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Draft Operation Contract
Draft Operation Contract
Acting through
AND
PREAMBLE
WHEREAS the Government through the Ministry and the Project Manager are
desirous to cooperate for the purpose of operating, developing and managing the
Uvhungu-vhungu Dairy Project for the promotion of agricultural production;
WHEREAS the Parties agree that the Lessee shall lease a portion of land
measuring 396 hectares situated in Rundu Rural Constituency with the aim to
develop, operate and manage the Uvhungu-vhungu Dairy Project;
Whereas the Government entrusts the Project Manager who accepts the
terms and condition of this Agreement to operate, further develop, manage
the Project and to perform certain other functions in accordance with the
terms agreed upon hereinafter; and
ARTICLE 1
INTERPRETATION AND DEFINITIONS
1.1 In this Agreement unless the context clearly indicates a contrary intention:
1.1.1 The headings to the paragraphs in this Agreement are for reference
purposes only and shall not affect the interpretation of any part
hereof.
1.1.2 Words projecting any one gender shall include all of the other
genders; the singular shall include the plural and vice versa; and
any reference to a natural person shall include a body corporate,
firm or association and vice versa.
1.1.3 The following words shall each bear the meaning set out opposite
them below and cognate expressions shall bear corresponding
meanings:
“Effective Date” means the date upon which all Parties sign the
Agreement, and upon satisfactory presentation of the proof of
funding for investment as may be required by the Ministry;
ARTICLE 2
OBJECTIVES OF THE PROJECT
2.1 To engage in the production of agricultural products as set out in the Business Plan
and which is consistent with the Dairy Industry Act.
2.3 To mobilize public and private capital to supproject agricultural production under
irrigation and value addition.
2.4 To promote the efficient utilisation of land, good agricultural practices, enhance
productivity and return on investment.
2.5 To promote capacity building and skills development as well as continuous research
and development for inter alia technology adaptation, crop and product
diversification.
2.7 To ensure efficient and sustainable management of the _________ Green Scheme
Project resulting in good return on investment of the parties
ARTICLE 3
RESPONSIBILITIES OF THE PARTIES
3.3 Jointly with the Project Manager, conduct annual inspection of the Project
infrastructure on a date to be confirmed in writing.
3.4 Ensure that the operations of the Project are in line with the Business
Plan, which in turn shall be in line with Government objectives of
increasing productivity and competitiveness of the agricultural sector.
3.4 Ensure compliance with the Dairy Industry Act, 1961 (Act 30 of 1961)
by the Project Manager.
3.7 Approve the annual investment programme from the Project Manager.
3.9 Be responsible for the provision of working capital and annual work plans
in order to keep the Project under full and optimal production and shall
provide proof thereof to the Ministry on a quarterly basis.
3.12 Cause true and accurate books of account and other records, prepared in
terms of normal business practices, reflecting the results of the operation
of the Project to be kept at all times.
3.15 Undertake not to dispose of, auction off or remove any assets belonging to
the Ministry without their written permission.
3.16 Protect and maintain State assets entrusted upon them through this
Agreement, and ensure that all State assets are used solely for Project
activities.
3.20 Submit all required management and operational reports in respect of all
facets of the Project to the Ministry.
ARTICLE 4
RESERVATIONS OF OWNERSHIP
4.1 The land (including all natural resources below and above the surface of
the land) upon which the Project is located as well as all assets and all
future assets bought or donated by the Government of the Republic of
Namibia shall remain the property of the Government.
4.3 The Project Manager shall not raise any right or title to the land and
assets belonging to the Government in any dispute, especially the right to
occupy such land and possess such assets.
ARTICLE 5
PROJECT FINANCING
5.1 The Government shall provide land, movable and immovable assets as
contained in the inventory list constituting an Annex to this Agreement,
and any other necessary assets to be acquired thereafter.
5.2 Capital investments by the Project Manager shall be done with the consent
of the Ministry, on condition that such assets shall become Government
property at the end of the Agreement. The Project Manager shall
herewith have the Ministry’s permission to effect
alterations/additions/changes to the assets of Project on the conditions
that:
5.2.3 the Ministry shall compensate the Project Manager for the
alterations
/additions/changes if this Agreement does not endure for the entire
duration.
5.3 The Project Manager shall be responsible for maintaining the existing and
new infrastructure, related plant and equipment to a reasonable standard
in order to ensure productive and competitive farming at all times.
B. Working Capital
5.4 It is the responsibility of the Project Manager to mobilize the working
capital and use its best endeavours to ensure the profitability of the
Project and to minimize liabilities on the Project, within the parameters of
the Business Plan.
5.5 The Project Manager shall be responsible for the funding of all operational
related costs and shall equally be responsible for servicing capital loan
and overdraft, including interest accrued on money borrowed by it.
ARTICLE 6
LEASE FEES AND ROYALTY
The Project Manager shall pay the lease fees and royalty, in accordance with the
provisions of a separate Lease Agreement.
ARTICLE 7
QUARTERLY AND ANNUAL MEETINGS
7.2 An Annual General Meeting shall be called by the Ministry and held at
Uvhungu-vhungu Dairy Project site or any such venue as agreed upon by
the Parties in writing, during the months of July each year or whenever
possible, to: evaluate the progress made in implementing the Project;
examine extracts of the financial statements; review lease fees; and
review cropping and marketing programmes.
7.4 The Ministry shall facilitate the meetings and compile minutes of the
meetings.
7.5 The quorum of any meeting shall be formed when each Party is
represented by authorised representatives.
ARTICLE 8
CESSION OF RIGHTS
The Project Manager shall not cede any of its rights or delegate any of its
obligations in terms of this Agreement or part thereof to any person without the
prior written consent of the Ministry and which consent shall be granted on
reasonable ground.
ARTICLE 9
CHANGE IN MEMBERSHIP
9.1 The Project Manager shall ensure that no shares or interests shall be
transferred from its shareholders or associates to any person or corporate
body without the prior written consent of the Ministry, which consent shall
not be unreasonably withheld taking into consideration the needs of the
Project and financing thereof.
ARTICLE 10
POWER SUPPLY
10.1 The Project Manager shall ensure that the Property is connected to the
power grid and that a transformer(s) with the required capacity is in place.
10.2 The Parties shall co-operate to ensure that a production plan is in place
indicating the period of maximum and low demand and negotiate with the
electricity supplier.
10.3 The Project Manager shall be responsible for the payment of all electricity
charges in respect of the Project.
10.4 The Project Manager shall at its costs maintain the power supply in a good
state of repairs.
ARTICLE 11
WATER RIGHTS
The Ministry shall grant the Project Manager the rights for abstraction of water
from the Okavango River at a sufficient rate to irrigate the allocated 264 hectares
and the Project Manager shall be responsible for the payment of such rights of
extraction.
ARTICLE 12
LOSS CONTROL MANAGEMENT SYSTEM
A comprehensive Loss Control Management System, looking after all forms of losses
(time, energy, fodder, equipment, livestock, useable land) should be introduced and
reprojected upon on a formal basis during the quarterly meetings and at the Annual
General Meeting.
ARTICLE 13
MINIMUM WASTAGE
13.1 The Project Manager shall observe strict overall waste generation
practices.
13.2 The Project Manager shall ensure that organic and bio-waste is converted
into compost or soil conditioning material, and that plastic covers and
other solid waste shall, under no circumstances, be burned or left on the
farm to be blown away.
13.3 The Project Manager shall, within 90 days after entry into force of this
Agreement, draw up a policy to deal with solid waste which policy shall be
in line with the accepted norms and standards.
13.4 The Ministry, once satisfied with the content of the policy, shall endorse
the policy.
ARTICLE 14
INSURANCE AND LIABILITY
14.1 The Project Manager shall be responsible for the insurance of equipment
and plants (transformer) that are critical to the Project.
14.2 The Project Manager (including its agents or employees) shall not keep or
do in or about the Project anything which is liable to create or enhance the
risk of livestock, the buildings or equipment being damaged or destroyed,
or which may result in any insurance being void or voidable, or the
insurance premiums being increased, should the livestock, buildings or
equipment in question be insured.
14.4 The Project Manager shall also be responsible for the insurance of
livestock, milk and milk products against fire on the project or in storage,
as deemed necessary and as is deemed reasonable under the
circumstances.
14.5 The Project Manager shall submit proof of such insurance within 14 days
after such insurance was secured.
ARTICLE 15
LIMITATION OF MINISTRY’S LIABILITY
15.1 Repairs: The Ministry shall not be liable for repairs of any damage to the
exterior or the interior of the buildings on the Property, and Project Manager will
be liable for repairs and the full maintenance of buildings on the Property.
15.2 Entry to the Property: The Ministry and any official(s) delegated by the
Ministry shall be entitled to enter the Property upon immediate notice to the
Project Manager.
15.3 Damages to Private Property: The Ministry shall not be liable for any
damage to, or any loss of, any property of any nature owned by whomsoever as
may from time to time be upon the Property, or any injury or death suffered to
anyone whomsoever on the Property, unless such damage, loss or injury is
caused by gross negligence or wilful act on the part of the Ministry.
15.4 Obligation to third Parties: The Ministry shall not be liable for any
obligation for which the Project Manager is liable to third parties arising
out the implementation of this Agreement.
ARTICLE 16
INDEMNITY
The Project Manager hereby indemnifies and shall keep the Ministry indemnified
against all claims, demands and proceedings brought or instituted by third parties
against the Project Manager and arising from the performance or non-
performance by the Project Manager, its employees and or agents, of any
obligations of the business as from the effective date, including all costs, charges
and expenses incurred by the Project Manager arising from or relating to such
claims, demands and proceedings.
ARTICLE 17
FORCE MAJEURE
17.1 Neither of the Parties shall be liable for the failure to perform any of its
obligations under this Agreement insofar as it proves that:
17.1.1 the failure was due to an impediment beyond its control and could
not reasonable have been foreseen and avoided at the effective
date and include inter alia the following:
17.1.1.1 war, whether declared or not, civil war, civil violence, riots
and revolutions, acts of sabotage, etc;
apart from acts from which the Party seeking relief has assumed the risk by
virtue of any other provision of this Agreement.
17.1.2 For the purposes of this Article, “impediment” does not include lack
of authorisations, of licenses, permits, or approvals necessary for
the performance of this Agreement and to be issued by the
appropriate public Procuring Authority.
ARTICLE 18
BREACH OF THE AGREEMENT
18.1 Failure by the Project Manager to pay any amount due in terms of this
Agreement within 120 days from the financial year end of the Project and
if it remains in default after 30 (thirty) days despite written notice to
remedy such a default shall constitute a material breach of this
Agreement.
18.2 Failure by either Party to meet its obligations under Article 3 shall
constitute a material breach of this Agreement.
18.3 In the event of a material breach of this Agreement by either the Ministry
or the Project Manager, the offended Party shall be entitled to request in
writing the Party in breach to remedy the breach within 30 (thirty) days of
the said request. Failure to remedy such breach shall entitle the offended
Party:
ARTICLE 19
EFFECTS OF TERMINATION OF THE AGREEMENT
19.1 The long-term nature of this Agreement is agreed to between the Parties
to enable the Project Manager to recoup its investment in the Project.
Should the operation of the Project be transferred back to the Ministry at
the expiry of this Agreement by effluxion of time, no residual value will be
payable to the Project Manager.
19.2 Notwithstanding Article 19.1 above, either Party may terminate this
Agreement for other justifiable reasons other than breach of the
Agreement, provided that this Agreement may not be so terminated within
the first 10 years, and provided further that the Party terminating the
Agreement gives the other Party four (4) months’ notice of its intention to
terminate the Agreement.
19.4 The Parties hereby agree that the Ministry shall pay to the Project
Manager the difference between the Project Manager’s contribution to the
Project and the amount recouped as set out in Article 19.3 above, and
shall pay the amount of such residual value to the Project Manager within
6 months calculated from the date on which the Project Manager vacated
the Property.
19.5 In the event of termination of the Agreement by either Party, the Parties
shall negotiate in good faith to reach a mutual understanding and shall
compile an inventory list to determine which assets should be shared and
removed from the Property.
19.6 Upon presentation of the termination notice by either Party, the Project
Manager shall vacate the Property within 120 days from date of receipt of
the notice, and at the handover of the Property, the Parties will jointly
carry out an inventory assessment.
ARTICLE 20
APPLICABLE LAW
This Agreement shall be interpreted and governed in accordance with the laws of
the Republic of Namibia.
ARTICLE 21
ARBITRATION
21.1 Save where otherwise provided for in this Agreement, should any dispute
arise between the Parties in connection with:
this Agreement or which relates in any event to any matter affecting the
interests of the Parties in terms of this Agreement, that dispute shall, unless
resolved between the Parties, be referred to and be determined by arbitration
in terms of this Article.
21.2 Any Party to this Agreement may demand that a dispute be determined in
terms of this Article by written notice to the other Party.
21.3 This Article shall not preclude any Party from obtaining interim relief on
an urgent basis from a court of competent jurisdiction pending the decision
of the arbitrator.
21.4.1 at Windhoek;
21.4.2 with only the legal or other representatives of the Parties to the
dispute present thereat; and
21.4.3 in accordance with the Arbitration Act, 1965 (Act No. 42 of 1965),
as amended.
21.5.1 a legal matter, a Legal Practitioner who has been practicing for at
least 5 (Five) years;
21.5.3 any other matter, an independent person, agreed upon between the
Parties.
21.6 Should the Parties fail to agree as to the nature of the dispute within 7
(Seven) days after arbitration was demanded, the matter shall be deemed
to be a legal matter.
21.7 Should the Parties fail to agree on an arbitrator within 14 (Fourteen) days
after giving notice in terms of Article 21.2, the arbitrator shall be
appointed at the request of either Party by the President for the time
being of the Law Society of Namibia.
21.8 The decision of the arbitrator shall be final and binding on the Parties and
may be made an order of court referred to in Article 21.9 at the instance
of either Party.
21.9 The Parties hereby consent to the jurisdiction of the High Court of
Namibia in respect of the proceedings referred to in Article 21.8.
21.10 The Parties agree to keep the arbitration, including the subject matter of
the arbitration and the evidence heard during the proceedings confidential
and not to disclose it to anyone except for the purpose of an order to be
made in terms of Article 21.8.
21.11 The provisions of this Article:
21.11.2 are severable from the rest of this Agreement and shall
remain in effect despite determination of or invalidity for any
reason of this Agreement.
21.12 The issue of ownership shall not be the subject of any dispute whether in
terms of this Article or any other Article.
ARTICLE 22
ENTRY INTO FORCE AND DURATION
22.1 The entry into force of this Agreement shall be suspensive upon receipt of
proof of funding by the Ministry, within ninety (90) days calculated from
the date of signing this Agreement, or such a later date as may be agreed
by the Parties.
22.2 The Agreement shall remain in force for a period of … years, unless
terminated in terms of this Agreement.
22.3 The Ministry may renew this Agreement for a period of 5 (five) years,
subject to the following provisions:
22.3.1 The Ministry shall give notice of renewal in writing to the Project
Manager 6 (six) months before the expiry date of this Agreement.
22.3.2 At the expiry of this Agreement, the Parties will revise the
provisions of the Agreement in order to renew the Agreement. In
the event that the Parties cannot agree to any particular revision
suggested by any of them and a deadlock is thus reached, the
Ministry reserves the right to make a final decision.
22.3.3 If this Agreement does not endure at least for the full term
indicated in Article 22.2, including any renewal thereof, the right of
renewal shall lapse and shall be of no force and effect.
ARTICLE 23
NON-WAIVER
23.1 No relaxation or indulgence which either Party may show or give at any
time whatsoever in regard to the other Party's obligations in terms of this
Agreement shall prejudice the other Party or be regarded as a waiver of
any of that Party's rights under this Agreement.
ARTICLE 24
VARIATION AND AMENDMENTS
24.2 Subject to Article 24.1 above, either Party may propose an amendment to
this Agreement through the submission of documentation regarding the
provision to be amended, after which a reasonable time shall be mutually
agreed upon for the negotiations.
ARTICLE 25
SEVERABILITY
25.1 Each of the provisions of this Agreement shall be regarded as distinct and
severable from the other provisions thereof, and shall be given effect to as
such notwithstanding the manner in which it has been linked to any other
provision of this Agreement.
ARTICLE 26
COSTS
Stamp Duty
26.1 The Project Manager shall be responsible for and pay the stamp duty
payable in respect of this Agreement.
Other Costs
26.2 Each Party shall bear their own costs of negotiation, drafting, execution
and implementation of this Agreement.
ARTICLE 27
DOMICILIUM EXECUTANDI
27.1 The Parties choose as their domicilia citandi et executandi for all purposes
under this Agreement at the addresses as set out below, and either party
may at any time change its domicilium to any other address (not being a
post box or post restante) on not less than 30 (thirty) days written notice
to such effect to the other Party:
27.2 Any notice given in terms of this Agreement shall be in writing and shall if
delivered by hand or telecopy be deemed to have been duly received by
the addressee at noon on the first day following the day of delivery or
transmission.
ARTICLE 28
ENTIRE AGREEMENT
28.1 The Parties hereto agree that this Agreement and annexes thereof,
constitute the entire and exclusive agreement between them pertaining to
the subject matter contained in it and supersedes all prior agreements,
oral or written, conditions, representations, warranties, proposals and
undertakings of the Parties pertaining to the subject matter.
28.2 In the event of there being a conflict between the content of this document
and its annexes, this Agreement shall supersede the content of annexes.
AS WITNESS
1. _______________________
2. _______________________
_______________________________________
IN HIS/HER CAPACITY AS EXECUTIVE
DIRECTOR
AS WITNESSES
1. _______________________
2. _______________________
____________________________________
___ IN HIS/HER
CAPACITY AS DIRECTOR OR
MANAGING DRECTOR