Draft for Discussion - Version Oct 25, 2018

Draft Terms and Conditions (“Terms Sheet”)

Supply of Recycled Water by GVSCCL to RINL’s Visakhapatnam Steel Plant

1. Name of the 1. Greater Visakhapatnam Smart City Corporation Limited

Parties (GVSCCL), the Special Purpose Vehicle (SPV) owned by GoAP and
GVMC (hereinafter referred to as the “SPV”)

2. Rashtriya Ispat Nigam Limited (RINL) (hereinafter referred to as

the “User”).

2. Project and Greater Visakhapatnam Municipal Corporation (GVMC) has intended to

Purpose of the develop a Sewerage infrastructure project comprising of “Development
Agreement of Sewerage System for Visakhapatnam (Gajuwaka, Malkapuram,
Pendurthi areas) and Supply of Treated (Recycled) Water to various
industries in Vishakhapatnam” (the “Project”)

Government of Andhra Pradesh (GoAP) has accorded administrative

sanction and approval to transfer the Project from GVMC to the SPV i.e.
GVSCCL (vide G.O. Rt. No. 546 dated 26.07.2017 issued by MA&UD
(Urban Infra) Department). Further, as approved by GoAP to take up
work of Package I - Sewerage System in Pendurthi and Waste Water
Treatment System for Supply of Recycled Water to various industries in
the peripheral of Visakhapatnam, the same is awarded to M/s Tata
Projects Limited vide G.O. Rt No. 927 dated 03.10.2018 issued by
MA&UD (UBS) Department).

The SPV will implement, operate and maintain the Project Facility and
supply the Recycled Water to the User.

The terms and conditions of this Term Sheet shall be incorporated into
the Agreement (“Contract”) to be entered into between SPV and RINL,
for Bulk Recycled Water Supply (“Product”) by SPV to RINL’s
Visakhapatnam Steel Plant at Visakhapatnam.

3. Contract The duration of the Contract shall be initially 15 years from the Date of
Period Commencement.

4. Project Means collectively the following:

Facility  Waste Water Treatment Plant and Reverse Osmosis (RO) plant
being constructed in Narava STP premises (collectively referred
to as “Tertiary Treatment and Reverse Osmosis plant (TTRO)”)
 Pumping Station(s)for Product supply
 Conveyance Pipeline from Narava STP premises to RINL’s
Visakhapatnam Steel Plant premises on a non-exclusive basis,
for supply of the Product

The Project Facility shall be developed in two or more Packages by the

SPV. Each Package would have its respective Commercial Operations
Date (COD).

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5. Delivery Point The Delivery Point is adjacent to RINL’s Visakhapatnam Steel Plant Main
Gate boundary.

Beyond Delivery Point, tThe User shall be responsible with regards to

the construction and operation of any facilities located on their Property
for usage, storage etc. of Product in its premises beyond the Delivery
Point.

The title and property in and the risk of loss of Recycled Water delivered
under the Contract shall pass from the SPV to the User at the Delivery
Point.

6. Supply Price Supply price of Rs. 35 per KL shall be payable by the User to the SPV, for
for the the supply of the Product. This price shall comprise of “Fixed Charge
Product Component X1” and “Variable Charge Component X2”.

The Fixed Charge Component shall mean the fixed rate as agreed
between the Parties. The Fixed Charge Component shall be Rs. 15 per
KL i.e. cost of capital (Rs. 13.82 per KL) and establishment expenses (Rs.
1.18 per KL).

The Variable Charge Component shall be Rs. 20 per KL, which comprises
of expenses for Energy Charges, Chemicals and Consumables, Repair,
Replacement and Operation & Maintenance Cost.

This price of Rs. 35 (i.e. Rs. 15 + Rs. 20) per KL shall be the “Supply
Price”.

All the amounts mentioned above are exclusive of Taxes.

The applicable Taxes shall be payable by the User.

The Supply Price shall be applicable from COD onwards.

An escalation of 5% shall be applicable per year on the Variable

Charge Component + Establishment Expenses, over the previous year
charges.

7. Contracted (a) The “Contracted Quantity” is 45 Million Litres per Day (MLD) of
Quantity Product. Out of this, 22.5 MLD quantity shall be off-taken by User for
the first two years from the Date of Commencement, and thereafter
balance 22.5 MLD shall be off-taken by User.

(b) The supply obligations on the part of the SPV and payment
obligations on the part of the User (as described in Clause 6 above)
shall commence from the COD. The User shall off take the
Contracted Quantity of the Product for the Supply Period from the
SPV, from the COD onwards in the manner as abovesaid in Clause
7(a).

(c) “Supply Period” would mean the period on daily basis i.e. calendar
day

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 (d) The actual supply may vary for about +/- 5-10% of the Contracted
Quantity. The User will be billed and shall pay for the actual quantity
delivered to the User.

(e) The Contracted Quantity of Product shall be supplied equally in a

period spread of 24 hours

8 Offtake by The off-take by the User shall be of the Contracted Quantity in the
User and manner as specified therein above in Clause 7, except with prior
Charges information to SPV and as agreed upon by both the Parties. The User
Payable shall provide an Off-take schedule in advance, for taking delivery of
Product for specific Supply Period.

Reconciliation of the quantities off-taken shall be done on a daily basis.

It is clarified that payment obligation is to be fulfilled w.r.t. Contracted

Quantity.

The Supply Price payable by RINL are structured to include the Fixed
and Variable Charge Component.
 The Fixed Charge Component shall be applicable on Contracted
Quantity in the manner as abovesaid in Clause 7(a).
 The Variable Charge Component shall be applicable on the Product
Water Off-taken by RINL during the Supply Period

In case the User plans to off-take a particular quantity or is unable to off-

take the Contracted Quantity of Product in a specific Supply Period, it
shall inform the SPV with prior information (in advance of 24 hours)
that a particular quantity of off-take would be carried out by the User
for specified Supply Period.

Thus, in case the off-take by the User is going to be less than the
Contracted Quantity, then the charges payable by User for the Product
shall be as follows:
Contracted Quantity x Fixed Charge Component (Rs. X1 per KL) + (Off-
Ttake Quantity x Variable Charge Component (Rs. X2 per KL)

In absence of providing such Off-Ttake schedule, the supply of

Contracted Quantity applicable shall be deemed considered.

Off-Ttake Quantity is the quantity of Product off-taken during that

Supply Period. Such calculation shall be done on a daily basis.

For instance:

Case-1: In the Supply Period in first two years, if the Off-Take quantity is
20 MLD (or 20,000 KLD), then the charges payable to User shall be
calculated as provided below,

Charges Payable = (22,500 KLD x Rs. X1 per KL) + (20,000 KLD x Rs. X2 per
kL)

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 Case-2: In the Supply Period after two years, if the Off-Take quantity is 20
MLD (or 20,000 KLD), then the charges payable to User shall be calculated
as provided below,

Charges Payable = (45,000 KLD x Rs. X1 per KL) + (20,000 KLD x Rs. X2 per
kL)

9. Failure to If the SPV is unable to supply the Contracted Quantity of Product during
Supply a Supply Period, in normal circumstances, then the Supply Price shall be
payable for the actual Off-Take Quantity shall be payable by the User

However, if the SPV is unable to supply the Contracted Quantity of

Product during a Supply Period, for reasons not attributable to the SPV,
then the User shall make a pro-rata payment for the quantity of Product
off-taken by it. The Fixed Charge Component for the Contracted
Quantity shall be payable by the User.

The User is required to make adequate arrangements at its end for

storage of water to meet up its demand in case of failure to do so by the
SPV.

10. Conveyance The right of way for laying of the Conveyance Pipeline in the User
Pipeline premises upto Delivery Point, would be provided free of cost by the User
to the SPV.

The User shall facilitate the SPV during the construction and operation
& maintenance period by providing requisite permission etc. for
carrying out the various works.

The SPV shall be responsible for the safety and O&M of the Conveyance
Pipeline upto Delivery Pointoutside the User premises.

11. Metering and Continuous Online Metering for determining the exact quantities of the
Calibration Product supplied shall be done at the Delivery Point in the User
premises. SPV shall install a meter with a standby at the Delivery Point.

Necessary instrumentation for real time online monitoring of water

quality shall be installed at Delivery Point.

Periodical calibration of the water meters and water quality

instruments shall be carried out by SPV along with User.

User shall provide adequate space @ 2m x 2m for installation of the

water meters.

Power requirement for the metering station shall be provided by User.

12. Water Quality The Product to be supplied by the SPV to the User shall be substantially
close to the standards as specified by the User, as provided in Annexure-
‘1’.

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 In case the water quality is not close to the standards as specified by the
User, then the User may stop the receipt of Product with immediate
intimation to SPV.

The water quality parameters to be measured online include:

- pH
- Total Dissolved Solids (TDS)
- Chlorides
- Conductivity

Prior to usage of such Product, the User shall carry out the requisite
quality tests of the Product to confirm the quality standards /
requirements for its further intended use.

The SPV shall not be responsible for the quality of Product beyond the
Delivery Point.

13. Security for Advance Consumption Charges (Security Deposit) shall be paid by User
Payment to SPV for the Contracted Quantity of Product in the manner as specified
therein above in Clause 7 i.e. Contracted Quantity x 92183 days x Supply
Price. The ACC will be interest free deposit with GVSCCL

The ACC shall be deposited 15 days prior to the anticipated / expected

date of start of supply.

User has to pay the difference balance amount of 183 92 days Advance
Consumption charges (Security Deposit) to take into consideration the
yearly escalation in Supply Price of Product. This differential amount
shall be payable every year.

14. Payment The bill for the Product consumed will be served once in a month.
Mechanism
SPV will see that the bill reaches to the User by 10th day of every month.
In any case if the bill is not received by 10th day, the User has to inform
the same to the SPV on the 11th day and obtain the duplicate bill.

The User has to pay the bill within 15 (fifteen) days from the date of
generation of bill in the Bank Account as specified by SPV, failing which
the release of Product will be stopped.

15. Disconnection If the monthly consumption charges are not paid within the due date,
Product supply to the User will be disconnected without issuing any
notice and penalty of Rs.10,000/- will be levied on the User for
reconnection after clearing the bill.

In any case, if the connection is disconnected, the User shall be charged

an interest rate of SBI MCLR + 3% from due date to the date of actual
payment over the outstanding due amount, in addition to the penalty of
Rs.10,000/- for reconnection.

15 Review The Parties will review the Contract to consider consistency with the
6. operating arrangements and requirements and such other matters
agreed between the Parties, during the course of the Contract.

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A Review Committee comprising of members from the respective
Parties may be set up.

The changes /impact on Product Supply Price due to changes in

technology, operation and maintenance requirements etc. may be
reviewed by the Review Committee.

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 Annexure-1

Desired Product (Recycled Water) Quality and Specifications

Desired Product Water

Sl. No. Parameters Unit
Quality

1 pH 7.2 - 8.2
2 BOD mg/l <10
3 COD mg/l <25
4 TSS mg/l <10
5 Turbidity NTU <15
6 NH4-N mg/l <15
7 N-Total mg/l <20
8 Faecal Coliform MPN/100 ml Nil
9 Total Dissolved Solids (TDS) mg/l <150*
10 Total Hardness mg/l <100
11 Calcium Hardness mg/l <50
12 Chlorides mg/l <25*
13 Oil and Grease mg/l BDL
14 Iron mg/l 0.1
15 Conductivity µ mho/cm <300*
16 Sulphates mg/l <30
17 Heavy Metals and Toxic Compounds IS 10500
* For TDS, Chlorides and Conductivity the parameter conveyed by RINL will be considered as
the upper limit.