Annex N 7 of the Bid Terms

Republic of Peru ANNEX N° 7 OF THE BID TERMS Concession Contract “System of Supply of Liquefied Petroleum Gas for Lima and Callao”(Fourth version)May 25, 2015 Important: This is an unofficial translation. In case of divergence between the English and Spanish text, the version in Spanish shall prevail.INDEXCLÁUSES BOOT CONTRACT OF CONCESSION OF THE SYSTEM OF SUPPLY OF LIQUEFIED PETROLEUM GAS FOR LIMA AND CALLAO Known all men by these presents the BOOT Contract of concession for the design, financing, construction, operation, maintenance, exploitation of the concession assets, and transfer to the Peruvian State at the end of the concession term of the System of Supply of Liquefied Petroleum Gas for Lima and Callao (hereinafter, the “Contract”), between the Peruvian State (the “Grantor”), acting through the Ministry of Energy and Mines, domiciled at Av. Las Artes Nº 260, Lima 41, Peru, duly represented by [•], empowered through Supreme Resolution Nº [•]-2015-EM, and the other party the [•], domiciled at [•] that proceeds duly represented by [•], empowered for said purposes through powers granted according to the Bid Terms (hereinafter, the “Concessionaire Corporation”)Intervenes in the contract [•] (the Shortlisted Operator), that is a Corporation duly incorporated and existing according to the laws [•], domiciled at [•] that proceeds duly represented by [•], empowered through powers granted according to the Bid Terms, to guarantee, where applicable, the provisions of Clauses 4.1.1., 4.1.2., 4.1.3., 4.1.4., 4.1.5., 4.1.6., and to jointly assume with the Concessionaire Corporation the obligations resulting from the technical operations, according to the provisions of subparagraph b) of Clause 7.7.1.FIRST CLAUSE.- GENERAL PROVISIONS 1.1. The contract results from the promotion process which has led PROINVERSIÓN under the Organic Law which regulates the activities of hydrocarbons in the country (Act No. 26221), which TUO was approved by Supreme Decree No. 042-2005-EM, the law creating the system of Hydrocarbons and Energy Security and the Energy Social Inclusion Energy Fund (Law 29852), its Regulations approved by Supreme Decree No. 021-2012-EM and its modifications; Regulation of Transportation of Hydrocarbons by Ducts, approved by Supreme Decree No. 081-2007-EM, Regulation of Commercialization of Liquefied Petroleum Gas, approved by Supreme Decree No. 01-94-EM, Supreme Decree No. 005- 2014-EM, the Consolidated Text of the rules with the force of law governing the granting in concession to the private sector in public infrastructure and public services, approved by Supreme Decree No. 059-96-PCM (TUO) and its Regulation approved by Supreme Decree No. 060-96-PCM, the Legislative Decree approving the Framework Law on Public - Private Partnerships for the creation of productive employment and lays down rules for speeding up the process of promoting private investment, approved by Legislative Decree No. 1012 and its regulations approved by Supreme Decree No. 127-2014-EF, and other applicable laws and rules and following acts: a) The Official Letter N° 1452-2010-MEM/SEG, of the Ministry of Energy and Mines by which was requested to PROINVERSIÓN to incorporate in the process of promotion of private investment the project “System of Supply of LPG for Lima and Callao”.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 3 de 114 CONCESSION CONTRACT – FOURTH VERSION b) Supreme Resolution Nº 094-2010-EF, published on September 9, 2010, that ratified the agreement of the Steering Council of PROINVERSIÓN, adopted in its meeting dated August 11, 2010, by which it was agreed to incorporate to the respective process of promotion of private investment the project “System of Supply of LPG for Lima and Callao” (hereinafter the System of Supply of LPG), under the mechanisms established in Legislative Decree N° 1012, el TUO and its regulation, approved by Supreme Decrees Nos. 059-96-PCM and 060-96-PCM, respectively and its amendments; and entrusts the Committee of PROINVERSIÓN in Projects of Telecommunications, Energy and Hydrocarbons PRO CONECTIVIDAD the conduction of the process and, ratifies the agreement of the Steering Council of PROINVERSIÓN adopted in its meeting dated August 19, 2010, that approves the Plan of Promotion that will govern the bid. c) The Official Letter N° 241-2014-MEM/VME dated December 30, 2014, by which it is informed to PROINVERSION the Report 185-2014-MEM/DGH that considers the guidelines to modify the technical characteristics of the System of Supply of LPG. d) Supreme Decree N° […] prioritizing by the State as part of the infrastructure of energy security the System of Supply of LPG, and the remuneration of said infrastructure through SISE charges. e) According to Article 27 of the regulation, the Supreme Resolution Nº [•]-2015-EM has been issued, dated [•], that grants the concession, approves the contract and appoints the officer who shall subscribe the contract in representation of the Grantor.1.2. The contract has been drawn up and subscribed according to the internal law of Peru; and its content, execution and other consequences resulting from it will be governed according to it.1.3. Without prejudice of the multiplicity of activities and services in which its purpose is divided, the contract is of unit nature and replies to a single cause.The system of supply of LPG that is subject matter of the contract is governed by the principles of open access, continuity, regularity and non-discrimination.1.4. In the contract: a) The terms indicated in capital letters whether used in singular or plural, shall have the meanings indicated in Clause 1.5. b) The terms that begin with capital letter, whether used in singular or plural, which are not defined in Clause 1.5 or other sections of the contract, shall have the meanings attributed in the Bid Terms or the Regulation and other applicable laws, or correspond to the terms that generally are used with capital letters. c) Any reference made in the contract to “clause” or “annex” should be understood made to clauses or annexes of the contract, unless express indication to the contrary. d) The titles have been included to systematize the exposition and should not be considered as a part of it that limits or extends its content or to determine the rights and obligations of the parties. e) The terms in singular shall include the same terms in plural and vice versa. The terms in masculine include the feminine and viceversa. 1.5 By virtue of the aforementioned, it has been agreed to conclude the contract under the following terms and conditions:DEFINITIONSAllowed Creditors :The concept of Allowed Creditors is only applicable for the assumptions of Guaranteed Debt. For said purpose, the Allowed Creditor shall be:(i) Any multilateral credit institution from which the State of the Republic of Peru is member, (ii) Any institution or any governmental agency of any country with which the State of the Republic of Peru keeps diplomatic relations, (iii) Any financial institution appointed as first category foreign bank in the Circular N° 003- 2015-BCRP, issued by the Central Reserve Bank of Peru, or any other circular that modifies it or replaces it. Also are included the financial institutions (banking or not banking) that are subsidiaries of said banks, as far as they comply with the requirements of shareholding participation indicated in the circular. (iv) Any other International financial institution that has a risk classification not less than the classification of the Peruvian sovereign debt corresponding to foreign currency of long term, assigned by an International risk classifying entity that qualifies the Republic of Peru. (v) Any national financial institution with a local risk classification not less than “A”, which evaluation has been made by a national risk classifying company duly authorized by the Superintendence of Securities Market (SSM). (vi) all institutional investors thus considered by legal regulations in force in Peru or in their country of origin (such as Pension Fund Administrators - AFP, insurance companies and mutual funds) that directly or indirectly acquire any security issued by (i) the Concessionaire Corporation, or (ii) a trust estate, investment funds or securitization company to acquire rights and/or assets under the Concession contract. (vii)Any natural or legal person who acquires directly or indirectly any transferable security or debt instrument issued by the Concessionaire Corporation through public or private offer, or through a trust estate, investment funds or securitization company in Peru or abroad. Only for the case of structuring of this kind of operations, we may consider that the agent, trustee or representative of the bondholders that act in representation of future persons that will acquire said values or instruments, shall temporarily have the qualification of Allowed Creditor, for this purpose they must comply, as appropriate, the requirements indicated in the preceding Sections (i) to (vi). The Allowed Creditors should not have economic link with the Concessionaire Corporation, according to Resolution CONASEV N° 090-2005-EF-94.10, modified by Resolution CONASEV N° 005-2006-EF/94.10, or the regulation that replaces it.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 5 de 114 CONCESSION CONTRACT – FOURTH VERSION For cases of subparagraphs (i) to (v), to be considered Allowed Creditor, it should have said condition on the date of subscription of its respective financing contract.If the case of securities, the Allowed Creditors shall be represented by the representative of the bondholders (as established in Article 87 of the Securities Market Law and Article 325 of the Corporations Act).In case of syndicated loans, the Allowed Creditors may be represented by an Administrator Agent and/or the Security Agent. For such purposes, it is considered:“Security Agent”: in the case of syndicated loans, their administration requires a specialized person in that role. The Security Agent is a bank (the structuring itself or one of the banks that make up the union), whose role will be to manage contracts guarantees that the Concessionaire Corporation has granted in support of credit, execute guarantees by order and account of banks, and recover the amounts of execution to be distributed among the banks.“ Administrative Agent”: in the case of syndicated loans, their administration requires a specialized person in that role. The Administrative Agent will be a bank (the structuring itself or one of the Banks that make up the union), whose role will be to manage and make the follow- up to the compliance of the obligations and commitments established in the syndicated credit contract by the Concessionaire Corporation.The Allowed Creditors must have the authorization of the Grantor to credit that condition.Minutes of Evidence Shall have the meaning indicated in Clause 5.3 and Annex 2.Award Is the declaration made by the Committee appointing the awardee of the bid, who submitted the best proposal for the execution of the System of Supply of LPG, according to indications of the Bid Terms.Awardee It is the bidder favored with the award.Year of Operation It is the period of twelve (12) months, within the contract term, in which the service is provided. The first year of operation begins on the date of commercial commissioning.Year of Calculation It is the calendar year. For purposes of this contract the available days in a year of calculation may not exceed three hundred and sixty five (365) days.Governmental Authority It is any competent authority, judicial, legislative, political or administrative of Peru, empowered according to the applicable laws to issue, interpret and/or apply the regulations or decisions, general or particular, with mandatory effects for those submitted to their scope.Bid Terms Is the document, including its forms, annexes, appendices and circulars, that establishes the terms under which the bid was developed and that is part of the contract. In case of divergence in the interpretation of the contract, shall prevail the order of priority indicated in Clause 21 of the contract.Concession Assets It is the set of real and personal property, such as: rights (including the concession granted to the Concessionaire Corporation and easements and rights of way generally required to obtain the right of way, according to what is stated in the Regulation), piping, equipment, accessories and generally all works, equipment and facilities provided by the Concessionaire Corporation under the terms of the Regulation and the contract to provide the Service. According to their nature, piping, and equipment and accessories of the compressor stations, pumping stations and regulation stations and storage infrastructure Security, the office facilities are movable, in accordance with Article 886 ° of the Civil Code. Within the Assets of the Concession are considered including all rights to the operating system, software, know- how and their respective licenses and permits used by the Concessionaire Corporation in the Exploitation of the Concession Assets. The Assets of the Concession are subject to the provisions of Article 30 of the TUO, as amended by Article 1 of Supreme Decree No. 054-97- PCM.Capacity of Transportation Is the maximum quantity of LPG that the Concessionaire Corporation is in conditions to transport per unit of time through the System of Transportation of the Transport of LPG. Ground of Suspension Are the grounds of suspension of the contract term described in Clause 18.Grantor Is the Peruvian State represented by the Ministry of Energy and Mines.Concession Is the administrative act, reflected in a Supreme Resolution and developed by the contract, by which the Grantor grants the right to the Concessionaire Corporation for the design, Financing, construction, supply or goods and services, temporal ownership of the concession assets, operation, exploitation of the concession assets, maintenance and transfer at the end of the concession term to the Peruvian State of the System of Supply of LPG, according to the terms of the contract and applicable laws.Bid Is the process regulated by the Bid Terms for the delivery in concession to the private sector of the design, financing, construction, supply of goods and services, temporal ownership of the concession assets, operation, exploitation of the concession assets, maintenance and transfer at the end of the concession term to the State of the System of Supply of LPG, according to the terms of the contract and applicable laws. Contract Is this contract including its annexes and the Bid Terms, entered between the Grantor and the Concessionaire Corporation under the TUO and its regulation, in which intervenes the Shortlisted Operator that defines the rights and obligations of the parties and regulates the concession.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 7 de 114 CONCESSION CONTRACT – FOURTH VERSION Effective Control Is the capacity to direct the management of a legal person. There is effective control, unless it is demonstrated the contrary upon the judgment of the Grantor, in the assumptions contained in Resolution CONASEV N° 090-2005-EF-94.10, modified by Resolution CONASEV N° 005-2006-EF/94.10 and by Resolution CONASEV N° 016-2007-EF/94.10 or regulation that modifies it, which are: a) When through direct or indirect ownership of shares, usufruct contract, security interest, trust or similar, agreements with other shareholders or any other legal act can exercise more than half the voting rights in the general shareholders meeting of said legal person, unless that in the same legal person a third party is in the situation referred to in the following paragraph b); b) When without more than half of the voting rights in the general shareholders meeting of the legal person, can appoint or remove the majority of board membersCost of Service It is the value proposed by the Awardee.Schedule of execution of works Is the sequence detailed of all the activities necessary for the construction of the System of Supply of LPG that will be submitted by the Concessionaire Corporation according to the provisions of Clause 3 and that will be incorporated in Annex 13. It distinguishes the critical route of activities and the milestones of progress in the critical route of execution of the System of Supply of LPG. The performance of the activities foreseen in the mentioned schedule should not exceed the term for the commercial commissioning. Partial Destruction Is that situation produced by any cause which results in damages to the System of Supply of LPG, estimated in a value less than 50% of the total value of replacement thereof or that, if greater to said percentage, upon the criterion of the Grantor is convenient for the continuation of the service that repairs are made by the Concessionaire Corporation, provided it is in capacity to make it upon the criterion of the Grantor.Total Destruction Is that situation produced by any cause which results in damages to the System of Supply of LPG, estimated in a value of 50% or more than the total value of replacement thereof and that, upon the criterion of the Grantor, is not convenient for the continuation of the service that repairs are made by the Concessionaire Corporation or that, qualifying it as convenient, the Concessionaire Corporation, for being economically non-viable, upon the criterion of the Grantor, may not perform the repairs.Guaranteed Debt Involves borrowing from operations of finance, securities and/or money loans granted by any Allowed Creditor in any form, which shall be intended to fulfill the object of the contract, including financial derivatives related to the indebtedness, any renew or refinance of such indebtedness that is guaranteed; whose main financial terms, including the amount of principal, interest rate or rates, provisions for amortization or other similar terms, have been informed in writing to the Grantor. DGH Is the General Direction of Hydrocarbons of the Ministry of Energy and Mines.Days Are the days that are not Saturdays, Sundays or holidays, in the city of Lima. Also are understood as holidays, the days in which the Banks or the public entities in the city of Lima are not obliged to attend the public by order of the governmental authority, unless express indication in the contrary. All time references should be understood as made at the hour of Peru.Available days Number of days or fraction of days in which the System of Transportation of LPG and the System of Dispatch had available the capacities established in Annex 1 considering Clause 12.3.4 and 12.3.5 and Section 3.2.11 of Annex 1. In this definition is included the days that are within the period declared as Force Majeure according to the contract.Dollar or US$ Is the currency or monetary sign of legal tender of the United States of America.Parent Company Is the company that has the effective control of the other. Also is considered in this definition that company that has the effective control of a parent company, as it has been defined and so on.Collection Company Are the companies responsible of the collection of the guaranteed remuneration.Subsidiary Company Is the company which effective control is under a parent company. Also is considered in this definition that company which effective control is under a subsidiary company, as it has been defined, and so on.Related Companies Are the companies linked together through a relation parent company – subsidiary company (or vice versa) or affiliated company)– affiliated company, according to the relevant definitions.State Is the State of the Republic of Peru.Exploitation of the Concession Assets Is the activity performed by the Concessionaire Corporation that consists in the economic use in the operation of the System of Supply of LPG and the provision of the service.Closing Date Is the day in which all and each one of the requirements indicated in the Bid Terms are complied, and from which starts counting the contract term, according to Clause 2.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 9 de 114 CONCESSION CONTRACT – FOURTH VERSION Collector Trust-Payer or Trust Is the trust constituted by the Grantor and the trust company of the Trust, with the purpose to collect and assure the intangibility of the amount collected corresponding to the Guaranteed Remuneration in favor of the Concessionaire Corporation, according to the terms of the Trust contract.Force Majeure Has the scope foreseen in the Fifteenth Clause.Performance Bond Is each one of the letters of guarantee to be granted by the Concessionaire Corporation in order to guarantee its obligations according to Clause 8.1Said guarantees are jointly, unconditional, irrevocable, without benefit of excussio and division, and automatically enforceable; and should be issued according to Annex 5.Complementary Performance Bond Is each one of the bond letters to be granted by the Concessionaire Corporation according to Clause 8.2, in order to ensure the compliance of its obligations pursuant the contract.Said guarantee must be jointly, unconditional, irrevocable, without benefit of excussio and division, and automatically enforceable; should be issued according to Annex 6. Liquefied Petroleum Gas or LPG Hydrocarbon that, at normal pressure and temperature condition is in a gaseous state, but at normal temperature and is liquefiable moderately at high pressure. Usually it consists of propane, butane, butylene or polypropylene or mixture thereof. In certain percentages form an explosive mixture. It is stored in liquid state in pressurized containers.Hydrocarbons Organic compound, gaseous, liquid or solid, that mainly consists in carbon and hydrogen.Infrastructure of Security Storage Are the facilities that enable the storage of the security inventory, according to the scope foreseen in Clause 12 and in Annex 1.Annual Guaranteed Remuneration Has the scope foreseen in Clause 12.3 Security Inventory Is the storage capacity indicated in Section 3.3.2 of Annex 1, that the Concessionaire Corporation should maintain during the effectiveness of the contract with the purpose to have a security supply of LPG for Lima and Callao and that may be used in situations of emergency and crisis.Inspector Is the person chosen by the Grantor at the proposal of the Concessionaire Corporation, according to Clause 5.3, who will have the functions and attributions indicated in said clause and Annex 2. Law Is Law N° 26221, Organic Law of Hydrocarbons.Law 29852 Is the law that creates the System of Energy Security in Hydrocarbons to implement the mechanism of Collection in charge of the SISE.Applicable Laws Is the set of legal provisions that regulate and/or affect directly or indirectly the concession contract. Include the Political Constitution of Peru, laws, regulations with force of law, supreme decrees, regulations, directives and resolutions, and any other that according to the legal system of the Republic of Peru is applicable, which will be mandatory for this contract and comprise the regulatory rules. Currency of the Contract Dollar.Economic Proposal Is the amount offered by the Awardee as service cost expressed on the date of commercial operation. The Economic Proposal is part of the contract as Annex 7.Shortlisted Operator Is the person or persons who have been preshortlisted as such by the Committee. Is/are the holder(s) of the minimum participation in the Concessionaire Corporation. OSINERGMIN Is the Supervising Organism of Investment in Energy and Mining– OSINERGMIN, created by Law N° 26734 complemented by Law N° 27332 and which General Regulation was approved by Supreme Decree N° 054-2001-PCM.Parties Are, jointly, the Grantor and the Concessionaire Corporation. For purposes of the scope of Clause 16 includes the Shortlisted Operator.Minimum Participation Is the participation that the Shortlisted Operator should have in the capital of the Concessionaire Corporation. The Minimum Participation, according to the provisions of the Bid Terms will be twenty five per cent (25%) of the capital.Period of Guarantee Is the time equal or lower than the period of recovery, during which is applied the Guaranteed Remuneration granted in merit of Law N° 29852, for the recovery of the service cost. The period of guarantee culminates according to the provisions of the contract. Recovery period Is the term of twenty (20) years counted since the commercial commissioning.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 11 de 114 CONCESSION CONTRACT – FOURTH VERSION Person Is any natural or legal person, foreign or national, who can perform legal acts and assume obligations.Plant of Supply and Dispatch of LPG Installation where the facilities have been constructed to have the Storage of Security and to allow the dispatch of the LPG. Contract Term Shall have the meaning assigned in Clause 2.Commercial commissioning (CC) Is the date in which we have complied with the procedures and terms in Clause 5.3 and the provisions of Annex 2, from which the Concessionaire Corporation is in capacity to provide the service.Reception Points Is the point defined in Annex 1.Regulation Is the Regulation of Transportation of Hydrocarbons by Ducts approved by Supreme Decree N° 081-2007-EM and its amending regulations, complementary or substitute rules.Regulation of Law 29970 Is the Regulation of Law N° 29970–Law that strengthens the energy security and promotes the development of the petrochemical hub of the South of the country, approved by Supreme Decree N° 005-2014-EM and its amending regulations, complementary and substitute rules.Guaranteed Remuneration Is the mechanism foreseen in Clause 12.Service or Service of Transportation and Dispatch of LPG Is the service provided by the Concessionaire Corporation that allows to receive transport by ducts, and dispatch volumes of LPG, through the infrastructure that is part of the System of Supply of LPG.Easements Are the rights of way, of transit or for the occupation of public assets or private property, acquired by the Concessionaire Corporation according to the Regulation and the applicable laws, that are necessary to comply its obligations in the contract. They form part of the concession assets. This definition also includes any right of way necessary for obtaining the right of way that allows the execution of the System of Supply of LPG.System of Supply of LPG Are the concession assets such as the System of Transportation of LPG and the Plant of Storage and Dispatch of LPG, among others, that are operated and exploited by the Concessionaire Corporation for the transportation, storage and dispatch of LPG under the terms of the contract, the Regulation, the TUO and applicable laws; and that are used in part for the provision of the service. System of Transportation of LPG Are the concession assets such as the ducts, dumping stations, measurement stations, delivery systems, works, equipment, among others, which are operated and exploited by the Concessionaire Corporation for the transportation from the point of reception to the final point, under the terms of the contract, the Regulation, the TUO and applicable laws; and that are used for the provision of the service.Dispatch System Are the facilities that allow the provision of the service for the dispatch of LPG to the respective users.Concessionaire Corporation Is the holder of the concession that has access to it through the bid.Suspension Is the suspension of the activities as the result of the occurrence of any ground of suspension according to this contract or applicable laws.Table of Penalties Is the document that appears as Annex 4 and that contains the penalties applicable to the Concessionaire Corporation according to the provisions of this contract.Base Tariff of the System of Transportation of LPG and the Dispatch System Are the tariffs determined according to Clause 12.20 and Clause 12.21 respectively. Regulated Tariff Is that foreseen in Clause 12.Termination of the Concession It is the result of the occurrence of any of the grounds specified in Clause 18 of the contract, giving rise to the termination of rights and obligations, legal and contractual of the Concessionaire as holder of the concession, and the extinction of the rights and obligations of the Grantor under the Contract, without prejudice to the obligations and/or rights that both parties comply or after exercise to that time, expressly provided for in the Contract and the applicable laws.Exchange Rate Is the average weighted exchange rate (sale) of the dollar published in the official newspaper “El Peruano” by the Superintendence of Banking, Insurance and AFP or by the organism that replaces it.TUO Is the Consolidated Text of regulations with force of law that regulate the delivery in concession to the private sector of public works of infrastructure and public services approved by Supreme Decree N° 059-96- PCM and under which has subscribed the contract.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 13 de 114 CONCESSION CONTRACT – FOURTH VERSION User Is the person who receives the service corresponding to the transportation of the LPG or/and Dispatch of LPG.Accounting Value Regardless of the value established for tax purposes or for any other purpose for the contract, "accounting value" is the book value expressed in dollars (according to financial statements prepared in accordance with the standards and principles generally accepted in Peru), of Concession assets, net of depreciation and amortizations accumulated at the time of calculating. For these purposes, depreciation is calculated under the straight-line method, for a period of twenty (20) years. If the depreciation for tax purposes is greater than that defined in this paragraph, shall be deducted from the value in books resulting the difference between (1) the income tax that would have been paid under the depreciation by the method straight line described and (2) the resulting income tax depreciation method used by the Concessionaire Corporation. The accounting value does not include revaluations of any nature, for purposes of the contract.SECOND CLAUSE.- PURPOSE AND CONTRACT TERM 2.1. The purpose of the contract is to establish the rights and obligations of the parties and establish the regulations and procedures that will rule them for the design, financing, construction, operation, maintenance, exploitation of the concession assets, and transfer of the concession assets to the State at the termination of the concession by any of the grounds described in Clause 18. This contract responds to a BOOT scheme (build, own, operate and transfer). In merit of which, during the term of the contract the Concessionaire Corporation will be the owner of the concession assets. At the termination of the concession, the Concessionaire Corporation shall transfer the concession assets according to Clause 18, Article 22° of the TUO and according to the procedure considered in the Regulation. The Concessionaire Corporation may hire consultants, contractors, subcontractors and suppliers in the cases that are necessary or those that it deems as convenient, establishing that the Concessionaire Corporation is the single responsible before the Grantor for the full and complete execution of the obligations under its charge by virtue of the contract and applicable laws.2.2. The term of the concession is twenty three (23) years counted since the closing date. The contract term shall not be computed for the time that the suspensions last, according to the provisions of Clause 17 and applicable laws. The Concessionaire Corporation may, according to the Regulation, request the extension of the contract term no later than four (4) years in advance to its expiration or its extensions, according to the procedure established in Article 8 and following of the Regulation. The decision to do not extend the concession term by the Ministry of Energy and Mines may not be subject matter of Challenger by the Concessionaire Corporation. 2.3. The granting of the concession is free of charge in accordance with paragraph b) of article 14 of the TUO, which means that the Concessionaire is not required to make any payment to the Grantor or any other entity for the provision of the concession, except as indicated in paragraph 4 of Annex 5 of the Bid Terms.THIRD CLAUSE.- CHARACTERISTICS OF THE SYSTEM OF SUPPLY OF LPG.3.1. The Concessionaire Corporation must perform the design, construction and operation of the System of Supply of LPG according to the applicable laws, Annex 1 of the technical national and international applicable regulation. Likewise, the Concessionaire Corporation will be responsible of the maintenance and operation of it and the provision of the service under its responsibility. The System of Supply of LPG is conformed minimum by: i) one System of Transportation of LPG, that starts in the Reception Point, and culminates in the Final Point, and ii) one Plant of Storage and Dispatch of LPG, located at […] The System of Supply of LPG, since the date of commercial commissioning, must be in capacity to transport, store and dispatch the LPG, covering the minimum capacities indicated in Annex 1.3.2. Design and Construction of the System of Supply of LPG 3.2.1. Scope The responsibility of the Concessionaire Corporation for the design and construction of the System of Supply of LPG includes all the works, installations and equipment necessary for their adequate operation and maintenance; as well as for obtaining all the permits, consents, authorizations, licenses and others for the performance of the works, installations and equipment necessary for the adequate operation and maintenance of the System of Supply of LPG, respecting the security regulations established in Annex 1 and applicable laws.3.2.2. Schedule of Execution of Works and Execution Terms a) The Concessionaire Corporation must submit to the Grantor for its approval, within the term of six (6) months, counted since the closing date, a schedule detailing in quarterly periods, the programming of the engineering activities, construction, commissioning, among others, of the System of Supply of LPG. The performance of the activities foreseen in the mentioned schedule and its updates should not exceed the term for the commercial commissioning. The schedule and its updates, duly approved, shall be part of the contract as Annex 13. The updated versions of the Schedule will be delivered to the Grantor before twelve (12) months, before eighteen (18) months and before twenty four (24) months counted since the closing date. Said updates shall not modify the milestones of progress of the critical route of the execution of the System of Supply of LPG considered in the Schedule delivered by the Concessionaire Corporation according to the previous paragraph, unless the Concessionaire Corporation submits the support for the modification of the milestonesSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 15 de 114 CONCESSION CONTRACT – FOURTH VERSION initially foreseen and they are approved by the Grantor, supported in reasons of Force Majeure. b) The schedule must clearly distinguish the critical route of the execution of works of the System of Supply of LPG and establish the milestones of progress in the critical route of said works, to be complied until twelve (12) months, until eighteen (18) months, until twenty four (24) months and until thirty (30) months since the closing date. The Grantor will see the establishment of the milestones of progress on the critical route, alleging that do not fit the type of installation to perform or the type of work to be done. This power may be exercised within forty-five (45) days after the date of receipt of the schedule indicated in subparagraph a) of this clause or within (45) days after the date of receipt of its updates. If there are any observations they must be remedied within a maximum period of twenty (20) days, unless there is controversy regarding the points raised, in which case the dispute shall be resolved in accordance with clause 16 as a Technical Controversy. If there are not objections within the deadline it shall mean that the schedule is approved. For purposes of the approval of the respective Force Majeure shall forward the milestones affected of the progress of critical route of the works related to the implementation of LPG Supply System. c) The delay in the compliance of each Milestone shall cause the Concessionaire Corporation to be obliged to the payment of the penalty for each calendar day of delay, according to Annex 4, and that should be guaranteed through the increase of the Performance Bond, when thirty (30) days of delay have been accumulated, and so on according to Clause 14.3. The penalties will be cumulative and may be executed considering the following paragraph. If the Concessionaire Corporation complies with the commercial commissioning, before or in the foreseen date, the penalties generated according to what is indicated previously will be automatically condoned, and its payment is not claimable. In case of non-compliance of the commercial commissioning on the foreseen date, the Concessionaire Corporation should pay the amount generated for the concept of penalties for non-compliance of the milestones of progress of the critical route, in case of non-compliance of the term for the commercial commissioning, and the payment of the penalties corresponding to this last non-compliance. Said penalties must be paid to the Grantor in a term no later than ten (10) days of the requirement of payment by the Grantor, in case of not paying the penalties directly; we shall proceed with the execution of the Performance Bond for the amount equivalent to said penalties. d) The Concessionaire Corporation must communicate in writing to the Grantor the start of the construction of the System of Supply of LPG, which should be made at least sixty (60) calendar days in advance, for which it should have complied with the requirements foreseen for said purpose in the applicable laws. Without prejudice of the provisions of Clauses 15 and 17, the commercial commissioning must be made in a term no later than thirty six (36) months counted since the closing date.If in the term indicated in the previous subparagraph the commercial commissioning is not performed, the Concessionaire Corporation shall have an additional term of ninety (90) calendar days to comply said obligation, and should pay to the Grantor a penalty for each calendar day of delay during this period, according to Annex 4. Said penalty shall be additional to others foreseen in the contract.After expiration of the term of ninety (90) calendar days referred in the previous paragraph, the Grantor shall have the power to declare the termination of the concession according to Clause 18.3.2.3. Supervision of design and construction of the System of Supply of LPGThe Concessionaire Corporation is obliged to hire and assume the expenses demanded by the supervision of design and construction of the System of Supply of LPG, according to the applicable laws and to the national and International applicable technical regulations. Without prejudice of this, the supervision of design and construction may not be performed by a company linked to the Concessionaire Corporation.For purposes of hiring the supervision, the scope foreseen in Annex 12 must be taken into account.3.2.4. List of goods, services and contractsThe Concessionaire Corporation must submit the description and nature of the goods, services and contracts of design and construction, linked to the purpose of the contract, for purposes referred in Article 21º of the TUO.FOURTH CLAUSE.- DECLARATIONS OF THE PARTIES 4.1. Declarations of the Concessionaire Corporation.The Concessionaire Corporation guarantees the Grantor, on the closing date, the truthfulness and accuracy of the following declarations:4.1.1.1. Incorporation, validity and consentThe Concessionaire Corporation and the Shortlisted Operator:(a.i) The Concessionaire Corporation is duly incorporated and validly existing according to the applicable laws, and the Shortlisted Operator is a Corporation duly incorporated and validly existing according to the laws of the country or the place of its incorporation;(a.ii)Are duly authorized and in capacity to assume the obligations that respectively correspond to them, as consequence of the conclusion of the contract in all the jurisdictions in where said authorization is necessary for the nature of their activities or by the property, leasing or operation of their assets, except in those jurisdictions in which the lack of said authorization does not have a substantially adverse effect on their Business or operations; andSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 17 de 114 CONCESSION CONTRACT – FOURTH VERSION (a.iii) Have complied with all the requirements necessary to formalize this contract and to comply the commitments provided therein.4.1.1.2. Authorization, signature and effect The signature, delivery and compliance of the contract by the Concessionaire Corporation and the Shortlisted Operator are comprised within their powers and have been duly authorized by the respective boards or other competent bodies. It shall not be necessary the performance of other acts or procedures by the Concessionaire Corporation or the Shortlisted Operator to authorize the subscription and compliance of the obligations that respectively correspond to them under this contract. The contract has been duly and validly signed by the Concessionaire Corporation and by the Shortlisted Operator, and is a valid obligation, binding and required for the Concessionaire Corporation and for the Shortlisted Operator according to its terms.4.1.1.3. Consents That the Concessionaire Corporation and the Shortlisted Operator have complied with all the requirements and obligations necessary to formalize this contract and to provide duly compliance to their provisions.4.1.1.4. Minimum Participation The Shortlisted Operator is owner and holder of the Minimum Participation, which shall be maintained during a minimum term of ten (10) years since the closing date, unless the prior consent of the Grantor, according to Clause 7.8.4.1.1.5. Litigations There are no actions, suits, arbitration or other legal proceedings in progress, and no statements or decisions of any kind not executed against the Concessionaire Corporation, the Shortlisted Operator, or any major shareholder of these, which have to prohibit, impede or limit compliance with the commitments or obligations under the contract.4.1.1.6. Undue Payment That the Concessionaire Corporation and the Shortlisted Operator, none of its shareholders or Related Companies or any of their respective directors, officers, employees, consultants, legal representatives or agents, have paid, received, offered or attempted to pay or receive or offer or intends to pay or receive or be offered any payment or illegal commission in connection with the concession, contract and bid.4.2. Declarations of the Grantor The Grantor guarantees to the Concessionaire Corporation, on the closing date, the truthfulness and accuracy of the following declarations:4.2.1.1. Authorization, signature and effect The Ministry of Energy and Mines is duly authorized according to the applicable laws to act in representation of the Grantor in the contract. The signature, delivery and compliance of the contract, by the Grantor, are comprised within its powers, are according to the applicable laws and have been duly authorized by the governmental authority. Any other action or procedure by the Grantor or any governmental authority is necessary to authorize the subscription of the contract or for the compliance of the obligations of the Grantor foreseen in it.4.2.1.2. The contract has been duly signed by the authorized representative of the Grantor and, with the authorization, signature and delivery of it by the Concessionaire Corporation, is a valid and binding obligation for the Grantor. There are no actions, trials, arbitrations or other legal procedures in progress, or judgments or decisions of any class not executed, against the Grantor, that have the purpose to prohibit, prevent or limit the compliance of the commitments or obligations foreseen in the contract.4.2.1.3. Environmental Impact Study That it will not deny to the Concessionaire Corporation, without justification, which can only be based on the violation of the relevant Applicable Laws, the approval of the respective environmental management tool, as a requirement of environmental character necessary to begin the execution of the works of the System of Supply LPG. Such approval will be granted within a maximum period of six (6) months from the date of filing of the application, not counting the time it takes for the Concessionaire to respond to the comments that were generated in the process of evaluation of the relevant instrument of environmental management.4.2.1.4. Exploitation right The Concessionaire Corporation shall have the right to exploit the concession assets during the effectiveness of the contract. 4.2.1.5. Guarantee of the Grantor That the procedures and coordination relevant have been made in order that by virtue of the provisions of Article 4 of Law No. 26885 Law, the Executive Power issues the Supreme Decree referred in Article 2 of Legislative Decree No. 674, modified by Article 6 of Law No. 26438, by which it shall be granted through contract the guarantee of the State in support of declarations, obligations, assurances and guarantees of the Grantor under this Contract. Supreme Decree referred to in this clause and the security agreement whereby the State will grant the guarantee in support of declarations, obligations, assurances and guarantees of the Grantor, will be delivered to the Concessionaire Corporation on the closing date. This guarantee does not constitute a financial guarantee.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 19 de 114 CONCESSION CONTRACT – FOURTH VERSION FIFTH CLAUSE.- LANDS, ROUTES, EASEMENTS AND COMMERCIAL OPERATION5.1. Lands 5.1.1 The Grantor shall make available to the Concessionaire Corporation a land for the installation of the Plant of Storage and Dispatch of e LPG with the dimensions that are necessary for said facilities. The scope of the conditions of delivery of said land and the construction of the facilities indicated are included in Annex 3.5.1.2 The land that the Grantor shall make available according to the previous clause, will have the adequate zoning to perform the activities of storage and dispatch of LPG.5.2. Easements, right of way and plotting 5.2.1.1. Obtaining easements and rights of way that, according to applicable laws, requires the Concessionaire Corporation for the execution of the works of the System of Supply of LPG to allow the fulfillment of its obligations under the contract, will be managed and its costs shall be borne by the Concessionaire Corporation in accordance with the procedures and requirements of the Regulations and other applicable laws. If the Concessionaire Corporation requires the Ministry of Energy and Mines to grant the easements, it shall, within a period not exceeding eight (8) months following the approval of an instrument of environmental management, submit applications as appropriate.However, after the term established for the submission of the imposition of easements, in case the Concessionaire Corporation is obliged to make a change in the plotting, it must submit to the Grantor a new request of imposition of easements following the procedure established in the Regulation and in applicable laws. 5.2.1.2. After obtaining and imposing easements, they shall be considered concession assets. 5.2.1.3. The Concessionaire Corporation has the obligation to exercise any of the following modalities of possessory defense, both for the case of usurpation, affectation, dispossession, etc, or intent of usurpation, affectation, dispossession, etc., of the area on which it has the respective right of easement , as in the case of incompatible activities with the good use of said area by third parties: a) Extrajudicial possessory defense, used to repeal the force that is used against the Concessionaire Corporation and to protect and recover the asset, without interval of time, if it were dispossessed or its possession is threatened, but always refraining from the use of channels of fact not justified by the circumstances. b) Judicial possessory defense, that the Concessionaire Corporation must exercise, in case of any affectation, dispossession, occupation, usurpation, etc. on the concession. The Concessionaire Corporation must communicate to the Grantor, with copy to OSINERGMIN, said facts and make use of the mechanisms and judicial remedies that allow holding harmless the right of the Grantor on the concession assets. 5.2.1.4. With the written and supported request of the Concessionaire Corporation, the Grantor shall provide according to its powers, the facilities for the Concessionaire Corporation may have access and possession of the lands with imposed easement required for the construction of the System of Supply of LPG. 5.3. Commercial Commissioning After the construction and equipping of the System of Supply of LPG, the Concessionaire Corporation shall proceed, in the presence of the Inspector, to make the pre-commissioning tests and pre-commissioning Commercial Operation, the same to be carried out in strict accordance with the provisions of Annex 2 to the applicable laws. The commercial commissioning shall occur within the period specified in clause 3.The commercial commissioning shall occur when the Concessionaire Corporation has the infrastructure of Storage of Security with the volume of the LPG foreseen as Storage of Security according to Annex 1. The Concessionaire Corporation shall propose to the Grantor, with not less than three (3) months in advance to the commercial commissioning, a list of three (3) companies of recognized International prestige in the supervision of Systems of Transportation of Hydrocarbons and facilities of storage, for the election of the inspector, who shall be elected by the Grantor in a term no later than thirty (30) days since the date of submission of the proposal of the short list. If the Grantor does not inform its election in said term, the Concessionaire Corporation shall have the right of election among the three (3) proposed companies. The fees of the inspector shall be borne by the Concessionaire Corporation. The provisions of this clause will be complied without prejudice of the obligations that the Concessionaire Corporation should comply according to the Regulation and applicable laws. The Grantor shall coordinate with the entities and public and private organisms related to the System of Supply of LPG to provide their support in the performance of the aforementioned tests. At the successful conclusion of the tests for the commercial commissioning of works of the System of Supply of LPG, the parties shall subscribe a document to credit it (the “Minutes of Tests”). 5.4. Responsibility and risk 5.4.1.1. The Concessionaire Corporation shall be responsible according to the applicable laws, for damages, losses or injuries caused to the concession assets or to third parties. The Concessionaire Corporation shall hold harmless the Grantor and to its officers and advisors regarding and against any action or exception of legal nature, administrative, arbitral or contractual, or claim of any nature in relation to the concession assets, unless that said damages, losses or injuries are originated by intent or gross negligence of the Grantor. 5.4.1.2. From the commercial commissioning, the Concessionaire Corporation shall be responsible for the provision of the service, in its condition of holder of the concession, according to the applicable laws and the provisions of the contract. The Concessionaire Corporation shall hold harmless the Grantor and its officers and advisors regarding to and against any actionSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 21 de 114 CONCESSION CONTRACT – FOURTH VERSION or exception of legal nature, administrative, arbitral or contractual, or claim of any nature regarding the Exploitation of the concession assets, unless said actions, exception or claims are originated by intent or gross negligence of the Grantor.5.4.1.3. The Concessionaire Corporation may not dispose of the inventory of security under any contractual modality, except when required to dispose of it according to the contract. SIXTH CLAUSE.- OBLIGATIONS AND RIGHTS OF THE GRANTOR 6.1. Notwithstanding the provisions of clause 5.2 as well as Articles 94 to 112 of the Regulation, the Grantor, at the request in writing, duly substantiated by the Concessionaire Corporation to the Government Authority and compliance with the provisions of the aforementioned articles of the Regulation , is obliged to impose, within a maximum period of six (6) months of that request, the easements for the occupation of public property or private property necessary for the construction of LPG Supply System, provided that that application meets the requirements and attach the documents required by applicable laws, or, if there is opposition within four (4) months since the opposition has been declared unfounded according to the procedure of Regulations and other applicable laws.6.2. The Grantor, before a written and justified request of the Concessionaire Corporation, shall make the efforts that are reasonably necessary and within its powers expressly established in the Applicable Laws, for the Concessionaire obtains the licenses and permits in general, including environmental that it requires for the construction, operation, maintenance and exploitation of the concession assets, where appropriate in accordance with applicable laws.6.3. The Grantor is committed to provide to the Concessionaire Corporation the necessary assistance and within its attributions to coordinate with the competent entities the protection of the works and installations to allow the construction of the System of Supply of LPG and the continuity of the operations, in cases of public disaster, internal shocks and/or disturbances. 6.4. The Grantor, according to its attributions conferred in the applicable laws, shall coordinate with the entities and public and private organisms related with the concession assets, with the purpose to provide their support for the performance of the tests at the conclusion of the construction of works of the System of Supply of LPG to perform the activities related with the commercial commissioning. 6.5. The Grantor has the right to declare the termination of the concession for grounds established in Clause 18 and in consideration of the provisions of the Regulation.SEVENTH CLAUSE.- OBLIGATIONS AND RIGHTS OF THE CONCESSIONAIRE CORPORATION 7.1. General Conditions of provision of the Service The service must be provided according to the standards established in the applicable laws, the contract and the contracts with users of said service, in order to guarantee the quality, efficiency and continuity thereof. The Concessionaire Corporation is obliged to install and operate the equipment necessary for the measurement of variables and parameters for the verification of the goals of quality, efficiency and continuity, according to the applicable laws. The Concessionaire Corporation must facilitate to OSINERGMIN and to the Governmental Authorities the information they shall request referred to the registries to evaluate the quality of the service and that referred in Articles 37° and 38° of the Regulation.7.2. Since the commercial commissioning, the Concessionaire Corporation is obliged to provide the service to the person who requests it in the term and conditions established in the contract, for the aspects not foreseen in the contract shall apply the regulation and other applicable laws. The Concessionaire Corporation shall be obliged to comply the provisions about free access and supply established in the contract, the Regulation and the applicable laws. 7.3. Obligations in case of emergency or crisis In case of any situation of emergency or crisis, declared by the Grantor, the Concessionaire Corporation will continue to provide the service as far as possible, prioritizing the actions that are necessary for the solution of the emergency or crisis. For this purpose, the Concessionaire Corporation shall coordinate with the Grantor the actions corresponding to each party to overcome said situation. The situations of emergency or crisis may be generated: - When are affected other storage installations that are not part of the System of Supply of LPG, and that as consequence the availability of the LPG is affected to attend the market of Lima and Callao. - When are affected any of the installations or facilities that are part of the System of Supply of LPG. In said situations of emergency or crisis, the Concessionaire Corporation must dispose the security inventory according to the requirements of demand and according to the instruction of the Grantor. The reduction of the security inventory for causes foreseen in this clause, will not be grounds of non-compliance of the Contract by the Concessionaire Corporation. It shall be the responsibility of the Concessionaire Corporation to restore the LPG to have the security inventory, which mechanism is foreseen in Clause 12.19.2. After the situation of emergency or crisis is overcome, said inventory must be restored in a term no later than twenty (20) days. Equally, the Concessionaire Corporation must comply the provisions established in Annex 4 of the Regulation and applicable laws about security in case of crisis or emergencies for affectation of the System of Supply of LPG.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 23 de 114 CONCESSION CONTRACT – FOURTH VERSION 7.4. Obligations of information and updated of inventories 7.4.1.1. Information The Concessionaire Corporation must provide to OSINERGMIN and to the Grantor the information and facilities of inspection that they may require to control the correct compliance of their obligations under this contract. 7.4.1.2. Inventory Update The Concessionaire Corporation must keep an updated inventory of the concession assets, indicating its characteristics, location, condition, operation and performance. Said inventory must be delivered to the Grantor on the third quarter of each year since the commercial commissioning.7.5. Conditions of supply and conditions of access The Concessionaire Corporation shall be obliged to comply with the provisions about free access and supply established in the Regulation and applicable laws. 7.6. Calidad y normas de fabricación 7.6.1.1. The Concessionaire Corporation shall purchase and install new equipment or of first use of technology appropriate for the provision of the service according to this contract and that comply the applicable laws, and cannot purchase and install equipment of second use, except in the cases of transfer or relocation of its equipment that conform the concession assets for their use in the provision of the service and prior accreditation before OSINERGMIN that said equipment are suitable for the provision of the service according to this contract and applicable laws. 7.6.1.2. The Concessionaire Corporation will launch and maintain an adequate program of quality assurance that complies, at least, the provisions of the applicable laws, during the design and construction of the System of Supply of LPG, and during the exploitation of the concession assets.7.7. Shortlisted Operator 7.7.8.1. The Shortlisted Operator should: a) Maintain the Minimum Participation, during a term of ten (10) years, except prior authorization of the Grantor. b) Be in charge of the technical operations of the System of Supply of LPG, which includes the appointment of the manager of operations. The right of the Shortlisted Operator to appoint the manager of operations should be established in the bylaws of the Concessionaire Corporation.7.7.8.2. The obligations corresponding to the technical operations are assumed by the Shortlisted Operator jointly with the Concessionaire Corporation. 7.7.8.3. Notwithstanding the provisions of subparagraph a) of clause 7.7.1, any of the Allowed Creditors may request prior written approval of the Grantor, which approval shall not be denied without reasonable and justifiable reason for the purposes of transfer shares or shares of the Concessionaire Corporation as a result of the partial or total execution of the guarantee referred to in clause 19.2. The application for approval must be duly based on the breach of the obligations of the Concessionaire Corporation.7.8. Change of Shortlisted Operator The Concessionaire Corporation may request to the Grantor the change of the Shortlisted Operator by another who shall comply the same conditions of the Shortlisted Operator. The Grantor must give its prior and written agreement of the requested change, which shall not be denied as far as the proposed operator complies the minimum requirements foreseen in the Bid Terms. After thirty (30) days have elapsed without a written reply of the Grantor, the request shall be understood as accepted.7.9. The Concessionaire Corporation must comply the other obligations not comprised in this clause, foreseen in the TUO, the Regulation and other applicable laws.7.10. The contracts that the Concessionaire Corporation may subscribe with the users for the provision of the service shall be governed by the following criteria, which should be included in each one of the referred contracts: a.a) It shall not apply dissimilar conditions to equivalent services which place some competitors at a disadvantage compared to others, in accordance with the applicable laws. a.b) Service contracts may not contain confidentiality clauses. Any User of the Service or the Concessionaire Corporation, may be punished, administrative, civil or criminal, for disclosing all or part of those contracts.7.11. Financial Closure 7.12.8.1.No later than eighteen (18) months from the closing date, the Concessionaire Corporation must demonstrate that it counts all the financial resources or contracts that establish funding commitments generated for the execution of works of the Supply System LPG by this. If the Concessionaire fails to demonstrate compliance with this obligation within the aforementioned period for reasons not attributable to the Concessionaire Corporation itself, the Grantor at the request of the first may extend the period set out in this section for four (4) additional months.7.12.8.2.If the Concessionaire does not prove to have all the financial resources or with contracts that establish funding commitments at the end of the deadlines previously established, theSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 25 de 114 CONCESSION CONTRACT – FOURTH VERSION Grantor is empowered to declare the termination of the concession for reasons attributable to the Concessionaire Corporation, and empowered to execute the Performance Bond for an amount equivalent to one hundred percent (100%) of the same, as compensation for damages.7.12. The Concessionaire Corporation is obliged to sign the agreement of assignment of the concession in favor of the person submitted by the Allowed Creditors, provided that the Grantor, pursuant to the referred clause, has accepted the request for replacement of the Concessionaire Corporation submitted by the Allowed Creditors, to which the latter must prove the situation that motivates the replacement. Failure to comply with this obligation by the Concessionaire Corporation shall be considered as a serious breach for the purposes of clause 18.3.1.7.13. For purposes of the allocation of the capacity of the System of Transportation, the Concessionaire Corporation is obliged to make public offerings. The first public offering procedure by the Concessionaire Corporation will be made, no later than twenty-four (24) months from the Closing Date.7.14. After the commercial commissioning of the LPG Supply System, the Concessionaire Corporation shall convene every six (6) months to the respective procedures of public offerings, provided there is available capacity. The basis of the procedures in question must be approved by the Grantor.7.15. The Concessionaire Corporation may make additions to the LPG Supply System, for this purpose must agree on the terms of such extensions with the Grantor.EIGHTH CLAUSE.- GUARANTEES GRANTED BYTHE CONCESSIONAIRE CORPORATION The Concessionaire Corporation must deliver the following guarantees:8.1. Performance Bond.To ensure compliance with the obligations for the period from the Closing Date and the commercial commissioning derived from the Contract, the Concessionaire Corporation shall deliver to the Grantor, at the closing date, a Performance Bond in the amount of twenty six million dollars (US $ 26,000,000.00) according to the format shown in Annex 5. The Performance Bond also guarantees the payment of penalties under clause 14.The Concessionaire Corporation must submit the renewal of the Performance Bond, when it shall be necessary, with anticipation not less than thirty (30) calendar days at its expiration. The Performance Bond must be issued for terms not less than one (1) year, and must be in force from the date of its delivery to the Grantor until sixty (60) calendar days after the commercial commissioning. If it is not renewed in the term established, the provisions of Clause 8.4 shall apply.The Grantor shall return the Performance Bond to the Concessionaire Corporation, provided that the delivery of the Complementary Performance Bond indicated in Clause 8.2 is complied.8.2. Complementary Performance Bond In order to guarantee the compliance of the obligations since the commercial commissioning derived from the contract, the Concessionaire Corporation, according to Article 28° of the TUO, must deliver to the Grantor, at the subscription of the Minutes of Tests, the Complementary Performance Bond for an amount of three million five hundred thousand dollars (US$ 3,500,000.00), according to the format indicated in Annex 6.The Complementary Performance Bond must be issued for terms not less than one (1) year and must be in force since the date of its delivery to the Grantor until sixty (60) calendar days after the date of expiration of the contract term, as appropriate. If it is not renewed in the term established, the provisions of Clause 8.4 shall apply.The Concessionaire Corporation must renew the Complementary Performance Bond with anticipation not less than thirty (30) calendar days at its expiration.Provided there is no ground for its partial or total execution according to the contract and there is no ground, the Grantor shall return the Complementary Performance Bond to the Concessionaire Corporation sixty (60) calendar days after the termination of the concession.8.3. Execution of Guarantees.The Performance Bond or the Complementary Performance Bond may be executed: a) Partially or totally to pay the accrued penalties according to the contract, or any other payment that the Concessionaire Corporation must make to the Grantor according to the contract, in case they have not been paid directly and timely by the Concessionaire Corporation. b) Partially or totally in case of termination of the concession for cause attributable to the Concessionaire Corporation according to Clause 18.2.1.8.4. Renewal of guarantees In case of partial or full execution of the Performance Bond or Complementary Performance Bond, the Concessionaire Corporation shall be obliged to restore it to the original amount and under the same conditions set out in clauses 8.1 and 8.2, as appropriate, which should be made within thirty (30) calendar days following the date of execution of the guarantee, except when this would have executed in compliance with the provisions of subparagraph (b)SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 27 de 114 CONCESSION CONTRACT – FOURTH VERSION of clause 8.3. If that deadline expires, without the Concessionaire Corporation meets that obligation, shall apply the provisions of clause 18.If the guarantee is not renewed by the Concessionaire Corporation within thirty (30) calendar days prior to its expiration, the Grantor may fully execute the Performance Bond or the Complementary Performance Bond, in which case the funds resulting from the execution will be automatically constituted, without the need of additional approval in the respective guarantee, until the time when the Concessionaire Corporation delivers to the Grantor the new guarantee. After said delivery, the Grantor shall immediately proceed to restore to the Concessionaire Corporation the funds resulting from the executed guarantee without interests. If the Concessionaire Corporation does not comply to deliver the new guarantee within thirty (30) calendar days following to the execution of the original guarantee, the Grantor may declare the termination of the concession and said guarantee, indistinctly of the termination of the concession, and shall be applied as penalty in full. 8.5. Issuing Banks. The guarantees shall be issued by any of the banking and insurance companies indicated in Annex 8 of the Bid Terms, following the format and for the amount indicated in Annexes 5 and 6.NINTH CLAUSE.- REORGANIZATION OF THE CONCESSIONAIRE CORPORATION AND ASSIGNMENT OF CONTRACTUAL POSITION 9.1. The Concessionaire Corporation may reorganize, provided it counts with the prior written consent of the Grantor, and as far as the term provided in Clause 4.1.4. of the contract has not expired, and the Shortlisted Operator maintains the Minimum Participation. The Grantor may not deny authorizing the reorganization without existing justified and reasonable cause.9.2. The Concessionaire Corporation may also, in accordance with Article 34 of the TUO, assign its contractual position in the contract, which will be complete, comprising all the rights and obligations of the Concessionaire Corporation understanding as holder of the concession. For these purposes, it must have the prior written consent of the Grantor to the extent that the term provided in Clause 4.1.4 of the Contract has not expired, the Shortlisted Operator must maintain the Minimum Participation in the new Concessionaire Corporation, except that in the same session is also appropriate the position to change the Shortlisted Operator, in which case it will apply the provisions of clause 7.8 of the contract.The Grantor may not deny without justified cause the requested assignment.TENTH CLAUSE.- CONTRACTS WITH SUPPLIERS 10.1. The Concessionaire Corporation and in its case the Shortlisted Operator, may at their own account, cost and risk, hire consultants, contractors and suppliers in the cases that are necessary or those deemed as convenient, to contribute to the purpose of the contract, for said purpose should be considered the following: a) That the Concessionaire Corporation or in its case the Shortlisted Operator, are the single responsible for the full and complete execution of the obligations under its charge under the contract and applicable laws. b) In the contracts of continued execution necessary for the continuity of the operation of the concession it should expressly provide, that in case of termination of the concession for any cause, the Grantor or eventually the New Concessionaire Corporation, may at its sole criterion, assume the contractual position of the Concessionaire Corporation, without the need for the efficiency of the assignment, of a single Communications in this sense addressed by the Grantor or the New Concessionaire Corporation, to the consultant, contractor or supplier.10.2. The power referred in paragraph b) of Clause 10.1, shall not apply for any contract related to the financing of the concession, and will be only exercised when the Grantor decides that the corresponding contracts are necessary to secure that the System of Supply of LPG are put in commercial commissioning or that the service normally continues, in spite of the termination of the concession. 10.3. The Concessionaire Corporation shall send to the Grantor a copy of the contracts referred in subparagraph b) of Clause 10.1, ten (10) days after entering them or modified them, as appropriate. The Grantor shall keep confidentiality regarding those contracts or parts of contracts that, as it is informed by the Concessionaire Corporation in the first opportunity, deserve such caution.ELEVENTH CLAUSE.- PROTECTION TO ENVIRONMENT AND TO THE CULTURAL HERITAGE 11.1. Without prejudice of the provisions set forth in Clause 4 of the contract and of its other obligations under the contract and applicable laws, the Concessionaire Corporation is obliged to construct, preserve, operate and maintain the System of Supply of LPG considering the applicable laws that protect the cultural heritage of the nation and the environment of Peru.11.2. Within twelve (12) months following to the closing date, the Concessionaire Corporation shall submit to the General Direction of Energy Environmental Affairs of the Ministry of Energy and Mines, or the entity that replaces its functions, for its approval, the respective instrument of environmental Management for the execution of the works of the System of Supply of LPG.11.3. For purposes of preparation and approval of the instrument of environmental management with relation to the works of the System of Supply of LPG, the Concessionaire Corporation must comply the applicable laws. The Ministry of Energy and Mines, through the General Direction of Energy Environmental Affairs, or the entity that replaces its functions, when evaluating the approval of the instrument of environmental management shall consider the compliance of the corresponding standards and those that are applicable according to the applicable laws.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 29 de 114 CONCESSION CONTRACT – FOURTH VERSION 11.4. After approving the instrument of environmental management with relation to the works of the System of Supply of LPG, the Concessionaire Corporation shall be obliged to comply with the content of said instrument. Without prejudice of the aforementioned, the Concessionaire Corporation shall assume the exclusive responsibility before third parties for the negative environmental impacts not identified in it. The Concessionaire Corporation will be jointly responsible with the subcontractors before any environmental damage caused by the effect of the activities of the concession, as far as said environmental damage is directly attributable to any of them. The hiring of insurance policies does not relieve of responsibility to the Concessionaire Corporation.11.5. The obtaining of the corresponding Certificate of Absence of Archaeological Remains-CIRA, the Plan of Archaeological Monitoring and others required according to the applicable laws, will be the responsibility of the Concessionaire Corporation, and should comply the procedures established in the applicable laws for said purpose.11.6. According to Article 30 of Law N° 28296 – General Law of Cultural Heritage of the Nation, in case that during the construction of works of the System of Supply of LPG occurs the fortuitous finding of any assets integrant of the cultural heritage of the nation, the Concessionaire Corporation is obliged to suspend its activities in that place and should communicate that finding to the Ministry of Culture, in order to dictate the applicable protection measures.11.7. In any case, the Concessionaire Corporation may acquire title or any right over the material or archaeological or historic remain found. Additionally, the Concessionaire Corporation must establish barriers of protection regarding the archaeological remains identified in the neighboring areas of the activities, as far as it is not assumed by the Ministry of Culture or the competent entity.TWELFTH CLAUSE.-REGIME OF REMUNERATION OF THE COST OF THE SERVICE AND TARIFFS 12.1 About the concepts that are remunerated as service cost The service cost comprises all the costs of investment, operation and maintenance related to part of the System of Supply of LPG, according to the following: a) The investment and the operation and maintenance costs related to the System of Transportation of LPG, which minimum capacity will be thirty (30) thousand barrels/d. b) The investment and the operation and maintenance costs related to the System of Dispatch of LPG, which minimum capacity will be thirty (30) thousand barrels /d. c) The investment and costs of operation and maintenance related to the Infrastructure of Storage of Security, which minimum capacity shall be ninety (90) thousand barrels.- d) The service cost includes the losses and own consumption of the LPG up to one per cent (1%) of the transported volume. The losses and own consumption above the referred value will be the responsibility of the Concessionaire Corporation according to subparagraph m) of Article 36 of the Regulation. These costs must be considered as component of the System of Transportation of the LPG. e) Also is included in the service cost, the costs necessary of the acquisition of the LPG for tests required for the operation of the System of Transportation of LPG and the System of Supply of LPG; and the costs of LPG required for Linepack. f) The service cost submitted by the Awardee in the Economic Proposal shall not comprise only the costs of the LPG acquired as Storage of Security. The costs associated to the acquisition of LPG for Storage of Security will be governed by Clause 12.19.2. 12.2 Guaranteed Capacity The following must be guaranteed: a) That the infrastructure of the System of Transportation of LPG and the System of Supply of LPG have a guaranteed capacity of thirty (30) thousand barrels /dy that will be required said capacity to the Concessionaire Corporation from the commercial commissioning until the end of the recovery period. b) That it has a guaranteed capacity of Storage of Security of ninety (90) thousand barrels of LPG. If the guaranteed capacity for the Storage of Security is increased, the mechanism established in Clauses 12.20 and 12.21 shall be applied. 12.3 Guaranteed Remuneration 12.3.1 Guaranteed remuneration is considered according to the following: a. For the System of Transportation of LPG and for the System of Distribution of LPG, for a capacity of thirty (30) thousand barrels /d according to Clause Extinction and waiver to the guaranteed remuneration. b. For infrastructure of storage of security for all the recovery period. c. The LPG necessary for the storage of security is remunerated according to Clause 12.19.2.12.3.2 The Concessionaire Corporation according to the provisions of Law N° 29852, Article 18 of Supreme Decree N° 005-2014-EM, shall access to an Annual Guaranteed Remuneration that repays the cost of service. The Annual Guaranteed Remuneration shall be monthly paid in dollars with charge of liquidations at the end of each year of calculation. Within the framework of the referred regulations and other applicable laws, OSINERGMIN shall establish the procedure for the application of the annual guaranteed remuneration in favor of the Concessionaire Corporation.12.3.3 Said procedures shall consider the mechanism to guarantee the payment of the annual guaranteed remuneration. Furthermore, shall take into account that in the final liquidation of each year of calculation, made by OSINERGMIN, they should consider the adjustments related to the liquidation balances, so as they are incorporated in the following year considering the discount rate.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 31 de 114 CONCESSION CONTRACT – FOURTH VERSION 12.3.4 If a Force Majeure event occurs, after the commercial commissioning, that causes the suspension of the contract term, the guaranteed remuneration shall not be suspended nor the term of the recovery period, considering as available days, unless that the period of uninterrupted Force Majeure is greater than six (6) months or that the guaranteed remuneration has been extinguished according to the contract. Said term of six (6) months will be computed since the date in which is invoked the existence of Force Majeure, as far as it is accepted by the Grantor. 12.3.5 In case of suspension of payment of the guaranteed remuneration and the period of the recovery period, it shall take effect from the day following to the date on which the period of six (6) months above is met. Additionally, in cases of payment of Guaranteed Income during Force Majeure event, such income shall be considered as definitive payments made during the event and therefore will not generate debit or credit for the next year calculation under the settlement It referred to in clause 12.3.2, and considering the payment of the guaranteed remuneration in this period will not apply the suspension of the contract term.12.4 The Concessionaire Corporation may waive to the guaranteed remuneration corresponding to the System of Transportation of LPG and for the System of Distribution of LPG through notarial letter send to the Grantor, provided the following is complied: a) The request of waiver is submitted one (1) year in advance to the date to make effective said waiver. b) All the information is submitted for the determination of the Regulated Tariff of the System of Transportation of LPG and the System of Distribution of LPG according to the procedure established in the Regulation and other applicable laws. 12.5 Exchange rate for tariffs In determining the regulated tariffs based on the Base Rate, the establishment and implementation of its update formulas, determining the application of the charge SISE and other calculations that are carried out under the tariff scheme provided in this clause, the exchange rate to be used shall be the average sales value of the last five quotes available and published by the Superintendence of Banking and Insurance or by the entity replacing it, on the 25th of each month. REMUNERATION OF THE SYSTEM OF TRANSPORTATION OF LPG AND THE SYSTEM OF DISTRIBUTION OF LPG12.6 By virtue of Article 2 of Law N° 29852 and Article 18 of Supreme Decree N° 005-2014-EM, the development of the System of Supply of LPG will be remunerated through SISE charges in the part not covered by the income coming from the provision of the service according to Section 2 of Article 18 of the mentioned supreme decree. In that sense, the income of the Concessionaire Corporation will be covered as follows: a) Income resulting from the provision of the service of the System of Transportation of LPG. b) Income resulting from the provision of the service of the System of Distribution of LPG. c) Income resulting from other services. d) Income resulting from SISE according to the procedure established by OSINERGMIN, within the Framework of the provisions set forth in Article 18 of Supreme Decree N° 005- 2014-EM. e) Income or expenses of SISE settlement balances.12.7 The tariff regulated for the provision of the service of the System of Transportation of LPG and for the System of Distribution of LPG will be established by OSINERGMIN considering the guidelines indicated in this clause, the regulated tariff may be less or equal to (≤) the Base Rate.12.8 According to the provisions set forth in Article 18 of S.D. 005-2014-EM, OSINERGMIN shall establish the procedures for the collection and payment of income in favor of the Concessionaire Corporation. 12.9 OSINERGMIN shall establish the procedure for the determination of tariffs when the guaranteed capacity is overcome, defined in Section 12.21 of this clause.12.10 Extinction and waiver to the guaranteed remuneration: 12.11 The guaranteed remuneration for the System of Transportation of LPG and for the System of Distribution of LPG is automatically extinguished when, since the fifth year of operation of the System of Supply of LPG, the calculation of the SISE is less or equal to zero for a period of: a. Three (3) years of consecutive calculation; or b. Three (3) years during five (5) years of consecutive calculation. During the period of evaluation indicated in the previous paragraph, the difference between the income received for the collection of regulated tariffs and the guaranteed remuneration, consisting in positive balances, will be accumulated in a trust account. The positive balances will be disposed according to the procedure approved by OSINERGMIN. 12.11.1 The extinction of the guaranteed remuneration for the System of Transportation of LPG and the System of Distribution of LPG indicated in this clause do not imply the extinction of the SISE corresponding to the remuneration of the infrastructure of storage of security. SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 33 de 114 CONCESSION CONTRACT – FOURTH VERSION READJUSTMENT FOR DELAY IN THE CC 12.12 Delay in the Commercial Commissioning The cost of the service will be readjusted for delays in the commercial commissioning provided said delay is produced due to causes of Force Majeure according to the provisions of the Fifteenth Clause of this contract. Said readjustment shall consider a maximum period of six (6) months. This readjustment shall be applied when the delays generate that the commercial commissioning occurs after thirty six (36) months counted since the closing date. The readjustment mechanism for delay in the CC will be made according to the provisions of Clause 12.17.UPDATE FORMULA, DISCOUNT RATE AND PERIOD OF RECOVERY 12.13 Formula of updated of the cost of the service adjusted by effects of inflation:Where: = Cost of Adjusted Service. PPI = Producer Price Index (Finished goods less foods and energy - Series ID: WPSSOP3500, published by Bureau of Labor Statistics of the United States of America) = Cost of the service in the month when making the update. = Cost of the service in the month when the commercial commissioning is declared.The PPI index to use will be the last index published in the month for which is made the update or to the month when the commercial commissioning is made, as the case may be. The update is made once a year. The values of the PPI once they are used are not subject to changes as a result of new calculations made by the Bureau of Labor Statistics of the United States of America. 12.14 Discount Rate: is the annual effective rate in dollars equivalent to 12%. 12.15 Recovery period (n = 20 years): Is the period comprised between the date of the end of the contract term and the date of commercial commissioning.MECHANISMS OF DETERMINATION OF THE COST OF THE SERVICE AND ANNUAL GUARANTEED REMUNERATION 12.16 Cost of the service for the System of Transportation of LPG, System of Distribution of LPG and Infrastructure of Storage of Security The cost of the service (CS) for the System of Transportation of LPG (ST), System of Distribution of LPG(SD) and infrastructure of Storage of Security (ISS) is determined according to the following: Cost of service of ST(CSST) = FST *CSCost of service of SD(CSSD) = FSD *CSCost of service of ISS (CSIA) = FIAS *CS Where: CS : Cost of service that includes ST, SD and ISS.FST, FSD, FIAS: Are factors of allocation of cost of service, according to the Bid Terms. The sum of factors FST , FSD y FIAS is equal to 1.0.12.17 Factor of Capital Recovery (FCR)The factor of capital recovery (FCR) is in function to the recovery period (n) and the discount rate (DR), according to the following formula:Where: FRC : Factor of capital recovery. n : 20 years for recovery period TD : Annual update rate in dollars (12% real). 12.18 Readjustment for delay of the commercial commissioning If due to causes of Force Majeure the commercial commissioning is delayed regarding the date foreseen in the contract, the cost of the service will be adjusted according to the following formulas: m CSPOC= (1+TM) * CSPOEWhere: TM: Monthly update rate considering an annual effective rate of 5% in dollars. TM = (1 + 5%) (1/12) – 1 CSPOC: Cost of service on the date when effectively occurs the commercial commissioning. CSPOE: Cost of service on the limit date of the commercial commissioning estimated by the contract (thirty six [36] months counted since the closing date). m: Period of delay of the commercial commissioning, expressed in months. The period of delay of the commercial commissioning that will be recognized maximum six (6) months.GUARANTEED REMUNERATION 12.19 Calculation of the Guaranteed Remuneration (GR) The guaranteed remuneration shall have two components, the annual guaranteed remuneration that guarantee the System of Transportation of LPG (ST), the System of Distribution of LPG (SD) and Infrastructure of Storage of Security (ISS) and the guaranteed remuneration associated to LPG corresponding to the storage of security, according to the following:IG=IGA+IGLPG Where: RGA= Annual guaranteed remuneration for the ST, SD and ISS. RGLPG = Guaranteed remuneration to compensate the LPG of the Storage of Security SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 35 de 114 CONCESSION CONTRACT – FOURTH VERSION 12.19.1 Calculation of the Annual Guaranteed Remuneration for the System of Transportation of LPG, System of Distribution of LPG and Infrastructure of Storage of Security The annual guaranteed remuneration of the System of Transportation of LPG (ST), System of Distribution of LPG (SD) and Infrastructure of Storage of Security (ISS) will be determined through the following expression: RGA = CSPOC * FRC Where: RGA= Annual guaranteed remuneration for the ST, SD and ISS. CSPOC= Cost of Service, that includes the ST, SD and the ISS, adjusted on the date of the CC. TheCSPOC will be updated each year according to Section 12.12 of this clause. FRC= Factor of capital recovery.OSINERGMIN shall defined a procedure to guarantee the annual payment of the RGA so as the settlement balances are incorporated in the following year according to the TD indicated in Section 12.16 of this clause. 12.19.2 Calculation of the Guaranteed Remuneration for the Storage of Security (IGLPG)The calculation of the guaranteed remuneration for the LPG corresponding to Storage of Security, will be made according to the following guidelines: a. The stored LPG will be compensated the first time at explant value defined by the produce r on the date of commercial commissioning, or the true date of signature of the respective contract of purchase or supply of said GL. b. The remuneration of the LPG corresponding to the Storage of Security shall be made in a term no later than twelve (12) months after demonstrating the purchase or supply by the Concessionaire Corporation before the Grantor, according to the procedure of the OSINERGMIN, and should consider a discount rate for said remuneration of 5% effective annually. c. When there are events that require to use said LPG for security conditions to allow the supply of LPG, according to the instructions of the Grantor, a balance shall be carried out of the LPG consumed and will compensate the quantity necessary to restore the LPG up to the volume corresponding to the storage of security, with charge of the SISE, according to the procedure determined by OSINERGMIN. d. The SISE shall remunerate the value at ex plant price on the true date of signature of the contract of purchase and/or supply of said LPG. The Concessionaire Corporation must submit before the Grantor the necessary support, in a maximum term of ten (10) days, to prove the quantities and prices finally agreed with relation to the LPG, a copy of it must be sent to OSINERGMIN on the same date, which shall be communicated to the respective Trust for the corresponding payment. Said payment will be made in the term established in the preceding subparagraph b). e. The Concessionaire Corporation must make all the commercial and technical procedures to keep the storage of security available and replenish them in the term foreseen in the contract.12.20 Base Tariff of the System of Transportation (ST) The Base Tariff will be determined through the following equation.Where:TBST = Base tariff expressed in US$ per barrel of LPG for the System of Transportation of LPG.CSPOC = Cost of service, that includes the ST, SD and the ISS, adjusted on the date of CC , expressed in dollars.FST= Factor indicating the economic proposal to define the relative weight of the cost of the service of the ST within the CSPOC CGi = Annual Guaranteed Capacity expressed in barrels of LPG (10,950,000 barrels per year), resulting from the daily guaranteed capacity (30,000 barrels per day).* 365 days of the year. n = Recovery period (20 years). i= Number of year of operation. TD= Annual Update Rate in dollars (12% real).If due to commercial conditions, that are determined by the Grantor, it shall be required a Regulated Tariff lesser than the Base Tariff, the difference between the tariff for the User and the Base Tariff will be covered by the charges of the SISE, according to the procedure determined by OSINERGMIN. 12.21 Base Tariff of the System of Dispatch (SD)The Base Tariff wil be determined through the following equation.Where:TBSD = Base Tariff expressed in US$ per barrel of LPG for the System of Dispatch CSPOC = Cost of service, that includes the ST, SD and the ISS, adjusted on the date of the CC, expressed in dollars.FSD= Factor indicated in the economic proposal to define the relative weight of the cost of the service of the SD within the CSPOC CGi = Annual Guaranteed Capacity of the System of Dispatch expressed in barrels of LPG (10,950,000 barrels per year), resulting from the daily guaranteed capacity (30,000 barrels per day).* 365 days of the year n = Recovery period (20 years). i= Number of year in operation. TD= Annual Update Rate in dollars (12% real).SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 37 de 114 CONCESSION CONTRACT – FOURTH VERSION READJUSTMENT FOR CAPACITY INCREASE 12.22 Review of Annual Guaranteed Remuneration as consequence of the capacity increase of infrastructure of Storage of Security.For the calculation of the cost of the service as consequence of the capacity increase of the storage of security up to one hundred and fifty (150) thousand barrels, that will be required by the Grantor, the following will be considered:12.22.1 Execution of extension of Storage of Security The Grantor, in case of requiring the capacity increase of Storage of Security up to the indicated volume, must communicate to the Concessionaire Corporation said requirement and will be obliged to execute said extension. For that purpose, in a term no later than two (2) months of performing the requirement, the parties shall subscribe the respective addenda for the increase of the Infrastructure of Storage of Security, according to this clause 12.22.12.22.2 Review of Investment Cost i). Procedure of hiring the Consulting company that will revise the infrastructure of Storage of Security. a. Within forty five (45) days of the subscription of the addenda that approves the increase of the infrastructure of storage of security to have a greater capacity of storage of security, the Grantor shall prepare the terms of reference to which should adjust the hiring of the consulting company that will revise the costs associated to the investment for the increase of said infrastructure and the respective costs of operation and maintenance of the new capacity. The terms of reference indicated, will be communicated to the Concessionaire Corporation within the term indicated by the Grantor. b. The Concessionaire Corporation may express to the Grantor, for one time, his comments and objections to the terms of reference within the term of twenty (20) Days counted since its reception. Within said term, the Concessionaire Corporation shall equally proceed to send to the Grantor a list of three (3) Consulting companies of recognized experience in the task, and the proposed companies may not be a related company with the Concessionaire Corporation. c. After submitting the list of companies and its comments to the terms of reference by the Concessionaire Corporation, the Grantor shall have a term of sixty (60) days to choose the indicated shortlist, the company that shall have under its responsibility the consultancy of the costs, enclosing the final terms of reference. d. The Grantor shall hire chargeable to the resources of the trust to the Consulting company, of the indicated in the previous paragraph. After subscribing the contracts of service with the consulting company, the Grantor shall send a copy of them to the Concessionaire Corporation. e. The payment will be made after the Grantor approves the results of the study of costs of investment and operation and maintenance. In that sense, the Trust shall establish that the payments will be made to the consulting company with the reception by the trustee of the respective Communications of the conformity of the Grantor. Notwithstanding the aforementioned, payment can be made at the subscription of the respective contract not higher than 20% of the total amount of the hiring previously indicated, for which shall require the respective guarantee. ii). Conditions of hiring for the execution of the increase of the infrastructure of Storage of Security. a. For purposes of the review of the cost of investment, the Concessionaire Corporation must bid at least 80% of the goods and services related to the investment for the increase of the infrastructure of storage of security. In case of direct hiring with entities linked to the Concessionaire Corporation, shall apply market prices, verified by the consulting company that will revise the investment cost. b. The bids referred in the preceding point may be performed jointly, by blocks or disaggregated by items, through calls opened to the public, provided they participate and formulate proposals and/or offers to at least three (03) Interested Parties. c. The remaining services and provision of materials may be hired directly, or made by the Concessionaire Corporation.The investment cost to be revised by the consulting company after executing the increase of the infrastructure of storage of security, will be all those real costs incurred by the Concessionaire Corporation to construct and operate said increase.The investment costs, among others, shall include the cost of storage tanks, piping, materials and equipment, construction, engineering, management services and supervision and their related costs, permits and licenses, taxes, charges and tariffs, auxiliary works, archaeological rescues and everything required to have the new storage capacity.The hired consulting company must perform the process of revision of costs incurred by the Concessionaire Corporation since it is hired until the commercial commissioning of the increase of infrastructure of storage of security, until one hundred and fifty (150) thousand barrels /d. In any case, the maximum costs to recognize to the Concessionaire Corporation shall be those resulting of the process of revision, duly approved by the consulting company.The payment related to the acquisition of the LPG to have a greater storage of security up to the indicated volume, will be made according to Clause 12.19.2.THIRTEENTH CLAUSE.- REGIME OF INSURANCES 13.1. The Concessionaire Corporation shall take and maintain the following insurances:SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 39 de 114 CONCESSION CONTRACT – FOURTH VERSION 13.1.1 Contractual and extra contractual civil liability insurance, which should cover any damage, harm, loss or injury that might befall goods and persons, including immediate medical attention of third parties that might be affected, and the payment of a compensation for owners of housing or property that are directly affected by any kind of emergency or accident, such as explosion, leakage, fire or others; originated in the System of Supply of LPG. The hiring of the indicated insurance must comply the provisions of Article 40 of the Regulation and applicable laws.13.1.2 The Concessionaire Corporation is obliged to hire, during the execution of the System of Supply of LPG, an insurance against all risk of construction C.A.R. policies (Construction All Risk) that covers within the Basic Coverage (A) one hundred per cent (100%) of the value of replacement of the concession assets.Additionally to the Basic Coverage (A), the C.A.R. policy must have other coverage such as: design risk, engineering risk, and emergencies such as: partial or total damages caused by water, earthquake, fire, terrorism, vandalism, civil commotion, theft, illegal appropriation and any other coverage included under a C.A.R. policy up to an insured amount that allow to face any accident that might occur during the construction stage.13.1.3 Insurance that covers the replacement value of the concession assets in the period comprised since the culmination of the works of the System of Supply of LPG until the termination of the concession. The hiring of policies must adapt to the nature of each good. The coverage shall be the following: partial or total damages caused by water, earthquake, fire, terrorism, vandalism, civil commotion, theft, illegal appropriation and shall cover the total value of the insured assets.The funds obtained by the Concessionaire Corporation as a result of the collection of insurance policies referred in the preceding paragraph, shall have the priority of repair or replacement, as appropriate, of the concession assets. 13.1.4 Insurance that covers the value of losses of the LPG in the System of Supply of LPG, as consequence of an incident. The amount that collects the Concessionaire Corporation as a result of the coverage of the insurance policy must be transferred to the owner of the LPG, determined according to the respective contracts of service.13.1.5 Without prejudice of the mandatory policies indicated in this clause, the Concessionaire Corporation may, according to its own strategic vision of management and distribution of risks to comply with the provisions established or to comply with the legal system of the Republic of Peru or by any other duly justified cause, take any other insurance policy, which should be informed to the Grantor.The amount that should be insured in each one of the aforementioned policies will be determined by the Concessionaire Corporation in a sufficient level to cover the damages according to each type of policy. The Concessionaire Corporation shall be responsible for the balance not covered with the hired insurance, in case that any incident that is attributable exceeds the insured amount, relieving from liability to the Grantor.The insurance referred in Clauses 13.1.1 and 13.1.2 must consider their effectiveness since the first calendar day of commencement of the execution of works of the System of Supply of LPG. The insurance referred in Clause 13.1.3 must begin its effectiveness at the end of the works of the System of Supply of LPG. The insurance referred in Clause 13.1.4 must consider its effectiveness before the start of the filling of the System of Supply of LPG for the tests and commercial commissioning. All the referred insurances, with exception of that referred in Clause 13.1.2, will be in force until the termination of the concession. The insurance indicated in Clause 13.1.2 will be in force until the end of the works of the System of Supply of LPG, according to the provision set forth in this contract. 13.2. The policies that are issued according to the provisions of the contract must contain a provision that obliges the insurance company to notify in writing to the Grantor of any omission of payment of the Concessionaire Corporation, no later than twenty five (25) calendar days in advance to the date in which said omission may totally or partially determine the expiration or loss of effectiveness of the policy. The obligation of notification will also be applicable to the assumption of resignation, retirement, cancellation or lack of renewal of any insurance that the Concessionaire Corporation should maintain according to this contract and to the applicable laws. The respective policy must also establish that the expiration or loss of effectiveness of the policy, will only be produced if the insurance company has previously complied with the obligation referred in the preceding paragraph. 13.3. In case of incident covered by the policy indicated in Clause 13.1.3 of the contract, the amount that covers the Concessionaire Corporation resulting from the coverage of the referred policy should be used to replace and/or repair the concession assets affected by the respective incident, unless it is an assumption of total destruction. 13.4. If the incident produced provokes total destruction, the benefits derived from the policy shall be directly paid by the insurer, following the guidelines established in Clause 18.7 of the contract. For these purposes, the respective policy must provide, at the satisfaction of the Grantor and the Allowed Creditors, the appropriate to guarantee that the benefits of the policy are applied according to the referred clause, in the assumptions of total destruction. For these purposes, the Grantor should inform to the insurer and to the Allowed Creditors the amount owed to the workers of the Concessionaire Corporation for the concept of remunerations and other labor right that should be paid before payment of the guaranteed debt. 13.5. Before the January 30 of each year, during the effectiveness of the contract, the Concessionaire Corporation shall submit to the Grantor, or its designee, the list of insurances taken and/or maintained by the Concessionaire Corporation, indicating at least the coverage, the name of the insurance company and the claims made during the previous year. To assure the compliance of the provisions set forth in this clause, the Grantor may to the Concessionaire Corporation to prove that the insurance policies that he is obliged to maintain according to this contract have been hired and are in force. 13.6. All the insurance policies required by this clause 13 must provide that they may not be modified –including any reduction to the limits, to the effective coverage or increase in deductibles – without prior written authorization of the Grantor.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 41 de 114 CONCESSION CONTRACT – FOURTH VERSION 13.7. The Concessionaire shall ensure that all its contractors, subcontractors and suppliers at any time during the period involved in performing work or services in relation to the System of Supply of LPG, provide and maintain in full force and effect the insurance policies allowing insurance coverage established in clause 13.1. These policies cover risks of physical and material damage and civil liability to third parties, including the Concessionaire Corporation, contractors, subcontractors and suppliers and their employees. 13.8. The Concessionaire Corporation shall hire all the insurance policies that will be required in this contract with insurance companies that have a local risk classification not less than “A”, which evaluation has been made by a national risk classifying company duly authorized by the Superintendence of Securities Market (SMV).FORTEENTH CLAUSE.- RESPONSIBILITY AND PENALTIES 14.1. The Concessionaire Corporation assumes the concession and the obligations in this contract at its own technical, economic and financial risk and is responsible for the compliance of all and each one of its obligations in this contract and in the applicable laws during the contract term.14.2. General Provisions. 14.2.1.1 The events or non-compliance that are liable to be penalized will be configured with regardless of intent or negligence of the Concessionaire Corporation or the persons for whom it should respond, unless express provision in the contrary in this contract or in the applicable laws. 14.2.1.2 The application of the penalty does not exempt the Concessionaire Corporation of the compliance of the respective obligation. For that purpose, and provided that the non- compliance does not result in the termination of the concession, when notifying the penalty to the Concessionaire Corporation, it shall be required the compliance of the obligation subject matter of the non-compliance within the term established in the respective Communications, which cannot be less than sixty (60) days, unless that for the nature of the obligation to be complied the Grantor justifies and supports said need.14.3. Penalties The non-compliance of the obligations of the Concessionaire Corporation contained in the contract shall cause the application of the penalties indicated in Annex 4. The application of the penalties will be made without affecting the right of the Grantor to claim further damage and, if appropriate, to terminate this contract according to Clause 18. The penalties generated by the non-compliance of the milestones foreseen in Clause 3.2.2., shall make that the Concessionaire Corporation increases the Performance Bond up to the amount of the penalties accumulated for each thirty (30) days of delay, and so on. In case of non-compliance of the term for the commercial commissioning the guarantee shall be executed to cover the penalties for the non-compliance of the milestones indicated and for the non-compliance of the commercial commissioning, according to Clause 14.4. 14.4. Procedure a) The payment of the penalties shall be required in writing by the Grantor to the Concessionaire Corporation, indicating it the banking account in which it should deposit the corresponding amount, which should occur on the tenth day of the reception of the requirement. b) Within the fifth day of the request made by the Grantor, the Concessionaire Corporation shall: (i) contradict the origin of the payment; or (ii) propose to the Grantor a way to cure the breach without being required to pay the appropriate penalty, such correction does not apply in the case of missing the deadline of commercial commissioning. In relation to the above subparagraph ii) the Grantor is free to: (1) accept or not the contradiction of the Concessionaire to the order for payment; or (2) accept or not the remedy proposal by the Concessionaire. After ten (10) days from the contradiction or proposal of the Concessionaire and the Grantor has not acted, it shall be understood that the contradiction or proposal has not been accepted and the payment of the penalty is payable. c) The Concessionaire Corporation must pay the corresponding penalty, without prejudice fo its right to submit it to the procedure of settlement of disputes regulated in Clause 16. In case the Concessionaire Corporation does not comply to pay the penalty in the indicated term, the Grantor shall have the right to request the execution of the Performance Bond or the Complementary Performance Bond, as appropriate, according to the procedure provided by it, to cover the amount of the penalties.14.5. Penalties after the Commercial Commissioning 14.5.1 Capacity of the System of Supply of LPG In the event that, at any time during the term of the contract, even after the expiration of the guaranteed remuneration, the availability in the System of Transportation of LPG and System of Dispatch that are part of the LPG supply system is lower that indicated in Section 3.2.11 of Annex 1 of the contract, the Concessionaire Corporation will be obliged to pay to the Grantor a penalty equal to the product of the deficit of availability expressed in barrels per day multiplied by double the base rate. The expression of this deficit in barrels per day takes place regarding this percentage of deficit for the Guaranteed Capacity.14.5.2 Capacity of Storage and Dispatch In the event that, at any time during the term of the contract, even after the expiration of the guaranteed remuneration, the inventory of security is lower than indicated in Section 3.3.2 of Annex 1 of the contract, the Concessionaire Corporation will be obliged to pay to the GrantorSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 43 de 114 CONCESSION CONTRACT – FOURTH VERSION a penalty equal to the product of deficit of availability expressed as inventory shortfall multiplied by twice the cost recognized per barrel of LPG explant Pisco or paid by the Concessionaire Corporation if it would have acquired LPG within a period not exceeding sixty (60) days of given the penalty. The penalty foreseen in the preceding paragraph shall not operate; therefore, shall not be ground of breach of the contract in case the Concessionaire Corporation proves that it has in other storage plants of LPG, the inventory of LPG which deficit is evidenced regarding that required as inventory of security in the contract. Equally shall not apply the penalty of the previous paragraph when is available said inventory in situations of emergency determined by the Grantor.14.6. Administrative Sanctions The penalties foreseen in this clause do not undermine the audit function and punishment of OSINERGMIN and other governmental authorities.14.7. Default interest The breach in the obligation of payment of the penalties foreseen in this clause, shall generate a default interest from the day in which, it is required according to this contract, payment was required until the effective date of payment by the Concessionaire Corporation. The rate to apply will be the maximum permitted by the Central Bank of Reserve of Peru.FIFTEENTH CLAUSE.- FORCE MAJEURE 15.1. Neither Party shall be liable for non-performance of an obligation or partial, late or defective performance during the term in which the obligatory party is affected by Force Majeure, provided it can prove that said cause prevented its due compliance and affects the critical route in building the System of Supply of LPG, the latter in the stage prior to the start of commercial commissioning.15.2. For purposes of the contract, the term “Force Majeure” shall mean an event, condition or circumstance beyond the reasonable and unpredictable control of the party that invokes it, which in spite of the reasonable efforts to prevent or mitigate its effects, causes a delay or material suspension of any obligation imposed under this contract. Without prejudice of the aforementioned, the parties agree that for purposes of the contract shall also qualify as Force Majeure the following: (i) Any act of third parties that directly affects the Concessionaire Corporation, its staff or its contractors, for reasons beyond its reasonable control or that are unpredictable, such as vandalism against facilities or equipment of the Concessionaire , blocking roads, or access, or of the premises where the system is installed the System of Transportation of LPG by the owners or holders, although it has previously agreed with those corresponding occupancy rights; invasions, pressures for recruitment or other events of a similar nature.(ii) Any act of external war (declared or not declared), invasion, armed conflict, blockage, embargo, revolution, riot, insurrection, civil commotion, acts of vandalism or terrorism and delinquency;SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 45 de 114 CONCESSION CONTRACT – FOURTH VERSION (iii) Any stoppage or strike of workers that directly affects the System of Supply of LPG for causes beyond the reasonable control of the Concessionaire Corporation or that are unpredictable. (iv) Any earthquake, flood, storm, hurricane, tornado, electric storm or similar natural events; fire, explosion or similar events, provided they directly, totally or partially affect the System of Supply of LPG. (v) The LPG is not at the disposal of the Concessionaire Corporation in the point of reception at the temperature, pressure and other technical conditions required and in the enough volumes, for the compliance of the obligations of the Concessionaire Corporation established in Clause 3 or for the provision of the service, provided that, for the first case, there is no delay in the execution of the works of the System of Supply of LPG that cause a delay in the commercial commissioning. (vi) The eventual partial and/or total destruction of the work of the System of Supply of LPG, or the partial and/or total destruction of the concession assets, for causes no attributable to the Concessionaire Corporation. (vii) The discovery, neither foreseen nor foreseeable, of cultural heritage, as provided in Law No. 28296 - General Law on Cultural Heritage of the Nation and other applicable laws, that originates the alteration of the layout for the installation of the System of Transportation of LPG or cessation of the work involved, and any interruption or suspension of work or repairs of the System of Supply of LPG to be ordered by the governmental authority for that cause.(viii) Failure to obtain any necessary easement for the development, construction, testing, operation, repair and/or maintenance of the System of Supply of LPG within the period and under the terms specified in clauses 5 and 6, or the failure to obtain any permission, consent, authorization, license or approval of a governmental authority, different to the instrument of environmental management for the System of Supply of LPG, necessary for the development, construction, testing, operation, repair and/or maintenance of it within the time and under the terms specified in the Contract and the Applicable Laws, or inability, incapacity or limitation whether total or partial of the Concessionaire Corporation, to exercise, immediately from the date of execution of the respective permit, easement, right, license, authorization or consent or concession and without interruption or interference, any of the rights under this contract and/or applicable laws that correspond to the Concessionaire Corporation under such easements, permit, license, authorization, consent or concession; provided that in any case, the Concessionaire Corporation has fulfilled the requirements and obligations required by regulation and other applicable laws, to obtain such easements, rights, permits, licenses, authorizations, approvals or concessions. The Parties agree that the Force Majeure by not obtaining any permission, consent, authorization, easement, right, license or approval of a government authority set out in this section, may be requested by the Concessionaire Corporation from the deadline of legal provisions of the Applicable Law to grant the respective permit, right, easement, consent, approval, license or approval. If applicable laws should not set a deadline, Force Majeure may be requested by the Concessionaire Corporation, after expiry of thirty (30) days of the request, provided it complies with the conditions and requirements under applicable laws.(ix) The non-obtaining of the approval of the instrument of environmental Management for the execution of the works of the System of Supply of LPG, after elapsing the term foreseen in Clause 4.2.3, due to causes not attributable to the Concessionaire Corporation. After said term the Concessionaire Corporation may request the Force Majeure. (x) It shall expressly be understood that the Force Majeure shall not include any of the following events: (a) economic difficulties or (b) changes in the market conditions. In the cases in which the request of Force Majeure implies a variation in the conditions of providing the service, shall apply Article 62 of the Regulation. 15.3. The Force Majeure shall not relieve the parties of compliance of the obligations that are not affected by said events. In this hypothesis, the affected obligations shall be suspended while the event of Force Majeure lasts or its effects and the contract term shall be suspended for a term equal of duration of the Force Majeure. 15.4. The party that invokes the event of Force Majeure should inform the other party according to the procedure described as follows: 15.4.1. In case of Force Majeure is produced before the Commercial Commissioning: The affected party must notify the other party by e-mail or written communications of the facts occurred within twenty four (24) hours of occurring said facts or of being informed, as the case may be, in order that the suspension of the term for compliance of the obligations shall proceed from the date in which the respective event has occurred. (a.b.1.a.i) Additionally, within the following five (5) days of the occurrence or being informed of the event of Force Majeure the affected party, through written document, must communicate the other party the detailed facts that constitute said event of Force Majeure. (a.b.1.a.ii) The estimated period of total or partial restriction of their activities and the level of impact foreseen in the works of the System of Supply of LPG and the compliance of its obligations and how the critical route is affected in the construction of the System of Supply of LPG.The affected party shall lose its right to invoke the Force Majeure if it does not perform within the term established the aforementioned notifications. Within thirty (30) days of receiving the written document of invocation of Force Majeure, the notified party should issue its opinion regarding the qualification of the event as one of Force Majeure, and in case of not issuing any pronouncement in said term, it shall be understood that the event qualifies as one of Force Majeure. Additionally, along the duration of the events of Force Majeure, it should send each fifteen (15) days to the other party a written document informing about the development of said events, its progress or other relevant information. The first of these communications shall be made on the fifteen (15) days of the following day of the date in which it has been produced or the affected party has been informed, as the case may be, of the event of Force Majeure.15.4.2. In case the Force Majeure is produced after the Commercial Commissioning:The affected party must notify to the other party by e-mail or written communication of the events occurred within twenty four (24) hours of the occurrence or of being informed, as theSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 47 de 114 CONCESSION CONTRACT – FOURTH VERSION case may be, in order that the suspension of the term of compliance of the obligations shall proceed from the date in which the respective event has occurred. (i) Additionally, within the following five (5) days of the occurrence or being informed of the event of Force Majeure the affected party through written document must communicate to the other party the detailed facts that constitute said event of Force Majeure. (j) The period estimated of total or partial restriction in the provision of the service and the level of impact foreseen in the operation and availability of the System of Supply of LPG. The affected party shall lose its right to invoke the Force Majeure if does not make within the term established the aforementioned notifications. Within thirty (30) days of the reception of the written document of invocation of the Force Majeure, the notified party must issue its opinion regarding the qualification of the event as one of Force Majeure, and if it does not issue its opinion in said term, the event shall be understood that qualifies as one of Force Majeure. Additionally, along the duration of the events of Force Majeure should send each fifteen (15) days to the other party a written document informing about the development of said events, its progress or other relevant information. The first of these communications shall be made on the fifteen (15) days of the following day of the date in which it has occurred or the affected party has been informed, as the case may be, of the event of Force Majeure. The party that invokes the Force Majeure must make its best efforts to secure the restart of the provision of the service in the shortest possible time after the occurrence of said events.15.5. In case that the event of Force Majeure causes damages to the System of Supply LPG, the Concessionaire Corporation shall have the obligation to use any payment derived from the insurances taken by the Concessionaire Corporation for said event to reconstruct the System of Supply of LPG, as far as the repair is technical and economically viable. The aforementioned, understanding that any amount of money received from an insurance without using for the reconstruction of the System of Supply of LPG will be the amount of Money recovered by the Concessionaire Corporation and computed as investment remuneration. In case that the Concessionaire Corporation confronts with its own resources to reconstruct the System of Supply of LPG, it shall apply the payment derived from the insurances for the corresponding reimbursement, if applicable.15.6. After elapsing twelve (12) months without overcoming the events of Force Majeure or its effects, the Concessionaire Corporation shall have the right, from that time, to terminate the contract, according to Clause 18. Likewise, after eighteen (18) months without the events of Force Majeure or its effects are overcome, the Grantor shall have the right, from that time, to terminate the contract, according to Clause 18.15.7. If the party to whom the event of Force Majeure is notified does not agree with said invocation made by the alleging party and is pronounced in that sense within the terms provided in Sections 15.4.1, third paragraph, or 15.4.2 third paragraph, the party that alleged the Force Majeure may use the procedure of settlement of disputes of Clause 16.SIXTEENTH CLAUSE.- SETTLEMENT OF DISPUTES 16.1. The contract shall govern and interpret according to the applicable laws. Therefore, the content, execution, conflicts and other consequences resulting from it shall be governed by said legislation, the same that the Concessionaire Corporation declares to know.16.2. The parties declare that it is their will that all the conflicts and controversies that might arise between the parties about the interpretation, execution, compliance and any aspect related to the existence, validity or termination of the contract, will be settled by direct negotiation between the parties. In case of national arbitration, the period of negotiation or direct deal will be no greater than thirty (30) days, counted since the date in which one party communicates to the other, in writing, the existence of a conflict or controversy. In case of International arbitration, the period of negotiation or direct deal shall be six (6) months. Said term shall be computed since the date when the party that invokes the clause notifies its request to initiate the direct deal in writing, including detailed information (background, facts, points of controversy, claims and proposals of alternatives of settlement of disputes) to the Ministry of Economy and Finance as coordinator of the System of Coordination and Response of the State in International Disputes of Investment, by virtue of Law N° 28933 and its regulation approved through Supreme Decree N° 125-2008-EF and amendments. The terms referred in the previous paragraphs may be extended by jointly decision of the parties, agreement that should be made in writing. 16.3. In case that the parties, within the term of direct deal or any other term agreed by the parties, do not settle the dispute or conflict arisen, then they should define it as a conflict or controversy of technical nature or non-technical nature, as the case may be. The conflicts or technical disputes (each one, a “Technical Controversy”) will be settled according to the procedure provided in Clause 16.4. The conflicts or controversies that are non-technical (each one, a “Non-Technical Controversy”) will be settled according to the procedure foreseen in Clause 16.5. In case the parties do not reach an agreement within direct deal term, on whether the dispute or controversy is a technical controversy or Non-Technical Controversy, then such dispute or controversy shall be considered a Non-Technical Controversy and it will be resolved in accordance with the relevant procedure provided in clause 16.5. No Technical Controversy may deal grounds for termination of the concession, which in all cases will be considered Non-Technical Disputes.16.4. Each and every one of the Technical Disputes that cannot be resolved directly by the parties within direct negotiation shall be submitted to final and binding decision of one skilled in the art (the "Expert"), who shall be appointed by the Parties by mutual agreement within ten (10) days after the determination of the existence of a Technical Controversy.The expert may be a national or international expert with extensive experience in the area of the respective Technical Controversy, who should have no conflict of interest with either party at the time of his appointment and as involved as expert. If the Parties fail to agree on the appointment of the expert, then the expert should be appointed by two people, each one designated by each of the Parties.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 49 de 114 CONCESSION CONTRACT – FOURTH VERSION In the event that these two people do not agree on the appointment of the expert within ten (10) days of being designated or they were not designated within the deadline, then the expert will be chosen by lot from a list that either party may request to the Arbitration Center of the Lima Chamber of Commerce, which must meet the same requirements for the expert to be appointed by the Parties and shall resolve in accordance with the provisions of this clause 16.In case the selected expert is not trained to settle the technical controversy, another person may be appointed in the same form in order that, since the acceptance of the entrust conferred, is considered for all purposes as the expert who shall solve said technical controversy.The expert may request to the parties the information it deems necessary to resolve the Technical Controversy he knows, and as a result may present to the Parties a conciliation proposal, which may or may not be accepted by them. The expert may act all the evidence and request of the parties or third parties the evidence that it considers necessary. The expert shall prepare a draft decision to notify the parties within thirty (30) calendar days following his appointment, having the parties a term of five (5) days to prepare and submit to the expert their comments on such preliminary decision.The expert shall issue its final decision on the Technical Controversy raised within ten (10) days following receipt of the comments of the parties to its preliminary decision or the expiration of time to file those comments, whichever comes first. The procedure for the resolution of a technical dispute shall be carried out in the city of Lima, Peru, except for the performance of the expert evidences that he deemed necessary to perform elsewhere.The expert must keep absolute reserve and maintain confidentiality on all information known for his involvement in the resolution of a Technical Controversy.16.5. The Non-Technical Controversies shall be solved through arbitration of law, national or International, according to the following: a) The parties recognize that they can submit to arbitration the disputes on matters of free disposition according to law, as well as those that the law or international treaties or agreements authorize. As such, they may not be the subject of arbitration, the decisions of OSINERGMIN or other entities that are issued in implementation of its administrative powers conferred by express provision, whose channel of claim is the administrative. b) Disputes whose value exceeds thirty million dollars ($ 30'000,000.00) or its equivalent in national currency, shall be resolved by direct negotiation in accordance with the timeframe established in the third paragraph of Clause 16.2. If the parties fail to agree on the period in question, disputes arising shall be resolved through international arbitration of law through a procedure conducted in accordance with the Rules of Conciliation and Arbitration of the International Centre for Settlement of Disputes Related to Investments (ICSDI) under the Convention on the Settlement of Disputes Related to Investments between States and Nationals of other States, approved by Peru by Legislative Resolution No. 26210, to which regulations the parties submit unconditionally.The parties express their anticipated and irrevocable consent for any difference of this nature may be submitted to arbitration of the ICSDI, according to indications of the preceding paragraph. Alternatively, the parties may agree to submit the controversy to another jurisdiction different from the ICSDI, if they deem as convenient.If the Concessionaire Corporation is an entity incorporated under the laws of the Republic of Peru, for purposes of processing procedures for international arbitration of law, in accordance with the Arbitration Rules of the ICSDI, the Grantor on behalf of the State of the Republic of Peru declares that the Concessionaire will be considered as "national of another Contracting State" for being subject to foreign control as provided in subparagraph b) of Section 2) of Article 25 of the Convention on the Settlement of Disputes Related to Investments between States and Nationals of other States, and the Concessionaire Corporation agrees to be considered as such.The arbitration shall be held in the city of Washington, D.C., or in the city of Lima, upon the election of the Concessionaire Corporation, and will be conducted in Spanish language. In anything not established in the clauses corresponding to the Settlement of Controversies in this document, the procedure established in the convention referred in the preceding paragraph will be followed, and in the arbitration rules of the ICSDI. The Arbitral Tribunal shall consist of three (3) members. Each party shall appoint one arbitrator and the third shall be appointed by agreement of the two arbitrators appointed by the parties, who in turn will serve as President of the Arbitral Tribunal. If the two arbitrators fail to reach agreement on the appointment of the third arbitrator within fifteen (15) days from the date of appointment of the second arbitrator, the third arbitrator shall be appointed by the ICSDI at the request of either party and as possible, after consulting both parties in accordance with Article 38 of the ICSDI Convention.If a party fails to appoint the arbitrator within sixty (60) days from the date of receipt of the respective order of appointment, it shall be considered to have waived to its right and the arbitrator shall be appointed by the ICSDI at the request of the other Party and where possible, after consulting both parties in accordance with Article 38 of the ICSDI Convention. c) Disputes which value is equal to or less than thirty million dollars ($ 30'000,000.00) or its equivalent in national currency, or which cannot be quantified or in monetary value, shall be settled by national arbitration of law through a procedure conducted in accordance with the Arbitration Rules of the Arbitration Center of the Lima Chamber of Commerce, to which regulations the parties submit unconditionally, with supplementary application of Legislative Decree No. 1071, Arbitration Act. The arbitration will take place in the city of Lima, Peru and will be conducted in Spanish.The Arbitral Tribunal shall consist of three (3) members. Each party shall appoint one arbitrator and the third shall be appointed by agreement of the two arbitrators appointedSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 51 de 114 CONCESSION CONTRACT – FOURTH VERSION by the parties, who in turn will serve as President of the Arbitral Tribunal. If the two arbitrators fail to reach agreement on the appointment of the third arbitrator within ten (10) days following the date of appointment of the second arbitrator, the third arbitrator shall be appointed by the Chamber of Commerce of Lima at the request of any of the parties.If a party fails to appoint the arbitrator within ten (10) days from the date of receipt of the respective request for appointment by the other party, it will be deemed to have waived its right and arbitrator shall be appointed by the Chamber of Commerce of Lima at the request of the other party.16.6. The parties agree that the award issued by the Arbitral Tribunal shall be final and binding. Accordingly, the parties waive to the appeals, appeal in cassation or any other appeal contesting the arbitration decision declaring that it be binding, of definitive compliance and immediate execution, except in the grounds specifically provided in Articles 62º and 63 of Legislative Decree No. 1071 or in Articles 51st and 52nd of the ICSDI Convention, as appropriate application.16.7. During the course of arbitration or direct deal, the parties shall continue to comply with their contractual obligations, insofar as possible, including those subject to arbitration.If the arbitration matters or direct negotiation was the fulfillment of the secured obligations under clause 8, if applicable, the Performance Bond and Complementary Performance Bond may not be executed and should be maintained in force during the arbitration proceedings. However, such guarantees, as appropriate, they may be enforced if it is not renewed16.8. All expenses incurred in the resolution of a Technical Controversy or Non-Technical, including the fees of the expert or of the arbitrators involved in the resolution of a dispute, will be covered by the losing party, unless the Expert or Arbitrators decide otherwise. If the procedure ends without a decision on the merits of the claim by reason of settlement or conciliation, those expenses will be covered in equal parts by the plaintiff and the defendant.Excluded from the provisions of this clause are the costs and expenses such as advisory fees, or other internal costs that are attributable to a party individually.Waiver to diplomatic claims The Concessionary Corporation expressly waives unconditionally and irrevocably to any diplomatic claim for controversies or conflicts that may arise from the contract.SEVENTEENTH CLAUSE.- SUSPENSION OF THE TERMS OF THE CONTRACT 17.1. The periods specified in the Contract, including deadlines for compliance of progress milestones of the critical route mentioned in clause 3 and the deadline to implement the commercial commissioning, will be suspended from calendar day to calendar day when are produced any of the following events (each one, a "Ground of Suspension"): a) Force Majeure, according to clause 15, which prevents the construction of the System of Supply of LPG or the provision of the service under this contract and applicable laws, and has been accepted as such by the Grantor, pursuant to Sections 15.4.1 or 15.4.2, as appropriate. b) partial destruction of the System of Supply of LPG or any of its equipment or major facilities, for causes not attributable to the Concessionaire, so that the Service is impossible. c) The delay in the imposition of easements, or in the approval of an environmental management tool for reasons not attributable to the Concessionaire Corporation as stated in clause 5, in a manner that prevents the Concessionaire Corporation to build the System of Supply of LPG or provide the service as provided in this contract and the Applicable Laws. d) Agreement between the parties, for which the parties shall take into account the potential damage this could generate in the service, if applicable.The suspension of the contract term for any of the grounds for suspension, within the period of construction of the works for the System of Supply of LPG or the provision of the service, obliges the Concessionaire Corporation to extend or renew, for the same period the duration of the suspension, the guarantees that correspond, pursuant the provisions of this contract.17.2. If the request of the Concessionaire Corporation to agree to suspend the deadlines, under subparagraph (b) of the preceding Section 17.1 is not accepted by the Grantor, this will be considered by the parties as a dispute whose term of Direct Deal has expired, being applying the procedure provided in this contract. In this case, the requesting party shall notify the other party within five (5) calendar days following the date of notification of the response to the request for suspension or the deadline by which the other party has to decide, the qualification of the controversy as Technical or Non-Technical, following the provisions of clause 16. If the requesting party fails to communicate its qualification to the other party of the controversy as Technical or Non-Technical, within the period prescribed in this clause, it shall be deemed to waive its request for suspension.17.3. If the arbitration concludes with a favorable award to the requesting party, it should be understood that the suspension of the term subject matter of the application took effect the calendar day following the date on which the Requesting Party submitted the request for suspension. In this case the preventive suspension becomes final, the latter computed from the date of submission of the application until the date of expiry of the requested suspension. Similarly, on the date arrival, under this clause, it would have ended the computation of the final suspension, if the arbitration is still unresolved to this date; the preventive suspension ceases to operate, restituting the calculation of the suspended term.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 53 de 114 CONCESSION CONTRACT – FOURTH VERSION 17.4. If the arbitration concludes with favorable award to the other party, the effects of the award will be retroactive to the date of the request for suspension.In the case referred to in the preceding paragraph, it should be understood that the preventive suspension referred to in this clause has never been effective, so that the obligations and rights suspended preventively should be executed or may be exercised, respectively, within the limits laid down in the contract, which was due, if applicable, the penalty generated by the corresponding failure.EIGHTEENTH CLAUSE.- TERMINATION OF THE CONCESSION 18.1. Forms of termination of the concession The concession shall end due to: a) Agreement of the parties. b) Acceptance of waiver to the concession. c) Expiration of the contract term. d) Declaration of expiration. e) Termination of the contract.18.2. Grounds of expiration. The Grantor may declare the expiration of the concession, in the following cases:18.2.1 If the Concessionaire Corporation: a) Would have subscribed the contract and then is verified that any of the declarations formulated in Clause 4 are false. b) Delays for more than ninety (90) calendar days the commercial commissioning, according to Clause 3.2.2. c) Does not renew or extend or increase, in the form indicated in the contract, the Performance Bond or the Complementary Performance Bond. d) Stops operating the System of Supply of LPG with justified cause for a period exceeding the provisions of subparagraph b) of Article 46º of the Regulation. e) Persist, after being administratively sanctioned by the OSINERGMIN, in not complying its obligations to provide the service in the terms prescribed and according to the security standards and the quality standards established in the contract and in the relevant technical standards, provided said sanctions would have been firm in the administrative and judicial proceedings, if it had brought the corresponding administrative contentious. f) Transfers partially or totally the contract, for any title, without prior approval of the Grantor. g) Were sanctioned with administrative fines of the OSINERGMIN, that in one (1) calendar year exceed ten per cent (10%) of its annual income of the previous year, provided said fines would have been remain firm in the administrative and judicial proceedings if filing the respective contentious. This ground is applicable since the second year of the commercial commissioning. h) Fails to comply unjustifiably, serious and reiterated, any obligation established in the contract or the applicable laws, different from those contained in the preceding subparagraphs. i) Is merged, splitted, or transformed, without prior written approval of the Grantor. j) Does not prove, within the terms provided in Section 7.12 of the Seventh Clause, that it has the funds necessary for the construction of the System of Supply of LPG.18.2.2 If the Shortlisted Operator during the term required in the contract: a) Does not preserve the minimum participation. b) Does not keep or exercise the right and the obligation to be in charge of the technical operations of the Concessionaire Corporation.18.2.3 If the Concessionaire Corporation or the Shortlisted Operator were declared under insolvency, in bankrupt, dissolved or liquidated, or a controller would have been appointed different to that indicated in Clause 18.6.18.2.4 If there is total destruction of the System of Supply of LPG18.3. Grounds of termination of the contract: 18.4.1 The Concessionaire Corporation may terminate the contract if: a) The Grantor fails to comply, unjustifiably, seriously and repeatedly, any of the obligations that correspond according to the contract or applicable laws, or if is verified that any of the declarations formulated in Clause 4.2 is false. b) If there is an event of Force Majeure and it and its effects may not be overcome in spite of having elapsed twelve (12) months since the start of the event, according to Clause 15.6.18.4.2 The Grantor may terminate the contract, if there is an event of Force Majeure and it or its effects may not be overcome in spite of having elapsed eighteen (18) months since the start of the event, according to Clause 15.6.18.5 Rectification of grounds The cases referred to in subparagraphs c), e), f), h), i) and j) of clause 18.2.1, subparagraph a) of clause 18.2.2 and subparagraph a) of clause 18.3 1, set grounds for termination of the contract, only if they produced a written request, the requested party does not cure to theSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 55 de 114 CONCESSION CONTRACT – FOURTH VERSION satisfaction of the other party, the non-compliance situation, within sixty (60) calendar days following the date of given written request, or within such longer period as it would have given for that purpose.18.6 Procedures of termination 18.5.5.1. Termination by agreement of the parties The termination by agreement of the parties shall be recorded in public deed. To be valid, said agreement must be ratified by supreme resolution. Published the indicated resolution, shall proceed according to Clauses 18.6 and 18.7.18.5.5.2. Termination for waiver of the Concessionaire Corporation The Concessionaire Corporation may waive to the concession communicating it to the Grantor in advance no less than one (1) year. The Grantor shall evaluate the waiver and if he deems appropriate, he shall process the issuance of a supreme resolution in which the waiver is accepted, determining the date when it shall be effective and the controller is appointed. After publishing the resolution, we shall proceed according to Clauses 18.6 and 18.7.18.5.5.3. Termination for expiration of the contract term By supreme resolution a controller will be appointed. Published the resolution, we shall proceed according to Clauses 18.6 and 18.7.18.5.5.4. Termination of the contract for declaration of expiration a) The DGH shall form a file in which it shall be documented the cause that merits the expiration, and should include a report of OSINERGMIN where applicable, notifying this fact to the Concessionaire Corporation by notary. b) The Concessionaire Corporation may make the discharges and submit the evidences that it deems convenient to its right, within a term of fifteen (15) days of the reception of the corresponding notarial letter. c) After evaluating the tests by the DGH and, if appropriate, the declaration of expiration will be formulated by supreme resolution in a maximum term of forty five (45) days, counted since the notification to the Concessionaire Corporation of the creation of the file. d) The resolution must declare the expiration and appoint the controller, which shall be notarially notified to the Concessionaire Corporation in the domicile indicated in the file within forty eight (48) hours of its issuance, and should in the same term be published for one (1) day in the official Gazette El Peruano. e) After the aforementioned, shall proceed according to Clause 18.6 and 18.7. f) The Concessionaire Corporation may contradict the declaration of expiration before the Judiciary in the corresponding channel. The demand must be filed within ninety (90) calendar days, counted since the notification of the resolution of expiration. In this case, the intervention will be kept until the controversy if settled definitively.18.5.5.5. Termination of the contract a) The termination of the contract will be made when the affected party with the non-compliance or the event that causes the termination invokes said ground and communicates in writing, through letter sent to the other party by notarial channel, its intention to terminate the contract by enforcing the respective termination clause. b) After receiving the notarial letter of termination of the contract, the addressee of it may declare his disagreement with the existence of a ground of termination, for which purposes should send to the other party a notarial letter, which should be received in a maximum term of fifteen (15) days, counted since the date of reception of the first notarial letter. In this case, it shall be understood that there is conflict or controversy regarding the termination of the contract, applying Clause 16. c) After the term of fifteen (15) days have expired without the addressee of the first notarial letter have expressed his disagreement, the contract shall be understood terminated on the date of reception of said letter. d) After declaring the termination through firm award or in case of the assumption of subparagraph c), we shall proceed according to Clauses 18.6 and 18.7.18.6 Intervention of the Concession 18.6.1 General Rules a) The intervention is a process that starts on the date indicated in the supreme resolution that determines it and concludes with the delivery of the concession to a concessionaire (the “New Concessionaire Corporation”). b) The controller may be a person or a committee of natural persons, and shall have, for the sole merit of its appointment, the widest powers for:. Determine the actions of administrative nature that allow the continuation of the operation of the System of Supply of LPG; and, . Determine the actions of technical nature that allow the continuity of the provision of the service. c) The Concessionaire Corporation is obliged to comply with the instructions of the Controller. However, within five (5) days of notification of the statement, he can request reconsideration before the DGH, which shall decide within a period of five (5) days. The DGH response does not produce an administrative process, is not challenged and mustSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 57 de 114 CONCESSION CONTRACT – FOURTH VERSION be respected by the Concessionaire Corporation and the controller. The Concessionaire Corporation shall not be liable for damages arising from the instructions of the controller, provided that they have been challenged by the Concessionaire Corporation pursuant to the procedure provided in this subparagraph c). d) The total expenses required by the intervention shall be borne by the Concessionaire Corporation. e) The Concessionaire Corporation shall have the right to receive all the income generated by the concession during the intervention, without prejudice of the provisions set forth in the previous paragraph d). f) The Concessionaire Corporation will be obliged to keep the continuity of the service for one (1) year or until the replacement of the Concessionaire Corporation is produced by the New Concessionaire Corporation, whichever comes first. g) If there were no New Concessionaire after one (1) year of intervention, or during the process of intervention of the Concessionaire Corporation becomes insolvent, or if for any other reason is unable to maintain the service or implement the instructions available to the controller; the Grantor shall assume full and direct administration of the concession assets, as is appropriate to the transfer of the Concession.18.6.2 Special rules a) In case of termination of the concession for expiration of the contract term, the intervention shall initiate twelve (12) months before the expiration of the contract term. b) In case of termination of the concession by agreement of the parties, it shall be the agreement that establishes the date of start and end of the intervention. c) In case of termination of the concession by termination of the contract, the intervention shall begin fifteen (15) days after the date in which the termination is produced according to subparagraph c) of Clause 18.5.5., or of the notification of the award referred in subparagraph d) of Clause 18.5.5., as appropriate.18.7 Auction of the Concession 18.7.1 Rules for the Auction procedure a) The controller exercises on behalf of the Grantor, the attributions that correspond to him according to Article 51º of the Regulation. b) Likewise, the controller shall have, for the sole merit of this appointment, the widest powers to organize, call and execute a public auction (“Auction”) for the transfer of the concession and delivery of the concession assets to the New Concessionaire Corporation. c) The bidders for the public auction will be qualified by the Grantor, or the person who it shall appoint. In case the concession ends for waiver or declaration of expiration, the Concessionaire Corporation, its main shareholders and related companies of both, may not present as bidders of the auction. d) The base amount of the first call of the auction of the concession will be determined by a qualified expert in valuations in the industry to be hired in order to determine the market value of the Concession, which in no case can be less the Book Value of the concession assets. In the absence of bidders and if there are new calls, the Grantor in each new call may reduce by up to fifteen percent (15%) the base amount of the immediately preceding call.Between the date on which a call is unsuccessful or expires without awardee and the date when the next call is published, shall not elapse more than ninety (90) days. If two calls were declared abandoned or concluded without awardee, it will proceed under clause 18.8. e) The awardee of the auction will be the person that submits the highest economic proposal for the concession. The payment made by said awardee should be made in cash and in dollars. f) The new Concessionaire Corporation must subscribe with he Grantor a new concession contract, which shall be formulated by the controller considering the applicable laws in force at that time.18.7.2 Rules for the transfer of the concession assets a) The assets of the concession will be transferred to the State and delivered to the New Concessionaire Corporation as a whole, constituting an economic unit so that the Assets of the Concession can continue to be operated by the New Concessionaire for the Service as uninterrupted. b) The Concessionaire Corporation shall transfer ownership of the concession assets to the State free of all charges and encumbrances, including in the transfer the information necessary for it to continue with the provision of the Service uninterruptedly, including the following technical information:(i) File of drawings of the installations. (ii) Projects and Studies made that have relation with the System of Supply of LPG. (iii) Technical information about each one of the assets. (iv) The procedures of operation and maintenance of the System of Supply of LPG. (v) Manuals of quality assurance for the provision of the service. (vi) Any other relevant information for the continuity of the service.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 59 de 114 CONCESSION CONTRACT – FOURTH VERSION The State shall deliver said assets and information to the new Concessionaire Corporation that is the winner of the auction. c) The Concessionaire Corporation shall transfer and deliver the concession assets in good operative conditions, except normal wear as consequence of the time and normal use. d) The Concessionaire Corporation shall provide its full and reasonable cooperation, to ensure the orderly delivery of the assets of the concession and information to the New Concessionaire Corporation, so that there is no interruption in the provision of the service. The Concessionaire Corporation shall grant the public deeds and other documents required in accordance with applicable laws, or those that are reasonably requested by the Grantor to the transfer or assignment of contractual position or assignment of rights, as applicable, of rights that are part of the assets of the concession. e) In all cases of termination of the concession and for the purposes of Article 22 of the TUO, it is understood that the assets of the concession are transferred to the State which, in turn, will deliver in concession to the New Concessionaire Corporation. The transfer to the State of the Assets of the Concession will be exempted from any tax created or to be created, as established in Article 22 of the TUO and the Regulation of Tax Benefits for private investment in public infrastructure works and public services , approved by SD No. 132-97-EF or regulations amending or replacing it.18.7.3 Rules for the distribution of the product of the auction a) From the amount obtained in the auction and far reaching that amount, the controller shall deduct direct expenses that he had incurred or the Grantor associated with the process of intervention and Auction; and then will pay to the respective creditors:. The remunerations and other labor Rights of workers of the Concessionaire Corporation. . The amounts of Money that should be delivered to the Allowed Creditors. . The taxes, except those that are guaranteed according to the applicable laws. . Any fine or penalty that would not have been met by the Concessionaire Corporation. . Any other liability of the Concessionaire Corporation that is in favor of the State. . Other liabilities of the Concessionaire Corporation not previously considered.The priority for the payment of the aforementioned items will be that previously referred, unless otherwise provided in the applicable laws. b) The remaining balance, if any, will be delivered to the Concessionaire Corporation, up to a maximum equivalent to the book value of the Assets of the Concession. If the remaining balance is greater than this value, the difference will belong to the State.The net amount payable, will be paid by the Grantor to the Concessionaire Corporation in cash, in dollars and within a period of ninety (90) calendar days from the date when the awardee of the auction makes payment of the price offered in the same, recognizing the interest accrued on the period since the date on which operated the termination of the concession to the effective settlement, at a rate equal to the average of the six (06) months prior to the payment date, corresponding to the lending rate in national currency or foreign currency, as applicable, in force in the Peruvian financial system.18.8 Additional provisions 18.8.8.1 If the concession ends by the ground established in subparagraph a) of Clause 18.3.1, or if the Grantor decides to finish it de facto or by the channels of fact without existing grounds foreseen in the contract or the Regulation, the Grantor shall pay to the Concessionaire Corporation, for all concept, including the transfer of the assets of the concession to the Grantor and the compensation, referred in Article 22° and 17° of the TUO, respectively, the amount that results greater between: a) The present value of the net cash flow of the Concessionaire Corporation that would have been generated for the contract term it would have deducted if the termination have not been produced, on the basis of the real installed capacity in the System of Supply of LPG on the date of termination, using for these effects an annual discount rate of 12% real. b) The accounting value that the concession assets, that would not have been depreciated, would have on the date of termination of the concession. 18.8.8.2 The calculation of the amount to pay will be made by a specialized Consulting company appointed similarly to the expert referred in Clause 16, who shall apply the parameters established in this clause. The Grantor should formulate the terms of reference and supervise the execution of the corresponding study, and pay the fees and respective expenses. The study must entrusted and executed within a term of ninety (90) calendar days, counted since the termination of the concession, unless the Grantor determines a greater term. 18.8.8.3 To the mentioned amount to pay we must discount the expenses and payments indicated in subparagraph a) of Clause 18.7.3., with exception of the expenses of the processes of intervention, auction and transfer of the concession assets. 18.8.8.4 The net amount to pay, will be cancelled by the Grantor to the Concessionaire Corporation in cash, in dollars and within a term of ninety (90) calendar days counted since that amount was firm, recognizing the accrued interests for the period elapsed since the date in which operated the termination of the concession until the effective cancellation, with a rate equivalent to the average of six (6) months previous to the payment date, corresponding to the passive rate in national currency or foreign currency, which is applicable, in force in the Peruvian financial system.18.9 Treatment of Guarantees 18.9.1 The Performance Bond or Complementary Performance Bond, as appropriate, should be in force during the processes of intervention and auction.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 61 de 114 CONCESSION CONTRACT – FOURTH VERSION 18.9.2 In the cases of termination of the concession for waiver of the Concessionaire Corporation or declaration of expiration, shall execute the guarantees that are in force. If the termination of the concession is contradicted at judicial or arbitral level, the guarantees should be renewed up to one hundred and fifty (150) calendar days after settling the controversy.NINETEENTH CLAUSE.- FINANCING OF THE PROJECT AND GUARANTEES IN FAVOR OF THE ALLOWED CREDITORS 19.1. To fulfill the purpose of the contract and in order to finance the design, construction, operation and maintenance, exploitation of the concession assets, of infrastructure of the System of Supply of LPG, the Concessionaire Corporation prior authorization of the Grantor, may: (a) constitute security interest, mortgage and/or trust on the assets of the Concession; (b) establish mortgage on its concession right; (c) constitute security interest, transfers (conditional or not) or trusts about their future revenues from the concession, on compensation in respect of insurance contracted with the limits set out in this contract or compensation or any other amount that can perceive the Concessionaire Corporation for the termination of the concession, as outlined in the Contract and applicable laws (d) provide security interest or trust over shares or representing the share capital of the Concessionaire Corporation; (e) impose a lien or transfer of funds to the nature of a guarantee in favor of the Allowed Creditors, to support the guaranteed debt, in respect of income which are freely available to the Concessionaire; and (f) provide any other real security, personal or trusts allowed by Applicable Laws. The Concessionaire Corporation shall inform the Grantor prior to its constitution, the nature of the guarantees to be granted in favor of the Allowed Creditors, to back up the guaranteed debt. Such collateral contracts must contain clauses ensuring the continuity of the provision of the service.For purposes of authorization of constitution of guarantees referred in this clause, the Concessionaire Corporation must deliver to the Grantor the drafts contract and other documents related to the operation of the guaranteed debt. After delivering said documents, the Grantor shall have a maximum term of thirty (30) days to issue its opinion. The Grantor may request additional information within the fifteen (15) first days of receipt of the documents related to the operation of guaranteed debt of the Concessionaire Corporation. In that case, the maximum term of thirty (30) days to issue its opinion, shall start again to be computed since the date of submission of the requested additional information. In case of expiration of the terms mentioned in the previous paragraphs without any opinion of the Grantor, it shall be understood that the authorization is granted. The provisions set forth in the previous paragraphs do not relieve the Concessionaire Corporation of the compliance of all and each one of the provisions of the contract and applicable laws. The denial of the authorization referred in this clause should be made with reasoning. 19.2. Procedure of execution of guarantees on the concession and/or shares or participations corresponding to the minimum participation. The procedure of execution of guarantees on the concession and/or the shares or participations corresponding to the minimum participation, under the direction of the Allowed Creditor(s) and with the participation of the Grantor, will be governed compulsorily by the following rules:  The decision of Allowed Creditor(s) to exercise their right to execute the guarantees on the concession and/or the shares or participations constituted in their favor, should be communicated in writing to the Grantor and to the Concessionaire Corporation.  From that time: (a) the Grantor shall be unable to declare the termination of the concession and will be obliged to immediately begin the coordination of the case with eh Allowed Creditor(s), with the purpose to appoint the legal person who, according to the same terms foreseen in the concession contract and under a retribution to be agreed with the Allowed Creditor(s), shall act as controller and will be transitorily in charge of the operation of the concession assets during the time required by the replacement of the Concessionaire Corporation or of the Shortlisted Operator referred in the following points; and (b) any act of the Concessionaire Corporation may suspend the procedure of execution of the mentioned guarantees, and will be unable to comply the obligations that originated the execution of the referred guarantees.  For that purposes, the Allowed Creditors(s) may propose to the Grantor the shortlisted operators, who comply with the requirements established in the Bid Terms, from which the Grantor, within thirty (30) days following to the referred proposal, shall elect one of them to be transitorily in charge of the concession. The appointment of the legal person who shall act as controller, determined by the Grantor, must be communicated in writing to the Concessionaire Corporation. From that time, the Concessionaire Corporation will be obliged to begin the coordination of the case, with the purpose that the transition of the transfer is carried out as efficient as possible.  The transitory operation of the concession under the responsibility of the controller should be completed in a term no later than sixty (60) calendar days counted since the date when the Concessionaire Corporation is informed of the referred appointment, assuming the Concessionaire Corporation the responsibility if the transitory operation mentioned above is not completed due to causes attributable to it.  After the concession is under the transitory operation of the controller, the Allowed Creditor(s) must propose the Grantor, the complete text of the call and the bid terms of the procedure of private auction of the minimum participation or the right of concession, as appropriate, in a maximum term of thirty (30) days. Said bid terms should respect the substantial guidelines contained in the bid terms, especially regarding the general characteristics of the concession, as far as they do not oppose to the nature of the new auction to be performed. For that purpose, the Allowed Creditor(s) must send a proposal of the call and the bid terms to the Grantor. Submitted the text of the call and the bases of the procedure of private auction of the Concession or the minimum participation for consideration by the Grantor, it shall formulate its objections through a pronouncement that should be issued within ten (10) days counted from the date when he was handed the text in question. After this deadline and no decision by the Grantor, the referred text will be considered approved. Once the Allowed Creditor (s) are informed about the objections formulated by the Grantor, they shall have a term no later than ten (10) days to correct them or deny them and submit to the Grantor for second time the text of the call and the bid terms of theSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 63 de 114 CONCESSION CONTRACT – FOURTH VERSION procedure of private auction of the minimum participation. Then, the Grantor should issue its opinion regarding the text in reference within ten (10) days counted since the date when he was informed by second time. However, after the expiration of the deadline in reference and in the absence of opinion in agreement, the referred text will be understood as approved.  After approving the text of the call and the terms of the procedure of private auction of the concession or the minimum participation, the Allowed Creditor(s) must begin the procedure therein established in a term no later than ten (10) days following the approval of the bid terms and the call. The award must be granted in the term considered in the bid terms, unless that, according to the circumstances of the case, the process of said procedure requires a greater term, in which case shall apply the extension determined by the Grantor.  Awarded the bid for the private auction of the minimum participation or the concession as provided in the text of the bid terms approved by the Grantor, and as stated in this clause, said act must be communicated in writing to both the Grantor and to the legal person intervening; as well as the Concessionaire and the Shortlisted Operator. From that moment, the latter is obliged to initiate the coordination of the case, in order that the transition of the operation of the concession is carried out as effectively and efficiently as possible. The final replacement of Shortlisted Operator or the Concessionaire Corporation in favor of the awardee of award must be improved within a period not to exceed thirty (30) days from the date on which the bid was awarded of the private auction, under the responsibility of the controller, except that the replacement could not be perfected within that period for an act attributable to the awardee. According to the previously established procedure, the awardee of the award for the private auction described lines above will be recognized by the Grantor as the New Concessionaire Corporation or, as applicable, as the new Shortlisted Operator. For such purposes, the New Concessionaire Corporation or Shortlisted Operator shall replace entirely the Shortlisted Operator or the original Concessionaire Corporation, respectively, being subject to the terms of the concession contract. Only in the case of guarantees of the shares, the Allowed Creditor may choose to make the sale of the shares without complying with the requirements of this section. However, the successful awardee of the Minimum Participation or concession must have the prior approval of the Grantor. The Grantor shall approve the New Concessionaire Corporation or the new shareholder (s) Holder of the Minimum Participation within not more than thirty (30) days from the proposal made by the Allowed Creditor. The Grantor may only object to the proposed Concession or the Minimum Participation, as appropriate, if the holder does not meet the requirements of the Bid Terms. If the Grantor does not issue an opinion about the request of the Allowed Creditor(s) within the period specified in the preceding paragraph, the application shall be approved and the New Shortlisted Operator or the New Concessionaire Corporation shall replace entirely the Shortlisted Operator or the original Concessionaire Corporation, respectively, being subject to the terms of the concession contract. It is clear that no approval is required from the Grantor for the execution of guarantees on shares or other than the Minimum Participation shares.  The right of the Allowed Creditors with Guaranteed Debt to replace the Concessionaire Corporation may not be exercised if the Grantor prior to the filing of replacement, has initiated the proceedings for a declaration of termination of the concession according to the provisions of this contract, provided that it has initiated such proceedings the day that the Concessionaire receives the notice referred to in paragraph "a" of Article 48 of the Regulation. Nor it may be exercised if, prior to the filing of replacement, either party has initiated any proceedings under the Eighteenth Clause that have as their object to achieve the termination of the concession.19.3. The Allowed Creditors may appoint a joint representative (the "Representative") through which they may request to the Grantor the replacement of the Concessionaire Corporation by another person who meets the requirements of the Applicable Laws, according to what is stated in clause above and provided that the representative would have received a written communication from the Grantor indicating that the Concessionaire Corporation has incurred a ground for termination of the concession and that the same or not is remedied, or to be, has not been made in the terms established in the contract.19.4. Replacement of Guarantees The Concessionaire Corporation, with prior authorization of the Grantor, may replace the guarantees that would have been granted according to the provisions of this contract, by any other guarantee indicated in Clause 19.1.19.5. Security interest or trust on the shares or participations The shareholders of the Concessionaire Corporation shall give security interest or in trust their shares or social shares to secure payment of the guaranteed debt. For the acquisition, at auction or execution of guarantees, of shares or shares of the Shortlisted Operator in favor of a particular person we must have the prior approval of the Grantor and respect the minimum participation requirements.Notwithstanding the aforementioned, there will be no impediment to shareholders and partners of the Concessionaire Corporation allow that their political rights and/or their derivatives economic rights of the shares for which they hold to be exercised by the Allowed Creditors; however, the exercise of these rights requires the prior approval of the Grantor.19.6. The Concessionaire Corporation shall inform the Grantor on credit operations constituting Guaranteed Debt and shall deliver a copy of the respective contracts within thirty (30) calendar days following the date of their subscription, including the contract signed by all the Allowed Creditors to regulate the participation and rights of these creditors in the guarantees provided by the Concessionaire Corporation and its eventual implementation process. It shall inform the Grantor in writing every six months in respect of the outstanding balances with each Allowed Creditor having guaranteed debt.Equally, the Concessionaire Corporation shall inform the Grantor the name and data of the common representative appointed jointly by all the creditors of the Concessionaire Corporation with guaranteed debt.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 65 de 114 CONCESSION CONTRACT – FOURTH VERSION Upon request of the Concessionaire Corporation, the Grantor shall send to the Allowed Creditors a copy of the communications sent by the Grantor to the Concessionaire Corporation. In case of facts that might cause the termination of the concession or in the event the Concessionaire Corporation requests the transfer of the Concession, a contract modification or renounces to any right under this contract, the Grantor obliges to inform thereof to the Allowed Creditors, without the need of approval of the Concessionaire Corporation.19.7. The Concessionaire Corporation undertakes to terminate or cause extinction and raise or cause to raise any and all charges and/or encumbrances and/or ownership limitations that may exist on the assets of the concession before the end of the term of the contract. Also any trust to subscribe on the assets of the concession, shall include a clause in which the trustee is obliged to deliver these assets to the Grantor in the event of termination of the Concession. For this purpose, the Concessionaire Corporation is obliged to sign public or private documents that are necessary or are requested by the Grantor and cause the trustee complies with the return of the assets of the concession in accordance with the provisions of the contract. If not proceed in the direction indicated, the Grantor reserves the right to invoke the exception of non-compliance with its obligations to the Concessionaire Corporation at the time of the termination of the concession.TWENTIETH CLAUSE.- ECONOMIC-FINANCIAL BALANCE20.1.1. The parties recognize that on the date of submission of proposals the existing situation was one of economic and financial balance in terms of rights, responsibilities and risks assigned to the parties.20.1.2. This clause provides a mechanism to restore the economic and financial balance, to which are entitled the Concessionaire Corporation and the Grantor, in case the economic and financial balance of the Concession is significantly affected in an exclusive and excluding way due to changes in the applicable laws, to the extent that it has direct relation and incidence with the economic and financial aspects related to changes in income, investment costs or operating and maintenance costs related to the provision of the service.20.1.3. The economic and financial balance will be restored if, as a result of what is stated in section 20.2 above, and compared to what would have happened in the same period if the changes had not happened that this clause refers to: a) Vary the investment costs incurred by the Concessionaire Corporation from the closing date until the commercial commissioning in an amount equal to five percent (5%) or more of the investment, considering for this purpose as reference the investment submitted by the Concessionaire Corporation for purposes of the anticipated recovery of VAT, or other similar nature, and should be considered to restore the financial and economic balance, the entire variation. or, b) income or the costs of operating and maintaining of the service is affected in such a way that the difference between income minus operating costs and maintenance of the Concessionaire Corporation in the operation of the service, for a period of twelve (12) months consecutive or more, vary in the amount of five percent (5%) or more of the annual average cost in force.20.1.4. If the economic - financial balance hereof is affected, as defined in the preceding clause, the Concessionaire Corporation or the Grantor may propose in writing to the other party and with the necessary support, solutions and procedures for restoring the economic balance affected. Restoring economic-financial balance must consider the present value of the impact on future cash flows of the Concessionaire Corporation. Copy of the application will be forwarded to OSINERGMIN, to issue a technical-economic opinion regarding the request, which must be evaluated by the Grantor, without binding nature. This opinion shall be submitted to the parties within twenty (20) days.20.1.5. The affected party may invoke the breakdown of the economic and financial balance in the following cases: b.1.a) Within the first six (6) months counted since the commercial commissioning, for the provisions of Section 20.3.a. b.1.b) After twelve (12) months counted since the commercial commissioning, for the provisions of Section 20.3.b.20.1.6. The restoring of the economic balance shall be made on the basis of the audited financial statements (or information used in the preparation thereof) of the Concessionaire Corporation for the period in which the changes in income, investment costs or costs are verified or operation and maintenance costs referred to above.20.1.7. If the Concessionaire Corporation has several concessions, it must deliver additional information necessary to support the division of income or costs, as appropriate, among its different concessions.20.1.8. Without prejudice of the aforementioned, the Grantor may request further information that supports the indicated variations. Additionally, the parties may agree to use documentation different from the audited financial statements for the purposes described in this clause, provided it has duly support.20.1.9. The existence of an imbalance may only result in the modification of the provisions contained in this contract to restore the balance, but it shall not result in a suspension nor in the termination of the contract, nor payment in charge of the State. 20.1.10. It shall not be deemed applicable as indicated in this Clause the provisions issued by the OSINERGMIN to determine violations and impose sanctions, which were referred to in the contract or were as a result of acts, or acts attributable or result of the performance of the Concessionaire Corporation.20.1.11. In case of discrepancies between the parties on whether there is a breakdown of the economic and financial balance, its amount or the form to reset it will be resolved in accordance with the mechanisms provided for in Clause 16 for non-technical controversies.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 67 de 114 CONCESSION CONTRACT – FOURTH VERSION TAX REGIME OF THE CONCESSION The Concessionaire Corporation will be subject to national, regional and municipal tax legislation that may be applicable, and must comply with all obligations of tax nature that apply to the exercise of its activity. The Concessionaire Corporation will be obliged, in the terms set forth in applicable laws and regulations, to the payment of all taxes, levies and duties which apply among others, the Assets of the Concession or built or incorporated into the Concession, whether these taxes are administered by the national, regional or municipal government.TWENTY FIRST CLAUSE.- OTHER PROVISIONS 21.1. Submission to Applicable Laws. The contract was negotiated, drafted and signed in accordance with the laws of Peru and its content, execution and other consequences arising from it are governed by applicable laws.21.2. Priority Order. In case of divergence of interpretation of the contract, the parties shall follow the following order of priority to resolve the situation:(a.b.1.a) The contract, excluding the Bid Terms. (a.b.1.b) The Bid Terms. 21.3. Interpretation Criteria.  This contract is interpreted according to its own clauses and Bid Terms.  The terms established in the contract will be computed in days, calendar days, months or years, as appropriate.  The language of the contract is Spanish.  The annexes of the contract shall be integrant part thereof. 21.4. Tariffs Currency All tariffs, costs, expenses and similar to be collected by the Concessionaire Corporation for the provision of the service should be collected in the corresponding currency according to the applicable laws and the terms of the respective contracts. 21.5. Contract Currency21.5.a.1.Determination of the currency of the contract: Based on the provisions set forth in Article 1237° of the Civil Code of Peru, all payments foreseen in the contract will be made in dollars, except those that according to the applicable laws should be made in the currency of legal tender in Peru.21.5.a.2.Conversion of currency of the contract: In the event that, for any reason, the Governmental Authority approves an applicable law related to the contract for payment of obligations in foreign currency in a currency other than the dollar, the Party affected by Applicable Law, immediately after receiving or making all scheduled payments under the relevant applicable law shall convert to the currency of the contract and is entitled to receive the sums in the currency of the contract, necessary to compensate for the loss resulting from the devaluation of the currency in which payment has been made under the relevant law applicable against the currency of the contract.21.5.a.3.Exchange Rate: For purposes of the contract, with exception to indications made in Clause 12, the conversion of sums in national currency to the currency of the contract will be made at the Exchange rate of sale published by the Superintendence of Banking, Insurance and AFP in the official gazette "El Peruano" the day when verifying the payment or when making the respective conversion, as the case may be.21.5.a.4.Guarantees granted by the legal stability related to free availability of foreign currency Notwithstanding stated in clause 21.5.3, if the Concessionaire Corporation decides to invoke the legal stability provided by Legislative Decrees No. 662 and 757, the Regulation of Guarantee Schemes to Foreign Investment approved by Supreme Decree ° 162-92-EF and regulatory rules and amendments of such provisions, and subscribes the corresponding Legal Stability Agreement under the procedures established by those rules, the Concessionaire Corporation, pursuant to Section 19 of the DS No. 162-92-EF shall enjoy, among other the duties (i) to the stability of the regime of free availability of foreign currency, according to the provisions of paragraph b) of Article 10 of Legislative Decree No. 662, applied in accordance with the requirements of paragraph a) of Article 3 of the SD No. 162- 92-EF; (ii) to the stability of the right of free remittance of profits, dividends, capital and other income earned, which is subject to the provisions of article 15 DS No. 162-92-EF; and (iii) to the stability of the right to use the type of more favorable exchange rate in the exchange market, which is subject to the provisions of Article 13 ° of SD No. 162-92-EF.Pursuant to paragraph b) of Article 10 of Legislative Decree No. 662 (the right to the stability of the regime of free availability of foreign exchange and rights under articles 7 and 9 of Legislative Decree No. 662), the Convention of Legal Stability guarantees foreign investors the right to transfer abroad, in freely convertible currency, without prior authorization from any Governmental Authority on payment of tax of law: (i) the whole of their capital from the investments provided for Article 1 of Legislative Decree No. 662, and registered with the competent governmental authority; and (ii) the total dividends or proven net profits from their investment and other items referred to in paragraph b) of Article 7 of the Legislative Decree No. 662.21.6. Waiver, Modifications and Clarifications. The waiver of any of the parties to one or more of the corresponding rights under this contract will only take effect if it is made in writing and with due notice to the other party except as otherwise provided situation in the contract. If at any time during the contract term one of the parties waives or ceases to exercise a specific right in the contract, such conduct may not be considered by the other party as a permanent waiver to enforce the same right or any other corresponds throughout the contract term.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 69 de 114 CONCESSION CONTRACT – FOURTH VERSION Changes and clarifications to the contract, including those that the Concessionaire Corporation may propose at the suggestion of the Allowed Creditors, shall be valid only if they are agreed in writing and signed by representatives duly empowered of the parties, comply with the relevant requirements of the Applicable Laws and are raised to public deed. The parties shall use their best endeavors to consider the suggestions of the Allowed Creditors.21.7. Partial invalidity. If any term or provision of this contract is held invalid, void or unenforceable by arbitration award, the decision will be interpreted strictly to such provision or stipulation and shall not affect the validity of the other provisions of the contract.21.8. Notifications. Unless expressly stated otherwise in the contract, the notices, subpoenas, requests, demands and other communications due or permitted hereunder shall be in writing and shall be deemed validly made when they have the respective delivery receipt or when they are sent by courier, fax or email, once verified by direct receipt or confirmation of complete transmission issued by the respective system of the recipient of the communication, to the following addresses:If addressed to the Grantor: Name: Ministry of Energy and Mines. General Direction of Hydrocarbons. Address: Av. Las Artes 260, Lima 41, Perú. Attention: Mr. Director General of Hydrocarbons Fax: [•] Email: [•] If addressed to the Concessionaire Corporation Name: [•] Address: [•] Attention: [•] Fax: [•] Email: [•] If addressed to the Shortlisted Operator: Name: [•] Address: [•] Attention: [•] Fax: [•] Email: [•] Or to any other address or person appointed in writing by the parties, and they may modify said addresses through Communications of certain date sent to the other party, in which case the change of domicile shall have effects on the following day of receiving the respective communication.Signed in Lima, in six (6) original documents, for the Grantor, for OSINERGMIN, for Proinversión, for the Shortlisted Operator and two (2) for the Concessionaire Corporation, on [•] 2015.THE GRANTOR THE CONCESSIONAIRE CORPORATION SHORTLISTED OPERATOR SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 71 de 114 CONCESSION CONTRACT – FOURTH VERSION ANNEX 1TECHNICAL CHARACTERISTICS AND CONDITIONS FOR THE DESIGN, CONSTRUCTION, OPERATION AND MAINTENANCE OF THE SYSTEM OF SUPPLY OF LPGI. SCOPE OF THE CONCESSION The concession of the System of Supply of LPG include the design, construction, operation and maintenance of a System of Transportation of LPG by pipeline and Storage Plant and Dispatch of LPG, with capacities equal to or higher than the guaranteed capacities set forth in sections 3 . 2.6 and 3.3.2 of this Annex. The Transportation System envisages transporting LPG from the Pisco Fractionation Plant, owned by the holding companies of the Exploration License and/or Hydrocarbon Exploration Contract Block 88, operated by Pluspetrol Peru Corporation SA, to the plant of Storage and Dispatch of LPG, the latter located in [...], without prejudice to be considered the connection to other producers or wholesalers distributors of LPG.The System of Supply of LPG should be ready to operate on schedule for commercial commissioning and shall operate with safety requirements, reliability, quality, efficiency and continuity established in the applicable laws, in the national and international technical standards applicable during the contract term.II. TECHNICAL STANDARDS The design, construction, operation and maintenance of the System of Supply of LPG shall comply with the provisions of the contract and the technical standards set forth in applicable laws, and in matters not covered by them, with international technical standards applicable and with the Best Practices of the hydrocarbons industry.III. BASIS FOR THE DESIGN, CONSTRUCTION, OPERATION AND MAINTENANCE OF THE SYSTEM OF SUPPLY OF LPG3.1. Characteristics of LPGThe Concessionaire Corporation shall take into account for the design and construction of the System of Supply of LPG, the technical characteristics and properties of LPG laid down in the International Peruvian Standard 321 007: 2002, or its replacement. The technical characteristics and definitive properties should be requested to the owner of the Fractionation Plant if they comply with the aforementioned technical standard.The Concessionaire Corporation will ship or deliver LPG to users, under the conditions, composition and properties that shall be specified in the respective contracts of service.The System of Transportation of LPG shall comply with the provisions of the Regulation and its amendments. Also, the Storage Plant and Dispatch shall comply with the provisions of the Safety Regulations for Hydrocarbon Storage, approved by Supreme Decree No. 052-93-EM, and its amendments. The facilities for dispatch shall comply with the provisions of the Regulations for the Marketing of Liquefied Petroleum Gas, approved by Supreme Decree No. 001-94-EM and its amendments. Also, the System of transportation of LPG and the Storage and Dispatch Plant must comply with the provisions of the Safety Regulations for Hydrocarbon Activities, approved by Supreme Decree No. 043-2007-EM.3.2. System of Transportation of LPG3.2.1. Referential description of the Transportation System The Transportation System consists in referential way of a pipeline, station (s) and pumping facilities required to transport LPG from the Pisco Fractionation Plant to the Storage and Dispatch Plant of LPG.3.2.2. Referential characteristics of the pipeline route Determining the pipeline layout is the responsibility of the Concessionaire Corporation, and shall be determined according to design to be developed and to the permits obtained for this purpose. It is also the responsibility of the Concessionaire Corporation to enter the easements agreements and assume the expenses incurred.3.2.3. Start reference point This point will be located in a referential way in the limit of the Pisco Fractionation Plant, which is located in the district of Paracas, province of Pisco, Department of Ica, in the following UTM coordinates: UTM: 8476999, 367 896 E .The Concessionaire Corporation shall subscribe the necessary agreements with the holder of the Pisco Fractionation Plant to determine the final location of the starting point, the technical aspects related to the connection and the opportunity to perform the respective connection. These agreements must be reported to the Grantor and to OSINERGMIN. Any change in the location of the starting point will not adjust the cost of service of the concession.The Concessionaire Corporation must include within the cost of service, all the costs associated to the connection of the System of Transportation with the Fractionation Plant.3.2.4. Point of Referential reception Is the point of start of the pipeline.3.2.5. Final Point This point will be located in the Storage and Dispatch Plant of LPG which land will be part of the concession assets which exact location will be part of the design that it should develop.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 73 de 114 CONCESSION CONTRACT – FOURTH VERSION3.2.6. Capacity of the Transportation System The system must meet, at least, the capacity of transportation of LPG of thirty thousand barrels per day (30 MBPD).3.2.7. Conditions of operation The final conditions of operation should be established as part of the agreements indicated in Section 3.2.3 of this annex.3.2.8. Referential characteristics of the Transportation System The Concessionaire Corporation must consider for the design and construction of pipelines the following referential characteristics: The minimum diameter should be eight inches (8”).  The thickness should be enough to support the internal pressure, external charges, internal and external corrosion to which it shall be exposed during and after its installation.  For the material to be used, it must be taken into account the manufacturing standard API 5L, according to indication of the Regulation.3.2.9. Infrastructure of the Transportation System of referential LPG The System of Transportation of LPG must have the installations and equipment necessary for a secure, reliable, efficient and continuous operation.The Concessionaire Corporation must design and construct, at least, the following: Measurement station of custody transfer.  Stations of valves of automatic sectionalizing.  Shipping traps /reception of inspection Tools (Smart Pig)/Cleaning.  Two (2) control rooms: one principal and other alternate.  Systems of acquisition of data, supervision and control of the System of Transportation of LPG.  Leak detection system.The Concessionaire Corporation must determine and implement all the infrastructure necessary to perform a volumetric balance of LPG and comply all indications of the Regulation, technical regulation and applicable laws.3.2.10. Pumping Station For the design and construction of the pumping stations, the Concessionaire Corporation should consider, among others, the following:SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 75 de 114 CONCESSION CONTRACT – FOURTH VERSION  The auxiliary equipment, accessories and control Systems should be selected to allow a secure and efficient operation within the range of estimated operation and the foreseen operative deviations.  Should have emergency shutdown of manual and automatic operation, that detect the abnormal or unsecure conditions.  Should have al alternate system of electric supply that allows operating the control Systems and emergency lighting.  Should select the final location, determine the required area, acquire the land, enable it and build the necessary infrastructure.3.2.11. Availability of the Transportation System The System of Transportation of LPG must be designed, built, kept and operated to restrict unscheduled shutdowns and provide availability of 99% for one year.An unscheduled shutdown is a failure to cover the demand of users. The System of Transportation of LPG must have effective procedures of maintenance to reach the specified availability.The Concessionaire Corporation shall prepare a study of availability and submit it to the Grantor or its nominee in the same opportunity to submit the schedule referred to clause 3.2.2 of the contract. The study should take into account the values of mean time between failures and mean time to repair for each major component of the LPG Transport System which may affect the values of availability and reliability of the integrated installation.The availability will be defined as:Availability MTBF : Mean time between failures MTTR : Mean time of repair They are scheduled shutdowns and therefore not eligible to calculate the availability of the System of Transportation of LPG, those arising as a result of: 1) work of any kind of preventive maintenance and/or predictive, on which it has previously informed the users, 2) damage caused to the System of Transportation of LPG or Supply Plant and Dispatch by third parties, 3) damage by Force Majeure causes as provided in clause 15 4) suspensions made by the operator of the Fractionation plant or users.The deficit in the availability will be measured as:Capacity deficit = (99% – availability) x 365 x (Capacity of the system)3.3. Storage Plant and Dispatch 3.3.1. Referential description of the Plant The plant shall consist in a storage area, a dispatch area to tank trucks and facilities necessary to receive, store and dispatch LPG to users. 3.3.2. Capacity of the Plant The plant, since the commercial commissioning, should meet, at least, the following capacities: Storage capacity Dispatch capacity (Barrels) (Barrels per Day)90,000 30,000The same volume of storage will be required as security inventory and the Concessionaire Corporation must consider all the costs associated to obtaining and maintenance of the security inventory in its economic proposal.Upon request of the Grantor, the Concessionaire Corporation must extend the storage facilities up to 150,000 barrels, according to Clause 12.7.3.3.3. Location of the Plant The plant must be built in the land, property of the State, of approximately fifteen (15) hectares, located in […].The location of the facilities within the plant should consider the possibility of future expansion, so that must have enough space (including buffer zones and security), in referential way that would allow an expansion of storage capacity of 300,000 barrels.3.3.4. Characteristics of the storage facilities For the design of the facilities of storage, the Concessionaire Corporation must: Consider recognized codes or standards, using adequate security factors.  Take into account the actions of earthquakes or winds, internal pressures, soil characteristics and tank stability.  Take into account the compatibility of the constituent tank materials with liquid therein.Likewise, for the construction must take into account the applicable technical regulation and the good engineering practice.3.3.5. Infrastructure of the Plant of Supply and Dispatch of LPGThe Plant of Supply and Dispatch of LPG must have the installations and equipment necessary for the secure, reliable, efficient and continuous operation.The Concessionaire Corporation in referential way may consider for the design and construction, at least, the following: Tanks for storage SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 77 de 114 CONCESSION CONTRACT – FOURTH VERSION  Tanks for dispatch  Dispatch pumps  Odorization system  System of vapor recovery  Fire system  Control rooms: one principal and another alternate. These control rooms may consider the supervision and control of the System of Transportation of LPG described in Section 3.2.9 of this annex.  Control System: supervision Systems, control, monitoring and data acquisition.The Concessionaire Corporation must determine and implement all the infrastructure necessary to perform a volumetric balance of the LPG and comply indications of the applicable technical regulations and applicable laws.IV. COMPLEMENTARY SYSTEMS OF THE TRANSPORTATION SYSTEM AND OF THE FACILITIES OF STORAGE AND DISPATCH 4.1. Measurement System On the reception point, in the plant of Storage and Dispatch must be considered the facilities necessary for measurement for a volumetric balance of transported LPG. Such facilities shall have the following characteristics: be high resolution, accuracy and completeness, so that precisely measure the volumes received, stored and shipped of LPG. It should provide that information collected locally must be transmitted to a point where it can consolidate all the information of the System of Supply of LPG.The measurement equipment must provide the enough redundancy for the activities of calibration and maintenance do not affect the operation and accuracy of the measurements.4.2. Control System It should design, install, operate and maintain a system of control of the latest technology to ensure safe, reliable and efficient operation of the Transportation System of LPG and of the Plant of Storage and Dispatch.The System of Transportation of LPG must be equipped with an automatic system of monitoring, control and reading the parameters of operation remotely (SCADA, for its acronym in English) according to length, capacity and risk involved.In the case of the Storage and Dispatch Plant, you can implement a system of data acquisition, supervision, monitoring and control, alternative to SCADA, whenever is superior in performance to SCADA and ensure safe operation in accordance with the provisions of Regulation and Supreme Decree No. 052-93-EM.Similarly, measuring stations and pumping systems must have smoke detection, gas, fire, temperature, pressure, and other foreign income that would be applicable, which will also be interconnected with the SCADA system. Stations should include a telephone communication system dedicated of high reliability, or a superior system. 4.3. Communication System For safety and reliability reasons of the measurement and control system, the System of Supply of LPG shall be equipped with at least two (2) independent telecommunication systems, one of them must be via optical fiber. See Annex 9.Incremental costs that are recognized to the Concessionaire Corporation for the infrastructure required to comply with the provisions of Law No. 29904 and listed in Annex 9 shall not exceed US $ 356 per kilometer.The Ministry of Energy and Mines shall establish within its respective regulations, the mechanism for the recognition of the incremental costs incurred by the Concessionaire Corporation to comply the provisions of Annex Nº9 considering the indications of the preceding paragraph.4.4. Referential Materials The materials of pipelines and materials of main equipment should: Keep their structural integrity according to the conditions of temperature foreseen and other environmental conditions,  Be chemically compatible with the hydrocarbon that is transported,  Be compatible with any other material that is in contact with them, and  Obtain the certifications of the materials according to the requirements of the design and construction standards. Obtain the corresponding qualification according to the provisions of the internationally recognized practice.4.5. Referential welding The welded joints must be performed by skilled welders using welding procedures properly tested according to the applicable technical regulations. Both, welders and procedures must comply with international technical standards related to pipeline transportation of hydrocarbons and hydrocarbon storage in accordance with the product to be transported (LPG). To qualify the welding process, welding quality must be determined by destructive testing.The welding procedures applied to a System of Supply of LPG must preserve in the quality dossier of the project and in the archives of the Concessionaire Corporation, they should include the results of the qualification tests of welding.4.6. Quality Management The Concessionaire Corporation must establish a program of quality management for the supervision of manufacturing of: i) piping and ii) the materials and main equipment for theSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 79 de 114 CONCESSION CONTRACT – FOURTH VERSION plant and pumping station (s); and for the engineering, construction, commissioning, operation, maintenance and repair of the System of Supply of LPG. The program must consider the verifications, inspections and audits of quality during the development of the project to secure the compliance of the required quality specifications.4.7. Useful life of the System of Supply of LPG The Concessionaire Corporation must design and build the System of Transportation of LPG and the Plant of Storage and Dispatch for a useful life not less than thirty (30) years.4.8. Enabling Camps The Concessionaire Corporation, if applicable, should look inside the camps, fixed and mobile, an area and accommodation facilities, food and medical assistance assigned to staff and supply facilities for mobile units that provide security during the various stages of the construction of the System of Supply of LPG.V. OPERATION AND MAINTENANCE OF THE SYSTEM OF SUPPLY OF LPGBefore starting the operations the following documents must be available:  Manuals of operation and maintenance  Annual program of work to develop the activities of operation and maintenance  Program of prevention of accidents  Program of training and coaching  Construction specifications, drawings and historical data of the operations should be available to the operative staff  Study of risks and contingency plan, according to the Regulation of Security for Activities of Hydrocarbons, approved by Supreme Decree N° 043-2007-EM.  Quality dossier and drawings “as built”  Others required by applicable laws No part of the System of Transportation and Storage and Dispatch Plant will be operated over the conditions for which they are designed and tested.The Concessionaire Corporation shall take into account the following: (i) The manual of operation and maintenance will be updated each two (2) years or when important changes are made, or according to the modifications ordered by applicable laws. (ii) Within the first six (6) months of the commencement of the operation of the System of Transportation, should pass an instrumented inertial navigation tool, to register the initial position of pipelines. (iii) All failures must be investigated to determine the causes that originated them and implement preventive measures to avoid their repetition. (iv) Any leak or rupture in the pipeline or tanks for storage must be documented and registered, and their repairs. The registry of an incident should be jointly made with the inspection of the leak. The registries must be kept for the time of operation of the System of Transportation and the Plant of Storage and Dispatch. (v) The persons who perform activities of transportation, storage and dispatch must have training and coaching programs focused in the security of the system regarding the operation and maintenance.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 81 de 114 CONCESSION CONTRACT – FOURTH VERSION ANNEX 2PROCEDURE OF TESTS FOR THE COMMERCIAL COMMISSIONING OF THE SYSTEM OF SUPPLY OF LPGI. GENERAL ASPECTS The purpose of this annex is to consider a systematized procedure of tests that should be made previously to the commercial commissioning of the System of Transportation and of the Plant of Storage and Dispatch.The Concessionaire Corporation must following the following general procedures:1.1. Standards to be used For the tests of the System of Supply of LPG we must use recognized International standards related to the transportation of hydrocarbons by pipelines and storage of hydrocarbons.1.2. Procedure of notice of test  The Concessionaire Corporation through written Communications, shall inform OSINERGMIN not less than sixty (60) calendar days in advance that it is Reddy to make the tests for the commercial commissioning. Said communication shall indicate the place, date and hour of the tests to be performed.  Likewise, with thirty (30) days in advance to the performance of tests, the Concessionaire Corporation must send to the Grantor and to the inspector the corresponding procedure of tests and the corresponding protocols to carry out the tests.  The Concessionaire Corporation shall assign its engineer of tests and the personnel of support necessary facilitating all the equipment and instruments, duly calibrated for the execution of tests.  The inspector according to Clause 5.3 shall have the responsibility to supervise the compliance of all the obligations established in this annex.  At the end of each test and if it is within the levels of acceptance, which shall be defined by the inspector, the respective minutes of tests shall be signed concluding said test.  If the inspector considers that the result is not satisfactory, the Concessionaire Corporation shall proceed to make the corresponding correction. The new test shall be made, within the term agreed by the parties, only in the point or in the points that were not satisfactory. Then, we shall proceed to the subscription of the Minutes of Tests.II. UNITSUnless indications to the contrary, in the Minutes of Tests we shall use the units of the International system.III. NATURE AND EXTENSION OF THE TECHNICAL GOALS The Concessionaire Corporation must give all reasonable facilities to the inspector to obtain real, complete and acceptable data regarding all parts of the equipment related to the System of Transportation and the Plant of Storage and Dispatch. In addition to the foregoing, the inspector shall have access to all the mechanisms related to the equipment of the System of Transportation and of the Plant of Storage and Dispatch.IV. TEST PROCEDURE 4.1. Personnel 4.1.1. Authority for the test The Concessionaire Corporation shall have the authority to carry out the tests.4.1.2. Head of Testing The Head of Testing shall be appointed by the Concessionaire Corporation. He will lead and supervise the test and report on the conditions of the same. He will be responsible for all measurements, the computation of the results and preparation of the final report. His decision will be crucial to any questions regarding the test or its execution.4.1.3. Number and Competence of Personnel Specialized engineers with specialized expertise for the measurement of the corresponding parameters will be selected. The other members of the test team shall have the necessary experience in positions that are entrusted to them.4.1.4. Presence in Tests The manufacturers of the equipment and materials will be authorized for the members of their personnel participate as observers of the tests.4.1.5. Minutes of Tests At the end of the tests performed according to the procedures of tests and protocols that were provided by the Concessionaire Corporation for this purpose, the parties shall sign the respective Minutes of Tests, for the commercial commissioning, enclosing the following information: List of personnel who made the tests by the Concessionaire Corporation and by the Grantor.  The detail of the protocols used during the tests, with the results obtained.List of tests not performed with their corresponding discharge SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 83 de 114 CONCESSION CONTRACT – FOURTH VERSION4.2. Preparation for the Test 4.2.1. Submission of designs and related data All designs of importance for the test, related data, documents, specifications, certificates and reports on the operating conditions, will be made available to observers by the Head of Test of the Concessionaire Corporation.4.2.2. Inspection in the place The main components of the System of Transportation and of the Plant of Storage and Dispatch will be submitted to inspection upon the requirement of the inspector before the start of the test.4.3. Approval of the Procedure of Tests 4.3.1. Approval of the Procedure All protocols, including the levels of acceptance, will be delivered by the Concessionaire Corporation to the inspector for his consideration and approval. The approval will be made in writing.4.3.2. General Program The general program will be established by the Head of the Test and will be submitted to the inspector for his approval.V. FINAL REPORT The Grantor shall determine the guidelines of the content of the final report and will be forwarded to the Concessionaire Corporation ninety (90) calendar days prior to its submission under the following paragraph.The final report will be presented by the Head of Test to the inspector for approval with details of calculation and presentation of results. Any difference of opinion will be resolved by the parties within thirty (30) calendar days. If the parties fail to resolve the aforementioned difference of criteria, the dispute shall be settled in accordance with Clause 16.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 85 de 114 CONCESSION CONTRACT – FOURTH VERSION ANNEX 3CONDITIONS OF DELIVERY OF LAND FOR THE PLANT OF STORAGE AND DISPATCH OF LPG. This Annex regulates the conditions and general aspects related to the land to be provided by the Grantor in favor of the Concessionaire Corporation, for the installation of storage facilities and dispatch.LAND:The land identified is located in [ …….. ]Inside this land, the Concessionaire Corporation shall install the facilities of storage and dispatch of the System of Supply of LPG; likewise, shall facilitate the installation to the marketing agents of LPG, to whom PROINVERSIÓN has authorized the conclusion of contract of transportation capacity.CONTRACT, EASEMENT AND SURFACE The State, as holder of the land, shall enter with the Concessionaire Corporation a contract of easement and surface, on the corresponding area thereof, in order that the Concessionaire Corporation may execute the facilities of storage and dispatch of the System of Supply of LPG.The area of the land, shall consist of [ … ] hectares, from which a maximum of [ … ] will be addressed by the Concessionaire Corporation for the installation of the facilities of storage and dispatch of the System of Supply of LPG and a maximum of [ … ]hectares will be addressed for the installation of marketing agents of LPG that PROINVERSIÓN has authorized to conclude contracts of transportation capacity.The contract of easement and surface that the State will enter with the Concessionaire Corporation, shall recognize the rights of this latter to enter with the marketing agents of LPG –authorized by PROINVERSIÓN contracts of transportation capacity– the corresponding contracts regarding the access and use of lands for the development of their respective activities related to the business of the project.1. RESPONSIBILITITES OF THE CONCESSIONAIRE CORPORATION REGARDING THE LAND The Concessionaire Corporation should pay annually an amount per m2 of land in favor of the State, according to the price agreed with this latter in the respective contract of easement and surface. This concept will be in consideration for the easement and surface entered for all the contract term. This payment shall be understood that includes all the taxes created or to be created, that encumber the land. Equally, the Concessionaire Corporation shall assume the environmental responsibility related to the land, and should consider the compliance of the legal provisions related to the environment that are in force.The improvements that the Concessionaire Corporation shall introduce in the asset, in order to comply the concession contract, shall be borne by it and shall not be reimbursed by the State.2. RELATION WITH MARKETING AGENTS OF LPGThe Concessionaire Corporation may enter contracts related to the use of the land subject matter of easement and surface with those marketing agents of LPG authorized by PROINVERSIÓN to conclude contracts of transportation capacity. The term of the aforementioned contracts, should be equal to the contract term.These contracts shall only be referred to the use required of the land for the installation of said agents and the facilities required for their activity, and should compulsorily consider a termination clause of full right that operates in case the marketing agent of LPG does not hire the transportation capacity for a period greater than six (6) months continuously. In these cases, the Concessionaire Corporation must regulate in their contracts the possibility that these marketing agents of LPG lose the installed facilities or are compensated for said facilities, if applicable.The Concessionaire Corporation shall collect to said agents a concept for consideration according to the following:. For the case of marketing agents of LPG to whom PROINVERSIÓN has authorized the entering of contracts of transportation capacity. The Concessionaire Corporation shall collect an amount equivalent to what it pays for consideration per m2 of land to the State for the concept of easement and surface plus 5% of said amount for operative expenses.. For the case of marketing agents of LPG that hire with the Concessionaire Corporation after the granting of the concession. The Concessionaire Corporation shall collect an amount equivalent to what it pays for consideration per m2 of land to the State plus 10% of said amount for operative expenses. The income previously detailed will be considered as part of the income for services that receives the Concessionaire Corporation, according to Clause 12 of the contract.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 87 de 114 CONCESSION CONTRACT – FOURTH VERSION ANNEX 4PENALTIESNON COMPLIANCE PENALTYDelay on the date of commercial According to the Table of Staggered commissioning. Penalties.Delay in the compliance of each US$ 100,000.00 (One hundred thousand Milestone of progress in the critical and 00/100 Dollars) per calendar day of route of the Schedule of Execution of delay, according to Clause 3.2.2 Works.Amount equivalent to the product of the Non compliance of the Transportation deficit in the capacity, determined according Capacity and/or availability. to Annex 1 or inventory deficit, according to Clause 14.5, per calendar day.TABLE OF STAGGERED PENALTIES DELAY DAILY AMOUNT (US$) CUMULATIVE (US$)From 1º to 30º day 150,000 4´500,000From 31º to 60º day 300,000 13´500,000From 61º to 90º day 416,666.67 26´000,000The “CUMULATIVE” column shows the cumulative amount on the last day of the respective period. ANNEX 5PERFORMANCE BOND [ ] [ ] 2015Messrs. MINISTRY OF ENERGY AND MINES Av. Las Artes Sur Nº 260, San Borja Lima, PeruReference: Concession Contract “System of Supply of LPG for Lima and Callao” Project .We hereby and upon request of our clients, Messrs. [indicate name] constitute this jointly, irrevocable, unconditional bond without the benefit of excussio and automatically enforceable, for the amount of twenty six million dollars of the United States of America (US$ 26,000,000) in favor of the Ministry of Energy and Mines, to guarantee that [indicate name] complies with the timely and correct compliance of all and each one of the obligations in charge of it, according to the contract in reference, and to make the payment of the penalties established in said contract.The payment of this guarantee will be made automatically and without further act on your part, when we receive a written request in that sense, by notarial channel, within fifteen (15) days following to the expiration of the deadline of this bond letter, which should be signed by the Administration Director and sent to [indicate office and address].Our obligations under this guarantee, including the payment of the guaranteed amount, will not be affected by any dispute between the Ministry of Energy and Mines, PROINVERSIÓN, or any entity of the Peruvian State and our clients. This guarantee will be in force until [ ] [ ] [ ].Any delay on our part to pay the amount of this guarantee, from the date it is payable to you under the terms stated herein, will accrue interest equivalent to LIBOR at one year plus a spread of three percent (3%). The applicable LIBOR rate will be established by the daily Reuter Cable at 05:00 pm of London and Interest shall accrue from the date on which compliance is required until the actual payment date.Unless otherwise stated, the terms used in this guarantee have the same meaning assigned in the contract.Cordially yours,SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 89 de 114 CONCESSION CONTRACT – FOURTH VERSION ANNEX 6COMPLEMENTARY PERFORMANCE BOND [ ] [ ] 2015Messrs. MINISTRY OF ENERGY AND MINES Av. Las Artes Sur Nº 260, San Borja Lima, PeruReference: Concession Contract “System of Supply of LPG for Lima and Callao” Project. We hereby and upon request of our clients, Messrs. [indicate name] constitute this jointly, irrevocable, unconditional bond without the benefit of excussio and automatically enforceable, for the amount of three million five hundred thousand dollars of the United States of America (US$ 3,500,000) in favor of the Ministry of Energy and Mines, to guarantee that [indicate name] complies with the timely and correct compliance of all and each one of the obligations in charge of it, according to the contract in reference, and to make the payment of the penalties established in said contract.The payment of this guarantee will be made automatically and without further act on your part, when we receive a written request in that sense, by notarial channel, within fifteen (15) days following to the expiration of the deadline of this bond letter, which should be signed by the Administration Director and sent to [indicate office and address].Our obligations under this guarantee, including the payment of the guaranteed amount, will not be affected by any dispute between the Ministry of Energy and Mines, PROINVERSIÓN, or any entity of the Peruvian State and our clients. This guarantee will be in force until [ ] [ ] [ ].The effectiveness term of this guarantee will be XX (letters) years, counted since ____ [date of commercial commissioning]___ and its expiration is on ______.. (must be at least one year).Any delay on our part to pay the amount of this guarantee, from the date it is payable to you under the terms stated herein, will accrue interest equivalent to LIBOR at one year plus a spread of three percent (3%). The applicable LIBOR rate will be established by the daily Reuter Cable at 05:00 pm of London and Interest shall accrue from the date on which compliance is required until the actual payment date.Unless otherwise stated, the terms used in this guarantee have the same meaning assigned in the contract.Cordially yours, SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 91 de 114 CONCESSION CONTRACT – FOURTH VERSION ANEXO 7OFERTA ECONÓMICA(Para ser reemplazada por la que será presentada por el Adjudicatario) ANNEX 8TRUST In order to facilitate the collection and payment of the guaranteed income, the Concessionaire is obliged to maintain at its cost, as trustee, an irrevocable trust of collection and payment (Collector- Payer Trust), which is governed by the rules and provisions to that effect issued by OSINERGMIN, the guidelines listed in this Annex and other applicable laws: a) The Trust will be celebrated with a banking company or any other qualified financial institution, acting as trustee, which must be approved by the Grantor. b) Not later than twelve (12) months from the closing date, the Concessionaire Corporation shall provide the Grantor a Draft Contract of Collector-Payer Trust. By that time, OSINERGMIN should have determined how the procedures should be made for collecting the guaranteed income.The Grantor shall have a maximum period of ninety (90) days from receipt of the draft Collector- Payer Trust contract, to issue its comments. The Concessionaire Corporation must correct the observations within a period not exceeding ten (10) days from being notified. c) Once acquitted the observations by the Concessionaire Corporation, the Grantor shall have a period of thirty (30) days for the respective approval of the draft contract. d) After the periods referred to above, as applicable, and the Grantor has not acted, it is understood that the draft contract has been accepted and approved, the Concessionaire must submit to the Grantor a copy . e) The trust contract shall respect the obligations under the concession contract and the rules and regulations issued by OSINERGMIN and applicable laws.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 93 de 114 CONCESSION CONTRACT – FOURTH VERSION ANNEX 9RESERVE OF CAPACITY OF TELECOMMUNICATIONS IN FAVOR OF THE STATE Pursuant to section 4.3 of Annex 1, the System of Supply of LPG must have a primary telecommunications system (optical fiber), for which the following is agreed:1. The fiber optic cable to be installed on System of Transportation should have at least twenty- four (24) threads.2. The State acquires ownership of eighteen (18) dark threads of optical fiber cable installed by the Concessionaire Corporation in the full length of the Transportation System, as established by Supreme Decree No. 034-2010-MTC and the Ministerial Resolution No. 468-2011-MTC / 03, which will be used by the National Optical Fiber Backbone, according to Law No. 29904, which gives exclusive right to dispose of the fiber without limitations.3. The Concessionaire Corporation shall use six (6) threads of remaining optical fiber, for its own communication needs.4. The transfer of eighteen (18) threads of optical fiber owned by the State shall be made according to the procedure established by the Ministry of Transportation and Communications, who will be responsible for granting them in concession. The Ministry of Transportation and Communications is the state entity with which the Concessionaire Corporation will directly address all aspects related to the telecommunications activity.5. It is the obligation of the Concessionaire Corporation to install the optical fiber cable of the main telecommunications system, having at least the following technical considerations:5.i.1.a. The optical fiber cable must be new and be guaranteed against any manufacturing defects, also shall take into account the environmental conditions where it will install and operate the optical fiber cable so that the cable characteristics are adequate. 5.i.1.b. The manufacturer of optical fiber cable must possess and TL900 certification ISO 9001- 2008 (Quality Management System). 5.i.1.c. The type, physical parameters, tolerances, the characteristics of the optical fiber must meet at least with the Recommendation UIT-T G.655 or G.652.D of the International Telecommunication Union (hereinafter ITU). 5.i.1.d. The optical fiber must have a polarization mode dispersion (PDMQ) less than or equal to zero whole with one tenth (0.1). 5.i.1.e. The attenuation of all installed fiber must be less or equal to entire zero with thirty-five hundredths (0.35) dB per km at 1310 nm and entire zero with twenty-five hundredths (0.25) dB per km at 1550 nm. 5.i.1.f. Should use a type of optical fiber cable with a useful life of at least twenty (20) years. For this purpose, should take into consideration the recommendations given by the manufacturer, so as to ensure its useful life. 5.i.1.g. To perform the installation, sílices and tests of optical fiber, the maintenance of the optical fiber cable, and the identification of threads, consider the recommendations of UIT-T of the International Telecommunications Union, and the standards ANSI EIA/TIA and IEC that are applicable.6. The maintenance of all the threads of the fiber cable will be done by the Concessionaire Corporation, according to the guidelines indicated in Recommendation of ITU-T L.25: "Network maintenance of optical fiber cables" in order to keep it in good condition, until the eighteen (18) threads of ownership of the State are effectively transferred for the provision of telecommunications services, from which, operation and maintenance to the optical fiber cable of responsibility of the Concessionaire Corporation will fall only on the six (6) threads of optical fiber cable from that time continues to be owned by the Concessionaire Corporation. The operation and maintenance of the eighteen (18) threads of optical fiber cable transferred by the Concessionaire Corporation pursuant to this Annex correspond to the telecommunications concessionaires appointed by the State, from the time when said transfer occurs.7. The Concessionaire Corporation will provide facilities for accommodating the optical equipment needed to illuminate the optical fiber owned by the State, including shared use of spaces.It will also allow access to fiber threads of state ownership and the installation of accessories and/or devices that allow the provision of public telecommunications services, both for the commissioning of telecommunications services and for the operation and maintenance thereof.In that sense, the Concessionaire Corporation shall leave a distributor of optical fiber in each telecommunications room that he builds, ready for access to the eighteen (18) threads owned by the State. It must also provide at least, electric power supply of 220 Vac and no less power than three (3) kilowatts of sufficient space to install and operate four (4) racks of telecommunications with independent access and to accommodate air conditioning equipment and energy and space to install a telecommunications antenna, taking into account also the minimum safety distances.For all the above, it shall not be required to perform any consideration in favor of the Concessionaire Corporation by the State or third parties designated by it. In case there are additional technical requirements for the use of optical fiber threads owned by the State, the Concessionaire Corporation shall agree within ten (10) days, the economic and technical terms with the State or third parties that it designate. This period may be extended by the State, up to forty-five (45) additional days, for duly justified causes and notified to the Concessionaire. In case of any dispute, it shall be resolved in accordance with Clause 16.8. The State shall ensure that telecommunications activities that are carried out not limit or endanger the continuity and safety of the transportation service of hydrocarbons, providing in the process of concession of the optical fiber owned by the State, the mechanisms that are necessary. In any event, if any involvement occur to the transportation service, by an act or omission in the operation of the optical fiber owned by the state, outside of the Concessionaire Corporation, the latter shall be exempted from administrative, civil and/or criminal responsibility; corresponding to the concessionaire of telecommunications who will in charge of the operation of optical fiber, to assume the corresponding responsibilities.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 95 de 114 CONCESSION CONTRACT – FOURTH VERSION 9. The Concessionaire may supervise directly or through third parties, the works and/or activities implemented to illuminate the optical fiber owned by the State and to make possible the exploitation of the fiber in the provision of public telecommunications services. In case the infrastructure and/or the provision of transportation is jeopardized, the Concessionaire Corporation may order the suspension of those activities for reasons duly substantiated, which shall inform in writing to the Ministry of Transportation and Communications, and the Ministry of Energy and Mines, within no more than 48 hours of making the suspension. The activities should be resumed within a period of thirty (30) days, unless otherwise agreed between the parties. Failing to arrive to an agreement, the dispute shall be resolved in accordance with clause 16.10. The Concessionaire shall send every six months to the Grantor and to the Ministry of Transportation and Communications, the georeferenced information on the laying of optical fiber made the current use and projected, and if applicable, the telecommunications companies and the sections from which they would had entered into contracts for the use of their infrastructure.11. The optical fiber threads that are not owned by the State as well as complementary equipment and related services are part of the assets of the concession. ANNEX 10RULES FOR THE TRANSPORTATION SERVICE AND DISPATCH The following rules must be considered for transportation and for dispatch of LPG and are mandatory.These provisions will not have any effect in case of issuing legal provisions by the Ministry of Energy and Mines that regulate the aspects considered in this annex.SECTION I: RULES FOR THE SERVICE a.i.1.a.i.1. Service Contract Prior to the start of the provision of the service, the Concessionaire Corporation and the user must sign a service contract. Service contract shall contain as minimum elements, the specifications provided in the contract and in particular the provisions of this annex, other applicable laws and stipulations that the user or applicant of transport capacity and dispatch may agree with the Concessionaire Corporation (hereinafter, the "Rules"). a.i.1.a.i.2. Transportation Services 2.1 The service can be provided under the firm modality according to the following conditions: a) The Concessionaire Corporation and the user must enter a contract of service; b) The firm service shall not be subject to interruption or reduction, except those provided in these rules; c) The provision of the firm service is subject to the reserve of a daily reserved capacity; d) For the firm service the user shall pay to the Concessionaire Corporation the charge of reserve of capacity; according to the tariff indicated in the contract e) The payment of the firm service is independently of its effective use; f) In case of interruption or reduction of the firm service, for cause not foreseen in the rules, the Concessionaire Corporation shall pay to the corresponding users the penalty agreed by the parties. 2.2 The service may be provided under the uninterrupted modality according to the following conditions: a) The Concessionaire Corporation and the user must enter a contract of service. b) The uninterrupted service is subject to interruption or reduction at the option of the Concessionaire Corporation, who cannot deny to provide it, except for technical reasons, as far as there is available capacity in the System of Supply of LPG. c) For the uninterrupted service the user should pay to the Concessionaire Corporation a charge for the volume of LPG effectively transported (Charge for Use).SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 97 de 114 CONCESSION CONTRACT – FOURTH VERSION d) In case of non-compliance of the uninterrupted service, for cause not considered in the rules, the Concessionaire Corporation shall pay to the corresponding users the penalty established by the parties. a.i.1.a.i.3. Basis for hiring the service The hiring of the service will be based on volumes of LPG in barrels measured at the point of delivery. The Concessionaire Corporation shall deliver to the user the volume that corresponds to the LPG that was delivered at the point of reception, by said user, respecting what is established in each contract of service with respect to changes in volume. a.i.1.a.i.4. Ownership Guarantee The User of the System of Supply of LPG ensures that he owns or controls and has the right to deliver or to make the delivery on its own, the LPG available to the Concessionaire Corporation in the Reception Point, under the relevant contract of service and maintain harmless to the Concessionaire Corporation for any claim, action or consequential damage of any third party filed regarding ownership of LPG delivered for its transportation to the Concessionaire Corporation under the contract of transportation or any interest in such LPG.Receipt and dispatch of LPG under the concluded contract of service, may not be deemed to affect or change the ownership of LPG. a.i.1.a.i.5. Responsibility for the control and custody of LPGThe Concessionaire Corporation shall keep under its care and responsibility the LPG, from the moment it is injected into the Reception Point and until it is delivered to the user or a third party on its behalf at the point of dispatch. During that period the Concessionaire Corporation will be responsible for the partial or total loss of carrying LPG. a.i.1.a.i.6. Mandatory Measurement Stations It is the obligation of the Concessionaire Corporation, to provide, install, maintain and operate under its responsibility, at or near the point of delivery, measurement stations suitably equipped in accordance with the provisions of the relevant technical standard. Consequently, any negligence that registers in fulfilling this duty will make it responsible for the consequences of its actions or lack thereof. a.i.1.a.i.7. Presence of users in the review of equipment of the Measurement System Any user of the System of Supply of LPG shall have the right to be present at the time of installation, reading, cleaning, change, repair, inspection, verification, testing, calibration and adjustment of the equipment of the measuring system used for measuring or checking measurements LPG deliveries, within the safety parameters applicable and without disrupting the normal operation of the System of Supply of LPG, for which it must make the appropriate coordination with the Concessionaire Corporation. Prior notification, each party shall make available to the other its records, along with estimates of inspection and verification. a.i.1.a.i.8. Inaccurate measurements If a meter was out of service or provides inaccurate readings, the amount delivered of LPG will be determined: a) Using data of a contrasting meter that provides accurate measurements, or in absence of this mechanism; b) Correcting the error or the error percentage if they were known by calibration, test or mathematical calculation, or in absence of a) and b); c) Estimating the quantity of delivery for the deliveries made during other periods, and may consider for said purpose until six (6) prior months, in similar conditions when the meter correctly operated. a.i.1.a.i.9. Adjustment for inaccuracy In order to make the adjustments by inaccuracies in the measurement equipment we shall proceed to the following: a) If according to the evaluation, any measurement equipment, proves a margin of error that not exceeds one per cent (1%), the previous readings of said equipment will be considered accurate to compute deliveries, but that equipment must be immediately adjusted to work correctly; b) If according to the evaluation, any measurement equipment, proves a margin of error higher than one per cent (1%), in a reading corresponding to the quantity of average flow per hour of the period subsequent to the last evaluation, all the previous reading of that equipment will be corrected to zero error to all period known with certainty. c) Where a period was not known with certainty nor does reach agreement on it, this correction includes a period of an extension equal to half the time elapsed since the date of the last assessment, and may not exceed this correction period of fifteen (15) days.The user and the Concessionaire Corporation may agree that any equipment is corrected when it has a margin of error less than that established herein. a.i.1.a.i.10. Biling Service billing will be done by monthly periods and in the currency of payment established by the contract, unless otherwise agreed by the parties in the contract of service.For purposes of billing service, the Concessionaire Corporation shall use the volumes measured in the Delivery Point or reserved volumes in the respective contract of service.The Concessionaire Corporation must issue and send its invoice to the user for the service provided during the preceding calendar month, within the first five (5) days of the followingSYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 99 de 114 CONCESSION CONTRACT – FOURTH VERSION period concerned be billed and no less than seven (7) days before the date of maturity; unless otherwise agreed by the parties to establish longer terms. a.i.1.a.i.11. Content of invoice The invoice shall include at least: a) The charge for reserve of capacity if it is firm service, or charge for use, if it is uninterrupted service; b) The remaining charges that should be invoiced.Any tax which incidence should be of charge of the user must discriminately appear in the invoice. a.i.1.a.i.12. Information for Billing The Concessionaire Corporation and the user must make available to the other party, readings and graphics needed to verify the accuracy of any statement, invoice or estimate, that any of them had done in relation to the regime applicable tariff or to the service contract for five (5) years. a.i.1.a.i.13. Changes of Tariff In case of variations in the tariff during a billing period, the Concessionaire Corporation should apply the appropriate tariffs based on volumes delivered during the period corresponding to each of the tariffs. a.i.1.a.i.14. Pressures 14.1 Pressure in the Point of Reception Corresponds to the Concessionaire Corporation to coordinate with the producer or another wholesale distributor the necessary or appropriate agreements for the LPG to be taken by the Concessionaire Corporation in the Reception Point at a enough pressure to allow entry of LPG in the System of Supply of LPG taking into account the operational pressures and limits of the system.14.2 Pressure in the Point of Dispatch The Concessionaire Corporation shall deliver the LPG to the user in the point of dispatch within the range of pressure agreed in the service contract. a.i.1.a.i.15. Force Majeure 15.1. When either party is wholly or partially unable to comply with the obligations of the contract of service, but that such failure is due to a fact that could be causally covered by Force Majeure; it must immediately notify in writing to the other party and the Grantor specifying the date such event, its nature, the obligation affected and the estimated time it will take the ground of Force Majeure, as appropriate.Said notification must be made before elapsing twenty four (24 hours) of the event or of the day when it was known.15.2. Within no more than seven (7) days from the date of occurrence of the event of Force Majeure, the affected party shall submit to the other party a report detailing the circumstances in which the event occurred and the evidence to support the way how it affected the fulfillment of their obligations under the service contract.15.3. The obligations of both parties are suspended during the existence of the ground caused by Force Majeure. If there is no agreement of the parties regarding the qualification of Force Majeure as such, the parties may apply the rules provided in Chapter XIII of Supreme Decree No. 018-2004-EM, its extension rules, amendments, supplementary or substitute.It cannot be argued as grounds of force majeure the impossibility of any kind to meet the payment at maturity of the amounts billed by the provision of the service.15.4. If the parties fail to fulfill their duty to notify, they lose their right to claim Force Majeure to exempt from liability for the breach of their obligations during the period from the occurrence of the event until receipt of such notification.15.5. The grounds or contingencies of fortuitous event or Force Majeure affecting the conduct of the parties do not release them from liability in the case they would have acted with due negligence to remedy this situation and eliminate the ground in a suitable form and with reasonable promptness, since it is understood that the same obligations are obligations of result and not of means.15.6. The party that invokes the Force Majeure shall notify the other party, when the event has ended, or failed to prevent the fulfillment of its obligations. a.i.1.a.i.16. Daily Reductions If due to events of Force Majeure, operating conditions or emergencies of any party of the service contract, the Concessionaire Corporation is unable to receive the entire volume of LPG that were obliged to take, or if the LPG available for delivery through the supply system of LPG or part of this, is insufficient to cover all authorized services on any day, the Concessionaire Corporation prior notice with as much detail on the circumstances, shall dispose of a reduction to the user as necessary in accordance with the following order and procedures: a) Interruptible Service: first, the Concessionaire Corporation shall provide for the reduction of service offered on the basis of Interruptible Service. The reduction shall be apportioned among the users according to their daily deliveries for the date on which the ground of restriction occurred, to the extent that it is operationally reasonable and appropriate to the system as a whole.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 101 de 114 CONCESSION CONTRACT – FOURTH VERSION b) Firm Service: once the volumes are reduced as provided in the preceding paragraph, the Concessionaire Corporation shall have reduced its service rendered based on firm service through a pro rata reduction of the capacity of transportation of firm service contracted by the respective user on the date of occurrence of the restriction ground except the Firm Service described in the following section; For purposes of this annex we shall understand:Firm service: the service that renders the Concessionaire Corporation to users considering that said service may not be subject to any interruption or reduction, except provision to the contrary included in the contract.Firm service: the service that renders the Concessionaire Corporation to users considering that said service is subject to interruptions or reductions, at the option of the Concessionaire Corporation, who cannot deny providing it, except for technical reasons. a.i.1.a.i.17. Billing adjustment for charge of reserve of capacity When the Concessionaire Corporation for reasons not attributable to the user or those who should deliver the LPG on their behalf, provides a reduction in the volumes to be transported in the form of Firm Service, shall subtract from the total to be invoiced by charge of Reserve of Capacity of the month in which this reduction took place, the amount corresponding to the volume that the Concessionaire Corporation was unable to provide to the user in each of the days affected by the reduction. a.i.1.a.i.18. Reductions and interruptions of the service.18.1. The Concessionaire Corporation may reduce or temporarily disrupt the service to perform activities of construction, modification, expansion, revision or maintenance of the System of Supply of LPG, as agreed in the respective contract.In this situation, the Concessionaire Corporation must keep to a minimum the frequency and duration of reductions and interruptions, programmed on dates when decreasing consumption of LPG and hours likely to cause the least possible inconvenience to users, which scope should be seen in the respective contract of service.It is understood that reduction or scheduled interruption is that notified to the user and the Grantor for their approval with at least sixty (60) calendar days in advance, specifying the regime of suspension and the volume to be affected.18.2. The Concessionaire Corporation shall notify the users and support to the Grantor, the reductions or interruptions that is obliged to perform for emergency reasons. Communication to the Grantor shall be made within a maximum period of forty-eight (48) hours following the reduction or discontinuance of the transportation service.In cases of reduction or interruption of the System of Supply of LPG, the Concessionaire Corporation should apply the corresponding billing adjustment.The restoration of the service after overcoming the event that generates reduction or interruption shall require the coordination of the Concessionaire Corporation with the user. a.i.1.a.i.19. Open Access SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 103 de 114 CONCESSION CONTRACT – FOURTH VERSION The Concessionaire Corporation is obliged to allow the non-discriminatory access of users, provided it is economically and technically viable and the applicant of access to the System of Supply of LPG has subscribed the respective contract. The Concessionaire Corporation must respond to any request for service within thirty (30) calendar days of receipt. The eventual refusal shall be duly founded in technical or economic reasons. Likewise, it must comply with the procedures laid down for open competition under the Contract.Section II: Rules for Dispatch a.i.1.a.i.20. Daily nomination 20.1. The user shall daily submit to the Concessionaire Corporation by fax, email or other agreed method before fifteen hours (15:00 hours) of the Operating Day immediately preceding the delivery, a request for service indicating the LPG volumes intended to load on the Reception Point and the Concessionaire Corporation makes available at the point of dispatch.20.2. The user must include in its request of nomination for each operative day, the deliveries estimated for four (4) following operative days. The deliveries estimated for the last three (3) operative days are referential.In case of failure to submit the request for daily nomination, will be considered valid the volumes required in the last submitted request for service provided it has not expressly been rejected or observed by the Concessionaire Corporation or, unless the Concessionaire Corporation had agreed previously with the user the application under another scope. a.i.1.a.i.21. Content of the Service Request The service request must have at least the following information: a. Identification of the Transportation contract; b. Quantity of LPG; c. Adjustment for accumulated imbalance; d. Date of start and end of nomination; e. Identification of user of the persons acting on behalf of him and representation in the points of reception and delivery;The Concessionaire Corporation may reduce or reject requests of nomination that are not supported in the subscribed service contract. a.i.1.a.i.22. AuthorizationThe Concessionaire Corporation will evaluate transportation requests received and shall determine no more than seventeen hours (17:00 hours), the volume authorized to inject and withdraw each user for the following day. If they are not confirmed at that time, volumes that the user is authorized to inject and withdraw, will be requested at each point of reception and dispatch. SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 105 de 114 CONCESSION CONTRACT – FOURTH VERSION a.i.1.a.i.23. Imputation of daily deliveriesWhen a user receives on the Delivery Point the LPG volumes under contracts of service of more than one type of service, it is considered that the user has received on the date the delivery of the amounts authorized according to the transport services attended pursuant the following order:(i) Firm Service (ii) Interruptible service It is deemed that the volume of LPG taken by the user over the total daily amounts authorized, will be an unauthorized amount in excess and the charge corresponding to the delivery point will applied. ANNEX 11TRANSPARENCE1.1. General rule As an exception to the provisions of applicable laws regarding reserved information, professional secret, trade secret, and the like; the Concessionaire Corporation is required to respond fully and as soon as possible, any information relating to the provision of the service, consumption and contracts entered with users, concession, operational statistics, the Concessionaire Corporation itself or its relationship with Grantor.The Concessionaire Corporation may not agree with users, clauses that oppose or limit the provisions of the previous paragraph.1.2. Special rules The Concessionaire Corporation will publish on its website and sent to users by email, in Microsoft Excel format, the following information at the time it indicated:1.2.1. Critical events of the System of Supply of LPG, not later than 24 hours after starting each of those events. Critical events are considered all extraordinary events affecting the normal provision of the Service. The information shall include the place, date and time of the event, a brief description of the event; losses incurred and measures taken by the Concessionaire Corporation.1.2.2. For each user in alphabetical order, for each operating day and no later than 12:00 noon. of the corresponding next trading day: the reception point, the Delivery Point, the nomination, the authorized capacity, the volume delivered and the contracted volume as Firm Service, the maximum transport capacity in the corresponding Delivery Point (design pressure for maximum demand coincident with the Transportation System).1.2.3. All Service Contracts, and any contract relating to the capacity of the transportation system, and any amendments thereto, no later than five (5) days after the contracts signed or amended.1.2.4. Whenever are approved or amended, the marketing policies and internal regulations and procedures of the Concessionaire Corporation, if any, within five (5) days of approval or modification produced.1.3. RegistryAll files that generate the above provisions should be available on the website of the Concessionaire Corporation, so organized that access and search are easy and quick.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 107 de 114 CONCESSION CONTRACT – FOURTH VERSION ANNEX 12GUIDELINES TO BE INCORPORATED FOR HIRING A SUPERVISOR OF EXECUTION OF WORKS OF THE SYSTEM OF SUPPLY OF LPGI. DEFINITIONS1.1. Mechanical complexionIs the last mechanical activity of construction, approved by the supervision company. Activity prior to the tests that will be verified by the inspector.1.2. InspectorHas the scope foreseen in Clause 5 and Annex 2.For purposes of this document, the definitions set out in the applicable laws shall be applied, in accordance with the provisions of the Safety Regulations for Hydrocarbon Activities, approved by Supreme Decree No. 043-2007-EM, and the amended rules apply and/or replacement of the said regulations.II. GENERAL ASPECTS OF SUPERVISION The Concessionaire Corporation will be responsible for including other elements or components not described in the Contract, and sizing, modifying or adapting whatever is necessary, in order to ensure proper operation of the facilities of the System of Transportation and Plant of Supply and Dispatch and the provision of the service according to technical and safety standards in force.The Concessionaire Corporation must correct al the objections or findings formulated by the supervision company and/or by OSINERGMIN, before the mechanical complexion, including the hydraulic tests.III. SCOPE OF TASKS OF THE SUPERVISING COMPANY The supervising company shall be responsible, beside other obligations contained in the contract, for the supervision of the following: a) Basic engineering and detail engineering corresponding to the scope of the contract. b) The supply of equipment and materials, corresponding to the scope of the contract, verifying to comply the certifications, specifications, minimum requirements and standards established in that contract, and in the good practice of engineering. c) The construction of the System of Supply of LPG. d) The construction of installations to be performed according to the Schedule of execution of works established in the contract. e) The supervising company shall prepare a report according to the construction of the System of Supply of LPG. IV. ACTIVITIES DEVELOPED BY THE SUPERVISING COMPANY:The supervising company shall perform any activity own of the work supervision, which main activities are the following:4.1. Supervision of design Revise and evaluate the engineering studies prepared by the Concessionaire Corporation which should be in accordance with the scope foreseen in the applicable laws and in the contract. Said studies, among others, are the following: Basic Engineering  Detail engineering  Operational study  Engineering according to the work4.2. Supervision of acquisition  Verification of protocols of test in factory of piping, plates, accessories and equipment (FAT).  Supervision of transportation, collection and storage of piping, plates, equipment and accessories of pipeline until its commissioning.  Supervise the quality of supplies and technical characteristics of equipment.4.3. Supervision of construction Perform the supervision of the activities related to the construction of works. The following should be supervised without limitation: Compliance of the Schedule of Execution of Works and the Schedule of investments.  Quality of piping, plates, accessories and equipment.  Correct construction of civil works (mainly foundations), and the quality of supplies and materials to be used.  Correct execution of piping installation.  Shall approve the procedures of work and shall verify the compliance of the technical specifications of works.  Adequate transportation, handling and storage of supplies and equipment.  Shall verify that the organization of the contractor in charge of the execution of works is in accordance to the dimension of the project, to guarantee the compliance of the constructive procedures and the security of its personnel.  Shall approve the appointment of the companies that are subcontracted for the construction of works. Shall assess the experience and technical qualifications of the company and the personnel of subcontractors  Compliance of the program of quality assurance according to the provisions of the contract.  Compliance of the environmental protection standards and security of works revising and authorizing the security procedures and environmental protection.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 109 de 114 CONCESSION CONTRACT – FOURTH VERSION  The task of the supervising company must not interfere in the attributions and responsibilities of the inspector.  Hydraulic tests.  Compliance of the documents related to the construction such as: manual of design, manual of construction, manual of security, instruments of security management, among others, foreseen in the applicable laws.The activities indicated in this section are a general list, that in no way must be understood as restrictive of the own functions of a work supervision, according to the engineering practices.V. MINIMUM TECHNICAL REQUIREMENTS OF THE SUPERVISING COMPANY Having participated in any of the following activities: design, construction, certification or monitoring of at least two (2) Hydrocarbons transport systems of larger diameter pipelines than 12 inches and 300 km long, nationally or internationally.The supervising company must have a team of qualified professionals with International experience in the corresponding activity and specialty. The minimum team shall be the following:Head of Supervision of the Project: Professional with degree in mechanical engineering, civil, petrochemical, geology, oil, or related, with minimum experience of fifteen (15) years in the International field as Head or responsible of the Project in any of the following activities: :design, construction, maintenance supervision and/or certification of systems of transportation of hydrocarbons by pipelines ,of at least two (2) projects of construction of systems of transportation of hydrocarbons by pipelines greater or equal to 8 inches of diameter and 200 km of length.5.1. Head of Field Supervision Qualified professional of the specialty of Mechanical Engineering, Civil, Chemical, Petrochemical, Geology, Oil, or other related, with a minimum experience of ten (10) years at the international level, as Chief Project Officer or any of the following activities: construction, maintenance, monitoring and/or certification systems of transportation of hydrocarbons by pipeline of at least two (2) installation projects of the system of transportation of hydrocarbons by pipelines greater than or equal to 8 inches in diameter and 200 km long .5.2. Supervision team 5.3.a.1. Head of supervision of mechanic works of pipelines Professional with degree in the specialty of mechanic engineering or related ,with minimum experience of ten (10) years in the International field in any of the following activities: design, construction, supervision and/or certification of mechanical works of Systems of transportation of hydrocarbons by pipelines. 5.3.a.2. Head of supervision of mechanical works of storage of hydrocarbons Professional with degree in the specialty of mechanical engineering or related, with minimum experience of ten (10) years in the International field in any of the following activities: design, construction, maintenance,supervision and/or certification of mechanical works of storage of hydrocarbons. 5.3.a.3. Head of environmental supervision, security and health (EHS) Professional with degree in the specialty of health engineering and industrial security, mechanics, electric mechanics, chemicals, or related career , with minimum experience of ten (10)years in the International field , in the preparation of risk studies , risk analysis and/or environmental supervision , security and health in plants of processing of hydrocarbons and/or systems of transportation of hydrocarbons by pipelines.5.3.a.4. Head of supervision of civil works and geotechnics Professional with degree in the specialty of civil engineering, geology or related career ,with minimum experience of ten (10)years in the International field ,in any of the following activities: design, construction, maintenance ,certification and/or supervision of civil works and/ o r g e o t e c h n i c s o f S y s t e m s o f t r a n s p o r t a t i o n o f h y d r o c a r b o n s b y p i p e l i n e s .5.3.a.5. Head of supervision of electric Systems /Electronic and telecommunications Professional with degree in the specialty of electric engineering or Electronic or related , with minimum experience of ten (10)years in the International field ,in any of the following activities: design, installation and maintenance of telecommunications, SCADA system, field instruments in systems of transportation of hydrocarbons by pipelines. 5.3.a.6. Support Team in the Supervision: The specialty and profile of the professionals required for the support task to the supervising company, without limitation, is the following: Systems engineer  Mechanical engineer  Security engineer and assessment of risks  Civil engineer / geotechnics  Electronic engineer /Communications Professional with degree in the corresponding specialty, w i t h m i n i m u m e x p e r i e n c e o f f i v e (5)years in construction ,operation and/or maintenance of Systems of transportation of hydrocarbons by pipelines or storage plants of hydrocarbons.VI. DELIVERABLES– REPORTS The supervising company shall submit the following types of reports during the execution of the service:SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 111 de 114 CONCESSION CONTRACT – FOURTH VERSION General work plan and a general schedule of activities to be undertaken during the term of the contract. The general schedule of activities should include the estimated delivery monthly monitoring reports and the final report monitoring schedule.  Monthly reports: In which are indicated in detail the activities carried out by its staff during the month and the progress of construction. Monitoring reports should be documented and made at the end of each month, including relevant work notebook, and during the execution of the works.  Executive report of daily activities which will contain a summary of the main activities during the previous day.  Reports of objections: Each time when the supervising company detects an objection, shall prepare the respective report, describing its details.  Specific reports: These are reports that during the execution of the work, OSINERGMIN shall request to the Concessionaire Corporation about specific aspects or technical problems, security situations or other aspects relating to the execution of the works.  Final report: Must contain the results of monitoring of the last month and also contain a summary of the activities performed as well as the previous monthly reports, including photographs, graphics, conclusions and recommendations. In this report, the supervising company shall express its approval and conformity with the facilities.VII. EXECUTION TERM OF THE SERVICE The execution term of the service will be since the beginning of the engineering until the mechanical completion of the project, including the hydraulic tests.VIII. FACILITIES OF INFORMATION AND SUPERVISION The Concessionaire Corporation shall make available of the supervising company the documentation required by it.IX. EXCLUSIVITY OF SERVICE During the execution of the service and within six (6) months from the completion of the service, the supervising company shall not establish any type of business or professional relationship with the Concessionaire Corporation.SYSTEM OF SUPPLY OF LPG FOR LIMA AND CALLAO Pág. 113 de 114 CONCESSION CONTRACT – FOURTH VERSION ANNEX 13SCHEDULE OF EXECUTION OF WORKS (To be replaced by the person submitted by the Concessionaire Corporation)

Annex N 7 of the Bid Terms

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