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Infrastructure Contracts Sairam Bhat Introduction ack fash has vial led evry statin the nati 1 explove innovate finance techniques that allow important improvement i infaracare projects In public-private parineahip (PPP) model vo rove forward hile keeping tne ad fet low Pate sector ivoremen im infu: {ute har equ repultoy reform, implying not oly a new sto rules ‘but an acd eve of the way givernnens wana think about regulon Tnfasracrure cise inch ny fom af cy, whether in the atte ofa phyiedeructare ra sour, commodo serve thats provided idan objective tobe wed by a socey ora econ of society? Tafasuctre ithe most cial em for any development and even mot 0 for industien Dept heavy expendiare on iin forthe pst 0 ‘any ye infrastructure was il iadequate forthe neds ofthe county. Tina oe ofthe mations bebind ving so mach prominence ro che TTF W Ream an i “eng th Paine: The Ralf ang ram Conn Spc Pig Fans nrc” Cae naa ict tae P0259 oe 200 Te Kenan rhe Fee SEES Net eatin pennants Treen Ube “bag Rely tos a Lan Anes, Fm Pin he Ane Sane ph epi * Law ain fra Pro New Di Burro 203) a2. efron Contact 31 Ueiniasactareshe wy roqutement af funds which, wae hough Serato cepeemn ees waar i ald cnt Sect pear asain eeepc cn are {ev el bgen ob moored inthe 180 bn with mach re Sea ce ates Seat aes ween Seinen qiergeraau hence patel (Si Gnas and PPPs wo Begin to I te Funding gop end of ancing Seetine armenia shed BES Siac taser aero Sean noose EERE it etna tyr pte ee "nip Rang lane Sarin he Rep fe Ps Essie in nei Sinema neha sls buldogts acho nh A pec pj read enn, ‘hg ms pan yore ed ‘Src armen run ccnp ofancainFoveumpe te Hydra SSS Arne pen pe ssh pret cpg perso anys rw The separ bang bat pee CASEI Temas iodo yan sah spon enone 3 yr ee ae ae ee TTIUITETTTIII II) Constieutionality of PPP: Historical Origin a dy Inn 199-51 prove pprniy ‘or unackling the economy desicening = number Teh opi pa nrc sai oni of ie nant es ig eta ‘Saar se govering brcign hocinen we Hirer: Spree rd t impeoring de ply imate are ir The power veto bos wienedraoon phar of poley ‘ken Thes pe wipe 9G art (Sve che poy cra for prot Pheer Ts 19t- the Cor Summer the ice Sp A OU woe yo pv neon pom grngratin nd dation” Gilly there no need dsb he mporance of apart in rational ecenany However cotdeing he public lie nar a te ‘anor indy the ovens hase sug ores ie ae fn theron Arsh the PPP mode which exis in Indi ss tocombine tie ‘engi ofboth tse ror Conninsio of India ee wo aviation 12st onthe ena Lis ad the sj al win sai Sigel aes he ew 27 bie aed ‘Babbsiporn obese by senso lindo compan or opoaione ‘Bisset scence setae We iti to cs bodgeay Sonsini egied xperle item rer fe poben is euting al cing emit fora permis and orem, sla Searing oproval fy RSTn sndwvccring nndnte desea the ene Sate ant Isl fermen suse As giveramet conc ve pict ion ST PPP wae with 7 Cet apo Mya cards GMO) pie a erm Ar Eine coven Se conten Fee eee prenty penne cy war tpn ‘fe Visas Toes Bowe hic eet z arian pcs widely baleed that ed i power prices Ie Sa eer nei aap “iy Evin nd ay rm i Pe Fe, me Bog unr A Ceo he a A pate ad ry cain: pape/2007/04/26/236 policy. environment power. cette vermtmateinnpweci, nO Feu 1208 fates Coats 33 tony in abr se ahr gee 197s : Spd mpi cangy daw ar 280 mgt Foci Bt dps oer pn nm feed Stoning naps oct i je hn ere Ti or poe pons ye . © Eo ‘Capers Datel ine Hato Nahar a err ee, Fra etn oe enemas | GPS” Siigptetistne pone abo TccT serial lege pbc | Berlin of vec epee ! hot code ling 23s bas Stare For On the other and he Government of Kana ‘eed ice 2 Memorandum of Understanding (MOU) with Nan Infe- 1995, Later Febraaey, 195 ation th ric] wa tered vo wes NICE Lied [Oe econ under the lndesbip of Chel Minive LE Fel The jes hal log drs sary ip oncom ‘Bic ‘iranian of che {fling daca Enyonment Impact Anement wih Soi-conamic Camponens 2. Rehan sd Reeement Repor 43. Emionmenel Ris Arment Repo 4. Techno-sonomi Fal Repor 5 é 3. Memorandum of Undertandng Project Report Framework Agreement 1997 [NICE (a infarct Conor Eters-KIADB (Karsala + Indu Ares Development Bond). 9, NICE-BWSSB (Bangalore Water Supply and Sewerage Boa) Agreement to, NICE-KES (Kana Hetty Board) Ageemene S11, 1999 Gerber Supplementary Azeement Tameka, i nc Ls fo da wie alae npdpennnpeminnSeinotetperspma an) ea ‘Fey 1.208 Sine the cos of ilding she road and fastest te Gosrnmencathamaniionel Sees, iste Cane tame ane ep Song the eps. lands aque ke epee oe i Fame i elds eal by the Hon be ign ot ra Espoving che PIL (W-P. No-29021) Hale Coos Redy. On page 70 ofthe judgment sare a floes “Aesth mane wt ded ai ef poe dd ‘cabinet andthe lgintarure, it cannot be held that he specs comedy Shegoermen: af Karas wool in sy eg ae Inany ways Gandoine ner oe On the ue of wheter the Framework Agemen bind yeoman i binding on the goverment in any uve ccumstancs ating te pbb cent ‘Hon'ble Court clarified as follows: ae - thelr ro caw in operate oon a Se lisse Seen Shel Beig pty tn mae thee in te ae -ment cnnot be consrcd eo hae he lc of nding Lg ch ln ject he pop af th etn to eas any law ae Oy the or, nme The gan i tn con en lf on apt cae empha ed In the Be phase of PPP the government took wo the competive bidding Tae nn Spore eT et isnge public slr serves. Compedive bidding route was del ued (Gr goveinment contacts "I Involved “public auction and ender proces” “Beare fmes in seein ofthe private pyr. Aer ch decion wi ‘SKE on selection, the ply of selection coud hardly be challenged ia te ‘our swat held inthe BALCO cate by the Supreme Cour. Government ‘would then have the Weedam of contract, with the rule of reasonableness Ee cnet tte te ea rate cette eee see tee See Soe eee Seo onal reece Sytem aeamememecnes icine ee eee omen ie cbt cael LEE arate so 27-t sa tan \| pe orownentpy ir conrser praca 35 snd nowathitins i i anand conde The pray ase ‘old in the BALCO cate wa eguding the vaya he decom of the Government of India wo dives ad wart 1 pescent shares of Mic Bhan Aluminium Coonpny Ld TEs gusto at ose SOF ‘Edraion in hat xe wa wher ach 3 econ fener amenable (jude ever! "The petition was mined and dhe Supreme Cou ed ha ‘Spoon nd niet enomi eon bed om anomie epetcs {Sienmand cobesvidne cond rope roe ‘remem ate ou el eh ro i i Sapen Cou al tin che pperine e ‘Stpeme Cou gue inet nine PP ese cone. EPP ae Spee Cn pcm shckthsaaia deem Eg coe e e no ving pre paves who weal to Tei bao hegre PPP rates opered nd Slaton fe ston fans roa prc har on yn oe al ence Satoh TIES apply Asse ss nt hes sme of wneaip hough na P es | Sandee Stine | timewe ty Coos Trcssanieaitegana cae \ichosctcekertnicieccciatsbrescoatnectstes | Vgc inien secede pee “Reece wht ere of counral nonin 6 serene fone snd Pp. Wake FFF oma ena Sree posmen conc? Whether wc wil ke cren pcan sf norScarery conc! tthe of taney Scrawl sae arse oe poion 7 iy ule oan oon a * tis import wate hd BALCO wu ot cred by any Ataf the patna. odd toons he Ses Cen esr BALL wa re yam hb ee FF ia eft Caaiton Mewes in he se ery we eectparenh keener tog. Seemihe prom chor vidaio st soeeny se Bcc Ince coc ses eae SSSR Sceptre ieee | ‘Seep pean Tet Seen Seto td nto ene Fee tnany ence bce pea ee Frstipnrbtecahd oe spare acon 490 In tne nd IC Carpe poo Sancta Coie) te gerne rapt pveee poo ely] Soe pepe le Soren a Spon an vio le el a Ses iv ae hp Maen eae teen ei Te ches Fe {Fae pense tg ea aes Juttner a PP cn fd he ig sale enema Un em et ‘een forte ency sy woe Se onde ‘Seige pene breton aga sano ee tothe pid nin sinatra ‘ony od pd tia aa as ee nde SE ep 5 80 met ini of ke al i pose: Goer te aan fe ann Se eee (Sh cal af eS Tet esa een Comm ee pds ‘nn rhs get The hon taneb odreo beo ay we i pss ad cs pop ae in| ime Cen 37 “The fot mpreion one ye about PP i that hi ey mush go tram conta nd ee the pln ta 399 af he Con pus cot between the government and he cence cone, evouilecomreby de prvionsatar 297 and 200fihe onsen ‘Tha ia rw yonermen condemned day har in coubig tc check ees PA: wheter ection malig ahora pomers 3, Chet the ont comnts ech of es ofan us “A. sheer the gvcnman reached» seen which no roa “5, Sheer rea ower ‘onter dhe court has held that she grounds pn which an aminoative| {clon in german one abject 1 pate Thi en the dco maker mu undead ce ‘Below at ope deconaking pet ands et 2 leanain Namely, Wedowsbury aeesonblenes ot 3. Prendelimproprcg ‘The Legal Framework for Establishing a Project Vehicle for Infrastructure Projects tn India the pace io abi 2 pate mid company by it ‘entice agent bewen she panes rj whi five infra projec wal though jon entre agement be ‘wen salle The one venture agrees ened by companies, 2nd corporation wo fel the races, specyicorprain tnd Ea einem de oe Ho en ey * seperti cnet }s \S& commencement of basins. The join venture sgrecnet is uly fallow crt MOU tnong the partner A fit venture (he new conser) fated a ape limited company regiered under the Campane Ace ‘Tosortoutthe management pat ofthe ln venue the puter a nts Ives sburcholdenstecment in which the concems of management 2nd clang ae clean down to void confontation rd gation. In'lndi 2 project devdopmentvehide he private limited company ‘modal prefered over the parneship model forthe flowing reason nimi ‘Tax holidays under the Income Tax Act ae not partnerships ‘Phere are Limited source for nancing of proj in a partnership. Ce Tere ict co pr new pres and eubl exit of paren “Thus, compared ro private limited company, the most stable model in the ct would ave been the Limited Liability Pataenhip (LLP) sthih ina sen wil change the perepion ofthe “ont and severly Tibi” principe in parneshipe Councies ike che United Kingdom: nd he United States have amend thes parnechip laws to suit int “tnare: i infasrcture projec Tong time back India brought she LLP [Kmendment to the Companies Ace in 2008. This wil provide impes the growth of Join Venture busines LLP aball bea body comport and ‘Teg ent separce fom paren e wil have perpersl suction ‘While she LL haa sparat lop enti, able tothe all xen of tases, the lai ofthe partacr would be limited to their agsed contribution in the LLP. Furter, na partner would be lable on accoue of the inde Penden ot unauhocedstlons of ocer pares, dhs llowing individ Bartnr to be silded from jin iabllry creed by another partners ‘rongfl busines deciions or miscondace. LLP simplifies reitrition [oat nd doer way with compliateddocumenction. A cnsotum cn Spee ry nig campi ha wi om ind copy pnp connate apm ur he ‘ernment Sr dt lyin Siscpycnnreid ingredient Poem ie farce Com 39 commence busines with ited el formaies and intervention. The ‘Regina of Companies (RoC) sal reir and onal LPs a State Legal Framework for PPP Esse far Andes Prada and Gata, 906 ofthe sae i Indi aye Fred enabling Ison to make policies and guidelines for PPP. The Srncmant of Ar Pde ced he dvs Pada nis ecDepment Enbig(APIDE} As 2001 Twas nore providefor Fae er ee artipralandscalnsscurin these re RSE ctr percipaton in infstscrare bling. ro pens Banke ject he pate secon and fo improve he level of infer i Fe.” Andie Prado ao her cested Inesrucure Corpor ‘Sf Andes Pradesh as. pa of the Depaztmen of TaasracoTe ieee? Se Fhe APIDE Act atempt wo ansicpate every comtngeney relating to infunvture projec and tee bddng proc I ay dwn prec let {brs varety of development models and concesion agrecment—she perminions that would be rquited. operting conditions and cones, Payment mai, perio lapsr and abuse of development right Erpot tion ofthe vironment by developers. The scarce pecs how ok id would be wested or how sated esponse would be dealt with r how onsowium bd would be stunted. The lication of gene isksandtheit ‘lclowue said down along wit the facts provided by government ‘A concliaion board with pees proeedings for srbieaton,setlement {ni joicl prosedings ae spt out, For the Bat time, the penis cone 1 i compe indy bul pein oh urte compan ‘Sh flomng pecs ne ned leant projec unde the puew of lint ites Kn an tad tt ee ert a eg es ed ‘TE iam Ordopen Ann Pah Sp, pow dco sue clon mmnenrer 9AMANRMaeHegner ease & & Seta nt nny na srl wf 1 cor An nhc eben ober ieee iin te carer Seuieis eacetnaa geet she fequiremencs inthe Br pce. by making wan neiiog wana ‘ecm hate epee cca a TET oan te sepaene figment ciate SSI eases Soopers ose nel eames aera te ences aera Inauchedale othe law (builds ope, eal nel, pda BOLT) rer epr ed anter ROTH. The hee of projects lined se ling hin the jeton abe ct ae peed in Schule othe At conse with ate jc ute Conta, Sth alo enon neon, Trnmsn and Deon Sycmna" which rn be Concurene i Whi flag prjeron he sbjec, due compliance woul THREW be made ithe Una To pr ale inthis sexton: The At provide fx clecion f= rj proponent Trough she proms of sompeave bidding” ct negoon sess aviaged inte event Sat prope re submited nor ss egos oy ‘pene bidding proce, bu he vate ofthe concen eye. ‘The lw procribe acection of bidders in an open bidding proce bed an hve faces er of rer prequalified Gan ‘Of ther, the Act ys down the ters for Branca ST "The GujarsACt allows the proj developer to charge est speci in the conction agreemen, Such ect se Eee a ola Wed inthe atone ‘The Act eognises tate of nfaon and {eatin in tte frig exchange ae factors which may be ake to ia lec nen hh pi ling fmm Coma tt coun fr revon of fe. A nani cai the ps eee is rou cen an csc cose on ‘an provide aiance forthe projec such ss though parciption te ‘leapt of dope earn epec af any nd and inca (Burm ofsempon ordeals "The Aes nes the poulecnaoe whch may emerge om seemimation af the coacealon genet with » proj: emer td 1. payment of empention te te deelopr in scone wih she 2. takeover of the project without repaying the invenments made by ‘he derdoer upon son fr deta ofthe deer bt ‘he sate tne suming able of the develope fo repent of 5. newconcenon pene wih person commended yen nthe ae tome pce rt eer conceson perme ‘TheGIDh sin the nate ofan ovenrching amen. A all ‘leglenindon dere mechani onthe ae ‘A Study of PPP in Infrastructures Sector Infarct contrac del wih bic works Some of ht publ wake ia be dvided sccrding these and saxo of operon Thy te 1 phys infarct ridges rou highway, pons poe} 2. Sytem infarrucae (sey ipines 2) meron infuse Cepia etapee tem, wae management ad 4, Commodi: natu ga pee, wae sp) ise pation in pub wor elt design cnsruto, pecson, Imsimenance,envatin, of upreatin. 42 Sain Bhat “The imporeance of PPP in ifs ruta projec ned not be ver= ‘mmphaized,consdeing cat India l trgeting prowth ee of nay 10 nt per annum, Further, with practi dicate county thee |i considerable acceptance tht = welle se with soe cones ‘an move competitively by balancing both the Mele of wells snd {ocialsm in building key infarcts projec, Telecom Sector “The only ctor that seems to be atc pte cpt i ecommunl- cavons, wee large pojecs ae being implemented” If we ence PPP of the recta hioryspor-1991 Uberaltion pig of the Government of Tain probably dhe Be private parcipcon in infrasructar append in the elcommunicatin sor The Telegph Ac, 1865 was amended and Sec: allow the cen government to grants lcese on such cndion Iiincontdenion of ich payment asi think 6 a"sererprovides"™ Slain 20) ofthe Telcom Repay Autor fT TRAD Act define fcenseef0 mena any person Heed under bsccion (1) of ex of Tian Tlegaph Acs 1485 for providing speed publ tlecomman ‘on sic td feenor co men the cera goverment. Ths fr te [Boetime the government esinated the “permit system co ran Tics" eee companies for providing pe tity services The change 0 Tec yer siguifcant a he vate bound under the Consiuion © Nesp providing thes seni public uli services. Ths rom monopely Ee Eltcommuniaion, the sate moved on toward» contac fegime ‘Sttetningto involve and sac prvate paricpason i auch ental se ‘ess Valdating this move, the Supreme Cour in Tats Clr v. Union Finda? eld thar a elegraphy Ucense is enenily a contac between “he leenvor andthe cease wich the Lawful object of providing com tmunicaon series To segue the private players the Teleom Regulatory “Raton of nia Ac, 1997 wa ped. Section 11(2) of eepapy Act ‘thr TRA! to tor decmmantaon see, The eet ‘bound by any subeeqeent change inthe tr oder a ee ems of li nse aputant ell Seton 10 snes that "no service provider sll ies 1 Vln gh, Conan La inn Oe Des utero Lesh “ I puree Cras 45 ny manner, stot berensubscsber of the same as and ch ‘Sueno of wv al not be sey” "The Calls Mote Seneca btwn the Deparment of Tle commancaon an pvt iver ars Tere pei of 20 yeas 2 ‘enews a 10 yrs sine apn rut made yee "The ‘Tcon of he bce in shear fa The lene eval befor the prod af 20 yea for ror specie in he agreement “She goveremane sol ovr he telecom sector remained de tabshmes fs regan autor prove wd ein eres Setitncn Sal ar Sniar Rga led(N)and her as player in proidng lcnniaon services in he county. Airgors “Dusso she anseilof ubliinds” the Apo nfs ol, {997 swe 2003 wnendene ohe A Aa, both cgi he Ipocancs of pete prtcpon inthe Airport Insure sesae "THe palley negated modernization and uppadaion of sports i caesreee id xemtonl Ci Aviation Organization sana” The ‘otey apie that greet spor may be permed whevean casing, pot una o met the roel equines ea” "Tce no eran pois of the esac mannes in which che roe should pond esther developer as been lee anita been EAE mnjor modes ave bon flowed oe repding he SS pe i inn Seton ea Os ont eT ee Aen Seana ofthe Fm emer ee, 2 Sond ene i 9c a Came eect no of wsiomen mp sl onion of wi aed of "Seite tf pala 997. See et cecal anand Ae a nese pon eo a i al dom eh hrc cmp ft ing ies Meteo +80 ald Ome Op a Pt a ae ONerSclpy Fy a perenne modernisation of ing pena ih ther opting ‘Reeamacion a ne aprs" Repidng he vm of por ¢ rept el okey l pons pc aot Spor yb ove bythe cenal government gerne when fal di: poe oman and ndviua nd boy fa rentarriingoenae The Arpors Astor af nda AAD Aes, 194, amended in 203 wove forthe concep prises Any spor oweed bys eon, gens an AAI or any se goverment or cs ft ‘enturth he AAT rhe ateoverment ng owned by wh pen Sra aon toa ener 30 eet soe oe teeny for charge of ws functinns povided tat na cotractceing teh value or aur 3 the ental memento yon fa roll fate hat oC fo sein oe ef tunable propery efor lee ef any wich pope Tor» em exceding 0 yeas nade The modernisation, operation, ond maintenance fe, ‘Bahar tant apr were de 3000 tp he ae em (OW) roue win 74 pron parcpaon by patey ary and percent yaa Power Sector Power isa concurrent ub filling under Enry 38 Li Io the Seve Schell read with at. 246(2) of the Consittion of India, Te ep Framework inthe per scr cam he ace to thie mai lations nt ie thereunder ule en ING Satta Cand Aan Company ofc 2. The ey Supp Aer 48 4. The cng Repltory Comision At, 1998 “The fi of hee gene she namin, upland she we of ey sey The neon om te te and. prvi or he Toa ie End ee goer he "ot aly replace Tuo Comms he en and at vlad othe son anton 3 cre ising tansptet olor epi whe rie ind promovon fein and crenmenaly ey ples i200! the owernmenta Inn enced he Fete Act which eh to cree ther amen fo eh development of he power etn At ration eva eel are wate We ced Feon. The Appeoprte Comminion ean suipen! + debutionIceme (Frei eer eer im eve of pbc ier, of whee the tandads celina lett ae there peste deol in ng wh the ection af the commision or whee the Kenieba ‘he tre and condoms a the leene Al suspension sal be reson order andthe suiperion sal be fora masimum pv of one ‘rat dating hich the dab dal be managed by a mann {pind bythe common, “The conmsion mayo erminaethe iene publicitert otin ae of will tod pelonged dtl Liense ca sell iwi any prion ‘Si Act 1900 coms fnew lar PP hawagh tf eenan, Mwee {Senne ia mop fo ccs ok ah a at Ae SESE ph et are Seri ik found lige by the commision. The pinay ctson fr mon of thar hs ob he hight nda eof forthe way H/T Sa Commision denne opt Jenedingot eect however open ss pried sg ot ‘nbn under see 420), ean deerme oywhecng arpa” “The Suc of Deli ped he Di lecicy Retorm A2000 ich tn Part Vic des th censng of sino an ply. Secon 200) iri geen paren frre obese nape po the of power under» tanga power puch seer py inal dest te cme fo canes may tered th Irons pow co ake scons for teen zon, prsetion of Te ne npg dawson dacs, ruminal ers the dary devdlop and mata sm efile corned ed eetcinal ptr of dcy supply snd fr the opcaion and mae ‘Sin of ger yem: ito hve ait ‘Shires ul commlaton and ich semen al be bled with he ‘SiS Falcon may inquest conduct or faction ony ite and my ook ens poirot” ori enue 0 ofthe Dah Rene 2000, et PED in 2001 North Dali Powe ad wa ended in Jo Sonfteagh Pv tamewo JV" bree TATA Rowen Gove see eli Toe ofthe lcs 25 yan and the anal en rs aa count le rng te previous Banc ea, Highway cod. “There ae 2 mabe fresons forthe inadequnis four ond nots Pray hasbeen he ceo sures provided othe sector which al is ne ee Sper erect erent Week ny nat Tp ent fr oii ie fren Comma 7 scram the tho he 1008 eye plan. The Nason ighwaye ‘Ax 1986 was smende in 195 to spcealy ver th anal pone ‘men with te reson fo “ees an apne wi sn pain ‘loon athe depen nd sacar ofthe mle oy pr of natn highway. Thur, eva pron tte ecard ‘inenance of mana ighays har nw cane pole ough ‘Sard anne beer heen oversea the pre tcf) Cora ae demons pte apion ae el sing inl Famenoce The Nana! ey At pris hat ean ‘chap ha ana Ui ond Tas pov ec ascpeanT nae fig hte ns pate develope ache ‘ten psi nah gen in cet me ‘Tuntenane” as neon highway. This ini the op of pte Paipation to "dewdapment” and “multean’ aed do nos lase ‘lopment oflindsppunennt raced phenyte? “Another concen at ay preety the ope and pre of the ‘Nasal liphwuysAuhoiyatas (NTA coated dete NA Hag TOBE-Tre NFAT as jrcton over na hay pa a atonal igh which sen ween arene ey chee trl gwen Both ecrmn bargain diel consequences through seog” hereon ben alte tae pope ‘Eependingon the mere te rein wheres "ctrien weld em ‘afer in rs rasp prpse oy. This aient ine of he Betta ts the NEA, nd aoe emer ovement nl, hat seen ‘asic athe auto who woud be ging he concen see ‘Bee for eee parctan nthe matona hghay rr Una ere 1 diy the soe of poner ed arian f the NHAL eh Shs he nash penn op ch hohe Fee Ren ge a Sin Rn ery a Sa Ct ie cme ae = al = = 2 = o ot ra ~ Ss wl eTRKeEeL Cees eid il ]) TI site mma fe er kis pn he ae eo rrmrt meng tose od giro a om oarong Sa irvine manage ond opengene ew cnn es Se ST STRAPS

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