CONTRACT AGREEMENTTHIS CONTRACT NO. _______________________ made this ______________ Day of February, Two thousand seven at Rourkela.BETWEENSTEEL AUTHORITY OF INDIA LIMITED, a Company incorporated under the Companies Act, 1956 and having its registered office at Ispat Bhavan, Lodi Road, New Delhi 110 003, India, having one of its plants Rourkela Steel Plant at Rourkela (hereinafter referred to as the "Employer") which term or expression unless excluded by or repugnant to the context or the meaning thereof, shall be deemed to include its successors and permitted assigns, OF THE ONE PART,ANDM/s.Sinosteel Engineering Design & Research Institute, a Company incorporated and existing under the laws of China and having its Registered Office at 108 Huaian East Street, Shijiazhuang, Hebei Province, 050021 China(hereinafter referred to as "Contractor"), which term or expression unless excluded by or repugnant to the context or meaning thereof, shall be deemed to include its successors and permitted assigns, OF THE OTHER PARTAND WHEREASa) The Employer has decided to set-up Coal Dust Injection unit in Blast Furnace #4at Rourkela Steel Plant, (hereinafter referred to as the " Facilities "), andb) The Contractor has declared that the Contractor has valuable and specialised knowledge andexpertise for design & engineering, civil engineering work, dismantling of buildings, structures & equipment, fabrication & supply of steel structures, manufacture & supply of plant and equipment, manufacture & supply of refractories, intermediate storage, insurance & handling, erection work, testing, pre-commissioning, start-up & commissioning and demonstration & establishment of performance guarantee parameters of the Facilities on divisible turnkey basis, andc) The Contractor has declared that the Contractor is in a position to disclose, impart, deliver andtransfer the requisite engineering data, drawings and documents of those items which are in the scope of the Contractor in this Contract, to the Employer for the engineering of the Facilities and for erection, start-up and commissioning of the Facilities with the aim to manufacture product as specified in the Contract, andd) The Contractor has obtained clarifications on technical and commercial aspects, inspected the siteand surroundings of Facilities and has examined and considered all other matters, conditions and things, probable contingencies including delays, hindrances and interferences and generally all matters incidental thereto and ancillary thereof, affecting the execution and completion of the Facilities, ande) The Contractor has agreed to undertake design & engineering, civil engineering work, dismantling ofbuildings, structures & equipment, fabrication & supply of steel structures, manufacture & supply of plant and equipment, manufacture & supply of refractories, intermediate storage, insurance & handling, erection work, testing, pre-commissioning, start-up & commissioning and demonstration & establishment of performance guarantee parameters of the Facilities, andf) SAIL, Centre for Engineering & Technology, Ranchi shall be the Consultant for the Facilities.NOW IT IS HEREBY AGREED as follows :Article 1. Contract Documents 1.11.2Definitions (Reference GCC Clause 1)Contract Documents (Reference GCC Clause 2)The following documents shall constitute the Contract between the Employerand the Contractor, and each shall be read and construed as an integral partof the Contract :(a) This Contract Agreement and Appendices hereto(b) Special Conditions of Contract and Annexures hereto(c) General Conditions of Contract and Annexures hereto(d) Technical Specifications(e) General Technical Specifications(f) Safety Code(g) Wage circular1.3 Order of Precedence (Reference GCC Clause 2)In the event of any ambiguity or conflict between the Contract Documentslisted above, the order of precedence shall be the order in which the ContractDocuments are listed in Article 1.2 (Contract Documents) above.Article 2. Contract Price and Terms of Payment 2.1 Contract Price (Reference GCC Clause 11 & Appendix-1)The Employer hereby agrees to pay to the Contractor the Contract Price inconsideration of the performance by the Contractor of its obligationshereunder. The Contract Price shall be the aggregate of US Dollar FourMillion Eight Hundred Sixteen Thousand and Four Hundred Fifty only[ US$ 4,816,450.00] and Indian Rupees Two Hundred Twenty One MillionNine Hundred Thirty Seven Thousand and Five Hundred Seventy Sixonly [ Rs. 221,937,576.00]or such other sums as may be determined inaccordance with the terms and conditions of the Contract.2.2 Terms of Payment (Reference GCC Clause 12 & Appendix-3)The terms of payment are given in Clause 12 of GCC and Appendix-3.2.3 Price Adjustment due to Variation in Price Indices(Reference GCC Sub-Clauses 11.3.3 & 11.4.1, Clause 11.5 & Appendix-4)Where the Contract period [excluding the Defect Liability Period, i.e., twelve(12) months from the date of issue of commissioning certificate as indicated inthe Clause 30 of GCC] exceeds twelve (12) months as specified in Sub-Clause 11.3.3 of GCC, the price payable to the Contractor, in accordance withthe Contract shall be subject to adjustment during performance of the Contractdue to variation in price indices. Price adjustment due to variation in priceindices shall be in accordance with the provisions given in the Appendix-4 andClause 11.5 of GCC subject to a ceiling of 15% of total Base Price forrespective heads as specified in Sub-Clause 11.4.1 of GCC.Article 3. Effective Date 3.1 Effective Date (Reference GCC Clause 1)The Effective Date of Contract is the date of signing the Contract.Article 4. Scope of Facilities 4.1 Scope of Facilities (Reference GCC Clause 7 & Technical Specifications)The Contract is for the execution of Scope of Facilities as specified in theGCC Clause 7 and Technical Specifications, on divisible turnkey basis. Thephysical quantities of civil work and weights of the mechanical equipmentincluding technological structures, building structures and refractories as givenin Tables in Appendix-1, are indicative only for the purpose of makingprogress payments on pro-rata basis as per Sub-Clause 2.3 of Appendix-3. 4.2 Should the actual physical quantities and weights differ from the indicatedones, neither the Contractor shall be entitled to get any additional price fromthe Employer nor the Employer is entitled to deduct any amount from theContract Price due to variation in physical quantities and weight.Article 5. Time for Completion 5.1 Time for Completion (Reference GCC Clause 8 & Appendix-2)Time is the most important feature of the contract.The Facilities will be completed in Seventeen(17) months from the EffectiveDate of the Contract. The Facilities shall be considered as completed whencommissioning certificate has been issued by the Employer. Performanceguarantee parameters will be established by the Contractor within a period ofsix (6) months from the date of issue of commissioning certificate. TheFacilities shall be considered as completed in all respects only afterestablishment of performance guarantee parameters and completion of DefectLiability period of twelve (12) months from the date of issue of commissioningcertificate. Bar Chart indicating the Time Schedule for completion of theFacilities is given in Appendix-2.The Contractor shall arrange for supplies of the plant & equipment, structuresand refractories in the logical sequence required for erection at site within theoverall delivery schedule of the Contract as per Sub-Clause 11.7.2 of GCC.Article 6. Consultant 6.1 Consultant (Reference GCC Clause 1)The Consultant in relation to the Contractor, shall have such functions as aredelegated to him in the Contract or as may be delegated to him by theEmployer from time to time. Employer shall keep the Contractor informed ofsuch delegation.6.2 If there is any difference between the Contractor and the Consultant on anymatter about the implementation of this Contract, the matter shall be referredto the Employer, whose decision shall be final and binding on the Contractorand the Consultant.Article 7. Subcontract ing 7.1 Subcontracting (Reference GCC Clause 19)The Contractor shall engage only those Sub-Contractors / Vendors which areapproved by the Employer and included in the list of approved Sub-Contractors / Vendors (Appendix-6) forming part of the Contract Agreement.The Contractor may from time to time propose any addition to or deletion fromapproved list to the Employer for its approval in sufficient time so as not toimpede the progress of work on the Facilities. Such approval by the Employerfor any of the Sub-Contractors / Vendors shall not relieve the Contractor fromany of its obligations, duties or responsibilities under the Contract.Article 8.Use of SAIL Steel 8.1 Use of SAIL Steel (Reference GCC Sub-Clause 11.2.11)The Contractor shall have to use such items of steel as are manufactured bySteel Authority of India Limited (SAIL) and which are required for execution ofall civil and building structural work including sheeting, technologicalstructures, pipelines, etc. Such items of steel as are made by SAIL andrequired for the work shall be procured from SAIL-Stockyards / Plants toensure availability of steel items required for the Facilities, the Contractor hasto give at least six (6) weeks advance intimation of such requirement. In nocase without obtaining a prior “No Objection” from the Engineer, any item ofsteel other than made by SAIL shall be used by the Contractor.Article 9. Liquidated Damages 9.1 Liquidated Damages (Reference GCC Clause 27 & 29) LD shall be applicableon the Base Contract price including escalation but excluding taxes andduties.9,1.1Liquidated Damages due to Delay in Completion of Facilities(Reference GCC Sub-Clause 29.2)If the Contractor fails to attain “Completion of the Facilities” as defined inClause 1 of GCC within the Time for Completion or any extension thereofunder Clause 42 (Extension of Time for Completion) of GCC due to reasonsnot attributable to the Employer, the Employer shall recover the amount ofLiquidated Damages, but not by way of penalty, by making deductions fromthe Contractor’s account or by encashment of Contractor’s Bank Guarantees(as per Sub-Clause 13.1.2 of GCC), at the rate of 0.5% of the total ContractPrice plus escalations, if any, paid or payable to the Contractor, per week ofdelay or part thereof up to a maximum of 5% of the Contract Price plusescalation if any, paid or payable to the Contractor, but excluding taxes andduties as specified in the Clause 29.2 of GCC.In case, the Contractor is a Consortium, the Employer shall recover theamount of Liquidated Damages, but not by way of penalty, by makingdeductions from the account of each member of Consortium, or byencashment of their Bank Guarantees as per above clause, up to a maximumof 5% of the Contract Price of the respective Scope of Facilities as specified inSub-Clause 7.11.1 of GCC. However, each member of Consortium, shall bejointly and severally bound to the Employer for paying Liquidated Damages.The Employer shall recover Liquidated Damages due to delay in completion offacilities from the account of Contractor or each member of consortium at thetime of payment due upon issue of Commissioning Certificate and if requiredthereafter.9.1.2 Liquidated Damages for Non-fulfilment of Performance Guarantee Parametersof Facilities (Reference GCC Clause 27)If, for reasons not attributable to the Employer, the performance guaranteeparameters specified in Appendix-5 to the Contract Agreement are not meteither in whole or in part, the Contractor shall at its cost and expense makesuch changes, modifications and / or additions to the Facilities or any partthereof as may be necessary to meet performance guarantees parameters.The Contractor shall notify the Employer upon completion of the necessarychanges, modifications and / or additions, and shall request the Employer toallow the Contractor to repeat the performance guarantee test (2nd test) so asto establish the performance guarantee parameters.If, for reasons not attributable to the Employer, the performance guarantees specified in Appendix-5 to the Contract Agreement are not attained either in whole or in part, after first performance guarantee test as per Sub-Clause 27.2 of GCC, the Contractor shall be allowed by the Employer to repeat the performance guarantee tests twice after first test and the Contractor must establish the performance guarantee tests during second or third test, within a period of six months from the date of commissioning certificate as indicated in Appendix-5.In case the Contractor expresses its inability to achieve the performance guarantee parameters but attains above the minimum acceptance level of performance guarantee parameters, specified in Appendix-5, either in whole or in part in spite of second and third performance guarantee tests conducted by the Contractor within a period of six months from the date of commissioning, the Employer shall recover the amount of Liquidated Damages, but not by way of penalty, by making deductions from the Contractor’s account or by encashment of Contractor’s Bank Guarantees (as per Sub-Clause 13.1.2 of GCC), at the rates specified in the Appendix-5 for respective items, subject to a maximum of 7.5% of the Contract Price, in respect of the failure to meet the minimum level of Performance Guarantees in accordance with the provisions in Appendix-5 to the Contract Agreement.In case, even after all possible repairs and replacements the Contractor fails to attain the minimum level of performance guarantee parameters in third test conducted within a period of 6 months from the date of commissioning the Employer may at its option reject the Facilities and recover the entire cost paid to the Contractor or alternatively the Employer may proceed for commercial settlement with the Contractor for acceptance of the Facilities at the negotiated Price.9.1.3 In case, the Contractor is a Consortium, the Employer shall recover the amount of Liquidated Damages, but not by way of penalty, by making deductions from the account of each member of Consortium, or by encashment of their Bank Guarantees as per above clause, up to maximum of 7.5% of the Price of the respective Scope of Facilities as specified in Sub-Clause 7.11.1 of GCC. However, each member of Consortium, shall be jointly and severally bound to the Employer for paying Liquidated Damages to the Employer.The ceiling on Liquidated Damages on account of delay (maximum 5%) and non-fulfilment of Performance Guarantee parameters (maximum 7.5%) will be limited to maximum 10% of the contract price.Article 10.Arbitration10.1 Arbitration (Reference GCC Clause 6)Any disputes, differences, whatsoever, arising between the parties out of orrelating to the construction, meaning, scope, operation or effect of thisContract shall be settled between the Employer and the Contractor amicably.If however, the Employer and the Contractor are not able to resolve theirdisputes / differences amicably as aforesaid the said disputes / differencesshall be settled by Arbitration in accordance with the Rules of Arbitration ofthe Indian Council of Arbitration and the award made in pursuance thereofshall be binding on the parties.The arbitration shall be governed and regulated in all respect according to thelaws of India and the Arbitration proceedings shall be regulated and governedby Indian Arbitration and Conciliation Act 1996 or such modifications or re-enactment thereof. The venue of Arbitration shall be New Delhi, India forContracts with Overseas Contractors and for indigenous contractors venueshall be the place where plant is situated i.e. Rourkela.Article 11. Liability of Govt. of India 11.1 Liability of Govt. of IndiaIt is expressly understood and agreed between the Contractor and theEmployer that the Employer is entering into this Agreement solely on its ownbehalf and not on behalf of any other person or entity. In particular, it isexpressly understood and agreed that the Govt. of India is not a party to thisAgreement and has no liabilities, obligations or rights hereunder. It isexpressly understood and agreed that the Employer is an independent legalentity with power and authority to enter into Contracts solely on its own behalfunder the applicable laws of India and general principles of Contract Law. TheContractor expressly agrees, acknowledges and understands that theEmployer is not an agent, representative or delegate of the Govt. of India. It isfurther understood and agreed that the Govt. of India is not and shall not beliable for any acts, omissions, commissions, breaches or other wrongs arisingout of the Contract. Accordingly, the Contractor hereby, expressly waives,releases and foregoes any and all actions or claims, including cross claims,impleader claims or counter claims against the Govt. of India arising out of thiscontract and covenants not to sue the Govt. of India as to any manner, claim,cause of action or thing whatsoever arising of or under this agreement.Article 12. Appendix The following Appendices shall be deemed to form an integral part of this Contract Agreement. Reference in the Contract to any Appendix shall mean the Appendices attached hereto, and the Contract shall be read and construed accordingly.1 Price Schedule2 Time Schedule3 Terms of Payment4 Price Adjustment due to Variation in Price Indices5 Performance Guarantees6 List of Approved Sub-Contractors / VendorsArticle 13.No modifications of this Contract including Appendices hereto, shall be validunless the same is agreed to in writing by the parties and issued asamendments to the Contract.IN WITNESS WHEREOF the Employer and the Contractor have caused this Agreement to be duly executed by their duly authorised representatives the day and year first above written.Signed by for and on behalf of the Contractor Signed by for and on behalf of the Employer[Signature][Signature] [Designation] [Designation]In the presence of In the presence of1) [Signature]1) [Signature][Designation][Designation]2) [Signature]2) [Signature][Designation][Designation]。