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DEEPAK PHINOLEC LIMITED - Operation and Supply
DEEPAK PHINOLEC LIMITED - Operation and Supply
BETWEEN
STEAMHOUSE INDIA LIMITED
AND
DEEPAK PHINOLEC LIMITED
This Operation and Supply agreement (hereby referred as ‘agreement’) has been entered into
and made effective and binding on ______ day of ____ month to the year Two Thousand and
Twenty- Two (Commencement Date) by and between the Following Parties:
RECITALS
WHERAS, the Owner Owns a Boiler Details of the Boiler with a capacity of 125 TPH
(hereby referred as “project”) and desires to contract for operations, maintenance and
management of the Project as well as purchase the steam produced by the operation
undertaken by the Operator on the terms and conditions set forth in this Agreement
WHEREAS, Operator provides operations, maintenance and management services for the
Boiler, the Operator further agrees to generate the steam using the fuel purchased at the cost
of the Operator and supply the steam to the Owner on the terms and conditions set forth in
this Agreement
The parties have undertaken all necessary Legal/Statutory approvals as may be required to
enter into the present Agreement and are following all the requisite laws applicable.
NOW THEREFORE, in consideration of the terms and conditions hereinafter contained, the
Owner and Operator hereby agree as follows:
ARTICLES
1. AGREEMENT
This Agreement consists of the terms and conditions set forth in the sections captioned
by numbered article designations (“Articles”) and the following appendices, which are
incorporated and made part this Agreement by this reference and are included in any
reference to this Agreement.
If the terms and conditions of the Articles of this Agreement vary or are inconsistent with
any portion of the Appendices, the terms of the Articles of this Agreement shall control
and be given priority, and the provisions of the Appendices shall be subject to the terms of
the Articles. This Agreement contains the entire agreement between the parties and
supersedes all prior agreements, whether oral or written, between the parties with respect
to the subject matter of this Agreement. Neither party will be bound by or be deemed to
have made any representations, warranties, commitments or other undertakings with
respect to the subject matter of this Agreement that are not contained in this Agreement.
1.1 Effective Date and Term: This Agreement shall be effective and shall govern the rights
and obligations of the parties from and after the date of this Agreement for a period of 5
(Five) years/months.
1.2 Relationship of The Parties: Operator has been retained by Owner as an independent
contractor to operate, maintain and manage the Project on behalf of Owner, in
accordance with Prudent Utility Practice and the requirements of the Project
Agreements. Owner has delegated to Operator overall responsibility for operating,
maintaining and managing the Project to ensure that the Project is available to produce
Steam for supply and running the turbine. Further, it is also agreed between the party
that the Operator shall have full and complete rights over the steam generated from the
Boiler and the Owner shall purchase the Steam being produced by the operation
undertaken by the Operator/Supplier.
The object of this Agreement is to set out the provisions under which the Owner will
deliver to the Operator the Boiler owned by the Owner and the Operator will Operate,
Maintain and manage the Boiler. The agreement further states out the provisions under
which the Operator shall Supply the Steam being produced to the Owner on the virtue that
the Coal is purchased by the Operator and the Owner shall Purchase the steam being
produced. The Operation, Maintenance and Management of the Boiler and Supply of the
Steam shall be exclusively subject to the provisions of this Agreement unless this
Agreement explicitly provides otherwise.
The Owner acknowledges that this Agreement forms the basis of the contractual
relationship between the Parties and waives the application of the Owner’s standard terms
and conditions that usually apply to such transaction. The Owner explicitly agrees that the
provisions of such standard terms and conditions of the Owner shall not bind the Operator,
even if they are printed or attached to orders (if any), confirmations of orders (if any),
shipping documents, invoices, or other business documents.
3. INTERPRETATION CLAUSE
Unless defined elsewhere in this Agreement, the capitalized terms in this Agreement shall
have the meaning set forth in this Section. The terms defined below or used elsewhere in
this Agreement shall be deemed to refer to the singular or plural as the context requires.
Further, the Terms that are defined in the other Articles shall have the meaning given to
them in those Articles.
3.1 “AFFILIATE” means any person or body Controlled by, Controlling or under common
Control with either party.
3.2 “BILLING METER”
3.3 "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required to close in India.
3.4 “CONFIDENTIAL INFORMATION: means any financial, commercial, scientific,
operating and all proprietary information that is made available to the duly authorized
representatives of the Receiving Party in writing or electronic form or labelled as
“confidential” at the time of disclosure. Confidential Information will include but not
be limited to, the contents of all business negotiations including all legal documentation
such as agreements, memoranda of understanding, texts, articles, commentaries, emails,
financial details and projections, and all data given or made available to the Receiving
Party.
3.5 "CONTRACT YEAR" means: (i) for the first Contract Year, that period from the date
of this Agreement to and including December 31 of such year; and (ii) for each
Contract Year thereafter, the calendar year.
3.6 “CONTROL, CONTROLLED OR CONTROLLING” shall mean with respect to a
Person, the right or ability, directly or indirectly, to cause a person to act in accordance
with another Person’s instruction.
3.7 ‘DAY’ means a period of twenty-four (24) consecutive hours beginning and ending at
0800 hours.
3.8 “WEEK’ means a period of seven (7) consecutive days beginning from a day.
3.9 "FORCE MAJEURE EVENT" means an event, condition or circumstance beyond the
reasonable control of, and not due to the fault or negligence of, the party affected, and
which could not have been avoided by due diligence and use of reasonable efforts,
which prevents the performance by such affected party of its obligations hereunder;
provided, that a "Force Majeure Event" shall not be deemed to have occurred or to be
continuing unless the party claiming Force Majeure complies with the requirements of
Section 15.3 (Force Majeure). Subject to the foregoing, "Force Majeure Event" shall
include, as to either party, explosion and fire (in either case to the extent not attributable
to the negligence of the affected party), flood, earthquake, storm or other natural
calamity or act of God, strike or other labour dispute, war, insurrection or riot, actions
or failures to act by governmental entities or officials, failure to obtain governmental
permits or approvals (despite timely application therefor and due diligence) and
changes in laws, rules, regulations, orders or ordinances affecting operation of the
Project, which events were not pending on the date of this Agreement.
3.10 ‘FORTNIGHT’ means a period of fifteen (15) consecutive days beginning from a
day.
3.11 ‘FIRST FORTNIGHT’ means a period commencing from the first day of the month
to the fifteenth day of the month.
3.12 ‘MONTH’ means a period beginning at 0800 hours on the first day of the calendar
month and ending at 0800 hours on the first day of the succeeding calendar month.
3.13 "OPERATION” shall mean all the activities undertaken by the Operator to Operate,
maintain manage the Boiler and Generate Steam.
3.14 "PROJECT" means generating Steam in the [Size, technology and other descriptive
information about the Boiler] and related assets, together with other facilities and
related assets, on the property owned by the Owner, located at the ________
3.15 "PROJECT AGREEMENTS" means the agreements relating to the Project, including
any Power Purchase Agreement, Interconnection Agreement, Loan Agreements, this
Agreement and all other agreements applicable to the Project, permits, and licenses
required for the operation, maintenance and management of the Project, as identified in
writing by Owner.
3.16 "PRUDENT UTILITY PRACTICE" means (i) any of the practices, methods, and acts
engaged in or approved by a significant portion of the electric utility industry in the
country and geographic region where the Project is located during the relevant time
period, or (ii) practices, methods and acts that, in the exercise of reasonable judgment
on the facts known (or that reasonably should have been known) at the time a decision
was made, could have been expected to accomplish the desired result at a reasonable
cost consistent with good business practices, reliability, safety and expedition.
3.17 ‘PERSON’ shall mean any natural person or legal entity, including trustees,
representatives, administrators, heirs, executors, partnerships, corporations, limited
liability companies, trusts, unincorporated organizations, and governmental agencies,
departments and branches.
3.18 ‘SECOND FORTNIGHT’ means a period commencing from the sixteenth day of the
month to the last day of the month.
3.19 ‘STEAM’ shall mean steam produced by the Operator at the premises of the Owner,
in the Boiler Owned by the Owner, meeting the Specifications, as described in
________of the present Agreement or varied from time to time in terms of the present
Agreement.
3.20 “SUPPLY” shall mean the supply of steam by the operator to the owner at the price
on the basis of weighted average fuel cost.
3.21 ‘TIME’ shall be stated in ‘Hours’ and shall mean Indian Standard Time.
3.22 ‘TPH’ shall mean tons per hour (1000 kg per hour).
4. SERVICES
4.1 Scope of Service: Operator shall (i) operate, maintain and manage the Project on behalf
of Owner (“Services”) and (ii) also perform the specific duties set forth in this
Agreement if they are not otherwise required by the standards defined in Section 4.2.
Operator shall further Sell/Supply the Steam of _______(CONTRACTED QUANTIY)
to the Owner at a pressure of 35KG/cm2 45KG/cm2 at 590 degrees centigrade generated
from the operation undertaken by him using the Coal & other fuel purchased/Imported
by the Operator. It is further agreed by the party that the Operator shall be at a liberty to
use the _______ Steam extracted from the back pressure turbine for further re-sale.
4.2 Standards for Performance of the Services: Operator will perform the Services
required under this Agreement, including those set forth in Appendix A, in a prudent,
reasonable, and efficient manner and in accordance with (i) Operating Manuals, the
Administrative Procedures Manual and applicable vendor warranties, (ii) the applicable
Annual Project Operating Plan (iii) all applicable Laws, (iv) Prudent Utility Practices,
(v) the Project Agreements, (vi) the requirements of any System Operator. Operator
shall use all reasonable efforts to optimize the useful life of the Project and to minimize
Reimbursable Costs and Project outages or other unavailability.
4.3 Operator’s Personnel Standards: Operator shall provide as reasonably necessary all
labour and professional, supervisory and managerial personnel as are required to
perform the Services. Such personnel shall be qualified to perform the duties to which
they are assigned and shall meet any requirements for Project personnel under the
Project Agreements. All individuals employed by Operator to perform the Services
shall be employees of Operator, and their working hours, rates of compensation and all
other matters relating to their employment shall be determined solely by Operator. With
respect to labour matters, hiring personnel, and employment policies, Operator shall
comply with all applicable Laws. Operator also shall act in a reasonable manner that is
consistent with the intent and purpose of this Agreement.
4.4 Compliance: Operator shall comply with all Laws applicable to the operation,
maintenance and management of the Project and the performance of the Services.
Operator shall not be responsible for and obtaining, all necessary permits, licenses and
approvals (and renewals of the same) required to allow Operator to do business or
perform the Services in the jurisdictions where the Services are to be performed and it
shall be the duty of the Owner to take all the necessary permit, licenses and approvals.
Owner also shall file such reports, notices, and other communications as may be
required by any governmental agency regarding the Project.
4.5 Procurement of Raw Materials: Operator shall be under an Obligation to procure the
Fuel to be used in the Boiler for generation of Steam at its own cost and the Owner
shall not be liable to pay for the Fuel & other raw material (water, electricity,
chemicals, bed material, maintenance material etc.) procured by the Operator.
4.6 Operating Records and Reports: Operator shall maintain, at a location acceptable to
Owner, the Project operating logs, records, and reports that document the operation and
maintenance of the Project, all in form and substance sufficient to meet Owner's
reporting requirements under the Project Agreements. Operator shall maintain current
revisions of drawings, specifications, lists, clarifications and other materials related to
operation and maintenance of the Project provided to Operator by Owner and vendors.
Operator shall provide Owner reasonably necessary assistance in connection with
Owner's compliance with reporting requirements under the Project Agreements,
applicable Laws or any other agreement to which Owner is a party relating to the
Project. Such assistance shall include providing reports, records, logs and other
information that Owner may reasonably request as to the Project or its operation.
4.7 No Liens or Encumbrances: Owner shall maintain the Project free and clear of all liens
and encumbrances resulting from any action of Owner or work done at the request of
Owner.
4.8 Emergency Action: If an emergency endangering the safety or protection of persons, the
Project, or property located near the Project occurs, Operator can take all necessary
action to attempt to prevent or mitigate any such threatened damage, injury or loss
without any prior permission of the Owner and Operator shall not be held liable for any
loss which has not occurred due to the fault of the operator. However, if any loss is
caused to the Operator due to such accidents, the Owner shall reimburse the Operator
and make good of his loss.
4.9 Overhaul of Major Equipment and Capital Improvements: The cost of all major
equipment teardowns and overhauls and all capital improvements shall be the
responsibility of Operator. Operator shall promptly notify Owner in writing of any
such teardowns and overhauls of major equipment or capital improvements that
Operator believes are necessary or advisable together with a proposed schedule for
completing such repairs or improvements. If Owner has otherwise consented in writing
to reimburse Operator for such costs, Operator shall schedule, coordinate, contract and
oversee the performance of such activities and the expenses made by the Operator for
such teardowns and overhauls immediately after the servicing of such equipment.
5. OWNER’S RESPONSIBILITY
5.1 Information: Owner shall provide Operator with all vendor manuals, spare parts lists,
Project data books and drawings which are provided to Owner pursuant to any Project
Agreement or by any contractor responsible for construction, installation, repair or
maintenance of the Project or a part thereof. Subject to the standards of performance
set forth in Article 4.2. Operator shall be entitled to rely upon such information in
performance of the Services. Owner shall also provide Operator with copies of all
Project Agreements and any amendments thereto and any other documents that define
the Project's operating requirements.
5.2 Installation of other technical equipment: The Owner shall be liable to install the other
technical equipment apart from the back- pressure Turbine for the extraction of steam
for its further supply at the cost of the owner during the commencement of the
operation.
If the Owner has not fulfilled its Obligation and due to such failure of fulfilment of its
obligation the Operator/ Supplier has faced loss and damages, the Operator shall be at
liberty to terminate this agreement and also claim the damages and losses incurred to it
due to such failure.
6.1 The Owner/Buyer shall purchase STEAM every month to a minimum of 80% of the
contracted quantity. If The Buyer purchases STEAM less than 80% of the contracted
quantity during a calendar month and when the Supplier is prepared to supply the
same, the Buyer shall pay to the Supplier, the fixed cost accrued by the SUPPLIER
for this monthly minimum quantity (hereinafter termed as ‘Minimum Guaranteed
Offtake’ or ‘MGO’) of 80% of the contracted quantity. However, in case of stoppage
or interruption of supply of STEAM from the SUPPLIER’s side, the MGO will be
reduced on a pro-rata basis. That is, if STEAM supply for ‘N’ number of days is less
than the MGO quantity or if the plant of the Buyer is under shutdown for ‘N’ number
of days due to scheduled planned maintenance then the MGO would be worked out
as: -
7.3 Invoicing: The Supplier shall raise and issue the invoice for First Fortnight on every
15th day of the month based on the quantity drawn and the invoice for second
fortnight would be raised on the last day of the month. Payments are to be made
within 7 (seven) days of receipt of the invoice. However, if the 7th day is a bank
holiday, then the 6th working day would be considered as the due date and on this
precise day, the invoice amount should be received in the Supplier’s bank account.
Bill sent on designated e-mail would be considered as proper delivery of the bill. If
payment to any invoice is delayed beyond seven days, The buyer/Owner shall pay
interest of @18% for the period of delay. Supplier reserves the right to discontinue the
supply of steam to the buyer if the payment is not received within ten days after the
due date. For resumption of supplies, the BUYER must pay Rs. 5,000/- as
reconnection charges.
7.5 Invoice Requirements: The Operator shall a raise valid Tax invoice for the supplies
made to the BUYER as per the provisions of the GST Act. and shall include the
following information:
a. Name, address and GSTIN of the supplier;
b. A consecutive serial number, in one or multiple series, containing alphabets or
numerals or special characters’, hyphen or dash and slash symbolized as “-” and
“/” respectively, and any combination thereof, unique for a financial year;
c. date of its issue.
d. name, address, and GSTIN of the recipient.
e. HSN code of goods or Accounting Code of services.
f. description of goods or services.
g. quantity in case of goods and unit or Unique Quantity Code thereof.
h. total value of supply of goods or services or both.
i. taxable value of supply of goods or services or both taking into account discount
or abatement, if any.
j. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess).
k. amount of tax charged in respect of taxable goods or services (central tax, State
tax, integrated tax, Union territory tax or cess).
l. place of supply along with the name of State, in case of a supply in the course of
inter-State trade or commerce.
m. address of delivery where the same is different from the place of supply.
n. whether the tax is payable on a reverse charge basis; and
o. A signature or digital signature of the supplier or his authorized representative:
p. Above details are required for the BUYER to claim Input Tax Credit with respect
to the taxes charged in the invoice by the vendor.
8. SECURITY DEPOSIT
In order for the Operator/ Supplier to procure the fuel for generation of the steam, the
Buyer/ Owner agrees to deposit within 10 days of signing of the agreement pay
interest-free deposit equivalent to 30 days bill based on ‘CONTRACTED
QUANTITY’ as defined at clause 2 above, of STEAM per day at a prevailing
STEAM price. That is, _____________This deposit would be refunded only when
The BUYER surrenders the STEAM connection and settles the outstanding amount.
The said amount shall be adjusted against the other claims of the SUPPLIER against
BUYER if any.
10. ARBITRATION
Any dispute or claims which have not been resolved within the time prescribed by the
parties as mentioned in clause 14, the dissenting party shall invoke arbitration by
serving a notice of invocation of arbitration within 30 (thirty) days of failure of Initial
dispute resolution under clause 14. After notice of invocation of Arbitration, any
claim, dispute or difference relating to or arising out of this Agreement shall be
referred to the arbitration, of a sole Arbitrator. The Sole Arbitrator shall be appointed
mutually by the parties, if the parties fail to arrive at a mutual decision as to the
appointment of the Arbitrator, an application shall be made to the South Gujarat
Chamber of Commerce and Industries for the appointment of the Arbitrator. The
arbitration shall be subject to the Arbitration and Conciliation Act, 1996 which may
be amended from time to time. The parties shall be at liberty to decide the procedure
to be adopted for arbitration with the prior consent of the Arbitrator. The seat and
venue of arbitration shall be Surat, Gujarat. The proceedings shall be undertaken in
English. The arbitration award shall be final and binding on the parties. The Fee of
Arbitrator shall be in accordance with Schedule IV of Arbitration and Conciliation
Act, 1996.
11. TERMINATION
11.1 In addition to the causes of termination as already stipulated in this Agreement, this
Agreement shall come to an automatic termination on completion of the
Agreement period or the extended Agreement period. The Operator/Supplier has
all unrestricted right to deduct/adjust/set-off its all pending claims (undisputed)
from the interest-free deposit paid by the Owner/Buyer.
If the party wishes to terminate this agreement for any other reason except for
breach of contract on the part of the other party or on expiry of the agreement, a
notice shall be served on the other party in regard to the same along with the reason
for such early termination of the agreement. In this regard if the Buyer understands
and agree that if it wishes to terminate the agreement it shall serve 18 months of
notice to the Operator/Supplier as Operator will have to install a boiler to continue
its supplies to its customers other than the Buyer/Owner. On the other hand, the
Operator/buyer shall be required to serve the notice of three (3) Months to the
Owner/buyer in order for the Owner to find another Operator. Both the Parties(s)
hereby agree that if no notice is served by the terminating party, it shall be liable to
make good of loss to the other party who has suffered loss of business due to such
failure in serving notice.
(b) Allow and co-operate with the SUPPLIER to remove all its equipment,
fixture and fittings without resulting in damage to the SUPPLIER or to its
other customers
The AGREEMENT shall be subject to Indian laws and also under rules and
regulations framed under it.
Notice Obligations:
If either Party is rendered wholly or partially unable to perform its obligations (other
than any obligation to make any payment hereunder) under this Agreement because of
a Force Majeure Event, that Party will provide the other Party with prompt written
notice of the nature and an estimate of its expected duration of each Force Majeure
Event and of the extent of its effect on such Party’s performance hereunder, and the
Party giving the notice shall be excused from whatever performance is affected by
such Force Majeure Event to the extent so affected.
14. TRANSFERS
The Owner/buyer shall not, without the prior written consent of the Operator/Supplier
assign, transfer, charge, or deal in any other similar manner with this agreement.
The provisions of this Agreement shall not be amended, changed, reformed, altered,
or modified in any way by any practice or course of dealing prior to or during the
term of the Agreement, and can only be amended, changed, reformed, altered, or
modified by a writing signed by authorized representatives of the Operator/Supplier
17. NOTICES
All notices, requests and demands to or upon the respective Parties shall be in
Writing. Such communications shall be addressed and directed to the Parties listed
below as follows, or to such other address or recipient for a Party as may be hereafter
notified by such Party:
If to, If to,
Legal Officer
Sachin – 394230
Dist: Surat
18. COOPERATION
At each respective Party’s sole expense, the Owner/buyer and the Operator/Supplier
shall exchange information and confer in good faith upon request regarding operating
conditions, maintenance schedules, changes in planned operation and other
operational matters of importance and cooperate with each other to facilitate any
maintenance requirements of the other Party. Nothing in this provision shall require a
Party to undertake any action inconsistent with Prudent Practice of operation of their
respective plants.
19. INDEMNITIES:
The delivery of steam being a continuous process, Once the Coal has been
purchased/imported by the Operator/Seller for the purpose of steam generation at the
Boiler of the Owner/Buyer, the Buyer shall be deemed to be in exclusive possession
and control of the steam and fully liable for and responsible for its arrangements,
appurtenances and properties. Accordingly, the Owner/Buyer covenants and agrees to
fully protect, indemnify and hold the Operator/Supplier, its employees, agents,
successors, affiliates and assigns harmless against all and any claims, demands,
actions, suits, proceedings and judgments and any and all liabilities, cost, expenses,
incidental to or in connection therewith which may be made or brought against the
Operator/Supplier, whether by the Owner/Buyer, its employees, agents and successors
and assigns or by third parties on account of damages or injury to property or person
or loss of life resulting from or arising out of the installation, presence, maintenance
or operation of the intake arrangements, appurtenances, and properties of the Owner/
Buyer or others relating to the possession and handling of any steam supplied and
further defend the Operator/Supplier and bear the expenses arising on the
Operator/Supplier in any litigation involving the Supplier.
20. SEVERABILITY
All provisions of this Agreement are severable. If pursuant to the decision of any
court or arbitration tribunal having jurisdiction, any provisions, in whole or in part are
not enforceable, the remainder of this Agreement will continue to be in full force and
effect, and the applicable parts of the affected provisions are superseded and modified
by such applicable law. If any provision requiring Owner/Buyer to indemnify, defend
and hold Operator/Supplier (or its Affiliates) harmless against and from the
consequences of Owner’s/Buyer (or its Affiliates’) negligence is judicially determined
to be unenforceable, the parties will contribute to, or reimburse each other for, any
payments required to be made pursuant to the applicable Claim in proportion to the
adjudicated degree of fault.
22. WAIVER
The failure, refusal, or neglect of one party to require the other party to comply with
any provision of this Agreement, in whole or in part, does not constitute a waiver by
the former of its right to require full compliance with the same or different provisions
in the future, regardless of the acceptance of payments or performance by the party
seeking compliance.
Parties also acknowledges that this undertaking forms an integral part of the terms of
their engagement with the Company and any breach of this undertaking would result
in a breach of the terms of such engagement and they understand and agree to be
subject to all the consequences of such a breach.
(ii) Any action which either party needs to or is required to take with or
under this Agreement.
27. INSURANCE
The Owner/ Buyer will maintain all required insurances to cover any risk within their
factory premises arising out of the steam
28. CONFIDENTIALITY
Neither party will disclose any confidential information in terms of this Agreement to
any Person, provided, however, that the restrictions of this clause do not apply to any
information required to be disclosed pursuant to legal requirements or the requirements
of any stock exchange or other regulatory body, or to information that becomes public
other than by virtue of a breach of this Section. In case either party is disclosing the
contents of the present agreement to its consultants/advisors, such party will inform
such consultants/advisors of the confidential nature of the information disclosed to
them and will require them to agree to act in accordance with the provisions of this
Section with respect to such information. Neither party will issue any press releases or
make any other statements for public consumption with respect to this Agreement
without the other party's approval.
29. NO OBJECTION
The Parties hereby mutually agree that the other party shall be at liberty to marketize
this collaboration at Global Level with the sole intent to attract other Stakeholders in
the market and in relation to such marketization, the Parties are at liberty to use the logo
of the company in the advertisement and Presentation.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized officers as of the date first above written.
WITNESS:
STEAMHOUSE INDIA Ltd. DEEPAK PHINOLEC LIMITED
1. 1.
2. 2.
ANNEXURE-A
*The Fixed Cost will Escalate by 5% Every Financial Year from the Second Year of
Contract.