Note:
In December 2015, Ethiopia's Ministry of Agriculture and Rural Development announced that it had terminated this lease. Source: https://www.bloomberg.com/news/articles/2016-01-11/karuturi-challenges-ethiopian-decision-to-cancel-farming-project
The agreement can be renewed for additional years if mutually agreed between the parties. The agreement shall be renewed on the same terms and conditions. If either party wishes to renew the agreement, it shall inform the other party at least 6 months before the expiration of the term.
100,000 hectares. Karuturi Agro Products has the right to get an additional 200,000 hectares of land upon accomplishing the 100,000 hectares within 2 years in accordance with article 4.4.
Environmental impact assessment and management plan
Karuturi Agro Products has an obligation to conduct an environmental impact assessment and deliver the report within 3 months of execution of the agreement
Karuturi Agro Products is obliged to take good care of the leased land and the natural resources on it, with particular obligations to (a) conserve tree plantations that have not been cleared for earth works, (b) apply appropriate work methods to prevent soil erosion in "slopping" areas, and (c) observe and implement all legislation regarding natural resource conservation
Karuturi Agro Products has the right to use irrigation water from rivers or ground water. Karuturi Agro Products must respect current and future environmental and water laws, cause no disturbance to the environment, and gain prior permission from the relevant federal and regional institutions.
The Government undertakes to provide special investment privileges such as exemptions from taxation, import duties of capital goods, and repatriation of capital and profits granted under the investment laws of Ethiopia
The annual lease payment is birr 2,000,000 (or birr 20 per hectare). The total amount payable under the agreement shall be birr 100,000,000. The Government reserves the right to revise the lease payment rate as the need may arise.
Karuturi Agro Products has the right to build infrastructure such as dams, water boreholes, power houses, irrigation system, roads, bridges, offices, residential buildings, fuel/power supply stations/outlets, health/hospitals/dispensaries and education facilities at its discretion upon consultation and submission of permit request with the Ministry of Agriculture and Rural Development, subject to the type and size of the investment project
Upon the expiry or termination of the agreement, Karuturi Agro Products shall remove all assets installed on the leased land within 1 year. However, where the agreement is terminated upon expiry of the term or for one of the reasons in article 9, the Government has the priority right to purchase properties over the land in negotiation with Karuturi Agro Products.
The Ministry of Agriculture and Rural Development has an obligation to arrange access and use of facilities of the Government and Regional State Research centers for soil testing and mapping purposes, for a fee
The Government shall ensure that Karuturi Agro Products shall, during the period of the lease, enjoy peaceful and trouble free possession of the premises and shall be provided adequate security, free of cost, for carrying out its activities, against any riot, disturbance or other turbulent time other than force majeure, as and when requested by Karuturi Agro Products. The Government shall protect the right of Karuturi Agro Products to the peaceful possession, use and quiet enjoyment of the leased area.
Karuturi Agro Products is expected to start to develop the land within 6 months from the date of execution of the agreement, or from the date that it receives final clearance from the Government, whichever is later. Half of the leased land must be developed within 1 year of the signing date of the agreement, or the date Karuturi Agro Products receives final clearance from the Government, whichever is later. The entire plot must be developed within 2 years.
Karuturi Agro Products shall, upon entering into the agreement, submit an advance action plan regarding the use of leased land to the Ministry of Agriculture and Rural Development.Karuturi Agro Products shall not make any unauthorized use of the leased land beyond the predetermined purpose, objective or plan as permitted under the agreement without expressed consent of the Ministry of Agriculture and Rural Development in writing
In the event of a dispute, both parties will do their utmost to resolve the dispute amicably and to their mutual satisfaction. If they are unable to achieve such a settlement, the dispute shall be referred to Ethiopian Federal Court.
Unless 75% of the land is developed, Karuturi Agro Products has no right to transfer the land or use right of the land and properties to other persons. Upon developing 75% of the land, Karuturi Agro Products can transfer the land or the properties (but not only the remaining land which is not developed) to other persons with the prior permit of the Ministry of Agriculture and Rural Development.
Karuturi Agro Products has the right to terminate the land lease agreement subject to at least 6 months' prior written notice. The Government has the right to terminate the land lease agreement subject to at least 6 months' prior written notice (i) for better socio economic benefit of the country/public, (ii) on the grounds of failure to develop the land within the time limits in accordance the contract obligation, (iii) on the grounds of any damage on the natural resources, or (iv) on the grounds of non-performance of due payment of lease charge. In the case of (ii), (iii) and (iv) above, if Karuturi Agro Products does not address such issue, the Government may extend the time period for such compliance or terminate the agreement. The land lease agreement may be terminated for a number of reasons, including upon (9.3) failure of the Government to fulfill or observe any of its obligations or covenants in the lease after Karuturi Agro Products has given written notice of 6 months and the Government fails to perform, (9.4) failure of Karuturi Agro Products to settle annual rental and other relevant tax payments for 2 consecutive years, (9.5) failure of Karuturi Agro Products to perform its obligations in the lease after the Government has given a 6 months' written notice calling upon them to observe and perform such obligations. The Government has the right to restore any land which is not developed with 6 months' advance notice and after Karuturi Agro Products has not cured the failure within 1 year.
If the agreement is terminated by Karuturi Agro Products for failure of the Government to fulfill its obligations or for termination by the Government on a decision for ay better socio-economic benefit, the Government shall pay to Karuturi Agro Products the value of improvements made by Karuturi Agro Products on the land at the market price after setting off any dues on account of rentals or taxes
Karuturi Agro Products shall provide correct data and investment activity reports upon request by the Ministry of Agriculture and Rural Development. The Government has the right to monitor and establish the fact that Karuturi Agro Products is discharging and accomplishing its obligations diligently. This monitoring must be done in a manner that does not cause any hindrances to the work and activities of Karuturi Agro Products.