10.1 Form of Concession Contract ...............................................
EXHIBIT 10.1
COC No. CONCESSION AGREEMENT FOR THE DEVELOPMENT OF THE PUBLIC WATER SUPPLY
AND WASTEWATER REMOVAL SYSTEM MADE BETWEEN COMPANHIA DE SANEAMENTO
DO PARANA, SANEPAR, AND THE CITY OF ________, STATE OF PARANA, AS
GIVEN BELOW:
On this date, the party of the first part, the CITY OF ___________, represented
by its Mayor, ________, duly authorized by Law, and the party of the second
part, COMPANHIA DE SANEAMENTO DO PARANA - SANEPAR, represented herein by its
General Director, _______, and his Director of Operations, appear for the
purpose of signing this Concession Agreement, with the right of sole succession,
which will be governed by Federal Law No. 9074 of 07/07095 and by the following
Clauses and conditions:
CLAUSE ONE. SUBJECT
Companhia de Saneamento do Parana -- SANEPAR is awarded by the City of _______,
with the right of sole succession, the operation of the basic public sanitary
systems of water and wastewater removal, including the production of the water
to be supplied, distribution, operation, conservation, maintenance, collection
and the removal of wastewater.
SOLE PARAGRAPH. For the purposes of this Agreement, the following parties are
designated: (a) GRANTOR; the CITY OF _________; and the GRANTEE: COMPANHIA DE
SANEAMENTO DO PARANA - SANEPAR.
CLAUSE TWO. AREA OF OPERATION AND TERM
The GRANTEE will perform the services that are the subject of this Agreement
within the territorial area of the GRANTOR, and the term of the concession, by
succession of the City of _______, will be until _________.
CLAUSE THREE. THE MANNER, FORM AND CONDITIONS OF THE PROVISION OF SERVICE
In order to perform the obligations accepted under this Agreement, the GRANTEE
must, solely, directly, or by contracting a company specializing in sanitary
engineering: (a) study, plan and execute projects relating to the construction,
expansion or remodeling of the public potable water supply and municipal sewage
systems; (b) act as the coordinator, the executor or the overseer of the
execution of the agreements entered into with the City and Federal or State
agencies for the purposes of item "a;" (c) operate, maintain, conserve, and
develop the potable water and sewage systems; (d) issue, control and collect the
accounts for the services to be provided.
CLAUSE FOUR. QUALITY OF SERVICE
The service must be performed in strict conformity with the legislative rules
that regulate the basic sanitation sector, in particular with regard to the
potability of
the water for the public water supply, according to the standard established in
Ministry of Health Regulation No. 56-BSB, as well as the laws defined by
resolutions of the National Council on the Environment - CONAMA, the National
Health Code, the State Sanitary Code and related municipal legislation.
ss. 1. Water and sewer service must be provided to all properties with buildings
in the territory of the GRANTOR, in which the service may be available.
ss. 2. The Municipal Sanitary Inspector, at the request of the GRANTEE, will
notify the owner or tenant of the property for the purpose of complying with the
provisions of ss. 1 of this Clause.
CLAUSE FIVE. RATES
The GRANTEE is authorized to set rates that will permit the equitable return of
the investment, the improvement and expansion of the services, and assure the
economic and financial equilibrium of the system being operated, after a hearing
of the Municipal Council of Users of the respective service.
ss. 1. The cost of rates for the service will depend upon the service plan.
ss. 2. The rate that is set must guarantee the economic-financial equilibrium of
the agreement and the preservation of the social aspects of the respective
services, in such a manner that it is possible to provide adequate attention to
users who consume less, based on a minimum rate.
ss. 3. The cost of the services that is to be calculated in the determination of
the rates must be the minimum necessary for the adequate operation of the
systems by the GRANTEE and for its own economic-financial viability.
ss. 4. The cost of the services includes:
(a) Operating expenses;
(b) Depreciation allowances, provisions for bad debts, and amortization of
costs;
(c) Recuperation of the investment.
CLAUSE SIX. INCIDENCE, READJUSTMENT AND REVISION OF RATES
The water supply and sewage services that are provided or made available by the
GRANTEE will be remunerated by means of rates," which must cover, at a minimum,
the costs of operation and maintenance, depreciation allowances, provisions for
bad debts, amortization of costs and recovery of the investment.
ss. 1. The rates will be readjusted one time annually, with a proposal from the
GRANTEE, for the purpose of guaranteeing the economic-financial equilibrium of
the agreement.
2
ss. 2. The rates will also be revised upon the occurrence of any event that
might affect the equilibrium of the contract, such as an increase in the costs
of services, the creation or alteration of any taxes or legal fees, the
standardization of the rates or their readjustment.
ss. 3. If any unilateral alteration occurs that might affect the initial
economic-financial equilibrium of the agreement, the GRANTEE must renew it,
concomitantly with the alteration.
ss. 4. At the opinion of the Municipal Council of Users on the selling of the
rates, the GRANTOR must provide, as a budget item, a subsidy to the GRANTEE, for
the purpose of maintaining affordable rates.
ss. 5. The setting of the rates and their revision or readjustment will be
performed with the authorization of the appropriate state authority, at the
proposal of the GRANTEE, after a hearing of the Municipal Council of Users, in
accordance with current legislation.
CLAUSE SEVEN. DIFFERENTIAL RATES
Rates may differ on the basis of the technical characteristics or the specific
costs related to the provision of service to the various user segments.
ss. 1. Depending on the Rate Policy adopted by the GRANTEE, the rate structure
will be adjusted for five (5) segments or categories of users: Residential,
Commercial, Industrial, Public and Public Utility.
ss. 2. For the rates for water, sewage and services, the constant prices
appearing in the Price Table attached to State Act No. __ of __/__/9_ will be in
effect.
ss. 3. The minimum rate will be at least 10 cubic meters of water consumption
per month per household for the user category referred to in ss. 1 of this
Clause.
CLAUSE EIGHT. RIGHTS AND OBLIGATIONS.
OF THE GRANTOR:
I. Permanent supervision of the provision of services through the
Municipal Council of Users;
II. Comply with and enforce compliance with the regulatory provisions
expressed in State Act No. 3926/88 and the Clauses of this
Agreement;
III. Monitor the quality of service, and receive and process user
complaints about the GRANTEE so that the latter may resolve the
problems;
IV. Rescind and declare the Agreement to be terminated as provided in
Articles 37 and 38 of Law No. 8987/95.
3
OF THE GRANTEE:
I. Provide adequate service, in the manner set forth by law and in this
Agreement;
II. Keep an updated inventory or record of the goods belonging to the
concession;
III. Provide information on the service to the GRANTOR, to the Council
and to the users;
IV. Comply with and enforce compliance with the regulations for the
provision of service and the Clauses of this Agreement;
V. Execute expropriations and enforce easements authorized by the
GRANTOR, as agreed upon in the Appendix to this Agreement;
VI. Protect the integrity of the goods connected with the provision of
service, and insure them adequately;
VII. Receive, apply and manage the financial resources necessary for the
provision of service;
VIII. Enter into contracts for the purposes of this Agreement, including
the hiring of personnel, with no legal relationship being
established between the GRANTOR and the third parties contracted by
the GRANTEE.
CLAUSE NINE. THE RIGHTS AND OBLIGATIONS OF THE USERS
I. Receive adequate service;
II. Receive Information from the GRANTOR and the GRANTEE for the defense
of individual or collective interest;
III. Obtain and use the services in accordance with the regulations of
the GRANTOR;
IV. Notify the public authorities and the GRANTEE of any known
irregularities in connection with the service provided;
V. Notify the competent authorities regarding any illegal actions by
the GRANTEE in the course of providing the service;
VI. Assist in the maintenance of the public property through which the
services are provided;
VII. Comply with the provisions of the Service Regulations of the GRANTEE
(State Act No. 3926/88) and the basic rules of the service issued by
the GRANTEE;
VIII. Pay bills for this service promptly.
CLAUSE TEN. ADEQUATE SERVICE
Adequate service will mean that which qualifies as regular, continuous,
efficient, secure, up to date and generalized.
ss. 1. Being up to date means the modernization of the techniques, equipment and
facilities, and their maintenance as well as the improvement and expansion of
service.
4
ss. 2. When service is interrupted because of an emergency or upon prior notice,
it will not be considered discontinuity of service when:
I. It results from technical causes or for the security of the facilities; or
II. It is for the common good, because of non-compliance by the user.
ss. 3. Service will be interrupted if payment of a xxxx that is due has not been
made for more than thirty (30) days, with this non-payment being subject to the
other sanctions provided in the Regulations of the GRANTEE.
CLAUSE ELEVEN. PROHIBITION OF FREE SERVICE.
The GRANTEE may not offer its services free of cost.
CLAUSE TWELVE. SUBDIVISION.
Within the city limits, the parceling of land by allotments, subdivision or
condominium will only be authorized by the Authorities if they include water and
sewer networks, with the projects previously approved by the GRANTEE.
SOLE PARAGRAPH. The owner of the parcel of urban land in any of its forms will
transfer to the GRANTEE, without cost, any water and sewer networks established
in it, without indemnification from the GRANTOR.
CLAUSE THIRTEEN. REPAIR OF PUBLIC STREETS
The GRANTOR will be liable for the repair of the pavement of streets that are
damaged in the performance of the installation, expansion or repair of public
networks and building collection points, during the use or shortage of the
pledged resources.
ss. 1. The expenses appropriated for the repair of the damaged streets covered
by this Clause will be credited to the GRANTOR as part of the financial
participation referred to in CLAUSE SEVENTEEN.
ss. 2. It will be the obligation of the GRANTEE to repair the sidewalks, billing
the directly affected users for the cost of the repairs.
CLAUSE FOURTEEN. EXPROPRIATION - RIGHT OF WAY
For the purposes of expropriation or the exercise of right of way, the Municipal
Authority will declare any property that is needed for the installation or
expansion of water and sewer systems, in accordance with the projects approved
by the competent authorities, to be of public utility.
ss. 1. The GRANTEE is authorized to initiate the expropriation or acquisition of
easements for the purposes set forth in this Clause, being liable for any
appropriate indemnifications.
5
ss. 2. By agreement, the GRANTOR may assume liability for indemnification. In
this case, the provisions of ss. 3 of CLAUSE SEVENTEEN of this Agreement will be
applicable.
CLAUSE FIFTEEN. GOODS AND RIGHTS CONNECTED TO THE SERVICE
The Municipal Authority is authorized to transfer to the GRANTEE all those goods
and rights connected to the water and sewer services, through the shareholder
participation of the GRANTOR in the capital of the GRANTEE, in the amount of
verified liquid assets, pursuant to the valuation procedures of Federal Law No.
6404, December 16, 1976.
SOLE PARAGRAPH. For the performance of the services awarded herein, the GRANTEE
may use lands in the public domain and establish easements across public roads,
routes and highways, in the legally specified manner.
CLAUSE SIXTEEN. TAX EXEMPTION
The GRANTEE will be completely exempt from municipal taxes or duties on its
goods and services.
CLAUSE SEVENTEEN. BUDGETARY ALLOTMENTS
The budgetary laws of the GRANTOR for future fiscal periods, as well as the
respective investment budgets, will provide for the appropriate and necessary
allotments for covering the expenses of the municipal share of the agreement
authorized by this Law [sic], which will be set at 25% (twenty five percent) for
the systems, according to the life of each investment.
ss. 1. The GRANTOR will share in the costs of expansion, extension,
reinforcement and installation of new water supply and sewer systems with a
contribution that will be defined in the APPENDIX.
ss. 2. The share of the GRANTOR covered in this Clause will be concomitant with
the payment of expenses by the GRANTEE, starting with the initiation of the
expansion or improvement projects.
ss. 3. The share covered in ss. 2 will be in the form of money, services and/or
assets and rights, with the contributions being converted into preferential
shares in the capital of the GRANTEE, pursuant to Article 5 of the Municipal
Concessions Law, in an amount that does not make the installation of the system
economically unfeasible.
CLAUSE EIGHTEEN. NEW PROJECTS - PARTICIPATION
It will be incumbent upon the GRANTEE to negotiate, as a priority, with the
appropriate entities for the acquisition of the financing necessary for the
performance of the water supply and sewer projects and services, with no
liability for these loans being imputable to the GRANTOR.
6
CLAUSE NINETEEN. SUBROGATION OF RIGHTS AND OBLIGATIONS
The GRANTOR accepts and subrogates itself in the rights and obligations of the
original agreement signed between the City of _____ and the GRANTEE.
CLAUSE TWENTY. PUBLIC RESTROOMS AND FOUNTAINS
The GRANTOR will be liable for payment of rates on public restrooms, fountains
and spigots and branches of the sewer system used by the GRANTOR or that are its
responsibility.
CLAUSE TWENTY-ONE. INTERRUPTION OF SERVICE BECAUSE OF ACTS OF GOD
The GRANTEE will not be liable for interruption of water and sewer services
resulting from Acts of God, such as strikes, floods, accidents, fires, civil
unrest, wars, etc.
CLAUSE TWENTY-TWO. STUDIES AND PLANS FOR PROJECTS
As part of its operating plan, the GRANTEE will perform ongoing studies
regarding the improvement and planning of the installation projects and the
expansion of the public services that it has been awarded, and may therefore
sign agreements with the GRANTOR under the terms of Article ___ of the Municipal
Concessions Law (__/__).
CLAUSE TWENTY-THREE. EXPLANATIONS TO THE MUNICIPAL COUNCIL OF USERS
Whenever it deems necessary, the GRANTOR, acting on its own or through the
Municipal Council of Users, may request explanations regarding the operating
plan being used in the area served by the GRANTEE, and about the rates in
effect.
CLAUSE TWENTY-FOUR. SEIZURE OF XXXXX
Within the urban limits, the GRANTEE may take over the operation of artesian
xxxxx, reservoirs and cisterns within the area supplied by the public water
distribution system, being permitted to close and seal the aforementioned supply
sources, with the owners or users having no right to demand indemnification.
ss. 1. The provisions of this Clause will only be applicable when the system
operated by the GRANTEE has achieved the technical capacity to provide services
to the users who are supplied by private xxxxx.
ss. 2. Already existing artesian xxxxx/reservoirs and cisterns may continue to
be used freely provided there are no hygiene and health objections.
7
ss. 3. Rural areas and industrial districts are not affected by the
aforementioned grant of exclusivity of service defined in Clause One of this
Agreement.
CLAUSE TWENTY-FIVE. EXTENSION
This Agreement may be extended or renewed at the agreement of the parties, to be
executed in a formal act, adjusted and signed before the termination of the
concession period, which is expected to be ________.
CLAUSE TWENTY-SIX. TERMINATION
This Agreement may be terminated by:
I. The end of contractual term;
II. An agreement between the parties;
III. A serious violation, heard in a regular administrative proceeding;
IV. A judicial decision issued in a court.
SOLE PARAGRAPH. When the Agreement is declared to be terminated, in any form,
the GRANTEE will continue to manage and operate the systems up to the effective
date of transfer to its successor, and the rights of the GRANTEE will be
respected and any existing credits and debits will be settled.
CLAUSE TWENTY-SEVEN. THE EFFECTS OF TERMINATION
After the termination, the GRANTOR will remain liable for the indemnification of
assets and rights before public institutions, local governments, in any court or
tribunal, claimed by third parties of any kind, physical or legal, service
providers or not, of water supply and sewage collection systems.
CLAUSE TWENTY-EIGHT. REVERSION
If the concession period is not extended or upon termination of this Agreement,
the property of the water and sewer systems will revert to the possession of the
GRANTOR, in accordance with the By Laws of the GRANTEE, and the GRANTOR will
also assume liability for the payment of any financial commitments existing on
the date of transfer of the property, and indemnify the GRANTEE for the
investments, at their original book value, that exceed the stake of the GRANTOR
and were not amortized during the life of the Agreement.
SOLE PARAGRAPH. Any movable or immovable assets intended for the management of
the GRANTEE and that were not acquired as a result of this Agreement are
excluded from reversion.
CLAUSE TWENTY-NINE. TERM
This Agreement will become effective at the time of its signing, ratifying all
the terms and conditions of the original agreement signed with the City of ____
which are not altered by this present instrument.
8
CLAUSE THIRTY. JURISDICTION
The jurisdiction of the District of Curitiba, Capital of the State, is chosen
for the resolution of all judicial matters arising from this instrument, with
the parties expressly renouncing any other forum, regardless of its privileged
status. For full legal efficacy, the parties date and sign this Agreement in
three copies equal in form and tenor, in the presence of the witnesses.
Curitiba
GENERAL DIRECTOR MAYOR, CITY OF _______________
DIRECTOR OF OPERATIONS
WITNESSES: ______________ ______________
9
