LPTAP_PQD_18DEC09_FINAL

REPUBLIKA E KOSOVËS / REPUBLIKA KOSOVA / REPUBLIC OF KOSOVA QEVERIA E KOSOVËS / VLADA KOSOVA /GOVERNMENT OF KOSOVA MINISTRIA E ENERGJISE DHE MINIERAVE MINISTARSTVO ENERGIJE I RUDARSTVA MINISTRY OF ENERGY AND MINING

Pursuant to the Authority Granted to it by the Project Steering Committee

REQUEST FOR EXPRESSIONS OF INTEREST FOR THE DEVELOPMENT OF THE SIBOVC LIGNITE FIELD IN KOSOVO AND ASSOCIATED POWER GENERATION CAPACITY

Pre-Qualification Memorandum

December 18, 2009

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Pre-Qualification Memorandum

Table of Contents Page Introduction To The Reconfigured Project ................................................................................ 4 Project Components ............................................................................................................... 4 Relevant Country Background ................................................................................................... 5 Relevant Energy Sector Issues .............................................................................................. 5 Lignite Mining and Power Generation .................................................................................. 6 Background Studies and Reports .......................................................................................... 8 Investment Program for the Sibovc Lignite field & Electric Power Generation ....................... 9 Development of Sibovc Mining ............................................................................................ 9 Development of New Power Generation (KRPP) ............................................................... 10 Private Sector Participation in Existing Kosovo B ............................................................. 11 Project Support by Donors ....................................................................................................... 12 LPTAP Implementation Schedule ....................................................................................... 13 Pre-Qualification Procedures ................................................................................................... 14 Additional Information and Questions..................................................................................... 15 Annex A—Glossary ................................................................................................................. 16 Annex B—Procurement Notice ............................................................................................... 18 Annex C – Application For Pre-qualification for Bidding ...................................................... 22 Annex D – Expericence Declaration Form .............................................................................. 24 Annex E – Confidentiality Agreement Form ........................................................................... 26

Pre-Qualification Memorandum

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IMPORTANT NOTICES This Memorandum is issued by the Ministry of Energy and Mining (“MEM”) of the Republic of Kosovo and on behalf of the Project Steering Committee (“PSC”) for information purposes only and is being provided solely for use by interested investors to assist them in submitting Expressions of Interest pursuant to Annex B—Procurement Notice below.

Neither the Republic of Kosovo, MEM, the Lignite Power Technical Assistance Project (LPTAP) PSC or Project Office, nor any of their respective agents, representatives, advisers, or consultants make, will make, or will be deemed to have made, any representation or warranty, express or implied, as to the accuracy, reliability, or completeness of the information contained herein, in the data room, or any information otherwise provided, whether orally or in writing, other than such representations or warranties as may be contained in the final Project documentation.

Neither the receipt of this Memorandum, nor any information contained herein or supplied herewith or subsequently communicated to any Person, whether orally or in writing, in connection with a proposed transaction involving the Republic of Kosovo, MEM, or Korporata Energjetike e Kosovës Sh.A. (Kosovo Energy Corporation J.S.C.) (“KEK”) (the “Entities”), consultants to the Entities, or their subcontractors, is to be taken as constituting the giving of investment, legal, technical, or other advice. None of the information set forth herein constitutes an offer or invitation to sell, or any form of commitment or recommendation or the solicitation of any offer to sell, any of the assets or securities of KEK or of the generation, distribution, or mine assets resulting or which may result from any future restructuring of KEK. MEM, on behalf of the PSC, reserves the right, in its sole discretion, to modify any of the rules or procedures relating to this Memorandum and any subsequent tender, including the right to refuse to accept offers or, without prior notice or assigning any reason therefore, to terminate the tender. No Entity nor any agent, representative, adviser, or consultant of an Entity, will be liable or responsible to any Person for any cost or expense incurred in responding to this Pre-Qualification Memorandum or in any investigation, negotiation, or transaction, whether or not consummated, which may follow.

Neither this Memorandum nor any other written or oral information made available to any potential bidder or any other Person or their respective representatives, agents, or advisers will form the basis of any offer or contract. A proposal regarding the Project or any part thereof will give rise to contractual obligations only if and when the final Project documentation related thereto has been executed in writing by MEM and the successful bidder.

All prospective bidders or interested Persons are advised to seek their own independent financial, legal, tax, technical, and other advice. Recipients of these materials should inform themselves about and observe any applicable legal requirements in their jurisdictions.

In providing materials in connection with the proposed transactions, neither MEM nor any of the other Entities undertake any obligation to correct, amend, or update such materials.

Pre-Qualification Memorandum

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INTRODUCTION TO THE RECONFIGURED PROJECT 1. The purpose of this Memorandum is to present background information for investors and others interested in learning more about the proposed development of the Sibovc Lignite Field, new electric power plant, and the private sector participation in Kosovo B (“Project”).

Arrangements for the dissemination of additional information will be forwarded to all prospective bidders in due course. Short-listed bidders will be provided access to detailed information in a data room.

2. In 2006, the Provisional Institutions of Self-Government (“PISG”) in Kosovo, launched an ambitious plan to attract strategic investors to the energy sector of Kosovo, looking to secure, in particular, 2000MW of new lignite-fired generation capacity and an associated accelerated mine development plan.

3. In the last year it has become clear that the scale of this proposed project may have been beyond that which the market could reasonably invest. It is therefore the purpose of the PreQualification Memorandum (“PQM”) to set out the scope of a reconfigured investment proposition in which perspective investor interest is sought.

4. Through an economic, transparent, and competitive process, it remains the strategic policy of the Republic of Kosovo to work as expeditiously as possible towards engagement with a private sector investor (“Project Developer”) to implement the now reconfigured Project.

Project Components 5. In accordance with Republic of Kosovo policy, the Ministry of Energy and Mining (“MEM”), on behalf of the Project Steering Committee (“PSC”), is soliciting through this Pre-Qualification Memorandum expressions of interest from qualified private investors in the Project, which encompasses the following components: a) Construction of a new electric power generation plant, ‘Kosova e Re Power Plant’ (“KRPP”) with an estimated installed capacity of initially 500 MW with the possibility of expanding up to 1000 MW and (limited) associated interconnection facilities; b) Immediate development of the Sibovc Lignite Field to provide lignite fuel for both the existing lignite fired generation in Kosovo (Kosovo A and Kosovo B) and the new KRPP generation unit(s) as they enter service; and c) Private sector participation in Kosovo B. Development of the Project components shall be pursued in compliance with EU Directives and other best practices in mining and power generation, as well as in a manner consistent with international best practices in regard to the management of social, economic, and environmental impacts of such a large-scale undertaking. Development of the Sibovc Lignite Field will focus first and foremost on the development of a reliable long-term fuel supply for Kosovo, and secondly on economic monetization of Kosovo’s lignite resources.

Pre-Qualification Memorandum

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RELEVANT COUNTRY BACKGROUND 6. The republic of Kosovo declared its independence on February 17, 2008. By November 2009 Kosovo had been recognized by 64 countries worldwide and has become a member of the International Monetary Fund and the World Bank Group. Kosovo has been granted the status of potential candidate by the European Union.

7. Kosovo’s economic growth has been solid since the end of the conflict attributable in part to large investments in rebuilding infrastructure. GDP growth, reflecting the donor-funded reconstruction effort and high public and private investment, averaged 4% since the end of the conflict and reached 5.4% in 2008. Exports, mainly of agricultural products, textiles and metals to the EU and South Eastern Europe have grown steadily in recent years and by 20.2% in 2008. Kosovo has established the euro as the local currency.

Relevant Energy Sector Issues 8. Kosovo’s key energy resource is its extensive lignite deposits; the third largest in Europe.

It has no other fossil fuel resource and has only a modest hydroelectric potential. Mining of lignite has taken place in Kosovo for over a century, with large-scale open cast mining operations and power generation in place for about the last 40 years. The ratio between lignite and overburden across Kosovo’s lignite fields is favorable, a fact that makes exploitation of these mines with open cast mining competitive and attractive.

9. Kosovo’s domestic electricity network covers almost 100% of households, with district heating networks confined to only about 11,000 consumers in three cities, meeting only 5% of the heating demand. Hence, there is a significant heat demand load on the power system.

10. Internationally, the Kosovo transmission network is an important part of the regional transmission system via interconnections with Serbia, Macedonia, Montenegro, and Albania.

Kosovo is at the center of the north-south transmission interface of the South East European market, and important for power flows to and from Serbia, Macedonia and Greece.

11. Prior to restructuring, Korporata Energjetike e Kosovës (Kosovo Energy Corporation, KEK) was a vertically integrated utility incorporating five core businesses: lignite mines, power generation, transmission and dispatching, network, and supply. Restructuring was completed in November 2005 and has resulted in the creation of two separate companies: KEK J.S.C. and KOSTT J.S.C. (“KOSTT”).

12. Kosovo’s mines, thermal power plants and disposal sites are now owned by KEK J.S.C, and have a total installed generation capacity of approximately 1,480 MW though overall effective capacity is presently around 800 MW given long term outages and reduced availability at Kosovo A and Kosovo B lignite fuelled thermal power plants.

13. The Kosovo transmission system and market operation responsibilities were transferred to KOSTT. KOSTT is responsible for planning, development and maintenance of the electricity transmission system, as well as ensuring open and non discriminatory access based on the requirements of Energy Community Treaty in Southeast Europe, to which Kosovo is a party.

14. Responsibility for mining, energy policy and strategy is under the authority of MEM, established in late 2004. The Energy Strategy of the Republic of Kosovo for the period 2009 –

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Pre-Qualification Memorandum

2018, set by MEM in September 2009, sets expectations for the sector and in particular sets out the role for private sector participation in both the development of new thermal generation capacity, as well as in the rehabilitation of the existing units of Kosovo B. 15. The Energy Regulatory Office was also established in 2004 in compliance with the Law on Energy Regulation, and has the role of regulating tariffs set by KEK as well as the transmission charges levied by KOSTT. It also plays an important role in transformation of the energy sector, operation and monitoring of the market, as well as the granting of licenses for the market participants.

Lignite Mining and Power Generation Lignite Mining 16. Kosovo is endowed with large lignite deposits. To date, only the Bardh and Mirash mines have been exploited commercially, with initial development of the South West corner of the Sibovc field ongoing via truck and shovel overburden removal (first lignite expected in 2010).

Chart 1: The lignite fields near Kosovo A and B Kosovo B

Lajthisht Sibovc

Kosovo A

Hade

17. The Sibovc Lignite Field lies immediately north of existing operations, and contains in excess of 900 million tonnes of lignite as described in Table 1. Other fields in the area (the D Field and the South Field) are less appropriate for future development because they are, respectively, overlain by ash dumps and outside overburden dumps.

Sibovc SW Mine

Mirash

Bardh

Lismir

Kuzmin

Table 1: Salient features of the lignite fields west of Pristina

Lignite content within technological border

Sibovc Field

D Field

South Field

900 million tonnes

280 million tonnes

500 million tonnes

(990 geological)

(395 geological)

(537 geological)

3

3

Overburden to lignite ratio

0.85 m /tonne

0.90 m /tonne

2.8 m3/tonne

Average net calorific value

8312 kJ/kg

7340 kJ/kg

Similar to Sibovc

Average sulfur content

1.1%

1.0%

Similar to Sibovc

Land use

Agriculture

Ash and overburden dumps

Overburden dump

Covering by dumps

0.5 million m2

2.2 million m2

5.5 million m2

Resettlement

Hade, Sibovc, Lajthisht

Few houses

Lismir, Kuzmin

Source: Preparation of a Mid Term Plan for Existing Coal Mines and a Main Mining Plan for the Development of the new Sibovc Mine, Vattenfall Europe Mining AG, June 2005.

18. With current rates of lignite consumption averaging 7 to 8 million tonnes per annum, Kosovo A and B thermal power plants may require over 100 million tonnes of lignite to

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Pre-Qualification Memorandum

sustain supply through their respective remaining operational lives. Existing units at both plants have high rates of lignite consumption, with Kosovo B averaging 1.4 tonnes/MWh and Kosovo A averaging 1.7 tonnes/MWh. For comparison, it is envisaged that a new more efficient generation unit could achieve 1.1 tonnes per MWh or less.

19. With reserves in the Mirash and Bardh mines almost depleted, combined with growing demand for electric energy from existing and planned generation units, exploitation of the Sibovc field is therefore required with some urgency.

Power Generation 20. The total installed nameplate generation capacity in Kosovo is approximately 1,500 MW, divided into: 800 MW in Kosovo A, the oldest and least efficient station; 680 MW across two units at the Kosovo B lignite fuelled generation plant; and a further 35 MW of hydroelectric generation. However, long term unit outages at Kosovo A and reduced availability and performance of units at Kosovo A & B mean that net available thermal capacity is around 800MW across both plants.

21. As result of this reduced availability, peak demand frequently exceeds the available capacity, requiring KEK to import energy from neighboring countries (12.6% in 2008) and/or engage in load-shedding. For example, in February 2008, peak demand in Kosovo reached 967 MW. 22. The maintenance of Kosovo B has improved in recent years and many new components have been installed to sustain operation and improve performance, but only to a limited extent to improve the environmental performance. Between 1999 and 2006, the European Agency for Reconstruction (“EAR”) spent €175 million on the refurbishment of the plant.1 23. Since September 2007, active power of both units of Kosovo B has been reduced due to damage of the low pressure rotors of both steam turbines. For this reason, currently, the maximum net available power of unit B1 is 240MW, while that of the unit B2 is 280MW. This situation is expected to last until 2010 when new rotors will be installed and the capacity of two units will be increased.

Table 2: Kosovo B units Kosovo B unit

Nominal capacity (MW) – Gross

Available capacity (MW) - Net

Technology

Fuel

Operated from

B1

339

240

Subcritical Steam Turbine

Lignite/Heavy Fuel Oil

1983

B2

339

280

Subcritical Steam Turbine

Lignite/Heavy Fuel Oil

1984

Total

678

520

Source: KEK JSC (October 2008)

24. It should be noted that though Kosovo’s lignite has low sulfur content and a relatively good concentration of lime (calcium oxide) for absorbing sulfur during the combustion process, current emissions from both units at Kosovo B are higher than those set out in the EU Large Combustion Plant Directive 2001/80/EU. 1

Pre-feasibility studies for the new lignite fired power plant and for pollution mitigation measures at Kosovo B power plant, by Electrowatt-Ekono, Lot 2 Environmental Audit Report of Kosovo B power plant, Jan 9, 2006.

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Pre-Qualification Memorandum Background Studies and Reports

25. With the financial assistance of the European Agency for Reconstruction, the World Bank Group, USAID, and other donor organizations, the following studies/analyses relevant to the Project have been completed: Table 3: KEK documentation Completion Date

Status

May-01

Completed under the first contract for the rehabilitation of Kosovo B Unit 2, and prepared

by Innogy plc

Environmental Impact Assessment and Action Plan for Kosovo A and B Power Plants and Coal Mines

Jun-03

Completed. Prepared by Carl Bro.

Final Report on the visual inspection of the electrostatic precipitator plant at Unit B1 of Kosovo B Power Plant

Aug-03

Completed under contract with SwedPower Consortium for management support to KEK.

Institutional Development of Implementation of the Energy Efficiency Programme in Kosovo

Jan-04

Completed. Prepared Française d'Ingénierie.

Economic and Technical Feasibility of the Rehabilitation of Units of Kosovo A Power Plant

Sep-05

Completed. Prepared by A3i Consortium (Application Européenne de Technologie et de Services, AEA Technology plc, Allplan, Iberdrola S.A.).

Preparation of a Mid Term Plan for the Development of Existing Coal Mines and a Main Mining Plan for the new Sibovc Mine

Jun-05

Completed. Prepared by Vattenfall Europe Mining AG.

Pre-feasibility studies for new power plant and pollution mitigation measures in Kosovo B

Feb-06

Completed. The contractor is Electrowatt-Ekono (Jaakko Pöyry Group Oyj).

Preparation of complementary mining plan for Sibovc south west lignite mine

May-06

Completed. Prepared by STEAG AG.

Options Analysis Study for Sibovc Lignite Mine and Generation Stations

Oct-06

Completed: Implemented by GDSI Galway Development Services International (A Consortium of Pohl Consulting & Associates)

Studies to support the development of new generation capacities and related transmission

Sept-07

Completed by a consortium of Pöyry, Cesi, Terna and Decon

Clean up and Land Reclamation Project (CLRP): “Site Investigation, Technical and Organizational Planning”

Jun-07

Ongoing

SESA REPORT: “Environmental and Social Safeguards Services for Private Sector Participation in the Development of new generation capacity, related transmission and the development of the Sibovc Lignite Field”

May 2008

Document Combustion Investigation Kosovo B2 generation unit

Report

for

by

BCEOM

Completed by ERM Italia et al Available to download at: www.lignitepower.com

Société

Pre-Qualification Memorandum

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INVESTMENT PROGRAM FOR THE SIBOVC LIGNITE FIELD & ELECTRIC POWER GENERATION 26. In accordance with the Kosovo Energy Strategy, priority investments in the energy sector for private sector involvement, and which form components of this Project, are: A. Construction of a new electric power generation plant, ‘Kosova e Re Power Plant’ (“KRPP”) with an estimated installed capacity of initially 500 MW with the possibility of expanding up to 1000 MW and (limited) associated interconnection facilities; B. Immediate development of the Sibovc Lignite Field to provide lignite fuel for both the existing lignite fired generation in Kosovo (Kosovo A and Kosovo B) and the new KRPP generation unit(s) as they enter service; and C. Private sector participation in Kosovo B. 27. The Project Developer will be required to implement the Project in a manner consistent with international best practices in regard to the management of social, economic, and environmental impacts of such a large-scale undertaking. Development of the Sibovc Lignite Field will focus first and foremost on development of a reliable long-term fuel supply for Kosovo, and secondly on economic monetization of Kosovo’s lignite resources through exports of power into regional markets.

28. In addition to the above, Government decision no. 03/38 in 2008 set in motion a separate transaction to privatize the Distribution and Supply business of KEK. The World Bank Group’s International Finance Corporation (IFC) has been appointed as transaction advisor for this work, and it is recognized by all parties involved that full coordination will be required with the mining and power generation Project set out in this memorandum.

Development of Sibovc Mining 29. Kosovo’s Energy Strategy identifies the greater Sibovc Lignite Field as the first lignite resource that will be developed to supply all existing and new power stations. Sibovc has a surface area of 19.7 km2, and geological reserves of lignite of 990 million tonnes. It is estimated that the field could support the lignite needs of an additional 2000 MW of thermal generation capacity over a 40 year lifespan, in addition to the units that are already in place for the remainder of their respective operational lives.

30. In exchange for the contribution of a defined portfolio of mining assets, infrastructure and land, it is expected that the Government of Kosovo will take a shareholding within any new mining company or venture (MineCo) formed in connection with the Project. The process for achieving this new MineCo, including the terms of such shareholdings and the methodology or competitive mechanism through which such shareholding is valued, is to be developed and will be set out in the Full RFP. 31. Building on KEK efforts to develop the Southwest corner of the Sibovc Lignite Field, the Project Developer will be expected, inter alia, to sell lignite to the owner/operator(s) of Kosovo A and B. In compliance with best practices, the Project Developer will also be

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expected to implement a Community Development Program. Details on ownership and these contract terms will be finalized by the Transaction Adviser before issuing the Full RFP. 32. The Project Developer will then be expected to continue development and exploitation of the Sibovc Lignite Field, expanding operations to the North, and ensuring such mining capacity is available to supply both existing generation units, as well as new unit(s) developed for KRPP (see below).

33. As identified in the Strategic Environmental and Social Assessment (“SESA”) prepared

by ERM Italia, the exploitation of the Sibovc Lignite Field will require the resettlement of a number of villages and communities, as well as agricultural business and other land.

Development of New Power Generation (KRPP) 34. To address power shortages in Kosovo, the Kosovo Energy Strategy proposes new lignite fuelled power generation at the Sibovc Lignite Field. To support this endeavor, EAR financed a pre-feasibility study,2 which concludes that new generating capacities of up to 2100MW, supplying both local and regional energy markets, would be cost-effective.

According to the study, the economic feasibility of new electric generation in Kosovo is very high because of low production costs utilizing Kosovo’s large, economically accessible deposits of high quality lignite.

35. As stated by Kosovo’s Prime Minister Thaçi in a press conference on July 15 20093, it is envisaged that new power generation to serve both domestic and export markets be developed in phases. This new power generation development forms a part of this Project, alongside the other components listed above.

36. KRPP and all other new power stations would be expected to fulfill all EU-mandated environmental requirements by using advanced and commercially proven technology, either PF or CFB coal burning processes to achieve efficiencies in excess of 38%.

37. MEM has selected the location for the next power station at the Sibovc Lignite Field based on a number of factors, including the likely modality of exploitation of lignite reserves in the Sibovc Lignite Field. The selected construction site is adjacent to KEK’s Kosovo B Power Station, where the existing infrastructure (land, network utilities, water supply, transport, etc.) can also be used to support the new KRPP generation units.

38. The Project Developer will be expected, inter alia, to enter into commercial contracts for sales of power to the licensed distribution and supply company. Details on the contract terms will be finalized by the Transaction Adviser before issuing the Full RFP. 39. It is expected that the Government of Kosovo will receive an ownership interest in the new power plant as a consequence of its shareholding interest within any new generation company or venture (GenCo) formed in connection with the Project, as described in paragraph 41 below.

2

Pre-feasibility studies for the new lignite fired power plant and for pollution mitigation measures at Kosovo B power plant, by Electrowatt-Ekono, 2006.

3 http://www.kryeministri-ks.net/index.php?page=2,9,754

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Private Sector Participation in Kosovo B 40. Private sector participation in Kosovo B shall be included in the Project to maximize the value of the transaction to both Kosovo and the Project Developer, through the realization of operational efficiencies with the new units of KRPP. 41. Through the contribution of Kosovo B, it is expected that the Government of Kosovo will take a shareholding within the new generation company or venture (GenCo) formed in connection with the Project. The process for achieving this new GenCo, including the terms of such shareholdings and the methodology or competitive mechanism through which such shareholding is valued, is to be developed and will be set out in the Full RFP. 42. Further, when under the ownership or control of the Project Developer, it is expected that the Project Developer will invest in the necessary rehabilitation to extend the operational life, availability and performance of the Kosovo B assets, as well as undertake environmental rehabilitation to bring the units into line with EU emissions and other applicable environmental standards.

43. During the period of private sector participation in Kosovo B, the Project Developer shall enter into sales of power to the licensed distribution and supply company from those assets.

Details on the contract terms will be finalized by the Transaction Adviser before issuing the Full RFP.

Pre-Qualification Memorandum

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PROJECT SUPPORT BY DONORS 44. In 2007, the Lignite Power Technical Assistance Project was granted $8.5 million from the World Bank’s International Development Association (IDA).

45. This funding provides for engagement of international consultants (a) to act as Transaction Adviser, (b) to act as Legal and Regulatory Adviser, (c) to act as Environmental and Social Safeguards Adviser, (d) to prepare an Options Analysis, and (e) to prepare a Technical Analysis for the proposed development of the Sibovc Lignite Field (including new and existing lignite mining and power generation assets) in Kosovo for both domestic and export purposes, in a manner consistent with international best practices in regard to the management of social, economic, and environmental impacts of such a mining and generation development project.

46. In addition, at the time of preparation of the Full RFP, the Government intends to request a portion of its IDA lending envelope from the World Bank be allocated for a partial risk guarantee for the Project. Expressions of in-principle support are also expected from MIGA and IFC, to be included in the Full RFP. Use of these instruments will be at the option of bidders.

47. The other two donors supporting the energy sector broadly are the EC and USAID. In addition to policy dialogue, in particular, the EC is leading the donor support for the decommissioning of Kosovo A Power Station, while USAID is leading the donor support for the private sector participation in the distribution and supply business of KEK. In addition, KfW is actively supporting investment projects such as mining equipment rehabilitation and the new transmission upgrade between Kosovo and Albania.

Pre-Qualification Memorandum

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LPTAP Implementation Schedule 48. The Project is expected to be implemented as follows: A. Investors conference – 20-21 January 2010 B. Receipt of expressions of interest – 29 January 2010 C. Announcement of short-listed bidders – 18 February 2010 D. Issue of Draft Request for Proposals – March/April 2010 E. Issue of Full Request for Proposals – July 2010 F. Selection & Announcement of winning bidder – September 2010

Pre-Qualification Memorandum

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PRE-QUALIFICATION PROCEDURES 49. Republic of Kosovo policy requires new investment in mining and power generation to be procured through competitive bidding. For the development of the Project bidding will be limited to a short-list of pre-qualified bidders.

50. Interested investors must apply for pre-qualification to be eligible for selection to the short-list of bidders. The instructions for applying are reproduced in Annex B—Procurement Notice, as are the minimum requirements for pre-qualification.

51. All applicants meeting the minimum qualifications will be pre-qualified. If more than six applicants pre-qualify, the Transaction Adviser will evaluate the Expressions of Interest and Qualifications submitted to determine a short-list of up to six pre-qualified bidders. Such process will employ the scoring criteria and methodology set out in Annex B, and from which the top scoring pre-qualifying applicants will be selected for the short-list of bidders.

52. Applicants are encouraged to form consortia should they need to improve their qualifications.

53. The timetable for pre-qualification and short-listing is as follows: • • •

Interested investors are invited to a conference in Pristina on or about 20-21 January 2010.

Applicants must submit their credentials for pre-qualification by 29 January 2010.

Announcement of the short-list of pre-qualified bidders no later than in the first quarter of 2010.

54. The Transaction Adviser, in partnership with the Legal and Regulatory Adviser, will prepare: A. Draft Request for Proposals (“Draft RFP”), issued to short listed bidders for information purposes only, with the objective of soliciting feedback and discussion on the proposed transaction structure as well as the contractual package through which the transaction will be realized.

B. Full Request for Proposals (“Full RFP”), formally issued to short listed bidders and against which bidders will be invited to prepare their bid.

55. It is expected that the Draft RFP will be distributed to the short-list of pre-qualified bidders in the first/second quarter of 2010, with the Full RFP issued in the second/third quarter.

56. A Data Room will be set up in Kosovo for the short-list of pre-qualified bidders.

Pre-Qualification Memorandum

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ADDITIONAL INFORMATION AND QUESTIONS 57. Questions regarding this Memorandum, the procurement process, or any aspect of the proposed Project should be directed in writing to: Ministry of Energy and Mining Lignite Power Technical Assistance Project Attention: Mr Lorik Haxhiu Arberia, 24 Maji Street, No.15 Prishtina 10000, Republic of Kosovo Telephone: +381 38 213 770 E-mail: lorik.haxhiu@lignitepower.com Web-site: www.lignitepower.com

58. Please ensure that any verbal communication is confirmed in writing immediately thereafter. Where requests relate to clarifications, additional information or omissions within this Pre-Qualification Memorandum, the reply shall be available on the web-site.

Pre-Qualification Memorandum

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ANNEX A—GLOSSARY The following terms will have the meaning indicated, unless otherwise noted: “CFB” means circulating fluidized bed.

“Data Room” means the room or rooms located at a physical site in Kosovo to be specified, and the associated internet web site containing information pertaining to the Project.

“Data Room Administrator” means the individual designated by MEM to manage the Data Room.

“EAR” means the European Agency for Reconstruction.

“ERO” means the Electricity Regulatory Office, the regulator of the power sector in Kosovo.

“Euros” or “€”means the currency of the European Central Bank.

“GenCo” means the new generation company or venture formed in connection with the Project, in which the Government of Kosovo and Project Developer will each hold shares, and which is expected to hold the Kosovo B power plant and the new power plant.

“ICMM” means the Independent Commission for Mines and Minerals, the mining sector regulator in Kosovo.

“IDA” means the International Development Association.

“KEK” means the publicly owned electric utility enterprise Korporata Energjetike e Kosovës J.S.C. “Kosovo” means the Republic of Kosovo.

“LPTAP” means the Lignite Power Technical Assistance Project.

“MEM” means the Ministry of Energy and Mining.

“Memorandum” means this Pre-Qualification Memorandum dated 18 December, 2009.

“MineCo” means the new mining company or venture formed in connection with the Project, in which the Government of Kosovo and Project Developer will each hold shares, and which is expected to hold the mining assets.

“MW” means megawatt.

“MWh” means megawatt-hours.

“Person” means any physical person or undertaking, including a partnership, legal person, company, association, joint venture, trust, or other entity or organization (including, without limitation, any limited liability entity).

“PF” means pulverized fuel.

“PO” means the Project Office.

“Pre-qualified Bidders” means those Prospective Bidders or Bidding Consortia who have been pre-qualified in accordance with the criteria established in this Memorandum.

“Project” means the project described in this document consisting of development of the Sibovc Lignite Field, new electric power generation capacity, and private sector participation in Kosovo B. “Project Developer” means the private sector investor who submits the winning bid in

Pre-Qualification Memorandum

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response to the Tender, as determined by the PSC. “PSC” means the Project Steering Committee.

“Full RFP” means the Full Request for Proposals (“Full RFP”), formally issued to short listed bidders and against which bidders will be invited to prepare their bid.

“Draft RFP” means an initial draft of the Full RFP, issued to short listed bidders for information purposes only, with the objective of soliciting feedback and discussion on the proposed transaction structure as well as the contractual package through which the transaction will be realized “Tender” means the formal request for proposals to execute the Project issued to Prequalified Bidders by MEM. “Transaction Advisor” means the LPTAP consultant responsible for short-listing of bidders, tendering, and all required legal assistance prior to and during negotiations and financial closing of the Project.

“USAID” means the US Agency for International Development.

Pre-Qualification Memorandum

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ANNEX B—PROCUREMENT NOTICE

REPUBLIKA E KOSOVËS / REPUBLIKA KOSOVA / REPUBLIC OF KOSOVA QEVERIA E KOSOVËS / VLADA KOSOVA /GOVERNMENT OF KOSOVA MINISTRIA E ENERGJISE DHE MINIERAVE MINISTARSTVO ENERGIJE I RUDARSTVA MINISTRY OF ENERGY AND MINING

Request for Expressions of Interest for Development of the Sibovc Lignite Field and Associated Power Generation Capacity in Kosovo The proposed Project includes sequential investments towards

a) Construction of a new electric power generation plant, ‘Kosova e Re Power Plant’ (“KRPP”) with an estimated installed capacity of initially 500 MW with the possibility of expanding up to 1000 MW and (limited) associated interconnection facilities; b) Immediate development of the Sibovc Lignite Field to provide lignite fuel for both the existing lignite fired generation in Kosovo (Kosovo A and Kosovo B) and the new KRPP generation unit(s) as they enter service; and c) Private sector participation in Kosovo B. The Project shall be developed in a manner consistent with international best practices in regard to the management of social, economic, and environmental impacts of such a large-scale undertaking.

Development of the Sibovc Lignite Field will focus first and foremost on development of a reliable long-term fuel supply for Kosovo, and secondly on economic monetization of Kosovo’s lignite resources.

The Project Steering Committee (PSC) has the role of managing the Lignite Power Technical Assistance Project (“LPTAP”), which includes engagement of international consultants (a) to act as Transaction Adviser, (b) to act as Legal and Regulatory Adviser, (c) to act as Environmental and Social Safeguards Adviser, (d) to prepare an Options Analysis, and (e) to prepare a Technical Analysis for the proposed development of the Sibovc Lignite Field (including new and existing lignite mining and power generation assets).

Interested investors in the Project may obtain further information at the address below during regular business hours. Background information on the Project may be downloaded at www.lignitepower.com. Furthermore, the PSC is planning a conference in Pristina on or about 20-21 January 2010 at which interested investors may solicit further information.

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The PSC now invites qualified applicants to indicate their interest in undertaking the Project. For an applicant to be considered for the short-list of pre-qualified bidders, its Expression of Interest, written in English, must contain qualifications information in sufficient detail to allow the PSC to assess the firm’s or consortium’s ability to develop the Project within the requirements set by the PSC. If an interested party has insufficient experience in a specific area, it may and is encouraged to associate with others to enhance its qualifications. The following will be used in determination of qualifications: a. An applicant can be a single entity or can be a consortium. After an applicant has been shortlisted, the membership structure used to qualify may not be changed without prior written approval of the PSC. b. For determining the experience and technical capability of a consortium, the experience and technical capability of each member shall be combined for evaluation. However, experience and resources of subcontractors to the applicant shall be taken into account in determining the applicant’s compliance only with the qualification criteria (d.iii) and (d.iv) below. c. Each member of a consortium is encouraged to provide its financial capability separately, for evaluation. d. A pre-qualified bidder will be one who meets or exceeds the qualification criteria listed below. A bidder must demonstrate its experience in the contracting, financing, management, engineering, procurement, construction, and operation of projects of similar nature and complexity to the proposed Project. The following criteria will be used in the evaluation for the purposes of prequalification: (i) Financial Capacity: The applicant must demonstrate financial capacity to fund, or experience in arranging financing, for the investment required for a large open-cast mine and for a power station (potentially over € 1 billion). Please describe all the power generation and all the opencast mining projects over the last 10 years in which the applicant has invested, clearly listing the location, year of financial closing, the total capital amount, debt ratio, and the role of and amount invested by the applicant. o Minimum to pre-qualify: The applicant shall provide evidence that it, if not a consortium, or the lead member if a consortium, has arranged financing for an independent power and/or mining project with a financing amount (debt plus equity) of at least €800 million. (ii) Project Management and Sponsorship: The applicant must demonstrate that it has the capabilities to successfully manage the contracting, financing, design, engineering, procurement, construction, start-up, operation, and site restoration of a large open-cast mine and of a lignite fuelled power station. Please describe all the power generation and all the open-cast mining projects over the last 10 years in which the applicant has played a management role, clearly indicating the size (throughputs) of the project, location, year of completion of construction, and whether the applicant acted as lead or participant. o Minimum to pre-qualify: The applicant shall provide evidence that it has managed the development of (A) an open-cast mine of at least 8 million tonnes/yr of coal or lignite production and (B) a coal- or lignite-fired independent power producer(s) of at least 600 MW gross electric power generating capacity. (iii) Construction: The applicant must demonstrate it (or its construction subcontractors) has the past experience to successfully engineer, procure, and construct an open-cast mine and power station of size as at (ii) above. Please describe all (but not to exceed ten each of open-cast mines and power stations) relevant open-cast mines and power stations in which the applicant (or its subcontractors) has been lead constructor, clearly indicating the size (throughputs) of

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the project, location, year of completion of construction, technology, and manufacturers of major equipment. o Minimum to pre-qualify: The applicant shall provide evidence that it (or its construction subcontractors) has served as the lead construction entity in at least two projects of a similar nature and complexity as the components of the Project that have been completed and operated successfully for at least 18 months; (iv) Operation and Maintenance: The applicant must demonstrate it (or its operations subcontractors) has the experience to operate and maintain an open-cast mine and to operate and maintain a power station of size as at (ii) above. If the operator is a subcontractor, the contract must be for at least 5 years. Please describe all (but not to exceed ten each of opencast mines and power stations) relevant O&M contracts into which the proposed operator(s) has entered in the last 10 years, clearly indicating the location, years under contract, size, and technology of each contract. o Minimum to pre-qualify: The applicant shall provide evidence that it (or its lead operations subcontractor) has (A) operated an open-cast mine of at least 5 million tonnes/yr production for at least 3 years since 2004 and (B), operated coal or lignite fuelled power generation capacity of at least 2000MW (at a single or in aggregate across multiple locations) for at least 3 years since 2004. e. Each applicant’s minimum qualifications will be evaluated on the basis of a PASS-FAIL approach.

Submissions must clearly identify the lead developer or firm, its relationship to a parent company (if any), and any other firms that comprise the consortium or joint venture. Each applicant shall provide a statement from each consortium member that the lead member is authorized to act on their behalf, and the lead member shall be the point of contact for each consortium. All consortium members will be required to participate through out the term of the Project, unless the PSC’s prior approval is granted.

The name, mailing address, telephone and facsimile numbers, and e-mail address of the applicant’s project manager to whom all correspondence will be directed in relation to the Project shall be provided in the submission.

Submissions should be made (by hand or by prepaid, registered, or certified mail or by overnight courier, but not by facsimile, electronic mail, telex or telegram) in a sealed envelope to the address below not later than 1700 hours (Pristina time) on 29 January 2010, signed and certified by an officer of the firm (or the lead consortium member), and clearly marked “Expression of Interest for Development of the Sibovc Lignite Field.” The submission shall contain one original and five (5) copies of the firm’s or consortium’s: Expression of Interest, qualifications, as well as the completed and duly signed forms contained in Annex C, D and E of this Prequalification Memorandum, namely “Application for Pre-Qualification for Bidding”; “Experience Declaration Form”; and “Confidentiality Agreement Form”.

Ministry of Energy and Mining Lignite Power Technical Assistance Project Attention: Mr Lorik Haxhiu Arberia, 24 Maji Street, No.15 Prishtina 10000, Republic of Kosovo Telephone: +381 38 213 770 E-mail: lorik.haxhiu@lignitepower.com Web-site: www.lignitepower.com The PSC reserves the right, in its sole discretion, to accept or reject any application, to waive minor informalities in applications received, or to extend the deadline for submission of applications.

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Furthermore, it is the intention of the PSC that the two remaining pre-qualified bidders4, short-listed under the request for “Expression Of Interest For The Development Of A New Lignite Mining Facility And Associated New Electric Generating And Associated Transmission Capacity And Rehabilitation Of Existing Generators” issued August 15, 2006, shall, upon application, be automatically short-listed as pre-qualified bidders under the criteria set out in this memorandum, so far as the consortia structure of those pre-qualified bidders remains unchanged.

The Transaction Adviser engaged by the PSC under the LPTAP will evaluate Expressions of Interest and qualifications submitted hereunder for compliance with the pre-qualification minimums and, if necessary, reduce the list to a maximum of approximately six pre-qualified bidders. In such circumstance, the Transaction Adviser will recommend a short-list of the most highly qualified bidders to the PSC, employing a weighted scoring mechanism as follows: Scoring Criteria Financial Capacity – finance raising experience Development Management Experience - mining Development Management Experience - generation Construction Experience – similar projects O&M Experience – Mining O&M Experience – Coal/Lignite Generation Financial Standing Bidder/Consortium Structure*

Maximum Points Available 15 10 10 15 10 10 15 15

* Consortium Structure scoring shall favor pre-qualified bidders who are a single organization with equity interest in both mining and generation activities, then secondly consortia in which members individually hold equity interests in mining or generation activities

The PSC will notify in writing the project manager of each applicant of the names of firms or consortia on the short-list during the first quarter of 2010.

The Transaction Adviser will prepare the Draft RFP and Full RFP set out above and, assisted by and the Legal and Regulatory Adviser engaged by the PSC under the LPTAP, shall include forms of legal agreements to be employed (e.g., implementation agreement, power purchase agreement, lignite purchase agreement, concession agreement, etc).

Only the short-listed firms will be invited by the PSC to participate in the forthcoming tender, for which the PSC will make the Full RFP available in the second/third quarter of 2010. The successful bidder will be required to arrange the necessary financing and to finalize the engineering, procurement, construction, operation and maintenance, and other contracts required for Project development and implementation.

4

AES Corporation / ČEZ, a.s.; and Enel S.p.A / SENCAP S.A.

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ANNEX C – APPLICATION FOR PRE-QUALIFICATION FOR BIDDING

Re:

Pre-qualification for Bidding

Ministry of Energy and Mining Lignite Power Technical Assistance Project Arberia, 24 Maji Street, No.15 Prishtina 10000, Republic of Kosovo

Pursuant to the Pre-qualification Memorandum dated 18 December 2009, and the procedures and criteria for bidding included therein, [Name of applicant] (“Applicant”) hereby submits its Application for Pre-qualification for Bidding and requests to be considered for prequalification.

All capitalized terms used in this Application are defined in the glossary of the PreQualification Memorandum, unless otherwise indicated.

Applicant hereby applies to become pre-qualified in the Tender for the Project.

Applicant hereby confirms that it: (a)

agrees to comply with the pre-qualification criteria and all other rules, laws and regulations governing the Tender;

(b)

acknowledges that the PSC reserves the right to declare the Tender void or otherwise without effect for any reason or no reason or to reopen the pre-qualification or the Tender or to accept or reject any application for pre-qualification at any time, and that such action will not entitle any Applicant to any claim whatsoever against the Republic of Kosovo, the MEM, KEK or any of their respective agents, representatives, advisors or consultants;

(c)

accepts the right of the PSC to: (i) request additional information from Applicants; (ii) amend the pre-qualification criteria and rules or make clarifications thereof; and (iii) extend or amend the schedule of the pre-qualification and the Tender;

(d)

accepts the exclusive application of the law applicable in Kosovo with respect to these pre-qualification rules and the Tender; and

(e)

accepts that each Applicant will be required to perform its own investigation and analysis to the extent it deems necessary with respect to the Project, including, without limitation, financial, technical, tax and legal aspects.

Applicant hereby represents and warrants that as of the date of this letter: (a)

all of the information submitted or to be submitted by the Applicant is accurate in all respects;

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(b)

it has not been subject to any voluntary or involuntary bankruptcy or insolvency or similar proceeding during the last five years; and

(c)

it has paid all taxes due, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established

Attached herewith to this application for pre-qualification are the following documents, as appropriate: (a)

the properly completed Experience Declaration Form as set forth in Annex D to the Pre-Qualification Memorandum;

(b)

copies of the current bylaws and articles of incorporation or articles of association of the Applicant or other equivalent constitutional documents;

(c)

the audited financial statements of the Applicant as required by the pre-qualification rules;

(d)

the document or documents (such as powers of attorney or corporate minutes) evidencing the authority of the officer or director who shall execute this letter of application, the Experience Declaration Forms and the Confidentiality Agreement; and

(e)

the Confidentiality Agreement set forth in Annex E of the Pre-Qualification Memorandum executed by an officer or director of the Applicant who has the legal capacity and authority to bind the Applicant with respect to matters in the prequalification process.

As required by the pre-qualification rules, Applicant hereby designates________________ ___________ as its representative and _______________________ as its alternate to receive notices in respect of the pre-qualification and the Tender at the following address, telephone and facsimile numbers: [Representative’s and alternate’s address, telephone and facsimile numbers.]

Very truly yours, [Name of Applicant] By: __________________________________ Date: _________________________ Name: __________________________________ Title: __________________________________

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ANNEX D – EXPERICENCE DECLARATION FORM THE APPLICANT [Insert Name] Applicant is/are local / international investors or a consortium of investors with a proven track record in ownership, financial capability and technical competence to construct, own and manage the lignite open cast mining operations and coal preparation facilities and associated power plant. Accordingly, the Applicant submits the attached documentation as verifiable evidence of its technical, managerial and financial capability.

The pre-qualification criteria that the Applicant meets and for which Applicant has supplied evidence herewith includes but is not limited to the following: 1. evidence that it, if not a consortium, or the lead member if a consortium, has arranged financing for an independent power and/or mining project with a financing amount (debt plus equity) of at least €800 million.

2. evidence that it, if not a consortium, or a consortium member if a consortium, has managed the development of (A) an open-cast mine of at least 8 million tonnes/yr of coal or lignite production and (B) a coal- or lignite-fired independent power producer(s) of at least 600 MW gross electric power generating capacity.

3. evidence that it, if not a consortium, or a consortium member if a consortium, (or its, or a consortium member’s, construction subcontractors) has served as the lead construction entity in at least two projects of a similar nature and complexity as the components of the Project that have been completed since 2000 and have operated successfully for at least 18 months; and 4. evidence that it, if not a consortium, or a consortium member if a consortium, (or its, or a consortium member’s, construction subcontractors) has (A) operated an open-cast mine of at least 5 million tonnes/yr production for at least 3 years since 2004 and (B), operated coal or lignite fuelled power generation capacity of at least 2000MW (at a single or in aggregate across multiple locations) for at least 3 years since 2004.

METHOD OF APPLICATION The Applicant, as a single or consortium of investors, has supplied the following documentation and information: -

For the applicant company, or if a consortium, for each member of that, consortium, the full name of that company and a lead contact person, postal address, telephone / fax numbers and e-mail address.

-

For the applicant company, or if a consortium, for each member of that consortium, the ownership structure of the company; Name(s) of major shareholders, and Percentage shareholdings; composition and profile of management team showing qualification and years of relevant experience.

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-

For the applicant company, or if a consortium, for each member of that, consortium, the ownership structure of the company; audited financial statements for up to the past five (5) years and most recent management accounts.

-

Technical and operational capabilities per the above criteria

-

Evidence of financial resources per the above criteria

Very truly yours, [Name of Applicant] By: __________________________________ Date: _________________________ Name: __________________________________ Title: __________________________________

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ANNEX E – CONFIDENTIALITY AGREEMENT FORM Minister Ministry of Energy and Mining Mother Theresa Street, No. 36 Prishtina, 10000 Republic of Kosovo Dear Honorable Minister: Pursuant to the Pre-Qualification Memorandum issued by the Ministry of Energy and Mining (“MEM”) (this and other capitalized terms used here shall have the meaning given to them in the Memorandum unless it is otherwise indicated) on 18 December, 2009, we understand that MEM will, in due course, invite investors to begin due diligence (the “Process”). As part of the Process, MEM is prepared to disclose certain Confidential Information (as hereinafter defined) to potential bidders in order to assist them in evaluating the Process and in preparing their bids. As an entity interested in the Process, the undersigned recipient (the “Recipient”) of Confidential Information hereby executes and delivers this letter agreement (the “Confidentiality Agreement”). By this Confidentiality Agreement, the rights and obligations of the Recipient concerning the use, protection and disclosure of Confidential Information, which may be provided to the Recipient, are set forth below.

Definitions.

“Confidential Information,” as used herein, shall include information of whatever nature and on whatever medium relating to the Project which is obtained in connection with the Process, in writing, orally or by any other means by the Recipient, its employees, directors, officers, agents or advisors from MEM or its employees, directors, officers, agents or advisors.

Confidential Information does not include (1) information which is or becomes publicly available, other than as a result of a breach of this Confidentiality Agreement or a similar Confidentiality Agreement signed by another Recipient, (2) information which becomes lawfully available to the Recipient from a third party which is free from any confidentiality restriction, (3) information which prior to being imparted to the Recipient during the Process was already properly in the Recipient’s possession, and (4) information which was independently created by the Recipient without the use or knowledge of Confidential Information.

“Restricted Person,” as used herein, shall include the Recipient’s and Recipients’ affiliates employees, directors, officers, agents and advisors.

Undertakings of the Recipient.

The Recipient hereby undertakes that: (i) Recipient shall use the Confidential Information only for the purpose of evaluating the Process and preparing its bid for the Project; (ii) Recipient shall treat and safeguard as private and confidential all Confidential Information from the time of receipt until notified by MEM;

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(iii) Subject to (ix) below, Recipient shall not any time until notified by MEM, without the prior written consent of MEM directly or indirectly disclose or permit the disclosure of any Confidential Information to any Person or other party whatever, other than to Restricted Persons who need to know or see the same in the course of the Recipient’s evaluation of the Process and the preparation of its bid; (iv) Recipient shall be responsible that all Restricted Persons observe the terms of this Confidentiality Agreement and maintain the confidentiality of all Confidential Information.

Recipient shall impose upon each Restricted Person who receives Confidential Information an obligation of confidentiality equivalent to or greater than the obligations placed on Recipient herein, and Recipient shall be responsible for any disclosure of Confidential Information by any Restricted Person in violation of the terms of this Confidentiality Agreement; (v) Except as permitted by the Process, Recipient shall not and shall ensure that Restricted Persons shall not at any time during the Process discuss with, communicate with, or solicit information from KEK, the PSC or MEM, their employees, directors, officers, agents or advisors concerning any matter related to the Project without the prior written consent of MEM, and shall notify MEM of any information received outside the formal Process; (vi) Recipient shall not and shall ensure the Restricted Persons shall not at any time during the Process directly or indirectly disclose or permit to be disclosed to any Person, except other Restricted Persons, that discussions are taking place between (a) the Recipient or Restricted Persons and (b) MEM or its agents in relation to the Process or the contents of such discussions, without the prior written consent of MEM; (vii) Recipient shall only make such copies of any document or other material (in whatever medium) embodying or including any Confidential Information as are necessary for evaluating the Process and preparing its bid. Recipient shall keep a record of the location of and Person holding all Confidential Information, and copies thereof; (viii) Recipient shall promptly return to MEM, (i) upon the request of the MEM (ii) upon the Recipient’s decision not to further participate in the Process, or (iii) upon the termination of the Process, all Confidential Information (and copies thereof) which was supplied to the Recipient or a Restricted Person, which physically can be returned and which is in the Recipient’s possession or the possession of a Restricted Person. Recipient shall destroy any paper or other record (including records stored on computers or similar devices) containing Confidential Information, and shall at the same time deliver to MEM a certificate signed by Recipient that all Confidential Information and copies have been so returned or destroyed; (ix) If Recipient is requested or required (by judicial or regulatory order or demand or otherwise) to disclose any of the Confidential Information, Recipient shall notify MEM promptly so that the MEM may seek any appropriate protective order and/or take any other action. In the event that such protective order is not obtained, or that MEM waives compliance with the provisions hereof, (a) Recipient may disclose to any tribunal or other Person only that portion of the Confidential Information which the Recipient is advised by legal counsel in writing is legally required to be disclosed and shall use Recipient’s best efforts to obtain assurances that confidential treatment will be accorded such Confidential Information, and (b) Recipient shall not be liable for such disclosure unless such disclosure to

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such tribunal or other person was caused by, or resulted from, a previous disclosure by the Recipient which was not permitted by the Confidentiality Agreement.

No Representations or Warranties.

Except as may be contained in the final transaction documentation executed by MEM: (a) MEM, its directors, officers, advisors, agents, employees, have not made at any time, now or in the future, any representation or warranty (express or implied) concerning or related to MEM , the Tender, the accuracy or completeness of any Confidential Information, or any other information concerning the Project or the Process, (b) no representation or warranty is or will be made that such information will remain unchanged, (c) the MEM shall have not responsibility or liability whatever arising from any Confidential Information or any other information supplied to the Recipient.

In particular, but without prejudice to the generality of the foregoing, any projected results for future periods which may be contained in the information which Recipient may receive are for indicative purposes only, and the Government of Kosovo, MEM, the PSC and KEK, their directors, officers, advisers, agents, employees, and associates do not warrant or in any way accept liability for their accuracy. Recipient must make its own independent assessment of the Tender and rely on Recipient’s own judgment in reaching any conclusion.

No Offer; Independent Contractor.

Recipient agrees that any document or information (whether Confidential Information or not) with the exception of the definitive Project agreements to be executed by the awardee(s) of the Tender, made available to Recipient does not and will not constitute an offer or invitation or form the basis of any contract. The PSC, MEM and KEK shall be entitled at any time to decline to provide or to continue to provide any Confidential Information to the Recipient.

Nothing in this Confidentiality Agreement shall be deemed to constitute any party a partner, agent or legal representative of any other party or to create a fiduciary relationship between the parties.

Other Provisions.

The PSC, KEK and MEM, their directors, officers, advisors, agents, employees and associates shall not be and are not under any obligation to reimburse any costs and expense which the Recipient or any Restricted Person may incur in connection with the Process.

The Recipient acknowledges that the Confidential Information is the exclusive property of the Republic of Kosovo and it shall not be deemed to confer upon Recipient any rights whatsoever in respect of any part thereof, except for the purpose of the Process and preparing its bid.

The Recipient acknowledges that any breach of the terms of this Confidentiality Agreement may give rise to severe damage to the Republic of Kosovo, MEM, KEK, PSC, and that for each violation of this Confidentiality Agreement (a) a penalty may be imposed upon the Recipient payable to MEM in the amount of Twenty Thousand Euros (â‚Ź 20,000) and/or (b) MEM may disqualify the Recipient from any further participation in the Process; it being understood that invoking the sanctions under (a) and/or (b) above shall not preclude MEM from seeking any additional remedies available under law or equity. A continuing violation

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of this Confidentiality Agreement shall be considered a single violation so long as the Recipient takes prompt, reasonable actions to terminate the violation. Failure to take prompt, reasonable actions to terminate the violation shall be considered a separate violation.

In executing this Confidentiality Agreement the Recipient agrees to pay all invoices sent to it by the Data Room Administrator for expenses incurred for photocopies and any other charge incurred in connection with the Data Room within thirty (30) days of the date of the invoice sent by the Data Room Administrator.

This Confidentiality Agreement shall be governed and construed in accordance with the laws of Kosovo.

This Confidentiality Agreement may only be modified or amended in writing with the consent of all the parties hereto. If a provision, clause, phrase, word or term of this Confidentiality Agreement is found to be ambiguous, the parties hereby agree that such ambiguity shall not cause the provision, clause, phrase, word or term to be read against, or in favor of any party. The invalidity or unenforceability of any provision of this Confidentiality Agreement shall in no way affect the validity or enforceability of any other provision. Any invalid provision shall be deemed severed from this Confidentiality Agreement and the balance of this Confidentiality Agreement shall be reformed in such a manner as to give effect to the maximum extent possible the original intent of the parties. This Confidentiality Agreement constitutes the entire understanding between the parties regarding Confidential Information, superseding, but not relieving [counterparty] of its prior obligations for, all prior or contemporaneous communications, agreements and undertakings between the parties relating to Confidential Information. This Confidentiality Agreement may be executed in several counterparts, which shall constitute one and the same instrument.

Very truly yours, [Name of Applicant] By: __________________________________ Date: _________________________ Name: __________________________________ Title: __________________________________