
  or failure to maintain equipment
• Acts or omissions of a Government Authority or
  modification/removal/delay of an authorisation
• Gas Producer

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THIRD PARTY TRANSPORTATION OF GAS

• Where due to force majeure, Transporter is unable
  to provide transportation services, Shipper may
  enter into an agreement with another Transporter
  for the anticipated duration of the force majeure
• Where due to force majeure, Shipper is unable to
  input Gas at Entry Point or take Gas at the Exit
  Point, Transporter may enter into an agreement
  with a third party to use Shipper's Reserved
  Capacity for the duration of the Force Majeure

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TERMINATION

• Termination events include the following
• Delivery of agreed gas quantity equal to the
  Total Contract Quantity
• 10th, 15th, 20th anniversary of the start date as
  parties may agree
• Expiration or termination of transporters
  licence to provide transportation services under
  the Granting Instrument.
• Expiration or termination of Shippers licence or
  right to procure gas under the Granting
  Instrument.
• Operation of law
• Insolvency
• Prolonged force majeure
• Abandonment of pipeline etc

23
DISPUTE RESOLUTION

• Expert determination whenever the agreement says
  an expert should be called upon.
• Amicable resolution by parties.
• Arbitration in accordance with any law agreed
  upon by the parties.

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GENERAL

• Some general provisions in the GTA include the
  following
• Confidential information
• Insurance
• Waiver
• Amendment
• Affirmation
• Severability
• Disclaimer
• Further assurances
• Change in law
• Entire agreement etc.

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• THANK YOU FOR LISTENING