John Dabi, Minister for Finance, Trade and Investment, Western Equatorial State Government.
Jackson Zowai, Minister for Agriculture, Environment and Rural Development, Western Equatorial State Government.
State agency, national company or ministry executing the document
The Government of Western Equatoria State, Ministry of Agriculture, Environment and Rural Development
The Government of Southern Sudan, Ministry of Agriculture and Forestry
Equatoria Teak Company shall at all times permit the government or its authorized agents and officers to enter, inspect and examine the plantation and any installations to observe conditions, how the plantation is managed and the quantity of forest products produced, or for any other reasonable purposes. During such inspections, the government may also take samples, plans and measurements necessary for their examination and for the above mentioned purposes. Equatoria Teak Company’s staff are to provide all necessary assistance to the government.
The plantation shall be managed and developed in a sustainable manner which shall ensure precise harvesting rotation.
As a condition of the contract entering into force, Equatoria Teak Company shall submit to the government an acceptable Forest Management Plan.
Equatoria Teak Company shall perform, fulfill and observe all obligations rules and regulations imposed on the operators of forests by or under the Forest Act so far as the Act is applicable to any forest or forest operations within the Plantation. Equatoria Teak Company shall use its best endeavors to ensure conservation and protection of natural biodiversity, ecosystems function and environmental considerations including soil conservation and watershed regulation.
Equatoria Teak Company shall not pollute or allow pollution to rivers or streams flowing through the plantation or cause such pollution or injure the habitat.
Equatoria Teak Company shall not divert, stop or dam the rivers, streams, watercourses, springs or water so as to interfere with the present supply of water to the prejudice of the village communities or any person entitled to use the water without first obtaining the appropriate water right license
Customs and clearance duties will be payable at the rate of 10% of the royalty value of every cubic meter of timber being exported. This sum will be paid as custom clearance to Customs Office in Yambio, State Headquarters.
Financial obligations - community or commodity funds
Equatoria Teak Company will pay US$ 100,000 into a social fund account. The money will be spent on community development projects as will be determined with stake-holding communities at the second stakeholders meeting not later than 6 months after the signing of this contract. Equatoria Teak Company will pay a further social fund contribution into a community fund at a rate of US$ 5 per cubic meter of sawn board (wood) exported.
Equatoria Teak Company shall pay all present and future taxes, rates and assessments and all other charges and outgoings whatsoever upon or in respect of the concession and liberties granted under this contract
The government requires a surety of US$ 300,000. The surety will be repaid to Equatoria Teak Company when it has invested an amount of US$ 2,000,000 into the Yambio county project.
Equatoria Teak Company will regularly pay royalties on the sale of forestry produce which shall be based on volume of whole standing trees or mechantable volume. Equatoria Teak Company will pay a royalty of US$ 100 per cubic meter of sawn board exported (subject to renegotiation every 2 years). 80% of this payment shall be paid 80% to Western Equatoria State Ministry of Agriculture, and the remaining 20% to Yambio County Local Government.
Equatoria Teak Company shall, as far as may be reasonably practicable, have due regard to the wishes of the village communities living adjacent to the plantation and their customary dependence on the plantation. This includes the village communities’ dependence on forest products (including fuel wood, house construction materials, thatching grass and non timber forest products) and employment. Equatoria Teak Company shall avoid any action which might tend to prejudice good relations between the village communities and Equatoria Teak Company or the government. Equatoria Teak Company's proposals shall deal with regular consultations with village communities and mechanisms for resolving any disputes.
As a condition to the contract coming into force, affected communities will be informed of the government's intention to license the plantation to Equatoria Teak Company and explain the impacts and processes the Equatoria Teak Company will follow.
Equatoria Teak Company's proposals covering social responsibility shall deal with regular consultations with village communities and mechanisms for resolving any disputes
Equatoria Teak Company shall prepare and submit to the government for approval within a period of 6 months its proposals covering social responsibility. The proposals shall in particular deal with social and economic empowerment through employment generation, community development, regular consultations, dispute resolution, and forestry training and inputs.
Equatoria Teak Company's proposal's shall deal with clear plans and strategies on mode, time and the extent to which South Sudanese staff shall occupy management positions and senior officer ranks
Equatoria Teak Company's proposals shall include preference to communities adjacent to the plantation as far as possible, award of sub-contracts for forest development, training and skills and the development and promotion of small businesses. Equatoria Teak Company shall give due priority to prospective contractors residing in villages adjacent to the plantation.
Protections or benefits for employees, dependents, or others
Equatoria Teak Company shall at its own expense develop, implement and administer a surveillance and safety program for the operations of its plantation, saw mills (if any) and equipment and its contractors' personnel engaged in the provision of any services under any of its sub-contracts. This program will include correction of safety violations, deficiencies, and taking of all other actions necessary to provide a safe environment in accordance with applicable laws and good industry practice.
Right to access concession area (non-contracting parties)
Equatoria Teak Company acknowledges that there might exist designated areas within the plantation area which are excluded from the concession granted in this contract. Equatoria Teak Company agrees to allow uninterrupted access to those designated areas by the people permitted to access them by the government, and not to take any action which might prejudice good relations between those people and Equatoria Teak Company.
The grant of the concession is also subject to third party rights, including the rights of other people to access the plantation to carry out research, build or repair infrastructure and other similar purposes.
Equatoria Teak Company's proposals shall deal with rural training in forestry and/or nursery tree development, including provision of necessary inputs, environmental protection and any other related aspects.
Equatoria Teak Company shall construct and maintain according to the forest management plan, roads to transport plantation products through the plantation and general access thereto. Equatoria Teak Company shall make arrangements with local authorities for the construction and/or maintenance of access roads leading to and/or adjoining various sections of the plantation.
Equatoria Teak Company shall at its own expense construct sawmills, if necessary, and in doing so observe and fulfill the environmental and other requirements under the applicable laws and applicable permits.
Equatoria Teak Company shall at its own expense ensure that the plantation remains free from encroachment. Equatoria Teak Company will report any act of encroachment within 7 days. It is the government's responsibility to remove encroaching parties within a period of 30 days.
If there is any conflict and/or disputes arising from the contract and its implementation, Equatoria Teak Company and the government shall: (a) amicably negotiate with each other and reach agreement or amendment within 10 days, (b) mutually agree or revert to using arbitration. The arbitrators shall make their decision or award within 30 days. The arbitration shall be conducted in accordance with the arbitration laws of Southern Sudan. Any arbitration conducted pursuant to this contract shall be held in Juba, South Sudan and the proceedings shall be conducted in English. Any arbitration verdict shall be binding on Equatoria Teak Company and the government.
This contract shall not be assigned by Equatoria Teak Company unless the government gives its prior consent in writing. The government is entitled to withhold consent without a reason, except in the case of intra group assignment where there is no change to the beneficial shareholders of Equatoria Teak Company.
If Equatoria Teak Company has an event of default, as provided above, the government can terminate this contract by issuing a termination notice to Equatoria Teak Company. Before issuing the termination notice, the government shall by a notice in writing (by “preliminary notice”) inform Equatoria Teak Company of its intention to issue the termination notice. If the underlying breach is not fixed within a period of 30 days from the date of the preliminary notice, the government can terminate this contract by issuing the termination notice.
If the government has an event of default, as provided above, Equatoria Teak Company can terminate this contract by issuing a termination notice to the government.
If Equatoria Teak Company or the government terminate the contract because of an event of default by the other, they shall reimburse each other, by way of termination payment, an amount equal to the costs they actually incurred for the management and development of the plantation pursuant to this contract as at the date of termination, less any returns recouped. In the case of Equatoria Teak Company, such returns may include sales of forest products. In the case of the Government, such returns may include receipts, development levies and/or royalties.
All the technical data, plans and audited financial information released by Equatoria Teak Company to the government under this agreement shall be recognised by the government as confidential and, except as provided herein, shall belong to Equatoria Teak Comapny
This contract shall be construed in accordance with and governed by the laws of South Sudan and the courts of South Sudan shall have jurisdiction in all matters relating to it
If it is impossible or impractical for Equatoria Teak Company or the government to perform any part of this contract because of a force majeure event, their failure to perform shall be excused as long as the cause of the prevention, delay or stoppage continues.
Force majeure events also include: (a) a change in law which fundamentally alters the positions of Equatoria Teak Company and the government, (b) expropriation or compulsory acquisition by the government of any assets or rights of Equatoria Teak Company or its contractors, or (c) any unlawful or unauthorised revocation of, or refusal to renew or grant without valid cause any consent or approval required by Equatoria Teak Company or its contractors to perform their respective obligations under the contract, provided that such delay, modification, denial, refusal or revocation did not result from Equatoria Teak Company's or any of its contractors' inability or failure to comply with any condition relating to grant, maintenance or removal of such consents or permits.
If a force majeure event occurs, the following rules shall apply: (a) there shall be no termination of this contract for reasons of force majeure occurrences except as provided hereinafter, (b) Equatoria Teak Company shall continue to make all reasonable efforts to discharge its obligations under this contract, but if it shall be unable or shall be prevented from doing so, the concession period shall, having due regard to the extent of the impact of the force majeure event as determined by the government, be extended by the period of the force majeaure event, and (c) Equatoria Teak Company and the government shall bear their respective costs arising from any force majeure event.
The government at its option may reimburse any force majeure costs to Equatoria Teak Company through a remission of levies and/or royalties or compensate Equatoria Teak Company for such costs by appropriate extension of the concession period. If a force majeure event continues or is, in the reasonable judgment of Equatoria Teak Company and the government, likely to continue beyond a period of 120 days, Equatoria Teak Company and the government may mutually decide to terminate this contract or continue to perform their respective obligations on mutually agreed revised terms. If Equatoria Teak Company and the Government are unable to reach an agreement in this regard, the party claiming relief out of a force majeure event shall after 90 days, be entitled to terminate this contract by issuing a termination notice.
Equatoria Teak Company shall submit annual reports to the Directorate of Forestry under the Ministry of Agriculture and Forestry (Government of South Sudan) with copies the Directorate of Forestry under Ministry of Agriculture (Government of Western Equatoria State) about the operations of the plantation. The reports shall cover such areas as short-term management plans, production records, harvested areas, replanted areas and nurseries.
Equatoria Teak Company shall at its own expense prepare and furnish to the Government reports on a regular basis relating to Equatoria Teak Company's undertakings with regard to the social responsibility programme.
A change in law which fundamentally alters the positions of Equatoria Teak Company and the government shall be considered to be a force majeure event. This may allow Equatoria Teak Company or the government to terminate the contract by issuing a termination notice 90 days after the force majeure event began.