PRESENTED BY
Barrister I.N. Inyang(CSLA, NGC)
AT THE ELECTRIC POWER SECTOR TRANSACTION AND
INDUSTRY REVIEW CONFERENCE
HELD AT THE BANQUET HALL OF THE PRESIDENTIAL
VILLA ON 28-29TH NOVEMBER, 2011
















PARTIES
KEY TERMINOLOGIES
CONDITIONS
TRANSPORTER’S OBLIGATIONS
TITLE AND RISK
LOST GAS
CAPACITY RESEVATION
TRANSPORTATION CHARGES
INVOICING AND PAYMENTS
QUALITY AND OFF-SPECIFICATION GAS
MEASUREMENT AND TESTING
LIABILITES AND LIMITATION
FORCE MAJEURE AND THIRD PARTY TRANSPORTATION OF GAS
TERMINATION
DISPUTE RESOLUTION
GENERAL


NGC - as Transporter
PHCN or GENCO -as Shipper
GENCO refers to any power generation
company which emerges as a successor
company to PHCN.
•
Shipper's Stock Account

•
A designated account of the Shipper to be maintained by the Transporter and
which shall record the volumes of Gas from time to time held in the pipeline
by the Transporter for the account of the Shipper
Entry Point

A Gas producer’s outlet flange along the Pipeline at which Gas can be
delivered into the Pipeline
 Includes any other agreed entry point on the Pipeline for delivery of Gas
into the Pipeline
 This may be the same as the Delivery Point under the GSAA
•
Exit Point

Point where the outlet flange of the Pipeline is connected to the Shipper's
facilities
4

Nominated Quantity


Reserved Capacity


Capacity in the Pipeline which the Transporter reserves, and makes available
to receive Gas from the Shipper at the Inlet Point, transport and deliver the
received quantities of Gas to the Shipper at the Delivery Point
Freed Capacity


The quantity of Gas which has been nominated or deemed nominated by the
Shipper for delivery by the Transporter at the Delivery Point
The amount of capacity in the Pipeline by which the Reserved Capacity is
reduced in accordance with any Capacity Reduction Notice
Lost Gas

The quantity of Gas received by the Transporter at the Inlet Point but not
delivered to the Shipper at the Delivery Point
5

Execution Date

Effective Date

Start Date
6

Shipper
• Evidence of creditworthiness and ability to fulfill payment obligations
• Execution of Gas Purchase Agreement
• Execution of Allocation and Attribution Agreement

Transporter
• Approvals to transport Gas
• Execution of Entry Point Tie-in Agreement with Gas Producer.
7

To receive and take delivery of Gas at inlet point

Transporter will not be obliged to receive Gas where:
 the safe operating pressure of the pipeline will be affected; or
 the failure of the Shipper to take delivery of Gas at the Exit Point
might adversely affect the interests of any other customer

To transport through the pipeline and deliver at Exit Point the volumes
of Gas from the Shipper's Stock Account required to meet each
Nominated Quantity

aggregate of such Nominated Quantities for a Day should not exceed
the Reserved Capacity for that Day

no obligation to deliver where nominated quantity will result in a less
than zero balance in the Shipper's Stock Account
8
•
To deliver Gas above Nominated Quantity on a reasonable endeavour
basis where Shipper makes a request

•
No obligation to deliver where the excess volume requested will
result in a less than zero balance in the Shipper's Stock Account
Maintain Shipper's Stock Account
 The designated account of the Shipper to be maintained by the
Transporter and which will record the volumes of Gas from time to
time held in the pipeline by the Transporter for the account of the
Shipper
9
•
Title to transported Gas remains with Shipper at all
times
•
Custody and risk of loss passes to Transporter at the
Inlet Point

Passes back to Shipper at the Exit Point
10

Any quantity of Gas received by the Transporter at the Delivery Point
which is not delivered to Shipper shall be considered to be Lost Gas


Transporter will pay the Shipper the Lost Gas Price in respect of any
quantity of Lost Gas
Lost Gas will not include Gas not delivered:

as a result of Force Majeure

as a result of any act or omission of the Shipper

due to Maintenance

during the Commissioning Period

as a result of Shipper's failure to make payment as and when due
11
Shipper is expected to pay for and reserve
Capacity in the pipeline.
Transporter shall on each day make available
and provide Shipper the capacity paid for the
Transportation of Shipper’s gas to exit point.

Capacity Charge:

Commodity Charge

Overrun Charge

Send or Pay:.


Transporter at the end of each contract month
shall issue an invoice to Shipper containing the
applicable transportation charge, nominated
quantity, delivered quantity, adjustments, taxes
etc.
Shipper baring any dispute, pays the full
invoiced amount within 15 working days of
receipt of the invoice.
•
Shipper is required to provide and maintain a stand by Letter of Credit
(LoC) or such other security specified by the Transporter

Amount of security to be equivalent to total tariff payable by the
Shipper for twelve months as estimated by Transporter

Amount may be increased if Shipper increases Annual Capacity
Reservation

Transporter entitled to draw down on the LoC where Shipper fails to
pay amount due

Shipper to replenish LoC to original amount within time specified in
the Agreement (45 working days)
15



Quality and Specification of gas is agreed upon
by parties and made part of the agreement.
Both Shipper and Transporter have obligations
to ensure that gas entering and exiting the
pipeline conform with the agreed specification.
Liabilities for off-spec gas exists for both
Transporter and Shipper depending on
circumstances provided in the GTA.
•
Nominated Quantity - Quantity of Gas nominated by Shipper for delivery
within a Nomination Period

Shipper to give a daily notice in respect of each Nomination Period
for the next Day

Aggregate of the Nominated Quantities specified in a Daily Notice
shall not be less than an agreed quantity and shall not be greater than
the Reserved Capacity for that Day
•
Shipper is required to provide a good faith best estimate of its hourly,
weekly and monthly estimates of Gas
•
Where Maintenance Notification has been given, the aggregate of the
Nominated Quantities in respect of that day shall not exceed the reduced
Reserved Capacity
17
•
•
The quality, quantity, delivery pressure and heating value of Gas is to be
measured and calculated at each Entry Point and at the Exit Point

Shipper responsible for measurement at Entry Point

Transporter responsible for measurement at Exit Point
Parties to grant each other free access to facilitate monitoring of Gas
quantities and Gas quality
18
•
Remedies in the agreement are exclusive and exhaustive
•
No liability for Consequential Losses
•
Cap on total cumulative liability

Liability cap does not apply to:
 losses caused by Willful Misconduct
 personal injury or death

•
Indemnified party to mitigate losses which would otherwise be
recovered
Reasonable and Prudent Operator Standard to be used
19
•
FM Events: Acts typically beyond the control of the parties and which excuses
them from any legal responsibility or liability
•
They include:

Acts of God

Acts or serious threats of war, riots, insurrection, terrorism, etc

Strikes, lock outs or industrial disturbances

Pollution, chemical or radioactive contamination

Damage to/loss of/inoperability of Shipper’s/Transporter’s Facilities other than
breakdown/failure caused by normal wear and tear or failure to maintain
equipment

Acts or omissions of a Government Authority or modification/removal/delay of
an authorisation

Gas Producer

Collapse of the Electricity Transmission System
20
•
Where due to force majeure, Transporter is unable to provide
transportation services, Shipper may enter into an agreement with
another Transporter for the anticipated duration of the force majeure
•
Where due to force majeure, Shipper is unable to input Gas at Entry Point
or take Gas at the Exit Point, Transporter may enter into an agreement
with a third party to use Shipper's Reserved Capacity for the duration of
the Force Majeure
21
Termination events include the following:
 Delivery of agreed gas quantity equal to the Total Contract
Quantity
 10th, 15th, 20th anniversary of the start date as parties may
agree
 Expiration or termination of transporter’s licence to provide
transportation services under the Granting Instrument.
 Expiration or termination of Shipper’s licence or right to
procure gas under the Granting Instrument.
 Operation of law
 Insolvency
 Prolonged force majeure
 Abandonment of pipeline etc



Expert determination: whenever the agreement
says an expert should be called upon.
Amicable resolution by parties.
Arbitration in accordance with any law agreed
upon by the parties.











Some general provisions in the GTA include the
following:
Confidential information
Insurance
Waiver
Amendment
Affirmation
Severability
Disclaimer
Further assurances
Change in law
Entire agreement etc.
THANK YOU FOR LISTENING